The third largest U.S. pharmacy chain cut its profit and sales forecast, citing costs related to its $2 billion acquisition of EnvisionRx. Fred Katayama reports.
Acquiring pharmacy benefit manager EnvisionRX was a blessing and a curse in the latest quarter for Rite Aid. The purchase fattened revenue at the third largest U.S. drug store chain even as new generic drugs cut into its sales. But the costs related to that $2 billion acquisition led to profit falling more than 80 percent. And Rite Aid cut its full-year profit and drugstore sales forecast for the full year, citing costs related to that acquisition and what it called "recent sales trends." Pharmacy benefit managers like Envision run drug benefits for employers and health plans. Rite Aid bought Envision Rx to better compete against CVS, which bought benefit manager Caremark. These moves come at a time of reduced payments to pharmacies from the government. That pressures profit on prescription drugs. and prescriptions account for nearly 70 percent of Rite Aid's drugstore sales. Rite Aid's shares dropped in early trading, cutting deeply into their 14 percent gain this year.