- Fourth Quarter Net Loss from
Continuing Operations of $255.6 Million or $0.24 Per Share,
Compared to the Prior Year Fourth Quarter Net Loss of $483.7
Million or $0.46 Per Share
- Fourth Quarter Net Loss from
Continuing Operations Includes $197 Million, or $0.19 Per Share of
Income Tax Expense Related to an Increase in the Valuation
Allowance Against the Company’s Deferred Tax Assets
- Fourth Quarter Adjusted Net Loss
from Continuing Operations of $13.3 Million or $0.01 Per Share,
Compared to the Prior Year Fourth Quarter Adjusted Net Loss of $7.8
Million or $0.01 Per Share
- Fourth Quarter Adjusted EBITDA from
Continuing Operations of $134.1 Million, Compared to the Prior Year
Fourth Quarter Adjusted EBITDA of $154.8 Million
- Completed Refinancing of Senior
Secured Credit Facility in the Fourth Quarter Which Extends Debt
Maturities and Improves Liquidity
- Provides Outlook for Fiscal
2020
- Rite Aid Board Approves 1-for-20
Stock Split Ratio
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its fourth quarter and fiscal year ended March 2,
2019.
For the fourth quarter, the company reported net loss from
continuing operations of $255.6 million, or $0.24 per share,
Adjusted net loss from continuing operations of $13.3 million, or
$0.01 per share, and Adjusted EBITDA from continuing operations of
$134.1 million, or 2.5 percent of revenues.
“In the fourth quarter, we continued generating critical
momentum in key areas of our business while taking important steps
to position Rite Aid for future growth” said Rite Aid CEO John
Standley. “Despite a mild flu season, we delivered our third
consecutive quarter of same-store pharmacy sales and prescription
count growth thanks to a record number of immunizations and other
script growth initiatives. We also increased Medicare Part D
membership within our EnvisionRxOptions PBM, which helped drive
revenue growth and a $4.5 million increase in Pharmacy Services
Segment Adjusted EBITDA. As we begin our new fiscal year, we’ll
look to build on this momentum as we continue transforming our
business to better align with our new operational footprint and
deliver greater value in the emerging value-based care marketplace.
These efforts will include a strong focus on driving positive
patient health outcomes, evolving our front-end business, expanding
our omni-channel capabilities and controlling costs to become a
more efficient and profitable company.”
Fourth Quarter Summary
Revenues from continuing operations for the fourth quarter were
$5.38 billion compared to revenues from continuing operations of
$5.39 billion in the prior year’s fourth quarter. Retail Pharmacy
Segment revenues were $3.97 billion and were flat compared to the
prior year period. Revenues in the Pharmacy Services Segment were
$1.46 billion, an increase of 1.2 percent compared to the prior
year period, which was due to an increase in Medicare Part D
membership.
Same store sales from Retail Pharmacy continuing operations for
the fourth quarter increased 0.7 percent over the prior year,
consisting of a 2.1 percent increase in pharmacy sales and a 1.9
percent decrease in front-end sales. Pharmacy sales were negatively
impacted by approximately 100 basis points as a result of new
generic introductions. The number of prescriptions filled in same
stores, adjusted to 30-day equivalents, increased 0.8 percent over
the prior year period as the company’s initiatives to drive script
growth more than offset the benefit of last year’s strong flu
season. Prescription sales from continuing operations accounted for
65.9 percent of total drugstore sales.
Net loss from continuing operations was $255.6 million or $0.24
per share compared to last year’s fourth quarter net loss from
continuing operations of $483.7 million or $0.46 per share. The
improvement in operating results was due primarily to a prior year
charge of $191.0 million, net of tax, for the impairment of
goodwill related to the Pharmacy Services Segment and lower income
tax expense. Income tax expense in the current year’s fourth
quarter was impacted by a $197.0 million charge related to an
increase in the valuation allowance against the company’s deferred
tax asset, while income tax expense in the prior year’s fourth
quarter included a charge of $325.0 million relating to the
revaluation of the company’s deferred tax assets as a result of the
2017 Tax Act. Other items impacting net loss from continuing
operations included a LIFO charge in the current year compared to a
LIFO credit in the prior year, and a decline in Adjusted
EBITDA.
