- Revenues Increased 12.0 Percent – Driven by Growth in Both
Retail Pharmacy and Pharmacy Services Segments
- Increased Market Share in both Front-End and
Pharmacy
- Third Quarter Net Income from Continuing Operations of $4.3
Million or $0.08 Per Share, Compared to the Prior Year Third
Quarter Net Income of $52.3 Million or $0.98 Per Share
- Third Quarter Adjusted Net Income from Continuing Operations
of $21.6 Million or $0.40 Per Share, Compared to the Prior Year
Third Quarter Adjusted Net Income of $29.1 Million or $0.54 Per
Share
- Third Quarter Adjusted EBITDA from Continuing Operations of
$137.4 Million, Compared to the Prior Year Adjusted EBITDA of
$158.1 Million
- Company Narrows Fiscal 2021 Guidance
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its third fiscal quarter ended November 28, 2020.
For the third quarter, the company reported net income from
continuing operations of $4.3 million, or $0.08 income per share,
Adjusted net income from continuing operations of $21.6 million, or
$0.40 income per share, and Adjusted EBITDA from continuing
operations of $137.4 million, or 2.3 percent of revenues.
“We are pleased with our third quarter performance as we
continue to grow our business and achieve major physical and
digital milestones through our RxEvolution strategy,” said Heyward
Donigan, president and chief executive officer, Rite Aid. “We
officially launched our new brand and logo, made substantial
progress in evolving our merchandise mix to an assortment that best
supports whole health, refreshed over 700 store exteriors, opened
the first three new Store of the Future prototypes and began the
integration of our two legacy PBMs. On the digital side, we
launched a completely modernized Rite Aid online experience and
mobile app and are set to launch our new member portal at
Elixir.”
“Our teams are working hard to serve our customers during these
challenging times. We have administered over one million COVID-19
tests and will be partnering with the CDC to help administer
COVID-19 vaccines in our communities. I am so proud of our 50,000
associates and the strategic progress we’re making in our journey
to revolutionize our industry and elevate our role as an
indispensable healthcare provider. We are accelerating the key
initiatives that support our strategy, and we will continue to
deliver the operational excellence needed to achieve strong results
as we generate cash flow, reduce debt and improve our leverage
ratio.”
Consolidated Third Quarter Summary
(dollars in thousands)
Thirteen Week Period Ended
Thirty-nine Week Period Ended
November 28, 2020
November 30, 2019
November 28, 2020
November 30, 2019
Revenues from continuing operations
$
6,117,038
$
5,462,298
$
18,126,384
$
16,201,151
Net income (loss) from continuing
operations
4,324
52,286
(81,575)
(125,758)
Adjusted EBITDA from continuing
operations
137,405
158,090
396,400
402,627
Revenues from continuing operations for the quarter were $6.12
billion compared to revenues from continuing operations of $5.46
billion in the prior year’s quarter. The increase in revenues was
driven by growth at both the Retail Pharmacy and Pharmacy Services
segments.
Net income from continuing operations was $4.3 million, or $0.08
per share, compared to last year’s third quarter net income from
continuing operations of $52.3 million, or $0.98 per share. The
decline in net income was due primarily to a $55.7 million gain on
debt retirements in the prior year and a decrease in Adjusted
EBITDA, partially offset by lower restructuring-related costs and a
higher gain on sale of assets resulting from the sale-leaseback of
the company’s Perryman, MD distribution center.
Adjusted EBITDA from continuing operations was $137.4 million,
or 2.3 percent of revenues, compared to last year’s third quarter
Adjusted EBITDA of $158.1 million, or 2.9 percent of revenues.
Retail Pharmacy Segment
(dollars in thousands)
Thirteen Week Period Ended
Thirty-nine Week Period Ended
November 28, 2020
November 30, 2019
November 28, 2020
November 30, 2019
Revenues from continuing operations
$
4,109,592
$
3,909,946
$
12,250,775
$
11,622,858
Adjusted EBITDA from continuing
operations
88,557
108,579
273,879
285,260
Retail Pharmacy Segment revenues from continuing operations
increased 5.1 percent over the prior year quarter. Same store sales
from continuing operations for the third quarter increased 4.3
percent over the prior year period, consisting of a 6.1 percent
increase in pharmacy sales and a 0.7 percent decrease in front-end
sales. Front-end same store sales, excluding cigarettes and tobacco
products, increased 0.3 percent. Front-end sales benefited from
increases in immunity, first aid and paper products, offset by
decreases in over-the-counter products related to cough cold and
flu and Halloween candy sales. The company increased its retail
script share1, and also increased its front-end market share in
both dollars and in unit sales2. The number of prescriptions filled
in same stores, adjusted to 30-day equivalents, increased 3.1
percent over the prior year period driven by increases in
maintenance prescriptions, supported by personalized Medication
Therapy Management interventions and home deliveries. Flu
immunizations increased by 28 percent over the prior year period,
which offset a 19 percent decline in acute scripts related to cough
cold and flu. In total, acute prescriptions decreased by 1.9
percent.
