Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 28, 2022 | Jun. 22, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | May 28, 2022 | |
Current Fiscal Year End Date | --03-04 | |
Entity File Number | 1-5742 | |
Entity Registrant Name | RITE AID CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 23-1614034 | |
Entity Address, Address Line One | 30 Hunter Lane | |
Entity Address, City or Town | Camp Hill | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 17011 | |
City Area Code | 717 | |
Local Phone Number | 761-2633 | |
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | RAD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,626,790 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000084129 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 56,060 | $ 39,721 |
Accounts receivable, net | 1,449,745 | 1,343,496 |
Inventories, net of LIFO reserve of $487,173 and $487,173 | 1,974,759 | 1,959,389 |
Prepaid expenses and other current assets | 88,860 | 106,749 |
Total current assets | 3,569,424 | 3,449,355 |
Property, plant and equipment, net | 985,121 | 989,167 |
Operating lease right-of-use assets | 2,723,405 | 2,813,535 |
Goodwill | 879,136 | 879,136 |
Other intangibles, net | 282,950 | 291,196 |
Deferred tax assets | 20,071 | 20,071 |
Other assets | 89,666 | 86,543 |
Total assets | 8,549,773 | 8,529,003 |
Current liabilities: | ||
Current maturities of long-term debt and lease financing obligations | 5,016 | 5,544 |
Accounts payable | 1,461,238 | 1,571,261 |
Accrued salaries, wages and other current liabilities | 787,591 | 780,632 |
Current portion of operating lease liabilities | 574,392 | 575,651 |
Total current liabilities | 2,828,237 | 2,933,088 |
Long-term debt, less current maturities | 3,026,456 | 2,732,986 |
Long-term operating lease liabilities | 2,526,607 | 2,597,090 |
Lease financing obligations, less current maturities | 14,392 | 14,830 |
Other noncurrent liabilities | 162,457 | 151,976 |
Total liabilities | 8,558,149 | 8,429,970 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 55,623 and 55,752 | 55,623 | 55,752 |
Additional paid-in capital | 5,913,210 | 5,910,299 |
Accumulated deficit | (5,961,772) | (5,851,581) |
Accumulated other comprehensive loss | (15,437) | (15,437) |
Total stockholders' equity | (8,376) | 99,033 |
Total liabilities and stockholders' equity | $ 8,549,773 | $ 8,529,003 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Inventory, LIFO Reserve | $ 487,173 | $ 487,173 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 75,000 | 75,000 |
Common stock, shares issued | 55,623 | 55,752 |
Common stock, shares outstanding | 55,623 | 55,752 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 6,014,583 | $ 6,160,985 |
Costs and expenses: | ||
Cost of revenues | 4,817,854 | 4,876,110 |
Selling, general and administrative expenses | 1,217,929 | 1,245,362 |
Facility exit and impairment charges | 66,571 | 8,831 |
Interest expense | 48,119 | 49,121 |
Loss on debt retirements, net | 396 | |
Gain on sale of assets, net | (29,196) | (6,558) |
Total costs and expenses | 6,121,277 | 6,173,262 |
Loss before income taxes | (106,694) | (12,277) |
Income tax expense | 3,497 | 780 |
Net loss | (110,191) | (13,057) |
Net loss | (110,191) | (13,057) |
Computation of loss attributable to common stockholders: | ||
Net loss attributable to common stockholders - basic | (110,191) | (13,057) |
Net loss attributable to common stockholders - diluted | $ (110,191) | $ (13,057) |
Basic loss per share: | ||
Basic loss per share | $ (2.03) | $ (0.24) |
Diluted loss per share: | ||
Diluted loss per share | $ (2.03) | $ (0.24) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS $ in Thousands | 3 Months Ended |
May 29, 2021 USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |
Net loss | $ (13,057) |
Defined benefit pension plans: | |
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 income tax expense | 123 |
Change in fair value of interest rate cap | 27 |
Total other comprehensive income | 150 |
Comprehensive loss | $ (12,907) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Amortization of net actuarial losses included in net periodic pension cost, income tax expense | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) | Total |
Balance - beginning of period at Feb. 27, 2021 | $ 55,143 | $ 5,897,168 | $ (5,313,103) | $ (24,054) | $ 615,154 |
BALANCE (in shares) at Feb. 27, 2021 | 55,143 | ||||
Increase (Decrease) in Stockholders' Deficit | |||||
Net loss | (13,057) | (13,057) | |||
Other comprehensive loss: | |||||
Changes in Defined Benefit Plans, net of $0 tax expense | 123 | 123 | |||
Change in fair value of interest rate cap | 27 | 27 | |||
Comprehensive loss | (12,907) | ||||
Exchange of restricted shares for taxes | $ (2) | (33) | (35) | ||
Exchange of restricted shares for taxes (in shares) | (2) | ||||
Cancellation of restricted stock | $ (48) | 48 | |||
Cancellation of restricted stock (in shares) | (48) | ||||
Amortization of restricted stock balance | 1,618 | 1,618 | |||
Stock-based compensation expense | 150 | 150 | |||
Balance - end of period at May. 29, 2021 | $ 55,093 | 5,898,951 | (5,326,160) | (23,904) | 603,980 |
BALANCE (in shares) at May. 29, 2021 | 55,093 | ||||
Balance - beginning of period at Feb. 26, 2022 | $ 55,752 | 5,910,299 | (5,851,581) | (15,437) | 99,033 |
BALANCE (in shares) at Feb. 26, 2022 | 55,752 | ||||
Increase (Decrease) in Stockholders' Deficit | |||||
Net loss | (110,191) | (110,191) | |||
Other comprehensive loss: | |||||
Comprehensive loss | (110,191) | ||||
Issuance of restricted stock | $ 61 | (61) | |||
Issuance of restricted stock (in shares) | 61 | ||||
Exchange of restricted shares for taxes | $ (63) | (490) | (553) | ||
Exchange of restricted shares for taxes (in shares) | (63) | ||||
Cancellation of restricted stock | $ (127) | 127 | |||
Cancellation of restricted stock (in shares) | (127) | ||||
Amortization of restricted stock balance | 3,324 | 3,324 | |||
Stock-based compensation expense | 201 | 201 | |||
Amortization of performance-based incentive plans | (190) | (190) | |||
Balance - end of period at May. 28, 2022 | $ 55,623 | $ 5,913,210 | $ (5,961,772) | $ (15,437) | $ (8,376) |
BALANCE (in shares) at May. 28, 2022 | 55,623 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||
Changes in defined benefit plans, tax expense | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Operating activities: | ||
Net loss | $ (110,191) | $ (13,057) |
Net loss from continuing operations | (110,191) | (13,057) |
Adjustments to reconcile to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 70,073 | 75,859 |
Facility exit and impairment charges | 66,571 | 8,831 |
LIFO credit | (3,993) | |
Gain on sale of assets, net | (29,196) | (6,558) |
Change in allowances for uncollectible accounts receivable | 3,763 | |
Stock-based compensation expense | 3,334 | 2,811 |
Loss on debt retirements, net | 396 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (104,458) | (149,487) |
Inventories | (15,827) | 11,918 |
Accounts payable | (137,572) | 50,527 |
Operating lease right-of-use assets and operating lease liabilities | (14,812) | (5,909) |
Other assets | 751 | 7,978 |
Other liabilities | 15,327 | 34,559 |
Net cash (used in) provided by operating activities | (252,237) | 13,875 |
Investing activities: | ||
Payments for property, plant and equipment | (73,176) | (59,164) |
Intangible assets acquired | (12,248) | (5,436) |
Proceeds from dispositions of assets and investments | 30,839 | 2,448 |
Proceeds from sale-leaseback transactions | 7,456 | |
Net cash used in investing activities | (54,585) | (54,696) |
Financing activities: | ||
Net proceeds from revolver | 291,000 | 39,000 |
Principal payments on long-term debt | (977) | (91,941) |
Change in zero balance cash accounts | 33,691 | 51,957 |
Financing fees paid for early debt redemption | (2) | |
Payments for taxes related to net share settlement of equity awards | (553) | (35) |
Deferred financing costs paid | (580) | |
Net cash provided by (used in) financing activities | 323,161 | (1,601) |
Increase (decrease) in cash and cash equivalents | 16,339 | (42,422) |
Cash and cash equivalents, beginning of period | 39,721 | 160,902 |
Cash and cash equivalents, end of period | $ 56,060 | $ 118,480 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
May 28, 2022 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | 1. Basis of Presentation and Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2022 10-K. Revenue Recognition The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 28, 2022 and May 29, 2021: May 28, May 29, 2022 2021 In thousands (13 Weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 3,053,449 $ 2,997,044 Front-end sales 1,261,206 1,321,699 Other revenue 30,701 32,939 Total Retail Pharmacy segment 4,345,356 4,351,682 Pharmacy Services segment 1,725,857 1,872,282 Intersegment elimination (56,630) (62,979) Total revenue $ 6,014,583 $ 6,160,985 The Retail Pharmacy segment offered a chain-wide loyalty card program titled wellness+. Individual customers were able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earned points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. The wellness+ program was terminated as of July 1, 2020, with benefits earned as of that date available to be used through the end of calendar 2020. Beginning in December 2020, the Company granted temporary extensions of benefits to certain previous members that were eligible for a discount as of the end of each previous 6 month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent 6 months with no additional purchase requirement. New and existing customers who were not already eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each 6 month period. A final extension was granted on December 31, 2021 through February 26, 2022 at which point all discounts were terminated. A new loyalty program, Rite Aid Rewards, was initiated on February 27, 2022. Customers that enroll in the new program earn points for each dollar spent on front of store purchases as well as for eligible pharmacy prescriptions. Points can then be converted into a “Rite Aid Rewards” coupon that can be tendered as payment in a future purchase. Each point is worth $0.002. Customers must accumulate 1,000 points and create an online account in order to convert earned points to a “Rite Aid Rewards” coupon. Unused/unconverted points expire after 90 days . Unredeemed “Rite Aid Rewards” coupons expire 30 days after conversion from points earned. Points earned pursuant to the Rite Aid Rewards program represent a performance obligation. The value of unredeemed Rite Aid Rewards points is deferred as a contract liability (included in other current liabilities). As members redeem points in the form of a Rite Aid Rewards coupon or when points or unredeemed Rite Aid Rewards coupons expire, the Retail Pharmacy segment recognizes the redeemed/expired portion of the deferred contract liability into revenue. For the thirteen week period ended May 28, 2022, the Company recognized $713 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $5,577 and $0 as of May 28, 2022 and February 26, 2022, respectively. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) |
Acquisition
Acquisition | 3 Months Ended |
May 28, 2022 | |
Acquisition | |
