Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - RITE AID CORP | tm2015873d1_ex99-2.htm |
| 8-K - FORM 8-K - RITE AID CORP | tm2015873-1_8k.htm |
Exhibit 99.1
Press Release
For Further Information Contact:
| INVESTORS: | MEDIA: |
| Byron Purcell | Christopher Savarese |
| (717) 975-5809 | (717) 975-5718 |
| investor@riteaid.com | Christopher.Savarese@riteaid.com |
FOR IMMEDIATE RELEASE
Rite Aid Corporation Reports Fiscal 2020 Fourth Quarter and Full Year Results
Provides Update on Impact of COVID-19 on the Business
| · | Fourth Quarter Net Loss from Continuing Operations of $343.5 Million, or $6.43 Per Share, Compared to the Prior Year Fourth Quarter Net Loss of $255.6 Million, or $4.83 Per Share |
| o | Fourth Quarter Net Loss from Continuing Operations Includes $320.6 Million, or $6.00 Per Share of Non-Cash Income Tax Expense |
| · | Fourth Quarter Adjusted Net Loss from Continuing Operations of $19.9 Million, or $0.37 Per Share, Compared to the Prior Year Fourth Quarter Adjusted Net Loss of $13.3 Million, or $0.25 Per Share |
| · | Fourth Quarter Adjusted EBITDA from Continuing Operations of $135.6 Million, Compared to the Prior Year Fourth Quarter Adjusted EBITDA of $134.1 Million |
| · | Strong Growth in Pharmacy Services Segment Revenues and Same Store Prescription Volume |
| · | Substantially Improved Pro-Forma Leverage Ratio to 5.3x Adjusted EBITDA |
| · | Fiscal 2021 Outlook as Previously Announced on March 16, 2020 Unchanged – Ultimate Impact of COVID-19 on Fiscal 2021 Outlook Uncertain |
CAMP HILL, Pa. (Apr. 16, 2020) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its fourth quarter and fiscal year ended February 29, 2020.
For the fourth quarter, the company reported net loss from continuing operations of $343.5 million, or $6.43 per share, Adjusted net loss from continuing operations of $19.9 million, or $0.37 per share, and Adjusted EBITDA from continuing operations of $135.6 million, or 2.4 percent of revenues.
“I’d like to thank our Rite Aid team for working together to deliver a solid finish to the fiscal year,” said Heyward Donigan, president and chief executive officer, Rite Aid. “Strong execution by our team drove growth in both Pharmacy Services Segment revenues and Retail Pharmacy Segment prescription count, and helped deliver our second consecutive quarter-over-quarter improvement in Adjusted EBITDA. These results provide important momentum as we redefine our industry by deploying our bold, new RxEvolution strategy.”
“As we begin the new fiscal year, Rite Aid’s top priority is to continue providing the essential care, services and products that our communities need during the COVID-19 crisis,” Donigan continued. “I couldn’t be more proud of our team for working together to support our fellow associates and serve our customers and clients during this global health emergency. There has never been a more important time to be a pharmacy company, and we remain committed to serving as a trusted and essential resource for medications, supplies and services in our communities.”
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Rite Aid FY 2020 Q4 Press Release - page 2
Fourth Quarter Summary
Revenues from continuing operations for the quarter were $5.73 billion compared to revenues from continuing operations of $5.38 billion in the prior year’s quarter. Retail Pharmacy Segment revenues were $3.99 billion and increased 0.6 percent compared to the prior year period due to an increase in same store sales. Revenues in the Pharmacy Services Segment were $1.8 billion, an increase of 23.1 percent compared to the prior year period, which was due to an increase in Medicare Part D membership of approximately 244,000 compared to the prior year period.
Retail Pharmacy Segment same store sales from continuing operations for the fourth quarter increased 1.6 percent over the prior year period, consisting of a 1.6 percent increase in pharmacy sales and a 0.1 percent increase in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 1.5 percent. Pharmacy sales were negatively impacted by approximately 330 basis points as a result of new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 5.0 percent over the prior year period driven by strong execution, notably in growing immunizations and medication adherence through personalized interventions, as well as prescription file buys and gaining access to new networks in markets where we have strong market presence. Prescription sales from continuing operations accounted for 65.9 percent of total drugstore sales.
Net loss from continuing operations was $343.5 million, or $6.43 per share compared to last year’s fourth quarter net loss from continuing operations of $255.6 million, or $4.83 per share. Income tax expense in the current year’s fourth quarter was impacted by a $320.6 million charge related to an increase in the valuation allowance against the company’s deferred tax asset. Other items impacting net loss from continuing operations included a loss on sale of assets in the current year compared to a gain on sale of assets in the prior year, partially offset by a LIFO credit in the current year compared to a LIFO charge in the prior year.
Adjusted EBITDA from continuing operations was $135.6 million or 2.4 percent of revenues for the fourth quarter compared to last year’s fourth quarter Adjusted EBITDA from continuing operations of $134.1 million or 2.5 percent of revenues. Retail Pharmacy Segment Adjusted EBITDA from continuing operations decreased $11.1 million due primarily to a reduction in the Transition Services Agreement (the TSA) fee income from Walgreens Boots Alliance, Inc. (WBA). Pharmacy Services Segment Adjusted EBITDA increased $12.6 million over the prior year due to increased revenues and improvements in pharmacy network management.
Full Year Results
For the fiscal year ended February 29, 2020, revenues from continuing operations were $21.9 billion compared to revenues of $21.6 billion in the prior year, an increase of $0.3 billion or 1.3 percent. Retail Pharmacy Segment revenues were $15.6 billion, a decrease of 0.9 percent compared to the prior year. Revenues in the Pharmacy Services Segment were $6.6 billion, an increase of 7.6 percent compared to the prior year, which was due to an increase in Medicare Part D membership.