Retail Pharmacy Segment Adjusted EBITDA from continuing
operations was $88.6 million, or 2.2 percent of revenues, for the
third quarter compared to last year’s third quarter Adjusted EBITDA
from continuing operations of $108.6 million or 2.8 percent of
revenues. Gross profit dollars increased due to increased revenues,
but gross margin rate declined due to reimbursement rate pressure
and the impact of the reduction in over-the-counter front-end
sales. Selling, general and administrative (SG&A) expenses
improved as a percentage of sales, but SG&A dollars increased
due to incremental costs associated with the COVID-19 pandemic and
the absence of Transition Services Agreement income in the current
quarter, as services under that agreement have been completed.
1 – Source: IQVIA RxInsight. Share based
on 30-day equivalent scripts in Rite Aid operating area.
2 – Source: IRI. Excludes tobacco,
cigarettes, greeting cards and online sales. For drug store channel
during Rite Aid’s third fiscal quarter.
Pharmacy Services Segment
(dollars in thousands)
Thirteen Week Period Ended
Thirty-nine Week Period Ended
November 28, 2020
November 30, 2019
November 28, 2020
November 30, 2019
Revenues from continuing operations
$
2,084,402
$
1,613,109
$
6,100,026
$
4,758,470
Adjusted EBITDA from continuing
operations
48,848
49,511
122,521
117,367
Pharmacy Services Segment revenues were $2.1 billion, an
increase of 29.2 percent compared to the prior year period. The
increase in revenues was primarily the result of an increase of
252,000 Medicare Part D members.
Pharmacy Services Segment Adjusted EBITDA from continuing
operations was $48.8 million, or 2.3 percent of revenues, for the
third quarter and was flat to last year’s third quarter Adjusted
EBITDA from continuing operations of $49.5 million, or 3.1 percent
of revenues. The increase in revenues was offset by a decline in
Adjusted EBITDA as a percent of revenues. The Pharmacy Services
Segment benefited from reductions in payroll and indirect spend
overall, but these benefits were offset by increased drug costs
within Medicare Part D and SG&A spend related to an increase in
Medicare Part D members. The Company expects Medicare Part D
membership to decrease in fiscal 2022, but expects these members to
be more profitable.
Outlook for Fiscal 2021
Rite Aid Corporation is narrowing its fiscal 2021 guidance. The
company’s key guidance assumptions are as follows:
- Benefits from initiatives to drive retail sales growth, offset
by the impact of a less severe cough, cold and flu season on front
end over-the-counter sales and related prescriptions;
- A reduction in Medicare Part D membership beginning January
1;
- Strong expense control across both the Retail Pharmacy and
Pharmacy Services segments, offset by additional retail operating
expenses caused by the recent increase in COVID-19 cases across
many of our markets; and
- Continued improvements in pharmacy network management at
Elixir.
Rite Aid Corporation expects revenues to be between $23.9
billion and $24.2 billion in fiscal 2021 with same store sales
expected to range from an increase of 3.5 percent to an increase of
4.5 percent over fiscal 2020.
Net loss is expected to be between $114 million and $89
million.
Adjusted EBITDA is expected to be between $490 million and $520
million.
Adjusted net income per share is expected to be between $0.45
and $0.85.
Capital expenditures are expected to be approximately $325
million, which includes our previously announced acquisition of
Bartell Drugs.
Free cash flow is expected to be between $50 million and $100
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://www.riteaid.com/corporate/investor-relations/presentations.
