RAD
$21.67
Rite Aid
$1.89
9.56%
Earnings Details
3rd Quarter November 2020
Thursday, December 17, 2020 7:00:00 AM
Tweet Share Watch
Summary

Rite Aid Beats

Rite Aid (RAD) reported 3rd Quarter November 2020 earnings of $0.40 per share on revenue of $6.1 billion. The consensus estimate was a loss of $0.01 per share on revenue of $5.9 billion. The Earnings Whisper number was $0.06 per share. Revenue grew 12.0% on a year-over-year basis.

The company said it expects fiscal 2021 earnings of $0.45 to $0.85 per share on revenue of $23.9 billion to $24.2 billion. The company's previous guidance was for results to range from a loss of $0.67 per share to earnings of $0.09 per share on revenue of $23.5 million to $24.0 million and the current consensus estimate is a loss of $0.07 per share on revenue of $23.82 billion for the year ending February 28, 2021.

Rite Aid Corp operates retail drugstore chains in the United States.

Results
Reported Earnings
$0.40
Earnings Whisper
$0.06
Consensus Estimate
($0.01)
Reported Revenue
$6.12 Bil
Revenue Estimate
$5.85 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rite Aid Corporation Reports Fiscal 2021 Third Quarter Results

  • Revenues Increased 12.0 Percent – Driven by Growth in Both Retail Pharmacy and Pharmacy Services Segments
  • Increased Market Share in both Front-End and Pharmacy
  • Third Quarter Net Income from Continuing Operations of $4.3 Million or $0.08 Per Share, Compared to the Prior Year Third Quarter Net Income of $52.3 Million or $0.98 Per Share
  • Third Quarter Adjusted Net Income from Continuing Operations of $21.6 Million or $0.40 Per Share, Compared to the Prior Year Third Quarter Adjusted Net Income of $29.1 Million or $0.54 Per Share
  • Third Quarter Adjusted EBITDA from Continuing Operations of $137.4 Million, Compared to the Prior Year Adjusted EBITDA of $158.1 Million
  • Company Narrows Fiscal 2021 Guidance

CAMP HILL, Pa.--(BUSINESS WIRE)--Rite Aid Corporation (NYSE: RAD) today reported operating results for its third fiscal quarter ended November 28, 2020.

For the third quarter, the company reported net income from continuing operations of $4.3 million, or $0.08 income per share, Adjusted net income from continuing operations of $21.6 million, or $0.40 income per share, and Adjusted EBITDA from continuing operations of $137.4 million, or 2.3 percent of revenues.

“We are pleased with our third quarter performance as we continue to grow our business and achieve major physical and digital milestones through our RxEvolution strategy,” said Heyward Donigan, president and chief executive officer, Rite Aid. “We officially launched our new brand and logo, made substantial progress in evolving our merchandise mix to an assortment that best supports whole health, refreshed over 700 store exteriors, opened the first three new Store of the Future prototypes and began the integration of our two legacy PBMs. On the digital side, we launched a completely modernized Rite Aid online experience and mobile app and are set to launch our new member portal at Elixir.”

“Our teams are working hard to serve our customers during these challenging times. We have administered over one million COVID-19 tests and will be partnering with the CDC to help administer COVID-19 vaccines in our communities. I am so proud of our 50,000 associates and the strategic progress we’re making in our journey to revolutionize our industry and elevate our role as an indispensable healthcare provider. We are accelerating the key initiatives that support our strategy, and we will continue to deliver the operational excellence needed to achieve strong results as we generate cash flow, reduce debt and improve our leverage ratio.”

Consolidated Third Quarter Summary

(dollars in thousands)

Thirteen Week Period Ended

Thirty-nine Week Period Ended

 

 

 November 28,
2020

 

 November 30,
2019

 

 November 28,
2020

 

 November 30,
2019

Revenues from continuing operations

 $

6,117,038 

 $

5,462,298 

 $

18,126,384 

 $

16,201,151 

Net income (loss) from continuing operations

 

4,324 

 

52,286 

 

(81,575) 

 

(125,758) 

Adjusted EBITDA from continuing operations

137,405 

158,090 

396,400 

402,627 

Revenues from continuing operations for the quarter were $6.12 billion compared to revenues from continuing operations of $5.46 billion in the prior year’s quarter. The increase in revenues was driven by growth at both the Retail Pharmacy and Pharmacy Services segments.

Net income from continuing operations was $4.3 million, or $0.08 per share, compared to last year’s third quarter net income from continuing operations of $52.3 million, or $0.98 per share. The decline in net income was due primarily to a $55.7 million gain on debt retirements in the prior year and a decrease in Adjusted EBITDA, partially offset by lower restructuring-related costs and a higher gain on sale of assets resulting from the sale-leaseback of the company’s Perryman, MD distribution center.

Adjusted EBITDA from continuing operations was $137.4 million, or 2.3 percent of revenues, compared to last year’s third quarter Adjusted EBITDA of $158.1 million, or 2.9 percent of revenues.

