Rite Aid (RAD) Misses Q4 EPS by 22c, Revenues Beat; Confirms FY21 Revenue Outlook

Rite Aid (NYSE: RAD) reported Q4 EPS of ($0.37), $0.22 worse than the analyst estimate of ($0.15). Revenue for the quarter came in at $5.73 billion versus the consensus estimate of $5.59 billion.

• 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
  • 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

“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.”

GUIDANCE:

Rite Aid sees FY2021 revenue of $22.5-22.9 billion, versus the consensus of $22.26 billion.

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.

For earnings history and earnings-related data on Rite Aid (RAD) click here.

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