Executive Summary

• Rite Aid reported 4Q15 revenues of $8.3 billion, up 20.8% year over year but slightly below the consensus estimate of $8.4 billion. Growth was driven by the acquisition of a pharmacy-benefit manager. Adjusted EPS was $0.07, above the consensus estimate of $0.06 and up 16.6% year over year.
• However, the company reported its first decline in retail and pharmacy same-store sales in years. Same-store sales were down 0.6% year over year, driven by a 0.8% drop in pharmacy sales and a 0.4% drop in retail sales.
• Last October, Rite Aid agreed to be acquired by Walgreens Boots Alliance (WBA) in a transaction valued at $17.2 billion. The deal is pending regulatory approval, and the companies expect the transaction to close in the second half of 2016.