Rite Aid Is Finally on the Right Track After Delivering Upbeat Earnings

Shares of Rite Aid (NYSE: RAD  ) soared more than 12% this morning to trade around $7.32 as of 10:05 a.m. The rise comes after Rite Aid posted better-than-expected results for its fiscal fourth quarter. The drugstore chain earned a profit of $0.06 per diluted share in the quarter, which topped Wall Street's estimates for earnings per share of just $0.04 in the period. Rite Aid's fourth-quarter revenue of $6.6 billion also came in slightly ahead of expectations, as analysts were looking for $6.5 billion.

On top of this, Rite Aid said it would acquire RediClinic, which owns 30 retail clinics in the Houston, Austin, and San Antonio areas, according to a company  press release. RediClinics are staffed by nurse practitioners and physician assistants who treat common conditions and provide preventive services, in collaboration with local physicians.

While the financial details of this transaction were not disclosed, it's encouraging to see Rite Aid move beyond its recent turnaround phase and into more growth initiatives. Rite Aid's chief executive, John Standley, said in the company press release that "... our continued commitment to investing in our store base [has] positioned us to transition our strategy from turnaround to growth as we more aggressively pursue opportunities to become a growing retail health care company."

The stock continues to make a comeback from its lows in 2012, with shares of Rite Aid now up more than 26% on the year.


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Tamara Rutter

I've been an analytical writer for The Motley Fool since 2011. I cover the sectors of Consumer Goods, Technology, and Industrials. Connect with me on Twitter using the handle, @TamaraRutter -- I'd love to hear from you!

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8/28/2015 4:00 PM
RAD $8.24 Down +0.00 +0.00%
Rite Aid Corp CAPS Rating: ***