Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Rite Aid Corporation Reports Fiscal 2024 First Quarter Results By: Rite Aid Corporation via Business Wire June 29, 2023 at 07:00 AM EDT Revenues of $5.7 Billion, Compared to Prior Year Revenues of $6.0 Billion Retail Comparable Same Store Prescriptions Increased 4.7 Percent – Comparable Same Store Prescriptions, Excluding COVID Impact, Increased 7.4 Percent Net Loss of $306.7 Million Compared to Prior Year Net Loss of $110.2 Million – Increase Largely Attributable to a Goodwill Impairment Charge at Elixir Adjusted EBITDA of $91.7 Million, Compared to Prior Year Adjusted EBITDA of $100.1 Million Updates Fiscal 2024 Outlook Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended June 3, 2023. “Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the Retail Pharmacy Segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, interim chief executive officer. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year. Importantly, we made good progress on turnaround initiatives across key areas of the business, and we continue to believe we are on track to achieve Adjusted EBITDA growth in fiscal years 2025 and 2026.” Consolidated First Quarter Summary (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Net loss (306,718) (110,191) Adjusted EBITDA 91,715 100,130 For the first quarter, the Company reported a net loss of $306.7 million, or $5.56 loss per share, Adjusted net loss of $40.1 million, or $0.73 loss per share, and Adjusted EBITDA of $91.7 million, or 1.6 percent of revenues. Revenues for the quarter were $5.65 billion compared to revenues of $6.01 billion in the prior year’s quarter, largely due to the reduction in the Company’s Prescription Drug Plan (PDP) membership and the loss of commercial clients at Elixir. The reduction in revenues for the first quarter was partially offset by an increase in Retail Pharmacy Segment revenues, driven by an increase in pharmacy sales. First quarter net loss was $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. The increase in net loss is primarily due to a non-cash charge to write down Elixir goodwill, driven by performance in Elixir Insurance’s Individual Part D Plan and the Company’s decision to exit the Individual Part D market beginning in January 2024. Other factors contributing to the higher net loss were higher restructuring-related charges, a lower gain on sale of assets, higher interest expense and a decrease in Adjusted EBITDA. These were partially offset by decreased facility exit and impairment charges. Retail Pharmacy Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 4,492,329 $ 4,345,356 Adjusted EBITDA 70,049 73,682 Retail Pharmacy Segment revenues increased 3.4 percent over the prior year quarter driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID vaccine and testing revenue as well as store closures. Same store sales for the first quarter increased 8.4 percent over the prior year period, consisting of a 13.3 percent increase in pharmacy sales, partially offset by a 4.4 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 3.8 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 4.7 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations and tests, increased 7.4 percent, with same store maintenance prescriptions increasing 7.6 percent and other same store acute prescriptions increasing 6.8 percent. Prescription sales accounted for 73.9 percent of total drugstore sales. Total store count at the end of the first quarter was 2,284. Retail Pharmacy Segment Adjusted EBITDA was $70.0 million, or 1.6 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $73.7 million, or 1.7 percent of revenues. The decline in Adjusted EBITDA was due to a decrease in Adjusted EBITDA gross profit of $8.4 million, partially offset by decreased Adjusted EBITDA selling, general and administrative (SG&A) expenses of $4.8 million. Gross profit was negatively impacted by the decline in front-end sales, COVID vaccinations and testing and increased shrink expense, partially offset by an increase in prescriptions sold, better than expected recovery rates and the impact of generic drug settlements. SG&A expenses benefited from lower occupancy and other operating costs due to store closures and cost control initiatives. Pharmacy Services Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 1,196,154 $ 1,725,857 Adjusted EBITDA 21,666 26,448 Pharmacy Services Segment revenues were $1.2 billion for the quarter, a decrease of 30.7 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a decrease in Elixir Individual Part D Insurance membership due to a change in the Company’s pricing structure and loss of commercial clients, partially offset by increased utilization and higher drugs costs. Pharmacy Services Segment Adjusted EBITDA was $21.7 million, or 1.8 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $26.4 million, or 1.5 percent of revenues. The decrease in Adjusted EBITDA resulted from the lower membership as mentioned above and an increase in the medical loss ratio at Elixir Insurance, partially offset by improved procurement economics and reductions in SG&A expense. Outlook for Fiscal 2024 The following fiscal 2024 outlook is forward-looking information, reflecting the Company’s expectations as of June 29, 2023, and subject to a range of assumptions and uncertainties described below and in documents that the Company files or furnishes with the Securities and Exchange Commission (the “SEC”). Based on recent business trends, the Company is reducing total company Adjusted EBITDA guidance by $10 million to be between $330 million and $360 million. Pharmacy Services Segment Adjusted EBITDA expectations are being lowered by $10 million to be between $90 million and $100 million due to higher drug costs and a higher medical loss ratio at Elixir Insurance. Retail Pharmacy Segment Adjusted EBITDA remains unchanged and is expected to be between $240 million and $260 million, which is a result of tougher front-end sales trends balanced with cost savings. Total revenues are expected to be between $22.6 billion and $23.0 billion in fiscal 2024. Retail Pharmacy Segment revenue is expected to be between $18.0 billion and $18.3 billion, and Pharmacy Services Segment revenue is expected to be between $4.6 billion and $4.7 billion, net of any intercompany revenues to the Retail Pharmacy Segment. Net loss is expected to be between approximately $650 million and $680 million. Adjusted net loss per share is expected to be between $4.29 and $4.78. Capital expenditures are now expected to be approximately $175 million, with a focus on investments in technology, prescription file purchases and distribution center automation. Conference Call Broadcast Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be broadcast via the Internet at https://investors.riteaid.com. The telephone replay will be available beginning at 12:00 p.m. Eastern Time on June 29, 2023, and ending at 11:59 p.m. Eastern Time on July 29, 2023. To access the replay of the call, telephone (800) 770-2030 or (647) 362-9199 and enter the seven-digit reservation number 9029129. The webcast replay of the call will also be available at https://investors.riteaid.com starting at 12 p.m. Eastern Time today. The playback will be available until the Company’s next conference call. About Rite Aid Corporation Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,200 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of members nationwide. 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 2024; Rite Aid’s plan to reduce SG&A expense and capital expenditure spend; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the continued impact of negative trends in Rite Aid’s front end sales and gross profit in the retail segment; and any assumptions underlying any of the foregoing. