Rite Aid Corp. reported net income of $59.5 million, or six cents per diluted share, in the third quarter versus $104.8 million, or 10 cents per diluted share, in the year-ago period. Comparable store sales, recorded in the company’s retail pharmacy segment, increased 0.9% versus the prior year, with front-end sales, including general merchandise such as home goods, up 0.3%.
Earnings per diluted share equaled an analyst average estimate from Thomson Reuters.
Revenues increased 21.8% to $8.15 billion, Rite Aid said.
The company stated that the decline in net income in the last-completed quarter resulted from lower income tax expense in the prior year as a result of an adjustment to the company’s deferred tax valuation allowance of $45.9 million, an increase in interest and amortization expense related to the company’s purchase of EnvisionRx and transaction expenses of $9.8 million related to the company’s pending merger with Walgreens Boots Alliance. An increase in adjusted EBITDA and a prior-year loss on debt retirement offset some effects of the one-time items. Adjusted EBITDA increased $40.4 million to $373.2 million, the company asserted.
On October 27, Rite Aid and Walgreens Boots entered into a definitive agreement under which that company would acquire all outstanding Rite Aid stock for $9 per share in cash, for a total enterprise value of approximately $17.2 billion, including acquired net debt. Rite Aid expected the transaction to close in the second half of calendar 2016. The company also said that a special stockholder meeting will be held February 4, to consider and vote on the proposal to approve the merger plan.
“We are pleased with our results for the third quarter, which reflect growth in revenue, same-store sales and adjusted EBITDA along with positive, significant contributions from our new pharmacy services segment,” said Rite Aid chairman and CEO John Standley. “We also continued making tremendous progress in strengthening our retail health care offering by converting additional stores to our wellness format.”
In the third quarter, Rite Aid relocated five stores and remodeled 96 stores to bring the total operating under its wellness format to 1,948. The company acquired two stores and closed three, resulting in a total store count of 4,560 at third quarter’s end. The company also opened five clinics in the quarter, bringing the total to 75.