- Revenues from Continuing Operations Increased 1.8 Percent to
$6.23 Billion Compared to Prior Year Third Quarter Revenues from
Continuing Operations of $6.12 Billion
- Third Quarter Net Loss from Continuing Operations of $36.1
Million or $0.67 Per Share, Compared to the Prior Year Third
Quarter Net Income of $4.3 Million or $0.08 Per Share
- Third Quarter Adjusted Net Income from Continuing Operations
of $8.2 Million or $0.15 Per Share, Compared to the Prior Year
Third Quarter Adjusted Net Income of $21.6 Million or $0.40 Per
Share
- Third Quarter Adjusted EBITDA from Continuing Operations
Increased 12.7 Percent to $154.8 Million, Compared to the Prior
Year Third Quarter Adjusted EBITDA of $137.4 Million
- Rite Aid Raises Adjusted EBITDA Guidance for Fiscal
2022
- Company Announces Rebate Aggregation Agreement between
Elixir and Prime Therapeutics
- Company Announces Store Closure Plan to Reduce Costs and
Improve Profitability
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its third fiscal quarter ended November 27, 2021.
This press release features multimedia. View
the full release here:
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For the third quarter, the company reported net loss from
continuing operations of $36.1 million, or $0.67 loss per share,
Adjusted net income from continuing operations of $8.2 million, or
$0.15 income per share, and Adjusted EBITDA from continuing
operations of $154.8 million, or 2.5 percent of revenues.
“We delivered a solid quarter as we grew Adjusted EBITDA by 12.7
percent versus last year,” said Heyward Donigan, president and
chief executive officer, Rite Aid. “Despite challenges in the labor
market, our pharmacists and store teams were able to meet the
unprecedented volumes for COVID and flu immunizations, COVID
testing and other clinical services, which clearly demonstrates our
Lean work to free up capacity is paying off.”
“We have also taken steps to drive increased value for all of
Elixir’s PBM clients by entering into a new rebate aggregation
agreement with Prime Therapeutics. In addition to the benefit to
clients, this partnership will enable Elixir to be more competitive
in the marketplace and improve profit margins.”
“Today, we also announced the first phase of a store closure
program to reduce costs, drive improved profitability and ensure
that we have a healthy foundation to grow from, with the right
stores in the right locations, for the communities we serve and for
our business. We have identified an initial 63 stores for closure
that is expected to provide an annual EBITDA benefit of
approximately $25 million.”
“We are encouraged by our recent momentum and expect to deliver
a significant increase in our fourth quarter Adjusted EBITDA
results compared to last year. As a result, we are raising our
guidance for Adjusted EBITDA for Fiscal 2022.”
“Finally, I want to thank each and every one of our associates
for everything they do. It is my greatest privilege to work
alongside such a tremendous team, and I am forever grateful for
their passion and commitment to our company, our customers and each
other.”
Consolidated Third Quarter Summary
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
27, 2021
November
28, 2020
November
27, 2021
November
28, 2020
Revenues from continuing operations
$
6,228,880
$
6,117,038
$
18,502,865
$
18,126,384
Net (loss) income from continuing
operations
(36,058)
4,324
(149,416)
(81,575)
Adjusted EBITDA from continuing
operations
154,793
137,405
399,830
396,400
Revenues from continuing operations for the quarter were $6.23
billion compared to revenues from continuing operations of $6.12
billion in the prior year’s quarter. The 1.8 percent increase in
revenues was driven by growth at the Retail Pharmacy Segment,
partially offset by a decline at the Pharmacy Services Segment.
Net loss from continuing operations was $36.1 million, or $0.67
per share, compared to last year’s third quarter net income from
continuing operations of $4.3 million, or $0.08 per share. The
increase in net loss is due primarily to higher facility exit and
impairment charges driven by the Company’s store closure decisions.
Other variance drivers include a LIFO charge in the current quarter
compared to a LIFO credit in the prior year third quarter and a
lower gain on the sale of assets. These items were partially offset
by an increase in Adjusted EBITDA and lower depreciation and
amortization expense.
Retail Pharmacy Segment
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
27, 2021
November
28, 2020
November
27, 2021
November
28, 2020
Revenues from continuing operations
$
4,432,508
$
4,109,592
$
13,061,408
$
12,250,775
Adjusted EBITDA from continuing
operations
125,931
88,557
290,214
273,879
Retail Pharmacy Segment revenues from continuing operations
increased 7.9 percent over the prior year quarter, driven by an
increase in same store sales and the inclusion of Bartell’s results
this quarter. Same store sales from continuing operations for the
third quarter increased 4.4 percent over the prior year period,
consisting of a 5.9 percent increase in pharmacy sales and a 0.4
percent increase in front-end sales. Front-end same store sales,
excluding cigarettes and tobacco products, increased 1.0 percent.
