• Retail Comparable Store Prescriptions Increased 3.1 Percent – Comparable Store Acute Prescriptions, Excluding COVID Immunizations, Increased 5.3 Percent
  • Revenues of $5.9 billion, Compared to Prior Year Revenues of $6.1 billion
  • Net Loss per Share of $6.07, Compared to the Prior Year Net Loss per Share of $1.86 Driven by Non-Cash Goodwill Impairment Charge
  • Adjusted Net Loss per Share of $0.63, Compared to the Prior Year Adjusted Net Loss of $0.41 per Share
  • Adjusted EBITDA of $78.5 million, Compared to the Prior Year Adjusted EBITDA of $106.2 million
  • Fiscal 2023 Adjusted EBITDA Outlook Updated to $450 million to $490 million

Rite Aid Corporation (NYSE: RAD) today reported operating results for its second fiscal quarter ended August 27, 2022.

“We’ve made good progress on key initiatives during the quarter: driving prescription growth and market share, improving operating margins at Elixir and achieving reductions in SG&A expenses across our business,” said Heyward Donigan, president and CEO. “As we look to the second half of the year, we expect continued pressure on consumer spending and supply chain challenges. At the same time, we are ready to meet a high demand for immunizations, while driving continued strong performance at Elixir and further SG&A expense reductions.”

Consolidated Second Quarter Summary

(dollars in thousands)

Thirteen Week Period Ended

Twenty-six Week Period Ended

 

 

August 27, 2022

 

August 28, 2021

 

August 27, 2022

 

August 28, 2021

Revenues

$

5,901,069

$

6,113,000

$

11,915,652

$

12,273,985

Net loss

 

(331,290)

 

(100,301)

 

(441,481)

 

(113,358)

Adjusted EBITDA

 

78,549

 

106,160

 

178,679

 

245,037

For the second quarter, the Company reported a net loss of $331.3 million, or $6.07 loss per share, Adjusted net loss of $34.4 million, or $0.63 loss per share, and Adjusted EBITDA of $78.5 million, or 1.3 percent of revenues.

Revenues for the quarter were $5.90 billion compared to revenues of $6.11 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.

Second quarter net loss was $331.3 million, or $6.07 per share, compared to last year’s second quarter net loss of $100.3 million, or $1.86 per share. The increase in net loss is due primarily to a current quarter charge of $252.2 million, or $4.62 per share, for the impairment of goodwill related to the Pharmacy Services Segment. Net loss was also impacted by higher facility exit and impairment charges driven by the Company’s previously announced store closures. These items are partially offset by a gain on our repurchase of certain bonds at a discount, a gain on sale of assets resulting from sale leasebacks of two distribution centers and script file sales resulting from the store closures.

Retail Pharmacy Segment

(dollars in thousands)

Thirteen Week Period Ended

Twenty-six Week Period Ended

 

 

August 27, 2022

 

August 28, 2021

 

August 27, 2022

 

August 28, 2021

Revenues

$

4,231,791

$

4,277,218

$

8,577,147

$

8,628,900

Adjusted EBITDA

 

31,484

 

69,369

 

105,166

 

164,283

Retail Pharmacy Segment revenues decreased 1.1 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 second quarter increased 5.6 percent over the prior year period, consisting of an 8.0 percent increase in pharmacy sales, partially offset by a 0.3 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 0.2 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 3.1 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations, increased 2.1 percent, with same store maintenance prescriptions increasing 1.2 percent and other same store acute prescriptions increasing 5.3 percent. Prescription sales accounted for 70.7 percent of total drugstore sales. Total store count at the end of the second quarter was 2,352.

Retail Pharmacy Segment Adjusted EBITDA was $31.5 million, or 0.7 percent of revenues, for the second quarter compared to last year’s second quarter Adjusted EBITDA of $69.4 million, or 1.6 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 $45.0 million. Gross profit was negatively impacted by the decline in COVID vaccinations and testing, 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

Twenty-six Week Period Ended

 

 

August 27, 2022

 

August 28, 2021

 

August 27, 2022

 

August 28, 2021

Revenues

$

1,727,241

$

1,898,213

$

3,453,098

$

3,770,495

Adjusted EBITDA

 

47,065

 

36,791

 

73,513

 

80,754

Pharmacy Services Segment revenues were $1.7 billion for the quarter, a decrease of 9.0 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 $47.1 million, or 2.7 percent of revenues, for the second quarter compared to last year’s second quarter Adjusted EBITDA of $36.8 million, or 1.9 percent of revenues. The current quarter benefitted from increased gross profit resulting from improved network performance, increases in rebates, 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 maintaining its outlook for Fiscal 2023 revenues and lowering its outlook for net loss and Adjusted EBITDA.

