- Third Quarter Net Income from Continuing Operations of $52.3
Million or $0.98 Per Share, Compared to the Prior Year Third
Quarter Net Loss of $17.3 Million or $0.33 Per Share
- Third Quarter Adjusted Net Income from Continuing Operations
of $29.1 Million or $0.54 Per Share, Compared to the Prior Year
Third Quarter Adjusted Net Income of $14.7 Million or $0.28 Per
Share
- Third Quarter Adjusted EBITDA from Continuing Operations of
$158.1 Million, Compared to the Prior Year Third Quarter Adjusted
EBITDA of $142.8 Million
- Improved Adjusted EBITDA in both the Retail Pharmacy and
Pharmacy Services Segments
- Achieved Growth in Both Same Store Front-End Sales
(Excluding Cigarettes and Tobacco Products) and Same Store
Prescription Volume
Rite Aid Corporation (NYSE: RAD) today reported operating
results for its third fiscal quarter ended November 30, 2019.
For the third quarter, the company reported net income from
continuing operations of $52.3 million, or $0.98 per share,
Adjusted net income from continuing operations of $29.1 million, or
$0.54 per share, and Adjusted EBITDA from continuing operations of
$158.1 million, or 2.9 percent of revenues.
“Our team delivered a strong quarter that provides us with
momentum as we prepare to roll out our long-term strategy and
position Rite Aid Corporation as an innovative leader in our
industry,” said Rite Aid Corporation CEO Heyward Donigan. “Adjusted
EBITDA grew in our retail business due to tight expense control and
prescription count growth in our retail pharmacies, which benefited
from solid growth in immunizations. At the same time, we saw
improved pharmacy network management at EnvisionRxOptions.
“While we are pleased with these results, we have important work
ahead of us to put our company on a path to long-term sustainable
growth. We will soon reveal our comprehensive strategy that
revitalizes Rite Aid retail pharmacies as fresh and relevant,
leveraging the trust and expertise of our pharmacists in meeting
the unique health and wellbeing needs of our communities. We are
also investing in the expansion and integration of
EnvisionRxOptions, particularly its services, technologies and
clinical offerings. This will provide us scale to deliver lower
total cost of care, an enhanced client experience and heightened
consumer engagement. We are making great progress, and we are
excited to share more details at our upcoming Analyst Day on March
16.”
Third Quarter Summary
Revenues from continuing operations for the quarter were $5.46
billion compared to revenues from continuing operations of $5.45
billion in the prior year’s quarter. Retail Pharmacy Segment
revenues were $3.91 billion and decreased 1.7 percent compared to
the prior year period due to a reduction in store count. Revenues
in the Pharmacy Services Segment were $1.61 billion, an increase of
5.7 percent compared to the prior year period, which was due to an
increase in Medicare Part D membership.
Retail Pharmacy Segment same store sales from continuing
operations for the third quarter decreased 0.1 percent over the
prior year period, consisting of a 0.1 percent increase in pharmacy
sales and a 0.5 percent decrease in front-end sales. Front-end same
store sales, excluding cigarettes and tobacco products, increased
1.0 percent. Pharmacy sales were negatively impacted by
approximately 331 basis points as a result of new generic
introductions. The number of prescriptions filled in same stores,
adjusted to 30-day equivalents, increased 2.8 percent over the
prior year period resulting primarily from the company’s continued
emphasis on driving clinical services, including immunizations.
Prescription sales from continuing operations accounted for 67.7
percent of total drugstore sales.
Net income from continuing operations was $52.3 million or $0.98
per share compared to last year’s third quarter net loss from
continuing operations of $17.3 million or $0.33 per share. The
increase in net income was due primarily to a $55.7 million gain on
debt retirements and an increase in Adjusted EBITDA.
Adjusted EBITDA from continuing operations was $158.1 million or
2.9 percent of revenues for the third quarter compared to last
year’s third quarter Adjusted EBITDA from continuing operations of
$142.8 million or 2.6 percent of revenues, an increase of $15.3
million. Retail Pharmacy Segment Adjusted EBITDA from continuing
operations increased $7.4 million due to strong labor and benefits
expense control. These improvements were partially offset by a
reduction in gross profit and a reduction in Transition Service
Agreement fee income from Walgreens Boots Alliance. The Pharmacy
Services Segment Adjusted EBITDA increased $7.9 million compared to
the prior year due to improvements in pharmacy network
management.