The number of prescriptions filled in same stores, adjusted to
30-day equivalents, increased 7.9 percent over the prior year
period. In addition to the benefit from 4 million COVID-19
vaccinations, maintenance prescriptions increased 1.7 percent while
other acute prescriptions increased 3.9 percent on a same store
basis when excluding COVID-19, flu and all other ancillary
vaccinations. Prescription sales from continuing operations
accounted for 71.1 percent of total drugstore sales. Total store
count at the end of the third quarter was 2,488.
Retail Pharmacy Segment Adjusted EBITDA from continuing
operations was $125.9 million, or 2.8 percent of revenues, for the
third quarter compared to last year’s third quarter Adjusted EBITDA
from continuing operations of $88.6 million, or 2.2 percent of
revenues. The increase in Adjusted EBITDA was due to increased
gross profit, partially offset by an increase in selling, general
and administrative (SG&A) expenses. Gross profit benefited from
higher pharmacy same store sales, including immunizations,
partially offset by pharmacy reimbursement rate pressures that were
not fully offset by generic drug cost reductions and an increase in
front-end gross profit resulting from higher front-end same store
sales and a reduction in markdowns. SG&A expenses were
negatively impacted by incremental payroll costs to support COVID
immunizations, increases in bonus expense for store, field and
corporate associates, increases in workers compensation costs and
cycling the benefit from the prior year change to modernize our
associate PTO plans.
Pharmacy Services Segment
(dollars in thousands)
Thirteen
Week Period Ended
Thirty-nine
Week Period Ended
November
27, 2021
November
28, 2020
November
27, 2021
November
28, 2020
Revenues from continuing operations
$
1,858,830
$
2,084,402
$
5,629,325
$
6,100,026
Adjusted EBITDA from continuing
operations
28,862
48,848
109,616
122,521
Pharmacy Services Segment revenues were $1.9 billion for the
quarter, a decrease of 10.8 percent compared to the prior year
quarter. The decrease in revenues was primarily the result of a
planned decrease in Elixir Insurance membership and a previously
announced client loss.
Pharmacy Services Segment Adjusted EBITDA from continuing
operations was $28.9 million, or 1.6 percent of revenues, for the
third quarter compared to last year’s third quarter Adjusted EBITDA
from continuing operations of $48.8 million, or 2.3 percent of
revenues. Gross profit dollars were negatively impacted from the
decline in revenues, a reduction in rebates and an increase in the
Medical Loss Ratio at Elixir Insurance. SG&A expenses improved
due to reduced payroll and a reduction in broker commissions.
Retail Store Base Assessment
Rite Aid is conducting a rigorous assessment of its store base
and has implemented a store closure program. The program’s primary
focus is to reduce costs, drive improved profitability and ensure
that Rite Aid has a healthy foundation to grow from, with the right
stores in the right locations, for the communities it serves and
for its business.
As a result of this ongoing review, Rite Aid identified 63
stores for closure that is expected to provide an annual EBITDA
benefit of approximately $25 million. The closures began this past
November. Associates impacted by these store closures are being
offered the opportunity to transfer to another store. The review
work will continue, and the Company anticipates the number of
closures to increase as it finalizes the review over the next
several months.
Outlook for Fiscal 2022
As a result of the momentum in the third quarter, and an
anticipated increase in demand for COVID-19 vaccines and testing
versus prior expectations, Rite Aid Corporation is raising its
fiscal 2022 Adjusted EBITDA guidance.
Total revenues are expected to be between $24.4 billion and
$24.7 billion in fiscal 2022. Pharmacy Services Segment revenue is
expected to be between $7.1 billion and $7.2 billion (net of any
intercompany revenues to the Retail Pharmacy Segment).
Net loss is expected to be between $230 million and $189
million.
Adjusted EBITDA is expected to be between $500 million and $520
million.
Adjusted net loss per share is expected to be between $0.49 and
$0.04.
Capital expenditures are expected to be approximately $275
million.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time
today with remarks by Rite Aid's management team. The call will be
broadcast via the Internet at https://investors.riteaid.com. The
telephone replay will be available beginning at 12:00 p.m. Eastern
Time on Tuesday, Dec. 21, 2021 and ending at 11:59 p.m. Eastern
Time on Jan. 21, 2022. To access the replay of the call, telephone
(800) 585-8367 or (416) 621-4642 and enter the seven-digit
reservation number 1787289. The webcast replay of the call will
also be available at https://investors.riteaid.com starting at 12
p.m. Eastern Time today. The playback will be available until the
company’s next conference call.