Retail Pharmacy Segment same store sales from continuing operations for the year increased 1.1 percent, consisting of a 1.4 percent increase in pharmacy sales and a 0.6 percent decrease in front end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 0.6 percent for the year. Pharmacy sales were negatively impacted by approximately 286 basis points as a result of new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 3.5 percent over the prior year resulting primarily from strong execution, notably in growing immunizations and medication adherence through personalized interventions, as well as prescription file buys and gaining access to new networks in markets where we have strong market presence. Prescription sales from continuing operations accounted for 67.0 percent of total drugstore sales.
Net loss from continuing operations for fiscal 2020 was $469.2 million, or $8.82 per share compared to last year’s net loss from continuing operations of $667.0 million, or $12.62 per share. The reduction in net loss is due to lower goodwill and intangible asset impairment charges, lower LIFO expense, lower lease termination and impairment charges, and a gain on debt retirements in the current year compared to a loss on debt retirements in the prior year. These items were partially offset by higher income tax expense and higher restructuring-related costs.
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Rite Aid FY 2020 Q4 Press Release - page 3
Adjusted EBITDA from continuing operations was $538.2 million or 2.5 percent of revenues for the year compared to $563.4 million or 2.6 percent of revenues for last year. The decrease in Adjusted EBITDA is due to a decrease of $34.8 million in the Retail Pharmacy Segment, partially offset by a $9.5 million increase in the Pharmacy Services Segment. The decrease in the Retail Pharmacy Segment Adjusted EBITDA was driven by a $42.4 million reduction in TSA fee income from WBA. Also contributing to the reduction in Adjusted EBITDA was a decrease in Adjusted EBITDA gross profit resulting from reimbursement rate pressures that were not fully offset by generic drug purchasing efficiencies, a reduction in vendor promotional funds and a decline in front-end same store sales. These negative variances were partially offset by same-store prescription count growth and lower selling, general and administrative expenses due to strong labor and benefits expense control. The improvement in the Pharmacy Services Segment EBITDA was due to increased revenue and improvements in pharmacy network management.
For the year, the company relocated five stores, finished the last 75 stores with the wellness remodel format, opened two stores, and closed 10 stores.
Rite Aid on the Front Lines of the COVID-19 Crisis
Rite Aid is on the front lines of providing communities with essential care, services and products during the COVID-19 pandemic. The company has taken numerous steps to ensure that Rite Aid can continue providing these vital services during this time of great need, including:
| · | Working with the U.S. Department of Health and Human Services to pilot new testing models. |
| · | Announcing plans to hire an additional 5,000 full and part-time associates to support store and distribution center teams. |
| · | Implementing Hero Pay and Hero Bonus programs, along with increasing our associate discount to 35%, to show appreciation for the exceptional commitment of Rite Aid associates on the front lines. |
| · | Instituting a “Pandemic Pay” policy that ensures associates are compensated if diagnosed with the virus or quarantined because of exposure. |
| · | Implementing specific internal protocols to keep associates safe and ready to serve customers, including the installation of Plexiglas shields at pharmacy and front-end counters to provide additional protection. |
| · | Ensuring contact-less capabilities at our stores for prescription pickup and payment. |
| · | Launching a new telehealth service RediClinic@Home to better serve patient needs. |
| · | Designating 9 a.m. to 10 a.m. as a senior shopping hour to limit exposure for customers 60 and older and offering a 30% discount to wellness+ rewards members every Wednesday in April. |
| · | Establishing social distancing procedures that include marking floor areas in front of the pharmacy and front-end counters with tape to ensure 6-foot separation. |
| · | Waiving delivery-service fees for eligible prescriptions. |
| · | Following enhanced cleaning and sanitization protocols designed specifically to prevent the spread of a wide spectrum of viruses, including COVID-19 and influenza. |
In response to the COVID-19 pandemic, the company implemented its business continuity plans in an effort to continue normal operations based on the work from home and social distancing requirements of various governmental entities. During the month of March, the company saw increases in comparable front-end sales of 33 percent, due to demand for personal care, paper products and OTC medications, and increases in 30-day comparable adjusted prescription count of 8.3 percent due to increased fills of maintenance medications.
The company expects these initial favorable results to be tempered by a decline in front-end sales during the remainder of the first quarter of fiscal 2021 due to social distancing measures that are in effect in our markets, and a moderation in prescription count due to the timing of maintenance medication fills and a potential prolonged acute prescription decline. Also the company incurred incremental costs related to the Hero Pay and Bonus programs for front-line associates, as well as incremental expenses (e.g. Plexiglas protective barriers, cleaning crews and additional staffing) to ensure our stores stay open and to minimize the risk to our associates and customers.
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Rite Aid FY 2020 Q4 Press Release - page 4
The company currently has liquidity of $1.9 billion, which consists of availability to borrow under our secured revolving credit facility of $1.7 billion and cash on hand of $180 million. The company will continue to assess developments related to COVID-19 as the quarter progresses to determine if any material negative impacts are identified and will work to minimize the risk to the company’s financial position if material negative developments occur.
Outlook for Fiscal 2021
The company’s outlook for fiscal 2021, as previously announced on March 16, 2020, assumes a decline in reimbursement rates consistent with the decline experienced in fiscal 2020. However, based upon conditions in the generic drug market, the company does not expect to be able to as effectively offset these declines with generic drug purchasing savings as in the prior year. The company does expect benefits from revenue growth and initiatives to control costs to partially offset these reimbursement rate pressures. The company’s outlook also assumes restructuring charges of approximately $60.0 million, which will not be included in Adjusted EBITDA. These charges include costs to relaunch the brand and to transition certain merchandise lines.
At this time, the impact of COVID-19 on fiscal 2021 Adjusted EBITDA has not been material, as increased sales volumes in March are expected to be offset by declines in sales during the remainder of the first quarter of fiscal 2021 and the cost investments described above. At this time, the company does not have enough information about the ultimate impact of COVID-19 on fiscal 2021 results to justify changing guidance. It is important to note that the impacts of COVID-19 on our business are fluid and difficult to predict and these estimates could materially change. Factors that could cause our estimates for fiscal 2021 to materially change include a deterioration in front-end sales and prescriptions due to prolonged social distancing measures, a reduction in members at our Pharmacy Services Segment commercial clients and disruptions to our front-end or pharmaceutical supply chain.
