Let's take a look at today's top stories in biotech and health care. Keep an eye out for Celgene (CELG) and Rite Aid (RAD 24.00%)
Celgene shares move higher after split is announced
Celgene shareholders approved a two for one stock split yesterday at the company's annual meeting. The split will increase the number of outstanding shares from 399 million to approximately 798 million. What this means is that shareholders will receive one extra share for every share they currently own.
Is this a good move? Forward stock splits generally help increase a company's value over the long-term, as it makes the stock more affordable for a broader base of investors. With a share price presently exceeding $160 per share, for example, some retail investors are probably unwilling to invest even if they think the company still has upside potential. In short, a lower share price tends to entice more buyers over the long term. Celgene shares are up 0.58% following this news.
Rite Aid shares falling after reporting first-quarter earnings
Shares of drugstore company Rite Aid are down over 4% in premarket this morning after posting first-quarter results. Per the release, the company reported net income of $41.4 million or $0.04 per diluted share, which is in-line with consensus estimates. Revenues also increased year over year by 2.7% to $6.47 billion, beating consensus by $3 million.
Despite earnings coming in more or less on target, investors are keying in Rite Aid's lower profitably due to higher taxes, drug costs, operating costs and reimbursement rate reductions. Specifically, profit fell by a noteworthy 55% compared to the same period a year ago. Looking ahead, management reaffirmed its 2015 guidance, with annual sales expected to come in between between $26.0 billion and $26.5 billion.
