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Rite Aid Corp – ‘8-K’ for 12/19/19 – ‘EX-99.1’

On:  Thursday, 12/19/19, at 7:12am ET   ·   For:  12/19/19   ·   Accession #:  1104659-19-74056   ·   File #:  1-05742

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

12/19/19  Rite Aid Corp                     8-K:2,9    12/19/19   12:5.1M                                   Toppan Merrill/FA

Current Report   —   Form 8-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     34K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    166K 
 3: EX-99.2     Miscellaneous Exhibit                               HTML     31K 
10: R1          Cover                                               HTML     47K 
 9: XML         IDEA XML File -- Filing Summary                      XML     12K 
12: XML         XBRL Instance -- tm1926453-1_8k_htm                  XML     15K 
11: EXCEL       IDEA Workbook of Financial Reports                  XLSX      6K 
 5: EX-101.LAB  XBRL Labels -- rad-20191219_lab                      XML     97K 
 6: EX-101.PRE  XBRL Presentations -- rad-20191219_pre               XML     64K 
 4: EX-101.SCH  XBRL Schema -- rad-20191219                          XSD     12K 
 7: JSON        XBRL Instance as JSON Data -- MetaLinks               25±    33K 
 8: ZIP         XBRL Zipped Folder -- 0001104659-19-074056-xbrl      Zip     39K 


‘EX-99.1’   —   Miscellaneous Exhibit


This Exhibit is an HTML Document rendered as filed.  [ Alternative Formats ]



Exhibit 99.1

 

Press Release

For Further Information Contact:

 

INVESTORS: MEDIA:
Byron Purcell Christopher Savarese
(717) 975-5809 (717) 975-5718
Or investor@riteaid.com

 

FOR IMMEDIATE RELEASE

 

Rite Aid Corporation Reports Fiscal 2020 Third Quarter Results

 

·Third Quarter Net Income from Continuing Operations of $52.3 Million or $0.98 Per Share, Compared to the Prior Year Third Quarter Net Loss of $17.3 Million or $0.33 Per Share

 

·Third Quarter Adjusted Net Income from Continuing Operations of $29.1 Million or $0.54 Per Share, Compared to the Prior Year Third Quarter Adjusted Net Income of $14.7 Million or $0.28 Per Share

 

·Third Quarter Adjusted EBITDA from Continuing Operations of $158.1 Million, Compared to the Prior Year Third Quarter Adjusted EBITDA of $142.8 Million
oImproved Adjusted EBITDA in both the Retail Pharmacy and Pharmacy Services Segments

 

·Achieved Growth in Both Same Store Front-End Sales (Excluding Cigarettes and Tobacco Products) and Same Store Prescription Volume

 

CAMP HILL, Pa. (Dec. 19, 2019) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its third fiscal quarter ended November 30, 2019.

 

For the third quarter, the company reported net income from continuing operations of $52.3 million, or $0.98 per share, Adjusted net income from continuing operations of $29.1 million, or $0.54 per share, and Adjusted EBITDA from continuing operations of $158.1 million, or 2.9 percent of revenues.

 

“Our team delivered a strong quarter that provides us with momentum as we prepare to roll out our long-term strategy and position Rite Aid Corporation as an innovative leader in our industry,” said Rite Aid Corporation CEO Heyward Donigan. “Adjusted EBITDA grew in our retail business due to tight expense control and prescription count growth in our retail pharmacies, which benefited from solid growth in immunizations. At the same time, we saw improved pharmacy network management at EnvisionRxOptions.

“While we are pleased with these results, we have important work ahead of us to put our company on a path to long-term sustainable growth. We will soon reveal our comprehensive strategy that revitalizes Rite Aid retail pharmacies as fresh and relevant, leveraging the trust and expertise of our pharmacists in meeting the unique health and wellbeing needs of our communities. We are also investing in the expansion and integration of EnvisionRxOptions, particularly its services, technologies and clinical offerings. This will provide us scale to deliver lower total cost of care, an enhanced client experience and heightened consumer engagement. We are making great progress, and we are excited to share more details at our upcoming Analyst Day on March 16.”