About Rite Aid Corporation
Rite Aid Corporation is on the front lines of delivering
healthcare services and retail products to Americans 365 days a
year. Our pharmacists are uniquely positioned to engage with
customers and improve their health outcomes. We provide an array of
whole being health products and services for the entire family
through over 2,400 retail pharmacy locations across 17 states.
Through Elixir, we provide pharmacy benefits and services to
millions of members nationwide. For more information,
www.riteaid.com.
Cautionary Statement Regarding Forward-Looking
Statements
Statements in this release that are not historical, are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements
regarding Rite Aid's outlook and guidance for fiscal 2022; the
continued impact of the global coronavirus (COVID-19) pandemic on
Rite Aid’s business; Rite Aid’s store closure program; and any
assumptions underlying any of the foregoing. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "should," and "will"
and variations of such words and similar expressions are intended
to identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and involve risks, assumptions and uncertainties,
including, but not limited to: risks related to the prolonged
impact of the COVID-19 global pandemic and the emerging new
variants, including the government responses thereto; the impact of
COVID-19 on our workforce, operations, stores, expenses, and supply
chain, and the operations or behaviors of our customers, suppliers
and business partners; our ability to successfully implement our
store closure program and other strategies; the impact of our high
level of indebtedness, the ability to refinance such indebtedness
on acceptable terms and our ability to satisfy our obligations and
the other covenants contained in our debt agreements; outcome of
pending or new litigation, including related to Opioids, “usual and
customary” pricing or other matters; our ability to monetize the
CMS receivable created in our Part D business; general competitive,
economic, industry, market, political (including healthcare reform)
and regulatory conditions (including changes to laws or regulations
relating to labor or wages), as well as other factors that impact
the markets in which we operate; the impact of private and public
third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; our ability
to achieve the benefits of our efforts to reduce the costs of our
generic and other drugs; our ability to achieve cost savings and
other benefits of our restructuring efforts within our anticipated
timeframe, if at all; the outcome of our continuing efforts to
monitor and comply with applicable laws, regulations, policies and
procedures; and our ability to partner and have relationships with
health plans and health systems.
These and other risks, assumptions and uncertainties are more
fully described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K and in other documents that we file or furnish
with the Securities and Exchange Commission (the “SEC”), which you
are encouraged to read. To the extent that COVID-19 adversely
affects our business and financial results, it may also have the
effect of heightening many of such risk factors.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
rely on these forward-looking statements, which speak only as of
the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s
results and operations, including its ability to achieve its
outlook for fiscal 2022 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, federal, state and local
governmental policies and initiatives designed to reduce the
transmission of COVID-19 and emerging new variants and how quickly
and to what extent normal economic and operating conditions can
resume. As a result, the impact on Rite Aid’s financial and
operating results cannot be reasonably estimated with specificity
at this time, but the impact could be material. Rite Aid expressly
disclaims any current intention, and assumes no duty, to update
publicly any forward-looking statement after the distribution of
this release, whether as a result of new information, future
events, changes in assumptions or otherwise.
All references to “Company” and “Rite Aid” as used throughout
this release refer to Rite Aid Corporation and its affiliates.
Reconciliation of Non-GAAP Financial Measures
Rite Aid separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted
EBITDA SG&A, which are non-GAAP financial measures. See the
attached tables for a reconciliation of Adjusted Net Income (Loss),
Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to
net income (loss), and net income (loss) per diluted share, which
are the most directly comparable GAAP financial measures. Adjusted
Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
exclude amortization expense, merger and acquisition-related costs,
non-recurring litigation settlements, gains or losses on debt
modifications and retirements, LIFO adjustments, goodwill and
intangible asset impairment charges, restructuring-related costs,
and the loss on Bartell acquisition. Rite Aid believes Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
serve as appropriate measures to be used in evaluating the
performance of its business and help its investors better compare
its operating performance over multiple periods.
Adjusted EBITDA is defined as net income (loss) excluding the
impact of income taxes, interest expense, depreciation and
amortization, LIFO adjustments, charges or credits for facility
closing and impairment, goodwill and intangible asset impairment
charges, inventory write-downs related to store closings, gains or
losses on debt modifications and retirements, and other items
(including stock-based compensation expense, merger and
acquisition-related costs, non-recurring litigation settlements,
severance, restructuring-related costs, costs related to facility
closures, gain or loss on sale of assets, and the loss on Bartell
acquisition). The add back of LIFO (credit) charge when calculating
Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income
(Loss) per Diluted Share removes the entire impact of LIFO
(credits) charges, and effectively reflects Rite Aid's results as
if the company was on a FIFO inventory basis. Rite Aid believes
Adjusted EBITDA serves as an appropriate measure in evaluating the
performance of its business and helps its investors better compare
its operating performance with its competitors.
