Rite Aid Corporation Reports Fiscal 2023 Second Quarter Results

Rhea-AI Summary

Rite Aid Corporation (NYSE: RAD) reported second-quarter revenues of $5.9 billion, a decline from $6.1 billion in the previous year. The company experienced a significant net loss of $331.3 million or $6.07 per share, influenced by a $252.2 million goodwill impairment charge. Adjusted EBITDA fell to $78.5 million from $106.2 million year-over-year. Retail comparable prescriptions rose 3.1%, with acute prescriptions growing 5.3%. The outlook for fiscal 2023 projects revenues between $23.6 billion and $24.0 billion but an increased net loss estimate between $520.3 million and $477.3 million.

Positive

• Retail comparable store prescriptions increased by 3.1%.
• Acute prescriptions, excluding COVID immunizations, rose by 5.3%.
• Adjusted EBITDA outlook for Fiscal 2023 maintained at $450 million to $490 million.

Negative

• Net loss increased to $331.3 million, compared to $100.3 million in the prior year.
• Adjusted EBITDA decreased from $106.2 million to $78.5 million year-over-year.
• Revenues fell from $6.1 billion to $5.9 billion, mainly due to reduced COVID vaccine and testing revenue.
• Goodwill impairment charge of $252.2 million negatively impacted net loss.

• Retail Comparable Store Prescriptions Increased 3.1 Percent – Comparable Store Acute Prescriptions, Excluding COVID Immunizations, Increased 5.3 Percent

• Revenues of $5.9 billion, Compared to Prior Year Revenues of $6.1 billion

• Net Loss per Share of $6.07, Compared to the Prior Year Net Loss per Share of $1.86 Driven by Non-Cash Goodwill Impairment Charge

• Adjusted Net Loss per Share of $0.63, Compared to the Prior Year Adjusted Net Loss of $0.41 per Share

• Adjusted EBITDA of $78.5 million, Compared to the Prior Year Adjusted EBITDA of $106.2 million

• Fiscal 2023 Adjusted EBITDA Outlook Updated to $450 million to $490 million

PHILADELPHIA--(BUSINESS WIRE)-- Rite Aid Corporation (NYSE: RAD) today reported operating results for its second fiscal quarter ended August 27, 2022.

“We’ve made good progress on key initiatives during the quarter: driving prescription growth and market share, improving operating margins at Elixir and achieving reductions in SG&A expenses across our business,” said Heyward Donigan, president and CEO. “As we look to the second half of the year, we expect continued pressure on consumer spending and supply chain challenges. At the same time, we are ready to meet a high demand for immunizations, while driving continued strong performance at Elixir and further SG&A expense reductions.”

Consolidated Second Quarter Summary

(dollars in thousands)		Thirteen Week Period Ended						Twenty-six Week Period Ended
			August 27, 2022			August 28, 2021			August 27, 2022			August 28, 2021
Revenues		$	5,901,069		$	6,113,000		$	11,915,652		$	12,273,985
Net loss			(331,290)			(100,301)			(441,481)			(113,358)
Adjusted EBITDA			78,549			106,160			178,679			245,037

For the second quarter, the Company reported a net loss of $331.3 million, or $6.07 loss per share, Adjusted net loss of $34.4 million, or $0.63 loss per share, and Adjusted EBITDA of $78.5 million, or 1.3 percent of revenues.

Revenues for the quarter were $5.90 billion compared to revenues of $6.11 billion in the prior year’s quarter, largely due to a reduction in revenue from COVID vaccines and testing, store closures and a planned loss of covered lives at Elixir.

Second quarter net loss was $331.3 million, or $6.07 per share, compared to last year’s second quarter net loss of $100.3 million, or $1.86 per share. The increase in net loss is due primarily to a current quarter charge of $252.2 million, or $4.62 per share, for the impairment of goodwill related to the Pharmacy Services Segment. Net loss was also impacted by higher facility exit and impairment charges driven by the Company’s previously announced store closures. These items are partially offset by a gain on our repurchase of certain bonds at a discount, a gain on sale of assets resulting from sale leasebacks of two distribution centers and script file sales resulting from the store closures.

