Rite Aid's Q4, full year see growth in retail script count, pharmacy services revenue

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Rite Aid's Q4, full year see growth in retail script count, pharmacy services revenue

By David Salazar - 04/16/2020

With growth in its pharmacy services segment and in the number of scripts filled by its retail pharmacies, Rite Aid shared its fourth quarter and full year fiscal 2020 results, swinging to a loss but marking an improvement over prior performance. 

For the fourth quarter, the company reported revenue of $5.73 billion and a net loss from continuing operations of $343.5 million, or $6.43 per share. For the full year, Rite Aid reported revenue of $21.9 billion, a 1.3% increase over fiscal 2019, and a net loss of $469.2 million, or $8.82 per share — an improvement over fiscal 2019, when it posted loss per share of $12.62. 

"I'd like to thank our Rite Aid team for working together to deliver a solid finish to the fiscal year," said Heyward Donigan, Rite Aid president and CEO. "Strong execution by our team drove growth in both pharmacy services segment revenues and retail pharmacy segment prescription count, and helped deliver our second consecutive quarter-over-quarter improvement in adjusted EBITDA. These results provide important momentum as we redefine our industry by deploying our bold, new RxEvolution strategy."

For the quarter, the retail pharmacy segment saw revenue of $3.99 billion, an increase of 0.6% over the prior-year period, attributed to a 1.6% increase in same-store sale driven largely by pharmacy sales growth. Despite the increase, pharmacy sales — which made up 65.9% of drug store sales — were hampered in the quarter by roughly 330 basis points due to new generic introductions, but the company’s script volume, adjusted to 30-day equivalents, grew by 5% over a prior-year period. The company attributed this largely to growing immunization counts and improved adherence and prescription file buys. Rite Aid’s pharmacy services segment saw revenue of $1.8 billion for the quarter, a 23.8% increase over the prior-year period, which the company attributed largely to growth among Medicare Part D membership. 

For the fill year, retail pharmacy segment revenue was $15.6 billion, marking a 0.9% decrease from the full year 2019. Same-store sales for the year increased by 1.1%, driven by 1.4% growth in pharmacy sales and 0.6% on the front end. As in the fourth quarter, generic introductions hampered pharmacy sales with a 286-basis-point impact. Rite Aid’s adjusted script count in the segment grew by 3.5% for the year, with prescription sales generating 67% of the segment’s revenue. The pharmacy services segment saw revenue of $6.6 billion, a 7.6% increase over the prior-year, which the company again credited to Medicare Part D membership growth. 

Overall, the year’s net loss marked an improvement over fiscal 2019, which Rite Aid said was due to lower goodwill and intangible asset impairment charges, as well as lower LIFO expenses, lower lease termination and impairment charges, and a gain on debt retirements compared with a loss on debt retirements in the prior period — all offset by higher income tax expense and higher restructuring-related costs. 

As the company navigates the COVID-19 crisis in its fiscal 2021 first quarter, Rite Aid highlighted the various personnel policies it has implemented, and shared a preview of March sales. For March, Rite Aid said its comparable front-end sales were up 33% from the year-ago period, driven largely by personal care, paper product, OTC and prescription count growth. 

"As we begin the new fiscal year, Rite Aid's top priority is to continue providing the essential care, services and products that our communities need during the COVID-19 crisis," Donigan said. "I couldn't be more proud of our team for working together to support our fellow associates and serve our customers and clients during this global health emergency. There has never been a more important time to be a pharmacy company, and we remain committed to serving as a trusted and essential resource for medications, supplies and services in our communities."

Rite Aid said its fiscal 2021 guidance expects revenue of between $22.5 billion and $22.9 billion, with retail pharmacy same-store sales growth expected to range from 1.5% to 2.5%. It anticipates a net loss of between $91 million and $119 million. The company noted that the COVID-19 pandemic has not had a material impact on 2021 adjusted EBITDA, but March volumes are expected to be offset by declines in future months, but said it does not have enough information about its ultimate impact to justify changing its guidance.