RAD Stock Tumbles 35% this Year as Financial Results Spook Investors

RAD stock

RAD stock remains under pressure amidst surging short selling pressure. After a solid start to the year, the stock has once again come tumbling down in what appears to be a continuation of a bear trend that began last year. Shares of Rite Aid Corporation (NYSE:RAD) are down over 35% so far this year.

Widening Net Loss

A recent spiral follows the delivery of mixed financial results that seem to have rattled RAD stock investors. Fourth quarter results for the period ending March 2, 2019, indicates revenue dropped to $5.38 billion from $5.39 reported a year earlier. Revenues also fell short of analysts’ estimates of $5.56 billion.

RAD stock market sentiments also appear to have taken a hit after the company reported a wider than expected net loss of -$13.3 million compared to a net loss of -$7.8 million reported a year earlier.

Chief Executive Officer John Standley is shrugging off the widening net loss concerns, instead focusing on the milestones that were achieved, many of which he says point to future growth.

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RAD Stock: FY2020 Outlook

A third quarter of same-store pharmacy sales, as well as an increase in Medicare Part D, are some of the milestones Standley is referencing. Going forward the company intends to build on the Q4 momentum to deliver higher value in emerging value-based care marketplace according to the CEO.

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“These efforts will include a strong focus on driving positive patient health outcomes, evolving our front-end business, expanding our Omni-channel capabilities and controlling costs to become a more efficient and profitable company,” explains the CEO.

For fiscal 2020, Rite Aid expects sales of between $21.5 billion and $21.9 billion with same-store sales expected to increase by between 0 and 1% from 2019 levels.

Reverse Stock Split

The board of directors has since moved to prop RAD stock value with the approval of a reverse stock split. A 1-for-20 reverse stock split will result in the reduction of the number of shares by approximately 1.08 billion to 54 million.

The reverse stock split also seeks to ensure that RAD stock regains full compliance with the New York Stock Exchange listing requirements.

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