RAD
$9.13
Rite Aid
$.56
6.53%
Earnings Details
2nd Quarter August 2019
Thursday, September 26, 2019 7:00:00 AM
Tweet Share Watch
Summary

Rite Aid Beats

Rite Aid (RAD) reported 2nd Quarter August 2019 earnings of $0.12 per share on revenue of $5.4 billion. The consensus earnings estimate was $0.08 per share on revenue of $5.4 billion. The Earnings Whisper number was $0.10 per share. Revenue fell 1.0% compared to the same quarter a year ago.

The company said it now expects fiscal 2020 results to range from breakeven to earnings of $0.56 per share and continues to expect revenue of $21.50 billion to $21.90 billion. The company's previous guidance was for results to range from a loss of $0.14 per share to earnings of $0.72 per share and the current consensus estimate is a loss of $0.04 per share on revenue of $21.69 billion for the year ending February 29, 2020.

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

Results
Reported Earnings
$0.12
Earnings Whisper
$0.10
Consensus Estimate
$0.08
Reported Revenue
$5.37 Bil
Revenue Estimate
$5.42 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rite Aid Reports Fiscal 2020 Second Quarter Results

• Same Store Prescription Volume Grew 2.7 Percent

• Second Quarter Net Loss from Continuing Operations of $78.7 Million or $1.48 Per Share, Compared to the Prior Year Second Quarter Net Loss of $352.3 Million or $6.67 Per Share

• Second Quarter Adjusted Net Income from Continuing Operations of $6.3 Million or $0.12 Per Share, Compared to the Prior Year Second Quarter Adjusted Net Loss of $7.9 Million or $0.15 Per Share

• Second Quarter Adjusted EBITDA from Continuing Operations of $134.2 Million, Compared to the Prior Year Second Quarter Adjusted EBITDA of $148.6 Million

• Rite Aid Narrows Fiscal 2020 Outlook for Adjusted EBITDA

CAMP HILL, Pa.--(BUSINESS WIRE)--Rite Aid Corporation (NYSE: RAD) today reported operating results for its second fiscal quarter ended August 31, 2019.

For the second quarter, the company reported net loss from continuing operations of $78.7 million, or $1.48 per share, Adjusted net income from continuing operations of $6.3 million, or $0.12 per share, and Adjusted EBITDA from continuing operations of $134.2 million, or 2.5 percent of revenues.

“After my first few weeks as CEO, I’m optimistic about our future because I believe in the Rite Aid brand and the opportunity we have to deliver innovative experiences as a health and wellness destination, even as we recognize the challenges ahead,” said Rite Aid CEO Heyward Donigan. “I’m also encouraged by the market opportunities for EnvisionRxOptions as health plans and employers rethink their pharmacy services partnerships. In talking with many associates during my first 45 days, we know there is important work in front of us, and we are acting with urgency to finalize a strategic plan that positions our company to meet its full potential. We look forward to sharing the key elements of this plan in the coming months.”

“As we continue these efforts, I’d like to thank our Rite Aid team for their hard work during the second quarter,” Donigan continued. “Our Adjusted EBITDA results exceeded our plan driven by prescription count growth and strong expense control. This gives us important momentum for our future, and I look forward to working closely with our team to deliver a solid finish to our fiscal year and position Rite Aid as an innovative leader in our industry.”

Second Quarter Summary

Revenues from continuing operations for the quarter were $5.37 billion compared to revenues from continuing operations of $5.42 billion in the prior year’s quarter. Retail Pharmacy Segment revenues were $3.85 billion and decreased 1.6 percent compared to the prior year period due to a reduction in store count, partially offset by an increase in same store sales. Revenues in the Pharmacy Services Segment were $1.58 billion, an increase of 1.1 percent compared to the prior year period, which was due to an increase in Medicare Part D revenue.

Retail Pharmacy Segment same store sales from continuing operations for the second quarter increased 0.4 percent over the prior year period, consisting of a 1.5 percent increase in pharmacy sales and a 1.8 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 0.6 percent. Pharmacy sales were negatively impacted by approximately 276 basis points as a result of new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 2.7 percent over the prior year period resulting primarily from the company’s continued emphasis on driving clinical services. Prescription sales from continuing operations accounted for 67.2 percent of total drugstore sales.