 

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Rite Aid FY 2020 Q3 Press Release - page 2

 

Third Quarter Summary

 

Revenues from continuing operations for the quarter were $5.46 billion compared to revenues from continuing operations of $5.45 billion in the prior year’s quarter. Retail Pharmacy Segment revenues were $3.91 billion and decreased 1.7 percent compared to the prior year period due to a reduction in store count. Revenues in the Pharmacy Services Segment were $1.61 billion, an increase of 5.7 percent compared to the prior year period, which was due to an increase in Medicare Part D membership.

 

Retail Pharmacy Segment same store sales from continuing operations for the third quarter decreased 0.1 percent over the prior year period, consisting of a 0.1 percent increase in pharmacy sales and a 0.5 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 1.0 percent. Pharmacy sales were negatively impacted by approximately 331 basis points as a result of new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 2.8 percent over the prior year period resulting primarily from the company’s continued emphasis on driving clinical services, including immunizations. Prescription sales from continuing operations accounted for 67.7 percent of total drugstore sales.

 

Net income from continuing operations was $52.3 million or $0.98 per share compared to last year’s third quarter net loss from continuing operations of $17.3 million or $0.33 per share. The increase in net income was due primarily to a $55.7 million gain on debt retirements and an increase in Adjusted EBITDA.

 

Adjusted EBITDA from continuing operations was $158.1 million or 2.9 percent of revenues for the third quarter compared to last year’s third quarter Adjusted EBITDA from continuing operations of $142.8 million or 2.6 percent of revenues, an increase of $15.3 million. Retail Pharmacy Segment Adjusted EBITDA from continuing operations increased $7.4 million due to strong labor and benefits expense control. These improvements were partially offset by a reduction in gross profit and a reduction in Transition Service Agreement fee income from Walgreens Boots Alliance. The Pharmacy Services Segment Adjusted EBITDA increased $7.9 million compared to the prior year due to improvements in pharmacy network management.

 

Outlook for Fiscal 2020

 

Rite Aid Corporation is updating its fiscal 2020 outlook, which includes narrowing its guidance for Adjusted EBITDA. The company’s outlook assumes continued prescription count growth, improvements in generic drug costs and strong SG&A expense control, offset by a decline in prescription reimbursement rates. The fiscal 2020 guidance for EnvisionRxOptions assumes sustained improvements in pharmacy network management and initial results of SG&A reduction, benefits integration and restructuring initiatives.

 

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

 

Net loss is expected to be between $174.0 million and $204.0 million.

 

Adjusted EBITDA is expected to be between $515.0 million and $545.0 million.

 

Adjusted net income per share is expected to be between $0.13 and $0.55.

 

Capital expenditures are expected to be approximately $230 million.

 

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Rite Aid FY 2020 Q3 Press Release - page 3

 

Conference Call Broadcast

 

Rite Aid Corporation will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be simulcast via the internet and can be accessed at www.riteaid.com in the conference call section of investor information. A playback of the call will also be available by telephone beginning at 12:00 p.m. Eastern Time today until 11:59 p.m. Eastern Time on Dec. 21, 2019. The playback number is 1-855-859-2056 from within the U.S. and Canada or 1-404-537-3406 from outside the U.S. and Canada with the reservation number 6188277.

 

About Rite Aid Corporation


Rite Aid Corporation is on the front lines of delivering health care services and retail products to over 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 through over 2,400 retail pharmacy locations across 18 states. Through EnvisionRxOptions, we also deliver pharmacy benefit management to approximately 1,900 clients and 3.4 million members. For more information, visit 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 2020; Rite Aid’s competitive position and ability to realize its growth initiatives and operating efficiencies; and any assumptions underlying any of the foregoing. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements.