Outlook for Fiscal 2020
Rite Aid Corporation is updating its fiscal 2020 outlook, which
includes 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 for EnvisionRxOptions assumes sustained improvements in
pharmacy network management and initial results of SG&A
reduction, benefits integration and restructuring initiatives.
Rite Aid Corporation 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 $174.0 million and $204.0
million.
Adjusted EBITDA is expected to be between $515.0 million and
$545.0 million.
Adjusted net income per share is expected to be between $0.13
and $0.55.
Capital expenditures are expected to be approximately $230
million.
Conference Call Broadcast
Rite Aid Corporation 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 Dec. 21, 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
6188277.
About Rite Aid Corporation
Rite Aid Corporation is on the front lines of delivering health
care services and retail products to over 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 EnvisionRxOptions, we also deliver pharmacy benefit
management to approximately 1,900 clients and 3.4 million members.
For more information, visit 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 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 ongoing 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 center and related assets to Walgreens Boots Alliance,
Inc. ("WBA"), including the possibility that the transaction may
not close due to the failure to satisfy the minimal remaining
conditions; our ability to successfully 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,
gains and losses 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, gains or losses 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)
November 30, 2019 March 2, 2019 ASSETS Current
assets: Cash and cash equivalents
$
289,498
$
144,353
Accounts receivable, net
1,689,838
1,788,712
Inventories, net of LIFO reserve of $611,997 and $604,444
1,957,045
1,871,941
Prepaid expenses and other current assets
178,292
179,132
Current assets held for sale
101,594
117,581
Total current assets
4,216,267
4,101,719
Property, plant and equipment, net
1,254,234
1,308,514
Operating lease right-of-use assets
2,935,104
-
Goodwill
1,108,136
1,108,136
Other intangibles, net
374,660
448,706
Deferred tax assets
382,105
409,084
Other assets
158,285
215,208
Total assets
$
10,428,791
$
7,591,367
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt and lease financing
obligations
$
9,486
$
16,111
Accounts payable
1,534,302
1,618,585
Accrued salaries, wages and other current liabilities
806,739
808,439
Current portion of operating lease liabilities
493,699
-
Current liabilities held for sale
42,422
-
Total current liabilities
2,886,648
2,443,135
Long-term debt, less current maturities
3,566,261
3,454,585
Long-term operating lease liabilities
2,732,339
-
Lease financing obligations, less current maturities
20,607
24,064
Other noncurrent liabilities
207,078
482,893
Total liabilities
9,412,933
6,404,677
Commitments and contingencies
-
-
Stockholders' equity: Common stock
54,862
54,016
Additional paid-in capital
5,888,870
5,876,977
Accumulated deficit
(4,897,473
)
(4,713,244
)
Accumulated other comprehensive loss
(30,401
)
(31,059
)
Total stockholders' equity
1,015,858
1,186,690
Total liabilities and stockholders' equity
$
10,428,791
$
7,591,367
RITE AID CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in thousands, except per
share amounts)
(unaudited)
Thirteen weeks endedNovember 30, 2019 Thirteen
weeks endedDecember 1, 2018 Revenues
$
5,462,298
$
5,450,060
Costs and expenses: Cost of revenues
4,273,323
4,267,972
Selling, general and administrative expenses
1,134,854
1,142,555
Lease termination and impairment charges
166
2,628
Interest expense
57,856
56,008
Gain on debt retirements, net
(55,692
)
-
Gain on sale of assets, net
(1,371
)
(382
)
5,409,136
5,468,781