Net loss from continuing operations was $78.7 million or $1.48 per share compared to last year’s second quarter net loss from continuing operations of $352.3 million or $6.67 per share. The decrease in net loss was due primarily to $282.6 million of goodwill and intangible asset impairment charges, net of tax, in the prior year period and a reduction in lease termination and impairment charges. These items were partially offset by higher restructuring-related costs, higher income tax expense and a decrease in Adjusted EBITDA.

Adjusted EBITDA from continuing operations was $134.2 million or 2.5 percent of revenues for the second quarter compared to Adjusted EBITDA from continuing operations of $148.6 million or 2.7 percent of revenues for the same period last year, a decrease of $14.4 million. The Retail Pharmacy Segment Adjusted EBITDA from continuing operations decreased $10.9 million compared to the prior year due primarily to weaker front end gross profit, resulting from a decline in front end same store sales, and a reduction in Transition Service Agreement fee income from Walgreens Boots Alliance. These items were partially offset by lower salaries and benefit expense related to the company’s recent corporate restructuring and strong labor and expense control at the stores. The Pharmacy Services Segment Adjusted EBITDA benefited from improvements in pharmacy network performance but decreased $3.4 million over the prior year period due to operating investments to support current year and future growth.

In the second quarter, the company remodeled 24 stores and relocated one store, bringing the total number of wellness stores chainwide to 1,805. Additionally, the company closed 2 stores, resulting in a total store count of 2,464 at the end of the second quarter.

Outlook for Fiscal 2020

Rite Aid is updating its fiscal 2020 outlook, including narrowing its guidance for Adjusted EBITDA. The company’s outlook assumes continued prescription count growth, improvements in generic drug costs and strong SG&A expense control, offset by a decline in prescription reimbursement rates. The fiscal 2020 guidance also assumes continued improvements in pharmacy network performance in the Pharmacy Services Segment.

Rite Aid expects revenues to be between $21.5 billion and $21.9 billion in fiscal 2020 with same store sales expected to range from an increase of 0.0 percent to an increase of 1.0 percent over fiscal 2019.

Net loss is expected to be between $235.0 million and $275.0 million.

Adjusted EBITDA is expected to be between $510.0 million and $550.0 million.

Adjusted net income per share is expected to be between $0.00 and $0.56.

Capital expenditures are expected to be approximately $250 million.

Conference Call Broadcast

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be simulcast via the internet and can be accessed at www.riteaid.com in the conference call section of investor information. A playback of the call will also be available by telephone beginning at 12:00 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Sept. 29, 2019. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and Canada with the reservation number 4487388.

About Rite Aid Corporation

Rite Aid Corporation, which generated fiscal 2019 annual revenue of $21.6 billion, is one of the nation's leading drugstore chains with 2,464 stores in 18 states and pharmacy benefit management (PBM) capabilities through EnvisionRxOptions and its affiliates. At Rite Aid we have a personal interest in our customers’ health and wellness and deliver the products and services they need to lead healthier lives. Information about Rite Aid, including corporate background and press releases, is available through the company's website at www.riteaid.com.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this release that are not historical, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding Rite Aid’s outlook for fiscal 2020; Rite Aid’s competitive position and ability to realize its growth initiatives and operating efficiencies; and any assumptions underlying any of the foregoing. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our debt agreements; general economic, industry, market, competitive, regulatory and political conditions; our ability to improve the operating performance of our stores in accordance with our long term strategy; the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; outcomes of legal and regulatory matters; changes in legislation or regulations, including healthcare reform; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; risks related to the pending sale of the remaining Rite Aid distribution centers and related assets to Walgreens Boots Alliance, Inc. ("WBA"), including the possibility that the transactions may not close, or the business of Rite Aid may suffer as a result of uncertainty surrounding the pending transactions; our ability to successfully execute and achieve benefits from our leadership transition plan and organizational restructuring, including managing the transition to our new chief executive officer and other management; the potential for operational disruptions due to, among other things, concerns of management, employees, current and potential customers, other third parties with whom we do business and shareholders; the success of any changes to our business strategy that may be implemented under our new chief executive officer and other management; our ability to achieve cost savings through the organizational restructurings within the anticipated timeframe, if at all; possible changes in the size and components of the expected costs and charges associated with the organizational restructuring plan; and the outlook for and future growth of the Company.

