Rite Aid Corporation Reports Fiscal 2022 Third Quarter Results

Rhea-AI Summary

Rite Aid Corporation (NYSE: RAD) reported a third-quarter revenue increase of 1.8% to $6.23 billion but faced a net loss of $36.1 million, or $0.67 per share, compared to a net income of $4.3 million, or $0.08 per share, last year. Adjusted EBITDA rose 12.7% to $154.8 million. The firm has initiated a store closure program, targeting 63 stores for closure, aiming for an annual EBITDA benefit of about $25 million. Due to strong momentum, Rite Aid raised its fiscal 2022 Adjusted EBITDA guidance to between $500 million and $520 million.

Positive

• Adjusted EBITDA increased 12.7% to $154.8 million.
• Rite Aid raised fiscal 2022 Adjusted EBITDA guidance to $500 million - $520 million.

Negative

• Net loss from continuing operations of $36.1 million compared to previous year's net income of $4.3 million.
• Pharmacy Services Segment revenue fell 10.8% to $1.9 billion.

• Revenues from Continuing Operations Increased 1.8 Percent to $6.23 Billion Compared to Prior Year Third Quarter Revenues from Continuing Operations of $6.12 Billion

• Third Quarter Net Loss from Continuing Operations of $36.1 Million or $0.67 Per Share, Compared to the Prior Year Third Quarter Net Income of $4.3 Million or $0.08 Per Share

• Third Quarter Adjusted Net Income from Continuing Operations of $8.2 Million or $0.15 Per Share, Compared to the Prior Year Third Quarter Adjusted Net Income of $21.6 Million or $0.40 Per Share

• Third Quarter Adjusted EBITDA from Continuing Operations Increased 12.7 Percent to $154.8 Million, Compared to the Prior Year Third Quarter Adjusted EBITDA of $137.4 Million

• Rite Aid Raises Adjusted EBITDA Guidance for Fiscal 2022

• Company Announces Rebate Aggregation Agreement between Elixir and Prime Therapeutics

• Company Announces Store Closure Plan to Reduce Costs and Improve Profitability

CAMP HILL, Pa.--(BUSINESS WIRE)-- Rite Aid Corporation (NYSE: RAD) today reported operating results for its third fiscal quarter ended November 27, 2021.

(Photo: Business Wire)

For the third quarter, the company reported net loss from continuing operations of $36.1 million, or $0.67 loss per share, Adjusted net income from continuing operations of $8.2 million, or $0.15 income per share, and Adjusted EBITDA from continuing operations of $154.8 million, or 2.5 percent of revenues.

“We delivered a solid quarter as we grew Adjusted EBITDA by 12.7 percent versus last year,” said Heyward Donigan, president and chief executive officer, Rite Aid. “Despite challenges in the labor market, our pharmacists and store teams were able to meet the unprecedented volumes for COVID and flu immunizations, COVID testing and other clinical services, which clearly demonstrates our Lean work to free up capacity is paying off.”

“We have also taken steps to drive increased value for all of Elixir’s PBM clients by entering into a new rebate aggregation agreement with Prime Therapeutics. In addition to the benefit to clients, this partnership will enable Elixir to be more competitive in the marketplace and improve profit margins.”

“Today, we also announced the first phase of a store closure program to reduce costs, drive improved profitability and ensure that we have a healthy foundation to grow from, with the right stores in the right locations, for the communities we serve and for our business. We have identified an initial 63 stores for closure that is expected to provide an annual EBITDA benefit of approximately $25 million.”

“We are encouraged by our recent momentum and expect to deliver a significant increase in our fourth quarter Adjusted EBITDA results compared to last year. As a result, we are raising our guidance for Adjusted EBITDA for Fiscal 2022.”

“Finally, I want to thank each and every one of our associates for everything they do. It is my greatest privilege to work alongside such a tremendous team, and I am forever grateful for their passion and commitment to our company, our customers and each other.”

Consolidated Third Quarter Summary

(dollars in thousands)		Thirteen Week Period Ended						Thirty-nine Week Period Ended
			November 27, 2021			November 28, 2020			November 27, 2021			November 28, 2020
Revenues from continuing operations		$	6,228,880		$	6,117,038		$	18,502,865		$	18,126,384
Net (loss) income from continuing operations			(36,058)			4,324			(149,416)			(81,575)
Adjusted EBITDA from continuing operations			154,793			137,405			399,830			396,400

Revenues from continuing operations for the quarter were $6.23 billion compared to revenues from continuing operations of $6.12 billion in the prior year’s quarter. The 1.8 percent increase in revenues was driven by growth at the Retail Pharmacy Segment, partially offset by a decline at the Pharmacy Services Segment.

