• Same Store Prescription Volume Grew 2.7 Percent
• Second Quarter Net Loss from Continuing Operations of $78.7
Million or $1.48 Per Share, Compared to the Prior Year Second
Quarter Net Loss of $352.3 Million or $6.67 Per Share
• Second Quarter Adjusted Net Income from Continuing Operations
of $6.3 Million or $0.12 Per Share, Compared to the Prior Year
Second Quarter Adjusted Net Loss of $7.9 Million or $0.15 Per
Share
• Second Quarter Adjusted EBITDA from Continuing Operations of
$134.2 Million, Compared to the Prior Year Second Quarter Adjusted
EBITDA of $148.6 Million
• Rite Aid Narrows Fiscal 2020 Outlook for Adjusted EBITDA
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its second fiscal quarter ended August 31, 2019.
For the second quarter, the company reported net loss from
continuing operations of $78.7 million, or $1.48 per share,
Adjusted net income from continuing operations of $6.3 million, or
$0.12 per share, and Adjusted EBITDA from continuing operations of
$134.2 million, or 2.5 percent of revenues.
“After my first few weeks as CEO, I’m optimistic about our
future because I believe in the Rite Aid brand and the opportunity
we have to deliver innovative experiences as a health and wellness
destination, even as we recognize the challenges ahead,” said Rite
Aid CEO Heyward Donigan. “I’m also encouraged by the market
opportunities for EnvisionRxOptions as health plans and employers
rethink their pharmacy services partnerships. In talking with many
associates during my first 45 days, we know there is important work
in front of us, and we are acting with urgency to finalize a
strategic plan that positions our company to meet its full
potential. We look forward to sharing the key elements of this plan
in the coming months.”
“As we continue these efforts, I’d like to thank our Rite Aid
team for their hard work during the second quarter,” Donigan
continued. “Our Adjusted EBITDA results exceeded our plan driven by
prescription count growth and strong expense control. This gives us
important momentum for our future, and I look forward to working
closely with our team to deliver a solid finish to our fiscal year
and position Rite Aid as an innovative leader in our industry.”
Second Quarter Summary
Revenues from continuing operations for the quarter were $5.37
billion compared to revenues from continuing operations of $5.42
billion in the prior year’s quarter. Retail Pharmacy Segment
revenues were $3.85 billion and decreased 1.6 percent compared to
the prior year period due to a reduction in store count, partially
offset by an increase in same store sales. Revenues in the Pharmacy
Services Segment were $1.58 billion, an increase of 1.1 percent
compared to the prior year period, which was due to an increase in
Medicare Part D revenue.
Retail Pharmacy Segment same store sales from continuing
operations for the second quarter increased 0.4 percent over the
prior year period, consisting of a 1.5 percent increase in pharmacy
sales and a 1.8 percent decrease in front-end sales. Front-end same
store sales, excluding cigarettes and tobacco products, decreased
0.6 percent. Pharmacy sales were negatively impacted by
approximately 276 basis points as a result of new generic
introductions. The number of prescriptions filled in same stores,
adjusted to 30-day equivalents, increased 2.7 percent over the
prior year period resulting primarily from the company’s continued
emphasis on driving clinical services. Prescription sales from
continuing operations accounted for 67.2 percent of total drugstore
sales.
Net loss from continuing operations was $78.7 million or $1.48
per share compared to last year’s second quarter net loss from
continuing operations of $352.3 million or $6.67 per share. The
decrease in net loss was due primarily to $282.6 million of
goodwill and intangible asset impairment charges, net of tax, in
the prior year period and a reduction in lease termination and
impairment charges. These items were partially offset by higher
restructuring-related costs, higher income tax expense and a
decrease in Adjusted EBITDA.
Adjusted EBITDA from continuing operations was $134.2 million or
2.5 percent of revenues for the second quarter compared to Adjusted
EBITDA from continuing operations of $148.6 million or 2.7 percent
of revenues for the same period last year, a decrease of $14.4
million. The Retail Pharmacy Segment Adjusted EBITDA from
continuing operations decreased $10.9 million compared to the prior
year due primarily to weaker front end gross profit, resulting from
a decline in front end same store sales, and a reduction in
Transition Service Agreement fee income from Walgreens Boots
Alliance. These items were partially offset by lower salaries and
benefit expense related to the company’s recent corporate
restructuring and strong labor and expense control at the stores.
