Amended Current Report Filing (8-k/a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

AMENDMENT TO CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

September 3, 2015 (June 24, 2015)

Rite Aid Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-5742	23-1614034
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification Number)

30 Hunter Lane, Camp Hill, Pennsylvania 17011

(Address of principal executive offices, including zip code)

(717) 761-2633

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note:

On June 24, 2015, Rite Aid Corporation (“Rite Aid”) completed its previously announced acquisition of Envision Pharmaceutical Services, a national, full-service pharmacy benefit management company (“Envision”), pursuant to an Agreement and Plan of Merger, dated as of February 10, 2015. This amendment to Rite Aid’s Current Report on Form 8-K dated June 24, 2015 (the “Initial Form 8-K”) is being filed to provide the financial statements described in Item 9.01 below, which were not previously filed with the Initial Form 8-K, and which are permitted to be filed by amendment no later than 71 calendar days after the date the Initial Form 8-K was required to be filed with the Securities and Exchange Commission.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The historical audited consolidated financial statements of Envision and its subsidiaries for the year ended December 31, 2014 (successor), the period from November 4, 2013 to December 31, 2013 (successor), the period from January 1, 2013 to November 3, 2013 (predecessor) and the year ended December 31, 2012 (predecessor) are attached hereto as Exhibit 99.1 and are incorporated herein by reference.

The historical unaudited consolidated financial statements of Envision and its subsidiaries for the quarter ended March 31, 2015 are attached hereto as Exhibit 99.2 and are incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial statements of Rite Aid for the year ended February 28, 2015 and the quarter ended May 30, 2015 are attached hereto as Exhibit 99.3 and are incorporated herein by reference.

(d) Exhibits

Exhibit No.		Description
23.1		Consent of Skoda Minotti
99.1		Audited Consolidated Financial Statements of Envision and Subsidiaries for the year ended December 31, 2014 (successor), the period from November 4, 2013 to December 31, 2013 (successor), the period from January 1, 2013 to November 3, 2013 (predecessor) and the year ended December 31, 2012 (predecessor)
99.2		Unaudited Consolidated Financial Statements of Envision and Subsidiaries for the quarter ended March 31, 2015
99.3		Unaudited Pro Forma Condensed Combined Financial Statements of Rite Aid for the year ended February 28, 2015 and the quarter ended May 30, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

Date: September 3, 2015	By:	/s/ Marc A. Strassler
	Name:	Marc A. Strassler
	Title:	Executive Vice President, Secretary and General Counsel

EXHIBIT INDEX

Exhibit No.		Description
23.1		Consent of Skoda Minotti
99.1		Audited Consolidated Financial Statements of Envision and Subsidiaries for the year ended December 31, 2014 (successor), the period from November 4, 2013 to December 31, 2013 (successor), the period from January 1, 2013 to November 3, 2013 (predecessor) and the year ended December 31, 2012 (predecessor)
99.2		Unaudited Consolidated Financial Statements of Envision and Subsidiaries for the quarter ended March 31, 2015
99.3		Unaudited Pro Forma Condensed Combined Financial Statements of Rite Aid for the year ended February 28, 2015 and the quarter ended May 30, 2015

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm — Skoda Minotti

We consent to the incorporation by reference in Registration Statement Nos. 333-61734, 333-107824, 333-124725, 333-146531, 333-167720, 333-182320 and 333-196904 on Forms S-8 of Rite Aid Corporation, of our report dated March 9, 2015, except as to Note 20, which is as of August 17, 2015, which report appears in the Form 8-K/A of Rite Aid Corporation dated as of June 24, 2015 and filed on September 3, 2015, with respect to the consolidated balance sheets of Envision Topco Holdings, LLC as of December 31, 2014 (Successor), 2013 (Successor), and 2012 (Predecessor), and the related consolidated statements of operations and comprehensive income (loss), changes in members’ equity, and cash flows for the year ended December 31, 2014 (Successor), period from November 4, 2013 through December 31, 2013 (Successor), period from July 1, 2013 through November 3, 2013 (Predecessor), and for the year ended December 31, 2012 (Predecessor), and the related notes to the financial statements, which report appears in the consolidated financial statements and schedules of Envision Topco Holdings, LLC and Subsidiaries for the year ended December 31, 2014.

SKODA MINOTTI

/s/ Skoda Minotti

Cleveland, Ohio
September 3, 2015

Akron | 3320 West Market Street, Suite 300, Fairlawn, Ohio 44333 | ph 330 668 1100 | fx 440 646 1615

Cleveland | 6685 Beta Drive, Mayfield Village, Ohio 44143 | ph 440 449 6800 | fx 440 646 1615

Skoda Minotti | Certified Public Accountants | www.skodaminotti.com

AKRON | CLEVELAND | TAMPA

Exhibit 99.1

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2014 (SUCCESSOR), PERIOD FROM

NOVEMBER 4, 2013 TO DECEMBER 31, 2013 (SUCCESSOR), PERIOD FROM

JANUARY 1, 2013 TO NOVEMBER 3, 2013 (PREDECESSOR), AND YEAR ENDED

DECEMBER 31, 2012 (PREDECESSOR)

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

FOR THE YEAR ENDED DECEMBER 31, 2014 (SUCCESSOR), PERIOD FROM

NOVEMBER 4, 2013 TO DECEMBER 31, 2013 (SUCCESSOR), PERIOD FROM

JANUARY 1, 2013 TO NOVEMBER 3, 2013 (PREDECESSOR), AND YEAR ENDED

DECEMBER 31, 2012 (PREDECESSOR)

TABLE OF CONTENTS

	PAGE NO.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	2

CONSOLIDATED BALANCE SHEETS
December 31, 2014 (Successor), 2013 (Successor) and 2012 (Predecessor)	3

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor)	4

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY
For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor)	5

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor)	6 - 7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	8 - 41

UNAUDITED SUPPLEMENTARY INFORMATION

2014 PRO FORMA CONSOLIDATED STATEMENT OF INCOME	42 - 43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS

ENVISION TOPCO HOLDINGS, LLC

AND SUBSIDIARIES

We have audited the accompanying consolidated financial statements of Envision Topco Holdings, LLC and Subsidiaries (together the “Company”), which comprise the consolidated balance sheets as of December 31, 2014 (Successor), 2013 (Successor) and 2012 (Predecessor), and the related consolidated statements of operations and comprehensive income (loss), changes in members’ equity, and cash flows for the year ended December 31, 2014, period from November 4, 2013 through December 31, 2013 (Successor), period from January 1, 2013 through November 3, 2013 (Predecessor), and for the year ended December 31, 2012 (Predecessor), and the related notes to the financial statements. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Envision Topco Holdings, LLC and Subsidiaries as of December 31, 2014 (Successor), 2013 (Successor) and 2012 (Predecessor), and the results of their operations and their cash flows for the year ended December 31, 2014, period from November 4, 2013 through December 31, 2013 (Successor), period from January 1, 2013 through November 3, 2013 (Predecessor), and for the year ended December 31, 2012 (Predecessor) in conformity with accounting principles generally accepted in the United States of America.

Other Matter

As described in Note 2, the Predecessor Company was acquired in a purchase transaction on November 4, 2013. The acquisition was accounted for as a purchase and, accordingly, the consolidated financial statements of the Successor Company are not comparable to those of the Predecessor Company.

SKODA MINOTTI

Cleveland, Ohio

March 9, 2015, except as to Note 20, which is as of August 17, 2015

Akron | 3320 West Market Street, Suite 300, Fairlawn, Ohio 44333 | ph 330 668 1100 | fx 440 646 1615

Cleveland | 6685 Beta Drive, Mayfield Village, Ohio 44143 | ph 440 449 6800 | fx 440 646 1615

Skoda Minotti | Certified Public Accountants | www.skodaminotti.com

AKRON | CLEVELAND | TAMPA

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2014, 2013 AND 2012

(in thousands)

ASSETS

	Successor			Successor			Predecessor
	2014			2013			2012
CURRENT ASSETS
Cash and cash equivalents	$	114,022		$	79,962		$	60,501
Investments, at amortized cost	6,564			6,557			6,462
Accounts receivable, net	648,947			393,870			314,574
Accrued receivables	87,219			63,527			46,261
Reinsurance recoverable	13,520			16,009			—
Income tax receivable	614			—			—
Inventory	6,140			5,478			4,628
Prepaid expenses and other current assets	6,047			3,443			2,855
Deferred tax asset	940			527			—
	884,013			569,373			435,281
PROPERTY AND EQUIPMENT - AT COST
Land	571			571			571
Building and improvements	3,932			3,921			4,462
Furniture, fixtures and equipment	11,759			9,247			13,490
	16,262			13,739			18,523
Less: Accumulated depreciation and amortization	(3,368		)	(508		)	(6,800		)
	12,894			13,231			11,723
OTHER ASSETS
Employee advance	—			—			316
Deposits and other assets	540			528			2,328
Deferred financing fees, net	21,931			19,361			5,010
Other investments	1,750			1,750			1,750
Intangible assets, net	720,872			562,403			37,459
Goodwill	424,401			390,444			4,854
	1,169,494			974,486			51,717
	$	2,066,401		$	1,557,090		$	498,721

LIABILITIES

	Successor		Successor		Predecessor
	2014		2013		2012
CURRENT LIABILITIES
Current portion of long-term debt	$	5,262	$	4,468	$	10,262
Accounts payable	480,247		374,663		263,747
Accrued expenses	22,493		9,675		6,933
Income taxes payable	—		246		—
Contract funds on deposit	5,314		3,374		2,284
Ceded reinsurance premiums payable	—		—		2,965
Funds held under reinsurance treaties	329,785		185,277		143,761
	843,101		577,703		429,952
LONG-TERM LIABILITIES
Deferred tax liabilities	104		113		—
Accrued expenses	—		1,054		—
Interest rate swaps	5,665		—		—
Long-term debt	738,256		569,687		177,553
	744,025		570,854		177,553
	1,587,126		1,148,557		607,505

MEMBERS’ EQUITY

SUCCESSOR: MEMBERS’ EQUITY	486,348			407,234		—
SUCCESSOR: RETAINED EARNINGS (DEFICIT)	(1,408		)	1,299		—
SUCCESSOR: ACCUMULATED COMPREHENSIVE LOSS	(5,665		)	—		—
PREDECESSOR: COMMON STOCK, no par or stated value	—			—		208
PREDECESSOR: ADDITIONAL PAID-IN CAPITAL	—			—		435
PREDECESSOR: SUBSCRIPTION RECEIVABLE	—			—		(1,661		)
PREDECESSOR: RETAINED EARNINGS	—			—		72,640
PREDECESSOR: TREASURY STOCK, at cost	—			—		(180,406		)
	479,275			408,533		(108,784		)
	$	2,066,401		$	1,557,090	$	498,721

The accompanying notes are an integral part of these consolidated financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Successor			Successor			Predecessor			Predecessor
	For the year			November 4, 2013			January 1, 2013			For the year
	ended			through			through			ended
	December 31, 2014			December 31, 2013			November 3, 2013			December 31, 2012

REVENUES	$	4,071,402		$	640,936		$	3,003,492		$	2,743,946

COST OF REVENUES	3,832,928			608,418			2,833,265			2,573,145

GROSS PROFIT	238,474			32,518			170,227			170,801

OPERATING EXPENSES
Selling, general and administrative	144,886			20,398			97,054			100,715
Depreciation and amortization	30,198			4,176			4,510			3,767
Incurred in connection with Acquisition	—			878			24,246			—
	175,084			25,452			125,810			104,482

INCOME FROM OPERATIONS	63,390			7,066			44,417			66,319

OTHER INCOME (EXPENSES)
Interest income	46			13			113			208
Interest expense	(52,226		)	(7,169		)	(6,477		)	(5,335		)
Write-off of deferred financing fees	—			—			(4,014		)	(4,540		)
State and local taxes and other	(5		)	—			(1,149		)	(1,393		)
	(52,185		)	(7,156		)	(11,527		)	(11,060		)
INCOME (LOSS) BEFORE
PROVISION FOR (BENEFIT FROM) FEDERAL INCOME TAXES	11,205			(90		)	32,890			55,259

PROVISION FOR (BENEFIT FROM) FEDERAL INCOME TAXES
Current	55			247			—			—
Deferred	(422		)	103			—			—
	(367		)	350			—			—

NET INCOME (LOSS)	$	11,572		$	(440	)	$	32,890		$	55,259

COMPREHENSIVE INCOME (LOSS):

Net income (loss)	$	11,572		$	(440	)	$	32,890		$	55,259
Change in fair market value of interest rate swaps	(5,665		)	—			—			—

TOTAL COMPREHENSIVE INCOME (LOSS)	$	5,907		$	(440	)	$	32,890		$	55,259

The accompanying notes are an integral part of these consolidated financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

(in thousands, except shares)

Shares					Additional					Retained						Accumulated
Common Stock	Treasury Stock		Common Stock		Paid-in Capital		Subscription Receivable			Earnings (Deficit)			Treasury Stock			Comprehensive Loss			Members’ Equity			Total

1,689,500	199,030	Predecessor: Balance at December 31, 2011	$	208	$	335	$	(2,964	)	$	45,375		$	(2,450	)	$	—		$	—		40,504
—	—	Net income	—		—		—			55,259			—			—			—			55,259
—	360,577	Treasury stock buyback	—		—		—			—			(177,956		)	—			—			(177,956		)
2,500	—	Receipt of subscription receivable	—		100		(100		)	—			—			—			—			—
—	—	Collection of subscription receivable	—		—		1,403			—			—			—			—			1,403
—	—	Distributions	—		—		—			(27,994		)	—			—			—			(27,994		)
1,692,000	559,607	Balance at December 31, 2012	208		435		(1,661		)	72,640			(180,406		)	—			—			(108,784		)
—	—	Net income	—		—		—			32,890			—			—			—			32,890
2,500	—	Receipt of subscription receivable	—		100		(100		)	—			—			—			—			—
—	—	Distributions	—		—		—			(45,354		)	—			—			—			(45,354		)
1,694,500	559,607	Predecessor: Balance at November 3, 2013	$	208	$	535	$	(1,761	)	$	60,176		$	(180,406	)	$	—		$	—		$	(121,248	)
		Successor: Balance at November 4, 2013	$	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—
		Capital contribution from members, net of transaction costs	—		—		—			—			—			—			382,546			382,546
		Opening deferred tax assets	—		—		—			517			—			—			—			517
		Net income (loss)	—		—		—			782			—			—			(1,222		)	(440		)
		Capital contributions for Laker purchase	—		—		—			—			—			—			17,000			17,000
		Rollover of Laker member interests	—		—		—			—			—			—			8,910			8,910
		Successor: Balance at December 31, 2013	—		—		—			1,299			—			—			407,234			408,533
		Capital contributions for MedTrak purchase	—		—		—			—			—			—			54,808			54,808
		Rollover of MedTrak member interests	—		—		—			—			—			—			13,090			13,090
		Grant of member interest	—		—		—			—			—			—			50			50
		Contributions	—		—		—			—			—			—			2,570			2,570
		Distributions	—		—		—			—			—			—			(5,683		)	(5,683		)
		Other comprehensive loss	—		—		—			—			—			(5,665		)	—			(5,665		)
		Net income (loss)	—		—		—			(2,707		)	—			—			14,279			11,572
		Successor: Balance at December 31, 2014	$	—	$	—	$	—		$	(1,408	)	$	—		$	(5,665	)	$	486,348		$	479,275

The accompanying notes are an integral part of these consolidated financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Successor		Successor		Predecessor		Predecessor
	For the year		November 4, 2013		January 1, 2013		For the year
	ended		through		through		ended
	December 31, 2014		December 31, 2013		November 3, 2013		December 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$11,572		$(440	)	$32,890		$55,259
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Add back (deduct): Items not affecting cash
Depreciation and amortization	30,198		4,176		4,510		3,767
Loss on disposals of intangible assets	40		—		—		—
Deferred financing fees amortization	3,181		460		887		957
Write-off of deferred financing fees	—		—		4,014		4,540
Bad debts	205		205		1,790		1,186
Amortization of investments	2		13		69		61
Amortization of original issue discount	844		124		—		—
Deferred income taxes	(422	)	103		—		—
Compensation expense for equity grant	50		—		—		—
Cash provided by (used in) changes in the following items:
(Increase) decrease in accounts receivable	(239,091	)	(236,335	)	156,568		(155,620	)
(Increase) decrease in accrued receivables	(5,956	)	356,604		(373,870	)	(12,432	)
(Increase) decrease in reinsurance recoverable	2,489		(16,009	)	—		5,402
Increase in inventory	(662	)	(554	)	(296	)	(592	)
(Increase) decrease in prepaid expenses and other current assets	(2,523	)	796		(1,381	)	56
(Increase) decrease in deposits and other assets	15		2,507		(707	)	(2,087	)
Increase in accounts payable	74,786		14,727		96,160		62,413
Increase (decrease) in accrued expenses	(608	)	4,135		10,236		(763	)
Increase in income taxes receivable/payable	(860	)	246		—		—
Increase (decrease) in contract funds on deposit	1,940		(585	)	1,675		(3,134	)
Increase (decrease) in ceded reinsurance premiums payable	—		—		(2,965	)	2,965
Increase (decrease) in funds held under reinsurance treaties	144,508		(73,533	)	115,049		125,468
Net cash provided by operating activities	19,708		56,640		44,629		87,446
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment	(1,876	)	(1,154	)	(1,474	)	(795	)
Investment in intangible assets	(8,247	)	(1,095	)	(3,612	)	(4,358	)
(Purchases of) proceeds from investments, net	(9	)	(8	)	(169	)	20
Acquisition of Laker Software, LLC, net of cash acquired	—		(35,121	)	—		—
Acquisition of Envision Pharmaceutical Holdings, LLC and Subsidiaries	—		(620,002	)	—		—
Acquisition of MedTrak Services, LLC, net of cash acquired	(189,631	)	—		—		—
Collection of advance to employee	—		313		3		3
Net cash used in investing activities	(199,763	)	(657,067	)	(5,252	)	(5,130	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt borrowings	173,250		572,450		—		139,437
Payments of principal on long-term debt	(5,079	)	(179,292	)	(7,896	)	(5,861	)
Financing fees incurred	(5,751	)	(19,712	)	—		(657	)
Purchase of treasury shares	—		—		—		(177,956	)
Collection of subscription receivable	—		1,761		—		1,403
Capital contributions	57,378		258,554		—		—
Distributions	(5,683	)	—		(45,354	)	(27,994	)
Net cash provided by (used in) financing activities	214,115		633,761		(53,250	)	(71,628	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	34,060		33,334		(13,873	)	10,688
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	79,962		46,628		60,501		49,813
CASH AND CASH EQUIVALENTS - END OF PERIOD	$114,022		$79,962		$46,628		$60,501

The accompanying notes are an integral part of these consolidated financial statements.

