- Retail Comparable Store Prescriptions Increased 3.1 Percent
– Comparable Store Acute Prescriptions, Excluding COVID
Immunizations, Increased 5.3 Percent
- Revenues of $5.9 billion, Compared to Prior Year Revenues of
$6.1 billion
- Net Loss per Share of $6.07, Compared to the Prior Year Net
Loss per Share of $1.86 Driven by Non-Cash Goodwill Impairment
Charge
- Adjusted Net Loss per Share of $0.63, Compared to the Prior
Year Adjusted Net Loss of $0.41 per Share
- Adjusted EBITDA of $78.5 million, Compared to the Prior Year
Adjusted EBITDA of $106.2 million
- Fiscal 2023 Adjusted EBITDA Outlook Updated to $450 million
to $490 million
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its second fiscal quarter ended August 27, 2022.
“We’ve made good progress on key initiatives during the quarter:
driving prescription growth and market share, improving operating
margins at Elixir and achieving reductions in SG&A expenses
across our business,” said Heyward Donigan, president and CEO. “As
we look to the second half of the year, we expect continued
pressure on consumer spending and supply chain challenges. At the
same time, we are ready to meet a high demand for immunizations,
while driving continued strong performance at Elixir and further
SG&A expense reductions.”
Consolidated Second Quarter Summary
(dollars in thousands)
Thirteen
Week Period Ended
Twenty-six
Week Period Ended
August 27,
2022
August 28,
2021
August 27,
2022
August 28,
2021
Revenues
$
5,901,069
$
6,113,000
$
11,915,652
$
12,273,985
Net loss
(331,290)
(100,301)
(441,481)
(113,358)
Adjusted EBITDA
78,549
106,160
178,679
245,037
For the second quarter, the Company reported a net loss of
$331.3 million, or $6.07 loss per share, Adjusted net loss of $34.4
million, or $0.63 loss per share, and Adjusted EBITDA of $78.5
million, or 1.3 percent of revenues.
Revenues for the quarter were $5.90 billion compared to revenues
of $6.11 billion in the prior year’s quarter, largely due to a
reduction in revenue from COVID vaccines and testing, store
closures and a planned loss of covered lives at Elixir.
Second quarter net loss was $331.3 million, or $6.07 per share,
compared to last year’s second quarter net loss of $100.3 million,
or $1.86 per share. The increase in net loss is due primarily to a
current quarter charge of $252.2 million, or $4.62 per share, for
the impairment of goodwill related to the Pharmacy Services
Segment. Net loss was also impacted by higher facility exit and
impairment charges driven by the Company’s previously announced
store closures. These items are partially offset by a gain on our
repurchase of certain bonds at a discount, a gain on sale of assets
resulting from sale leasebacks of two distribution centers and
script file sales resulting from the store closures.
Retail Pharmacy Segment
(dollars in thousands)
Thirteen
Week Period Ended
Twenty-six
Week Period Ended
August 27,
2022
August 28,
2021
August 27,
2022
August 28,
2021
Revenues
$
4,231,791
$
4,277,218
$
8,577,147
$
8,628,900
Adjusted EBITDA
31,484
69,369
105,166
164,283
Retail Pharmacy Segment revenues decreased 1.1 percent over the
prior year quarter, driven by a reduction in COVID vaccine and
testing revenue as well as store closures, partially offset by an
increase in both acute and maintenance prescriptions. Same store
sales for the second quarter increased 5.6 percent over the prior
year period, consisting of an 8.0 percent increase in pharmacy
sales, partially offset by a 0.3 percent decrease in front-end
sales. Front-end same store sales, excluding cigarettes and tobacco
products, increased 0.2 percent. The number of prescriptions filled
in same stores, adjusted to 30-day equivalents, increased 3.1
percent over the prior year period. Total same store prescriptions,
excluding COVID immunizations, increased 2.1 percent, with
same store maintenance prescriptions increasing 1.2 percent and
other same store acute prescriptions increasing 5.3 percent.
Prescription sales accounted for 70.7 percent of total drugstore
sales. Total store count at the end of the second quarter was
2,352.
Retail Pharmacy Segment Adjusted EBITDA was $31.5 million, or
0.7 percent of revenues, for the second quarter compared to last
year’s second quarter Adjusted EBITDA of $69.4 million, or 1.6
percent of revenues. The decline in Adjusted EBITDA was due to
decreased gross profit, partially offset by a decrease in selling,
general and administrative (SG&A) expenses of $45.0 million.
