- Revenues Increased 11.5 Percent – Driven by Growth in Both
Retail Pharmacy and Pharmacy Services Segments
- Front-End Market Share Increased by 130 Basis Points in
Dollars and 150 Basis Points in Unit Sales
- Net Loss from Continuing Operations Narrowed $65.5 Million
to $13.2 Million, or $0.25 Per Share
- Adjusted EBITDA from Continuing Operations Increased $17.4
Million or 13% to $151.6 Million
- Company Issues Revised Fiscal 2021 Guidance
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its second fiscal quarter ended August 29, 2020.
For the second quarter, net loss from continuing operations
narrowed $65.5 million to $13.2 million, or $0.25 loss per share.
Adjusted net income from continuing operations increased $7.2
million to $13.5 million, or $0.25 earnings per share, and Adjusted
EBITDA from continuing operations increased $17.4 million to $151.6
million, or 2.5 percent of revenues.
“We are pleased with our second quarter performance as we
delivered another quarter of strong results while making solid
progress on our bold, new RxEvolution strategy,” said Heyward
Donigan, president and chief executive officer, Rite Aid. “Our
retail pharmacists and associates have always been deeply committed
to our communities, and they are doing a great job protecting our
customers during a global pandemic. Thanks to them, Rite Aid
continues to gain retail market share and increase both same store
prescription count and front-end sales.”
“And at Elixir, our new leadership team is in place, and we are
making progress on modernizing and integrating our many assets. We
also officially launched our new Elixir brand and are focused on
enhancing our curated solutions, products, clinical and digital
capabilities. We grew membership in our Medicare Part D business
and benefitted from strong expense control, especially as we
continue to integrate Rite Aid and Elixir.”
“I am so proud of our 50,000 associates and how they are working
together each and every day to deliver operational excellence and
help our customers to not just get healthy, but get thriving.
Together, we are building a strong foundation for sustainable
growth and setting the stage to engage with consumers in ways never
before seen in health care. A whole new Rite Aid is coming to life,
and I’m excited to continue our journey to become a dominant
mid-market PBM, unlock the value of our pharmacists and revitalize
our retail and digital experiences.”
Consolidated Second Quarter Summary
(dollars in thousands)
Thirteen Week Period Ended
Twenty-six Week Period Ended
August 29, 2020
August 31, 2019
August 29, 2020
August 31, 2019
Revenues from continuing operations
$
5,981,970
$
5,366,264
$
12,009,346
$
10,738,853
Net loss from continuing operations
(13,197
)
(78,705
)
(85,899
)
(178,044
)
Adjusted EBITDA from continuing
operations
151,603
134,190
258,995
244,537
Revenues from continuing operations for the quarter were $5.98
billion compared to revenues from continuing operations of $5.37
billion in the prior year’s quarter. The increase in revenues was
driven by growth at both the Retail Pharmacy and Pharmacy Services
segments.
Net loss from continuing operations was $13.2 million, or $0.25
per share compared to last year’s second quarter net loss from
continuing operations of $78.7 million, or $1.48 per share. The
improvement in net loss is due primarily to an increase in Adjusted
EBITDA, decreases in income tax and interest expense, a LIFO credit
in the current quarter compared to a LIFO charge in the prior year
second quarter, and a gain on debt modification in the current
quarter. These benefits were partially offset by an increase in
lease termination and impairment charges caused by the wind down of
our RediClinic business in the current quarter.
Adjusted EBITDA from continuing operations was $151.6 million or
2.5% of revenues, compared to last year’s second quarter Adjusted
EBITDA of $134.2 million or 2.5% of revenues. The improvement in
Adjusted EBITDA was driven by increased revenues and a reduction in
SG&A expenses.
