- Fourth Quarter Net Loss from
Continuing Operations of $483.7 Million or $0.46 Per Diluted Share,
Compared to the Prior Year Fourth Quarter Net Loss of $25.1 Million
or $0.02 Per Diluted Share
- Fourth Quarter Net Loss includes
$325 million of income tax expense relating to the revaluation of
the company’s deferred tax assets in connection with the Tax Cuts
and Jobs Act of 2017 (“2017 Tax Act”) and a goodwill impairment
charge of $191 million, net of tax
- Fourth Quarter Adjusted Net Loss
from Continuing Operations Per Diluted Share of $0.01, Compared to
the Prior Year Fourth Quarter Adjusted Net Income Per Diluted Share
of $0.02
- Fourth Quarter Adjusted EBITDA from
Continuing Operations of $157.4 Million, Compared to the Prior Year
Fourth Quarter Adjusted EBITDA of $167.6 Million;
- Fourth Quarter Pro-forma Adjusted
EBITDA from Continuing Operations of $173.2 Million, Compared to
Prior Year Fourth Quarter Pro-forma Adjusted EBITDA from Continuing
Operations of $180.8 Million
- Prior Year Included Benefit of
53rd Week
- HSR Waiting Period for Albertsons
Companies, Inc. (“Albertsons”) Merger Expired on March 28,
2018
- Sale of Stores to Walgreens Boots
Alliance, Inc. (“WBA”) Completed on March 27, 2018
Rite Aid Corporation (NYSE:RAD) today reported operating results
for its fourth quarter and fiscal year ended March 3, 2018.
For the fourth quarter, the company reported net loss from
continuing operations of $483.7 million, or $0.46 per diluted
share, Adjusted net loss from continuing operations of $10.3
million, or $0.01 per diluted share, Adjusted EBITDA from
continuing operations of $157.4 million, or 2.9 percent of revenues
and pro-forma Adjusted EBITDA from continuing operations of $173.2
million.
For the fourth quarter of fiscal 2018 the company reported net
income of $767.1 million, or $0.73 per diluted share. For the full
year, the company reported net income of $943.5 million, or $0.90
per diluted share. Net income for the fourth quarter and the full
year of fiscal 2018 includes an after-tax gain of approximately
$1.2 billion and $1.3 billion, respectively, relating to the 1,554
and 1,651 stores and related assets sold to WBA. As of March 27,
2018, Rite Aid has completed the sale of all 1,932 stores and
related assets to WBA. The transfer of the three distribution
centers and related inventory is expected to begin after September
1, 2018. As a result of the proceeds received from the store sales,
Rite Aid’s debt related to continuing operations, net of cash, was
$2.9 billion as of March 3, 2018.
“During the fourth quarter, we made significant progress in a
number of areas: our Retail Pharmacy Segment delivered strong
results with an increase in Adjusted EBITDA over the prior year;
our Pharmacy Services Segment is off to a strong start in the new
commercial selling season; shortly after the quarter ended, we
completed the asset sale of 1,932 stores to WBA; and we entered
into a definitive merger agreement with Albertsons Companies to
transform Rite Aid into a truly differentiated leader in food,
health and wellness,” said Rite Aid Chairman and CEO John
Standley.
Rite Aid President and Chief Operating Officer Kermit Crawford
added: “We are pleased that we’ve been able to drive improved
operational performance through a stabilization of reimbursement
rates, improvements in drug purchasing costs and a record number of
immunizations which helped us deliver a higher pharmacy margin for
the quarter. These areas of our business will continue to be key
priorities as we begin our new fiscal year and work together to
continue building momentum.”
Fourth Quarter Summary
Revenues from continuing operations for the quarter were $5.4
billion compared to revenues from continuing operations of $5.9
billion in the prior year’s fourth quarter, a decrease of $509.1
million or 8.6 percent. Retail Pharmacy Segment revenues were $4.0
billion and decreased 10.1 percent compared to the prior year
period primarily as a result of the extra week in the prior year’s
fourth quarter and a decline in same store sales. Revenues in the
Pharmacy Services Segment were $1.4 billion, a decrease of 4.3
percent compared to the prior year period, which was due to a
decline in commercial business and changes in its composition of
Medicare Part D membership.
Same store sales from Retail Pharmacy continuing operations for
the quarter decreased 1.7 percent over the prior year, consisting
of a 2.3 percent decrease in pharmacy sales and a 0.6 percent
decrease in front-end sales. Pharmacy sales included an approximate
138 basis point negative impact from new generic introductions. The
number of prescriptions filled in same stores, adjusted to 30-day
equivalents, decreased 1.8 percent over the prior year period due
in part to exclusion from certain pharmacy networks that Rite Aid
participated in the prior year. Prescription sales from continuing
operations accounted for 64.9 percent of total drugstore sales.