Gross profit was negatively impacted by the decline in COVID
vaccinations and testing, partially offset by the increase in
prescriptions filled. SG&A expenses benefited from lower
payroll, occupancy, and other operating costs due to store closures
and cost control initiatives.
Pharmacy Services Segment
(dollars in thousands)
Thirteen
Week Period Ended
Twenty-six
Week Period Ended
August 27,
2022
August 28,
2021
August 27,
2022
August 28,
2021
Revenues
$
1,727,241
$
1,898,213
$
3,453,098
$
3,770,495
Adjusted EBITDA
47,065
36,791
73,513
80,754
Pharmacy Services Segment revenues were $1.7 billion for the
quarter, a decrease of 9.0 percent compared to the prior year
quarter. The decrease in revenues was primarily the result of a
planned decrease in Elixir Insurance membership and a previously
announced client loss due to industry consolidation, partially
offset by increased utilization of higher cost drugs.
Pharmacy Services Segment Adjusted EBITDA was $47.1 million, or
2.7 percent of revenues, for the second quarter compared to last
year’s second quarter Adjusted EBITDA of $36.8 million, or 1.9
percent of revenues. The current quarter benefitted from increased
gross profit resulting from improved network performance, increases
in rebates, and reductions in SG&A expense, partially offset by
the decline in revenues associated with lost clients, as mentioned
above.
Outlook for Fiscal 2023
Rite Aid Corporation is maintaining its outlook for Fiscal 2023
revenues and lowering its outlook for net loss and Adjusted
EBITDA.
Total revenues are expected to be between $23.6 billion and
$24.0 billion in fiscal 2023. Retail Pharmacy Segment revenue is
expected to be between $17.35 billion and $17.65 billion and
Pharmacy Services Segment revenue is expected to be between $6.25
billion and $6.35 billion (net of any intercompany revenues to the
Retail Pharmacy Segment).
Net loss is expected to be between $520.3 million and $477.3
million. Our estimates for net loss have increased primarily due to
goodwill impairment charges in the Pharmacy Services Segment and
increased impairment charges for closed stores.
Adjusted EBITDA is expected to be between $450 million and $490
million versus prior guidance of between $460 million and $500
million, due to expectations of cautious consumer demand and
continued supply chain challenges in our front end retail business,
partially offset by improved margins at Elixir. Retail Pharmacy
Segment Adjusted EBITDA is expected to be between $305 million and
$335 million and Pharmacy Services Segment Adjusted EBITDA is
expected to be between $145 million and $155 million.
Adjusted net loss per share is expected to be between $1.52 and
$0.97.
Capital expenditures are expected to be approximately $225
million, with a focus on investments in digital capabilities,
technology, prescription file purchases and distribution center
automation.
We expect to generate positive free cash flow in Fiscal
2023.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time
today with remarks by Rite Aid's management team. The call will be
broadcast via the Internet at https://investors.riteaid.com. The
telephone replay will be available beginning at 12:00 p.m. Eastern
Time on Thursday, Sept. 29, 2022 and ending at 11:59 p.m. Eastern
Time on Oct. 31 2022. To access the replay of the call, telephone
(800) 770-2030 or (647) 362-9199 and enter the seven-digit
reservation number 9029129. The webcast replay of the call will
also be available at https://investors.riteaid.com starting at 12
p.m. Eastern Time today. The playback will be available until the
company’s next conference call.
About Rite Aid Corporation
Rite Aid Corporation is on the front lines of delivering
healthcare services and retail products to Americans 365 days a
year. Our pharmacists are uniquely positioned to engage with
customers and improve their health outcomes. We provide an array of
whole being health products and services for the entire family
through over 2,300 retail pharmacy locations across 17 states.