	Successor		Successor		Predecessor		Predecessor
	For the year		November 4, 2013		January 1, 2013		For the year
	ended		through		through		ended
	December 31, 2014		December 31, 2013		November 3, 2013		December 31, 2012
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
INTEREST	$	48,947	$	6,596	$	5,590	$	4,490
INCOME TAXES	$	892	$	—	$	1,149	$	1,155

NON-CASH INVESTING AND FINANCING ACTIVITIES:

The Company incurred capital lease obligations to directly finance the acquisition of various equipment of $0.3 million, $0.9 million and $2.5 million during the year ended December 31, 2014 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor), respectively.

Various shareholders exercised stock options in exchange for subscription receivables held by the Company in the amount of $.1 million during the period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor).

During the period from November 4, 2013 to December 31, 2013 (Successor), the Company recognized a deferred tax asset of $.5 million as a result of EIC becoming a C corporation.

During the year ended December 31, 2012 (Predecessor), the Company executed two term loan refinancings. In addition to cash received, the refinancing provided for the settlement of $157.5 million of previously held term loans, $3.7 million of previously held subordinate debt instruments, and $9.3 million of fees incurred for the refinancing.

The accompanying notes are an integral part of these consolidated financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Envision Topco Holdings, LLC (Topco or the Parent) was formed by, and is majority-owned by, funds affiliated with TPG Capital L.P. (the Sponsor) on July 1, 2013. Topco wholly owns Envision Intermediate Holdings, LLC (Intermediate Holdings). Intermediate Holdings was formed on July 1, 2013, and Intermediate Holdings wholly owns Envision Acquisition Company, LLC (EAC). EAC was formed on July 1, 2013, and EAC acquired Envision Pharmaceutical Holdings, LLC (Envision Holdings) on November 4, 2013 (the Acquisition Date) in a transaction (the Acquisition) sponsored by the Sponsor. Topco does not have any business activities other than its investment in Intermediate Holdings. Intermediate Holdings does not have any business activities other than in connection with its investment in EAC. EAC does not have any business activities other than in connection with its investment in Envision Holdings.

Envision Holdings wholly owns, directly or indirectly, each of the following entities (collectively, the Subsidiaries): Rx Options, LLC, Envision Pharmaceutical Services, LLC (Ohio), Envision Pharmaceutical Services, LLC (Nevada), MedTrak Services, LLC (MedTrak), Envision Medical Solutions, LLC, First Florida Insurers of Tampa, LLC (FFI), Advance Benefits, LLC (ABI), Envision Insurance Company (EIC), Ascend Health Technologies, LLC (formerly, Midwest Technology Investments LLC), Laker Software, LLC (Laker); Design Rx Holdings LLC, Design Rx, LLC, Design Rxclusives, LLC, Rx Initiatives L.L.C. (collectively, Design Rx Companies); and Orchard Pharmaceutical Services, LLC (Orchard).

Throughout 2012 and 2013, the Design Rx Companies, FFI and ABI were single member limited liability companies. As of December 31, 2012, all other companies included in the consolidated financial statements were S corporations. Effective November 4, 2013, all companies included in the consolidated financial statements (other than EIC) are single member limited liability companies. Effective November 4, 2013, EIC is a C corporation.

Basis of Presentation

These are the financial statements of Topco, Intermediate Holdings, EAC, and Envision Holdings and the Subsidiaries (collectively, the Company).

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of Presentation (continued)

In connection with the Acquisition: (i) Envision Holdings converted from an S corporation to a limited liability company and continues as a disregarded entity for tax purposes, with the same Delaware File Number and Federal Employer Identification Number both before and after the Acquisition, and (ii) all Subsidiaries (other than EIC) which were not limited liability companies, converted to limited liability companies. However, a new accounting basis was established in order to account for the merger as a business combination. The accompanying consolidated statements of operations, cash flows and equity are presented for the years ended December 31, 2014, 2013 and 2012. However, the year ended December 31, 2013 is presented in two periods: the Predecessor fiscal 2013 period (January 1, 2013 to November 3, 2013) and the Successor fiscal 2013 period (November 4, 2013 to December 31, 2013), which relate to the period preceding the Acquisition Date and the period including and succeeding the Acquisition Date, respectively. Although the accounting policies are consistent for the Predecessor and Successor periods, financial information for such periods has been prepared under two different historical cost bases of accounting and is therefore not comparable. The results of the periods presented are not necessarily indicative of the results that may be achieved for future periods.

Consolidation Policy

The consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations

Certain subsidiaries of Envision Holdings are engaged in the design, service and sale of benefit cost- sharing prescription drug programs primarily to employer groups, health plans, business coalitions, unions, and governmental agencies throughout the United States. This is achieved through use of a preferred drug list, which is a tiered benefit based upon safety, efficacy, cost of the medication, and “partner” contributions (pharmaceutical and pharmacy companies).

EIC participates as a prescription drug plan sponsor through Part D of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Part D). Part D is administered by the Center for Medicare and Medicaid Services (CMS).

Laker provides claims processing systems and support services for prescription drug benefit programs.

The Design Rx Companies are engaged by pharmaceutical manufacturers and specialty pharmacies to offer programs to assist individuals with minimal prescription drug coverage by providing managed cash programs, coupon programs, co-pay offset programs, prescription data services, generics programs, direct to consumer programs, and patient education service programs. The Design Rx Companies also provide pharmacy claims adjudication services.

Orchard is a mail-order prescription drug pharmacy and specialty pharmacy.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect certain amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company generates its pharmacy benefit management revenue primarily from charging a flat fee per employee/member per month or per claim to enroll under the Company’s drug plans. The Company recognizes revenue over the period to which the fee is applied.

The Company also provides a variety of pharmacy benefit programs that include such services as claims processing, nationwide pharmacy network, mail services, and formulary management. Revenue is recognized at the time these services are rendered.

The Company receives premiums for plans offered under a national Medicare Part D Prescription Drug Plan. Premiums are earned on a monthly basis over the terms of the contract.

In accordance with GAAP, when the Company provides certain pharmacy benefit management services in the fulfillment of prescriptions through the retail pharmacy network, revenues are recognized at the gross prescription price (ingredient cost plus dispensing fee less applicable co- payment). Gross reporting is appropriate because the Company has separate contractual relationships with clients and with pharmacies and has credit risk for the prescription price due from the client.

In limited instances where there are no financial risks to the Company, revenue is recorded at the net amount of the administrative fee earned for processing the claim.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

Investments

The Company invests in debt securities to satisfy licensing and other requirements of various state insurance regulations. The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity.

Other investments consist of a minority investment in another company carried at cost. GAAP requires that an impairment loss be recognized if the carrying value is deemed to be not recoverable or exceeds fair value. During the years ended December 31, 2014, 2013, and 2012, the Company did not incur any impairment loss.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable

The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, the previous loss history, the customer’s current ability to pay their obligations, and the general economy as a whole. The Company writes off accounts receivable when it determines them to be uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Any differences between estimated rebate billings and subsequent collections on those billings are recorded as a direct addition to rebate revenue. At December 31, 2014, 2013, and 2012, the Company provided an allowance for doubtful accounts of $1.6 million, $1.5 million, and $870 thousand, respectively.

Uninsured Plans

Portions of Part D are uninsured plans whereby the Company acts as an administrator and has no underwriting risk. The Company receives prospective payments from CMS in relation to Part D and amounts actually paid by the Company in excess of the prospective payments are recorded as a receivable due from CMS.

CMS reconciles the amounts actually paid and remits the final payment to the Company subsequent to year-end. Receivables from uninsured plans amounted to approximately $454 million, $258 million, and $193 million as of December 31, 2014, 2013 and 2012, respectively, and are included in accounts receivable in the accompanying consolidated balance sheets.

Accrued Receivables

Accrued receivables result from services provided to customers and earned rebates that have not been formally invoiced as of December 31, 2014, 2013, and 2012. Such amounts are generally invoiced on a monthly or quarterly basis.

Reinsurance

In the normal course of business, EIC seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by reinsuring certain levels of risk with a reinsurance company. EIC reports balances pertaining to reinsurance transactions “gross” on the balance sheet, meaning that reinsurance recoverable on unpaid losses and loss adjustment expenses are not deducted from insurance reserves but are recorded as a reinsurance recoverable asset.

Funds Held Under Reinsurance Treaties

The Company holds certain funds due to reinsurers as collateral for future claims to be paid. Amounts held in excess of payment of all claim obligations would be returned to the respective party.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and Equipment

Depreciation and amortization of property and equipment are provided by use of the straight-line method over the following estimated useful lives:

Building and improvements		40 years
Furniture, fixtures and equipment		5 – 7 years

For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor), and year ended December 31, 2013 (Predecessor), depreciation expense was $2.9 million, $.5 million, $1.9 million and $1.8 million, respectively.

Deferred Financing Fees

Deferred financing fees represent fees paid to third parties that provided services in relation to securing financing. Amortization is recognized as a component of interest expense and is computed using the straight-line method over the life of the term loan.

Intangible Assets

Intangible assets are recorded at cost and consist primarily of patents, computer software development, pharmacy benefit management accreditation license, specialty pharmacy network, non-compete agreements, customer relationships, backlog, trademarks, state insurance license costs, and manufacturer rebate contracts. Patents and computer software development costs are being amortized over their estimated useful lives of 17 and 5 years, respectively. The pharmacy benefit management accreditation license is amortized over the life of the economic benefit received, 3 years. Specialty pharmacy network is being amortized over the estimated useful life of 30 years. Non-compete agreements are being amortized over 3 to 5 years, the terms of the agreements. Customer relationships are being amortized over their estimated useful lives of 30 years. Certain trademarks are being amortized over their estimated useful lives of 20 years. Backlog is being amortized over its useful life, 3 years. Certain trademarks and the state insurance licenses have indefinite lives and as such are tested for impairment on an annual basis. The manufacturer rebate contracts are being amortized over the life of the contracts, 3 years. For the year ended December 31, 2014, the period from November 4, 2013 to December 31, 2013 (Successor), the period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor), amortization expense was $27.3 million, $3.7 million, $2.6 million and $1.9 million, respectively.

The Company assesses its intangible assets for impairment in accordance with GAAP. GAAP requires that an impairment loss be recognized if the carrying amount of an intangible asset is deemed not to be recoverable and its carrying amount exceeds its fair value. During the years ended December 31, 2014, 2013 and 2012, the Company did not incur any impairment charges related to intangible assets.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill

As of December 31, 2012, the Company recorded $4.9 million of goodwill in relation to the 2006 acquisition of FFI and ABI and the 2010 acquisition of the Design Rx Companies. Goodwill represents the excess of cost over the fair value of the tangible net assets acquired. This goodwill has been tested for impairment using qualitative analysis and, if necessary, fair value measurement techniques. At December 31, 2012, no impairment charge was necessary.

As of December 31, 2013, the Company recorded $390.4 million of goodwill in relation to the 2013 acquisitions described in Note 2. This goodwill has been tested for impairment using qualitative analysis and, if necessary, fair value measurement techniques. At December 31, 2014, no impairment charge was necessary.

During the year ended December 31, 2014, the Company recorded $34.0 million of goodwill in relation to the MedTrak acquisition described in Note 2, which will be tested for impairment in 2015 and thereafter.

Contract Funds on Deposit

The Company holds certain funds as collateral for future claims to be paid and for expenses incurred related to the administration of contracts with Part D clients. Deposits are returned to clients subsequent to the expiration of the contracts.

Inventory

Inventory is carried at the lower of cost or market, with cost being determined by the first-in, first-out (FIFO) method. At December 31, 2014, 2013 and 2012, inventory consisted of prescription drugs purchased by Orchard.

Derivative Instruments and Hedging Activities

The Company utilizes interest rate swaps to hedge potential rate increases in its variable rate debt. At the inception of the interest rate swap contracts, the Company determined that the contracts were derivative instruments. Because the instruments are designed as an effective cash flow hedge, the mark-to-market gains or losses on each swap are deferred and included as a component of accumulated other comprehensive income or loss to the extent affected.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Federal Income Taxes

For the period from January 1, 2013 through November 3, 2013 and the year ended December 31, 2012, Envision Holdings and subsidiaries, with the consent of its shareholders, elected under the Internal Revenue Code to be taxed as an S Corporation. In lieu of corporation Federal income taxes, the shareholders of an S Corporation are taxed on their proportionate share of a company’s taxable income. Therefore, no provision or liability for Federal income taxes has been included in these consolidated financial statements. Envision Holdings and subsidiaries have no uncertain tax positions that have been taken and believes it can defend its tax returns to any tax jurisdiction. Envision Holdings and the Subsidiaries are no longer subject to examination by tax authorities for years before 2011.

Effective November 4, 2013, the Company, other than EIC, is a single member limited liability company. The Company is treated as a disregarded entity for Federal income tax purposes. In lieu of corporation Federal income taxes, the members of the Parent are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for Federal income taxes has been included in these consolidated financial statements for these entities.

The Parent files income tax or information returns in the U.S. Federal jurisdiction, and various state and local jurisdictions. The Parent currently has no uncertain tax positions that have been taken and believes it can defend its tax returns to any tax jurisdiction. The Parent is subject to examination by tax authorities for 2014 and 2013.

Effective with the acquisition of Envision Holdings by the Sponsor and its conversion to a limited liability company on November 4, 2013, EIC became taxed as a C Corporation under the Internal Revenue Code. Tax provisions for the year ended December 31, 2014 and the period from November 4, 2013 to December 31, 2013 have been recorded and applicable deferred taxes have been recorded as of December 31, 2014 and 2013. EIC currently has no uncertain tax positions that have been taken and believes it can defend its tax returns to any tax jurisdiction. EIC is subject to examination by tax authorities for 2014 and 2013.

EIC recognizes interest and penalties related to tax contingencies in operating expenses. As of and for the year ended December 31, 2014, as of December 31, 2013 and for the period from November 4, 2013 to December 31, 2013, EIC did not recognize any expense for interest and penalties.

Subsequent Events

The Company has evaluated subsequent events through March 9, 2015, the date these financial statements were available to be issued. Other than the matter described in Note 20, there were no material subsequent events that required recognition or additional disclosure in these financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS

Acquisition - TPG

Envision Holdings was acquired on the Acquisition Date through the Acquisition described in Note 1.

The Acquisition has been accounted for as a purchase business combination. Acquisition-related transaction costs include investment banking, legal and accounting fees, and other external costs directly related to the Acquisition. Such transaction costs paid at closing totaled $65.6 million and include $19.7 million that was capitalized as debt issuance costs and $25.1 million which are included in operating expenses in the consolidated statements of operations.

The remaining $20.8 million was paid by the Company out of equity proceeds from the Acquisition. These costs have been reflected in the consolidated financial statements as a reduction of the capital contribution from the Sponsor.

Sources and Uses of Funds

The sources and uses of funds in connection with the Acquisition are summarized below (in thousands):

	Successor
	2013
Sources:
Proceeds from 1st Lien Term Loan, net of discount	$	400,950
Proceeds from 2nd Lien Term Loan, net of discount	171,500
Proceeds from equity contributions	403,372
Envision Holdings cash used in transaction	15,000
Company cash used for post-closing adjustment	51,124
	$	1,041,946
Uses:
Payoff November 2012 Term Loan	$	178,063
Equity purchase price	759,338
Transaction costs	52,405
Employee retention program	2,820
Excess cash to balance sheet	49,320
	$	1,041,946

Proceeds from equity contributions of $403.4 million include $141 million rollover equity contributions from certain employees who were shareholders of Envision Holdings prior to the Acquisition.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Sources and Uses of Funds

The Acquisition was recorded under the acquisition method of accounting by the Parent and pushed- down to the Company by allocating the purchase consideration of $951.6 million to the cost of the assets acquired, including intangible assets, based on their estimated fair values at the Acquisition Date. The allocation of purchase price is based on management’s judgment after evaluating several factors, including, but not limited to, valuation assessments of tangible and intangible assets. The excess of the total purchase price over the fair value of assets acquired and the liabilities assumed of $372.5 million is recorded as goodwill. The goodwill arising from the Acquisition consists largely of the commercial potential of the Company. The fair value of intangible assets acquired and residual goodwill was determined based on a third party valuation.