Net loss from continuing operations was $483.7 million or $0.46
per diluted share compared to last year’s fourth quarter net loss
from continuing operations of $25.1 million or $0.02 per diluted
share. The decline in operating results was due primarily to $325
million of income tax expense relating to the revaluation of the
company’s deferred tax assets as a result of the 2017 Tax Act and a
charge of $191 million, net of tax, for the impairment of goodwill
related to our Pharmacy Services Segment. The effect of the
goodwill impairment charge is to adjust the book value of our
Pharmacy Services Segment to $2.1 billion, which was our basis in
the segment at the date of acquisition. Also impacting results was
a decline in Adjusted EBITDA, higher WBA deal related costs, and
higher lease termination and impairment charges, partially offset
by a higher LIFO credit.
Adjusted EBITDA from continuing operations (which is reconciled
to net loss from continuing operations in the attached tables) was
$157.4 million or 2.9 percent of revenues for the fourth quarter
compared to $167.6 million or 2.8 percent of revenues for the same
period last year. Current quarter Adjusted EBITDA includes the
benefit of $8.2 million in TSA fees while prior year’s fourth
quarter Adjusted EBITDA includes the benefit of $10.8 million from
the extra week. The decline in Adjusted EBITDA was due to a
decrease of $11.3 million in the Pharmacy Services Segment,
resulting primarily from the decline in revenues. Adjusted EBITDA
in the Retail Pharmacy Segment was favorable to the prior year due
to the stabilization of reimbursement rates and improvement in
generic purchasing, offset somewhat by lower revenues. Results from
continuing operations are fully burdened for corporate
administration costs that support both continuing and discontinued
operations. Fiscal 2018 and fiscal 2017 quarterly results from
continuing operations do not include $15.8 million and $24.0
million of fees, respectively, that would be earned if all of the
stores sold to WBA were being supported under the TSA for the
entire respective period. After adjusting to reflect those fees as
if they had been earned for the full period and adjusting for the
extra week in fiscal 2017, Pro-forma Adjusted EBITDA for the fourth
quarter of fiscal 2018 and fiscal 2017 was $173.2 million and
$180.8 million, respectively.
In the fourth quarter, the company relocated 6 stores and
remodeled 38 stores, bringing the total number of wellness stores
chainwide to 1,805. During the fourth quarter, the company sold
1,554 stores to WBA and closed 19 stores, resulting in a total
store count of 2,831 at the end of the fourth quarter. Wellness
store count and total store count related to continuing operations
was 1,651 and 2,550, respectively.
Full Year Results
For the fiscal year ended March 3, 2018, revenues from
continuing operations were $21.5 billion compared to revenues of
$22.9 billion in the prior year, a decrease of $1.4 billion or 6.1
percent. Retail Pharmacy Segment revenues were $15.8 billion and
decreased 5.6 percent compared to the prior year period primarily
as a result of the extra week in the prior year and a decline in
same store sales. Revenues in the Pharmacy Services Segment were
$5.9 billion, a decrease of 7.8 percent compared to the prior year,
which was due a decline in commercial business and to the change in
the composition of Medicare Part D membership.
Same store sales from continuing operations for the year
decreased 2.9 percent, consisting of a 3.9 percent decrease in
pharmacy sales and a 0.8 percent decrease in front end sales.
Pharmacy sales included an approximate 187 basis point negative
impact from new generic introductions. The number of prescriptions
filled in same stores, adjusted to 30-day equivalents, decreased
1.8 percent over the prior year due in part to our exclusion from
certain pharmacy networks that Rite Aid participated in the prior
year. Prescription sales from continuing operations accounted for
65.9 percent of total drugstore sales.
Net loss from continuing operations for fiscal 2018 was $349.5
million or $0.33 per diluted share compared to last year’s net
income from continuing operations of $4.1 million or $0.00 per
diluted share. The decline in operating results was due primarily
to higher income tax expense relating to the revaluation of the
company’s deferred tax assets as a result of the 2017 Tax Act, a
goodwill impairment charge in the current year, a decline in
Adjusted EBITDA, higher lease termination and impairment charges,
and higher WBA deal related costs, partially offset by a $325.0
million merger termination fee from WBA and a higher LIFO credit.
Adjusted net loss from continuing operations for fiscal 2018 was
$20.2 million or $0.02 per diluted share compared to last year’s
Adjusted net income of $84.5 million or $0.08 per diluted share,
driven primarily by a decline in Adjusted EBITDA.
Adjusted EBITDA from continuing operations was $559.9 million or
2.6 percent of revenues for the year compared to $740.1 million or
3.2 percent of revenues for last year. The decline in Adjusted
EBITDA is due to a decrease of $163.5 million in the Retail
Pharmacy Segment and $16.7 million in the Pharmacy Services
Segment. The decrease in the Retail Pharmacy Segment EBITDA was
primarily driven by a decline in pharmacy sales and gross profit.
These declines were due to a continued reductions in reimbursement
rates which the company was unable to fully offset with generic
purchasing efficiencies, as well as lower script counts. The
decrease in the Pharmacy Services Segment EBITDA was primarily
driven by the decline in revenues. Fiscal 2018 and fiscal 2017
annual results from continuing operations do not include $87.6
million and $96.0 million of fees, respectively, that would be
earned if all of the stores sold to WBA were being supported under
the TSA. After adjusting to reflect those fees as if they had been
earned for the full period and for the extra week in fiscal 2017,
Pro-forma Adjusted EBITDA for fiscal 2018 and fiscal 2017 was
$647.5 million and $825.3 million, respectively.