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: risks related to the prolonged impact of the COVID-19 global pandemic and the emerging new variants, including the government responses thereto; the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations or behaviors of our customers, suppliers and business partners; our ability to successfully implement our turnaround program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation and government investigations, including, without limitation, those related to opioids, “usual and customary” pricing, government payer programs or other matters; our ability to monetize (and on reasonably available terms) the CMS receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, 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, new or disruptive business models or practices, and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, orders, regulations, policies and procedures; and our ability to partner and have relationships with health plans and health systems; and any requirement to incur additional impairment charges. These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission (the “SEC”), which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made. The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2024 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material. Rite Aid expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. All references to “Company” and “Rite Aid” as used throughout this release refer to Rite Aid Corporation and its affiliates. Reconciliation of Non-GAAP Financial Measures Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables. Rite Aid believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare its operating performance over multiple periods. Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility exit and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. See the attached tables for a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, and other items. See the attached tables for a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. The Company believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A serve as appropriate measures in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. The Company presents these non-GAAP financial measures in order to provide transparency to its investors because they are measures that management uses to assess both management performance and the financial performance of its operations and to allocate resources. In addition, management believes that these measures may assist investors with understanding and evaluating the Company’s initiatives to drive improved financial performance and enables investors to supplementally compare its operating performance with the operating performance of its competitors including with those of its competitors having different capital structures. While the Company has excluded certain of these items from historical non-GAAP financial measures, there is no guarantee that the items excluded from non-GAAP financial measures will not continue into future periods. For instance, the Company expects to continue to experience charges for facility exit and impairment charges and inventory write-downs related to store closures as the Company continues to complete a multi-year strategic initiative designed to improve overall performance. The Company also expects to continue to experience and report restructuring-related charges associated with continued execution of its strategic initiatives. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share or other non-GAAP measures should not be considered in isolation from, and are not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Company’s definition of these non-GAAP measures may not be comparable to similarly titled measurements reported by other companies, including companies in its industry. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited) June 3, 2023 March 4, 2023 ASSETS Current assets: Cash and cash equivalents $ 135,527 $ 157,151 Accounts receivable, net 1,392,348 1,149,958 Inventories, net of LIFO reserve of $547,432 and $539,932 1,950,413 1,900,744 Prepaid expenses and other current assets 171,175 93,194 Total current assets 3,649,463 3,301,047 Property, plant and equipment, net 892,540 907,771 Operating lease right-of-use assets 2,457,110 2,497,206 Goodwill 356,436 507,936 Other intangibles, net 244,883 250,112 Deferred tax assets 12,368 12,368 Other assets 37,618 50,922 Total assets $ 7,650,418 $ 7,527,362 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 6,060 $ 6,332 Accounts payable 1,505,741 1,494,611 Accrued salaries, wages and other current liabilities 772,058 724,529 Current portion of operating lease liabilities 488,712 502,403 Total current liabilities 2,772,571 2,727,875 Long-term debt, less current maturities 3,327,970 2,925,258 Long-term operating lease liabilities 2,345,277 2,372,943 Lease financing obligations, less current maturities 12,151 12,580 Other noncurrent liabilities 139,897 130,482 Total liabilities 8,597,866 8,169,138 Commitments and contingencies - - Stockholders' (deficit) equity: Common stock 56,708 56,629 Additional paid-in capital 5,918,931 5,917,964 Accumulated deficit (6,908,235 ) (6,601,517 ) Accumulated other comprehensive loss (14,852 ) (14,852 ) Total stockholders' (deficit) equity (947,448 ) (641,776 ) Total liabilities and stockholders' (deficit) equity $ 7,650,418 $ 7,527,362 RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Costs and expenses: Cost of revenues 4,474,636 4,817,854 Selling, general and administrative expenses 1,255,223 1,217,929 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Interest expense 65,220 48,119 Gain on sale of assets, net (8,193 ) (29,196 ) 5,958,387 6,121,277 Loss before income taxes (305,225 ) (106,694 ) Income tax expense 1,493 3,497 Net loss $ (306,718 ) $ (110,191 ) Basic and diluted loss per share: Numerator for loss per share: Net loss attributable to common stockholders - basic and diluted $ (306,718 ) $ (110,191 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Basic and diluted loss per share $ (5.56 ) $ (2.03 ) RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 OPERATING ACTIVITIES: Net loss $ (306,718 ) $ (110,191 ) Adjustments to reconcile to net cash used in operating activities: Depreciation and amortization 65,895 70,073 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - LIFO charge 7,500 - Change in allowances for uncollectible accounts receivable 4,004 3,763 Gain on sale of assets, net (8,193 ) (29,196 ) Stock-based compensation expense 1,081 3,334 Changes in operating assets and liabilities: Accounts receivable (246,838 ) (104,458 ) Inventories (57,169 ) (15,827 ) Accounts payable 20,558 (137,572 ) Operating lease right-of-use assets and operating lease liabilities (10,857 ) (14,812 ) Other assets (64,687 ) 751 Other liabilities 51,385 15,327 Net cash used in operating activities (372,538 ) (252,237 ) INVESTING ACTIVITIES: Payments for property, plant and equipment (35,891 ) (73,176 ) Intangible assets acquired (11,612 ) (12,248 ) Proceeds from dispositions of assets and investments 8,157 30,839 Net cash used in investing activities (39,346 ) (54,585 ) FINANCING ACTIVITIES: Net proceeds from revolver 400,000 291,000 Principal payments on long-term debt (1,009 ) (977 ) Change in zero balance cash accounts (8,272 ) 33,691 Financing fees paid for early debt redemption (51 ) - Payments for taxes related to net share settlement of equity awards (46 ) (553 ) Deferred financing costs paid (362 ) - Net cash provided by financing activities 390,260 323,161 (Decrease) increase in cash and cash equivalents (21,624 ) 16,339 Cash and cash equivalents, beginning of period 157,151 39,721 Cash and cash equivalents, end of period $ 135,527 $ 56,060 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Retail Pharmacy Segment Revenues (a) $ 4,492,329 $ 4,345,356 Cost of revenues (a) 3,405,466 3,247,999 Gross profit 1,086,863 1,097,357 LIFO charge 7,500 - FIFO gross profit 1,094,363 1,097,357 Adjusted EBITDA gross profit 1,098,268 1,106,652 Gross profit as a percentage of