Adjusted EBITDA from continuing operations was $134.1 million or
2.5 percent of revenues for the fourth quarter compared to Adjusted
EBITDA from continuing operations of $154.8 million or 2.9 percent
of revenues for the same period last year, a decrease of $20.8
million. The Retail Pharmacy Segment Adjusted EBITDA from
continuing operations decreased $25.3 million compared to the prior
year due primarily to weaker pharmacy gross profit caused by
reimbursement rate pressure that the company was not able to fully
offset with generic drug purchasing efficiencies and increases in
prescriptions filled in comparable stores. Also contributing to the
reduction in Adjusted EBITDA was a decline in front end same store
sales and increases in distribution costs caused partially by the
realignment of stores within Rite Aid’s distribution network. These
negative variances were partially offset by lower salaries and
benefits, a reduction in advertising expense and an increase in
Transition Services Agreement (“TSA”) fee income from Walgreens
Boots Alliance (“WBA”). The Pharmacy Services Segment Adjusted
EBITDA increased $4.5 million over the prior year due to an
increase in Medicare Part D membership.
In the fourth quarter, the company remodeled 30 stores, bringing
the total number of wellness stores chainwide to 1,765.
Additionally, the company closed 56 stores, resulting in a total
store count of 2,469 at the end of the fourth quarter.
Full Year Results
For the fiscal year ended March 2, 2019, revenues from
continuing operations were $21.6 billion compared to revenues of
$21.5 billion in the prior year, an increase of $0.1 billion or 0.5
percent. Retail Pharmacy Segment revenues were $15.8 billion and
were flat compared to the prior year period. Revenues in the
Pharmacy Services Segment were $6.1 billion, an increase of 3.3
percent compared to the prior year, which was due to an increase in
Medicare Part D membership.
Same store sales from continuing operations for the year
increased 0.6 percent, consisting of a 1.7 percent increase in
pharmacy sales and a 1.4 percent decrease in front end sales.
Pharmacy sales were negatively impacted by approximately 112 basis
points as a result of new generic introductions. The number of
prescriptions filled in same stores, adjusted to 30-day
equivalents, increased 0.7 percent over the prior year due to an
increase in immunizations and other initiatives to drive
prescription growth. Prescription sales from continuing operations
accounted for 66.6 percent of total drugstore sales.
Net loss from continuing operations for fiscal 2019 was $667.0
million or $0.63 per share compared to last year’s net loss from
continuing operations of $349.5 million or $0.33 per share. The
increase in net loss is due to increased goodwill and intangible
asset charges, increased lease termination and impairment charges,
increased LIFO expense and a prior year gain caused by the receipt
of a merger termination fee from WBA. These items were partially
offset by a decrease in income tax expense.
Adjusted EBITDA from continuing operations was $563.4 million or
2.6 percent of revenues for the year compared to $559.9 million or
2.6 percent of revenues for last year. The increase in Adjusted
EBITDA is due to an increase of $16.9 million in the Retail
Pharmacy Segment, partially offset by a $13.3 million decrease in
the Pharmacy Services Segment. The increase in the Retail Pharmacy
Segment EBITDA was primarily driven by the receipt of $80.2 million
of fees under the TSA and lower salaries and benefits, partially
offset by lower front end and pharmacy gross profit and increases
in distribution costs caused partially by the realignment of stores
within Rite Aid’s distribution network. The decline in the Pharmacy
Services Segment EBITDA was due to compression in the company’s
commercial business and other operating investments to support
current year and future growth.
For the year, the company relocated one store, remodeled 134
stores, opened one store, and closed 82 stores.
Senior Secured Credit Facility Refinancing
As previously announced, Rite Aid completed the refinancing of a
new senior secured credit agreement, consisting of a $2.7 billion
senior secured asset-based revolving credit facility and a $450
million “first in, last out” senior secured term loan facility on
December 20, 2018. The new $3.15 billion credit facility refinanced
Rite Aid’s existing $2.7 billion senior secured asset-based
revolving credit facility that was scheduled to mature in January
2020. As a result of this refinancing, Rite Aid has no debt
maturing until 2023 and has increased liquidity by $450
million.
Outlook for Fiscal 2020
The company’s outlook for fiscal 2020 assumes a decline in
reimbursement rates consistent with the decline experienced in
fiscal 2019. However, based upon conditions in the generic drug
market, the company does not expect to be able to as effectively
offset these declines with generic drug purchasing savings as in
the prior year. The company’s outlook also assumes a reduction of
approximately $40 million in TSA fee income from WBA, which the
company expects to offset by the reduction in corporate SG&A
costs that was disclosed last month. The Company also has factored
into the outlook an increase in rent expense of $11 million as a
result of the adoption of the new lease accounting standard.
