June 5 Drug retailer Rite Aid Corp estimated first-quarter profit much below analysts' expectations due to higher-than-expected drug costs and a bigger-than-expected fall in reimbursement rates.
Rite Aid's shares fell as much as 14 percent on Thursday on the New York Stock Exchange. The stock was among the biggest percentage losers on the exchange.
The company said delays in realizing expected price reductions for generic medicines raised its drug costs in the first quarter ended May 31.
Rite Aid estimated earnings of 4 cents per share for the quarter.
Analysts on average were expecting 8 cents per share, according to Thomson Reuters I/B/E/S.
Rite Aid cut its profit forecast for the year ending February to 30-40 cents per share from 31-42 cents per share.
Analysts on average were expecting 39 cents per share.
The company also reported a 3.5 percent rise in same-store sales for May. Competition from new generic drugs hurt pharmacy same-store sales by 1.6 percentage points, Rite Aid said.
Rival Walgreen Co said on Wednesday that new generic drugs hurt its same-store sales growth by 0.8 percentage points in May. The company's same-store sales rose 4.4 percent in the month.
Rite Aid's shares were down 9.4 percent at $7.70 in late morning trading. The stock had risen 68 percent this year to Wednesday's close. (Reporting by Siddharth Cavale in Bangalore; Editing by Kirti Pandey)