Rite Aid’s Earnings Review: Growth Driven by EnvisionRx Acquisition
Rite Aid, one of the largest pharmacy retail chains in the US, released its Q4 and full-year 2016 earnings on April 7th. The company reported a strong quarter driven by the acquisition of EnvisionRx. Following is a brief look at the numbers and trends that drove Rite Aid’s performance in Q4 and FY 2016.
Driving Factors for year-on-year growth (FY 2016):
>> Acquisition of EnvisionRx in 2015 led to the entry of Rite Aid in the Pharmacy Benefit Management (PBM) market
>> 1.3% increase in Pharmacy and Front-end Same Store Sales driven by favorable industry dynamics of aging population, increased life expectancy and growth in Medicare part D prescription program
>> Wellness remodel program increased the total number of wellness stores to 2,042 in FY 2016 from 1,643 in FY 2015
>> Incremental Revenues from Health Dialog and Redi Clinic (Both acquired in 2014)
>> The McKesson distribution agreement (extends through March 2019) drive greater supply chain efficiencies
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Key Highlights FY 2016 Onwards:
>> Pending Acquisition by Walgreens will help boost Rite Aid’s business by creating economies of scale and expanding distribution of its beauty brands including Number 7, Soap & Glory, Botanics etc.
>> McKesson distribution agreement will continue to drive supply chain efficiencies.
>> Increased Pharmacy and Front-end same store sales driven by increased store count will positively impact Retail Pharmacy segment revenues
>> Expected 7.1% CAGR in PBM market will continue to positively impact EnvisionRx revenues
Have more questions about Rite Aid (NYSE: RAD)? See the links below:
- What is Rite Aid’s Current Revenue & EBITDA Breakdown?
- What’s Rite Aid’s Fundamental Value Based on Expected 2016 Results?
- What contributed to Rite Aid’s topline growth in 2015?
- By How Much Can Rite Aid’s Revenue & EBITDA Grow In The Next 5 Years: Trefis Estimate
- What To Expect From Rite Aid’s Q4 and Fiscal 2016 Earnings?
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