Income (loss) from continuing operations before income taxes
53,162
(18,721
)
Income tax expense (benefit)
876
(1,471
)
Net income (loss) from continuing operations
52,286
(17,250
)
Net (loss) income from discontinued operations, net of tax
(801
)
12,740
Net income (loss)
$
51,485
$
(4,510
)
Basic and diluted income (loss) per share:
Numerator for income (loss) per share: Net income (loss)
from continuing operations attributable to common stockholders -
basic and diluted
$
52,286
$
(17,250
)
Net (loss) income from discontinued operations attributable to
common stockholders - basic and diluted
(801
)
12,740
Income (loss) attributable to common stockholders - basic and
diluted
$
51,485
$
(4,510
)
Denominator: Basic weighted average shares
53,310
52,920
Outstanding options and restricted shares, net
274
-
Diluted weighted average shares
53,584
52,920
Basic income (loss) per share Continuing operations
$
0.98
$
(0.33
)
Discontinued operations
$
(0.01
)
$
0.24
Net basic income (loss) per share
$
0.97
$
(0.09
)
Diluted income (loss) per share Continuing operations
$
0.98
$
(0.33
)
Discontinued operations
$
(0.02
)
$
0.24
Net diluted income (loss) per share
$
0.96
$
(0.09
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in thousands, except per share amounts)
(unaudited) Thirty-nine weeks endedNovember 30, 2019
Thirty-nine weeks endedDecember 1, 2018 Revenues
$
16,201,151
$
16,259,912
Costs and expenses: Cost of revenues
12,741,014
12,747,924
Selling, general and administrative expenses
3,433,036
3,449,173
Lease termination and impairment charges
2,115
52,096
Goodwill and intangible asset impairment charges
-
375,190
Interest expense
176,228
175,033
(Gain) loss on debt retirements, net
(55,692
)
554
Gain on sale of assets, net
(5,670
)
(11,206
)
16,291,031
16,788,764
Loss from continuing operations before income taxes
(89,880
)
(528,852
)
Income tax expense (benefit)
35,878
(117,527
)
Net loss from continuing operations
(125,758
)
(411,325
)
Net (loss) income from discontinued operations, net of tax
(1,695
)
262,091
Net loss
$
(127,453
)
$
(149,234
)
Basic and diluted loss per share:
Numerator for loss per share: Net loss from continuing operations
attributable to common stockholders - basic and diluted
$
(125,758
)
$
(411,325
)
Net (loss) income from discontinued operations attributable to
common stockholders - basic and diluted
(1,695
)
262,091
Loss attributable to common stockholders - basic and diluted
$
(127,453
)
$
(149,234
)
Denominator: Basic and diluted weighted
average shares
53,159
52,824
Basic and diluted loss per share Continuing operations
$
(2.37
)
$
(7.79
)
Discontinued operations
$
(0.03
)
$
4.96
Net basic and diluted loss per share
$
(2.40
)
$
(2.83
)
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS (Dollars in thousands) (unaudited)
Thirteen weeks endedNovember 30, 2019 Thirteen weeks endedDecember
1, 2018 OPERATING ACTIVITIES: Net income (loss)
$
51,485
$
(4,510
)
Net (loss) income from discontinued operations, net of tax
(801
)
12,740
Net income (loss) from continuing operations
$
52,286
$
(17,250
)
Adjustments to reconcile to net cash provided by operating
activities of continuing operations: Depreciation and amortization
82,007
86,685
Lease termination and impairment charges
166
2,628
LIFO (credit) charge
(7,440
)
5,987
Gain on sale of assets, net
(1,371
)
(382
)
Stock-based compensation expense
3,506
1,317
Gain on debt retirements, net
(55,692
)
-
Changes in deferred taxes
-
(1,295
)
Changes in operating assets and liabilities: Accounts receivable
252,767
318,287
Inventories
19,333
(46,839
)
Accounts payable
47,378
(26,446
)
Operating lease right-of-use assets and operating lease liabilities
(12,179
)
-
Other assets
1,959
(1,072
)
Other liabilities
40,993
29,501
Net cash provided by operating activities of continuing operations
423,713
351,121
INVESTING ACTIVITIES: Payments for property, plant and equipment
(45,075
)