Total revenues are expected to be between $23.6 billion and $24.0 billion in fiscal 2023. Retail Pharmacy Segment revenue is expected to be between $17.35 billion and $17.65 billion and Pharmacy Services Segment revenue is expected to be between $6.25 billion and $6.35 billion (net of any intercompany revenues to the Retail Pharmacy Segment).

Net loss is expected to be between $520.3 million and $477.3 million. Our estimates for net loss have increased primarily due to goodwill impairment charges in the Pharmacy Services Segment and increased impairment charges for closed stores.

Adjusted EBITDA is expected to be between $450 million and $490 million versus prior guidance of between $460 million and $500 million, due to expectations of cautious consumer demand and continued supply chain challenges in our front end retail business, partially offset by improved margins at Elixir. Retail Pharmacy Segment Adjusted EBITDA is expected to be between $305 million and $335 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 $1.52 and $0.97.

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 Thursday, Sept. 29, 2022 and ending at 11:59 p.m. Eastern Time on Oct. 31 2022. 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; the timing and roll out of the Company’s new loyalty program; our key growth initiatives, including our plans to improve adherence; the timing of the opening of four new small format stores in underserved markets; 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, including related to Opioids, “usual and customary” pricing 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), and regulatory conditions, 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 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, 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)       August 27, 2022 February 26, 2022 ASSETS Current assets: Cash and cash equivalents

$

46,808

 

$

39,721

 

Accounts receivable, net

 

1,564,388

 

 

1,343,496

 

Inventories, net of LIFO reserve of $497,294 and $487,173

 

2,026,216

 

 

1,959,389

 

Prepaid expenses and other current assets

 

103,452

 

 

106,749

 

Total current assets

 

3,740,864

 

 

3,449,355

 

Property, plant and equipment, net

 

950,962

 

 

989,167

 

Operating lease right-of-use assets

 

2,679,500

 

 

2,813,535

 

Goodwill

 

626,936

 

 

879,136

 

Other intangibles, net

 

268,040

 

 

291,196

 

Deferred tax assets

 

13,938

 

 

20,071

 

Other assets

 

86,885

 

 

86,543

 

Total assets

$

8,367,125

 

$

8,529,003

 

  LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations

$

5,581

 

$

5,544

 

Accounts payable

 

1,511,673

 

 

1,571,261

 

Accrued salaries, wages and other current liabilities

 

729,561

 

 

780,632

 

Current portion of operating lease liabilities

 

571,952

 

 

575,651

 

Total current liabilities

 

2,818,767

 

 

2,933,088

 

Long-term debt, less current maturities

 

3,222,655

 

 

2,732,986

 

Long-term operating lease liabilities

 

2,496,476

 

 

2,597,090

 

Lease financing obligations, less current maturities

 

14,009

 

 

14,830

 

Other noncurrent liabilities

 

151,616

 

 

151,976

 

Total liabilities

 

8,703,523

 

 

8,429,970

 

  Commitments and contingencies

 

-

 

 

-

 

Stockholders' (deficit) equity: Common stock

 

56,580

 

 

55,752

 

Additional paid-in capital

 

5,915,521

 

 

5,910,299

 

Accumulated deficit

 

(6,293,062

)

 

(5,851,581

)

Accumulated other comprehensive loss

 

(15,437

)

 

(15,437

)

Total stockholders' (deficit) equity

 

(336,398

)

 

99,033

 

Total liabilities and stockholders' (deficit) equity

$

8,367,125

 

$

8,529,003

 

  RITE AID CORPORATION AND SUBSIDIARIES   CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)       Thirteen weeks endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021 Revenues

$

5,901,069

 

$

6,113,000

 

Costs and expenses: Cost of revenues

 

4,746,574

 

 

4,867,076

 

Selling, general and administrative expenses

 

1,193,553

 

 

1,267,753

 

Facility exit and impairment charges

 

45,845

 

 

11,353

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

Interest expense

 

52,533

 

 

48,592

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

2,839

 

(Gain) loss on sale of assets, net

 

(29,001

)

 

12,378

 

