Rite Aid Q3 Results Top Estimates, Lifts Full-year Outlook - Update

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) Thursday reported a sharp increase in the third-quarter profit, as revenues grew mainly by increase in same store sales. Earnings per share, as well as revenues topped analysts' estimates. The firm also lifted its outlook for the full year. The shares are up about 10 percent in the pre-market trading.

For the third quarter ended November 29, 2014, the company's net income attributable to stockholders more than doubled to $106.21 million or $0.10 per share from $43.11 million or $0.04 per share in the previous year.

On average, nine analysts polled by Thomson Reuters expected the company to report profit per share of $0.05 for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 5.3 percent to $6.69 billion from $6.36 billion in the preceding year, mainly due to an increase in same store sales. Analysts expected revenue of $6.65 billion for the quarter.

Same store sales rose 5.4 percent, consisting of a 1.6 percent increase in front-end sales and a 7.2 percent rise in pharmacy sales. The company noted that pharmacy sales included about 228 basis point negative impact from new generic introductions.

The number of prescriptions filled in same stores increased 4.5 percent year-over-year. Prescription sales accounted for 69.8 percent of total drugstore sales, and third party prescription revenue was 97.6 percent of pharmacy sales.

Chairman and CEO John Standley said, "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 the fiscal year ending February 2015, the company now expects net income to be between $315 million and $370 million or $0.31 to $0.37 per share.

Sales are expected to be between $26.25 billion and $26.4 billion, with same store sales increase of 3.75 percent to 4.25 percent over fiscal 2014.

Analysts expect the company to report fiscal 2015 profit per share of $0.31, on revenue of $26.43 billion.

In mid-September, while reporting its second-quarter results, the company forecast net income to be between $223 million and $333 million or income per share of $0.22 to $0.33. Sales were expected to be in the range of $26 billion to $26.3 billion and same store sales were expected to range from an increase of 3.00 percent to an increase of 4.00 percent over Fiscal 2014.

At that time, the firm had lowered its full year earnings outlook and cut the upper end of its annual sales forecast, citing lower than anticipated pharmacy margin in the second half of fiscal 2015.

RAD closed Wednesday's trading at $6.06. In the pre-market activity on Thursday, the shares rose 9.74 percent.