Dec 19 Rite Aid Corp, the third-largest
U.S. drugstore chain, cut its full-year profit forecast, mainly
due to Medicare reimbursement cuts and higher cost of some
generic drugs, sending the company's shares down as much as 11
This outlook contrasts that of CVS Caremark Corp,
which said on Wednesday that it expected sales and earnings to
rise in 2014 and forecast good growth in its pharmacy benefits
The U.S. market for medicines has seen a major shift toward
cheaper generic drugs as patents on major branded drugs expired
in recent years and efforts to cut healthcare costs increase.
Although generic drugs carry higher margins than branded
ones, they can hurt overall revenue because they are sold at
Generic drugs now account for more than 80 percent of all
prescriptions filled, according to data from IMS Health, which
tracks prescription drug data.
Rite Aid cut its full-year profit forecast to 17-23 cents
per share from 18-27 cents per share.
Analysts on average were expecting a profit of 24 cents per
share, according to Thomson Reuters I/B/E/S.
The company's net income fell to $71.5 million, or 4 cents
per share, in the third quarter ended Nov. 30 from $61.9
million, or 7 cents per share.
Analysts on average had expected a profit of 4 cents per
Rite Aid shares were down 8.6 percent at $5.26 on Thursday
afternoon on the New York Stock Exchange.
(Reporting by Aditi Shrivastava in Bangalore; Editing by Kirti