Adjusted EBITDA Gross Profit includes LIFO adjustments,
depreciation and amortization (COGS portion only) and other items.
See the attached tables for a reconciliation of Adjusted EBITDA
Gross Profit to Revenue, which is the most directly comparable GAAP
financial measure. Adjusted EBITDA SG&A excludes depreciation
and amortization (SG&A portion only), stock-based compensation
expense, merger and acquisition-related costs, litigation
settlements and other items. See the attached tables for a
reconciliation of Adjusted EBITDA SG&A to Revenue, which is the
most directly comparable GAAP financial measure. The Company
believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A
serve as appropriate measures in evaluating the performance of its
business and helps its investors better compare its operating
performance with its competitors.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited) November 27, 2021
February 27, 2021 ASSETS Current assets: Cash and cash equivalents
$
155,289
$
160,902
Accounts receivable, net
1,844,234
1,462,441
Inventories, net of LIFO reserve of $486,759 and $485,859
1,949,841
1,864,890
Prepaid expenses and other current assets
106,666
106,941
Total current assets
4,056,030
3,595,174
Property, plant and equipment, net
1,014,662
1,080,499
Operating lease right-of-use assets
2,915,748
3,064,077
Goodwill
1,108,136
1,108,136
Other intangibles, net
307,345
340,519
Deferred tax assets
14,964
14,964
Other assets
82,239
132,035
Total assets
$
9,499,124
$
9,335,404
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt and lease financing
obligations
$
6,119
$
6,409
Accounts payable
1,547,770
1,437,421
Accrued salaries, wages and other current liabilities
873,201
642,364
Current portion of operating lease liabilities
522,272
516,752
Total current liabilities
2,949,362
2,602,946
Long-term debt, less current maturities
3,167,060
3,063,087
Long-term operating lease liabilities
2,692,669
2,829,293
Lease financing obligations, less current maturities
15,270
16,711
Other noncurrent liabilities
202,734
208,213
Total liabilities
9,027,095
8,720,250
Commitments and contingencies
-
-
Stockholders' equity: Common stock
55,761
55,143
Additional paid-in capital
5,902,445
5,897,168
Accumulated deficit
(5,462,519
)
(5,313,103
)
Accumulated other comprehensive loss
(23,658
)
(24,054
)
Total stockholders' equity
472,029
615,154
Total liabilities and stockholders' equity
$
9,499,124
$
9,335,404
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
Revenues
$
6,228,880
$
6,117,038
Costs and expenses: Cost of revenues
4,894,497
4,913,939
Selling, general and administrative expenses
1,276,920
1,156,355
Facility exit and impairment charges
47,455
7,453
Interest expense
47,794
50,835
Gain on sale of assets, net
(5,899
)
(16,305
)
Loss on Bartell acquisition
5,346
-
6,266,113
6,112,277
(Loss) income from continuing operations before income taxes
(37,233
)
4,761
Income tax (benefit) expense
(1,175
)
437
Net (loss) income from continuing operations
(36,058
)
4,324
Net income from discontinued operations, net of tax
-
-
Net (loss) income
$
(36,058
)
$
4,324
Basic and diluted (loss) income per share: Numerator
for (loss) income per share: Net (loss) income from continuing
operations attributable to common stockholders - basic and diluted
$
(36,058
)
$
4,324
Net income from discontinued operations attributable to common
stockholders - basic and diluted
-
-
(Loss) income attributable to common stockholders - basic and
diluted
$
(36,058
)
$
4,324
Denominator: Basic weighted average shares
54,168
53,744
Outstanding options and restricted shares, net
-
335
Diluted weighted average shares
54,168
54,079
Basic and diluted (loss) income per share Continuing
operations
$
(0.67
)
$
0.08
Discontinued operations
$
-
$
-
Net basic and diluted (loss) income per share
$
(0.67
)
$
0.08
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited)
Thirty-nine weeks ended
November 27, 2021
Thirty-nine weeks ended
November 28, 2020
Revenues
$
18,502,865
$
18,126,384
Costs and expenses: Cost of revenues
14,637,683
14,564,621
Selling, general and administrative expenses
3,790,035
3,469,644
Facility exit and impairment charges
67,639
22,734
Intangible asset impairment charges
-
29,852
Interest expense
145,507
151,389
Loss (gain) on debt modifications and retirements, net
3,235
(5,274
)
Gain on sale of assets, net
(79
)
(17,473
)
Loss on Bartell acquisition
5,346
-
18,649,366
18,215,493
Loss from continuing operations before income taxes
(146,501
)
(89,109
)
Income tax expense (benefit)
2,915
(7,534
)
Net loss from continuing operations