Retail Pharmacy Segment
(dollars in thousands)
Thirteen Week Period Ended
Twenty-six Week Period Ended
August 29, 2020
August 31, 2019
August 29, 2020
August 31, 2019
Revenues from continuing operations
$
4,017,912
$
3,848,104
$
8,141,183
$
7,712,912
Adjusted EBITDA from continuing
operations
122,340
92,673
185,322
176,681
Retail Pharmacy Segment revenues from continuing operations
increased 4.4 percent over the prior year quarter. Same store sales
from continuing operations for the second quarter increased 3.5
percent over the prior year period, consisting of a 4.6 percent
increase in front-end sales and a 2.3 percent increase in pharmacy
sales. Front-end same store sales, excluding cigarettes and tobacco
products, increased 6.1 percent, driven by increases across a
number of categories. The company increased its front-end market
share by 130 basis points in dollars and 150 basis points in unit
sales1. The number of prescriptions filled in same stores, adjusted
to 30-day equivalents, increased 2.6 percent over the prior year
period driven by increases in maintenance prescriptions, supported
by personalized Medication Therapy Management interventions and
home deliveries, partially offset by a reduction in acute
prescriptions of 4.9 percent.
Retail Pharmacy Segment Adjusted EBITDA from continuing
operations was $122.3 million or 3.0 percent of revenues for the
second quarter compared to last year’s second quarter Adjusted
EBITDA from continuing operations of $92.7 million or 2.4 percent
of revenues. The increase of $29.6 million is due to a reduction in
SG&A expenses and increased gross profit. SG&A expenses
were favorably impacted by changes to modernize our associate paid
time off (PTO) plans along with strong expense control. These
savings were partially offset by incremental costs associated with
the COVID-19 pandemic and the absence of Transition Services
Agreement income in the current quarter, as services under that
agreement have been completed. Gross profit benefited from
increased revenue, partially offset by continued pharmacy
reimbursement rate pressures that were not fully offset by generic
drug cost reductions.
1 – Source: IRI. Excludes tobacco, cigarettes, greeting cards
and online sales. For drug store channel during Rite Aid’s second
fiscal quarter.
Pharmacy Services Segment
(dollars in thousands)
Thirteen Week Period Ended
Twenty-six Week Period Ended
August 29, 2020
August 31, 2019
August 29, 2020
August 31, 2019
Revenues from continuing operations
$
2,038,378
$
1,579,069
$
4,015,624
$
3,145,361
Adjusted EBITDA from continuing
operations
29,263
41,517
73,673
67,856
Pharmacy Services Segment revenues were $2.0 billion, an
increase of 29.1 percent compared to the prior year period. The
increase in Pharmacy Services Segment revenues was due primarily to
a membership increase of 259,000 in Medicare Part D.
Pharmacy Services Segment Adjusted EBITDA from continuing
operations was $29.3 million or 1.4 percent of revenues for the
second quarter compared to last year’s second quarter Adjusted
EBITDA from continuing operations of $41.5 million or 2.6 percent
of revenues. The decrease in Adjusted EBITDA of $12.3 million was
primarily due to a reduction of $21.0 million in gross profit
related to a change in rebate aggregator at our MedTrak subsidiary.
The company anticipates that the new rebate aggregator contract
will drive improved gross profit for the company and savings for
its clients. The unfavorable gross profit reduction was partially
offset by increased revenues, improved pharmacy network management
and strong expense control.
Outlook for Fiscal 2021
Rite Aid Corporation is issuing revised fiscal 2021 guidance.
The company’s guidance assumes strong demand for flu immunizations,
continued improvement in pharmacy network management at Elixir and
savings from our previously announced cost reduction initiatives,
offset by continued reimbursement rate pressure and the impact of a
less severe cough, cold and flu season on OTC sales and related
prescriptions.
Rite Aid Corporation expects revenues to be between $23.5
billion and $24.0 billion in fiscal 2021 with same store sales
expected to range from an increase of 3.0 percent to an increase of
4.0 percent over fiscal 2020.
Net loss is expected to be between $190 million and $140
million.
Adjusted EBITDA is expected to be between $475 million and $525
million.
Adjusted net (loss) income per share is expected to be between
$(0.67) and $0.09.
Capital expenditures are expected to be approximately $275
million.
Free cash flow is expected to be between $110 million and $160
million.
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://www.riteaid.com/corporate/investor-relations/presentations.
