- Fourth Quarter Net Loss Per Diluted
Share of $0.02, Compared to the Prior Year Net Income Per Diluted
Share of $0.06; Full Year Net Income Per Diluted Share of $0.00,
Compared to the Prior Year of $0.16
- Fourth Quarter Adjusted Net Loss Per
Diluted Share of $0.00, Compared to the Prior Year Adjusted Net
Income Per Diluted Share of $0.07; Full Year Adjusted Net Income
Per Diluted Share of $0.06, Compared to the Prior Year of
$0.24
- Adjusted EBITDA of $264.3 Million
for the Fourth Quarter, Compared to the Prior Year Adjusted EBITDA
of $383.0 Million; Full Year Adjusted EBITDA of $1,137.1 Million,
Compared to the Prior Year of $1,402.3 Million
Rite Aid Corporation (NYSE:RAD) today reported operating results
for its fourteen week fourth quarter and fifty-three week fiscal
year ended March 4, 2017.
For the fourth quarter, the company reported revenues of $8.5
billion, net loss of $21.1 million, or $0.02 per diluted share,
Adjusted net loss of $3.2 million, or $0.00 per diluted share and
Adjusted EBITDA of $264.3 million, or 3.1 percent of revenues. For
the full year, the company reported revenues of $32.8 billion, net
income of $4.1 million, or $0.00 per diluted share, Adjusted net
income of $66.8 million or $0.06 per diluted share and Adjusted
EBITDA of $1,137.1 million, or 3.5 percent of revenues. The fiscal
2017 fourth quarter and full year results benefited from the extra
week in fiscal 2017.
Commenting on Rite Aid’s fourth-quarter and full-year results,
Chairman and CEO John Standley said: “We remain confident that the
completion of our proposed merger with Walgreens Boots Alliance is
in the best interest of Rite Aid shareholders, customers and
associates. However, despite our team’s continued focus on growing
our business, the extended duration of the merger process is having
a negative impact on our results. In addition, we continue to face
reimbursement rate challenges that we have been unable to offset
with drug cost reductions. As we remain actively engaged in
discussions with the Federal Trade Commission to gain regulatory
approval for the merger, we are also taking steps to review our
ongoing strategy, reduce costs and make necessary changes to our
business to improve our performance going forward.”
Fourth Quarter Summary
Revenues for the quarter were $8.5 billion compared to revenues
of $8.3 billion in the prior year’s fourth quarter, an increase of
$271.2 million or 3.3 percent. Retail Pharmacy Segment revenues
were $7.1 billion and increased 4.3 percent compared to the prior
year period primarily as a result of the extra week in the fourth
quarter, partially offset by a decrease in same store sales.
Revenues in the company’s Pharmacy Services Segment were $1.5
billion and decreased 1.3 percent compared to the prior year
period.
Same store sales for the quarter decreased 3.0 percent over the
prior year, consisting of a 4.3 percent decrease in pharmacy sales
and a 0.3 percent decrease in front-end sales. Pharmacy sales
included an approximate 246 basis point negative impact from new
generic introductions. The number of prescriptions filled in same
stores, adjusted to 30-day equivalents, decreased 0.3 percent over
the prior year period. Prescription sales accounted for 67.1
percent of total drugstore sales, and third party prescription
revenue was 98.4 percent of pharmacy sales.
Net loss was $21.1 million or $0.02 per diluted share compared
to last year’s fourth quarter net income of $65.6 million or $0.06
per diluted share. The decline in operating results is due
primarily to a decline in Adjusted EBITDA, partially offset by a
higher LIFO credit.
Adjusted EBITDA (which is reconciled to net income in the
attached tables) was $264.3 million or 3.1 percent of revenues for
the fourth quarter compared to $383.0 million or 4.6 percent of
revenues for the same period last year. The decline in Adjusted
EBITDA is due to a decrease of $129.1 million in the Retail
Pharmacy Segment, resulting primarily from lower pharmacy gross
profit, which decreased because of lower reimbursement rates and
script count, partially offset by good cost control and the benefit
from the extra week in the quarter. The decline in Retail Pharmacy
Segment Adjusted EBITDA was partially offset by an increase of
$10.4 million of Pharmacy Services Segment Adjusted EBITDA, as a
result of higher gross profit in the segment.