For the year, the company relocated 20 stores, remodeled 179
stores, expanded 3 stores, opened 3 stores, sold 1,651 stores to
WBA, and closed 57 stores.
Outlook for Fiscal 2019
Rite Aid is confirming its fiscal 2019 outlook for Adjusted
EBITDA and net loss and providing fiscal 2019 outlook for revenues,
same store sales, capital expenditures and Adjusted net income. The
company’s outlook for fiscal 2019 is based on the anticipated
benefits from generic drug purchasing efficiencies, a reimbursement
rate environment that is somewhat more stable than fiscal 2018, TSA
fees under the agreement with WBA, and other initiatives to grow
sales and drive operational efficiencies. The outlook provided
herein, does not reflect the impact of the pending transaction with
Albertsons.
Rite Aid said it expects sales to be between $21.7 billion and
$22.1 billion in fiscal 2019 with same store sales expected to
range from an increase of 0.0 percent to an increase of 1.0 percent
over fiscal 2018.
Adjusted EBITDA (which is reconciled to net loss in the attached
table) is expected to be between $615.0 million and $675.0
million.
Net loss is expected to be between $40.0 million and $95.0
million.
Adjusted net income per diluted share is expected to be between
$0.02 and $0.06.
Capital expenditures are expected to be approximately $250
million.
Rite Aid is one of the nation’s leading drugstore chains with
2,548 stores in 19 states. Information about Rite Aid, including
corporate background and press releases, is available through Rite
Aid’s website at www.riteaid.com.
Rite Aid Merger with Albertsons
As previously announced on February 20, 2018, Rite Aid and
Albertsons entered into a definitive agreement under which
Albertsons will merge with Rite Aid. The boards of directors of
both companies have approved the transaction, and the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, has expired. The merger is expected to close
early in the second half of calendar year 2018, subject to the
approval of Rite Aid's shareholders, regulatory approvals, and
other customary closing conditions.
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
simulcast via the internet and can be accessed at www.riteaid.com
in the conference call section of investor information. A playback
of the call will also be available by telephone beginning at 12:00
p.m. Eastern Time today until 11:59 p.m. Eastern Time on April 15,
2018. The playback number is 1-855-859-2056 from within the U.S.
and Canada or 1-404-537-3406 from outside the U.S. and Canada with
the eight-digit reservation number 72531387.
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 for fiscal 2019, the pending merger
(the “Merger”) between Rite Aid and Albertsons; the expected timing
of the closing of the Merger and the subsequent closings of the
sale of Rite Aid distribution centers and assets to WBA; the
ability of the parties to complete the Merger considering the
various closing conditions to the Merger; the ability of the
parties to complete the distribution center closing considering the
various closing conditions applicable to the distribution centers
and related assets being transferred at such distribution center
closing; the outcome of legal and regulatory matters in connection
with the Merger and the sale of stores and assets of Rite Aid to
WBA; the expected benefits of the transactions such as improved
operations, growth potential, market profile and financial
strength; the competitive ability and position of Rite Aid
following completion of the proposed transactions; the ability of
Rite Aid to implement new business strategies following the
completion of the proposed transactions 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, our high level of indebtedness and our ability to make interest
and principal payments on our debt and satisfy the other covenants
contained in our debt agreements; general economic, industry,
market, competitive, regulatory and political conditions; our
ability to improve the operating performance of our stores in
accordance with our long term strategy; 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; outcomes of
legal and regulatory matters; changes in legislation or
regulations, including healthcare reform; our ability to achieve
the benefits of our efforts to reduce the costs of our generic and
other drugs; risks related to the proposed transactions with WBA,
including the possibility that the remaining transactions may not
close, or the business of Rite Aid may suffer as a result of
uncertainty surrounding the proposed transactions; risks related to
the expected timing and likelihood of completion of the Merger,
including the risk that the Merger may not close due to one or more
closing conditions to the Merger not being satisfied or waived,
such as the remaining Ohio Department of Insurance regulatory
approval not being obtained, on a timely basis or otherwise, or
that a governmental entity prohibited, delayed or refused to grant
approval for the consummation of the Merger or required certain
conditions, limitations or restrictions in connection with such
approvals, or that the required approval of the merger agreement by
the stockholders of Rite Aid was not obtained; risks related to the
ability to realize the anticipated benefits of the proposed
transactions with Albertsons and WBA; risks related to diverting
management's or employees' attention from ongoing business
operations; the risk that any announcements relating to the Merger
could have adverse effects on the market price of Rite Aid’s common
stock, and the risk that the Merger and its announcement could have
an adverse effect on the ability of Rite Aid to retain customers
and retain and hire key personnel and maintain relationships with
their suppliers and customers and on their operating results and
businesses generally; the risk that Rite Aid's stock price may
decline significantly if the Merger or sale of distribution centers
and related assets to WBA is not completed; the occurrence of any
event, change or other circumstances that could give rise to the
termination of the merger agreement (including circumstances
requiring Rite Aid to pay Albertsons a termination fee pursuant to
the merger agreement);
significant transaction costs; unknown liabilities; the risk of
litigation and/or regulatory actions related to the proposed
transactions; potential changes to our strategy in the event the
remaining proposed transactions do not close, which may include
delaying or reducing capital or other expenditures, selling assets
or other operations, attempting to restructure or refinance our
debt, or seeking additional capital, and other business effects.
