Strong Elixir earnings contribute to
results
- Revenues of $6.1 billion, Compared to Prior Year Revenues of
$6.2 billion
- Retail Comparable Same Store Prescriptions Increased 4.4
Percent - Comparable Same Store Acute Prescriptions, Excluding
COVID Immunizations, Increased 8.0 Percent
- Same Store Front-End Sales, Excluding Tobacco, Increased
2.7%
- Net Loss per Share of $1.23, Compared to the Prior Year Net
Loss per Share of $0.67
- Adjusted Net Loss per Share of $0.14, Compared to the Prior
Year Adjusted Net Income of $0.15 per Share
- Adjusted EBITDA of $121.9 million, Compared to the Prior
Year Adjusted EBITDA of $154.8 million, with Elixir growing 39% to
$40.2 million from $28.9 million
- Fiscal 2023 Adjusted EBITDA Outlook Lowered to $410 million
to $440 million, and Adjusted Net Loss per Share to be between
$2.18 and $1.78
Rite Aid Corporation (NYSE: RAD) today reported
operating results for its third fiscal quarter ended November 26,
2022.
“Our third quarter beat consensus on top and bottom line, and
we’re pleased with our results at Elixir and our accelerated sales
growth at retail. However, based on recent trends, we are lowering
our full year guidance due to headwinds including pharmacy margin,
seasonal markdowns and higher shrink,” said Heyward Donigan,
president and chief executive officer. “In addition, we are kicking
off a performance acceleration program, which allows us to
fast-track initiatives that will improve sales, script volume and
operating margins, and free up cash. We look forward to updating
you on our progress at year end.”
Consolidated Third Quarter Summary
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
26, 2022
November
27, 2021
November
26, 2022
November
27, 2021
Revenues
$
6,083,346
$
6,228,880
$
17,998,997
$
18,502,865
Net loss
(67,144)
(36,058)
(508,625)
(149,416)
Adjusted EBITDA
121,916
154,793
300,595
399,830
For the third quarter, the Company reported a net loss of $67.1
million, or $1.23 loss per share, Adjusted net loss of $7.9
million, or $0.14 loss per share, and Adjusted EBITDA of $121.9
million, or 2.0 percent of revenues.
Revenues for the quarter were $6.08 billion compared to revenues
of $6.23 billion in the prior year’s quarter, largely due to a
reduction in revenue from COVID vaccines and testing, store
closures and a planned loss of covered lives at Elixir. These items
were partially offset by increases in both comparable front-end
sales and non-COVID prescriptions.
Third quarter net loss was $67.1 million, or $1.23 per share,
compared to last year’s third quarter net loss of $36.1 million, or
$0.67 per share. The increase in net loss is due primarily to a
decrease in Adjusted EBITDA, an increase in interest expense and an
increase in restructuring charges. These items were partially
offset by a reduction in facility exit and impairment charges.
Retail Pharmacy Segment
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
26, 2022
November
27, 2021
November
26, 2022
November
27, 2021
Revenues
$
4,412,232
$
4,432,508
$
12,989,379
$
13,061,408
Adjusted EBITDA
81,683
125,931
186,849
290,214
Retail Pharmacy Segment revenues decreased 0.5 percent over the
prior year quarter, driven by a reduction in COVID vaccine and
testing revenue as well as store closures, partially offset by an
increase in both acute and maintenance prescriptions. Same store
sales for the third quarter increased 7.5 percent over the prior
year period, consisting of a 9.5 percent increase in pharmacy sales
and a 2.2 percent increase in front-end sales. Front-end same store
sales, excluding tobacco products, increased 2.7 percent. The
number of prescriptions filled in same stores, adjusted to 30-day
equivalents, increased 4.4 percent over the prior year period.
Total same store prescriptions, excluding COVID
immunizations, increased 3.6 percent, with same store
maintenance prescriptions increasing 2.1 percent and other same
store acute prescriptions increasing 8.0 percent. Prescription
sales accounted for 72.0 percent of total drugstore sales. Total
store count at the end of the third quarter was 2,324.
Retail Pharmacy Segment Adjusted EBITDA was $81.7 million, or
1.9 percent of revenues, for the third quarter compared to last
year’s third quarter Adjusted EBITDA of $125.9 million, or 2.8
percent of revenues. The decline in Adjusted EBITDA was due to
decreased gross profit, partially offset by a decrease in selling,
general and administrative (SG&A) expenses of $81.2 million.