revenues 24.19 % 25.25 % LIFO charge as a percentage of revenues 0.17 % 0.00 % FIFO gross profit as a percentage of revenues 24.36 % 25.25 % Adjusted EBITDA gross profit as a percentage of revenues 24.45 % 25.47 % Selling, general and administrative expenses 1,172,573 1,117,214 Adjusted EBITDA selling, general and administrative expenses 1,028,219 1,032,970 Selling, general and administrative expenses as a percentage of revenues 26.10 % 25.71 % Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues 22.89 % 23.77 % Cash interest expense 61,767 45,244 Non-cash interest expense 3,453 2,875 Total interest expense 65,220 48,119 Adjusted EBITDA 70,049 73,682 Adjusted EBITDA as a percentage of revenues 1.56 % 1.70 % Pharmacy Services Segment Revenues (a) $ 1,196,154 $ 1,725,857 Cost of revenues (a) 1,104,491 1,626,485 Gross profit 91,663 99,372 Gross profit as a percentage of revenues 7.66 % 5.76 % Adjusted EBITDA 21,666 26,448 Adjusted EBITDA as a percentage of revenues 1.81 % 1.53 % (a) - Revenues and cost of revenues include $35,321 and $56,630 of inter-segment activity for the thirteen weeks ended June 3, 2023 and May 28, 2022, 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of net loss to adjusted EBITDA: Net loss $ (306,718 ) $ (110,191 ) Adjustments: Interest expense 65,220 48,119 Income tax expense 1,493 3,497 Depreciation and amortization 65,895 70,073 LIFO charge 7,500 - Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Stock-based compensation expense 1,081 3,334 Restructuring-related costs 78,130 22,646 Inventory write-downs related to store closings 2,057 7,955 Litigation and other contractual settlements 11,050 18,271 Gain on sale of assets, net (8,193 ) (29,196 ) Other 2,699 (949 ) Adjusted EBITDA $ 91,715 $ 100,130 Percent of revenues 1.62 % 1.66 % RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Net loss $ (306,718 ) $ (110,191 ) Add back - Income tax expense 1,493 3,497 Loss before income taxes (305,225 ) (106,694 ) Adjustments: Amortization expense 17,133 20,626 LIFO charge 7,500 - Goodwill and intangible asset impairment charges 151,500 - Restructuring-related costs 78,130 22,646 Litigation and other contractual settlements 11,050 18,271 Adjusted loss before income taxes (39,912 ) (45,151 ) Adjusted income tax expense (a) 195 1,490 Adjusted net loss $ (40,107 ) $ (46,641 ) Adjusted net loss per diluted share: Numerator for adjusted net loss per diluted share: Adjusted net loss $ (40,107 ) $ (46,641 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Net loss per diluted share $ (5.56 ) $ (2.03 ) Adjusted net loss per diluted share $ (0.73 ) $ (0.86 ) (a) The fiscal year 2024 and 2023 adjustments to the income tax provision include adjustments to the GAAP basis tax provision commensurate with non-GAAP adjustments and certain discrete tax items, when applicable, was used for the thirteen weeks ended June 3, 2023 and May 28, 2022. 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of adjusted EBITDA gross profit: Revenues $ 4,492,329 $ 4,345,356 Gross Profit 1,086,863 1,097,357 Addback: LIFO charge 7,500 - Depreciation and amortization (cost of goods sold portion only) 2,642 2,893 Other 1,263 6,402 Adjusted EBITDA gross profit $ 1,098,268 $ 1,106,652 Percent of revenues 24.45 % 25.47 % Reconciliation of adjusted EBITDA selling, general and administrative expenses: Revenues $ 4,492,329 $ 4,345,356 Selling, general and administrative expenses 1,172,573 1,117,214 Less: Depreciation and amortization (SG&A portion only) 52,827 53,215 Stock-based compensation expense 723 3,102 Restructuring-related costs 76,469 17,371 Litigation and other contractual settlements 11,050 9,952 Other 3,285 604 Adjusted EBITDA selling, general and administrative expenses $ 1,028,219 $ 1,032,970 Percent of revenues 22.89 % 23.77 % Adjusted EBITDA $ 70,049 $ 73,682 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Total Revenues $ 22,600,000 $ 23,000,000 Pharmacy Services Segment Revenues $ 4,550,000 $ 4,650,000 Gross Capital Expenditures $ 175,000 $ 175,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (678,500 ) $ (651,500 ) Adjustments: Interest expense 273,000 273,000 Income tax expense 2,000 5,000 Depreciation and amortization 280,000 280,000 LIFO charge 30,000 30,000 Facility exit and impairment charges 100,000 100,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Gain on sale of assets, net (9,000 ) (9,000 ) Other 15,000 15,000 Adjusted EBITDA $ 330,000 $ 360,000 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Net loss $ (678,500 ) $ (651,500 ) Add back - income tax expense 2,000 5,000 Loss before income taxes (676,500 ) (646,500 ) Adjustments: Amortization expense 68,000 68,000 LIFO charge 30,000 30,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Adjusted loss before adjusted income taxes (261,000 ) (231,000 ) Adjusted income tax expense 2,000 5,000 Adjusted net loss $ (263,000 ) $ (236,000 ) Diluted adjusted net loss per share $ (4.78 ) $ (4.29 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230628911516/en/Contacts INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com MEDIA: Joy Errico (203) 970-5559 press@riteaid.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Rite Aid Corporation Reports Fiscal 2024 First Quarter Results By: Rite Aid Corporation via Business Wire June 29, 2023 at 07:00 AM EDT Revenues of $5.7 Billion, Compared to Prior Year Revenues of $6.0 Billion Retail Comparable Same Store Prescriptions Increased 4.7 Percent – Comparable Same Store Prescriptions, Excluding COVID Impact, Increased 7.4 Percent Net Loss of $306.7 Million Compared to Prior Year Net Loss of $110.2 Million – Increase Largely Attributable to a Goodwill Impairment Charge at Elixir Adjusted EBITDA of $91.7 Million, Compared to Prior Year Adjusted EBITDA of $100.1 Million Updates Fiscal 2024 Outlook Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended June 3, 2023. “Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the Retail Pharmacy Segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, interim chief executive officer. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year. Importantly, we made good progress on turnaround initiatives across key areas of the business, and we continue to believe we are on track to achieve Adjusted EBITDA growth in fiscal years 2025 and 2026.” Consolidated First Quarter Summary (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Net loss (306,718) (110,191) Adjusted EBITDA 91,715 100,130 For the first quarter, the Company reported a net loss of $306.7 million, or $5.56 loss per share, Adjusted net loss of $40.1 million, or $0.73 loss per share, and Adjusted EBITDA of $91.7 million, or 1.6 percent of revenues. Revenues for the quarter were $5.65 billion compared to revenues of $6.01 billion in the prior year’s quarter, largely due to the reduction in the Company’s Prescription Drug Plan (PDP) membership and the loss of commercial clients at Elixir. The reduction in revenues for the first quarter was partially offset by an increase in Retail Pharmacy Segment revenues, driven by an increase in pharmacy sales. First quarter net loss was $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. The increase in net loss is primarily due to a non-cash charge to write down Elixir goodwill, driven by performance in Elixir Insurance’s Individual Part D Plan and the Company’s decision to exit the Individual Part D market beginning in January 2024. Other factors contributing to the higher net loss were higher restructuring-related charges, a lower gain on sale of assets, higher interest expense and a decrease in Adjusted EBITDA. These were partially offset by decreased facility exit and impairment charges. Retail Pharmacy Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 4,492,329 $ 4,345,356 Adjusted EBITDA 70,049 73,682 Retail Pharmacy Segment revenues increased 3.4 percent over the prior year quarter driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID vaccine and testing revenue as well as store