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News Breaks
June 19, 2014
12:20 EDTWAG, MCK, CVS, RADRite Aid slides after posting a steeper decline in profit vs. last year
Shares of retail drugstore chain Rite Aid (RAD) are falling after the company reported that its first quarter profit was down significantly from the year-ago period. WHAT'S NEW: Rite Aid reported Q1 earnings per share of 4c, matching analyst's expectations, but below the 9c it reported last year. Revenue for the quarter was $6.47B, slightly higher than expectations of $6.43B ad $6.3B in the prior year quarter. Rite Aid's Q1 same-store sales were up 3.1% over the prior year period. The retailer reported net income of $41.4M, well below the company's net income at this time last year of $89.7M. A decrease in adjusted EBITDA and higher income tax expense contributed to this result and these factors were partially offset by lower interest expense and a lower LIFO charge. Rite Aid confirmed that it sees fiscal year 2015 EPS in the range of 30c-40c, while analysts estimate that EPS will be 35c. The company still sees FY15 revenue to be between $26B-$26.5B, which is in line with analyst's consensus of $26.19B. The retailer confirmed that it sees FY15 SSS of up to 2.5%-4.5% vs. fiscal year 2014. WHAT'S NOTABLE: During the company's Q1 earnings conference call, Rite Aid said that as it more aggressively pursues opportunities for growth, it is prepared to increase allocation for prescription file buys if additional opportunities arise throughout the fiscal year. The retailer expects the current competitive environment to remain promotional and is also considering plan wages and benefit increases. Rite Aid said that it increased its expected working capital benefit to $250M from $150M as a result of the McKesson (MCK) agreement and says the working capital benefit will not be fully realized until the fourth quarter. As the company mentioned on its FY14 earnings call in April, it expected the second half of FY15 to be stronger than the first two quarters due in part to the strength of FY14's first half as well as the introduction of new generics in 2H15. Rite Aid anticipates closing a total of 40 stores of which the guidance includes a store lease closing provision for FY15 to balance closing upon lease expiration. ANALYST REACTION: UBS analyst Scott Arwin said that generic drug MAC-ing by pharmacy benefit managers was a component in Rite Aid's Q1 earnings falling below predictions. He said that the retailer's management suggested that historically, they would usually have some ability to go back to generic manufacturers to offset some of the MAC reimbursement cuts. In this situation, however, Arwin said the company is currently hindered temporarily on their ability to do this during the transition of its generic procurement over to McKesson. Ride Aid suggested that this will also impact second quarter results as well, Arwin said. UBS maintains its Neutral rating on the drugstore franchise and raised its price target to $7.50 from $7.00. PRICE ACTION: During afternoon trading, Rite Aid was down 24c or 3.23%, to $7.20. OTHERS TO WATCH: Rite Aid peer Walgreen Company (WAG) was down around 0.8% to $75.45, while CVS Caremark (CVS) was up moderately to $77.46.
News For RAD;MCK;WAG;CVS From The Last 14 Days
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November 25, 2015
07:25 EDTRADDeutsche Bank sees no competing bid for Rite Aid
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November 23, 2015
14:10 EDTCVSAmgen's PCSK9 inhibitor Repatha gets exclusive deal with CVS
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10:51 EDTRADOptions with increasing implied volatility: TERP BRCM CHK RAD POM
09:21 EDTCVSConsolidated Tomoka disposes non-core income property for about $5.4M
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05:56 EDTRADStocks with implied volatility below IV index mean; WMT RAD
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November 20, 2015
05:34 EDTRADStocks with implied volatility below IV index mean; NUAN RAD
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November 18, 2015
15:40 EDTCVS, RADCongressman says U.S. may need look at pharmacy competition, dealReporter says
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11:01 EDTCVSTarget says working with CVS team to secure regulatory approval for deal
Target (TGT) says "pleased" with progress to date of CVS (CVS) deal.