 

 

6,220,392

 

 

6,209,991

 

  Loss before income taxes

 

(319,323

)

 

(96,991

)

Income tax expense

 

11,967

 

 

3,310

 

Net loss

$

(331,290

)

$

(100,301

)

      Basic and diluted loss per share:   Numerator for loss per share: Net loss attributable to common stockholders - basic and diluted

$

(331,290

)

$

(100,301

)

      Denominator: Basic and diluted weighted average shares

 

54,548

 

 

53,989

 

    Basic and diluted loss per share

$

(6.07

)

$

(1.86

)

  RITE AID CORPORATION AND SUBSIDIARIES   CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited)       Twenty-six weeksended August 27, 2022 Twenty-six weeksended August 28, 2021 Revenues

$

11,915,652

 

$

12,273,985

 

Costs and expenses: Cost of revenues

 

9,564,428

 

 

9,743,186

 

Selling, general and administrative expenses

 

2,411,482

 

 

2,513,115

 

Facility exit and impairment charges

 

112,416

 

 

20,184

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

Interest expense

 

100,652

 

 

97,713

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

3,235

 

(Gain) loss on sale of assets, net

 

(58,197

)

 

5,820

 

 

 

12,341,669

 

 

12,383,253

 

  Loss before income taxes

 

(426,017

)

 

(109,268

)

Income tax expense

 

15,464

 

 

4,090

 

Net loss

$

(441,481

)

$

(113,358

)

      Basic and diluted loss per share:   Numerator for loss per share: Net loss attributable to common stockholders - basic and diluted

$

(441,481

)

$

(113,358

)

      Denominator: Basic and diluted weighted average shares

 

54,453

 

 

53,920

 

    Basic and diluted loss per share

$

(8.11

)

$

(2.10

)

  RITE AID CORPORATION AND SUBSIDIARIES   CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)       Thirteen weeks endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021     OPERATING ACTIVITIES: Net loss

$

(331,290

)

$

(100,301

)

Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization

 

68,564

 

 

73,859

 

Facility exit and impairment charges

 

45,845

 

 

11,353

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

LIFO charge (credit)

 

10,121

 

 

(3,993

)

Change in allowances for uncollectible accounts receivable

 

(5,434

)

 

-

 

(Gain) loss on sale of assets, net

 

(29,001

)

 

12,378

 

Stock-based compensation expense

 

4,735

 

 

5,792

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

2,839

 

Changes in deferred taxes

 

6,133

 

 

-

 

Changes in operating assets and liabilities: Accounts receivable

 

(107,215

)

 

(63,368

)

Inventories

 

(61,578

)

 

(31,014

)

Accounts payable

 

94,229

 

 

40,797

 

Operating lease right-of-use assets and operating lease liabilities

 

(16,901

)

 

(6,400

)

Other assets

 

(11,621

)

 

17,207

 

Other liabilities

 

(76,699

)

 

66,574

 

Net cash (used in) provided by operating activities

 

(199,224

)

 

25,723

 

INVESTING ACTIVITIES: Payments for property, plant and equipment

 

(49,067

)

 

(46,192

)

Intangible assets acquired

 

(3,108

)

 

(9,043

)

Proceeds from insured loss

 

-

 

 

10,436

 

Proceeds from dispositions of assets and investments

 

10,164

 

 

2,228

 

Proceeds from sale-leaseback transactions

 

45,986

 

 

6,729

 

Net cash provided by (used in) investing activities

 

3,975

 

 

(35,842

)

FINANCING ACTIVITIES: Proceeds from issuance of long-term debt

 

-

 

 

350,000

 

Net proceeds from revolver

 

386,000

 

 

211,000

 

Principal payments on long-term debt

 

(151,034

)

 

(451,047

)

Change in zero balance cash accounts

 

(46,622

)

 

(52,801

)

Financing fees paid for early debt redemption

 

(881

)

 

(831

)

Payments for taxes related to net share settlement of equity awards

 

(1,466

)

 

(2,186

)

Deferred financing costs paid

 

-

 

 

(15,932

)

Net cash provided by financing activities

 

185,997

 

 

38,203

 

(Decrease) increase in cash and cash equivalents

 

(9,252

)

 

28,084

 

Cash and cash equivalents, beginning of period

 

56,060

 

 

118,480

 

Cash and cash equivalents, end of period

$

46,808

 

$

146,564

 