closures. Same store sales for the first quarter increased 8.4 percent over the prior year period, consisting of a 13.3 percent increase in pharmacy sales, partially offset by a 4.4 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 3.8 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 4.7 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations and tests, increased 7.4 percent, with same store maintenance prescriptions increasing 7.6 percent and other same store acute prescriptions increasing 6.8 percent. Prescription sales accounted for 73.9 percent of total drugstore sales. Total store count at the end of the first quarter was 2,284. Retail Pharmacy Segment Adjusted EBITDA was $70.0 million, or 1.6 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $73.7 million, or 1.7 percent of revenues. The decline in Adjusted EBITDA was due to a decrease in Adjusted EBITDA gross profit of $8.4 million, partially offset by decreased Adjusted EBITDA selling, general and administrative (SG&A) expenses of $4.8 million. Gross profit was negatively impacted by the decline in front-end sales, COVID vaccinations and testing and increased shrink expense, partially offset by an increase in prescriptions sold, better than expected recovery rates and the impact of generic drug settlements. SG&A expenses benefited from lower occupancy and other operating costs due to store closures and cost control initiatives. Pharmacy Services Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 1,196,154 $ 1,725,857 Adjusted EBITDA 21,666 26,448 Pharmacy Services Segment revenues were $1.2 billion for the quarter, a decrease of 30.7 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a decrease in Elixir Individual Part D Insurance membership due to a change in the Company’s pricing structure and loss of commercial clients, partially offset by increased utilization and higher drugs costs. Pharmacy Services Segment Adjusted EBITDA was $21.7 million, or 1.8 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $26.4 million, or 1.5 percent of revenues. The decrease in Adjusted EBITDA resulted from the lower membership as mentioned above and an increase in the medical loss ratio at Elixir Insurance, partially offset by improved procurement economics and reductions in SG&A expense. Outlook for Fiscal 2024 The following fiscal 2024 outlook is forward-looking information, reflecting the Company’s expectations as of June 29, 2023, and subject to a range of assumptions and uncertainties described below and in documents that the Company files or furnishes with the Securities and Exchange Commission (the “SEC”). Based on recent business trends, the Company is reducing total company Adjusted EBITDA guidance by $10 million to be between $330 million and $360 million. Pharmacy Services Segment Adjusted EBITDA expectations are being lowered by $10 million to be between $90 million and $100 million due to higher drug costs and a higher medical loss ratio at Elixir Insurance. Retail Pharmacy Segment Adjusted EBITDA remains unchanged and is expected to be between $240 million and $260 million, which is a result of tougher front-end sales trends balanced with cost savings. Total revenues are expected to be between $22.6 billion and $23.0 billion in fiscal 2024. Retail Pharmacy Segment revenue is expected to be between $18.0 billion and $18.3 billion, and Pharmacy Services Segment revenue is expected to be between $4.6 billion and $4.7 billion, net of any intercompany revenues to the Retail Pharmacy Segment. Net loss is expected to be between approximately $650 million and $680 million. Adjusted net loss per share is expected to be between $4.29 and $4.78. Capital expenditures are now expected to be approximately $175 million, with a focus on investments in technology, prescription file purchases and distribution center automation. Conference Call Broadcast Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be broadcast via the Internet at https://investors.riteaid.com. The telephone replay will be available beginning at 12:00 p.m. Eastern Time on June 29, 2023, and ending at 11:59 p.m. Eastern Time on July 29, 2023. To access the replay of the call, telephone (800) 770-2030 or (647) 362-9199 and enter the seven-digit reservation number 9029129. The webcast replay of the call will also be available at https://investors.riteaid.com starting at 12 p.m. Eastern Time today. The playback will be available until the Company’s next conference call. About Rite Aid Corporation Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,200 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of members nationwide. 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 2024; Rite Aid’s plan to reduce SG&A expense and capital expenditure spend; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the continued impact of negative trends in Rite Aid’s front end sales and gross profit in the retail segment; and any assumptions underlying any of the foregoing. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: risks related to the prolonged impact of the COVID-19 global pandemic and the emerging new variants, including the government responses thereto; the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations or behaviors of our customers, suppliers and business partners; our ability to successfully implement our turnaround program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation and government investigations, including, without limitation, those related to opioids, “usual and customary” pricing, government payer programs or other matters; our ability to monetize (and on reasonably available terms) the CMS receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, 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, new or disruptive business models or practices, and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, orders, regulations, policies and procedures; and our ability to partner and have relationships with health plans and health systems; and any requirement to incur additional impairment charges. These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission (the “SEC”), which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made. The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2024 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material. Rite Aid expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. All references to “Company” and “Rite Aid” as used throughout this release refer to Rite Aid Corporation and its affiliates. Reconciliation of Non-GAAP Financial Measures Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables. Rite Aid believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare its operating performance over multiple periods. Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility exit and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. See the attached tables for a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, and other items. See the attached tables for a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. The Company believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A serve as appropriate measures in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. The Company presents these non-GAAP financial measures in order to provide transparency to its investors because they are measures that management uses to assess both management performance and the financial performance of its operations and to allocate resources. In addition, management believes that these measures may assist investors with understanding and evaluating the Company’s initiatives to drive improved financial performance and enables investors to supplementally compare its operating performance with the operating performance of its competitors including with those of its competitors having different capital structures. While the Company has excluded certain of these items from historical non-GAAP financial measures, there is no guarantee that the items excluded from non-GAAP financial measures will not continue into future periods. For instance, the Company expects to continue to experience charges for facility exit and impairment charges and inventory write-downs related to store closures as the Company continues to complete a multi-year strategic initiative designed to improve overall performance. The Company also expects to continue to experience and report restructuring-related charges associated with continued execution of its strategic initiatives. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share or other non-GAAP measures should not be considered in isolation from, and are not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Company’s definition of these non-GAAP measures may not be comparable to similarly titled measurements reported by other companies, including companies in its industry. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited) June 3, 2023 March 4, 2023 ASSETS Current assets: Cash and cash equivalents $ 135,527 $ 157,151 Accounts receivable, net 1,392,348 1,149,958 Inventories, net of LIFO reserve of $547,432 and $539,932 1,950,413 1,900,744 Prepaid expenses and other current assets 171,175 93,194 Total current assets 3,649,463 3,301,047 Property, plant and equipment, net 892,540 907,771 Operating lease right-of-use assets 2,457,110 2,497,206 Goodwill 356,436 507,936 Other intangibles, net 244,883 250,112 Deferred tax assets 12,368 12,368 Other assets 37,618 50,922 Total assets $ 7,650,418 $ 7,527,362 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 6,060 $ 6,332 Accounts payable 1,505,741 1,494,611 Accrued salaries, wages and other current liabilities 772,058 724,529 Current portion of operating lease liabilities 488,712 502,403 Total current liabilities 2,772,571 2,727,875 Long-term debt, less current maturities 3,327,970 2,925,258 Long-term operating lease liabilities 2,345,277 2,372,943 Lease financing obligations, less current maturities 12,151 12,580 Other noncurrent liabilities 139,897 130,482 Total liabilities 8,597,866 8,169,138 Commitments and contingencies - - Stockholders' (deficit) equity: Common stock 56,708 56,629 Additional paid-in capital 5,918,931 5,917,964 Accumulated deficit (6,908,235 ) (6,601,517 ) Accumulated other comprehensive loss (14,852 ) (14,852 ) Total stockholders' (deficit) equity (947,448 ) (641,776 ) Total liabilities and stockholders' (deficit) equity $ 7,650,418 $ 7,527,362 RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Costs and expenses: Cost of revenues 4,474,636 4,817,854 Selling, general and administrative expenses 1,255,223 1,217,929 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Interest expense 65,220 48,119 Gain on sale of assets, net (8,193 ) (29,196 ) 5,958,387 6,121,277 Loss before income taxes (305,225 ) (106,694 ) Income tax expense 1,493 3,497 Net loss $ (306,718 ) $ (110,191 ) Basic and diluted loss per share: Numerator for loss per share: Net loss attributable to common stockholders - basic and diluted $ (306,718 ) $ (110,191 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Basic and diluted loss per share $ (5.56 ) $ (2.03 ) RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 OPERATING ACTIVITIES: Net loss $ (306,718 ) $ (110,191 ) Adjustments to reconcile to net cash used in operating activities: Depreciation and amortization 65,895 70,073 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - LIFO charge 7,500 - Change in allowances for uncollectible accounts receivable 4,004 3,763 Gain on sale of assets, net (8,193 ) (29,196 ) Stock-based compensation expense 1,081 3,334 Changes in operating assets and liabilities: Accounts receivable (246,838 ) (104,458 ) Inventories (57,169 ) (15,827 ) Accounts payable 20,558 (137,572 ) Operating lease right-of-use assets and operating lease liabilities (10,857 ) (14,812 ) Other assets (64,687 ) 751 Other liabilities 51,385 15,327 Net cash used in operating activities (372,538 ) (252,237 ) INVESTING ACTIVITIES: Payments for property, plant and equipment (35,891 ) (73,176 ) Intangible assets acquired (11,612 ) (12,248 ) Proceeds from dispositions of assets and investments 8,157 30,839 Net cash used in investing activities (39,346 ) (54,585 ) FINANCING ACTIVITIES: Net proceeds from revolver 400,000 291,000 Principal payments on long-term debt (1,009 ) (977 ) Change in zero balance cash accounts (8,272 ) 33,691 Financing fees paid for early debt redemption (51 ) - Payments for taxes related to net share settlement of equity awards (46 ) (553 ) Deferred financing costs paid (362 ) - Net cash provided by financing activities 390,260 323,161 (Decrease) increase in cash and cash equivalents (21,624 ) 16,339 Cash and cash equivalents, beginning of period 157,151 39,721 Cash and cash equivalents, end of period $ 135,527 $ 56,060 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Retail Pharmacy Segment Revenues (a) $ 4,492,329 $ 4,345,356 Cost of revenues (a) 3,405,466 3,247,999 Gross profit 1,086,863 1,097,357 LIFO charge 7,500 - FIFO gross profit 1,094,363 1,097,357 Adjusted EBITDA gross profit 1,098,268 1,106,652 Gross profit as a percentage of revenues 24.19 % 25.25 % LIFO charge as a percentage of revenues 0.17 % 0.00 % FIFO gross profit as a percentage of revenues 24.36 % 25.25 % Adjusted EBITDA gross profit as a percentage of revenues 24.45 % 25.47 % Selling, general and administrative expenses 1,172,573 1,117,214 Adjusted EBITDA selling, general and administrative expenses 1,028,219 1,032,970 Selling, general and administrative expenses as a percentage of revenues 26.10 % 25.71 % Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues 22.89 % 23.77 % Cash interest expense 61,767 45,244 Non-cash interest expense 3,453 2,875 Total interest expense 65,220 48,119 Adjusted EBITDA 70,049 73,682 Adjusted EBITDA as a percentage of revenues 1.56 % 1.70 % Pharmacy Services Segment Revenues (a) $ 1,196,154 $ 1,725,857 Cost of revenues (a) 1,104,491 1,626,485 Gross profit 91,663 99,372 Gross profit as a percentage of revenues 7.66 % 5.76 % Adjusted EBITDA 21,666 26,448 Adjusted EBITDA as a percentage of revenues 1.81 % 1.53 % (a) - Revenues and cost of revenues include $35,321 and $56,630 of inter-segment activity for the thirteen weeks ended June 3, 2023 and May 28, 2022, 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of net loss to adjusted EBITDA: Net loss $ (306,718 ) $ (110,191 ) Adjustments: Interest expense 65,220 48,119 Income tax expense 1,493 3,497 Depreciation and amortization 65,895 70,073 LIFO charge 7,500 - Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Stock-based compensation expense 1,081 3,334 Restructuring-related costs 78,130 22,646 Inventory write-downs related to store closings 2,057 7,955 Litigation and other contractual settlements 11,050 18,271 Gain on sale of assets, net (8,193 ) (29,196 ) Other 2,699 (949 ) Adjusted EBITDA $ 91,715 $ 100,130 Percent of revenues 1.62 % 1.66 % RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Net loss $ (306,718 ) $ (110,191 ) Add back - Income tax expense 1,493 3,497 Loss before income taxes (305,225 ) (106,694 ) Adjustments: Amortization expense 17,133 20,626 LIFO charge 7,500 - Goodwill and intangible asset impairment charges 151,500 - Restructuring-related costs 78,130 22,646 Litigation and other contractual settlements 11,050 18,271 Adjusted loss before income taxes (39,912 ) (45,151 ) Adjusted income tax expense (a) 195 1,490 Adjusted net loss $ (40,107 ) $ (46,641 ) Adjusted net loss per diluted share: Numerator for adjusted net loss per diluted share: Adjusted net loss $ (40,107 ) $ (46,641 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Net loss per diluted share $ (5.56 ) $ (2.03 ) Adjusted net loss per diluted share $ (0.73 ) $ (0.86 ) (a) The fiscal year 2024 and 2023 adjustments to the income tax provision include adjustments to the GAAP basis tax provision commensurate with non-GAAP adjustments and certain discrete tax items, when applicable, was used for the thirteen weeks ended June 3, 2023 and May 28, 2022. 