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Drug retailer Rite Aid forecasts profit above estimates, shares rise
April 10, 2014 / 12:35 PM / 4 years ago

Drug retailer Rite Aid forecasts profit above estimates, shares rise

April 10 (Reuters) - Rite Aid Corp forecast 2015 earnings above analysts’ estimate, after reporting a higher-than-expected quarterly profit due to strong pharmacy same-store sales, sending its shares up about 10 percent before the bell.

The company said it expected its pharmacy sourcing arrangement with McKesson Corp, launch of new generic drugs in the second half of fiscal 2015 and generic drug price increases to drive sales in the year ending March 2015.

Generic drugs generate lower revenue but higher profit than branded medicines.

Rite Aid estimated full-year earnings of 31-42 cents per share and sales of $26 billion-$26.5 billion.

Analysts on average were expecting a profit of 35 cents per share on revenue of $25.75 billion, according to Thomson Reuters I/B/E/S.

Rite Aid said it expected same-store sales to grow 2.5-4.5 percent in the year.

Separately, the company said it acquired Houston-based retail clinics operator, RediClinic, which operates 30 clinics in greater Houston, Austin and San Antonio areas.

Rite Aid did not disclose the details of the transaction.

The company’s net income fell to $55.4 million, or 6 cents per share, in the fourth quarter ended March 1 from $123.1 million, or 13 cents per share, a year earlier.

Excluding items, Rite Aid earned 10 cents per share.

Revenue rose 2.2 percent to $6.6 billion as pharmacy same-store sales grew 3.5 percent.

Total same-store sales rose 2.1 percent.

Analysts on average were expecting a profit of 4 cents per share on revenue of $6.54 billion.

Rite Aid’s shares closed at $6.40 on Wednesday on the New York Stock Exchange. (Reporting by Shailaja Sharma in Bangalore; Editing by Kirti Pandey)

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