UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 26, 2019
Rite Aid Corporation
(Exact name of registrant as specified in its charter)
Delaware |
|
1-5742 |
|
23-1614034 |
(State or Other Jurisdiction |
|
(Commission File Number) |
|
(IRS Employer |
30 Hunter Lane, Camp Hill, Pennsylvania 17011
(Address of principal executive offices, including zip code)
(717) 761-2633
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which |
Common Stock, $1.00 par value |
|
RAD |
|
The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On September 26, 2019, Rite Aid Corporation (the Company) reported its financial position and results of operations as of and for the thirteen and twenty-six week periods ended August 31, 2019. The press release includes the non-GAAP financial measures, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share. The Company uses these non-GAAP measures in assessing its performance in addition to net income, the most directly comparable GAAP financial measure. Reconciliations of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share to net income and net income (loss) per diluted share, the most directly comparable GAAP financial measures, are included in the press release, which is furnished as Exhibit 99.1 hereto.
The Company believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare the Companys operating performance with its competitors. The Company defines Adjusted EBITDA 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, loss on debt retirements, the WBA merger termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs, a 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. The Company references this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to historical periods and external comparisons to competitors. In addition, incentive compensation is based in part on Adjusted EBITDA and the Company bases certain of its forward-looking estimates and budgets on Adjusted EBITDA.
The Company defines Adjusted Net Income (Loss) as net income (loss) excluding amortization expense, merger and acquisition-related costs, a non-recurring litigation settlement, loss 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. The Company calculates Adjusted Net Income (Loss) per Diluted Share using the Companys above-referenced definition of Adjusted Net Income (Loss). The Company believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare the Companys operating performance over multiple periods.
In addition, 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 Aids results as if the company was on a FIFO inventory basis.
Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share should not be considered in isolation from, and are not intended to represent alternative measures of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Companys definitions of Adjusted EBITDA, Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) per Diluted Share may not be comparable to similarly titled measurements reported by other companies or similar terms in the Companys debt facilities.
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.
In addition, a copy of the Companys Earnings Release Supplement for the second quarter of fiscal 2020 is being furnished as Exhibit 99.2 to this Form 8-K.
The information (including Exhibits 99.1 and 99.2) being furnished pursuant to this Item 2.02. Results of Operations and Financial Condition shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release, dated September 26, 2019.
99.2 Second Quarter Fiscal 2020 Supplemental Information.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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RITE AID CORPORATION | ||
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|
| ||
Dated: September 26, 2019 |
By: |
/s/ James J. Comitale | |
|
|
Name: |
James J. Comitale |
|
|
Title: |
Senior Vice President, General Counsel |
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 Reports Fiscal 2020 Second Quarter Results
· Same Store Prescription Volume Grew 2.7 Percent
· Second Quarter Net Loss from Continuing Operations of $78.7 Million or $1.48 Per Share, Compared to the Prior Year Second Quarter Net Loss of $352.3 Million or $6.67 Per Share
· Second Quarter Adjusted Net Income from Continuing Operations of $6.3 Million or $0.12 Per Share, Compared to the Prior Year Second Quarter Adjusted Net Loss of $7.9 Million or $0.15 Per Share
· Second Quarter Adjusted EBITDA from Continuing Operations of $134.2 Million, Compared to the Prior Year Second Quarter Adjusted EBITDA of $148.6 Million
· Rite Aid Narrows Fiscal 2020 Outlook for Adjusted EBITDA
CAMP HILL, Pa. (Sept. 26, 2019) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its second fiscal quarter ended August 31, 2019.
For the second quarter, the company reported net loss from continuing operations of $78.7 million, or $1.48 per share, Adjusted net income from continuing operations of $6.3 million, or $0.12 per share, and Adjusted EBITDA from continuing operations of $134.2 million, or 2.5 percent of revenues.
After my first few weeks as CEO, Im optimistic about our future because I believe in the Rite Aid brand and the opportunity we have to deliver innovative experiences as a health and wellness destination, even as we recognize the challenges ahead, said Rite Aid CEO Heyward Donigan. Im also encouraged by the market opportunities for EnvisionRxOptions as health plans and employers rethink their pharmacy services partnerships. In talking with many associates during my first 45 days, we know there is important work in front of us, and we are acting with urgency to finalize a strategic plan that positions our company to meet its full potential. We look forward to sharing the key elements of this plan in the coming months.
As we continue these efforts, Id like to thank our Rite Aid team for their hard work during the second quarter, Donigan continued. Our Adjusted EBITDA results exceeded our plan driven by prescription count growth and strong expense control. This gives us important momentum for our future, and I look forward to working closely with our team to deliver a solid finish to our fiscal year and position Rite Aid as an innovative leader in our industry.
-More-
Second Quarter Summary
Revenues from continuing operations for the quarter were $5.37 billion compared to revenues from continuing operations of $5.42 billion in the prior years quarter. Retail Pharmacy Segment revenues were $3.85 billion and decreased 1.6 percent compared to the prior year period due to a reduction in store count, partially offset by an increase in same store sales. Revenues in the Pharmacy Services Segment were $1.58 billion, an increase of 1.1 percent compared to the prior year period, which was due to an increase in Medicare Part D revenue.
Retail Pharmacy Segment same store sales from continuing operations for the second quarter increased 0.4 percent over the prior year period, consisting of a 1.5 percent increase in pharmacy sales and a 1.8 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 0.6 percent. Pharmacy sales were negatively impacted by approximately 276 basis points as a result of new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 2.7 percent over the prior year period resulting primarily from the companys continued emphasis on driving clinical services. Prescription sales from continuing operations accounted for 67.2 percent of total drugstore sales.
Net loss from continuing operations was $78.7 million or $1.48 per share compared to last years second quarter net loss from continuing operations of $352.3 million or $6.67 per share. The decrease in net loss was due primarily to $282.6 million of goodwill and intangible asset impairment charges, net of tax, in the prior year period and a reduction in lease termination and impairment charges. These items were partially offset by higher restructuring-related costs, higher income tax expense and a decrease in Adjusted EBITDA.
Adjusted EBITDA from continuing operations was $134.2 million or 2.5 percent of revenues for the second quarter compared to Adjusted EBITDA from continuing operations of $148.6 million or 2.7 percent of revenues for the same period last year, a decrease of $14.4 million. The Retail Pharmacy Segment Adjusted EBITDA from continuing operations decreased $10.9 million compared to the prior year due primarily to weaker front end gross profit, resulting from a decline in front end same store sales, and a reduction in Transition Service Agreement fee income from Walgreens Boots Alliance. These items were partially offset by lower salaries and benefit expense related to the companys recent corporate restructuring and strong labor and expense control at the stores. The Pharmacy Services Segment Adjusted EBITDA benefited from improvements in pharmacy network performance but decreased $3.4 million over the prior year period due to operating investments to support current year and future growth.