Gross profit was negatively impacted by the decline in COVID
vaccinations and testing and increased shrink expense, partially
offset by the increase in prescriptions filled. SG&A expenses
benefited from lower payroll, occupancy, and other operating costs
due to store closures and cost control initiatives.
Pharmacy Services Segment
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
26, 2022
November
27, 2021
November
26, 2022
November
27, 2021
Revenues
$
1,726,933
$
1,858,830
$
5,180,031
$
5,629,325
Adjusted EBITDA
40,233
28,862
113,746
109,616
Pharmacy Services Segment revenues were $1.7 billion for the
quarter, a decrease of 7.1 percent compared to the prior year
quarter. The decrease in revenues was primarily the result of a
planned decrease in Elixir Insurance membership and a previously
announced client loss due to industry consolidation, partially
offset by increased utilization of higher cost drugs.
Pharmacy Services Segment Adjusted EBITDA was $40.2 million, or
2.3 percent of revenues, for the third quarter compared to last
year’s third quarter Adjusted EBITDA of $28.9 million, or 1.6
percent of revenues. The current quarter benefitted from increased
gross profit resulting from procurement economics, and reductions
in SG&A expense, partially offset by the decline in revenues
associated with lost clients, as mentioned above.
Outlook for Fiscal 2023
Rite Aid Corporation is narrowing its outlook for Fiscal 2023
revenues and lowering its outlook for net loss and Adjusted
EBITDA.
Total revenues are expected to be between $23.7 billion and
$24.0 billion in fiscal 2023. Retail Pharmacy Segment revenue is
expected to be between $17.4 billion and $17.6 billion and Pharmacy
Services Segment revenue is expected to be between $6.3 billion and
$6.4 billion (net of any intercompany revenues to the Retail
Pharmacy Segment).
Net loss is expected to be between $584 million and $551
million.
Adjusted EBITDA is expected to be between $410 million and $440
million versus prior guidance of between $450 million and $490
million, due to expectations of lower pharmacy margins, cautious
consumer demand and the related impact on seasonal markdowns and
continued shrink expense. Retail Pharmacy Segment Adjusted EBITDA
is expected to be between $265 million and $285 million and
Pharmacy Services Segment Adjusted EBITDA is expected to be between
$145 million and $155 million.
Adjusted net loss per share is expected to be between $2.18 and
$1.78.
Capital expenditures are expected to be approximately $225
million, with a focus on investments in digital capabilities,
technology, prescription file purchases and distribution center
automation.
We expect to generate positive free cash flow in Fiscal
2023.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time
today with remarks by Rite Aid's management team. The call will be
broadcast via the Internet at https://investors.riteaid.com. The
telephone replay will be available beginning at 12:00 p.m. Eastern
Time on Wednesday, Dec. 21, 2022 and ending at 11:59 p.m. Eastern
Time on Jan. 21, 2023. To access the replay of the call, telephone
(800) 770-2030 or (647) 362-9199 and enter the seven-digit
reservation number 9029129. The webcast replay of the call will
also be available at https://investors.riteaid.com starting at 12
p.m. Eastern Time today. The playback will be available until the
company’s next conference call.
About Rite Aid Corporation
Rite Aid Corporation is on the front lines of delivering
healthcare services and retail products to Americans 365 days a
year. Our pharmacists are uniquely positioned to engage with
customers and improve their health outcomes. We provide an array of
whole being health products and services for the entire family
through over 2,300 retail pharmacy locations across 17 states.