Net loss from continuing operations was $36.1 million, or $0.67 per share, compared to last year’s third quarter net income from continuing operations of $4.3 million, or $0.08 per share. The increase in net loss is due primarily to higher facility exit and impairment charges driven by the Company’s store closure decisions. Other variance drivers include a LIFO charge in the current quarter compared to a LIFO credit in the prior year third quarter and a lower gain on the sale of assets. These items were partially offset by an increase in Adjusted EBITDA and lower depreciation and amortization expense.

Retail Pharmacy Segment

(dollars in thousands)		Thirteen Week Period Ended						Thirty-nine Week Period Ended
			November 27, 2021			November 28, 2020			November 27, 2021			November 28, 2020
Revenues from continuing operations		$	4,432,508		$	4,109,592		$	13,061,408		$	12,250,775
Adjusted EBITDA from continuing operations			125,931			88,557			290,214			273,879

Retail Pharmacy Segment revenues from continuing operations increased 7.9 percent over the prior year quarter, driven by an increase in same store sales and the inclusion of Bartell’s results this quarter. Same store sales from continuing operations for the third quarter increased 4.4 percent over the prior year period, consisting of a 5.9 percent increase in pharmacy sales and a 0.4 percent increase in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 1.0 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 7.9 percent over the prior year period. In addition to the benefit from 4 million COVID-19 vaccinations, maintenance prescriptions increased 1.7 percent while other acute prescriptions increased 3.9 percent on a same store basis when excluding COVID-19, flu and all other ancillary vaccinations. Prescription sales from continuing operations accounted for 71.1 percent of total drugstore sales. Total store count at the end of the third quarter was 2,488.

Retail Pharmacy Segment Adjusted EBITDA from continuing operations was $125.9 million, or 2.8 percent of revenues, for the third quarter compared to last year’s third quarter Adjusted EBITDA from continuing operations of $88.6 million, or 2.2 percent of revenues. The increase in Adjusted EBITDA was due to increased gross profit, partially offset by an increase in selling, general and administrative (SG&A) expenses. Gross profit benefited from higher pharmacy same store sales, including immunizations, partially offset by pharmacy reimbursement rate pressures that were not fully offset by generic drug cost reductions and an increase in front-end gross profit resulting from higher front-end same store sales and a reduction in markdowns. SG&A expenses were negatively impacted by incremental payroll costs to support COVID immunizations, increases in bonus expense for store, field and corporate associates, increases in workers compensation costs and cycling the benefit from the prior year change to modernize our associate PTO plans.

Pharmacy Services Segment

(dollars in thousands)		Thirteen Week Period Ended						Thirty-nine Week Period Ended
			November 27, 2021			November 28, 2020			November 27, 2021			November 28, 2020
Revenues from continuing operations		$	1,858,830		$	2,084,402		$	5,629,325		$	6,100,026
Adjusted EBITDA from continuing operations			28,862			48,848			109,616			122,521

Pharmacy Services Segment revenues were $1.9 billion for the quarter, a decrease of 10.8 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a planned decrease in Elixir Insurance membership and a previously announced client loss.

Pharmacy Services Segment Adjusted EBITDA from continuing operations was $28.9 million, or 1.6 percent of revenues, for the third quarter compared to last year’s third quarter Adjusted EBITDA from continuing operations of $48.8 million, or 2.3 percent of revenues. Gross profit dollars were negatively impacted from the decline in revenues, a reduction in rebates and an increase in the Medical Loss Ratio at Elixir Insurance. SG&A expenses improved due to reduced payroll and a reduction in broker commissions.

Retail Store Base Assessment

Rite Aid is conducting a rigorous assessment of its store base and has implemented a store closure program. The program’s primary focus is to reduce costs, drive improved profitability and ensure that Rite Aid has a healthy foundation to grow from, with the right stores in the right locations, for the communities it serves and for its business.

As a result of this ongoing review, Rite Aid identified 63 stores for closure that is expected to provide an annual EBITDA benefit of approximately $25 million. The closures began this past November. Associates impacted by these store closures are being offered the opportunity to transfer to another store. The review work will continue, and the Company anticipates the number of closures to increase as it finalizes the review over the next several months.

Outlook for Fiscal 2022

As a result of the momentum in the third quarter, and an anticipated increase in demand for COVID-19 vaccines and testing versus prior expectations, Rite Aid Corporation is raising its fiscal 2022 Adjusted EBITDA guidance.