Through Elixir, we provide pharmacy benefits and services to
millions of members nationwide. For more information,
www.riteaid.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this release that are not historical, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements
regarding Rite Aid's outlook and guidance for fiscal 2023,
including our expectation to generate positive free cash flow in
fiscal 2023; the continued impact of the global coronavirus
(COVID-19) pandemic on Rite Aid’s business; the timing and roll out
of the Company’s new loyalty program; our key growth initiatives,
including our plans to improve adherence; the timing of the opening
of four new small format stores in underserved markets; and any
assumptions underlying any of the foregoing. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "should," and "will"
and variations of such words and similar expressions are intended
to identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and involve risks, assumptions and uncertainties,
including, but not limited to: risks related to the prolonged
impact of the COVID-19 global pandemic and the emerging new
variants, including the government responses thereto; the impact of
COVID-19 on our workforce, operations, stores, expenses, and supply
chain, and the operations or behaviors of our customers, suppliers
and business partners; our ability to successfully implement our
store closure program and other strategies; the impact of our high
level of indebtedness, the ability to refinance such indebtedness
on acceptable terms (including the impact of rising interest rates,
market volatility, and continuing actions by the United States
Federal Reserve) and our ability to satisfy our obligations and the
other covenants contained in our debt agreements; outcome of
pending or new litigation, including related to Opioids, “usual and
customary” pricing or other matters; our ability to monetize (and
on reasonably available terms) the CMS receivable created in our
Part D business; general competitive, economic, industry, market,
political (including healthcare reform) and regulatory conditions
(including changes to laws or regulations relating to labor or
wages), and regulatory conditions, including continued impacts of
inflation or other pricing environment factors on our costs,
liquidity and our ability to pass on price increases to our
customers, including as a result of inflationary and deflationary
pressures, a decline in consumer financial position, whether due to
inflation or other factors, as well as other factors specific to
the markets in which we operate; the impact of private and public
third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; our ability
to achieve the benefits of our efforts to reduce the costs of our
generic and other drugs; our ability to achieve cost savings and
other benefits of our restructuring efforts within our anticipated
timeframe, if at all; the outcome of our continuing efforts to
monitor and comply with applicable laws, regulations, policies and
procedures; and our ability to partner and have relationships with
health plans and health systems.
These and other risks, assumptions and uncertainties are more
fully described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K and in other documents that we file or furnish
with the Securities and Exchange Commission (the “SEC”), which you
are encouraged to read. To the extent that COVID-19 adversely
affects our business and financial results, it may also have the
effect of heightening many of such risk factors.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
rely on these forward-looking statements, which speak only as of
the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s
results and operations, including its ability to achieve its
outlook for fiscal 2023 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, federal, state and local
governmental policies and initiatives designed to reduce the
transmission of COVID-19 and emerging new variants and how quickly
and to what extent normal economic and operating conditions can
resume. As a result, the impact on Rite Aid’s financial and
operating results cannot be reasonably estimated with specificity
at this time, but the impact could be material. Rite Aid expressly
disclaims any current intention, and assumes no duty, to update
publicly any forward-looking statement after the distribution of
this release, whether as a result of new information, future
events, changes in assumptions or otherwise.
All references to “Company” and “Rite Aid” as used throughout
this release refer to Rite Aid Corporation and its affiliates.
Reconciliation of Non-GAAP Financial Measures
Rite Aid separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted
EBITDA SG&A, which are non-GAAP financial measures. See the
attached tables for a reconciliation of Adjusted Net Income (Loss),
Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to
net income (loss), and net income (loss) per diluted share, which
are the most directly comparable GAAP financial measures. Adjusted
Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
exclude amortization expense, merger and acquisition-related costs,
non-recurring litigation and other contractual settlements, gains
or losses on debt modifications and retirements, LIFO adjustments,
goodwill and intangible asset impairment charges,
restructuring-related costs, the gain or loss on Bartell
acquisition, and the change in estimate related to manufacturer
rebate receivables. Rite Aid believes Adjusted Net Income (Loss)
and Adjusted Net Income (Loss) per Diluted Share serve as
appropriate measures to be used in evaluating the performance of
its business and help its investors better compare its operating
performance over multiple periods.
Adjusted EBITDA is defined as net income (loss) excluding the
impact of income taxes, interest expense, depreciation and
amortization, LIFO adjustments, charges or credits for facility
exit and impairment, goodwill and intangible asset impairment
charges, inventory write-downs related to store closings, gains or
losses on debt modifications and retirements, and other items
(including stock-based compensation expense, merger and
acquisition-related costs, non-recurring litigation and other
contractual settlements, severance, restructuring-related costs,
costs related to facility closures, gain or loss on sale of assets,
the gain or loss on Bartell acquisition, and the change in estimate
related to manufacturer rebate receivables). The add back of LIFO
(credit) charge when calculating Adjusted EBITDA, Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
removes the entire impact of LIFO (credits) charges, and
effectively reflects Rite Aid's results as if the company was on a
FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as
an appropriate measure in evaluating the performance of its
business and helps its investors better compare its operating
performance with its competitors.