Acquisition | 2. Acquisition On December 18, 2020, pursuant to that certain stock purchase agreement, dated as of October 7, 2020, by and between the Company and Bartell Drug Company (“Bartell”), the Company acquired Bartell (the “Acquisition”), a Washington corporation, for approximately $89,724 in cash, subject to certain customary post-closing working capital adjustments. The Company financed the Acquisition with borrowings under its Senior Secured Revolving Credit Facility together with cash on hand. Bartell operated 67 retail drug stores and one distribution center in the greater Seattle, Washington area. Bartell operates as a 100 percent owned subsidiary of the Company within its Retail Pharmacy segment. The Company’s condensed consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021 include Bartell’s results of operations. The Company’s condensed consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the Acquisition date. The following allocation of the purchase price and the estimated transaction costs is final: Final purchase price Cash consideration $ 89,724 Total 89,724 Final purchase price allocation Cash and cash equivalents $ 3,494 Accounts receivable 23,860 Inventories 67,745 Prepaid expenses and other current assets 1,857 Total current assets 96,956 Property and equipment 28,229 Operating lease right-of-use assets 143,651 Intangible assets(1) 68,700 Other assets 1,805 Total assets acquired 339,341 Accounts payable 24,166 Accrued salaries, wages and other current liabilities 20,335 Current portion of operating lease liabilities 24,617 Total current liabilities 69,118 Long-term operating lease liabilities 124,023 Other long-term liabilities 166 Total liabilities assumed 193,307 Deferred tax liabilities recorded on purchase 13,951 Net assets acquired 132,083 Bargain purchase gain (42,359) Total purchase price $ 89,724 (1) Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes a final valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s final estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation include: Estimated Fair Value Estimated Useful Life (In Years) Prescription files $ 54,300 10 Tradename 14,400 Indefinite Total $ 68,700 During the thirteen week period ended February 27, 2021, the Company recorded a gain on Bartell acquisition of $47,705 primarily due to fair value adjustments related to prescription files and the tradename compared to book values. During the thirteen week period ended November 27, 2021, in connection with determining its final purchase price allocation, the Company recorded a loss on Bartell acquisition of $5,346 primarily due to contract termination charges, inventory valuation adjustments and changes in deferred income taxes, resulting in a net bargain purchase gain of $42,359. The Company believes that the bargain purchase gain was primarily the result of the decision by the Bartell stockholders to sell their interests as Bartell had been experiencing increasing borrowings under its credit agreements to meet its operating needs and increasing net losses. The agreed upon purchase price reflected the fact the seller would have needed to incur further significant debt to cover the operating costs of Bartell, which would have required amendments to its credit arrangements. With the Company’s existing infrastructure, scale and expertise, the Company believes that it has access to the necessary synergies to allow necessary operational improvements to be implemented more efficiently than the seller was capable of. During the thirteen week periods ended May 28, 2022 and May 29, 2021, acquisition costs of $0 and $3,886 were expensed as incurred. |
Restructuring
Restructuring | 3 Months Ended |
May 28, 2022 | |
Restructuring | |
Restructuring | 3. Restructuring Beginning in fiscal 2019, the Company initiated a series of restructuring plans designed to reorganize its executive management team, reduce managerial layers, and consolidate roles. In March 2020, the Company announced the details of its RxEvolution strategy, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in its front-end offering to free up working capital and update its merchandise assortment, assessing its pricing and promotional strategy, rebranding its retail pharmacy and pharmacy services business, launching its Store of the Future format and further reducing SG&A and headcount, including integrating certain back office functions in the Pharmacy Services segment both within the segment and across Rite Aid. Other strategic initiatives include the expansion of the Company’s digital business, replacing and updating the Company’s financial systems to improve efficiency, and movement to a common client platform at Elixir. In April 2022, the Company announced further strategic initiatives to reduce costs through the closure of unprofitable stores, reducing corporate administration expenses and improving efficiencies in worked payroll and other store labor costs as well as expense reductions at the Pharmacy Services segment. These and future restructuring activities are expected to provide future growth and expense efficiency benefits. There can be no assurance that the Company’s current and future restructuring charges will achieve the cost savings and remerchandising benefits in the amounts or time anticipated. For the thirteen week period ended May 28, 2022, the Company incurred total restructuring-related costs of $22,646, which are included as a component of SG&A. These costs are as follows: Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ 11,288 $ 616 $ 11,904 Professional and other fees relating to restructuring activities (b) 6,083 4,659 10,742 Total restructuring-related costs $ 17,371 $ 5,275 $ 22,646 For the thirteen week period ended May 29, 2021, the Company incurred total restructuring-related costs of $5,932, which are included as a component of SG&A. These costs are as follows: Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ — $ 506 $ 506 Professional and other fees relating to restructuring activities (b) 1,621 3,805 5,426 Total restructuring-related costs $ 1,621 $ 4,311 $ 5,932 A summary of activity for the thirteen week period ended May 28, 2022 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows: Severance and related Professional and costs (a) other fees (b) Total Balance at February 26, 2022 $ 4,257 $ 4,463 $ 8,720 Additions charged to expense 11,904 10,742 22,646 Cash payments (5,231) (11,727) (16,958) Balance at May 28, 2022 $ 10,930 $ 3,478 $ 14,408 (a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts. (b) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities. The Company anticipates incurring approximately $60,000 during fiscal 2023 in connection with its continued restructuring activities. |
Income (Loss) Per Share
Income (Loss) Per Share | 3 Months Ended |
May 28, 2022 | |
Income (Loss) Per Share | |
Income (Loss) Per Share | 4. Income (Loss) Per Share Basic income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company, subject to anti-dilution limitations. Thirteen Week Period Ended May 28, May 29, 2022 2021 Basic and diluted loss per share: Numerator: Net loss attributable to common stockholders— basic and diluted $ (110,191) $ (13,057) Denominator: Basic and diluted weighted average shares 54,348 53,852 Basic and diluted loss per share $ (2.03) $ (0.24) Due to their antidilutive effect, 700 and 773 potential shares related to stock options have been excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. Also, excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021 are restricted shares of 1,247 and 1,240, respectively, which are included in shares outstanding. |
Facility Exit and Impairment Ch
Facility Exit and Impairment Charges | 3 Months Ended |
May 28, 2022 | |
Facility Exit and Impairment Charges | |
Facility Exit and Impairment Charges | 5. Facility Exit and Impairment Charges Facility exit and impairment charges consist of amounts as follows: Thirteen Week Period Ended May 28, May 29, 2022 2021 Impairment charges $ 35,036 $ 4,313 Facility exit charges 31,535 4,518 $ 66,571 $ 8,831 Impairment Charges These amounts include the write-down of long-lived assets at locations that were assessed for impairment because of management’s intention to relocate or close the location or because of changes in circumstances that indicated the carrying value of an asset may not be recoverable. The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following: ● Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. ● Level 2—Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. ● Level 3—Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk. Non-Financial Assets Measured on a Non-Recurring Basis Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 2 and Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 2 inputs is determined by evaluating the current economic conditions in the geographic area for similar use assets. The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases or decreases in actual cash flows may result in valuation changes. During the thirteen week period ended May 28, 2022, long-lived assets with a carrying value of $39,228, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $4,192, resulting in an impairment charge of $35,036. During the thirteen week period ended May 29, 2021, long-lived assets with a carrying value of $4,313, primarily right-of-use assets in connection with leased office spaces, were written down to their fair value of $0, resulting in an impairment charge of $4,313. If our actual future cash flows differ from our projections materially, certain stores that are either not impaired or partially impaired in the current period may be further impaired in future periods. The following table presents fair values for those assets measured at fair value on a non-recurring basis at May 28, 2022 and May 29, 2021: Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date May 28, 2022 Long-lived assets held for use $ — $ 4,192 $ — $ 4,192 $ (35,036) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ 4,192 $ — $ 4,192 $ (35,036) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date May 29, 2021 Long-lived assets held for use $ — $ — $ — $ — $ (4,313) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (4,313) The above assets reflected in the caption Long-lived assets held for sale are separate and apart from the Assets to be Sold and due to their immateriality have not been reclassified to assets held for sale. Facility Exit Charges As part of the Company's ongoing business activities, the Company assesses stores and distribution centers for potential closure or relocation. Decisions to close or relocate stores or distribution centers in future periods would result in facility exit charges and inventory liquidation charges, as well as impairment of assets at these locations. When a store or distribution center is closed, the Company records an expense for unrecoverable costs and accrues a liability equal to the present value at current credit adjusted risk-free interest rates of any anticipated executory costs which are not included within the store or distribution center's respective lease liability under Topic 842. Other store or distribution center closing and liquidation costs are expensed when incurred. The following table reflects changes in the Company’s closed store liability relating to closed store and distribution center charges for new closures, changes in assumptions and interest accretion: Thirteen Week Period Ended May 28, May 29, 2022 2021 Balance—beginning of period $ 18,688 $ 3,443 Provision for present value of executory costs for leases exited 26,499 1,708 Changes in assumptions and other adjustments (191) 1,493 Interest accretion 98 7 Cash payments (1,692) (516) Balance—end of period $ 43,402 $ 6,135 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
May 28, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 6. Fair Value Measurements The Company utilizes the three-level valuation hierarchy as described in Note 5, Facility Exit and Impairment Charges, Financial instruments other than long-term indebtedness include cash and cash equivalents, accounts receivable and accounts payable. These instruments are recorded at book value, which we believe approximate their fair values due to their short term nature. In addition, as of May 28, 2022 and February 26, 2022, the Company has $7,186 and $7,406, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of other assets. The Company believes the carrying value of these investments approximates their fair value. The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility is estimated based on the quoted market price of the financial instrument which is considered Level 1 of the fair value hierarchy. The fair values of substantially all of the Company’s other long-term indebtedness are estimated based on quoted market prices of the financial instruments which are considered Level 1 of the fair value hierarchy. The carrying amount and estimated fair value of the Company’s total long-term indebtedness was $3,026,456 and $2,677,190, respectively, as of May 28, 2022. The carrying amount and estimated fair value of the Company's total long-term indebtedness was $2,732,986 and $2,661,122, respectively, as of February 26, 2022. |
