Business Wire | Jun 24, 2021 07:00AM EDT

Rite Aid Corporation Reports Fiscal 2022 First Quarter Results

Jun. 24, 2021

CAMP HILL, Pa.--(BUSINESS WIRE)--Jun. 24, 2021--Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended May 29, 2021.

For the first quarter, the company reported net loss from continuing operations of $13.1 million, or $0.24 loss per share, Adjusted net income from continuing operations of $20.9 million, or $0.38 income per share, and Adjusted EBITDA from continuing operations of $138.9 million, or 2.3 percent of revenues.

"We are pleased with our first quarter results, as we delivered adjusted EBITDA at the top end of our guidance range and continued our extraordinary efforts to vaccinate Americans against COVID-19," said Heyward Donigan, president and chief executive officer, Rite Aid. "As a result of the tireless efforts and dedication of our teams, I am proud to announce that we delivered nearly 4.7 million COVID-19 vaccines in the first quarter. We have now provided over 6 million COVID-19 vaccines since we began administering shots late last fiscal year."

"Our results improved sequentially through the first quarter, and we have momentum in several areas of our business as the country began taking meaningful steps towards a post-pandemic world. With a healthier economy and the reopening of the communities we serve, combined with the execution of our RxEvolution strategy, we are well positioned to deliver on our strategic priorities. I am very proud of our over 50,000 associates and the progress we're making in our journey to revitalize our brand and elevate the crucial role that pharmacy plays in the health of our customers."

Consolidated First Quarter Summary

(dollars in thousands) Thirteen Week Period Ended

May 29, 2021 May 30, 2020

Revenues from continuing operations $ 6,160,985 $ 6,027,376

Net loss from continuing operations (13,057 ) (72,702 )

Adjusted EBITDA from continuing operations 138,877 107,392

Revenues from continuing operations for the quarter were $6.16 billion compared to revenues from continuing operations of $6.03 billion in the prior year's quarter. The 2.2 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 $13.1 million, or $0.24 per share, compared to last year's first quarter net loss from continuing operations of $72.7 million, or $1.36 per share. The improvement in net loss is due primarily to improved operating results in the Retail Pharmacy Segment, higher intangible asset impairment charges in the prior year first quarter, and lower restructuring-related costs as a result of last year's merchandise optimization program. These benefits were partially offset by litigation settlements in the current quarter, a lower LIFO credit, and an increase in income tax expense.

Adjusted EBITDA from continuing operations was $138.9 million or 2.3% of revenues, compared to last year's first quarter Adjusted EBITDA of $107.4 million or 1.8% of revenues. The improvement in Adjusted EBITDA was driven by an increase in gross profit resulting from an increase in prescription volume in our Retail Pharmacy Segment.

Retail Pharmacy Segment

(dollars in thousands) Thirteen Week Period Ended

May 29, 2021 May 30, 2020

Revenues from continuing operations $ 4,351,682 $ 4,123,271

Adjusted EBITDA from continuing operations 94,914 62,982

Retail Pharmacy Segment revenues from continuing operations increased 5.5 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 first quarter increased 1.4 percent over the prior year period, consisting of an 8.2 percent increase in pharmacy sales and a 12.0 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 11.5 percent, driven by decreases in general cleaning products, sanitizers, wipes, paper products, liquor, and over-the-counter products resulting from the pandemic driven surge in the prior year quarter. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 11.2 percent over the prior year period. In addition to the benefit from COVID-19 vaccinations, other acute prescriptions increased 3 percent and maintenance prescriptions increased 2 percent on a same store basis. Prescription sales from continuing operations accounted for 68.9 percent of total drugstore sales. Total store count at the end of the first quarter was 2,506.

Retail Pharmacy Segment Adjusted EBITDA from continuing operations was $94.9 million, or 2.2 percent of revenues, for the first quarter compared to last year's first quarter Adjusted EBITDA from continuing operations of $63.0 million, or 1.5 percent of revenues. The improvement in Adjusted EBITDA was driven by an increase in gross profit resulting from higher pharmacy same store sales, partially offset by pharmacy reimbursement rate pressures that were not fully offset by generic drug cost reductions and a decline in front end gross profit as we cycled the impact of the prior year's COVID-19 buying surge.