Total revenues are expected to be between $24.4 billion and $24.7 billion in fiscal 2022. Pharmacy Services Segment revenue is expected to be between $7.1 billion and $7.2 billion (net of any intercompany revenues to the Retail Pharmacy Segment).

Net loss is expected to be between $230 million and $189 million.

Adjusted EBITDA is expected to be between $500 million and $520 million.

Adjusted net loss per share is expected to be between $0.49 and $0.04.

Capital expenditures are expected to be approximately $275 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://investors.riteaid.com. The telephone replay will be available beginning at 12:00 p.m. Eastern Time on Tuesday, Dec. 21, 2021 and ending at 11:59 p.m. Eastern Time on Jan. 21, 2022. To access the replay of the call, telephone (800) 585-8367 or (416) 621-4642 and enter the seven-digit reservation number 1787289. 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 2,400 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of 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 2022; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; Rite Aid’s store closure program; 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 store closure program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation, including related to Opioids, “usual and customary” pricing or other matters; our ability to monetize 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), as well as other factors that impact 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 restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, regulations, policies and procedures; 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 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 2022 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain, including, but not limited to, federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 and emerging new variants 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, 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 settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, and the loss on Bartell acquisition. 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 closing 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 settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, and the loss on Bartell acquisition). 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, litigation 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.

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
			November 27, 2021				February 27, 2021
ASSETS
Current assets:
	Cash and cash equivalents		$	155,289			$	160,902
	Accounts receivable, net			1,844,234				1,462,441
	Inventories, net of LIFO reserve of $486,759 and $485,859			1,949,841				1,864,890
	Prepaid expenses and other current assets			106,666				106,941
		Total current assets		4,056,030				3,595,174
Property, plant and equipment, net				1,014,662				1,080,499
Operating lease right-of-use assets				2,915,748				3,064,077
Goodwill				1,108,136				1,108,136
Other intangibles, net				307,345				340,519
Deferred tax assets				14,964				14,964
Other assets				82,239				132,035
		Total assets	$	9,499,124			$	9,335,404
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current maturities of long-term debt and lease financing obligations		$	6,119			$	6,409
	Accounts payable			1,547,770				1,437,421
	Accrued salaries, wages and other current liabilities			873,201				642,364
	Current portion of operating lease liabilities			522,272				516,752
		Total current liabilities		2,949,362				2,602,946
Long-term debt, less current maturities				3,167,060				3,063,087
Long-term operating lease liabilities				2,692,669				2,829,293
Lease financing obligations, less current maturities				15,270				16,711
Other noncurrent liabilities				202,734				208,213
		Total liabilities		9,027,095				8,720,250
Commitments and contingencies				-				-
Stockholders' equity:
	Common stock			55,761				55,143
	Additional paid-in capital			5,902,445				5,897,168
	Accumulated deficit			(5,462,519	)			(5,313,103	)
	Accumulated other comprehensive loss			(23,658	)			(24,054	)
		Total stockholders' equity		472,029				615,154
		Total liabilities and stockholders' equity	$	9,499,124			$	9,335,404

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
			Thirteen weeks ended November 27, 2021				Thirteen weeks ended November 28, 2020
Revenues			$	6,228,880			$	6,117,038
Costs and expenses:
	Cost of revenues			4,894,497				4,913,939
	Selling, general and administrative expenses			1,276,920				1,156,355
	Facility exit and impairment charges			47,455				7,453
	Interest expense			47,794				50,835
	Gain on sale of assets, net			(5,899	)			(16,305	)
	Loss on Bartell acquisition			5,346				-
				6,266,113				6,112,277
(Loss) income from continuing operations before income taxes				(37,233	)			4,761
Income tax (benefit) expense				(1,175	)			437
	Net (loss) income from continuing operations			(36,058	)			4,324
	Net income from discontinued operations, net of tax			-				-
	Net (loss) income		$	(36,058	)		$	4,324
Basic and diluted (loss) income per share:
Numerator for (loss) income per share:
	Net (loss) income from continuing operations attributable to common
		stockholders - basic and diluted	$	(36,058	)		$	4,324
	Net income from discontinued operations attributable to
		common stockholders - basic and diluted		-				-
	(Loss) income attributable to common stockholders - basic and diluted		$	(36,058	)		$	4,324
Denominator:
	Basic weighted average shares			54,168				53,744
	Outstanding options and restricted shares, net			-				335
	Diluted weighted average shares			54,168				54,079
Basic and diluted (loss) income per share
	Continuing operations		$	(0.67	)		$	0.08
	Discontinued operations		$	-			$	-
	Net basic and diluted (loss) income per share		$	(0.67	)		$	0.08

