CAMP HILL, Pa. — As part of its ongoing efforts to closely manage and reduce costs, Rite Aid Corp. has eliminated 254 corporate office positions across its retail pharmacy and pharmacy services segments, the company reported in the release of its first quarter earnings.
Rite Aid has also taken steps to reduce other expenses, such as shrinking its advertising, rent, travel and call center expenses. In total, the company expects these reductions to result in savings of more than $40 million in fiscal 2021.
At the same time, the company posted a net loss from continuing operations of $72.7 million, or $1.36 per share; adjusted net loss from continuing operations of $2 million, or 4 cents per share; and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations of $107.4 million, or 1.8% of revenues.
Additionally, the company expects to incur severance costs of $7 million related to the elimination of various corporate positions, which will be classified as a restructuring expense.
Rite Aid currently has liquidity of approximately $1.7 billion, which consists of availability to borrow under its secured revolving credit facility of approximately $1.52 billion and cash on hand of approximately $180 million.
“I couldn’t be more proud of how our teams have worked tirelessly to support and care for our communities during these unprecedented times, while continuing to push forward in achieving our vision for the future,” said Rite Aid president and chief executive officer Heyward Donigan. “Our Retail Pharmacy teams responded to the COVID-19 crisis by taking immediate action to maintain our supply chain and stay in stock, enhance our digital experience, quickly implement safety measures, keep our stores open and provide outstanding service, all of which helped us drive double-digit front-end sales growth and gain retail market share.”
Donigan noted that Rite Aid’s full leadership team is now in place in the pharmacy services segment and has made “excellent progress” in integrating the assets of EnvisionRxOptions, soon to be renamed Elixir.
“There are certainly challenges brought about by COVID-19, including the decline in acute prescriptions and increased costs incurred to assure the safety of our associates and customers,” added Donigan. “No matter the challenge, we can execute our strategy and deliver day-to-day operational excellence in the face of a pandemic. I am amazed by the passion and spirit of our more than 50,000 associates, who have come to work every day driven by a desire to help customers stay healthy and demonstrating the essential role of pharmacy in our communities.”
Revenues from continuing operations for the first quarter, according to the earnings report, were $6.03 billion, compared to $5.37 billion in the prior-year quarter.
Retail pharmacy segment revenues were $4.12 billion, an increase of 6.7% compared to the prior-year period, due to a gain in same-store sales.
Revenues in the pharmacy services segment were $1.98 billion, an increase of 26.2% compared to the prior-year period, which was primarily due to an increase in Medicare Part D membership of approximately 252,000 compared to the prior-year period.
Retail pharmacy segment same-store sales from continuing operations for the first quarter increased 6.6% over the prior-year period, consisting of a 14.2% increase in front-end sales and a 2.2% increase in pharmacy sales.
Front-end same-store sales, excluding cigarettes and tobacco products, increased 16%, driven by increases in general cleaning products, sanitizers, wipes, paper products, liquor, over-the-counter products and summer seasonal items.
Rite Aid increased its front-end market share by 270 basis points in both dollar and unit sales.