Revenues are expected to be between $22.5 billion and $22.9 billion in fiscal 2021 with Retail Pharmacy Segment same store sales expected to range from an increase of 1.5 percent to an increase of 2.5 percent over fiscal 2020. Pharmacy Services Segment revenue is expected to be between $6.75 billion and $6.85 billion (net of any intercompany revenues to Rite Aid retail).
Net loss is expected to be between $91.0 million and $119.0 million.
Adjusted EBITDA is expected to be between $500.0 million and $540.0 million.
Adjusted net (loss) income per share is expected to be between a loss of $0.22 and income of $0.19.
Cash flow from operations is expected to be between $400.0 million and $450.0 million.
Capital expenditures are expected to be approximately $350.0 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://www.riteaid.com/corporate/investor-relations/presentations. The telephone replay will be available beginning at 12 p.m. Eastern Time today and ending at 11:59 p.m. Eastern Time on, April 18, 2020. To access the replay of the call, telephone (855) 859-2056 from within the U.S. and Canada or (404) 537-3406 from outside the U.S. and Canada and enter the seven-digit reservation number 5497617. 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 today. The playback will be available until the company’s next conference call.
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Rite Aid FY 2020 Q4 Press Release - page 5
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, soon to be renamed Elixir, we provide pharmacy benefits and services to approximately 4 million 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 2021, including the impact of coronavirus pandemic (COVID-19) on the company’s business; Rite Aid’s plan to hire additional associates; 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: the impact of COVID-19 on our workforce, operations, stores, and supply chain, and the operations of our customers, suppliers and business partners; our ability to successfully implement our new business strategy (including any delays as a result of COVID-19) and improve the operating performance of our stores; our high level of indebtedness and our ability to satisfy our obligations and the other covenants contained in our debt agreements; general competitive, economic, industry, market, political (including healthcare reform), and regulatory conditions, as well as factors specific to the markets in which we operate; the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order ;our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; outcomes of legal and regulatory matters; our ability to partner and have relationships with health plans and health systems; risks related to the pending sale of the remaining Rite Aid distribution center and related assets to WBA, including the possibility that the transaction may not close; and the continued integration of our new senior management team and our ability to realize the benefits from our organizational restructuring.
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 place undue reliance on these forward-looking statements, which speak only as of the date they are made. The degree to which COVID-19 may affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2021, will depend on future developments, which are highly uncertain, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact (including travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns), 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 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.
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Rite Aid FY 2020 Q4 Press Release - page 6
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.
Cautionary Note Regarding Pro Forma Information
This release provides certain pro forma information regarding the impact of Rite Aid’s pending sale of a distribution center and assets to WBA on Rite Aid’s results of operations and capital structure. The pro forma information is for illustrative purposes only, was prepared by management in response to investor inquiries and is based upon a number of assumptions. The pro forma information assumes the completion of all the asset sales when they actually take place over an extended period of time. Additional items that may require adjustments to the pro forma information may be identified and could result in material changes to the information contained herein. The information in this release is not necessarily indicative of what actual financial results of Rite Aid would have been had the sale occurred on the dates or for the periods indicated, nor does it purport to project the financial results of Rite Aid for any future periods or as of any date. Such pro forma information has not been prepared in conformity with Regulation S-X. Rite Aid’s independent auditors have not audited, reviewed, compiled or performed any procedures with respect to this preliminary financial information. Accordingly, they do not express an opinion or provide any form of assurance with respect thereto. The information in this release should not be viewed in replacement of results prepared in compliance with Generally Accepted Accounting Principles or any pro forma financial statements subsequently required by the rules and regulations of the SEC.
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RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| February 29, 2020 | March 2, 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 218,180 | $ | 144,353 | ||||
| Accounts receivable, net | 1,286,785 | 1,788,712 | ||||||