  RITE AID CORPORATION AND SUBSIDIARIES   CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)       Twenty-six weeksended August 27, 2022 Twenty-six weeksended August 28, 2021     OPERATING ACTIVITIES: Net loss

$

(441,481

)

$

(113,358

)

Adjustments to reconcile to net cash (used in) provided by operating activities: Depreciation and amortization

 

138,637

 

 

149,718

 

Facility exit and impairment charges

 

112,416

 

 

20,184

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

LIFO charge (credit)

 

10,121

 

 

(7,986

)

Change in allowances for uncollectible accounts receivable

 

(1,671

)

 

-

 

(Gain) loss on sale of assets, net

 

(58,197

)

 

5,820

 

Stock-based compensation expense

 

8,069

 

 

8,603

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

3,235

 

Changes in deferred taxes

 

6,133

 

 

-

 

Changes in operating assets and liabilities: Accounts receivable

 

(211,673

)

 

(212,855

)

Inventories

 

(77,405

)

 

(19,096

)

Accounts payable

 

(43,343

)

 

91,324

 

Operating lease right-of-use assets and operating lease liabilities

 

(31,713

)

 

(12,309

)

Other assets

 

(10,870

)

 

25,185

 

Other liabilities

 

(61,372

)

 

101,133

 

Net cash (used in) provided by operating activities

 

(451,461

)

 

39,598

 

INVESTING ACTIVITIES: Payments for property, plant and equipment

 

(122,243

)

 

(105,356

)

Intangible assets acquired

 

(15,356

)

 

(14,479

)

Proceeds from insured loss

 

-

 

 

10,436

 

Proceeds from dispositions of assets and investments

 

41,003

 

 

4,676

 

Proceeds from sale-leaseback transactions

 

45,986

 

 

14,185

 

Net cash used in investing activities

 

(50,610

)

 

(90,538

)

FINANCING ACTIVITIES: Proceeds from issuance of long-term debt

 

-

 

 

350,000

 

Net proceeds from revolver

 

677,000

 

 

250,000

 

Principal payments on long-term debt

 

(152,011

)

 

(542,988

)

Change in zero balance cash accounts

 

(12,931

)

 

(844

)

Financing fees paid for early debt redemption

 

(881

)

 

(833

)

Payments for taxes related to net share settlement of equity awards

 

(2,019

)

 

(2,221

)

Deferred financing costs paid

 

-

 

 

(16,512

)

Net cash provided by financing activities

 

509,158

 

 

36,602

 

Increase (decrease) in cash and cash equivalents

 

7,087

 

 

(14,338

)

Cash and cash equivalents, beginning of period

 

39,721

 

 

160,902

 

Cash and cash equivalents, end of period

$

46,808

 

$

146,564

 

RITE AID CORPORATION AND SUBSIDIARIES   SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)     Thirteen weeks endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021   Retail Pharmacy Segment Revenues (a)

$

4,231,791

 

$

4,277,218

 

Cost of revenues (a)

 

3,188,755

 

 

3,136,856

 

Gross profit

 

1,043,036

 

 

1,140,362

 

LIFO charge (credit)

 

10,121

 

 

(3,993

)

FIFO gross profit

 

1,053,157

 

 

1,136,369

 

Adjusted EBITDA gross profit

 

1,056,055

 

 

1,138,913

 

  Gross profit as a percentage of revenues

 

24.65

%

 

26.66

%

LIFO charge (credit) as a percentage of revenues

 

0.24

%

 

-0.09

%

FIFO gross profit as a percentage of revenues

 

24.89

%

 

26.57

%

Adjusted EBITDA gross profit as a percentage of revenues

 

24.96

%

 

26.63

%

  Selling, general and administrative expenses

 

1,100,775

 

 

1,163,352

 

Adjusted EBITDA selling, general and administrative expenses

 

1,024,571

 

 

1,069,544

 

Selling, general and administrative expenses as a percentage of revenues

 

26.01

%

 

27.20

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues

 

24.21

%

 

25.01

%

  Cash interest expense

 

49,619

 

 

45,599

 

Non-cash interest expense

 

2,914

 

 

2,993

 

Total interest expense

 

52,533

 

 

48,592

 

  Adjusted EBITDA

 

31,484

 

 

69,369

 

Adjusted EBITDA as a percentage of revenues

 

0.74

%

 

1.62

%

    Pharmacy Services Segment Revenues (a)