In the fourth quarter, the company opened 2 stores, relocated 5
stores, remodeled 89 stores and expanded 2 stores, bringing the
total number of wellness stores chainwide to 2,418. The company
closed 13 stores, resulting in a total store count of 4,536 at the
end of the fourth quarter. The company also opened 7 clinics in the
fourth quarter, bringing the total to 99.
Full Year Results
For the fiscal year ended March 4, 2017, Rite Aid had revenues
of $32.8 billion compared to revenues of $30.7 billion in the prior
year, an increase of $2.1 billion or 6.9 percent. Retail Pharmacy
Segment revenues were $26.8 billion which were flat compared to the
prior year primarily as a result of the extra week this year,
offset by a decrease in same store sales. Revenues in the company’s
Pharmacy Services Segment, which was acquired on June 24, 2015,
were $6.4 billion.
Same store sales for the year decreased 2.2 percent consisting
of a 3.2 percent decrease in pharmacy sales and a 0.2 percent
increase in front end sales. Pharmacy sales included an approximate
182 basis point negative impact from new generic introductions. The
number of prescriptions filled in same stores, adjusted to 30-day
equivalents, increased 0.1 percent over the prior year period.
Prescription sales accounted for 68.3 percent of total drugstore
sales, and third party prescription revenue was 98.2 percent of
pharmacy sales.
Net income for fiscal 2017 was $4.1 million or $0.00 per diluted
share compared to last year’s net income of $165.5 million or $0.16
per diluted share. The decline in operating results is due
primarily to a decline in Adjusted EBITDA and an increase in
Pharmacy Services Segment amortization expense, partially offset by
lower income tax expense, a $33.2 million loss on debt retirement
in the prior year and lower interest expense.
Adjusted EBITDA was $1,137.1 million or 3.5 percent of revenues
for the year compared to $1,402.3 million or 4.6 percent of
revenues for last year. The decline in Adjusted EBITDA is due to a
decrease of $352.1 million in the Retail Pharmacy Segment,
resulting from lower pharmacy gross profit due to lower
reimbursement rates and script count. The decline in Retail
Pharmacy Segment Adjusted EBITDA was partially offset by an
increase of $86.9 million of Pharmacy Services Segment Adjusted
EBITDA. This increase was due to strong operating results in the
current year and the fact that the prior year’s Pharmacy Services
Segment results do not reflect a full year’s ownership of
EnvisionRx.
For the year, the company relocated 24 stores, acquired 3
stores, remodeled 348 stores, expanded 2 stores, opened 12 stores,
and closed 40 stores. The company also opened 21 clinics during the
fiscal year.
Rite Aid Merger with Walgreens Boots Alliance
As announced on January 30, 2017, Walgreens Boots Alliance, Inc.
(“WBA”) and Rite Aid entered into an amendment to the original
merger agreement dated as of October 27, 2015. Under the terms of
the amendment, WBA and Rite Aid agreed to reduce the price for each
share of Rite Aid common stock to be paid by WBA. In addition, WBA
will be required to divest up to 1,200 Rite Aid stores and certain
additional related assets if required to obtain regulatory
approval. The exact per share merger consideration will be
determined based on the number of retail stores that WBA agrees to
divest in connection with the parties’ efforts to obtain the
required regulatory approvals for the merger, with the price set at
$7.00 per share if 1,000 retail stores or fewer retail stores are
required to be divested and at $6.50 per share if 1,200 retail
stores are required to be divested (or more, if WBA agrees to sell
more). Additionally, WBA and Rite Aid agreed to extend the end date
to July 31, 2017. While WBA and Rite Aid continue to be actively
engaged in discussions with the Federal Trade Commission regarding
the transaction and are working toward a close of the merger by
July 31, 2017, there can be no assurance that the requisite
regulatory approvals will be obtained, or that the merger will be
completed within the time period contemplated by the merger
agreement on the current terms, if at all. The transaction is
subject to approval by the holders of Rite Aid’s common stock, the
expiration or termination of applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and other customary closing conditions.
