Rite Aid Corporation has reported operating results for its fiscal first quarter ended May 31, 2014. Revenues for the quarter were $6.5 billion versus revenues of $6.3 billion in the prior year’s first quarter.
Revenues increased 2.7% primarily as a result of an increase in pharmacy same store sales. Same store sales for the quarter increased 3.1% over the prior year. Front-end same store sales were flat compared to the prior-year period while pharmacy same store sales increased 4.6%. Prescription sales accounted for 68.4% of total drug store sales.
Net income was $41.4 million compared to last year’s first quarter net income of $89.7 million. The decline in net income resulted primarily from a decrease in adjusted EBITDA and higher income tax expense, partially offset by lower interest expense and a lower LIFO charge. Adjusted EBITDA was $282.6 million or 4.4% of revenues for the first quarter compared to $344.8 million or 5.5% of revenues for the like period last year. The decrease in adjusted EBITDA was driven by a reduction in pharmacy gross profit due to lower reimbursement rates that were not offset with reductions in generic costs, as well as higher salary and payroll related expenses, noted Rite Aid.
“In the first quarter, we delivered a strong store operating performance, highlighted by increases in same-store sales and same-store prescription count,” said Rite Aid chairman and CEO John Standley. “As we work through managing the higher-than-expected drug costs and reimbursement rate pressure that affected our financial results for the quarter, we remain focused on executing our strategy to expand our health care offering and transform Rite Aid into a growing retail health care company.”
In the first quarter, the company relocated three stores, remodeled 105 stores and expanded one store, bringing the total number of wellness stores chain wide to 1,325. The company also acquired one store and closed seven stores, resulting in a total store count of 4,581 at the end of the first quarter.