Adjusted EBITDA Gross Profit includes LIFO adjustments,
depreciation and amortization (COGS portion only) and other items.
See the attached tables for a reconciliation of Adjusted EBITDA
Gross Profit to Revenue, which is the most directly comparable GAAP
financial measure. Adjusted EBITDA SG&A excludes depreciation
and amortization (SG&A portion only), stock-based compensation
expense, merger and acquisition-related costs, non-recurring
litigation and other contractual settlements, and other items. See
the attached tables for a reconciliation of Adjusted EBITDA
SG&A to Revenue, which is the most directly comparable GAAP
financial measure. The Company believes Adjusted EBITDA Gross
Profit and Adjusted EBITDA SG&A serve as appropriate measures
in evaluating the performance of its business and helps its
investors better compare its operating performance with its
competitors.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited)
August 27, 2022 February 26, 2022 ASSETS Current assets: Cash and
cash equivalents
$
46,808
$
39,721
Accounts receivable, net
1,564,388
1,343,496
Inventories, net of LIFO reserve of $497,294 and $487,173
2,026,216
1,959,389
Prepaid expenses and other current assets
103,452
106,749
Total current assets
3,740,864
3,449,355
Property, plant and equipment, net
950,962
989,167
Operating lease right-of-use assets
2,679,500
2,813,535
Goodwill
626,936
879,136
Other intangibles, net
268,040
291,196
Deferred tax assets
13,938
20,071
Other assets
86,885
86,543
Total assets
$
8,367,125
$
8,529,003
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current
liabilities: Current maturities of long-term debt and lease
financing obligations
$
5,581
$
5,544
Accounts payable
1,511,673
1,571,261
Accrued salaries, wages and other current liabilities
729,561
780,632
Current portion of operating lease liabilities
571,952
575,651
Total current liabilities
2,818,767
2,933,088
Long-term debt, less current maturities
3,222,655
2,732,986
Long-term operating lease liabilities
2,496,476
2,597,090
Lease financing obligations, less current maturities
14,009
14,830
Other noncurrent liabilities
151,616
151,976
Total liabilities
8,703,523
8,429,970
Commitments and contingencies
-
-
Stockholders' (deficit) equity: Common stock
56,580
55,752
Additional paid-in capital
5,915,521
5,910,299
Accumulated deficit
(6,293,062
)
(5,851,581
)
Accumulated other comprehensive loss
(15,437
)
(15,437
)
Total stockholders' (deficit) equity
(336,398
)
99,033
Total liabilities and stockholders' (deficit) equity
$
8,367,125
$
8,529,003
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks
endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021 Revenues
$
5,901,069
$
6,113,000
Costs and expenses: Cost of revenues
4,746,574
4,867,076
Selling, general and administrative expenses
1,193,553
1,267,753
Facility exit and impairment charges
45,845
11,353
Goodwill and intangible asset impairment charges
252,200
-
Interest expense
52,533
48,592
(Gain) loss on debt modifications and retirements, net
(41,312
)
2,839
(Gain) loss on sale of assets, net
(29,001
)
12,378
6,220,392
6,209,991
Loss before income taxes
(319,323
)
(96,991
)
Income tax expense
11,967
3,310
Net loss
$
(331,290
)
$
(100,301
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss attributable to common
stockholders - basic and diluted
$
(331,290
)
$
(100,301
)
Denominator: Basic and diluted weighted
average shares
54,548
53,989
Basic and diluted loss per share
$
(6.07
)
$
(1.86
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Twenty-six weeksended
August 27, 2022 Twenty-six weeksended August 28, 2021 Revenues
$
11,915,652
$
12,273,985
Costs and expenses: Cost of revenues
9,564,428
9,743,186
Selling, general and administrative expenses
2,411,482
2,513,115
Facility exit and impairment charges
112,416
20,184
Goodwill and intangible asset impairment charges
252,200
-
Interest expense
100,652
97,713
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
