Rite Aid (RAD) Updates FY21 Guidance

March 24, 2021 4:10 PM EDT

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

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

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

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

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

Outlook for Fiscal 2021

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

(*Consensus sees FY21 revenue of $24.07 billion)

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

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

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

Liquidity is approximately $1.7 billion.

Fourth Quarter Earnings Announcement

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

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

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

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