Rite Aid Q4 Results Top Estimates, Sees Higher Results In FY15

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) reported Thursday a sharp decline in fourth-quarter profit, hurt mainly by a LIFO charge and the absence of prior year's LIFO credit. Earnings per share and top line, however, beat analysts' estimates on higher same store sales. Looking ahead, the company projects higher earnings and revenues in fiscal 2015.

In a separate statement, Rite Aid said it has acquired Houston-based RediClinic, an operator of retail clinics, for undisclosed terms. Regarding its acquisition, the company said RediClinic currently operates 30 clinics in the greater Houston, Austin and San Antonio areas. Through the acquisition, RediClinic will operate as Rite Aid subsidiary.

In pre-market activity, Rite Aid shares gained $0.72 or 11.25 percent, and traded at $7.12.

For the fourth quarter, net income declined to $55.38 million from $123.09 million last year. Earnings per share fell significantly to $0.06 from $0.13 a year before.

The latest results 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. Excluding the LIFO impact, net income was $99.5 million or $0.10 per share, compared to prior year's $70.4 million or $0.07 per share.

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

Quarterly revenues increased 2.2 percent to $6.60 billion from $6.46 billion in the previous year, reflecting an increase in pharmacy same store sales. Analysts expected revenues of $6.54 billion for the quarter.

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.

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 1.8 percent, 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.

Looking ahead for fiscal 2015, the firm sees net income between $313 million and $423 million or income per share of $0.31 to $0.42. Full-year sales are projected to be between $26 billion and $26.5 billion, with same store sales expected to range from an increase of 2.50 percent to 4.50 percent. Analysts anticipate annual earnings of $0.35 per share on $25.75 billion in revenues.

In the previous year 2014, the company generated net income of $249.4 million or $0.23 per share, revenues of $25.5 billion on same store sales increase of 0.7 percent.

The outlook is based on the expected benefits of its wellness remodels, customer loyalty program, new pharmacy sourcing arrangement and other initiatives to grow sales and drive operational efficiencies, the company said.