In the second quarter, the company remodeled 24 stores and relocated one store, bringing the total number of wellness stores chainwide to 1,805. Additionally, the company closed 2 stores, resulting in a total store count of 2,464 at the end of the second quarter.
Outlook for Fiscal 2020
Rite Aid is updating its fiscal 2020 outlook, including narrowing its guidance for Adjusted EBITDA. The companys 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 also assumes continued improvements in pharmacy network performance in the Pharmacy Services Segment.
Rite Aid 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 $235.0 million and $275.0 million.
Adjusted EBITDA is expected to be between $510.0 million and $550.0 million.
Adjusted net income per share is expected to be between $0.00 and $0.56.
Capital expenditures are expected to be approximately $250 million.
Conference Call Broadcast
Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aids 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 Sept. 29, 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 4487388.
About Rite Aid Corporation
Rite Aid Corporation, which generated fiscal 2019 annual revenue of $21.6 billion, is one of the nations leading drugstore chains with 2,464 stores in 18 states and pharmacy benefit management (PBM) capabilities through EnvisionRxOptions and its affiliates. At Rite Aid we have a personal interest in our customers health and wellness and deliver the products and services they need to lead healthier lives. Information about Rite Aid, including corporate background and press releases, is available through the companys website at 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 Aids outlook for fiscal 2020; Rite Aids 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 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 centers and related assets to Walgreens Boots Alliance, Inc. (WBA), including the possibility that the transactions may not close, or the business of Rite Aid may suffer as a result of uncertainty surrounding the pending transactions; our ability to successfully execute and 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.
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, loss 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, loss 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 Aids 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.
###
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
|
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August 31, 2019 |
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March 2, 2019 |
| ||
ASSETS |
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Current assets: |
|
|
|
|
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Cash and cash equivalents |
|
$ |
142,181 |
|
$ |
144,353 |
|
Accounts receivable, net |
|
1,945,600 |
|
1,788,712 |
| ||
Inventories, net of LIFO reserve of $619,437 and $604,444 |
|
1,968,937 |
|
1,871,941 |
| ||
Prepaid expenses and other current assets |
|
183,428 |
|
179,132 |
| ||
Current assets held for sale |
|
145,213 |
|
117,581 |
| ||
Total current assets |
|
4,385,359 |
|
4,101,719 |
| ||
Property, plant and equipment, net |
|
1,270,467 |
|
1,308,514 |
| ||
Operating lease right-of-use assets |
|
2,944,651 |
|
|
| ||
Goodwill |
|
1,108,136 |
|
1,108,136 |
| ||
Other intangibles, net |
|
381,369 |
|
448,706 |
| ||
Deferred tax assets |
|
382,105 |
|
409,084 |
| ||
Other assets |
|
201,126 |
|
215,208 |
| ||
Total assets |
|
$ |
10,673,213 |
|
$ |
7,591,367 |
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|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
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Current liabilities: |
|
|
|
|
| ||
Current maturities of long-term debt and lease financing obligations |
|
$ |
10,704 |
|
$ |
16,111 |
|
Accounts payable |
|
1,570,178 |
|
1,618,585 |
| ||
Accrued salaries, wages and other current liabilities |
|
732,787 |
|
808,439 |
| ||
Current portion of operating lease liabilities |
|
502,706 |
|
|
| ||
Current liabilities held for sale |
|
43,364 |
|
|
| ||
Total current liabilities |
|
2,859,739 |
|
2,443,135 |
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Long-term debt, less current maturities |
|
3,834,605 |
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3,454,585 |
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Long-term operating lease liabilities |
|
2,745,598 |
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|
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Lease financing obligations, less current maturities |
|
22,540 |
|
24,064 |
| ||
Other noncurrent liabilities |
|
250,145 |
|
482,893 |
| ||
Total liabilities |
|
9,712,627 |
|
6,404,677 |
| ||
|
|
|
|
|
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Commitments and contingencies |
|
|
|
|
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Stockholders equity: |
|
|
|
|
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Common stock |
|
54,896 |
|
54,016 |
| ||
Additional paid-in capital |
|
5,885,550 |
|
5,876,977 |
| ||
Accumulated deficit |
|
(4,948,958 |
) |
(4,713,244 |
) | ||
Accumulated other comprehensive loss |
|
(30,902 |
) |
(31,059 |
) | ||
Total stockholders equity |
|
960,586 |
|
1,186,690 |
| ||
Total liabilities and stockholders equity |
|
$ |
10,673,213 |
|
$ |
7,591,367 |
|
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
| ||
Revenues |
|
$ |
5,366,264 |
|
$ |
5,421,362 |
|
Costs and expenses: |
|
|
|
|
| ||
Cost of revenues |
|
4,221,825 |
|
4,260,211 |
| ||
Selling, general and administrative expenses |
|
1,135,530 |
|
1,153,991 |
| ||
Lease termination and impairment charges |
|
1,471 |
|
39,609 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Interest expense |
|
60,102 |
|
56,233 |
| ||
Gain on sale of assets, net |
|
(1,587 |
) |
(4,965 |
) | ||
|
|
|
|
|
| ||
|
|
5,417,341 |
|
5,880,269 |
| ||
|
|
|
|
|
| ||
