Rite Aid Hits 3-Year High on First Annual Profit Since 2007Chris Burritt
Rite Aid Corp. rose to the highest price in more than three years after reporting its first annual profit since 2007, saying the company is benefiting from a focus on wellness programs.
The shares soared 18 percent to $2.12 at the close in New York, marking their biggest one-day gain since June 2009 and the highest price since September of that year. The third-largest U.S. drugstore chain has risen 25 percent in the past 12 months, as the Russell 2000 Index added 19 percent.
Chief Executive Officer John Standley is remodeling the Camp Hill, Pennsylvania-based company’s stores to spur visits with new displays such as eye-care centers where customers can order contact lenses or glasses. Earnings also benefited from demand for higher-margin generic drugs and last year’s dispute between larger Walgreen Co. and employee-benefits manager Express Scripts Holding Co. that sent customers to Rite Aid.
“The underlying business, excluding the generic benefit and the Walgreen windfall, appears quite healthy,” John Heinbockel, an analyst at Guggenheim Securities in New York, wrote today in a note. He recommends buying Rite Aid shares.
Net income for the fiscal year ended March 2 was $118.1 million, or 12 cents a share, compared with a loss of $368.6 million, or 43 cents, a year earlier, the company said in a statement.
About 17 percent of the chain’s 4623 locations have been turned into wellness centers with expanded pharmacy services and health-focused products.
Profit this year will be 4 cents to 20 cents a share, Rite Aid said. That compares with an average estimate of 4 cents a share from seven analysts surveyed by Bloomberg. Revenue will be $24.9 billion to $25.3 billion, the company said. Analysts estimated $25.2 billion, on average.