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Rite Aid ‘continues to believe’ merger will happen this year

When it comes to mergers, no news is … well, no news.

Rite Aid Corp. today, in reporting operating results for the second quarter, offered one sentence about the status of its planned merger with Walgreens Boots Alliance.

“The company continues to believe that the transaction will close in the second half of calendar year 2016,” was all Cumberland County-based Rite Aid had to say.

The planned $9- per-share merger was announced last year in late October.

Illinois-based Walgreens earlier this month also said it still expects the $17.2 billion deal to close by year’s end, according to a statement released through the Federal Trade Commission.

That announcement came at the same time Walgreens said it expects to shed more stores than previously planned in an effort to address concerns of federal regulators.

Walgreens, the nation’s top pharmacy chain, has about 8,200 stores nationwide. Rite Aid — No. 3 in the nation, behind CVS — has 4,550 stores in 31 states and the District of Columbia. More than 70 of Rite Aid’s stores are in the midstate, where there are only a handful of Walgreens stores.

Rite Aid earnings

Highlights from Rite Aid’s earnings report included:

• For the second quarter, the company reported revenues of $8 billion, net income of $14.8 million, adjusted net income of $35.5 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $312.7 million, or 3.9 percent of revenues.

• Revenue was up 4.8 percent compared with revenue of $7.7 billion in the second quarter of 2015.

• Retail pharmacy revenue was down, however, at $6.5 billion. That was a decrease of 2.4 percent from the prior year period, and stemmed primarily from a decrease in same-store sales, the company said.

• Revenue in the company’s pharmacy services segment, which was acquired in June 2015, was $1.6 billion.

• The number of prescriptions filled in same stores decreased 1.8 percent over the prior year period, officials said. Prescription sales accounted for 68.5 percent of total drugstore sales, and third-party prescription revenue was 98.1 percent of pharmacy sales.

• In the second quarter, the company opened three stores, relocated six stores and remodeled 85 stores. The company also acquired one store and closed 14 stores. The company also opened 10 clinics in the second quarter, bringing the total to 90.

“In the second quarter, we continued to drive positive results in our Pharmacy Services Segment, which includes our EnvisionRx PBM, and had strong performance in our front-end business,” Chairman and CEO John Standley said.

“We also saw improvements in prescription drug costs, but these improvements were more than offset by the challenging reimbursement rate environment, which we expect to continue through the remainder of the fiscal year,” Standley added.

“Heading forward, we will remain focused on operating our business as efficiently as possible while pursuing key growth opportunities such as our flu immunization campaign and converting additional stores to the Wellness format, which continue to perform well and now represent nearly half of our chain.”

Roger DuPuis
Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at [email protected].

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