Despite revenue growth coming in below Wall Street expectations and swinging to a loss, Rite Aid’s Q2 showed strong growth in retail pharmacy and led the retailer to raise is guidance for its fiscal 2022. The retailer reported a net loss of $100.3 million, or $1.86 per share, with an adjusted net loss of $22 million. For the quarter, revenue increased by 2.2%, totaling $6.11 billion, and adjusted EBITDA was $106.2 million.
“We are pleased with our second-quarter results, which show continued improvement in our underlying business as we delivered another quarter of revenue growth and Adjusted EBITDA that exceeded expectations,” said Heyward Donigan, Rite Aid president CEO. “We also amended and extended our revolving credit facility, successfully extending the maturity out to August 2026 as we continue to enhance our financial flexibility to deliver on our RxEvolution strategy.
[Read more: Rite Aid unveils new HQ for remote-first workforce]
Rite Aid’s retail pharmacy segment was the star of the quarter, with revenue up 6.5% from the prior-year quarter for a total of $4.3 billion, which reflected same-store sales growth, as well as the inclusion of Bartell’s results this quarter. Same-store sales were up 2.6% from the previous year’s Q2, with a 5% increase in pharmacy sales helping mitigate a 2.8% drop in front-end sales. During the period, Rite Aid filled 7.1% more prescriptions than it did in the prior-year period, adjusted to 30-day equivalents. The company said this reflects increases in acute prescriptions and maintenance prescriptions. Rite Aid’s total store count at the end of the quarter was 2,501.
Rite Aid’s pharmacy services business saw revenue of $1.9 billion, a 6.9% decrease from the prior-year period, which the company attributed to decreased membership in its PBM business and a decrease in membership of Elixir Insurance.
The company’s overall revenue and its net loss were impacted by decreased adjusted EBITDA, higher litigation settlements, a higher loss on sale of assets and a loss on debt modifications and retirements compared to a gain in those areas in Q2 of its fiscal 2021. Lower costs relating to restructuring offset these losses, the company said.
“Our results were driven by the continued strong execution of our COVID-19 vaccine administration, improved profitability at Elixir and benefits from our work to revitalize our retail and digital experiences,” Donigan said. “Since launching our strategy last March, our organization is executing a clear plan to build top-line momentum with an intense focus on improving our profitability. We have transformed our business to be more relevant to our target growth consumer and more efficient in how we operate, while making investments necessary to drive the long-term health of our business.”
Citing an expected increase in demand for COVID-19 vaccine and testing, Rite Aid raised its full-year adjusted EBITDA guidance, now anticipating it to be between $460 million and $500 million. The company expects total revenue of between $25.2 billion and $25.5 billion, with a net loss of between $221 million and $197 million.
“The progress on our RxEvolution strategy validates our belief that, as the trusted everyday care connector, Rite Aid will drive lower healthcare costs through better coordination, stronger engagement, and personalized services that help our customers achieve whole health for life,” Donigan said.