The Pharmacy Services Segment Adjusted EBITDA benefited from
improvements in pharmacy network performance but decreased $3.4
million over the prior year period due to operating investments to
support current year and future growth.
In the second quarter, the company remodeled 24 stores and
relocated one store, bringing the total number of wellness stores
chainwide to 1,805. Additionally, the company closed 2 stores,
resulting in a total store count of 2,464 at the end of the second
quarter.
Outlook for Fiscal 2020
Rite Aid is updating its fiscal 2020 outlook, including
narrowing its guidance for Adjusted EBITDA. The company’s outlook
assumes continued prescription count growth, improvements in
generic drug costs and strong SG&A expense control, offset by a
decline in prescription reimbursement rates. The fiscal 2020
guidance also assumes continued improvements in pharmacy network
performance in the Pharmacy Services Segment.
Rite Aid expects revenues to be between $21.5 billion and $21.9
billion in fiscal 2020 with same store sales expected to range from
an increase of 0.0 percent to an increase of 1.0 percent over
fiscal 2019.
Net loss is expected to be between $235.0 million and $275.0
million.
Adjusted EBITDA is expected to be between $510.0 million and
$550.0 million.
Adjusted net income per share is expected to be between $0.00
and $0.56.
Capital expenditures are expected to be approximately $250
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
simulcast via the internet and can be accessed at www.riteaid.com
in the conference call section of investor information. A playback
of the call will also be available by telephone beginning at 12:00
p.m. Eastern Time today until 11:59 p.m. Eastern Time on Sept. 29,
2019. The playback number is 1-855-859-2056 from within the U.S.
and Canada or 1-404-537-3406 from outside the U.S. and Canada with
the reservation number 4487388.
About Rite Aid Corporation
Rite Aid Corporation, which generated fiscal 2019 annual revenue
of $21.6 billion, is one of the nation's leading drugstore chains
with 2,464 stores in 18 states and pharmacy benefit management
(PBM) capabilities through EnvisionRxOptions and its affiliates. At
Rite Aid we have a personal interest in our customers’ health and
wellness and deliver the products and services they need to lead
healthier lives. Information about Rite Aid, including corporate
background and press releases, is available through the company's
website at 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 for fiscal 2020; Rite Aid’s
competitive position and ability to realize its growth initiatives
and operating efficiencies; and any assumptions underlying any of
the foregoing. Words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “should,” and “will” and variations of such words and
similar expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future
performance and involve risks, assumptions and uncertainties,
including, but not limited to, our high level of indebtedness and
our ability to make interest and principal payments on our debt and
satisfy the other covenants contained in our debt agreements;
general economic, industry, market, competitive, regulatory and
political conditions; our ability to improve the operating
performance of our stores in accordance with our long term
strategy; the impact of private and public third-party payers
continued reduction in prescription drug reimbursements and efforts
to encourage mail order; our ability to manage expenses and our
investments in working capital; outcomes of legal and regulatory
matters; changes in legislation or regulations, including
healthcare reform; our ability to achieve the benefits of our
efforts to reduce the costs of our generic and other drugs; risks
related to the pending sale of the remaining Rite Aid distribution
centers and related assets to Walgreens Boots Alliance, Inc.
("WBA"), including the possibility that the transactions may not
close, or the business of Rite Aid may suffer as a result of
uncertainty surrounding the pending transactions; our ability to
successfully execute and achieve benefits from our leadership
transition plan and organizational restructuring, including
managing the transition to our new chief executive officer and
other management; the potential for operational disruptions due to,
among other things, concerns of management, employees, current and
potential customers, other third parties with whom we do business
and shareholders; the success of any changes to our business
strategy that may be implemented under our new chief executive
officer and other management; our ability to achieve cost savings
through the organizational restructurings within the anticipated
timeframe, if at all; possible changes in the size and components
of the expected costs and charges associated with the
organizational restructuring plan; and the outlook for and future
growth of the Company.