The telephone replay will be available beginning at 12 p.m. Eastern
Time on Thursday, Dec. 17, 2020 and ending at 11:59 p.m. Eastern
Time on Jan. 16, 2021. To access the replay of the call, telephone
(800) 585-8367 or (416) 621-4642 and enter the seven-digit
reservation number 3338667. The webcast replay of the call will
also be available at
https://www.riteaid.com/corporate/investor-relations/presentations
starting at 12 p.m. Eastern Time 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 more than 1.6 million
Americans daily. Our pharmacists are uniquely positioned to engage
with customers and improve their health outcomes. We provide an
array of whole being health products and services for the entire
family through over 2,400 retail pharmacy locations across 18
states. Through Elixir, we provide pharmacy benefits and services
to approximately 4 million 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 2021, the
ability to generate positive free cash flows in fiscal 2021; the
continued impact of the global coronavirus (COVID-19) pandemic on
Rite Aid’s business; the ability to accelerate key initiatives and
improve the operating performance of our stores; and any
assumptions underlying any of the foregoing. Words such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "should," and "will"
and variations of such words and similar expressions are intended
to identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and involve risks, assumptions and uncertainties,
including, but not limited to: the impact of COVID-19 on our
workforce, operations, stores, expenses, and supply chain, and the
operations of our customers, suppliers and business partners; our
ability to successfully implement our RxEvolution strategy; our
high level of indebtedness and our ability to satisfy our
obligations and the other covenants contained in our debt
agreements; general competitive, economic, industry, market,
political (including healthcare reform) and regulatory conditions,
civil unrest (including any resulting store closures, damage, or
loss of inventory), as well as other factors specific to the
markets in which we operate; the impact of private and public
third-party payers continued reduction in prescription drug
reimbursements and efforts to encourage mail order; our ability to
manage expenses and our investments in working capital; our ability
to achieve the benefits of our efforts to reduce the costs of our
generic and other drugs; our ability to achieve cost savings and
other benefits of our organizational restructuring within our
anticipated timeframe, if at all; outcomes of legal and regulatory
matters; and our ability to partner and have relationships with
health plans and health systems.
These and other risks, assumptions and uncertainties are more
fully described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K, in Item 1A (Risk Factors) of our Quarterly
Report on Form 10-Q filed on July 2, 2020 and in other documents
that we file or furnish with the Securities and Exchange Commission
(the “SEC”), which you are encouraged to read. To the extent that
COVID-19 adversely affects our business and financial results, it
may also have the effect of heightening many of such risk
factors.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s
results and operations, including its ability to achieve its
outlook for fiscal 2021 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, the duration and spread of the
outbreak, its severity, the actions to contain the virus or treat
its impact (such as travel bans and restrictions, quarantines,
shelter-in-place orders and shutdowns), including the reinstitution
of more stringent regulations (including mandatory stay at home
orders, the availability and rollout of vaccines to treat the
virus), and how quickly and to what extent normal economic and
operating conditions can resume. As a result, the impact on Rite
Aid’s financial and operating results cannot be reasonably
estimated with specificity at this time, but the impact could be
material. Rite Aid expressly disclaims any current intention to
update publicly any forward-looking statement after the
distribution of this release, whether as a result of new
information, future events, changes in assumptions or
otherwise.
Reconciliation of Non-GAAP Financial Measures
Rite Aid separately reports financial results on the basis of
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted
Share and Adjusted EBITDA 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 settlement,
gains or losses on debt modifications and retirements, LIFO
adjustments, goodwill and intangible asset impairment charges,
restructuring-related costs and the WBA merger termination fee.
