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Camp Hill, Pa. – Rising drug costs and falling reimbursements, as well as higher income tax expense, significantly cut into profits at Rite Aid Corp. Net income dropped 55% to $41.4 million in the first quarter, from $91 million in the year-ago period. Its earnings matched analysts' expectations.
Improving pharmacy sales helped drive a 3% increase in revenue to $6.47 billion from $6.29 billion, above Wall Street projections. Same-store sales rose 3.1%. Rite Aid maintained its fiscal 2015 earnings and revenue predictions.
“In the first quarter, we delivered a strong store operating performance, highlighted by increases in same-store sales and same-store prescription count,” said Rite Aid chairman and CEO John Standley. “As we work through managing the higher-than-expected drug costs and reimbursement rate pressure that affected our financial results for the quarter, we remain focused on executing our strategy to expand our health care offering and transform Rite Aid into a growing retail health care company.”