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 the registration statement on Form S-4,
as it may be amended, that was filed with the SEC by Albertsons on
April 6, 2018 in connection with the Merger, and in other documents
that we file or furnish with the Securities and Exchange Commission
(the “SEC”), which you are encouraged to read. 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 place undue
reliance on these forward- looking statements, which speak only as
of the date they are made. Rite Aid expressly disclaims any current
intention 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.
Additional Information and Where to Find It
In connection with the proposed merger involving Rite Aid and
Albertsons, Rite Aid and Albertsons have prepared and Albertsons
has filed with the SEC on April 6, 2018 a registration statement on
Form S-4 that includes a proxy statement of Rite Aid that also
constitutes a prospectus of Albertsons. The registration statement
is not yet final and will be amended. Rite Aid will mail the proxy
statement/prospectus and a proxy card to each stockholder entitled
to vote at the special meeting relating to the proposed merger.
Rite Aid and Albertsons also plan to file other relevant documents
with the SEC regarding the proposed merger. INVESTORS ARE URGED TO
READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE, AS WELL AS OTHER DOCUMENTS FILED WITH THE SEC, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. RITE AID’S EXISTING PUBLIC
FILINGS WITH THE SEC SHOULD ALSO BE READ, INCLUDING THE RISK
FACTORS CONTAINED THEREIN.
Investors and security holders may obtain copies of the Form
S-4, including the proxy statement/prospectus, as well as other
filings containing information about Rite Aid, free of charge, from
the SEC’s Web site (www.sec.gov). Investors and security holders
may also obtain Rite Aid’s SEC filings in connection with the
transaction, free of charge, from Rite Aid’s Web site
(www.RiteAid.com) under the link “Investor Relations” and then
under the tab “SEC Filings,” or by directing a request to Rite Aid,
Byron Purcell, Attention: Senior Director, Treasury Services &
Investor Relations. Copies of documents filed with the SEC by
Albertsons will be made available, free of charge, on Albertsons’
website at www.albertsonscompanies.com.
Participants in Solicitation
Rite Aid, Albertsons and their respective directors, executive
officers and employees and other persons may be deemed to be
participants in the solicitation of proxies from the holders of
Rite Aid common stock in respect of the proposed transaction.
Information regarding Rite Aid’s directors and executive officers
is available in its definitive proxy statement for Rite Aid’s 2017
annual meeting of stockholders filed with the SEC on June 7, 2017,
as modified or supplemented by any Form 3 or Form 4 filed with the
SEC since the date of such definitive proxy statement. Information
about the directors and executive officers of Albertsons is set
forth in the registration statement on Form S-4, including the
proxy statement/prospectus, as it may be amended, that has been
filed with the SEC on April 6, 2018. Other information regarding
the interests of the participants in the proxy solicitation may be
included in the definitive proxy statement/prospectus when it
becomes available. These documents can be obtained free of charge
from the sources indicated above.
Non-Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Reconciliation of Non-GAAP Financial Measures
The company separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share, Adjusted EBITDA and Pro-Forma Adjusted EBITDA 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, Adjusted EBITDA and Pro-Forma 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 of EnvisionRx intangible
assets, merger and acquisition-related costs, loss on debt
retirements, LIFO adjustments, goodwill impairment and the
Walgreens Boots Alliance, Inc. termination fee. 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 closing and impairment, goodwill
impairment, inventory write-downs related to store closings, debt
retirements, the Walgreens Boots Alliance, Inc. termination fee,
and other items (including stock-based compensation expense, merger
and acquisition-related costs, severance and costs related to
distribution center closures, gain or loss on sale of assets and
revenue deferrals related to our customer loyalty program).