| Inventories, net of LIFO reserve of $539,640 and $604,444 | 1,921,604 | 1,871,941 | ||||||
| Prepaid expenses and other current assets | 181,794 | 179,132 | ||||||
| Current assets held for sale | 92,278 | 117,581 | ||||||
| Total current assets | 3,700,641 | 4,101,719 | ||||||
| Property, plant and equipment, net | 1,215,838 | 1,308,514 | ||||||
| Operating lease right-of-use assets | 2,903,256 | - | ||||||
| Goodwill | 1,108,136 | 1,108,136 | ||||||
| Other intangibles, net | 359,491 | 448,706 | ||||||
| Deferred tax assets | 16,680 | 409,084 | ||||||
| Other assets | 148,327 | 215,208 | ||||||
| Total assets | $ | 9,452,369 | $ | 7,591,367 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current maturities of long-term debt and lease financing obligations | $ | 8,840 | $ | 16,111 | ||||
| Accounts payable | 1,484,081 | 1,618,585 | ||||||
| Accrued salaries, wages and other current liabilities | 746,318 | 808,439 | ||||||
| Current portion of operating lease liabilities | 490,161 | - | ||||||
| Current liabilities held for sale | 37,063 | - | ||||||
| Total current liabilities | 2,766,463 | 2,443,135 | ||||||
| Long-term debt, less current maturities | 3,077,268 | 3,454,585 | ||||||
| Long-term operating lease liabilities | 2,710,347 | - | ||||||
| Lease financing obligations, less current maturities | 19,326 | 24,064 | ||||||
| Other noncurrent liabilities | 204,438 | 482,893 | ||||||
| Total liabilities | 8,777,842 | 6,404,677 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 54,716 | 54,016 | ||||||
| Additional paid-in capital | 5,890,903 | 5,876,977 | ||||||
| Accumulated deficit | (5,222,194 | ) | (4,713,244 | ) | ||||
| Accumulated other comprehensive loss | (48,898 | ) | (31,059 | ) | ||||
| Total stockholders' equity | 674,527 | 1,186,690 | ||||||
| Total liabilities and stockholders' equity | $ | 9,452,369 | $ | 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 February 29, 2020 | Thirteen weeks ended March 2, 2019 | |||||||
| Revenues | $ | 5,727,242 | $ | 5,379,645 | ||||
| Costs and expenses: | ||||||||
| Cost of revenues | 4,460,621 | 4,215,281 | ||||||
| Selling, general and administrative expenses | 1,154,300 | 1,143,202 | ||||||
| Lease termination and impairment charges | 40,728 | 55,898 | ||||||
| Interest expense | 53,429 | 52,695 | ||||||
| Loss (gain) on sale of assets, net | 9,896 | (26,806 | ) | |||||
| 5,718,974 | 5,440,270 | |||||||
| Income (loss) from continuing operations before income taxes | 8,268 | (60,625 | ) | |||||
| Income tax expense | 351,729 | 195,004 | ||||||
| Net loss from continuing operations | (343,461 | ) | (255,629 | ) | ||||
| Net income (loss) from discontinued operations, net of tax | 18,740 | (17,350 | ) | |||||
| Net loss | $ | (324,721 | ) | $ | (272,979 | ) | ||
| Basic and diluted loss per share: | ||||||||
| Numerator for loss per share: | ||||||||
| Net loss from continuing operations attributable to common stockholders - basic and diluted | $ | (343,461 | ) | $ | (255,629 | ) | ||
| Net income (loss) from discontinued operations attributable to common stockholders - basic and diluted | 18,740 | (17,350 | ) | |||||
| Loss attributable to common stockholders - basic and diluted | $ | (324,721 | ) | $ | (272,979 | ) | ||
| Denominator: | ||||||||
| Basic and diluted weighted average shares | 53,434 | 52,965 | ||||||
| Basic and diluted loss per share | ||||||||
| Continuing operations | $ | (6.43 | ) | $ | (4.83 | ) | ||
| Discontinued operations | $ | 0.35 | $ | (0.32 | ) | |||
| Net basic and diluted loss per share | $ | (6.08 | ) | $ | (5.15 | ) | ||
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RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
| Fifty-two weeks ended February 29, 2020 | Fifty-two weeks ended March 2, 2019 | |||||||
| Revenues | $ | 21,928,393 | $ | 21,639,557 | ||||
| Costs and expenses: | ||||||||
| Cost of revenues | 17,201,635 | 16,963,205 | ||||||
| Selling, general and administrative expenses | 4,587,336 | 4,592,375 | ||||||
| Lease termination and impairment charges | 42,843 | 107,994 | ||||||
| Goodwill and intangible asset impairment charges | - | 375,190 | ||||||
| Interest expense | 229,657 | 227,728 | ||||||
| (Gain) loss on debt retirements, net | (55,692 | ) | 554 | |||||
| Loss (gain) on sale of assets, net | 4,226 | (38,012 | ) | |||||
| 22,010,005 | 22,229,034 | |||||||
| Loss from continuing operations before income taxes | (81,612 | ) | (589,477 | ) | ||||
| Income tax expense | 387,607 | 77,477 | ||||||
| Net loss from continuing operations | (469,219 | ) | (666,954 | ) | ||||
| Net income from discontinued operations, net of tax | 17,045 | 244,741 | ||||||
| Net loss | $ | (452,174 | ) | $ | (422,213 | ) | ||
| Basic and diluted loss per share: | ||||||||
| Numerator for loss per share: | ||||||||
| Net loss from continuing operations attributable to common stockholders - basic and diluted | $ | (469,219 | ) | $ | (666,954 | ) | ||
| Net income from discontinued operations attributable to common stockholders - basic and diluted | 17,045 | 244,741 | ||||||
| Loss attributable to common stockholders - basic and diluted | $ | (452,174 | ) | $ | (422,213 | ) | ||
| Denominator: | ||||||||
| Basic and diluted weighted average shares | 53,228 | 52,854 | ||||||
| Basic and diluted loss per share | ||||||||
| Continuing operations | $ | (8.82 | ) | $ | (12.62 | ) | ||
| Discontinued operations | $ | 0.32 | $ | 4.63 | ||||
| Net basic and diluted loss per share | $ | (8.50 | ) | $ | (7.99 | ) | ||
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RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| Thirteen weeks ended February 29, 2020 | Thirteen weeks ended March 2, 2019 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (324,721 | ) | $ | (272,979 | ) | ||
