Rite Aid Q4 Profit Slumps; Issues FY15 Forecast - Quick Facts

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) reported a plunge in its fourth-quarter net income to $55.4 million, from $123.09 million last year, and earnings per share fell significantly to $0.06, from $0.13 a year before.

The recent period's net income included a LIFO charge of $44.1 million due to pharmacy inflation, while the prior year included a LIFO credit of $175.4 million resulting from significant generic deflation. The increase in LIFO expense was partially offset by a growth in Adjusted EBITDA, no loss on debt retirement in the current year compared with a $122.7 million loss on debt retirement a year ago and decreases in interest expense and lease termination and impairment charges. Excluding the LIFO charge, current year net income stood at $99.5 million or $0.10 per share.

For the quarter, income attributable to common stockholders plummeted year-on-year to $56.74 million, from $124.43 million.

Quarterly revenues totaled $6.6 billion, compared with $6.46 billion in the previous year. Three-month same-store sales rose 2.1 percent from last year, comprising a 3.5 percent growth in pharmacy sales, partially offset by a 0.7 percent decline in front end sales.

On average, 7 analysts polled by Thomson Reuters expected earnings per share of $0.04, on revenues of $6.54 billion for the quarter. Analysts' estimates typically exclude one-time items.

Pharmacy sales included an approximate 123 basis point negative impact from new generic introductions, the company said. The number of prescriptions filled in same stores slipped by 1.8 percent year-over-year, with 1.3 percent of this decrease being driven by a reduction in flu-related prescriptions and flu shots. Prescription sales accounted for 67.5 percent of total drugstore sales, and third party prescription revenue was 97.1 percent of pharmacy sales.

For fiscal 2015, the firm sees net income of between $313.0 million and $423.0 million or income per share of $0.31 - $0.42. Full-year sales are projected to lie between $26.0 billion and $26.5 billion, with same store sales expected to range from an increase of 2.50 percent to an increase of 4.50 percent over fiscal 2014. Eight analysts anticipate annual earnings of $0.35 per share on $25.75 billion in revenues.

The fiscal 2015 guidance is based on the expected benefits of its wellness remodels, customer loyalty program, new pharmacy sourcing arrangement with McKesson and other initiatives to grow sales and drive operational efficiencies. The company's outlook also considers planned wage and benefit increases, the launch of new generics in the second half of Fiscal 2015, generic drug price increases and a challenging reimbursement rate environment.