Retail Pharmacy Segment

(dollars in thousands)		Thirteen Week Period Ended						Twenty-six Week Period Ended
			August 27, 2022			August 28, 2021			August 27, 2022			August 28, 2021
Revenues		$	4,231,791		$	4,277,218		$	8,577,147		$	8,628,900
Adjusted EBITDA			31,484			69,369			105,166			164,283

Retail Pharmacy Segment revenues decreased 1.1 percent over the prior year quarter, driven by a reduction in COVID vaccine and testing revenue as well as store closures, partially offset by an increase in both acute and maintenance prescriptions. Same store sales for the second quarter increased 5.6 percent over the prior year period, consisting of an 8.0 percent increase in pharmacy sales, partially offset by a 0.3 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 0.2 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 3.1 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations, increased 2.1 percent, with same store maintenance prescriptions increasing 1.2 percent and other same store acute prescriptions increasing 5.3 percent. Prescription sales accounted for 70.7 percent of total drugstore sales. Total store count at the end of the second quarter was 2,352.

Retail Pharmacy Segment Adjusted EBITDA was $31.5 million, or 0.7 percent of revenues, for the second quarter compared to last year’s second quarter Adjusted EBITDA of $69.4 million, or 1.6 percent of revenues. The decline in Adjusted EBITDA was due to decreased gross profit, partially offset by a decrease in selling, general and administrative (SG&A) expenses of $45.0 million. Gross profit was negatively impacted by the decline in COVID vaccinations and testing, partially offset by the increase in prescriptions filled. SG&A expenses benefited from lower payroll, occupancy, and other operating costs due to store closures and cost control initiatives.

Pharmacy Services Segment

(dollars in thousands)		Thirteen Week Period Ended						Twenty-six Week Period Ended
			August 27, 2022			August 28, 2021			August 27, 2022			August 28, 2021
Revenues		$	1,727,241		$	1,898,213		$	3,453,098		$	3,770,495
Adjusted EBITDA			47,065			36,791			73,513			80,754

Pharmacy Services Segment revenues were $1.7 billion for the quarter, a decrease of 9.0 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 due to industry consolidation, partially offset by increased utilization of higher cost drugs.

Pharmacy Services Segment Adjusted EBITDA was $47.1 million, or 2.7 percent of revenues, for the second quarter compared to last year’s second quarter Adjusted EBITDA of $36.8 million, or 1.9 percent of revenues. The current quarter benefitted from increased gross profit resulting from improved network performance, increases in rebates, and reductions in SG&A expense, partially offset by the decline in revenues associated with lost clients, as mentioned above.

Outlook for Fiscal 2023

Rite Aid Corporation is maintaining its outlook for Fiscal 2023 revenues and lowering its outlook for net loss and Adjusted EBITDA.

Total revenues are expected to be between $23.6 billion and $24.0 billion in fiscal 2023. Retail Pharmacy Segment revenue is expected to be between $17.35 billion and $17.65 billion and Pharmacy Services Segment revenue is expected to be between $6.25 billion and $6.35 billion (net of any intercompany revenues to the Retail Pharmacy Segment).

Net loss is expected to be between $520.3 million and $477.3 million. Our estimates for net loss have increased primarily due to goodwill impairment charges in the Pharmacy Services Segment and increased impairment charges for closed stores.

Adjusted EBITDA is expected to be between $450 million and $490 million versus prior guidance of between $460 million and $500 million, due to expectations of cautious consumer demand and continued supply chain challenges in our front end retail business, partially offset by improved margins at Elixir. Retail Pharmacy Segment Adjusted EBITDA is expected to be between $305 million and $335 million and Pharmacy Services Segment Adjusted EBITDA is expected to be between $145 million and $155 million.

Adjusted net loss per share is expected to be between $1.52 and $0.97.

Capital expenditures are expected to be approximately $225 million, with a focus on investments in digital capabilities, technology, prescription file purchases and distribution center automation.

We expect to generate positive free cash flow in Fiscal 2023.