Pharmacy Services Segment

(dollars in thousands) Thirteen Week Period Ended

May 29, 2021 May 30, 2020

Revenues from continuing operations $ 1,872,282 $ 1,977,246

Adjusted EBITDA from continuing operations 43,963 44,410

Pharmacy Services Segment revenues were $1.9 billion for the quarter, a decrease of 5.3 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a decrease in lives stemming from the loss of a large customer account and a decrease in Medicare Part D membership.

Pharmacy Services Segment Adjusted EBITDA from continuing operations was $44.0 million, or 2.3 percent of revenues, for the first quarter and was flat to last year's first quarter Adjusted EBITDA from continuing operations of $44.4 million, or 2.2 percent of revenues. Improvements in the company's discount card business and good network management were offset by the decline in revenues and an increase in the medical loss ratio tied to the company's Medicare Part D business.

Outlook for Fiscal 2022

The company's outlook for fiscal 2022 is based on the following key assumptions:

* No assumed benefit for additional COVID-19 boosters or for vaccinations of children under 12. * Acute scripts and front end OTC sales will be below historical levels as we do not expect a full recovery in cough, cold and flu results. * The markets in which our retail stores operate will not be subject to lockdowns caused by COVID-19. * Continued reimbursement rate pressure in our retail pharmacy business. * A decrease in Elixir revenues due to the loss of a large customer account and the planned reduction in Medicare Part D lives. * Improved Elixir EBITDA margin due to continued strong network and rebate management, offset by pressure from an increase in medical loss ratio tied to the company's Medicare Part D business. * Increased investment at Elixir in personnel and technology spend to drive future sales and to develop a more efficient operating platform. * Increased investments in retail wages in to drive improved customer satisfaction and revenue.

Total revenues are expected to be between $25.1 billion and $25.5 billion in fiscal 2022. Pharmacy Services Segment revenue is expected to be between $7.9 billion and $8.0 billion (net of any intercompany revenues to the Retail Pharmacy Segment).

Net loss is expected to be between $175 million and $138 million.

Adjusted EBITDA is expected to be between $440 million and $480 million.

Adjusted net loss per share is expected to be between $0.79 and $0.24.

Capital expenditures are expected to be approximately $300 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 Thursday, June 24, 2021 and ending at 11:59 p.m. Eastern Time on July 24, 2021. To access the replay of the call, telephone (800) 585-8367 or (416) 621-4642 and enter the seven-digit reservation number 3989887. 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 2,500 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; 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 impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, and other impacts to the business, or on our ability to execute business continuity plans, as a result of the COVID-19 pandemic; 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 RxEvolution 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), civil unrest (including any resulting store closures, damage, or loss of inventory), 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 organizational restructuring 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, the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact, including the reinstitution of more stringent regulations (including mandatory stay at home orders), 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, and restructuring-related costs. 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, and gain or loss on sale of assets). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis.Rite Aid 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) May 29, 2021 February 27, 2021ASSETSCurrent assets:Cash and cash equivalents $ 118,480 $ 160,902

Accounts receivable, net 1,612,596 1,462,441

Inventories, net of LIFO reserve of $481,866 and 1,856,968 1,864,890 $485,859Prepaid expenses and other current assets 96,908 106,941

Total current assets 3,684,952 3,595,174

Property, plant and equipment, net 1,074,596 1,080,499

Operating lease right-of-use assets 3,013,577 3,064,077

Goodwill 1,108,136 1,108,136

Other intangibles, net 325,882 340,519

Deferred tax assets 14,964 14,964

Other assets 129,339 132,035

Total assets $ 9,351,446 $ 9,335,404

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Current maturities of long-term debt and lease $ 7,261 $ 6,409 financing obligationsAccounts payable 1,537,469 1,437,421

Accrued salaries, wages and other current 677,151 642,364 liabilitiesCurrent portion of operating lease liabilities 517,602 516,752

Total current liabilities 2,739,483 2,602,946

Long-term debt, less current maturities 3,014,517 3,063,087

Long-term operating lease liabilities 2,771,797 2,829,293

Lease financing obligations, less current 16,162 16,711 maturitiesOther noncurrent liabilities 205,507 208,213

Total liabilities 8,747,466 8,720,250

Commitments and contingencies - -

Stockholders' equity:Common stock 55,093 55,143

Additional paid-in capital 5,898,951 5,897,168

Accumulated deficit (5,326,160 ) (5,313,103 )

Accumulated other comprehensive loss (23,904 ) (24,054 )

