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Rite Aid’s Q4, full-year results beat expectations

Despite a difficult cough-cold and flu season, as well as overarching pandemic headwinds, Rite Aid executives said that the company continues to make progress on its RxEvolution objectives.
David Salazar
Managing Editor
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Rite Aid’s fourth-quarter and full-year results, shared Thursday, saw the company beating Wall Street estimates on earnings and revenue. For the quarter ended Feb. 27, the company posted a net loss of $18.5 million, or 34 cents loss per share — an improvement over the $343 million loss the company posted for Q4 of 2020. For the full year, Rite Aid saw net loss of $100.1 million, or $1.87 loss per share — an improvement over the $469 million loss seen in fiscal 2020. 

Despite headwinds, president and CEO Heyward Donigan said that the company is making progress on its RxEvolution strategy and making moves that position the chain for the future. 

"We remain very optimistic about the direction of Rite Aid, despite a fourth quarter that was impacted by a historically soft cough, cold and flu season, the deferral of elective procedures and related acute prescription volume and the impact of COVID-19 on selling, general and administrative expenses," said Heyward Donigan, president and chief executive officer, Rite Aid. "This past year, we made significant progress in bringing our RxEvolution strategy to life. We redefined the role of the pharmacist, rebranded both our retail pharmacy business and Elixir, completed the strategic acquisition of Bartell's and moved quickly to deliver solutions to meet customer needs for COVID-19 testing and vaccine administration."

The company said its lower net loss came from lower income tax expense, a gain on asset sales rather than a loss on asset sales seen last year, and a gain from the company’s acquisition of Bartell Drugs. Fourth-quarter EBITDA was $134.6 million, or about 0.7% of revenue, a decrease from last year when it was $135.6 million, or 2.4% of revenue, attributed to lower gross profit from declining front-end same-store sales, as well as weather disruption and increased selling, general and administrative expenses. Full-year EBITDA was $437.7 million, or 1.8% of revenue. , a decrease from the prior year, when it was $538.2 million, or 2.5% of revenue. 

Rite Aid’s retail pharmacy segment saw $4.1 billion in revenue for the quarter, a 3% year-over-year increase, which the company said largely was due to the acquisition of Bartell DrugsSame-store sales saw a 0.3% decrease from the prior-year period, comprised of a 5.6% decrease in front-end sales and a 2% increase in pharmacy sales. A very soft cough-cold and flu season  —with related categories seeing a 37% sales decrease — was the main driver of the front-store sales decline. Even as the front-end struggled, Rite Aid said that its managed to grow its front-end market share in both dollars and unit sales. Driven by a roughly 14% drop in acute prescriptions, the company’s script count, adjusted to 30-day equivalents, decreased 0.9% year over year. The acute script contraction was offset by COVID-19 vaccine allocations and an increase in maintenance scripts. 

For the year, same-store sales were up 3.5% over fiscal 2020, with revenue up 4.8% year over year. Front-end sales were buoyed by gains in immunity, first aid and paper products, while being offset by cough-cold and flu sales declines. Same-stpre prescription fills, adjusted to 30-day equivalents, increased by 1.3% year over year, which the company attributed to increases in maintenance prescriptions supported by medication therapy management interventions and home deliveries, and slightly offset by a 9% reduction in acute prescriptions. Script sales made up 66.7% of total drug store sales. 

Rite Aid’s Elixir pharmacy services segment saw revenue of $1.9 billion for the quarter and roughly $8 billion for the year. The quarterly performance was a 3.8% year-over-year revenue increase, which Rite Aid attributed to higher claims revenue and Medicare Pard D revenue from the new calendar year. Full-year revenue was up 21.5% year over year, primarily attributed to growth in Medicare Part D membership. 

On the company’s earnings call, Donigan announced that Dan Robson, Elixir president, has departed the company and that she now will oversee Elixir. “Now more than ever we’re bullish on elixir,” Donigan said. 

Because of the ongoing pandemic and the various services Rite Aid offers related to it — including COVID-19 testing and vaccines — the company’s only is providing guidance for Q1 of fiscal 2022. For the quarter, the company expects revenue of between $6.1 billion and $6.3 billion, with retail pharmacy same-store sales expected to decrease between 9% and 7% compared with fiscal 2021. It projects net income/loss between a $10 million loss and $10 million in income. Rite Aid noted that these projections include the revenue bump from administering COVID-19 vaccines, as well as a continued decline in acute scripts and a meaningful reduction in front-end sales compared with the prior-year period’s pandemic-driven surge. 

"As we look ahead, our teams are continuing their heroic efforts to serve our communities and customers during this critical time. I am pleased to announce that we have administered over 2 million COVID-19 vaccines so far in the first quarter,” Donigan said. “We are also seeing prescription count trends, both acute and maintenance, return to positive levels. At Elixir, we are experiencing growth in our sales pipeline, and have recently been awarded over 200,000 new lives and over 6 million annualized scripts, with additional decisions pending in the current sales cycle. I am so proud of our 50,000 associates and the strategic progress we're making in our journey to revitalize our brand and elevate the crucial role that pharmacy plays in the health of our customers."