The telephone replay will be available beginning at 12 p.m. Eastern
Time today and ending at 11:59 p.m. Eastern Time on, Sept. 26,
2020. To access the replay of the call, telephone (800) 585-8367 or
(416) 621-4642 and enter the seven-digit reservation number
6691435. The webcast replay of the call will also be available at
https://www.riteaid.com/corporate/investor-relations/presentations
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 more than 1.6 million
Americans daily. 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 2,400 retail pharmacy locations across 18
states. Through Elixir, we provide pharmacy benefits and services
to approximately 4 million 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 2021, the
ability to generate positive free cash flows in fiscal 2021; the
continued impact of the recent global coronavirus (COVID-19)
pandemic on Rite Aid’s business; 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: the impact of COVID-19 on our
workforce, operations, stores, expenses, and supply chain, and the
operations of our customers, suppliers and business partners; our
ability to successfully implement our new business strategy
(including any delays and adjustments as a result of COVID-19) and
improve the operating performance of our stores; our high level of
indebtedness and our ability to satisfy our obligations and the
other covenants contained in our debt agreements; general
competitive, economic, industry, market, political (including
healthcare reform) and regulatory conditions, civil unrest
(including any resulting store closures, damage, or loss of
inventory), 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 organizational restructuring within our anticipated
timeframe, if at all; outcomes of legal and regulatory matters; 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, in Item 1A (Risk Factors) of our Quarterly
Report on Form 10-Q filed on July 2, 2020 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
place undue reliance 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 2021 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, the duration and spread of the
outbreak, its severity, the actions to contain the virus or treat
its impact (such as travel bans and restrictions, quarantines,
shelter-in-place orders and shutdowns), including the reinstitution
of more stringent regulations, 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 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.
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 and 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 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 settlement,
gains and losses on debt retirements and modifications, LIFO
adjustments, goodwill and intangible asset impairment charges,
restructuring-related costs and the WBA merger 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 and intangible asset impairment
charges, inventory write-downs related to store closings, gains or
losses on debt retirements and modifications, the WBA merger
termination fee, and other items (including stock-based
compensation expense, merger and acquisition-related costs,
non-recurring litigation settlement, severance,
restructuring-related costs and costs related to facility closures
and gain or loss on sale of assets). 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 CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited)
August 29, 2020 February 29, 2020 ASSETS Current assets: Cash and
cash equivalents
$
92,730
$
218,180
Accounts receivable, net
1,920,866
1,286,785
Inventories, net of LIFO reserve of $518,824 and $539,640
1,937,953
1,921,604
Prepaid expenses and other current assets
114,148
181,794
Current assets held for sale
-
92,278
Total current assets
4,065,697
3,700,641
Property, plant and equipment, net
1,140,658
1,215,838
Operating lease right-of-use assets
2,860,710
2,903,256
Goodwill
1,108,136
1,108,136
Other intangibles, net
305,730
359,491
Deferred tax assets
16,680
16,680
Other assets
122,588
148,327
Total assets
$
9,620,199
$
9,452,369
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt and lease financing
obligations
