Rite Aid Q2 Profit Misses Expectations, Shares Tumble

Shares of

dropped over 6 percent in pre-market trading after the company reported downbeat earnings for the second quarter and issued a weak forecast. The Camp Hill, Pennsylvania-based company posted quarterly net income of $21.5 million, or $0.02 per share, down from $127.8 million, or $0.13 per share, in the year-ago quarter. Its revenue climbed 17.5 percent year-over-year to $7.7 billion from $6.5 billion. However, analysts were expecting earnings of $0.04 per share on revenue of $7.6 billion. The average estimate among 31 Estimize users was for earnings of $0.06 per share and revenue of $7.53 billion. Retail Pharmacy Segment revenue rose 1.9 percent to $6.6 billion, while Pharmacy Services Segment revenue came in at $1.1 billion in the quarter. Same store drugstore sales for the Retail Pharmacy Segment gained 2.1 percent for the latest quarter. The number of prescriptions filled in same stores rose 0.2 percent year-over-year. Its adjusted EBITDA slipped to $346.8 million in the latest quarter, versus $364.2 million in the year-earlier period. "The second quarter was pivotal for Rite Aid as we completed the acquisition of EnvisionRx and worked as a team to accelerate our transformation into a retail healthcare company," said Rite Aid Chairman and CEO John Standley. "EnvisionRx made positive contributions to our performance as our Pharmacy Services Segment* delivered results that were in line with our expectations. We will continue to focus on key initiatives like wellness+ with Plenti, flu immunizations and Wellness store remodels to drive performance in our retail segment as we also leverage EnvisionRx's suite of services to create unique and integrated offerings in the healthcare marketplace." Rite Aid expects FY16 earnings of $0.12 to $0.19 per share, on revenue of $30.8 billion to $31.1 billion. The company had earlier expected earnings of $0.14 to $0.22 per share, on revenue of $30.7 billion to $31.2 billion. Analysts projected earnings of $0.21 per share on revenue of $30.9 billion. Rite Aid shares fell 6.75 percent to $8.01 in pre-market trading.