$

1,727,241

 

$

1,898,213

 

Cost of revenues (a)

 

1,615,782

 

 

1,792,651

 

Gross profit

 

111,459

 

 

105,562

 

  Gross profit as a percentage of revenues

 

6.45

%

 

5.56

%

  Adjusted EBITDA

 

47,065

 

 

36,791

 

Adjusted EBITDA as a percentage of revenues

 

2.72

%

 

1.94

%

  (a) - Revenues and cost of revenues include $57,963 and $62,431 of inter-segment activity for the thirteen weeks ended August 27, 2022 and August 28, 2021, respectively, that is eliminated in consolidation. RITE AID CORPORATION AND SUBSIDIARIES   SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)     Twenty-six weeksended August 27, 2022 Twenty-six weeksended August 28, 2021   Retail Pharmacy Segment Revenues (a)

$

8,577,147

 

$

8,628,900

 

Cost of revenues (a)

 

6,436,754

 

 

6,318,604

 

Gross profit

 

2,140,393

 

 

2,310,296

 

LIFO charge (credit)

 

10,121

 

 

(7,986

)

FIFO gross profit

 

2,150,514

 

 

2,302,310

 

Adjusted EBITDA gross profit

 

2,162,707

 

 

2,307,251

 

  Gross profit as a percentage of revenues

 

24.95

%

 

26.77

%

LIFO charge (credit) as a percentage of revenues

 

0.12

%

 

-0.09

%

FIFO gross profit as a percentage of revenues

 

25.07

%

 

26.68

%

Adjusted EBITDA gross profit as a percentage of revenues

 

25.21

%

 

26.74

%

  Selling, general and administrative expenses

 

2,217,989

 

 

2,319,391

 

Adjusted EBITDA selling, general and administrative expenses

 

2,057,541

 

 

2,142,968

 

Selling, general and administrative expenses as a percentage of revenues

 

25.86

%

 

26.88

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues

 

23.99

%

 

24.83

%

  Cash interest expense

 

94,863

 

 

91,623

 

Non-cash interest expense

 

5,789

 

 

6,090

 

Total interest expense

 

100,652

 

 

97,713

 

  Adjusted EBITDA

 

105,166

 

 

164,283

 

Adjusted EBITDA as a percentage of revenues

 

1.23

%

 

1.90

%

    Pharmacy Services Segment Revenues (a)

$

3,453,098

 

$

3,770,495

 

Cost of revenues (a)

 

3,242,267

 

 

3,549,992

 

Gross profit

 

210,831

 

 

220,503

 

  Gross profit as a percentage of revenues

 

6.11

%

 

5.85

%

  Adjusted EBITDA

 

73,513

 

 

80,754

 

Adjusted EBITDA as a percentage of revenues

 

2.13

%

 

2.14

%

(a) - Revenues and cost of revenues include $114,593 and $125,410 of inter-segment activity for the twenty-six weeks ended August 27, 2022 and August 28, 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 endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021     Reconciliation of net loss to adjusted EBITDA: Net loss

$

(331,290

)

$

(100,301

)

Adjustments: Interest expense

 

52,533

 

 

48,592

 

Income tax expense

 

11,967

 

 

3,310

 

Depreciation and amortization

 

68,564

 

 

73,859

 

LIFO charge (credit)

 

10,121

 

 

(3,993

)

Facility exit and impairment charges

 

45,845

 

 

11,353

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

2,839

 

Merger and Acquisition-related costs

 

-

 

 

4,591

 

Stock-based compensation expense

 

4,735

 

 

5,792

 

Restructuring-related costs

 

12,805

 

 

9,584

 

Inventory write-downs related to store closings

 

1,094

 

 

798

 

Litigation and other contractual settlements

 

20,093

 

 

34,212

 

(Gain) loss on sale of assets, net

 

(29,001

)

 

12,378

 

Other

 

195

 

 

3,146

 

Adjusted EBITDA

$

78,549

 

$

106,160

 

Percent of revenues

 

1.33

%

 

1.74

%

  RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands) (unaudited)       Twenty-six weeksended August 27, 2022 Twenty-six weeksended August 28, 2021     Reconciliation of net loss to adjusted EBITDA: Net loss

$

(441,481

)

$

(113,358

)

Adjustments: Interest expense

 

100,652

 

 

97,713

 

Income tax expense

 

15,464

 

 

4,090

 

Depreciation and amortization

 