Retail Pharmacy Segment

(dollars in thousands)

Thirteen Week Period Ended

Thirty-nine Week Period Ended

 

 

 November 28,
2020

 

 November 30,
2019

 

 November 28,
2020

 

 November 30,
2019

Revenues from continuing operations

 $

4,109,592 

 $

3,909,946 

 $

12,250,775 

 $

11,622,858 

Adjusted EBITDA from continuing operations

88,557 

108,579 

273,879 

285,260 

Retail Pharmacy Segment revenues from continuing operations increased 5.1 percent over the prior year quarter. Same store sales from continuing operations for the third quarter increased 4.3 percent over the prior year period, consisting of a 6.1 percent increase in pharmacy sales and a 0.7 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 0.3 percent. Front-end sales benefited from increases in immunity, first aid and paper products, offset by decreases in over-the-counter products related to cough cold and flu and Halloween candy sales. The company increased its retail script share1, and also increased its front-end market share in both dollars and in unit sales2. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 3.1 percent over the prior year period driven by increases in maintenance prescriptions, supported by personalized Medication Therapy Management interventions and home deliveries. Flu immunizations increased by 28 percent over the prior year period, which offset a 19 percent decline in acute scripts related to cough cold and flu. In total, acute prescriptions decreased by 1.9 percent.

Retail Pharmacy Segment Adjusted EBITDA from continuing operations was $88.6 million, or 2.2 percent of revenues, for the third quarter compared to last year’s third quarter Adjusted EBITDA from continuing operations of $108.6 million or 2.8 percent of revenues. Gross profit dollars increased due to increased revenues, but gross margin rate declined due to reimbursement rate pressure and the impact of the reduction in over-the-counter front-end sales. Selling, general and administrative (SG&A) expenses improved as a percentage of sales, but SG&A dollars increased due to incremental costs associated with the COVID-19 pandemic and the absence of Transition Services Agreement income in the current quarter, as services under that agreement have been completed.

1 – Source: IQVIA RxInsight. Share based on 30-day equivalent scripts in Rite Aid operating area.

2 – Source: IRI. Excludes tobacco, cigarettes, greeting cards and online sales. For drug store channel during Rite Aid’s third fiscal quarter.

Pharmacy Services Segment

(dollars in thousands)

Thirteen Week Period Ended

Thirty-nine Week Period Ended

 

 

 November 28,
2020

 

 November 30,
2019

 

 November 28,
2020

 

 November 30,
2019

Revenues from continuing operations

 $

2,084,402 

 $

1,613,109 

 $

6,100,026 

 $

4,758,470 

Adjusted EBITDA from continuing operations

 

48,848 

49,511 

 

 122,521 

117,367 

Pharmacy Services Segment revenues were $2.1 billion, an increase of 29.2 percent compared to the prior year period. The increase in revenues was primarily the result of an increase of 252,000 Medicare Part D members.

Pharmacy Services Segment Adjusted EBITDA from continuing operations was $48.8 million, or 2.3 percent of revenues, for the third quarter and was flat to last year’s third quarter Adjusted EBITDA from continuing operations of $49.5 million, or 3.1 percent of revenues. The increase in revenues was offset by a decline in Adjusted EBITDA as a percent of revenues. The Pharmacy Services Segment benefited from reductions in payroll and indirect spend overall, but these benefits were offset by increased drug costs within Medicare Part D and SG&A spend related to an increase in Medicare Part D members. The Company expects Medicare Part D membership to decrease in fiscal 2022, but expects these members to be more profitable.

Outlook for Fiscal 2021

Rite Aid Corporation is narrowing its fiscal 2021 guidance. The company’s key guidance assumptions are as follows:

  • Benefits from initiatives to drive retail sales growth, offset by the impact of a less severe cough, cold and flu season on front end over-the-counter sales and related prescriptions;
  • A reduction in Medicare Part D membership beginning January 1;
  • Strong expense control across both the Retail Pharmacy and Pharmacy Services segments, offset by additional retail operating expenses caused by the recent increase in COVID-19 cases across many of our markets; and
  • Continued improvements in pharmacy network management at Elixir.

Rite Aid Corporation expects revenues to be between $23.9 billion and $24.2 billion in fiscal 2021 with same store sales expected to range from an increase of 3.5 percent to an increase of 4.5 percent over fiscal 2020.

Net loss is expected to be between $114 million and $89 million.

Adjusted EBITDA is expected to be between $490 million and $520 million.

Adjusted net income per share is expected to be between $0.45 and $0.85.

Capital expenditures are expected to be approximately $325 million, which includes our previously announced acquisition of Bartell Drugs.

Free cash flow is expected to be between $50 million and $100 million.

Conference Call Broadcast

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be broadcast via the Internet at https://www.riteaid.com/corporate/investor-relations/presentations. The telephone replay will be available beginning at 12 p.m. Eastern Time on Thursday, Dec. 17, 2020 and ending at 11:59 p.m. Eastern Time on Jan. 16, 2021. To access the replay of the call, telephone (800) 585-8367 or (416) 621-4642 and enter the seven-digit reservation number 3338667. The webcast replay of the call will also be available at https://www.riteaid.com/corporate/investor-relations/presentations starting at 12 p.m. Eastern Time today. The playback will be available until the company’s next conference call.