(46,653
)
Intangible assets acquired
(17,727
)
(11,054
)
Proceeds from dispositions of assets and investments
51,548
72
Net cash used in investing activities of continuing operations
(11,254
)
(57,635
)
FINANCING ACTIVITIES: Net payments to revolver
(115,000
)
(90,000
)
Principal payments on long-term debt
(101,251
)
(3,851
)
Change in zero balance cash accounts
(66,461
)
1,137
Net proceeds from the issuance of common stock
-
992
Payments for taxes related to net share settlement of equity awards
(587
)
(175
)
Financing fees paid for early debt redemption
(518
)
-
Net cash used in financing activities of continuing operations
(283,817
)
(91,897
)
Cash flows from discontinued operations: Operating activities of
discontinued operations
(4,876
)
14,735
Investing activities of discontinued operations
23,551
61,251
Net cash provided by discontinued operations
18,675
75,986
Increase in cash and cash equivalents
147,317
277,575
Cash and cash equivalents, beginning of period
142,181
132,468
Cash and cash equivalents, end of period
$
289,498
$
410,043
RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Thirty-nine weeks endedNovember 30, 2019 Thirty-nine
weeks endedDecember 1, 2018 OPERATING ACTIVITIES: Net
loss
$
(127,453
)
$
(149,234
)
Net (loss) income from discontinued operations, net of tax
(1,695
)
262,091
Net loss from continuing operations
$
(125,758
)
$
(411,325
)
Adjustments to reconcile to net cash provided by operating
activities of continuing operations: Depreciation and amortization
248,977
270,957
Lease termination and impairment charges
2,115
52,096
Goodwill and intangible asset impairment charges
-
375,190
LIFO charge
7,553
19,311
Gain on sale of assets, net
(5,670
)
(11,206
)
Stock-based compensation expense
13,598
11,563
(Gain) loss on debt retirements, net
(55,692
)
554
Changes in deferred taxes
26,979
(126,102
)
Changes in operating assets and liabilities: Accounts receivable
99,498
(5,437
)
Inventories
(92,657
)
(78,489
)
Accounts payable
(38,245
)
181,497
Operating lease right-of-use assets and operating lease liabilities
22,803
-
Other assets
(42,715
)
(12,304
)
Other liabilities
32,889
(216,086
)
Net cash provided by operating activities of continuing operations
93,675
50,219
INVESTING ACTIVITIES: Payments for property, plant and equipment
(129,135
)
(139,218
)
Intangible assets acquired
(33,435
)
(31,573
)
Proceeds from dispositions of assets and investments
55,971
15,801
Proceeds from sale-leaseback transactions
-
2,587
Net cash used in investing activities of continuing operations
(106,599
)
(152,403
)
FINANCING ACTIVITIES: Net proceeds from revolver
260,000
1,245,000
Principal payments on long-term debt
(104,702
)
(437,597
)
Change in zero balance cash accounts
(11,749
)
(15,964
)
Net proceeds from the issuance of common stock
-
2,294
Payments for taxes related to net share settlement of equity awards
(1,573
)
(2,419
)
Financing fees paid for early debt redemption
(518
)
(13
)
Deferred financing costs paid
(315
)
-
Net cash provided by financing activities of continuing operations
141,143
791,301
Cash flows from discontinued operations: Operating activities of
discontinued operations
(7,148
)
(47,268
)
Investing activities of discontinued operations
24,074
664,653
Financing activities of discontinued operations
-
(1,343,793
)
Net cash provided by (used in) discontinued operations
16,926
(726,408
)
Increase (decrease) in cash and cash equivalents
145,145
(37,291
)
Cash and cash equivalents, beginning of period
144,353
447,334
Cash and cash equivalents, end of period
$
289,498
$
410,043
RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT
OPERATING INFORMATION (Dollars in thousands) (unaudited)
Thirteen weeks endedNovember 30, 2019 Thirteen weeks
endedDecember 1, 2018
Retail Pharmacy Segment
Revenues from continuing operations (a)
$
3,909,946
$
3,976,719
Cost of revenues from continuing operations (a)
2,839,094