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
			Thirty-nine weeks ended November 27, 2021				Thirty-nine weeks ended November 28, 2020
Revenues			$	18,502,865			$	18,126,384
Costs and expenses:
	Cost of revenues			14,637,683				14,564,621
	Selling, general and administrative expenses			3,790,035				3,469,644
	Facility exit and impairment charges			67,639				22,734
	Intangible asset impairment charges			-				29,852
	Interest expense			145,507				151,389
	Loss (gain) on debt modifications and retirements, net			3,235				(5,274	)
	Gain on sale of assets, net			(79	)			(17,473	)
	Loss on Bartell acquisition			5,346				-
				18,649,366				18,215,493
Loss from continuing operations before income taxes				(146,501	)			(89,109	)
Income tax expense (benefit)				2,915				(7,534	)
	Net loss from continuing operations			(149,416	)			(81,575	)
	Net income from discontinued operations, net of tax			-				9,161
	Net loss		$	(149,416	)		$	(72,414	)
Basic and diluted loss per share:
Numerator for loss per share:
	Net loss from continuing operations attributable to common
		stockholders - basic and diluted	$	(149,416	)		$	(81,575	)
	Net income from discontinued operations attributable to
		common stockholders - basic and diluted		-				9,161
	Loss attributable to common stockholders - basic and diluted		$	(149,416	)		$	(72,414	)
Denominator:
	Basic and diluted weighted average shares			54,004				53,600
Basic and diluted loss per share
	Continuing operations		$	(2.77	)		$	(1.52	)
	Discontinued operations		$	-			$	0.17
	Net basic and diluted loss per share		$	(2.77	)		$	(1.35	)

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
											Thirteen weeks ended November 27, 2021				Thirteen weeks ended November 28, 2020
OPERATING ACTIVITIES:
Net (loss) income											$	(36,058	)		$	4,324
Net income from discontinued operations, net of tax												-				-
Net (loss) income from continuing operations											$	(36,058	)		$	4,324
Adjustments to reconcile to net cash (used in) provided by operating activities of continuing operations:
	Depreciation and amortization											72,973				83,336
	Facility exit and impairment charges											47,455				7,453
	LIFO charge (credit)											8,886				(9,487	)
	Gain on sale of assets, net											(5,899	)			(16,305	)
	Loss on Bartell acquisition											5,346				-
	Stock-based compensation expense											217				2,867
	Changes in deferred taxes											(1,602	)			-
	Changes in operating assets and liabilities:
		Accounts receivable										(185,224	)			128,777
		Inventories										(68,054	)			(24,005	)
		Accounts payable										38,112				(488	)
		Operating lease right-of-use assets and operating lease liabilities										(7,208	)			(6,826	)
		Other assets										9,761				(4,248	)
		Other liabilities										118,257				57,351
		Net cash (used in) provided by operating activities of continuing operations										(3,038	)			222,749
INVESTING ACTIVITIES:
	Payments for property, plant and equipment											(39,645	)			(64,304	)
	Intangible assets acquired											(9,810	)			(6,131	)
	Proceeds from dispositions of assets and investments											3,145				3,176
	Proceeds from sale-leaseback transactions											25,605				80,551
		Net cash (used in) provided by investing activities of continuing operations										(20,705	)			13,292
FINANCING ACTIVITIES:
	Net proceeds from (payments to) revolver											50,000				(309,000	)
	Principal payments on long-term debt											(1,032	)			(1,194	)
	Change in zero balance cash accounts											(14,243	)			32,374
	Payments for taxes related to net share settlement of equity awards											(131	)			(64	)
	Deferred financing costs paid											(2,126	)			(74	)
		Net cash provided by (used in) financing activities of continuing operations										32,468				(277,958	)
Increase (decrease) in cash and cash equivalents												8,725				(41,917	)
Cash and cash equivalents, beginning of period												146,564				92,730
Cash and cash equivalents, end of period											$	155,289			$	50,813

