- Fourth Quarter Results Significantly Impacted by Weak Cough,
Cold and Flu Season, Continued Effects Related to the COVID-19
Pandemic and Difficult Weather Conditions
- Fiscal 2021 Net Loss is Now Expected to be Between $90
Million and $100 Million
- Fiscal 2021 Adjusted EBITDA is Now Expected to be Between
$425 Million and $435 Million
- Year-end Liquidity Remains Strong and is Approximately $1.7
Billion
Rite Aid Corporation’s (NYSE: RAD) fourth quarter 2021 financial
results were significantly impacted by a soft cough, cold and flu
season, ongoing impacts related to COVID-19 and challenging weather
conditions. As a result, the Company is updating its guidance for
the fiscal year ended February 27, 2021.
“During the fourth quarter our industry was impacted by a
historically soft cough, cold and flu season, as well as the
continued impacts of COVID on the deferral of elective procedures
and related acute prescription volume and selling, general and
administrative expenses. In addition, there were significant
weather events in February that impacted our supply chain and
depressed sales,” said Heyward Donigan, president and CEO of Rite
Aid. “Looking ahead, we have seen acute prescriptions return to
positive levels in March, and we are proud to be selected as one of
the retail providers administering COVID vaccines in the majority
of our key states and cities, representing over 1,800 of our
stores. We are significantly ramping up the number of vaccines we
are administering on a daily basis, and have administered
approximately 1 million COVID vaccines in March to date. Despite
the extraordinary external headwinds that impacted our fourth
quarter results, the entire organization is engaged, motivated and
relentless in the execution of our RxEvolution strategy.”
Front-end comparable same store sales declined approximately 5.6
percent in the quarter ended February 27, 2021, driven by a decline
of nearly 37 percent in cough, cold and flu related categories. The
decline in these categories had a disproportionately negative
impact on front-end gross profit, as these are comprised of higher
margin products. Comparable same store prescriptions declined
approximately 1.0 percent, driven by an over 14 percent decline in
acute prescriptions. The Company also incurred incremental COVID
related SG&A expenses due to a one time hero-pay bonus,
cleaning costs, pandemic sick leave and other incremental operating
costs. Rite Aid Corporation estimates the following impacts on
fourth quarter adjusted EBITDA:
- $20 million to $24 million from lower incidence in cough, cold
and flu related illnesses;
- $20 million to $24 million due to difficult weather conditions;
and
- $10 million to $12 million related to continued effects of
COVID-19.
The total unanticipated impact on the quarter results was
approximately $50 million to $60 million.
Outlook for Fiscal 2021
For fiscal 2021, Rite Aid Corporation now expects revenues to be
approximately $24.0 billion with same store sales expected to
increase approximately 3.5 percent over fiscal 2020.
Net loss is expected to be between $90 million and $100
million.
Adjusted EBITDA is expected to be between $425 million and $435
million.
Capital expenditures are expected to be approximately $315
million, which includes $95 million for our acquisition of Bartell
Drugs.
Liquidity is approximately $1.7 billion.
Fourth Quarter Earnings Announcement
Rite Aid Corporation is scheduled to release financial results
for its Fiscal 2021 Fourth Quarter, which ended Feb. 27, 2021, on
Thursday, Apr. 15, 2021. The company will hold an analyst call at
8:30 a.m. Eastern Time 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 12:30 p.m.
Eastern Time on Thursday, April 15, 2021 and ending at 11:59 p.m.
Eastern Time on May 5, 2021. To access the replay of the call,
telephone (800) 585-8367 or (416) 621-4642 and enter the
seven-digit reservation number 2368577.
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 Thursday, April 15, 2021. 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 17
states. Through Elixir, we provide pharmacy benefits and services
to approximately 4 million members nationwide. For more
information, https://www.riteaid.com/corporate.
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
continued impact of the global coronavirus (COVID-19) pandemic on
Rite Aid’s business; our ability to increase the administration of
vaccines; 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 RxEvolution strategy; 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, 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 (including mandatory stay at home
orders, the availability and rollout of vaccines to treat the
virus), 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 EBITDA which is non-GAAP financial measure. See the
attached table for a reconciliation of Adjusted EBITDA to net
income (loss), which is the most directly comparable GAAP financial
measure. 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 modifications and retirements, gain on Bartell
acquisition, 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 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.
The financial results presented in this press release are
preliminary and may change. This preliminary financial information
has been prepared by management, and the company’s independent
accountants have not completed their audit or review of such
financial information. There can be no assurance that the company’s
actual results for the periods presented herein will not differ
from the preliminary financial data presented herein and such
changes could be material. In particular, net loss will be impacted
by final valuations related to our acquisition of Bartell Drugs,
which has not yet been completed. This preliminary financial data
should not be viewed as a substitute for full financial statements
prepared in accordance with GAAP and is not necessarily indicative
of the results to be achieved for any future periods.
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
$
23,975,000
$
24,000,000
PBM Revenues
$
7,850,000
$
7,950,000
Same store sales
3.40
%
3.50
%
Gross Capital Expenditures
$
315,000
$
315,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(100,000
)
$
(90,000
)
Adjustments: Interest expense
201,000
201,000
Income tax benefit
(10,000
)
(10,000
)
Depreciation and amortization
327,000
327,000
LIFO credit
(52,000
)
(52,000
)
Lease termination and impairment charges
57,000
57,000
Intangible asset impairment charges
30,000
30,000
Gain on debt modifications and retirements, net
(5,000
)
(5,000
)
Merger and Acquisition-related costs
10,000
10,000
Restructuring-related costs
85,000
85,000
Gain on sale of assets, net
(70,000
)
(70,000
)
Gain on Bartell Drug acquisition
(61,000
)
(61,000
)
Other
13,000
13,000
Adjusted EBITDA
$
425,000
$
435,000
The above adjustments may differ from the final
amounts to be released in conjunction with our earnings release on
April 15, 2021, and such differences could be material.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210324005875/en/
INVESTORS: Trent Kruse (717) 975-3710 investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
Christopher.Savarese@riteaid.com
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