Rite Aid Q3 Sales Miss Street View; Reveals Store Closure Plan

Rite Aid Corp  RAD has reported Q3 FY22 adjusted EPS of $0.15, compared to $0.40 a year ago, but a turnaround from a loss of $(0.41) per share in Q2 FY22.

• Earnings: Revenues increased 1.8% Y/Y to $6.23 billion, missing the estimate of $6.32 billion.
• Retail Pharmacy Segment revenues increased 7.9% Y/Y to $4.43 billion. Same-store sales increased 4.4%, consisting of a 5.9% increase in pharmacy sales and a 0.4% decrease in front-end sales. 
• In addition to the benefit from 4 million COVID-19 vaccinations, maintenance prescriptions increased 1.7%, while other acute prescriptions increased 3.9% on a same-store basis when excluding COVID-19, flu, and all other ancillary vaccinations.
• The total store count at the end of the third quarter was 2,488.
• Pharmacy Services Segment revenues declined 10.8% to $1.9 billion.
• Store Closure: Rite Aid also announced the first phase of a store closure program to reduce costs, improve profitability. 
• It has identified an initial 63 stores for closure that will provide an annual EBITDA benefit of approximately $25 million.
• Guidance: Rite Aid revised its FY22 sales guidance to $24.4 billion - $24.7 billion, down from the prior outlook of $25.1 billion - $25.5 billion (consensus of $25.01 billion).
• It expects Pharmacy Services Segment revenue of $7.1 billion - $7.2 billion, down from the prior outlook of $7.7 billion - $7.8 billion.
• The company expects a net loss for FY22 of $(230) million - $(189) million, compared to $(221) million - $(197) million expected earlier. 
• Adjusted EPS loss is expected to be $(0.49) - $(0.04), narrower than earlier expected $(0.90) - $(0.53), and the consensus of $(0.52).
• The company expects adjusted EBITDA of $500 million - $520 million, better than the previous guidance of $460 million - $500 million.
• Price Action: RAD stock is up 4.84% at $13.00 during the premarket session on the last check Thursday.