PHARMACY

Rite Aid reports earnings for fiscal year

BY Michael Johnsen

CAMP HILL, Pa. Rite Aid recorded revenues of $26.3 billion for its fiscal year ended Feb. 28, the company announced Thursday. That represents revenue growth of 8.1%, primarily driven by an additional quarter of sales for the Brooks/Eckerd stores, which the company acquired June 4, 2007, Rite Aid noted.

“Despite continued weakness in the economy, we were able to improve our business significantly in the second half of the year as we completed the integration of Brooks/Eckerd, enhanced our management team and focused on strengthening our financial position,” stated Mary Sammons, Rite Aid chairman and CEO. “We made good progress operating our stores more efficiently, taking costs out of the business and reducing working capital, especially in the fourth quarter. As a result, we ended the year with our strongest liquidity position in more than a year.”

Net loss for fiscal 2009 was $2.9 billion, or $3.49 per diluted share. Adjusted EBITDA of $965.1 million, or 3.7% of revenues for the year, compared with $962.8 million, or 4% of revenues for last year.

“We are pleased with the results we have seen so far from these initiatives, and expect them to deliver greater benefits in fiscal 2010 and help us manage through this difficult operating environment,” Sammons said. “We are focused on improving cash flows and expect to be in a position to start reducing our debt this year.”

With the uncertainty of the retail environment, Rite Aid projected fiscal 2010 sales to fall between $26.3 billion and $26.7 billion, with same-store sales improving 0.5% to 2.5% over fiscal 2009. Adjusted EBITDA is expected to be between $1 billion and $1.1 billion. Net loss for fiscal 2010 is expected to be between $210 million and $435 million or a loss per diluted share of $.26 to $.53. Capital expenditures are expected to be approximately $250 million.

Same-store sales for the fiscal 2009, which include 39 weeks of the acquired stores, increased 0.8% over the prior 52-week comparable period. This increase consisted of a 0.9% front-end same store sales increase and a 0.7% increase in pharmacy same-store sales. The number of prescriptions filled in same-stores decreased 1%, negatively impacted primarily by the acquired stores. Prescription revenue accounted for 67.2% of total sales, and third-party prescription revenue was 96.3% of pharmacy sales.

For the year, the company opened 33 new stores, relocated 56 stores, remodeled 70 stores, acquired 9 stores, and sold or closed 200 stores. Stores in operation at the end of the year totaled 4,901.

Some highlights realized by Rite Aid in the fourth quarter included:

  • Core Rite Aid pharmacy same-store sales increases were strong in the fourth quarter and throughout the year, especially in light of the industry-wide downturn in prescription sales and the increase in the company’s dispensing of generic prescriptions, which negatively impacts sales but improves margin;
  • Pharmacy same-store sales trends in the acquired Brooks/Eckerd stores improved every quarter in fiscal 2009, narrowing to a decline of 1.9% in the fourth quarter compared to a 2.6% decline in the third quarter;
  • The company generated positive cash flow from operations of $324.8 million in the fourth quarter; and
  • Net cash from operations, including inventory reduction, and reduced capital expenditures contributed to availability of $723.7 million under the company’s revolving credit facility at year end.

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Pharmaxis announces completion of phase 3 trial for CF drug

BY Alaric DeArment

SYDNEY, Australia An Australian company announced Tuesday that it had finished the first part of an international phase 3 trial of a drug for cystic fibrosis.

Pharmaxis said the final patient in the trial of the inhaled drug Bronchitol (mannitol) had finished a final clinical visit, and the trial was running on time and on budget. Results of the trial are expected to be available later this month.

“We are very pleased to announce this major milestone for Pharmaxis and look forward to the results of the study with great interest,” Pharmaxis CEO Alan Robertson said. “It is hoped that Bronchitol will change the therapeutic landscape for people living with cystic fibrosis and provide a new therapeutic regimen that helps to prolong life.”

A second phase 3 clinical trial is recruiting in the United States, Canada, Argentina, Germany, Belgium and France, Pharmaxis said. The Food and Drug Administration and European Medicines Agency have given Bronchitol orphan drug designation due to the lack of effective treatments for cystic fibrosis.

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Court finds that Watson’s ADHD drug patent is valid

BY Alaric DeArment

CORONA, Calif. The U.S. District Court for the District of Delaware ruled Monday that Watson Pharmaceuticals’ generic version of an ADHD drug does not infringe the branded drug maker’s patent.

Watson announced the court ruling Tuesday, saying judge Joseph Farnan found that the ‘373 patent for Concerta (methylphenidate hydrochloride extended-release tablets), by ALZA Corp. and McNeil-PPC, is invalid. The ruling applies to Watson’s versions of Concerta in the 18 mg, 27 mg, 36 mg and 54 mg strengths.

“We are very pleased that the court has ruled in our favor, and we will continue to evaluate the court’s opinion as we contemplate next steps,” Watson president and CEO Paul Bisaro said. “We are currently pursuing final FDA approval of this important product.”

The two branded companies originally sued Andrx Corp. in 2005 over the drug; Watson acquired Andrx the next year.

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