Rite Aid Turns To Profit In Q2; Lifts FY14 Outlook - Quick Facts

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) reported that its second-quarter net income attributable to common stockholders was $30.03 million compared to a net loss of $41.40 million in the same quarter last year. On a per share basis, net income was $0.03, compared to a net loss of $0.05 in the prior year. Analysts polled by Thomson Reuters expected the company to report a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Included in net income was a $62.2 million or $0.07 per share charge from a loss on debt retirement on the previously announced refinancings that were completed during the quarter, partially offset by a recovery of $23.5 million or $0.02 per share related to the settlement of a prescription drug antitrust case. The improvement in net income resulted primarily from an increase in Adjusted EBITDA and a decrease in interest expense, partially offset by the loss on debt retirement.

Revenues for the quarter were $6.3 billion versus revenues of $6.2 billion in the prior year second quarter. Revenues increased 0.8 percent primarily as a result of an increase in same store sales, which were partially offset by store closings. Four analysts had consensus revenue estimate of $6.27 billion for the quarter.

Same store sales for the quarter increased 1.0 percent over the prior year 13-week period, consisting of a 1.7 percent increase in pharmacy sales, partially offset by a 0.3 percent decrease in front end sales.

The company has raised its fiscal 2014 guidance for net income and net income per share. Revised guidance for the fiscal year reflected the stronger-than-anticipated performance in the first half of the year and an expected stronger second half of the year versus the company's previous guidance, although the company still expects lower second-half performance as compared to the prior year.

The company expects its second-half performance will be negatively impacted by continued reimbursement rate pressure, pharmaceutical cost increases and a significantly lower benefit from new generics as the vast majority of the new generic wave is included in the company's run rate.

For fiscal 2014, the company now expects net income to be in the range of $182.0 million - $268.0 million or $0.18 - $ 0.27 per share, and sales of $25.1 billion - $25.3 billion.

While announcing the first-quarter result, the company had expected net income to be in a range of $22 million - $162 million, or $0.01 to $0.16 per share, and sales of $24.90 billion - $25.30 billion for fiscal 2014.

Analysts expect the company to report earnings of $0.14 per share and revenues of $25.31 billion for fiscal 2014.