Shoppers Drug Mart prescription sales rise; shares jump
By Allison Martell
(Reuters) - Shoppers Drug Mart Corp (SC.TO: Quote) said on Tuesday revenue from prescriptions grew in the third quarter despite the drag of regulatory changes, sending its shares higher, even though profit slipped at Canada's largest drugstore chain.
Shoppers' retail prescription count jumped 6 percent, more than offsetting the impact of provincial reforms that cut government support and pulled down the average value of each prescription filled. The company's total prescription sales rose 1.7 percent to C$1.54 billion ($1.54 billion).
Edward Jones analyst Brian Yarbrough said the accelerating prescription count beat expectations, and was likely lifting the stock. In the previous four quarters, prescription count growth averaged 3.7 percent.
Higher operating and administrative costs held back profit at Shoppers, but share buybacks pushed earnings per share slightly higher.
"At the end of the day, the earnings were what they were - they were nothing special," Yarbrough said. "If it wasn't for share buybacks, there's very limited growth here."
Net earnings receded to C$168 million, or 81 Canadian cents a share, in the third quarter ended October 6, from C$172 million, or 80 Canadian cents a share, in the year-before quarter.
After stock repurchases, the number of fully diluted shares outstanding dropped by 4.2 percent.
All told, sales rose 3.2 percent to C$3.21 billion, slightly higher than analysts' average forecast. Continued...