About Rite Aid Corporation

Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to more than 1.6 million Americans daily. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,400 retail pharmacy locations across 18 states. Through Elixir, we provide pharmacy benefits and services to approximately 4 million members nationwide. For more information, www.riteaid.com.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this release that are not historical, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding Rite Aid's outlook and guidance for fiscal 2021, the ability to generate positive free cash flows in fiscal 2021; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the ability to accelerate key initiatives and improve the operating performance of our stores; and any assumptions underlying any of the foregoing. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations of our customers, suppliers and business partners; our ability to successfully implement our RxEvolution strategy; our high level of indebtedness and our ability to satisfy our obligations and the other covenants contained in our debt agreements; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions, civil unrest (including any resulting store closures, damage, or loss of inventory), as well as other factors specific to the markets in which we operate; the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our organizational restructuring within our anticipated timeframe, if at all; outcomes of legal and regulatory matters; and our ability to partner and have relationships with health plans and health systems.

These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K, in Item 1A (Risk Factors) of our Quarterly Report on Form 10-Q filed on July 2, 2020 and in other documents that we file or furnish with the Securities and Exchange Commission (the “SEC”), which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.

The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2021 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact (such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns), including the reinstitution of more stringent regulations (including mandatory stay at home orders, the availability and rollout of vaccines to treat the virus), and how quickly and to what extent normal economic and operating conditions can resume. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

Reconciliation of Non-GAAP Financial Measures

Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation settlement, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs and the WBA merger termination fee.

Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, the WBA merger termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation settlement, severance, restructuring-related costs and costs related to facility closures and gain or loss on sale of assets). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis.

RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
 
 
 
November 28, 2020February 29, 2020
ASSETS
Current assets:
Cash and cash equivalents

$

50,813

 

$

218,180

 

Accounts receivable, net

 

1,770,691

 

 

1,286,785

 

Inventories, net of LIFO reserve of $509,337 and $539,640

 

1,971,250

 

 

1,921,604

 

Prepaid expenses and other current assets

 

116,463

 

 

181,794

 

Current assets held for sale

 

42,231

 

 

92,278

 

Total current assets

 

3,951,448

 

 

3,700,641

 

Property, plant and equipment, net

 

1,045,682

 

 

1,215,838

 

Operating lease right-of-use assets

 

2,892,445

 

 

2,903,256

 

Goodwill

 

1,108,136

 

 

1,108,136

 

Other intangibles, net

 

291,013

 

 

359,491

 

Deferred tax assets

 

16,680

 

 

16,680

 

Other assets

 

123,999

 

 

148,327

 

Total assets

$

9,429,403

 

$

9,452,369

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations

$

7,097

 

$

8,840

 

Accounts payable

 

1,482,521

 

 

1,484,081

 

Accrued salaries, wages and other current liabilities

 

676,582

 

 

746,318

 

Current portion of operating lease liabilities

 

489,867

 

 

490,161

 

Current liabilities held for sale

 

-

 

 

37,063

 

Total current liabilities

 

2,656,067

 

 

2,766,463

 

Long-term debt, less current maturities

 

3,200,577

 

 

3,077,268

 

Long-term operating lease liabilities

 

2,676,153

 

 

2,710,347

 

Lease financing obligations, less current maturities

 

17,098

 

 

19,326

 

Other noncurrent liabilities

 

268,973

 

 

204,438

 

Total liabilities

 

8,818,868

 

 

8,777,842

 

 
Commitments and contingencies

 

-

 

 

-

 

Stockholders' equity:
Common stock

 

55,251

 

 

54,716

 

Additional paid-in capital

 

5,895,709

 

 

5,890,903

 

Accumulated deficit

 

(5,294,608

)

 

(5,222,194

)

Accumulated other comprehensive loss

 

(45,817

)

 

(48,898

)

Total stockholders' equity

 

610,535

 

 

674,527

 

Total liabilities and stockholders' equity

$

9,429,403

 

$

9,452,369

 

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
Revenues

$

6,117,038

 

$

5,462,298

 

Costs and expenses:
Cost of revenues

 

4,913,939

 

 

4,273,323

 

Selling, general and administrative expenses

 

1,156,355

 

 

1,134,854

 

Lease termination and impairment charges

 

7,453

 

 

166

 

Interest expense

 

50,835

 

 

57,856

 

Gain on debt retirements, net

 

-

 

 

(55,692

)

Gain on sale of assets, net

 

(16,305

)

 

(1,371

)

 

 

6,112,277

 

 

5,409,136

 

 
Income from continuing operations before income taxes

 

4,761

 

 

53,162

 

Income tax expense

 

437

 

 

876

 

Net income from continuing operations

 

4,324

 

 

52,286

 

Net loss from discontinued operations, net of tax

 

-

 

 

(801

)

Net income

$

4,324

 

$

51,485

 

 
 
 
Basic and diluted income per share:
 
