Rite Aid Corporation reported operating results for its fourth quarter and fiscal year ended February 27, 2016.
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Revenues for the quarter were $8.3 billion compared to revenues of $6.8 billion in the prior year's fourth quarter, an increase of $1.4 billion or 20.8 percent.
Retail Pharmacy Segment revenues were $6.8 billion and decreased 0.3 percent 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.
Same store sales for the quarter decreased 0.6 percent over the prior year, consisting of a 0.8 percent decrease in pharmacy sales and a 0.4 percent 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 percent over the prior year period.
Prescription sales accounted for 68.1 percent of total drugstore sales, and third party prescription revenue was 97.9 percent of pharmacy sales.
Adjusted net income (which is reconciled to net income in the attached tables) was $76.1 million or $0.07 per diluted share compared to last year's fourth quarter adjusted net income of $65.2 million or $0.06 per diluted share.
Adjusted EBITDA (which is reconciled to net income in the attached tables) was $383.0 million or 4.6 percent of revenues for the fourth quarter compared to $343.3 million or 5.0 percent of revenues for the same period last year.
Adjusted EBITDA improved due to $34.2 million of Pharmacy Services Segment Adjusted EBITDA and an increase of $5.5 million in Retail Pharmacy Segment Adjusted EBITDA.
The increase in Retail Pharmacy Segment Adjusted EBITDA was driven by an increase in front-end gross profit, partially offset by a decrease in pharmacy gross profit and an increase in selling, general and administrative expenses.
In the fourth quarter, the company opened 3 stores, relocated 10 stores, remodeled 89 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 2,042.
The company also acquired 2 stores and closed 4 stores, resulting in a total store count of 4,561 at the end of the fourth quarter. The company also opened 3 clinics in the fourth quarter, bringing the total to 78.
Full year results
For the fiscal year ended February 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 percent.
Retail Pharmacy Segment revenues were $26.9 billion and increased 1.3 percent 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 percent consisting of a 1.8 percent increase in pharmacy sales and a 0.2 percent 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 percent over the prior year period. Prescription sales accounted for 69.1 percent of total drugstore sales, and third party prescription revenue was 97.8 percent 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.
Adjusted EBITDA was $1,402.3 million or 4.6 percent of revenues for the year compared to $1,322.8 million or 5.0 percent of revenues for last year. Adjusted EBITDA improved due to $101.4 million of Pharmacy Services Segment Adjusted EBITDA, partially offset by a decrease of $21.9 million in Retail Pharmacy Segment Adjusted EBITDA.
The decrease in Retail Pharmacy Segment Adjusted EBITDA was due to an increase in selling, general and administrative expenses related to our higher level of sales and a decrease in pharmacy gross profit, partially offset by an increase in front-end gross profit.
Operating cash flow for fiscal 2016 was approximately $1.0 billion, due to strong Adjusted EBITDA results and contributions from working capital management. Working capital primarily benefited from a reduction in store level pharmacy inventory.
The company used this operating cash flow to fund capital expenditures and to reduce borrowings following the acquisition of EnvisionRx.
For the year, the company relocated 20 stores, acquired 6 stores, remodeled 412 stores, expanded 2 stores, opened 5 stores, and closed 20 stores. The company also opened 23 clinics during the fiscal year. â–
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