Rite Aid Q4 results: Pharmacy causing pain

Following negative fourth quarter and FY 2023 results, Rite-Aid has mentioned a few cures moving forward, but all attention should be on the turnaround program, the company said.

The pharmacy reported a net loss of $241.3 million, an adjusted net loss of $68.2 million, and an adjusted EBITDA of $128.6 million for the fourth quarter, resulting in total adjusted EBITDA of $429.2 million for the fiscal year. For all of FY 2023, Rite-Aid, headquartered in Camp HIll, Pa., is looking at $749.9 million in net losses, which comes out to an adjusted net loss of $174.3 million and an adjusted EBITDA loss of $429.2 million.

Store closures, a total of 145 over the last year, and weakening COVID-19 vaccine and testing sales were the main culprits in the dismal financial numbers. Deepening the company’s troubles are bouts with lawsuits. Rite Aid and CVS were involved in a case accusing both of using a doctor’s name for prescription orders without the doctor’s approval. Rite Aid pharmacists also have been involved in a suit where they allegedly ignored guidance given regarding the distribution of controlled substances. Rite Aid is accused of violating the False Claims Act by submitting false subscription claims to Medicare, Medicaid and other government healthcare programs.

Related:Court turns tables on Rite Aid, CVS in controlled substance case

With the fourth quarter and all of FY 2023 in the background, the company will focus efforts on a turnaround program that will include:

More specifically, Rite Aid wants to see a reduction in abandoned scripts through messaging and in-store execution, improved retention from acquisition efforts, an elevation in price management responsiveness, promo optimization, and product mix, more shelf-space efficiency, an increased penetration in owned brands, and targeted negotiations with suppliers. Rite Aid also wants to lean on generic drug purchases.

The fourth quarter financial news was not all bad for Rite Aid, as revenues in the retail pharmacy segment increased 8.2% vs. fourth quarter 2022 and same store sales were up 8.9%. The extra week helped the fourth quarter sales.

“Our fourth quarter results were at the higher end of our guidance and above consensus, driven by encouraging results in retail pharmacy and year-over-year improvement for the quarter at Elixir,” said Elizabeth “Busy” Burr, interim chief executive officer. “We are making progress in our turnaround program to drive performance acceleration that we expect will help mitigate fiscal 2024 challenges related to reimbursement, COVID headwinds and enrollment at Elixir, and to drive meaningful Adjusted EBITDA growth in fiscal 2025 and 2026.”

Related:Rite Aid expands retail delivery partnership with Amazon

Elixir is Rite Aid’s pharmacy benefit management subsidiary, and the company wants to scale it to include:

Unfortunately it looks like the bleeding will continue in FY 2024, where the company is projecting losses that could be as much as $466 million.