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Rite Aid (RAD) Q4 Loss Wider Than Expected, Revenues Beat
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Rite Aid Corporation posted fourth-quarter fiscal 2023 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line lagged the same. However, both metrics improved year over year. Results gained from the encouraging performance in retail pharmacy and the year-over-year improvement at Elixir.
Shares of RAD have plunged 36.7% in the past three months compared with the industry's decline of 13.3%.
Q4 Highlights
Rite Aid incurred an adjusted loss of $1.24 per share, wider than the Zacks Consensus Estimate of a loss of 77 cents and our estimate of a loss of 78 cents. However, the figure was narrower than the prior-year quarter’s loss of $1.63.
Image Source: Zacks Investment Research
Revenues inched up 0.5% from the year-ago quarter to $6,093 million and surpassed the Zacks Consensus Estimate of $5,699 million and our estimate of $5,698. The upside mainly resulted from an extra week in the fourth quarter, as well as higher comparable front-end sales and non-COVID prescriptions, somewhat offset by lower revenues from COVID vaccines and testing, store closures, and the loss of commercial clients at Elixir.
In the fiscal fourth quarter, the Retail Pharmacy segment's revenues rose 8.2%, driven by an extra week in the fourth quarter, as well as higher acute and maintenance prescriptions, somewhat offset by reduced COVID vaccine and testing revenues, and store closures.
Retail Pharmacy same-store sales moved up 8.9%, driven by an 11.4% rise in pharmacy sales and 2.3% growth in front-end same-store sales. Excluding cigarettes and tobacco products, front-end same-store sales rose 2.8% from the year-ago period’s reading.
Prescription count at the same-store sales, adjusted to 30-day equivalent, rose 5.2% on the back of non-COVID-19 prescriptions (up 9.7%), acute prescriptions (up 14.9%) and maintenance prescriptions (up 8.2%). Prescription sales constituted 71.5% of the overall drugstore sales. The total store count at the end of the reported quarter was 2,309.
In the Pharmacy Services segment, revenues declined 21% due to client loss announced earlier and reduced Elixir Insurance membership.
In the reported quarter, adjusted EBITDA grew 21.2% from the year-ago period to $128.6 million. The adjusted EBITDA margin expanded 350 basis points to 21% in the quarter under review. SG&A expenses increased 4.2% from the year-ago period’s reading to $1,296.1 million.
Financial Status
Rite Aid ended the reported quarter with cash and cash equivalents of $157.2 million, long-term debt (net of current maturities) of $2,925.3 million, and a total shareholders' equity deficit of $641.8 million. This Zacks Rank #3 (Hold) company ended the quarter with a liquidity of $1.5 billion. For fiscal 2024, capital expenditure is anticipated to be $225 million.
Rite Aid Corporation Price, Consensus and EPS Surprise
Management issued the fiscal 2024 guidance, wherein it expects mid-single-digit growth in comparable store sales and non-COVID comparable prescriptions. The company anticipates generic purchasing efficiencies, lower indirect spend and robust adjusted EBITDA margins at Elixir stemming from a favorable member mix and continued improvement in procurement economics. RAD expects continued growth in comp sales and scripts in its core business.
Notably, adjusted EBITDA is estimated to be $340-$370 million. The Retail Pharmacy segment’s adjusted EBITDA is expected to be $240-$260 million and the Pharmacy Services segment’s adjusted EBITDA is likely to be $100-$110 million.
Adjusted EBITDA is likely to be higher in the second half of fiscal 2024, driven by the performance acceleration program and cost reduction initiatives. These initiatives are predicted to drive adjusted EBITDA growth in fiscal 2025 and 2026.
Total revenues are predicted to be $21.7-$22.1 billion in fiscal 2024 compared with our estimate of $22.2 billion. The Retail Pharmacy segment’s revenues are forecast to be $17.8-$18.1 billion, while the Pharmacy Services segment’s revenues are likely to be $3.9-$4.0 billion.
For fiscal 2025 and 2026, Elixir PBM memberships in its core retail business in both front-end and pharmacy are likely to grow. The potential absence of COVID-related headwinds in 2025 and a reduction in turnaround investments are expected to aid adjusted EBITDA growth by double-digits in fiscal 2025 and 2026.
The net loss is envisioned to be $439-$466 million. The adjusted loss is expected to be $4.44-$4.93.
However, the fiscal 2024 view takes into account the negative impacts of reimbursement rate declines, reduced demand for COVID vaccines and testing, and lower revenues at Elixir. The company expects COVID vaccines and testing demand to decline, with COVID vaccine administration expected to decrease from 5.1 million in fiscal 2023 to 3 million in fiscal 2024.
Stocks to Consider
Here are some better-ranked stocks you may want to consider — Urban Outfitters (URBN - Free Report) , Kroger (KR - Free Report) and DICK’S Sporting Goods (DKS - Free Report) .
Urban Outfitters, a leading lifestyle product and services company, currently flaunts a Zacks Rank #1 (Strong Buy). The company’s expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal year’s revenues suggests growth of 5% from the year-ago reported figure.
Kroger, a renowned grocery retailer, currently sports a Zacks Rank #1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial year’s EPS suggests growth of 6.6% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK’S Sporting, which operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment, carries a Zacks Rank #2 (Buy) at present. The company’s expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal year’s revenues and EPS suggests growth of 2.2% and 10%, respectively, from the year-ago reported figures. DKS has a trailing four-quarter earnings surprise of 10%, on average.
