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Merger Process Weighs On Rite Aid Q4 Results

For the 14-week fourth quarter, as its ongoing merger attempt with Walgreens Boots continued, Rite Aid posted a company net loss of $21.1 million, or two cents per diluted share, versus company net earnings of $65.6 million, or six cents per diluted share, in the 13-week period a year earlier.

Adjusted company net loss was $3.2 million, or zero per diluted share, versus net income of $73.8 million, or seven cents per diluted share, in the period the fiscal year before. Rite Aid beat a MarketBeat published analyst average fourth quarter estimate of an eight cents per adjusted diluted share loss.

Comparable store sales for the quarter slipped 3% from the period in the previous fiscal year consisting of a 4.3% decrease in pharmacy sales and a 0.3% decrease in front-end sales, which includes general merchandise such as home goods. Revenues were $8.54 billion versus $8.27 billion in the period a year prior.

For the full fiscal year, Rite Aid posted company net income of $4.1 million, or zero per diluted share, versus $165.5 million, or 16 cents per diluted share, in the fiscal year earlier. Adjusted company net income was $66.8 million, or six cents per diluted share, versus $255.2 million, or 24 cents per diluted share, in the fiscal year before. Comps slid 2.2%, consisting of a 3.2% decrease in pharmacy sales and a 0.2% increase in front-end sales, versus the fiscal year before. Revenues were $32.85 billion versus $30.74 billion in the year prior.

Rite Aid noted that the ongoing process of merging with Walgreens Boots, a move that is under review by the United States Federal Trade Commission, is affecting company performance.

John Standley, Rite Aid chairman and CEO, said, “We remain confident that the completion of our proposed merger with Walgreens Boots Alliance is in the best interest of Rite Aid shareholders, customers and associates. However, despite our team’s continued focus on growing our business, the extended duration of the merger process is having a negative impact on our results. In addition, we continue to face reimbursement rate challenges that we have been unable to offset with drug cost reductions. As we remain actively engaged in discussions with the Federal Trade Commission to gain regulatory approval for the merger, we are also taking steps to review our ongoing strategy, reduce costs and make necessary changes to our business to improve our performance going forward.”