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of adjusted EBITDA gross profit: Revenues $ 4,492,329 $ 4,345,356 Gross Profit 1,086,863 1,097,357 Addback: LIFO charge 7,500 - Depreciation and amortization (cost of goods sold portion only) 2,642 2,893 Other 1,263 6,402 Adjusted EBITDA gross profit $ 1,098,268 $ 1,106,652 Percent of revenues 24.45 % 25.47 % Reconciliation of adjusted EBITDA selling, general and administrative expenses: Revenues $ 4,492,329 $ 4,345,356 Selling, general and administrative expenses 1,172,573 1,117,214 Less: Depreciation and amortization (SG&A portion only) 52,827 53,215 Stock-based compensation expense 723 3,102 Restructuring-related costs 76,469 17,371 Litigation and other contractual settlements 11,050 9,952 Other 3,285 604 Adjusted EBITDA selling, general and administrative expenses $ 1,028,219 $ 1,032,970 Percent of revenues 22.89 % 23.77 % Adjusted EBITDA $ 70,049 $ 73,682 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Total Revenues $ 22,600,000 $ 23,000,000 Pharmacy Services Segment Revenues $ 4,550,000 $ 4,650,000 Gross Capital Expenditures $ 175,000 $ 175,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (678,500 ) $ (651,500 ) Adjustments: Interest expense 273,000 273,000 Income tax expense 2,000 5,000 Depreciation and amortization 280,000 280,000 LIFO charge 30,000 30,000 Facility exit and impairment charges 100,000 100,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Gain on sale of assets, net (9,000 ) (9,000 ) Other 15,000 15,000 Adjusted EBITDA $ 330,000 $ 360,000 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Net loss $ (678,500 ) $ (651,500 ) Add back - income tax expense 2,000 5,000 Loss before income taxes (676,500 ) (646,500 ) Adjustments: Amortization expense 68,000 68,000 LIFO charge 30,000 30,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Adjusted loss before adjusted income taxes (261,000 ) (231,000 ) Adjusted income tax expense 2,000 5,000 Adjusted net loss $ (263,000 ) $ (236,000 ) Diluted adjusted net loss per share $ (4.78 ) $ (4.29 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230628911516/en/Contacts INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com MEDIA: Joy Errico (203) 970-5559 press@riteaid.com
Revenues of $5.7 Billion, Compared to Prior Year Revenues of $6.0 Billion Retail Comparable Same Store Prescriptions Increased 4.7 Percent – Comparable Same Store Prescriptions, Excluding COVID Impact, Increased 7.4 Percent Net Loss of $306.7 Million Compared to Prior Year Net Loss of $110.2 Million – Increase Largely Attributable to a Goodwill Impairment Charge at Elixir Adjusted EBITDA of $91.7 Million, Compared to Prior Year Adjusted EBITDA of $100.1 Million Updates Fiscal 2024 Outlook
Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended June 3, 2023. “Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the Retail Pharmacy Segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, interim chief executive officer. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year. Importantly, we made good progress on turnaround initiatives across key areas of the business, and we continue to believe we are on track to achieve Adjusted EBITDA growth in fiscal years 2025 and 2026.” Consolidated First Quarter Summary (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Net loss (306,718) (110,191) Adjusted EBITDA 91,715 100,130 For the first quarter, the Company reported a net loss of $306.7 million, or $5.56 loss per share, Adjusted net loss of $40.1 million, or $0.73 loss per share, and Adjusted EBITDA of $91.7 million, or 1.6 percent of revenues. Revenues for the quarter were $5.65 billion compared to revenues of $6.01 billion in the prior year’s quarter, largely due to the reduction in the Company’s Prescription Drug Plan (PDP) membership and the loss of commercial clients at Elixir. The reduction in revenues for the first quarter was partially offset by an increase in Retail Pharmacy Segment revenues, driven by an increase in pharmacy sales. First quarter net loss was $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. The increase in net loss is primarily due to a non-cash charge to write down Elixir goodwill, driven by performance in Elixir Insurance’s Individual Part D Plan and the Company’s decision to exit the Individual Part D market beginning in January 2024. Other factors contributing to the higher net loss were higher restructuring-related charges, a lower gain on sale of assets, higher interest expense and a decrease in Adjusted EBITDA. These were partially offset by decreased facility exit and impairment charges. Retail Pharmacy Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 4,492,329 $ 4,345,356 Adjusted EBITDA 70,049 73,682 Retail Pharmacy Segment revenues increased 3.4 percent over the prior year quarter driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID vaccine and testing revenue as well as store closures. Same store sales for the first quarter increased 8.4 percent over the prior year period, consisting of a 13.3 percent increase in pharmacy sales, partially offset by a 4.4 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 3.8 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 4.7 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations and tests, increased 7.4 percent, with same store maintenance prescriptions increasing 7.6 percent and other same store acute prescriptions increasing 6.8 percent. Prescription sales accounted for 73.9 percent of total drugstore sales. Total store count at the end of the first quarter was 2,284. Retail Pharmacy Segment Adjusted EBITDA was $70.0 million, or 1.6 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $73.7 million, or 1.7 percent of revenues. The decline in Adjusted EBITDA was due to a decrease in Adjusted EBITDA gross profit of $8.4 million, partially offset by decreased Adjusted EBITDA selling, general and administrative (SG&A) expenses of $4.8 million. Gross profit was negatively impacted by the decline in front-end sales, COVID vaccinations and testing and increased shrink expense, partially offset by an increase in prescriptions sold, better than expected recovery rates and the impact of generic drug settlements. SG&A expenses benefited from lower occupancy and other operating costs due to store closures and cost control initiatives. Pharmacy Services Segment (dollars in thousands) Thirteen Week Period Ended Thirteen Week Period Ended June 3, 2023 May 28, 2022 Revenues $ 1,196,154 $ 1,725,857 Adjusted EBITDA 21,666 26,448 Pharmacy Services Segment revenues were $1.2 billion for the quarter, a decrease of 30.7 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a decrease in Elixir Individual Part D Insurance membership due to a change in the Company’s pricing structure and loss of commercial clients, partially offset by increased utilization and higher drugs costs. Pharmacy Services Segment Adjusted EBITDA was $21.7 million, or 1.8 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $26.4 million, or 1.5 percent of revenues. The decrease in Adjusted EBITDA resulted from the lower membership as mentioned above and an increase in the medical loss ratio at Elixir Insurance, partially offset by improved procurement economics and reductions in SG&A expense. Outlook for Fiscal 2024 The following fiscal 2024 outlook is forward-looking information, reflecting the Company’s expectations as of June 29, 2023, and subject to a range of assumptions and uncertainties described below and in documents that the Company files or furnishes with the Securities and Exchange Commission (the “SEC”). Based on recent business trends, the Company is reducing total company Adjusted EBITDA guidance by $10 million to be between $330 million and $360 million. Pharmacy Services Segment Adjusted EBITDA expectations are being lowered by $10 million to be between $90 million and $100 million due to higher drug costs and a higher medical loss ratio at Elixir