Rite Aid is one of the nation’s leading drugstore chains with
4,536 stores in 31 states and the District of Columbia. Information
about Rite Aid, including corporate background and press releases,
is available through Rite Aid’s website at www.riteaid.com.
Cautionary Statement Regarding Forward Looking
Statements
Statements in this release that are not historical and
statements regarding the expected timing of the closing of the
proposed merger with WBA, the closing of the proposed sale of
stores and assets to Fred’s and the ability of the parties to
complete such transactions considering the various closing
conditions and any assumptions underlying any of the foregoing, 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 the expected timing of the closing of the merger with WBA
and sale of stores and assets to Fred's; the ability of the parties
to complete the transactions considering the various closing
conditions; the outcome of legal and regulatory matters, including
with respect to the outcome of discussions with the Federal Trade
Commission and otherwise in connection with the pending acquisition
of Rite Aid by WBA; the number of stores divested in connection
with such pending acquisition and the terms, timing and likelihood
of consummation of such transactions; the expected benefits of the
transaction such as improved operations, enhanced revenues and cash
flow, growth potential, market profile and financial strength; the
competitive ability and position of WBA following completion of the
proposed transaction; 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, our high level of
indebtedness and our ability to make interest and principal
payments on our debt and satisfy the other covenants contained in
our debt agreements; general economic, industry, market,
competitive, regulatory and political conditions; our ability to
improve the operating performance of our stores in accordance with
our long term strategy; the impact of private and public
third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; outcomes of
legal and regulatory matters; changes in legislation or
regulations, including healthcare reform; our ability to achieve
the benefits of our efforts to reduce the costs of our generic and
other drugs; risks related to the proposed transactions, including
the possibility that the transactions may not close, including
because one or more closing conditions to the transactions,
including certain regulatory approvals, may not be satisfied or
waived, on a timely basis or otherwise, including that a
governmental entity may prohibit, delay or refuse to grant approval
for the consummation of the transactions, or may require
conditions, limitations or restrictions in connection with such
approvals, including the risk that the Federal Trade Commission may
not approve the transaction despite the changes the parties to the
merger agreement, as amended, and the asset purchase agreement, are
willing to make, or that the required approval of the amended
merger agreement by the stockholders of Rite Aid may not be
obtained; the risk that stockholders may receive the bottom of the
price range for the per share merger consideration; the risk that
the merger agreement may be terminated in certain circumstances
that require Rite Aid to pay WBA a termination fee of $325 million;
the risk that the parties to the asset purchase agreement, dated as
of December 19, 2016, by and among Rite Aid, WBA, Fred’s, Inc. and
AFAE, LLC may not receive regulatory approval or be able to
complete the transactions contemplated thereby considering the
various closing conditions; the risk that there may be a material
adverse change of Rite Aid or the stores proposed to be sold to
Fred's, or the business of Rite Aid or the stores proposed to be
sold to Fred's may suffer as a result of uncertainty surrounding
the transactions; risks related to the ability to realize the
anticipated benefits of the proposed transactions; risks associated
with the financing of the proposed transactions; disruption from
the proposed transactions making it more difficult to maintain
business and operational relationships; the continuing effect of
the merger, including the effect of the announcement of the merger
agreement amendment, on Rite Aid's business relationships
(including, without limitation, customers and suppliers), operating
results and business generally; risks related to diverting
management's or employees' attention from ongoing business
operations; the risk that Rite Aid's stock price may decline
significantly if the merger is not completed; significant
transaction costs; unknown liabilities; the risk of litigation
and/or regulatory actions related to the proposed transactions;
potential changes to our strategy in the event the proposed
transactions do not close, which may include delaying or reducing
capital or other expenditures, selling assets or other operations,
attempting to restructure or refinance our debt, or seeking
additional capital, and other business effects. 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 the preliminary proxy statement, as it may be amended,
that we filed with the Securities and Exchange Commission on March
3, 2017 in connection with the proposed merger, and in other
documents that we file or furnish with the Securities and Exchange
Commission, which you are encouraged to read. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated or anticipated by such forward-looking
statements. Additionally, there can be no assurance that the
requisite regulatory approvals for the proposed merger and proposed
sale of stores and assets to Fred's will be obtained, or that the
proposed transactions will be completed within the required time
period or at all, or that the expected benefits of the proposed
transactions will be realized. Accordingly, you are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date they are made. Rite Aid expressly
disclaims any current intention to update publicly any
forward-looking statement after the distribution of this release,
whether as a result of new information, future events, changes in
assumptions or otherwise.