The company's management team routinely evaluates how it
measures the company's financial performance. In connection with
such review, the company determined that it would be beneficial to
investors to reflect what the company's financial results would
have been had it received all of the fees that it would have earned
pursuant to the TSA Agreement with WBA for the relevant period. As
a result, the company hereby introduces the non-GAAP financial
measure Pro Forma Adjusted EBITDA which is defined as Adjusted
EBITDA plus the fees that would have been earned under the TSA,
and in order to improve comparability, Pro Forma Adjusted
EBITDA further adjusts results so that periods contain the same
number of weeks.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (Dollars in thousands) (unaudited)
March 3, 2018 March 4, 2017 ASSETS Current assets: Cash and
cash equivalents $ 447,334 $ 245,410 Accounts receivable, net
1,869,100 1,771,126 Inventories, net of LIFO reserve of $581,090
and $607,326 1,799,539 1,789,541 Prepaid expenses and other current
assets 181,181 211,541 Current assets held for sale 438,137
1,047,670 Total current assets 4,735,291
5,065,288 Property, plant and equipment, net 1,431,246 1,526,462
Goodwill 1,421,120 1,682,847 Other intangibles, net 590,443 715,406
Deferred tax assets 594,019 1,505,564 Other assets 217,208 215,917
Noncurrent assets held for sale - 882,268
Total assets $ 8,989,327 $ 11,593,752
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
maturities of long-term debt and lease financing obligations $
20,761 $ 17,709 Accounts payable 1,651,363 1,613,909 Accrued
salaries, wages and other current liabilities 1,231,736 1,340,947
Current liabilities held for sale 560,205
32,683 Total current liabilities 3,464,065 3,005,248
Long-term debt, less current maturities 3,340,099 3,235,888 Lease
financing obligations, less current maturities 30,775 37,204 Other
noncurrent liabilities 553,378 643,950 Noncurrent liabilities held
for sale - 4,057,392 Total liabilities
7,388,317 10,979,682 Commitments and contingencies - -
Stockholders' equity: Common stock 1,067,318 1,053,690 Additional
paid-in capital 4,850,712 4,839,854 Accumulated deficit (4,282,471
) (5,237,157 ) Accumulated other comprehensive loss (34,549
) (42,317 ) Total stockholders' equity 1,601,010
614,070 Total liabilities and stockholders'
equity $ 8,989,327 $ 11,593,752 RITE
AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited)
Thirteen weeks endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
Revenues $ 5,394,264 $ 5,903,385 Costs and expenses: Cost of
revenues 4,124,498 4,554,328 Selling, general and administrative
expenses 1,181,964 1,253,144 Lease termination and impairment
charges 47,675 25,575 Goodwill impairment 261,727 - Interest
expense 50,603 53,391 Gain on sale of assets, net (5,249 )
(6,261 ) 5,661,218 5,880,177
(Loss) income from continuing operations before
income taxes (266,954 ) 23,208 Income tax expense 216,719
48,262 Net loss from continuing operations
(483,673 ) (25,054 ) Net income from discontinued operations, net
of tax 1,250,745 3,912 Net income
(loss) $ 767,072 $ (21,142 ) Basic and
diluted income (loss) per share: Numerator for income (loss)
per share:
Net loss from continuing operations
attributable to common stockholders - basic and diluted
$ (483,673 ) $ (25,054 )
Net income from discontinued operations
attributable to common stockholders - basic and diluted
1,250,745 3,912 Income (loss)
attributable to common stockholders - basic and diluted $ 767,072
$ (21,142 ) Denominator: Basic and
diluted weighted average shares 1,053,491
1,045,929 Basic and diluted (loss) income per share
Continuing operations $ (0.46 ) $ (0.02 ) Discontinued operations $
1.19 $ 0.00 Net basic and diluted income per share $
0.73 $ (0.02 ) RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars
in thousands, except per share amounts) (unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
Revenues $ 21,528,968 $ 22,927,540 Costs and expenses: Cost of
revenues 16,748,863 17,862,833 Selling, general and administrative
expenses 4,651,262 4,776,995 Lease termination and impairment
charges 58,765 45,778 Goodwill impairment 261,727 - Interest
expense 202,768 200,065 Walgreens Boots Alliance merger termination
fee (325,000 ) - Gain on sale of assets, net (25,872 )
(6,649 ) 21,572,513 22,879,022
(Loss) income from continuing operations before
income taxes (43,545 ) 48,518 Income tax expense 305,987
44,438 Net (loss) income from continuing
operations (349,532 ) 4,080 Net income (loss) from discontinued
operations, net of tax 1,293,002 (27 ) Net
income $ 943,470 $ 4,053 Basic
and diluted (loss) income per share: Numerator for income
per share:
Net (loss) income from continuing
operations attributable to common stockholders - basic and
diluted
$ (349,532 ) $ 4,080
Net income (loss) from discontinued
operations attributable to common stockholders - basic and
diluted
1,293,002 (27 ) Income attributable to common
stockholders - basic and diluted $ 943,470 $ 4,053
Denominator: Basic weighted average shares
1,049,628 1,044,427 Outstanding options and restricted shares, net
- 16,399 Diluted weighted
average shares 1,049,628 1,060,826
Basic income (loss) per share Continuing operations $ (0.33
