Rite Aid Corp. now selling for $3 a share

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Rite Aid Corporation (Public, NYSE:RAD) shares are now trading at $3, that's a 50% drop in the last 6 months.  The slaughter on Wall Street continues and this time it's because investors are disappointed with Rite Aid's Q3 loss.

Rite Aid Corp. still holds the crown as the third-largest U.S. drugstore chain and today marked its stock worst fall in five years. RAD also reduced their 2008 forecast for the second time in three months on slowing sales of cold medicine and holiday items.

The net loss was $84.8 million, or 12 cents a share, for the third quarter through Dec. 1 because of costs related to the acquisition of the Brooks and Eckerd chains, the company said today in a statement. Analysts estimated a loss of 8 cents.

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Q3 results included $62.1 million of interest expense related to the Brooks and Eckerd purchase, integration costs of $53.3 million, an expense of $69.7 million for depreciation and amortization, and store closing and impairment costs of $16.7 million for the acquisition.

RAD commands a $2.4 billion market cap and if this company can't make a comeback in 2008, it's worthless.  The drop to $3 a share seems a bit much but then again, these days this seems like a typical reaction after reporting a dismal quarter and outlook for worried investors.  Despite all the negative news, RAD revenues increased 51% year-over-year to $6.52 billion. Same-store prescriptions, which account for some 68% of sales, increased 0.2%.  Those growth rates are unimpressive on their own, but even more so when compared with the likes of CVS Caremark Corp. (CVS).

For fiscal 2008, management anticipates deeper losses than initially forecast.  Losses per share are now expected to range from $0.27 to $0.31.  The company initially expected losses to range $0.15 to $0.27 per share.  Analysts forecast a loss of $0.21 per share.  The revision stems from lower sales during cold and flu season and slower holiday sales. 

The Masters are considering picking up some shares if RAD falls under $3, it could plunge lower as soon as the analyst downgrades come in.  All in all, tough day for Rite Aid.