Additional Information and Where to Find It
In connection with the proposed strategic combination with WBA,
as amended, Rite Aid prepared a preliminary proxy statement on
Schedule 14A that has been filed with the SEC on March 3, 2017. The
preliminary proxy statement is not yet final and will be amended.
Following the filing of the definitive proxy statement with the
SEC, Rite Aid will mail the definitive proxy statement and a proxy
card to each stockholder entitled to vote at the special meeting
relating to the proposed merger. INVESTORS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain the proxy
statement, as well as other filings containing information about
Rite Aid, free of charge, from the SEC’s Web site (www.sec.gov).
Investors may also obtain Rite Aid’s SEC filings in connection with
the transaction, free of charge, from Rite Aid’s Web site
(www.RiteAid.com) under the link “Investor Relations” and then
under the tab “SEC Filings,” or by directing a request to Rite Aid,
Byron Purcell, Attention: Senior Director, Treasury Services &
Investor Relations.
Participants in the Merger Solicitation
The directors, executive officers and employees of Rite Aid and
other persons may be deemed to be participants in the solicitation
of proxies in respect of the transaction. Information regarding
Rite Aid’s directors and executive officers is available in its
definitive proxy statement for its 2016 annual meeting of
stockholders filed with the SEC on May 13, 2016. This document can
be obtained free of charge from the sources indicated above. Other
information regarding the interests of the participants in the
proxy solicitation is set forth in the preliminary proxy statement,
as it may be amended, that has been filed with the SEC on March 3,
2017. This communication shall not constitute an offer to sell or
the solicitation of an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Reconciliation of Non-GAAP Financial Measures
The company separately reports financial results on the basis of
Adjusted Net Income, Adjusted Net Income per diluted share, and
Adjusted EBITDA, which are non-GAAP financial measures. See the
attached tables for a reconciliation of Adjusted Net Income,
Adjusted Net Income per diluted share and Adjusted EBITDA to net
income, and net income per diluted share, which are the most
directly comparable GAAP financial measures. Adjusted Net Income
and Adjusted Net Income per diluted share exclude amortization of
EnvisionRx intangible assets, merger and acquisition-related costs,
loss on debt retirements and LIFO adjustments. Adjusted EBITDA is
defined as net income excluding the impact of income taxes,
interest expense, depreciation and amortization, LIFO adjustments,
charges or credits for facility closing and impairment, inventory
write-downs related to store closings, debt retirements and other
items (including stock-based compensation expense, merger and
acquisition-related costs, severance and costs related to
distribution center closures, gain or loss on sale of assets and
revenue deferrals related to our customer loyalty program).