Loss from continuing operations before income taxes |
|
(51,077 |
) |
(458,907 |
) | ||
Income tax expense (benefit) |
|
27,628 |
|
(106,559 |
) | ||
Net loss from continuing operations |
|
(78,705 |
) |
(352,348 |
) | ||
Net loss from discontinued operations, net of tax |
|
(574 |
) |
(6,792 |
) | ||
Net loss |
|
$ |
(79,279 |
) |
$ |
(359,140 |
) |
|
|
|
|
|
| ||
Basic and diluted loss per share: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Numerator for loss per share: |
|
|
|
|
| ||
Net loss from continuing operations attributable to common stockholders - basic and diluted |
|
$ |
(78,705 |
) |
$ |
(352,348 |
) |
Net loss from discontinued operations attributable to common stockholders - basic and diluted |
|
(574 |
) |
(6,792 |
) | ||
Loss attributable to common stockholders - basic and diluted |
|
$ |
(79,279 |
) |
$ |
(359,140 |
) |
|
|
|
|
|
| ||
Denominator: |
|
|
|
|
| ||
Basic and diluted weighted average shares |
|
53,041 |
|
52,823 |
| ||
|
|
|
|
|
| ||
Basic and diluted loss per share |
|
|
|
|
| ||
Continuing operations |
|
$ |
(1.48 |
) |
$ |
(6.67 |
) |
Discontinued operations |
|
$ |
(0.01 |
) |
$ |
(0.13 |
) |
Net basic and diluted loss per share |
|
$ |
(1.49 |
) |
$ |
(6.80 |
) |
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
Revenues |
|
$ |
10,738,853 |
|
$ |
10,809,852 |
|
Costs and expenses: |
|
|
|
|
| ||
Cost of revenues |
|
8,467,691 |
|
8,479,952 |
| ||
Selling, general and administrative expenses |
|
2,298,182 |
|
2,306,618 |
| ||
Lease termination and impairment charges |
|
1,949 |
|
49,468 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Interest expense |
|
118,372 |
|
119,025 |
| ||
Loss on debt retirements, net |
|
|
|
554 |
| ||
Gain on sale of assets, net |
|
(4,299 |
) |
(10,824 |
) | ||
|
|
|
|
|
| ||
|
|
10,881,895 |
|
11,319,983 |
| ||
|
|
|
|
|
| ||
Loss from continuing operations before income taxes |
|
(143,042 |
) |
(510,131 |
) | ||
Income tax expense (benefit) |
|
35,002 |
|
(116,056 |
) | ||
Net loss from continuing operations |
|
(178,044 |
) |
(394,075 |
) | ||
Net (loss) income from discontinued operations, net of tax |
|
(894 |
) |
249,351 |
| ||
Net loss |
|
$ |
(178,938 |
) |
$ |
(144,724 |
) |
|
|
|
|
|
| ||
Basic and diluted loss per share: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Numerator for loss per share: |
|
|
|
|
| ||
Net loss from continuing operations attributable to common stockholders - basic and diluted |
|
$ |
(178,044 |
) |
$ |
(394,075 |
) |
Net (loss) income from discontinued operations attributable to common stockholders - basic and diluted |
|
(894 |
) |
249,351 |
| ||
Loss attributable to common stockholders - basic and diluted |
|
$ |
(178,938 |
) |
$ |
(144,724 |
) |
|
|
|
|
|
| ||
Denominator: |
|
|
|
|
| ||
Basic and diluted weighted average shares |
|
53,084 |
|
52,771 |
| ||
|
|
|
|
|
| ||
Basic and diluted loss per share |
|
|
|
|
| ||
Continuing operations |
|
$ |
(3.35 |
) |
$ |
(7.47 |
) |
Discontinued operations |
|
$ |
(0.02 |
) |
$ |
4.73 |
|
Net basic and diluted loss per share |
|
$ |
(3.37 |
) |
$ |
(2.74 |
) |
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net loss |
|
$ |
(79,279 |
) |
$ |
(359,140 |
) |
Net loss from discontinued operations, net of tax |
|
(574 |
) |
(6,792 |
) | ||
Net loss from continuing operations |
|
$ |
(78,705 |
) |
$ |
(352,348 |
) |
Adjustments to reconcile to net cash used in operating activities of continuing operations: |
|
|
|
|
| ||
Depreciation and amortization |
|
83,044 |
|
89,743 |
| ||
Lease termination and impairment charges |
|
1,471 |
|
39,609 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
LIFO charge |
|
7,504 |
|
3,358 |
| ||
Gain on sale of assets, net |
|
(1,587 |
) |
(4,965 |
) | ||
Stock-based compensation expense |
|
4,712 |
|
5,215 |
| ||
Changes in deferred taxes |
|
26,979 |
|
(112,452 |
) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
|
(135,704 |
) |
(129,565 |
) | ||
Inventories |
|
(100,536 |
) |
(62,751 |
) | ||
Accounts payable |
|
(9,730 |
) |
(17 |
) | ||
Operating lease right-of-use assets and operating lease liabilities |
|
46,875 |
|
|
| ||
Other assets |
|
(67,187 |
) |
(18,334 |
) | ||
Other liabilities |
|
(55,935 |
) |
(117,271 |
) | ||
Net cash used in operating activities of continuing operations |
|
(278,799 |
) |
(284,588 |
) | ||
INVESTING ACTIVITIES: |
|
|
|
|
| ||
Payments for property, plant and equipment |
|
(43,079 |
) |
(44,594 |
) | ||
Intangible assets acquired |
|
(7,498 |
) |
(6,864 |
) | ||
Proceeds from dispositions of assets and investments |
|
3,765 |
|
5,813 |
| ||
Net cash used in investing activities of continuing operations |
|
(46,812 |
) |
(45,645 |
) | ||
FINANCING ACTIVITIES: |
|
|
|
|
| ||
Net proceeds from revolver |
|
250,000 |
|
1,145,000 |
| ||
Principal payments on long-term debt |
|
(1,671 |
) |
(2,640 |
) | ||
Change in zero balance cash accounts |
|
18,325 |
|
(18,184 |
) | ||
Net proceeds from the issuance of common stock |
|
|
|
392 |
| ||
Payments for taxes related to net share settlement of equity awards |
|
(791 |
) |
(2,244 |
) | ||
Deferred financing costs paid |
|
(129 |
) |
|
| ||
Net cash provided by financing activities of continuing operations |
|
265,734 |
|
1,122,324 |
| ||
Cash flows from discontinued operations: |
|
|
|
|
| ||
Operating activities of discontinued operations |
|
11,605 |
|
12,047 |
| ||
Investing activities of discontinued operations |
|
|
|
|
| ||
Financing activities of discontinued operations |
|
|
|
(818,762 |
) | ||
Net cash provided by (used in) discontinued operations |
|
11,605 |
|
(806,715 |
) | ||
Decrease in cash and cash equivalents |
|
(48,272 |
) |
(14,624 |
) | ||
Cash and cash equivalents, beginning of period |
|
190,453 |
|
147,092 |
| ||
Cash and cash equivalents, end of period |
|
$ |
142,181 |
|
$ |
132,468 |
|
RITE AID CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
|
|
|
|
|
| ||
OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net loss |
|
$ |
(178,938 |