(Gain) loss on sale of assets, net
(58,197
)
5,820
12,341,669
12,383,253
Loss before income taxes
(426,017
)
(109,268
)
Income tax expense
15,464
4,090
Net loss
$
(441,481
)
$
(113,358
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss attributable to common
stockholders - basic and diluted
$
(441,481
)
$
(113,358
)
Denominator: Basic and diluted weighted
average shares
54,453
53,920
Basic and diluted loss per share
$
(8.11
)
$
(2.10
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 27, 2022 Thirteen weeks
endedAugust 28, 2021 OPERATING ACTIVITIES: Net loss
$
(331,290
)
$
(100,301
)
Adjustments to reconcile to net cash (used in) provided by
operating activities: Depreciation and amortization
68,564
73,859
Facility exit and impairment charges
45,845
11,353
Goodwill and intangible asset impairment charges
252,200
-
LIFO charge (credit)
10,121
(3,993
)
Change in allowances for uncollectible accounts receivable
(5,434
)
-
(Gain) loss on sale of assets, net
(29,001
)
12,378
Stock-based compensation expense
4,735
5,792
(Gain) loss on debt modifications and retirements, net
(41,312
)
2,839
Changes in deferred taxes
6,133
-
Changes in operating assets and liabilities: Accounts receivable
(107,215
)
(63,368
)
Inventories
(61,578
)
(31,014
)
Accounts payable
94,229
40,797
Operating lease right-of-use assets and operating lease liabilities
(16,901
)
(6,400
)
Other assets
(11,621
)
17,207
Other liabilities
(76,699
)
66,574
Net cash (used in) provided by operating activities
(199,224
)
25,723
INVESTING ACTIVITIES: Payments for property, plant and equipment
(49,067
)
(46,192
)
Intangible assets acquired
(3,108
)
(9,043
)
Proceeds from insured loss
-
10,436
Proceeds from dispositions of assets and investments
10,164
2,228
Proceeds from sale-leaseback transactions
45,986
6,729
Net cash provided by (used in) investing activities
3,975
(35,842
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
-
350,000
Net proceeds from revolver
386,000
211,000
Principal payments on long-term debt
(151,034
)
(451,047
)
Change in zero balance cash accounts
(46,622
)
(52,801
)
Financing fees paid for early debt redemption
(881
)
(831
)
Payments for taxes related to net share settlement of equity awards
(1,466
)
(2,186
)
Deferred financing costs paid
-
(15,932
)
Net cash provided by financing activities
185,997
38,203
(Decrease) increase in cash and cash equivalents
(9,252
)
28,084
Cash and cash equivalents, beginning of period
56,060
118,480
Cash and cash equivalents, end of period
$
46,808
$
146,564
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Twenty-six weeksended August 27, 2022 Twenty-six
weeksended August 28, 2021 OPERATING ACTIVITIES: Net
loss
$
(441,481
)
$
(113,358
)
Adjustments to reconcile to net cash (used in) provided by
operating activities: Depreciation and amortization
138,637
149,718
Facility exit and impairment charges
112,416
20,184
Goodwill and intangible asset impairment charges
252,200
-
LIFO charge (credit)
10,121
(7,986
)
Change in allowances for uncollectible accounts receivable
(1,671
)
-
(Gain) loss on sale of assets, net
(58,197
)
5,820
Stock-based compensation expense
8,069
8,603
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Changes in deferred taxes
6,133
-
Changes in operating assets and liabilities: Accounts receivable
(211,673
)
(212,855
)
Inventories
(77,405
)
(19,096
)
Accounts payable
(43,343
)
91,324
Operating lease right-of-use assets and operating lease liabilities
(31,713
)
(12,309
)
Other assets
(10,870
)
25,185
Other liabilities
(61,372
)
101,133
Net cash (used in) provided by operating activities
(451,461
)
39,598
INVESTING ACTIVITIES: Payments for property, plant and equipment
(122,243
)
(105,356
)
Intangible assets acquired
(15,356
)
(14,479
)
Proceeds from insured loss
-
10,436
Proceeds from dispositions of assets and investments
41,003
4,676
Proceeds from sale-leaseback transactions
45,986
14,185
Net cash used in investing activities
