Rite Aid — Presentation (October 2023)
37 slides from Rite Aid's investor presentation, Oct 16, 2023
Slide 1: Discussion Materials
© 2020 Rite Aid. All rights reserved. 1 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents September 16, 2023 Discussion Materials Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents
Slide 2: Disclaimer
2 Disclaimer This presentation (together with any related oral commentary and any supplemental materials or updates, this “Presentation” and, together with any associated information and materials provided heretofore, herewith or hereafter, whether communicated in written, electronic or oral form, c
Slide 3: Disclaimer (cont'd)
3 Disclaimer (cont’d) The information used to prepare this Presentation and any other Materials is based upon industry, business, financial, legal, regulatory, tax, accounting, actuarial and other information (including, without limitation, financial projections, other estimates and other forward -
Slide 4: Cautionary Statement Regarding Forward Looking Statements
4 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,
Slide 5: Non-GAAP Financial Measures
5 Non - GAAP Financial Measures The following presentation includes the non - GAAP financial measures Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A, which are non - GAAP financial measures . See the at
Slide 6: Table of Contents
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents I. Company Overview II. Rite Aid 2.0 Business Plan A. Retail Business Plan B. Elixir Business Plan III. Litigation IV. Transaction Proposal V. Owned Real Estate Summary Table of Contents
Slide 7: I. Company Overview
© 2020 Rite Aid. All rights reserved. 7 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents I. Company Overview
Slide 8: Rite Aid Overview
8 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Rite Aid Overview • A full - service pharmacy company with approximately 2,300 retail pharmacy locations across 17 states and more than 46,000 employees • Rite Aid provides essential pharm
Slide 9: Over 70% of Retail revenue comes from Rite Aid's Pharmacy
9 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Over 70% of Retail revenue comes from Rite Aid’s Pharmacy Retail: Retail Pharmacy of consumers trust their pharmacists as healthcare advocates Average annual retail pharmacy visits per con
Slide 10: Retail: Front-End Offerings
10 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Retail: Front - End Offerings Our Owned Brands • Rite Aid offers a wide assortment of front - end merchandise to complement the comprehensive pharmacy products offering, including: • OTC
Slide 11: Pharmacy Services: Elixir
11 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Pharmacy Services: Elixir A leading, independent pharmacy management platform offering comprehensive pharmacy solutions to middle market plan sponsors Overview National Footprint ~1.1MM P
Slide 12: Elixir: A PBM Providing a Full Suite of Pharmacy Capabilities
12 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Elixir: A PBM Providing a Full Suite of Pharmacy Capabilities Mail & Specialty Pharmacy ~ 460K Claims PBMaaS Pharmacy Benefit Management ~ 1.1MM Members (1) Discount Saving Cards ~$85MM G
Slide 13: Long-Term Need for Pharmacy Services
13 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Aging U.S. Population Growing Incidence of Chronic Conditions Increasing Healthcare and Pharma Spend Evolving Preferences Among Healthcare Constituents Long - Term Need for Pharmacy Servi
Slide 14: Rite Aid: Uniquely Positioned to Win
14 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Rite Aid: Uniquely Positioned to Win ▪ Rite Aid is a healthcare company with a neighborhood footprint ▪ Deeply intertwined in communities served with significant local density ▪ Network o
Slide 15: II. Rite Aid 2.0 Business Plan
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents II. Rite Aid 2.0 Business Plan
Slide 16: Our vision for Rite Aid 2.0
16 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Our vision for Rite Aid 2.0 is to create a portfolio of high - performing stores to deliver value to our stakeholders and improved health and wellness outcomes to our customers Overview o
Slide 17: Business Plan Summary
17 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Business Plan Summary Rite Aid 2.0 provides meaningful uplift in EBITDA and EBITDA margin compared to current guidance Adjusted EBITDA ($MM) Gross Profit (1) ($MM) WholeCo Unlevered Free
Slide 18: II.A. Retail Business Plan
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents II.A. Retail Business Plan
Slide 19: Retail Baseline: Year-Over-Year EBITDA Bridge