| Net income (loss) from discontinued operations, net of tax | 18,740 | (17,350 | ) | |||||
| Net loss from continuing operations | $ | (343,461 | ) | $ | (255,629 | ) | ||
| Adjustments to reconcile to net cash provided by (used in) operating activities of continuing operations: | ||||||||
| Depreciation and amortization | 79,300 | 86,925 | ||||||
| Lease termination and impairment charges | 40,728 | 55,898 | ||||||
| LIFO (credit) charge | (72,357 | ) | 4,043 | |||||
| Loss (gain) on sale of assets, net | 9,896 | (26,806 | ) | |||||
| Stock-based compensation expense | 2,489 | 552 | ||||||
| Changes in deferred taxes | 358,925 | 221,740 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 387,065 | (70,407 | ) | |||||
| Inventories | 107,798 | 33,844 | ||||||
| Accounts payable | (53,817 | ) | (55,572 | ) | ||||
| Operating lease right-of-use assets and operating lease liabilities | (8,691 | ) | - | |||||
| Other assets | 4,364 | 13,304 | ||||||
| Other liabilities | (95,057 | ) | (223,820 | ) | ||||
| Net cash provided by (used in) operating activities of continuing operations | 417,182 | (215,928 | ) | |||||
| INVESTING ACTIVITIES: | ||||||||
| Payments for property, plant and equipment | (42,570 | ) | (57,560 | ) | ||||
| Intangible assets acquired | (9,246 | ) | (16,338 | ) | ||||
| Proceeds from dispositions of assets and investments | 3,687 | 27,749 | ||||||
| Proceeds from sale-leaseback transactions | 4,879 | - | ||||||
| Net cash used in investing activities of continuing operations | (43,250 | ) | (46,149 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of long-term debt | 600,000 | 450,000 | ||||||
| Net payments to revolver | (485,000 | ) | (370,000 | ) | ||||
| Principal payments on long-term debt | (601,401 | ) | (2,773 | ) | ||||
| Change in zero balance cash accounts | 24,420 | (43,517 | ) | |||||
| Payments for taxes related to net share settlement of equity awards | (348 | ) | - | |||||
| Financing fees paid for early debt redemption | - | (158 | ) | |||||
| Deferred financing costs paid | (5,466 | ) | (21,564 | ) | ||||
| Net cash (used in) provided by financing activities of continuing operations | (467,795 | ) | 11,988 | |||||
| Cash flows from discontinued operations: | ||||||||
| Operating activities of discontinued operations | (16,688 | ) | (15,688 | ) | ||||
| Investing activities of discontinued operations | 39,233 | 87 | ||||||
| Net cash provided by (used in) discontinued operations | 22,545 | (15,601 | ) | |||||
| Decrease in cash and cash equivalents | (71,318 | ) | (265,690 | ) | ||||
| Cash and cash equivalents, beginning of period | 289,498 | 410,043 | ||||||
| Cash and cash equivalents, end of period | $ | 218,180 | $ | 144,353 | ||||
10
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| Fifty-two weeks ended February 29, 2020 | Fifty-two weeks ended March 2, 2019 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (452,174 | ) | $ | (422,213 | ) | ||
| Net income from discontinued operations, net of tax | 17,045 | 244,741 | ||||||
| Net loss from continuing operations | $ | (469,219 | ) | $ | (666,954 | ) | ||
| Adjustments to reconcile to net cash provided by (used in) operating activities of continuing operations: | ||||||||
| Depreciation and amortization | 328,277 | 357,882 | ||||||
| Lease termination and impairment charges | 42,843 | 107,994 | ||||||
| Goodwill and intangible asset impairment charges | - | 375,190 | ||||||
| LIFO (credit) charge | (64,804 | ) | 23,354 | |||||
| Loss (gain) on sale of assets, net | 4,226 | (38,012 | ) | |||||
| Stock-based compensation expense | 16,087 | 12,115 | ||||||
| (Gain) loss on debt retirements, net | (55,692 | ) | 554 | |||||
| Changes in deferred taxes | 385,904 | 95,638 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 486,563 | (75,844 | ) | |||||
| Inventories | 15,141 | (44,645 | ) | |||||
| Accounts payable | (92,062 | ) | 125,925 | |||||
| Operating lease right-of-use assets and operating lease liabilities | 14,112 | - | ||||||
| Other assets | (38,351 | ) | 1,000 | |||||
| Other liabilities | (62,168 | ) | (439,906 | ) | ||||
| Net cash provided by (used in) operating activities of continuing operations | 510,857 | (165,709 | ) | |||||
| INVESTING ACTIVITIES: | ||||||||
| Payments for property, plant and equipment | (171,705 | ) | (196,778 | ) | ||||
| Intangible assets acquired | (42,681 | ) | (47,911 | ) | ||||
| Proceeds from dispositions of assets and investments | 59,658 | 43,550 | ||||||
| Proceeds from sale-leaseback transactions | 4,879 | 2,587 | ||||||
| Net cash used in investing activities of continuing operations | (149,849 | ) | (198,552 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of long-term debt | 600,000 | 450,000 | ||||||
| Net (payments to) proceeds from revolver | (225,000 | ) | 875,000 | |||||
| Principal payments on long-term debt | (706,103 | ) | (440,370 | ) | ||||
| Change in zero balance cash accounts | 12,671 | (59,481 | ) | |||||
| Net proceeds from the issuance of common stock | - | 2,294 | ||||||
| Payments for taxes related to net share settlement of equity awards | (1,921 | ) | (2,419 | ) | ||||
| Financing fees paid for early debt redemption | (518 | ) | (171 | ) | ||||
| Deferred financing costs paid | (5,781 | ) | (21,564 | ) | ||||
| Net cash (used in) provided by financing activities of continuing operations | (326,652 | ) | 803,289 | |||||
| Cash flows from discontinued operations: | ||||||||
| Operating activities of discontinued operations | (23,836 | ) | (62,956 | ) | ||||