Numerator for income per share:
Net income from continuing operations attributable to common
stockholders - basic and diluted

$

4,324

 

$

52,286

 

Net loss from discontinued operations attributable to
common stockholders - basic and diluted

 

-

 

 

(801

)

Income attributable to common stockholders - basic and diluted

$

4,324

 

$

51,485

 

 
 
 
Denominator:
Basic weighted average shares

 

53,744

 

 

53,310

 

Outstanding options and restricted shares, net

 

335

 

 

274

 

Diluted weighted average shares

 

54,079

 

 

53,584

 

 
Basic income per share
Continuing operations

$

0.08

 

$

0.98

 

Discontinued operations

$

-

 

$

(0.01

)

Net basic income per share

$

0.08

 

$

0.97

 

 
Diluted income per share
Continuing operations

$

0.08

 

$

0.98

 

Discontinued operations

$

-

 

$

(0.02

)

Net diluted income per share

$

0.08

 

$

0.96

 

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
Revenues

$

18,126,384

 

$

16,201,151

 

Costs and expenses:
Cost of revenues

 

14,564,621

 

 

12,741,014

 

Selling, general and administrative expenses

 

3,469,644

 

 

3,433,036

 

Lease termination and impairment charges

 

22,734

 

 

2,115

 

Intangible asset impairment charges

 

29,852

 

 

-

 

Interest expense

 

151,389

 

 

176,228

 

Gain on debt modifications and retirements, net

 

(5,274

)

 

(55,692

)

Gain on sale of assets, net

 

(17,473

)

 

(5,670

)

 

 

18,215,493

 

 

16,291,031

 

 
Loss from continuing operations before income taxes

 

(89,109

)

 

(89,880

)

Income tax (benefit) expense

 

(7,534

)

 

35,878

 

Net loss from continuing operations

 

(81,575

)

 

(125,758

)

Net income (loss) from discontinued operations, net of tax

 

9,161

 

 

(1,695

)

Net loss

$

(72,414

)

$

(127,453

)

 
 
 
Basic and diluted loss per share:
 
Numerator for loss per share:
Net loss from continuing operations attributable to common
stockholders - basic and diluted

$

(81,575

)

$

(125,758

)

Net income (loss) from discontinued operations attributable to
common stockholders - basic and diluted

 

9,161

 

 

(1,695

)

Loss attributable to common stockholders - basic and diluted

$

(72,414

)

$

(127,453

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

53,600

 

 

53,159

 

 
Basic and diluted loss per share
Continuing operations

$

(1.52

)

$

(2.37

)

Discontinued operations

$

0.17

 

$

(0.03

)

Net basic and diluted loss per share

$

(1.35

)

$

(2.40

)

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
 
 
OPERATING ACTIVITIES:
Net income

$

4,324

 

$

51,485

 

Net loss from discontinued operations, net of tax

 

-

 

 

(801

)

Net income from continuing operations

$

4,324

 

$

52,286

 

Adjustments to reconcile to net cash provided by operating activities of continuing operations:
Depreciation and amortization

 

83,336

 

 

82,007

 

Lease termination and impairment charges

 

7,453

 

 

166

 

LIFO credit

 

(9,487

)

 

(7,440

)

Gain on sale of assets, net

 

(16,305

)

 

(1,371

)

Stock-based compensation expense

 

2,867

 

 

3,506

 

Gain on debt retirements, net

 

-

 

 

(55,692

)

Changes in operating assets and liabilities:
Accounts receivable

 

128,777

 

 

252,767

 

Inventories

 

(24,005

)

 

19,333

 

Accounts payable

 

(488

)

 

47,378

 

Operating lease right-of-use assets and operating lease liabilities

 

(6,826

)

 

(12,179

)

Other assets

 

(4,248

)

 

1,959

 

Other liabilities

 

57,351

 

 

40,993

 

Net cash provided by operating activities of continuing operations

 

222,749

 

 

423,713

 

INVESTING ACTIVITIES:
Payments for property, plant and equipment

 

(64,304

)

 

(45,075

)

Intangible assets acquired

 

(6,131

)

 

(17,727

)

Proceeds from dispositions of assets and investments

 

3,176

 

 

51,548

 

Proceeds from sale-leaseback transactions

 

80,551

 

 

-

 

Net cash provided by (used in) investing activities of continuing operations

 

13,292

 

 

(11,254

)

FINANCING ACTIVITIES:
Net payments to revolver

 

(309,000

)

 

(115,000

)

Principal payments on long-term debt

 

(1,194

)

 

(101,251

)

Change in zero balance cash accounts

 

32,374

 

 

(66,461

)

Payments for taxes related to net share settlement of equity awards

 

(64

)

 

(587

)

Financing fees paid for early debt redemption

 

-

 

 

(518

)

Deferred financing costs paid

 

(74

)

 

-

 

Net cash used in financing activities of continuing operations

 

(277,958

)

 

(283,817

)

Cash flows from discontinued operations:
Operating activities of discontinued operations

 

-

 

 

(4,876

)

Investing activities of discontinued operations

 

-

 