19 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents $288 214 $168 $140 $142 $177 $83 $260 ($74) ($6) ($206) ($178) ($42) ($47) ($9) FY23A EBITDA FY23A Dead Rent FY23A, less Dead Rent Wks Adj. Generic Cost & Other Rx GP Reimb. Rate Script G
Slide 20: Retail 2.0: Run-Rate EBITDA
20 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents $260 $177 $23 $83 $97 $29 $168 $502 ($83) ($74) FY24 Plan FY24 Plan Dead Rent FY24 Plan, less Dead Rent 1Q Favorability Dead Rent Extinguished Footprint Rationalization Fee For Service Co
Slide 21: Rite Aid's Current Retail Portfolio
21 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Rite Aid’s Current Retail Portfolio Roughly three - quarters of Rite Aid’s stores are Retail EBITDA positive on an LTM basis Commentary • Pre - Allocation EBITDA: excludes allocated regio
Slide 22: Building Rite Aid Retail 2.0
22 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Building Rite Aid Retail 2.0 • The Company has closed nearly 200 stores over the past few years and has developed several analytical tools to inform those d eci sions, assess opportunitie
Slide 23: Retail 2.0: Cost Reduction Opportunities
23 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Retail 2.0: Cost Reduction Opportunities Retail Operating Cost Reductions Corporate Cost Reductions In addition to footprint rationalization, the Company has developed plans for additiona
Slide 24: Retail 2.0 Financial Projections
24 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Retail 2.0 Financial Projections The following provides a summary of the retail business plan Gross Profit ($MM) Revenue ($BN) Adjusted EBITDA ($MM) Commentary $288 $208 $518 $598 $502 1.
Slide 25: II.B. Elixir Business Plan
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents II.B. Elixir Business Plan
Slide 26: Elixir is at a Transformational Inflection Point
26 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Elixir is at a Transformational Inflection Point Ongoing strategic redesign targeting membership expansion, operational excellence and focus on core competencies Focus Sowing the Seeds Pr
Slide 27: Elixir is at a Transformational Inflection Point (cont'd)
27 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Elixir is at a Transformational Inflection Point (cont’d) Initiatives focused on low hanging fruit to increase profitability, retention and new sales GPO Strategy Spread Optimization Netw
Slide 28: Elixir: Baseline Annual P&L Projections
28 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents 91 91 122 - 20 40 60 80 100 120 140 FY'24 FY'25 FY'26 EBITDA ($in millions) Baseline EBITDA Elixir: Baseline Annual P&L Projections EBITDA growth is a function of membership growth and ab
Slide 29: Elixir: Baseline to Restructuring Scenario Bridge
29 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents EBITDA decline of ~$25MM in FY25E and ~$36MM in FY26E compared to Baseline due to higher attrition and lower new customer wins Elixir: Baseline to Restructuring Scenario Bridge FY26E: Bas
Slide 30: Elixir Business Plan Summary
30 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Elixir Business Plan Summary The following provides a summary of the Elixir business plan Gross Profit ($MM) Revenue ($MM) Adjusted EBITDA ($MM) Commentary $141 $91 $86 $91 $66 $122 $86 A
Slide 31: III. Litigation
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents III. Litigation
Slide 32: Litigation Overview
32 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Litigation Overview • The pending investigations and litigation claims generally encompass five types of matters: • Opioids Litigation: along with its peers, Rite Aid is a defendant in th
Slide 33: IV. Transaction Proposal
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents IV. Transaction Proposal
Slide 34: Transaction Overview
34 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Transaction Overview The Company believes a restructuring supported by its stakeholders focused on implementing Rite Aid 2.0 may be value - maximizing Proposed Transaction Benefits Bolste
Slide 35: Supplemental Liquidity Projections Detail
35 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Supplemental Liquidity Projections Detail Illustrative Petition Date Illustrative Emergence Date Approximate M/E: Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun
Slide 36: V. Owned Real Estate Summary
Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents V. Owned Real Estate Summary
Slide 37: Rite Aid's Owned Real Estate
37 Privileged & Confidential | Draft - Subject to Material Change | Subject to FRE 408 and State Law Equivalents Rite Aid’s Owned Real Estate (9/5/2023) Implied Value Sensitivity • In developing their analysis, A&G leveraged its national network of brokers, with local market knowledge. The brokers a