By Sam Boughedda
Rite Aid (NYSE:RAD) shares plunged over 27% Thursday after the company reported earnings before the open, missing earnings expectations.
The company reported a second-quarter loss per share of $0.63, $0.13 worse than the analyst estimate of a loss of $0.50 per share, while revenue for the quarter came in at $5.9 billion versus the consensus estimate of $5.77 billion.
Looking ahead, Rite Aid sees its fiscal 2023 loss per share coming in between $1.52 to $0.97, versus the consensus of a loss per share of $1.39. Revenue for the period is expected to be between $23.6 billion and $24 billion, versus the consensus of $23.36 billion.
Following the earnings release, JPMorgan said the company's FY23 adjusted EBITDA guidance was reduced due to continued consumer pressure and supply chain challenges.
"This morning, RAD reported F2Q23 adjusted EBITDA of $78.5M, below our $116.9M estimate and Bloomberg consensus of $107M. Adjusted EPS of -$0.63 came in below our estimate of -$0.46 and Bloomberg consensus of -$0.50. Adjusted EBITDA of $31.5M came in -54.5% below our estimates for the Retail Pharmacy while Pharmacy Services segment saw adjusted EBITDA of $47.5m, exceeding our estimate of $35.9M. The company cited prescription growth and market share, improving operating margins at Elixir along with reductions in SG&A as relevant drivers to the quarter’s performance," wrote analysts.
"The company affirmed FY23 revenue guidance while reducing adjusted EBITDA guidance to $450M-$490M, which compares with our estimate of $480M and Bloomberg consensus of $458M, and down vs. $505M in FY22. In reducing guidance, the company indicated that it expects continued pressure on consumer spending and supply chain challenges, with continued strong performance at Elixir and further SG&A expense mitigating some headwind," they added.
Meanwhile, Evercore ISI told investors in a note that Rite-Aid revenues held up reasonably well in the quarter, beating expectations.
"However, Retail EBITDA collapsed (down >50% qoq) given a 50 bps qoq (160 bps yoy) decline in gross margin and a 1.7% increase in SG&A/store (deleveraging in a high fixed cost industry is ugly). RAD did 875K COVID tests in the Q (~$17.5 MM of EBITDA out of $31.5 MM Retail EBITDA) and sold >3 MM antigen tests, raising questions about core profitability going forward. Pharmacy Services EBITDA beat expectations, almost doubling qoq," they added.