 

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

 

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

 

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Rite Aid FY 2020 Q3 Press Release - page 4

 

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

 

Reconciliation of Non-GAAP Financial Measures

 

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

 

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

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

   November 30, 2019   March 2, 2019 
ASSETS          
Current assets:          
Cash and cash equivalents  $289,498   $144,353 
Accounts receivable, net   1,689,838    1,788,712 
Inventories, net of LIFO reserve of $611,997 and $604,444   1,957,045    1,871,941 
Prepaid expenses and other current assets   178,292    179,132 
Current assets held for sale   101,594    117,581 
Total current assets   4,216,267    4,101,719 
Property, plant and equipment, net   1,254,234    1,308,514 
Operating lease right-of-use assets   2,935,104    - 
Goodwill   1,108,136    1,108,136 
Other intangibles, net   374,660    448,706 
Deferred tax assets   382,105    409,084 
Other assets   158,285    215,208 
Total assets  $10,428,791   $7,591,367 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Current maturities of long-term debt and lease financing obligations  $9,486   $16,111 
Accounts payable   1,534,302    1,618,585 
Accrued salaries, wages and other current liabilities   806,739    808,439 
Current portion of operating lease liabilities   493,699    - 
Current liabilities held for sale   42,422    - 
Total current liabilities   2,886,648    2,443,135 
Long-term debt, less current maturities   3,566,261    3,454,585 
Long-term operating lease liabilities   2,732,339    - 
Lease financing obligations, less current maturities   20,607    24,064 
Other noncurrent liabilities   207,078    482,893 
Total liabilities   9,412,933    6,404,677 
           
Commitments and contingencies   -    - 
Stockholders' equity:          
Common stock   54,862    54,016 
Additional paid-in capital   5,888,870    5,876,977 
Accumulated deficit   (4,897,473)   (4,713,244)
Accumulated other comprehensive loss   (30,401)   (31,059)
Total stockholders' equity   1,015,858    1,186,690 
Total liabilities and stockholders' equity  $10,428,791   $7,591,367 

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

   Thirteen weeks ended
November 30, 2019
   Thirteen weeks ended
December 1, 2018
 
Revenues  $5,462,298   $5,450,060 
Costs and expenses:          
Cost of revenues   4,273,323    4,267,972 
Selling, general and administrative expenses   1,134,854    1,142,555 
Lease termination and impairment charges   166    2,628 
Interest expense   57,856    56,008 
Gain on debt retirements, net   (55,692)   - 
Gain on sale of assets, net   (1,371)   (382)
           
    5,409,136    5,468,781 
           
Income (loss) from continuing operations before income taxes   53,162    (18,721)
Income tax expense (benefit)   876    (1,471)
Net income (loss) from continuing operations   52,286    (17,250)
Net (loss) income from discontinued operations, net of tax   (801)   12,740 
Net income (loss)  $51,485   $(4,510)
           
Basic and diluted income (loss) per share:          
           
Numerator for income (loss) per share:          
Net income (loss) from continuing operations attributable to common stockholders - basic and diluted  $52,286   $(17,250)
Net (loss) income from discontinued operations attributable to common stockholders - basic and diluted   (801)   12,740 
Income (loss) attributable to common stockholders - basic and diluted  $51,485   $(4,510)
           
Denominator:          
Basic weighted average shares   53,310    52,920 
Outstanding options and restricted shares, net   274    - 
Diluted weighted average shares   53,584    52,920 
           
Basic income (loss) per share          
Continuing operations  $0.98   $(0.33)
Discontinued operations  $(0.01)  $0.24 
Net basic income (loss) per share  $0.97   $(0.09)
           
Diluted income (loss) per share          
Continuing operations  $0.98   $(0.33)
Discontinued operations  $(0.02)  $0.24 
Net diluted income (loss) per share  $0.96   $(0.09)

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

 

   Thirty-nine weeks ended
November 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
Revenues  $16,201,151   $16,259,912 
Costs and expenses:          
Cost of revenues   12,741,014    12,747,924 
Selling, general and administrative expenses   3,433,036    3,449,173 
Lease termination and impairment charges   2,115    52,096 
Goodwill and intangible asset impairment charges   -    375,190 
Interest expense   176,228    175,033 
(Gain) loss on debt retirements, net   (55,692)   554 
Gain on sale of assets, net   (5,670)   (11,206)
           
