Rite Aid — Investor Presentation (August 2017)
31 slides from Rite Aid's investor presentation, Aug 9, 2017
Slide 1: Investor Presentation August 9, 2017
RITE With us, its personal. INVESTOR PRESENTATION August 9, 2017
Slide 2: Safe Harbor Statement: Forward-Looking Statements
Safe Harbor Statement CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: Statements in this presentation that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but ar
Slide 3: Safe Harbor Statement: Pro Forma Information
Safe Harbor Statement CAUTIONARY NOTE REGARDING PRO FORMA INFORMATION: The following presentation provides certain pro forma information regarding the impact of Rite Aid’s proposed sale of stores and assets to Walgreens Boots Alliance, Inc. on Rite Aid’s results of operations and capital structure.
Slide 4: Non-GAAP Financial Measures
Non-GAAP Financial Measures The following presentation includes a non-GAAP financial measure, Adjusted EBITDA. Rite Aid defines Adjusted EBITDA as net income excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closi
Slide 5: Current Rite Aid Company Overview
Current Rite Aid Company Overview Key Metrics 4,523 Stores in 31 States as of May 2017 Full-Service Pharmacy Benefit Management Company(EnvisionRx) with 4 million lives under management Fills over 300 million scripts per year in retail pharmacy Approximately $26.5 billion in Retail Pharmacy Sales an
Slide 6: Recent Financial Performance
5.0% 4.6% 3.5% 3.2% Recent Financial Performance Adj. EBITDA ($ in millions) Comparable Store Sales Growth Net Leverage Net Debt / Adj. EBITDA Note: Fiscal year ending February. (1)Same store script count adjusted to 30-day equivalents. Adj. EBITDA % Margin: Front End Sales Rx Sales Script Count(1)
Slide 7: Summary of Recent Performance
Summary of Recent Performance Front end comparable sales growth in line with industry competitors –front end gross margin has improved Recent Rx sales decline driven by reimbursement rate pressure Q1 script count declines driven by the exclusion from certain pharmacy networks that we participated in
Slide 8: Q1 Fiscal 2018 Results: Retail Pharmacy Segment
Q1 -Fiscal 2018 ResultsRETAIL PHARMACY SEGMENT ($ in millions) Revenue6,350.2$ 6,675.5$ 26,491.3$ Adjusted EBITDA Gross Profit1,693.0$ 26.7%1,836.4$ 27.5%7,240.3$ 27.3%Adjusted EBITDA SG&A1,549.0$ 24.4%1,591.6$ 23.8%6,392.3$ 24.1%Adjusted EBITDA144.0$ 2.3%244.8$ 3.7%848.0$ 3.2%13 Weeks Ended June 3,
Slide 9: Near Term Initiatives: Retail Pharmacy Segment
Near Term InitiativesRETAIL PHARMACY SEGMENT Wellness Store Renovations Prescription File Buys Enhanced Pharmacy Services „{ Immunizations „{ MTM „{ One Trip Refill Loyalty Program Expense Reduction & Control Initiatives
Slide 10: Wellness Store Renovations
Wellness Store Renovations Comp results for Wellness stores continue to exceed the chain average(1) „{Front-end sales growth outperformance of 155 bps in Q1 of Fiscal 2018 „{Script count growth outperformance of 38 bps in Q1of Fiscal 2018 274 797 1,215 1,634 2,042 2,418 2,482 FY 2012 FY 2013 FY 2014
Slide 11: Immunization Trends
Immunization Trends 2,366 2,830 3,235 3,189 3,233 415 436 561 765 804 2,781 3,266 3,796 3,954 4,037 FY2013 FY2014 FY2015 FY2016 FY2017 Flu shots All Other (in thousands)
Slide 12: Wellness+ with Plenti
Wellness+ with Plenti 21.1 million active members 49% of Gold+ and Silver+ members shop at our stores every week Increased unique email count 430% since launce of Plenti (May 2015) $31.71 $41.05 $48.46 Bronze Silver Gold Wellness+ Members Wellness+ Penetration(1) $34.74 $38.15 Non-wellness+Members w
Slide 13: Q1 Fiscal 2018 Results: Pharmacy Services Segment
Q1 –Fiscal 2018 ResultsPHARMACY SERVICES SEGMENT ($ in millions) 13 Weeks Ended June 3, 201713 Weeks EndedMay 28, 201653 Weeks EndedJune 3, 2017Revenues1,513.2$ 1,602.4$ 6,304.7$ Gross Profit105.0$ 89.0$ 408.7$ Selling, General & Administrative Expense56.4 47.8 213.1 Adjusted EBITDA - Pharmacy Servi
Slide 14: EnvisionRx Business Overview
EnvisionRx Business Overview Highlights • Founded in 2001, operating a pass-through PBM focused on customer alignment and transparency •Added traditional capabilities with MedTrak acquisition •Steadfast commitment to customer savings and service •Recognized as Top-Tier PBM(2) •Over 21 million member
Slide 15: Multi-Pronged Growth Strategy
Multi-Pronged Growth Strategy Transparent Pass-through PBM •Core/Legacy EnvisionRxcompetency •Admin Fee •Point-of-Sale Rebates Traditional PBM •Acquired MedTrak in 2014 •Spread-based •Shared Rebates Envision Pharmacies •Leverage volume growth •Natural increase in mail penetration from large employer
Slide 16: Asset Purchase Agreement with WBA