Income Taxes
Income Taxes | 3 Months Ended |
May 28, 2022 | |
Income Taxes | |
Income Taxes | 7. Income Taxes The Company recorded an income tax expense of $3,497 and $780 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was (3.3)% and (6.4)%, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was net of an adjustment of (37.6)% and (18.5)%, respectively, to adjust the valuation allowance against deferred tax assets. The Company recognizes tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. The Company believes that it is reasonably possible that a decrease of up to $25,130 in unrecognized tax benefits related to state exposures may be necessary in the next twelve months; however, management does not expect the change to have a material impact on the results of operations or the financial position of the Company. The Company regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain. Management will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. The Company continues to maintain a valuation allowance against net deferred tax assets of $1,862,823 and $1,822,710, which relates to federal and state deferred tax assets that may not be realized based on the Company's future projections of taxable income at May 28, 2022 and February 26, 2022, respectively. |
Medicare Part D
Medicare Part D | 3 Months Ended |
May 28, 2022 | |
Medicare Part D | |
Medicare Part D | 8. Medicare Part D The Company offers Medicare Part D benefits through Elixir Insurance (“EI”), which has contracted with CMS to be a Prescription Drug Plan (“PDP”) and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bearing entity regulated under state insurance laws or similar statutes. EI is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these laws and regulations, EI must file quarterly and annual reports with the National Association of Insurance Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus under formulas established by certain states and must, in certain circumstances, request and receive the approval of certain state regulators before making dividend payments or other capital distributions to the Company. The Company does not believe these limitations on dividends and distributions materially impact its financial position. EI is subject to minimum capital and surplus requirements in certain states. The minimum amount of capital and surplus required to satisfy regulatory requirements in these states is $8,323 as of March 31, 2022. EI was in excess of the minimum required amounts in these states as of May 28, 2022. The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidies, reinsurance amounts, and coverage gap discount amounts ultimately payable to or receivable from CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported. On August 12, 2021, the Company entered into a receivable purchase agreement (the “August 2021 Receivable Purchase Agreement”) with Bank of America, N.A. (the “Purchaser”). Pursuant to the terms and conditions set forth in the August 2021 Receivable Purchase Agreement, the Company sold $271,829, a portion of its calendar 2021 CMS receivable, for $258,116, of which $239,360 was received on August 12, 2021. The remaining $18,756, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,713, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended August 28, 2021. On August 12, 2021, concurrent with the August 2021 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “August 2021 Indemnity Agreement”), whereby the Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the August 2021 Indemnity Agreement. Based on its evaluation of the August 2021 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the August 2021 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the August 2021 Indemnity Agreement. On January 24, 2022, the Company entered into a receivable purchase agreement (the “January 2022 Receivable Purchase Agreement”) with Purchaser. Pursuant to the terms and conditions set forth in the January 2022 Receivable Purchase Agreement, the Company sold $400,680, a portion of its calendar 2021 CMS receivable, for $387,035, of which $359,388 was received on January 24, 2022. The remaining $27,647, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,645, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended February 26, 2022. On January 24, 2022, concurrent with the January 2022 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “January 2022 Indemnity Agreement”), whereby the Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the January 2022 Indemnity Agreement. Based on its evaluation of the January 2022 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the January 2022 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the January 2022 Indemnity Agreement. As of May 28, 2022 and February 26, 2022 accounts receivable, net included $36,147 and $34,898 due from the Purchaser, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance for the respective calendar years from CMS. As of May 28, 2022, and February 26, 2022, accounts receivable, net included $155,397 and $63,203 due from CMS. |
Manufacturer Rebates Receivable
Manufacturer Rebates Receivables | 3 Months Ended |
May 28, 2022 | |
Manufacturer Rebates Receivables | |
Manufacturer Rebates Receivables | 9. Manufacturer Rebates Receivables The Pharmacy Services Segment has manufacturer rebates receivables due directly from manufacturers and from our rebate aggregator of $563,389 and $535,620 included in accounts receivable, net of an allowance for uncollectible rebates of $15,295 and $18,796, as of May 28, 2022 and February 26, 2022, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
May 28, 2022 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 10. Goodwill and Other Intangible Assets At May 28, 2022, the goodwill related to the Pharmacy Services segment is at risk of future impairment if the fair value of this segment, and its associated assets, decrease in value due to further declines in its operating results or an inability to execute management’s business strategies. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates. If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. As of May 28, 2022, the Pharmacy Services segment had goodwill of $835,644. The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of May 28, 2022 and February 26, 2022. May 28, 2022 February 26, 2022 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 199,351 $ (179,046) $ 20,305 3 years $ 197,651 $ (178,958) $ 18,693 3 years Prescription files 1,026,342 (914,911) 111,431 5 years 1,030,169 (918,773) 111,396 6 years Customer relationships(a) 388,000 (291,770) 96,230 9 years 388,000 (286,090) 101,910 10 years CMS license 57,500 (17,478) 40,022 4 years 57,500 (15,372) 42,128 5 years Claims adjudication and other developed software 58,985 (58,423) 562 0 years 58,985 (56,316) 2,669 1 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,741,678 $ (1,473,128) 268,550 $ 1,743,805 $ (1,467,009) $ 276,796 Trademarks 14,400 — 14,400 Indefinite 14,400 — 14,400 Indefinite Total $ 1,756,078 $ (1,473,128) $ 282,950 $ 1,758,205 $ (1,467,009) $ 291,196 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. The Company is continuing to reposition its approach to the Elixir Insurance Part D business including an expectation of a purposeful shrinkage of the business. As a result, at the end of fiscal 2022, the Company adjusted the remaining amortization period of the CMS License to 5 years. Prior to such adjustment, the remaining life was 19 years. Amortization expense for these intangible assets and liabilities was $20,626 and $20,460 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2023—$71,185; 2024—$57,613; 2025—$46,393; 2026—$35,802 and 2027—$28,815. |
Indebtedness and Credit Agreeme
Indebtedness and Credit Agreements | 3 Months Ended |
May 28, 2022 | |
Indebtedness and Credit Agreements | |
Indebtedness and Credit Agreements | 11. Indebtedness and Credit Agreement Following is a summary of indebtedness and lease financing obligations at May 28, 2022 and February 26, 2022: May 28, February 26, 2022 2022 Secured Debt: Senior secured revolving credit facility due August 2026 ($1,000,000 and $709,000 face value less unamortized debt issuance costs of $16,992 and $18,010) 983,008 690,990 FILO Term Loan due August 2026 ($350,000 face value less unamortized debt issuance costs of $2,211 and $2,344) 347,789 347,656 1,330,797 1,038,646 Second Lien Secured Debt: 7.5% senior secured notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $6,311 and $6,824) 593,689 593,176 8.0% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $13,628 and $14,397) 836,290 835,521 1,429,979 1,428,697 Unguaranteed Unsecured Debt: 7.7% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $609 and $642) 236,777 236,744 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $98 and $102) 28,903 28,899 265,680 265,643 Lease financing obligations 19,408 20,374 Total debt 3,045,864 2,753,360 Current maturities of long-term debt and lease financing obligations (5,016) (5,544) Long-term debt and lease financing obligations, less current maturities $ 3,040,848 $ 2,747,816 Credit Facility On December 20, 2018, the Company entered into a senior secured credit agreement (as amended by the First Amendment to Credit Agreement, dated as of January 6, 2020, the “Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Amended Credit Agreement”), which Credit Agreement provided for facilities consisting of a $2,700,000 senior secured asset-based revolving credit facility (“Initial Senior Secured Revolving Credit Facility”) and a $450,000 “first-in, last out” senior secured term loan facility (“Initial Senior Secured Term Loan,” and together with the Initial Senior Secured Revolving Credit Facility, collectively, the “Initial Facilities”). In December 2018, the Company used proceeds from the Initial Facilities to refinance its prior $2,700,000 existing credit agreement. On August 20, 2021, the Company entered in to the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Credit Agreement to provide for a $2,800,000 senior secured asset-based revolving credit facility (“Senior Secured Revolving Credit Facility” or “revolver”) and a $350,000 “first-in, last out” senior secured term loan facility (“Senior Secured Term Loan” or “Term Loan” and together with the Senior Secured Revolving Credit Facility, collectively, the “Amended Facilities”) and incorporate customary “hardwired” LIBOR transition provisions. The Amended Facilities extend the Company’s debt maturity profile and provide additional liquidity. Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, a base rate (determined in a customary manner) plus a margin of between 0.25% to 0.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of between 1.25% and 1.75%, in each case based upon the Average ABL Availability (as defined in the Amended Credit Agreement). Borrowings under the Senior Secured Term Loan bear interest at a rate per annum equal to, at the Company’s option, (x) a base rate (determined in a customary manner) plus a margin of 1.