Through Elixir, we provide pharmacy benefits and services to
millions of members nationwide. For more information,
www.riteaid.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this release that are not historical, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements
regarding Rite Aid's outlook and guidance for fiscal 2023,
including our expectation to generate positive free cash flow in
fiscal 2023; the continued impact of the global coronavirus
(COVID-19) pandemic on Rite Aid’s business; and any assumptions
underlying any of the foregoing. Words such as "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intend,"
"may," "plan," "predict," "project," "should," and "will" and
variations of such words and similar expressions are intended to
identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and involve risks, assumptions and uncertainties,
including, but not limited to: risks related to the prolonged
impact of the COVID-19 global pandemic and the emerging new
variants, including the government responses thereto; the impact of
COVID-19 on our workforce, operations, stores, expenses, and supply
chain, and the operations or behaviors of our customers, suppliers
and business partners; our ability to successfully implement our
store closure program and other strategies; the impact of our high
level of indebtedness, the ability to refinance such indebtedness
on acceptable terms (including the impact of rising interest rates,
market volatility, and continuing actions by the United States
Federal Reserve) and our ability to satisfy our obligations and the
other covenants contained in our debt agreements; outcome of
pending or new litigation and government investigations, including
related to Opioids, “usual and customary” pricing, government payer
programs or other matters; our ability to monetize (and on
reasonably available terms) the CMS receivable created in our Part
D business; general competitive, economic, industry, market,
political (including healthcare reform) and regulatory conditions
(including changes to laws or regulations relating to labor or
wages), including continued impacts of inflation or other pricing
environment factors on our costs, liquidity and our ability to pass
on price increases to our customers, including as a result of
inflationary and deflationary pressures, a decline in consumer
financial position, whether due to inflation or other factors, as
well as other factors specific to the markets in which we operate;
the impact of private and public third-party payers continued
reduction in prescription drug reimbursements, new or disruptive
business models or practices, and efforts to encourage mail order;
our ability to manage expenses and our investments in working
capital; our ability to achieve the benefits of our efforts to
reduce the costs of our generic and other drugs; our ability to
achieve cost savings and other benefits of our restructuring
efforts within our anticipated timeframe, if at all; the outcome of
our continuing efforts to monitor and comply with applicable laws,
orders, regulations, policies and procedures; and our ability to
partner and have relationships with health plans and health
systems.
These and other risks, assumptions and uncertainties are more
fully described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K and in other documents that we file or furnish
with the Securities and Exchange Commission (the “SEC”), which you
are encouraged to read. To the extent that COVID-19 adversely
affects our business and financial results, it may also have the
effect of heightening many of such risk factors.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
rely on these forward-looking statements, which speak only as of
the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s
results and operations, including its ability to achieve its
outlook for fiscal 2023 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, federal, state and local
governmental policies and initiatives designed to reduce the
transmission of COVID-19 and emerging new variants and how quickly
and to what extent normal economic and operating conditions can
resume. As a result, the impact on Rite Aid’s financial and
operating results cannot be reasonably estimated with specificity
at this time, but the impact could be material. Rite Aid expressly
disclaims any current intention, and assumes no duty, to update
publicly any forward-looking statement after the distribution of
this release, whether as a result of new information, future
events, changes in assumptions or otherwise.
All references to “Company” and “Rite Aid” as used throughout
this release refer to Rite Aid Corporation and its affiliates.
Reconciliation of Non-GAAP Financial Measures
Rite Aid separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted
EBITDA SG&A, which are non-GAAP financial measures. See the
attached tables for a reconciliation of Adjusted Net Income (Loss),
Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to
net income (loss), and net income (loss) per diluted share, which
are the most directly comparable GAAP financial measures. Adjusted
Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
exclude amortization expense, merger and acquisition-related costs,
non-recurring litigation and other contractual settlements, gains
or losses on debt modifications and retirements, LIFO adjustments,
goodwill and intangible asset impairment charges,
restructuring-related costs, the gain or loss on Bartell
acquisition, and the change in estimate related to manufacturer
rebate receivables. Rite Aid believes Adjusted Net Income (Loss)
and Adjusted Net Income (Loss) per Diluted Share serve as
appropriate measures to be used in evaluating the performance of
its business and help its investors better compare its operating
performance over multiple periods.
Adjusted EBITDA is defined as net income (loss) excluding the
impact of income taxes, interest expense, depreciation and
amortization, LIFO adjustments, charges or credits for facility
exit and impairment, goodwill and intangible asset impairment
charges, inventory write-downs related to store closings, gains or
losses on debt modifications and retirements, and other items
(including stock-based compensation expense, merger and
acquisition-related costs, non-recurring litigation and other
contractual settlements, severance, restructuring-related costs,
costs related to facility closures, gain or loss on sale of assets,
the gain or loss on Bartell acquisition, and the change in estimate
related to manufacturer rebate receivables). The add back of LIFO
(credit) charge when calculating Adjusted EBITDA, Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
removes the entire impact of LIFO (credits) charges, and
effectively reflects Rite Aid's results as if the company was on a
FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as
an appropriate measure in evaluating the performance of its
business and helps its investors better compare its operating
performance with its competitors.