Purchase Price Allocation

The following sets forth the Company’s purchase price allocation (in thousands):

Cash and cash equivalents	$	46,628
Investments	6,562
Accounts receivable and accrued receivables	588,492
Prepaid and other	4,009
Inventory	4,924
Property and equipment	12,284
Intangible assets	540,576
Goodwill	372,490
Other assets	4,785
Current liabilities	(629,149		)
Total purchase price allocation	$	951,601

Identifiable Intangible Assets

In performing the purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analyses of historical financial performance and estimates of future performance. The following table sets forth the components of intangible assets as of the date of the Acquisition (in thousands):

	Fair		Useful Life
Intangible Asset	Value		(in years)
Customer relationships	$	253,100	30
Backlog	19,500		3
Patented technology	11,200		14
Non-compete agreements	12,138		3 to 5
CMS license	186,600		indefinite
Trademarks	49,900		indefinite
Other	8,138		3 to 5
	$	540,576

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Identifiable Intangible Assets (continued)

Customer relationships represent the fair value of the Company’s existing customer base. Backlog represents the fair value of the Company’s backlog of client contracts. Patented technology represents the fair value of the Company’s patented technology for passing 100% of earned rebates to the benefit payer at the point of sale for the Company’s pharmacy benefit management business. Non-compete agreements represent the fair value of the Company’s non-compete agreements with certain employees. Useful lives of the amortizable intangible assets were based on estimated economic useful lives and are being amortized using the straight-line method.

CMS license represents the fair value of the Company’s Part D license with CMS. Trademarks represent the fair value of the Company’s established trademarks in the pharmacy benefit management business and the infertility and fertility pharmacy services business. CMS license and trademarks are not amortized, but will be evaluated for potential impairment on a periodic basis.

Acquisition - Laker

On November 26, 2013 the Company purchased 100% of the equity interest of Laker Software LLC (Laker). The aggregate purchase price was $44.6 million and was comprised of the following (in thousands):

Cash	$	35,705
Class B Units of Topco	8,910
Total purchase price	$	44,615

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the purchase of Laker (in thousands):

Cash	$	584
Accounts receivable	1,524
Prepaid expenses	3
Property and equipment, net	300
Claims adjudication software	20,500
Other intangibles	3,900
Goodwill	17,954
Total assets acquired	44,765
Accounts payable and accrued expenses	150
Total liabilities assumed	150
Net purchase price	$	44,615

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Acquisition — Laker (continued)

The excess of the purchase price over the fair value of the net assets acquired and identifiable intangible assets acquired was allocated to goodwill. The Company believes the acquisition of Laker creates synergies from combining the operations of the Company and Laker, complements its existing business, increases the Company’s capabilities, and should enable the Company to provide broader product offerings to new and existing customers.

The fair value of $8.9 million for 8.9 million Class B units of Topco issued as part of the consideration paid for Laker was determined based on negotiations between the Company and the members of Laker. The fair value of intangible assets acquired and residual goodwill was determined based on a third party valuation.

As part of the Laker transaction, the Company incurred professional fees of $571 thousand during 2013, which are included as an element of selling, general and administrative expense in the accompanying Successor consolidated statement of operations.

In connection with the acquisition of Laker on November 26, 2013, certain Laker employees were granted 2,000,000 phantom units of Topco (the Phantom Units).

The Company entered into employment agreements through November 26, 2016 with two of the three individuals who were the sellers of Laker. The Company entered into a consulting agreement through November 26, 2015 with the third individual who was one of the sellers of Laker. The employment agreements and consulting agreement contain an annual incentive compensation plan based on Laker’s annual achievement of EBITDA in excess of a threshold level. The three individuals who were the sellers of Laker also entered into non-compete agreements.

Acquisition — MedTrak

On September 8, 2014 the Company purchased 100% of the equity interest of MedTrak Services, LLC (MedTrak). The aggregate purchase price was $211.8 million and was comprised of the following (in thousands):

Cash	$	198,693
Class B Units of Topco	13,090
Total purchase price	$	211,783

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Acquisition — MedTrak (continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the purchase of MedTrak (in thousands):

Cash	$	9,062
Accounts receivable	33,927
Prepaid expenses	81
Property and equipment, net	299
Deposits and other assets	27
Customer relationships	140,800
Trademarks	36,400
Other intangibles	400
Goodwill	33,957
Total assets acquired	254,953
Accounts payable and accrued expenses	43,170
Total liabilities assumed	43,170
Net purchase price	$	211,783

The excess of the purchase price over the fair value of the net assets acquired and identifiable intangible assets acquired was allocated to goodwill. The Company believes the acquisition of Laker complements its existing business, increases the Company’s capabilities, and should enable the Company to provide broader product offerings to new and existing customers.

The fair value of $13.1 million for 12.6 million Class B units of Topco issued as part of the consideration paid for MedTrak was determined based on negotiations between the Company and the members of MedTrak. The fair value of intangible assets acquired and residual goodwill was determined based on a third party valuation.

As part of the MedTrak acquisition, transaction costs paid at closing totaled $6.5 million and include $5.8 million that was capitalized as debt issuance costs and $0.7 million that are included as an element of selling, general and administrative expense in the accompanying consolidated statement of operations.

The Company entered into employment agreements through September 8, 2017 with three members of MedTrak management. The employment agreements contain an annual incentive compensation plan based on the Company’s annual achievement of EBITDA in excess of a threshold level. The three individuals also entered into non-compete agreements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Acquisition — MedTrak (continued)

The following pro forma consolidated statements of income for 2014, 2013 and 2012 have been prepared as if the acquisitions of Laker and MedTrak had occurred on January 1, 2012 (in thousands):

	2014 (unaudited)			2013 (unaudited)			2012 (unaudited)
Revenues	$	4,242,608		$	3,986,570		$	3,052,644
Cost of revenues	3,983,088			3,743,601			2,847,342

Gross profit	259,520			242,969			205,302

Operating expenses:
Selling, general and administrative	149,521			128,256			110,973
Depreciation and amortization	38,009			19,567			14,724
Incurred in connection with Acquisition	—			25,124			—
	187,530			172,947			125,697

Income from operations	71,990			70,022			79,605

Other expenses	(52,352		)	(18,745		)	(10,959		)

Income before (provision for) benefit from Federal income taxes	19,638			51,277			66,646

(Provision for) benefit from Federal income taxes	367			(350		)	—

Net income	20,005			50,927			66,646

Other expenses	52,352			18,745			10,959

Provision for (benefit from) Federal income taxes	(367		)	350			—

Depreciation and amortization	38,009			19,567			14,724

EBITDA	$	109,999		$	89,589		$	94,329

Operating earnings before interest, income taxes, depreciation and amortization (EBITDA) shown on a pro forma basis in the table above is calculated as net income excluding the impact of income taxes, interest expense, interest income, write-off of deferred financing fees, and depreciation and amortization, and has not been adjusted to remove expenses incurred in connection with the Acquisition or other non-recurring and/or non-operating items included in income from operations. EBITDA in the table above has not been adjusted to reflect the increase in gross profit realized through post-acquisition operational improvements and synergies.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ACQUISITIONS (continued)

Acquisition — MedTrak (continued)

However, EBITDA in the table above has been adjusted to remove professional fees expense incurred in 2013 for the acquisition of Laker and 2014 for the acquisition of MedTrak, and to reflect contractual changes in compensation expense for 2013 for Laker. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisitions of Laker and MedTrak been consummated as of January 1, 2012.

3. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

The Company uses EBITDA as a primary measurement of the Company’s earnings. The Company’s consolidated EBITDA for the year ended December 31, 2014, period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor), and year ended December 31, 2012 (Predecessor) is summarized as follows (in thousands):

	Successor			Successor			Predecessor		Predecessor
	2014			2013			2013		2012
Net income (loss)	$	11,572		$	(440	)	$	32,890	$	55,259
Interest expense	52,226			7,169			6,477		5,335
Other (income) expenses	(41		)	(13		)	5,050		5,725
Provision for (benefit from) Federal income taxes	(367		)	350			—		—
Depreciation and amortization	30,198			4,176			4,510		3,767

EBITDA	$	93,588		$	11,242		$	48,927	$	70,086

EBITDA shown in the table above has not been adjusted to remove expenses incurred in connection with the Acquisition, the Laker transaction, the MedTrak transaction, or other non-recurring and/or non-operating items included in income from operations.

4. INVESTMENTS

At December 31, 2014, 2013 and 2012, EIC held investments in U.S. Treasury debt securities that were classified as held to maturity and carried at amortized cost. The amortized cost and estimated fair values of investments at December 31, 2014, 2013, and 2012 were as follows (in thousands):

	Successor		Successor		Predecessor
	2014		2013		2012
Amortized cost	$	6,564	$	6,557	$	6,462
Gross unrealized gains	12		38		77

Estimated fair value	$	6,576	$	6,595	$	6,539

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. INVESTMENTS (continued)

Contractual maturities of held-to-maturity securities at December 31, 2014, 2013 and 2012, were as follows (in thousands):

	Successor		Successor		Predecessor
	2014		2013		2012
Due in one year or less	$	5,994	$	300	$	4,757
Due after one year but less than five years	570		6,257		1,705

	$	6,564	$	6,557	$	6,462

5. INTANGIBLE ASSETS

The following is a summary of the intangible assets that are presented in the accompanying consolidated balance sheets as of December 31, 2014, 2013, and 2012 (in thousands):

	Successor
	2014
Description	Cost		Accumulated Amortization		Net Carrying Value
Subject to amortization:

Backlog	$	19,500	$	7,529	$	11,971
Claims adjudication software	20,500		2,841		17,659
Computer software development	11,733		1,915		9,818
Customer relationships	395,600		11,844		383,756
Other intangibles	5,376		1,565		3,811
Non-compete agreements	12,938		3,855		9,083
Pharmacy benefit management accreditation license	176		77		99
Patents	11,200		926		10,274
Trademarks	36,400		476		35,924

	$	513,423	$	31,028	482,395

Indefinite-lived intangible assets:

State insurance license costs					177
CMS license					186,600
Trademarks					51,700
					238,477

					$	720,872

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. INTANGIBLE ASSETS (continued)

	Successor
	2013
			Accumulated		Net Carrying
Description	Cost		Amortization		Value
Subject to amortization:

Backlog	$	19,500	$	1,029	$	18,471
Claims adjudication software	20,500		248		20,252
Computer software development	4,347		292		4,055
Customer relationships	254,800		1,261		253,539
Other intangibles	4,555		225		4,330
Non-compete agreements	12,538		500		12,038
Pharmacy benefit management accreditation license	176		13		163
Patents	11,200		122		11,078

	$	327,616	$	3,690	323,926

Indefinite-lived intangible assets:

State insurance license costs					177
CMS license					186,600
Trademarks					51,700
					238,477

					$	562,403

	Predecessor
	2012
			Accumulated		Net Carrying
Description	Cost		Amortization		Value
Subject to amortization:

Computer software development	$	2,764	$	1,148	$	1,616
Other intangibles	5,512		1,390		4,122
Non-compete agreements	2,300		1,162		1,138
Pharmacy benefit management accreditation license	238		156		82
Patents	881		406		475
Specialty pharmacy network	19,300		1,951		17,349

Balance to next page	$	30,995	$	6,213	24,782

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. INTANGIBLE ASSETS (continued)

	Predecessor
	2012
			Accumulated		Net Carrying
Description	Cost		Amortization		Value
Balance from previous page	$	30,995	$	6,213	$	24,782
Indefinite-lived intangible assets:
State insurance license costs					177
Trademarks					12,500
					12,677

					$	37,459

The Company expects amortization expense for the next 5 years to be as follows (in thousands):

YEAR ENDING
DECEMBER 31,
2015	$	31,881
2016	30,271
2017	23,263
2018	20,668
2019	19,197

6. DEFERRED FINANCING FEES

Deferred financing fees of $21.9 million, $19.4 million, and $5.0 million at December 31, 2014, 2013, and 2012, respectively, represents fees paid to third parties that provided services in relation to securing financing. The deferred financing fees are shown net of accumulated amortization of $3.2 million, $460 thousand, and $122 thousand at December 31, 2014, 2013, and 2012, respectively.

Expected future amortization expense for the deferred financing fees for the next 5 years is as follows

(in thousands):

YEAR ENDING
DECEMBER 31,
2015	$	3,761
2016	3,732
2017	3,732
2018	3,661
2019	3,277

	$	18,344

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. LINE OF CREDIT AND LONG-TERM DEBT

Predecessor

On November 30, 2012, the Company and the bank group entered into an amended and restated credit agreement (the 2012 Credit Agreement), which provided the Company with (i) a $185 million term loan (the 2012 Term Loan) payable in quarterly installments with a balloon payment in November 2017 and (ii) a $50 million revolving line of credit (the 2012 Line of Credit) maturing in November 2017.

The 2012 Term Loan and any outstanding borrowings on the 2012 Line of Credit bore interest at a variable rate based on the one-month LIBOR plus an interest margin based on the Company’s leverage ratio. As of December 31, 2012, the Company had $0 borrowings on the 2012 Line of Credit. The 2012 Term Loan and the 2012 Line of Credit were collateralized by (i) a first lien on substantially all assets of the Company (other than the assets of EIC) and (ii) a pledge of the stock of each of the Company’s subsidiaries (other than EIC). Each of the Company’s subsidiaries (other than EIC) guaranteed the 2012 Term Loan and the 2012 Line of Credit. The 2012 Credit Agreement required the Company to maintain certain financial covenants pertaining to leverage and fixed charges. The Company was in compliance with the covenants as of December 31, 2012.

Successor

In connection with the Acquisition, on November 4, 2013, EAC and various lenders entered into agreements for (i) a $65 million revolving credit facility (the Revolving Credit Facility), (ii) a $405 million first lien term loan (the 1st Lien Term Loan) and (iii) a $175 million second lien term loan (the 2nd Lien Term Loan). The 2012 Term Loan was repaid in-full on November 4, 2013 in connection with the Acquisition.

In connection with the acquisition of MedTrak, on September 8, 2014 EAC and various lenders entered into: (i) incremental amendment No. 1 to the first lien credit agreement which increased the 1st Lien Term Loan principal amount by $125 million (the Incremental 1st Lien Term Loan), (ii) incremental amendment No. 1 to the second lien term loan credit agreement which increased the 2nd Lien Term Loan principal amount by $50 million (the Incremental 2nd Lien Term Loan) and (iii) incremental amendment No. 2 to the first lien credit agreement which increased the Revolving Credit Facility from $65 million to $100 million.

The Revolving Credit Facility is fully available for borrowing, and is not subject to a borrowing base or any other availability calculations. The Revolving Credit Facility matures in November 2018, and any outstanding borrowings bear interest at a variable rate based on the one-month LIBOR plus an interest margin (based on the Company’s leverage ratio) in the range of 4.50% to 4.75%. As of December 31, 2014 and 2013, the Company had $0 borrowings on the Revolving Credit Facility. The Revolving Credit Facility requires the Company to comply with a financial covenant pertaining to secured first lien leverage as of the end of each quarter. The Company was in compliance with the financial covenant as of December 31, 2014 and 2013.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. LINE OF CREDIT AND LONG-TERM DEBT

Successor (continued)

The 1st Lien Term Loan is payable in quarterly installments of $1.3 million, with a balloon payment in November 2020. The 1st Lien Term Loan and Incremental 1st Lien Term Loan bears cash interest based on the one-month LIBOR (subject to a LIBOR floor of 1.00%) plus 4.75%. The 1st Lien Term loan was issued net of an original issue discount of $4.0 million (the 1st Lien OID). The 1st Lien OID is amortized to interest expense over the contractual term of the 1st Lien Term Loan, which results in an effective interest rate of 6.01% annually. The Incremental 1st Lien Term Loan of $125 million was issued net of an original issue discount of $0.6 million (the Incremental 1st Lien OID). The Incremental 1st Lien OID is amortized to interest expense over the contractual term of the Incremental 1st Lien Term Loan, which results in an effective interest rate of 5.93% annually.

The 2nd Lien Term Loan is non-amortizing, and matures in November 2021. The 2nd Lien Term Loan and Incremental 2nd Lien Term Loan bears cash interest based on the one-month LIBOR (subject to a LIBOR floor of 1.00%) plus 8.75%. The 2nd Lien Term loan was issued net of an original issue discount of $3.5 million (the 2nd Lien OID). The 2nd Lien OID is amortized to interest expense over the contractual term of the 2nd Lien Term Loan, which results in an effective interest rate of 10.26% annually. The Incremental 2nd Lien Term Loan of $50 million was issued net of an original issue discount of $0.3 million (the Incremental 2nd Lien OID). The Incremental 2nd Lien OID is amortized to interest expense over the contractual term of the Incremental 2nd Lien Term Loan, which results in an effective interest rate of 9.98% annually.

The Revolving Credit Facility and 1st Lien Term Loan are collateralized by (i) a first lien on substantially all assets of the Company (other than the assets of EIC) and (ii) a pledge of the stock of each of the Company’s subsidiaries (other than EIC). Each of the Company’s subsidiaries (other than EIC) guaranteed the Revolving Credit Facility and the 1st Lien Term Loan.

The 2nd Lien Term Loan is collateralized by (i) a second lien on substantially all assets of the Company (other than the assets of EIC) and (ii) a pledge of the stock of each of the Company’s subsidiaries (other than EIC). Each of the Company’s subsidiaries (other than EIC) guaranteed the 2nd Lien Term Loan.

As of December 31, 2014, 2013, and 2012, the Company has interest cap agreements with commercial banks which provide hedges that set the maximum LIBOR rate at 2.75% for approximately $76 million of debt principal outstanding through November 2015.