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, the WBA merger
termination fee, and other items (including stock-based
compensation expense, merger and acquisition-related costs,
non-recurring litigation settlement, severance,
restructuring-related costs and costs related to facility closures
and gain or loss on sale of assets). The add back of LIFO (credit)
charge when calculating Adjusted EBITDA, 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 CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited)
November 28, 2020 February 29, 2020 ASSETS Current assets: Cash and
cash equivalents
$
50,813
$
218,180
Accounts receivable, net
1,770,691
1,286,785
Inventories, net of LIFO reserve of $509,337 and $539,640
1,971,250
1,921,604
Prepaid expenses and other current assets
116,463
181,794
Current assets held for sale
42,231
92,278
Total current assets
3,951,448
3,700,641
Property, plant and equipment, net
1,045,682
1,215,838
Operating lease right-of-use assets
2,892,445
2,903,256
Goodwill
1,108,136
1,108,136
Other intangibles, net
291,013
359,491
Deferred tax assets
16,680
16,680
Other assets
123,999
148,327
Total assets
$
9,429,403
$
9,452,369
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt and lease financing
obligations
$
7,097
$
8,840
Accounts payable
1,482,521
1,484,081
Accrued salaries, wages and other current liabilities
676,582
746,318
Current portion of operating lease liabilities
489,867
490,161
Current liabilities held for sale
-
37,063
Total current liabilities
2,656,067
2,766,463
Long-term debt, less current maturities
3,200,577
3,077,268
Long-term operating lease liabilities
2,676,153
2,710,347
Lease financing obligations, less current maturities
17,098
19,326
Other noncurrent liabilities
268,973
204,438
Total liabilities
8,818,868
8,777,842
Commitments and contingencies
-
-
Stockholders' equity: Common stock
55,251
54,716
Additional paid-in capital
5,895,709
5,890,903
Accumulated deficit
(5,294,608
)
(5,222,194
)
Accumulated other comprehensive loss
(45,817
)
(48,898
)
Total stockholders' equity
610,535
674,527
Total liabilities and stockholders' equity
$
9,429,403
$
9,452,369
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks
endedNovember 28, 2020 Thirteen weeks endedNovember 30, 2019
Revenues
$
6,117,038
$
5,462,298
Costs and expenses: Cost of revenues
4,913,939
4,273,323
Selling, general and administrative expenses
1,156,355
1,134,854
Lease termination and impairment charges
7,453
166
Interest expense
50,835
57,856
Gain on debt retirements, net
-
(55,692
)
Gain on sale of assets, net
(16,305
)
(1,371
)
6,112,277
5,409,136
Income from continuing operations before income taxes
4,761
53,162
Income tax expense
437
876
Net income from continuing operations
4,324
52,286
Net loss from discontinued operations, net of tax
-
(801
)
Net income
$
4,324
$
51,485
Basic and diluted income per share:
Numerator for income per share: Net income from continuing
operations attributable to common stockholders - basic and diluted
$
4,324
$
52,286
Net loss from discontinued operations attributable to common
stockholders - basic and diluted
-
(801
)
Income attributable to common stockholders - basic and diluted
$
4,324
$
51,485
Denominator: Basic weighted average shares
53,744
53,310
Outstanding options and restricted shares, net
335
274
Diluted weighted average shares
54,079
53,584
Basic income per share Continuing operations
$
0.08
$
0.98
Discontinued operations
$
-
$
(0.01
)
Net basic income per share
$
0.08
$
0.97
Diluted income per share Continuing operations
$
0.08
$
0.98
Discontinued operations
$
-
$
(0.02
)
Net diluted income per share
$
0.08
$
0.96
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirty-nine weeks
endedNovember 28, 2020 Thirty-nine weeks endedNovember 30, 2019
Revenues
$
18,126,384
$
16,201,151
Costs and expenses: Cost of revenues
14,564,621
12,741,014
Selling, general and administrative expenses
3,469,644
3,433,036
Lease termination and impairment charges
22,734
2,115
Intangible asset impairment charges
29,852
-
Interest expense
151,389
176,228
Gain on debt modifications and retirements, net
(5,274
)
(55,692
)
Gain on sale of assets, net
(17,473
)
(5,670
)
18,215,493
16,291,031
Loss from continuing operations before income taxes
(89,109
)
(89,880
)
Income tax (benefit) expense
(7,534
)
35,878
Net loss from continuing operations
(81,575
)
(125,758
)
Net income (loss) from discontinued operations, net of tax
9,161
(1,695
)
Net loss
$
(72,414
)
$
(127,453
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(81,575
)
$
