Rite Aid Provides Update on Fiscal Year 2021 Guidance

Rhea-AI Summary

Rite Aid Corporation (NYSE: RAD) faced significant challenges in its fourth quarter of fiscal 2021, marking a soft cough, cold, and flu season alongside ongoing COVID-19 impacts. The company expects a revised revenue forecast of approximately $24.0 billion with a net loss between $90 million and $100 million. Adjusted EBITDA is anticipated to be between $425 million and $435 million. The overall unanticipated impact on the quarter was approximately $50 million to $60 million. Despite these hurdles, Rite Aid is ramping up COVID vaccine administration, aiming to restore acute prescription levels.

Positive

• Rite Aid has administered approximately 1 million COVID vaccines in March 2021.
• Expectations for fiscal 2021 include 3.5% growth in same store sales compared to fiscal 2020.
• Liquidity stands at approximately $1.7 billion.

Negative

• Fourth quarter front-end comparable same store sales declined by approximately 5.6%.
• Cough, cold and flu related sales fell 37%, negatively impacting gross profit.
• Comparable same store prescriptions decreased by 1.0%, driven by a 14% drop in acute prescriptions.
• Net loss is projected to be between $90 million and $100 million.

Rite Aid Corporation’s (NYSE: RAD) fourth quarter 2021 financial results were significantly impacted by a soft cough, cold and flu season, ongoing impacts related to COVID-19 and challenging weather conditions. As a result, the Company is updating its guidance for the fiscal year ended February 27, 2021.

“During the fourth quarter our industry was impacted by a historically soft cough, cold and flu season, as well as the continued impacts of COVID on the deferral of elective procedures and related acute prescription volume and selling, general and administrative expenses. In addition, there were significant weather events in February that impacted our supply chain and depressed sales,” said Heyward Donigan, president and CEO of Rite Aid. “Looking ahead, we have seen acute prescriptions return to positive levels in March, and we are proud to be selected as one of the retail providers administering COVID vaccines in the majority of our key states and cities, representing over 1,800 of our stores. We are significantly ramping up the number of vaccines we are administering on a daily basis, and have administered approximately 1 million COVID vaccines in March to date. Despite the extraordinary external headwinds that impacted our fourth quarter results, the entire organization is engaged, motivated and relentless in the execution of our RxEvolution strategy.”

Front-end comparable same store sales declined approximately 5.6 percent in the quarter ended February 27, 2021, driven by a decline of nearly 37 percent in cough, cold and flu related categories. The decline in these categories had a disproportionately negative impact on front-end gross profit, as these are comprised of higher margin products. Comparable same store prescriptions declined approximately 1.0 percent, driven by an over 14 percent decline in acute prescriptions. The Company also incurred incremental COVID related SG&A expenses due to a one time hero-pay bonus, cleaning costs, pandemic sick leave and other incremental operating costs. Rite Aid Corporation estimates the following impacts on fourth quarter adjusted EBITDA:

• $20 million to $24 million from lower incidence in cough, cold and flu related illnesses;
• $20 million to $24 million due to difficult weather conditions; and
• $10 million to $12 million related to continued effects of COVID-19.

The total unanticipated impact on the quarter results was approximately $50 million to $60 million.

Outlook for Fiscal 2021

For fiscal 2021, Rite Aid Corporation now expects revenues to be approximately $24.0 billion with same store sales expected to increase approximately 3.5 percent over fiscal 2020.

Net loss is expected to be between $90 million and $100 million.

Adjusted EBITDA is expected to be between $425 million and $435 million.

Capital expenditures are expected to be approximately $315 million, which includes $95 million for our acquisition of Bartell Drugs.

Liquidity is approximately $1.7 billion.

Fourth Quarter Earnings Announcement

Rite Aid Corporation is scheduled to release financial results for its Fiscal 2021 Fourth Quarter, which ended Feb. 27, 2021, on Thursday, Apr. 15, 2021. The company will hold an analyst call at 8:30 a.m. Eastern Time with remarks by Rite Aid's management team. The call will be broadcast via the Internet at https://www.riteaid.com/corporate/investor-relations/presentations.

The telephone replay will be available beginning at 12:30 p.m. Eastern Time on Thursday, April 15, 2021 and ending at 11:59 p.m. Eastern Time on May 5, 2021. To access the replay of the call, telephone (800) 585-8367 or (416) 621-4642 and enter the seven-digit reservation number 2368577.

The webcast replay of the call will also be available at https://www.riteaid.com/corporate/investor-relations/presentations starting at 12 p.m. Eastern Time Thursday, April 15, 2021. The playback will be available until the company’s next conference call.

About Rite Aid Corporation

Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to more than 1.6 million Americans daily. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family

FAQ

What are Rite Aid's fourth quarter earnings for fiscal 2021?

Rite Aid's fourth quarter earnings were negatively impacted by a soft cough, cold, and flu season, with expected revenues around $24.0 billion.

What is Rite Aid's outlook for fiscal 2021?

Rite Aid expects same store sales to increase by approximately 3.5% over fiscal 2020, with a projected net loss of $90 million to $100 million.

How many COVID vaccines has Rite Aid administered in March 2021?

Rite Aid has administered approximately 1 million COVID vaccines in March 2021.

What are the anticipated impacts on Rite Aid's fourth quarter adjusted EBITDA?

The anticipated impacts on fourth quarter adjusted EBITDA range from $50 million to $60 million due to illness incidence, weather conditions, and COVID-19 effects.