(149,416
)
(81,575
)
Net income from discontinued operations, net of tax
-
9,161
Net loss
$
(149,416
)
$
(72,414
)
Basic and diluted loss per share: Numerator for loss
per share: Net loss from continuing operations attributable to
common stockholders - basic and diluted
$
(149,416
)
$
(81,575
)
Net income from discontinued operations attributable to common
stockholders - basic and diluted
-
9,161
Loss attributable to common stockholders - basic and diluted
$
(149,416
)
$
(72,414
)
Denominator: Basic and diluted weighted average shares
54,004
53,600
Basic and diluted loss per share Continuing operations
$
(2.77
)
$
(1.52
)
Discontinued operations
$
-
$
0.17
Net basic and diluted loss per share
$
(2.77
)
$
(1.35
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
OPERATING ACTIVITIES: Net (loss) income
$
(36,058
)
$
4,324
Net income from discontinued operations, net of tax
-
-
Net (loss) income from continuing operations
$
(36,058
)
$
4,324
Adjustments to reconcile to net cash (used in) provided by
operating activities of continuing operations: Depreciation and
amortization
72,973
83,336
Facility exit and impairment charges
47,455
7,453
LIFO charge (credit)
8,886
(9,487
)
Gain on sale of assets, net
(5,899
)
(16,305
)
Loss on Bartell acquisition
5,346
-
Stock-based compensation expense
217
2,867
Changes in deferred taxes
(1,602
)
-
Changes in operating assets and liabilities: Accounts receivable
(185,224
)
128,777
Inventories
(68,054
)
(24,005
)
Accounts payable
38,112
(488
)
Operating lease right-of-use assets and operating lease liabilities
(7,208
)
(6,826
)
Other assets
9,761
(4,248
)
Other liabilities
118,257
57,351
Net cash (used in) provided by operating activities of continuing
operations
(3,038
)
222,749
INVESTING ACTIVITIES: Payments for property, plant and equipment
(39,645
)
(64,304
)
Intangible assets acquired
(9,810
)
(6,131
)
Proceeds from dispositions of assets and investments
3,145
3,176
Proceeds from sale-leaseback transactions
25,605
80,551
Net cash (used in) provided by investing activities of continuing
operations
(20,705
)
13,292
FINANCING ACTIVITIES: Net proceeds from (payments to) revolver
50,000
(309,000
)
Principal payments on long-term debt
(1,032
)
(1,194
)
Change in zero balance cash accounts
(14,243
)
32,374
Payments for taxes related to net share settlement of equity awards
(131
)
(64
)
Deferred financing costs paid
(2,126
)
(74
)
Net cash provided by (used in) financing activities of continuing
operations
32,468
(277,958
)
Increase (decrease) in cash and cash equivalents
8,725
(41,917
)
Cash and cash equivalents, beginning of period
146,564
92,730
Cash and cash equivalents, end of period
$
155,289
$
50,813
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirty-nine weeks endedNovember 27, 2021 Thirty-nine weeks
endedNovember 28, 2020 OPERATING ACTIVITIES: Net loss
$
(149,416
)
$
(72,414
)
Net income from discontinued operations, net of tax
-
9,161
Net loss from continuing operations
$
(149,416
)
$
(81,575
)
Adjustments to reconcile to net cash provided by (used in)
operating activities of continuing operations: Depreciation and
amortization
222,691
249,556
Facility exit and impairment charges
67,639
22,734
Intangible asset impairment charges
-
29,852
LIFO charge (credit)
900
(30,303
)
Gain on sale of assets, net
(79
)
(17,473
)
Loss on Bartell acquisition
5,346
-
Stock-based compensation expense
8,820
8,677
Loss (gain) on debt modifications and retirements, net
3,235
(5,274
)
Changes in deferred taxes
(1,602
)
-
Changes in operating assets and liabilities: Accounts receivable
(398,079
)
(507,778
)
Inventories
(87,150
)
(19,532
)
Accounts payable
129,436
1,460
Operating lease right-of-use assets and operating lease liabilities
(19,517
)
(25,319
)
Other assets
34,946
75,265
Other liabilities
219,390
45,867
Net cash provided by (used in) operating activities of continuing
operations
36,560
(253,843
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(145,001
)
(127,389
)
Intangible assets acquired
(24,289
)
(28,703
)
Proceeds from insured loss
10,436
12,500
Proceeds from dispositions of assets and investments
7,821
9,086
Proceeds from sale-leaseback transactions
39,790
89,012
Net cash used in investing activities of continuing operations
(111,243
)
(45,494
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
350,000
849,918
Net proceeds from revolver
300,000
341,000
Principal payments on long-term debt
(544,020
)
(1,057,376
)
Change in zero balance cash accounts
(15,087
)
5,545
Financing fees paid for early debt redemption
(833
)
(2,399
