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Rite Aid shares jump over 15% on Q3 results, increased guidance

Last updated: 13:16 20 Dec 2012 GMT, First published: 14:16 20 Dec 2012 GMT

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Rite Aid Corp. (NYSE:RAD) saw its shares hike up over 15 per cent early Thursday, after the company said it swung to a profit in the third quarter and boosted its profit outlook for 2013.

Shares advanced 15.38 per cent in premarket hours, trading at $1.20.

For the full year, Rite Aid now expects between a net loss of five cents per diluted share to a profit of three cents per diluted share.

It also revised its full-year sales outlook to between $25.15 and $25.3 billion. Its prior view was for a loss of between nine and 23 cents on revenue of $25.1 to $25.4 billion. 

Analysts polled by Thomson Reuters are expecting a loss of 15 cents on revenues of $25.36 billion.

For the quarter that ended December 1, the company posted net income of $61.9 million or seven cents per diluted share, compared to a net loss of $52.0 million or six cents per diluted share a year earlier.

Revenues fell 1.2 per cent to $6.2 billion, due to the impact of lower cost generics on pharmacy same store sales as well as store closings.

Analysts expected a per share loss of three cents on revenue of $6.28 billion.

“We have reached a significant milestone in our turnaround efforts by returning to profitability,” said chairman, president and CEO John Standley. 

“We have now increased adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and same store prescription counts for eight consecutive quarters."

Rite Aid said adjusted EBITDA was $295.3 million, or 4.7 per cent of revenues.

“While we are pleased with our third quarter results, we remain focused on sustaining our positive momentum and achieving long-term success,” Standley added.

Same-store sales fell 1.5 per cent as front end sales increased 1.1 per cent, but pharmacy sales fell 2.7 per cent.

Gross margin rose to 29.04 per cent from 26.48 per cent.

The No. 3 U.S. drug-store chain has posted losses since its 2007 acquisition of the Brooks and Eckerd chains that saddled it with debt just before consumers reduced spending. 

The number of prescriptions filled in same stores increased 3.6 per cent, benefiting from additional prescriptions as a result of the dispute between Walgreen (NYSE:WAG) and Express Scripts Holding Co. (NASDAQ:ESRX).

 

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