Rite Aid shares surge on heels of third-quarter earnings
'Our team delivered a strong quarter,' said CEO Heyward Donigan
Rite Aid’s stock is not top-shelf but it’s beating Wall Street expectations.
Shares of the retail brand are up 42.5 percent and were nearing $12 as of press time. The stock is on pace for its largest surge since October 2015, when it rose 42.6 percent.
The news comes as Rite Aid reported its third-quarter earnings Thursday, in which net income from continuing operations hit $52.3 million, adjusted net income reached $29.1 million and adjusted EBITDA, or earnings before interest taxes and amortization, landed at $158.1 million, accounting for 3 percent of the company’s total revenues.
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Revenues from continuing operations ended at $5.46 billion on the quarter, retail pharmacy revenues reached $3.91 billion and pharmacy services revenues hit $1.61 billion.
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“Our team delivered a strong quarter that provides us with momentum as we prepare to roll out our long-term strategy and position Rite Aid Corporation as an innovative leader in our industry,” Rite Aid Chief Executive Officer Heyward Donigan said in a statement.
“Adjusted EBITDA grew due to tight expense control and prescription count growth in our retail pharmacies, which benefited from solid growth in immunizations. We [also] saw improved pharmacy network management at EnvisionRxOptions.”
Donigan did caution that while the brand is “pleased” with the results, “we have important work ahead of us to put our company on a path to long-term sustainable growth.”
He said the company will soon reveal a comprehensive strategy to refresh its pharmacy operations and that it plans to expand its EnvisionRxOptions branch, which it acquired in 2015 $1.8 billion in cash and $200 million in stock, to offer more health options.
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“This will provide us scale to deliver lower total cost of care, an enhanced client experience and heightened consumer engagement,” Donigan added. “We are making great progress, and are excited to share more details at our upcoming Analyst Day March 16.”
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For its fiscal year 2020, the brand expects revenues could rise as high as $21.9 billion.