Rite Aid said it expects sales to be between $21.5 billion and
$21.9 billion in fiscal 2020 with same store sales expected to
range from an increase of 0.0 percent to an increase of 1.0 percent
over fiscal 2019.
Net loss is expected to be between $170.0 million and $220.0
million.
Adjusted EBITDA is expected to be between $500.0 million and
$560.0 million.
Adjusted net (loss) income per share is expected to be between a
loss of $0.01 and income of $0.04.
Capital expenditures are expected to be approximately $250
million.
Rite Aid Board Approves 1-for-20 Stock Split Ratio
As previously announced on March 21, 2019, Rite Aid’s
stockholders approved a reverse stock split of the company’s
outstanding shares of common stock, at a reverse stock split ratio
of 1-for-10, 1-for-15 or 1-for-20. On April 10, 2019, Rite Aid’s
Board approved the implementation of the Reverse Stock Split at a
ratio of 1-for-20. Once effective, the reverse stock split will
reduce the number of shares of common stock issued and outstanding
from approximately 1.08 billion to approximately 54 million. Rite
Aid’s common stock will begin trading on a split-adjusted basis on
the New York Stock Exchange at the market open on April 22,
2019.
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 13,
2019. 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 reservation number 9067846.
Rite Aid is one of the nation’s leading drugstore chains with
2,469 stores in 18 states. Information about Rite Aid, including
corporate background and press releases, is available through Rite
Aid’s website at 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 for fiscal 2020; Rite Aid’s
competitive position and ability to implement new strategies; the
timing of the reverse stock split; 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 possibility that the reverse
stock split may not have its intended effects and that factors
unrelated to the reverse stock split may impact the per share
trading price of our common stock; our ability to successfully
execute and achieve benefits from our leadership transition plan
and organizational restructuring, including our chief executive
officer search process, and to manage the transition to a new chief
executive officer and other management; the potential for
operational disruptions due to, among other things, concerns of
management, employees, current and potential customers, other third
parties with whom we do business and shareholders; the success of
any changes to our business strategy that may be implemented under
our new chief executive officer and other management; our ability
to achieve cost savings through the organizational restructurings
within the anticipated timeframe, if at all; possible changes in
the size and components of the expected costs and charges
associated with the organizational restructuring plan and the
outlook for and future growth of the Company; 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; and our ability to
achieve the benefits of our efforts to reduce the costs of our
generic and other drugs; risks related to the pending sale of the
remaining Rite Aid distribution centers and related assets to WBA,
including the possibility that the transactions may not close, or
the business of Rite Aid may suffer as a result of uncertainty
surrounding the pending transactions. 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, 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.
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,
loss on debt retirements, LIFO adjustments, goodwill and intangible
asset impairment charges and the WBA merger termination fee. The
current calculations of Adjusted Net Income (Loss) and Adjusted Net
Income (Loss) per Diluted Share reflect a modification made in the
second quarter of fiscal 2019 to add back all amortization expenses
rather than the amortization of EnvisionRx intangible assets only.
