There have been plenty of ups and downs for Rite Aid (NYSE:RAD) so far in 2020. In less than nine months, the pharmacy chain's share price has experienced swings of 20% or more nearly a dozen times. Some investors were hoping that the stock was poised to bounce back from its latest downswing.

Those hopes might have been dashed, however. Rite Aid announced its fiscal 2021 second-quarter results before the market opened on Thursday, and following that report, its shares fell by as much as 22% during morning trading. As of 11:50 a.m. EDT, they were down by 16.7% Here are the highlights from the company's update for the period, which ended Aug. 29.

Customer holding medicine bottle on a pharmacy aisle

Image source: Getty Images.

By the numbers

Rite Aid reported quarterly revenue of $5.98 billion, up 11.5% from the prior-year period's $5.37 billion. This result also beat Wall Street's consensus revenue estimate of $5.74 billion.

The pharmacy chain announced a GAAP net loss of $13.2 million, or $0.25 per share. This was an improvement from the prior-year period's GAAP net loss of $78.7 million, or $1.48 per share.

For the quarter, its adjusted (non-GAAP) net income was $13.5 million, or $0.25 per share, more than twice its adjusted earnings of $6.3 million, or $0.12 per share, from the prior-year period. That result also outperformed analysts' expectations for that metric: on average, they had predicted that the company would only break even on an adjusted basis.

Behind the numbers

Both of Rite Aid's business segments displayed solid improvements. Its retail pharmacy segment generated revenue of $4 billion in Q2, up 4.4% year over year. Its pharmacy services segment pulled in revenue of $2 billion, a 29.1% jump from the prior-year period.

Given all that, it's not surprising that CEO Heyward Donigan stated that the company was "pleased" with its Q2 performance. She noted that Rite Aid is gaining market share and increasing same-store prescriptions and front-end sales.

The best story for Rite Aid last quarter came from its Elixir pharmacy services business. The company attributed the segment's success primarily to growth in its Medicare Part D business, which added 259,000 members in Q2. Donigan also mentioned that Elixir now has a new leadership team in place and is "making progress on modernizing and integrating our many assets."

Rite Aid's bottom-line improvement stemmed in part from its increased revenue. The company also benefited from lower interest and income tax expenses compared to the prior-year period. 

Looking ahead

Rite Aid delivered pretty good results. So why did the healthcare stock plunge in the wake of the earnings release? It's likely because of the way the company revised its guidance for the full fiscal year.

The top-line outlook wasn't problematic. Rite Aid now expects fiscal 2021 revenue of between $23.5 billion and $24 billion. The consensus Wall Street estimate lands at the low end of that range.

It was a different story with Rite Aid's bottom-line forecast, though. The company projects a GAAP net loss of between $190 million and $140 million. On adjusted net income, the anticipated range runs from as high as $0.09 per share to as low as a loss of $0.67 per share. However, the average analysts' estimate was for full-year adjusted earnings of $0.38 per share.

Donigan says she thinks that Rite Aid is "building a strong foundation for sustainable growth." The company's Q2 results seem to back up her confidence. The bad news, though, is that Rite Aid still isn't where Wall Street wants it to be.

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