(125,758
)
Net income (loss) from discontinued operations attributable to
common stockholders - basic and diluted
9,161
(1,695
)
Loss attributable to common stockholders - basic and diluted
$
(72,414
)
$
(127,453
)
Denominator: Basic and diluted weighted
average shares
53,600
53,159
Basic and diluted loss per share Continuing operations
$
(1.52
)
$
(2.37
)
Discontinued operations
$
0.17
$
(0.03
)
Net basic and diluted loss per share
$
(1.35
)
$
(2.40
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedNovember 28, 2020 Thirteen weeks
endedNovember 30, 2019 OPERATING ACTIVITIES: Net
income
$
4,324
$
51,485
Net loss from discontinued operations, net of tax
-
(801
)
Net income from continuing operations
$
4,324
$
52,286
Adjustments to reconcile to net cash provided by operating
activities of continuing operations: Depreciation and amortization
83,336
82,007
Lease termination and impairment charges
7,453
166
LIFO credit
(9,487
)
(7,440
)
Gain on sale of assets, net
(16,305
)
(1,371
)
Stock-based compensation expense
2,867
3,506
Gain on debt retirements, net
-
(55,692
)
Changes in operating assets and liabilities: Accounts receivable
128,777
252,767
Inventories
(24,005
)
19,333
Accounts payable
(488
)
47,378
Operating lease right-of-use assets and operating lease liabilities
(6,826
)
(12,179
)
Other assets
(4,248
)
1,959
Other liabilities
57,351
40,993
Net cash provided by operating activities of continuing operations
222,749
423,713
INVESTING ACTIVITIES: Payments for property, plant and equipment
(64,304
)
(45,075
)
Intangible assets acquired
(6,131
)
(17,727
)
Proceeds from dispositions of assets and investments
3,176
51,548
Proceeds from sale-leaseback transactions
80,551
-
Net cash provided by (used in) investing activities of continuing
operations
13,292
(11,254
)
FINANCING ACTIVITIES: Net payments to revolver
(309,000
)
(115,000
)
Principal payments on long-term debt
(1,194
)
(101,251
)
Change in zero balance cash accounts
32,374
(66,461
)
Payments for taxes related to net share settlement of equity awards
(64
)
(587
)
Financing fees paid for early debt redemption
-
(518
)
Deferred financing costs paid
(74
)
-
Net cash used in financing activities of continuing operations
(277,958
)
(283,817
)
Cash flows from discontinued operations: Operating activities of
discontinued operations
-
(4,876
)
Investing activities of discontinued operations
-
23,551
Net cash provided by discontinued operations
-
18,675
(Decrease) increase in cash and cash equivalents
(41,917
)
147,317
Cash and cash equivalents, beginning of period
92,730
142,181
Cash and cash equivalents, end of period
$
50,813
$
289,498
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirty-nine weeks endedNovember 28, 2020 Thirty-nine
weeks endedNovember 30, 2019 OPERATING ACTIVITIES:
Net loss
$
(72,414
)
$
(127,453
)
Net income (loss) from discontinued operations, net of tax
9,161
(1,695
)
Net loss from continuing operations
$
(81,575
)
$
(125,758
)
Adjustments to reconcile to net cash (used in) provided by
operating activities of continuing operations: Depreciation and
amortization
249,556
248,977
Lease termination and impairment charges
22,734
2,115
Intangible asset impairment charges
29,852
-
LIFO (credit) charge
(30,303
)
7,553
Gain on sale of assets, net
(17,473
)
(5,670
)
Stock-based compensation expense
8,677
13,598
Gain on debt modifications and retirements, net
(5,274
)
(55,692
)
Changes in deferred taxes
-
26,979
Changes in operating assets and liabilities: Accounts receivable
(507,778
)
99,498
Inventories
(19,532
)
(92,657
)
Accounts payable
1,460
(38,245
)
Operating lease right-of-use assets and operating lease liabilities
(25,319
)
22,803
Other assets
75,265
(42,715
)
Other liabilities
45,867
32,889
Net cash (used in) provided by operating activities of continuing
operations
(253,843
)
93,675
INVESTING ACTIVITIES: Payments for property, plant and equipment
(127,389
)
(129,135
)
Intangible assets acquired
(28,703
)
(33,435
)
Proceeds from insured loss
12,500
-
Proceeds from dispositions of assets and investments
9,086
55,971
Proceeds from sale-leaseback transactions
89,012
-
Net cash used in investing activities of continuing operations
(45,494
)
(106,599
)
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt
849,918
-
Net proceeds from revolver
341,000
260,000
Principal payments on long-term debt
(1,057,376
)
(104,702
)
Change in zero balance cash accounts
5,545
(11,749
)
Payments for taxes related to net share settlement of equity awards
(2,165
)
(1,573
)
Financing fees paid for early debt redemption