Asset Purchase Agreement with WBA WBA has agreed to acquire 2,186 stores and certain distribution assets and inventory from Rite Aid for $5.175 billion on a cash-free, debt-free basis Transaction is subject to usual and customary closing conditions, including regulatory clearance Transaction does no
Slide 17: Strategic Rationale
Strategic Rationale Allows Rite Aid to significantly reduce leverage and provides flexibility to invest in the business More diversified business model „{ Reduces exposure to reimbursement rate pressure by virtue of reducing relative size of retail pharmacy business „{ Higher percentage of Adjusted
Slide 18: Current Store Profile
Current Store Profile Rite Aid States & Store Count Rite Aid Distribution Centers As of 6/3/2017 139 14 73 1 577 22 21 274 10 224 116 81 52 25 91 89 224 537 103 79 185 37 68 MA146 RI 43 CT 77 NJ 251 DE 42 D.C. 7 176 599 MD 140\
Slide 19: New Store Profile
New Store Profile Rite Aid States & Store Count Rite Aid Distribution Centers Pro Forma, as of 6/3/2017 139 9 73 1 577 4 274 217 2 4 4 1 1 8 535 2 1 80 6 62 MA10 RI 1 CT 22 NJ 100 DE 42 . 2 143 MD 13
Slide 20: Strong Presence in Key States
Strong Presence in Key States Note: Represents our position in CBSA’s where we have a presence, based on store count. Source is from Neilson Trade Dimensions data (February 2017). Stores 1st 2nd 3rd California 577 32% 35% 18% Pennsylvania 535 66% 21% 10% Michigan 274 72% 7% 7% Ohio 217 65% 12% 3% Ne
Slide 21: Asset Sale Pro-Forma Information: Key Assumptions
Asset Sale Pro-Forma Information –Key Assumptions Fiscal 2017 data presented on a 52 -week basis instead of on a 53-week basis, as reported for the fiscal year ended March 4, 2017 Net proceeds of $4.9 billion used to pay down debt (refer to "Sources and Uses" slide) Corporate administration costs ar
Slide 22: Pro-Forma Reconciliation of Net Income to Adjusted EBITDA
Pro-Forma Financial Information –Reconciliation of Net Income to Adjusted EBITDA ($ in thousands) (1) Includes adjustments to reflect results on a 52 week basis and account for the sale of the divested stores (except for recordingthe gain on sale), including, among other things, adjustments to refle
Slide 23: Pro-Forma Sources & Uses
Pro-Forma Sources & Uses ($ in millions) SourcesEstimated Purchase Price(1)5,175$ Merger Termination Fee325Total Sources5,500$ UsesEstimated Accrued Liabilities (Net of Retained Assets)(2)369$ Estimated Restructuring Charges and Transaction Costs100Estimated Income Tax Expense on Sale of Assets(3)11
Slide 24: Pro-Forma Store Metrics
Pro-Forma Store Metrics(as of and for the year ending March 4, 2017) (1) Per store sales and script information is presented on a 52 week basis and is derived from Rite Aid’s internal data. (2) Includes impact of Rite Aid’s proposed sale of 2,186 stores and other assets to WBA. Current Rite AidPro-F
Slide 25: Post Transaction Strategy
Post Transaction Strategy Script Growth „{ Increase level of file buys „{ Strategically target participation in limited and preferred networks Invest in the PBM ¡Vgrow lives through commercial wins and Med D participation Pharmacy Margins „{ Actively engage PBM and other payer partners now that the
Slide 26: Appendix
RITE With us, its personal. APPENDIX
Slide 27: Generic Calendar
Generic Calendar $21.3 $22.5 $19.5 $12.6 $8.2 2015 2016 2017 2018E 2019E Total Brand Market Sales of Expected Generic Launches Copaxone(20 mg) Abilify Nexium Seroquel Gleevec Crestor Viagra Truvada Copaxone(40 mg) Atripla Cialis Lyrica Gilenya ($ in billions)
Slide 28: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation of Net Loss to Adjusted EBITDA ($ in thousands) 13 Weeks EndedJune 3, 201713 Weeks Ended May 28, 201653 Weeks Ended June 3, 2017Net Loss(75,349)$ (4,588)$ (66,708)$ Adjustments:Interest expense109,937 105,113 436,815 Income tax (benefit) / expense(35,209) (6,309) 15,492 Depreciation a
Slide 29: Reconciliation of Adjusted EBITDA Gross Profit
Reconciliation of Adjusted EBITDA Gross ProfitRETAIL PHARMACY SEGMENT ($ in thousands) 13 Weeks EndedJune 3, 201713 Weeks Ended May 28, 201653 Weeks Ended June 3, 2017Revenues6,350,208$ 6,675,548$ 26,491,328$ Gross Profit1,654,062 1,805,367 7,230,028 Addback:LIFO charge / (credit)16,874 13,750 (3,49
Slide 30: Reconciliation of Adjusted EBITDA SG&A
Reconciliation of Adjusted EBITDA SG&ARETAIL PHARMACY SEGMENT ($ in thousands) 13 Weeks Ended June 3, 201713 Weeks Ended May 28, 201653 Weeks Ended June 3, 2017Total Revenues6,350,208$ 6,675,548$ 26,491,328$ Selling, general and administrative expenses1,682,391 1,723,903 6,907,348 Less:Depreciation
Slide 31: Rite Aid: With us, it's personal.
RITE ,AID, With us, its personal.