$
6,902
$
8,840
Accounts payable
1,448,682
1,484,081
Accrued salaries, wages and other current liabilities
637,610
746,318
Current portion of operating lease liabilities
487,844
490,161
Current liabilities held for sale
-
37,063
Total current liabilities
2,581,038
2,766,463
Long-term debt, less current maturities
3,506,708
3,077,268
Long-term operating lease liabilities
2,657,891
2,710,347
Lease financing obligations, less current maturities
17,935
19,326
Other noncurrent liabilities
253,589
204,438
Total liabilities
9,017,161
8,777,842
Commitments and contingencies
-
-
Stockholders' equity: Common stock
55,224
54,716
Additional paid-in capital
5,893,590
5,890,903
Accumulated deficit
(5,298,932
)
(5,222,194
)
Accumulated other comprehensive loss
(46,844
)
(48,898
)
Total stockholders' equity
603,038
674,527
Total liabilities and stockholders' equity
$
9,620,199
$
9,452,369
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks
endedAugust 29, 2020 Thirteen weeks endedAugust 31, 2019 Revenues
$
5,981,970
$
5,366,264
Costs and expenses: Cost of revenues
4,821,625
4,221,825
Selling, general and administrative expenses
1,116,142
1,135,530
Lease termination and impairment charges
11,528
1,471
Interest expense
50,007
60,102
Gain on debt modification, net
(5,274
)
-
Loss (gain) on sale of assets, net
1,092
(1,587
)
5,995,120
5,417,341
Loss from continuing operations before income taxes
(13,150
)
(51,077
)
Income tax expense
47
27,628
Net loss from continuing operations
(13,197
)
(78,705
)
Net loss from discontinued operations, net of tax
-
(574
)
Net loss
$
(13,197
)
$
(79,279
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(13,197
)
$
(78,705
)
Net loss from discontinued operations attributable to common
stockholders - basic and diluted
-
(574
)
Loss attributable to common stockholders - basic and diluted
$
(13,197
)
$
(79,279
)
Denominator: Basic and diluted weighted
average shares
53,573
53,041
Basic and diluted loss per share Continuing operations
$
(0.25
)
$
(1.48
)
Discontinued operations
$
-
$
(0.01
)
Net basic and diluted loss per share
$
(0.25
)
$
(1.49
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Twenty-six weeks
endedAugust 29, 2020 Twenty-six weeks endedAugust 31, 2019 Revenues
$
12,009,346
$
10,738,853
Costs and expenses: Cost of revenues
9,650,682
8,467,691
Selling, general and administrative expenses
2,313,289
2,298,182
Lease termination and impairment charges
15,281
1,949
Intangible asset impairment charges
29,852
-
Interest expense
100,554
118,372
Gain on debt modification, net
(5,274
)
-
Gain on sale of assets, net
(1,168
)
(4,299
)
12,103,216
10,881,895
Loss from continuing operations before income taxes
(93,870
)
(143,042
)
Income tax (benefit) expense
(7,971
)
35,002
Net loss from continuing operations
(85,899
)
(178,044
)
Net income (loss) from discontinued operations, net of tax
9,161
(894
)
Net loss
$
(76,738
)
$
(178,938
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(85,899
)
$
(178,044
)
Net income (loss) from discontinued operations attributable to
common stockholders - basic and diluted
9,161
(894
)
Loss attributable to common stockholders - basic and diluted
$
(76,738
)
$
(178,938
)
Denominator: Basic and diluted weighted
average shares
53,528
53,084
Basic and diluted loss per share Continuing operations
$
(1.60
)
$
(3.35
)
Discontinued operations
$
0.17
$
(0.02
)
Net basic and diluted loss per share
$
(1.43
)
$
(3.37
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 29, 2020 Thirteen weeks
endedAugust 31, 2019 OPERATING ACTIVITIES: Net loss
$
(13,197
)
$
(79,279
)
Net loss from discontinued operations, net of tax
-
(574
)
Net loss from continuing operations
$
(13,197
)
$
(78,705
)
Adjustments to reconcile to net cash used in operating activities
of continuing operations: Depreciation and amortization
87,117
83,044
Lease termination and impairment charges
11,528
1,471
LIFO (credit) charge
(8,750
)
7,504
Loss (gain) on sale of assets, net
1,092
(1,587
)
Stock-based compensation expense
3,936
4,712
Gain on debt modification, net
(5,274
)
-
Changes in deferred taxes
-
26,979
Changes in operating assets and liabilities: Accounts receivable
