It has been about a month since the last earnings report for Rite Aid . Shares have lost about 16.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rite Aid due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Rite Aid Q3 Earnings Beat Estimates, Revenues Lag
Rite Aid posted third-quarter fiscal 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while sales lagged the same. Results gained from robust demand in COVID-19 vaccination and testing.
The company delivered adjusted earnings of 15 cents per share, down 62.5% from 40 cents in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of a loss of 18 cents.
Revenues grew 1.8% to $6,229 million but missed the Zacks Consensus Estimate of $6,281 million. The uptick was mainly due to the solid performance in the Retail Pharmacy, which more than offset the sluggishness in the Pharmacy Services segment.
In the quarter, the Retail Pharmacy segment’s revenues grew 7.9%, driven by gains from the acquisition of Bartell and same-store sales growth. Retail Pharmacy same-store sales were up 4.4%, driven by a 5.9% rise in pharmacy sales and a 0.4% increase in front-end same-store sales. Excluding cigarettes and tobacco products, front-end same-store sales increased 1%.
Prescription count at same-store sales, adjusted to 30-day equivalents, rose 7.9% on the back of COVID-19 vaccinations, higher acute prescriptions (up 3.9%) and maintenance prescriptions (up 1.7%).
In the Pharmacy Services segment, revenues fell 10.8% due to client loss announced earlier and reduced Elixir Insurance membership.
Online revenues surged 75% year over year in the quarter under review on the back of continued strength in on-demand delivery, third-party marketplaces, and buy online, pick up at store options. Management expanded Uber Eats and Postmates, and rolled out its buy online, pick up at store facility in the quarter under review.
In the reported quarter, adjusted EBITDA grew 12.7% year over year to $154.8 million. The adjusted EBITDA margin expanded 30 bps to 2.5% in the quarter under review. SG&A expenses increased 10.4% year over year to $1,276.9 million.
Financial Status
Rite Aid ended the reported quarter with cash and cash equivalents of $155.3 million, long-term debt (net of current maturities) of $3,167.1 million, and total shareholders’ equity of $472 million. Capital expenditure is likely to be $275 million in fiscal 2022. Rite Aid also boasts strong liquidity of $1.6 billion.
Fiscal 2022 Outlook
Driven by the rising demand for COVID-19 vaccine and testing as well as positive momentum in the fiscal third quarter, management lifted its adjusted EBITDA view for fiscal 2022. Adjusted EBITDA is likely to be $500-$520 million, up from the earlier mentioned $460-$500 million.
For fiscal 2022, the company expects sales of $24.4-$24.7 million, down from the earlier mentioned $25.1-$25.5 billion. The Pharmacy services segment’s sales is likely to be $7.1-$7.2 billion, down from the previously mentioned $7.7-$7.8 million. Although adjusted net loss is envisioned to be 49-4 cents as compared to the previously mentioned loss of 90-53 cents, its midpoint of a loss of 26.5 cents compares unfavorably with fiscal 2021 reported figure of a loss of 15 cents.
Business Developments
Management has entered a rebate aggregation agreement with Prime Therapeutics to drive value for Elixir’s PBM clients. The company also launched a store closure program to lower costs and drive profitability. The first phase of the program has started with 63 store closures, which is likely to benefit EBITDA by $25 million on an annual basis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -34.52% due to these changes.
VGM Scores
At this time, Rite Aid has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Rite Aid has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Rite Aid (RAD) Down 16.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Rite Aid . Shares have lost about 16.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rite Aid due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Rite Aid Q3 Earnings Beat Estimates, Revenues Lag
Rite Aid posted third-quarter fiscal 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while sales lagged the same. Results gained from robust demand in COVID-19 vaccination and testing.
The company delivered adjusted earnings of 15 cents per share, down 62.5% from 40 cents in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of a loss of 18 cents.
Revenues grew 1.8% to $6,229 million but missed the Zacks Consensus Estimate of $6,281 million. The uptick was mainly due to the solid performance in the Retail Pharmacy, which more than offset the sluggishness in the Pharmacy Services segment.
In the quarter, the Retail Pharmacy segment’s revenues grew 7.9%, driven by gains from the acquisition of Bartell and same-store sales growth. Retail Pharmacy same-store sales were up 4.4%, driven by a 5.9% rise in pharmacy sales and a 0.4% increase in front-end same-store sales. Excluding cigarettes and tobacco products, front-end same-store sales increased 1%.
Prescription count at same-store sales, adjusted to 30-day equivalents, rose 7.9% on the back of COVID-19 vaccinations, higher acute prescriptions (up 3.9%) and maintenance prescriptions (up 1.7%).
In the Pharmacy Services segment, revenues fell 10.8% due to client loss announced earlier and reduced Elixir Insurance membership.
Online revenues surged 75% year over year in the quarter under review on the back of continued strength in on-demand delivery, third-party marketplaces, and buy online, pick up at store options. Management expanded Uber Eats and Postmates, and rolled out its buy online, pick up at store facility in the quarter under review.
In the reported quarter, adjusted EBITDA grew 12.7% year over year to $154.8 million. The adjusted EBITDA margin expanded 30 bps to 2.5% in the quarter under review. SG&A expenses increased 10.4% year over year to $1,276.9 million.
Financial Status
Rite Aid ended the reported quarter with cash and cash equivalents of $155.3 million, long-term debt (net of current maturities) of $3,167.1 million, and total shareholders’ equity of $472 million. Capital expenditure is likely to be $275 million in fiscal 2022. Rite Aid also boasts strong liquidity of $1.6 billion.
Fiscal 2022 Outlook
Driven by the rising demand for COVID-19 vaccine and testing as well as positive momentum in the fiscal third quarter, management lifted its adjusted EBITDA view for fiscal 2022. Adjusted EBITDA is likely to be $500-$520 million, up from the earlier mentioned $460-$500 million.
For fiscal 2022, the company expects sales of $24.4-$24.7 million, down from the earlier mentioned $25.1-$25.5 billion. The Pharmacy services segment’s sales is likely to be $7.1-$7.2 billion, down from the previously mentioned $7.7-$7.8 million. Although adjusted net loss is envisioned to be 49-4 cents as compared to the previously mentioned loss of 90-53 cents, its midpoint of a loss of 26.5 cents compares unfavorably with fiscal 2021 reported figure of a loss of 15 cents.
Business Developments
Management has entered a rebate aggregation agreement with Prime Therapeutics to drive value for Elixir’s PBM clients. The company also launched a store closure program to lower costs and drive profitability. The first phase of the program has started with 63 store closures, which is likely to benefit EBITDA by $25 million on an annual basis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -34.52% due to these changes.
VGM Scores
At this time, Rite Aid has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Rite Aid has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.