) $ 0.00 Discontinued operations $ 1.23 $ (0.00 ) Net basic
income per share $ 0.90 $ 0.00 Diluted income
(loss) per share Continuing operations $ (0.33 ) $ 0.00
Discontinued operations $ 1.23 $ (0.00 ) Net diluted income
per share $ 0.90 $ 0.00 RITE AID
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS) (In thousands) (unaudited)
Thirteen weeks endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
Net income (loss) $ 767,072 $ (21,142 ) Other comprehensive income:
Defined benefit pension plans: Amortization of prior service cost,
net transition obligation and net actuarial losses included in net
periodic pension cost, net of $3,816 and $2,247 tax expense 5,712
3,421 Adjustment for implementation of ASU 2018-02, Income
Statement - Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income 513 - Total other
comprehensive income 6,225 3,421 Comprehensive
income (loss) $ 773,297 $ (17,721 ) RITE AID
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (In thousands) (unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
Net income $ 943,470 $ 4,053 Other comprehensive income: Defined
benefit pension plans: Amortization of prior service cost, net
transition obligation and net actuarial losses included in net
periodic pension cost, net of $4,842 and $3,600 tax expense 7,255
5,464 Adjustment for implementation of ASU 2018-02, Income
Statement - Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income 513 - Total other comprehensive
income 7,768 5,464 Comprehensive income $ 951,238 $
9,517 RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in
thousands) (unaudited)
Thirteen weeks endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
Retail Pharmacy Segment Revenues from continuing
operations (a) $ 3,999,430 $ 4,447,175 Cost of revenues from
continuing operations (a) 2,830,327 3,201,466
Gross profit from continuing operations 1,169,103 1,245,709
LIFO credit from continuing operations (49,220 )
(28,987 ) FIFO gross profit from continuing operations 1,119,883
1,216,722 Gross profit as a percentage of revenues -
continuing operations 29.23 % 28.01 % LIFO credit as a percentage
of revenues - continuing operations -1.23 % -0.65 % FIFO gross
profit as a percentage of revenues - continuing operations 28.00 %
27.36 % Selling, general and administrative expenses from
continuing operations 1,093,258 1,171,840
Selling, general and administrative
expenses as a percentage of revenues - continuing operations
27.34 % 26.35 % Cash interest expense 90,915 109,584
Non-cash interest expense 5,217 5,639
Total interest expense 96,132 115,223 Interest expense - continuing
operations 50,628 53,433 Interest
expense - discontinued operations 45,504 61,790 Adjusted
EBITDA - continuing operations 124,107 122,951 Adjusted EBITDA as a
percentage of revenues - continuing operations 3.10 % 2.76 %
Pharmacy Services Segment Revenues (a) $ 1,445,457 $
1,510,814 Cost of revenues (a) 1,344,794
1,407,466 Gross profit 100,663 103,348 Gross profit
as a percentage of revenues 6.96 % 6.84 % Adjusted EBITDA
33,297 44,619 Adjusted EBITDA as a percentage of revenues 2.30 %
2.95 %
(a) -
Revenues and cost of revenues include
$50,623 and $54,604 of inter-segment activity for the thirteen
weeks ended March 3, 2018 and the fourteen weeks ended March 4,
2017, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands)
(unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
Retail Pharmacy Segment Revenues from continuing
operations (a) $ 15,832,625 $ 16,766,620 Cost of revenues from
continuing operations (a) 11,460,252
12,094,645 Gross profit from continuing operations 4,372,373
4,671,975 LIFO credit from continuing operations (28,827 )
(3,721 ) FIFO gross profit from continuing operations
4,343,546 4,668,254 Gross profit as a percentage of revenues
- continuing operations 27.62 % 27.86 % LIFO credit as a percentage
of revenues - continuing operations -0.18 % -0.02 % FIFO gross
profit as a percentage of revenues - continuing operations 27.43 %
27.84 % Selling, general and administrative expenses from
continuing operations 4,328,567 4,483,496
Selling, general and administrative
expenses as a percentage of revenues - continuing operations
27.34 % 26.74 % Cash interest expense 404,491 410,386
Non-cash interest expense 21,566 21,612
Total interest expense 426,057 431,998 Interest expense -
continuing operations 201,756 200,072
Interest expense - discontinued operations 224,301 231,926
Adjusted EBITDA - continuing operations 388,360 551,816 Adjusted
EBITDA as a percentage of revenues - continuing operations 2.45 %
3.29 %
Pharmacy Services Segment Revenues (a)
$ 5,896,669 $ 6,393,884 Cost of revenues (a) 5,488,937
6,001,152 Gross profit 407,732 392,732
Gross profit as a percentage of revenues 6.91 % 6.14 %
Adjusted EBITDA 171,534 188,235 Adjusted EBITDA as a percentage of
revenues 2.91 % 2.94 %
(a) -
Revenues and cost of revenues include
$200,326 and $232,964 of inter-segment activity for the fifty-two
weeks ended March 3, 2018 and the fifty-three weeks ended March 4,
2017, 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 endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
Reconciliation of net loss to adjusted EBITDA: Net
loss - continuing operations $ (483,673 ) $ (25,054 ) Adjustments:
Interest expense 50,603 53,391 Income tax expense 216,719 48,262