The first lien credit agreement and the second lien credit agreement restrict the Company’s ability to pay dividends or distributions to the amount that is required for income tax purposes.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. LINE OF CREDIT AND LONG-TERM DEBT (continued)

At December 31, 2014, 2013, and 2012, long-term debt consisted of the following (in thousands):

	Successor		Successor		Predecessor
	2014		2013		2012
2012 Term Loan payable to a bank group in quarterly installments of principal ranging between $2.3 million and $4.6 million plus variable rate interest (3.7% at December 31, 2012) subject to interest rate cap agreements through November 2015; collateralized by a first lien on substantially all assets of the Company (other than the assets of EIC) and a pledge of the stock of each of the Company’s subsidiaries (other than EIC)	$	—	$	—	$	185,000

1st Lien Term Loan payable to a lender group in quarterly installments of principal of $1.3 million plus variable interest (5.75% at December 31, 2014 and 2013) with a balloon payment in November 2020; collateralized by a first lien on substantially all assets of the Company (other than the assets of EIC) and a pledge of the stock of each of the Company’s subsidiaries (other than EIC); outstanding amount as of December 31, 2014 and 2013, is net of original issue discount of $4.1 million and $4.0 million, respectively	520,244		400,016		—

2nd Lien Term Loan payable to a lender group in-full at maturity in November 2021 with variable interest (9.75% at December 31, 2014 and 2013) payable quarterly; collateralized by a second lien on substantially all assets of the Company (other than the assets of EIC) and a pledge of the stock of each of the Company’s subsidiaries (other than EIC); outstanding amount as of December 31, 2014 and 2013, is net of original issue discount of $3.4 million and $3.4 million, respectively.	221,607		171,546		—

Balance to next page	741,851		571,562		185,000

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. LINE OF CREDIT AND LONG-TERM DEBT (continued)

	Successor			Successor			Predecessor
	2014			2013			2012

Balance from previous page	$	741,851		$	571,562		$	185,000

Capital leases payable to various vendors expiring in various years through 2017; collateralized by certain equipment and a vehicle with a cost of $5.5 million and a net book value of $2.9 million.	1,667			2,593			2,815
	743,518			574,155			187,815
Less: Current portion	(5,262		)	(4,468		)	(10,262		)
	$	738,256		$	569,687		$	177,553

Future maturities of long-term debt are as follows (in thousands):

YEAR ENDING
DECEMBER 31,
2015	$	5,262
2016	4,845
2017	4,335
2018	4,108
2019	4,022
Thereafter	720,946
	$	743,518

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. CAPITALIZATION

The following table sets forth the fully vested Class A Units and Class B Units of Topco as of December 31, 2013 and 2014:

				Total Class A
	Class A	Class B		and Class B
	Units	Units		Units

Issued at $1.00 per unit and outstanding as of December 31, 2013	279,380,000	149,902,280		429,282,280
Issued at $1.00 per unit during 2014	1,650,000	—		1,650,000
Redeemed at $1.00 per unit during 2014	—	(200,000	)	(200,000	)
Granted at deemed value of $1.00 per unit during 2014 and vested in 2014	720,000	—		720,000
Issued at $1.04 per unit during 2014	48,586,308	16,941,030		65,527,388

Issued and outstanding at December 31, 2014	330,336,308	166,643,310		496,979,618

All Class A Units and Class B Units outlined in the table above were issued in exchange for an actual or deemed cash contribution to Topco of either $1.00 per Unit or $1.04 per Unit, which represented fair market value at the date of issuance.

Class B Units are subject to certain restrictions not imposed upon the Class A Units owned by the Sponsor. Such restrictions include limitations on transfer, such as (i) requisite holding periods, (ii) non-transferability to competitors, (iii) drag-along covenants imposed by, and rights of first offer in favor of, the Sponsor, (iv) call rights in favor of Topco in certain circumstances, and (v) lock-up periods which may be different than those imposed on Class A Units in the event of a public offering of Envision Holdings’ or Topco’s securities. Class A Units not owned by the Sponsor are similarly subject to the restrictions outlined in (iii) and (iv) of the previous sentence. In addition, owners of Class B Units are essentially restricted in their activities to being an investment vehicle in Topco, and may not perform certain business functions (including incurring indebtedness, redeeming equity outside of the parameters of the Limited Liability Company Agreement of Topco or issuing additional securities).

A member of Topco’s board of directors was granted 720,000 Class A Units in 2014 which are included in the Class A Units outlined in the table above, and are comprised of (i) 670,000 Class A Units, which vested in full on the date of grant, January 8, 2014, and (ii) 50,000 Class A Units, which vested in full on November 4, 2014. In addition, this board member was granted the right to receive a number of Class A Units with a fair market value of $50,000 on each November 4th (so long as he remains a member of Topco’s board of directors on such date), beginning with November 4, 2014, which Class A Units vest in full on the one-year anniversary of the date of grant. 48,077 Class A Units granted on November 4, 2014 pursuant to the arrangement set forth in the previous sentence are not reflected in the table set forth above.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. CAPITALIZATION (continued)

In connection with the acquisition of Laker on November 26, 2013, 12 Laker employees were granted a total of 1,999,992 phantom units of Topco (the Phantom Units) (166,666 Phantom Units each). The Phantom Units are the economic equivalent of Class B Units of Topco, and vest as follows: (i) 0.5 million vested on November 26, 2014, (ii) 0.5 million on November 26, 2015 (subject to continuing employment) and (iii) 1.0 million immediately upon a qualifying liquidity event (subject to continuing employment) in which the Sponsor receives a multiple of money of at least 3.0 times its initial investment. The Phantom Units are not reflected in the table set forth above.

The following table sets forth the Class C-1 Units of Topco (the Class C-1 Units) and the Class C-2 Units of Topco (the Class C-2 Units) as of December 31, 2013 and 2014:

					Total Class C-1
	Class C-1		Class C-2		and Class C-2
	Units		Units		Units

Granted at $1.00 per unit hurdle and outstanding as of December 31, 2013	5,735,000		7,485,000		13,220,000
Granted at $1.00 per unit hurdle rate during 2014	7,230,000		7,230,000		14,460,000
Previously granted at $1.00 per unit hurdle rate and cancelled during 2014	(180,000	)	(180,000	)	(360,000	)
Granted at $1.04 per unit hurdle rate during 2014	2,360,000		2,360,000		4,720,000

Granted and outstanding at December 31, 2014	15,145,000		16,895,000		32,040,000

As outlined in the table above, in 2013 certain employees and a member of Topco’s board of directors were granted 5,735,000 Class C-1 Units at a $1.00 per Unit hurdle rate and 7,485,000 Class C-2 Units at a $1.00 per Unit hurdle rate, which represented fair market value at the date of grant. As outlined in the table above, in 2014 certain employees and certain members of Topco’s board of directors were granted 2,360,000 Class C-1 Units at a $1.04 per Unit hurdle rate and 2,360,000 Class C-2 Units at a $1.04 per Unit hurdle rate, which represented fair market value at the date of grant. All Class C-1 Units vest (subject to continuing employment) 20% per year on each of the first five anniversaries of the Acquisition Date (or first five anniversaries of the date of grant for Class C-1 Units grants subsequent to December 18, 2013). Except as outlined in the next sentence, Class C-2 Units vest (subject to continuing employment) 20% per year from 2014 through 2018 if the Company achieves a target-level of EBITDA established annually by Topco’s board of directors. A certain amount of Class C-2 Units granted to a member of Topco’s board of directors vest only upon a qualifying liquidity event in which the Sponsor receives a multiple of money of at least 3.0 times its initial investment. All Class C-2 Units immediately vest in full (subject to continuing employment) upon a qualifying liquidity event in which the Sponsor receives a multiple of money of at least 3.5 times its initial investment. All Class C-1 Units and Class C-2 Units are intended to represent “Profits Interests” in Topco within the meaning of IRS Revenue Procedure 93-27 (June 9, 1993) and IRS Revenue Procedure 2001-43 (August 3, 2001), will not receive distributions from Topco (other than certain tax distributions) until such time as the holders of Class A Units and Class B Units have received their unreturned capital contributions from Topco.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. CAPITALIZATION (continued)

In accordance with the terms of the Merger Agreement summarized in Note 20, all Phantom Units, Class C-1 Units and Class C-2 Units outstanding on the Closing date will be paid-out in connection with the Closing as if fully vested.

The shares of common stock authorized, issued and outstanding at December 31, 2012 (Predecessor) were as follows:

		Predecessor
		2012

Authorized		2,000,000
Issued		1,692,000
Outstanding		1,132,393

9. COMMITMENTS

Leases

The Company leases office facilities and office equipment under various non-cancelable operating lease agreements through 2023.

The Company also leases a vehicle and equipment under various capital lease agreements. These leases are included in long-term debt and the related assets have been capitalized.

Minimum annual rentals for operating and capital leases under the remaining lease terms are as follows (in thousands):

YEAR ENDING	Capital			Operating
DECEMBER 31,	Leases			Leases
2015	$	1,009		$	3,882
2016	586			3,965
2017	143			3,208
2018	8			3,191
2019	—			3,209
Thereafter	—			9,863

	1,746			$	27,318
Less: Interest included in capital lease obligations	(79		)

	$	1,667

For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor), and year ended December 31, 2012 (Predecessor), the Company incurred rent expense of $3.8 million, $.5 million, $2.6 million, and $2.4 million, respectively.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. RELATED PARTY TRANSACTIONS

In connection with the Acquisition, EAC, Intermediate Holdings and Topco entered into a management services agreement with TPG VI Management, LLC (Management), an affiliate of the Sponsor, pursuant to which Management, its affiliates and designees received on the closing date an aggregate transaction fee and reimbursement of expenses in the amount of $20.8 million in cash, which was paid by the Company out of equity proceeds from the Acquisition. In addition, pursuant to such agreement, and in exchange for on-going consulting and management advisory services that will be provided to the Company, the Sponsor will receive an annual monitoring fee of 1% of consolidated EBITDA. For the year ended December 31, 2014 (Successor) and the period from November 4, 2013 to December 31, 2013 (Successor), $964 thousand and $151 thousand, respectively, was recorded for monitoring fees and expenses and is included in general and administrative expenses in the consolidated statements of operations.

11. CONCENTRATIONS

The Company places its cash with regulated financial institutions. Balances with the financial institutions may exceed Federally insured limits.

12. CONTINGENCIES

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the outcome of such current proceedings will not materially affect the Company’s operations, cash flows or financial position.

13. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) Plan (the Plan) covering substantially all of its employees who are at least age 21 and have completed six months of service. Participating employees may elect to contribute, on a tax deferred basis, a portion of their compensation in accordance with Section 401(k) of the Internal Revenue Code. Additional matching contributions may be made to the Plan at the discretion of the Company. For the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor), and year ended December 31, 2012 (Predecessor), the Company contributed $2.5 million, $2.1 million, $.3 million and $1.5 million, respectively.

14. DERIVATIVES

The Company entered into various interest rate swaps during 2014 with maturities ranging from 2015 to 2019. A net settlement is made quarterly based on the difference between various fixed rates (depending on the hedge) and the greater of the three-month LIBOR or one percent. The net settlement is recorded to interest expense. As a result of the swap agreements, interest expense was increased by $3.1 million for the year ended December 31, 2014.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. DERIVATIVES (continued)

At December 31, 2014, the Company recorded a liability of $5.7 million for the present value of the estimated increase in interest over the remaining term of the swap agreements. A corresponding charge or credit for the net change was made to other comprehensive loss for the year ended December 31, 2014.

15. FAIR VALUE MEASUREMENTS

GAAP requires disclosure of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories:

· Level 1 — Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement.

· Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or in instances where prices vary substantially over time or among brokered market makers.

· Level 3 — Model derived valuations in which one or more significant inputs of significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Company’s own assumptions that market participants would use to price the assets or liabilities based on the best available information.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodology used for liabilities measured at fair value at December 31, 2014.

Interest rate swaps — Valued by observable market data of similar liabilities

The preceding method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

15. FAIR VALUE MEASUREMENTS (continued)

The following table presents the Company’s net liability measured at fair value on a recurring basis at December 31, 2014 (in thousands):

	Level 1		Level 2		Level 3		Total

Interest rate swaps	$	—	$	5,665	$	—	$	5,665

Other Financial Instruments

The fair value of current assets and liabilities approximate carrying value because of the short-term nature of these items. There is no quoted market value for the 1st Lien Term Loan or 2nd Lien Term Loan. Accordingly, management estimates that the recorded value of 1st Lien Term Loan and 2nd Lien Term Loan approximates the fair value of those instruments.

16. STOCK OPTIONS, PHANTOM STOCK AND TREASURY STOCK

At December 31, 2012, employees had unexercised stock options outstanding to acquire 7,000 shares of the Company’s common stock at an exercise price of approximately $40 per share. At December 31, 2012, 3,000 shares of unexercised stock options outstanding were vested and the remaining 4,000 shares of unexercised stock options outstanding vested in January 2013. The fair value of the previously issued stock option awards, as estimated using a valuation model, was not significant. Accordingly, no compensation costs related to the awards has been recognized. All outstanding stock options were exercised immediately prior to the Acquisition.

In 2012, the Company granted 25,000 shares of phantom stock to employees at a base price of $392 per share. Subsequent to December 31, 2012, the Company granted 17,500 shares of phantom stock to employees at a base price of $400 per share. All phantom stock became immediately fully vested as a result of the Acquisition and was redeemed. The Predecessor consolidated statement of operations for the period from January 1, 2013 through November 3, 2013 includes phantom stock expense of $10.2 million.

During 2012, the Company purchased 360,577 shares of the Company’s common stock as treasury shares. During 2013, all treasury stock was retired as a result of the Acquisition.

17. REINSURANCE ACTIVITY

EIC cedes insurance to a reinsurance company on a quota-share basis. The reinsurance contracts do not relieve EIC from its obligations to policyholders. Failure of the reinsurer to honor its obligations could result in losses to EIC; consequently, allowances are established for amounts deemed uncollectible. EIC evaluates the financial condition of its reinsurer and monitors concentrations of credit risk arising from the reinsurer to minimize its exposure to significant losses from reinsurer insolvency. In the opinion of management, no allowance was considered necessary as of December 31, 2014, 2013, and 2012.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17. REINSURANCE ACTIVITY (continued)

EIC’s reinsurance contract was based on 75% quota-share reinsurance for 2014, 2013 and 2012. During 2014, EIC entered into a new reinsurance contract effective January 1, 2015 which extends through December 31, 2017. Under the terms of the contract, the reinsurer provides EIC with 50% quota-share reinsurance for 2015 and a minimum of 50% quota-share reinsurance for 2016 and 2017.

In accordance with GAAP, reinsurance activity is reflected in the consolidated statements of operations on a net basis. The net effects of reinsurance on premiums written and earned for the year ended December 31, 2014 (Successor), period from November 4, 2013 to December 31, 2013 (Successor), period from January 1, 2013 to November 3, 2013 (Predecessor) and year ended December 31, 2012 (Predecessor) are as follows (in thousands):

	Successor						Successor
	2014						2013
	Written			Earned			Written			Earned
Direct	$	435,291		$	435,291		$	88,372		$	88,372
Ceded	(315,360		)	(315,360		)	(66,089		)	(66,089		)

	$	119,931		$	119,931		$	22,283		$	22,283

	Predecessor						Predecessor
	2013						2012
	Written			Earned			Written			Earned
Direct	$	445,817		$	445,817		$	393,049		$	393,049
Ceded	(333,404		)	(333,404		)	(285,641		)	(285,641		)

	$	112,413		$	112,413		$	107,408		$	107,408

18. STATUTORY SURPLUS AND NET INCOME

EIC is statutorily required to file financial statements with state and other regulatory authorities. The accounting principles used to prepare such statutory financial statements follow prescribed or permitted accounting practices as defined in the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual, which principles may differ from GAAP. Permitted statutory accounting practices encompass all accounting practices not so prescribed, but allowed by the Ohio Department of Insurance. EIC has no permitted statutory accounting practices. EIC’s statutory reporting period is January 1 through December 31. For the year ended December 31, 2014, EIC’s statutory net loss was $3.1 million. For the years ended December 31, 2013 and 2012, EIC’s statutory net income was $1.8 million and $1.3 million, respectively. As of December 31, 2014, 2013, and 2012, EIC’s statutory surplus was $37.6 million, $25.5 million and $22.0 million, respectively.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

18. STATUTORY SURPLUS AND NET INCOME (continued)

EIC is generally restricted by insurance laws of the State of Ohio with regard to amounts that can be transferred to Envision Holdings in the form of dividends, loans, or advances without the approval of the Department to the greater of (a) 10 percent of statutory surplus as of December 31 of the year preceding the dividend, loan or advancement or (b) 100 percent of statutory net income for the year ended December 31 preceding the dividend, loan or advancement. The Company did not declare and/or pay any dividends to the Envision Holdings during 2014, 2013, and 2012.

EIC is subject to minimum capital and surplus requirements in the states of California, Florida, Ohio, and Wisconsin. The amount of capital and surplus required to satisfy regulatory requirements in California, Florida, Ohio, and Wisconsin is $4.8 million, $37.1 million, $34.8 million, and $8.9 million, respectively, for the year ended December 31, 2014. EIC was in excess of the minimum required amounts in these four states as of December 31, 2014.