Adjusted EBITDA Gross Profit includes LIFO adjustments,
depreciation and amortization (COGS portion only) and other items.
See the attached tables for a reconciliation of Adjusted EBITDA
Gross Profit to Revenue, which is the most directly comparable GAAP
financial measure. Adjusted EBITDA SG&A excludes depreciation
and amortization (SG&A portion only), stock-based compensation
expense, merger and acquisition-related costs, non-recurring
litigation and other contractual settlements, and other items. See
the attached tables for a reconciliation of Adjusted EBITDA
SG&A to Revenue, which is the most directly comparable GAAP
financial measure. The Company believes Adjusted EBITDA Gross
Profit and Adjusted EBITDA SG&A serve as appropriate measures
in evaluating the performance of its business and helps its
investors better compare its operating performance with its
competitors.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited) November
26, 2022 February 26, 2022 ASSETS Current assets: Cash and cash
equivalents
$
103,054
$
39,721
Accounts receivable, net
1,473,997
1,343,496
Inventories, net of LIFO reserve of $512,540 and $487,173
1,981,335
1,959,389
Prepaid expenses and other current assets
119,836
106,749
Total current assets
3,678,222
3,449,355
Property, plant and equipment, net
939,648
989,167
Operating lease right-of-use assets
2,622,969
2,813,535
Goodwill
626,936
879,136
Other intangibles, net
259,954
291,196
Deferred tax assets
13,938
20,071
Other assets
68,107
86,543
Total assets
$
8,209,774
$
8,529,003
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current
liabilities: Current maturities of long-term debt and lease
financing obligations
$
6,107
$
5,544
Accounts payable
1,454,988
1,571,261
Accrued salaries, wages and other current liabilities
799,555
780,632
Current portion of operating lease liabilities
563,490
575,651
Total current liabilities
2,824,140
2,933,088
Long-term debt, less current maturities
3,189,013
2,732,986
Long-term operating lease liabilities
2,427,836
2,597,090
Lease financing obligations, less current maturities
12,970
14,830
Other noncurrent liabilities
159,549
151,976
Total liabilities
8,613,508
8,429,970
Commitments and contingencies
-
-
Stockholders' (deficit) equity: Common stock
56,526
55,752
Additional paid-in capital
5,915,383
5,910,299
Accumulated deficit
(6,360,206
)
(5,851,581
)
Accumulated other comprehensive loss
(15,437
)
(15,437
)
Total stockholders' (deficit) equity
(403,734
)
99,033
Total liabilities and stockholders' (deficit) equity
$
8,209,774
$
8,529,003
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks endedNovember 26,
2022 Thirteen weeks endedNovember 27, 2021 Revenues
$
6,083,346
$
6,228,880
Costs and expenses: Cost of revenues
4,879,594
4,894,497
Selling, general and administrative expenses
1,194,546
1,276,920
Facility exit and impairment charges
22,539
47,455
Interest expense
57,416
47,794
Gain on sale of assets, net
(3,095
)
(5,899
)
Loss on Bartell acquisition
-
5,346
6,151,000
6,266,113
Loss before income taxes
(67,654
)
(37,233
)
Income tax benefit
(510
)
(1,175
)
Net loss
$
(67,144
)
$
(36,058
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss attributable to common
stockholders - basic and diluted
$
(67,144
)
$
(36,058
)
Denominator: Basic and diluted weighted
average shares
54,792
54,168
Basic and diluted loss per share
$
(1.23
)
$
(0.67
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirty-nine weeks endedNovember
26, 2022 Thirty-nine weeks endedNovember 27, 2021 Revenues
$
17,998,997
$
18,502,865
Costs and expenses: Cost of revenues
14,444,021
14,637,683
Selling, general and administrative expenses
3,606,028
3,790,035
Facility exit and impairment charges
134,955
67,639
Goodwill and intangible asset impairment charges
252,200
-
Interest expense
158,068
145,507
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Gain on sale of assets, net
(61,292
)
(79
)
Loss on Bartell acquisition
-
5,346
18,492,668
18,649,366
Loss before income taxes
(493,671