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
(unaudited) March 4, 2017 February 27, 2016 ASSETS
Current assets: Cash and cash equivalents $ 245,410 $ 124,471
Accounts receivable, net 1,771,126 1,601,008 Inventories, net of
LIFO reserve of $999,776 and $1,006,396 2,837,211 2,697,104 Prepaid
expenses and other current assets 211,541
128,144 Total current assets 5,065,288 4,550,727 Property,
plant and equipment, net 2,251,692 2,255,398 Goodwill 1,715,479
1,713,475 Other intangibles, net 835,795 1,004,379 Deferred tax
assets 1,505,564 1,539,141 Other assets 219,934
213,890 Total assets $ 11,593,752 $ 11,277,010
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Current maturities of long-term debt and lease
financing obligations $ 21,335 $ 26,848 Accounts payable 1,613,909
1,542,797 Accrued salaries, wages and other current liabilities
1,370,004 1,427,250 Total current
liabilities 3,005,248 2,996,895 Long-term debt, less current
maturities 7,263,288 6,914,393 Lease financing obligations, less
current maturities 44,070 52,895 Other noncurrent liabilities
667,076 731,399 Total liabilities
10,979,682 10,695,582 Commitments and contingencies - -
Stockholders' equity: Common stock 1,053,690 1,047,754 Additional
paid-in capital 4,839,854 4,822,665 Accumulated deficit (5,237,157
) (5,241,210 ) Accumulated other comprehensive loss (42,317
) (47,781 ) Total stockholders' equity 614,070
581,428 Total liabilities and stockholders' equity $
11,593,752 $ 11,277,010
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
Revenues $ 8,541,360 $ 8,270,136 Costs and expenses: Cost of
revenues 6,473,198 6,228,581 Selling, general and administrative
expenses 1,897,003 1,810,288 Lease termination and impairment
charges 35,015 26,753 Interest expense 115,181 103,678 Gain on sale
of assets, net (5,755 ) (348 )
8,514,642 8,168,952 Income before
income taxes 26,718 101,184 Income tax expense 47,860
35,567 Net (loss) income $ (21,142 ) $ 65,617
Basic and diluted (loss) earnings per share:
Numerator for (loss) earnings per share: (Loss) income attributable
to common stockholders - basic and diluted $ (21,142 ) $ 65,617
Denominator: Basic weighted average
shares 1,045,929 1,041,157 Outstanding options and restricted
shares, net - 17,357 Diluted
weighted average shares 1,045,929 1,058,514
Basic and diluted (loss) income per share $ (0.02 ) $
0.06 RITE AID CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars
in thousands, except per share amounts) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
Revenues $ 32,845,073 $ 30,736,657 Costs and expenses: Cost of
revenues 25,071,008 22,910,402 Selling, general and administrative
expenses 7,242,359 7,013,346 Lease termination and impairment
charges 55,294 48,423 Interest expense 431,991 449,574 Loss on debt
retirements, net - 33,205 (Gain) loss on sale of assets, net
(4,024 ) 3,303 32,796,628
30,458,253 Income before income taxes 48,445 278,404 Income
tax expense 44,392 112,939 Net income $ 4,053
$ 165,465 Basic and diluted earnings per share:
Numerator for earnings per share: Income attributable to
common stockholders - basic and diluted $ 4,053 $ 165,465
Denominator: Basic weighted average shares
1,044,427 1,024,377 Outstanding options and restricted shares, net
16,399 17,985 Diluted weighted average
shares 1,060,826 1,042,362 Basic and
diluted income per share $ 0.00 $ 0.16
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (In thousands)
(unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
Net (loss) income $ (21,142 ) $ 65,617 Other comprehensive income
(loss): Defined benefit pension plans: Amortization of prior