19. FEDERAL INCOME TAXES

Deferred income taxes for EIC at December 31, 2014 and 2013 (Successor) reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured on an income tax basis. Temporary differences that give rise to the net deferred tax asset at December 31 were as follows (in thousands):

	Successor			Successor
	2014			2013
Deferred tax assets:
Fixed assets	$	26		$	32
Bad debt reserve	509			495
NOL carryforwards	411			—
Accrued audit and actuary fees	20			—

Total deferred tax assets	966			527

Deferred tax liabilities:
Intangible assets	(130		)	(113		)

Net deferred tax asset	$	836		$	414

At December 31, 2014, EIC has an available unused net operating loss carryforward that may be applied against future taxable income which expires in 2034.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. FEDERAL INCOME TAXES (continued)

Current income taxes incurred consisted of the following major components for the year ended December 31, 2014 (Successor) and the period from November 4, 2013 through December 31, 2013 (Successor) (in thousands):

	Successor			Successor
	2014			2013
Current income tax expense:
Federal income tax expense	$	55		$	247

Net change in deferred taxes:
Change in deferred tax assets	$	419		$	(100	)
Change in deferred tax liabilities	(16		)	(3		)
Net change in deferred taxes	403			(103		)
Provision to return adjustments	19			—
Cumulative effect of change in tax status	—			517
Gross change in deferred taxes	$	422		$	414

The following table reconciles the EIC’s effective income tax rate with that which would be expected if the Federal statutory rate of 34% were applied to income before income taxes for the year ended December 31, 2014 (Successor) and the period from November 4, 2013 through December 31, 2013 (Successor) (in thousands):

	Successor			Successor
	2014			2013
Income tax provision (benefit) at US Federal statutory rates	$	(1,045	)	$	349
Affordable Care Act (ACA) 9010 Fee	642			—
Other	1			1
Provision to return adjustments	35			—
Provision for (benefit from) income taxes	$	(367	)	$	350

20. SUBSEQUENT EVENTS

On February 10, 2015, Topco and Rite Aid Corporation (“Rite Aid”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Rite Aid will acquire Topco through a merger of a wholly-owned subsidiary of Rite Aid with and into Topco, with Topco continuing as the surviving limited liability company and a wholly-owned subsidiary of Rite Aid. Rite Aid will also acquire TPG VI Envision BL, LLC (the “Blocker”) through a merger of a wholly-owned subsidiary of Rite Aid with and into the Blocker, with the Blocker continuing as the surviving limited liability company and a wholly-owned subsidiary of Rite Aid.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. SUBSEQUENT EVENTS (continued)

Upon consummation of the merger (the “Closing”), each of the issued and outstanding limited liability company interests in Topco and the Blocker and each of the restricted stock units and phantom units of Topco (other than any such interests or units held by Rite Aid, Topco or any of their direct or indirect wholly-owned subsidiaries) will be cancelled and converted into the right to receive the pro rata share (in accordance with the waterfall provisions in Topco’s governing documents), without interest and subject to any applicable tax withholding, of an aggregate purchase price comprised of 27,862,138 shares of Rite Aid’s common stock and $1.8 billion in cash, less Topco’s existing indebtedness and certain expenses and plus certain cash amounts, and subject to certain adjustments, all as further described in the Merger Agreement. In addition, following the Closing, Rite Aid is obligated to pay to the sellers’ representative on behalf of the former holders of company interests, restricted stock units and phantom units such former holders’ pro rata share of the settlement payment to be received by EIC from the Centers for Medicare and Medicaid Services in respect of the 2014 plan year, net of amounts due to EIC’s reinsurer.

The parties’ obligations to consummate the Mergers are subject to conditions, including, among others, customary closing conditions relating to (i) the expiration or termination of the applicable antitrust waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, (ii) the receipt of applicable required insurance and healthcare regulatory approvals, and (iii) the absence of a material adverse effect, as defined in the Merger Agreement, on Topco or Rite Aid, as applicable. There is no financing condition to Closing in the Merger Agreement. On February 10, 2015, holders representing a majority of the outstanding limited liability company interests of Topco entitled to vote delivered a written consent approving and adopting the Merger Agreement and the transactions contemplated by the Merger Agreement.

The parties to the Merger Agreement have each made customary representations, warranties and covenants in the Merger Agreement, including, among others, (i) Topco’s agreement to conduct its business in the ordinary course consistent with past practice between the date of the Merger Agreement and the Closing, (ii) the parties’ agreement to obtain governmental approvals, subject to certain exceptions, and (iii) Rite Aid’s agreement to use reasonable best efforts to obtain debt financing to pay the cash portion of the merger consideration on the terms set forth in the debt commitment letters executed in connection with the Merger Agreement.

On April 2, 2015, Rite Aid issued $1.8 billion aggregate principal amount of 6.125% senior notes (the “6.125% Notes”) due 2023 to finance the cash portion of the pending acquisition of Topco. Upon completion of the Closing, Topco and certain of its subsidiaries other than EIC (the “Guarantors”) fully and unconditionally guarantee, jointly and severally, on an unsubordinated basis, the 6.125% Notes and other Rite Aid debt totaling $4.9 billion. The guarantees are unsecured. The 6.125% Notes are unsecured, unsubordinated obligations of Rite Aid and rank equally in right of payment with all of Rite Aid’s other unsecured, unsubordinated indebtedness.

The Closing occurred on June 24, 2015.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. SUBSEQUENT EVENTS (continued)

Guarantor and Non-Guarantor Statements

The following schedules present the financial information for the Guarantors and EIC (Non- Guarantor). Investments in subsidiaries are accounted for by their parent using the equity method of accounting. The Guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

	Condensed Consolidating Statements of Operations
	and Comprehensive Income (Loss)
	For the Year Ended December 31, 2014 (Successor)
	((in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total

Revenues	$	4,065,899		$	119,995		$	(114,492	)	$	4,071,402
Cost of revenues	3,832,928			110,399			(110,399		)	3,832,928

Gross profit	232,971			9,596			(4,093		)	238,474

Operating expenses
Selling, general and administrative	136,302			12,677			(4,093		)	144,886
Depreciation and amortization	30,193			5			—			30,198
	166,495			12,682			(4,093		)	175,084

Income (loss) from operations	66,476			(3,086		)	—			63,390

Other income (expenses)
Interest income	7			39			—			46
Interest expense	(52,199		)	(27		)	—			(52,226		)
State and local taxes and other	(5		)	—			—			(5		)
	(52,197		)	12			—			(52,185		)
Income (loss) before benefit from Federal income taxes	14,279			(3,074		)	—			11,205

Benefit from Federal income taxes	—			(367		)	—			(367		)

Income (loss) before equity in loss of consolidated subsidiary	14,279			(2,707		)	—			11,572

Equity in loss of consolidated subsidiary	(2,707		)	—			2,707			—

Net income (loss)	$	11,572		$	(2,707	)	$	2,707		$	11,572

Comprehensive income (loss):

Net income (loss)	$	11,572		$	(2,707	)	$	2,707		$	11,572
Change in fair market value of interest rate swaps	(5,665		)	—			—			(5,665		)

Total comprehensive income (loss)	$	5,907		$	(2,707	)	$	2,707		$	5,907

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. SUBSEQUENT EVENTS (continued)

	Condensed Consolidating Balance Sheet
	December 31, 2014 (Successor)
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total
Current assets
Cash and cash equivalents	$	94,515		$	19,507		$	—		$	114,022
Investments, at amortized cost	—			6,564			—			6,564
Accounts receivable, net	183,515			465,432			—			648,947
Related party receivable	135,020			—			(135,020		)	—
Accrued receivables	87,179			40			—			87,219
Reinsurance recoverable	—			13,520			—			13,520
Income tax receivable	—			614			—			614
Inventory	6,140			—			—			6,140
Prepaid expenses and other current assets	5,736			311			—			6,047
Deferred tax asset	—			940			—			940
	512,105			506,928			(135,020		)	884,013

Property and equipment, net	12,696			198			—			12,894

Other assets
Investment in subsidiary	27,625			—			(27,625		)	—
Related party note receivable	15,000			—			(15,000		)	—
Deposits and other assets	540			—			—			540
Deferred financing fees, net	21,931			—			—			21,931
Other investments	1,750			—			—			1,750
Intangible assets, net	720,144			728			—			720,872
Goodwill	424,401			—			—			424,401
	1,211,391			728			(42,625		)	1,169,494

Total assets	$	1,736,192		$	507,854		$	(177,645	)	$	2,066,401

Current liabilities
Current portion of long-term debt	$	5,262		$	—		$	—		$	5,262
Accounts payable	480,028			219			—			480,247
Related party payable	—			135,020			(135,020		)	—
Accrued expenses	22,392			101			—			22,493
Contract funds on deposit	5,314			—			—			5,314
Funds held under reinsurance treaties	—			329,785			—			329,785
	512,996			465,125			(135,020		)	843,101

Long-term liabilities
Deferred tax liabilities	—			104			—			104
Interest rate swaps	5,665			—			—			5,665
Related party note payable	—			15,000			(15,000		)	—
Long-term debt	738,256			—			—			738,256
	743,921			15,104			(15,000		)	744,025

	1,256,917			480,229			(150,020		)	1,587,126

Members’ equity
Members’ equity	484,940			3,333			(1,925		)	486,348
Common stock	—			2,000			(2,000		)	—
Additional paid-in capital	—			23,700			(23,700		)	—
Accumulated deficit	—			(1,408		)	—			(1,408		)
Accumulated comprehensive loss	(5,665		)	—			—			(5,665		)
	479,275			27,625			(27,625		)	479,275

Total liabilities and members’ equity	$	1,736,192		$	507,854		$	(177,645	)	$	2,066,401

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. SUBSEQUENT EVENTS (continued)

	Condensed Consolidating Statement of Cash Flows
	For the Year Ended December 31, 2014 (Successor)
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total

Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	29,599		$	(9,891	)	$	—		$	19,708

Cash flows from investing activities:
Acquisitions of property and equipment	(1,876		)	—			—			(1,876		)
Investment in intangible assets	(8,247		)	—			—			(8,247		)
Purchases of investments, net	—			(9		)	—			(9		)
Acquisition of MedTrak Services, LLC, net of cash acquired	(189,631		)	—			—			(189,631		)
Issuance of related party note receivable	(15,000		)	—			15,000			—
Net cash used in investing activities	(214,754		)	(9		)	15,000			(199,763		)

Cash flows from financing activities:
Proceeds from long-term debt borrowings	173,250			—			—			173,250
Payments of principal on long-term debt	(5,079		)	—			—			(5,079		)
Proceeds from issuance of related party note payable	—			15,000			(15,000		)	—
Financing fees incurred	(5,751)			—			—			(5,751		)
Capital contributions	57,378			—			—			57,378
Distributions	(5,683		)	—			—			(5,683		)
Net cash provided by financing activities	214,115			15,000			(15,000		)	214,115

Net increase in cash and cash equivalents	28,960			5,100			—			34,060

Cash and cash equivalents — beginning of year	65,555			14,407			—			79,962

Cash and cash equivalents — end of year	$	94,515		$	19,507		$	—		$	114,022

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

UNAUDITED SUPPLEMENTARY INFORMATION

2014 PRO FORMA CONSOLIDATED STATEMENT OF INCOME

The following pro forma consolidated statement of income for 2014 has been prepared as if the acquisition of MedTrak Services, LLC (MedTrak) had occurred on January 1, 2014 (in thousands):

	The Company			Adjustments for Professional			MedTrak
	Consolidated Statement			Fees Paid in Connection			January 1, 2014 through			The Company
	of Operations 2014			with MedTrak Acquisition			September 7, 2014			Pro Forma 2014

Revenues	$	4,071,402		$	—		$	171,206		$	4,242,608
Cost of revenues	3,832,928			—			150,160			3,983,088

Gross profit	238,474			—			21,046			259,520

Operating expenses:
Selling, general and administrative	144,886			(749		)	5,384			149,521
Depreciation and amortization	30,198			—			7,811			38,009
	175,084			(749		)	13,195			187,530

Income from operations	63,390			749			7,851			71,990

Other expenses	(52,185		)	—			(167		)	(52,352		)

Income before benefit from Federal income taxes	11,205			749			7,684			19,638

Benefit from Federal income taxes	367			—			—			367

Net income	11,572			749			7,684			20,005

Other expenses	52,185			—			167			52,352

Benefit from Federal income taxes	(367		)	—			—			(367		)

Depreciation and amortization	30,198			—			7,811			38,009

EBITDA	$	93,588		$	749		$	15,662		$	109,999

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

UNAUDITED SUPPLEMENTARY INFORMATION

2014 PRO FORMA CONSOLIDATED STATEMENT OF INCOME (continued)

Operating earnings before interest, income taxes, depreciation and amortization (EBITDA) shown on a pro forma basis in the table above is calculated as net income excluding the impact of income taxes, interest expense, interest income, and depreciation and amortization, and has not been adjusted to remove expenses other non-recurring and/or non-operating items included in income from operations. EBITDA in the table above has not been adjusted to reflect the increase in gross profit realized through post-acquisition operational improvements and synergies.

However, EBITDA in the table above has been adjusted to remove professional fees expense incurred in 2014 for the acquisition of MedTrak. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved if the acquisition of MedTrak been consummated as of January 1, 2014.

Exhibit 99.2

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIODS ENDED MARCH 31, 2015 AND 2014

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

FOR THE PERIODS ENDED MARCH 31, 2015 AND 2014

TABLE OF CONTENTS

	PAGE NO

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 2015 and December 31, 2014	2

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) For the three months ended March 31, 2015 and 2014	3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the three months ended March 31, 2015 and 2014	4

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	5 - 22

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MARCH 31, 2015 AND DECEMBER 31, 2014

(in thousands)

ASSETS

	March 31,			December 31,
	2015			2014
CURRENT ASSETS
Cash and cash equivalents	$	116,125		$	114,022
Investments, at amortized cost	6,697			6,564
Accounts receivable, net	661,727			648,947
Accrued receivables	112,510			87,219
Reinsurance recoverable	—			13,520
Uninsured plans receivable	24,561			—
Income tax receivable	—			614
Inventory	6,490			6,140
Prepaid expenses and other current assets	13,986			6,047
Deferred tax asset	644			940
	942,740			884,013
PROPERTY AND EQUIPMENT - AT COST
Land	571			571
Building and improvements	3,926			3,932
Furniture, fixtures and equipment	12,650			11,759
	17,147			16,262
Less: Accumulated depreciation and amortization	(4,095		)	(3,368		)
	13,052			12,894
OTHER ASSETS
Deposits and other assets	540			540
Deferred financing fees, net	20,985			21,931
Other investments	1,750			1,750
Intangible assets, net	714,595			720,872
Goodwill	424,401			424,401
	1,162,271			1,169,494
	$	2,118,063		$	2,066,401

LIABILITIES

	March 31,		December 31,
	2015		2014
CURRENT LIABILITIES
Current portion of long-term debt	$	5,132	$	5,262
Accounts payable	508,220		480,247
Accrued expenses	29,719		22,493
Income taxes payable	43		—
Contract funds on deposit	3,450		5,314
Ceded reinsurance premiums payable	21,967		—
Funds held under reinsurance treaties	324,239		329,785
	892,770		843,101
LONG-TERM LIABILITIES
Deferred tax liabilities	105		104
Interest rate swaps	—		5,665
Long-term debt	737,000		738,256
	737,105		744,025
	1,629,875		1,587,126

MEMBERS’ EQUITY

MEMBERS’ EQUITY	489,600			486,348
ACCUMULATED DEFICIT	(1,412		)	(1,408		)
ACCUMULATED COMPREHENSIVE LOSS	—			(5,665		)
	488,188			479,275
	$	2,118,063		$	2,066,401

See notes to condensed consolidated financial statements (unaudited).

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(in thousands)

	For the three			For the three
	months ended			months ended
	March 31, 2015			March 31, 2014
REVENUES	$	1,262,815		$	934,268
COST OF REVENUES	1,184,914			878,545
GROSS PROFIT	77,901			55,723

OPERATING EXPENSES
Selling, general and administrative	43,293			34,242
Depreciation and amortization	9,067			6,971
	52,360			41,213
INCOME FROM OPERATIONS	25,541			14,510

OTHER INCOME (EXPENSES)
Interest income	63			55
Interest expense	(21,312		)	(11,181		)
State and local taxes and other	(90		)	(124		)
	(21,339		)	(11,250		)
INCOME BEFORE PROVISION FOR FEDERAL INCOME TAXES	4,202			3,260
PROVISION FOR FEDERAL INCOME TAXES
Current	657			—
Deferred	297			33
	954			33
NET INCOME	$	3,248		$	3,227

COMPREHENSIVE INCOME:
Net income	$	3,248		$	3,227
Change in fair market value of interest rate swaps	5,665			—

TOTAL COMPREHENSIVE INCOME	$	8,913		$	3,227

See notes to condensed consolidated financial statements (unaudited).

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(in thousands)

	For the three			For the three
	months ended			months ended
	March 31, 2015			March 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,248		$	3,227
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Add back: Items not affecting cash
Depreciation and amortization	9,067			6,971
Deferred financing fees amortization	946			726
Bad debts	213			629
Interest incurred on payoff of interest rate swap	7,076			—
Amortization of investments	24			25
Amortization of original issue discount	239			197
Deferred income taxes	297			33
Compensation expense for equity grant	—			50
Cash provided by (used in) changes in the following items:
Increase in accounts receivable	(12,993		)	(52,409		)
(Increase) decrease in accrued receivables	(25,291		)	7,295
Decrease in reinsurance recoverable	13,520			6,403
Increase in uninsured plans receivable	(24,561		)	(13,438		)
(Increase) decrease in inventory	(350		)	949
Increase in prepaid expenses and other current assets	(7,939		)	(354		)
Increase (decrease) in accounts payable	27,973			(7,225		)
Increase (decrease) in accrued expenses	7,226			(1,386		)
(Increase) decrease in income taxes receivable/payable, net	657			(315		)
Decrease in contract funds on deposit	(1,864		)	(1,306		)
Increase in ceded reinsurance premiums payable	21,967			—
Increase (decrease) in funds held under reinsurance treaties	(5,546		)	26,830
Net cash provided by (used in) operating activities	13,909			(23,098		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment	(891		)	(375		)
Investment in intangible assets	(2,057		)	(1,841		)
Purchases of investments, net	(157		)	—
Net cash used in investing activities	(3,105		)	(2,216		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of principal on long-term debt	(1,625		)	(1,333		)
Payoff of interest rate swaps	(7,076		)	—
Capital contributions	—			1,670
Distributions	—			(29		)
Net cash provided by (used in) financing activities	(8,701		)	308

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2,103			(25,006		)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	114,022			79,962
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	116,125		$	54,956

See notes to condensed consolidated financial statements (unaudited).