(2,399
)
(518
)
Deferred financing costs paid
(14,674
)
(315
)
Net cash provided by financing activities of continuing operations
119,849
141,143
Cash flows from discontinued operations: Operating activities of
discontinued operations
(82,189
)
(7,148
)
Investing activities of discontinued operations
94,310
24,074
Net cash provided by discontinued operations
12,121
16,926
(Decrease) increase in cash and cash equivalents
(167,367
)
145,145
Cash and cash equivalents, beginning of period
218,180
144,353
Cash and cash equivalents, end of period
$
50,813
$
289,498
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in
thousands) (unaudited) Thirteen weeks endedNovember
28, 2020 Thirteen weeks endedNovember 30, 2019
Retail
Pharmacy Segment Revenues from continuing operations (a)
$
4,109,592
$
3,909,946
Cost of revenues from continuing operations (a)
3,029,884
2,839,094
Gross profit from continuing operations
1,079,708
1,070,852
LIFO credit from continuing operations
(9,487
)
(7,440
)
FIFO gross profit from continuing operations
1,070,221
1,063,412
Adjusted EBITDA gross profit from continuing operations
1,072,547
1,065,523
Gross profit as a percentage of revenues - continuing
operations
26.27
%
27.39
%
LIFO credit as a percentage of revenues - continuing operations
-0.23
%
-0.19
%
FIFO gross profit as a percentage of revenues - continuing
operations
26.04
%
27.20
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
26.10
%
27.25
%
Selling, general and administrative expenses from continuing
operations
1,067,027
1,044,236
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
983,990
956,944
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
25.96
%
26.71
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
23.94
%
24.47
%
Cash interest expense
47,500
54,068
Non-cash interest expense
3,335
3,788
Total interest expense
50,835
57,856
Interest expense - continuing operations
50,835
57,856
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
88,557
108,579
Adjusted EBITDA as a percentage of revenues - continuing operations
2.15
%
2.78
%
Pharmacy Services Segment Revenues (a)
$
2,084,402
$
1,613,109
Cost of revenues (a)
1,961,011
1,494,986
Gross profit
123,391
118,123
Gross profit as a percentage of revenues
5.92
%
7.32
%
Adjusted EBITDA
48,848
49,511
Adjusted EBITDA as a percentage of revenues
2.34
%
3.07
%
(a) - Revenues and cost of revenues include $76,956 and
$60,757 of inter-segment activity for the thirteen weeks ended
November 28, 2020 and November 30, 2019, respectively, that is
eliminated in consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in
thousands) (unaudited) Thirty-nine weeks
endedNovember 28, 2020 Thirty-nine weeks endedNovember 30, 2019
Retail Pharmacy Segment Revenues from continuing
operations (a)
$
12,250,775
$
11,622,858
Cost of revenues from continuing operations (a)
9,027,618
8,489,067
Gross profit from continuing operations
3,223,157
3,133,791
LIFO (credit) charge from continuing operations
(30,303
)
7,553
FIFO gross profit from continuing operations
3,192,854
3,141,344
Adjusted EBITDA gross profit from continuing operations
3,227,196
3,151,043
Gross profit as a percentage of revenues - continuing
operations
26.31
%
26.96
%
LIFO (credit) charge as a percentage of revenues - continuing
operations
-0.25
%
0.06
%
FIFO gross profit as a percentage of revenues - continuing
operations
26.06
%
27.03
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
26.34
%
27.11
%
Selling, general and administrative expenses from continuing
operations
3,206,078
3,160,379
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
2,953,317
2,865,783
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
26.17
%
27.19
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.11
%
24.66
%
Cash interest expense
141,635
164,982
Non-cash interest expense
9,754
11,246
Total interest expense
151,389
176,228
Interest expense - continuing operations
151,389
176,228
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
273,879
285,260
Adjusted EBITDA as a percentage of revenues - continuing operations
2.24
%
2.45
%
Pharmacy Services Segment Revenues (a)
$
6,100,026
$
4,758,470
Cost of revenues (a)
5,761,420
4,432,124
Gross profit
338,606
326,346
Gross profit as a percentage of revenues
5.55
%
6.86
%
Adjusted EBITDA
122,521
117,367
Adjusted EBITDA as a percentage of revenues
2.01
%
2.47
%
(a) - Revenues and cost of revenues include $224,417 and
$180,177 of inter-segment activity for the thirty-nine weeks ended
November 28, 2020 and November 30, 2019, respectively, that is
