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Rite Aid Earnings Down due to Reimbursement Rates and Drug Costs


Rite Aid shares are trading lower Thursday after the drugstore chain posted results which fell short of forecasts and said reimbursement rates were higher than anticipated drug costs. Rite Aid's first quarter earnings came in at just half of what they were a year ago at roughly $41 million - that's down from the close to 90-million dollars it earned in the same quarter last year. During the company's conference call, Rite Aid CEO John Standley said, 'As we transition to our new purchasing model, we expect lower pharmacy gross margin during the transition period because we're unable to negotiate lower drug costs as we normally would do to offset reimbursement rate pressure and generic drug cost increases.' Standley also expressed confidence that this strategic next step will lead to long-term success for the company.