Rite Aid fiscal 2016 year-end revenue exceeds $30 billion for first time

CAMP HILL, Pa. - Rite Aid on Friday reported revenues of $8.3 billion for its fourth quarter ended Feb. 27, representing an increase of 20.8%. Retail Pharmacy Segment revenues were $6.8 billion and decreased 0.3% compared to the prior year period primarily as a result of a decrease in same store sales. Pharmacy Services Segment revenues were $1.5 billion.

 

"Our positive fourth-quarter results helped us deliver a successful fiscal year that reflects the tremendous progress we're making to expand our retail healthcare offering," stated John Standley, Rite Aid chairman and CEO. "In the fourth quarter, we generated nearly $40 million of growth in Adjusted EBITDA, including an increase in our Retail Pharmacy Segment and strong results from our new Pharmacy Services Segment. This was one of many key highlights of fiscal 2016, which was a transformational year that saw us acquire EnvisionRx, launch the ground-breaking wellness+ with Plenti program, complete our 2,000th Wellness store and exceed $30 billion in revenues for the first time."

 

Same store sales for the quarter decreased 0.6% over the prior year, consisting of a 0.8% decrease in pharmacy sales and a 0.4% decrease in front-end sales. Pharmacy sales included an approximate 241 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.1% over the prior year period. Prescription sales accounted for 68.1% of total drug store sales, and third party prescription revenue was 97.9% of pharmacy sales.

 

In the fourth quarter, the company opened three stores, relocated 10 stores, remodeled 89 stores and expanded one store, bringing the total number of wellness stores chainwide to 2,042. The company also acquired two stores and closed four stores, resulting in a total store count of 4,561 at the end of the fourth quarter. The company also opened three clinics in the fourth quarter, bringing the total to 78.

 

For the fiscal year ended Feb. 27, 2016, Rite Aid had revenues of $30.7 billion compared to revenues of $26.5 billion in the prior year, an increase of $4.2 billion or 15.9%. Retail Pharmacy Segment revenues were $26.9 billion and increased 1.3% compared to the prior year primarily as a result of an increase in same-store sales. Pharmacy Services Segment revenues were $4.1 billion from the date of the acquisition of EnvisionRx, which was June 24, 2015, through the end of the fiscal year.

 

Same-store sales for the year increased 1.3% consisting of a 1.8% increase in pharmacy sales and a 0.2% increase in front-end sales. Pharmacy sales included an approximate 221 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.5% over the prior year period. Prescription sales accounted for 69.1% of total drug store sales, and third party prescription revenue was 97.8% of pharmacy sales.

 

Adjusted net income for fiscal 2016 was $241.0 million or $0.23 per diluted share compared to last year's adjusted net income of $273.0 million or $0.27 per diluted share. The decline in adjusted net income resulted primarily from increased interest expense incurred in connection with the company's acquisition of EnvisionRx and higher depreciation expense related to an increase in capital spending, partially offset by an increase in Adjusted EBITDA.

 

For the year, the company relocated 20 stores, acquired six stores, remodeled 412 stores, expanded two stores, opened five stores and closed 20 stores. The company also opened 23 clinics during the fiscal year.

 

As previously announced on Oct. 27, 2015, Rite Aid and Walgreens Boots Alliance entered into a definitive agreement under which WBA will acquire all outstanding shares of Rite Aid for $9 per share in cash, for a total enterprise value of approximately $17.2 billion, including acquired net debt. The board of directors of both companies and Rite Aid's shareholders have approved the transaction, which is subject to certain conditions, including, among others, the receipt of approval under applicable antitrust laws and other customary closing conditions. 

 

The transaction is expected to close in the second half of calendar 2016.

 

Given the agreement with WBA described above, and as is customary for transactions of this type, Rite Aid does not intend to provide earnings guidance for fiscal 2017.