    16,291,031    16,788,764 
           
Loss from continuing operations before income taxes   (89,880)   (528,852)
Income tax expense (benefit)   35,878    (117,527)
Net loss from continuing operations   (125,758)   (411,325)
Net (loss) income from discontinued operations, net of tax   (1,695)   262,091 
Net loss  $(127,453)  $(149,234)
           
Basic and diluted loss per share:          
           
Numerator for loss per share:          
Net loss from continuing operations attributable to common stockholders - basic and diluted  $(125,758)  $(411,325)
Net (loss) income from discontinued operations attributable to common stockholders - basic and diluted   (1,695)   262,091 
Loss attributable to common stockholders - basic and diluted  $(127,453)  $(149,234)
           
Denominator:          
Basic and diluted weighted average shares   53,159    52,824 
           
Basic and diluted loss per share          
Continuing operations  $(2.37)  $(7.79)
Discontinued operations  $(0.03)  $4.96 
Net basic and diluted loss per share  $(2.40)  $(2.83)

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

   Thirteen weeks ended
November 30, 2019
   Thirteen weeks ended
December 1, 2018
 
OPERATING ACTIVITIES:          
Net income (loss)  $51,485   $(4,510)
Net (loss) income from discontinued operations, net of tax   (801)   12,740 
Net income (loss) from continuing operations  $52,286   $(17,250)
Adjustments to reconcile to net cash provided by operating activities of continuing operations:          
Depreciation and amortization   82,007    86,685 
Lease termination and impairment charges   166    2,628 
LIFO (credit) charge   (7,440)   5,987 
Gain on sale of assets, net   (1,371)   (382)
Stock-based compensation expense   3,506    1,317 
Gain on debt retirements, net   (55,692)   - 
Changes in deferred taxes   -    (1,295)
Changes in operating assets and liabilities:          
Accounts receivable   252,767    318,287 
Inventories   19,333    (46,839)
Accounts payable   47,378    (26,446)
Operating lease right-of-use assets and operating lease liabilities   (12,179)   - 
Other assets   1,959    (1,072)
Other liabilities   40,993    29,501 
Net cash provided by operating activities of continuing operations   423,713    351,121 
INVESTING ACTIVITIES:          
Payments for property, plant and equipment   (45,075)   (46,653)
Intangible assets acquired   (17,727)   (11,054)
Proceeds from dispositions of assets and investments   51,548    72 
Net cash used in investing activities of continuing operations   (11,254)   (57,635)
FINANCING ACTIVITIES:          
Net payments to revolver   (115,000)   (90,000)
Principal payments on long-term debt   (101,251)   (3,851)
Change in zero balance cash accounts   (66,461)   1,137 
Net proceeds from the issuance of common stock   -    992 
Payments for taxes related to net share settlement of equity awards   (587)   (175)
Financing fees paid for early debt redemption   (518)   - 
Net cash used in financing activities of continuing operations   (283,817)   (91,897)
Cash flows from discontinued operations:          
Operating activities of discontinued operations   (4,876)   14,735 
Investing activities of discontinued operations   23,551    61,251 
Net cash provided by discontinued operations   18,675    75,986 
Increase in cash and cash equivalents   147,317    277,575 
Cash and cash equivalents, beginning of period   142,181    132,468 
Cash and cash equivalents, end of period  $289,498   $410,043 

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

 