2,897,135
Gross profit from continuing operations
1,070,852
1,079,584
LIFO (credit) charge from continuing operations
(7,440
)
5,987
FIFO gross profit from continuing operations
1,063,412
1,085,571
Adjusted EBITDA gross profit from continuing operations
1,065,523
1,088,213
Gross profit as a percentage of revenues - continuing
operations
27.39%
27.15%
LIFO (credit) charge as a percentage of revenues - continuing
operations
-0.19%
0.15%
FIFO gross profit as a percentage of revenues - continuing
operations
27.20%
27.30%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
27.25%
27.36%
Selling, general and administrative expenses from continuing
operations
1,044,236
1,062,598
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
956,944
986,988
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
26.71%
26.72%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.47%
24.82%
Cash interest expense
54,068
52,074
Non-cash interest expense
3,788
3,934
Total interest expense
57,856
56,008
Interest expense - continuing operations
57,856
56,008
Interest expense - discontinued operations
-
-
Adjusted EBITDA - continuing operations
108,579
101,225
Adjusted EBITDA as a percentage of revenues - continuing operations
2.78%
2.55%
Pharmacy Services Segment Revenues (a)
$
1,613,109
$
1,525,837
Cost of revenues (a)
1,494,986
1,423,333
Gross profit
118,123
102,504
Gross profit as a percentage of revenues
7.32%
6.72%
Adjusted EBITDA
49,511
41,566
Adjusted EBITDA as a percentage of revenues
3.07%
2.72%
(a) - Revenues and cost of revenues include $60,757 and $52,496 of
inter-segment activity for the thirteen weeks ended November 30,
2019 and December 1, 2018, respectively, that is eliminated in
consolidation. RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands)
(unaudited) Thirty-nine weeks endedNovember 30, 2019
Thirty-nine weeks endedDecember 1, 2018
Retail Pharmacy
Segment Revenues from continuing operations (a)
$
11,622,858
$
11,785,996
Cost of revenues from continuing operations (a)
8,489,067
8,585,318
Gross profit from continuing operations
3,133,791
3,200,678
LIFO charge from continuing operations
7,553
19,311
FIFO gross profit from continuing operations
3,141,344
3,219,989
Adjusted EBITDA gross profit from continuing operations
3,151,043
3,229,993
Gross profit as a percentage of revenues - continuing
operations
26.96%
27.16%
LIFO charge as a percentage of revenues - continuing operations
0.06%
0.16%
FIFO gross profit as a percentage of revenues - continuing
operations
27.03%
27.32%
Adjusted EBITDA gross profit as a percentage of revenues -
continuing operations
27.11%
27.41%
Selling, general and administrative expenses from continuing
operations
3,160,379
3,195,929
Adjusted EBITDA selling, general and administrative expenses from
continuing operations
2,865,783
2,921,021
Selling, general and administrative expenses as a percentage of
revenues - continuing operations
27.19%
27.12%
Adjusted EBITDA selling, general and administrative expenses as a
percentage of revenues - continuing operations
24.66%
24.78%
Cash interest expense
164,982
167,270
Non-cash interest expense
11,246
12,378
Total interest expense
176,228
179,648
Interest expense - continuing operations
176,228
175,033
Interest expense - discontinued operations
-
4,615
Adjusted EBITDA - continuing operations
285,260
308,972
Adjusted EBITDA as a percentage of revenues - continuing operations
2.45%
2.62%
Pharmacy Services Segment Revenues (a)
$
4,758,470
$
4,630,410
Cost of revenues (a)
4,432,124
4,319,100
Gross profit
326,346
311,310
Gross profit as a percentage of revenues
6.86%
6.72%
Adjusted EBITDA
117,367
120,392
Adjusted EBITDA as a percentage of revenues
2.47%
2.60%
(a) - Revenues and cost of revenues include $180,177 and $156,494
of inter-segment activity for the thirty-nine weeks ended November
30, 2019 and December 1, 2018, respectively, that is eliminated in
consolidation.
