Rite Aid beats expectations in Q2
Rite Aid’s second-quarter fiscal 2021 results beat Wall Street expectations as the retailer saw double-digit revenue growth and an increase in its market share while reducing its net loss. For the quarter ended Aug. 29, Rite Aid posted net loss of $13.2 million — a narrowing of $65.5 million from the prior-year period. Revenue totaled $5.98 billion, an 11.5% increase over the prior year’s Q2 driven by growth in retail pharmacy and pharmacy services revenues.
"We are pleased with our second quarter performance as we delivered another quarter of strong results while making solid progress on our bold, new RxEvolution strategy," said Heyward Donigan, Rite Aid president and CEO. "Our retail pharmacists and associates have always been deeply committed to our communities, and they are doing a great job protecting our customers during a global pandemic. Thanks to them, Rite Aid continues to gain retail market share and increase both same store prescription count and front-end sales."
In the company’s retail pharmacy segment, revenue grew by 4.4% year over year, with same-store sales up 2.5% from the prior-year period. Sales growth was driven by a 4.6% increase in front-end sales and a 2.3% increase I pharmacy sales. Front-end same-store sales, excluding cigarettes and tobacco, increased by 6.1% as its front-end market share saw 130 basis points of growth in dollars and 150 basis points in unit sales. Total prescriptions filled, adjusted to 30-day equivalents, increased 2.6% in Q2 due to growth in maintenance prescriptions that was supported by medication therapy management and home delivery — all of which was slightly offset by a 4.9% reduction in acute prescriptions.
On the pharmacy services front, Rite Aid’s rebranded PBM offering Elixir saw revenue of $2 billion — a 29.1% year-over-year increase, which the company attributed to a 259,000-life increase in Medicare Part D membership.
“At Elixir, our new leadership team is in place, and we are making progress on modernizing and integrating our many assets,” Donigan said. “We also officially launched our new Elixir brand and are focused on enhancing our curated solutions, products, clinical and digital capabilities. We grew membership in our Medicare Part D business and benefitted from strong expense control, especially as we continue to integrate Rite Aid and Elixir."
Other efforts during the quarter included closing all of the company's physical RediClinic locations while expanding its telehealth offerings.
Looking forward, Rite Aid revised its full-year guidance to assume a strong demand for flu shots, more in-pharmacy network management at Elixir and further savings from its cost-reduction efforts, offset by a less severe cough-cold and flu season. The retailer expects revenue to be between $23.5 billion and $24 billion, with a projected increase in same-store sales of between 3% and 4%. Net loss is expected to be between $190 million and $140 million.
"I am so proud of our 50,000 associates and how they are working together each and every day to deliver operational excellence and help our customers to not just get healthy, but get thriving,” Donigan said. “Together, we are building a strong foundation for sustainable growth and setting the stage to engage with consumers in ways never before seen in health care. A whole new Rite Aid is coming to life, and I'm excited to continue our journey to become a dominant mid-market PBM, unlock the value of our pharmacists and revitalize our retail and digital experiences."