Rite Aid (RAD) Tops Q3 EPS by 45c, Revenues Beat; Narrows FY21 EPS/Revenue Guidance Above Consensus

Rite Aid (NYSE: RAD) reported Q3 EPS of $0.40, $0.45 better than the analyst estimate of ($0.05). Revenue for the quarter came in at $6.11 billion versus the consensus estimate of $5.84 billion.

• Revenues Increased 12.0 Percent – Driven by Growth in Both Retail Pharmacy and Pharmacy Services Segments
• Increased Market Share in both Front-End and Pharmacy
• Third Quarter Net Income from Continuing Operations of $4.3 Million or $0.08 Per Share, Compared to the Prior Year Third Quarter Net Income of $52.3 Million or $0.98 Per Share
• Third Quarter Adjusted Net Income from Continuing Operations of $21.6 Million or $0.40 Per Share, Compared to the Prior Year Third Quarter Adjusted Net Income of $29.1 Million or $0.54 Per Share
• Third Quarter Adjusted EBITDA from Continuing Operations of $137.4 Million, Compared to the Prior Year Adjusted EBITDA of $158.1 Million

“We are pleased with our third quarter performance as we continue to grow our business and achieve major physical and digital milestones through our RxEvolution strategy,” said Heyward Donigan, president and chief executive officer, Rite Aid. “We officially launched our new brand and logo, made substantial progress in evolving our merchandise mix to an assortment that best supports whole health, refreshed over 700 store exteriors, opened the first three new Store of the Future prototypes and began the integration of our two legacy PBMs. On the digital side, we launched a completely modernized Rite Aid online experience and mobile app and are set to launch our new member portal at Elixir.”

“Our teams are working hard to serve our customers during these challenging times. We have administered over one million COVID-19 tests and will be partnering with the CDC to help administer COVID-19 vaccines in our communities. I am so proud of our 50,000 associates and the strategic progress we’re making in our journey to revolutionize our industry and elevate our role as an indispensable healthcare provider. We are accelerating the key initiatives that support our strategy, and we will continue to deliver the operational excellence needed to achieve strong results as we generate cash flow, reduce debt and improve our leverage ratio.”

GUIDANCE:

Rite Aid sees FY2021 EPS of $0.45-$0.85, versus the consensus of ($0.09). Rite Aid sees FY2021 revenue of $23.9-24.2 billion, versus the consensus of $23.76 billion.

Rite Aid Corporation is narrowing its fiscal 2021 guidance. The company’s key guidance assumptions are as follows:

• Benefits from initiatives to drive retail sales growth, offset by the impact of a less severe cough, cold and flu season on front end over-the-counter sales and related prescriptions;
• A reduction in Medicare Part D membership beginning January 1;
• Strong expense control across both the Retail Pharmacy and Pharmacy Services segments, offset by additional retail operating expenses caused by the recent increase in COVID-19 cases across many of our markets; and
• Continued improvements in pharmacy network management at Elixir.

Rite Aid Corporation expects revenues to be between $23.9 billion and $24.2 billion in fiscal 2021 with same store sales expected to range from an increase of 3.5 percent to an increase of 4.5 percent over fiscal 2020.

Net loss is expected to be between $114 million and $89 million.

Adjusted EBITDA is expected to be between $490 million and $520 million.

Adjusted net income per share is expected to be between $0.45 and $0.85.

Capital expenditures are expected to be approximately $325 million, which includes our previously announced acquisition of Bartell Drugs.

Free cash flow is expected to be between $50 million and $100 million.

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

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