   Thirty-nine weeks ended
November 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
OPERATING ACTIVITIES:          
Net loss  $(127,453)  $(149,234)
Net (loss) income from discontinued operations, net of tax   (1,695)   262,091 
Net loss from continuing operations  $(125,758)  $(411,325)
Adjustments to reconcile to net cash provided by operating activities of continuing operations:          
Depreciation and amortization   248,977    270,957 
Lease termination and impairment charges   2,115    52,096 
Goodwill and intangible asset impairment charges   -    375,190 
LIFO charge   7,553    19,311 
Gain on sale of assets, net   (5,670)   (11,206)
Stock-based compensation expense   13,598    11,563 
(Gain) loss on debt retirements, net   (55,692)   554 
Changes in deferred taxes   26,979    (126,102)
Changes in operating assets and liabilities:          
Accounts receivable   99,498    (5,437)
Inventories   (92,657)   (78,489)
Accounts payable   (38,245)   181,497 
Operating lease right-of-use assets and operating lease liabilities   22,803    - 
Other assets   (42,715)   (12,304)
Other liabilities   32,889    (216,086)
Net cash provided by operating activities of continuing operations   93,675    50,219 
INVESTING ACTIVITIES:          
Payments for property, plant and equipment   (129,135)   (139,218)
Intangible assets acquired   (33,435)   (31,573)
Proceeds from dispositions of assets and investments   55,971    15,801 
Proceeds from sale-leaseback transactions   -    2,587 
Net cash used in investing activities of continuing operations   (106,599)   (152,403)
FINANCING ACTIVITIES:          
Net proceeds from revolver   260,000    1,245,000 
Principal payments on long-term debt   (104,702)   (437,597)
Change in zero balance cash accounts   (11,749)   (15,964)
Net proceeds from the issuance of common stock   -    2,294 
Payments for taxes related to net share settlement of equity awards   (1,573)   (2,419)
Financing fees paid for early debt redemption   (518)   (13)
Deferred financing costs paid   (315)   - 
Net cash provided by financing activities of continuing operations   141,143    791,301 
Cash flows from discontinued operations:          
Operating activities of discontinued operations   (7,148)   (47,268)
Investing activities of discontinued operations   24,074    664,653 
Financing activities of discontinued operations   -    (1,343,793)
Net cash provided by (used in) discontinued operations   16,926    (726,408)
Increase (decrease) in cash and cash equivalents   145,145    (37,291)
Cash and cash equivalents, beginning of period   144,353    447,334 
Cash and cash equivalents, end of period  $289,498   $410,043 

 

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RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL SEGMENT OPERATING INFORMATION

(Dollars in thousands)

(unaudited)

 

   Thirteen weeks ended
November 30, 2019
   Thirteen weeks ended
December 1, 2018
 
Retail Pharmacy Segment          
Revenues from continuing operations (a)  $3,909,946   $3,976,719 
Cost of revenues from continuing operations (a)   2,839,094    2,897,135 
Gross profit from continuing operations   1,070,852    1,079,584 
LIFO (credit) charge from continuing operations   (7,440)   5,987 
FIFO gross profit from continuing operations   1,063,412    1,085,571 
Adjusted EBITDA gross profit from continuing operations   1,065,523    1,088,213 
           
Gross profit as a percentage of revenues - continuing operations   27.39%   27.15%
LIFO (credit) charge as a percentage of revenues - continuing operations   -0.19%   0.15%
FIFO gross profit as a percentage of revenues - continuing operations   27.20%   27.30%
Adjusted EBITDA gross profit as a percentage of revenues - continuing operations   27.25%   27.36%
           
Selling, general and administrative expenses from continuing operations   1,044,236    1,062,598 
Adjusted EBITDA selling, general and administrative expenses from continuing operations   956,944    986,988 
Selling, general and administrative expenses as a percentage of revenues - continuing operations   26.71%   26.72%
Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations   24.47%   24.82%
           
Cash interest expense   54,068    52,074 
Non-cash interest expense   3,788    3,934 
Total interest expense   57,856    56,008 
Interest expense - continuing operations   57,856    56,008 
Interest expense - discontinued operations   -    - 
           
Adjusted EBITDA - continuing operations   108,579    101,225 
Adjusted EBITDA as a percentage of revenues - continuing operations   2.78%   2.55%
           
           
Pharmacy Services Segment          
Revenues (a)  $1,613,109   $1,525,837 
Cost of revenues (a)   1,494,986    1,423,333 
Gross profit   118,123    102,504 
           
Gross profit as a percentage of revenues   7.32%   6.72%
           
Adjusted EBITDA   49,511    41,566 
Adjusted EBITDA as a percentage of revenues   3.07%   2.72%

 

(a) - Revenues and cost of revenues include $60,757 and $52,496 of inter-segment activity for the thirteen weeks ended November 30, 2019 and December 1, 2018, respectively, that is eliminated in consolidation.