Depreciation and amortization 93,609 102,906 LIFO credit (49,220 )
(28,987 ) Lease termination and impairment charges 47,675 25,575
Goodwill impairment 261,727 - Other 19,964
(8,523 ) Adjusted EBITDA - continuing operations $ 157,404 $
167,570 Percent of revenues - continuing operations 2.92 % 2.84 %
Pro-forma Adjustments: Adjustment for additional week
$ - $ (10,800 ) Adjustment to reflect a full TSA fee 15,800
24,000 Pro Forma Adjusted EBITDA - continuing
operations $ 173,204 $ 180,770 RITE AID
CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA (In
thousands) (unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
Reconciliation of net (loss) income to adjusted
EBITDA: Net (loss) income - continuing operations $ (349,532 ) $
4,080 Adjustments: Interest expense 202,768 200,065 Income tax
expense 305,987 44,438 Depreciation and amortization 386,057
407,366 LIFO credit (28,827 ) (3,721 ) Lease termination and
impairment charges 58,765 45,778 Goodwill impairment 261,727 -
Walgreens Boots Alliance merger termination fee (325,000 ) - Other
47,949 42,045 Adjusted EBITDA -
continuing operations $ 559,894 $ 740,051 Percent of revenues -
continuing operations 2.60 % 3.23 % Pro-forma
Adjustments: Adjustment for additional week $ - $ (10,800 )
Adjustment to reflect a full TSA fee 87,600
96,000 Pro Forma Adjusted EBITDA - continuing operations $
647,494 $ 825,251 RITE AID CORPORATION
AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET (LOSS)
INCOME (Dollars in thousands, except per share amounts) (unaudited)
Thirteen weeks endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
Net loss from continuing operations $ (483,673 ) $ (25,054 )
Add back - Income tax expense 216,719 48,262
(Loss) income before income taxes - continuing operations
(266,954 ) 23,208 Adjustments: Amortization of EnvisionRx
intangible assets 19,139 20,805 LIFO credits (49,220 ) (28,987 )
Goodwill Impairment 261,727 - Merger and Acquisition-related costs
6,885 7,944 Adjusted (loss)
income before income taxes - continuing operations (28,423 ) 22,970
Adjusted income tax (benefit) expense (a) (18,143 )
3,160 Adjusted net (loss) income from continuing
operations $ (10,280 ) $ 19,810 Adjusted net income
(loss) per diluted share - continuing operations: Numerator
for adjusted net (loss) income per diluted share: Adjusted net
(loss) income from continuing operations $ (10,280 ) $ 19,810
Denominator: Basic and diluted weighted
average shares 1,053,491 1,045,929
Net loss from continuing operations per
diluted share - continuing operations
$ (0.46 ) $ (0.02 ) Adjusted net (loss) income per
diluted share - continuing operations $ (0.01 ) $ 0.02
(a)
The fiscal year 2018 and 2017 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
March 3, 2018 and the fourteen weeks ended March 4, 2017,
respectively.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET (LOSS) INCOME (Dollars in thousands,
except per share amounts) (unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
Net (loss) income from continuing operations $ (349,532 ) $
4,080 Add back - Income tax expense 305,987
44,438 Income before income taxes - continuing operations
(43,545 ) 48,518 Adjustments: Amortization of EnvisionRx
intangible assets 78,554 83,022 LIFO credits (28,827 ) (3,721 )
Goodwill Impairment 261,727 - Merger and Acquisition-related costs
24,283 14,066 Walgreens Boots Alliance merger termination fee
(325,000 ) - Adjusted (loss) income
before income taxes - continuing operations (32,808 ) 141,885
Adjusted income tax (benefit) expense (a) (12,570 )
57,344 Adjusted net (loss) income from continuing
operations $ (20,238 ) $ 84,541 Adjusted net (loss)
income per diluted share - continuing operations: Numerator
for adjusted net (loss) income per diluted share: Adjusted net
(loss) income from continuing operations $ (20,238 ) $ 84,541
Denominator: Basic weighted average
shares 1,049,628 1,044,427 Outstanding options and restricted
shares, net - 16,399 Diluted
weighted average shares 1,049,628 1,060,826
Net (loss) income from continuing
operations per diluted share - continuing operations
$ (0.33 ) $ 0.00 Adjusted net (loss) income per diluted
share - continuing operations $ (0.02 ) $ 0.08
(a)
The fiscal year 2018 and 2017 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 fifty-two weeks ended
March 3, 2018 and the fifty-three weeks ended March 4, 2017,
respectively.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
(unaudited)
Thirteen weeks endedMarch 3, 2018
Fourteen weeks endedMarch 4, 2017
OPERATING ACTIVITIES: Net income (loss) $ 767,072 $
(21,142 ) Net income from discontinued operations, net of tax
1,250,745 3,912 Net loss from
continuing operations $ (483,673 ) $ (25,054 ) Adjustments to
reconcile to net cash provided by (used in) operating activities of
continuing operations: Depreciation and amortization 93,609 102,906
Lease termination and impairment charges 47,675 25,575 Goodwill
impairment 261,727 - LIFO credits (49,220 ) (28,987 ) Gain on sale
of assets, net (5,249 ) (6,261 ) Stock-based compensation expense
3,243 (13,284 ) Changes in deferred taxes 161,814 28,873 Excess tax
benefit on stock options and restricted stock - 3,266 Changes in
operating assets and liabilities: Accounts receivable (329,616 )