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, which you are
encouraged to read.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date they are made. Rite Aid expressly
disclaims any current intention to update publicly any
forward-looking statement after the distribution of this release,
whether as a result of new information, future events, changes in
assumptions or otherwise.
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,
loss on debt retirements, LIFO adjustments, goodwill and intangible
asset impairment charges, restructuring-related costs and the WBA
merger termination fee. The current calculations of Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) per Diluted Share
reflect a modification made in the second quarter of fiscal 2019 to
add back all amortization expenses rather than the amortization of
EnvisionRx intangible assets only. 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, loss on debt 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 current calculation of
Adjusted EBITDA reflects a modification made in the second quarter
of fiscal 2019 to eliminate the add back of revenue deferrals
related to our customer loyalty program and to present amounts
previously included within other as separate reconciling items. We
further note that 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.
In addition to Adjusted EBITDA, Adjusted Net (Loss) Income and
Adjusted Net (Loss) Income per Diluted Share, we occasionally refer
to several other Non‑GAAP measures, on a less frequent basis, in
order to describe certain components of our business and how we
utilize them to describe our results. Adjusted EBITDA Gross Profit
includes LIFO adjustments, depreciation and amortization (COGS
portion only) and other items. The presentation includes 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 settlement,
restructuring-related costs and other items. The presentation
includes a reconciliation of Adjusted EBITDA SG&A to Revenue,
which is the most directly comparable GAAP financial measure.
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (Dollars in thousands) (unaudited)
August 31, 2019 March 2, 2019 ASSETS Current assets: Cash
and cash equivalents
$
142,181
$
144,353
Accounts receivable, net
1,945,600
1,788,712
Inventories, net of LIFO reserve of $619,437 and $604,444
1,968,937
1,871,941
Prepaid expenses and other current assets
183,428
179,132
Current assets held for sale
145,213
117,581
Total current assets
4,385,359
4,101,719
Property, plant and equipment, net
1,270,467
1,308,514
Operating lease right-of-use assets
2,944,651
-
Goodwill
1,108,136
1,108,136
Other intangibles, net
381,369
448,706
Deferred tax assets
382,105
409,084
Other assets
201,126
215,208
Total assets
$
10,673,213
$
7,591,367
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt and lease financing
obligations
$
10,704
$
16,111
Accounts payable
1,570,178
1,618,585
Accrued salaries, wages and other current liabilities
732,787
808,439
Current portion of operating lease liabilities
502,706
-
Current liabilities held for sale
43,364
-
Total current liabilities
2,859,739
2,443,135
Long-term debt, less current maturities
3,834,605
3,454,585
Long-term operating lease liabilities
2,745,598
-
Lease financing obligations, less current maturities
22,540
24,064
Other noncurrent liabilities
250,145
482,893
Total liabilities
9,712,627
6,404,677
Commitments and contingencies
-
-
Stockholders' equity: Common stock
54,896
54,016
Additional paid-in capital
5,885,550
5,876,977
Accumulated deficit
(4,948,958
)
(4,713,244
)
Accumulated other comprehensive loss
(30,902
)
(31,059
)
Total stockholders' equity
960,586
1,186,690
Total liabilities and stockholders' equity
$
10,673,213
$
7,591,367
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks
endedAugust 31, 2019 Thirteen weeks endedSeptember 1, 2018 Revenues
$
5,366,264
$
5,421,362
Costs and expenses: Cost of revenues
4,221,825
4,260,211
Selling, general and administrative expenses
1,135,530
1,153,991