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and therefore do not include all of the information and footnotes required by GAAP for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim period. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the December 31, 2014 audited consolidated financial statements and notes thereto.

Organization

These are the condensed consolidated financial statements of Topco, Intermediate Holdings, EAC, and Envision Holdings and the Subsidiaries (collectively, the Company).

Consolidation Policy

The condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation.

Subsequent Events

The Company has evaluated subsequent events through August 18, 2015, the date these financial statements were available to be issued. There were no material subsequent events that required recognition or additional disclosure in these financial statements.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION (continued)

The Closing occurred on June 24, 2015.

Guarantor and Non-Guarantor Statements

	Condensed Consolidating Statements of Operations
	and Comprehensive Income (Loss) (Unaudited)
	For the Three Months Ended March 31, 2015
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total

Revenues	$	1,261,152		$	57,894		$	(56,231	)	$	1,262,815
Cost of revenues	1,184,914			55,240			(55,240		)	1,184,914

Gross profit	76,238			2,654			(991		)	77,901

Operating expenses
Selling, general and administrative	42,576			1,708			(991		)	43,293
Depreciation and amortization	9,067			—			—			9,067
	51,643			1,708			(991		)	52,360

Income from operations	24,595			946			—			25,541

Other income (expenses)
Interest income	15			63			(15		)	63
Interest expense	(21,268		)	(59		)	15			(21,312		)
State and local taxes and other	(90		)	—			—			(90		)
	(21,343		)	4			—			(21,339		)
Income before provision for Federal income taxes	3,252			950			—			4,202

Provision for Federal income taxes	—			954			—			954

Income before equity in loss of consolidated subsidiary	3,252			(4		)	—			3,248

Equity in loss of consolidated subsidiary	(4		)	—			4			—

Net income (loss)	$	3,248		$	(4	)	$	4		$	3,248

Comprehensive income (loss):

Net income (loss)	$	3,248		$	(4	)	$	4		$	3,248
Change in fair market value of interest rate swaps	5,665			—			—			5,665

Total comprehensive income (loss)	$	8,913		$	(4	)	$	4		$	8,913

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION (continued)

	Condensed Consolidating Statements of Income and Comprehensive Income (Unaudited)
	For the Three Months Ended March 31, 2014
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total

Revenues	$	932,777		$	30,616		$	(29,125	)	$	934,268
Cost of revenues	878,545			28,086			(28,086		)	878,545

Gross profit	54,232			2,530			(1,039		)	55,723

Operating expenses
Selling, general and administrative	32,825			2,456			(1,039		)	34,242
Depreciation and amortization	6,970			1			—			6,971
	39,795			2,457			(1,039		)	41,213

Income from operations	14,437			73			—			14,510

Other income (expenses)
Interest income	32			23			—			55
Interest expense	(11,176		)	(5		)	—			(11,181		)
State and local taxes and other	(124		)	—			—			(124		)
	(11,268		)	18			—			(11,250		)
Income before provision for Federal income taxes	3,169			91			—			3,260

Provision for Federal income taxes	—			33			—			33

Income before equity in income of consolidated subsidiary	3,169			58			—			3,227

Equity in income of consolidated subsidiary	58			—			(58		)	—

Net income	$	3,227		$	58		$	(58	)	$	3,227

Comprehensive income (loss):

Net income (loss)	$	3,227		$	58		$	(58	)	$	3,227
Change in fair market value of interest rate swaps	—			—			—			—

Total comprehensive income (loss)	$	3,227		$	58		$	(58	)	$	3,227

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION (continued)

	Condensed Consolidating Balance Sheet March 31, 2015 (Unaudited)
	(in thousands)
	Guarantors		Non-Guarantor			Eliminations			Total
Current assets
Cash and cash equivalents	$	83,454	$	32,671		$	—		$	116,125
Investments, at amortized cost	—		6,697			—			6,697
Accounts receivable, net	211,329		450,398			—			661,727
Related party receivable	108,970		—			(108,970		)	—
Accrued receivables	112,466		44			—			112,510
Uninsured plans receivable	—		24,561			—			24,561
Inventory	6,490		—			—			6,490
Prepaid expenses and other current assets	8,145		5,841			—			13,986
Deferred tax asset	—		644			—			644
	530,854		520,856			(108,970		)	942,740
Property and equipment, net	13,052		—			—			13,052

Other assets
Investment in subsidiary	27,621		—			(27,621		)	—
Related party note receivable	30,000		—			(30,000		)	—
Related party accrued interest receivable	15		—			(15		)	—
Deposits and other assets	540		—			—			540
Deferred financing fees, net	20,985		—			—			20,985
Other investments	1,750		—			—			1,750
Intangible assets, net	713,867		728			—			714,595
Goodwill	424,401		—			—			424,401
	1,219,179		728			(57,636		)	1,162,271
Total assets	$	1,763,085	$	521,584		$	(166,606	)	$	2,118,063

Current liabilities
Current portion of long-term debt	$	5,132	$	—		$	—		$	5,132
Accounts payable	508,144		76			—			508,220
Related party payable	—		108,970			(108,970		)	—
Accrued expenses	21,171		8,548			—			29,719
Income taxes payable	—		43			—			43
Contract funds on deposit	3,450		—			—			3,450
Ceded reinsurance premiums payable	—		21,967			—			21,967
Funds held under reinsurance treaties	—		324,239			—			324,239
	537,897		463,843			(108,970		)	892,770

Long-term liabilities
Deferred tax liabilities	—		105			—			105
Related party note payable	—		30,000			(30,000		)	—
Related party accrued interest payable	—		15			(15		)	—
Long-term debt	737,000		—			—			737,000
	737,000		30,120			(30,015		)	737,105

	1,274,897		493,963			(138,985		)	1,629,875

Members’ equity
Members’ equity	488,188		3,333			(1,921		)	489,600
Common stock	—		2,000			(2,000		)	—
Additional paid-in capital	—		23,700			(23,700		)	—
Accumulated deficit	—		(1,412		)	—			(1,412		)
	488,188		27,621			(27,621		)	488,188

Total liabilities and members’ equity	$	1,763,085	$	521,584		$	(166,606	)	$	2,118,063

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION (continued)

	Condensed Consolidating Balance Sheet December 31, 2014
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total
Current assets
Cash and cash equivalents	$	94,515		$	19,507		$	—		$	114,022
Investments, at amortized cost	—			6,564			—			6,564
Accounts receivable, net	183,515			465,432			—			648,947
Related party receivable	135,020			—			(135,020		)	—
Accrued receivables	87,179			40			—			87,219
Reinsurance recoverable	—			13,520			—			13,520
Income tax receivable	—			614			—			614
Inventory	6,140			—			—			6,140
Prepaid expenses and other current assets	5,736			311			—			6,047
Deferred tax asset	—			940			—			940
	512,105			506,928			(135,020		)	884,013
Property and equipment, net	12,696			198			—			12,894

Other assets
Investment in subsidiary	27,625			—			(27,625		)	—
Related party note receivable	15,000			—			(15,000		)	—
Deposits and other assets	540			—			—			540
Deferred financing fees, net	21,931			—			—			21,931
Other investments	1,750			—			—			1,750
Intangible assets, net	720,144			728			—			720,872
Goodwill	424,401			—			—			424,401
	1,211,391			728			(42,625		)	1,169,494

Total assets	$	1,736,192		$	507,854		$	(177,645	)	$	2,066,401

Current liabilities
Current portion of long-term debt	$	5,262		$	—		$	—		$	5,262
Accounts payable	480,028			219			—			480,247
Related party payable	—			135,020			(135,020		)	—
Accrued expenses	22,392			101			—			22,493
Contract funds on deposit	5,314			—			—			5,314
Funds held under reinsurance treaties	—			329,785			—			329,785
	512,996			465,125			(135,020		)	843,101
Long-term liabilities
Deferred tax liabilities	—			104			—			104
Interest rate swaps	5,665			—			—			5,665
Related party note payable	—			15,000			(15,000		)	—
Long-term debt	738,256			—			—			738,256
	743,921			15,104			(15,000		)	744,025
	1,256,917			480,229			(150,020		)	1,587,126

Members’ equity
Members’ equity	484,940			3,333			(1,925		)	486,348
Common stock	—			2,000			(2,000		)	—
Additional paid-in capital	—			23,700			(23,700		)	—
Accumulated deficit	—			(1,408		)	—			(1,408		)
Accumulated comprehensive loss	(5,665		)	—			—			(5,665		)
	479,275			27,625			(27,625		)	479,275

Total liabilities and members’ equity	$	1,736,192		$	507,854		$	(177,645	)	$	2,066,401

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. PLANNED MERGER WITH RITE AID CORPORATION (continued)

	Condensed Consolidating Statement of Cash Flows
	For the Three Months Ended March 31, 2015 (Unaudited)
	(in thousands)
	Guarantors			Non-Guarantor			Eliminations			Total
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	15,786		$	(1,877	)	$	—		$	13,909

Cash flows from investing activities:
Acquisitions of property and equipment	(891		)	—			—			(891		)
Proceeds from sale (purchase) of property and equipment from related party	(198		)	198			—			—
Investment in intangible assets	(2,057		)	—			—			(2,057		)
Purchases of investments, net	—			(157		)	—			(157		)
Issuance of related party note receivable	(15,000		)	—			15,000			—
Net cash provided by (used in) investing activities	(18,146		)	41			15,000			(3,105		)

Cash flows from financing activities:
Payments of principal on long-term debt	(1,625		)	—			—			(1,625		)
Proceeds from issuance of related party note payable	—			15,000			(15,000		)	—
Payoff of interest rate swaps	(7,076		)	—			—			(7,076		)
Net cash provided by (used in) financing activities	(8,701		)	15,000			(15,000		)	(8,701		)

Net increase (decrease) in cash and cash equivalents	(11,061		)	13,164			—			2,103

Cash and cash equivalents — beginning of year	94,515			19,507			—			114,022

Cash and cash equivalents — end of year	$	83,454		$	32,671		$	—		$	116,125

	Condensed Consolidating Statement of Cash Flows
	For the Three Months Ended March 31, 2014 (Unaudited)
	(in thousands)
	Guarantors			Non-Guarantor		Eliminations		Total

Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(29,459	)	$	6,361	$	—	$	(23,098	)

Cash flows from investing activities:
Acquisitions of property and equipment	(375		)	—		—		(375		)
Investment in intangible assets	(1,841		)	—		—		(1,841		)
Net cash provided by (used in) investing activities	(2,216		)	—		—		(2,216		)

Cash flows from financing activities:
Payments of principal on long-term debt	(1,333		)	—		—		(1,333		)
Capital contributions	1,670			—		—		1,670
Distributions	(29		)	—		—		(29		)
Net cash provided by (used in) financing activities	308			—		—		308

Net increase (decrease) in cash and cash equivalents	(31,367		)	6,361		—		25,006

Cash and cash equivalents — beginning of period	65,555			14,407		—		79,962

Cash and cash equivalents — end of period	$	34,188		$	20,768	$	—	$	54,956

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)

The Company uses EBITDA as a primary measurement of the Company’s earnings. The Company’s consolidated EBITDA for the three months ended March 31, 2015 and 2014 is summarized as follows (in thousands):

	2015		2014
Net income	$	3,248	$	3,227
Interest expense	21,312		11,181
Other expenses	27		69
Provision for (benefit from)
Federal income taxes	954		33
Depreciation and amortization	9,067		6,971

EBITDA	$	34,608	$	21,481

EBITDA shown in the table above has not been adjusted to remove non-recurring and/or non- operating items included in income from operations.

4. INVESTMENTS

At March 31, 2015 and December 31, 2014, EIC held investments in U.S. Treasury debt securities that were classified as held to maturity and carried at amortized cost. The amortized cost and estimated fair values of investments at March 31, 2015 and December 31, 2014 were as follows (in thousands):

	March 31,		December 31,
	2015		2014
Amortized cost	$	6,697	$	6,564
Gross unrealized gains	37		12

Estimated fair value	$	6,734	$	6,576

Contractual maturities of held-to-maturity securities at March 31, 2015 for the remainder of fiscal year 2015 and thereafter are as follows (in thousands):

	March 31,
	2015
Due in one year or less	$	1,930
Due after one year but less than five years	4,767
	$	6,697

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. INTANGIBLE ASSETS

The following is a summary of the intangible assets that are presented in the accompanying condensed consolidated balance sheets as of March 31, 2015 and December 31, 2014 (in thousands):

	March 31, 2015
Description	Cost		Accumulated Amortization		Net Carrying Value
Subject to amortization:
Backlog	$	19,500	$	9,154	$	10,346
Claims adjudication software	20,500		3,481		17,019
Computer software development	13,645		2,544		11,101
Customer relationships	395,600		15,497		380,103
Other intangibles	5,521		1,917		3,604
Non-compete agreements	12,938		4,699		8,239
Pharmacy benefit management accreditation license	176		89		87
Patents	11,200		1,126		10,074
Trademarks	36,400		855		35,545
	$	515,480	$	39,362	$	476,118
Indefinite-lived intangible assets:
State insurance license costs					177
CMS license					186,600
Trademarks					51,700
					238,477
					$	714,595

	December 31, 2014
Description	Cost		Accumulated Amortization		Net Carrying Value
Subject to amortization:
Backlog	$	19,500	$	7,529	$	11,971
Claims adjudication software	20,500		2,841		17,659
Computer software development	11,733		1,915		9,818
Customer relationships	395,600		11,844		383,756
Other intangibles	5,376		1,565		3,811
Non-compete agreements	12,938		3,855		9,083
Pharmacy benefit management accreditation license	176		77		99
Patents	11,200		926		10,274
Trademarks	36,400		476		35,924
Balance to next page	$	513,423	$	31,028	$	482,395

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. INTANGIBLE ASSETS (continued)

	March 31, 2014
			Accumulated		Net Carrying
Description	Cost		Amortization		Value

Balance from previous page	$	513,423	$	31,028	$	482,395

Indefinite-lived intangible assets:

State insurance license costs					177
CMS license					186,600
Trademarks					51,700
					238,477

					$	720,872

6. LINE OF CREDIT AND LONG-TERM DEBT

The Revolving Credit Facility is fully available for borrowing, and is not subject to a borrowing base or any other availability calculations. The Revolving Credit Facility matures in November 2018, and any outstanding borrowings bear interest at a variable rate based on the one-month LIBOR plus an interest margin (based on the Company’s leverage ratio) in the range of 4.50% to 4.75%. As of March 31, 2015 and December 31, 2014, the Company had $0 borrowings on the Revolving Credit Facility. The Revolving Credit Facility requires the Company to comply with a financial covenant pertaining to secured first lien leverage as of the end of each quarter. The Company was in compliance with the financial covenant as of March 31, 2015 and December 31, 2014.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. LINE OF CREDIT AND LONG-TERM DEBT (continued)

The Incremental 1st Lien Term Loan of $125 million was issued net of an original issue discount of $0.6 million (the Incremental 1st Lien OID). The Incremental 1st Lien OID is amortized to interest expense over the contractual term of the Incremental 1st Lien Term Loan, which results in an effective interest rate of 5.93% annually.

The first lien credit agreement and the second lien credit agreement restrict the Company’s ability to pay dividends or distributions to the amount that is required for income tax purposes.

At March 31, 2015 and December 31, 2014, long-term debt consisted of the following (in thousands):

	March 31,		December 31,
	2015		2014
1st Lien Term Loan payable to a lender group in quarterly installments of principal of $1.3 million plus variable interest (5.75% at March 31, 2015 and December 31, 2014) with a balloon payment in November 2020; collateralized by a first lien on substantially all assets of the Company (other than the assets of EIC) and a pledge of the stock of each of the Company’s subsidiaries (other than EIC); outstanding amount as of March 31, 2015 and December 31, 2014, is net of original issue discount of $3.9 million and $4.1 million, respectively	$	519,069	$	520,244
Balance to next page	519,069		520,244

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. LINE OF CREDIT AND LONG-TERM DEBT (continued)

	March 31,			December 31,
	2015			2014

Balance from previous page	$	519,069		$	520,244

2nd Lien Term Loan payable to a lender group in-full at maturity in November 2021 with variable interest (9.75% at March 31, 2015 and December 31, 2014) payable quarterly; collateralized bya second lien on substantially all assets of the Company (other than the assets of EIC) and a pledge of the stock of each of the Company’s subsidiaries (other than EIC); outstanding amount as of March 31, 2015 and December 31, 2014, is net of original issue discount of $3.3 million and $3.4 million, respectively	221,694			221,607

Capital leases payable to various vendors expiring in various years through 2017; collateralized by certain equipment and a vehicle	1,369			1,667
	742,132			743,518
Less: Current portion	(5,132		)	(5,262		)

	$	737,000		$	738,256

Future maturities of long-term debt for the remainder of fiscal year 2015 and thereafter are as follows (in thousands):

YEAR ENDING
DECEMBER 31,
2015	$	3,876
2016	4,845
2017	4,335
2018	4,108
2019	4,022
Thereafter	720,946

	$	742,132

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. CAPITALIZATION

The following table sets forth the fully vested Class A Units and Class B Units of Topco as of March 31, 2015 and December 31, 2014:

			Total Class A
	Class A	Class B	and Class B
	Units	Units	Units
Issued and outstanding at March 31, 2015 and December 31, 2014	330,336,308	166,643,310	496,979,618

The following table sets forth the Class C-1 Units of Topco (the Class C-1 Units) and the Class C-2 Units of Topco (the Class C-2 Units) as of March 31, 2015 and December 31, 2014:

			Total Class C-1
	Class C-1	Class C-2	and Class C-2
	Units	Units	Units
Granted and outstanding at March 31, 2015 and December 31, 2014	15,145,000	16,895,000	32,040,000

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. CAPITALIZATION (continued)

As outlined in the table above, in 2014 certain employees and certain members of Topco’s board of directors were granted 2,360,000 Class C-1 Units at a $1.04 per Unit hurdle rate and 2,360,000 Class C-2 Units at a $1.04 per Unit hurdle rate, which represented fair market value at the date of grant. All Class C-1 Units vest (subject to continuing employment) 20% per year on each of the first five anniversaries of the Acquisition Date (or first five anniversaries of the date of grant for Class C-1 Units grants subsequent to December 18, 2013). Except as outlined in the next sentence, Class C-2 Units vest (subject to continuing employment) 20% per year from 2014 through 2018 if the Company achieves a target-level of EBITDA established annually by Topco’s board of directors. A certain amount of Class C-2 Units granted to a member of Topco’s board of directors vest only upon a qualifying liquidity event in which the Sponsor receives a multiple of money of at least 3.0 times its initial investment. All Class C-2 Units immediately vest in full (subject to continuing employment) upon a qualifying liquidity event in which the Sponsor receives a multiple of money of at least 3.5 times its initial investment. All Class C-1 Units and Class C-2 Units are intended to represent “Profits Interests” in Topco within the meaning of IRS Revenue Procedure 93-27 (June 9, 1993) and IRS Revenue Procedure 2001-43 (August 3, 2001), and will not receive distributions from Topco (other than certain tax distributions) until such time as the holders of Class A Units and Class B Units have received their unreturned capital contributions from Topco.