These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission, which you are encouraged to read.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

Reconciliation of Non-GAAP Financial Measures

Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation settlement, loss on debt retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs and the WBA merger termination fee. The current calculations of Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share reflect a modification made in the second quarter of fiscal 2019 to add back all amortization expenses rather than the amortization of EnvisionRx intangible assets only. Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, loss on debt retirements, the WBA merger termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation settlement, severance, restructuring-related costs and costs related to facility closures and gain or loss on sale of assets). The current calculation of Adjusted EBITDA reflects a modification made in the second quarter of fiscal 2019 to eliminate the add back of revenue deferrals related to our customer loyalty program and to present amounts previously included within other as separate reconciling items. We further note that the add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid’s results as if the company was on a FIFO inventory basis.

In addition to Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted Net (Loss) Income per Diluted Share, we occasionally refer to several other Non-GAAP measures, on a less frequent basis, in order to describe certain components of our business and how we utilize them to describe our results. Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. The presentation includes a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, litigation settlement, restructuring-related costs and other items. The presentation includes a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure.

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
 
 
 
August 31, 2019March 2, 2019
ASSETS
Current assets:
Cash and cash equivalents

$

142,181

 

$

144,353

 

Accounts receivable, net

 

1,945,600

 

 

1,788,712

 

Inventories, net of LIFO reserve of $619,437 and $604,444

 

1,968,937

 

 

1,871,941

 

Prepaid expenses and other current assets

 

183,428

 

 

179,132

 

Current assets held for sale

 

145,213

 

 

117,581

 

Total current assets

 

4,385,359

 

 

4,101,719

 

Property, plant and equipment, net

 

1,270,467

 

 

1,308,514

 

Operating lease right-of-use assets

 

2,944,651

 

 

-

 

Goodwill

 

1,108,136

 

 

1,108,136

 

Other intangibles, net

 

381,369

 

 

448,706

 

Deferred tax assets

 

382,105

 

 

409,084

 

Other assets

 

201,126

 

 

215,208

 

Total assets

$

10,673,213

 

$

7,591,367

 

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

$

10,704

 

$

16,111

 

Accounts payable

 

1,570,178

 

 

1,618,585

 

Accrued salaries, wages and other current liabilities

 

732,787

 

 

808,439

 

Current portion of operating lease liabilities

 

502,706

 

 

-

 

Current liabilities held for sale

 

43,364

 

 

-

 

Total current liabilities

 

2,859,739

 

 

2,443,135

 

Long-term debt, less current maturities

 

3,834,605

 

 

3,454,585

 

Long-term operating lease liabilities

 

2,745,598

 

 

-

 

Lease financing obligations, less current maturities

 

22,540

 

 

24,064

 

Other noncurrent liabilities

 

250,145

 

 

482,893

 

Total liabilities

 

9,712,627

 

 

6,404,677

 

 
Commitments and contingencies

 

-

 

 

-

 

Stockholders' equity:
Common stock

 

54,896

 

 

54,016

 

Additional paid-in capital

 

5,885,550

 

 

5,876,977

 

Accumulated deficit

 

(4,948,958

)

 

(4,713,244

)

Accumulated other comprehensive loss

 

(30,902

)

 

(31,059

)

Total stockholders' equity

 

960,586

 

 

1,186,690

 

Total liabilities and stockholders' equity

$

10,673,213

 

$

7,591,367

 

RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
Revenues

$

5,366,264

 

$

5,421,362

 

Costs and expenses:
Cost of revenues

 

4,221,825

 

 

4,260,211

 

Selling, general and administrative expenses

 

1,135,530

 

 

1,153,991

 

Lease termination and impairment charges

 

1,471

 

 

39,609

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Interest expense

 

60,102

 

 

56,233

 

Gain on sale of assets, net

 

(1,587

)

 

(4,965

)

 

 

5,417,341

 

 

5,880,269

 

 
Loss from continuing operations before income taxes

 

(51,077

)

 

(458,907

)

Income tax expense (benefit)

 

27,628

 

 

(106,559

)

Net loss from continuing operations

 

(78,705

)

 

(352,348

)

Net loss from discontinued operations, net of tax

 

(574

)

 

(6,792

)

Net loss

$

(79,279

)

$

(359,140

)

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

$

(78,705

)

$

(352,348

)

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

 

(574

)

 

(6,792

)

Loss attributable to common stockholders - basic and diluted

$

(79,279

)

$

(359,140

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

53,041

 

 

52,823

 

 
Basic and diluted loss per share
Continuing operations

$

(1.48

)