(327,919
)
(135,704
)
Inventories
(39,174
)
(100,536
)
Accounts payable
(11,372
)
(9,730
)
Operating lease right-of-use assets and operating lease liabilities
(11,898
)
46,875
Other assets
(19,664
)
(67,187
)
Other liabilities
(24,747
)
(55,935
)
Net cash used in operating activities of continuing operations
(358,322
)
(278,799
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(34,626
)
(43,079
)
Intangible assets acquired
(11,857
)
(7,498
)
Proceeds from insured loss
12,500
-
Proceeds from dispositions of assets and investments
3,155
3,765
Proceeds from sale-leaseback transactions
8,461
-
Net cash used in investing activities of continuing operations
(22,367
)
(46,812
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
849,918
-
Net proceeds from revolver
408,000
250,000
Principal payments on long-term debt
(1,054,884
)
(1,671
)
Change in zero balance cash accounts
(262
)
18,325
Payments for taxes related to net share settlement of equity awards
(2,002
)
(791
)
Financing fees paid for early debt redemption
(2,399
)
-
Deferred financing costs paid
(13,268
)
(129
)
Net cash provided by financing activities of continuing operations
185,103
265,734
Cash flows from discontinued operations: Operating activities of
discontinued operations
-
11,605
Investing activities of discontinued operations
-
-
Net cash provided by discontinued operations
-
11,605
Decrease in cash and cash equivalents
(195,586
)
(48,272
)
Cash and cash equivalents, beginning of period
288,316
190,453
Cash and cash equivalents, end of period
$
92,730
$
142,181
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Twenty-six weeks endedAugust 29, 2020 Twenty-six
weeks endedAugust 31, 2019 OPERATING ACTIVITIES: Net
loss
$
(76,738
)
$
(178,938
)
Net income (loss) from discontinued operations, net of tax
9,161
(894
)
Net loss from continuing operations
$
(85,899
)
$
(178,044
)
Adjustments to reconcile to net cash used in operating activities
of continuing operations: Depreciation and amortization
166,220
166,970
Lease termination and impairment charges
15,281
1,949
Intangible asset impairment charges
29,852
-
LIFO (credit) charge
(20,816
)
14,993
Gain on sale of assets, net
(1,168
)
(4,299
)
Stock-based compensation expense
5,810
10,092
Gain on debt modification, net
(5,274
)
-
Changes in deferred taxes
-
26,979
Changes in operating assets and liabilities: Accounts receivable
(636,555
)
(153,269
)
Inventories
4,473
(111,990
)
Accounts payable
1,948
(85,623
)
Operating lease right-of-use assets and operating lease liabilities
(18,493
)
34,982
Other assets
79,513
(44,674
)
Other liabilities
(11,484
)
(8,104
)
Net cash used in operating activities of continuing operations
(476,592
)
(330,038
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(63,085
)
(84,060
)
Intangible assets acquired
(22,572
)
(15,708
)
Proceeds from insured loss
12,500
-
Proceeds from dispositions of assets and investments
5,910
4,423
Proceeds from sale-leaseback transactions
8,461
-
Net cash used in investing activities of continuing operations
(58,786
)
(95,345
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
849,918
-
Net proceeds from revolver
650,000
375,000
Principal payments on long-term debt
(1,056,182
)
(3,451
)
Change in zero balance cash accounts
(26,829
)
54,712
Payments for taxes related to net share settlement of equity awards
(2,101
)
(986
)
Financing fees paid for early debt redemption
(2,399
)
-
Deferred financing costs paid
(14,600
)
(315
)
Net cash provided by financing activities of continuing operations
397,807
424,960
Cash flows from discontinued operations: Operating activities of
discontinued operations
(82,189
)
(2,272
)
Investing activities of discontinued operations
94,310
523
Net cash provided by (used in) discontinued operations
12,121
(1,749
)
Decrease in cash and cash equivalents
(125,450
)
(2,172
)
Cash and cash equivalents, beginning of period
218,180
144,353
Cash and cash equivalents, end of period
$
92,730
$
142,181
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 29, 2020 Thirteen weeks
endedAugust 31, 2019
Retail Pharmacy Segment Revenues
from continuing operations (a)
$
4,017,912
$
3,848,104