Insurance. Retail Pharmacy Segment Adjusted EBITDA remains unchanged and is expected to be between $240 million and $260 million, which is a result of tougher front-end sales trends balanced with cost savings. Total revenues are expected to be between $22.6 billion and $23.0 billion in fiscal 2024. Retail Pharmacy Segment revenue is expected to be between $18.0 billion and $18.3 billion, and Pharmacy Services Segment revenue is expected to be between $4.6 billion and $4.7 billion, net of any intercompany revenues to the Retail Pharmacy Segment. Net loss is expected to be between approximately $650 million and $680 million. Adjusted net loss per share is expected to be between $4.29 and $4.78. Capital expenditures are now expected to be approximately $175 million, with a focus on investments in technology, prescription file purchases and distribution center automation. Conference Call Broadcast Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be broadcast via the Internet at https://investors.riteaid.com. The telephone replay will be available beginning at 12:00 p.m. Eastern Time on June 29, 2023, and ending at 11:59 p.m. Eastern Time on July 29, 2023. To access the replay of the call, telephone (800) 770-2030 or (647) 362-9199 and enter the seven-digit reservation number 9029129. The webcast replay of the call will also be available at https://investors.riteaid.com starting at 12 p.m. Eastern Time today. The playback will be available until the Company’s next conference call. About Rite Aid Corporation Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,200 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of members nationwide. 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 2024; Rite Aid’s plan to reduce SG&A expense and capital expenditure spend; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the continued impact of negative trends in Rite Aid’s front end sales and gross profit in the retail segment; and any assumptions underlying any of the foregoing. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: risks related to the prolonged impact of the COVID-19 global pandemic and the emerging new variants, including the government responses thereto; the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations or behaviors of our customers, suppliers and business partners; our ability to successfully implement our turnaround program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation and government investigations, including, without limitation, those related to opioids, “usual and customary” pricing, government payer programs or other matters; our ability to monetize (and on reasonably available terms) the CMS receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, 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, new or disruptive business models or practices, and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, orders, regulations, policies and procedures; and our ability to partner and have relationships with health plans and health systems; and any requirement to incur additional impairment charges. These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission (the “SEC”), which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made. The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2024 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material. Rite Aid expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. All references to “Company” and “Rite Aid” as used throughout this release refer to Rite Aid Corporation and its affiliates. Reconciliation of Non-GAAP Financial Measures Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables. Rite Aid believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare its operating performance over multiple periods. Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility exit and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. See the attached tables for a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, and other items. See the attached tables for a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. The Company believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A serve as appropriate measures in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors. The Company presents these non-GAAP financial measures in order to provide transparency to its investors because they are measures that management uses to assess both management performance and the financial performance of its operations and to allocate resources. In addition, management believes that these measures may assist investors with understanding and evaluating the Company’s initiatives to drive improved financial performance and enables investors to supplementally compare its operating performance with the operating performance of its competitors including with those of its competitors having different capital structures. While the Company has excluded certain of these items from historical non-GAAP financial measures, there is no guarantee that the items excluded from non-GAAP financial measures will not continue into future periods. For instance, the Company expects to continue to experience charges for facility exit and impairment charges and inventory write-downs related to store closures as the Company continues to complete a multi-year strategic initiative designed to improve overall performance. The Company also expects to continue to experience and report restructuring-related charges associated with continued execution of its strategic initiatives. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share or other non-GAAP measures should not be considered in isolation from, and are not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Company’s definition of these non-GAAP measures may not be comparable to similarly titled measurements reported by other companies, including companies in its industry. RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (unaudited) June 3, 2023 March 4, 2023 ASSETS Current assets: Cash and cash equivalents $ 135,527 $ 157,151 Accounts receivable, net 1,392,348 1,149,958 Inventories, net of LIFO reserve of $547,432 and $539,932 1,950,413 1,900,744 Prepaid expenses and other current assets 171,175 93,194 Total current assets 3,649,463 3,301,047 Property, plant and equipment, net 892,540 907,771 Operating lease right-of-use assets 2,457,110 2,497,206 Goodwill 356,436 507,936 Other intangibles, net 244,883 250,112 Deferred tax assets 12,368 12,368 Other assets 37,618 50,922 Total assets $ 7,650,418 $ 7,527,362 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current liabilities: Current maturities of long-term debt and lease financing obligations $ 6,060 $ 6,332 Accounts payable 1,505,741 1,494,611 Accrued salaries, wages and other current liabilities 772,058 724,529 Current portion of operating lease liabilities 488,712 502,403 Total current liabilities 2,772,571 2,727,875 Long-term debt, less current maturities 3,327,970 2,925,258 Long-term operating lease liabilities 2,345,277 2,372,943 Lease financing obligations, less current maturities 12,151 12,580 Other noncurrent liabilities 139,897 130,482 Total liabilities 8,597,866 8,169,138 Commitments and contingencies - - Stockholders' (deficit) equity: Common stock 56,708 56,629 Additional paid-in capital 5,918,931 5,917,964 Accumulated deficit (6,908,235 ) (6,601,517 ) Accumulated other comprehensive loss (14,852 ) (14,852 ) Total stockholders' (deficit) equity (947,448 ) (641,776 ) Total liabilities and stockholders' (deficit) equity $ 7,650,418 $ 7,527,362 RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Revenues $ 5,653,162 $ 6,014,583 Costs and expenses: Cost of revenues 4,474,636 4,817,854 Selling, general and administrative expenses 1,255,223 1,217,929 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Interest expense 65,220 48,119 Gain on sale of assets, net (8,193 ) (29,196 ) 5,958,387 6,121,277 Loss before income taxes (305,225 ) (106,694 ) Income tax expense 1,493 