As one of the nation’s largest leading drugstores Rite Aid Corp. (NYSE: RAD) is one of the companies to watch when earnings season comes around. Many on Wall Street see the company as very favorably positioned in health care, given its geographic overlap with Medicaid expansion, as well as its push into clinics. For this quarter, the main driver in earnings came in the form of a large tax break and solid same-store sales.

Rite Aid released its fiscal fourth-quarter financial results Wednesday before the markets opened. The company had $0.12 in earnings per share (EPS) on $6.8 billion in revenue. That compared to Thomson Reuters consensus estimates of $0.07 in EPS on $6.80 billion in revenue. In the same quarter of the previous year, Rite Aid posted $0.06 in EPS and $6.60 billion in revenue.

The company expects sales to be between $26.9 billion and $27.4 billion in fiscal 2016, with same-store sales growth expected to range from 2.5% to 4.5% over fiscal 2015. At the same time, Rite Aid expects $0.19 to $0.27 in EPS for the fiscal year. The consensus estimates are $0.43 in EPS and revenue of $27.19 billion.

Same-store sales for the quarter increased 4.5% over the prior year, consisting of a 5.7% increase in pharmacy sales and a 2.0% increase in front-end sales.

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Net income for Rite Aid rose to $1.79 per share in the fiscal fourth quarter, largely due to an income tax benefit of $1.67 per share. In terms of broader numbers, the company had net income of $1.84 billion and a tax benefit for the quarter of $1.72 billion.

John Standley, chairman and CEO of Rite Aid, said:

In the fourth quarter, our strong growth in same-store sales and prescription count as well as strong cost control helped drive continued profitability.

These positive results contributed to a successful year in which we took significant steps to further position Rite Aid as a retail healthcare company.

Ahead of earnings, a few analysts gave their calls for Rite Aid on April 6:

• Cowen maintained an Outperform rating and set its price target at $12.
• Jeffries maintained a Hold rating with a price target at $8.25.
• Deutsche Bank upgraded Rite Aid to a Buy rating with a $9 price target.
• J.P. Morgan initiated coverage with an Overweight rating and a $10 price target.

Shares of Rite Aid closed Tuesday down 1.7% at $8.69. Following the release of the earnings report, shares were up 1.5% at $8.82 in premarket trading Wednesday. The stock has a consensus analyst price target of $9.69 and a 52-week trading range of $4.42 to $9.07.

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