service cost, net transition obligation and net actuarial losses
included in net periodic pension cost, net of $2,247 tax expense
and $2,875 tax benefit 3,421 (3,723 ) Total
other comprehensive income (loss) 3,421 (3,723
) Comprehensive (loss) income $ (17,721 ) $ 61,894
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In
thousands) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
Net income $ 4,053 $ 165,465 Other comprehensive income (loss):
Defined benefit pension plans: Amortization of prior service cost,
net transition obligation and net actuarial losses included in net
periodic pension cost, net of $3,600 tax expense and $1,681 tax
benefit 5,464 (1,931 ) Total other comprehensive
income (benefit) 5,464 (1,931 ) Comprehensive income
$ 9,517 $ 163,534 RITE
AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
Retail Pharmacy Segment Revenues (a) $ 7,120,364 $
6,826,984 Cost of revenues (a) 5,155,550
4,873,484 Gross profit 1,964,814 1,953,500 LIFO credit
(47,881 ) (6,796 ) FIFO gross profit 1,916,933
1,946,704 Gross profit as a percentage of revenues 27.59 %
28.61 % LIFO credit as a percentage of revenues -0.67 % -0.10 %
FIFO gross profit as a percentage of revenues 26.92 % 28.51 %
Selling, general and administrative expenses 1,815,699
1,737,759 Selling, general and administrative expenses as a
percentage of revenues 25.50 % 25.45 % Cash interest expense
109,584 98,081 Non-cash interest expense 5,639
5,342 Total interest expense 115,223 103,423 Adjusted
EBITDA 219,720 348,785 Adjusted EBITDA as a percentage of revenues
3.09 % 5.11 %
Pharmacy Services Segment
Revenues (a) $ 1,510,814 $ 1,530,729 Cost of revenues (a)
1,407,466 1,442,674 Gross profit 103,348
88,055 Gross profit as a percentage of revenues 6.84 % 5.75
% Adjusted EBITDA 44,619 34,224 Adjusted EBITDA as a
percentage of revenues 2.95 % 2.24 %
(a) -
Revenues and cost of revenues include
$89,818 and $87,577 of inter-segment activity for the fourteen
weeks ended March 4, 2017 and the thirteen weeks ended February 27,
2016, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
Retail Pharmacy Segment Revenues (a) $ 26,816,669 $
26,865,931 Cost of revenues (a) 19,435,336
19,270,502 Gross profit 7,381,333 7,595,429 LIFO charge
(6,620 ) 11,163 FIFO gross profit 7,374,713
7,606,592 Gross profit as a percentage of revenues 27.53 %
28.27 % LIFO charge as a percentage of revenues -0.02 % 0.04 % FIFO
gross profit as a percentage of revenues 27.50 % 28.31 %
Selling, general and administrative expenses 6,948,860 6,824,698
Selling, general and administrative expenses as a percentage of
revenues 25.91 % 25.40 % Cash interest expense 410,386
412,133 Non-cash interest expense 21,612
37,170 Total interest expense 431,998 449,303
Adjusted EBITDA 948,906 1,300,905 Adjusted EBITDA as a percentage
of revenues 3.54 % 4.84 %
Pharmacy Services
Segment Revenues (a) $ 6,393,884 $ 4,103,513 Cost of revenues
(a) 6,001,152 3,872,687 Gross profit
392,732 230,826 Gross profit as a percentage of revenues
6.14 % 5.63 % Adjusted EBITDA 188,235 101,357 Adjusted
EBITDA as a percentage of revenues 2.94 % 2.47 %
(a) -
Revenues and cost of revenues include
$365,480 and $232,787 of inter-segment activity for the fifty-three
weeks ended March 4, 2017 and fifty-two weeks ended February 27,
2016, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET (LOSS)
INCOME TO ADJUSTED EBITDA (In thousands) (unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
Reconciliation of net (loss) income to adjusted
EBITDA: Net (loss) income $ (21,142 ) $ 65,617 Adjustments:
Interest expense 115,181 103,678 Income tax expense 33,157 61,925
