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Rite Aid Earnings Boosted By Termination Fee From Scuttled Walgreens Deal

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Rite Aid Earnings Boosted By Termination Fee From Scuttled Walgreens Deal

Rite Aid Corporation (NYSE: RAD)'s second quarter results saw the pharmacy chain reporting results boosted by a one-time break-up fee secured from Walgreens Boots Alliance Inc (NASDAQ: WBA).

In reaction, shares of Rite Aid were down 3.51 percent at $2.20 in pre-market trading.

Walgreens and Rite Aid decided to terminate the deal in July after a year-and-a-half after realizing that regulatory approval may not be forthcoming. Instead, Rite Aid sold 2,186 of its stores located predominantly in the Northeast, Mid-Atlantic and Southeastern regions to Walgreens.

Rite Aid announced before the market open on Thursday that second quarter net income was $170.7 million, or $0.16 per share, compared to $14.8 million or $0.01 per share one year ago. 

On an adjusted basis, the loss per share was $0.01 compared to net income of $0.03 per share a year ago. 

A Challenging Environment

The anomaly between the reported and adjusted results was due to a $325 million termination fee the company received from Walgreens. This was partially offset by a decline in adjusted EBITDA and higher income tax expense.

Reported revenues were $7.7 billion, 4.4 percent lower than $8 billion in the second quarter of last year. Same-store sales were down 3.4 percent year-over-year.

Among the segments, retail pharmacy revenues fell 3.4 percent to $6.3 billion, dragged by declines in same-store sales and reimbursement rates. Pharmacy segment revenues declined a steeper 8.7 percent to $1.5 billion, with the drop attributed to Rite Aid's election to take part in fewer Medicare Part D regions.

The company said the results reflected a challenging reimbursement rate environment.

Rite Aid also announced the appointment of retail pharmacy veteran Kermit Crawford as president and COO.

"As we work to complete the asset sale, which will reduce our leverage and provide greater financial flexibility to invest in our business, we'll also focus on generating momentum for our business by meeting the health and wellness needs of our customers and patients while delivering an outstanding experience in our stores," Rite Aid Chairman and CEO John Standley said in a statement. 

Related Links: 

The Long Saga Of Walgreens-Rite Aid Finds Closure With Amended Deal

Rite Aid-Walgreens Deal Resolution Produces A Winner: Core-Mark

Posted-In: Rite Aid WalgreensEarnings News Trading Ideas Best of Benzinga

 

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