Total stockholders' equity 603,980 615,154

Total liabilities and stockholders' equity $ 9,351,446 $ 9,335,404

RITE AID CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020Revenues$

6,160,985

$

6,027,376

Costs and expenses:Cost of revenues4,876,110

4,829,057

Selling, general and administrative expenses1,245,362

1,197,147

Lease termination and impairment charges8,831

3,753

Intangible asset impairment charges-

29,852

Interest expense49,121

50,547

Loss on debt retirements, net396

-

Gain on sale of assets, net(6,558

)

(2,260

)

6,173,262

6,108,096

Loss from continuing operations before income taxes(12,277

)

(80,720

)

Income tax expense (benefit)780

(8,018

)

Net loss from continuing operations(13,057

)

(72,702

)

Net income from discontinued operations, net of tax-

9,161

Net loss$

(13,057

)

$

(63,541

)

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

(13,057

)

$

(72,702

)

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

9,161

Loss attributable to common stockholders - basic and diluted$

(13,057

)

$

(63,541

)

Denominator:Basic and diluted weighted average shares53,852

53,462

Basic and diluted loss per shareContinuing operations$

(0.24

)

$

(1.36

)

Discontinued operations$

-

$

0.17

Net basic and diluted loss per share$

(0.24

)

$

(1.19

)

RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts)(unaudited) Thirteen Thirteen weeks ended weeks ended May 29, 2021 May 30, 2020Revenues $ 6,160,985 $ 6,027,376

Costs and expenses:Cost of revenues 4,876,110 4,829,057

Selling, general and administrative expenses 1,245,362 1,197,147

Lease termination and impairment charges 8,831 3,753

Intangible asset impairment charges - 29,852

Interest expense 49,121 50,547

Loss on debt retirements, net 396 -

Gain on sale of assets, net (6,558 ) (2,260 )

6,173,262 6,108,096

Loss from continuing operations before income taxes (12,277 ) (80,720 )

Income tax expense (benefit) 780 (8,018 )

Net loss from continuing operations (13,057 ) (72,702 )

Net income from discontinued operations, net of tax - 9,161

Net loss $ (13,057 ) $ (63,541 )

Basic and diluted loss per share: Numerator for loss per share:Net loss from continuing operations attributable to $ (13,057 ) $ (72,702 )common stockholders - basic and dilutedNet income from discontinued operations - 9,161 attributable to common stockholders - basic anddilutedLoss attributable to common stockholders - basic $ (13,057 ) $ (63,541 )and diluted Denominator:Basic and diluted weighted average shares 53,852 53,462

Basic and diluted loss per shareContinuing operations $ (0.24 ) $ (1.36 )

Discontinued operations $ - $ 0.17

Net basic and diluted loss per share $ (0.24 ) $ (1.19 )

RITE AID CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020OPERATING ACTIVITIES:Net loss$

(13,057

)

$

(63,541

)

Net income from discontinued operations, net of tax-

9,161

Net loss from continuing operations$

(13,057

)

$

(72,702

)

Adjustments to reconcile to net cash provided by (used in) operating activities of continuing operations:Depreciation and amortization75,859

79,103

Lease termination and impairment charges8,831

3,753

Intangible asset impairment charges-

29,852

LIFO credit(3,993

)

(12,066

)

Gain on sale of assets, net(6,558

)

(2,260

)

Stock-based compensation expense2,811

1,874

Loss on debt retirements, net396

-

Changes in operating assets and liabilities:Accounts receivable(149,487

)

(308,636

)

Inventories11,918

43,647

Accounts payable50,527

13,320

Operating lease right-of-use assets and operating lease liabilities(5,909

)

(6,595

)

Other assets7,978

99,177

Other liabilities34,559

13,263

Net cash provided by (used in) operating activities of continuing operations13,875

(118,270

)

INVESTING ACTIVITIES:Payments for property, plant and equipment(59,164

)

(28,459

)

Intangible assets acquired(5,436

)

(10,715

)

Proceeds from dispositions of assets and investments2,448

2,755

Proceeds from sale-leaseback transactions7,456

-

Net cash used in investing activities of continuing operations(54,696

)

(36,419

)

FINANCING ACTIVITIES:Net proceeds from revolver39,000

242,000

Principal payments on long-term debt(91,941

)

(1,298

)

Change in zero balance cash accounts51,957

(26,567

)

Financing fees paid for early debt redemption(2

)

