In the first quarter, Rite Aid made strides, posting revenues that exceeded analyst expectations and a lower adjusted loss that also came in better than Wall Street anticipated.
An analyst consensus estimate published by Yahoo Finance called for per adjusted diluted sales of $1.46 and sales of $5.32 billion.
The increase in unadjusted net loss was primarily due to a non-cash charge to write down Elixir Insurance goodwill, driven by performance in Elixir’s Individual Part D Plan and the company’s decision to exit the Individual Part D market beginning in January 2024. Other factors contributing to the net loss gain were higher restructuring-related charges, a lower gain on sale of assets, higher interest expense and a decrease in adjusted EBITDA. A decreased facility exit and impairment charges partially offset the factors contributing to the higher unadjusted not loss.
Revenues for the quarter were $5.65 billion versus $6.01 billion in the year-before quarter, largely due to a reduction in the company’s Prescription Drug Plan membership and the loss of commercial clients at Elixir. The revenue reduction for the first quarter was partially offset by an increase in Retail Pharmacy Segment sales, driven by an increase in pharmacy sales, Rite Aid noted.
In the Retail Pharmacy Segment, comparable sales increased 8.4% year over year, consisting of a 13.3% advance in pharmacy sales, partially offset by a 4.4% decrease in front-end sales, which include general merchandise. Front-end comps, excluding cigarettes and tobacco products, declined by 3.8%. Revenues were up 3.4% to $4.49 billion versus the year-previous period, the company pointed out, with the increase driven by acute and maintenance prescriptions, partially offset by a reduction in COVID-19 vaccine and testing revenue as well as store closures.
“Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the Retail Pharmacy Segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, interim CEO. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year. Importantly, we made good progress on turnaround initiatives across key areas of the business, and we continue to believe we are on track to achieve Adjusted EBITDA growth in fiscal years 2025 and 2026.”
