Despite merger uncertainly, Rite Aid beats Street in Q4

Rite Aid managed to best analyst forecasts for the fourth quarter even as its chairman and CEO noted that "the extended duration of the merger process" with Walgreens Boots Alliance is "having a negative impact" on the company's results.



Rite Aid’s revenue rose a better-than-expected 2.7% to $8.5 billion in the quarter. Same-store sales fell 3.0%, consisting of a 4.3% decrease in pharmacy sales and a 0.3% decrease in front-end sales.



The chain posted a net loss of $21.1 million. Its adjusted net loss came in at $3.2 million.



“We remain confident that the completion of our proposed merger with Walgreens Boots Alliance is in the best interest of Rite Aid shareholders, customers and associates,” said chairman and CEO John Standley. “However, despite our team’s continued focus on growing our business, the extended duration of the merger process is having a negative impact on our results.”



Rite Aid noted that it and Walgreens are working toward a close of the merger by July 31, 2017. But the chain added “there can be no assurance that the requisite regulatory approvals will be obtained, or that the merger will be completed within the time period contemplated by the merger agreement on the current terms, if at all.”



“As we remain actively engaged in discussions with the Federal Trade Commission to gain regulatory approval for the merger, we are also taking steps to review our ongoing strategy, reduce costs and make necessary changes to our business to improve our performance going forward,” Standley said.



For the full year, ended March 4, revenues rose 6.9% to $32.8 billion. Net income totaled $4.1 million compared to last year’s net income of $165.5 million. The decline in operating results is due primarily to a decline in adjusted EBITDA and an increase in the pharmacy services segment amortization expense, the chain said.



At the end of its fiscal year, Rite Aid operated 4,536 stores in 31 states and the District of Columbia.