 

 C:   C: 

 C: 

 

 

 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL SEGMENT OPERATING  INFORMATION

(Dollars in thousands)

(unaudited)

 

   Thirty-nine weeks ended
November 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
Retail Pharmacy Segment          
Revenues from continuing operations (a)  $11,622,858   $11,785,996 
Cost of revenues from continuing operations (a)   8,489,067    8,585,318 
Gross profit from continuing operations   3,133,791    3,200,678 
LIFO charge from continuing operations   7,553    19,311 
FIFO gross profit from continuing operations   3,141,344    3,219,989 
Adjusted EBITDA gross profit from continuing operations   3,151,043    3,229,993 
           
Gross profit as a percentage of revenues - continuing operations   26.96%   27.16%
LIFO charge as a percentage of revenues - continuing operations   0.06%   0.16%
FIFO gross profit as a percentage of revenues - continuing operations   27.03%   27.32%
Adjusted EBITDA gross profit as a percentage of revenues - continuing operations   27.11%   27.41%
           
Selling, general and administrative expenses from continuing operations   3,160,379    3,195,929 
Adjusted EBITDA selling, general and administrative expenses from continuing operations   2,865,783    2,921,021 
Selling, general and administrative expenses as a percentage of revenues - continuing operations   27.19%   27.12%
Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations   24.66%   24.78%
           
Cash interest expense   164,982    167,270 
Non-cash interest expense   11,246    12,378 
Total interest expense   176,228    179,648 
Interest expense - continuing operations   176,228    175,033 
Interest expense - discontinued operations   -    4,615 
           
Adjusted EBITDA - continuing operations   285,260    308,972 
Adjusted EBITDA as a percentage of revenues - continuing operations   2.45%   2.62%
           
           
Pharmacy Services Segment          
Revenues (a)  $4,758,470   $4,630,410 
Cost of revenues (a)   4,432,124    4,319,100 
Gross profit   326,346    311,310 
           
Gross profit as a percentage of revenues   6.86%   6.72%
           
Adjusted EBITDA   117,367    120,392 
Adjusted EBITDA as a percentage of revenues   2.47%   2.60%

 

(a) - Revenues and cost of revenues include $180,177 and $156,494 of inter-segment activity for the thirty-nine weeks ended November 30, 2019 and December 1, 2018, respectively, that is eliminated in consolidation.

 

 C: 

 

 

 

 C:   C: 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

(unaudited)

 

   Thirteen weeks ended
November 30, 2019
   Thirteen weeks ended
December 1, 2018
 
Reconciliation of net income (loss) to adjusted EBITDA:          
Net income (loss) - continuing operations  $52,286   $(17,250)
Adjustments:          
Interest expense   57,856    56,008 
Income tax expense (benefit)   876    (1,471)
Depreciation and amortization   82,007    86,685 
LIFO (credit) charge   (7,440)   5,987 
Lease termination and impairment charges   166    2,628 
Gain on debt retirements, net   (55,692)   - 
Merger and Acquisition-related costs   -    4,175 
Stock-based compensation expense   3,506    1,317 
Restructuring-related costs   25,275    - 
Inventory write-downs related to store closings   93    421 
Gain on sale of assets, net   (1,371)   (382)
Other   528    4,673 
Adjusted EBITDA - continuing operations  $158,090   $142,791 
Percent of revenues - continuing operations   2.89%   2.62%

 

 C: 

 

 

 

 C:   C: 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(In thousands)

(unaudited)

 

   Thirty-nine weeks ended
November 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
Reconciliation of net loss to adjusted EBITDA:          
Net loss - continuing operations  $(125,758)  $(411,325)
Adjustments:          
Interest expense   176,228    175,033 
Income tax expense (benefit)   35,878    (117,527)
Depreciation and amortization   248,977    270,957 
LIFO charge   7,553    19,311 
Lease termination and impairment charges   2,115    52,096 
Goodwill and intangible asset impairment charges   -    375,190 
(Gain) loss on debt retirements, net   (55,692)   554 
Merger and Acquisition-related costs   3,599    30,394 
Stock-based compensation expense   13,598    11,563 
Restructuring-related costs   93,770    - 
Inventory write-downs related to store closings   4,083    5,554 
Litigation settlement   -    18,000 
Gain on sale of assets, net   (5,670)   (11,206)
Other   3,946    10,770 
Adjusted EBITDA - continuing operations  $402,627   $429,364 
Percent of revenues - continuing operations   2.49%   2.64%