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, loss on
debt retirements, the WBA merger termination fee, and other items
(including stock-based compensation expense, merger and
acquisition-related costs, non-recurring litigation settlement,
severance and costs related to facility closures and gain or loss
on sale of assets). The current calculation of Adjusted EBITDA
reflects a modification made in the second quarter of fiscal 2019
to eliminate the add back of revenue deferrals related to our
customer loyalty program and to present amounts previously included
within other as separate reconciling items. We further note that
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)
March 2, 2019 March 3, 2018 ASSETS Current
assets: Cash and cash equivalents $ 144,353 $ 447,334 Accounts
receivable, net 1,788,712 1,869,100 Inventories, net of LIFO
reserve of $604,444 and $581,090 1,871,941 1,799,539 Prepaid
expenses and other current assets 179,132 181,181 Current assets
held for sale 117,581 438,137 Total
current assets 4,101,719 4,735,291 Property, plant and equipment,
net 1,308,514 1,431,246 Goodwill 1,108,136 1,421,120 Other
intangibles, net 448,706 590,443 Deferred tax assets 409,084
594,019 Other assets 215,208 217,208
Total assets $ 7,591,367 $ 8,989,327
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current
maturities of long-term debt and lease financing obligations $
16,111 $ 20,761 Accounts payable 1,618,585 1,651,363 Accrued
salaries, wages and other current liabilities 808,439 1,231,736
Current liabilities held for sale - 560,205
Total current liabilities 2,443,135 3,464,065 Long-term
debt, less current maturities 3,454,585 3,340,099 Lease financing
obligations, less current maturities 24,064 30,775 Other noncurrent
liabilities 482,893 553,378 Total
liabilities 6,404,677 7,388,317 Commitments and
contingencies - - Stockholders' equity: Common stock 1,080,321
1,067,318 Additional paid-in capital 4,850,672 4,850,712
Accumulated deficit (4,713,244 ) (4,282,471 ) Accumulated other
comprehensive loss (31,059 ) (34,549 ) Total
stockholders' equity 1,186,690 1,601,010
Total liabilities and stockholders' equity $ 7,591,367
$ 8,989,327 RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars
in thousands, except per share amounts) (unaudited)
Thirteen weeks endedMarch 2, 2019
Thirteen weeks endedMarch 3, 2018
Revenues $ 5,379,645 $ 5,394,264 Costs and expenses: Cost of
revenues 4,215,281 4,124,498 Selling, general and administrative
expenses 1,143,202 1,181,964 Lease termination and impairment
charges 55,898 47,675 Goodwill and intangible asset impairment
charges - 261,727 Interest expense 52,695 50,603 Gain on sale of
assets, net (26,806 ) (5,249 )
5,440,270 5,661,218 Loss from
continuing operations before income taxes (60,625 ) (266,954 )
Income tax expense 195,004 216,719 Net
loss from continuing operations (255,629 ) (483,673 ) Net (loss)
income from discontinued operations, net of tax (17,350 )
1,250,745 Net (loss) income $ (272,979 ) $ 767,072
Basic and diluted (loss) income per
share: Numerator for (loss) income per share:
Net loss from continuing operations
attributable to common stockholders - basic and diluted
$ (255,629 ) $ (483,673 )
Net (loss) income from discontinued
operations attributable to common stockholders - basic and
diluted
(17,350 ) 1,250,745 (Loss) income attributable
to common stockholders - basic and diluted $ (272,979 ) $ 767,072
Denominator: Basic and diluted weighted
average shares 1,059,308 1,053,491
Basic and diluted (loss) income per share Continuing
operations $ (0.24 ) $ (0.46 ) Discontinued operations $ (0.02 ) $
1.19 Net basic and diluted (loss) income per share $ (0.26 )
$ 0.73 Proforma per-share results after
giving effect for the 1-for-20 reverse stock split:
Denominator: Basic and diluted weighted average shares
52,965 52,675 Basic and diluted (loss)
income per share Continuing operations $ (4.83 ) $ (9.18 )
Discontinued operations $ (0.32 ) $ 23.74 Net basic and
diluted (loss) income per share $ (5.15 ) $ 14.56
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited)
Fifty-two weeks endedMarch 2, 2019
Fifty-two weeks endedMarch 3, 2018
Revenues $ 21,639,557 $ 21,528,968 Costs and expenses: Cost of
revenues 16,963,205 16,748,863 Selling, general and administrative
expenses 4,592,375 4,651,262 Lease termination and impairment
