Rite Aid Corp.’s stock rose 7.5% in premarket trade Thursday, after the drugstore chain surprised investors with a narrower-than-expected loss for its fiscal first quarter and better-than-expected revenue.
The stock
RAD,
has fallen 20% this week, hurt by a report from Bloomberg that it’s in talks to restructure $2.9 billion of debt.
The Philadelphia-based company posted a net loss of $306.7 million, or $5.56 a share, for the quarter to June 3, wider than the loss of $110.2 million, or $2.03 a share, posted in the year-earlier period. The wider loss was mostly due to a noncash goodwill impairment charge at the company’s Elixir pharmacy benefit management business.
The company’s adjusted per-share loss came to 73 cents, narrower than the FactSet consensus for a loss of $1.50.
Revenue edged down to $5.653 billion from $6.015 billion, but was ahead of the $5.324 billion FactSet consensus.
“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, interim chief executive officer.
The company is now planning to cut SG&A and capex costs for the rest of the year, she said.
Retail same-store prescriptions rose 4.7% in the quarter and were up 8.4% excluding the impact of lower demand for COVID vaccines and testing.
Revenue was hit by a reduction in the company’s Prescription Drug Plan membership and the loss of commercial clients at Elixir. Other items that contributed to the net loss were higher restructuring-related charges, a smaller gain on the sale of assets, higher interest costs and a decline in adjusted EBITDA. Those were partially offset by decreased facility exit and impairment charges.
The company’s retail-pharmacy revenue rose 3.4%. Same-store sales were up 8.4%, as same-pharmacy sales rose 13.5%, while front-end sales fell 4.4%.
Rite Aid is expecting a fiscal 2024 loss per share of $4.29 to $4.78 and revenue of $22.6 billion to $23.0 billion. FactSet is expecting a loss of $4.79 and revenue of $22.3 billion.
The stock has fallen 54% in the year to date, while the S&P 500
SPX,
has gained 14%.
The news comes a day after a disappointing report from rival Walgreens Boots Alliance Inc.
WBA,
which sent its stock to levels last seen in 2010.
See now: Walgreens shares drop sharply as cautious consumers dent full-year outlook