$

(6.67

)

Discontinued operations

$

(0.01

)

$

(0.13

)

Net basic and diluted loss per share

$

(1.49

)

$

(6.80

)

RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
Revenues

$

10,738,853

 

$

10,809,852

 

Costs and expenses:
Cost of revenues

 

8,467,691

 

 

8,479,952

 

Selling, general and administrative expenses

 

2,298,182

 

 

2,306,618

 

Lease termination and impairment charges

 

1,949

 

 

49,468

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Interest expense

 

118,372

 

 

119,025

 

Loss on debt retirements, net

 

-

 

 

554

 

Gain on sale of assets, net

 

(4,299

)

 

(10,824

)

 

 

10,881,895

 

 

11,319,983

 

 
Loss from continuing operations before income taxes

 

(143,042

)

 

(510,131

)

Income tax expense (benefit)

 

35,002

 

 

(116,056

)

Net loss from continuing operations

 

(178,044

)

 

(394,075

)

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

 

(894

)

 

249,351

 

Net loss

$

(178,938

)

$

(144,724

)

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

$

(178,044

)

 

$

(394,075

)

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

 

(894

)

 

 

249,351

 

Loss attributable to common stockholders - basic and diluted

$

(178,938

)

$

(144,724

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

53,084

 

 

52,771

 

 
Basic and diluted loss per share
Continuing operations

$

(3.35

)

$

(7.47

)

Discontinued operations

$

(0.02

)

$

4.73

 

Net basic and diluted loss per share

$

(3.37

)

$

(2.74

)

RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
 
 
OPERATING ACTIVITIES:
Net loss

$

(79,279

)

$

(359,140

)

Net loss from discontinued operations, net of tax

 

(574

)

 

(6,792

)

Net loss from continuing operations

$

(78,705

)

$

(352,348

)

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

 

83,044

 

 

89,743

 

Lease termination and impairment charges

 

1,471

 

 

39,609

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

LIFO charge

 

7,504

 

 

3,358

 

Gain on sale of assets, net

 

(1,587

)

 

(4,965

)

Stock-based compensation expense

 

4,712

 

 

5,215

 

Changes in deferred taxes

 

26,979

 

 

(112,452

)

Changes in operating assets and liabilities:
Accounts receivable

 

(135,704

)

 

(129,565

)

Inventories

 

(100,536

)

 

(62,751

)

Accounts payable

 

(9,730

)

 

(17

)

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

 

46,875

 

 

-

 

Other assets

 

(67,187

)

 

(18,334

)

Other liabilities

 

(55,935

)

 

(117,271

)

Net cash used in operating activities of continuing operations

 

(278,799

)

 

(284,588

)

INVESTING ACTIVITIES:
Payments for property, plant and equipment

 

(43,079

)

 

(44,594

)

Intangible assets acquired

 

(7,498

)

 

(6,864

)

Proceeds from dispositions of assets and investments

 

3,765

 

 

5,813

 

Net cash used in investing activities of continuing operations

 

(46,812

)

 

(45,645

)

FINANCING ACTIVITIES:
Net proceeds from revolver

 

250,000

 

 

1,145,000

 

Principal payments on long-term debt

 

(1,671

)

 

(2,640

)

Change in zero balance cash accounts

 

18,325

 

 

(18,184

)

Net proceeds from the issuance of common stock

 

-

 

 

392

 

Payments for taxes related to net share settlement of equity awards

 

(791

)

 

(2,244

)

Deferred financing costs paid

 

(129

)

 

-

 

Net cash provided by financing activities of continuing operations

 

265,734

 

 

1,122,324

 

Cash flows from discontinued operations:
Operating activities of discontinued operations

 

11,605

 

 

12,047

 

Investing activities of discontinued operations

 

-

 

 

-

 

Financing activities of discontinued operations

 

-

 

 

(818,762

)

Net cash provided by (used in) discontinued operations

 

11,605

 

 

(806,715

)

Decrease in cash and cash equivalents

 

(48,272

)

 

(14,624

)

Cash and cash equivalents, beginning of period

 

190,453

 

 

147,092

 

Cash and cash equivalents, end of period

$

142,181

 

$

132,468

 

RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
 
 
OPERATING ACTIVITIES:
Net loss

$

(178,938

)

$

(144,724

)

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

 

(894

)

 

249,351

 

Net loss from continuing operations

$

(178,044

)