charges 107,994 58,765 Goodwill and intangible asset impairment
charges 375,190 261,727 Interest expense 227,728 202,768 Loss on
debt retirements, net 554 - Walgreens Boots Alliance merger
termination fee - (325,000 ) Gain on sale of assets, net
(38,012 ) (25,872 ) 22,229,034
21,572,513 Loss from continuing operations before
income taxes (589,477 ) (43,545 ) Income tax expense 77,477
305,987 Net loss from continuing operations
(666,954 ) (349,532 ) Net income from discontinued operations, net
of tax 244,741 1,293,002 Net (loss)
income $ (422,213 ) $ 943,470 Basic and
diluted (loss) income per share: Numerator for (loss) income
per share:
Net loss from continuing operations
attributable to common stockholders - basic and diluted
$ (666,954 ) $ (349,532 )
Net income from discontinued operations
attributable to common stockholders - basic and diluted
244,741 1,293,002 (Loss) income
attributable to common stockholders - basic and diluted $ (422,213
) $ 943,470 Denominator: Basic and
diluted weighted average shares 1,057,079
1,049,628 Basic and diluted (loss) income per share
Continuing operations $ (0.63 ) $ (0.33 ) Discontinued operations $
0.23 $ 1.23 Net basic and diluted (loss) income per
share $ (0.40 ) $ 0.90 Proforma
per-share results after giving effect for the 1-for-20 reverse
stock split: Denominator: Basic and diluted weighted average
shares 52,854 52,481 Basic and
diluted (loss) income per share Continuing operations $ (12.62 ) $
(6.66 ) Discontinued operations $ 4.63 $ 24.64 Net
basic and diluted (loss) income per share $ (7.99 ) $ 17.98
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
(unaudited)
Thirteen weeks endedMarch 2, 2019
Thirteen weeks endedMarch 3, 2018
OPERATING ACTIVITIES: Net (loss) income $ (272,979 )
$ 767,072 Net (loss) income from discontinued operations, net of
tax (17,350 ) 1,250,745 Net loss from
continuing operations $ (255,629 ) $ (483,673 ) Adjustments to
reconcile to net cash (used in) provided by operating activities of
continuing operations: Depreciation and amortization 86,925 93,609
Lease termination and impairment charges 55,898 47,675 Goodwill and
intangible asset impairment charges - 261,727 LIFO charge (credit)
4,043 (49,220 ) Gain on sale of assets, net (26,806 ) (5,249 )
Stock-based compensation expense 552 3,243 Changes in deferred
taxes 221,740 161,814 Changes in operating assets and liabilities:
Accounts receivable (70,407 ) (329,616 ) Inventories 33,844 103,566
Accounts payable (55,572 ) 92,570 Other assets 13,304 19,967 Other
liabilities (223,820 ) 170,607 Net cash (used
in) provided by operating activities of continuing operations
(215,928 ) 87,020 INVESTING ACTIVITIES: Payments for property,
plant and equipment (57,560 ) (45,063 ) Intangible assets acquired
(16,338 ) (8,684 ) Proceeds from insured loss - 612 Proceeds from
dispositions of assets and investments 27,749
8,332 Net cash used in investing activities of continuing
operations (46,149 ) (44,803 ) FINANCING ACTIVITIES: Proceeds from
issuance of long-term debt 450,000 - Net payments to revolver
(370,000 ) (920 ) Principal payments on long-term debt (2,773 )
(2,590 ) Change in zero balance cash accounts (43,517 ) 8,011 Net
proceeds from the issuance of common stock - 1,380 Financing fees
paid for early debt redemption (158 ) - Deferred financing costs
paid (21,564 ) - Net cash provided by
financing activities of continuing operations 11,988
5,881 Cash flows from discontinued operations:
Operating activities of discontinued operations (15,688 ) (182,832
) Investing activities of discontinued operations 87 3,307,047
Financing activities of discontinued operations -
(2,894,779 ) Net cash (used in) provided by discontinued
operations (15,601 ) 229,436 (Decrease)
increase in cash and cash equivalents (265,690 ) 277,534 Cash and
cash equivalents, beginning of period 410,043
169,800 Cash and cash equivalents, end of period $ 144,353
$ 447,334 RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars
in thousands) (unaudited)
Fifty-two weeks endedMarch 2, 2019
Fifty-two weeks endedMarch 3, 2018
OPERATING ACTIVITIES: Net (loss) income $ (422,213 )
$ 943,470 Net income from discontinued operations, net of tax
244,741 1,293,002 Net loss from
continuing operations $ (666,954 ) $ (349,532 ) Adjustments to
reconcile to net cash (used in) provided by operating activities of
continuing operations: Depreciation and amortization 357,882