eliminated in consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA (In thousands) (unaudited) Thirteen
weeks endedNovember 28, 2020 Thirteen weeks endedNovember 30, 2019
Reconciliation of net income to adjusted EBITDA: Net
income - continuing operations
$
4,324
$
52,286
Adjustments: Interest expense
50,835
57,856
Income tax expense
437
876
Depreciation and amortization
83,336
82,007
LIFO credit
(9,487
)
(7,440
)
Lease termination and impairment charges
7,453
166
Gain on debt retirements, net
-
(55,692
)
Merger and Acquisition-related costs
1,136
-
Stock-based compensation expense
2,867
3,506
Restructuring-related costs
12,175
25,275
Inventory write-downs related to store closings
704
93
Gain on sale of assets, net
(16,305
)
(1,371
)
Other
(70
)
528
Adjusted EBITDA - continuing operations
$
137,405
$
158,090
Percent of revenues - continuing operations
2.25
%
2.89
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
(unaudited) Thirty-nine weeks endedNovember
28, 2020 Thirty-nine weeks endedNovember 30, 2019
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(81,575
)
$
(125,758
)
Adjustments: Interest expense
151,389
176,228
Income tax (benefit) expense
(7,534
)
35,878
Depreciation and amortization
249,556
248,977
LIFO (credit) charge
(30,303
)
7,553
Lease termination and impairment charges
22,734
2,115
Intangible asset impairment charges
29,852
-
Gain on debt modifications and retirements, net
(5,274
)
(55,692
)
Merger and Acquisition-related costs
1,136
3,599
Stock-based compensation expense
8,677
13,598
Restructuring-related costs
71,096
93,770
Inventory write-downs related to store closings
2,596
4,083
Gain on sale of assets, net
(17,473
)
(5,670
)
Other
1,523
3,946
Adjusted EBITDA - continuing operations
$
396,400
$
402,627
Percent of revenues - continuing operations
2.19
%
2.49
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET INCOME (Dollars in thousands, except per
share amounts) (unaudited) Thirteen weeks
endedNovember 28, 2020 Thirteen weeks endedNovember 30, 2019
Net income from continuing operations
$
4,324
$
52,286
Add back - Income tax expense
437
876
Income before income taxes - continuing operations
4,761
53,162
Adjustments: Amortization expense
21,236
24,920
LIFO credit
(9,487
)
(7,440
)
Gain on debt retirements, net
-
(55,692
)
Merger and Acquisition-related costs
1,136
-
Restructuring-related costs
12,175
25,275
Adjusted income before income taxes - continuing operations
29,821
40,225
Adjusted income tax expense (a)
8,243
11,090
Adjusted net income from continuing operations
$
21,578
$
29,135
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
21,578
$
29,135
Denominator: Basic weighted average shares
53,744
53,310
Outstanding options and restricted shares, net
335
274
Diluted weighted average shares
54,079
53,584
Net income from continuing operations per diluted share -
continuing operations
$
0.08
$
0.98
Adjusted net income per diluted share - continuing
operations
$
0.40
$
0.54
(a)
The fiscal year 2021 and 2020
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 28, 2020 and November 30, 2019, respectively.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION ADJUSTED NET INCOME (Dollars in thousands, except per
share amounts) (unaudited) Thirty-nine weeks
endedNovember 28, 2020 Thirty-nine weeks endedNovember 30, 2019
Net loss from continuing operations
$
(81,575
)
$
(125,758
)
Add back - Income tax (benefit) expense
(7,534
)
35,878
Loss before income taxes - continuing operations
(89,109
)
(89,880
)
Adjustments: Amortization expense
68,351
79,176
LIFO (credit) charge
(30,303
)
7,553
Intangible asset impairment charges
29,852
-
Gain on debt modifications and retirements, net
(5,274
)
(55,692
)
Merger and Acquisition-related costs
1,136
3,599
Restructuring-related costs
71,096
93,770
Adjusted income before income taxes - continuing operations
45,749
38,526
Adjusted income tax expense (a)
12,645
10,622
Adjusted net income from continuing operations
$
33,104
$
27,904
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
33,104
$
27,904
Denominator: Basic weighted average shares
53,600
53,159
Outstanding options and restricted shares, net
754
775
Diluted weighted average shares
54,354
53,934
Net loss from continuing operations per diluted share -
continuing operations
$
(1.52
)
$
(2.37
)
Adjusted net income per diluted share - continuing
operations
$
0.61
$
0.52
(a)
The fiscal year 2021 and 2020
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 28, 2020 and November 30, 2019, 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 endedNovember 28, 2020 Thirteen weeks