 

23,551

 

Net cash provided by discontinued operations

 

-

 

 

18,675

 

(Decrease) increase in cash and cash equivalents

 

(41,917

)

 

147,317

 

Cash and cash equivalents, beginning of period

 

92,730

 

 

142,181

 

Cash and cash equivalents, end of period

$

50,813

 

$

289,498

 

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
 
 
OPERATING ACTIVITIES:
Net loss

$

(72,414

)

$

(127,453

)

Net income (loss) from discontinued operations, net of tax

 

9,161

 

 

(1,695

)

Net loss from continuing operations

$

(81,575

)

$

(125,758

)

Adjustments to reconcile to net cash (used in) provided by operating activities of continuing operations:
Depreciation and amortization

 

249,556

 

 

248,977

 

Lease termination and impairment charges

 

22,734

 

 

2,115

 

Intangible asset impairment charges

 

29,852

 

 

-

 

LIFO (credit) charge

 

(30,303

)

 

7,553

 

Gain on sale of assets, net

 

(17,473

)

 

(5,670

)

Stock-based compensation expense

 

8,677

 

 

13,598

 

Gain on debt modifications and retirements, net

 

(5,274

)

 

(55,692

)

Changes in deferred taxes

 

-

 

 

26,979

 

Changes in operating assets and liabilities:
Accounts receivable

 

(507,778

)

 

99,498

 

Inventories

 

(19,532

)

 

(92,657

)

Accounts payable

 

1,460

 

 

(38,245

)

Operating lease right-of-use assets and operating lease liabilities

 

(25,319

)

 

22,803

 

Other assets

 

75,265

 

 

(42,715

)

Other liabilities

 

45,867

 

 

32,889

 

Net cash (used in) provided by operating activities of continuing operations

 

(253,843

)

 

93,675

 

INVESTING ACTIVITIES:
Payments for property, plant and equipment

 

(127,389

)

 

(129,135

)

Intangible assets acquired

 

(28,703

)

 

(33,435

)

Proceeds from insured loss

 

12,500

 

 

-

 

Proceeds from dispositions of assets and investments

 

9,086

 

 

55,971

 

Proceeds from sale-leaseback transactions

 

89,012

 

 

-

 

Net cash used in investing activities of continuing operations

 

(45,494

)

 

(106,599

)

FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt

 

849,918

 

 

-

 

Net proceeds from revolver

 

341,000

 

 

260,000

 

Principal payments on long-term debt

 

(1,057,376

)

 

(104,702

)

Change in zero balance cash accounts

 

5,545

 

 

(11,749

)

Payments for taxes related to net share settlement of equity awards

 

(2,165

)

 

(1,573

)

Financing fees paid for early debt redemption

 

(2,399

)

 

(518

)

Deferred financing costs paid

 

(14,674

)

 

(315

)

Net cash provided by financing activities of continuing operations

 

119,849

 

 

141,143

 

Cash flows from discontinued operations:
Operating activities of discontinued operations

 

(82,189

)

 

(7,148

)

Investing activities of discontinued operations

 

94,310

 

 

24,074

 

Net cash provided by discontinued operations

 

12,121

 

 

16,926

 

(Decrease) increase in cash and cash equivalents

 

(167,367

)

 

145,145

 

Cash and cash equivalents, beginning of period

 

218,180

 

 

144,353

 

Cash and cash equivalents, end of period

$

50,813

 

$

289,498

 

 

RITE AID CORPORATION AND SUBSIDIARIES

 
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
 
Retail Pharmacy Segment
Revenues from continuing operations (a)

$

4,109,592

 

$

3,909,946

 

Cost of revenues from continuing operations (a)

 

3,029,884

 

 

2,839,094

 

Gross profit from continuing operations

 

1,079,708

 

 

1,070,852

 

LIFO credit from continuing operations

 

(9,487

)

 

(7,440

)

FIFO gross profit from continuing operations

 

1,070,221

 

 

1,063,412

 

Adjusted EBITDA gross profit from continuing operations

 

1,072,547

 

 

1,065,523

 

 
Gross profit as a percentage of revenues - continuing operations

 

26.27

%

 

27.39

%

LIFO credit as a percentage of revenues - continuing operations

 

-0.23

%

 

-0.19

%

FIFO gross profit as a percentage of revenues - continuing operations

 

26.04

%

 

27.20

%

Adjusted EBITDA gross profit as a percentage of revenues - continuing operations

 

26.10

%

 

27.25

%

 
Selling, general and administrative expenses from continuing operations

 

1,067,027

 

 

1,044,236

 

Adjusted EBITDA selling, general and administrative expenses from continuing operations

 

983,990

 

 

956,944

 

Selling, general and administrative expenses as a percentage of
revenues - continuing operations

 

25.96

%

 

26.71

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of
revenues - continuing operations

 

23.94

%

 

24.47

%

 
Cash interest expense

 

47,500

 

 

54,068

 

Non-cash interest expense

 

3,335

 

 

3,788

 

Total interest expense

 

50,835

 

 

57,856

 

Interest expense - continuing operations

 