) |
$ |
(144,724 |
) |
Net (loss) income from discontinued operations, net of tax |
|
(894 |
) |
249,351 |
| ||
Net loss from continuing operations |
|
$ |
(178,044 |
) |
$ |
(394,075 |
) |
Adjustments to reconcile to net cash used in operating activities of continuing operations: |
|
|
|
|
| ||
Depreciation and amortization |
|
166,970 |
|
184,272 |
| ||
Lease termination and impairment charges |
|
1,949 |
|
49,468 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
LIFO charge |
|
14,993 |
|
13,324 |
| ||
Gain on sale of assets, net |
|
(4,299 |
) |
(10,824 |
) | ||
Stock-based compensation expense |
|
10,092 |
|
10,246 |
| ||
Loss on debt retirements, net |
|
|
|
554 |
| ||
Changes in deferred taxes |
|
26,979 |
|
(124,807 |
) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
|
(153,269 |
) |
(323,724 |
) | ||
Inventories |
|
(111,990 |
) |
(31,650 |
) | ||
Accounts payable |
|
(85,623 |
) |
207,943 |
| ||
Operating lease right-of-use assets and operating lease liabilities |
|
34,982 |
|
|
| ||
Other assets |
|
(44,674 |
) |
(11,232 |
) | ||
Other liabilities |
|
(8,104 |
) |
(245,587 |
) | ||
Net cash used in operating activities of continuing operations |
|
(330,038 |
) |
(300,902 |
) | ||
INVESTING ACTIVITIES: |
|
|
|
|
| ||
Payments for property, plant and equipment |
|
(84,060 |
) |
(92,565 |
) | ||
Intangible assets acquired |
|
(15,708 |
) |
(20,519 |
) | ||
Proceeds from dispositions of assets and investments |
|
4,423 |
|
15,729 |
| ||
Proceeds from sale-leaseback transactions |
|
|
|
2,587 |
| ||
Net cash used in investing activities of continuing operations |
|
(95,345 |
) |
(94,768 |
) | ||
FINANCING ACTIVITIES: |
|
|
|
|
| ||
Net proceeds from revolver |
|
375,000 |
|
1,335,000 |
| ||
Principal payments on long-term debt |
|
(3,451 |
) |
(433,746 |
) | ||
Change in zero balance cash accounts |
|
54,712 |
|
(17,101 |
) | ||
Net proceeds from the issuance of common stock |
|
|
|
1,302 |
| ||
Payments for taxes related to net share settlement of equity awards |
|
(986 |
) |
(2,244 |
) | ||
Financing fees paid for early debt redemption |
|
|
|
(13 |
) | ||
Deferred financing costs paid |
|
(315 |
) |
|
| ||
Net cash provided by financing activities of continuing operations |
|
424,960 |
|
883,198 |
| ||
Cash flows from discontinued operations: |
|
|
|
|
| ||
Operating activities of discontinued operations |
|
(2,272 |
) |
(62,003 |
) | ||
Investing activities of discontinued operations |
|
523 |
|
603,402 |
| ||
Financing activities of discontinued operations |
|
|
|
(1,343,793 |
) | ||
Net cash used in discontinued operations |
|
(1,749 |
) |
(802,394 |
) | ||
Decrease in cash and cash equivalents |
|
(2,172 |
) |
(314,866 |
) | ||
Cash and cash equivalents, beginning of period |
|
144,353 |
|
447,334 |
| ||
Cash and cash equivalents, end of period |
|
$ |
142,181 |
|
$ |
132,468 |
|
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
Retail Pharmacy Segment |
|
|
|
|
| ||
Revenues from continuing operations (a) |
|
$ |
3,848,104 |
|
$ |
3,911,512 |
|
Cost of revenues from continuing operations (a) |
|
2,815,660 |
|
2,859,875 |
| ||
Gross profit from continuing operations |
|
1,032,444 |
|
1,051,637 |
| ||
LIFO charge from continuing operations |
|
7,504 |
|
3,358 |
| ||
FIFO gross profit from continuing operations |
|
1,039,948 |
|
1,054,995 |
| ||
Adjusted EBITDA gross profit from continuing operations |
|
1,045,257 |
|
1,057,742 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues - continuing operations |
|
26.83 |
% |
26.89 |
% | ||
LIFO charge as a percentage of revenues - continuing operations |
|
0.20 |
% |
0.09 |
% | ||
FIFO gross profit as a percentage of revenues - continuing operations |
|
27.02 |
% |
26.97 |
% | ||
Adjusted EBITDA gross profit as a percentage of revenues - continuing operations |
|
27.16 |
% |
27.04 |
% | ||
|
|
|
|
|
| ||
Selling, general and administrative expenses from continuing operations |
|
1,044,818 |
|
1,068,944 |
| ||
Adjusted EBITDA selling, general and administrative expenses from continuing operations |
|
952,584 |
|
954,124 |
| ||
Selling, general and administrative expenses as a percentage of revenues - continuing operations |
|
27.15 |
% |
27.33 |
% | ||
Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations |
|
24.75 |
% |
24.39 |
% | ||
|
|
|
|
|
| ||
Cash interest expense |
|
56,304 |
|
52,295 |
| ||
Non-cash interest expense |
|
3,798 |
|
3,938 |
| ||
Total interest expense |
|
60,102 |
|
56,233 |
| ||
Interest expense - continuing operations |
|
60,102 |
|
56,233 |
| ||
Interest expense - discontinued operations |
|
0 |
|
0 |
| ||
|
|
|
|
|
| ||
Adjusted EBITDA - continuing operations |
|
92,673 |
|
103,618 |
| ||
Adjusted EBITDA as a percentage of revenues - continuing operations |
|
2.41 |
% |
2.65 |
% | ||
|
|
|
|
|
| ||
Pharmacy Services Segment |
|
|
|
|
| ||
Revenues (a) |
|
$ |
1,579,069 |
|
$ |
1,561,811 |
|
Cost of revenues (a) |
|
1,467,074 |
|
1,452,297 |
| ||
Gross profit |
|
111,995 |
|
109,514 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues |
|
7.09 |
% |
7.01 |
% | ||
|
|
|
|
|
| ||
Adjusted EBITDA |
|
41,517 |
|
44,963 |
| ||
Adjusted EBITDA as a percentage of revenues |
|
2.63 |
% |
2.88 |
% |
(a) - Revenues and cost of revenues include $60,909 and $51,961 of inter-segment activity for the thirteen weeks ended August 31, 2019 and September 1, 2018, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
|
|
|
|
|
| ||
Retail Pharmacy Segment |
|
|
|
|
| ||
Revenues from continuing operations (a) |
|
$ |
7,712,912 |
|
$ |
7,809,277 |
|
Cost of revenues from continuing operations (a) |
|
5,649,973 |
|
5,688,183 |
| ||
Gross profit from continuing operations |
|
2,062,939 |
|
2,121,094 |
| ||
LIFO charge from continuing operations |
|
14,993 |
|
13,324 |
| ||
FIFO gross profit from continuing operations |
|
2,077,932 |
|
2,134,418 |
| ||
Adjusted EBITDA gross profit from continuing operations |
|
2,085,520 |
|