In accordance with the terms of the Merger Agreement summarized in Note 2, all Phantom Units, Class C-1 Units and Class C-2 Units outstanding on the Closing date will be paid-out in connection with the Closing as if fully vested.

8. RELATED PARTY TRANSACTIONS

Pursuant to a management services agreement with TPG VI Management, LLC (Management), an affiliate of the Sponsor, and in exchange for on-going consulting and management advisory services provided to the Company, the Sponsor receives an annual monitoring fee of 1% of consolidated EBITDA. For the three months ended March 31, 2015 and 2014, $285 thousand and $247 thousand, respectively, was recorded for monitoring fees and expenses and is included in general and administrative expenses in the consolidated statements of operations.

9. CONCENTRATIONS

The Company places its cash with regulated financial institutions. Balances with the financial institutions may exceed Federally insured limits.

10. CONTINGENCIES

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11. DERIVATIVES AND OTHER COMPREHENSIVE INCOME

During the three months ended March 31, 2015, the Company paid off all of its interest rate swaps at their net fair value, which resulted in incremental interest expense of $7.1 million for the three months ended March 31, 2015. A credit for the net change was made to other comprehensive income (loss) for the three months ended March 31, 2015.

Balances of components comprising accumulated other comprehensive income (loss), included in members’ equity, at March 31, 2015 are as follows:

	Interest
	Rate
	Swaps

Balance at December 31, 2014	$	(5,665	)

Other comprehensive loss before reclassifications	(1,411		)

Amounts reclassified from other comprehensive
Loss (included as a component of interest expense)	7,076

Net current-period other comprehensive income	5,665

Balance at March 31, 2015	$	—

12. FAIR VALUE MEASUREMENTS

GAAP requires disclosure of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories:

· Level 1 — Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. FAIR VALUE MEASUREMENTS (continued)

The following is a description of the valuation methodology used for liabilities measured at fair value at December 31, 2014.

Interest rate swaps — Valued by observable market data of similar liabilities

The following table presents the Company’s net liability measured at fair value on a recurring basis at December 31, 2014 (in thousands):

	Level 1		Level 2		Level 3		Total

Interest rate swaps	$	—	$	5,665	$	—	$	5,665

Other Financial Instruments

13. REINSURANCE ACTIVITY

During 2014, EIC entered into a new reinsurance contract effective January 1, 2015 which extends through December 31, 2017. Under the terms of the contract, the reinsurer provides EIC with 50% quota-share reinsurance for 2015 and a minimum of 50% quota-share reinsurance for 2016 and 2017.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13. REINSURANCE ACTIVITY (continued)

In accordance with GAAP, reinsurance activity is reflected in the consolidated statements of income on a net basis. The net effects of reinsurance on premiums written and earned for the three months ended March 31, 2015 and 2014 are as follows (in thousands):

	Three months ended						Three months ended
	March 31, 2015						March 31, 2014
	Written			Earned			Written			Earned

Direct	$	111,410		$	111,410		$	110,539		$	110,539
Ceded	(53,530		)	(53,530		)	(79,923		)	(79,923		)
	$	57,880		$	57,880		$	30,616		$	30,616

14. STATUTORY SURPLUS AND NET INCOME

EIC is statutorily required to file financial statements with state and other regulatory authorities. The accounting principles used to prepare such statutory financial statements follow prescribed or permitted accounting practices as defined in the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual, which principles may differ from GAAP. Permitted statutory accounting practices encompass all accounting practices not so prescribed, but allowed by the Ohio Department of Insurance. EIC has no permitted statutory accounting practices. EIC’s statutory reporting period is January 1 through December 31. For the three months ended March 31, 2015 and 2014, EIC’s statutory net loss was $5.3 million and $201 thousand, respectively. As of March 31, 2015 and December 31, 2014, EIC’s statutory surplus was $47.2 million and $37.6 million, respectively.

EIC is subject to minimum capital and surplus requirements in the states of California, Florida, Ohio, and Wisconsin. The amount of capital and surplus required to satisfy regulatory requirements in California, Florida, Ohio, and Wisconsin is $5.8 million, $41.0 million, $35.1 million, and $10.9 million, respectively, for the three months ended March 31, 2015. EIC was in excess of the minimum required amounts in these four states as of March 31, 2015.

ENVISION TOPCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15. FEDERAL INCOME TAXES

The Company’s provision for Federal income taxes for the three months ended March 31, 2015 and 2014 have been computed based on EIC’s estimated taxable income for the three months then ended. Income before Federal income taxes differs from taxable income principally due to the effect of bad debt reserving and carryforward of net operating losses. Deferred income taxes for EIC reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured on an income tax basis.

EIC currently has no uncertain tax positions that have been taken and believes it can defend its tax returns to any tax jurisdiction. EIC is subject to examination by tax authorities for 2014 and 2013.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the June 24, 2015 acquisition of EnvisionRx by Rite Aid and the related financing transactions on Rite Aid’s historical balance sheets and statements of operations for the periods discussed below. The acquisition of EnvisionRx is being accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standards Codification 805, “Business Combinations” (“ASC 805”). The unaudited pro forma condensed combined financial information set forth below gives effect to the following:

· The June 24, 2015 acquisition of EnvisionRx, including the April 2, 2015 issuance of $1.8 billion aggregate principal amount of Rite Aid’s 6.125% senior notes due 2023 to finance the cash portion of the consideration for the acquisition and the issuance of 27.8 million shares of Rite Aid common stock, using the acquisition method of accounting;

· The January 2015 amendment and restatement of Rite Aid’s Senior Credit Facility, which, among other things, increased borrowing capacity from $1.795 billion to $3.0 billion (which was increased to $3.7 billion upon the repayment of the 8.00% Notes in August 2015), and extended the maturity to January 2020 from February 2018; and

· The January 2015 use of borrowings under the amended and restated Senior Credit Facility to repay and retire all of the $1.147 billion outstanding under Rite Aid’s Tranche 7 Senior Secured Term Loan due 2020, along with associated fees and expenses.

The unaudited pro forma condensed combined balance sheets have been prepared as if the above occurred on February 28, 2015 and May 30, 2015, and on March 1, 2014 and February 28, 2015 for purposes of the unaudited pro forma condensed combined statements of operations.

The historical condensed combined financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the aforementioned transactions, (2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the consolidated results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements are based on and should be read in conjunction with the:

· Separate audited consolidated financial statements of Rite Aid as of and for the year ended February 28, 2015, included in Rite Aid’s Annual Report on Form 10 K for the year ended February 28, 2015;

· Separate unaudited consolidated financial statements of Rite Aid as of and for the quarter ended May 30, 2015, included in Rite Aid’s Quarterly Report on From 10-Q for the quarter ended May 30, 2015;

· Separate audited consolidated financial statements of EnvisionRx as of and for the year ended December 31, 2014 and the related notes, filed herewith; and

· Separate unaudited consolidated financial statements of EnvisionRx as of and for the quarter ended March 31, 2015 and the related notes, filed herewith.

The unaudited pro forma condensed combined financial statements have been presented for informational purposes only. The pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the acquisition of EnvisionRx or the related financing transactions been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the combined company.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under GAAP. The accounting for the acquisition of EnvisionRx is dependent upon

certain valuations that are provisional and are subject to change. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing these unaudited pro forma condensed combined financial statements. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could be material. The differences, if any, could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and Rite Aid’s future results of operations and financial position.

In addition, the unaudited pro forma condensed combined financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition of EnvisionRx or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements. The unaudited pro forma condensed combined financial statements also do not include certain pro forma adjustments for EnvisionRx’s prior acquisitions.

RITE AID CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the 52 weeks ended February 28, 2015 for Rite Aid Historical and the year ended December 31, 2015 for EnvisionRx Historical

(Dollars in thousands)

	Rite Aid Historical 52 weeks ended February 28, 2015			EnvisionRx Historical for the year ended December 31, 2014			Preliminary Pro Forma Adjustments for Transactions			Total
Revenues	$	26,528,377		$	4,071,402		$	(271,544	)(1)	$	30,328,235
Cost of goods sold	18,951,645			3,832,928			(271,544		)(1)	22,513,029
Selling, general and administrative expenses	6,695,642			144,886			88,280		(2)(5)	6,928,808
Depreciation and amortization	—			30,198			(30,198		)(2)	—
Lease termination and impairment charges	41,945			—			—			41,945
Interest expense	397,612			52,185			49,536		(3)	499,333
Loss on debt retirements, net	18,512			—			—			18,512
Gain on sale of assets, net	(3,799		)	—			—			(3,799		)
Income (loss) before income taxes	426,820			11,205			(107,618		)	330,407
Income tax benefit	(1,682,353		)	(367		)	(41,971		)(4)	(1,724,691		)
Net income (loss)	$	2,109,173		$	11,572		$	(65,647	)	$	2,055,098

These unaudited pro forma condensed combined financial statements contain estimated adjustments which are based on information available to our management at the time this document was prepared. Accordingly, the adjustments are subject to change and the impact of such changes may be material. See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements.

Rite Aid is accounting for the EnvisionRx acquisition using the acquisition method of accounting. The pro forma adjustments reflect preliminary estimates of the purchase price allocation, which are expected to change upon finalization of appraisals and other valuation studies. The final allocation will be based on the actual purchase price and the assets and liabilities that exist as of the date of the EnvisionRx acquisition. The final allocation may also result in deferred taxes for which information is not currently available. The final adjustments could be materially different from the unaudited pro forma adjustments presented herein.

The unaudited pro forma condensed combined statement of operations also includes certain accounting adjustments related to the acquisition that are expected to have a continuing impact on the combined results, such as increased depreciation and amortization of the acquired tangible and intangible assets, increased interest expense on the debt expected to be incurred to complete the acquisition, amortization of deferred financing fees and the tax impact of these pro forma adjustments.

The unaudited pro forma condensed combined statement of operations does not reflect certain adjustments that are expected to result from the acquisition because they are considered to be of a non-recurring nature. These include transaction costs expected to be incurred related to the acquisition.

Rite Aid expects to realize synergies following the acquisition that are not reflected in the pro forma adjustments. No assurance can be given with respect to the ultimate level of such synergies and the timing of their realization.

Rite Aid is in process of conducting a review of EnvisionRx’s accounting policies in an effort to determine if differences in accounting policies require adjustment or reclassification of EnvisionRx’s results of operations or reclassification of assets or liabilities to conform to Rite Aid’s accounting policies and classifications. During the

preparation of these unaudited pro forma condensed combined financial statements, Rite Aid was not aware of any material differences between accounting policies of the two companies, except for certain reclassifications necessary to conform to Rite Aid’s financial presentation, and accordingly, this unaudited pro forma condensed combined financial information does not assume any material differences in accounting policies between the two companies.

(1) Represents the elimination of intercompany revenues and cost of goods sold for the 52 week period ended February 28, 2015. These amounts represent actual payments made to Rite Aid for dispensing prescription drugs to EnvisionRx plan members for the 52 week period ended February 28, 2015.

(2) Represents the reclassification of depreciation and amortization expense as reported by EnvisionRx for the year ended December 31, 2014 to conform to Rite Aid’s presentation. Rite Aid records substantially all depreciation and amortization in selling, general and administrative expenses.

(3) Represents the incremental interest expense after giving effect to (a) the April 2, 2015 issuance of $1.8 billion aggregate principal amount of 6.125% senior notes due 2023; (b) the amortization of the related fees and expenses; (c) the amendment and restatement of our Senior Credit Facility in January 2015, which increased the maximum commitment under the Senior Credit Facility to $3.0 billion (which was increased to $3.7 billion upon the repayment of the $650 million aggregate principal amount outstanding under our 8.00% Notes in August 2015) and extended the term of the Senior Credit Facility to January 2020; and (d) the repayment and retirement of all of the $1.147 billion outstanding under our Tranche 7 Senior Secured Term Loan due 2020, along with associated fees and expenses, with borrowings under the amended and restated Senior Credit Facility, calculated as follows:

		Preliminary Pro Forma 52 weeks ended February 28, 2015
Rite Aid historical interest expense for the fifty-two week period ended February 28, 2015		$	397,612
(a)	Incremental annual interest expense related to the April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023 ($1.8 billion at 6.125%)	110,250
(b)	Incremental full year amortization of anticipated debt issuance costs associated with the issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023 (approximately $36.1 million of debt issuance fees amortized over 7 years)	5,157
(c)	Incremental annualized anticipated interest savings generated from the January 2015 repayment of all of the $1.147 billion outstanding under our Tranche 7 Senior Secured Term Loan due 2020 with borrowings under the amended and restated Senior Credit Facility (approximately $20.0 million per year)	(17,500		)
(d)	Estimated full year amortization of anticipated debt issuance costs associated with the amendment and restatement of our Senior Credit Facility (approximately $19.1 million of debt issuance costs amortized over 5 years)	3,814
Preliminary pro forma interest expense for the 52 week period ended February 28, 2015		$	499,333

The preliminary pro forma interest expense for the 52 week period ended February 28, 2015 excludes incremental interest associated with the $74.4 million of debt issuance costs and transaction fees and expenses that were funded by our Senior Credit Facility, as those borrowings are expected to be repaid with cash in the near term.

(4) Represents the income tax benefit related to the preliminary pro forma adjustments for the acquisition based on an estimated statutory income tax rate of 39%.

(5) Represents the preliminary pro forma incremental amortization resulting from the preliminary fair value adjustments resulting from the preliminary purchase price allocation.

The incremental amortization resulting from the preliminary allocation of the purchase price is preliminary and is based on information available to our management at the time this document was prepared. Accordingly, the incremental amortization is subject to change and the impact of such change may be material.

RITE AID CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of February 28, 2015 for Rite Aid Historical and December 31, 2014 for EnvisionRx Historical

(Dollars in thousands)

	Rite Aid Historical as of February 28, 2015			EnvisionRx Historical as of December 31, 2014		Preliminary Pro Forma Adjustments for Transactions			Total
Assets
Current assets:
Cash and cash equivalents	$	115,899		$	114,022	$	(114,783	)(1)	$	115,138
Investments, at amortized cost	—			6,564		—			6,564
Accounts receivable, net	980,904			648,947			71,603	(2)	1,701,454
Accrued receivables	—			101,353		(101,353		)(2)	—
Inventories, net of LIFO reserve of $997,528	2,882,980			6,140		—			2,889,120
Deferred tax assets	17,823			940		—			18,763
Prepaid expenses and other current assets	224,152			6,047		—			230,199
Total current assets	4,221,758			884,013		(144,533		)	4,961,238
Property, plant and equipment, net	2,091,369			12,894		—			2,104,263
Goodwill	76,124			424,401		1,056,791		(3)	1,557,316
Other intangibles, net	421,480			720,872		104,228		(4)	1,246,580
Deferred tax assets	1,766,349			—		—			1,766,349
Other assets	286,172			24,221		14,200		(5)	324,593
Total assets	$	8,863,252		$	2,066,401	$	1,030,686		$	11,960,339
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	100,376		$	5,262	$	(5,262	)(6)	$	100,376
Accounts payable	1,133,520			480,247		86,750		(7)	1,700,517
Accrued salaries, wages and other current liabilities	1,193,419			357,592		(13,925		)(5)	1,537,086
Deferred tax liabilities	57,685			—		—			57,685
Total current liabilities	2,485,000			843,101		67,563			3,395,664
Long-term debt, less current maturities	5,483,415			738,256		1,104,766		(6)	7,326,437
Lease financing obligations, less current maturities	61,152			—		—			61,152
Deferred tax liabilities	—			—		143,000		(8)	143,000
Other noncurrent liabilities	776,629			5,769		(5,665		)(5)	776,733
Total liabilities	8,806,196			1,587,126		1,309,664			11,702,986
Commitments and contingencies
Stockholders’ equity:
Common stock	988,558			—		27,754		(9)	1,016,312
Additional paid-in capital	4,521,023			—		213,153		(9)	4,734,176
Members’ equity	—			479,275		(479,275		)(10)	—
Accumulated deficit	(5,406,675		)	—		(40,610		)(10)	(5,447,285		)
Accumulated other comprehensive loss	(45,850		)	—		—			(45,850		)
Total stockholders’ equity	57,056			479,275		(278,978		)	257,353
Total liabilities and stockholders’ equity	$	8,863,252		$	2,066,401	$	1,030,686		$	11,960,339

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements.