)
Payments for taxes related to net share settlement of equity awards
(2,352
)
(2,165
)
Deferred financing costs paid
(18,638
)
(14,674
)
Net cash provided by financing activities of continuing operations
69,070
119,849
Cash flows from discontinued operations: Operating activities of
discontinued operations
-
(82,189
)
Investing activities of discontinued operations
-
94,310
Net cash provided by discontinued operations
-
12,121
Decrease in cash and cash equivalents
(5,613
)
(167,367
)
Cash and cash equivalents, beginning of period
160,902
218,180
Cash and cash equivalents, end of period
$
155,289
$
50,813
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
Retail Pharmacy Segment Revenues from continuing
operations (a)
$
4,432,508
$
4,109,592
Cost of revenues from continuing operations (a)
3,199,271
3,029,884
Gross profit from continuing operations
1,233,237
1,079,708
LIFO charge (credit) from continuing operations
8,886
(9,487
)
FIFO gross profit from continuing operations
1,242,123
1,070,221
Adjusted EBITDA gross profit from continuing operations
1,244,637
1,072,547
Gross profit as a percentage of revenues - continuing
operations
27.82
%
26.27
%
LIFO charge (credit) as a percentage of revenues - continuing
operations
0.20
%
-0.23
%
FIFO gross profit as a percentage of revenues - continuing
operations
28.02
%
26.04
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
28.08
%
26.10
%
Selling, general and administrative expenses from continuing
operations
1,185,974
1,067,027
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
1,118,706
983,990
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
26.76
%
25.96
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
25.24
%
23.94
%
Cash interest expense
44,853
47,500
Non-cash interest expense
2,941
3,335
Total interest expense
47,794
50,835
Interest expense - continuing operations
47,794
50,835
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
125,931
88,557
Adjusted EBITDA as a percentage of revenues - continuing operations
2.84
%
2.15
%
Pharmacy Services Segment Revenues (a)
$
1,858,830
$
2,084,402
Cost of revenues (a)
1,757,684
1,961,011
Gross profit
101,146
123,391
Gross profit as a percentage of revenues
5.44
%
5.92
%
Adjusted EBITDA
28,862
48,848
Adjusted EBITDA as a percentage of revenues
1.55
%
2.34
%
(a) -
Revenues and cost of revenues include $62,458 and $76,956 of
inter-segment activity for the thirteen weeks ended November 27,
2021 and November 28, 2020, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands)
(unaudited)
Thirty-nine weeks ended
November 27, 2021
Thirty-nine weeks ended
November 28, 2020
Retail Pharmacy Segment Revenues from continuing
operations (a)
$
13,061,408
$
12,250,775
Cost of revenues from continuing operations (a)
9,517,875
9,027,618
Gross profit from continuing operations
3,543,533
3,223,157
LIFO charge (credit) from continuing operations
900
(30,303
)
FIFO gross profit from continuing operations
3,544,433
3,192,854
Adjusted EBITDA gross profit from continuing operations
3,551,888
3,227,196
Gross profit as a percentage of revenues - continuing
operations
27.13
%
26.31
%
LIFO charge (credit) as a percentage of revenues - continuing
operations
0.01
%
-0.25
%
FIFO gross profit as a percentage of revenues - continuing
operations
27.14
%
26.06
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
27.19
%
26.34
%
Selling, general and administrative expenses from continuing
operations
3,505,365
3,206,078
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
3,261,674
2,953,317
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
26.84
%
26.17
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.97
%
24.11
%
Cash interest expense
136,476
141,635
Non-cash interest expense
9,031
9,754
Total interest expense
145,507
151,389
Interest expense - continuing operations
145,507
151,389
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
290,214
273,879
Adjusted EBITDA as a percentage of revenues - continuing operations
2.22
%
2.24
%
Pharmacy Services Segment Revenues (a)
$
5,629,325
$
6,100,026
Cost of revenues (a)
5,307,676
5,761,420
Gross profit
321,649
338,606
Gross profit as a percentage of revenues
5.71
%
5.55
%
Adjusted EBITDA
109,616
122,521
Adjusted EBITDA as a percentage of revenues
1.95
%
2.01
%
(a) -
Revenues and cost of revenues include $187,868 and $224,417 of
inter-segment activity for the thirty-nine weeks ended November 27,
2021 and November 28, 2020, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION RECONCILIATION OF NET (LOSS) INCOME TO
ADJUSTED EBITDA (In thousands) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
