Retail drugstore chain operator Rite Aid Corp. (RAD) reported Thursday a narrower-than-expected net loss for its second quarter, benefited by growth in prescription count and margin. Revenues dropped slightly on lower pharmacy same store sales, yet topped analysts' estimates. Going ahead, the company now projects reduced net loss in its fiscal 2013, but lower sales due to negative impact of new generic introductions.
Chairman, President and CEO John Standley said, "We have now increased Adjusted EBITDA and same store prescription count for seven consecutive quarters...While the wave of new generic medications is negatively impacting same store sales, it's having a positive impact on pharmacy gross margin."
For the second quarter, net loss attributable to common stockholders was $41.40 million or $0.05 per share, compared to prior year's net loss of $94.74 million or $0.11 per share. On average, six analysts polled by Thomson Reuters expected loss per share of $0.07 for the quarter. Analysts' estimates typically exclude one-time items.
The company attributed the reduction in loss to continued front end sales, prescription count growth and an improvement in pharmacy gross margin resulting from new generic introductions along with lower expenses.
Revenues, meanwhile, edged down 0.6 percent to $6.23 billion primarily due to a decrease in pharmacy same store sales and store closings. Analysts estimated revenues of $6.21 billion for the quarter.
Same-store sales were flat as a 1.4 percent increase in front end sales was offset by a 0.7 percent decrease in pharmacy sales. The company noted that pharmacy sales included an approximate 750 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 4 percent.
In the quarter, gross margin improved to 27.45 percent from last year's 26.29 percent. Adjusted EBITDA as a percentage of revenues was 3.51 percent, while last year's margin was 2.94 percent.
Rite Aid updated its fiscal 2013 forecast, and now expects net loss between $69 million and $196 million or a loss per share of $0.09 to $0.23. The company's previous forecast was net loss between $103 million and $248 million or a loss per share of $0.13 to $0.29.
The company also trimmed its sales forecast, and now expects fiscal 2013 sales between $25.1 billion and $25.4 billion, compared to previous forecast of $25.3 billion to $25.7 billion.
Same-store sales is now projected to range from a decrease of 1.0 percent to an increase of 0.25 percent. Earlier, the company expected same store sales to range from a decrease of 0.5 percent to an increase of 1 percent.
Analysts project annual loss per share of $0.15 and revenue of $25.42 billion.
Rite Aid said the reduction in sales guidance is driven by a projected 650 basis points negative impact of new generic introductions on pharmacy same store sales and continued reimbursement rate pressure.
In pre-market activity, Rite Aid shares are currently trading at $1.35, up $0.04 or 3.05 percent.
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