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of 2.75%. The Company is required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Amended Credit Agreement). The Company’s borrowing capacity under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 28, 2022, the Company had $1,350,000 of borrowings outstanding under the Amended Facilities and had letters of credit outstanding under the Senior Secured Revolving Credit Facility in a face amount of $127,696, which resulted in remaining borrowing capacity under the Senior Secured Revolving Credit Facility of $1,672,304. If at any time the total credit exposure outstanding under the Senior Secured Revolving Credit Facility exceeds the borrowing base, the Company will be required to repay amounts outstanding to eliminate such shortfall. The Amended Credit Agreement restricts the Company and all of its subsidiaries that guarantee its obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes (collectively, the “Subsidiary Guarantors”) from accumulating cash on hand in excess of $200,000 at any time when revolving loans are outstanding (not including cash located in store and lockbox deposit accounts and cash necessary to cover current liabilities). The Amended Credit Agreement also states that if at any time (other than following the exercise of remedies or acceleration of any senior obligations or second priority debt and receipt of a triggering notice by the senior collateral agent from a representative of the senior obligations or the second priority debt) either (i) an event of default exists under the Amended Facilities or (ii) the sum of the Company’s borrowing capacity under the Senior Secured Revolving Credit Facility and certain amounts held on deposit with the senior collateral agent in a concentration account is less than $275,000 for three consecutive business days or less than or equal to $200,000 on any day (a “cash sweep period”), the funds in the Company’s deposit accounts will be swept to a concentration account with the senior collateral agent and will be applied first to repay outstanding revolving loans under the Amended Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Amended Facilities. With the exception of EI, substantially all of Rite Aid Corporation’s 100% owned subsidiaries guarantee the obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes. The Company’s obligations under the Amended Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations. The subsidiary guarantees related to the Company’s Amended Facilities, the secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. The Company has no independent assets or operations. Other than EI, the subsidiaries, including joint ventures, that do not guarantee the Amended Facilities and applicable notes, are minor. The Amended Credit Agreement allows the Company to have outstanding, at any time, up to an aggregate principal amount of $1,500,000 in secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Amended Facilities and existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest maturity date of any Term Loan or Other Revolving Commitment (each as defined in the Amended Credit Agreement) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date). Subject to the limitations described in the immediately preceding sentence, the Amended Credit Agreement additionally allows the Company to issue or incur an unlimited amount of unsecured debt and disqualified preferred stock so long as a Financial Covenant Effectiveness Period (as defined in the Amended Credit Agreement) is not in effect; provided, however, that certain of the Company’s other outstanding indebtedness limits the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence or other exemptions are not available. The Amended Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Amended Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Amended Facilities are not in default and the Company maintains availability under its revolver of more than $365,000. The Amended Credit Agreement has a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (i) on any date on which availability under the Senior Secured Revolving Credit Facility is less than $200,000 or (ii) on the third consecutive business day on which availability under the Senior Secured Revolving Credit Facility is less than $250,000 and, in each case, ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which availability under the revolver is equal to or greater than $250,000. As of May 28, 2022, the Company’s fixed charge coverage ratio was greater than 1.00 to 1.00, and the Company was in compliance with the Amended Credit Agreement’s financial covenant. The Amended Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens. The Amended Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50,000 or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment, repurchase, redemption or defeasance of such debt. Fiscal 2022 and 2023 Transactions On April 28, 2021, the Company issued a notice of redemption for all of the 6.125% Notes that were outstanding on May 28, 2021, pursuant to the terms of the indenture of the 6.125% Notes. On May 28, 2021, the Company redeemed 100% of the remaining outstanding 6.125% Notes at par. In connection therewith, the Company recorded a loss on debt retirement of $396 which included unamortized debt issuance costs. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows. On August 20, 2021, the Company entered into the Second Amendment in order to, among other things, increase the aggregate principal amount of commitments under the Senior Secured Revolving Credit Facility from $2,700,000 to $2,800,000 and decrease the aggregate principal amount of loans outstanding under the Senior Secured Term Loan from $450,000 to $350,000. In connection therewith, the Company recorded a loss on debt modification and retirement of $2,839 which included unamortized debt issuance costs. The debt repayment and related loss on debt modification and retirement is included in the results of operations and cash flows. On June 13, 2022, the Company announced the commencement of a series of cash tender offers to purchase up to $150,000 aggregate principal amount of the Company’s 7.50% Senior Secured Notes due 2025 (the “2025 Notes”), 8.0% Senior Secured Notes due 2026, 7.70% Notes due 2027 (the “2027 Notes”) and 6.875% Notes due 2028 (the “2028 Notes”), subject to prioritized acceptance levels, a subcap of $100,000 with respect to the 2025 Notes and proration. On June 29, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $114,942 of its 2025 Notes, $51,695 aggregate principal amount of its 2027 Notes and $26,955 aggregate principal amount of its 2028 Notes. The Company anticipates that the purchase will be considered a debt retirement and accordingly, anticipates a gain on debt retirement during the second quarter of fiscal 2023. Maturities The aggregate annual principal payments of long-term debt for the remainder of fiscal 2023 and thereafter are as follows: 2023—$0; 2024—$0; 2025—$0; 2026—$600,000; 2027—$2,437,304 and $29,001 thereafter. |
Leases
Leases | 3 Months Ended |
May 28, 2022 | |
Leases | |
Leases | 12. Leases The Company leases most of its retail stores and certain distribution facilities under noncancelable operating The following table is a summary of the Company’s components of net lease cost for the thirteen week Thirteen Week Period Ended May 28, 2022 May 29, 2021 Operating lease cost $ 159,845 $ 169,494 Financing lease cost: Amortization of right-of-use asset 809 1,011 Interest on long-term finance lease liabilities 501 568 Total finance lease costs $ 1,310 $ 1,579 Short-term lease costs 457 1,099 Variable lease costs 42,645 46,038 Less: sublease income (3,223) (3,343) Net lease cost $ 201,034 $ 214,867 Supplemental cash flow information related to leases for the thirteen week periods ended May 28, 2022 and May 29, 2021: Thirteen Week Period Ended May 28, 2022 May 29, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 175,414 $ 176,591 Operating cash flows paid for interest portion of finance leases 501 568 Financing cash flows paid for principal portion of finance leases 945 1,111 Right-of-use assets obtained in exchange for lease obligations: Operating leases 57,986 76,314 Finance leases — — Supplemental balance sheet information related to leases as of May 28, 2022 and February 26, 2022 (in thousands, except lease term and discount rate): May 28, February 26, 2022 2022 Operating leases: Operating lease right-of-use asset $ 2,723,405 $ 2,813,535 Short-term operating lease liabilities $ 574,392 $ 575,651 Long-term operating lease liabilities 2,526,607 2,597,090 Total operating lease liabilities $ 3,100,999 $ 3,172,741 Finance leases: Property, plant and equipment, net $ 13,151 $ 13,950 Current maturities of long-term debt and lease financing obligations $ 5,016 $ 5,544 Lease financing obligations, less current maturities 14,392 14,830 Total finance lease liabilities $ 19,408 $ 20,374 Weighted average remaining lease term Operating leases 7.5 7.7 Finance leases 8.7 8.7 Weighted average discount rate Operating leases 6.0 % 6.0 % Finance leases 9.8 % 10.0 % The following table summarizes the maturity of lease liabilities under finance and operating leases as of May 28, 2022: May 28, 2022 Finance Operating Fiscal year Leases Leases (1) Total 2023 (remaining forty weeks) $ 6,065 $ 519,021 $ 525,086 2024 4,234 647,443 651,677 2025 3,149 554,618 557,767 2026 2,367 465,409 467,776 2027 1,500 383,097 384,597 Thereafter 12,048 1,302,201 1,314,249 Total lease payments 29,363 3,871,789 3,901,152 Less: imputed interest (9,955) (770,790) (780,745) Total lease liabilities $ 19,408 $ 3,100,999 $ 3,120,407 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases. D uring the thirteen week the Company did not enter into any sale-leaseback transactions The Company has additional capacity under its outstanding debt agreements to enter into additional sale-leaseback transactions. |
Retirement Plans
Retirement Plans | 3 Months Ended |
May 28, 2022 | |
Retirement Plans | |
Retirement Plans | 13. Retirement Plans Net periodic pension expense for the thirteen May 29, 2021 Defined Benefit Pension Plan Thirteen Week Period Ended May 28, May 29, 2022 2021 Service cost $ 107 $ 128 Interest cost 1,264 1,232 Expected return on plan assets (1,402) (1,313) Amortization of unrecognized net loss — 123 Net periodic pension expense $ (31) $ 170 During the thirteen week |
Segment Reporting
Segment Reporting | 3 Months Ended |
May 28, 2022 | |
Segment Reporting | |
Segment Reporting | 14. Segment Reporting The Company has two reportable segments, its retail drug stores (“Retail Pharmacy”), and its pharmacy services (“Pharmacy Services”) segments. The Retail Pharmacy segment’s primary business is the sale of prescription drugs and related consultation to its customers. Additionally, the Retail Pharmacy segment sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment offers a full range of pharmacy benefit management services including plan design and administration, formulary management and claims processing. Additionally, the Pharmacy Services segment offers specialty and mail order services, and drug benefits to eligible beneficiaries under the federal government’s Medicare Part D program. The Company’s chief operating decision makers are its Chief Executive Officer, Chief Financial Officer and several other members of the Executive Leadership Team, (collectively the “CODM”). The CODM has ultimate responsibility for enterprise decisions. The CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy and Pharmacy Services segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. The CODM relies on internal management reporting that analyzes enterprise results on certain key performance indicators, namely, revenues, gross profit, and Adjusted EBITDA. The following is balance sheet information for the Company’s reportable segments: Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated May 28, 2022: Total Assets $ 6,101,168 $ 2,464,224 $ (15,619) $ 8,549,773 Goodwill 43,492 835,644 — 879,136 February 26, 2022: Total Assets $ 6,068,594 $ 2,482,232 $ (21,823) $ 8,529,003 Goodwill 43,492 835,644 — 879,136 (1) As of May 28, 2022 and February 26, 2022, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,619 and $21,823, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021 Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated Thirteen Week Period Ended May 28, 2022: Revenues $ 4,345,356 $ 1,725,857 $ (56,630) $ 6,014,583 Gross Profit 1,097,357 99,372 — 1,196,729 Adjusted EBITDA(2) 73,682 26,448 — 100,130 Additions to property and equipment and intangible assets 78,551 6,873 — 85,424 May 29, 2021: Revenues $ 4,351,682 $ 1,872,282 $ (62,979) $ 6,160,985 Gross Profit 1,169,934 114,941 — 1,284,875 Adjusted EBITDA(2) 94,914 43,963 — 138,877 Additions to property and equipment and intangible assets 60,893 3,707 — 64,600 (1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis. (2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details. The following is a reconciliation of net income (loss) to Adjusted EBITDA for the thirteen May 29, 2021 May 28, May 29, 2022 2021 (13 weeks) (13 weeks) Net loss $ (110,191) $ (13,057) Interest expense 48,119 49,121 Income tax expense 3,497 780 Depreciation and amortization 70,073 75,859 LIFO credit — (3,993) Facility exit and impairment charges 66,571 8,831 Loss on debt retirements, net — 396 Merger and Acquisition-related costs — 3,886 Stock-based compensation expense 3,334 2,811 Restructuring-related costs 22,646 5,932 Inventory write-downs related to store closings 7,955 472 Litigation and other contractual settlements 18,271 14,000 Gain on sale of assets, net (29,196) (6,558) Other (949) 397 Adjusted EBITDA $ 100,130 $ 138,877 |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 3 Months Ended |
