Rite Aid disappoints

Rite Aid Corp. reported disappointing first-quarter earnings and sales results in its first quarter amid pressure on pharmacy reimbursement rates.



The chain reported a loss of $4.6 million for the quarter ended May 28, after reporting a profit in the same period a year earlier. Excluding certain items, adjusted net income was $14.5 million, or 1 cent per diluted share, compared with 2 cents a year earlier.



The results fell short of Wall Street expectations.



Revenue rose to $8.2 billion from $6.65 billion in the year-ago period, below a forecast of $8.26 billion. Same-store sales for the quarter increased 0.4%, with a 0.1% increase in pharmacy sales and a 1.2% increase in front-end sales.



“Our results for the first quarter reflect strong performance in our Pharmacy Services Segment and our front-end business as well as good overall expense control,” said chairman and CEO John Standley. “Our challenge was pharmacy reimbursement rate pressure, which we were unable to offset largely due to drug purchasing efficiencies that did not meet our expectations. While drug cost reductions will continue to be short of our expectations in the near term, we anticipate improvements over the second half of the fiscal year.



Rite Aid is awaiting approval from the Federal Trade Commission for its proposed acquisition by Walgreens Boots Alliance, which was announced in February 2015. Rite Aid has said expects the transaction to close in the second half of calendar year 2016.