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
											Thirty-nine weeks ended November 27, 2021				Thirty-nine weeks ended November 28, 2020
OPERATING ACTIVITIES:
Net loss											$	(149,416	)		$	(72,414	)
Net income from discontinued operations, net of tax												-				9,161
Net loss from continuing operations											$	(149,416	)		$	(81,575	)
Adjustments to reconcile to net cash provided by (used in) operating activities of continuing operations:
	Depreciation and amortization											222,691				249,556
	Facility exit and impairment charges											67,639				22,734
	Intangible asset impairment charges											-				29,852
	LIFO charge (credit)											900				(30,303	)
	Gain on sale of assets, net											(79	)			(17,473	)
	Loss on Bartell acquisition											5,346				-
	Stock-based compensation expense											8,820				8,677
	Loss (gain) on debt modifications and retirements, net											3,235				(5,274	)
	Changes in deferred taxes											(1,602	)			-
	Changes in operating assets and liabilities:
		Accounts receivable										(398,079	)			(507,778	)
		Inventories										(87,150	)			(19,532	)
		Accounts payable										129,436				1,460
		Operating lease right-of-use assets and operating lease liabilities										(19,517	)			(25,319	)
		Other assets										34,946				75,265
		Other liabilities										219,390				45,867
		Net cash provided by (used in) operating activities of continuing operations										36,560				(253,843	)
INVESTING ACTIVITIES:
	Payments for property, plant and equipment											(145,001	)			(127,389	)
	Intangible assets acquired											(24,289	)			(28,703	)
	Proceeds from insured loss											10,436				12,500
	Proceeds from dispositions of assets and investments											7,821				9,086
	Proceeds from sale-leaseback transactions											39,790				89,012
		Net cash used in investing activities of continuing operations										(111,243	)			(45,494	)
FINANCING ACTIVITIES:
	Proceeds from issuance of long-term debt											350,000				849,918
	Net proceeds from revolver											300,000				341,000
	Principal payments on long-term debt											(544,020	)			(1,057,376	)
	Change in zero balance cash accounts											(15,087	)			5,545
	Financing fees paid for early debt redemption											(833	)			(2,399	)
	Payments for taxes related to net share settlement of equity awards											(2,352	)			(2,165	)
	Deferred financing costs paid											(18,638	)			(14,674	)
		Net cash provided by financing activities of continuing operations										69,070				119,849
Cash flows from discontinued operations:
	Operating activities of discontinued operations											-				(82,189	)
	Investing activities of discontinued operations											-				94,310
		Net cash provided by discontinued operations										-				12,121
Decrease in cash and cash equivalents												(5,613	)			(167,367	)
Cash and cash equivalents, beginning of period												160,902				218,180
Cash and cash equivalents, end of period											$	155,289			$	50,813

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
				Thirteen weeks ended November 27, 2021				Thirteen weeks ended November 28, 2020
Retail Pharmacy Segment
	Revenues from continuing operations (a)			$	4,432,508			$	4,109,592
	Cost of revenues from continuing operations (a)				3,199,271				3,029,884
	Gross profit from continuing operations				1,233,237				1,079,708
	LIFO charge (credit) from continuing operations				8,886				(9,487	)
	FIFO gross profit from continuing operations				1,242,123				1,070,221
	Adjusted EBITDA gross profit from continuing operations				1,244,637				1,072,547
	Gross profit as a percentage of revenues - continuing operations				27.82	%			26.27	%
	LIFO charge (credit) as a percentage of revenues - continuing operations				0.20	%			-0.23	%
	FIFO gross profit as a percentage of revenues - continuing operations				28.02	%			26.04	%
	Adjusted EBITDA gross profit as a percentage of revenues - continuing operations				28.08	%			26.10	%
	Selling, general and administrative expenses from continuing operations				1,185,974				1,067,027
	Adjusted EBITDA selling, general and administrative expenses from continuing operations				1,118,706				983,990
	Selling, general and administrative expenses as a percentage of
	revenues - continuing operations				26.76	%			25.96	%
	Adjusted EBITDA selling, general and administrative expenses as a percentage of
	revenues - continuing operations				25.24	%			23.94	%
	Cash interest expense				44,853				47,500
	Non-cash interest expense				2,941				3,335
	Total interest expense				47,794				50,835
	Interest expense - continuing operations				47,794				50,835
	Interest expense - discontinued operations				-				-
	Adjusted EBITDA - continuing operations				125,931				88,557
	Adjusted EBITDA as a percentage of revenues - continuing operations				2.84	%			2.15	%
Pharmacy Services Segment
	Revenues (a)			$	1,858,830			$	2,084,402
	Cost of revenues (a)				1,757,684				1,961,011
	Gross profit				101,146				123,391
	Gross profit as a percentage of revenues				5.44	%			5.92	%
	Adjusted EBITDA				28,862				48,848
	Adjusted EBITDA as a percentage of revenues				1.55	%			2.34	%