386,057 Lease termination and impairment charges 107,994 58,765
Goodwill and intangible asset impairment charges 375,190 261,727
LIFO charge (credit) 23,354 (28,827 ) Gain on sale of assets, net
(38,012 ) (25,872 ) Stock-based compensation expense 12,115 25,793
Loss on debt retirements, net 554 - Changes in deferred taxes
95,638 260,411 Changes in operating assets and liabilities:
Accounts receivable (75,844 ) (349,481 ) Inventories (44,645 )
18,835 Accounts payable 125,925 211,511 Other assets 1,000 (10,082
) Other liabilities (439,906 ) 52,165 Net cash
(used in) provided by operating activities of continuing operations
(165,709 ) 511,470 INVESTING ACTIVITIES: Payments for property,
plant and equipment (196,778 ) (185,879 ) Intangible assets
acquired (47,911 ) (28,885 ) Proceeds from insured loss - 4,239
Proceeds from dispositions of assets and investments 43,550 27,586
Proceeds from sale-leaseback transactions 2,587
- Net cash used in investing activities of continuing
operations (198,552 ) (182,939 ) FINANCING ACTIVITIES: Proceeds
from issuance of long-term debt 450,000 - Net proceeds from
(payments to) revolver 875,000 (265,000 ) Principal payments on
long-term debt (440,370 ) (9,882 ) Change in zero balance cash
accounts (59,481 ) 35,605 Net proceeds from the issuance of common
stock 2,294 5,796 Payments for taxes related to net share
settlement of equity awards (2,419 ) (4,103 ) Financing fees paid
for early debt redemption (171 ) - Deferred financing costs paid
(21,564 ) - Net cash provided by (used in)
financing activities of continuing operations 803,289
(237,584 ) Cash flows from discontinued operations:
Operating activities of discontinued operations (62,956 ) (245,126
) Investing activities of discontinued operations 664,740 3,496,222
Financing activities of discontinued operations (1,343,793 )
(3,140,119 ) Net cash (used in) provided by discontinued
operations (742,009 ) 110,977 (Decrease)
increase in cash and cash equivalents (302,981 ) 201,924 Cash and
cash equivalents, beginning of period 447,334
245,410 Cash and cash equivalents, end of period $ 144,353
$ 447,334 RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands) (unaudited)
Thirteen weeks endedMarch 2, 2019
Thirteen weeks endedMarch 3, 2018
Retail Pharmacy Segment Revenues from continuing
operations (a) $ 3,971,156 $ 3,999,430 Cost of revenues from
continuing operations (a) 2,913,118 2,830,327
Gross profit from continuing operations 1,058,038 1,169,103
LIFO charge (credit) from continuing operations 4,043
(49,220 ) FIFO gross profit from continuing operations
1,062,081 1,119,883 Gross profit as a percentage of revenues
- continuing operations 26.64 % 29.23 % LIFO charge (credit) as a
percentage of revenues - continuing operations 0.10 % -1.23 % FIFO
gross profit as a percentage of revenues - continuing operations
26.74 % 28.00 % Selling, general and administrative expenses
from continuing operations 1,055,449 1,093,258
Selling, general and administrative
expenses as a percentage of revenues - continuing operations
26.58 % 27.34 % Cash interest expense 49,325 90,915 Non-cash
interest expense 3,371 5,217 Total
interest expense 52,696 96,132 Interest expense - continuing
operations 52,695 50,628 Interest
expense - discontinued operations 1 45,504 Adjusted EBITDA -
continuing operations 96,234 121,543 Adjusted EBITDA as a
percentage of revenues - continuing operations 2.42 % 3.04 %
Pharmacy Services Segment Revenues (a) $ 1,463,278 $
1,445,457 Cost of revenues (a) 1,356,952
1,344,794 Gross profit 106,326 100,663 Gross profit
as a percentage of revenues 7.27 % 6.96 % Adjusted EBITDA
37,846 33,297 Adjusted EBITDA as a percentage of revenues 2.59 %
2.30 % (a) - Revenues and cost of revenues include
$54,789 and $50,623 of inter-segment activity for the thirteen
weeks ended March 2, 2019 and March 3, 2018, respectively, that is
eliminated in consolidation. RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands) (unaudited)
Fifty-two weeks endedMarch 2, 2019
Fifty-two weeks endedMarch 3, 2018
Retail Pharmacy Segment Revenues from continuing
operations (a) $ 15,757,152 $ 15,832,625 Cost of revenues from
continuing operations (a) 11,498,436
11,460,252 Gross profit from continuing operations 4,258,716
4,372,373 LIFO charge (credit) from continuing operations
23,354 (28,827 ) FIFO gross profit from continuing
