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Rite Aid’s Revenue Rose and Income Fell in Fiscal 3Q16

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Rite Aid’s price movement

Rite Aid (RAD) has a market cap of $8.2 billion. Its YTD (year-to-date) price movement was a mix of rises and falls in calendar 2015. After the fiscal 3Q16 earnings report, Rite Aid fell by 0.25% to close at $7.88 per share as of December 17, 2015. The price movement on a weekly, monthly, and YTD basis is 0.0%, 2.1%, and 4.8%, respectively.

At times, the stock broke the support of all the moving day averages in 2015. Currently, Rite Aid is trading 0.45% above its 20-day moving average, 6.5% above its 50-day moving average, and 2.0% below its 200-day moving average.

The First Trust Consumer Staples AlphaDEX ETF (FXG) invests 3.1% of its holdings in Rite Aid. FXG tracks an index of large and mid-cap US consumer staples stocks. The underlying index uses multifactor selection and tiered equal weighting. FXG’s YTD price movement is 6.7% as of December 16, 2015.

Rite Aid’s competitors and their market caps are:

  • CVS Health (CVS) – $104.9 billion
  • Walgreens Boots Alliance (WBA) – $90.5 billion
  • GNC Holdings (GNC) – $2.5 billion
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Rite Aid’s performance in fiscal 3Q16

Rite Aid reported fiscal 3Q16 revenue of $8,154.2 million—a rise of 21.8% compared to its revenue of $6,692.3 million in fiscal 3Q15. The revenue from the company’s retail pharmacy segment rose by 0.77% in fiscal 3Q16—compared to the revenue in fiscal 3Q15. It reported pharmacy services segment revenue of $1,500.9 million in fiscal 3Q16. The company’s cost of revenue as a percentage of revenue rose by 5.6% in fiscal 3Q16—compared to the same period last year.

Its net income and EPS (earnings per share) fell to $59.5 million and $0.06, respectively, in fiscal 3Q16—compared to its net income and EPS of $104.8 million and $0.10, respectively, in fiscal 3Q15. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $373.2 million in fiscal 3Q16—a rise of 12.1% compared to the same period last year.

Meanwhile, the company’s cash and cash equivalents rose by 48.4%. Its inventories fell by 1.1% on a quarterly basis in fiscal 3Q16. The company’s current ratio rose to 1.51 in fiscal 3Q16—compared to a current ratio of 1.50 in fiscal 3Q15.

Acquisition

Walgreens Boots Alliance and Rite Aid entered into a definitive agreement. Walgreens Boots Alliance will acquire all of Rite Aid’s outstanding shares for $9 per share in cash. The total enterprise value will be ~$17.2 billion including the acquired net debt. The purchase price shows a premium of 48% to the closing price per share on October 26, 2015—the day before the agreement was signed. This acquisition will deliver a high-quality retail pharmacy choice for US consumers in an evolving and increasingly personalized healthcare environment. The merger is expected to be completed by 2H16.

Visit Market Realist’s Consumer Products page for an in-depth and fundamental analysis of the sector.

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