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 Thursday, Sept. 29, 2022 and ending at 11:59 p.m. Eastern Time on Oct. 31 2022. To access the replay of the call, telephone (800) 770-2030 or (647) 362-9199 and enter the seven-digit reservation number 9029129. The webcast replay of the call will also be available at https://investors.riteaid.com starting at 12 p.m. Eastern Time today. The playback will be available until the company’s next conference call.

About Rite Aid Corporation

Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,300 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 2023, including our expectation to generate positive free cash flow in fiscal 2023; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the timing and roll out of the Company’s new loyalty program; our key growth initiatives, including our plans to improve adherence; the timing of the opening of four new small format stores in underserved markets; 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 (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation, including related to Opioids, “usual and customary” pricing or other matters; our ability to monetize (and on reasonably available terms) the CMS receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), and regulatory conditions, including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, as well as other factors specific to the markets in which we operate; the impact of private and public third-party payers continued reduction in prescription drug reimbursements 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 2023 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 and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables. Rite Aid believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare its operating performance over multiple periods.

Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility exit and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors.

Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. See the attached tables for a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, and other items. See the attached tables for a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. The Company believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A serve as appropriate measures in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors.

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
			August 27, 2022				February 26, 2022
ASSETS
Current assets:
	Cash and cash equivalents		$	46,808			$	39,721
	Accounts receivable, net			1,564,388				1,343,496
	Inventories, net of LIFO reserve of $497,294 and $487,173			2,026,216				1,959,389
	Prepaid expenses and other current assets			103,452				106,749
		Total current assets		3,740,864				3,449,355
Property, plant and equipment, net				950,962				989,167
Operating lease right-of-use assets				2,679,500				2,813,535
Goodwill				626,936				879,136
Other intangibles, net				268,040				291,196
Deferred tax assets				13,938				20,071
Other assets				86,885				86,543
		Total assets	$	8,367,125			$	8,529,003
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
	Current maturities of long-term debt and lease financing obligations		$	5,581			$	5,544
	Accounts payable			1,511,673				1,571,261
	Accrued salaries, wages and other current liabilities			729,561				780,632
	Current portion of operating lease liabilities			571,952				575,651
		Total current liabilities		2,818,767				2,933,088
Long-term debt, less current maturities				3,222,655				2,732,986
Long-term operating lease liabilities				2,496,476				2,597,090
Lease financing obligations, less current maturities				14,009				14,830
Other noncurrent liabilities				151,616				151,976
		Total liabilities		8,703,523				8,429,970
Commitments and contingencies				-				-
Stockholders' (deficit) equity:
	Common stock			56,580				55,752
	Additional paid-in capital			5,915,521				5,910,299
	Accumulated deficit			(6,293,062	)			(5,851,581	)
	Accumulated other comprehensive loss			(15,437	)			(15,437	)
		Total stockholders' (deficit) equity		(336,398	)			99,033
		Total liabilities and stockholders' (deficit) equity	$	8,367,125			$	8,529,003

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
			Thirteen weeks ended August 27, 2022				Thirteen weeks ended August 28, 2021
Revenues			$	5,901,069			$	6,113,000
Costs and expenses:
	Cost of revenues			4,746,574				4,867,076
	Selling, general and administrative expenses			1,193,553				1,267,753
	Facility exit and impairment charges			45,845				11,353
	Goodwill and intangible asset impairment charges			252,200				-
	Interest expense			52,533				48,592
	(Gain) loss on debt modifications and retirements, net			(41,312	)			2,839
	(Gain) loss on sale of assets, net			(29,001	)			12,378
				6,220,392				6,209,991
Loss before income taxes				(319,323	)			(96,991	)
Income tax expense				11,967				3,310
	Net loss		$	(331,290	)		$	(100,301	)
Basic and diluted loss per share:
Numerator for loss per share:
	Net loss attributable to common stockholders - basic and diluted		$	(331,290	)		$	(100,301	)
Denominator:
	Basic and diluted weighted average shares			54,548				53,989
	Basic and diluted loss per share		$	(6.07	)		$	(1.86	)