-

Payments for taxes related to net share settlement of equity awards(35

)

(99

)

Deferred financing costs paid(580

)

(1,332

)

Net cash (used in) provided by financing activities of continuing operations(1,601

)

212,704

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) increase in cash and cash equivalents(42,422

)

70,136

Cash and cash equivalents, beginning of period160,902

218,180

Cash and cash equivalents, end of period$

118,480

$

288,316

RITE AID CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)(unaudited) Thirteen Thirteen weeks ended weeks ended May 29, 2021 May 30, 2020 OPERATING ACTIVITIES:Net loss $ (13,057 ) $ (63,541 )

Net income from discontinued operations, net of tax - 9,161

Net loss from continuing operations $ (13,057 ) $ (72,702 )

Adjustments to reconcile to net cash provided by(used in) operating activities of continuingoperations:Depreciation and amortization 75,859 79,103

Lease termination and impairment charges 8,831 3,753

Intangible asset impairment charges - 29,852

LIFO credit (3,993 ) (12,066 )

Gain on sale of assets, net (6,558 ) (2,260 )

Stock-based compensation expense 2,811 1,874

Loss on debt retirements, net 396 -

Changes in operating assets and liabilities:Accounts receivable (149,487 ) (308,636 )

Inventories 11,918 43,647

Accounts payable 50,527 13,320

Operating lease right-of-use assets and operating (5,909 ) (6,595 )lease liabilitiesOther assets 7,978 99,177

Other liabilities 34,559 13,263

Net cash provided by (used in) operating activities 13,875 (118,270 )of continuing operationsINVESTING ACTIVITIES:Payments for property, plant and equipment (59,164 ) (28,459 )

Intangible assets acquired (5,436 ) (10,715 )

Proceeds from dispositions of assets and investments 2,448 2,755

Proceeds from sale-leaseback transactions 7,456 -

Net cash used in investing activities of continuing (54,696 ) (36,419 )operationsFINANCING ACTIVITIES:Net proceeds from revolver 39,000 242,000

Principal payments on long-term debt (91,941 ) (1,298 )

Change in zero balance cash accounts 51,957 (26,567 )

Financing fees paid for early debt redemption (2 ) -

Payments for taxes related to net share settlement (35 ) (99 )of equity awardsDeferred financing costs paid (580 ) (1,332 )

Net cash (used in) provided by financing activities (1,601 ) 212,704 of continuing operationsCash 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) increase in cash and cash equivalents (42,422 ) 70,136

Cash and cash equivalents, beginning of period 160,902 218,180

Cash and cash equivalents, end of period $ 118,480 $ 288,316

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL SEGMENT OPERATING INFORMATION(Dollars in thousands)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020Retail Pharmacy SegmentRevenues from continuing operations (a)$

4,351,682

$

4,123,271

Cost of revenues from continuing operations (a)3,181,748

3,041,735

Gross profit from continuing operations1,169,934

1,081,536

LIFO credit from continuing operations(3,993

)

(12,066

)

FIFO gross profit from continuing operations1,165,941

1,069,470

Adjusted EBITDA gross profit from continuing operations1,168,338

1,098,427

Gross profit as a percentage of revenues - continuing operations26.88

%

26.23

%

LIFO credit as a percentage of revenues - continuing operations-0.09

%

-0.29

%

FIFO gross profit as a percentage of revenues - continuing operations26.79

%

25.94

%

Adjusted EBITDA gross profit as a percentage of revenues - continuing operations26.85

%

26.64

%

Selling, general and administrative expenses from continuing operations1,156,039

1,108,976

Adjusted EBITDA selling, general and administrative expenses from continuing operations1,073,424

1,035,445

Selling, general and administrative expenses as a percentage of revenues - continuing operations26.57

%

26.90

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations24.67

%

25.11

%

Cash interest expense46,024

47,368

Non-cash interest expense3,097

3,179

Total interest expense49,121

50,547

Interest expense - continuing operations49,121

50,547

Interest expense - discontinued operations-

-

Adjusted EBITDA - continuing operations94,914

62,982

Adjusted EBITDA as a percentage of revenues - continuing operations2.18

%

1.53

%

Pharmacy Services SegmentRevenues (a)$

1,872,282

$

1,977,246

Cost of revenues (a)1,757,341

1,860,463

Gross profit114,941

116,783

Gross profit as a percentage of revenues6.14

%

5.91

%

Adjusted EBITDA43,963

44,410

Adjusted EBITDA as a percentage of revenues2.35

%

2.25

%

RITE AID CORPORATION AND SUBSIDIARIES SUPPLEMENTAL SEGMENT OPERATING INFORMATION(Dollars in thousands)(unaudited) Thirteen Thirteen weeks ended weeks ended May 29, 2021 May 30, 2020 Retail Pharmacy Segment Revenues from continuing operations (a) $ 4,351,682 $ 4,123,271