138,637

 

 

149,718

 

LIFO charge (credit)

 

10,121

 

 

(7,986

)

Facility exit and impairment charges

 

112,416

 

 

20,184

 

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

 

-

 

 

8,477

 

Stock-based compensation expense

 

8,069

 

 

8,603

 

Restructuring-related costs

 

35,451

 

 

15,516

 

Inventory write-downs related to store closings

 

9,049

 

 

1,270

 

Litigation and other contractual settlements

 

38,364

 

 

48,212

 

(Gain) loss on sale of assets, net

 

(58,197

)

 

5,820

 

Other

 

(754

)

 

3,543

 

Adjusted EBITDA

$

178,679

 

$

245,037

 

Percent of revenues

 

1.50

%

 

2.00

%

  RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per share amounts) (unaudited)     Thirteen weeks endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021   Net loss

$

(331,290

)

$

(100,301

)

Add back - Income tax expense

 

11,967

 

 

3,310

 

Loss before income taxes

 

(319,323

)

 

(96,991

)

  Adjustments: Amortization expense

 

18,420

 

 

19,953

 

LIFO charge (credit)

 

10,121

 

 

(3,993

)

Goodwill and intangible asset impairment charges

 

252,200

 

 

-

 

(Gain) loss on debt modifications and retirements, net

 

(41,312

)

 

2,839

 

Merger and Acquisition-related costs

 

-

 

 

4,591

 

Restructuring-related costs

 

12,805

 

 

9,584

 

Litigation and other contractual settlements

 

20,093

 

 

34,212

 

  Adjusted loss before income taxes

 

(46,996

)

 

(29,805

)

  Adjusted income tax benefit (a)

 

(12,576

)

 

(7,839

)

Adjusted net loss

$

(34,420

)

$

(21,966

)

  Adjusted net loss per diluted share:   Numerator for adjusted net loss per diluted share: Adjusted net loss

$

(34,420

)

$

(21,966

)

      Denominator: Basic and diluted weighted average shares

 

54,548

 

 

53,989

 

  Net loss per diluted share

$

(6.07

)

$

(1.86

)

  Adjusted net loss per diluted share

$

(0.63

)

$

(0.41

)

(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 August 27, 2022 and August 28, 2021, respectively. RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per share amounts) (unaudited)     Twenty-six weeks endedAugust 27, 2022 Twenty-six weeks endedAugust 28, 2021   Net loss

$

(441,481

)

$

(113,358

)

Add back - Income tax expense

 

15,464

 

 

4,090

 

Loss before income taxes

 

(426,017

)

 

(109,268

)

  Adjustments: Amortization expense

 

39,046

 

 

40,413

 

LIFO charge (credit)

 

10,121

 

 

(7,986

)

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

 

-

 

 

8,477

 

Restructuring-related costs

 

35,451

 

 

15,516

 

Litigation and other contractual settlements

 

38,364

 

 

48,212

 

  Adjusted loss before income taxes

 

(92,147

)

 

(1,401

)

  Adjusted income tax benefit (a)

 

(24,659

)

 

(368

)

Adjusted net loss

$

(67,488

)

$

(1,033

)

  Adjusted net loss per diluted share:   Numerator for adjusted net loss per diluted share: Adjusted net loss

$

(67,488

)

$

(1,033

)

      Denominator: Basic and diluted weighted average shares

 

54,453

 

 

53,920

 

  Net loss per diluted share

$

(8.11

)

$

(2.10

)

  Adjusted net loss per diluted share

$

(1.24

)

$

(0.02

)

(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 twenty-six weeks ended August 27, 2022 and August 28, 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 endedAugust 27, 2022 Thirteen weeks endedAugust 28, 2021     Reconciliation of adjusted EBITDA gross profit: Revenues

$

4,231,791

 

$

4,277,218

 

Gross Profit

 

1,043,036

 

 

1,140,362

 

Addback: LIFO charge (credit)

 

10,121

 

 

(3,993

)

Depreciation and amortization (cost of goods sold portion only)

 

2,075

 

 

1,950

 

Other

 

823

 

 

594

 

Adjusted EBITDA gross profit

$

1,056,055

 

$

1,138,913

 

Percent of revenues

 

24.96

%

 

26.63

%

      Reconciliation of adjusted EBITDA selling, general and administrative expenses: Revenues

$

4,231,791

 

$

4,277,218

 