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
			Twenty-six weeks ended August 27, 2022				Twenty-six weeks ended August 28, 2021
Revenues			$	11,915,652			$	12,273,985
Costs and expenses:
	Cost of revenues			9,564,428				9,743,186
	Selling, general and administrative expenses			2,411,482				2,513,115
	Facility exit and impairment charges			112,416				20,184
	Goodwill and intangible asset impairment charges			252,200				-
	Interest expense			100,652				97,713
	(Gain) loss on debt modifications and retirements, net			(41,312	)			3,235
	(Gain) loss on sale of assets, net			(58,197	)			5,820
				12,341,669				12,383,253
Loss before income taxes				(426,017	)			(109,268	)
Income tax expense				15,464				4,090
	Net loss		$	(441,481	)		$	(113,358	)
Basic and diluted loss per share:
Numerator for loss per share:
	Net loss attributable to common stockholders - basic and diluted		$	(441,481	)		$	(113,358	)
Denominator:
	Basic and diluted weighted average shares			54,453				53,920
	Basic and diluted loss per share		$	(8.11	)		$	(2.10	)

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
											Thirteen weeks ended August 27, 2022				Thirteen weeks ended August 28, 2021
OPERATING ACTIVITIES:
Net loss											$	(331,290	)		$	(100,301	)
Adjustments to reconcile to net cash (used in) provided by operating activities:
	Depreciation and amortization											68,564				73,859
	Facility exit and impairment charges											45,845				11,353
	Goodwill and intangible asset impairment charges											252,200				-
	LIFO charge (credit)											10,121				(3,993	)
	Change in allowances for uncollectible accounts receivable											(5,434	)			-
	(Gain) loss on sale of assets, net											(29,001	)			12,378
	Stock-based compensation expense											4,735				5,792
	(Gain) loss on debt modifications and retirements, net											(41,312	)			2,839
	Changes in deferred taxes											6,133				-
	Changes in operating assets and liabilities:
		Accounts receivable										(107,215	)			(63,368	)
		Inventories										(61,578	)			(31,014	)
		Accounts payable										94,229				40,797
		Operating lease right-of-use assets and operating lease liabilities										(16,901	)			(6,400	)
		Other assets										(11,621	)			17,207
		Other liabilities										(76,699	)			66,574
			Net cash (used in) provided by operating activities									(199,224	)			25,723
INVESTING ACTIVITIES:
	Payments for property, plant and equipment											(49,067	)			(46,192	)
	Intangible assets acquired											(3,108	)			(9,043	)
	Proceeds from insured loss											-				10,436
	Proceeds from dispositions of assets and investments											10,164				2,228
	Proceeds from sale-leaseback transactions											45,986				6,729
			Net cash provided by (used in) investing activities									3,975				(35,842	)
FINANCING ACTIVITIES:
	Proceeds from issuance of long-term debt											-				350,000
	Net proceeds from revolver											386,000				211,000
	Principal payments on long-term debt											(151,034	)			(451,047	)
	Change in zero balance cash accounts											(46,622	)			(52,801	)
	Financing fees paid for early debt redemption											(881	)			(831	)
	Payments for taxes related to net share settlement of equity awards											(1,466	)			(2,186	)
	Deferred financing costs paid											-				(15,932	)
			Net cash provided by financing activities									185,997				38,203
(Decrease) increase in cash and cash equivalents												(9,252	)			28,084
Cash and cash equivalents, beginning of period												56,060				118,480
Cash and cash equivalents, end of period											$	46,808			$	146,564

RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
											Twenty-six weeks ended August 27, 2022				Twenty-six weeks ended August 28, 2021
OPERATING ACTIVITIES:
Net loss											$	(441,481	)		$	(113,358	)
Adjustments to reconcile to net cash (used in) provided by operating activities:
	Depreciation and amortization											138,637				149,718
	Facility exit and impairment charges											112,416				20,184
	Goodwill and intangible asset impairment charges											252,200				-
	LIFO charge (credit)											10,121				(7,986	)
	Change in allowances for uncollectible accounts receivable											(1,671	)			-
	(Gain) loss on sale of assets, net											(58,197	)			5,820
	Stock-based compensation expense											8,069				8,603
	(Gain) loss on debt modifications and retirements, net											(41,312	)			3,235
	Changes in deferred taxes											6,133				-
	Changes in operating assets and liabilities:
		Accounts receivable										(211,673	)			(212,855	)
		Inventories										(77,405	)			(19,096	)
		Accounts payable										(43,343	)			91,324
		Operating lease right-of-use assets and operating lease liabilities										(31,713	)			(12,309	)
		Other assets										(10,870	)			25,185
		Other liabilities										(61,372	)			101,133
			Net cash (used in) provided by operating activities									(451,461	)			39,598
INVESTING ACTIVITIES:
	Payments for property, plant and equipment											(122,243	)			(105,356	)
	Intangible assets acquired											(15,356	)			(14,479	)
	Proceeds from insured loss											-				10,436
	Proceeds from dispositions of assets and investments											41,003				4,676
	Proceeds from sale-leaseback transactions											45,986				14,185
			Net cash used in investing activities									(50,610	)			(90,538	)
FINANCING ACTIVITIES:
	Proceeds from issuance of long-term debt											-				350,000
	Net proceeds from revolver											677,000				250,000
	Principal payments on long-term debt											(152,011	)			(542,988	)
	Change in zero balance cash accounts											(12,931	)			(844	)
	Financing fees paid for early debt redemption											(881	)			(833	)
	Payments for taxes related to net share settlement of equity awards											(2,019	)			(2,221	)
	Deferred financing costs paid											-				(16,512	)
			Net cash provided by financing activities									509,158				36,602
Increase (decrease) in cash and cash equivalents												7,087				(14,338	)
Cash and cash equivalents, beginning of period												39,721				160,902
Cash and cash equivalents, end of period											$	46,808			$	146,564

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
				Thirteen weeks ended August 27, 2022				Thirteen weeks ended August 28, 2021
Retail Pharmacy Segment
	Revenues (a)			$	4,231,791			$	4,277,218
	Cost of revenues (a)				3,188,755				3,136,856
	Gross profit				1,043,036				1,140,362
	LIFO charge (credit)				10,121				(3,993	)
	FIFO gross profit				1,053,157				1,136,369
	Adjusted EBITDA gross profit				1,056,055				1,138,913
	Gross profit as a percentage of revenues				24.65	%			26.66	%
	LIFO charge (credit) as a percentage of revenues				0.24	%			-0.09	%
	FIFO gross profit as a percentage of revenues				24.89	%			26.57	%
	Adjusted EBITDA gross profit as a percentage of revenues				24.96	%			26.63	%
	Selling, general and administrative expenses				1,100,775				1,163,352
	Adjusted EBITDA selling, general and administrative expenses				1,024,571				1,069,544
	Selling, general and administrative expenses as a percentage of revenues				26.01	%			27.20	%
	Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues				24.21	%			25.01	%
	Cash interest expense				49,619				45,599
	Non-cash interest expense				2,914				2,993
	Total interest expense				52,533				48,592
	Adjusted EBITDA				31,484				69,369
	Adjusted EBITDA as a percentage of revenues				0.74	%			1.62	%
Pharmacy Services Segment
	Revenues (a)			$	1,727,241			$	1,898,213
	Cost of revenues (a)				1,615,782				1,792,651
	Gross profit				111,459				105,562
	Gross profit as a percentage of revenues				6.45	%			5.56	%
	Adjusted EBITDA				47,065				36,791
	Adjusted EBITDA as a percentage of revenues				2.72	%			1.94	%