May 28, 2022 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | 15. Commitments, Contingencies and Guarantees Legal Matters and Regulatory Proceedings The Company is regularly involved in a variety of legal matters including arbitration, litigation (and related settlement discussions), audits by counter parties under our contracts, and other claims, and is subject to regulatory proceedings including audits, inspections, inquiries, investigations, and similar actions by health care, insurance, pharmacy, tax and other governmental authorities arising in the ordinary course of its business, including, without limitation, the matters described below. Substantial damages are sought from the Company in virtually all of these matters. The Company records accruals for outstanding legal matters and applicable regulatory proceedings when it believes it is probable that a loss has been incurred, and the amount can be reasonably estimated. The Company evaluates on a quarterly basis, developments in legal matters and regulatory proceedings that could affect the amount of any existing accrual or that warrant an accrual. If a loss contingency is not both probable and estimable, the Company typically does not establish an accrued liability. With respect to the litigation and other legal proceedings described below, the Company is unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings. None of the Company’s accruals for outstanding legal matters or regulatory proceedings are currently material, individually or in the aggregate, to the Company’s consolidated financial position. However, during the course of any proceeding, developments may result in the creation or an increase of an accrual that could be material. Additionally, unfavorable or unexpected outcomes in outstanding legal matters or regulatory proceedings could exceed any accrual and impact the Company’s financial position. Further, even if the Company is successful in its legal proceedings, the Company may incur significant costs and expenses defending itself or others that it is required to indemnify, and such costs and expenses may not be subject to or exceed reimbursement pursuant to any applicable insurance. The Company’s contingencies are subject to significant uncertainties, many of which are beyond the Company’s control, including, among other factors: (i) the stage of any proceeding and delays in scheduling; (ii) whether class or collective action status is sought and the likelihood of a class being certified; (iii) the outcome of pending or potential appeals, motions and settlement discussions; (iv) the range and magnitude of potential damages, fines or penalties, which are often unspecified or indeterminate; (v) the impact of discovery on the matter; (vi) whether novel or unsettled legal theories are at issue or advanced; (vii) whether there are significant factual issues to be resolved including findings made by juries; (viii) the exercise of discretion in enforcement actions including in the case of certain government agency investigations, whether a qui tam Employment Litigation. The Company is currently a defendant in several lawsuits filed in courts in California that contain allegations regarding violations of the California Business and Professions Code, various California employment laws and regulations, industry wage orders, wage-and-hour laws, rules and regulations pertaining primarily to failure to pay overtime, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (the “California Cases”). The Company also is defending a putative employment collective and class action filed in federal court in New York, which raises similar allegations in addition to others about the payment frequency for certain employees (the “New York Case”). Substantial damages are sought from the Company in virtually all of these matters. From time to time, one or more of these matters may be settled. Some of the California Cases purport or may be determined to be class actions or representative actions under the California Private Attorneys General Act and seek substantial damages and penalties. In June 2021, the Company agreed to settle two of the California Cases in which the plaintiffs brought class-based claims alleging that they and all other similarly situated associates were not paid for time waiting for their bags to be checked. One set of cases involving store associates was settled for $9 million and has concluded, while the other involving distribution center associates was settled for $1.75 million and remains subject to court approval. On October 1, 2021, the Company agreed to settle for $12 million allegations made by a purported class of California store associates that it required such associates to purchase uniforms, and the matter has concluded. The Company has aggressively defended itself and challenged the merits of the lawsuits and, where applicable, allegations that the lawsuits should be certified as class or representative actions. Usual and Customary Litigation. The Company is named as a defendant in a number of lawsuits, including the cases below, that allege that the Company’s retail stores overcharged for prescription drugs by not submitting the price available to members of the Rite Aid’s Rx Savings Program as the pharmacy’s usual and customary price, and related theories. The Company is defending itself against these claims. Substantial damages are sought from the Company in virtually all of these matters. The Company is a defendant in a putative consumer class action lawsuit in the United States District Court for the Southern District of California captioned Byron Stafford v. Rite Aid Corp Robert Josten v. Rite Aid Corp On February 6, 2019, Humana, Inc., filed a claim pursuant to a binding arbitration provision of the parties’ agreement alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program prices as its usual and customary prices to Humana. An arbitration hearing was held in this matter in November 2021. On April 22, 2022, the arbitrator issued an Opinion and Final Award against the Company for breach of contract awarding Humana $122.6 million, which includes $40.7 million in prejudgment interest (the “Arbitration Award”). The Company believes that the Arbitration Award contains a number of significant factual and legal errors. On June 20, 2022, the Company both opposed Humana’s effort to confirm the Arbitration Award and petitioned the United States District Court for Western District of Kentucky for vacatur of the Arbitration Award, as is its right under the Federal Arbitration Act (“FAA”). As such, the Company has determined that it is not probable that a loss has occurred. The FAA, as interpreted and applied by federal courts, permits vacatur when, among other things, an arbitrator’s decision: (1) is irreconcilable with the terms of a contract between the parties; (2) rests on a plain legal error that manifests disregard for the law; or (3) incorporates a refusal to consider pertinent, material evidence. Similarly, the FAA, as interpreted and applied by federal courts, permits modification of an arbitrator’s decision to correct an evident material miscalculation of figures. Although the Company cannot make any assurances of success in its efforts, it is the Company’s view that the errors in the Arbitration Award support both vacatur and modification under the FAA, the effect of either of which could be to set aside the Arbitration Award or reduce or eliminate the damages provided for in the Arbitration Award. The Company is a defendant in two consolidated lawsuits pending in the United States District Court for the District of Minnesota filed in 2020 by various Blue Cross/Blue Shield plans that operate in eight different states (North Carolina, North Dakota, Alabama, Utah, Minnesota, Oregon, Washington and New Jersey) alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program pricing to several Pharmacy Benefit Managers with which Rite Aid and the insurers had independent contracts. The Company is also defending a lawsuit filed in Delaware state court in 2019 by multiple Centene entities alleging that the Company overcharged for prescriptions by improperly reporting usual and customary prices that did not include Rx Savings Program pricing. The Company is defending a similar lawsuit filed in 2022 by WellCare in Florida state court. Drug Utilization Review and Code 1 Litigation In June 2012, qui tam On September 5, 2018, the court issued an order denying the motion to dismiss. Substantial damages are sought from the Company in this matter. No trial date has been set and as discovery continues, the parties are participating in a mediation process. Controlled Substances Litigation, Audits and Investigations The Company, along with various other defendants, is named in multiple opioid-related lawsuits filed by counties, cities, municipalities, Native American tribes, hospitals, third-party payers, and others across the United States. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation (“JPML”) consolidated and transferred more than a thousand federal opioid-related lawsuits that name the Company as a defendant to the multi-district litigation (“MDL”) pending in the United States District Court for the Northern District of Ohio under In re National Prescription Opiate Litigation The Company also has received warrants, subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, the federal and state governments regarding opioids and other controlled substances. The Company has been cooperating with and responding to these investigatory inquiries. Substantial damages are sought from the Company in virtually all of these matters. In April 2019, the Company initiated a coverage action styled Rite Aid Corporation et al. v. ACE American Ins. Co. et al. costs that may be paid for the opioid-related lawsuits. The action seeks declaratory relief with respect to the obligations of the insurers under the policies at issue in the action and asserts claims for breach of contract and statutory remedies against one of these insurers. Although the trial court determined on the Company’s motion for partial summary judgment that this insurer was obligated to reimburse the Company for its defense costs, on January 10, 2022, the Delaware Supreme Court reversed the trial court’s order and ruled that the insurer had no duty to defend the first MDL suits set for trial based on the specific allegations at issue in those cases. The matter has been remanded to the lower court for further proceedings. Miscellaneous Litigation and Investigations. The U.S. Securities and Exchange Commission (“SEC”) is investigating trading in the Company’s securities that occurred in or around January 2017, and has subpoenaed information from the Company and certain employees in connection with that investigation. The Company is cooperating with the SEC in this matter. The Company has received a CID and requests for information with respect to consumer protection laws. The Company is also defending a lawsuit asserting numerous claims based on allegations surrounding the Company’s use of a certain font including in the Company’s rebranded logo. |
Supplementary Cash Flow Data
