Rite Aid all smiles behind EBITDA and profit story

NEW YORK — Rite Aid EVP and CFO Darren Karst was all smiles Wednesday before analysts at the 33rd Annual JP Morgan Healthcare Conference. And with good reason. 

 

"A number of years ago on the operating expense line, things were increasing fairly dramatically. [We] got control of those costs and we were able to take significant costs out of the system and get more efficient," Karst said. "Ultimately that led to good growth in EBITDA over the years from the lowest point back in fiscal 2011," he said. EBITDA swung from $859 million in fiscal 2011 to more than $1.3 billion today. "Pretty big increase — 54%," Karst said."That's what John calls our version of a smiley face," he added, referencing the upward EBITDA momentum on the chart. 

 

That EBITDA story is evidence that in the past year, Rite Aid has really transitioned from a company on the turnaround to a company focused on growth. "In the beginning, the team established priorities and really set out to accomplish those [goals]," Karst said. "It all really started with the top line. The company had pretty negative trends in scripts and sales and have been able to really get the momentum moved in the right direction." 

 

The profitability story has also been good, Karst noted, with Rite Aid posting year-over-year profit increases for the past three years. The midpoint profit guidance for fiscal 2015 is $342.5 million.