Rite Aid shared its Q1 results for the quarter ending May 28, 2022.
For the first quarter, the chain retailer reported a net loss of $110.2 million, or $2.03 loss per share. Adjusted net loss was $32.8 million, or 60 cents loss per share, and adjusted EBITDA of $100.1 million, or 1.7% of revenues.
Revenues for the quarter were $6.01 billion compared with revenues of $6.16 billion in the prior year’s quarter.
“We continue to make strides on our journey to transform Rite Aid and define the modern pharmacy. In the first quarter, we increased our non-COVID prescriptions, reduced SG&A, built momentum at Elixir and delivered solid results across the business,” said Heyward Donigan, president and CEO. “The entire Rite Aid team looks forward to advancing our pharmacists’ role in improving health outcomes.”
Rite Aid reported that its first quarter net loss was $110.2 million, or $2.03 per share, compared with last year’s first quarter net loss of $13.1 million, or $0.24 per share. First quarter adjusted net loss was $32.8 million, or 60 cents per share, compared with last year’s first quarter adjusted net income of $20.9 million or 38 cents per share.
Rite Aid attributed the increase in adjusted net loss to higher facility exit and impairment charges driven by the company’s previously announced store closure decisions and a decrease in adjusted EBITDA. These items were partially offset by an increase in gain on the sale of assets resulting from script file sales of certain store closures.
[Read more: Rite Aid reports Q4, full-year results]
Rite Aid’s retail pharmacy segment revenues decreased .1% over the prior-year quarter, driven by a reduction in COVID vaccine and testing revenue, as well as store closures. This decrease was offset by an increase in non-COVID prescriptions.
Same-store sales for the first quarter increased 4.6% over the prior-year period, consisting of a 6.6% increase in pharmacy sales. This increase was partially offset by a .5% decrease in front-end sales. Front-end same-store sales, excluding cigarettes and tobacco products, were flat.
The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 0.9% over the prior-year period. Total non-COVID same-store prescriptions increased 3.7%, with same-store maintenance prescriptions increasing 1.4% and other same-store acute prescriptions increasing 11.9%. Prescription sales accounted for 70.8% of total drug store sales. The total store count at the end of the first quarter was 2,361.
Rite Aid’s retail pharmacy segment adjusted EBITDA was $73.7 million, or 1.7% of revenues, for the first quarter compared with last year’s first quarter adjusted EBITDA at $94.9 million, or 2.2% of revenues. The decline in adjusted EBITDA was due to decreased gross profit. This decline was partially offset by a decrease in adjusted EBITDA selling, and general and administrative expenses of $40.5 million.
Gross profit was negatively impacted by the decline in COVID-19 vaccinations and testing. The gross profit headwind from reduced COVID-related services was partially offset by an increase in prescriptions filled and improved front-end gross margin. SG&A expenses benefited from lower payroll, occupancy and other operating costs due to store closures and cost control initiatives, Rite Aid said.
Rite Aid’s pharmacy services segment revenues were $1.7 billion for the quarter, a decrease of 7.8% compared with the prior-year quarter. The decrease in revenues was primarily the result of a planned decrease in Elixir Insurance membership and a previously announced client loss due to industry consolidation. This decrease was offset by higher retained rebates from Rite Aid’s new rebate aggregation arrangement and increased utilization of higher-cost drugs, the company said.
Rite Aid's pharmacy services segment adjusted EBITDA was $26.4 million, or 1.5% of revenues, for the first quarter compared with last year’s first quarter adjusted EBITDA at $44 million, or 2.4% of revenues. The reduction in adjusted EBITDA resulted from the decline in revenues associated with lost clients, as discussed above, and an increase in the medical loss ratio at Elixir Insurance. This reduction was partially offset by higher retained rebates from Rite Aid's new rebate aggregation arrangement, the retailer said.
Rite Aid has increased its outlook for fiscal 2023 revenues, due to increased utilization of higher cost drugs at Elixir, and the company said that it is maintaining its guidance for adjusted EBITDA.
Total revenues are expected to be between $23.6 billion and $24 billion in fiscal 2023. Retail pharmacy segment revenue is expected to be between $17.35 billion and $17.65 billion and pharmacy services segment revenue is expected to be between $6.25 billion and $6.35 billion (net of any intercompany revenues to the retail pharmacy segment).
Net loss is expected to be between $246.3 million and $203.3 million. “Our estimates for net loss have increased due to increased impairment charges for closed stores and an increase in interest expense due to recent and anticipated interest rate increases throughout the year,” the retail pharmacy said.
Adjusted EBITDA is expected to be between $460 million and $500 million. Retail pharmacy segment adjusted EBITDA is expected to be between $320 million and $350 million and pharmacy services segment adjusted EBITDA is expected to be between $140 million and $150 million.
Rite Aid said that it expects adjusted net loss per share to be between $1.19 and 66 cents.
Capital expenditures are expected to be approximately $250 million, with a focus on investments in digital capabilities, technology, prescription file purchases, distribution center automation and store remodels.
Rite Aid said it expects to generate positive free cash flow in fiscal 2023.