| Investing activities of discontinued operations | 63,307 | 664,740 | ||||||
| Financing activities of discontinued operations | - | (1,343,793 | ) | |||||
| Net cash provided by (used in) discontinued operations | 39,471 | (742,009 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 73,827 | (302,981 | ) | |||||
| Cash and cash equivalents, beginning of period | 144,353 | 447,334 | ||||||
| Cash and cash equivalents, end of period | $ | 218,180 | $ | 144,353 | ||||
11
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
| Thirteen weeks ended February 29, 2020 | Thirteen weeks ended March 2, 2019 | |||||||
| Retail Pharmacy Segment | ||||||||
| Revenues from continuing operations (a) | $ | 3,993,328 | $ | 3,971,156 | ||||
| Cost of revenues from continuing operations (a) | 2,852,283 | 2,913,118 | ||||||
| Gross profit from continuing operations | 1,141,045 | 1,058,038 | ||||||
| LIFO (credit) charge from continuing operations | (72,357 | ) | 4,043 | |||||
| FIFO gross profit from continuing operations | 1,068,688 | 1,062,081 | ||||||
| Adjusted EBITDA gross profit from continuing operations | 1,070,890 | 1,069,396 | ||||||
| Gross profit as a percentage of revenues - continuing operations | 28.57 | % | 26.64 | % | ||||
| LIFO (credit) charge as a percentage of revenues - continuing operations | -1.81 | % | 0.10 | % | ||||
| FIFO gross profit as a percentage of revenues - continuing operations | 26.76 | % | 26.74 | % | ||||
| Adjusted EBITDA gross profit as a percentage of revenues - continuing operations | 26.82 | % | 26.93 | % | ||||
| Selling, general and administrative expenses from continuing operations | 1,060,472 | 1,055,449 | ||||||
| Adjusted EBITDA selling, general and administrative expenses from continuing operations | 985,715 | 973,162 | ||||||
| Selling, general and administrative expenses as a percentage of revenues - continuing operations | 26.56 | % | 26.58 | % | ||||
| Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations | 24.68 | % | 24.51 | % | ||||
| Cash interest expense | 49,607 | 49,325 | ||||||
| Non-cash interest expense | 3,822 | 3,371 | ||||||
| Total interest expense | 53,429 | 52,696 | ||||||
| Interest expense - continuing operations | 53,429 | 52,695 | ||||||
| Interest expense - discontinued operations | - | 1 | ||||||
| Adjusted EBITDA - continuing operations | 85,175 | 96,234 | ||||||
| Adjusted EBITDA as a percentage of revenues - continuing operations | 2.13 | % | 2.42 | % | ||||
| Pharmacy Services Segment | ||||||||
| Revenues (a) | $ | 1,801,090 | $ | 1,463,278 | ||||
| Cost of revenues (a) | 1,675,514 | 1,356,952 | ||||||
| Gross profit | 125,576 | 106,326 | ||||||
| Gross profit as a percentage of revenues | 6.97 | % | 7.27 | % | ||||
| Adjusted EBITDA | 50,409 | 37,846 | ||||||
| Adjusted EBITDA as a percentage of revenues | 2.80 | % | 2.59 | % | ||||
(a) - Revenues and cost of revenues include $67,176 and $54,789 of inter-segment activity for the thirteen weeks ended February 29, 2020 and March 2, 2019, respectively, that is eliminated in consolidation.
12
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
| Fifty-two weeks ended February 29, 2020 | Fifty-two weeks ended March 2, 2019 | |||||||
| Retail Pharmacy Segment | ||||||||
| Revenues from continuing operations (a) | $ | 15,616,186 | $ | 15,757,152 | ||||
| Cost of revenues from continuing operations (a) | 11,341,350 | 11,498,436 | ||||||
| Gross profit from continuing operations | 4,274,836 | 4,258,716 | ||||||
| LIFO (credit) charge from continuing operations | (64,804 | ) | 23,354 | |||||
| FIFO gross profit from continuing operations | 4,210,032 | 4,282,070 | ||||||
| Adjusted EBITDA gross profit from continuing operations | 4,221,933 | 4,299,389 | ||||||
| Gross profit as a percentage of revenues - continuing operations | 27.37 | % | 27.03 | % | ||||
| LIFO (credit) charge as a percentage of revenues - continuing operations | -0.41 | % | 0.15 | % | ||||
| FIFO gross profit as a percentage of revenues - continuing operations | 26.96 | % | 27.18 | % | ||||
| Adjusted EBITDA gross profit as a percentage of revenues - continuing operations | 27.04 | % | 27.29 | % | ||||
| Selling, general and administrative expenses from continuing operations | 4,220,851 | 4,251,378 | ||||||
| Adjusted EBITDA selling, general and administrative expenses from continuing operations | 3,851,498 | 3,894,183 | ||||||
| Selling, general and administrative expenses as a percentage of revenues - continuing operations | 27.03 | % | 26.98 | % | ||||
| Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations | 24.66 | % | 24.71 | % | ||||
| Cash interest expense | 214,589 | 216,595 | ||||||
| Non-cash interest expense | 15,068 | 15,749 | ||||||
| Total interest expense | 229,657 | 232,344 | ||||||
| Interest expense - continuing operations | 229,657 | 227,728 | ||||||
| Interest expense - discontinued operations | - | 4,616 | ||||||
| Adjusted EBITDA - continuing operations | 370,435 | 405,206 | ||||||
| Adjusted EBITDA as a percentage of revenues - continuing operations | 2.37 | % | 2.57 | % | ||||
| Pharmacy Services Segment | ||||||||
| Revenues (a) | $ | 6,559,560 | $ | 6,093,688 | ||||
| Cost of revenues (a) | 6,107,638 | 5,676,052 | ||||||
| Gross profit | 451,922 | 417,636 | ||||||
| Gross profit as a percentage of revenues | 6.89 | % | 6.85 | % | ||||
| Adjusted EBITDA | 167,776 | 158,238 | ||||||
| Adjusted EBITDA as a percentage of revenues | 2.56 | % | 2.60 | % | ||||
(a) - Revenues and cost of revenues include $247,353 and $211,283 of inter-segment activity for the fifty-two weeks ended February 29, 2020 and March 2, 2019, respectively, that is eliminated in consolidation.