(78,070 ) Inventories 103,566 77,878 Accounts payable 92,570
(138,724 ) Other assets and liabilities, net 190,574
37,967 Net cash provided by (used in) operating
activities of continuing operations 87,020 (13,915 ) INVESTING
ACTIVITIES: Payments for property, plant and equipment (45,063 )
(56,426 ) Intangible assets acquired (8,684 ) (3,662 ) Proceeds
from insured loss 612 - Proceeds from dispositions of assets and
investments 8,332 6,635 Net cash used
in investing activities of continuing operations (44,803 ) (53,453
) FINANCING ACTIVITIES: Net (payments to) proceeds from revolver
(920 ) 50,000 Principal payments on long-term debt (2,590 ) (3,860
) Change in zero balance cash accounts 8,011 12,395 Net proceeds
from the issuance of common stock 1,380 2,539 Excess tax benefit on
stock options and restricted stock - (3,266 )
Net cash provided by financing activities of continuing operations
5,881 57,808 Cash flows from
discontinued operations: Operating activities of discontinued
operations (182,832 ) 74,325 Investing activities of discontinued
operations 3,307,047 (38,430 ) Financing activities of discontinued
operations (2,894,779 ) (953 ) Net cash provided by
discontinued operations 229,436 34,942
Increase in cash and cash equivalents 277,534 25,382 Cash and cash
equivalents, beginning of period 169,800
220,028 Cash and cash equivalents, end of period $ 447,334
$ 245,410 RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars
in thousands) (unaudited)
Fifty-two weeks endedMarch 3, 2018
Fifty-three weeks endedMarch 4, 2017
OPERATING ACTIVITIES: Net income $ 943,470 $ 4,053
Net income (loss) from discontinued operations, net of tax
1,293,002 (27 ) Net (loss) income from continuing
operations $ (349,532 ) $ 4,080 Adjustments to reconcile to net
cash provided by operating activities of continuing operations:
Depreciation and amortization 386,057 407,366 Lease termination and
impairment charges 58,765 45,778 Goodwill impairment 261,727 - LIFO
credits (28,827 ) (3,721 ) Gain on sale of assets, net (25,872 )
(6,649 ) Stock-based compensation expense 25,793 23,482 Changes in
deferred taxes 260,411 35,038 Excess tax benefit on stock options
and restricted stock - (543 ) Changes in operating assets and
liabilities: Accounts receivable (349,481 ) (159,590 ) Inventories
18,835 (49,381 ) Accounts payable 211,511 39,542 Other assets and
liabilities, net 42,083 (152,375 ) Net cash
provided by operating activities of continuing operations 511,470
183,027 INVESTING ACTIVITIES: Payments for property, plant and
equipment (185,879 ) (254,149 ) Intangible assets acquired (28,885
) (39,648 ) Proceeds from insured loss 4,239 - Proceeds from
dispositions of assets and investments 27,586
16,852 Net cash used in investing activities of continuing
operations (182,939 ) (276,945 ) FINANCING ACTIVITIES: Net
(payments to) proceeds from revolver (265,000 ) 330,000 Principal
payments on long-term debt (9,882 ) (16,588 ) Change in zero
balance cash accounts 35,605 43,080 Net proceeds from the issuance
of common stock 5,796 6,951 Excess tax benefit on stock options and
restricted stock - 543 Payments for taxes related to net share
settlement of equity awards (4,103 ) (6,254 ) Net
cash (used in) provided by financing activities of continuing
operations (237,584 ) 357,732 Cash flows from
discontinued operations: Operating activities of discontinued
operations (245,126 ) 49,090 Investing activities of discontinued
operations 3,496,222 (187,314 ) Financing activities of
discontinued operations (3,140,119 ) (4,651 ) Net
cash provided by (used in) discontinued operations 110,977
(142,875 ) Increase in cash and cash equivalents
201,924 120,939 Cash and cash equivalents, beginning of period
245,410 124,471 Cash and cash
equivalents, end of period $ 447,334 $ 245,410
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA
GUIDANCE YEAR ENDING MARCH 2, 2019 (In thousands) (unaudited)
Guidance Range Low High
Total Revenues $ 21,700,000 $ 22,100,000 Same store sales
0.00 % 1.00 % Gross Capital Expenditures $ 250,000 $ 250,000
Reconciliation of net loss to adjusted EBITDA: Net
loss $ (95,000 ) $ (40,000 ) Adjustments: Interest expense 210,000
210,000 Income tax benefit (15,000 ) (10,000 ) Depreciation and
amortization 380,000 380,000 LIFO charge 35,000 35,000 Loss on debt
retirement 15,000 15,000 Store closing and impairment charges
40,000 40,000 Other 45,000 45,000
Adjusted EBITDA
$ 615,000 $ 675,000 RITE AID
CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET INCOME GUIDANCE
YEAR ENDING MARCH 2, 2019 (In thousands) (unaudited)
Guidance Range Low High Net loss
$ (95,000 ) $ (40,000 ) Add back - Income tax benefit
(15,000 ) (10,000 ) Loss before income taxes (110,000 )
(50,000 ) Adjustments: Amortization of EnvisionRx intangible
assets 85,000 85,000 LIFO charge 35,000 35,000 Loss on debt
retirements 15,000 15,000
Adjusted income before adjusted income taxes 25,000 85,000
Adjusted income tax expense 7,000 24,000
Adjusted net income $ 18,000 $ 61,000
Diluted adjusted net income per share $ 0.02 $ 0.06
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180412005597/en/
Rite Aid CorporationINVESTORS:Byron Purcell,
717-975-5809investor@riteaid.comorMEDIA:Susan Henderson,
717-730-7766
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Apr 2023 to Apr 2024