Pharmacy retailer Rite Aid Corporation (NYSE: RAD) reported a net loss for the first quarter of 2020 that is wider than the market’s estimate, on flat revenues. The company’s stock fell about 10% during Wednesday’s extended session following the announcement.
On an adjusted basis, the company reported a net loss from continuing operations of $0.14 per share, compared to earnings of $0.02 per share in the year-ago quarter. Analysts were looking for a narrower loss. Net loss from continuing operations, on an unadjusted basis, was $99.3 million or $1.88 per share during the three-month period, wider than last year’s loss of $41.7 million or $0.79 per share. The results were negatively impacted by higher restructuring-related costs.
Revenues were almost unchanged from last year and came in at $5.37 billion. The top line missed the forecast. Retail Pharmacy revenue dropped 0.8% year-over-year, hurt by a reduction in store count that was partially offset by an increase in same-store sales. Meanwhile, Pharmacy Services revenue rose by 1.5%.
Same-store sales at Retail Pharmacy moved up 1.4% annually in the May quarter, aided by a 2.3% increase in pharmacy sales. Pharmacy sales were negatively impacted by new generic introductions.
Same-store sales at Retail Pharmacy moved up 1.4% annually in the May quarter, aided by a 2.3% increase in pharmacy sales
“Looking forward, enhancements made to the McKesson supply agreement, generic purchasing improvements, revenue growth and the benefits of actions we have taken to reduce costs should drive improved results in both segments for the remainder of the year. We expect to meet our full-year guidance,” said Rite Aid CEO John Standley.
Looking ahead, the company expects net sales to be in the range of $21.5 billion to $21.9 billion in fiscal 2020 and annual same-store sales growth in the range of 0%-1%. Full-year net loss is expected to range from $170 million to $220 million and adjusted EBITDA between $500 million and $560 million. Adjusted bottom-line results are expected to be between a loss of $0.14 per share and a profit of $0.72 per share. Capital expenditures are predicted to be about $250 million.
During the quarter, Rite Aid remodeled 27 stores, bringing the total number of wellness stores to 1,787. It also opened one new store and closed four, resulting in a total store count of 2,466 at the end of the period.
Rite Aid shares have remained in a perpetual downward spiral for more than two years. They lost 80% in the past twelve months and 57% since the beginning of 2019. The stock, which has long been underperforming the sector, closed Wednesday’s regular session higher but fell sharply in the after-hours.
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