2,141,780 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues - continuing operations |
|
26.75 |
% |
27.16 |
% | ||
LIFO charge as a percentage of revenues - continuing operations |
|
0.19 |
% |
0.17 |
% | ||
FIFO gross profit as a percentage of revenues - continuing operations |
|
26.94 |
% |
27.33 |
% | ||
Adjusted EBITDA gross profit as a percentage of revenues - continuing operations |
|
27.04 |
% |
27.43 |
% | ||
|
|
|
|
|
| ||
Selling, general and administrative expenses from continuing operations |
|
2,116,143 |
|
2,133,331 |
| ||
Adjusted EBITDA selling, general and administrative expenses from continuing operations |
|
1,908,839 |
|
1,934,033 |
| ||
Selling, general and administrative expenses as a percentage of revenues - continuing operations |
|
27.44 |
% |
27.32 |
% | ||
Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues - continuing operations |
|
24.75 |
% |
24.77 |
% | ||
|
|
|
|
|
| ||
Cash interest expense |
|
110,914 |
|
115,196 |
| ||
Non-cash interest expense |
|
7,458 |
|
8,444 |
| ||
Total interest expense |
|
118,372 |
|
123,640 |
| ||
Interest expense - continuing operations |
|
118,372 |
|
119,025 |
| ||
Interest expense - discontinued operations |
|
0 |
|
4,615 |
| ||
|
|
|
|
|
| ||
Adjusted EBITDA - continuing operations |
|
176,681 |
|
207,747 |
| ||
Adjusted EBITDA as a percentage of revenues - continuing operations |
|
2.29 |
% |
2.66 |
% | ||
|
|
|
|
|
| ||
Pharmacy Services Segment |
|
|
|
|
| ||
Revenues (a) |
|
$ |
3,145,361 |
|
$ |
3,104,573 |
|
Cost of revenues (a) |
|
2,937,138 |
|
2,895,767 |
| ||
Gross profit |
|
208,223 |
|
208,806 |
| ||
|
|
|
|
|
| ||
Gross profit as a percentage of revenues |
|
6.62 |
% |
6.73 |
% | ||
|
|
|
|
|
| ||
Adjusted EBITDA |
|
67,856 |
|
78,826 |
| ||
Adjusted EBITDA as a percentage of revenues |
|
2.16 |
% |
2.54 |
% |
(a) - Revenues and cost of revenues include $119,420 and $103,998 of inter-segment activity for the twenty-six weeks ended August 31, 2019 and September 1, 2018, respectively, that is eliminated in consolidation.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss - continuing operations |
|
$ |
(78,705 |
) |
$ |
(352,348 |
) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
|
60,102 |
|
56,233 |
| ||
Income tax expense (benefit) |
|
27,628 |
|
(106,559 |
) | ||
Depreciation and amortization |
|
83,044 |
|
89,743 |
| ||
LIFO charge |
|
7,504 |
|
3,358 |
| ||
Lease termination and impairment charges |
|
1,471 |
|
39,609 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Merger and Acquisition-related costs |
|
514 |
|
19,031 |
| ||
Stock-based compensation expense |
|
4,712 |
|
5,215 |
| ||
Restructuring-related costs |
|
25,145 |
|
|
| ||
Inventory write-downs related to store closings |
|
3,149 |
|
1,300 |
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
Gain on sale of assets, net |
|
(1,587 |
) |
(4,965 |
) | ||
Other |
|
1,213 |
|
4,774 |
| ||
Adjusted EBITDA - continuing operations |
|
$ |
134,190 |
|
$ |
148,581 |
|
Percent of revenues - continuing operations |
|
2.50 |
% |
2.74 |
% |
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss - continuing operations |
|
$ |
(178,044 |
) |
$ |
(394,075 |
) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
|
118,372 |
|
119,025 |
| ||
Income tax expense (benefit) |
|
35,002 |
|
(116,056 |
) | ||
Depreciation and amortization |
|
166,970 |
|
184,272 |
| ||
LIFO charge |
|
14,993 |
|
13,324 |
| ||
Lease termination and impairment charges |
|
1,949 |
|
49,468 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Loss on debt retirements, net |
|
|
|
554 |
| ||
Merger and Acquisition-related costs |
|
3,599 |
|
26,219 |
| ||
Stock-based compensation expense |
|
10,092 |
|
10,246 |
| ||
Restructuring-related costs |
|
68,495 |
|
|
| ||
Inventory write-downs related to store closings |
|
3,990 |
|
5,133 |
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
Gain on sale of assets, net |
|
(4,299 |
) |
(10,824 |
) | ||
Other |
|
3,418 |
|
6,097 |
| ||
Adjusted EBITDA - continuing operations |
|
$ |
244,537 |
|
$ |
286,573 |
|
Percent of revenues - continuing operations |
|
2.28 |
% |
2.65 |
% |
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET INCOME (LOSS)
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
Thirteen weeks ended |
|
Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
Net loss from continuing operations |
|
$ |
(78,705 |
) |
$ |
(352,348 |
) |
Add back - Income tax expense (benefit) |
|
27,628 |
|
(106,559 |
) | ||
Loss before income taxes - continuing operations |
|
(51,077 |
) |
(458,907 |
) | ||
|
|
|
|
|
| ||
Adjustments: |
|
|
|
|
| ||
Amortization expense |
|
26,596 |
|
32,500 |
| ||
LIFO charge |
|
7,504 |
|
3,358 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Merger and Acquisition-related costs |
|
514 |
|
19,031 |
| ||
Restructuring-related costs |
|
25,145 |
|
|
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
|
|
|
|
|
| ||
Adjusted income (loss) before income taxes - continuing operations |
|
8,682 |
|
(10,828 |
) | ||
|
|
|
|
|
| ||
Adjusted income tax expense (benefit) (a) |
|
2,394 |
|
(2,951 |
) | ||
Adjusted net income (loss) from continuing operations |
|
$ |
6,288 |
|
$ |
(7,877 |
) |
|
|
|
|
|
| ||
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 |
|
$ |
6,288 |
|
$ |
(7,877 |
) |
|
|
|
|
|
| ||
Denominator: |
|
|
|
|
| ||
Basic weighted average shares |
|
53,041 |
|
52,823 |
| ||
Outstanding options and restricted shares, net |
|
651 |
|
|
| ||
Diluted weighted average shares |
|
53,692 |
|
52,823 |
| ||
|
|
|
|
|
| ||
Net loss from continuing operations per diluted share - continuing operations |
|
$ |
(1.48 |
) |
$ |
(6.67 |
) |
|
|
|
|
|
| ||
Adjusted net income (loss) per diluted share - continuing operations |
|
$ |
0.12 |
|
$ |
(0.15 |
) |
(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 NOLs, state credits and valuation allowance, was used for the thirteen weeks ended August 31, 2019 and September 1, 2018, respectively.