Lease termination and impairment charges
1,471
39,609
Goodwill and intangible asset impairment charges
-
375,190
Interest expense
60,102
56,233
Gain on sale of assets, net
(1,587
)
(4,965
)
5,417,341
5,880,269
Loss from continuing operations before income taxes
(51,077
)
(458,907
)
Income tax expense (benefit)
27,628
(106,559
)
Net loss from continuing operations
(78,705
)
(352,348
)
Net loss from discontinued operations, net of tax
(574
)
(6,792
)
Net loss
$
(79,279
)
$
(359,140
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(78,705
)
$
(352,348
)
Net loss from discontinued operations attributable to common
stockholders - basic and diluted
(574
)
(6,792
)
Loss attributable to common stockholders - basic and diluted
$
(79,279
)
$
(359,140
)
Denominator: Basic and diluted weighted
average shares
53,041
52,823
Basic and diluted loss per share Continuing operations
$
(1.48
)
$
(6.67
)
Discontinued operations
$
(0.01
)
$
(0.13
)
Net basic and diluted loss per share
$
(1.49
)
$
(6.80
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands, except per share
amounts) (unaudited) Twenty-six weeks
endedAugust 31, 2019 Twenty-six weeks endedSeptember 1, 2018
Revenues
$
10,738,853
$
10,809,852
Costs and expenses: Cost of revenues
8,467,691
8,479,952
Selling, general and administrative expenses
2,298,182
2,306,618
Lease termination and impairment charges
1,949
49,468
Goodwill and intangible asset impairment charges
-
375,190
Interest expense
118,372
119,025
Loss on debt retirements, net
-
554
Gain on sale of assets, net
(4,299
)
(10,824
)
10,881,895
11,319,983
Loss from continuing operations before income taxes
(143,042
)
(510,131
)
Income tax expense (benefit)
35,002
(116,056
)
Net loss from continuing operations
(178,044
)
(394,075
)
Net (loss) income from discontinued operations, net of tax
(894
)
249,351
Net loss
$
(178,938
)
$
(144,724
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(178,044
)
$
(394,075
)
Net (loss) income from discontinued operations attributable to
common stockholders - basic and diluted
(894
)
249,351
Loss attributable to common stockholders - basic and diluted
$
(178,938
)
$
(144,724
)
Denominator: Basic and diluted weighted
average shares
53,084
52,771
Basic and diluted loss per share Continuing operations
$
(3.35
)
$
(7.47
)
Discontinued operations
$
(0.02
)
$
4.73
Net basic and diluted loss per share
$
(3.37
)
$
(2.74
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 31, 2019 Thirteen weeks
endedSeptember 1, 2018 OPERATING ACTIVITIES: Net loss
$
(79,279
)
$
(359,140
)
Net loss from discontinued operations, net of tax
(574
)
(6,792
)
Net loss from continuing operations
$
(78,705
)
$
(352,348
)
Adjustments to reconcile to net cash used in operating activities
of continuing operations: Depreciation and amortization
83,044
89,743
Lease termination and impairment charges
1,471
39,609
Goodwill and intangible asset impairment charges
-
375,190
LIFO charge
7,504
3,358
Gain on sale of assets, net
(1,587
)
(4,965
)
Stock-based compensation expense
4,712
5,215
Changes in deferred taxes
26,979
(112,452
)
Changes in operating assets and liabilities: Accounts receivable
(135,704
)
(129,565
)
Inventories
(100,536
)
(62,751
)
Accounts payable
(9,730
)
(17
)
Operating lease right-of-use assets and operating lease liabilities
46,875
-
Other assets
(67,187
)
(18,334
)
Other liabilities
(55,935
)
(117,271
)
Net cash used in operating activities of continuing operations
(278,799
)
(284,588
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(43,079
)
(44,594
)
Intangible assets acquired
(7,498
)
(6,864
)
Proceeds from dispositions of assets and investments
3,765
5,813
Net cash used in investing activities of continuing operations
(46,812
)
(45,645
)
FINANCING ACTIVITIES: Net proceeds from revolver
250,000
1,145,000
Principal payments on long-term debt
(1,671
)
(2,640
)
Change in zero balance cash accounts
18,325
(18,184
)
Net proceeds from the issuance of common stock
-
392
Payments for taxes related to net share settlement of equity awards