(50,610
)
(90,538
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
-
350,000
Net proceeds from revolver
677,000
250,000
Principal payments on long-term debt
(152,011
)
(542,988
)
Change in zero balance cash accounts
(12,931
)
(844
)
Financing fees paid for early debt redemption
(881
)
(833
)
Payments for taxes related to net share settlement of equity awards
(2,019
)
(2,221
)
Deferred financing costs paid
-
(16,512
)
Net cash provided by financing activities
509,158
36,602
Increase (decrease) in cash and cash equivalents
7,087
(14,338
)
Cash and cash equivalents, beginning of period
39,721
160,902
Cash and cash equivalents, end of period
$
46,808
$
146,564
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 27, 2022 Thirteen weeks
endedAugust 28, 2021
Retail Pharmacy Segment Revenues
(a)
$
4,231,791
$
4,277,218
Cost of revenues (a)
3,188,755
3,136,856
Gross profit
1,043,036
1,140,362
LIFO charge (credit)
10,121
(3,993
)
FIFO gross profit
1,053,157
1,136,369
Adjusted EBITDA gross profit
1,056,055
1,138,913
Gross profit as a percentage of revenues
24.65
%
26.66
%
LIFO charge (credit) as a percentage of revenues
0.24
%
-0.09
%
FIFO gross profit as a percentage of revenues
24.89
%
26.57
%
Adjusted EBITDA gross profit as a percentage of revenues
24.96
%
26.63
%
Selling, general and administrative expenses
1,100,775
1,163,352
Adjusted EBITDA selling, general and administrative expenses
1,024,571
1,069,544
Selling, general and administrative expenses as a percentage of
revenues
26.01
%
27.20
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues
24.21
%
25.01
%
Cash interest expense
49,619
45,599
Non-cash interest expense
2,914
2,993
Total interest expense
52,533
48,592
Adjusted EBITDA
31,484
69,369
Adjusted EBITDA as a percentage of revenues
0.74
%
1.62
%
Pharmacy Services Segment Revenues (a)
$
1,727,241
$
1,898,213
Cost of revenues (a)
1,615,782
1,792,651
Gross profit
111,459
105,562
Gross profit as a percentage of revenues
6.45
%
5.56
%
Adjusted EBITDA
47,065
36,791
Adjusted EBITDA as a percentage of revenues
2.72
%
1.94
%
(a) - Revenues and cost of revenues include $57,963 and
$62,431 of inter-segment activity for the thirteen weeks ended
August 27, 2022 and August 28, 2021, respectively, that is
eliminated in consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in
thousands) (unaudited) Twenty-six weeksended August
27, 2022 Twenty-six weeksended August 28, 2021
Retail
Pharmacy Segment Revenues (a)
$
8,577,147
$
8,628,900
Cost of revenues (a)
6,436,754
6,318,604
Gross profit
2,140,393
2,310,296
LIFO charge (credit)
10,121
(7,986
)
FIFO gross profit
2,150,514
2,302,310
Adjusted EBITDA gross profit
2,162,707
2,307,251
Gross profit as a percentage of revenues
24.95
%
26.77
%
LIFO charge (credit) as a percentage of revenues
0.12
%
-0.09
%
FIFO gross profit as a percentage of revenues
25.07
%
26.68
%
Adjusted EBITDA gross profit as a percentage of revenues
25.21
%
26.74
%
Selling, general and administrative expenses
2,217,989
2,319,391
Adjusted EBITDA selling, general and administrative expenses
2,057,541
2,142,968
Selling, general and administrative expenses as a percentage of
revenues
25.86
%
26.88
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues
23.99
%
24.83
%
Cash interest expense
94,863
91,623
Non-cash interest expense
5,789
6,090
Total interest expense
100,652
97,713
Adjusted EBITDA
105,166
164,283
Adjusted EBITDA as a percentage of revenues
1.23
%
1.90
%
Pharmacy Services Segment Revenues (a)
$
3,453,098
$
3,770,495
Cost of revenues (a)
3,242,267
3,549,992
Gross profit
210,831
220,503
Gross profit as a percentage of revenues
6.11
%
5.85
%
Adjusted EBITDA
73,513
80,754
Adjusted EBITDA as a percentage of revenues
2.13
%
2.14
%
(a) - Revenues and cost of revenues include $114,593 and $125,410
of inter-segment activity for the twenty-six weeks ended August 27,
2022 and August 28, 2021, respectively, that is eliminated in
consolidation.