)
(146,501
)
Income tax expense
14,954
2,915
Net loss
$
(508,625
)
$
(149,416
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss attributable to common
stockholders - basic and diluted
$
(508,625
)
$
(149,416
)
Denominator: Basic and diluted weighted
average shares
54,567
54,004
Basic and diluted loss per share
$
(9.32
)
$
(2.77
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedNovember 26, 2022 Thirteen weeks
endedNovember 27, 2021 OPERATING ACTIVITIES: Net loss
$
(67,144
)
$
(36,058
)
Adjustments to reconcile to net cash provided by (used in)
operating activities: Depreciation and amortization
69,496
72,973
Facility exit and impairment charges
22,539
47,455
LIFO charge
15,246
8,886
Change in allowances for uncollectible accounts receivable
9,082
-
Gain on sale of assets, net
(3,095
)
(5,899
)
Loss on Bartell acquisition
-
5,346
Stock-based compensation expense
566
217
Changes in deferred taxes
-
(1,602
)
Changes in operating assets and liabilities: Accounts receivable
62,041
(185,224
)
Inventories
29,634
(68,054
)
Accounts payable
(55,762
)
38,112
Operating lease right-of-use assets and operating lease liabilities
(22,838
)
(7,208
)
Other assets
1,935
9,761
Other liabilities
70,909
118,257
Net cash provided by (used in) operating activities
132,609
(3,038
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(50,320
)
(39,645
)
Intangible assets acquired
(9,581
)
(9,810
)
Proceeds from dispositions of assets and investments
10,027
3,145
Proceeds from sale-leaseback transactions
9,908
25,605
Net cash used in investing activities
(39,966
)
(20,705
)
FINANCING ACTIVITIES: Net (payments to) proceeds from revolver
(36,000
)
50,000
Principal payments on long-term debt
(1,057
)
(1,032
)
Change in zero balance cash accounts
747
(14,243
)
Payments for taxes related to net share settlement of equity awards
(87
)
(131
)
Deferred financing costs paid
-
(2,126
)
Net cash (used in) provided by financing activities
(36,397
)
32,468
Increase in cash and cash equivalents
56,246
8,725
Cash and cash equivalents, beginning of period
46,808
146,564
Cash and cash equivalents, end of period
$
103,054
$
155,289
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirty-nine weeks endedNovember 26, 2022 Thirty-nine weeks
endedNovember 27, 2021 OPERATING ACTIVITIES: Net loss
$
(508,625
)
$
(149,416
)
Adjustments to reconcile to net cash (used in) provided by
operating activities: Depreciation and amortization
208,133
222,691
Facility exit and impairment charges
134,955
67,639
Goodwill and intangible asset impairment charges
252,200
-
LIFO charge
25,367
900
Change in allowances for uncollectible accounts receivable
7,411
-
Gain on sale of assets, net
(61,292
)
(79
)
Loss on Bartell acquisition
-
5,346
Stock-based compensation expense
8,635
8,820
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Changes in deferred taxes
6,133
(1,602
)
Changes in operating assets and liabilities: Accounts receivable
(149,632
)
(398,079
)
Inventories
(47,771
)
(87,150
)
Accounts payable
(99,105
)
129,436
Operating lease right-of-use assets and operating lease liabilities
(54,551
)
(19,517
)
Other assets
(8,935
)
34,946
Other liabilities
9,537
219,390
Net cash (used in) provided by operating activities
(318,852
)
36,560
INVESTING ACTIVITIES: Payments for property, plant and equipment
(172,563
)
(145,001
)
Intangible assets acquired
(24,937
)
(24,289
)
Proceeds from insured loss
-
10,436
Proceeds from dispositions of assets and investments
51,030
7,821
Proceeds from sale-leaseback transactions
55,894
39,790
Net cash used in investing activities
(90,576
)
(111,243
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
-
350,000
Net proceeds from revolver
641,000
300,000
Principal payments on long-term debt
(153,068
)
(544,020
)
Change in zero balance cash accounts
(12,184
)
(15,087
)
Financing fees paid for early debt redemption
(881
)
(833
)
Payments for taxes related to net share settlement of equity awards
(2,106
)
(2,352
)
Deferred financing costs paid
-