Cost of revenues from continuing operations (a) 3,181,748 3,041,735

Gross profit from continuing operations 1,169,934 1,081,536

LIFO credit from continuing operations (3,993 ) (12,066 )

FIFO gross profit from continuing operations 1,165,941 1,069,470

Adjusted EBITDA gross profit from continuing 1,168,338 1,098,427 operations Gross profit as a percentage of revenues - 26.88 % 26.23 % continuing operations LIFO credit as a percentage of revenues - -0.09 % -0.29 % continuing operations FIFO gross profit as a percentage of revenues - 26.79 % 25.94 % continuing operations Adjusted EBITDA gross profit as a percentage of 26.85 % 26.64 % revenues - continuing operations Selling, general and administrative expenses 1,156,039 1,108,976 from continuing operations Adjusted EBITDA selling, general and 1,073,424 1,035,445 administrative expenses from continuing operations Selling, general and administrative expenses as 26.57 % 26.90 % a percentage of revenues - continuing operations Adjusted EBITDA selling, general and 24.67 % 25.11 % administrative expenses as a percentage of revenues - continuing operations Cash interest expense 46,024 47,368

Non-cash interest expense 3,097 3,179

Total interest expense 49,121 50,547

Interest expense - continuing operations 49,121 50,547

Interest expense - discontinued operations - -

Adjusted EBITDA - continuing operations 94,914 62,982

Adjusted EBITDA as a percentage of revenues - 2.18 % 1.53 % continuing operations Pharmacy Services Segment Revenues (a) $ 1,872,282 $ 1,977,246

Cost of revenues (a) 1,757,341 1,860,463

Gross profit 114,941 116,783

Gross profit as a percentage of revenues 6.14 % 5.91 %

Adjusted EBITDA 43,963 44,410

Adjusted EBITDA as a percentage of revenues 2.35 % 2.25 %

(a) -Revenues and cost of revenues include $62,979 and $73,141 of inter-segment activity for the thirteen weeks ended May 29, 2021 and May 30, 2020, respectively, that is eliminated in consolidation.(a) Revenues and cost of revenues include $62,979 and $73,141 of inter-segment- activity for the thirteen weeks ended May 29, 2021 and May 30, 2020, respectively, that is eliminated in consolidation.RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF NET LOSS TO ADJUSTED EBITDA(In thousands)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020Reconciliation of net loss to adjusted EBITDA:Net loss - continuing operations$

(13,057

)

$

(72,702

)

Adjustments:Interest expense49,121

50,547

Income tax expense (benefit)780

(8,018

)

Depreciation and amortization75,859

79,103

LIFO credit(3,993

)

(12,066

)

Lease termination and impairment charges8,831

3,753

Intangible asset impairment charges-

29,852

Loss on debt retirements, net396

-

Merger and Acquisition-related costs3,886

-

Stock-based compensation expense2,811

1,874

Restructuring-related costs5,932

35,735

Inventory write-downs related to store closings472

834

Litigation settlements14,000

-

Gain on sale of assets, net(6,558

)

(2,260

)

Other397

740

Adjusted EBITDA - continuing operations$

138,877

$

107,392

Percent of revenues - continuing operations2.25

%

1.78

%

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF NET LOSS TO ADJUSTED EBITDA(In thousands)(unaudited) Thirteen weeks Thirteen weeks ended ended May 29, 2021 May 30, 2020 Reconciliation of net loss to adjustedEBITDA:Net loss - continuing operations $ (13,057 ) $ (72,702 )

Adjustments:Interest expense 49,121 50,547

Income tax expense (benefit) 780 (8,018 )

Depreciation and amortization 75,859 79,103

LIFO credit (3,993 ) (12,066 )

