As Rite Aid Corp, prepares to hand over more stores under its deal with Walgreens Boots Alliance Inc., the pharmacy giant reported a decrease in store and pharmacy sales
As the company prepares to unload nearly half its stores and pharmacies to Walgreens, Rite Aid’s latest earnings report shows a dip in revenue for the company.
The East Pennsboro-based pharmacy and retail chain reported $5.4 billion in revenue in its fiscal third quarter, which ended Dec. 2 of last year, down from $5.7 billion in revenue from the same quarter in 2016.
Retail revenue was down 3 percent to $4 billion, while pharmacy revenue fell 12.2 percent to $1.4 billion.
The earnings report primarily attributed the latter decline to the company’s decreased participation in Medicare Part D, the prescription drug coverage program for Medicare participants.
For continuing operations–including corporate administration and stores it is retaining in the deal with Walgreens–Rite Aid reported a net loss of $18.2 million for the third quarter, down from a net gain among those same stores last year of $23.6 million.
Among the stores the company is selling, Rite Aid reported a net gain of $99.2 million for the third quarter, up significantly from a net loss of $8.6 million from those same locations. When reached for clarification, the company attributed the gain to $157 million in pretax earnings from the sale of those stores.
The third quarter marked the beginning of Rite Aid’s process for transferring 1,932 stores to Walgreens in a$4.4 billion deal announced last September, with 97 of the stores transferred at the end of November.
Walgreens will reportedly be closing 600 of the stores it acquires in the deal.
“To date, we have transferred 357 stores and have received approximately $715 million in proceeds, which we have used to pay down debt,” CEO John Standley said in a statement accompanying the earnings release. “Looking forward, in addition to completing the transfer process, we will continue to focus on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients.”
Editor’s Note: This story has been modified from its original version to include comments from Rite Aid as well as the correct pretax earnings the company collected in its sale of stores to Walgreens. The pretax earnings were $157 million, not $137 million as originally reported.