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Rite Aid 1Q profit drops on drug costs, reimbursement rate reductions; revenue tops estimates

FILE - In this Dec. 15, 2009 file photo, a customer enters a Rite Aid store in Detroit. Rite Aid reports quarterly financial results on Thursday, June 19, 2014. (AP Photo/Paul Sancya, File)

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FILE - In this Dec. 15, 2009 file photo, a customer enters a Rite Aid store in Detroit. Rite Aid reports quarterly financial results on Thursday, June 19, 2014. (AP Photo/Paul Sancya, File)

CAMP HILL, Pa. - Rite Aid's fiscal first-quarter profit dropped 55 per cent as it dealt with higher-than-expected drug costs and reimbursement rate reductions.

Its earnings matched analysts' expectations, while revenue was slightly above of Wall Street's view.

For the period ended May 31, the nation's third-largest drugstore chain reported net income attributable to common stockholders of $41.4 million, or 4 cents per share. A year earlier it earned $91 million, or 9 cents per share.

Analysts surveyed by FactSet expected earnings of 4 cents per share.

Revenue for the Camp Hill, Pennsylvania, company climbed 3 per cent to $6.47 billion from $6.29 billion mostly due to better sales at pharmacies open at least a year.

This beat Wall Street's estimate of $6.44 billion.

Sales at stores open at least a year rose 3.1 per cent, while sales at pharmacies open at least a year increased 4.6 per cent.

This figure is a key gauge of a retailer's health because it excludes results from locations recently opened or closed.

Rite Aid Corp. said that the number of prescriptions filled in stores open at least a year climbed 2.3 per cent from a year ago. Prescription sales made up 68.4 per cent of total drugstore sales, and third party prescription revenue was 97.4 per cent of pharmacy sales.

The company maintained its fiscal 2015 forecast for earnings between 30 cents and 40 cents per share. Revenue is still anticipated in a range of $26 billion to $26.5 billion.

Wall Street is looking for full-year earnings of 35 cents per share on revenue of $26.19 billion.

Its shares fell 29 cents, or 3.9 per cent, to $7.15 in morning trading. Its shares had been up 47 per cent so far this year. Investors had been returning to the stock — which they had pushed below $1 by late 2012 — as Rite Aid has cleaned up its balance sheet and closed underperforming stores.

Rite Aid has 4,581 stores in 31 states and the District of Columbia.

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