Rite Aid loss widens on charges related to Elixir; to cut SG&A, capex costs
Rite Aid reported a first-quarter that beat analysts estimates even as its loss widened and revenue declined.
The company reported a net loss of $306.7 million, or $5.56 a share, for the quarter ended June 3, compared to a loss of $110.2 million, or $2.03 a share, posted in the year-ago period. The wider loss was mostly due to a non-cash goodwill impairment charge at the company’s Elixir pharmacy benefit management business. The adjusted per-share loss was $0.73 cents. Analysts polled by Thomson Reuters expected a loss of 1.46 per share.
Revenue inched down to $5.653 billion from $6.015 billion, but ahead of estimates of $5.324 billion. The company said the sales decline was largely due to the reduction in its prescription drug plan (PDP) membership and the loss of commercial clients at Elixir.
Retail pharmacy segment revenues increased 3.4% over the prior year quarter, driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID vaccine and testing revenue as well as store closures. Same store sales rose 8.4%, with a 13.3% increase in pharmacy sales and a 4.4% decrease in front-end sales.
“Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the retail pharmacy segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, who was named interim CEO in January following the departure of Heyward Donigan. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year.”
For fiscal 2024, Rite Aid expects adjusted net loss per share to be between $4.29 and $4.78. Net loss is expected to be between approximately $650 million and $680 million, with revenue of $22.6 billion to $23.0 billion.
The company said it continues to believe that it is on track to achieve adjusted EBITDA growth in fiscal years 2025 and 2026.
Rite Aid had 2,284 stores at the end of the quarter.