(a) -

Revenues and cost of revenues include $57,963 and $62,431 of inter-segment activity for the thirteen weeks ended August 27, 2022 and August 28, 2021, respectively, that is eliminated in consolidation.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
				Twenty-six weeks ended August 27, 2022				Twenty-six weeks ended August 28, 2021
Retail Pharmacy Segment
	Revenues (a)			$	8,577,147			$	8,628,900
	Cost of revenues (a)				6,436,754				6,318,604
	Gross profit				2,140,393				2,310,296
	LIFO charge (credit)				10,121				(7,986	)
	FIFO gross profit				2,150,514				2,302,310
	Adjusted EBITDA gross profit				2,162,707				2,307,251
	Gross profit as a percentage of revenues				24.95	%			26.77	%
	LIFO charge (credit) as a percentage of revenues				0.12	%			-0.09	%
	FIFO gross profit as a percentage of revenues				25.07	%			26.68	%
	Adjusted EBITDA gross profit as a percentage of revenues				25.21	%			26.74	%
	Selling, general and administrative expenses				2,217,989				2,319,391
	Adjusted EBITDA selling, general and administrative expenses				2,057,541				2,142,968
	Selling, general and administrative expenses as a percentage of revenues				25.86	%			26.88	%
	Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues				23.99	%			24.83	%
	Cash interest expense				94,863				91,623
	Non-cash interest expense				5,789				6,090
	Total interest expense				100,652				97,713
	Adjusted EBITDA				105,166				164,283
	Adjusted EBITDA as a percentage of revenues				1.23	%			1.90	%
Pharmacy Services Segment
	Revenues (a)			$	3,453,098			$	3,770,495
	Cost of revenues (a)				3,242,267				3,549,992
	Gross profit				210,831				220,503
	Gross profit as a percentage of revenues				6.11	%			5.85	%
	Adjusted EBITDA				73,513				80,754
	Adjusted EBITDA as a percentage of revenues				2.13	%			2.14	%

(a) -

Revenues and cost of revenues include $114,593 and $125,410 of inter-segment activity for the twenty-six weeks ended August 27, 2022 and August 28, 2021, 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 27, 2022				Thirteen weeks ended August 28, 2021
Reconciliation of net loss to adjusted EBITDA:
		Net loss				$	(331,290	)		$	(100,301	)
		Adjustments:
			Interest expense				52,533				48,592
			Income tax expense				11,967				3,310
			Depreciation and amortization				68,564				73,859
			LIFO charge (credit)				10,121				(3,993	)
			Facility exit and impairment charges				45,845				11,353
			Goodwill and intangible asset impairment charges				252,200				-
			(Gain) loss on debt modifications and retirements, net				(41,312	)			2,839
			Merger and Acquisition-related costs				-				4,591
			Stock-based compensation expense				4,735				5,792
			Restructuring-related costs				12,805				9,584
			Inventory write-downs related to store closings				1,094				798
			Litigation and other contractual settlements				20,093				34,212
			(Gain) loss on sale of assets, net				(29,001	)			12,378
			Other				195				3,146
					Adjusted EBITDA	$	78,549			$	106,160
					Percent of revenues		1.33	%			1.74	%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
						Twenty-six weeks ended August 27, 2022				Twenty-six weeks ended August 28, 2021
Reconciliation of net loss to adjusted EBITDA:
		Net loss				$	(441,481	)		$	(113,358	)
		Adjustments:
			Interest expense				100,652				97,713
			Income tax expense				15,464				4,090
			Depreciation and amortization				138,637				149,718
			LIFO charge (credit)				10,121				(7,986	)
			Facility exit and impairment charges				112,416				20,184
			Goodwill and intangible asset impairment charges				252,200				-
			(Gain) loss on debt modifications and retirements, net				(41,312	)			3,235
			Merger and Acquisition-related costs				-				8,477
			Stock-based compensation expense				8,069				8,603
			Restructuring-related costs				35,451				15,516
			Inventory write-downs related to store closings				9,049				1,270
			Litigation and other contractual settlements				38,364				48,212
			(Gain) loss on sale of assets, net				(58,197	)			5,820
			Other				(754	)			3,543
					Adjusted EBITDA	$	178,679			$	245,037
					Percent of revenues		1.50	%			2.00	%