Reconciliation of net (loss) income to adjusted EBITDA: Net
(loss) income - continuing operations
$
(36,058
)
$
4,324
Adjustments: Interest expense
47,794
50,835
Income tax (benefit) expense
(1,175
)
437
Depreciation and amortization
72,973
83,336
LIFO charge (credit)
8,886
(9,487
)
Facility exit and impairment charges
47,455
7,453
Merger and Acquisition-related costs
3,642
1,136
Stock-based compensation expense
217
2,867
Restructuring-related costs
9,657
12,175
Inventory write-downs related to store closings
86
704
Litigation settlements
2,000
-
Gain on sale of assets, net
(5,899
)
(16,305
)
Loss on Bartell acquisition
5,346
-
Other
(131
)
(70
)
Adjusted EBITDA - continuing operations
$
154,793
$
137,405
Percent of revenues - continuing operations
2.49
%
2.25
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In
thousands) (unaudited)
Thirty-nine weeks ended
November 27, 2021
Thirty-nine weeks ended
November 28, 2020
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(149,416
)
$
(81,575
)
Adjustments: Interest expense
145,507
151,389
Income tax expense (benefit)
2,915
(7,534
)
Depreciation and amortization
222,691
249,556
LIFO charge (credit)
900
(30,303
)
Facility exit and impairment charges
67,639
22,734
Intangible asset impairment charges
-
29,852
Loss (gain) on debt modifications and retirements, net
3,235
(5,274
)
Merger and Acquisition-related costs
12,119
1,136
Stock-based compensation expense
8,820
8,677
Restructuring-related costs
25,173
71,096
Inventory write-downs related to store closings
1,356
2,596
Litigation settlements
50,212
-
Gain on sale of assets, net
(79
)
(17,473
)
Loss on Bartell acquisition
5,346
-
Other
3,412
1,523
Adjusted EBITDA - continuing operations
$
399,830
$
396,400
Percent of revenues - continuing operations
2.16
%
2.19
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET INCOME (Dollars in thousands, except per
share amounts) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
Net (loss) income from continuing operations
$
(36,058
)
$
4,324
Add back - Income tax (benefit) expense
(1,175
)
437
(Loss) income before income taxes - continuing operations
(37,233
)
4,761
Adjustments: Amortization expense
18,780
21,236
LIFO charge (credit)
8,886
(9,487
)
Merger and Acquisition-related costs
3,642
1,136
Restructuring-related costs
9,657
12,175
Loss on Bartell acquisition
5,346
-
Litigation settlements
2,000
-
Adjusted income before income taxes - continuing operations
11,078
29,821
Adjusted income tax expense (a)
2,914
8,243
Adjusted net income from continuing operations
$
8,164
$
21,578
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
8,164
$
21,578
Denominator: Basic weighted average shares
54,168
53,744
Outstanding options and restricted shares, net
541
335
Diluted weighted average shares
54,709
54,079
Net (loss) income from continuing operations per diluted
share - continuing operations
$
(0.67
)
$
0.08
Adjusted net income per diluted share - continuing
operations
$
0.15
$
0.40
(a)
The fiscal year 2022 and 2021 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirteen weeks ended November 27, 2021 and
November 28, 2020, respectively. RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET INCOME (Dollars
in thousands, except per share amounts) (unaudited)
Thirty-nine weeks ended
November 27, 2021
Thirty-nine weeks ended
November 28, 2020
Net loss from continuing operations
$
(149,416
)
$
(81,575
)
Add back - Income tax expense (benefit)
2,915
(7,534
)
Loss before income taxes - continuing operations
(146,501
)
(89,109
)
Adjustments: Amortization expense
59,193
68,351
LIFO charge (credit)
900
(30,303
)
Intangible asset impairment charges
-
29,852
Loss (gain) on debt modifications and retirements, net
3,235
(5,274
)
Merger and Acquisition-related costs
12,119
1,136
Restructuring-related costs
25,173
71,096
Loss on Bartell acquisition
5,346
-
Litigation settlements
50,212
-
Adjusted income before income taxes - continuing operations
9,677
45,749
Adjusted income tax expense (a)
2,545
12,645
Adjusted net income from continuing operations
$
7,132
$
33,104
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
7,132
$
33,104
Denominator: Basic weighted average shares
54,004
53,600
Outstanding options and restricted shares, net
998
754
Diluted weighted average shares
55,002
54,354
Net loss from continuing operations per diluted share -
continuing operations
$
(2.77
)
$
(1.52
)
Adjusted net income per diluted share - continuing
operations
$
0.13
$
0.61
(a)