50,835

 

 

57,856

 

Interest expense - discontinued operations

 

-

 

 

-

 

 
Adjusted EBITDA - continuing operations

 

88,557

 

 

108,579

 

Adjusted EBITDA as a percentage of revenues - continuing operations

 

2.15

%

 

2.78

%

 
 
Pharmacy Services Segment
Revenues (a)

$

2,084,402

 

$

1,613,109

 

Cost of revenues (a)

 

1,961,011

 

 

1,494,986

 

Gross profit

 

123,391

 

 

118,123

 

 
Gross profit as a percentage of revenues

 

5.92

%

 

7.32

%

 
Adjusted EBITDA

 

48,848

 

 

49,511

 

Adjusted EBITDA as a percentage of revenues

 

2.34

%

 

3.07

%

 
(a) -Revenues and cost of revenues include $76,956 and $60,757 of inter-segment activity for the thirteen weeks ended November 28, 2020 and November 30, 2019, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
 
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
 
Retail Pharmacy Segment
Revenues from continuing operations (a)

$

12,250,775

 

$

11,622,858

 

Cost of revenues from continuing operations (a)

 

9,027,618

 

 

8,489,067

 

Gross profit from continuing operations

 

3,223,157

 

 

3,133,791

 

LIFO (credit) charge from continuing operations

 

(30,303

)

 

7,553

 

FIFO gross profit from continuing operations

 

3,192,854

 

 

3,141,344

 

Adjusted EBITDA gross profit from continuing operations

 

3,227,196

 

 

3,151,043

 

 
Gross profit as a percentage of revenues - continuing operations

 

26.31

%

 

26.96

%

LIFO (credit) charge as a percentage of revenues - continuing operations

 

-0.25

%

 

0.06

%

FIFO gross profit as a percentage of revenues - continuing operations

 

26.06

%

 

27.03

%

Adjusted EBITDA gross profit as a percentage of revenues - continuing operations

 

26.34

%

 

27.11

%

 
Selling, general and administrative expenses from continuing operations

 

3,206,078

 

 

3,160,379

 

Adjusted EBITDA selling, general and administrative expenses from continuing operations

 

2,953,317

 

 

2,865,783

 

Selling, general and administrative expenses as a percentage of
revenues - continuing operations

 

26.17

%

 

27.19

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of
revenues - continuing operations

 

24.11

%

 

24.66

%

 
Cash interest expense

 

141,635

 

 

164,982

 

Non-cash interest expense

 

9,754

 

 

11,246

 

Total interest expense

 

151,389

 

 

176,228

 

Interest expense - continuing operations

 

151,389

 

 

176,228

 

Interest expense - discontinued operations

 

-

 

 

-

 

 
Adjusted EBITDA - continuing operations

 

273,879

 

 

285,260

 

Adjusted EBITDA as a percentage of revenues - continuing operations

 

2.24

%

 

2.45

%

 
 
Pharmacy Services Segment
Revenues (a)

$

6,100,026

 

$

4,758,470

 

Cost of revenues (a)

 

5,761,420

 

 

4,432,124

 

Gross profit

 

338,606

 

 

326,346

 

 
Gross profit as a percentage of revenues

 

5.55

%

 

6.86

%

 
Adjusted EBITDA

 

122,521

 

 

117,367

 

Adjusted EBITDA as a percentage of revenues

 

2.01

%

 

2.47

%

 
(a) -Revenues and cost of revenues include $224,417 and $180,177 of inter-segment activity for the thirty-nine weeks ended November 28, 2020 and November 30, 2019, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
 
 
Reconciliation of net income to adjusted EBITDA:
Net income - continuing operations

$

4,324

 

$

52,286

 

Adjustments:
Interest expense

 

50,835

 

 

57,856

 

Income tax expense

 

437

 

 

876

 

Depreciation and amortization

 

83,336

 

 

82,007

 

LIFO credit

 

(9,487

)

 

(7,440

)

Lease termination and impairment charges

 

7,453

 

 

166

 

Gain on debt retirements, net

 

-

 

 

(55,692

)

Merger and Acquisition-related costs

 

1,136

 

 

-

 

Stock-based compensation expense

 

2,867

 

 

3,506

 

Restructuring-related costs

 

12,175

 

 

25,275

 

Inventory write-downs related to store closings

 

704

 

 

93

 

Gain on sale of assets, net

 

(16,305

)

 

(1,371

)

Other

 

(70

)

 

528

 

Adjusted EBITDA - continuing operations

$

137,405

 

$

158,090

 

Percent of revenues - continuing operations

 

2.25

%

 

2.89

%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss - continuing operations

$

(81,575

)

$

(125,758

)

Adjustments:
Interest expense

 

151,389

 

 

176,228

 

Income tax (benefit) expense

 

(7,534

)

 

35,878

 

Depreciation and amortization

 

249,556

 

 

248,977

 

LIFO (credit) charge

 

(30,303

)

 

7,553

 

Lease termination and impairment charges

 

22,734

 

 

2,115

 

Intangible asset impairment charges

 