(a) -	Revenues and cost of revenues include $62,458 and $76,956 of inter-segment activity for the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively, that is eliminated in consolidation.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
				Thirty-nine weeks ended November 27, 2021				Thirty-nine weeks ended November 28, 2020
Retail Pharmacy Segment
	Revenues from continuing operations (a)			$	13,061,408			$	12,250,775
	Cost of revenues from continuing operations (a)				9,517,875				9,027,618
	Gross profit from continuing operations				3,543,533				3,223,157
	LIFO charge (credit) from continuing operations				900				(30,303	)
	FIFO gross profit from continuing operations				3,544,433				3,192,854
	Adjusted EBITDA gross profit from continuing operations				3,551,888				3,227,196
	Gross profit as a percentage of revenues - continuing operations				27.13	%			26.31	%
	LIFO charge (credit) as a percentage of revenues - continuing operations				0.01	%			-0.25	%
	FIFO gross profit as a percentage of revenues - continuing operations				27.14	%			26.06	%
	Adjusted EBITDA gross profit as a percentage of revenues - continuing operations				27.19	%			26.34	%
	Selling, general and administrative expenses from continuing operations				3,505,365				3,206,078
	Adjusted EBITDA selling, general and administrative expenses from continuing operations				3,261,674				2,953,317
	Selling, general and administrative expenses as a percentage of
	revenues - continuing operations				26.84	%			26.17	%
	Adjusted EBITDA selling, general and administrative expenses as a percentage of
	revenues - continuing operations				24.97	%			24.11	%
	Cash interest expense				136,476				141,635
	Non-cash interest expense				9,031				9,754
	Total interest expense				145,507				151,389
	Interest expense - continuing operations				145,507				151,389
	Interest expense - discontinued operations				-				-
	Adjusted EBITDA - continuing operations				290,214				273,879
	Adjusted EBITDA as a percentage of revenues - continuing operations				2.22	%			2.24	%
Pharmacy Services Segment
	Revenues (a)			$	5,629,325			$	6,100,026
	Cost of revenues (a)				5,307,676				5,761,420
	Gross profit				321,649				338,606
	Gross profit as a percentage of revenues				5.71	%			5.55	%
	Adjusted EBITDA				109,616				122,521
	Adjusted EBITDA as a percentage of revenues				1.95	%			2.01	%

(a) -	Revenues and cost of revenues include $187,868 and $224,417 of inter-segment activity for the thirty-nine weeks ended November 27, 2021 and November 28, 2020, respectively, that is eliminated in consolidation.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(In thousands)
(unaudited)
						Thirteen weeks ended November 27, 2021				Thirteen weeks ended November 28, 2020
Reconciliation of net (loss) income to adjusted EBITDA:
		Net (loss) income - continuing operations				$	(36,058	)		$	4,324
		Adjustments:
			Interest expense				47,794				50,835
			Income tax (benefit) expense				(1,175	)			437
			Depreciation and amortization				72,973				83,336
			LIFO charge (credit)				8,886				(9,487	)
			Facility exit and impairment charges				47,455				7,453
			Merger and Acquisition-related costs				3,642				1,136
			Stock-based compensation expense				217				2,867
			Restructuring-related costs				9,657				12,175
			Inventory write-downs related to store closings				86				704
			Litigation settlements				2,000				-
			Gain on sale of assets, net				(5,899	)			(16,305	)
			Loss on Bartell acquisition				5,346				-
			Other				(131	)			(70	)
					Adjusted EBITDA - continuing operations	$	154,793			$	137,405
					Percent of revenues - continuing operations		2.49	%			2.25	%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
						Thirty-nine weeks ended November 27, 2021				Thirty-nine weeks ended November 28, 2020
Reconciliation of net loss to adjusted EBITDA:
		Net loss - continuing operations				$	(149,416	)		$	(81,575	)
		Adjustments:
			Interest expense				145,507				151,389
			Income tax expense (benefit)				2,915				(7,534	)
			Depreciation and amortization				222,691				249,556
			LIFO charge (credit)				900				(30,303	)
			Facility exit and impairment charges				67,639				22,734
			Intangible asset impairment charges				-				29,852
			Loss (gain) on debt modifications and retirements, net				3,235				(5,274	)
			Merger and Acquisition-related costs				12,119				1,136
			Stock-based compensation expense				8,820				8,677
			Restructuring-related costs				25,173				71,096
			Inventory write-downs related to store closings				1,356				2,596
			Litigation settlements				50,212				-
			Gain on sale of assets, net				(79	)			(17,473	)
			Loss on Bartell acquisition				5,346				-
			Other				3,412				1,523
					Adjusted EBITDA - continuing operations	$	399,830			$	396,400
					Percent of revenues - continuing operations		2.16	%			2.19	%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per share amounts)
(unaudited)
					Thirteen weeks ended November 27, 2021				Thirteen weeks ended November 28, 2020
Net (loss) income from continuing operations					$	(36,058	)		$	4,324
	Add back - Income tax (benefit) expense					(1,175	)			437
			(Loss) income before income taxes - continuing operations			(37,233	)			4,761
	Adjustments:
		Amortization expense				18,780				21,236
		LIFO charge (credit)				8,886				(9,487	)
		Merger and Acquisition-related costs				3,642				1,136
		Restructuring-related costs				9,657				12,175
		Loss on Bartell acquisition				5,346				-
		Litigation settlements				2,000				-
			Adjusted income before income taxes - continuing operations			11,078				29,821
			Adjusted income tax expense (a)			2,914				8,243
			Adjusted net income from continuing operations		$	8,164			$	21,578
	Adjusted net income per diluted share - continuing operations:
	Numerator for adjusted net income per diluted share:
		Adjusted net income from continuing operations			$	8,164			$	21,578
	Denominator:
		Basic weighted average shares				54,168				53,744
		Outstanding options and restricted shares, net				541				335
		Diluted weighted average shares				54,709				54,079
			Net (loss) income from continuing operations per diluted
				share - continuing operations	$	(0.67	)		$	0.08
			Adjusted net income per diluted share - continuing operations		$	0.15			$	0.40

