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Rite Aid Reports Fiscal 2016 Fourth Quarter And Full Year Results

The following excerpt is from the company's SEC filing.

Revenues of $8.3 Billion for the Fourth Quarter, Up 20.8 Percent Year-Over-Year and $30.7 Billion

for the Full Year, Up 15.9 Percent Year-Over-Year

Fourth Quarter Adjusted Net Income Per Diluted Share of $0.07, Compared to the Prior Year of $0.06; Full Year Adjusted Net Income Per Diluted Share of $0.23, Compared to the Prior Year of $0.27

Fourth Quarter Net Income Per Diluted Share of $0.06, Compared to the Prior Year of $1.79; Full Year Net Income Per Diluted Share of $0.16, Compared to the Prior Year of $2.08

Prior Year’s Fourth Quarter and Full Year Net Income Benefited from a Defer red Tax Valuation Allowance Adjustment of $1.841 Billion, or Approximately $1.80 Per Diluted Share

Adjusted EBITDA of $383.0 Million for the Fourth Quarter, Up 11.6 Percent Year-Over-Year and $1,402.3 Million for the Full Year, Up 6.0 Percent Year-Over-Year

CAMP HILL, Pa. (Apr. 7, 2016) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its fourth quarter and fiscal year ended February 27, 2016.

For the fourth quarter, the company reported revenues of $8.3 billion, net income of $65.6 million, or $0.06 per diluted share, Adjusted net income of $76.1 million, or $0.07 per diluted share and Adjusted EBITDA of $383.0 million, or 4.6 percent of revenues. For the full year, the company reported revenues of $30.7 billion, net income of $165.5 million, or $0.16 per diluted share, Adjusted net income of $241.0 million or $0.23 per diluted share and Adjusted EBITDA of $1,402.3 million, or 4.6 percent of revenues.

“Our positive fourth-quarter results helped us deliver a successful fiscal year that reflects the tremendous progress we’re making to expand our retail healthcare offering,” said Rite Aid Chairman and CEO John Standley. “In the fourth quarter, we generated nearly $40 million of growth in Adjusted EBITDA, including an increase in our Retail Pharmacy Segment and strong results from our new Pharmacy Services Segment. This was one of many key highlights of fiscal 2016, which was a transformational year that saw us acquire EnvisionRx, launch the ground-breaking wellness+ with Plenti program, complete our 2,000

Wellness store and exceed $30 billion in revenues for the first time.”

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Rite Aid FY 2016 Q4 Press Release - page 2

“We look forward to building upon this success and to continue delivering a higher level of care in the communities we serve. We thank our dedicated Rite Aid associates for their hard work in executing our strategy and providing an even better retail healthcare experience for our customers. We’re also excited about our opportunity to join forces with Walgreens Boots Alliance to further expand consumer access to health care as part of the first global, pharmacy-led health and wellbeing enterprise.”

Fourth Quarter Summary

Revenues for the quarter were $8.3 billion compared to revenues of $6.8 billion in the prior year’s fourth quarter, an increase of $1.4 billion or 20.8 percent. Retail Pharmacy Segment revenues were $6.8 billion and decreased 0.3 percent compared to the prior year period primarily as a result of a decrease in same store sales. Pharmacy Services Segment revenues were $1.5 billion.

Same store sales for the quarter decreased 0.6 percent over the prior year, consisting of a 0.8 percent decrease in pharmacy sales and a 0.4 percent decrease in front-end sales. Pharmacy sales included an approximate 241 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.1 percent over the prior year period. Prescription sales accounted for 68.1 percent of total drugstore sales, and third party prescription revenue was 97.9 percent of pharmacy sales.

Adjusted net income (which is reconciled to net income in the attached tables) was $76.1 million or $0.07 per diluted share compared to last year’s fourth quarter adjusted net income of $65.2 million or $0.06 per diluted share.

Adjusted EBITDA (which is reconciled to net income in the attached tables) was $383.0 million or 4.6 percent of revenues for the fourth quarter compared to $343.3 million or 5.0 percent of revenues for the same period last year. Adjusted EBITDA improved due to $34.2 million of Pharmacy Services Segment Adjusted EBITDA and an increase of $5.5 million in Retail Pharmacy Segment Adjusted EBITDA. The increase in Retail Pharmacy Segment Adjusted EBITDA was driven by an increase in front-end gross profit, partially offset by a decrease in pharmacy gross profit and an increase in selling, general and administrative expenses.

In the fourth quarter, the company opened 3 stores, relocated 10 stores, remodeled 89 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 2,042. The company also acquired 2 stores and closed 4 stores, resulting in a total store count of 4,561 at the end of the fourth quarter. The company also opened 3 clinics in the fourth quarter, bringing the total to 78.

Full Year Results

For the fiscal year ended February 27, 2016, Rite Aid had revenues of $30.7 billion compared to revenues of $26.5 billion in the prior year, an increase of $4.2 billion or 15.9 percent. Retail Pharmacy Segment revenues were $26.9 billion and increased 1.3 percent compared to the prior year primarily as a result of an increase in same store sales. Pharmacy Services Segment revenues were $4.1 billion from the date of the acquisition of EnvisionRx, which was June 24, 2015, through the end of the fiscal year.

Same store sales for the year increased 1.3 percent consisting of a 1.8 percent increase in pharmacy sales and a 0.2 percent increase in front end sales. Pharmacy sales included an approximate 221 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.5 percent over the prior year period. Prescription sales accounted for 69.1 percent of total drugstore sales, and third party prescription revenue was 97.8 percent of pharmacy sales.

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Rite Aid FY 2016 Q4 Press Release - page 3

Adjusted net income for fiscal 2016 was $241.0 million or $0.23 per diluted share compared to last year’s adjusted net income of $273.0 million or $0.27 per diluted share. The decline in adjusted net income resulted primarily from increased interest expense incurred in connection with the company’s acquisition of EnvisionRx and...


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