 

 C: 

 

 

 C:   C: 

 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

ADJUSTED NET INCOME 

(Dollars in thousands, except per share amounts)

(unaudited)

 

   Thirteen weeks ended
November 30, 2019
   Thirteen weeks ended
December 1, 2018
 
Net income (loss) from continuing operations  $52,286   $(17,250)
Add back - Income tax expense (benefit)   876    (1,471)
Income (loss) before income taxes - continuing operations   53,162    (18,721)
           
Adjustments:          
Amortization expense   24,920    28,768 
LIFO (credit) charge   (7,440)   5,987 
Gain on debt retirements, net   (55,692)   - 
Merger and Acquisition-related costs   -    4,175 
Restructuring-related costs   25,275    - 
           
Adjusted income before income taxes - continuing operations   40,225    20,209 
           
Adjusted income tax expense (a)   11,090    5,469 
Adjusted net income from continuing operations  $29,135   $14,740 
           
Adjusted net income per diluted share - continuing operations:          
           
Numerator for adjusted net income per diluted share:          
Adjusted net income from continuing operations  $29,135   $14,740 
           
Denominator:          
Basic weighted average shares   53,310    52,920 
Outstanding options and restricted shares, net   274    10 
Diluted weighted average shares   53,584    52,930 
           
Net income (loss) from continuing operations per diluted share - continuing operations  $0.98   $(0.33)
           
Adjusted net income per diluted share - continuing operations  $0.54   $0.28 

 

(a)    The fiscal year 2020 and 2019 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the thirteen weeks ended November 30, 2019 and December 1, 2018, respectively.

 

 C:   C: 

 C: 

 

 

 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

ADJUSTED NET INCOME

(Dollars in thousands, except per share amounts)

(unaudited)

 

   Thirty-nine weeks ended
November 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
Net loss from continuing operations  $(125,758)  $(411,325)
Add back - Income tax expense (benefit)   35,878    (117,527)
Loss before income taxes - continuing operations   (89,880)   (528,852)
           
Adjustments:          
Amortization expense   79,176    96,668 
LIFO charge   7,553    19,311 
Goodwill and intangible asset impairment charges   -    375,190 
(Gain) loss on debt retirements, net   (55,692)   554 
Merger and Acquisition-related costs   3,599    30,394 
Restructuring-related costs   93,770    - 
Litigation settlement   -    18,000 
           
Adjusted income before income taxes - continuing operations   38,526    11,265 
           
Adjusted income tax expense (a)   10,622    3,049 
Adjusted net income from continuing operations  $27,904   $8,216 
           
Adjusted net income per diluted share - continuing operations:          
           
Numerator for adjusted net income per diluted share:          
Adjusted net income from continuing operations  $27,904   $8,216 
           
Denominator:          
Basic weighted average shares   53,159    52,824 
Outstanding options and restricted shares, net   775    124 
Diluted weighted average shares   53,934    52,948 
           
Net loss from continuing operations per diluted share - continuing operations  $(2.37)  $(7.79)
           
Adjusted net income diluted share - continuing operations  $0.52   $0.16 

 

(a)    The fiscal year 2020 and 2019 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL's, state credits and valuation allowance, was used for the thirty-nine weeks ended November 30, 2019 and December 1, 2018, respectively.