$

(394,075

)

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

 

166,970

 

 

184,272

 

Lease termination and impairment charges

 

1,949

 

 

49,468

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

LIFO charge

 

14,993

 

 

13,324

 

Gain on sale of assets, net

 

(4,299

)

 

(10,824

)

Stock-based compensation expense

 

10,092

 

 

10,246

 

Loss on debt retirements, net

 

-

 

 

554

 

Changes in deferred taxes

 

26,979

 

 

(124,807

)

Changes in operating assets and liabilities:
Accounts receivable

 

(153,269

)

 

(323,724

)

Inventories

 

(111,990

)

 

(31,650

)

Accounts payable

 

(85,623

)

 

207,943

 

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

 

34,982

 

 

-

 

Other assets

 

(44,674

)

 

(11,232

)

Other liabilities

 

(8,104

)

 

(245,587

)

Net cash used in operating activities of continuing operations

 

(330,038

)

 

(300,902

)

INVESTING ACTIVITIES:
Payments for property, plant and equipment

 

(84,060

)

 

(92,565

)

Intangible assets acquired

 

(15,708

)

 

(20,519

)

Proceeds from dispositions of assets and investments

 

4,423

 

 

15,729

 

Proceeds from sale-leaseback transactions

 

-

 

 

2,587

 

Net cash used in investing activities of continuing operations

 

(95,345

)

 

(94,768

)

FINANCING ACTIVITIES:
Net proceeds from revolver

 

375,000

 

 

1,335,000

 

Principal payments on long-term debt

 

(3,451

)

 

(433,746

)

Change in zero balance cash accounts

 

54,712

 

 

(17,101

)

Net proceeds from the issuance of common stock

 

-

 

 

1,302

 

Payments for taxes related to net share settlement of equity awards

 

(986

)

 

(2,244

)

Financing fees paid for early debt redemption

 

-

 

 

(13

)

Deferred financing costs paid

 

(315

)

 

-

 

Net cash provided by financing activities of continuing operations

 

424,960

 

 

883,198

 

Cash flows from discontinued operations:
Operating activities of discontinued operations

 

(2,272

)

 

(62,003

)

Investing activities of discontinued operations

 

523

 

 

603,402

 

Financing activities of discontinued operations

 

-

 

 

(1,343,793

)

Net cash used in discontinued operations

 

(1,749

)

 

(802,394

)

Decrease in cash and cash equivalents

 

(2,172

)

 

(314,866

)

Cash and cash equivalents, beginning of period

 

144,353

 

 

447,334

 

Cash and cash equivalents, end of period

$

142,181

 

$

132,468

 

RITE AID CORPORATION AND SUBSIDIARIES
 
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
 
Retail Pharmacy Segment
Revenues from continuing operations (a)

$

3,848,104

 

$

3,911,512

 

Cost of revenues from continuing operations (a)

 

2,815,660

 

 

2,859,875

 

Gross profit from continuing operations

 

1,032,444

 

 

1,051,637

 

LIFO charge from continuing operations

 

7,504

 

 

3,358

 

FIFO gross profit from continuing operations

 

1,039,948

 

 

1,054,995

 

Adjusted EBITDA gross profit from continuing operations

 

1,045,257

 

 

1,057,742

 

 
Gross profit as a percentage of revenues - continuing operations

 

26.83

%

 

26.89

%

LIFO charge as a percentage of revenues - continuing operations

 

0.20

%

 

0.09

%

FIFO gross profit as a percentage of revenues - continuing operations

 

27.02

%

 

26.97

%

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

 

27.16

%

 

27.04

%

 
Selling, general and administrative expenses from continuing operations

 

1,044,818

 

 

1,068,944

 

Adjusted EBITDA selling, general and administrative expenses from continuing operations

 

952,584

 

 

954,124

 

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

 

27.15

%

 

 

27.33

%

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

 

24.75

%

 

 

24.39

%

 
Cash interest expense

 

56,304

 

 

52,295

 

Non-cash interest expense

 

3,798

 

 

3,938

 

Total interest expense

 

60,102

 

 

56,233

 

Interest expense - continuing operations

 

60,102

 

 

56,233

 

Interest expense - discontinued operations

 

0

 

 

0

 

 
Adjusted EBITDA - continuing operations

 

92,673

 

 

103,618

 

Adjusted EBITDA as a percentage of revenues - continuing operations

 

2.41

%

 