endedNovember 30, 2019 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
4,109,592
$
3,909,946
Gross Profit
1,079,708
1,070,852
Addback: LIFO credit
(9,487
)
(7,440
)
Depreciation and amortization (cost of goods sold portion only)
1,945
2,070
Other
381
41
Adjusted EBITDA gross profit - continuing operations
$
1,072,547
$
1,065,523
Percent of revenues - continuing operations
26.10
%
27.25
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
4,109,592
$
3,909,946
Selling, general and administrative expenses
1,067,027
1,044,236
Less: Depreciation and amortization (SG&A portion only)
67,641
65,267
Stock-based compensation expense
2,429
2,976
Merger and Acquisition-related costs
1,136
-
Restructuring-related costs
11,605
18,415
Other
226
634
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
983,990
$
956,944
Percent of revenues - continuing operations
23.94
%
24.47
%
Adjusted EBITDA - continuing operations
$
88,557
$
108,579
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 endedNovember 28, 2020 Thirty-nine weeks
endedNovember 30, 2019 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
12,250,775
$
11,622,858
Gross Profit
3,223,157
3,133,791
Addback: LIFO (credit) charge
(30,303
)
7,553
Depreciation and amortization (cost of goods sold portion only)
6,775
6,538
Restructuring-related costs - SKU optimization charges
25,763
-
Other
1,804
3,161
Adjusted EBITDA gross profit - continuing operations
$
3,227,196
$
3,151,043
Percent of revenues - continuing operations
26.34
%
27.11
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
12,250,775
$
11,622,858
Selling, general and administrative expenses
3,206,078
3,160,379
Less: Depreciation and amortization (SG&A portion only)
199,434
195,281
Stock-based compensation expense
7,785
12,673
Merger and Acquisition-related costs
1,136
2,828
Restructuring-related costs
41,992
78,851
Other
2,414
4,963
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
2,953,317
$
2,865,783
Percent of revenues - continuing operations
24.11
%
24.66
%
Adjusted EBITDA - continuing operations
$
273,879
$
285,260
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA
GUIDANCE YEAR ENDING FEBRUARY 27, 2021 (In thousands) (unaudited)
Guidance Range Low High
Total Revenues
$
23,900,000
$
24,200,000
PBM Revenues
$
7,850,000
$
7,950,000
Same store sales
3.50
%
4.50
%
Gross Capital Expenditures
$
325,000
$
325,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(113,800
)
$
(88,800
)
Adjustments: Interest expense
202,000
202,000
Income tax benefit
(12,000
)
(7,000
)
Depreciation and amortization
332,000
332,000
LIFO credit
(39,000
)
(39,000
)
Lease termination and impairment charges
57,000
57,000
Intangible asset impairment charges
30,000
30,000
Gain on debt modifications and retirements, net
(5,300
)
(5,300
)
Merger and Acquisition-related costs
1,200
1,200
Restructuring-related costs
80,000
80,000
Gain on sale of assets, net
(60,100
)
(60,100
)
Other
18,000
18,000
Adjusted EBITDA
$
490,000
$
520,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET
INCOME GUIDANCE YEAR ENDING FEBRUARY 27, 2021 (In thousands)
(unaudited)
Guidance Range Low
High Net loss
$
(113,800
)
$
(88,800
)
Add back - income tax benefit
(12,000
)
(7,000
)
Loss before income taxes
(125,800
)
(95,800
)
Adjustments: Amortization expense
92,000
92,000
LIFO credit
(39,000
)
(39,000
)
Intangible asset impairment charges
30,000
30,000
Gain on debt modifications and retirements, net
(5,300
)
(5,300
)
Merger and Acquisition-related costs
1,200
1,200
Restructuring-related costs
80,000
80,000
Adjusted income before adjusted income taxes
33,100
63,100
Adjusted income tax expense
9,000
17,000
Adjusted net income
$
24,100
$
46,100
Diluted adjusted net income per share
$
0.45
$
0.85
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF ADJUSTED EBITDA GUIDANCE TO FREE CASH
FLOW GUIDANCE YEAR ENDING FEBRUARY 27, 2021 (In thousands)
(unaudited)
Guidance Range Low
High Adjusted EBITDA
$
490,000
$
520,000
Cash interest expense
(190,000
)
(190,000
)
Restructuring-related costs
(80,000
)
(80,000
)
Closed store rent
(25,000
)
(25,000
)
Working capital benefit
180,000
200,000
Cash flow from operations
375,000
425,000
Gross capital expenditures
(325,000
)
(325,000
)
Free cash flow
$
50,000
$
100,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201217005491/en/
INVESTORS: Trent Kruse (717) 975-3710 investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
Christopher.Savarese@riteaid.com
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