(18,638
)
Net cash provided by financing activities
472,761
69,070
Increase (decrease) in cash and cash equivalents
63,333
(5,613
)
Cash and cash equivalents, beginning of period
39,721
160,902
Cash and cash equivalents, end of period
$
103,054
$
155,289
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedNovember 26, 2022 Thirteen weeks
endedNovember 27, 2021
Retail Pharmacy Segment
Revenues (a)
$
4,412,232
$
4,432,508
Cost of revenues (a)
3,312,953
3,199,271
Gross profit
1,099,279
1,233,237
LIFO charge
15,246
8,886
FIFO gross profit
1,114,525
1,242,123
Adjusted EBITDA gross profit
1,119,171
1,244,637
Gross profit as a percentage of revenues
24.91
%
27.82
%
LIFO charge as a percentage of revenues
0.35
%
0.20
%
FIFO gross profit as a percentage of revenues
25.26
%
28.02
%
Adjusted EBITDA gross profit as a percentage of revenues
25.37
%
28.08
%
Selling, general and administrative expenses
1,118,792
1,185,974
Adjusted EBITDA selling, general and administrative expenses
1,037,488
1,118,706
Selling, general and administrative expenses as a percentage of
revenues
25.36
%
26.76
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues
23.51
%
25.24
%
Cash interest expense
54,578
44,853
Non-cash interest expense
2,838
2,941
Total interest expense
57,416
47,794
Adjusted EBITDA
81,683
125,931
Adjusted EBITDA as a percentage of revenues
1.85
%
2.84
%
Pharmacy Services Segment Revenues (a)
$
1,726,933
$
1,858,830
Cost of revenues (a)
1,622,460
1,757,684
Gross profit
104,473
101,146
Gross profit as a percentage of revenues
6.05
%
5.44
%
Adjusted EBITDA
40,233
28,862
Adjusted EBITDA as a percentage of revenues
2.33
%
1.55
%
(a) - Revenues and cost of revenues include $55,819 and $62,458 of
inter-segment activity for the thirteen weeks ended November 26,
2022 and November 27, 2021, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands)
(unaudited) Thirty-nine weeks endedNovember 26, 2022
Thirty-nine weeks endedNovember 27, 2021
Retail Pharmacy
Segment Revenues (a)
$
12,989,379
$
13,061,408
Cost of revenues (a)
9,749,707
9,517,875
Gross profit
3,239,672
3,543,533
LIFO charge
25,367
900
FIFO gross profit
3,265,039
3,544,433
Adjusted EBITDA gross profit
3,281,878
3,551,888
Gross profit as a percentage of revenues
24.94
%
27.13
%
LIFO charge as a percentage of revenues
0.20
%
0.01
%
FIFO gross profit as a percentage of revenues
25.14
%
27.14
%
Adjusted EBITDA gross profit as a percentage of revenues
25.27
%
27.19
%
Selling, general and administrative expenses
3,336,781
3,505,365
Adjusted EBITDA selling, general and administrative expenses
3,095,029
3,261,674
Selling, general and administrative expenses as a percentage of
revenues
25.69
%
26.84
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues
23.83
%
24.97
%
Cash interest expense
149,441
136,476
Non-cash interest expense
8,627
9,031
Total interest expense
158,068
145,507
Adjusted EBITDA
186,849
290,214
Adjusted EBITDA as a percentage of revenues
1.44
%
2.22
%
Pharmacy Services Segment Revenues (a)
$
5,180,031
$
5,629,325
Cost of revenues (a)
4,864,727
5,307,676
Gross profit
315,304
321,649
Gross profit as a percentage of revenues
6.09
%
5.71
%
Adjusted EBITDA
113,746
109,616
Adjusted EBITDA as a percentage of revenues
2.20
%
1.95
%
(a) - Revenues and cost of revenues include $170,413 and $187,868
of inter-segment activity for the thirty-nine weeks ended November
26, 2022 and November 27, 2021, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In
thousands) (unaudited) Thirteen weeks endedNovember
26, 2022 Thirteen weeks endedNovember 27, 2021
Reconciliation of net loss to adjusted EBITDA: Net loss
$
(67,144
)
$
(36,058
)
Adjustments: Interest expense
57,416
47,794
Income tax benefit
(510
)
(1,175
)
Depreciation and amortization
69,496
72,973
LIFO charge
15,246
8,886
Facility exit and impairment charges
22,539
47,455
Merger and Acquisition-related costs
-
3,642
Stock-based compensation expense
566
217
Restructuring-related costs
26,500
9,657
Inventory write-downs related to store closings