29,852

 

 

-

 

Gain on debt modifications and retirements, net

 

(5,274

)

 

(55,692

)

Merger and Acquisition-related costs

 

1,136

 

 

3,599

 

Stock-based compensation expense

 

8,677

 

 

13,598

 

Restructuring-related costs

 

71,096

 

 

93,770

 

Inventory write-downs related to store closings

 

2,596

 

 

4,083

 

Gain on sale of assets, net

 

(17,473

)

 

(5,670

)

Other

 

1,523

 

 

3,946

 

Adjusted EBITDA - continuing operations

$

396,400

 

$

402,627

 

Percent of revenues - continuing operations

 

2.19

%

 

2.49

%

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
 
Net income from continuing operations

$

4,324

 

$

52,286

 

Add back - Income tax expense

 

437

 

 

876

 

Income before income taxes - continuing operations

 

4,761

 

 

53,162

 

 
Adjustments:
Amortization expense

 

21,236

 

 

24,920

 

LIFO credit

 

(9,487

)

 

(7,440

)

Gain on debt retirements, net

 

-

 

 

(55,692

)

Merger and Acquisition-related costs

 

1,136

 

 

-

 

Restructuring-related costs

 

12,175

 

 

25,275

 

 
Adjusted income before income taxes - continuing operations

 

29,821

 

 

40,225

 

 
Adjusted income tax expense (a)

 

8,243

 

 

11,090

 

Adjusted net income from continuing operations

$

21,578

 

$

29,135

 

 
Adjusted net income per diluted share - continuing operations:
 
Numerator for adjusted net income per diluted share:
Adjusted net income from continuing operations

$

21,578

 

$

29,135

 

 
 
 
Denominator:
Basic weighted average shares

 

53,744

 

 

53,310

 

Outstanding options and restricted shares, net

 

335

 

 

274

 

Diluted weighted average shares

 

54,079

 

 

53,584

 

 
Net income from continuing operations per diluted
share - continuing operations

$

0.08

 

$

0.98

 

 
 
Adjusted net income per diluted share - continuing operations

$

0.40

 

$

0.54

 

(a)

The fiscal year 2021 and 2020 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the thirteen weeks ended November 28, 2020 and November 30, 2019, respectively.

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
 
Net loss from continuing operations

$

(81,575

)

$

(125,758

)

Add back - Income tax (benefit) expense

 

(7,534

)

 

35,878

 

Loss before income taxes - continuing operations

 

(89,109

)

 

(89,880

)

 
Adjustments:
Amortization expense

 

68,351

 

 

79,176

 

LIFO (credit) charge

 

(30,303

)

 

7,553

 

Intangible asset impairment charges

 

29,852

 

 

-

 

Gain on debt modifications and retirements, net

 

(5,274

)

 

(55,692

)

Merger and Acquisition-related costs

 

1,136

 

 

3,599

 

Restructuring-related costs

 

71,096

 

 

93,770

 

 
Adjusted income before income taxes - continuing operations

 

45,749

 

 

38,526

 

 
Adjusted income tax expense (a)

 

12,645

 

 

10,622

 

Adjusted net income from continuing operations

$

33,104

 

$

27,904

 

 
Adjusted net income per diluted share - continuing operations:
 
Numerator for adjusted net income per diluted share:
Adjusted net income from continuing operations

$

33,104

 

$

27,904

 

 
 
 
Denominator:
Basic weighted average shares

 

53,600

 

 

53,159

 

Outstanding options and restricted shares, net

 

754

 

 

775

 

Diluted weighted average shares

 

54,354

 

 

53,934

 

 
Net loss from continuing operations per diluted
share - continuing operations

$

(1.52

)

$

(2.37

)

 
 
Adjusted net income per diluted share - continuing operations

$

0.61

 

$

0.52

 

 

(a)

The fiscal year 2021 and 2020 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the thirty-nine weeks ended November 28, 2020 and November 30, 2019, respectively.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended
November 28, 2020
Thirteen weeks ended
November 30, 2019
 
 
Reconciliation of adjusted EBITDA gross profit:
Revenues

$

4,109,592

 

$

3,909,946

 

Gross Profit

 

1,079,708

 

 

1,070,852

 

Addback:
LIFO credit

 

(9,487

)

 

(7,440

)

Depreciation and amortization (cost of goods sold portion only)

 

1,945

 

 

2,070

 

Other

 

381

 

 

41

 

Adjusted EBITDA gross profit - continuing operations

$

1,072,547

 

$

1,065,523

 

Percent of revenues - continuing operations

 

26.10

%

 

27.25

%

 
 
 
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
Revenues

$

4,109,592

 

$

3,909,946

 

Selling, general and administrative expenses

 

1,067,027

 

 

1,044,236

 

Less:
Depreciation and amortization (SG&A portion only)

 

67,641

 

 

65,267

 

Stock-based compensation expense

 

2,429

 

 

2,976

 

Merger and Acquisition-related costs

 

1,136

 

 

-

 

Restructuring-related costs

 

11,605

 

 

18,415

 

Other

 