(791
)
(2,244
)
Deferred financing costs paid
(129
)
-
Net cash provided by financing activities of continuing operations
265,734
1,122,324
Cash flows from discontinued operations: Operating activities of
discontinued operations
11,605
12,047
Investing activities of discontinued operations
-
-
Financing activities of discontinued operations
-
(818,762
)
Net cash provided by (used in) discontinued operations
11,605
(806,715
)
Decrease in cash and cash equivalents
(48,272
)
(14,624
)
Cash and cash equivalents, beginning of period
190,453
147,092
Cash and cash equivalents, end of period
$
142,181
$
132,468
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Twenty-six weeks endedAugust 31, 2019 Twenty-six
weeks endedSeptember 1, 2018 OPERATING ACTIVITIES:
Net loss
$
(178,938
)
$
(144,724
)
Net (loss) income from discontinued operations, net of tax
(894
)
249,351
Net loss from continuing operations
$
(178,044
)
$
(394,075
)
Adjustments to reconcile to net cash used in operating activities
of continuing operations: Depreciation and amortization
166,970
184,272
Lease termination and impairment charges
1,949
49,468
Goodwill and intangible asset impairment charges
-
375,190
LIFO charge
14,993
13,324
Gain on sale of assets, net
(4,299
)
(10,824
)
Stock-based compensation expense
10,092
10,246
Loss on debt retirements, net
-
554
Changes in deferred taxes
26,979
(124,807
)
Changes in operating assets and liabilities: Accounts receivable
(153,269
)
(323,724
)
Inventories
(111,990
)
(31,650
)
Accounts payable
(85,623
)
207,943
Operating lease right-of-use assets and operating lease liabilities
34,982
-
Other assets
(44,674
)
(11,232
)
Other liabilities
(8,104
)
(245,587
)
Net cash used in operating activities of continuing operations
(330,038
)
(300,902
)
INVESTING ACTIVITIES: Payments for property, plant and equipment
(84,060
)
(92,565
)
Intangible assets acquired
(15,708
)
(20,519
)
Proceeds from dispositions of assets and investments
4,423
15,729
Proceeds from sale-leaseback transactions
-
2,587
Net cash used in investing activities of continuing operations
(95,345
)
(94,768
)
FINANCING ACTIVITIES: Net proceeds from revolver
375,000
1,335,000
Principal payments on long-term debt
(3,451
)
(433,746
)
Change in zero balance cash accounts
54,712
(17,101
)
Net proceeds from the issuance of common stock
-
1,302
Payments for taxes related to net share settlement of equity awards
(986
)
(2,244
)
Financing fees paid for early debt redemption
-
(13
)
Deferred financing costs paid
(315
)
-
Net cash provided by financing activities of continuing operations
424,960
883,198
Cash flows from discontinued operations: Operating activities of
discontinued operations
(2,272
)
(62,003
)
Investing activities of discontinued operations
523
603,402
Financing activities of discontinued operations
-
(1,343,793
)
Net cash used in discontinued operations
(1,749
)
(802,394
)
Decrease in cash and cash equivalents
(2,172
)
(314,866
)
Cash and cash equivalents, beginning of period
144,353
447,334
Cash and cash equivalents, end of period
$
142,181
$
132,468
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedAugust 31, 2019 Thirteen weeks
endedSeptember 1, 2018
Retail Pharmacy Segment
Revenues from continuing operations (a)
$
3,848,104
$
3,911,512
Cost of revenues from continuing operations (a)
2,815,660
2,859,875
Gross profit from continuing operations
1,032,444
1,051,637
LIFO charge from continuing operations
7,504
3,358
FIFO gross profit from continuing operations
1,039,948
1,054,995
Adjusted EBITDA gross profit from continuing operations
1,045,257
1,057,742
Gross profit as a percentage of revenues - continuing
operations
26.83
%
26.89
%
LIFO charge as a percentage of revenues - continuing operations
0.20
%
0.09
%
FIFO gross profit as a percentage of revenues - continuing
operations
27.02
%
26.97
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
27.16
%
27.04
%
Selling, general and administrative expenses from continuing
operations
1,044,818
1,068,944