3,085
86
Litigation and other contractual settlements
(2,541
)
2,000
Gain on sale of assets, net
(3,095
)
(5,899
)
Loss on Bartell acquisition
-
5,346
Other
358
(131
)
Adjusted EBITDA
$
121,916
$
154,793
Percent of revenues
2.00
%
2.49
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
(unaudited) Thirty-nine weeks endedNovember 26, 2022
Thirty-nine weeks endedNovember 27, 2021
Reconciliation of net loss to adjusted EBITDA: Net loss
$
(508,625
)
$
(149,416
)
Adjustments: Interest expense
158,068
145,507
Income tax expense
14,954
2,915
Depreciation and amortization
208,133
222,691
LIFO charge
25,367
900
Facility exit and impairment charges
134,955
67,639
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Merger and Acquisition-related costs
-
12,119
Stock-based compensation expense
8,635
8,820
Restructuring-related costs
61,951
25,173
Inventory write-downs related to store closings
12,134
1,356
Litigation and other contractual settlements
35,823
50,212
Gain on sale of assets, net
(61,292
)
(79
)
Loss on Bartell acquisition
-
5,346
Other
(396
)
3,412
Adjusted EBITDA
$
300,595
$
399,830
Percent of revenues
1.67
%
2.16
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
ADJUSTED NET (LOSS) INCOME (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks endedNovember 26,
2022 Thirteen weeks endedNovember 27, 2021 Net loss
$
(67,144
)
$
(36,058
)
Add back - Income tax benefit
(510
)
(1,175
)
Loss before income taxes
(67,654
)
(37,233
)
Adjustments: Amortization expense
17,622
18,780
LIFO charge
15,246
8,886
Merger and Acquisition-related costs
-
3,642
Restructuring-related costs
26,500
9,657
Litigation and other contractual settlements
(2,541
)
2,000
Loss on Bartell acquisition
-
5,346
Adjusted (loss) income before income taxes
(10,827
)
11,078
Adjusted income tax (benefit) expense (a)
(2,897
)
2,914
Adjusted net (loss) income
$
(7,930
)
$
8,164
Adjusted net (loss) income per diluted share:
Numerator for adjusted net (loss) income per diluted share:
Adjusted net (loss) income
$
(7,930
)
$
8,164
Denominator: Basic weighted average shares
54,792
54,168
Outstanding options and restricted shares, net
-
541
Diluted weighted average shares
54,792
54,709
Net loss per diluted share
$
(1.23
)
$
(0.67
)
Adjusted net (loss) income per diluted share
$
(0.14
)
$
0.15
(a) The fiscal year 2023 and 2022 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirteen weeks ended November 26, 2022 and
November 27, 2021, respectively. RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET (LOSS) INCOME
(Dollars in thousands, except per share amounts) (unaudited)
Thirty-nine weeks endedNovember 26, 2022 Thirty-nine weeks
endedNovember 27, 2021 Net loss
$
(508,625
)
$
(149,416
)
Add back - Income tax expense
14,954
2,915
Loss before income taxes
(493,671
)
(146,501
)
Adjustments: Amortization expense
56,668
59,193
LIFO charge
25,367
900
Goodwill and intangible asset impairment charges
252,200
-
(Gain) loss on debt modifications and retirements, net
(41,312
)
3,235
Merger and Acquisition-related costs
-
12,119
Restructuring-related costs
61,951
25,173
Litigation and other contractual settlements
35,823
50,212
Loss on Bartell acquisition
-
5,346
Adjusted (loss) income before income taxes
(102,974
)
9,677
Adjusted income tax (benefit) expense (a)
(27,556
)
2,545
Adjusted net (loss) income
$
(75,418
)
$
7,132
Adjusted net (loss) income per diluted share:
Numerator for adjusted net (loss) income per diluted share:
Adjusted net (loss) income
$
(75,418
)
$
7,132
Denominator: Basic weighted average shares
54,567
54,004
Outstanding options and restricted shares, net
-
998
Diluted weighted average shares
54,567
55,002
Net loss per diluted share
$
(9.32
)
$
(2.77
)
Adjusted net (loss) income per diluted share
$
(1.38
)
$
0.13
(a) The fiscal year 2023 and 2022 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirty-nine weeks ended November 26, 2022 and
November 27, 2021, respectively. RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF ADJUSTED
EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT (In
thousands) (unaudited) Thirteen weeks endedNovember
26, 2022 Thirteen weeks endedNovember 27, 2021
Reconciliation of adjusted EBITDA gross profit: Revenues
$
4,412,232
$
4,432,508
Gross Profit
1,099,279
1,233,237
Addback: LIFO charge
15,246
8,886
Depreciation and amortization (cost of goods sold portion only)
2,158
2,489
Other
2,488
25
Adjusted EBITDA gross profit
$
1,119,171
$
1,244,637
Percent of revenues
25.37
%
28.08
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
4,412,232
$
4,432,508
Selling, general and administrative expenses
1,118,792
1,185,974
Less: Depreciation and amortization (SG&A portion only)
56,542
58,087
Stock-based compensation expense
456
(174
)
Merger and Acquisition-related costs
-
3,642
Restructuring-related costs
19,876
3,746
Litigation and other contractual settlements
3,475
2,000
Other
955
(33
)
Adjusted EBITDA selling, general and administrative expenses
$
1,037,488
$
1,118,706
Percent of revenues
23.51
%
25.24
%
Adjusted EBITDA
$
81,683
$
125,931
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)
Thirty-nine weeks endedNovember 26, 2022 Thirty-nine weeks
endedNovember 27, 2021 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
12,989,379
$
13,061,408
Gross Profit
3,239,672
3,543,533
Addback: LIFO charge
25,367
900
Depreciation and amortization (cost of goods sold portion only)
7,126
6,536
Other
9,713
919
Adjusted EBITDA gross profit
$
3,281,878
$
3,551,888
Percent of revenues
25.27
%
27.19
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
12,989,379
$
13,061,408
Selling, general and administrative expenses
3,336,781
3,505,365
Less: Depreciation and amortization (SG&A portion only)
164,361
176,936
Stock-based compensation expense
8,054
8,292
Merger and Acquisition-related costs
-
12,119
Restructuring-related costs
45,689
7,951
Litigation and other contractual settlements
21,597
34,448
Other
2,051
3,945
Adjusted EBITDA selling, general and administrative expenses
$
3,095,029
$
3,261,674
Percent of revenues
23.83
%
24.97
%
Adjusted EBITDA
$
186,849
$
290,214
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING MARCH 4, 2023 (In thousands) (unaudited)
Guidance Range Low High Total Revenues
$
23,700,000
$
24,000,000
Pharmacy Services Segment Revenues
$
6,300,000
$
6,400,000
Gross Capital Expenditures
$
225,000
$
225,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(584,000
)
$
(551,000
)
Adjustments: Interest expense
220,000
220,000
Income tax benefit
(7,000
)
(10,000
)
Depreciation and amortization
280,000
280,000
LIFO charge
35,000
35,000
Facility exit and impairment charges
182,000
182,000
Goodwill and intangible asset impairment charges
252,000
252,000
Gain on debt modifications and retirements, net
(41,000
)
(41,000
)
Restructuring-related costs
72,000
72,000
Litigation and other contractual settlements
36,000
36,000
Gain on sale of assets, net
(60,000
)
(60,000
)
Other
25,000
25,000
Adjusted EBITDA
$
410,000
$
440,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE
YEAR ENDING MARCH 4, 2023 (In thousands) (unaudited)
Guidance Range Low High Net loss
$
(584,000
)
$
(551,000
)
Add back - income tax benefit
(7,000
)
(10,000
)
Loss before income taxes
(591,000
)
(561,000
)
Adjustments: Amortization expense
75,000
75,000
LIFO charge
35,000
35,000
Goodwill and intangible asset impairment charges
252,000
252,000
Gain on debt modifications and retirements, net
(41,000
)
(41,000
)
Restructuring-related costs
72,000
72,000
Litigation and other contractual settlements
36,000
36,000
Adjusted loss before adjusted income taxes
(162,000
)
(132,000
)
Adjusted income tax benefit
(43,000
)
(35,000
)
Adjusted net loss
$
(119,000
)
$
(97,000
)
Diluted adjusted net loss per share
$
(2.18
)
$
(1.78
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221220005695/en/
INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com
MEDIA: Joy Errico Seusing (203) 970-5559 press@riteaid.com
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