operations 4,282,070 4,343,546 Gross profit as a percentage
of revenues - continuing operations 27.03 % 27.62 % LIFO charge
(credit) as a percentage of revenues - continuing operations 0.15 %
-0.18 % FIFO gross profit as a percentage of revenues - continuing
operations 27.18 % 27.43 % Selling, general and
administrative expenses from continuing operations 4,251,378
4,328,567
Selling, general and administrative
expenses as a percentage of revenues - continuing operations
26.98 % 27.34 % Cash interest expense 216,595 404,491
Non-cash interest expense 15,749 21,566
Total interest expense 232,344 426,057 Interest expense -
continuing operations 227,728 201,756
Interest expense - discontinued operations 4,616 224,301
Adjusted EBITDA - continuing operations 405,206 388,320 Adjusted
EBITDA as a percentage of revenues - continuing operations 2.57 %
2.45 %
Pharmacy Services Segment Revenues (a)
$ 6,093,688 $ 5,896,669 Cost of revenues (a) 5,676,052
5,488,937 Gross profit 417,636 407,732
Gross profit as a percentage of revenues 6.85 % 6.91 %
Adjusted EBITDA 158,238 171,534 Adjusted EBITDA as a percentage of
revenues 2.60 % 2.91 %
(a) -
Revenues and cost of revenues include
$211,283 and $200,326 of inter-segment activity for the fifty-two
weeks ended March 2, 2019 and March 3, 2018, 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 2, 2019
Thirteen weeks endedMarch 3, 2018
Reconciliation of net loss to adjusted EBITDA: Net
loss - continuing operations $ (255,629 ) $ (483,673 ) Adjustments:
Interest expense 52,695 50,603 Income tax expense 195,004 216,719
Depreciation and amortization 86,925 93,609 LIFO charge (credit)
4,043 (49,220 ) Lease termination and impairment charges 55,898
47,675 Goodwill and intangible asset impairment charges - 261,727
Merger and Acquisition-related costs 4,602 6,885 Stock-based
compensation expense 552 3,243 Restructuring-related costs 4,704 -
Inventory write-downs related to store closings 7,933 1,765 Gain on
sale of assets, net (26,806 ) (5,249 ) Other 4,159
10,756 Adjusted EBITDA - continuing operations $
134,080 $ 154,840 Percent of revenues - continuing operations 2.49
% 2.87 % RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA (In thousands) (unaudited)
Fifty-two weeks endedMarch 2, 2019
Fifty-two weeks endedMarch 3, 2018
Reconciliation of net loss to adjusted EBITDA: Net
loss - continuing operations $ (666,954 ) $ (349,532 ) Adjustments:
Interest expense 227,728 202,768 Income tax expense 77,477 305,987
Depreciation and amortization 357,882 386,057 LIFO charge (credit)
23,354 (28,827 ) Lease termination and impairment charges 107,994
58,765 Goodwill and intangible asset impairment charges 375,190
261,727 Loss on debt retirements, net 554 - Merger and
Acquisition-related costs 37,821 24,283 Stock-based compensation
expense 12,115 25,793 Restructuring-related costs 4,704 - Inventory
write-downs related to store closings 13,487 7,586 Litigation
settlement 18,000 - Gain on sale of assets, net (38,012 ) (25,872 )
Walgreens Boots Alliance merger termination fee - (325,000 ) Other
12,104 16,119 Adjusted EBITDA -
continuing operations $ 563,444 $ 559,854 Percent of revenues -
continuing operations 2.60 % 2.60 % RITE AID
CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET
LOSS (Dollars in thousands, except per share amounts) (unaudited)
Thirteen weeks endedMarch 2, 2019
Thirteen weeks endedMarch 3, 2018
Net loss from continuing operations $ (255,629 ) $ (483,673
) Add back - Income tax expense 195,004
216,719 Loss before income taxes - continuing operations
(60,625 ) (266,954 ) Adjustments: Amortization expense
28,972 34,967 LIFO charge (credit) 4,043 (49,220 ) Goodwill and
intangible asset impairment charges - 261,727 Merger and
Acquisition-related costs 4,602 6,885 Restructuring-related costs
4,704 - Adjusted loss before
income taxes - continuing operations (18,304 ) (12,595 )
Adjusted income tax benefit (a) (5,052 ) (4,826 )
Adjusted net loss from continuing operations $ (13,252 ) $ (7,769 )
Adjusted net loss per diluted share - continuing operations:
Numerator for adjusted net loss per diluted share: Adjusted
net loss from continuing operations $ (13,252 ) $ (7,769 )
Denominator: Basic and diluted weighted average
shares 1,059,308 1,053,491
Net loss from continuing operations per
diluted share - continuing operations
$ (0.24 ) $ (0.46 ) Adjusted net loss per diluted
share - continuing operations $ (0.01 ) $ (0.01 )
