Rite Aid restructures agreement with drugstore.com

Drugstore chain Rite Aid Corp. said Friday it will restructure its relationship with online retailer drugstore.com so that it will now own the rights to its online service allowing customers to order prescriptions and pick them up in the store.

The new agreement prompted drugstore.com to offer third-quarter sales guidance, which is below Wall Street's expectations.

Under the terms of the new agreement, Rite Aid said rights for prescriptions ordered online for pick up at a Rite Aid store will be transferred to Rite Aid. In return, drugstore.com will receive about $10 million total in 10 monthly installments from Rite Aid.

Drugstore.com will receive marketing service revenue for marketing Rite Aid's prescription pick-up service on the drugstore.com site, the company said.

Drugstore.com said the transfer of the pick-up service revenue to Rite Aid "will have an impact on total revenue" but added "it will significantly strengthen our overall growth rate and gross margins and is consistent with our strategy to focus on our higher growth, higher margin businesses."

Drugstore.com said it is now targeting sales of $85 million to $90 million for the third quarter. Analysts polled by Thomson Reuters expected sales of $118.9 million. It now expects sales of $370 million to $380 million, while analysts expected sales of $494 million. The company also offered a lower adjusted earnings forecast.

Under the new agreement, Rite Aid also will launch an online store through drugstore.com offering over the counter products. The store will be marketed to Rite Aid's customers and is expected to launch later this year, the company said.