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
					Thirteen weeks ended August 27, 2022				Thirteen weeks ended August 28, 2021
Net loss					$	(331,290	)		$	(100,301	)
	Add back - Income tax expense					11,967				3,310
			Loss before income taxes			(319,323	)			(96,991	)
	Adjustments:
		Amortization expense				18,420				19,953
		LIFO charge (credit)				10,121				(3,993	)
		Goodwill and intangible asset impairment charges				252,200				-
		(Gain) loss on debt modifications and retirements, net				(41,312	)			2,839
		Merger and Acquisition-related costs				-				4,591
		Restructuring-related costs				12,805				9,584
		Litigation and other contractual settlements				20,093				34,212
			Adjusted loss before income taxes			(46,996	)			(29,805	)
			Adjusted income tax benefit (a)			(12,576	)			(7,839	)
			Adjusted net loss		$	(34,420	)		$	(21,966	)
	Adjusted net loss per diluted share:
	Numerator for adjusted net loss per diluted share:
		Adjusted net loss			$	(34,420	)		$	(21,966	)
	Denominator:
		Basic and diluted weighted average shares				54,548				53,989
			Net loss per diluted share		$	(6.07	)		$	(1.86	)
			Adjusted net loss per diluted share		$	(0.63	)		$	(0.41	)

(a)	The fiscal year 2023 and 2022 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 27, 2022 and August 28, 2021, respectively.

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
					Twenty-six weeks ended August 27, 2022				Twenty-six weeks ended August 28, 2021
Net loss					$	(441,481	)		$	(113,358	)
	Add back - Income tax expense					15,464				4,090
			Loss before income taxes			(426,017	)			(109,268	)
	Adjustments:
		Amortization expense				39,046				40,413
		LIFO charge (credit)				10,121				(7,986	)
		Goodwill and intangible asset impairment charges				252,200				-
		(Gain) loss on debt modifications and retirements, net				(41,312	)			3,235
		Merger and Acquisition-related costs				-				8,477
		Restructuring-related costs				35,451				15,516
		Litigation and other contractual settlements				38,364				48,212
			Adjusted loss before income taxes			(92,147	)			(1,401	)
			Adjusted income tax benefit (a)			(24,659	)			(368	)
			Adjusted net loss		$	(67,488	)		$	(1,033	)
	Adjusted net loss per diluted share:
	Numerator for adjusted net loss per diluted share:
		Adjusted net loss			$	(67,488	)		$	(1,033	)
	Denominator:
		Basic and diluted weighted average shares				54,453				53,920
			Net loss per diluted share		$	(8.11	)		$	(2.10	)
			Adjusted net loss per diluted share		$	(1.24	)		$	(0.02	)

(a)	The fiscal year 2023 and 2022 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 27, 2022 and August 28, 2021, 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 27, 2022				Thirteen weeks ended August 28, 2021
Reconciliation of adjusted EBITDA gross profit:
		Revenues					$	4,231,791			$	4,277,218
		Gross Profit						1,043,036				1,140,362
		Addback:
			LIFO charge (credit)					10,121				(3,993	)
			Depreciation and amortization (cost of goods sold portion only)					2,075				1,950
			Other					823				594
					Adjusted EBITDA gross profit		$	1,056,055			$	1,138,913
					Percent of revenues			24.96	%			26.63	%
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
		Revenues					$	4,231,791			$	4,277,218
		Selling, general and administrative expenses						1,100,775				1,163,352
		Less:
			Depreciation and amortization (SG&A portion only)					54,604				59,081
			Stock-based compensation expense					4,496				5,695
			Merger and Acquisition-related costs					-				4,591
			Restructuring-related costs					8,442				2,584
			Litigation and other contractual settlements					8,170				18,448
			Other					492				3,409
					Adjusted EBITDA selling, general and administrative
						expenses	$	1,024,571			$	1,069,544
					Percent of revenues			24.21	%			25.01	%
						Adjusted EBITDA	$	31,484			$	69,369