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
|
|
|
|
|
| ||
Net loss from continuing operations |
|
$ |
(178,044 |
) |
$ |
(394,075 |
) |
Add back - Income tax expense (benefit) |
|
35,002 |
|
(116,056 |
) | ||
Loss before income taxes - continuing operations |
|
(143,042 |
) |
(510,131 |
) | ||
|
|
|
|
|
| ||
Adjustments: |
|
|
|
|
| ||
Amortization expense |
|
54,256 |
|
67,900 |
| ||
LIFO charge |
|
14,993 |
|
13,324 |
| ||
Goodwill and intangible asset impairment charges |
|
|
|
375,190 |
| ||
Loss on debt retirements, net |
|
|
|
554 |
| ||
Merger and Acquisition-related costs |
|
3,599 |
|
26,219 |
| ||
Restructuring-related costs |
|
68,495 |
|
|
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
|
|
|
|
|
| ||
Adjusted loss before income taxes - continuing operations |
|
(1,699 |
) |
(8,944 |
) | ||
|
|
|
|
|
| ||
Adjusted income tax benefit (a) |
|
(468 |
) |
(2,437 |
) | ||
Adjusted net loss from continuing operations |
|
$ |
(1,231 |
) |
$ |
(6,507 |
) |
|
|
|
|
|
| ||
Adjusted net loss per diluted share - continuing operations: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Numerator for adjusted net loss per diluted share: |
|
|
|
|
| ||
Adjusted net loss from continuing operations |
|
$ |
(1,231 |
) |
$ |
(6,507 |
) |
|
|
|
|
|
| ||
Denominator: |
|
|
|
|
| ||
Basic and diluted weighted average shares |
|
53,084 |
|
52,771 |
| ||
|
|
|
|
|
| ||
Net loss from continuing operations per diluted share - continuing operations |
|
$ |
(3.35 |
) |
$ |
(7.47 |
) |
|
|
|
|
|
| ||
Adjusted net loss diluted share - continuing operations |
|
$ |
(0.02 |
) |
$ |
(0.12 |
) |
(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 NOLs, state credits and valuation allowance, was used for the twenty-six weeks ended August 31, 2019 and September 1, 2018, respectively.
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 |
|
Thirteen weeks ended |
| ||
|
|
|
|
|
| ||
Reconciliation of adjusted EBITDA gross profit: |
|
|
|
|
| ||
Revenues |
|
$ |
3,848,104 |
|
$ |
3,911,512 |
|
Gross Profit |
|
1,032,444 |
|
1,051,637 |
| ||
Addback: |
|
|
|
|
| ||
LIFO charge |
|
7,504 |
|
3,358 |
| ||
Depreciation and amortization (cost of goods sold portion only) |
|
2,205 |
|
2,254 |
| ||
Other |
|
3,104 |
|
493 |
| ||
Adjusted EBITDA gross profit - continuing operations |
|
$ |
1,045,257 |
|
$ |
1,057,742 |
|
Percent of revenues - continuing operations |
|
27.16 |
% |
27.04 |
% | ||
|
|
|
|
|
| ||
Reconciliation of adjusted EBITDA selling, general and administrative expenses: |
|
|
|
|
| ||
Revenues |
|
$ |
3,848,104 |
|
$ |
3,911,512 |
|
Selling, general and administrative expenses |
|
1,044,818 |
|
1,068,944 |
| ||
Less: |
|
|
|
|
| ||
Depreciation and amortization (SG&A portion only) |
|
64,975 |
|
68,401 |
| ||
Stock-based compensation expense |
|
4,432 |
|
5,215 |
| ||
Merger and Acquisition-related costs |
|
514 |
|
19,031 |
| ||
Restructuring-related costs |
|
21,055 |
|
|
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
Other |
|
1,258 |
|
4,173 |
| ||
Adjusted EBITDA selling, general and administrative expenses - continuing operations |
|
$ |
952,584 |
|
$ |
954,124 |
|
Percent of revenues - continuing operations |
|
24.75 |
% |
24.39 |
% | ||
|
|
|
|
|
| ||
Adjusted EBITDA - continuing operations |
|
$ |
92,673 |
|
$ |
103,618 |
|
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)
|
|
Twenty-six weeks ended |
|
Twenty-six weeks ended |
| ||
|
|
|
|
|
| ||
Reconciliation of adjusted EBITDA gross profit: |
|
|
|
|
| ||
Revenues |
|
$ |
7,712,912 |
|
$ |
7,809,277 |
|
Gross Profit |
|
2,062,939 |
|
2,121,094 |
| ||
Addback: |
|
|
|
|
| ||
LIFO charge |
|
14,993 |
|
13,324 |
| ||
Depreciation and amortization (cost of goods sold portion only) |
|
4,468 |
|
4,621 |
| ||
Other |
|
3,120 |
|
2,741 |
| ||
Adjusted EBITDA gross profit - continuing operations |
|
$ |
2,085,520 |
|
$ |
2,141,780 |
|
Percent of revenues - continuing operations |
|
27.04 |
% |
27.43 |
% | ||
|
|
|
|
|
| ||
Reconciliation of adjusted EBITDA selling, general and administrative expenses: |
|
|
|
|
| ||
Revenues |
|
$ |
7,712,912 |
|
$ |
7,809,277 |
|
Selling, general and administrative expenses |
|
2,116,143 |
|
2,133,331 |
| ||
Less: |
|
|
|
|
| ||
Depreciation and amortization (SG&A portion only) |
|
130,014 |
|
138,067 |
| ||
Stock-based compensation expense |
|
9,697 |
|
10,246 |
| ||
Merger and Acquisition-related costs |
|
2,828 |
|
26,219 |
| ||
Restructuring-related costs |
|
60,436 |
|
|
| ||
Litigation settlement |
|
|
|
18,000 |
| ||
Other |
|
4,329 |
|
6,766 |
| ||
Adjusted EBITDA selling, general and administrative expenses - continuing operations |
|
$ |
1,908,839 |
|
$ |
1,934,033 |
|
Percent of revenues - continuing operations |
|
24.75 |
% |
24.77 |
% | ||
|
|
|
|
|
| ||
Adjusted EBITDA - continuing operations |
|
$ |
176,681 |
|
$ |
207,747 |
|
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 |
|
$ |
250,000 |
|
$ |
250,000 |
|
|
|
|
|
|
| ||
Reconciliation of net loss to adjusted EBITDA: |
|
|
|
|
| ||
Net loss |
|
$ |
(275,000 |
) |
$ |
(235,000 |
) |
Adjustments: |
|
|
|
|
| ||
Interest expense |
|
240,000 |
|
240,000 |
| ||
Income tax expense |
|
35,000 |
|
35,000 |
| ||
Depreciation and amortization |
|
340,000 |
|
340,000 |
| ||
LIFO charge |
|
30,000 |
|
30,000 |
| ||
Lease termination and impairment charges |
|
25,000 |
|
25,000 |
| ||
Restructuring-related costs |
|
90,000 |
|
90,000 |
| ||
Other |
|
25,000 |
|
25,000 |
| ||
Adjusted EBITDA |
|
$ |
510,000 |
|
$ |
550,000 |
|
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 |
|
$ |
(275,000 |
) |
$ |
(235,000 |
) |
Add back - income tax expense |
|
35,000 |
|
35,000 |
| ||
Loss before income taxes |
|
(240,000 |
) |
(200,000 |
) | ||
|
|
|
|
|
| ||
Adjustments: |
|
|
|
|
| ||
Amortization expense |
|
120,000 |
|
120,000 |
| ||
LIFO charge |
|
30,000 |
|
30,000 |
| ||
Restructuring-related costs |
|
90,000 |
|
90,000 |
| ||
|
|
|
|
|
| ||
Adjusted income before adjusted income taxes |
|
|
|
40,000 |
| ||
|
|
|
|
|
| ||
Adjusted income tax expense |
|
|
|
10,000 |
| ||
Adjusted net income |
|
$ |
|
|
$ |
30,000 |
|
|
|
|
|
|
| ||
Diluted adjusted net income per share |
|
$ |
|
|
$ |
0.56 |
|
