Rite Aid (RAD) 1Q17 Results: Rite Aid Misses Estimates as It Approaches Merger with Walgreens

Executive Summary

• Rite Aid reported adjusted fiscal 1Q17 EPS of $0.01 versus the consensus estimate of $0.05.
• Total revenues were $8.18 billion, up 23.1% year over year, versus expectations of $8.24 billion. Retail pharmacy segment revenues were $6.7 billion and increased by 0.4% year over year, along with an increase in same-store sales of 0.4%. The same-store sales increase was driven by a 0.1% increase in pharmacy sales and a 1.2% increase in front-end sales. Revenues in the pharmacy services segment, which was acquired on June 24, 2015, were $1.6 billion.
• The quarter’s results reflect strong performance in the pharmacy services segment and the front-end business that was offset by pharmacy reimbursement rate pressure.