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
952,584
954,124
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
27.15
%
27.33
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.75
%
24.39
%
Cash interest expense
56,304
52,295
Non-cash interest expense
3,798
3,938
Total interest expense
60,102
56,233
Interest expense - continuing operations
60,102
56,233
Interest expense - discontinued operations
0
0
Adjusted EBITDA - continuing operations
92,673
103,618
Adjusted EBITDA as a percentage of revenues - continuing operations
2.41
%
2.65
%
Pharmacy Services Segment Revenues (a)
$
1,579,069
$
1,561,811
Cost of revenues (a)
1,467,074
1,452,297
Gross profit
111,995
109,514
Gross profit as a percentage of revenues
7.09
%
7.01
%
Adjusted EBITDA
41,517
44,963
Adjusted EBITDA as a percentage of revenues
2.63
%
2.88
%
(a) -
Revenues and cost of revenues
include $60,909 and $51,961 of inter-segment activity for the
thirteen weeks ended August 31, 2019 and September 1, 2018,
respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Twenty-six weeks endedAugust 31, 2019 Twenty-six weeks
endedSeptember 1, 2018
Retail Pharmacy Segment
Revenues from continuing operations (a)
$
7,712,912
$
7,809,277
Cost of revenues from continuing operations (a)
5,649,973
5,688,183
Gross profit from continuing operations
2,062,939
2,121,094
LIFO charge from continuing operations
14,993
13,324
FIFO gross profit from continuing operations
2,077,932
2,134,418
Adjusted EBITDA gross profit from continuing operations
2,085,520
2,141,780
Gross profit as a percentage of revenues - continuing
operations
26.75
%
27.16
%
LIFO charge as a percentage of revenues - continuing operations
0.19
%
0.17
%
FIFO gross profit as a percentage of revenues - continuing
operations
26.94
%
27.33
%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
27.04
%
27.43
%
Selling, general and administrative expenses from continuing
operations
2,116,143
2,133,331
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
1,908,839
1,934,033
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
27.44
%
27.32
%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.75
%
24.77
%
Cash interest expense
110,914
115,196
Non-cash interest expense
7,458
8,444
Total interest expense
118,372
123,640
Interest expense - continuing operations
118,372
119,025
Interest expense - discontinued operations
0
4,615
Adjusted EBITDA - continuing operations
176,681
207,747
Adjusted EBITDA as a percentage of revenues - continuing operations
2.29
%
2.66
%
Pharmacy Services Segment Revenues (a)
$
3,145,361
$
3,104,573
Cost of revenues (a)
2,937,138
2,895,767
Gross profit
208,223
208,806
Gross profit as a percentage of revenues
6.62
%
6.73
%
Adjusted EBITDA
67,856
78,826
Adjusted EBITDA as a percentage of revenues
2.16
%
2.54
%
(a) - Revenues and cost of revenues include $119,420 and $103,998
of inter-segment activity for the twenty-six weeks ended August 31,
2019 and September 1, 2018, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In
thousands) (unaudited) Thirteen weeks
endedAugust 31, 2019 Thirteen weeks endedSeptember 1, 2018
Reconciliation of net loss to adjusted EBITDA:
Net loss - continuing
operations
$
(78,705
)
$
(352,348
)
Adjustments:
Interest expense
60,102
56,233
Income tax expense (benefit)
27,628
(106,559
)
Depreciation and amortization
83,044
89,743
LIFO charge
7,504
3,358
Lease termination and impairment
charges
1,471
39,609
Goodwill and intangible asset
impairment charges
-
375,190
Merger and Acquisition-related
costs
514
19,031
Stock-based compensation
expense
4,712
5,215
Restructuring-related costs
25,145
-
Inventory write-downs related to
store closings
3,149
1,300
Litigation settlement
-
18,000
Gain on sale of assets, net
(1,587
)
(4,965
)
Other
1,213
4,774
Adjusted EBITDA - continuing
operations
$
134,190
$
148,581
Percent of revenues - continuing
operations
2.50
%
2.74
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (In thousands)
(unaudited) Twenty-six weeks endedAugust 31,
2019 Twenty-six weeks endedSeptember 1, 2018