Cautionary Statement Regarding Forward Looking Statements Statements in this presentation 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 Aids outlook and guidance for fiscal 2020; the expected timing and the ability to complete the subsequent closings of the sale of the remaining Rite Aid distribution centers and related assets to Walgreens Boots Alliance, Inc. ("WBA"); Rite Aids competitive position and ability to implement new strategies following completion of such transaction with WBA; 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 centers and related assets to WBA, including the possibility that the transactions may not close due to the failure to satisfy the minimal remaining conditions applicable only to the distribution centers being transferred at such distribution center closing; our ability to successfully execute and 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 (the SEC), which you are encouraged to read. 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 presentation, whether as a result of new information, future events, changes in assumptions or otherwise. Safe Harbor Statement 2
Cautionary Note Regarding Pro Forma Information The following presentation provides certain pro forma information regarding the impact of Rite Aids pending sale of distribution centers and assets to WBA on Rite Aids 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 presentation 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 Aids 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 presentation 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. Safe Harbor Statement (cont.) 3
The following presentation includes the non-GAAP financial measures, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A. Rite Aid defines Adjusted EBITDA 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, loss on debt retirements, the WBA merger termination fee, and other items (including stock-based compensation expense, merger and acquisition-related costs, a 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. The presentation includes a reconciliation of Adjusted EBITDA to net income (loss), which is the most directly comparable GAAP financial measure. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, a non-recurring litigation settlement, loss 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. Additionally, 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 Aids results as if the company was on a FIFO inventory basis. The presentation includes a reconciliation of Adjusted Net Income (Loss) to net income (loss), which is the most directly comparable GAAP financial measure. 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 and other items. The presentation includes a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. Non-GAAP Financial Measures 4
Second Quarter Adjusted EBITDA of $134.2 million exceeded our expectations Retail Pharmacy: Same store 30-day equivalent prescription count grew 2.7% Strong expense control Generic drug cost savings EnvisionRx: Medicare Part D membership continues to drive revenues Improved pharmacy network performance Improved pharmacy network performance Owned brand penetration rate reached 19%: Thrifty Ice Cream has expanded to 900 additional stores in the Northwest and Northeast Robust pipeline of new items focused on health, beauty, and better-for-you natural and organic consumables Continued investment in our digital transformation: Partnership with Adobe to enhance our digital capabilities to form a deeper relationship with our customers EnvisonRx Commercial membership expected to increase in calendar 2020, having won over 360,000 new lives Narrowed Fiscal 2020 outlook Key Second Quarter FY 2020 Highlights 5
Q2 Fiscal 2020 Summary 6 ($ in millions, except per share amounts) Note: Data on this slide and throughout the presentation is on a continuing operations basis. 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Revenue $ 5,366.3 $ 5,421.4 Net Loss $ (78.7) $ (352.3) Net Loss per Diluted Share $ (1.48) $ (6.67) Adjusted Net Income (Loss) per Diluted Share $ 0.12 $ (0.15) Adjusted EBITDA $ 134.2 2.50% $ 148.6 2.74%
Q2 - Fiscal 2020 Reconciliation of Net Loss to Adjusted EBITDA 7 ($ in thousands) 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Net Loss $ (78,705) $ (352,348) Adjustments: Interest expense 60,102 56,233 Income tax expense (benefit) 27,628 (106,559) Depreciation and amortization 83,044 89,743 LIFO charge 7,504 3,358 Lease termination and impairment charges 1,471 39,609 Goodwill and intangible asset impairment charges - 375,190 Merger and Acquisition-related costs 514 19,031 Stock-based compensation expense 4,712 5,215 Restructuring-related costs 25,145 - Inventory write-downs related to store closings 3,149 1,300 Litigation settlement - 18,000 Gain on sale of assets, net (1,587) (4,965) Other 1,213 4,774 Adjusted EBITDA $ 134,190 $ 148,581 Percent of revenues 2.50% 2.74%
Q2 - Fiscal 2020 Reconciliation of Net Loss to Adjusted Net Income (Loss) 8 ($ in thousands, except per share amounts) 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Net Loss $ (78,705) $ (352,348) Add back - Income tax expense (benefit) 27,628 (106,559) Loss before income taxes $ (51,077) $ (458,907) Adjustments: Amortization expense 26,596 32,500 LIFO charge 7,504 3,358 Goodwill and intangible asset impairment charges - 375,190 Merger and Acquisition-related costs 514 19,031 Restructuring-related costs 25,145 - Litigation settlement - 18,000 Adjusted income (loss) before income taxes $ 8,682 $ (10,828) Adjusted income tax expense (benefit) 2,394 (2,951) Adjusted net income (loss) $ 6,288 $ (7,877) Net loss per diluted share $ (1.48) $ (6.67) Adjusted net income (loss) per diluted share $ 0.12 $ (0.15)
Q2 - Fiscal 2020 Summary Retail Pharmacy Segment 9 ($ in millions) (1) Refer to slides 11 and 12 for the reconciliations of these non-GAAP measures to their applicable GAAP measures. 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Revenue $ 3,848.1 $ 3,911.5 Adjusted EBITDA Gross Profit (1) $ 1,045.3 27.16% $ 1,057.7 27.04% Adjusted EBITDA SG&A(1) $ 952.6 24.75% $ 954.1 24.39% Adjusted EBITDA $ 92.7 2.41% $ 103.6 2.65%