3,497 Net loss $ (306,718 ) $ (110,191 ) Basic and diluted loss per share: Numerator for loss per share: Net loss attributable to common stockholders - basic and diluted $ (306,718 ) $ (110,191 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Basic and diluted loss per share $ (5.56 ) $ (2.03 ) RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 OPERATING ACTIVITIES: Net loss $ (306,718 ) $ (110,191 ) Adjustments to reconcile to net cash used in operating activities: Depreciation and amortization 65,895 70,073 Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - LIFO charge 7,500 - Change in allowances for uncollectible accounts receivable 4,004 3,763 Gain on sale of assets, net (8,193 ) (29,196 ) Stock-based compensation expense 1,081 3,334 Changes in operating assets and liabilities: Accounts receivable (246,838 ) (104,458 ) Inventories (57,169 ) (15,827 ) Accounts payable 20,558 (137,572 ) Operating lease right-of-use assets and operating lease liabilities (10,857 ) (14,812 ) Other assets (64,687 ) 751 Other liabilities 51,385 15,327 Net cash used in operating activities (372,538 ) (252,237 ) INVESTING ACTIVITIES: Payments for property, plant and equipment (35,891 ) (73,176 ) Intangible assets acquired (11,612 ) (12,248 ) Proceeds from dispositions of assets and investments 8,157 30,839 Net cash used in investing activities (39,346 ) (54,585 ) FINANCING ACTIVITIES: Net proceeds from revolver 400,000 291,000 Principal payments on long-term debt (1,009 ) (977 ) Change in zero balance cash accounts (8,272 ) 33,691 Financing fees paid for early debt redemption (51 ) - Payments for taxes related to net share settlement of equity awards (46 ) (553 ) Deferred financing costs paid (362 ) - Net cash provided by financing activities 390,260 323,161 (Decrease) increase in cash and cash equivalents (21,624 ) 16,339 Cash and cash equivalents, beginning of period 157,151 39,721 Cash and cash equivalents, end of period $ 135,527 $ 56,060 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION (Dollars in thousands) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Retail Pharmacy Segment Revenues (a) $ 4,492,329 $ 4,345,356 Cost of revenues (a) 3,405,466 3,247,999 Gross profit 1,086,863 1,097,357 LIFO charge 7,500 - FIFO gross profit 1,094,363 1,097,357 Adjusted EBITDA gross profit 1,098,268 1,106,652 Gross profit as a percentage of revenues 24.19 % 25.25 % LIFO charge as a percentage of revenues 0.17 % 0.00 % FIFO gross profit as a percentage of revenues 24.36 % 25.25 % Adjusted EBITDA gross profit as a percentage of revenues 24.45 % 25.47 % Selling, general and administrative expenses 1,172,573 1,117,214 Adjusted EBITDA selling, general and administrative expenses 1,028,219 1,032,970 Selling, general and administrative expenses as a percentage of revenues 26.10 % 25.71 % Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues 22.89 % 23.77 % Cash interest expense 61,767 45,244 Non-cash interest expense 3,453 2,875 Total interest expense 65,220 48,119 Adjusted EBITDA 70,049 73,682 Adjusted EBITDA as a percentage of revenues 1.56 % 1.70 % Pharmacy Services Segment Revenues (a) $ 1,196,154 $ 1,725,857 Cost of revenues (a) 1,104,491 1,626,485 Gross profit 91,663 99,372 Gross profit as a percentage of revenues 7.66 % 5.76 % Adjusted EBITDA 21,666 26,448 Adjusted EBITDA as a percentage of revenues 1.81 % 1.53 % (a) - Revenues and cost of revenues include $35,321 and $56,630 of inter-segment activity for the thirteen weeks ended June 3, 2023 and May 28, 2022, 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of net loss to adjusted EBITDA: Net loss $ (306,718 ) $ (110,191 ) Adjustments: Interest expense 65,220 48,119 Income tax expense 1,493 3,497 Depreciation and amortization 65,895 70,073 LIFO charge 7,500 - Facility exit and impairment charges 20,001 66,571 Goodwill and intangible asset impairment charges 151,500 - Stock-based compensation expense 1,081 3,334 Restructuring-related costs 78,130 22,646 Inventory write-downs related to store closings 2,057 7,955 Litigation and other contractual settlements 11,050 18,271 Gain on sale of assets, net (8,193 ) (29,196 ) Other 2,699 (949 ) Adjusted EBITDA $ 91,715 $ 100,130 Percent of revenues 1.62 % 1.66 % RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ADJUSTED NET LOSS (Dollars in thousands, except per share amounts) (unaudited) Thirteen weeks endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Net loss $ (306,718 ) $ (110,191 ) Add back - Income tax expense 1,493 3,497 Loss before income taxes (305,225 ) (106,694 ) Adjustments: Amortization expense 17,133 20,626 LIFO charge 7,500 - Goodwill and intangible asset impairment charges 151,500 - Restructuring-related costs 78,130 22,646 Litigation and other contractual settlements 11,050 18,271 Adjusted loss before income taxes (39,912 ) (45,151 ) Adjusted income tax expense (a) 195 1,490 Adjusted net loss $ (40,107 ) $ (46,641 ) Adjusted net loss per diluted share: Numerator for adjusted net loss per diluted share: Adjusted net loss $ (40,107 ) $ (46,641 ) Denominator: Basic and diluted weighted average shares 55,179 54,348 Net loss per diluted share $ (5.56 ) $ (2.03 ) Adjusted net loss per diluted share $ (0.73 ) $ (0.86 ) (a) The fiscal year 2024 and 2023 adjustments to the income tax provision include adjustments to the GAAP basis tax provision commensurate with non-GAAP adjustments and certain discrete tax items, when applicable, was used for the thirteen weeks ended June 3, 2023 and May 28, 2022. 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 endedJune 3, 2023 Thirteen weeks endedMay 28, 2022 Reconciliation of adjusted EBITDA gross profit: Revenues $ 4,492,329 $ 4,345,356 Gross Profit 1,086,863 1,097,357 Addback: LIFO charge 7,500 - Depreciation and amortization (cost of goods sold portion only) 2,642 2,893 Other 1,263 6,402 Adjusted EBITDA gross profit $ 1,098,268 $ 1,106,652 Percent of revenues 24.45 % 25.47 % Reconciliation of adjusted EBITDA selling, general and administrative expenses: Revenues $ 4,492,329 $ 4,345,356 Selling, general and administrative expenses 1,172,573 1,117,214 Less: Depreciation and amortization (SG&A portion only) 52,827 53,215 Stock-based compensation expense 723 3,102 Restructuring-related costs 76,469 17,371 Litigation and other contractual settlements 11,050 9,952 Other 3,285 604 Adjusted EBITDA selling, general and administrative expenses $ 1,028,219 $ 1,032,970 Percent of revenues 22.89 % 23.77 % Adjusted EBITDA $ 70,049 $ 73,682 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Total Revenues $ 22,600,000 $ 23,000,000 Pharmacy Services Segment Revenues $ 4,550,000 $ 4,650,000 Gross Capital Expenditures $ 175,000 $ 175,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (678,500 ) $ (651,500 ) Adjustments: Interest expense 273,000 273,000 Income tax expense 2,000 5,000 Depreciation and amortization 280,000 280,000 LIFO charge 30,000 30,000 Facility exit and impairment charges 100,000 100,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Gain on sale of assets, net (9,000 ) (9,000 ) Other 15,000 15,000 Adjusted EBITDA $ 330,000 $ 360,000 RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE YEAR ENDING MARCH 2, 2024 (In thousands) (unaudited) Guidance Range Low High Net loss $ (678,500 ) $ (651,500 ) Add back - income tax expense 2,000 5,000 Loss before income taxes (676,500 ) (646,500 ) Adjustments: Amortization expense 68,000 68,000 LIFO charge 30,000 30,000 Goodwill and intangible asset impairment charges 151,500 151,500 Restructuring-related costs 155,000 155,000 Litigation and other contractual settlements 11,000 11,000 Adjusted loss before adjusted income taxes (261,000 ) (231,000 ) Adjusted income tax expense 2,000 5,000 Adjusted net loss $ (263,000 ) $ (236,000 ) Diluted adjusted net loss per share $ (4.78 ) $ (4.29 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20230628911516/en/
INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com MEDIA: Joy Errico (203) 970-5559 press@riteaid.com