226

 

 

634

 

Adjusted EBITDA selling, general and administrative
expenses - continuing operations

$

983,990

 

$

956,944

 

Percent of revenues - continuing operations

 

23.94

%

 

24.47

%

 
 
 
Adjusted EBITDA - continuing operations

$

88,557

 

$

108,579

 

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT
(In thousands)
(unaudited)
 
 
 
Thirty-nine weeks ended
November 28, 2020
Thirty-nine weeks ended
November 30, 2019
 
 
Reconciliation of adjusted EBITDA gross profit:
Revenues

$

12,250,775

 

$

11,622,858

 

Gross Profit

 

3,223,157

 

 

3,133,791

 

Addback:
LIFO (credit) charge

 

(30,303

)

 

7,553

 

Depreciation and amortization (cost of goods sold portion only)

 

6,775

 

 

6,538

 

Restructuring-related costs - SKU optimization charges

 

25,763

 

 

-

 

Other

 

1,804

 

 

3,161

 

Adjusted EBITDA gross profit - continuing operations

$

3,227,196

 

$

3,151,043

 

Percent of revenues - continuing operations

 

26.34

%

 

27.11

%

 
 
 
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
Revenues

$

12,250,775

 

$

11,622,858

 

Selling, general and administrative expenses

 

3,206,078

 

 

3,160,379

 

Less:
Depreciation and amortization (SG&A portion only)

 

199,434

 

 

195,281

 

Stock-based compensation expense

 

7,785

 

 

12,673

 

Merger and Acquisition-related costs

 

1,136

 

 

2,828

 

Restructuring-related costs

 

41,992

 

 

78,851

 

Other

 

2,414

 

 

4,963

 

Adjusted EBITDA selling, general and administrative
expenses - continuing operations

$

2,953,317

 

$

2,865,783

 

Percent of revenues - continuing operations

 

24.11

%

 

24.66

%

 
 
 
Adjusted EBITDA - continuing operations

$

273,879

 

$

285,260

 

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
 
 
Guidance Range
LowHigh
 
Total Revenues

$

23,900,000

 

$

24,200,000

 

 
PBM Revenues

$

7,850,000

 

$

7,950,000

 

 
Same store sales

 

3.50

%

 

4.50

%

 
Gross Capital Expenditures

$

325,000

 

$

325,000

 

 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss

$

(113,800

)

$

(88,800

)

Adjustments:
Interest expense

 

202,000

 

 

202,000

 

Income tax benefit

 

(12,000

)

 

(7,000

)

Depreciation and amortization

 

332,000

 

 

332,000

 

LIFO credit

 

(39,000

)

 

(39,000

)

Lease termination and impairment charges

 

57,000

 

 

57,000

 

Intangible asset impairment charges

 

30,000

 

 

30,000

 

Gain on debt modifications and retirements, net

 

(5,300

)

 

(5,300

)

Merger and Acquisition-related costs

 

1,200

 

 

1,200

 

Restructuring-related costs

 

80,000

 

 

80,000

 

Gain on sale of assets, net

 

(60,100

)

 

(60,100

)

Other

 

18,000

 

 

18,000

 

Adjusted EBITDA

$

490,000

 

$

520,000

 

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET INCOME GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
 
 
 
Guidance Range
LowHigh
 
Net loss

$

(113,800

)

$

(88,800

)

Add back - income tax benefit

 

(12,000

)

 

(7,000

)

Loss before income taxes

 

(125,800

)

 

(95,800

)

 
Adjustments:
Amortization expense

 

92,000

 

 

92,000

 

LIFO credit

 

(39,000

)

 

(39,000

)

Intangible asset impairment charges

 

30,000

 

 

30,000

 

Gain on debt modifications and retirements, net

 

(5,300

)

 

(5,300

)

Merger and Acquisition-related costs

 

1,200

 

 

1,200

 

Restructuring-related costs

 

80,000

 

 

80,000

 

 
Adjusted income before adjusted income taxes

 

33,100

 

 

63,100

 

 
Adjusted income tax expense

 

9,000

 

 

17,000

 

Adjusted net income

$

24,100

 

$

46,100

 

 
 
Diluted adjusted net income per share

$

0.45

 

$

0.85

 

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE TO FREE CASH FLOW
GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
 
 
 
Guidance Range
LowHigh
 
Adjusted EBITDA

$

490,000

 

$

520,000

 

Cash interest expense

 

(190,000

)

 

(190,000

)

Restructuring-related costs

 

(80,000

)

 

(80,000

)

Closed store rent

 

(25,000

)

 

(25,000

)

Working capital benefit

 

180,000

 

 

200,000

 

Cash flow from operations

 

375,000

 

 

425,000

 

Gross capital expenditures

 

(325,000

)

 

(325,000

)

Free cash flow

$

50,000

 

$

100,000

 

 

INVESTORS:
Trent Kruse
(717) 975-3710
investor@riteaid.com

MEDIA:
Christopher Savarese
(717) 975-5718
Christopher.Savarese@riteaid.com

Source: Rite Aid Corporation