Income tax valuation allowance increase/(release) 14,703 (26,358 )
Depreciation and amortization 144,147 135,430 LIFO credit (47,881 )
(6,796 ) Lease termination and impairment charges 35,015 26,753
Other (8,841 ) 22,760 Adjusted EBITDA $
264,339 $ 383,009 Percent of revenues 3.09 % 4.63 %
RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME
TO ADJUSTED EBITDA (In thousands) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
Reconciliation of net income to adjusted EBITDA: Net
income $ 4,053 $ 165,465 Adjustments: Interest expense 431,991
449,574 Income tax expense 29,689 139,297 Income tax valuation
allowance increase/(release) 14,703 (26,358 ) Depreciation and
amortization 568,231 509,212 LIFO (credit) charge (6,620 ) 11,163
Lease termination and impairment charges 55,294 48,423 Loss on debt
retirements, net - 33,205 Other 39,800 72,281
Adjusted EBITDA $ 1,137,141 $ 1,402,262
Percent of revenues 3.46 % 4.56 %
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET (LOSS) INCOME (Dollars in thousands,
except per share amounts) (unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
Net (loss) income $ (21,142 ) $ 65,617 Add back - Income tax
expense 47,860 35,567 Income before
income taxes 26,718 101,184 Adjustments: Amortization of
EnvisionRx intangible assets 20,805 17,310 LIFO credit (47,881 )
(6,796 ) Merger and Acquisition-related costs 7,944
5,686 Adjusted income before income taxes
7,586 117,384 Adjusted income tax expense (a) 10,766
43,549 Adjusted net (loss) income $ (3,180 ) $
73,835 Adjusted net (loss) income per diluted share:
Numerator for adjusted net (loss) income per diluted share:
Adjusted net (loss) income $ (3,180 ) $ 73,835
Denominator: Basic weighted average shares 1,045,929
1,041,157 Outstanding options and restricted shares, net -
17,357 Diluted weighted average shares
1,045,929 1,058,514 Net (loss)
income per diluted share $ (0.02 ) $ 0.06 Adjusted net
(loss) income per diluted share $ (0.00 ) $ 0.07
(a)
The fiscal year 2017 and 2016 annual
effective tax rates, adjusted to exclude amortization of EnvisionRx
intangible assets, LIFO credits and Merger and Acquisition-related
costs from book income, are used for the fourteen weeks ended March
4, 2017 and the thirteen weeks ended February 27, 2016,
respectively.
RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET INCOME (Dollars
in thousands, except per share amounts) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
Net income $ 4,053 $ 165,465 Add back - Income tax expense
44,392 112,939 Income before income taxes
48,445 278,404 Adjustments: Amortization of EnvisionRx
intangible assets 83,022 55,527 LIFO (credit) charge (6,620 )
11,163 Loss on debt retirements, net - 33,205 Merger and
Acquisition-related costs 14,066 27,482
Adjusted income before income taxes 138,913 405,781 Adjusted
income tax expense (a) 72,096 150,545 Adjusted
net income $ 66,817 $ 255,236 Adjusted net income per
diluted share: Numerator for adjusted net income per diluted
share: Adjusted net income $ 66,817 $ 255,236
Denominator: Basic weighted average shares 1,044,427
1,024,377 Outstanding options and restricted shares, net
16,399 17,985 Diluted weighted average shares
1,060,826 1,042,362 Net income per
diluted share $ 0.00 $ 0.16 Adjusted net income per diluted
share $ 0.06 $ 0.24
(a)
The fiscal year 2017 and 2016 annual
effective tax rates, adjusted to exclude amortization of EnvisionRx
intangible assets, LIFO (credits) charges, loss on debt retirements
and Merger and Acquisition-related costs from book income, are used
for the fifty-three weeks ended March 4, 2017 and the fifty-two
weeks ended February 27, 2016, respectively.