Supplementary Cash Flow Data | 3 Months Ended |
May 28, 2022 | |
Supplementary Cash Flow Data | |
Supplementary Cash Flow Data | 16. Supplementary Cash Flow Data Thirteen Week Period Ended May 28, 2022 May 29, 2021 Cash paid for interest $ 11,230 $ 12,813 Cash payments for income taxes, net $ 13,290 $ 556 Equipment financed under capital leases $ — $ 1,585 Gross borrowings from revolver $ 860,000 $ 1,546,000 Gross repayments to revolver $ 569,000 $ 1,507,000 Significant components of cash provided by Other Liabilities of $15,327 for the thirteen |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
May 28, 2022 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2022 10-K. |
Revenue Recognition | Revenue Recognition The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 28, 2022 and May 29, 2021: May 28, May 29, 2022 2021 In thousands (13 Weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 3,053,449 $ 2,997,044 Front-end sales 1,261,206 1,321,699 Other revenue 30,701 32,939 Total Retail Pharmacy segment 4,345,356 4,351,682 Pharmacy Services segment 1,725,857 1,872,282 Intersegment elimination (56,630) (62,979) Total revenue $ 6,014,583 $ 6,160,985 The Retail Pharmacy segment offered a chain-wide loyalty card program titled wellness+. Individual customers were able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earned points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. The wellness+ program was terminated as of July 1, 2020, with benefits earned as of that date available to be used through the end of calendar 2020. Beginning in December 2020, the Company granted temporary extensions of benefits to certain previous members that were eligible for a discount as of the end of each previous 6 month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent 6 months with no additional purchase requirement. New and existing customers who were not already eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each 6 month period. A final extension was granted on December 31, 2021 through February 26, 2022 at which point all discounts were terminated. A new loyalty program, Rite Aid Rewards, was initiated on February 27, 2022. Customers that enroll in the new program earn points for each dollar spent on front of store purchases as well as for eligible pharmacy prescriptions. Points can then be converted into a “Rite Aid Rewards” coupon that can be tendered as payment in a future purchase. Each point is worth $0.002. Customers must accumulate 1,000 points and create an online account in order to convert earned points to a “Rite Aid Rewards” coupon. Unused/unconverted points expire after 90 days . Unredeemed “Rite Aid Rewards” coupons expire 30 days after conversion from points earned. Points earned pursuant to the Rite Aid Rewards program represent a performance obligation. The value of unredeemed Rite Aid Rewards points is deferred as a contract liability (included in other current liabilities). As members redeem points in the form of a Rite Aid Rewards coupon or when points or unredeemed Rite Aid Rewards coupons expire, the Retail Pharmacy segment recognizes the redeemed/expired portion of the deferred contract liability into revenue. For the thirteen week period ended May 28, 2022, the Company recognized $713 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $5,577 and $0 as of May 28, 2022 and February 26, 2022, respectively. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
May 28, 2022 | |
Basis of Presentation and Significant Accounting Policies | |
Schedule of revenues | May 28, May 29, 2022 2021 In thousands (13 Weeks) (13 weeks) Retail Pharmacy segment: Pharmacy sales $ 3,053,449 $ 2,997,044 Front-end sales 1,261,206 1,321,699 Other revenue 30,701 32,939 Total Retail Pharmacy segment 4,345,356 4,351,682 Pharmacy Services segment 1,725,857 1,872,282 Intersegment elimination (56,630) (62,979) Total revenue $ 6,014,583 $ 6,160,985 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
May 28, 2022 | |
Acquisition | |
Schedule of purchase price allocation | Final purchase price Cash consideration $ 89,724 Total 89,724 Final purchase price allocation Cash and cash equivalents $ 3,494 Accounts receivable 23,860 Inventories 67,745 Prepaid expenses and other current assets 1,857 Total current assets 96,956 Property and equipment 28,229 Operating lease right-of-use assets 143,651 Intangible assets(1) 68,700 Other assets 1,805 Total assets acquired 339,341 Accounts payable 24,166 Accrued salaries, wages and other current liabilities 20,335 Current portion of operating lease liabilities 24,617 Total current liabilities 69,118 Long-term operating lease liabilities 124,023 Other long-term liabilities 166 Total liabilities assumed 193,307 Deferred tax liabilities recorded on purchase 13,951 Net assets acquired 132,083 Bargain purchase gain (42,359) Total purchase price $ 89,724 (1) Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes a final valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s final estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation include: |
Schedule of estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation | Estimated Fair Value Estimated Useful Life (In Years) Prescription files $ 54,300 10 Tradename 14,400 Indefinite Total $ 68,700 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
May 28, 2022 | |
Restructuring | |
Schedule of restructuring-related costs | Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ 11,288 $ 616 $ 11,904 Professional and other fees relating to restructuring activities (b) 6,083 4,659 10,742 Total restructuring-related costs $ 17,371 $ 5,275 $ 22,646 Retail Pharmacy Pharmacy segment Services segment Total Restructuring-related costs Severance and related costs associated with ongoing reorganization efforts (a) $ — $ 506 $ 506 Professional and other fees relating to restructuring activities (b) 1,621 3,805 5,426 Total restructuring-related costs $ 1,621 $ 4,311 $ 5,932 |
Schedule of restructuring-related liabilities | Severance and related Professional and costs (a) other fees (b) Total Balance at February 26, 2022 $ 4,257 $ 4,463 $ 8,720 Additions charged to expense 11,904 10,742 22,646 Cash payments (5,231) (11,727) (16,958) Balance at May 28, 2022 $ 10,930 $ 3,478 $ 14,408 (a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts. (b) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities. |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 3 Months Ended |
May 28, 2022 | |
Income (Loss) Per Share | |
Schedule of calculation of basic and diluted income (loss) per share | Thirteen Week Period Ended May 28, May 29, 2022 2021 Basic and diluted loss per share: Numerator: Net loss attributable to common stockholders— basic and diluted $ (110,191) $ (13,057) Denominator: Basic and diluted weighted average shares 54,348 53,852 Basic and diluted loss per share $ (2.03) $ (0.24) |
Facility Exit and Impairment _2
Facility Exit and Impairment Charges (Tables) | 3 Months Ended |
May 28, 2022 | |
Facility Exit and Impairment Charges | |
Schedule of amounts relating to facility exit and impairment charges | Thirteen Week Period Ended May 28, May 29, 2022 2021 Impairment charges $ 35,036 $ 4,313 Facility exit charges 31,535 4,518 $ 66,571 $ 8,831 |
Schedule of fair value of long-lived assets measured on recurring and non-recurring basis | Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date May 28, 2022 Long-lived assets held for use $ — $ 4,192 $ — $ 4,192 $ (35,036) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ 4,192 $ — $ 4,192 $ (35,036) Fair Values Total as of Charges Level 1 Level 2 Level 3 Impairment Date May 29, 2021 Long-lived assets held for use $ — $ — $ — $ — $ (4,313) Long-lived assets held for sale $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ (4,313) |
Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion | Thirteen Week Period Ended May 28, May 29, 2022 2021 Balance—beginning of period $ 18,688 $ 3,443 Provision for present value of executory costs for leases exited 26,499 1,708 Changes in assumptions and other adjustments (191) 1,493 Interest accretion 98 7 Cash payments (1,692) (516) Balance—end of period $ 43,402 $ 6,135 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
May 28, 2022 | |
Goodwill and Other Intangible Assets | |
Schedule of Indefinite-Lived Intangible Assets [Table Text Block] | May 28, 2022 February 26, 2022 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 199,351 $ (179,046) $ 20,305 3 years $ 197,651 $ (178,958) $ 18,693 3 years Prescription files 1,026,342 (914,911) 111,431 5 years 1,030,169 (918,773) 111,396 6 years Customer relationships(a) 388,000 (291,770) 96,230 9 years 388,000 (286,090) 101,910 10 years CMS license 57,500 (17,478) 40,022 4 years 57,500 (15,372) 42,128 5 years Claims adjudication and other developed software 58,985 (58,423) 562 0 years 58,985 (56,316) 2,669 1 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,741,678 $ (1,473,128) 268,550 $ 1,743,805 $ (1,467,009) $ 276,796 Trademarks 14,400 — 14,400 Indefinite 14,400 — 14,400 Indefinite Total $ 1,756,078 $ (1,473,128) $ 282,950 $ 1,758,205 $ (1,467,009) $ 291,196 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | May 28, 2022 February 26, 2022 Remaining Remaining Weighted Weighted Gross Average Gross Average Carrying Accumulated Amortization Carrying Accumulated Amortization Amount Amortization Net Period Amount Amortization Net Period Non-compete agreements and other(a) $ 199,351 $ (179,046) $ 20,305 3 years $ 197,651 $ (178,958) $ 18,693 3 years Prescription files 1,026,342 (914,911) 111,431 5 years 1,030,169 (918,773) 111,396 6 years Customer relationships(a) 388,000 (291,770) 96,230 9 years 388,000 (286,090) 101,910 10 years CMS license 57,500 (17,478) 40,022 4 years 57,500 (15,372) 42,128 5 years Claims adjudication and other developed software 58,985 (58,423) 562 0 years 58,985 (56,316) 2,669 1 years Backlog 11,500 (11,500) — 0 years 11,500 (11,500) — 0 years Total finite $ 1,741,678 $ (1,473,128) 268,550 $ 1,743,805 $ (1,467,009) $ 276,796 Trademarks 14,400 — 14,400 Indefinite 14,400 — 14,400 Indefinite Total $ 1,756,078 $ (1,473,128) $ 282,950 $ 1,758,205 $ (1,467,009) $ 291,196 (a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows. |
Indebtedness and Credit Agree_2
Indebtedness and Credit Agreements (Tables) | 3 Months Ended |
May 28, 2022 | |
Indebtedness and Credit Agreements | |
Summary of indebtedness and lease financing obligations | May 28, February 26, 2022 2022 Secured Debt: Senior secured revolving credit facility due August 2026 ($1,000,000 and $709,000 face value less unamortized debt issuance costs of $16,992 and $18,010) 983,008 690,990 FILO Term Loan due August 2026 ($350,000 face value less unamortized debt issuance costs of $2,211 and $2,344) 347,789 347,656 1,330,797 1,038,646 Second Lien Secured Debt: 7.5% senior secured notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $6,311 and $6,824) 593,689 593,176 8.0% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $13,628 and $14,397) 836,290 835,521 1,429,979 1,428,697 Unguaranteed Unsecured Debt: 7.7% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $609 and $642) 236,777 236,744 6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $98 and $102) 28,903 28,899 265,680 265,643 Lease financing obligations 19,408 20,374 Total debt 3,045,864 2,753,360 Current maturities of long-term debt and lease financing obligations (5,016) (5,544) Long-term debt and lease financing obligations, less current maturities $ 3,040,848 $ 2,747,816 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
May 28, 2022 | |
Leases | |
Schedule of components of net lease cost | Thirteen Week Period Ended May 28, 2022 May 29, 2021 Operating lease cost $ 159,845 $ 169,494 Financing lease cost: Amortization of right-of-use asset 809 1,011 Interest on long-term finance lease liabilities 501 568 Total finance lease costs $ 1,310 $ 1,579 Short-term lease costs 457 1,099 Variable lease costs 42,645 46,038 Less: sublease income (3,223) (3,343) Net lease cost $ 201,034 $ 214,867 |