Proforma per-share results after giving effect for the
1-for-20 reverse stock split: Denominator: Basic and diluted
weighted average shares 52,965 52,675
Net loss from continuing operations per
diluted share - continuing operations
$ (4.83 ) $ (9.18 ) Adjusted net loss per diluted
share - continuing operations $ (0.25 ) $ (0.15 )
(a)
The fiscal year 2019 and 2018 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 2, 2019 and March 3, 2018, respectively. Note also that the
federal tax rate for the thirteen weeks ended March 2, 2019 is 21%
compared to 33% for the thirteen weeks ended March 3, 2018.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET (LOSS) INCOME (Dollars in thousands,
except per share amounts) (unaudited)
Fifty-two weeks endedMarch 2, 2019
Fifty-two weeks endedMarch 3, 2018
Net loss from continuing operations $ (666,954 ) $ (349,532
) Add back - Income tax expense 77,477 305,987
Loss before income taxes - continuing operations (589,477 )
(43,545 ) Adjustments: Amortization expense 125,640 147,739
LIFO charge (credit) 23,354 (28,827 ) Goodwill and intangible asset
impairment charges 375,190 261,727 Loss on debt retirements, net
554 - Merger and Acquisition-related costs 37,821 24,283
Restructuring-related costs 4,704 - Litigation settlement 18,000 -
Walgreens Boots Alliance merger termination fee -
(325,000 ) Adjusted (loss) income before income taxes
- continuing operations (4,214 ) 36,377 Adjusted income tax
(benefit) expense (a) (1,163 ) 13,937 Adjusted
net (loss) income from continuing operations $ (3,051 ) $ 22,440
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 $ (3,051 ) $ 22,440
Denominator: Basic weighted average shares 1,057,079
1,049,628 Outstanding options and restricted shares, net -
16,397 Diluted weighted average shares
1,057,079 1,066,025
Net loss from continuing operations per
diluted share - continuing operations
$ (0.63 ) $ (0.33 ) Adjusted net (loss) income per diluted
share - continuing operations $ (0.00 ) $ 0.02
Proforma per-share results after giving effect for the 1-for-20
reverse stock split: Denominator: Basic weighted average
shares 52,854 52,481 Outstanding options and restricted shares, net
- 820 Basic and diluted weighted
average shares 52,854 53,301
Net loss from continuing operations per
diluted share - continuing operations
$ (12.62 ) $ (6.66 ) Adjusted net (loss) income per
diluted share - continuing operations $ (0.06 ) $ 0.42
(a)
The fiscal year 2019 and 2018 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 2, 2019 and March 3, 2018, respectively. Note also that the
federal tax rate for the fifty-two weeks ended March 2, 2019 is 21%
compared to 33% for the fifty-two weeks ended March 3, 2018.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA
GUIDANCE YEAR ENDING FEBRUARY 29, 2020 (In thousands) (unaudited)
Guidance Range Low
High Total Revenues $ 21,500,000 $ 21,900,000
Same store sales 0.00 % 1.00 % Gross Capital Expenditures $
250,000 $ 250,000 Reconciliation of net loss to
adjusted EBITDA: Net loss $ (220,000 ) $ (170,000 ) Adjustments:
Interest expense 240,000 240,000 Income tax expense 5,000 15,000
Depreciation and amortization 340,000 340,000 LIFO charge 30,000
30,000 Lease termination and impairment charges 25,000 25,000
Restructuring-related costs 55,000 55,000 Other 25,000
25,000
Adjusted EBITDA
$ 500,000 $ 560,000 RITE AID
CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET (LOSS) INCOME
GUIDANCE YEAR ENDING FEBRUARY 29, 2020 (In thousands) (unaudited)
Guidance Range Low
High Net loss $ (220,000 ) $ (170,000 ) Add back -
income tax expense 5,000 15,000 Loss
before income taxes (215,000 ) (155,000 ) Adjustments:
Amortization expense 120,000 120,000 LIFO charge 30,000 30,000
Restructuring-related costs 55,000 55,000
Adjusted (loss) income before adjusted income taxes
(10,000 ) 50,000 Adjusted income tax (benefit) expense
(3,000 ) 14,000 Adjusted net (loss) income $
(7,000 ) $ 36,000 Diluted adjusted net (loss)
income per share $ (0.01 ) $ 0.04 Proforma
per-share results after giving effect for the 1-for-20 reverse
stock split: Diluted adjusted net (loss) income per share $
(0.14 ) $ 0.72
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190411005367/en/
INVESTORS:Byron Purcell(717) 975-5809or
investor@riteaid.comMEDIA:Susan Henderson(717) 730-7766
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