Selling, general and administrative expenses

 

1,100,775

 

 

1,163,352

 

Less: Depreciation and amortization (SG&A portion only)

 

54,604

 

 

59,081

 

Stock-based compensation expense

 

4,496

 

 

5,695

 

Merger and Acquisition-related costs

 

-

 

 

4,591

 

Restructuring-related costs

 

8,442

 

 

2,584

 

Litigation and other contractual settlements

 

8,170

 

 

18,448

 

Other

 

492

 

 

3,409

 

Adjusted EBITDA selling, general and administrative expenses

$

1,024,571

 

$

1,069,544

 

Percent of revenues

 

24.21

%

 

25.01

%

      Adjusted EBITDA

$

31,484

 

$

69,369

 

  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 weeksended August 27, 2022 Twenty-six weeksended August 28, 2021     Reconciliation of adjusted EBITDA gross profit: Revenues

$

8,577,147

 

$

8,628,900

 

Gross Profit

 

2,140,393

 

 

2,310,296

 

Addback: LIFO charge (credit)

 

10,121

 

 

(7,986

)

Depreciation and amortization (cost of goods sold portion only)

 

4,968

 

 

4,047

 

Other

 

7,225

 

 

894

 

Adjusted EBITDA gross profit

$

2,162,707

 

$

2,307,251

 

Percent of revenues

 

25.21

%

 

26.74

%

      Reconciliation of adjusted EBITDA selling, general and administrative expenses: Revenues

$

8,577,147

 

$

8,628,900

 

Selling, general and administrative expenses

 

2,217,989

 

 

2,319,391

 

Less: Depreciation and amortization (SG&A portion only)

 

107,819

 

 

118,849

 

Stock-based compensation expense

 

7,598

 

 

8,466

 

Merger and Acquisition-related costs

 

-

 

 

8,477

 

Restructuring-related costs

 

25,813

 

 

4,205

 

Litigation and other contractual settlements

 

18,122

 

 

32,448

 

Other

 

1,096

 

 

3,978

 

Adjusted EBITDA selling, general and administrative expenses

$

2,057,541

 

$

2,142,968

 

Percent of revenues

 

23.99

%

 

24.83

%

      Adjusted EBITDA

$

105,166

 

$

164,283

 

  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

$

23,600,000

 

$

24,000,000

 

  Pharmacy Services Segment Revenues

$

6,250,000

 

$

6,350,000

 

  Gross Capital Expenditures

$

225,000

 

$

225,000

 

    Reconciliation of net loss to adjusted EBITDA: Net loss

$

(520,300

)

$

(477,300

)

Adjustments: Interest expense

 

216,000

 

 

216,000

 

Income tax benefit

 

(7,000

)

 

(10,000

)

Depreciation and amortization

 

280,000

 

 

280,000

 

LIFO charge

 

20,000

 

 

20,000

 

Facility exit and impairment charges

 

175,000

 

 

175,000

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

252,200

 

Gain on debt modifications and retirements, net

 

(41,300

)

 

(41,300

)

Restructuring-related costs

 

72,000

 

 

72,000

 

Litigation and other contractual settlements

 

38,400

 

 

38,400

 

Gain on sale of assets, net

 

(60,000

)

 

(60,000

)

Other

 

25,000

 

 

25,000

 

Adjusted EBITDA

$

450,000

 

$

490,000

 

  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

$

(520,300

)

$

(477,300

)

Add back - income tax benefit

 

(7,000

)

 

(10,000

)

Loss before income taxes

 

(527,300

)

 

(487,300

)

  Adjustments: Amortization expense

 

73,000

 

 

73,000

 

LIFO charge

 

20,000

 

 

20,000

 

Goodwill and intangible asset impairment charges

 

252,200

 

 

252,200

 

Gain on debt modifications and retirements, net

 

(41,300

)

 

(41,300

)

Restructuring-related costs

 

72,000

 

 

72,000

 

Litigation and other contractual settlements

 

38,400

 

 

38,400

 

  Adjusted loss before adjusted income taxes

 

(113,000

)

 

(73,000

)

  Adjusted income tax benefit

 

(30,000

)

 

(20,000

)

Adjusted net loss

$

(83,000

)

$

(53,000

)

    Diluted adjusted net loss per share

$

(1.52

)

$

(0.97

)

 

INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com

MEDIA: Joy Errico Seusing (203) 970-5559 press@riteaid.com

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