2.65

%

 
 
Pharmacy Services Segment
Revenues (a)

$

1,579,069

 

$

1,561,811

 

Cost of revenues (a)

 

1,467,074

 

 

1,452,297

 

Gross profit

 

111,995

 

 

109,514

 

 
Gross profit as a percentage of revenues

 

7.09

%

 

7.01

%

 
Adjusted EBITDA

 

41,517

 

 

44,963

 

Adjusted EBITDA as a percentage of revenues

 

2.63

%

 

2.88

%

(a) -

Revenues and cost of revenues include $60,909 and $51,961 of inter-segment activity for the thirteen weeks ended August 31, 2019 and September 1, 2018, respectively, that is eliminated in consolidation.

RITE AID CORPORATION AND SUBSIDIARIES
 
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
 
Retail Pharmacy Segment
Revenues from continuing operations (a)

$

7,712,912

 

$

7,809,277

 

Cost of revenues from continuing operations (a)

 

5,649,973

 

 

5,688,183

 

Gross profit from continuing operations

 

2,062,939

 

 

2,121,094

 

LIFO charge from continuing operations

 

14,993

 

 

13,324

 

FIFO gross profit from continuing operations

 

2,077,932

 

 

2,134,418

 

Adjusted EBITDA gross profit from continuing operations

 

2,085,520

 

 

2,141,780

 

 
Gross profit as a percentage of revenues - continuing operations

 

26.75

%

 

27.16

%

LIFO charge as a percentage of revenues - continuing operations

 

0.19

%

 

0.17

%

FIFO gross profit as a percentage of revenues - continuing operations

 

26.94

%

 

27.33

%

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

 

27.04

%

 

27.43

%

 
Selling, general and administrative expenses from continuing operations

 

2,116,143

 

 

2,133,331

 

Adjusted EBITDA selling, general and administrative expenses from continuing operations

 

1,908,839

 

 

1,934,033

 

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

 

27.44

%

 

 

27.32

%

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

 

24.75

%

 

 

24.77

%

 
Cash interest expense

 

110,914

 

 

115,196

 

Non-cash interest expense

 

7,458

 

 

8,444

 

Total interest expense

 

118,372

 

 

123,640

 

Interest expense - continuing operations

 

118,372

 

 

119,025

 

Interest expense - discontinued operations

 

0

 

 

4,615

 

 
Adjusted EBITDA - continuing operations

 

176,681

 

 

207,747

 

Adjusted EBITDA as a percentage of revenues - continuing operations

 

2.29

%

 

2.66

%

 
 
Pharmacy Services Segment
Revenues (a)

$

3,145,361

 

$

3,104,573

 

Cost of revenues (a)

 

2,937,138

 

 

2,895,767

 

Gross profit

 

208,223

 

 

208,806

 

 
Gross profit as a percentage of revenues

 

6.62

%

 

6.73

%

 
Adjusted EBITDA

 

67,856

 

 

78,826

 

Adjusted EBITDA as a percentage of revenues

 

2.16

%

 

2.54

%

(a) -Revenues and cost of revenues include $119,420 and $103,998 of inter-segment activity for the twenty-six weeks ended August 31, 2019 and September 1, 2018, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
 
 
Reconciliation of net loss to adjusted EBITDA:

Net loss - continuing operations

$

(78,705

)

$

(352,348

)

Adjustments:

Interest expense

 

60,102

 

 

56,233

 

Income tax expense (benefit)

 

27,628

 

 

(106,559

)

Depreciation and amortization

 

83,044

 

 

89,743

 

LIFO charge

 

7,504

 

 

3,358

 

Lease termination and impairment charges

 

1,471

 

 

39,609

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Merger and Acquisition-related costs

 

514

 

 

19,031

 

Stock-based compensation expense

 

4,712

 

 

5,215

 

Restructuring-related costs

 

25,145

 

 

-

 

Inventory write-downs related to store closings

 

3,149

 

 

1,300

 

Litigation settlement

 

-

 

 

18,000

 

Gain on sale of assets, net

 

(1,587

)

 

(4,965

)

Other

 

1,213

 

 

4,774

 

Adjusted EBITDA - continuing operations

$

134,190

 

$

148,581

 

Percent of revenues - continuing operations

 

2.50

%

 

2.74

%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss - continuing operations

$

(178,044

)

$

(394,075

)

Adjustments:
Interest expense

 

