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Rite Aid Revenue Misses Expectations in Fiscal Fourth Quarter as Board Approves 1-for-20 Reverse Split

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Rite Aid (RAD) reported fiscal fourth-quarter revenue that missed expectations with pharmacy sales weighed down by the introduction of new generics, while the company’s board approved a reverse stock split to stay in compliance with market listing rules.

Revenue in the period ending March 2 slipped to $5.38 billion from $5.39 billion a year earlier and missing the consensus on Capital IQ for $5.56 billion. Retail pharmacy segment revenue was flat year-on-year at $3.97 billion while pharmacy services was up 1.2% to $1.46 billion, due to an increase in Medicare Part D membership, the US government prescription-drug benefit.

“Despite a mild flu season, we delivered our third-consecutive quarter of same-store pharmacy sales and prescription count growth thanks to a record number of immunizations and other script growth initiatives,” said John Standley, the company’s chief executive.

Retail pharmacy same-store sales from continuing operations rose 0.7%, with a 2.1% rise in pharmacy and a 1.9% decline in the front end. “Pharmacy sales were negatively impacted by approximately 100 basis points as a result of new generic introductions,” Camp Hill, Pa.-based Rite Aid said.

The company’s adjusted net loss from continuing operations came in at a penny a share, the same as a year earlier. For fiscal 2020, Rite Aid is projecting a range of a loss of $0.01 and income of $0.04 per share.

It’s also looking for sales between $21.5 billion and $21.9 billion with same store sales ranging from flat to up 1% year-on-year.

“As we begin our new fiscal year, we’ll look to build on this momentum as we continue transforming our business to better align with our new operational footprint and deliver greater value in the emerging value-based care marketplace,” Standley said. “These efforts will include a strong focus on driving positive patient health outcomes, evolving our front-end business, expanding our omni-channel capabilities and controlling costs to become a more efficient and profitable company.”

Late Wednesday, Rite Aid said its board of directors approved a one-for-20 reverse stock split ratio that will reduce the number of outstanding shares to about 54 million from 1.08 billion. The split-adjusted trading starts on April 22. It comes after the company received a non-compliance notice from the New York Stock Exchange following a plunge in its stock price after failed merger talks between it and grocery chain Albertsons.

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