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(178,044
)
$
(394,075
)
Adjustments: Interest expense
118,372
119,025
Income tax expense (benefit)
35,002
(116,056
)
Depreciation and amortization
166,970
184,272
LIFO charge
14,993
13,324
Lease termination and impairment charges
1,949
49,468
Goodwill and intangible asset impairment charges
-
375,190
Loss on debt retirements, net
-
554
Merger and Acquisition-related costs
3,599
26,219
Stock-based compensation expense
10,092
10,246
Restructuring-related costs
68,495
-
Inventory write-downs related to store closings
3,990
5,133
Litigation settlement
-
18,000
Gain on sale of assets, net
(4,299
)
(10,824
)
Other
3,418
6,097
Adjusted EBITDA - continuing operations
$
244,537
$
286,573
Percent of revenues - continuing operations
2.28
%
2.65
%
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME (LOSS) (Dollars in thousands, except per share
amounts) (unaudited) Thirteen weeks endedAugust 31,
2019 Thirteen weeks endedSeptember 1, 2018 Net loss from
continuing operations
$
(78,705
)
$
(352,348
)
Add back - Income tax expense (benefit)
27,628
(106,559
)
Loss before income taxes - continuing operations
(51,077
)
(458,907
)
Adjustments: Amortization expense
26,596
32,500
LIFO charge
7,504
3,358
Goodwill and intangible asset impairment charges
-
375,190
Merger and Acquisition-related costs
514
19,031
Restructuring-related costs
25,145
-
Litigation settlement
-
18,000
Adjusted income (loss) before income taxes - continuing
operations
8,682
(10,828
)
Adjusted income tax expense (benefit) (a)
2,394
(2,951
)
Adjusted net income (loss) from continuing operations
$
6,288
$
(7,877
)
Adjusted net income (loss) per diluted share - continuing
operations: Numerator for adjusted net income (loss) per
diluted share: Adjusted net income (loss) from continuing
operations
$
6,288
$
(7,877
)
Denominator: Basic weighted average shares
53,041
52,823
Outstanding options and restricted shares, net
651
-
Diluted weighted average shares
53,692
52,823
Net loss from continuing operations per diluted share -
continuing operations
$
(1.48
)
$
(6.67
)
Adjusted net income (loss) per diluted share -
continuing operations
$
0.12
$
(0.15
)
(a) The fiscal year 2020 and 2019 annual effective tax rates,
calculated using a federal rate plus a net state rate that excluded
the impact of state NOL's, state credits and valuation allowance,
was used for the thirteen weeks ended August 31, 2019 and September
1, 2018, respectively. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands,
except per share amounts) (unaudited) Twenty-six
weeks endedAugust 31, 2019 Twenty-six weeks endedSeptember 1, 2018
Net loss from continuing operations
$
(178,044
)
$
(394,075
)
Add back - Income tax expense (benefit)
35,002
(116,056
)
Loss before income taxes - continuing operations
(143,042
)
(510,131
)
Adjustments: Amortization expense
54,256
67,900
LIFO charge
14,993
13,324
Goodwill and intangible asset impairment charges
-
375,190
Loss on debt retirements, net
-
554
Merger and Acquisition-related costs
3,599
26,219
Restructuring-related costs
68,495
-
Litigation settlement
-
18,000
Adjusted loss before income taxes - continuing operations
(1,699
)
(8,944
)
Adjusted income tax benefit (a)
(468
)
(2,437
)
Adjusted net loss from continuing operations
$
(1,231
)
$
(6,507
)
Adjusted net loss per diluted share - continuing operations:
Numerator for adjusted net loss per diluted share: Adjusted
net loss from continuing operations
$
(1,231
)
$
(6,507
)
Denominator: Basic and diluted weighted
average shares
53,084
52,771
Net loss from continuing operations per diluted share -
continuing operations
$
(3.35
)
$
(7.47
)
Adjusted net loss diluted share - continuing operations
$
(0.02
)
$
(0.12
)
(a)
The fiscal year 2020 and 2019
annual effective tax rates, calculated using a federal rate plus a
net state rate that excluded the impact of state NOL's, state
credits and valuation allowance, was used for the twenty-six weeks
ended August 31, 2019 and September 1, 2018, respectively.