Cost of revenues from continuing operations (a)
2,955,999
2,815,660
Gross profit from continuing operations
1,061,913
1,032,444
LIFO (credit) charge from continuing operations
(8,750
)
7,504
FIFO gross profit from continuing operations
1,053,163
1,039,948
Adjusted EBITDA gross profit from continuing operations
1,056,222
1,045,257
Gross profit as a percentage of revenues - continuing
operations
26.43
%
26.83
%
LIFO (credit) charge as a percentage of revenues - continuing
operations
-0.22
%
0.20
%
FIFO gross profit as a percentage of revenues - continuing
operations
26.21
%
27.02
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
26.29
%
27.16
%
Selling, general and administrative expenses from continuing
operations
1,030,075
1,044,818
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
933,882
952,584
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
25.64
%
27.15
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
23.24
%
24.75
%
Cash interest expense
46,767
56,304
Non-cash interest expense
3,240
3,798
Total interest expense
50,007
60,102
Interest expense - continuing operations
50,007
60,102
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
122,340
92,673
Adjusted EBITDA as a percentage of revenues - continuing operations
3.04
%
2.41
%
Pharmacy Services Segment Revenues (a)
$
2,038,378
$
1,579,069
Cost of revenues (a)
1,939,946
1,467,074
Gross profit
98,432
111,995
Gross profit as a percentage of revenues
4.83
%
7.09
%
Adjusted EBITDA
29,263
41,517
Adjusted EBITDA as a percentage of revenues
1.44
%
2.63
%
(a) -
Revenues and cost of revenues include $74,320 and $60,909 of
inter-segment activity for the thirteen weeks ended August 29, 2020
and August 31, 2019, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands)
(unaudited) Twenty-six weeks endedAugust 29, 2020
Twenty-six weeks endedAugust 31, 2019
Retail Pharmacy
Segment Revenues from continuing operations (a)
$
8,141,183
$
7,712,912
Cost of revenues from continuing operations (a)
5,997,734
5,649,973
Gross profit from continuing operations
2,143,449
2,062,939
LIFO (credit) charge from continuing operations
(20,816
)
14,993
FIFO gross profit from continuing operations
2,122,633
2,077,932
Adjusted EBITDA gross profit from continuing operations
2,154,649
2,085,520
Gross profit as a percentage of revenues - continuing
operations
26.33
%
26.75
%
LIFO (credit) charge as a percentage of revenues - continuing
operations
-0.26
%
0.19
%
FIFO gross profit as a percentage of revenues - continuing
operations
26.07
%
26.94
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
26.47
%
27.04
%
Selling, general and administrative expenses from continuing
operations
2,139,051
2,116,143
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
1,969,327
1,908,839
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
26.27
%
27.44
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.19
%
24.75
%
Cash interest expense
94,135
110,914
Non-cash interest expense
6,419
7,458
Total interest expense
100,554
118,372
Interest expense - continuing operations
100,554
118,372
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
185,322
176,681
Adjusted EBITDA as a percentage of revenues - continuing operations
2.28
%
2.29
%
Pharmacy Services Segment Revenues (a)
$
4,015,624
$
3,145,361
Cost of revenues (a)
3,800,409
2,937,138
Gross profit
215,215
208,223
Gross profit as a percentage of revenues
5.36
%
6.62
%
Adjusted EBITDA
73,673
67,856
Adjusted EBITDA as a percentage of revenues
1.83
%
2.16
%
(a) -
Revenues and cost of revenues include $147,461 and $119,420 of
inter-segment activity for the twenty-six weeks ended August 29,
2020 and August 31, 2019, 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 29, 2020 Thirteen weeks endedAugust 31, 2019
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(13,197
)
$
(78,705
)
Adjustments: Interest expense
50,007
60,102
Income tax expense
47
27,628
Depreciation and amortization
87,117
83,044
LIFO (credit) charge
(8,750
)
7,504
Lease termination and impairment charges
11,528
1,471
Gain on debt modification, net
(5,274
)
-
Merger and Acquisition-related costs
-
514
Stock-based compensation expense
3,936
4,712