Schedule of supplemental cash flow information related to leases | Thirteen Week Period Ended May 28, 2022 May 29, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 175,414 $ 176,591 Operating cash flows paid for interest portion of finance leases 501 568 Financing cash flows paid for principal portion of finance leases 945 1,111 Right-of-use assets obtained in exchange for lease obligations: Operating leases 57,986 76,314 Finance leases — — |
Schedule of supplemental balance sheet information related to leases | May 28, February 26, 2022 2022 Operating leases: Operating lease right-of-use asset $ 2,723,405 $ 2,813,535 Short-term operating lease liabilities $ 574,392 $ 575,651 Long-term operating lease liabilities 2,526,607 2,597,090 Total operating lease liabilities $ 3,100,999 $ 3,172,741 Finance leases: Property, plant and equipment, net $ 13,151 $ 13,950 Current maturities of long-term debt and lease financing obligations $ 5,016 $ 5,544 Lease financing obligations, less current maturities 14,392 14,830 Total finance lease liabilities $ 19,408 $ 20,374 Weighted average remaining lease term Operating leases 7.5 7.7 Finance leases 8.7 8.7 Weighted average discount rate Operating leases 6.0 % 6.0 % Finance leases 9.8 % 10.0 % |
Schedule of minimum lease payments, financing leases | May 28, 2022 Finance Operating Fiscal year Leases Leases (1) Total 2023 (remaining forty weeks) $ 6,065 $ 519,021 $ 525,086 2024 4,234 647,443 651,677 2025 3,149 554,618 557,767 2026 2,367 465,409 467,776 2027 1,500 383,097 384,597 Thereafter 12,048 1,302,201 1,314,249 Total lease payments 29,363 3,871,789 3,901,152 Less: imputed interest (9,955) (770,790) (780,745) Total lease liabilities $ 19,408 $ 3,100,999 $ 3,120,407 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases. |
Schedule of minimum lease payments, operating leases | May 28, 2022 Finance Operating Fiscal year Leases Leases (1) Total 2023 (remaining forty weeks) $ 6,065 $ 519,021 $ 525,086 2024 4,234 647,443 651,677 2025 3,149 554,618 557,767 2026 2,367 465,409 467,776 2027 1,500 383,097 384,597 Thereafter 12,048 1,302,201 1,314,249 Total lease payments 29,363 3,871,789 3,901,152 Less: imputed interest (9,955) (770,790) (780,745) Total lease liabilities $ 19,408 $ 3,100,999 $ 3,120,407 (1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases. D uring the thirteen week the Company did not enter into any sale-leaseback transactions |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
May 28, 2022 | |
Retirement Plans | |
Summary of net periodic pension expense for the defined benefit plans | Defined Benefit Pension Plan Thirteen Week Period Ended May 28, May 29, 2022 2021 Service cost $ 107 $ 128 Interest cost 1,264 1,232 Expected return on plan assets (1,402) (1,313) Amortization of unrecognized net loss — 123 Net periodic pension expense $ (31) $ 170 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
May 28, 2022 | |
Segment Reporting | |
Schedule of balance sheet information for the Company's reportable segments | Retail Pharmacy Pharmacy Services Eliminations(1) Consolidated May 28, 2022: Total Assets $ 6,101,168 $ 2,464,224 $ (15,619) $ 8,549,773 Goodwill 43,492 835,644 — 879,136 February 26, 2022: Total Assets $ 6,068,594 $ 2,482,232 $ (21,823) $ 8,529,003 Goodwill 43,492 835,644 — 879,136 (1) As of May 28, 2022 and February 26, 2022, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,619 and $21,823, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. |
Schedule of reconciliation of the Company's business segments to the condensed consolidated financial statements | Retail Pharmacy Intersegment Pharmacy Services Eliminations(1) Consolidated Thirteen Week Period Ended May 28, 2022: Revenues $ 4,345,356 $ 1,725,857 $ (56,630) $ 6,014,583 Gross Profit 1,097,357 99,372 — 1,196,729 Adjusted EBITDA(2) 73,682 26,448 — 100,130 Additions to property and equipment and intangible assets 78,551 6,873 — 85,424 May 29, 2021: Revenues $ 4,351,682 $ 1,872,282 $ (62,979) $ 6,160,985 Gross Profit 1,169,934 114,941 — 1,284,875 Adjusted EBITDA(2) 94,914 43,963 — 138,877 Additions to property and equipment and intangible assets 60,893 3,707 — 64,600 (1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis. (2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details. |
Schedule of reconciliation of net (loss) income to Adjusted EBITDA | May 28, May 29, 2022 2021 (13 weeks) (13 weeks) Net loss $ (110,191) $ (13,057) Interest expense 48,119 49,121 Income tax expense 3,497 780 Depreciation and amortization 70,073 75,859 LIFO credit — (3,993) Facility exit and impairment charges 66,571 8,831 Loss on debt retirements, net — 396 Merger and Acquisition-related costs — 3,886 Stock-based compensation expense 3,334 2,811 Restructuring-related costs 22,646 5,932 Inventory write-downs related to store closings 7,955 472 Litigation and other contractual settlements 18,271 14,000 Gain on sale of assets, net (29,196) (6,558) Other (949) 397 Adjusted EBITDA $ 100,130 $ 138,877 |
Supplementary Cash Flow Data (T
Supplementary Cash Flow Data (Tables) | 3 Months Ended |
May 28, 2022 | |
Supplementary Cash Flow Data | |
Schedule of supplementary cash flow data | Thirteen Week Period Ended May 28, 2022 May 29, 2021 Cash paid for interest $ 11,230 $ 12,813 Cash payments for income taxes, net $ 13,290 $ 556 Equipment financed under capital leases $ — $ 1,585 Gross borrowings from revolver $ 860,000 $ 1,546,000 Gross repayments to revolver $ 569,000 $ 1,507,000 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies - Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Product Class | ||
Total revenue | $ 6,014,583 | $ 6,160,985 |
Intersegment elimination | ||
Product Class | ||
Revenues | (56,630) | (62,979) |
Total revenue | (56,630) | (62,979) |
Retail Pharmacy | ||
Product Class | ||
Other revenue | 30,701 | 32,939 |
Total revenue | 4,345,356 | 4,351,682 |
Pharmacy sales | ||
Product Class | ||
Revenues | 3,053,449 | 2,997,044 |
Front end sales | ||
Product Class | ||
Revenues | 1,261,206 | 1,321,699 |
Pharmacy Services | ||
Product Class | ||
Revenues | $ 1,725,857 | $ 1,872,282 |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - FY thru Revenue (Details) | 3 Months Ended | 12 Months Ended | |
Feb. 27, 2022 USD ($) Point | May 28, 2022 USD ($) | Feb. 26, 2022 USD ($) | |
Revenue Recognition | |||
Measurement period | 6 months | ||
Liability recognized into revenue | $ 713,000 | ||
Retail Pharmacy | |||
Revenue Recognition | |||
Value of each reward point earned | $ 0.002 | ||
Minimum points required for conversion into rewards | Point | 1,000 | ||
Threshold period for expiry of unconverted points | 90 days | ||
Threshold period for expiry of unredeemed rewards | 30 days | ||
Accrued contract liabilities | $ 5,577,000 | $ 0 | |
Prescription files | |||
Intangible Assets | |||
Remaining Weighted Average Amortization Period | 5 years | 6 years | |
Customer relationships | |||
Intangible Assets | |||
Remaining Weighted Average Amortization Period | 9 years | 10 years | |
CMS license | |||
Intangible Assets | |||
Remaining Weighted Average Amortization Period | 4 years | 5 years |
Acquisition (Details)
Acquisition (Details) - Bartell Drug Company $ in Thousands | Dec. 18, 2020 USD ($) item |
Business Acquisition [Line Items] | |
Cash consideration | $ | $ 89,724 |
Number of stores | 67 |
Number of distribution centers | 1 |
Percentage of ownership in subsidiary | 100% |
Acquisition - Purchase price al
Acquisition - Purchase price allocation (Details) - Bartell Drug Company - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 18, 2020 | Nov. 27, 2021 | Feb. 27, 2021 | |
Preliminary purchase price | |||
Cash consideration | $ 89,724 | ||
Purchase price | 89,724 | ||
Preliminary purchase price allocation | |||
Cash and cash equivalents | 3,494 | ||
Accounts receivable | 23,860 | ||
Inventories | 67,745 | ||
Prepaid expenses and other current assets | 1,857 | ||
Total current assets | 96,956 | ||
Property and equipment | 28,229 | ||
Operating lease right-of-use assets | 143,651 | ||
Intangible assets | 68,700 | ||
Other assets | 1,805 | ||
Total assets acquired | 339,341 | ||
Accounts payable | 24,166 | ||
Accrued salaries, wages and other current liabilities | 20,335 | ||
Current portion of operating lease liabilities | 24,617 | ||
Total current liabilities | 69,118 | ||
Long-term operating lease liabilities | 124,023 | ||
Other long term liabilities | 166 | ||
Total liabilities assumed | 193,307 | ||
Deferred tax liabilities recorded on purchase | 13,951 | ||
Net assets acquired | 132,083 | ||
Bargain purchase gain | (42,359) | $ (42,359) | $ (47,705) |
Purchase price | $ 89,724 |
Acquisition - Intangible assets
Acquisition - Intangible assets acquired (Details) - Bartell Drug Company $ in Thousands | Dec. 18, 2020 USD ($) |
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 68,700 |
Trademarks | |
Business Acquisition [Line Items] | |
Intangible assets acquired | 14,400 |
Prescription files | |
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 54,300 |
Estimated Useful Life | 10 years |
Acquisition - Acquisition costs
Acquisition - Acquisition costs (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Dec. 18, 2020 | May 28, 2022 | Nov. 27, 2021 | May 29, 2021 | Feb. 27, 2021 | |
Business Acquisition [Line Items] | |||||
Merger and Acquisition-related costs | $ 3,886 | ||||
Bartell Drug Company | |||||
Business Acquisition [Line Items] | |||||
Bargain purchase gain | $ 42,359 | $ 42,359 | $ 47,705 | ||
Loss on Bartell acquisition | $ 5,346 | ||||
Merger and Acquisition-related costs | $ 0 | $ 3,886 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Restructuring related liabilities | ||
Restructuring expense | $ 22,646 | $ 5,932 |
Anticipated restructuring-related costs | 60,000 | |
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Balance-beginning of period | 8,720 | |
Restructuring expense | 22,646 | 5,932 |
Cash payments | (16,958) | |
Balance-end of period | 14,408 | |
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 22,646 | |
Severance and related costs | ||
Restructuring related liabilities | ||
Balance-beginning of period | 4,257 | |
Restructuring expense | 11,904 | 506 |
Cash payments | (5,231) | |
Balance-end of period | 10,930 | |
Severance and related costs | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 11,904 | |
Professional and other fees | ||
Restructuring related liabilities | ||
Balance-beginning of period | 4,463 | |
Restructuring expense | 10,742 | 5,426 |
Cash payments | (11,727) | |
Balance-end of period | 3,478 | |
Professional and other fees | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 10,742 | |
Retail Pharmacy | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 1,621 | |
Retail Pharmacy | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 17,371 | |
Retail Pharmacy | Severance and related costs | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 11,288 | |
Retail Pharmacy | Professional and other fees | ||
Restructuring related liabilities | ||
Restructuring expense | 1,621 | |
Retail Pharmacy | Professional and other fees | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 6,083 | |
Pharmacy Services | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | ||
Restructuring related liabilities | ||
Restructuring expense | 4,311 | |
Pharmacy Services | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 5,275 | |
Pharmacy Services | Severance and related costs | ||
Restructuring related liabilities | ||
Restructuring expense | 506 | |
Pharmacy Services | Severance and related costs | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | 616 | |
Pharmacy Services | Professional and other fees | ||
Restructuring related liabilities | ||
Restructuring expense | $ 3,805 | |
Pharmacy Services | Professional and other fees | Selling, general and administrative expenses | ||
Restructuring related liabilities | ||
Restructuring expense | $ 4,659 |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Numerator: | ||
Net loss attributable to common stockholders - basic | $ (110,191) | $ (13,057) |
Net loss attributable to common stockholders - diluted | $ (110,191) | $ (13,057) |
Denominator: | ||
Basic weighted average shares | 54,348 | 53,852 |
Diluted weighted average shares | 54,348 | 53,852 |