05:40 EDTRADStocks with implied volatility below IV index mean; YUM RAD
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November 17, 2015
10:17 EDTCVSHouse Judiciary Committee to hold a hearing
The Subcommittee on Regulatory Reform, Commercial and Antitrust Law holds a hearing entitled, "The State of Competition in the Pharmacy Benefit Manager and Pharmacy Marketplaces" with Vice President Bricker of Express Scripts and Senior Vice President Pons of CVS Health on November 17 at 3 pm. Webcast Link
November 16, 2015
09:59 EDTMCKOmega bought Valeant in Q3, sold some SuneEdison
Leon Cooperman's Omega Advisors gave a quarterly update on its stakes in a filing this morning, disclosing its positions as of September 30. NEW STAKES: Pfizer (PFE), Valeant (VRX) Walgreens Boots Alliance (WBA), TerraForm Global (GLBL), Cigna (CI). INCREASED STAKES: Google Class A (GOOGL), Facebook (FB), Delta Air Lines (DAL). DECREASED STAKES: SunEdison (SUNE), Shire (SHPG), Citi (C), KAR Auction (KAR), LyondellBasell (LYB). LIQUIDATED STAKES: McKesson (MCK), 21st Century Fox (FOXA), General Motors (GM), QEP Resources (QEP), eBay (EBAY).
09:06 EDTRAD, CVSDiplomat seen as compelling amid specialty pharmacy fallout
Shares of specialty pharmacy operator Diplomat Pharmacy (DPLO) and pharmacy benefit manager Express Scripts (ESRX) have each been knocked down by the negative news surrounding the sector amid the troubles faced by Valeant (VRX) and others, but an analyst at Leerink contends in a note to investors that the pullbacks in both stocks provide buying opportunities. BACKGROUND: Drugmaker Valeant and its prior specialty pharmacy partner, Philidor Rx Services, have been at the center of the firestorm engulfing the sector. Following claims that Philidor urged its employees to modify prescriptions to ensure more orders of Valeant-branded drugs rather than generics, as well as other allegations of wrongdoing, Express Scripts (ESRX) and peer CVS Health (CVS) terminated Philidor from their networks. The day after those termination announcements, Valeant said that it was severing all ties with Philidor and that the pharmacy planned to shut down operations as soon as possible, consistent with applicable laws. Valeant has subsequently said that Philidor has committed to cease operations by January 30, 2016, at the latest. More recently, Express Scripts, the nation's largest pharmacy benefit manager, announced that it stopped doing business with Linden Care, accusing it of being a "captive" pharmacy that dispenses mostly products made by Horizon Pharma (HZNP). In turn, Horizon called the idea that Linden Care is a captive pharmacy "entirely false," stating that "at best Express Scripts is being reckless in its allegations and at worse it is intentionally attempting to mislead investors." Express Scripts' move also impacted shares of Insys Therapeutics (INSY), which reportedly also used Linden Care to fulfill prescription for its drugs. DIPLOMAT LIKELY TO STAY IN-NETWORK: Leerink analyst David Larsen acknowledged that recent events indicate that Express Scripts appears to be evaluating certain retail pharmacies and their relationships with manufacturers, but he believes Diplomat's mix of drugs for diseases like multiple sclerosis, HIV, hepatitis C and cancer differentiate it as a "true" specialty pharmacy. Larsen does not think Diplomat is at risk of being excluded from the pharmacy networks of Express Scripts, CVS or UnitedHealth's (UNH) Optum, he tells investors. Larsen expects limited distribution agreements to stay an important channel strategy for drugmakers and believes these agreements are appropriate for high cost specialty drugs that require special handling and additional services to manage patient adherence. The analyst, who thinks Diplomat remains well positioned to deliver annual growth of over 30% in the next several years, keeps an Outperform rating on its shares. EXPRESS BUYING OPPORTUNITY: Larsen also thinks concerns around manufacturer and pharmacy relationships have put unwarranted pressure on shares of Express Scripts. He does not expect Express Scripts to disclose new lawsuits around rebate dollars owed over other manufacturer disputes and keeps an Outperform rating on the stock, which he views as having an "attractive" valuation. WHAT'S NOTABLE: Larsen also thinks that the specialty channel remains an opportunity for Walgreens Boots Alliance (WBA) and believes its proposed acquisition of Rite Aid (RAD) can strengthen its specialty offering. The analyst keeps an Outperform rating on Walgreens shares as well. PRICE ACTION: Over the last three months, Diplomat Pharmacy shares have declined 28%, Express Scripts has fallen 6% and Walgreens has dropped 14%.
06:18 EDTCVSDiplomat Pharmacy selloff brings 'compelling' entry point, says Leerink
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