Restructuring-related costs
23,186
25,145
Inventory write-downs related to store closings
1,058
3,149
Loss (gain) on sale of assets, net
1,092
(1,587
)
Other
853
1,213
Adjusted EBITDA - continuing operations
$
151,603
$
134,190
Percent of revenues - continuing operations
2.53
%
2.50
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
(unaudited) Twenty-six weeks endedAugust 29,
2020 Twenty-six weeks endedAugust 31, 2019
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(85,899
)
$
(178,044
)
Adjustments: Interest expense
100,554
118,372
Income tax (benefit) expense
(7,971
)
35,002
Depreciation and amortization
166,220
166,970
LIFO (credit) charge
(20,816
)
14,993
Lease termination and impairment charges
15,281
1,949
Intangible asset impairment charges
29,852
-
Gain on debt modification, net
(5,274
)
-
Merger and Acquisition-related costs
-
3,599
Stock-based compensation expense
5,810
10,092
Restructuring-related costs
58,921
68,495
Inventory write-downs related to store closings
1,892
3,990
Gain on sale of assets, net
(1,168
)
(4,299
)
Other
1,593
3,418
Adjusted EBITDA - continuing operations
$
258,995
$
244,537
Percent of revenues - continuing operations
2.16
%
2.28
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks endedAugust 29,
2020 Thirteen weeks endedAugust 31, 2019 Net loss from
continuing operations
$
(13,197
)
$
(78,705
)
Add back - Income tax expense
47
27,628
Loss before income taxes - continuing operations
(13,150
)
(51,077
)
Adjustments: Amortization expense
22,695
26,596
LIFO (credit) charge
(8,750
)
7,504
Gain on debt modification, net
(5,274
)
-
Merger and Acquisition-related costs
-
514
Restructuring-related costs
23,186
25,145
Adjusted income before income taxes - continuing operations
18,707
8,682
Adjusted income tax expense (a)
5,171
2,394
Adjusted net income from continuing operations
$
13,536
$
6,288
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
13,536
$
6,288
Denominator: Basic weighted average shares
53,573
53,041
Outstanding options and restricted shares, net
842
651
Diluted weighted average shares
54,415
53,692
Net loss from continuing operations per diluted share -
continuing operations
$
(0.25
)
$
(1.48
)
Adjusted net income per diluted share - continuing
operations
$
0.25
$
0.12
(a)
The fiscal year 2021 and 2020 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 29, 2020 and August
31, 2019, respectively. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ADJUSTED NET INCOME (LOSS) (Dollars in
thousands, except per share amounts) (unaudited)
Twenty-six weeks endedAugust 29, 2020 Twenty-six weeks endedAugust
31, 2019 Net loss from continuing operations
$
(85,899
)
$
(178,044
)
Add back - Income tax (benefit) expense
(7,971
)
35,002
Loss before income taxes - continuing operations
(93,870
)
(143,042
)
Adjustments: Amortization expense
47,115
54,256
LIFO (credit) charge
(20,816
)
14,993
Intangible asset impairment charges
29,852
-
Gain on debt modification, net
(5,274
)
-
Merger and Acquisition-related costs
-
3,599
Restructuring-related costs
58,921
68,495
Adjusted income (loss) before income taxes - continuing
operations
15,928
(1,699
)
Adjusted income tax expense (benefit) (a)
4,402
(468
)
Adjusted net income (loss) from continuing operations
$
11,526
$
(1,231
)
Adjusted net income (loss) per diluted share - continuing
operations: Numerator for adjusted net income (loss) per
diluted share: Adjusted net income (loss) from continuing
operations
$
11,526
$
(1,231
)
Denominator: Basic weighted average shares
53,528
53,084
Outstanding options and restricted shares, net
775
-
Diluted weighted average shares
54,303
53,084
Net loss from continuing operations per diluted share -
continuing operations
$
(1.60
)
$
(3.35
)
Adjusted net income (loss) per diluted share -
continuing operations
$
0.21
$
(0.02
)
(a)
The fiscal year 2021 and 2020 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 29, 2020 and August
31, 2019, 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 29,
2020 Thirteen weeks endedAugust 31, 2019
Reconciliation of adjusted EBITDA gross profit: Revenues
$
4,017,912
$
3,848,104
Gross Profit
1,061,913
1,032,444
Addback: LIFO (credit) charge