Lease termination and impairment charges 8,831 3,753

Intangible asset impairment charges - 29,852

Loss on debt retirements, net 396 -

Merger and Acquisition-related costs 3,886 -

Stock-based compensation expense 2,811 1,874

Restructuring-related costs 5,932 35,735

Inventory write-downs related to store 472 834 closingsLitigation settlements 14,000 -

Gain on sale of assets, net (6,558 ) (2,260 )

Other 397 740

Adjusted EBITDA - continuing operations $ 138,877 $ 107,392

Percent of revenues - continuing 2.25 % 1.78 %operations RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONADJUSTED NET INCOME (LOSS)(Dollars in thousands, except per share amounts)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020Net loss from continuing operations$

(13,057

)

$

(72,702

)

Add back - Income tax expense (benefit)780

(8,018

)

Loss before income taxes - continuing operations(12,277

)

(80,720

)

Adjustments:Amortization expense20,460

24,420

LIFO credit(3,993

)

(12,066

)

Intangible asset impairment charges-

29,852

Loss on debt retirements, net396

-

Merger and Acquisition-related costs3,886

-

Restructuring-related costs5,932

35,735

Litigation settlements14,000

-

Adjusted income (loss) before income taxes - continuing operations28,404

(2,779

)

Adjusted income tax expense (benefit) (a)7,470

(768

)

Adjusted net income (loss) from continuing operations$

20,934

$

(2,011

)

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

20,934

$

(2,011

)

Denominator:Basic weighted average shares53,852

53,462

Outstanding options and restricted shares, net971

-

Diluted weighted average shares54,823

53,462

Net loss from continuing operations per diluted share - continuing operations$(0.24

)$(1.36

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

0.38

$

(0.04

)

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONADJUSTED NET INCOME (LOSS)(Dollars in thousands, except per share amounts)(unaudited) Thirteen weeks Thirteen weeks ended ended May 29, 2021 May 30, 2020 Net loss from continuing operations $ (13,057 ) $ (72,702 )

Add back - Income tax expense (benefit) 780 (8,018 )

Loss before income taxes - continuing operations (12,277 ) (80,720 )

Adjustments:Amortization expense 20,460 24,420

LIFO credit (3,993 ) (12,066 )

Intangible asset impairment charges - 29,852

Loss on debt retirements, net 396 -

Merger and Acquisition-related costs 3,886 -

Restructuring-related costs 5,932 35,735

Litigation settlements 14,000 -

Adjusted income (loss) before income taxes - 28,404 (2,779 )continuing operations Adjusted income tax expense (benefit) (a) 7,470 (768 )

Adjusted net income (loss) from continuing $ 20,934 $ (2,011 )operations Adjusted net income (loss) per diluted share -continuing operations: Numerator for adjusted net income (loss) perdiluted share:Adjusted net income (loss) from continuing $ 20,934 $ (2,011 )operations Denominator:Basic weighted average shares 53,852 53,462

Outstanding options and restricted shares, net 971 -

Diluted weighted average shares 54,823 53,462

Net loss from continuing operations per diluted $ (0.24 ) $ (1.36 )share - continuing operations Adjusted net income (loss) per diluted share - $ 0.38 $ (0.04 )continuing operations (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 May 29, 2021 and May 30, 2020, respectively. The fiscal year 2022 and 2021 annual effective tax rates, calculated(a) 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 May 29, 2021 and May 30, 2020, respectively.RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT(In thousands)(unaudited)Thirteen weeks endedMay 29, 2021Thirteen weeks endedMay 30, 2020Reconciliation of adjusted EBITDA gross profit:Revenues$

4,351,682

$

4,123,271

Gross Profit1,169,934

1,081,536

Addback:LIFO credit(3,993

)

(12,066

)

Depreciation and amortization (cost of goods sold portion only)2,097

2,663

Restructuring-related costs - SKU optimization charges-

25,763

Other300

531

Adjusted EBITDA gross profit - continuing operations$

1,168,338

$

1,098,427

Percent of revenues - continuing operations26.85

%

26.64

%

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

4,351,682

$

4,123,271

Selling, general and administrative expenses1,156,039

1,108,976

Less:Depreciation and amortization (SG&A portion only)59,768

60,909

Stock-based compensation expense2,771

1,725

Merger and Acquisition-related costs3,886

-

Restructuring-related costs1,621

9,946

Litigation settlements14,000

-

Other569

951

Adjusted EBITDA selling, general and administrative expenses - continuing operations$

