Rite Aid shared its Q1 results for the quarter ended 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 sales.
Revenue for the quarter was $6.01 billion, compared to revenue of $6.16 billion in the prior year quarter.
[Read more: Rite Aid to offer COVID-19 shots for kids ages 3 and older]
“We continue to make progress on our journey to transform Rite Aid and define the modern pharmacy. In the first quarter, we increased our non-COVID regulations, reduced SG&A expenses, built momentum at Elixir and delivered solid results across the company,” said Heyward Donigan, president and CEO. “The entire Rite Aid team looks forward to expanding our pharmacists’ role in improving health outcomes.”
Rite Aid reported net loss for the first quarter was $110.2 million, or $2.03 per share, compared to last year’s first quarter net loss of $13.1 million, or $0.24 per share. . Adjusted net loss for the first quarter was $32.8 million, or 60 cents per share, compared to last year’s adjusted net income of $20.9 million, or 38 cents per share.
Rite Aid attributed the increase in adjusted net loss to higher facility closing costs and impairment charges resulting from the company’s previously announced store closing decisions and a decrease in adjusted EBITDA. These items were partially offset by an increase in the gain on asset disposals resulting from the sale of script files from certain store closures.
[Read more: Rite Aid reports Q4, full-year results]
Rite Aid’s retail pharmacy segment revenues were down 0.1% year-over-year, due to a decline in revenues from COVID vaccines and testing, as well as store closures. This decrease was offset by an increase in non-COVID prescriptions.
Same-store sales for the first quarter were up 4.6% from the same period last year, comprising a 6.6% increase in pharmacy sales. This increase was partially offset by a 0.5% decrease in front-end sales. Front-end sales in the same store, excluding cigarettes and tobacco products, were flat.
The number of prescriptions filled in the same stores, adjusted to the equivalent of 30 days, increased by 0.9% compared to the same period last year. The total number of same-store non-COVID prescriptions increased by 3.7%, with same-store maintenance prescriptions up 1.4% and other acute prescriptions in the same store by 11.9%. Prescription sales accounted for 70.8% of total drugstore sales. The total number of stores at the end of the first quarter was 2,361.
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Rite Aid’s retail pharmacy segment adjusted EBITDA was $73.7 million, or 1.7% of sales, for the first quarter compared to last year’s adjusted EBITDA of $94.9 million, or 2.2 % of the turnover. The decrease in adjusted EBITDA was due to lower gross profit. This decrease was partially offset by a decrease in adjusted EBITDA sales and general and administrative expenses of $40.5 million.
Gross profit was negatively impacted by the decline in COVID-19 vaccinations and testing. Gross profit headwinds from reduced COVID-related services were partially offset by an increase in prescriptions filled and an improved front-end gross margin. SG&A expenses benefited from lower payroll, occupancy and other operating expenses due to store closings and cost containment initiatives, Rite Aid said.
[Read more: Rite Aid Healthy Futures partners with Children’s Hospitals to expand equitable care]
Rite Aid’s pharmacy services segment revenue was $1.7 billion for the quarter, down 7.8% from the same quarter last year. The revenue decline was primarily due to a planned reduction in Elixir Insurance membership and a previously announced loss of customers due to industry consolidation. This decline was offset by higher withheld rebates from Rite Aid’s new rebate aggregation scheme and increased use of more expensive drugs, the company said.
Rite Aid’s pharmacy services segment adjusted EBITDA was $26.4 million, or 1.5% of sales, for the first quarter, compared to last year’s adjusted EBITDA of $44 million, or 2. 4% of turnover. The decline in Adjusted EBITDA was the result of the decline in lost customer revenue, as discussed above, and an increase in the medical claims ratio at Elixir Insurance. This reduction was partially offset by higher withheld rebates from Rite Aid’s new rebate aggregation scheme, the retailer said.
Rite Aid has raised its revenue guidance for fiscal 2023 due to the increased use of more expensive drugs at Elixir, and the company said it is maintaining its adjusted EBITDA forecast.
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Total revenue is expected to be between $23.6 billion and $24 billion by 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 $17.35 billion and $17.65 billion. expected to be between $6.25 billion and $6.35 billion (net of any intercompany revenue to the retail pharmacy segment).
Net loss is expected to be between $246.3 million and $203.3 million. “Our net loss estimates increased due to higher closed store impairment charges and an increase in interest expense due to recent and projected rate hikes throughout the year,” the pharmacy said.
Adjusted EBITDA is expected to be between $460 million and $500 million. Adjusted EBITDA for the retail pharmacy segment is expected to be between $320 million and $350 million and adjusted EBITDA for the pharmacy services segment is expected to be between $140 million and $150 million.
[Read more: Rite Aid offers free COVID-19 tests to Medicare beneficiaries]
Rite Aid said 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, purchasing prescription files, distribution center automation and store renovations.
Rite Aid said it expects to generate positive free cash flow in fiscal 2023.