118,372

 

 

119,025

 

Income tax expense (benefit)

 

35,002

 

 

(116,056

)

Depreciation and amortization

 

166,970

 

 

184,272

 

LIFO charge

 

14,993

 

 

13,324

 

Lease termination and impairment charges

 

1,949

 

 

49,468

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Loss on debt retirements, net

 

-

 

 

554

 

Merger and Acquisition-related costs

 

3,599

 

 

26,219

 

Stock-based compensation expense

 

10,092

 

 

10,246

 

Restructuring-related costs

 

68,495

 

 

-

 

Inventory write-downs related to store closings

 

3,990

 

 

5,133

 

Litigation settlement

 

-

 

 

18,000

 

Gain on sale of assets, net

 

(4,299

)

 

(10,824

)

Other

 

3,418

 

 

6,097

 

Adjusted EBITDA - continuing operations

$

244,537

 

$

286,573

 

Percent of revenues - continuing operations

 

2.28

%

 

2.65

%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME (LOSS)
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
 
Net loss from continuing operations

$

(78,705

)

$

(352,348

)

Add back - Income tax expense (benefit)

 

27,628

 

 

(106,559

)

Loss before income taxes - continuing operations

 

(51,077

)

 

(458,907

)

 
Adjustments:
Amortization expense

 

26,596

 

 

32,500

 

LIFO charge

 

7,504

 

 

3,358

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Merger and Acquisition-related costs

 

514

 

 

19,031

 

Restructuring-related costs

 

25,145

 

 

-

 

Litigation settlement

 

-

 

 

18,000

 

 
Adjusted income (loss) before income taxes - continuing operations

 

8,682

 

 

(10,828

)

 
Adjusted income tax expense (benefit) (a)

 

2,394

 

 

(2,951

)

Adjusted net income (loss) from continuing operations

$

6,288

 

$

(7,877

)

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

$

6,288

 

$

(7,877

)

 
 
 
Denominator:
Basic weighted average shares

 

53,041

 

 

52,823

 

Outstanding options and restricted shares, net

 

651

 

 

-

 

Diluted weighted average shares

 

53,692

 

 

52,823

 

 
Net loss from continuing operations per diluted share - continuing operations

$

(1.48

)

$

(6.67

)

 
 
Adjusted net income (loss) per diluted share - continuing operations

$

0.12

 

$

(0.15

)

(a)The fiscal year 2020 and 2019 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the thirteen weeks ended August 31, 2019 and September 1, 2018, respectively.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
 
Net loss from continuing operations

$

(178,044

)

$

(394,075

)

Add back - Income tax expense (benefit)

 

35,002

 

 

(116,056

)

Loss before income taxes - continuing operations

 

(143,042

)

 

(510,131

)

 
Adjustments:
Amortization expense

 

54,256

 

 

67,900

 

LIFO charge

 

14,993

 

 

13,324

 

Goodwill and intangible asset impairment charges

 

-

 

 

375,190

 

Loss on debt retirements, net

 

-

 

 

554

 

Merger and Acquisition-related costs

 

3,599

 

 

26,219

 

Restructuring-related costs

 

68,495

 

 

-

 

Litigation settlement

 

-

 

 

18,000

 

 
Adjusted loss before income taxes - continuing operations

 

(1,699

)

 

(8,944

)

 
Adjusted income tax benefit (a)

 

(468

)

 

(2,437

)

Adjusted net loss from continuing operations

$

(1,231

)

$

(6,507

)

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

$

(1,231

)

$

(6,507

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

53,084

 

 

52,771

 

 
Net loss from continuing operations per diluted share - continuing operations

$

(3.35

)

$

(7.47

)

 
Adjusted net loss diluted share - continuing operations

$

(0.02

)

$

(0.12

)

(a)

The fiscal year 2020 and 2019 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the twenty-six weeks ended August 31, 2019 and September 1, 2018, respectively.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended
August 31, 2019
Thirteen weeks ended
September 1, 2018
 
 
Reconciliation of adjusted EBITDA gross profit:
Revenues

$

3,848,104

 

$

3,911,512

 

Gross Profit

 

1,032,444

 

 

1,051,637

 

Addback:
LIFO charge

 

7,504

 

 

3,358

 

Depreciation and amortization (cost of goods sold portion only)

 

2,205

 

 

2,254

 

Other

 

3,104

 

 

493

 