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA (In thousands) (unaudited) Thirteen
weeks endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(331,290
)
$
(100,301
)
Adjustments: Interest expense
52,533
48,592
Income tax expense
11,967
3,310
Depreciation and amortization
68,564
73,859
LIFO charge (credit)
10,121
(3,993
)
Facility exit and impairment charges
45,845
11,353
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
2,839
Merger and Acquisition-related costs
-
4,591
Stock-based compensation expense
4,735
5,792
Restructuring-related costs
12,805
9,584
Inventory write-downs related to store closings
1,094
798
Litigation and other contractual settlements
20,093
34,212
(Gain) loss on sale of assets, net
(29,001
)
12,378
Other
195
3,146
Adjusted EBITDA
$
78,549
$
106,160
Percent of revenues
1.33
%
1.74
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In
thousands) (unaudited) Twenty-six weeksended
August 27, 2022 Twenty-six weeksended August 28, 2021
Reconciliation of net loss to adjusted EBITDA: Net loss
$
(441,481
)
$
(113,358
)
Adjustments: Interest expense
100,652
97,713
Income tax expense
15,464
4,090
Depreciation and amortization
138,637
149,718
LIFO charge (credit)
10,121
(7,986
)
Facility exit and impairment charges
112,416
20,184
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Merger and Acquisition-related costs
-
8,477
Stock-based compensation expense
8,069
8,603
Restructuring-related costs
35,451
15,516
Inventory write-downs related to store closings
9,049
1,270
Litigation and other contractual settlements
38,364
48,212
(Gain) loss on sale of assets, net
(58,197
)
5,820
Other
(754
)
3,543
Adjusted EBITDA
$
178,679
$
245,037
Percent of revenues
1.50
%
2.00
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per
share amounts) (unaudited) Thirteen weeks endedAugust
27, 2022 Thirteen weeks endedAugust 28, 2021 Net loss
$
(331,290
)
$
(100,301
)
Add back - Income tax expense
11,967
3,310
Loss before income taxes
(319,323
)
(96,991
)
Adjustments: Amortization expense
18,420
19,953
LIFO charge (credit)
10,121
(3,993
)
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
2,839
Merger and Acquisition-related costs
-
4,591
Restructuring-related costs
12,805
9,584
Litigation and other contractual settlements
20,093
34,212
Adjusted loss before income taxes
(46,996
)
(29,805
)
Adjusted income tax benefit (a)
(12,576
)
(7,839
)
Adjusted net loss
$
(34,420
)
$
(21,966
)
Adjusted net loss per diluted share: Numerator for
adjusted net loss per diluted share: Adjusted net loss
$
(34,420
)
$
(21,966
)
Denominator: Basic and diluted weighted
average shares
54,548
53,989
Net loss per diluted share
$
(6.07
)
$
(1.86
)
Adjusted net loss per diluted share
$
(0.63
)
$
(0.41
)
(a) The fiscal year 2023 and 2022 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirteen weeks ended August 27, 2022 and August
28, 2021, respectively. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands,
except per share amounts) (unaudited) Twenty-six
weeks endedAugust 27, 2022 Twenty-six weeks endedAugust 28, 2021
Net loss
$
(441,481
)
$
(113,358
)
Add back - Income tax expense
15,464
4,090
Loss before income taxes
(426,017
)
(109,268
)
Adjustments: Amortization expense
39,046
40,413
LIFO charge (credit)
10,121
(7,986
)
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Merger and Acquisition-related costs
-
8,477
Restructuring-related costs
35,451
15,516
Litigation and other contractual settlements
38,364
48,212
Adjusted loss before income taxes
(92,147
)
(1,401
)
Adjusted income tax benefit (a)
(24,659
)
(368
)
Adjusted net loss
$
(67,488
)
$
(1,033
)
Adjusted net loss per diluted share: Numerator for
adjusted net loss per diluted share: Adjusted net loss
$
(67,488
)
$
(1,033
)
Denominator: Basic and diluted weighted
average shares
54,453
53,920
Net loss per diluted share
$
(8.11
)
$
(2.10
)
Adjusted net loss per diluted share
$
(1.24
)
$
(0.02
)
(a) The fiscal year 2023 and 2022 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the twenty-six weeks ended August 27, 2022 and August
28, 2021, respectively. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION RECONCILIATION OF ADJUSTED EBITDA GROSS
PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT (In thousands)
(unaudited) Thirteen weeks endedAugust 27,
2022 Thirteen weeks endedAugust 28, 2021
Reconciliation of adjusted EBITDA gross profit: Revenues
$
4,231,791
$
4,277,218
Gross Profit
1,043,036
1,140,362
Addback: LIFO charge (credit)
10,121
(3,993
)
Depreciation and amortization (cost of goods sold portion only)
2,075
1,950
Other
823
594
Adjusted EBITDA gross profit
$
1,056,055
$
1,138,913
Percent of revenues
24.96
%
26.63
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
4,231,791
$
4,277,218
Selling, general and administrative expenses
1,100,775
1,163,352
Less: Depreciation and amortization (SG&A portion only)
54,604
59,081
Stock-based compensation expense
4,496
5,695
Merger and Acquisition-related costs
-
4,591
Restructuring-related costs
8,442
2,584
Litigation and other contractual settlements
8,170
18,448
Other
492
3,409
Adjusted EBITDA selling, general and administrative expenses
$
1,024,571
$
1,069,544
Percent of revenues
24.21
%
25.01
%
Adjusted EBITDA
$
31,484
$
69,369
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND
RECONCILIATION OF ADJUSTED EBITDA SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT (In thousands)
(unaudited) Twenty-six weeksended August 27,
2022 Twenty-six weeksended August 28, 2021
Reconciliation of adjusted EBITDA gross profit: Revenues
$
8,577,147
$
8,628,900
Gross Profit
2,140,393
2,310,296
Addback: LIFO charge (credit)
10,121
(7,986
)
Depreciation and amortization (cost of goods sold portion only)
4,968
4,047
Other
7,225
894
Adjusted EBITDA gross profit
$
2,162,707
$
2,307,251
Percent of revenues
25.21
%
26.74
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
8,577,147
$
8,628,900
Selling, general and administrative expenses
2,217,989
2,319,391
Less: Depreciation and amortization (SG&A portion only)
107,819
118,849
Stock-based compensation expense
7,598
8,466
Merger and Acquisition-related costs
-
8,477
Restructuring-related costs
25,813
4,205
Litigation and other contractual settlements
18,122
32,448
Other
1,096
3,978
Adjusted EBITDA selling, general and administrative expenses
$
2,057,541
$
2,142,968
Percent of revenues
23.99
%
24.83
%
Adjusted EBITDA
$
105,166
$
164,283
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA
GUIDANCE YEAR ENDING MARCH 4, 2023 (In thousands) (unaudited)
Guidance Range Low High
Total Revenues
$
23,600,000
$
24,000,000
Pharmacy Services Segment Revenues
$
6,250,000
$
6,350,000
Gross Capital Expenditures
$
225,000
$
225,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(520,300
)
$
(477,300
)
Adjustments: Interest expense
216,000
216,000
Income tax benefit
(7,000
)
(10,000
)
Depreciation and amortization
280,000
280,000
LIFO charge
20,000
20,000
Facility exit and impairment charges
175,000
175,000
Goodwill and intangible asset impairment charges
252,200
252,200
Gain on debt modifications and retirements, net
(41,300
)
(41,300
)
Restructuring-related costs
72,000
72,000
Litigation and other contractual settlements
38,400
38,400
Gain on sale of assets, net
(60,000
)
(60,000
)
Other
25,000
25,000
Adjusted EBITDA
$
450,000
$
490,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET
LOSS GUIDANCE YEAR ENDING MARCH 4, 2023 (In thousands) (unaudited)
Guidance Range Low High
Net loss
$
(520,300
)
$
(477,300
)
Add back - income tax benefit
(7,000
)
(10,000
)
Loss before income taxes
(527,300
)
(487,300
)
Adjustments: Amortization expense
73,000
73,000
LIFO charge
20,000
20,000
Goodwill and intangible asset impairment charges
252,200
252,200
Gain on debt modifications and retirements, net
(41,300
)
(41,300
)
Restructuring-related costs
72,000
72,000
Litigation and other contractual settlements
38,400
38,400
Adjusted loss before adjusted income taxes
(113,000
)
(73,000
)
Adjusted income tax benefit
(30,000
)
(20,000
)
Adjusted net loss
$
(83,000
)
$
(53,000
)
Diluted adjusted net loss per share
$
(1.52
)
$
(0.97
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220928005838/en/
INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com
MEDIA: Joy Errico Seusing (203) 970-5559 press@riteaid.com
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