1,073,424

$

1,035,445

Percent of revenues - continuing operations24.67

%

25.11

%

Adjusted EBITDA - continuing operations$

94,914

$

62,982

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTEDEBITDA SELLING,GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT(In thousands)(unaudited) Thirteen Thirteen weeks ended weeks ended May 29, 2021 May 30, 2020 Reconciliation of adjusted EBITDA gross profit:Revenues $ 4,351,682 $ 4,123,271

Gross Profit 1,169,934 1,081,536

Addback:LIFO credit (3,993 ) (12,066 )

Depreciation and amortization (cost of goods sold 2,097 2,663 portion only)Restructuring-related costs - SKU optimization - 25,763 chargesOther 300 531

Adjusted EBITDA gross profit - continuing $ 1,168,338 $ 1,098,427 operationsPercent of revenues - continuing operations 26.85 % 26.64 %

Reconciliation of adjusted EBITDA selling,general and administrative expenses:Revenues $ 4,351,682 $ 4,123,271

Selling, general and administrative expenses 1,156,039 1,108,976

Less:Depreciation and amortization (SG&A portion only) 59,768 60,909

Stock-based compensation expense 2,771 1,725

Merger and Acquisition-related costs 3,886 -

Restructuring-related costs 1,621 9,946

Litigation settlements 14,000 -

Other 569 951

Adjusted EBITDA selling, general and $ 1,073,424 $ 1,035,445 administrative expenses - continuing operationsPercent of revenues - continuing operations 24.67 % 25.11 %

Adjusted EBITDA - continuing operations $ 94,914 $ 62,982

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCEYEAR ENDING FEBRUARY 26, 2022(In thousands)(unaudited)Guidance RangeLowHighTotal Revenues$

25,100,000

$

25,500,000

PBM Revenues$

7,850,000

$

7,950,000

Gross Capital Expenditures$

300,000

$

300,000

Reconciliation of net loss to adjusted EBITDA:Net loss$

(175,000

)

$

(138,000

)

Adjustments:Interest expense202,000

202,000

Income tax expense-

3,000

Depreciation and amortization308,000

308,000

LIFO credit(16,000

)

(16,000

)

Lease termination and impairment charges60,000

60,000

Loss on debt retirements, net400

400

Merger and Acquisition-related costs10,000

10,000

Restructuring-related costs30,000

30,000

Litigation settlements14,000

14,000

Gain on sale of assets, net(12,400

)

(12,400

)

Other19,000

19,000

Adjusted EBITDA$

440,000

$

480,000

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCEYEAR ENDING FEBRUARY 26, 2022(In thousands)(unaudited) Guidance Range Low High Total Revenues $ 25,100,000 $ 25,500,000

PBM Revenues $ 7,850,000 $ 7,950,000

Gross Capital Expenditures $ 300,000 $ 300,000

Reconciliation of net loss to adjustedEBITDA:Net loss $ (175,000 ) $ (138,000 )

Adjustments:Interest expense 202,000 202,000

Income tax expense - 3,000

Depreciation and amortization 308,000 308,000

LIFO credit (16,000 ) (16,000 )

Lease termination and impairment charges 60,000 60,000

Loss on debt retirements, net 400 400

Merger and Acquisition-related costs 10,000 10,000

Restructuring-related costs 30,000 30,000

Litigation settlements 14,000 14,000

Gain on sale of assets, net (12,400 ) (12,400 )

Other 19,000 19,000

Adjusted EBITDA $ 440,000 $ 480,000

RITE AID CORPORATION AND SUBSIDIARIESSUPPLEMENTAL INFORMATIONRECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCEYEAR ENDING FEBRUARY 26, 2022(In thousands)(unaudited)Guidance RangeLowHighNet loss$

(175,000

)

$

(138,000

)

Add back - income tax expense-

3,000

Loss before income taxes(175,000

)

(135,000

)

Adjustments:Amortization expense79,000

79,000

LIFO credit(16,000

)

(16,000

)

Loss on debt retirements, net400

400

Merger and Acquisition-related costs10,000

10,000

Restructuring-related costs30,000

30,000

Litigation settlements14,000

14,000

Adjusted loss before adjusted income taxes(57,600

)

(17,600

)

Adjusted income tax benefit(15,000

)

(4,500

)

Adjusted net loss$

(42,600

)

$

(13,100

)

Diluted adjusted net loss per share$

(0.79

)

$

(0.24

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210624005467/en/

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