The fiscal year 2022 and 2021 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirty-nine weeks ended November 27, 2021 and
November 28, 2020, respectively. RITE AID CORPORATION AND
SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF ADJUSTED
EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT (In
thousands) (unaudited)
Thirteen weeks ended
November 27, 2021
Thirteen weeks ended
November 28, 2020
Reconciliation of adjusted EBITDA gross profit: Revenues
$
4,432,508
$
4,109,592
Gross Profit
1,233,237
1,079,708
Addback: LIFO charge (credit)
8,886
(9,487
)
Depreciation and amortization (cost of goods sold portion only)
2,489
1,945
Other
25
381
Adjusted EBITDA gross profit - continuing operations
$
1,244,637
$
1,072,547
Percent of revenues - continuing operations
28.08
%
26.10
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
4,432,508
$
4,109,592
Selling, general and administrative expenses
1,185,974
1,067,027
Less: Depreciation and amortization (SG&A portion only)
58,087
67,641
Stock-based compensation expense
(174
)
2,429
Merger and Acquisition-related costs
3,642
1,136
Restructuring-related costs
3,746
11,605
Litigation settlements
2,000
-
Other
(33
)
226
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
1,118,706
$
983,990
Percent of revenues - continuing operations
25.24
%
23.94
%
Adjusted EBITDA - continuing operations
$
125,931
$
88,557
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND
RECONCILIATION OF ADJUSTED EBITDA SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT (In thousands)
(unaudited)
Thirty-nine weeks ended
November 27, 2021
Thirty-nine weeks ended
November 28, 2020
Reconciliation of adjusted EBITDA gross profit: Revenues
$
13,061,408
$
12,250,775
Gross Profit
3,543,533
3,223,157
Addback: LIFO charge (credit)
900
(30,303
)
Depreciation and amortization (cost of goods sold portion only)
6,536
6,775
Restructuring-related costs - SKU optimization charges
-
25,763
Other
919
1,804
Adjusted EBITDA gross profit - continuing operations
$
3,551,888
$
3,227,196
Percent of revenues - continuing operations
27.19
%
26.34
%
Reconciliation of adjusted EBITDA selling, general
and administrative expenses: Revenues
$
13,061,408
$
12,250,775
Selling, general and administrative expenses
3,505,365
3,206,078
Less: Depreciation and amortization (SG&A portion only)
176,936
199,434
Stock-based compensation expense
8,292
7,785
Merger and Acquisition-related costs
12,119
1,136
Restructuring-related costs
7,951
41,992
Litigation settlements
34,448
-
Other
3,945
2,414
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
3,261,674
$
2,953,317
Percent of revenues - continuing operations
24.97
%
24.11
%
Adjusted EBITDA - continuing operations
$
290,214
$
273,879
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA
GUIDANCE YEAR ENDING FEBRUARY 26, 2022 (In thousands) (unaudited)
Guidance Range Low High Total
Revenues
$
24,400,000
$
24,700,000
Pharmacy Services Segment Revenues
$
7,100,000
$
7,200,000
Gross Capital Expenditures
$
275,000
$
275,000
Reconciliation of net loss to adjusted EBITDA: Net loss
$
(229,500
)
$
(188,500
)
Adjustments: Interest expense
195,000
195,000
Income tax expense
3,000
-
Depreciation and amortization
302,000
302,000
LIFO charge
5,000
-
Facility exit and impairment charges
105,000
95,000
Loss on debt modifications and retirements, net
3,200
3,200
Merger and Acquisition-related costs
13,000
13,000
Restructuring-related costs
35,000
35,000
Litigation settlements
50,000
50,000
Gain on sale of assets, net
(7,000
)
(10,000
)
Loss on Bartell acquisition
5,300
5,300
Other
20,000
20,000
Adjusted EBITDA
$
500,000
$
520,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET
LOSS GUIDANCE YEAR ENDING FEBRUARY 26, 2022 (In thousands)
(unaudited)
Guidance Range Low High
Net loss
$
(229,500
)
$
(188,500
)
Add back - income tax expense
3,000
-
Loss before income taxes
(226,500
)
(188,500
)
Adjustments: Amortization expense
79,000
79,000
LIFO charge
5,000
-
Loss on debt modifications and retirements, net
3,200
3,200
Merger and Acquisition-related costs
13,000
13,000
Restructuring-related costs
35,000
35,000
Loss on Bartell acquisition
5,300
5,300
Litigation settlements
50,000
50,000
Adjusted loss before adjusted income taxes
(36,000
)
(3,000
)
Adjusted income tax benefit
(9,500
)
(800
)
Adjusted net loss
$
(26,500
)
$
(2,200
)
Diluted adjusted net loss per share
$
(0.49
)
$
(0.04
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211220005684/en/
INVESTORS: Trent Kruse (717) 975-3710 investor@riteaid.com
MEDIA: Jeffrey Olson 717-975-5718 press@riteaid.com
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