13
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
| Thirteen weeks ended February 29, 2020 | Thirteen weeks ended March 2, 2019 | |||||||
| Reconciliation of net loss to adjusted EBITDA: | ||||||||
| Net loss - continuing operations | $ | (343,461 | ) | $ | (255,629 | ) | ||
| Adjustments: | ||||||||
| Interest expense | 53,429 | 52,695 | ||||||
| Income tax expense | 351,729 | 195,004 | ||||||
| Depreciation and amortization | 79,300 | 86,925 | ||||||
| LIFO (credit) charge | (72,357 | ) | 4,043 | |||||
| Lease termination and impairment charges | 40,728 | 55,898 | ||||||
| Merger and Acquisition-related costs | - | 4,602 | ||||||
| Stock-based compensation expense | 2,489 | 552 | ||||||
| Restructuring-related costs | 11,872 | 4,704 | ||||||
| Inventory write-downs related to store closings | 569 | 7,933 | ||||||
| Loss (gain) on sale of assets, net | 9,896 | (26,806 | ) | |||||
| Other | 1,390 | 4,159 | ||||||
| Adjusted EBITDA - continuing operations | $ | 135,584 | $ | 134,080 | ||||
| Percent of revenues - continuing operations | 2.37 | % | 2.49 | % | ||||
14
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
| Fifty-two
weeks ended February 29, 2020 | Fifty-two
weeks ended March 2, 2019 | |||||||
| Reconciliation of net loss to adjusted EBITDA: | ||||||||
| Net loss - continuing operations | $ | (469,219 | ) | $ | (666,954 | ) | ||
| Adjustments: | ||||||||
| Interest expense | 229,657 | 227,728 | ||||||
| Income tax expense | 387,607 | 77,477 | ||||||
| Depreciation and amortization | 328,277 | 357,882 | ||||||
| LIFO (credit) charge | (64,804 | ) | 23,354 | |||||
| Lease termination and impairment charges | 42,843 | 107,994 | ||||||
| Goodwill and intangible asset impairment charges | - | 375,190 | ||||||
| (Gain) loss on debt retirements, net | (55,692 | ) | 554 | |||||
| Merger and Acquisition-related costs | 3,599 | 37,821 | ||||||
| Stock-based compensation expense | 16,087 | 12,115 | ||||||
| Restructuring-related costs | 105,642 | 4,704 | ||||||
| Inventory write-downs related to store closings | 4,652 | 13,487 | ||||||
| Litigation settlement | - | 18,000 | ||||||
| Loss (gain) on sale of assets, net | 4,226 | (38,012 | ) | |||||
| Other | 5,336 | 12,104 | ||||||
| Adjusted EBITDA - continuing operations | $ | 538,211 | $ | 563,444 | ||||
| Percent of revenues - continuing operations | 2.45 | % | 2.60 | % | ||||
15
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
| Thirteen
weeks ended February 29, 2020 | Thirteen
weeks ended March 2, 2019 | |||||||
| Net loss from continuing operations | $ | (343,461 | ) | $ | (255,629 | ) | ||
| Add back - Income tax expense | 351,729 | 195,004 | ||||||
| Income (loss) before income taxes - continuing operations | 8,268 | (60,625 | ) | |||||
| Adjustments: | ||||||||
| Amortization expense | 24,765 | 28,972 | ||||||
| LIFO (credit) charge | (72,357 | ) | 4,043 | |||||
| Merger and Acquisition-related costs | - | 4,602 | ||||||
| Restructuring-related costs | 11,872 | 4,704 | ||||||
| Adjusted loss before income taxes - continuing operations | (27,452 | ) | (18,304 | ) | ||||
| Adjusted income tax benefit (a) | (7,588 | ) | (5,052 | ) | ||||
| Adjusted net loss from continuing operations | $ | (19,864 | ) | $ | (13,252 | ) | ||
| Adjusted net loss per diluted share - continuing operations: | ||||||||
| Numerator for adjusted net loss per diluted share: | ||||||||
| Adjusted net loss from continuing operations | $ | (19,864 | ) | $ | (13,252 | ) | ||
| Denominator: | ||||||||
| Basic and diluted weighted average shares | 53,434 | 52,965 | ||||||
| Net loss from continuing operations per diluted share - continuing operations | $ | (6.43 | ) | $ | (4.83 | ) | ||
| Adjusted net loss per diluted share - continuing operations | $ | (0.37 | ) | $ | (0.25 | ) | ||
(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 February 29, 2020 and March 2, 2019, respectively.
16
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME (LOSS)
(Dollars in thousands, except per share amounts)
(unaudited)
| Fifty-two
weeks ended February 29, 2020 | Fifty-two
weeks ended March 2, 2019 | |||||||
| Net loss from continuing operations | $ | (469,219 | ) | $ | (666,954 | ) | ||
| Add back - Income tax expense | 387,607 | 77,477 | ||||||
| Loss before income taxes - continuing operations | (81,612 | ) | (589,477 | ) | ||||
| Adjustments: | ||||||||
| Amortization expense | 103,941 | 125,640 | ||||||
| LIFO (credit) charge | (64,804 | ) | 23,354 | |||||
| Goodwill and intangible asset impairment charges | - | 375,190 | ||||||
| (Gain) loss on debt retirements, net | (55,692 | ) | 554 | |||||
| Merger and Acquisition-related costs | 3,599 | 37,821 | ||||||
| Restructuring-related costs | 105,642 | 4,704 | ||||||
| Litigation settlement | - | 18,000 | ||||||
| Adjusted income (loss) before income taxes - continuing operations | 11,074 | (4,214 | ) | |||||
| Adjusted income tax expense (benefit) (a) | 3,061 | (1,163 | ) | |||||
| Adjusted net income (loss) from continuing operations | $ | 8,013 | $ | (3,051 | ) | |||
| 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 | $ | 8,013 | $ | (3,051 | ) | |||
| Denominator: | ||||||||
| Basic weighted average shares | 53,228 | 52,854 | ||||||
| Outstanding options and restricted shares, net | 778 | - | ||||||
| Diluted weighted average shares | 54,006 | 52,854 | ||||||
| Net loss from continuing operations per diluted share - continuing operations | $ | (8.82 | ) | $ | (12.62 | ) | ||
| Adjusted net income (loss) per diluted share - continuing operations | $ | 0.15 | $ | (0.06 | ) | |||
(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 fifty-two weeks ended February 29, 2020 and March 2, 2019, respectively.