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED EBITDA
(In thousands)
(unaudited)
Thirteen weeks endedNovember 30, 2019 Thirteen
weeks endedDecember 1, 2018 Reconciliation of net
income (loss) to adjusted EBITDA: Net income (loss) - continuing
operations
$
52,286
$
(17,250
)
Adjustments: Interest expense
57,856
56,008
Income tax expense (benefit)
876
(1,471
)
Depreciation and amortization
82,007
86,685
LIFO (credit) charge
(7,440
)
5,987
Lease termination and impairment charges
166
2,628
Gain on debt retirements, net
(55,692
)
-
Merger and Acquisition-related costs
-
4,175
Stock-based compensation expense
3,506
1,317
Restructuring-related costs
25,275
-
Inventory write-downs related to store closings
93
421
Gain on sale of assets, net
(1,371
)
(382
)
Other
528
4,673
Adjusted EBITDA - continuing operations
$
158,090
$
142,791
Percent of revenues - continuing operations
2.89%
2.62%
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA
(In thousands)
(unaudited)
Thirty-nine weeks endedNovember 30, 2019
Thirty-nine weeks endedDecember 1, 2018
Reconciliation of net loss to adjusted EBITDA: Net loss -
continuing operations
$
(125,758
)
$
(411,325
)
Adjustments: Interest expense
176,228
175,033
Income tax expense (benefit)
35,878
(117,527
)
Depreciation and amortization
248,977
270,957
LIFO charge
7,553
19,311
Lease termination and impairment charges
2,115
52,096
Goodwill and intangible asset impairment charges
-
375,190
(Gain) loss on debt retirements, net
(55,692
)
554
Merger and Acquisition-related costs
3,599
30,394
Stock-based compensation expense
13,598
11,563
Restructuring-related costs
93,770
-
Inventory write-downs related to store closings
4,083
5,554
Litigation settlement
-
18,000
Gain on sale of assets, net
(5,670
)
(11,206
)
Other
3,946
10,770
Adjusted EBITDA - continuing operations
$
402,627
$
429,364
Percent of revenues - continuing operations
2.49%
2.64%
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per
share amounts)
(unaudited)
Thirteen weeks endedNovember 30, 2019 Thirteen weeks
endedDecember 1, 2018 Net income (loss) from continuing
operations
$
52,286
$
(17,250
)
Add back - Income tax expense (benefit)
876
(1,471
)
Income (loss) before income taxes - continuing operations
53,162
(18,721
)
Adjustments: Amortization expense
24,920
28,768
LIFO (credit) charge
(7,440
)
5,987
Gain on debt retirements, net
(55,692
)
-
Merger and Acquisition-related costs
-
4,175
Restructuring-related costs
25,275
-
Adjusted income before income taxes - continuing operations
40,225
20,209
Adjusted income tax expense (a)
11,090
5,469
Adjusted net income from continuing operations
$
29,135
$
14,740
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
29,135
$
14,740
Denominator: Basic weighted average shares
53,310
52,920
Outstanding options and restricted shares, net
274
10
Diluted weighted average shares
53,584
52,930
Net income (loss) from continuing operations per diluted
share - continuing operations
$
0.98
$
(0.33
)
Adjusted net income per diluted share - continuing
operations
$
0.54
$
0.28
(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
November 30, 2019 and December 1, 2018, respectively.