Retail Pharmacy Segment revenue decreased $63.4 million. Same store sales increased 0.4%, driven primarily by a 2.7% increase in same store prescription count. The script count increase was driven by the success of our clinical initiatives and immunization program. Adjusted EBITDA Gross Profit decreased $12.4 million and Adjusted EBITDA Gross Margin increased by 12 bps. Adjusted EBITDA gross profit decreased primarily due to the impact of front end same store sales declines on gross profit. Reimbursement rate pressure that the company faced in the second quarter was offset with generic drug cost savings and increases in prescriptions filled in comparable stores. Adjusted EBITDA SG&A was $1.5 million worse than the prior year. Adjusted EBITDA SG&A was negatively impacted by lower TSA fee income from WBA, partially offset by a decrease in store and corporate salaries and benefits. Q2 - Fiscal 2020 Summary Retail Pharmacy Segment 10
Reconciliation of Adj. EBITDA Gross Profit Retail Pharmacy Segment 11 ($ in millions) 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Revenues $ 3,848.1 $ 3,911.5 Gross Profit 1,032.4 1,052.0 Addback: LIFO charge 7.5 3.4 Depreciation and amortization (COGS portion only) 2.2 2.3 Other 3.2 - Adjusted EBITDA Gross Profit $ 1,045.3 $ 1,057.7 Adjusted EBITDA Gross Profit as a percent of revenue 27.16% 27.04%
Reconciliation of Adj. EBITDA SG&A - Retail Pharmacy Segment 12 ($ in millions) 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Revenues $ 3,848.1 $ 3,911.5 Selling, general and administrative expenses 1,044.8 1,068.9 Less: Depreciation and amortization (SG&A portion only) 65.0 68.4 Stock-based compensation expense 4.4 5.2 Merger and Acquisition-related costs 0.5 19.0 Restructuring-related costs 21.1 - Litigation settlement - 18.0 Other 1.2 4.2 Adjusted EBITDA SG&A $ 952.6 $ 954.1 Adjusted EBITDA SG&A as a percent of revenue 24.75% 24.39%
Pharmacy Services Segment Results 13 ($ in millions) Pharmacy Services Segment Results ($ in millions) 13 Weeks Ended August 31, 2019 13 Weeks Ended September 1, 2018 Revenues $ 1,579.1 $ 1,561.8 Cost of Revenues 1,467.1 1,452.3 Gross Profit 112.0 109.5 Selling, General and Administrative Expenses (90.7) (85.0) Addback: Depreciation and Amortization 15.9 20.5 Merger and Acquisition-related costs - - Restructuring-related costs 4.1 - Other 0.2 - Adjusted EBITDA - Pharmacy Services Segment $ 41.5 $ 45.0
Revenues increased $17.3 million due to an increase in our Medicare Part D revenues. Adjusted EBITDA decreased $3.5 million year-over-year. Pharmacy Services Segment adjusted EBITDA benefited from improvements in pharmacy network performance that were offset by the increases in SG&A expenses as we continued to invest for current and future growth. Q2 - FY 2020 Summary Pharmacy Services Segment 14
Front End Sales Rx Sales Comparable Store Sales Growth 15 Script Count (1) (1) Script count growth shown on a 30-day equivalent basis. FY 2018 FY 2019 FY 2020 Excluding cigarette and tobacco products - 3.5% - 2.3% - 0.1% 1.6% 3.1% 2.1% 2.3% 1.5% - 0.5% - 0.6% - 1.8% - 0.1% - 1.5% - 1.9% - 0.3% - 1.8% 0.3% - 0.6% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 - 2.4% - 1.8% - 1.5% 1.1% 2.4% 0.8% 3.7% 2.7%
Capitalization Table 16 ($ in thousands) Note: Debt in the capitalization table is shown net of unamortized debt issuance costs. August 31, 2019 March 2, 2019 Secured Debt: Senior secured revolving credit facility due December 2023 $ 1,228,294 $ 850,931 FILO term loan due December 2023 446,542 446,082 1,674,836 1,297,013 Unsecured Guaranteed Debt: 6.125% senior secured notes due April 2023 1,738,591 1,736,508 1,738,591 1,736,508 Unsecured Unguaranteed Debt: 7.7% notes due February 2027 293,788 293,705 6.875% fixed-rate senior notes due December 2028 127,390 127,358 421,178 421,063 Lease financing obligations 33,244 40,176 Total Debt: 3,867,849 3,494,760 Currend maturities of long-term debt and lease fiancing obligations (10,704) (16,111) Long-term debt & lease financing obligations, less current maturities 3,857,145 3,478,649 Total debt and lease financing obligations, continuing operations Less: current maturities of long-term debt and lease financing oblligations, continuing operations 3,867,849 3,494,760 Long-term debt & lease financing obligations, less current maturities, continuing operations (10,704) (16,111) $ 3,857,145 $ 3,478,649 Total Debt gross 3,909,734 3,541,666 Less: Unamortized debt issue costs (41,885) (46,906) Total Debt per balance sheet $ 3,867,849 $ 3,494,760
Pro Forma Leverage Ratio 17 ($ in thousands) August 31, 2019 Total Debt: $ 3,867,849 Less: Cash and cash equivalents (142,181) Less: Distribution center sale proceeds (157,063) Pro Forma Net Debt $ 3,568,605 LTM Adjusted EBITDA: Retail Pharmacy Segment 374,140 Pharmacy Services Segment 147,268 LTM Adjusted EBITDA $ 521,408 Pro Forma Leverage Ratio 6.84 Leverage Ratio in the Second Quarter has temporarily increased from 6.08 in the first quarter due to timing of the CMS receivable and seasonal inventory builds
FY 2020 Guidance 18 ($ in thousands) Guidance Range Low High Total Revenues $ 21,500,000 $ 21,900,000 Same store sales 0.00% 1.00% Gross Capital Expenditures $ 250,000 $ 250,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (275,000) $ (235,000) Adjustments: Interest expense 240,000 240,000 Income tax expense 35,000 35,000 Depreciation and amortization 340,000 340,000 LIFO charge 30,000 30,000 Lease termination and impairment charges 25,000 25,000 Restructuring-related costs 90,000 90,000 Other 25,000 25,000 Adjusted EBITDA $ 510,000 $ 550,000
FY 2020 Guidance (cont.) 19 ($ in thousands, except per share amounts) Guidance Range Low High Net loss $(275,000) $(235,000) Add back - income tax expense 35,000 35,000 Loss before income taxes (240,000) (200,000) Adjustments: Amortization expense 120,000 120,000 LIFO charge 30,000 30,000 Restructuring-related costs 90,000 90,000 Adjusted income before adjusted income taxes - 40,000 Adjusted income tax expense - 10,000 Adjusted net income $ - $ 30,000 Diluted adjusted net income per share $ 0.00 $ 0.56
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