17
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 February 29, 2020 | Thirteen weeks ended March 2, 2019 | |||||||
| Reconciliation of adjusted EBITDA gross profit: | ||||||||
| Revenues | $ | 3,993,328 | $ | 3,971,156 | ||||
| Gross Profit | 1,141,045 | 1,058,038 | ||||||
| Addback: | ||||||||
| LIFO (credit) charge | (72,357 | ) | 4,043 | |||||
| Depreciation and amortization (cost of goods sold portion only) | 1,758 | 2,277 | ||||||
| Other | 444 | 5,038 | ||||||
| Adjusted EBITDA gross profit - continuing operations | $ | 1,070,890 | $ | 1,069,396 | ||||
| Percent of revenues - continuing operations | 26.82 | % | 26.93 | % | ||||
| Reconciliation of adjusted EBITDA selling, general and administrative expenses: | ||||||||
| Revenues | $ | 3,993,328 | $ | 3,971,156 | ||||
| Selling, general and administrative expenses | 1,060,472 | 1,055,449 | ||||||
| Less: | ||||||||
| Depreciation and amortization (SG&A portion only) | 62,109 | 68,150 | ||||||
| Stock-based compensation expense | 2,191 | 475 | ||||||
| Merger and Acquisition-related costs | - | 3,466 | ||||||
| Restructuring-related costs | 8,887 | 3,224 | ||||||
| Other | 1,570 | 6,972 | ||||||
| Adjusted EBITDA selling, general and administrative expenses - continuing operations | $ | 985,715 | $ | 973,162 | ||||
| Percent of revenues - continuing operations | 24.68 | % | 24.51 | % | ||||
| Adjusted EBITDA - continuing operations | $ | 85,175 | $ | 96,234 | ||||
18
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)
| Fifty-two weeks ended February 29, 2020 | Fifty-two weeks ended March 2, 2019 | |||||||
| Reconciliation of adjusted EBITDA gross profit: | ||||||||
| Revenues | $ | 15,616,186 | $ | 15,757,152 | ||||
| Gross Profit | 4,274,836 | 4,258,716 | ||||||
| Addback: | ||||||||
| LIFO (credit) charge | (64,804 | ) | 23,354 | |||||
| Depreciation and amortization (cost of goods sold portion only) | 8,296 | 9,206 | ||||||
| Other | 3,605 | 8,113 | ||||||
| Adjusted EBITDA gross profit - continuing operations | $ | 4,221,933 | $ | 4,299,389 | ||||
| Percent of revenues - continuing operations | 27.04 | % | 27.29 | % | ||||
| Reconciliation of adjusted EBITDA selling, general and administrative expenses: | ||||||||
| Revenues | $ | 15,616,186 | $ | 15,757,152 | ||||
| Selling, general and administrative expenses | 4,220,851 | 4,251,378 | ||||||
| Less: | ||||||||
| Depreciation and amortization (SG&A portion only) | 257,390 | 274,122 | ||||||
| Stock-based compensation expense | 14,864 | 12,038 | ||||||
| Merger and Acquisition-related costs | 2,828 | 33,860 | ||||||
| Restructuring-related costs | 87,738 | 3,224 | ||||||
| Litigation settlement | - | 18,000 | ||||||
| Other | 6,533 | 15,951 | ||||||
| Adjusted EBITDA selling, general and administrative expenses - continuing operations | $ | 3,851,498 | $ | 3,894,183 | ||||
| Percent of revenues - continuing operations | 24.66 | % | 24.71 | % | ||||
| Adjusted EBITDA - continuing operations | $ | 370,435 | $ | 405,206 | ||||
19
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
| Guidance Range | ||||||||
| Low | High | |||||||
| Total Revenues | $ | 22,500,000 | $ | 22,900,000 | ||||
| PBM Revenues | $ | 6,750,000 | $ | 6,850,000 | ||||
| Same store sales | 1.50 | % | 2.50 | % | ||||
| Gross Capital Expenditures | $ | 350,000 | $ | 350,000 | ||||
| Reconciliation of net loss to adjusted EBITDA: | ||||||||
| Net loss | $ | (119,000 | ) | $ | (91,000 | ) | ||
| Adjustments: | ||||||||
| Interest expense | 215,000 | 215,000 | ||||||
| Income tax expense | 3,000 | 15,000 | ||||||
| Depreciation and amortization | 317,000 | 317,000 | ||||||
| LIFO credit | (35,000 | ) | (35,000 | ) | ||||
| Lease termination and impairment charges | 41,000 | 41,000 | ||||||
| Restructuring-related costs | 60,000 | 60,000 | ||||||
| Other | 18,000 | 18,000 | ||||||
| Adjusted EBITDA | $ | 500,000 | $ | 540,000 | ||||
20
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET (LOSS) INCOME GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
| Guidance Range | ||||||||
| Low | High | |||||||
| Net loss | $ | (119,000 | ) | $ | (91,000 | ) | ||
| Add back - income tax expense | 3,000 | 15,000 | ||||||
| Loss before income taxes | (116,000 | ) | (76,000 | ) | ||||
| Adjustments: | ||||||||
| Amortization expense | 64,000 | 64,000 | ||||||
| LIFO credit | (35,000 | ) | (35,000 | ) | ||||
| Restructuring-related costs | 60,000 | 60,000 | ||||||
| Adjusted (loss) income before adjusted income taxes | (27,000 | ) | 13,000 | |||||
| Adjusted income tax (benefit) expense | (15,000 | ) | 3,000 | |||||
| Adjusted net (loss) income | $ | (12,000 | ) | $ | 10,000 | |||
| Diluted adjusted net (loss) income per share | $ | (0.22 | ) | $ | 0.19 | |||
21
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE TO FREE CASH FLOW
GUIDANCE
YEAR ENDING FEBRUARY 27, 2021
(In thousands)
(unaudited)
| Guidance Range | ||||||||
| Low | High | |||||||
| Adjusted EBITDA | $ | 500,000 | $ | 540,000 | ||||
| Cash interest expense | (210,000 | ) | (210,000 | ) | ||||
| Restructuring-related costs | (60,000 | ) | (60,000 | ) | ||||
| Closed store rent | (30,000 | ) | (30,000 | ) | ||||
| Working capital benefit | 200,000 | 210,000 | ||||||
| Cash flow from operations | 400,000 | 450,000 | ||||||
| Gross capital expenditures | (350,000 | ) | (350,000 | ) | ||||
| Free cash flow | $ | 50,000 | $ | 100,000 | ||||
22