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
thousands) (unaudited)
Fourteen weeks ended
March 4, 2017
Thirteen weeks ended
February 27, 2016
OPERATING ACTIVITIES: Net (loss) income $ (21,142 ) $
65,617 Adjustments to reconcile to net cash provided by operating
activities: Depreciation and amortization 144,147 135,430 Lease
termination and impairment charges 35,015 26,753 LIFO credit
(47,881 ) (6,796 ) Gain on sale of assets, net (5,755 ) (348 )
Stock-based compensation expense (13,284 ) 11,419 Changes in
deferred taxes 28,873 28,793 Excess tax benefit on stock options
and restricted stock 3,266 (1,448 ) Changes in operating assets and
liabilities: Accounts receivable (55,897 ) (24,239 ) Inventories
158,031 181,619 Accounts payable (195,750 ) (110,817 ) Other assets
and liabilities, net 30,787 21,882 Net
cash provided by operating activities 60,410 327,865 INVESTING
ACTIVITIES: Payments for property, plant and equipment (90,501 )
(127,009 ) Intangible assets acquired (8,017 ) (31,036 ) Proceeds
from sale-leaseback transactions - 36,732 Proceeds from
dispositions of assets and investments 6,635
1,085 Net cash used in investing activities (91,883 )
(120,228 ) FINANCING ACTIVITIES: Net proceeds from (payments to)
revolver 50,000 (280,000 ) Principal payments on long-term debt
(4,813 ) (5,750 ) Change in zero balance cash accounts 12,395
(27,867 ) Net proceeds from the issuance of common stock 2,539
2,751 Excess tax benefit on stock options and restricted stock
(3,266 ) 1,448 Net cash provided by (used in)
financing activities 56,855 (309,418 )
Increase (decrease) in cash and cash equivalents 25,382 (101,781 )
Cash and cash equivalents, beginning of period 220,028
226,252 Cash and cash equivalents, end of
period $ 245,410 $ 124,471
SUPPLEMENTAL CASH FLOW INFORMATION Payments for
property, plant and equipment $ 90,501 $ 127,009 Intangible assets
acquired 8,017 31,036 Total cash
capital expenditures 98,518 158,045 Equipment received for noncash
consideration - 1,000 Equipment financed under capital leases
3,670 6,115 Gross capital expenditures
$ 102,188 $ 165,160
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Fifty-three weeks ended
March 4, 2017
Fifty-two weeks ended
February 27, 2016
OPERATING ACTIVITIES: Net income $ 4,053 $ 165,465
Adjustments to reconcile to net cash provided by operating
activities: Depreciation and amortization 568,231 509,212 Lease
termination and impairment charges 55,294 48,423 LIFO (credit)
charge (6,620 ) 11,163 (Gain) loss on sale of assets, net (4,024 )
3,303 Stock-based compensation expense 23,482 37,948 Loss on debt
retirements, net - 33,205 Changes in deferred taxes 35,038 79,488
Excess tax benefit on stock options and restricted stock (543 )
(22,884 ) Changes in operating assets and liabilities: Accounts
receivable (166,765 ) 291,659 Inventories (133,543 ) 181,958
Accounts payable 29,528 (21,187 ) Other assets and liabilities, net
(178,268 ) (320,351 ) Net cash provided by operating
activities 225,863 997,402 INVESTING ACTIVITIES: Payments for
property, plant and equipment (424,289 ) (541,347 ) Intangible
assets acquired (56,822 ) (128,648 ) Acquisition of businesses, net
of cash acquired - (1,778,377 ) Proceeds from sale-leaseback
transactions - 36,732 Proceeds from dispositions of assets and
investments 16,852 9,782 Net cash used
in investing activities (464,259 ) (2,401,858 ) FINANCING
ACTIVITIES: Proceeds from issuance of long-term debt - 1,800,000
Net proceeds from revolver 330,000 375,000 Principal payments on
long-term debt (21,239 ) (672,717 ) Change in zero balance cash
accounts 43,080 (62,878 ) Net proceeds from the issuance of common
stock 6,951 11,376 Financing fees paid for early debt redemption -
(26,003 ) Excess tax benefit on stock options and restricted stock
543 22,884 Deferred financing costs paid -
(34,634 ) Net cash provided by financing activities 359,335
1,413,028 Increase in cash and cash
equivalents 120,939 8,572 Cash and cash equivalents, beginning of
period 124,471 115,899 Cash and cash
equivalents, end of period $ 245,410 $ 124,471
SUPPLEMENTAL CASH FLOW INFORMATION Payments
for property, plant and equipment $ 424,289 $ 541,347 Intangible
assets acquired 56,822 128,648 Total
cash capital expenditures 481,111 669,995 Equipment received for
noncash consideration 746 3,011 Equipment financed under capital
leases 7,551 9,614 Gross capital
expenditures $ 489,408 $ 682,620
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170425005820/en/
Rite Aid CorporationINVESTORS:Matt Schroeder,
717-214-8867investor@riteaid.comorMEDIA:Susan Henderson,
717-730-7766
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