(8,750
)
7,504
Depreciation and amortization (cost of goods sold portion only)
2,167
2,205
Other
892
3,104
Adjusted EBITDA gross profit - continuing operations
$
1,056,222
$
1,045,257
Percent of revenues - continuing operations
26.29
%
27.16
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
4,017,912
$
3,848,104
Selling, general and administrative expenses
1,030,075
1,044,818
Less: Depreciation and amortization (SG&A portion only)
70,884
64,975
Stock-based compensation expense
3,631
4,432
Merger and Acquisition-related costs
-
514
Restructuring-related costs
20,441
21,055
Other
1,237
1,258
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
933,882
$
952,584
Percent of revenues - continuing operations
23.24
%
24.75
%
Adjusted EBITDA - continuing operations
$
122,340
$
92,673
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 weeks endedAugust 29, 2020 Twenty-six weeks
endedAugust 31, 2019 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
8,141,183
$
7,712,912
Gross Profit
2,143,449
2,062,939
Addback: LIFO (credit) charge
(20,816
)
14,993
Depreciation and amortization (cost of goods sold portion only)
4,830
4,468
Restructuring-related costs - SKU optimization charges
25,763
-
Other
1,423
3,120
Adjusted EBITDA gross profit - continuing operations
$
2,154,649
$
2,085,520
Percent of revenues - continuing operations
26.47
%
27.04
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
8,141,183
$
7,712,912
Selling, general and administrative expenses
2,139,051
2,116,143
Less: Depreciation and amortization (SG&A portion only)
131,793
130,014
Stock-based compensation expense
5,356
9,697
Merger and Acquisition-related costs
-
2,828
Restructuring-related costs
30,387
60,436
Other
2,188
4,329
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
1,969,327
$
1,908,839
Percent of revenues - continuing operations
24.19
%
24.75
%
Adjusted EBITDA - continuing operations
$
185,322
$
176,681
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 27, 2021 (In thousands) (unaudited)
Guidance Range Low High Total
Revenues
$
23,500,000
$
24,000,000
PBM Revenues
$
7,550,000
$
7,650,000
Same store sales
3.00
%
4.00
%
Gross Capital Expenditures
$
275,000
$
275,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(190,000
)
$
(140,000
)
Adjustments: Interest expense
202,000
202,000
Income tax benefit
(12,000
)
(7,000
)
Depreciation and amortization
338,000
338,000
LIFO credit
(38,000
)
(38,000
)
Lease termination and impairment charges
53,000
53,000
Intangible asset impairment charges
30,000
30,000
Gain on debt modification, net
(5,300
)
(5,300
)
Restructuring-related costs
75,000
75,000
Other
22,300
17,300
Adjusted EBITDA
$
475,000
$
525,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET (LOSS) INCOME
GUIDANCE YEAR ENDING FEBRUARY 27, 2021 (In thousands) (unaudited)
Guidance Range Low High
Net loss
$
(190,000
)
$
(140,000
)
Add back - income tax benefit
(12,000
)
(7,000
)
Loss before income taxes
(202,000
)
(147,000
)
Adjustments: Amortization expense
92,000
92,000
LIFO credit
(38,000
)
(38,000
)
Intangible asset impairment charges
30,000
30,000
Gain on debt modification, net
(5,300
)
(5,300
)
Restructuring-related costs
75,000
75,000
Adjusted (loss) income before adjusted income taxes
(48,300
)
6,700
Adjusted income tax (benefit) expense
(12,000
)
2,000
Adjusted net (loss) income
$
(36,300
)
$
4,700
Diluted adjusted net (loss) income per share
$
(0.67
)
$
0.09
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE TO FREE CASH FLOW
GUIDANCE YEAR ENDING FEBRUARY 27, 2021 (In thousands) (unaudited)
Guidance Range Low High
Adjusted EBITDA
$
475,000
$
525,000
Cash interest expense
(189,000
)
(189,000
)
Restructuring-related costs
(75,000
)
(75,000
)
Closed store rent
(26,000
)
(26,000
)
Working capital benefit
200,000
200,000
Cash flow from operations
385,000
435,000
Gross capital expenditures
(275,000
)
(275,000
)
Free cash flow
$
110,000
$
160,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200924005410/en/
INVESTORS: Trent Kruse (717) 975-3710 investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
Christopher.Savarese@riteaid.com
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