Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Shares of pharmacy stock Rite Aid (RAD -17.23%) fell as much as 17.3% in morning trading on Wednesday after reporting fiscal third-quarter 2023 financial results. The stock didn’t recover much by noon ET, when it was down 14.1%.
Quarterly revenue fell 2.3% to $6.08 billion, and net loss nearly doubled to $67.1 million, or $1.23 per share. Retail results were about flat from a year ago, but margins were down, while pharmacy services revenue fell 7.1% to $1.73 billion.
It was guidance that really concerned investors. Management now expects full fiscal-year 2023 revenue to be between $23.7 billion and $24 billion, with a net loss of $584 million to $551 million. Only three months ago, they expected $23.6 billion to $24 billion in revenue and a net loss of $520.3 million to $477.3 million, so clearly margins and costs are deteriorating quickly.
Management said shrinkage (or theft) and seasonal markdowns were driving a lot of the guidance reduction. But it seems clear the company isn’t operating at an efficient level.
In the earnings release, management did say they expect positive free cash flow in fiscal 2023, but the losses appear to be getting worse, not better. That will keep me out of this stock until we see a clear improvement in operations. There are other pharmacy stocks on the market that aren’t losing money in what should be a lucrative pharmacy market.
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.
Market data powered by Xignite.
