Speaking of a pharmacy industry shakeout, perpetual also-ran Rite-Aid (RAD) reported another quarter of weak results. See Acquired Stores Weigh on Rite Aid from today’s Wall Street Journal. Last February, Rite-Aid’s stock had the dubious honor of being named the Worst 10-Year Performer when the stock was still a comparatively lofty $2.79 per share. Industry analyst Larry Abrams calculated at the time that Rite-Aid was worth more closed than as an ongoing concern. (See Rite Aid: Worth More Closed Than Open.)
Rite-Aid’s stock closed at $1.35 yesterday. A Goldman Sachs analyst is quoted in today’s paper as saying “it is hard to find compelling long-term value even at the $2 level.” Ouch.
FYI, McKesson (MCK), Rite-Aid’s primary wholesaler, generated about 15% of its
When Rite-Aid Brooks/Eckerd came together in August 2006, I wrote: “Rite-Aid, Brooks, and Eckerd are notorious underperformers in retail pharmacy. Yes, things have improved, but none of the companies are as well run as CVS or Walgreens. As one industry executive quipped to me this morning: ‘If you tie two rocks together, they still won’t float.’ Nonetheless, the deal makes sense given the marketplace dynamics.”
Thought for the day: In theory, theory and practice are the same. In practice, they are different.