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Rite Aid (RAD) Q4 Loss Wider Than Expected, Revenues Beat
Rite Aid Corporation posted fourth-quarter fiscal 2023 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line lagged the same. However, both metrics improved year over year. Results gained from the encouraging performance in retail pharmacy and the year-over-year improvement at Elixir.
Shares of RAD have plunged 36.7% in the past three months compared with the industry's decline of 13.3%.
Q4 Highlights
Rite Aid incurred an adjusted loss of $1.24 per share, wider than the Zacks Consensus Estimate of a loss of 77 cents and our estimate of a loss of 78 cents. However, the figure was narrower than the prior-year quarter’s loss of $1.63.
Image Source: Zacks Investment Research
Revenues inched up 0.5% from the year-ago quarter to $6,093 million and surpassed the Zacks Consensus Estimate of $5,699 million and our estimate of $5,698. The upside mainly resulted from an extra week in the fourth quarter, as well as higher comparable front-end sales and non-COVID prescriptions, somewhat offset by lower revenues from COVID vaccines and testing, store closures, and the loss of commercial clients at Elixir.
In the fiscal fourth quarter, the Retail Pharmacy segment's revenues rose 8.2%, driven by an extra week in the fourth quarter, as well as higher acute and maintenance prescriptions, somewhat offset by reduced COVID vaccine and testing revenues, and store closures.
Retail Pharmacy same-store sales moved up 8.9%, driven by an 11.4% rise in pharmacy sales and 2.3% growth in front-end same-store sales. Excluding cigarettes and tobacco products, front-end same-store sales rose 2.8% from the year-ago period’s reading.
Prescription count at the same-store sales, adjusted to 30-day equivalent, rose 5.2% on the back of non-COVID-19 prescriptions (up 9.7%), acute prescriptions (up 14.9%) and maintenance prescriptions (up 8.2%). Prescription sales constituted 71.5% of the overall drugstore sales. The total store count at the end of the reported quarter was 2,309.
In the Pharmacy Services segment, revenues declined 21% due to client loss announced earlier and reduced Elixir Insurance membership.
In the reported quarter, adjusted EBITDA grew 21.2% from the year-ago period to $128.6 million. The adjusted EBITDA margin expanded 350 basis points to 21% in the quarter under review. SG&A expenses increased 4.2% from the year-ago period’s reading to $1,296.1 million.
Financial Status
Rite Aid ended the reported quarter with cash and cash equivalents of $157.2 million, long-term debt (net of current maturities) of $2,925.3 million, and a total shareholders' equity deficit of $641.8 million. This Zacks Rank #3 (Hold) company ended the quarter with a liquidity of $1.5 billion. For fiscal 2024, capital expenditure is anticipated to be $225 million.
Rite Aid Corporation Price, Consensus and EPS Surprise
Rite Aid Corporation price-consensus-eps-surprise-chart | Rite Aid Corporation Quote
FY24 Outlook
Management issued the fiscal 2024 guidance, wherein it expects mid-single-digit growth in comparable store sales and non-COVID comparable prescriptions. The company anticipates generic purchasing efficiencies, lower indirect spend and robust adjusted EBITDA margins at Elixir stemming from a favorable member mix and continued improvement in procurement economics. RAD expects continued growth in comp sales and scripts in its core business.
Notably, adjusted EBITDA is estimated to be $340-$370 million. The Retail Pharmacy segment’s adjusted EBITDA is expected to be $240-$260 million and the Pharmacy Services segment’s adjusted EBITDA is likely to be $100-$110 million.
Adjusted EBITDA is likely to be higher in the second half of fiscal 2024, driven by the performance acceleration program and cost reduction initiatives. These initiatives are predicted to drive adjusted EBITDA growth in fiscal 2025 and 2026.
Total revenues are predicted to be $21.7-$22.1 billion in fiscal 2024 compared with our estimate of $22.2 billion. The Retail Pharmacy segment’s revenues are forecast to be $17.8-$18.1 billion, while the Pharmacy Services segment’s revenues are likely to be $3.9-$4.0 billion.
For fiscal 2025 and 2026, Elixir PBM memberships in its core retail business in both front-end and pharmacy are likely to grow. The potential absence of COVID-related headwinds in 2025 and a reduction in turnaround investments are expected to aid adjusted EBITDA growth by double-digits in fiscal 2025 and 2026.
The net loss is envisioned to be $439-$466 million. The adjusted loss is expected to be $4.44-$4.93.
However, the fiscal 2024 view takes into account the negative impacts of reimbursement rate declines, reduced demand for COVID vaccines and testing, and lower revenues at Elixir. The company expects COVID vaccines and testing demand to decline, with COVID vaccine administration expected to decrease from 5.1 million in fiscal 2023 to 3 million in fiscal 2024.
Stocks to Consider
Here are some better-ranked stocks you may want to consider — Urban Outfitters (URBN - Free Report) , Kroger (KR - Free Report) and DICK’S Sporting Goods (DKS - Free Report) .
Urban Outfitters, a leading lifestyle product and services company, currently flaunts a Zacks Rank #1 (Strong Buy). The company’s expected EPS growth rate for three to five years is 18%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal year’s revenues suggests growth of 5% from the year-ago reported figure.
Kroger, a renowned grocery retailer, currently sports a Zacks Rank #1. KR has a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial year’s EPS suggests growth of 6.6% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK’S Sporting, which operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment, carries a Zacks Rank #2 (Buy) at present. The company’s expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal year’s revenues and EPS suggests growth of 2.2% and 10%, respectively, from the year-ago reported figures. DKS has a trailing four-quarter earnings surprise of 10%, on average.