Rite Aid — Q4 FY2023 Earnings Presentation
27 slides from Rite Aid's earnings presentation, Apr 20, 2023
Slide 1: Fourth Quarter Fiscal 2023 Earnings Conference Call
FOURTH QUARTER FISCAL 2023 Earnings Conference Call Elizabeth “Busy” Burr Interim Chief Executive Officer Matt Schroeder Chief Financial Officer 4/20/2023
Slide 2: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements Deepen Grow by Driven Initiatives in Core Areas Create Leverage Assets to Develop New Offering 2 Statements in this presentation that are not historical, are forward - looking statements made pursuant to the safe harbor provisions of the Priv
Slide 3: Non-GAAP Financial Measures
Deepen Grow by Driven Initiatives in Core Areas Create Leverage Assets to Develop New Offering 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 EBITD
Slide 4: FY23 Financial Review
FY23 by FINANCIAL — REVIEW
Slide 5: FY2023 At a Glance
FY2023 At a Glance 5 $24.1B Total Revenue $429.2M Total Adjusted EBITDA 6.9% Increase in same store sales 9.1% Increase in pharmacy sales 1.6% Increase in FE same store sales (excluding tobacco) 6.5x Leverage ratio down from 7.6x at end of Q3FY23 $141.1M Elixir Adj. EBITDA 2.2% of revenues compared
Slide 6: Key Fourth Quarter FY2023 Highlights
Key Fourth Quarter FY2023 Highlights 6 * Adjusted EBITDA reconciliation in the Appendix • $6.09B Total revenues • $128.6M Adjusted EBITDA* Increase of 21% from prior year quarter • $241.3M Net loss • $18.6M Proceeds from sale of PP&E and prescription files from closed stores • $17.5M Sale - leasebac
Slide 7: Growing Our Pharmacy Business
Growing Our P harmacy Business 10 Growing our pharmacy business • Driving higher adherence through increasing medication therapy management consultations and improvements in automated courtesy refill enrollments • Investing in upgraded technology capabilities by expanding central fill facilities, fr
Slide 8: Deepening Our Customer Loyalty and Engagement
Deepening Our Cu stomer L oyalty and Engagement 10 • Optimizing inventory to improve our in - store experience and increase working capital by: • Implementing a store clustering initiative that will enable regional assortments and improve our product relevancy • Increasing space productivity efforts
Slide 9: Scaling Our Elixir Business
Scaling O ur Elixir Business 10 Scaling our Elixir business • Improving procurement economics, specifically through contributions from plan design administration, formulary and rebate management services, and network performance • Optimizing our specialty and mail pharmacies with expanded access to
Slide 10: We Are Implementing a Proven Turnaround Model
We Are Implementing a Proven T urnaround M odel 10 • Partnering with one of the world’s leading consulting firms • Applying a proven model that has been used by other Fortune 150 companies to successfully turn around their businesses • Leveraging a highly prescriptive and programmatic approach to de
Slide 11: Guidance
GUIDANCE
Slide 12: FY2024 Guidance
FY2024 Guidance • $21.7B - $22.1B Total revenues • $340M – $370M Adjusted EBITDA • Retail Pharmacy $240M - $260M • Elixir $100M - $110M • ($4.93) – ($4.44) Dil uted adjusted net loss per share • ~$225M Capital expenditures
Slide 13: To Grow the Core, We Are Leaning Into Specific Initiatives
To Grow the C ore, W e A re L eaning I nto S pecific Initiatives 13 • Elevating Price management responsiveness, Promo optimization, Product mix • Improving Shelf Space efficiency • Increasing penetration of Owned brands, and realizing greater impact from Marketing/ Digital initiatives Front End • I
Slide 14: Appendix
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Slide 15: Q4 Fiscal 2023 Summary
Q4 Fiscal 2023 Summary Create Leverage Assets to Develop New Offering ($ in millions, except per share amounts) 14 Weeks Ended March 4, 2023 13 Weeks Ended February 26 , 2022 Revenues $ 6,092.9 $ 6,065.4 Net Loss $ (241.3) $ (389.1) Net Loss per Diluted Share $ (4.39) $ (7.18) Adjusted Net Loss per