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 27, 2022				Twenty-six weeks ended August 28, 2021
Reconciliation of adjusted EBITDA gross profit:
		Revenues					$	8,577,147			$	8,628,900
		Gross Profit						2,140,393				2,310,296
		Addback:
			LIFO charge (credit)					10,121				(7,986	)
			Depreciation and amortization (cost of goods sold portion only)					4,968				4,047
			Other					7,225				894
					Adjusted EBITDA gross profit		$	2,162,707			$	2,307,251
					Percent of revenues			25.21	%			26.74	%
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
		Revenues					$	8,577,147			$	8,628,900
		Selling, general and administrative expenses						2,217,989				2,319,391
		Less:
			Depreciation and amortization (SG&A portion only)					107,819				118,849
			Stock-based compensation expense					7,598				8,466
			Merger and Acquisition-related costs					-				8,477
			Restructuring-related costs					25,813				4,205
			Litigation and other contractual settlements					18,122				32,448
			Other					1,096				3,978
					Adjusted EBITDA selling, general and administrative
						expenses	$	2,057,541			$	2,142,968
					Percent of revenues			23.99	%			24.83	%
						Adjusted EBITDA	$	105,166			$	164,283

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING MARCH 4, 2023
(In thousands)
(unaudited)
							Guidance Range
							Low				High
Total Revenues							$	23,600,000			$	24,000,000
Pharmacy Services Segment Revenues							$	6,250,000			$	6,350,000
Gross Capital Expenditures							$	225,000			$	225,000
Reconciliation of net loss to adjusted EBITDA:
		Net loss					$	(520,300	)		$	(477,300	)
		Adjustments:
			Interest expense					216,000				216,000
			Income tax benefit					(7,000	)			(10,000	)
			Depreciation and amortization					280,000				280,000
			LIFO charge					20,000				20,000
			Facility exit and impairment charges					175,000				175,000
			Goodwill and intangible asset impairment charges					252,200				252,200
			Gain on debt modifications and retirements, net					(41,300	)			(41,300	)
			Restructuring-related costs					72,000				72,000
			Litigation and other contractual settlements					38,400				38,400
			Gain on sale of assets, net					(60,000	)			(60,000	)
			Other					25,000				25,000
					Adjusted EBITDA		$	450,000			$	490,000

RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE
YEAR ENDING MARCH 4, 2023
(In thousands)
(unaudited)
					Guidance Range
					Low				High
Net loss					$	(520,300	)		$	(477,300	)
	Add back - income tax benefit					(7,000	)			(10,000	)
			Loss before income taxes			(527,300	)			(487,300	)
	Adjustments:
		Amortization expense				73,000				73,000
		LIFO charge				20,000				20,000
		Goodwill and intangible asset impairment charges				252,200				252,200
		Gain on debt modifications and retirements, net				(41,300	)			(41,300	)
		Restructuring-related costs				72,000				72,000
		Litigation and other contractual settlements				38,400				38,400
			Adjusted loss before adjusted income taxes			(113,000	)			(73,000	)
			Adjusted income tax benefit			(30,000	)			(20,000	)
			Adjusted net loss		$	(83,000	)		$	(53,000	)
			Diluted adjusted net loss per share		$	(1.52	)		$	(0.97	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220928005838/en/

INVESTORS:

Byron Purcell

(717) 975-3710

investor@riteaid.com

MEDIA:

Joy Errico Seusing

(203) 970-5559

press@riteaid.com

Source: Rite Aid Corporation

FAQ

What were Rite Aid's second quarter revenues for fiscal 2023?

Rite Aid's second quarter revenues for fiscal 2023 were $5.9 billion.

What is the net loss for Rite Aid in the second quarter?

Rite Aid reported a net loss of $331.3 million, or $6.07 per share, in the second quarter.

What does Rite Aid forecast for its fiscal 2023 adjusted EBITDA?

Rite Aid's adjusted EBITDA outlook for fiscal 2023 is between $450 million and $490 million.

How much did retail comparable store prescriptions increase?

Retail comparable store prescriptions increased by 3.1% in the second quarter.

What is the projected net loss for Rite Aid in fiscal 2023?

The projected net loss for Rite Aid in fiscal 2023 is between $520.3 million and $477.3 million.