(a)	The fiscal year 2022 and 2021 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 27, 2021 and November 28, 2020, respectively.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME
(Dollars in thousands, except per share amounts)
(unaudited)
					Thirty-nine weeks ended November 27, 2021				Thirty-nine weeks ended November 28, 2020
Net loss from continuing operations					$	(149,416	)		$	(81,575	)
	Add back - Income tax expense (benefit)					2,915				(7,534	)
			Loss before income taxes - continuing operations			(146,501	)			(89,109	)
	Adjustments:
		Amortization expense				59,193				68,351
		LIFO charge (credit)				900				(30,303	)
		Intangible asset impairment charges				-				29,852
		Loss (gain) on debt modifications and retirements, net				3,235				(5,274	)
		Merger and Acquisition-related costs				12,119				1,136
		Restructuring-related costs				25,173				71,096
		Loss on Bartell acquisition				5,346				-
		Litigation settlements				50,212				-
			Adjusted income before income taxes - continuing operations			9,677				45,749
			Adjusted income tax expense (a)			2,545				12,645
			Adjusted net income from continuing operations		$	7,132			$	33,104
	Adjusted net income per diluted share - continuing operations:
	Numerator for adjusted net income per diluted share:
		Adjusted net income from continuing operations			$	7,132			$	33,104
	Denominator:
		Basic weighted average shares				54,004				53,600
		Outstanding options and restricted shares, net				998				754
		Diluted weighted average shares				55,002				54,354
			Net loss from continuing operations per diluted
				share - continuing operations	$	(2.77	)		$	(1.52	)
			Adjusted net income per diluted share - continuing operations		$	0.13			$	0.61

(a)	The fiscal year 2022 and 2021 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 27, 2021 and November 28, 2020, 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 27, 2021				Thirteen weeks ended November 28, 2020
Reconciliation of adjusted EBITDA gross profit:
		Revenues					$	4,432,508			$	4,109,592
		Gross Profit						1,233,237				1,079,708
		Addback:
			LIFO charge (credit)					8,886				(9,487	)
			Depreciation and amortization (cost of goods sold portion only)					2,489				1,945
			Other					25				381
					Adjusted EBITDA gross profit - continuing operations		$	1,244,637			$	1,072,547
					Percent of revenues - continuing operations			28.08	%			26.10	%
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
		Revenues					$	4,432,508			$	4,109,592
		Selling, general and administrative expenses						1,185,974				1,067,027
		Less:
			Depreciation and amortization (SG&A portion only)					58,087				67,641
			Stock-based compensation expense					(174	)			2,429
			Merger and Acquisition-related costs					3,642				1,136
			Restructuring-related costs					3,746				11,605
			Litigation settlements					2,000				-
			Other					(33	)			226
					Adjusted EBITDA selling, general and administrative
						expenses - continuing operations	$	1,118,706			$	983,990
					Percent of revenues - continuing operations			25.24	%			23.94	%
						Adjusted EBITDA - continuing operations	$	125,931			$	88,557