Slide 16: Q4 Fiscal 2023 Reconciliation of Net Loss to Adjusted EBITDA
Q4 - Fiscal 2023 Reconciliation of Net Loss to Adjusted EBITDA 16 ($ in thousands) 14 Weeks Ended March 4, 2023 13 Weeks Ended February 26, 2022 Net loss $ (241,311) $ (389,062) Adjustments: • Interest expense 66,331 46,094 • Income tax benefit (21,421) (6,695) • Depreciation and amortization 68,450
Slide 17: Q4 Fiscal 2023 Reconciliation of Net Loss to Adjusted Net Loss
Q4 - Fiscal 2023 Reconciliation of Net Loss to Adjusted Net Loss Create Leverage Assets to Develop New Offering 17 ($ in thousands, except per share amounts) Net loss $ (241,311) $ (389 ,062) Add back - Income tax benefit (21,421) (6,695) Loss before income taxes $ (262,732) $ ( 395,757) Adjustments
Slide 18: Q4 Fiscal 2023 Summary – Retail Pharmacy Segment
Q4 - Fiscal 2023 Summary – Retail Pharmacy Segment Create Leverage Assets to Develop New Offering 18 ($ in millions) Revenues $ 4,795.7 $ 4,433.4 Adjusted EBITDA Gross Profit (1) $ 1,186.1 24.73% $ 1,185.1 26.73% Adjusted EBITDA SG&A (1) $ 1,084.9 22.62% $ 1,082.7 24.42% Adjusted EBITDA $ 101.2 2.11
Slide 19: Reconciliation of Adj. EBITDA Gross Profit – Retail Pharmacy Segment
Reconciliation of Adj. EBITDA Gross Profit – Retail Pharmacy Segment Create Leverage Assets to Develop New Offering 19 ($ in millions) 14 Weeks Ended March 4, 2023 13 Weeks Ended February 26, 2022 Revenues $ 4,795.7 $ 4,433.4 Gross Profit 1,155.2 1,178.5 Addback: LIFO charge 27.7 0.4 Depreciation an
Slide 20: Reconciliation of Adj. EBITDA SG&A – Retail Pharmacy Segment
Reconciliation of Adj. EBITDA SG&A – Retail Pharmacy Segment Create Leverage Assets to Develop New Offering 20 ($ in millions) 14 Weeks Ended March 4, 2023 13 Weeks Ended February 26 , 2022 Revenues $ 4,795.7 $ 4,433.4 Selling, general and administrative expenses 1,207.4 1,151.4 Less: Depreciation a
Slide 21: Pharmacy Services Segment Results
Pharmacy Services Segment Results 21 ($ in millions) Revenues $ 1,342.3 $ 1,693.8 Cost of Revenues 1,248.5 1,631.0 Gross Profit 93 .8 62.8 Selling, General and Administrative Expenses (88.6) (92.4) Addback: Depreciation and Amortization 10.6 12.3 Restructuring - related costs 5.9 5.7 Litigation and
Slide 22: Comparable Store Sales Growth
Comparable Store Sales Growth 10 Create Leverage Assets to Develop New Offering 22 FY2022 FY2023 Excluding cigarette and tobacco products Q4 2022 Q1 2023 Q2 2023 10.7% 6.6% 8.0% 9.5% 11.4% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 RX SALES 2.7% - 0.5% - 0.3% 2.2% 2.3% 3.2% 0.0% 0.2% 2.7% 2.8% Q3 2023
Slide 23: Capitalization Table
Capitalization Table Create Leverage Assets to Develop New Offering 23 ($ in thousands) March 4, 2023 February 26, 2022 Secured Debt: Senior secured revolving credit facility due August 2026 1,183,883$ 690,990$ FILO Term Loan due August 2026 397,910 347,656 1,581,793 1,038,646 Second Lien Secured De
Slide 24: Leverage Ratio
Expand Growth in New Markets 24 Leverage Ratio ($ in thousands) Total Debt: $ 2,944,170 Less: Cash and cash equivalents (157,151) Net Debt $ 2,787,019 LTM Adjusted EBITDA: Retail Pharmacy Segment 288,077 Pharmacy Services Segment 141,103 LTM Adjusted EBITDA $ 429,180 Leverage Ratio 6.49 March 4, 202
Slide 25: FY 2024 Guidance
Expand Growth in New Markets 25 FY 2024 Guidance ($ in thousands) Total Revenues $ 21,700,000 $ 22,100,000 Pharmacy Services Segment Revenues $ 3,900,000 $ 4,000,000 Gross Capital Expenditures $ 225,000 $ 225,000 Reconciliation of net loss to adjusted EBITDA: Net loss $ (466,000) $ (439,000) Adjustm
Slide 26: FY 2024 Guidance (cont.)
FY 2024 Guidance (cont.) Expand Growth in New Markets 26 FY 2023 Guidance ($ in thousands) Guidance Range Low High Net loss $ (466,000) $ (439,000) Add back - income tax expense 2,000 5,000 Loss before income taxes (464,000) (434,000) Adjustments: Amortization expense 68,000 68,000 LIFO charge 30,00
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