 

 C: 

 

 

 

 C:   C: 

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 30, 2019
   Thirteen weeks ended
December 1, 2018
 
Reconciliation of adjusted EBITDA gross profit:          
Revenues  $3,909,946   $3,976,719 
Gross Profit   1,070,852    1,079,584 
Addback:          
LIFO (credit) charge   (7,440)   5,987 
Depreciation and amortization (cost of goods sold portion only)   2,070    2,308 
Other   41    334 
Adjusted EBITDA gross profit - continuing operations  $1,065,523   $1,088,213 
Percent of revenues - continuing operations   27.25%   27.36%
           
           
           
Reconciliation of adjusted EBITDA selling, general and administrative expenses:          
Revenues  $3,909,946   $3,976,719 
Selling, general and administrative expenses   1,044,236    1,062,598 
Less:          
Depreciation and amortization (SG&A portion only)   65,267    67,905 
Stock-based compensation expense   2,976    1,317 
Merger and Acquisition-related costs   -    4,175 
Restructuring-related costs   18,415    - 
Other   634    2,213 
Adjusted EBITDA selling, general and administrative expenses - continuing operations  $956,944   $986,988 
Percent of revenues - continuing operations   24.47%   24.82%
           
Adjusted EBITDA - continuing operations  $108,579   $101,225 

 

 C:   C: 

 C: 

 

 

 

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 30, 2019
   Thirty-nine weeks ended
December 1, 2018
 
Reconciliation of adjusted EBITDA gross profit:          
Revenues  $11,622,858   $11,785,996 
Gross Profit   3,133,791    3,200,678 
Addback:          
LIFO charge   7,553    19,311 
Depreciation and amortization (cost of goods sold portion only)   6,538    6,929 
Other   3,161    3,075 
Adjusted EBITDA gross profit - continuing operations  $3,151,043   $3,229,993 
Percent of revenues - continuing operations   27.11%   27.41%
           
Reconciliation of adjusted EBITDA selling, general and administrative expenses:          
Revenues  $11,622,858   $11,785,996 
Selling, general and administrative expenses   3,160,379    3,195,929 
Less:          
Depreciation and amortization (SG&A portion only)   195,281    205,972 
Stock-based compensation expense   12,673    11,563 
Merger and Acquisition-related costs   2,828    30,394 
Restructuring-related costs   78,851    - 
Litigation settlement   -    18,000 
Other   4,963    8,979 
Adjusted EBITDA selling, general and administrative expenses - continuing operations  $2,865,783   $2,921,021 
Percent of revenues - continuing operations   24.66%   24.78%
           
Adjusted EBITDA - continuing operations  $285,260   $308,972 

 

 C: 

 

 

 

 C:   C: 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE

YEAR ENDING FEBRUARY 29, 2020

(In thousands)

(unaudited)

 

   Guidance Range 
   Low   High 
Total Revenues  $21,500,000   $21,900,000 
           
Same store sales   0.00%   1.00%
           
Gross Capital Expenditures  $230,000   $230,000 
           
Reconciliation of net loss to adjusted EBITDA:          
Net loss  $(204,000)  $(174,000)
Adjustments:          
Interest expense   235,000    235,000 
Income tax expense   40,000    40,000 
Depreciation and amortization   330,000    330,000 
LIFO charge   10,000    10,000 
Lease termination and impairment charges   35,000    35,000 
Gain on debt retirements, net   (56,000)   (56,000)
Restructuring-related costs   100,000    100,000 
Other   25,000    25,000 
Adjusted EBITDA  $515,000   $545,000 

 

 C: 

 

 

 

 C:   C: 

RITE AID CORPORATION AND SUBSIDIARIES

 

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET INCOME GUIDANCE

YEAR ENDING FEBRUARY 29, 2020

(In thousands)

(unaudited)

 

   Guidance Range 
   Low   High 
Net loss  $(204,000)  $(174,000)
Add back - income tax expense   40,000    40,000 
Loss before income taxes   (164,000)   (134,000)
           
Adjustments:          
Amortization expense   120,000    120,000 
LIFO charge   10,000    10,000 
Gain on debt retirements, net   (56,000)   (56,000)
Restructuring-related costs   100,000    100,000 
           
Adjusted income before adjusted income taxes   10,000    40,000 
           
Adjusted income tax expense   3,000    11,000 
Adjusted net income  $7,000   $29,000 
           
Diluted adjusted net income per share  $0.13   $0.55 

 

 C: 

 

 


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
2/29/2010-K
12/21/19
Filed on / For Period end:12/19/19
11/30/1910-Q
3/2/1910-K
12/1/1810-Q
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