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Investing.com – Rite Aid stock (NYSE:RAD) tumbled 5% in Tuesday’s premarket after third-quarter profit more than halved and the drugstore guided for annual losses that are wider than it previously estimated.
The company also pruned its annual revenue guidance.
The drugstore also announced a plan to store some of its stores – 63 to begin with — joining rivals like CVS Health (NYSE:CVS) in their pivot to digital as physical outlets struggle. The store closure is expected to provide an annual EBITDA benefit of approximately $25 million, it said. The company expects the number of closures to increase.
Adjusted net profit from continuing operations slumped to $8.2 million in the quarter ended November 27, compared to the prior-year quarter’s $21.6 million.
Revenue rose a mere 1.8% to $6.23 billion, mostly owing to struggles at the pharmacy services segment where revenue fell around 11% to $1.86 billion. The company attributed the fall in the segment revenue to a planned decrease in insurance membership at its pharmacy-benefits-and-services business, Elixir, and a previously announced loss of a large customer.
Annual net loss is expected to be $209.5 million at the center of its guidance range, a trifle deeper than the previously guided $209 million. The annual loss could be as much as $230 million, $9 million more than the worst outcome the company guided for earlier.
Total annual revenue is now seen around $24.6 billion, down from a previous estimate of $25.3 billion.
