Rite Aid Earnings Review: Company Reports Loss Despite Revenue Growth

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Rite Aid

Rite Aid Corporation (NYSE:RAD) announced its Q1 earnings on Thursday, June 16th. The company’s revenue grew by 23.1% year-on-year (y-o-y) to $8.2 billion for the quarter. The rise in revenue was primarily driven by the strong performance of the Pharmacy Services division, which contributed $1.6 billion to the revenue figures of the quarter. The company also incurred a significant increase in costs of good sold (31.4% increase y-o-y), which affected its margins significantly. The company posted a net loss of $4.58 million, which was a decrease of 124% from the previous year’s first quarter.

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Revenue Growth

The company reported an increase of 23% y-o-y in revenues for the quarter ending May 28th. This was primarily attributed to a minor increase in front end sales and to the strong performance of the Pharmacy Services segment, which was acquired last year. However, the large increase in costs of sales offset the increase in revenues, resulting in a fall in EBITDA and earnings. Rite Aid’s net cash also declined significantly to $160 million, compared to $368 million for the previous year’s first quarter.

Outlook for the Year

Rite Aid has not given any guidance figures for the upcoming quarters and for the full financial year, owing to the Federal Trade Commission’s pending approval of its merger with Walgreens Boots Alliance. The company expects the merger to be completed by the second half of this year.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com.
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our detailed analysis for Rite Aid

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