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 27, 2021				Thirty-nine weeks ended November 28, 2020
Reconciliation of adjusted EBITDA gross profit:
		Revenues					$	13,061,408			$	12,250,775
		Gross Profit						3,543,533				3,223,157
		Addback:
			LIFO charge (credit)					900				(30,303	)
			Depreciation and amortization (cost of goods sold portion only)					6,536				6,775
			Restructuring-related costs - SKU optimization charges					-				25,763
			Other					919				1,804
					Adjusted EBITDA gross profit - continuing operations		$	3,551,888			$	3,227,196
					Percent of revenues - continuing operations			27.19	%			26.34	%
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
		Revenues					$	13,061,408			$	12,250,775
		Selling, general and administrative expenses						3,505,365				3,206,078
		Less:
			Depreciation and amortization (SG&A portion only)					176,936				199,434
			Stock-based compensation expense					8,292				7,785
			Merger and Acquisition-related costs					12,119				1,136
			Restructuring-related costs					7,951				41,992
			Litigation settlements					34,448				-
			Other					3,945				2,414
					Adjusted EBITDA selling, general and administrative
						expenses - continuing operations	$	3,261,674			$	2,953,317
					Percent of revenues - continuing operations			24.97	%			24.11	%
						Adjusted EBITDA - continuing operations	$	290,214			$	273,879

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 26, 2022
(In thousands)
(unaudited)
							Guidance Range
							Low				High
Total Revenues							$	24,400,000			$	24,700,000
Pharmacy Services Segment Revenues							$	7,100,000			$	7,200,000
Gross Capital Expenditures							$	275,000			$	275,000
Reconciliation of net loss to adjusted EBITDA:
		Net loss					$	(229,500	)		$	(188,500	)
		Adjustments:
			Interest expense					195,000				195,000
			Income tax expense					3,000				-
			Depreciation and amortization					302,000				302,000
			LIFO charge					5,000				-
			Facility exit and impairment charges					105,000				95,000
			Loss on debt modifications and retirements, net					3,200				3,200
			Merger and Acquisition-related costs					13,000				13,000
			Restructuring-related costs					35,000				35,000
			Litigation settlements					50,000				50,000
			Gain on sale of assets, net					(7,000	)			(10,000	)
			Loss on Bartell acquisition					5,300				5,300
			Other					20,000				20,000
					Adjusted EBITDA		$	500,000			$	520,000

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE
YEAR ENDING FEBRUARY 26, 2022
(In thousands)
(unaudited)
					Guidance Range
					Low				High
Net loss					$	(229,500	)		$	(188,500	)
	Add back - income tax expense					3,000				-
			Loss before income taxes			(226,500	)			(188,500	)
	Adjustments:
		Amortization expense				79,000				79,000
		LIFO charge				5,000				-
		Loss on debt modifications and retirements, net				3,200				3,200
		Merger and Acquisition-related costs				13,000				13,000
		Restructuring-related costs				35,000				35,000
		Loss on Bartell acquisition				5,300				5,300
		Litigation settlements				50,000				50,000
			Adjusted loss before adjusted income taxes			(36,000	)			(3,000	)
			Adjusted income tax benefit			(9,500	)			(800	)
			Adjusted net loss		$	(26,500	)		$	(2,200	)
			Diluted adjusted net loss per share		$	(0.49	)		$	(0.04	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211220005684/en/

INVESTORS:

Trent Kruse

(717) 975-3710

investor@riteaid.com

MEDIA:

Jeffery Olson

(717) 975-5718

Jeffery.Olson@riteaid.com

Source: Rite Aid Corporation

FAQ

What were Rite Aid's revenues for the third quarter of fiscal 2022?

Rite Aid reported revenues of $6.23 billion for the third quarter.

What is the net loss per share reported by Rite Aid for the third quarter?

Rite Aid reported a net loss of $0.67 per share for the third quarter.

How much did Rite Aid raise its Adjusted EBITDA guidance for Fiscal 2022?

Rite Aid raised its Adjusted EBITDA guidance to between $500 million and $520 million.

How many stores is Rite Aid planning to close?

Rite Aid plans to close 63 stores as part of its store closure program.

What was the Adjusted EBITDA for Rite Aid in the third quarter?

Rite Aid's Adjusted EBITDA for the third quarter was $154.8 million.