(1) Represents the overall change in cash resulting from the receipt of the net proceeds of the issuance of $1.8 billion 6.125% senior notes due 2023 less the cash consideration portion of the purchase price.

	Preliminary Pro Forma as of February 28, 2015
Combined cash on hand as of February 28, 2015	$	229,921
Gross proceeds from the issuance of $1.8 billion aggregate principle amount of our 6.125% senior notes due 2023	1,800,000
Debt issuance costs associated with the issuance of the 6.125% senior notes due 2023 that were deducted from the gross proceeds upon issuance	(31,378		)
Cash consideration portion of the purchase price, plus the additional cash paid at settlement including estimated interim EBITDA.	(1,883,405		)
Pro forma cash and cash equivalents as of February 28, 2015	$	115,138

(2) Represents i) the actual amounts due to Rite Aid for dispensing prescription drugs to EnvisionRx plan members as of February 28, 2015, and ii) the reclassification of accrued receivables as reported by EnvisionRx as of December 31, 2014 to conform with Rite Aid’s presentation.

(3) Represents the goodwill resulting from the acquisition. Please see note (4) below for the preliminary purchase price allocation. The preliminary purchase price allocation is subject to change, and the impact of such changes may be material.

(4) Represents the fair value adjustments resulting from the purchase price allocation determined as follows:

The following allocation of the purchase price is preliminary and is based on information available to our management at the time this document was prepared. Accordingly, the allocation is subject to change and the impact of such changes may be material.

	Preliminary Purchase Price Allocation
The preliminary purchase price allocation is as follows:
Preliminary purchase price:
Cash consideration	$	1,800,000
Additional cash paid at settlement including estimated interim EBITDA	83,405
Stock consideration	240,907
Total	$	2,124,312
Preliminary purchase price allocation
Cash and cash equivalents	$	114,022
Investments, at amortized cost	6,564
Accounts receivable, net	749,686
Income tax receivable	614
Inventories	6,140
Prepaid expenses and other current assets	6,047
Deferred tax asset	940
Property, plant and equipment, net	12,894
Goodwill	1,481,192
Other intangibles, net	825,100
Other assets	24,221
Total assets acquired	3,227,420
Accounts payable	(596,747		)
Accrued expenses	(357,592		)
Total current liabilities assumed	(954,339		)
Deferred tax liabilities	(143,000		)
Other noncurrent liabilities	(5,769		)
Total liabilities assumed	(1,103,108		)
Net assets acquired	$	2,124,312
The preliminary composition of other intangibles, net as of February 28, 2015 are as follows:
Subject to amortization:
Customer relationships	$	585,500
CMS license	108,000
Claims adjudication and other software	72,000
Trademarks	15,600
	781,100
Indefinite-lived intangible assets:
Trademarks	44,000
	44,000
Preliminary total other intangibles acquired	$	825,100

(5) Represents the anticipated impact on other assets, accrued salaries, wages and other current liabilities and other non-current liabilities as follows:

Other assets - Capitalization of $36.1 million of debt issuance costs relating to our April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023, less the write-off of EnvisionRx capitalized debt issuance costs of $21.9 million.

Accrued salaries, wages and other current liabilities - Payment of $7.1 million of accrued bridge commitment fees incurred in connection with bridge financing commitments that expired upon completion of the $1.8 billion notes offering on April 2, 2015 and the payment of $6.8 million of accrued acquisition costs.

Other non-current liabilities — Write-off of EnvisionRx interest rate swap liability in connection with the repayment of all outstanding EnvisionRx indebtedness upon closing.

(6) Represents the impact on short-term and long-term indebtedness after giving effect to (a) the April 2, 2015 issuance of $1.8 billion aggregate principal amount our 6.125% senior notes due 2023 and (b) the payment of anticipated debt issuance costs and other transaction fees and expenses, calculated as follows:

		Preliminary Pro Forma as of February 28, 2015
Rite Aid historical outstanding indebtedness as of February 28, 2015		$	5,644,943
(a)	The April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023	1,800,000
(b)	Anticipated debt issuance costs and other transaction fees and expenses funded with our Senior Credit Facility	43,022
	Preliminary pro forma short-term and long-term indebtedness, including capital leases, as of February 28, 2015	$	7,487,965

(7) Represents $116,500 due to the seller upon collection of a $452,600 CMS receivable relating to December 31, 2014 activities, less a corresponding payable under certain reinsurance contracts of $336,100, as well as actual amounts due to Rite Aid for dispensing prescription drugs to EnvisionRx plan members as of February 28, 2015.

(8) This represents the deferred income tax liability resulting from the difference in fair value step-up of the acquired assets between book and tax.

(9) Represents the issuance of 27,754,300 shares of our common stock with a market value of $240.9 million based on a stock price of $8.68 per share as of June 24, 2014 calculated as follows:

Total pro forma adjustment to common stock and additional paid-in capital	Preliminary Pro Forma as of February 28, 2015
Issuance of 27.8 million shares of Rite Aid common stock, par value $1 per share, upon completion of the acquisition	$	27,754
Increase to additional paid-in capital resulting from the issuance of 27.8 million shares of Rite Aid common stock, par value $1 per share, at an assumed price of $8.68 per share—gross value of $240.9 million (27.8 million shares at $8.68 per share) less $27.8 million allocated to common stock	213,153
Aggregate increase in common stock and additional paid-in capital resulting from the issuance of 27.8 million shares of common stock in connection with the completion of the acquisition	$	240,907

(10) Represents the aggregate pro forma adjustments for (a) the retirement of EnvisionRx equity as of December 31, 2014, (b) the write-off of EnvisionRx capitalized debt issuance costs as of December 31, 2014 due to the repayment of all outstanding EnvisionRx indebtedness upon completion of the acquisition, (c) the write-off of the EnvisionRx accrued interest rate swap liability in connection with the repayment of all outstanding EnvisionRx indebtedness upon completion of the acquisition, (d) fees incurred in connection with bridge financing commitments, and (d) certain non-capital expenses and fees incurred in connection with the transaction, calculated as follows:

Pro forma adjustment to accumulated deficit		Preliminary Pro Forma as of February 28, 2015
(a)	Retirement of EnvisionRx equity as of December 31, 2014	$	(479,275	)
(b)	Write-off of EnvisionRx capitalized debt issuance costs as of December 31, 2014 due to the repayment of all outstanding EnvisionRx indebtedness upon completion of the acquisition	(21,900		)
(c)	Write-off of the EnvisionRx accrued interest rate swap liability in connection with the repayment of all outstanding indebtedness upon closing.	5,665
(d)	Unamortized fees incurred in connection with bridge financing commitments that expired upon completion of the $1.8 billion notes offering on April 2, 2015	(15,375		)
(e)	Certain non-capital expenses and fees incurred in connection with the transaction, including merger and acquisition consultation, legal, accounting and other professional services	(9,000		)
Total pro forma adjustment to accumulated deficit		$	(519,885	)

RITE AID CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the 13 weeks ended May 30, 2015 for Rite Aid Historical and the quarter ended March 31, 2015 for EnvisionRx Historical

(Dollars in thousands)

	Rite Aid Historical 13 weeks ended May 30, 2015		EnvisionRx Historical for the quarter ended March 31, 2015		Preliminary Pro Forma Adjustments for Transactions			Total
Revenues	$	6,647,561	$	1,262,815	$	(79,755	)(1)	$	7,830,621
Cost of goods sold	4,788,031		1,184,914		(79,755		)(1)	5,893,190
Selling, general and administrative expenses	1,699,585		43,293		22,070		(2)(5)	1,764,948
Depreciation and amortization	—		9,067		(9,067		)(2)	—
Lease termination and impairment charges	5,022		—		—			5,022
Interest expense	123,607		21,339		(11,081		)(3)	133,865
Loss on debt retirements, net	—		—		—			—
Gain on sale of assets, net	39		—		—			39
Income before income taxes	31,277		4,202		(1,922		)	33,557
Income tax expense	12,441		954		(750		)(4)	12,645
Net income	$	18,836	$	3,248	$	(1,172	)	$	20,912

(1) Represents the elimination of intercompany revenues and cost of goods sold for the 13 week period ended May 30, 2015. These amounts represent actual payments made to Rite Aid for dispensing prescription drugs to EnvisionRx plan members for the 13 week period ended May 30, 2015.

(2) Represents the reclassification of depreciation and amortization expense as reported by EnvisionRx for the quarter ended March 31, 2015 to conform to Rite Aid’s presentation. Rite Aid records substantially all depreciation and amortization in selling, general and administrative expenses.

(3) Represents the incremental interest expense after giving effect to (a) the April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023; and (b) the amortization of the related fees and expenses, calculated as follows:

		Preliminary Pro Forma 13 weeks ended May 30, 2015
Rite Aid historical interest expense for the thirteen week period ended May 30, 2015		$	123,607
(a)	Incremental full quarter interest expense related to the April 2, 2015 issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023 ($1.8 billion at 6.125%)	9,800
(b)	Incremental full quarter amortization of debt issuance costs associated with the issuance of $1.8 billion aggregate principal amount of our 6.125% senior notes due 2023 (Approximately $36.1 million of debt issuance fees amortized over 7 years)	458
Pro forma interest expense for the 13 week period ended May 30, 2015		$	133,865

The preliminary pro forma interest expense for the 13 week period ended May 30 28, 2015 excludes incremental interest associated with the $35.5 million of debt issuance costs and transaction fees and expenses that were funded by our Senior Credit Facility, as those borrowings are expected to be repaid with cash in the near term.

(4) Represents the income tax benefit related to the preliminary pro forma adjustments for the acquisition based on an estimated statutory income tax rate of 39%.

(5) Represents the preliminary pro forma incremental amortization resulting from the preliminary fair value adjustments resulting from the preliminary purchase price allocation.

RITE AID CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of May 30, 2015 for Rite Aid Historical and March 31, 2015 for EnvisionRx Historical

(Dollars in thousands)

	Rite Aid Historical as of May 30, 2015			EnvisionRx Historical as of March 31, 2015		Preliminary Pro Forma Adjustments for Transactions			Total
Assets
Current assets:
Cash and cash equivalents	$	1,922,129		$	116,125	$	(1,883,405	)(1)	$	154,849
Investments, at amortized cost	—			6,697		—			6,697
Accounts receivable, net	969,725			686,288		74,138		(2)	1,730,151
Accrued receivables	—			112,510		(112,510		)(2)	—
Inventories, net of LIFO reserve of $1,003,515	2,820,784			6,490		—			2,827,274
Deferred tax assets	17,823			644		—			18,467
Prepaid expenses and other current assets	100,386			13,986		—			114,372
Total current assets	5,830,847			942,740		(1,921,777		)	4,851,810
Property, plant and equipment, net	2,143,575			13,052		—			2,156,627
Goodwill	76,124			424,401		1,042,987		(3)	1,543,512
Other intangibles, net	403,085			714,595		110,505		(4)	1,228,185
Deferred tax assets	1,756,809			—		—			1,756,809
Other assets	319,334			23,275		(21,900		)(5)	320,709
Total assets	$	10,529,774		$	2,118,063	$	(790,185	)	$	11,857,652
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	35,039		$	5,132	$	(5,132	)(6)	$	35,039
Accounts payable	1,167,354			508,220		78,128		(7)	1,753,702
Accrued salaries, wages and other current liabilities	1,144,889			379,418		(26,500		)(5)	1,497,807
Deferred tax liabilities	57,685			—		—			57,685
Total current liabilities	2,404,967			892,770		46,496			3,344,233
Long-term debt, less current maturities	7,142,247			737,000		(701,500		)(6)	7,177,747
Lease financing obligations, less current maturities	57,585			—		—			57,585
Deferred tax liabilities	—			—		143,000		(8)	143,000
Other noncurrent liabilities	772,244			105		—			772,349
Total liabilities	10,377,043			1,629,875		(512,004		)	11,494,914
Commitments and contingencies
Stockholders’ equity:
Common stock	1,014,827			—		27,754		(9)	1,042,581
Additional paid-in capital	4,570,996			—		213,153		(9)	4,784,149
Members’ equity	—			488,188		(488,188		)(10)	—
Accumulated deficit	(5,387,839		)	—		(30,900		)(10)	(5,418,739		)
Accumulated other comprehensive loss	(45,253		)	—		—			(45,253		)
Total stockholders’ equity	152,731			488,188		(278,181		)	362,738
Total liabilities and stockholders’ equity	$	10,529,774		$	2,118,063	$	(790,185	)	$	11,857,652

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements.

(1) Represents the overall change in cash resulting from the cash consideration portion of the purchase price.

	Preliminary Pro Forma as of May 30, 2015
Combined cash on hand as of May 30, 2015	$	2,038,254
Cash consideration portion of the purchase price plus the additional cash paid at settlement including estimated interim EBITDA.	(1,883,405		)
Pro forma cash and cash equivalents as of May 30, 2015	$	154,849

(2) Represents i) the actual amounts due to Rite Aid for dispensing prescription drugs to EnvisionRx plan members as of May 30, 2015, and ii) the reclassification of accrued receivables as reported by EnvisionRx as of March 31, 2015 to conform with Rite Aid’s presentation.

(4) Represents the fair value adjustments resulting from the purchase price allocation determined as follows:

The following allocation of the purchase price is preliminary and is based on information available to our management at the time this offering memorandum was prepared. Accordingly, the allocation is subject to change and the impact of such changes may be material.

	Preliminary Purchase Price Allocation
The preliminary purchase price allocation is as follows:
Preliminary purchase price:
Cash consideration	$	1,800,000
Additional cash paid at settlement including estimated interim EBITDA	83,405
Stock consideration	240,907
Total	$	2,124,312
Preliminary purchase price allocation
Cash and cash equivalents	$	116,125
Investments, at amortized cost	6,697
Accounts receivable, net	798,798
Income tax receivable	—
Inventories	6,490
Prepaid expenses and other current assets	13,986
Deferred tax asset	644
Property, plant and equipment, net	13,052
Goodwill	1,467,388
Other intangibles, net	825,100
Other assets	23,275
Total assets acquired	3,271,555
Accounts payable	(624,720		)
Accrued expenses	(379,418		)
Total current liabilities assumed	(1,004,138		)
Deferred tax liabilities	(143,000		)
Other noncurrent liabilities	(105		)
Total liabilities assumed	(1,147,243		)
Net assets acquired	$	2,124,312
The preliminary composition of other intangibles, net as of May 30, 2015 are as follows:
Subject to amortization:
Customer relationships	$	585,500
CMS license	108,000
Claims adjudication and other software	72,000
Trademarks	15,600
	781,100
Indefinite-lived intangible assets:
Trademarks	44,000
	44,000
Preliminary total other intangibles acquired	$	825,100

(5) Represents the anticipated impact on other assets, accrued salaries, wages and other current liabilities as follows:

Other assets - Write-off of EnvisionRx capitalized debt issuance costs of $21.9 million.

Accrued salaries, wages and other current liabilities - Payment of $22.5 million of accrued bridge commitment fees incurred in connection with bridge financing commitments that expired upon completion of the $1.8 billion notes offering on April 2, 2015 and the payment of $4.0 million of accrued acquisition costs.

(6) Represents the impact on short-term and long-term indebtedness after giving effect to (a) the payment of anticipated debt issuance costs and other transaction fees and expenses, calculated as follows:

		Preliminary Pro Forma as of May 30, 2015
Rite Aid historical outstanding indebtedness as of May 30, 2015		$	7,234,871
(a)	Debt issuance costs and other transaction fees and expenses funded with our Senior Credit Facility	35,500
	Preliminary pro forma short-term and long-term indebtedness, including capital leases, as of May 30, 2015	$	7,270,371

(8) This represents the deferred income tax liability resulting from the difference in fair value step-up of the acquired assets between book and tax.

(9) Represents the issuance of 27,754,300 shares of our common stock with a market value of $240.9 million based on a stock price of $8.68 per share as of June 24, 2014 calculated as follows:

Total pro forma adjustment to common stock and additional paid-in capital	Preliminary Pro Forma as of May 30, 2015
Issuance of 27.8 million shares of Rite Aid common stock, par value $1 per share, upon completion of the acquisition	$	27,754
Increase to additional paid-in capital resulting from the issuance of 27.8 million shares of Rite Aid common stock, par value $1 per share, at an assumed price of $8.68 per share—gross value of $240.9 million (27.8 million shares at $8.68 per share) less $27.8 million allocated to common stock	213,153
Aggregate increase in common stock and additional paid-in capital resulting from the issuance of 27.8 million shares of common stock in connection with the completion of the acquisition	$	240,907

(10) Represents the aggregate pro forma adjustments for (a) the retirement of EnvisionRx equity as of March 31, 2015, (b) the write-off of anticipated EnvisionRx capitalized debt issuance costs as of March 31, 2015 due to the repayment of all outstanding EnvisionRx indebtedness upon completion of the acquisition, and (c) certain non-capital expenses and fees incurred in connection with the transaction, calculated as follows:

Pro forma adjustment to accumulated deficit		Preliminary Pro Forma as of May 30, 2015
(a)	Retirement of EnvisionRx equity as of March 31, 2015	$	(488,188	)
(b)	Write-off of the EnvisionRx capitalized debt issuance costs as of March 31, 2015 due to the repayment of all outstanding EnvisionRx indebtedness upon completion of the acquisition	(21,900		)
(e)	Certain non-capital expenses and fees incurred in connection with the transaction, including merger and acquisition consultation, legal, accounting and other professional services	(9,000		)
Total pro forma adjustment to accumulated deficit		$	(519,088	)

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