Adjusted EBITDA gross profit - continuing operations

$

1,045,257

 

$

1,057,742

 

Percent of revenues - continuing operations

 

27.16

%

 

27.04

%

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

$

3,848,104

 

$

3,911,512

 

Selling, general and administrative expenses

 

1,044,818

 

 

1,068,944

 

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

 

64,975

 

 

68,401

 

Stock-based compensation expense

 

4,432

 

 

5,215

 

Merger and Acquisition-related costs

 

514

 

 

19,031

 

Restructuring-related costs

 

21,055

 

 

-

 

Litigation settlement

 

-

 

 

18,000

 

Other

 

1,258

 

 

4,173

 

Adjusted EBITDA selling, general and administrative expenses - continuing operations

$

952,584

 

 

$

954,124

Percent of revenues - continuing operations

 

24.75

%

 

24.39

%

 
 
 
Adjusted EBITDA - continuing operations

$

92,673

 

$

103,618

 

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT
(In thousands)
(unaudited)
 
 
 
Twenty-six weeks ended
August 31, 2019
Twenty-six weeks ended
September 1, 2018
 
 
Reconciliation of adjusted EBITDA gross profit:
Revenues

$

7,712,912

 

$

7,809,277

 

Gross Profit

 

2,062,939

 

 

2,121,094

 

Addback:
LIFO charge

 

14,993

 

 

13,324

 

Depreciation and amortization (cost of goods sold portion only)

 

4,468

 

 

4,621

 

Other

 

3,120

 

 

2,741

 

Adjusted EBITDA gross profit - continuing operations

$

2,085,520

 

$

2,141,780

 

Percent of revenues - continuing operations

 

27.04

%

 

27.43

%

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

$

7,712,912

 

$

7,809,277

 

Selling, general and administrative expenses

 

2,116,143

 

 

2,133,331

 

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

 

130,014

 

 

138,067

 

Stock-based compensation expense

 

9,697

 

 

10,246

 

Merger and Acquisition-related costs

 

2,828

 

 

26,219

 

Restructuring-related costs

 

60,436

 

 

-

 

Litigation settlement

 

-

 

 

18,000

 

Other

 

4,329

 

 

6,766

 

Adjusted EBITDA selling, general and administrative expenses - continuing operations

$

1,908,839

 

$

1,934,033

 

Percent of revenues - continuing operations

 

24.75

%

 

24.77

%

 
 
 
Adjusted EBITDA - continuing operations

$

176,681

 

$

207,747

 

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 29, 2020
(In thousands)
(unaudited)
 
 
Guidance Range
LowHigh
 
Total Revenues

$

21,500,000

 

$

21,900,000

 

 
Same store sales

 

0.00

%

 

1.00

%

 
Gross Capital Expenditures

$

250,000

 

$

250,000

 

 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss

$

(275,000

)

$

(235,000

)

Adjustments:
Interest expense

 

240,000

 

 

240,000

 

Income tax expense

 

35,000

 

 

35,000

 

Depreciation and amortization

 

340,000

 

 

340,000

 

LIFO charge

 

30,000

 

 

30,000

 

Lease termination and impairment charges

 

25,000

 

 

25,000

 

Restructuring-related costs

 

90,000

 

 

90,000

 

Other

 

25,000

 

 

25,000

 

Adjusted EBITDA

$

510,000

 

$

550,000

 

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET INCOME GUIDANCE
YEAR ENDING FEBRUARY 29, 2020
(In thousands)
(unaudited)
 
 
 
Guidance Range
LowHigh
 
Net loss

$

(275,000

)

$

(235,000

)

Add back - income tax expense

 

35,000

 

 

35,000

 

Loss before income taxes

 

(240,000

)

 

(200,000

)

 
Adjustments:
Amortization expense

 

120,000

 

 

120,000

 

LIFO charge

 

30,000

 

 

30,000

 

Restructuring-related costs

 

90,000

 

 

90,000

 

 
Adjusted income before adjusted income taxes

 

-

 

 

40,000

 

 
Adjusted income tax expense

 

-

 

 

10,000

 

Adjusted net income

$

-

 

$

30,000

 

Diluted adjusted net income per share

$

-

 

$

0.56

 

 

INVESTORS:
Byron Purcell
(717) 975-5809
Or investor@riteaid.com

MEDIA:
Christopher Savarese
(717) 975-5718

Source: Rite Aid Corporation