RITE AID CORPORATION AND
SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per
share amounts)
(unaudited)
Thirty-nine weeks endedNovember 30, 2019 Thirty-nine
weeks endedDecember 1, 2018 Net loss from continuing
operations
$
(125,758
)
$
(411,325
)
Add back - Income tax expense (benefit)
35,878
(117,527
)
Loss before income taxes - continuing operations
(89,880
)
(528,852
)
Adjustments: Amortization expense
79,176
96,668
LIFO charge
7,553
19,311
Goodwill and intangible asset impairment charges
-
375,190
(Gain) loss on debt retirements, net
(55,692
)
554
Merger and Acquisition-related costs
3,599
30,394
Restructuring-related costs
93,770
-
Litigation settlement
-
18,000
Adjusted income before income taxes - continuing operations
38,526
11,265
Adjusted income tax expense (a)
10,622
3,049
Adjusted net income from continuing operations
$
27,904
$
8,216
Adjusted net income per diluted share - continuing
operations: Numerator for adjusted net income per diluted
share: Adjusted net income from continuing operations
$
27,904
$
8,216
Denominator: Basic weighted average shares
53,159
52,824
Outstanding options and restricted shares, net
775
124
Diluted weighted average shares
53,934
52,948
Net loss from continuing operations per diluted share -
continuing operations
$
(2.37
)
$
(7.79
)
Adjusted net income diluted share - continuing operations
$
0.52
$
0.16
(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 thirty-nine weeks ended November 30, 2019 and
December 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 endedNovember 30, 2019 Thirteen
weeks endedDecember 1, 2018 Reconciliation of
adjusted EBITDA gross profit: Revenues
$
3,909,946
$
3,976,719
Gross Profit
1,070,852
1,079,584
Addback: LIFO (credit) charge
(7,440
)
5,987
Depreciation and amortization (cost of goods sold portion only)
2,070
2,308
Other
41
334
Adjusted EBITDA gross profit - continuing operations
$
1,065,523
$
1,088,213
Percent of revenues - continuing operations
27.25%
27.36%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
3,909,946
$
3,976,719
Selling, general and administrative expenses
1,044,236
1,062,598
Less: Depreciation and amortization (SG&A portion only)
65,267
67,905
Stock-based compensation expense
2,976
1,317
Merger and Acquisition-related costs
-
4,175
Restructuring-related costs
18,415
-
Other
634
2,213
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
956,944
$
986,988
Percent of revenues - continuing operations
24.47%
24.82%
Adjusted EBITDA - continuing operations
$
108,579
$
101,225
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 30, 2019
Thirty-nine weeks endedDecember 1, 2018
Reconciliation of adjusted EBITDA gross profit: Revenues
$
11,622,858
$
11,785,996
Gross Profit
3,133,791
3,200,678
Addback: LIFO charge
7,553
19,311
Depreciation and amortization (cost of goods sold portion only)
6,538
6,929
Other
3,161
3,075
Adjusted EBITDA gross profit - continuing operations
$
3,151,043
$
3,229,993
Percent of revenues - continuing operations
27.11%
27.41%
Reconciliation of adjusted EBITDA selling,
general and administrative expenses: Revenues
$
11,622,858
$
11,785,996
Selling, general and administrative expenses
3,160,379
3,195,929
Less: Depreciation and amortization (SG&A portion only)
195,281
205,972
Stock-based compensation expense
12,673
11,563
Merger and Acquisition-related costs
2,828
30,394
Restructuring-related costs
78,851
-
Litigation settlement
-
18,000
Other
4,963
8,979
Adjusted EBITDA selling, general and administrative expenses -
continuing operations
$
2,865,783
$
2,921,021
Percent of revenues - continuing operations
24.66%
24.78%
Adjusted EBITDA - continuing operations
$
285,260
$
308,972
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
$
230,000
$
230,000
Reconciliation of net loss to adjusted EBITDA: Net
loss
$
(204,000
)
$
(174,000
)
Adjustments: Interest expense
235,000
235,000
Income tax expense
40,000
40,000
Depreciation and amortization
330,000
330,000
LIFO charge
10,000
10,000
Lease termination and impairment charges
35,000
35,000
Gain on debt retirements, net
(56,000
)
(56,000
)
Restructuring-related costs
100,000
100,000
Other
25,000
25,000
Adjusted EBITDA
$
515,000
$
545,000
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
$
(204,000
)
$
(174,000
)
Add back - income tax expense
40,000
40,000
Loss before income taxes
(164,000
)
(134,000
)
Adjustments: Amortization expense
120,000
120,000
LIFO charge
10,000
10,000
Gain on debt retirements, net
(56,000
)
(56,000
)
Restructuring-related costs
100,000
100,000
Adjusted income before adjusted income taxes
10,000
40,000
Adjusted income tax expense
3,000
11,000
Adjusted net income
$
7,000
$
29,000
Diluted adjusted net income per share
$
0.13
$
0.55
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191219005149/en/
INVESTORS: Byron Purcell (717) 975-5809 Or
investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
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