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CAMP HILL, Pa. — Rite Aid Corp. posted fiscal 2015 third-quarter earnings per share well above Wall Street’s projections.
Rite Aid Corp. posted fiscal 2015 third-quarter earnings per share well above Wall Street’s projections.
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Rite Aid said Thursday that for the third quarter ended Nov. 29, net income came in at $104.8 million, or 10 cents per diluted share, up from $71.5 million, or 4 cents per diluted share, a year earlier.
Analysts, on average, had forecast EPS of 5 cents, with estimates ranging from a low of 4 cents to a high of 7 cents, according to Thomson Financial.
The earnings improvement stemmed mainly from an increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and a lower LIFO charge, partially offset by a higher loss on debt retirement from the redemption of 10.25% senior secured notes, Rite Aid said.
Adjusted EBITDA totaled $332.8 million, or 5% of revenue, in the third quarter, compared with $282.3 million, or 4.4% of revenue, a year ago. Rite Aid said the gain resulted from an increase in front-end and pharmacy gross profit, partially offset by a rise in selling, general and administrative expenses related to a higher level of sales.
The company said the improved pharmacy gross profit was driven by increased pharmacy prescription sales and lower generic drug costs, resulting from the transition to a new drug purchasing and delivery arrangement with McKesson Corp., partially offset by lower reimbursement rates.
In the 2015 third quarter, sales rose 5.3% to $6.7 billion from $6.4 billion a year earlier, fueled by increased same-store sales, Rite Aid reported.
Same-store sales for the quarter climbed 5.4% year over year, reflecting gains of 1.6% in the front end and 7.2% in the pharmacy. Rite Aid said comparable pharmacy sales included a negative impact of 228 basis points from introductions of new generic drugs.
Prescription count in comparable stores grew 4.5% for the third quarter. Prescription sales accounted for 69.8% of total drug store sales in the period.
"We are pleased with our results for the third quarter," Rite Aid chairman and chief executive officer John Standley said in a statement. "Our focus on expanding our health and wellness offering and delivering a higher level of care to the communities we serve drove our strong same-store sales, prescription count and gross profit. Based upon our strong third-quarter results, we have raised our guidance for the year."
For fiscal 2015, Rite Aid now projects net income of $315 million to $370 million, or 31 cents to 37 cents per diluted share, compared with its earlier guidance of $223 million to $333 million, or 22 cents to 33 cents per diluted share.
The consensus analyst estimate is for fiscal 2015 EPS of 31 cents, with projections running from a low of 28 cents to a high of 40 cents, according to Thomson Financial.
Rite Aid expects adjusted EBITDA for 2015 to come in at $1.275 billion to $1.305 billion, up from its previous estimate of $1.2 billion to $1.275 billion.
The company also slightly raised its revenue forecast. Sales are expected to total between $26.25 billion and $26.4 billion, with same-store sales up 3.75% to 4.25%. Capital expenditures are expected to remain the same at about $525 million.
During the third quarter, Rite Aid relocated three drug stores, remodeled 103 stores and expanded one store, raising the total number of its wellness format stores to 1,529. The company also acquired six stores and closed six stores, resulting in a total store count of 4,572 as of Nov. 29.