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION
OF ADJUSTED EBITDA SELLING, GENERAL AND ADMINISTRATIVE EXPENSES-
RETAIL PHARMACY SEGMENT (In thousands) (unaudited)
Thirteen weeks endedAugust 31, 2019 Thirteen weeks
endedSeptember 1, 2018 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
3,848,104
$
3,911,512
Gross Profit
1,032,444
1,051,637
Addback: LIFO charge
7,504
3,358
Depreciation and amortization (cost of goods sold portion only)
2,205
2,254
Other
3,104
493
Adjusted EBITDA gross profit - continuing operations
$
1,045,257
$
1,057,742
Percent of revenues - continuing operations
27.16
%
27.04
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
3,848,104
$
3,911,512
Selling, general and administrative expenses
1,044,818
1,068,944
Less: Depreciation and amortization (SG&A portion only)
64,975
68,401
Stock-based compensation expense
4,432
5,215
Merger and Acquisition-related costs
514
19,031
Restructuring-related costs
21,055
-
Litigation settlement
-
18,000
Other
1,258
4,173
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
952,584
$
954,124
Percent of revenues - continuing operations
24.75
%
24.39
%
Adjusted EBITDA - continuing operations
$
92,673
$
103,618
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION
OF ADJUSTED EBITDA SELLING, GENERAL AND ADMINISTRATIVE EXPENSES-
RETAIL PHARMACY SEGMENT (In thousands) (unaudited)
Twenty-six weeks endedAugust 31, 2019 Twenty-six weeks
endedSeptember 1, 2018 Reconciliation of adjusted
EBITDA gross profit: Revenues
$
7,712,912
$
7,809,277
Gross Profit
2,062,939
2,121,094
Addback: LIFO charge
14,993
13,324
Depreciation and amortization (cost of goods sold portion only)
4,468
4,621
Other
3,120
2,741
Adjusted EBITDA gross profit - continuing operations
$
2,085,520
$
2,141,780
Percent of revenues - continuing operations
27.04
%
27.43
%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
7,712,912
$
7,809,277
Selling, general and administrative expenses
2,116,143
2,133,331
Less: Depreciation and amortization (SG&A portion only)
130,014
138,067
Stock-based compensation expense
9,697
10,246
Merger and Acquisition-related costs
2,828
26,219
Restructuring-related costs
60,436
-
Litigation settlement
-
18,000
Other
4,329
6,766
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
1,908,839
$
1,934,033
Percent of revenues - continuing operations
24.75
%
24.77
%
Adjusted EBITDA - continuing operations
$
176,681
$
207,747
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 29, 2020 (In thousands) (unaudited)
Guidance Range Low High Total
Revenues
$
21,500,000
$
21,900,000
Same store sales
0.00
%
1.00
%
Gross Capital Expenditures
$
250,000
$
250,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(275,000
)
$
(235,000
)
Adjustments: Interest expense
240,000
240,000
Income tax expense
35,000
35,000
Depreciation and amortization
340,000
340,000
LIFO charge
30,000
30,000
Lease termination and impairment charges
25,000
25,000
Restructuring-related costs
90,000
90,000
Other
25,000
25,000
Adjusted EBITDA
$
510,000
$
550,000
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET INCOME GUIDANCE
YEAR ENDING FEBRUARY 29, 2020 (In thousands) (unaudited)
Guidance Range Low High
Net loss
$
(275,000
)
$
(235,000
)
Add back - income tax expense
35,000
35,000
Loss before income taxes
(240,000
)
(200,000
)
Adjustments: Amortization expense
120,000
120,000
LIFO charge
30,000
30,000
Restructuring-related costs
90,000
90,000
Adjusted income before adjusted income taxes
-
40,000
Adjusted income tax expense
-
10,000
Adjusted net income
$
-
$
30,000
Diluted adjusted net income per share
$
-
$
0.56
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190926005411/en/
INVESTORS: Byron Purcell (717) 975-5809 Or
investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
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