Basic loss per share | $ (2.03) | $ (0.24) |
Diluted loss per share | $ (2.03) | $ (0.24) |
Stock options | ||
Antidilutive securities excluded from computation of income per share | ||
Shares excluded from the computation of diluted income per share | 700 | 773 |
Restricted stock | ||
Antidilutive securities excluded from computation of income per share | ||
Shares excluded from the computation of diluted income per share | 1,247 | 1,240 |
Facility Exit and Impairment _3
Facility Exit and Impairment Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 28, 2022 | May 29, 2021 | Feb. 26, 2022 | |
Lease termination and impairment charges | |||
Facility exit and impairment charges | $ 66,571 | $ 8,831 | |
Carrying value of long-lived assets | 39,228 | 4,313 | |
Operating right-of-use assets | 2,723,405 | $ 2,813,535 | |
Nonrecurring basis | |||
Lease termination and impairment charges | |||
Impairment charges | 35,036 | 4,313 | |
Impairment Charges, Total | 35,036 | 4,313 | |
Impairment charges | |||
Lease termination and impairment charges | |||
Facility exit and impairment charges | 35,036 | 4,313 | |
Closed stores or stores approved for closure | |||
Lease termination and impairment charges | |||
Facility exit and impairment charges | $ 31,535 | $ 4,518 |
Facility Exit and Impairment _4
Facility Exit and Impairment Charges - Fair value (Details) - Nonrecurring basis - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Non Financial Assets Measured on a Non Recurring Basis | ||
Fair value of Long-lived assets held for use | $ 4,192 | |
Fair value of Total | 4,192 | |
Long-lived assets held and used, impairment charges | (35,036) | $ (4,313) |
Total Charges | (35,036) | (4,313) |
Total | ||
Non Financial Assets Measured on a Non Recurring Basis | ||
Fair value of Total | 4,192 | $ 0 |
Level 2 | ||
Non Financial Assets Measured on a Non Recurring Basis | ||
Fair value of Long-lived assets held for use | 4,192 | |
Fair value of Total | $ 4,192 |
Facility Exit and Impairment _5
Facility Exit and Impairment Charges - Closed Store Liability rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Closed store and distribution center charges | ||
Provision for present value of executory costs for leases exited | $ 22,646 | $ 5,932 |
Revenues and operating losses of closed stores or stores approved for closure | ||
Loss before income taxes | (106,694) | (12,277) |
Depreciation and amortization | 70,073 | 75,859 |
Facility exit charges | ||
Closed store and distribution center charges | ||
Balance-beginning of period | 18,688 | 3,443 |
Provision for present value of executory costs for leases exited | 26,499 | 1,708 |
Changes in assumptions and other adjustments | (191) | 1,493 |
Interest accretion | 98 | 7 |
Cash payments | (1,692) | (516) |
Balance-end of period | $ 43,402 | $ 6,135 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
Other Financial Instruments | ||
Held to maturity investments | $ 7,186 | $ 7,406 |
Level 1 | ||
Other Financial Instruments | ||
Carrying value of total long-term indebtedness | 3,026,456 | 2,732,986 |
Estimated fair value of total long-term indebtedness | $ 2,677,190 | $ 2,661,122 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 28, 2022 | May 29, 2021 | Feb. 26, 2022 | |
Income Taxes | |||
Income tax (benefit) expense | $ 3,497 | $ 780 | |
Estimated effective tax rate (as a percent) | 3.30% | (6.40%) | |
Increase in valuation allowance to offset the current year deferred state tax benefits (as a percent) | (37.60%) | (18.50%) | |
Decrease in unrecognized tax benefits related to state exposures | $ 25,130 | ||
Valuation allowance against net deferred tax assets | $ 1,862,823 | $ 1,822,710 |
Medicare Part D (Details)
Medicare Part D (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Jan. 24, 2022 | Aug. 12, 2021 | Feb. 26, 2022 | Aug. 28, 2021 | May 28, 2022 | Mar. 31, 2022 | |
Statutory Accounting Practices [Line Items] | ||||||
Minimum amount of capital and surplus required by regulatory requirements | $ 8,323 | |||||
Accounts receivable, net | $ 1,343,496 | $ 1,449,745 | ||||
Medicare Part D | ||||||
Remaining receivable for receivables sold to third party | 34,898 | 36,147 | ||||
Accrued salaries, wages and other current liabilities | 780,632 | 787,591 | ||||
February 2021 Receivable Purchase Agreement | ||||||
Medicare Part D | ||||||
Amount of receivables sold under Receivable Purchase Agreement | $ 400,680 | |||||
Sale price for receivables sold | 387,035 | |||||
Receipts from sale of receivables | $ 359,388 | |||||
Remaining receivable for receivables sold to third party | 27,647 | |||||
Loss on sale of receivable | 13,645 | |||||
August 2021 Receivable Purchase Agreement | ||||||
Medicare Part D | ||||||
Amount of receivables sold under Receivable Purchase Agreement | $ 271,829 | |||||
Sale price for receivables sold | 258,116 | |||||
Receipts from sale of receivables | $ 239,360 | |||||
Remaining receivable for receivables sold to third party | 18,756 | |||||
Loss on sale of receivable | $ 13,713 | |||||
EI (Elixir Insurance) | ||||||
Statutory Accounting Practices [Line Items] | ||||||
Accounts receivable, net | $ 63,203 | $ 155,397 |
Manufacturer Rebates Receivab_2
Manufacturer Rebates Receivables (Details) - USD ($) $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
Manufacturer Rebates Receivables | ||
Manufacturer rebates receivables | $ 563,389 | $ 535,620 |
Allowance for Doubtful Accounts Receivable | $ 18,796 | |
Manufacturers Rebates Receivables [Member] | ||
Manufacturer Rebates Receivables | ||
Allowance for Doubtful Accounts Receivable | $ 15,295 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | Feb. 26, 2022 | |
Goodwill | ||
Accumulated impairment losses | $ 803,712 | $ 803,712 |
Carrying amount of goodwill | ||
Beginning Balance | 879,136 | |
Goodwill impairment | 0 | |
Ending Balance | 879,136 | |
Pharmacy Services | ||
Goodwill | ||
Accumulated impairment losses | $ 835,644 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
May 28, 2022 | Feb. 26, 2022 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Goodwill impairment | $ 0 | |
Accumulated impairment losses | 803,712 | $ 803,712 |
Gross Carrying Amount, Finite Lived | 1,741,678 | 1,743,805 |
Accumulated Amortization | (1,473,128) | (1,467,009) |
Net | 268,550 | 276,796 |
Gross Carrying Amount, Total | 1,756,078 | 1,758,205 |
Net, Total | 282,950 | 291,196 |
Other intangibles, net | 282,950 | 291,196 |
Trademarks | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Indefinite Lived | 14,400 | 14,400 |
Noncompete agreements and other | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | 199,351 | 197,651 |
Accumulated Amortization | (179,046) | (178,958) |
Net | $ 20,305 | $ 18,693 |
Remaining Weighted Average Amortization Period | 3 years | 3 years |
Prescription files | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 1,026,342 | $ 1,030,169 |
Accumulated Amortization | (914,911) | (918,773) |
Net | $ 111,431 | $ 111,396 |
Remaining Weighted Average Amortization Period | 5 years | 6 years |
Customer relationships | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 388,000 | $ 388,000 |
Accumulated Amortization | (291,770) | (286,090) |
Net | $ 96,230 | $ 101,910 |
Remaining Weighted Average Amortization Period | 9 years | 10 years |
CMS license | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 57,500 | $ 57,500 |
Accumulated Amortization | (17,478) | (15,372) |
Net | $ 40,022 | $ 42,128 |
Remaining Weighted Average Amortization Period | 4 years | 5 years |
Claims adjudication and other developed software | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 58,985 | $ 58,985 |
Accumulated Amortization | (58,423) | (56,316) |
Net | $ 562 | $ 2,669 |
Remaining Weighted Average Amortization Period | 0 years | 1 year |
Backlog | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Gross Carrying Amount, Finite Lived | $ 11,500 | $ 11,500 |
Accumulated Amortization | $ (11,500) | $ (11,500) |
Remaining Weighted Average Amortization Period | 0 years | 0 years |
EI (Elixir Insurance) | CMS license | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class | ||
Remaining Weighted Average Amortization Period | 5 years | 19 years |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Unfavorable lease intangibles and amortization expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Goodwill and Other Intangible Assets | ||
Amortization expense for intangible assets and liabilities | $ 20,626 | $ 20,460 |
Anticipated annual amortization expense for intangible assets and liabilities | ||
2023 | 71,185 | |
2024 | 57,613 | |
2025 | 46,393 | |
2026 | 35,802 | |
2027 | $ 28,815 |
Indebtedness and Credit Agree_3
Indebtedness and Credit Agreements - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands | Jun. 13, 2022 | May 28, 2022 | Feb. 26, 2022 | May 28, 2021 | Dec. 20, 2018 |
Indebtedness and credit agreements | |||||
Lease financing obligations | $ 19,408 | $ 20,374 | |||
Total Debt | 3,045,864 | 2,753,360 | |||
Current maturities of long-term debt and lease financing obligations | 5,016 | 5,544 | |||
Long-term debt and lease financing obligations, less current maturities | 3,040,848 | 2,747,816 | |||
Senior Secured Debt [Member] | |||||
Indebtedness and credit agreements | |||||
Long-term debt | 1,330,797 | 1,038,646 | |||
FILO term loan due December 2023 | |||||
Indebtedness and credit agreements | |||||
Principal amount of debt | $ 450,000 | ||||
FILO term loan due August 2026 [Member] | |||||
Indebtedness and credit agreements | |||||
Long-term debt | 347,789 | 347,656 | |||
Principal amount of debt | 350,000 | 2,211 | |||
Unamortized debt issuance costs | 2,344 | ||||
Senior secured revolving credit facility due August 2026 [Member] | |||||
Indebtedness and credit agreements | |||||
Long-term debt | 983,008 | 690,990 | |||
Principal amount of debt | 1,000,000 | 709,000 | |||
Unamortized debt issuance costs | 16,992 | 18,010 | |||
Second Lien Secured Debt | |||||
Indebtedness and credit agreements | |||||
Long-term debt | 1,429,979 | 1,428,697 | |||
7.5% senior notes due July 2025 | |||||
Indebtedness and credit agreements | |||||
Long-term debt | $ 593,689 | $ 593,176 | |||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | ||
Principal amount of debt | $ 600,000 | $ 600,000 | |||
Unamortized debt issuance costs | 6,311 | 6,824 | |||
8.0% senior secured notes due 2026 | |||||
Indebtedness and credit agreements | |||||
Long-term debt | $ 836,290 | $ 835,521 | |||
Debt instrument, stated interest rate (as a percent) | 8% | 8% | |||
Principal amount of debt | $ 849,918 | $ 849,918 | |||
Unamortized debt issuance costs | 13,628 | 14,397 | |||
6.125% senior notes due April 2023 | |||||
Indebtedness and credit agreements | |||||
Debt instrument, stated interest rate (as a percent) | 6.125% | ||||
Unguaranteed Unsecured Debt | |||||
Indebtedness and credit agreements | |||||
Long-term debt | 265,680 | 265,643 | |||
7.7% notes due February 2027 | |||||
Indebtedness and credit agreements | |||||
Long-term debt | $ 236,777 | $ 236,744 | |||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | |||
Principal amount of debt | $ 237,386 | $ 237,386 | |||
Unamortized debt issuance costs | 609 | 642 | |||
6.875% fixed-rate senior notes due December 2028 | |||||
Indebtedness and credit agreements | |||||
Long-term debt | $ 28,903 | $ 28,899 | |||
Debt instrument, stated interest rate (as a percent) | 6.875% | 6.875% | |||
Principal amount of debt | $ 29,001 | $ 29,001 | |||
Unamortized debt issuance costs | $ 98 | $ 102 |
Indebtedness and Credit Agree_4
Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Aug. 20, 2021 | May 28, 2022 | Feb. 26, 2022 | May 28, 2021 | Dec. 20, 2018 | |
Credit facility | |||||
Cash sweep, 3-day minimum threshold | $ 275,000 | ||||
Cash sweep, 1-day minimum threshold | $ 200,000 | ||||
Rite Aid Lease Management Company | |||||
Credit facility | |||||
Ownership interest (as a percent) | 100% | ||||
Senior secured credit facility | |||||
Credit facility | |||||
Outstanding borrowings | $ 1,350,000 | ||||
Maximum amount of accumulated cash on hand | 200,000 | ||||
Amount of debt allowed to be outstanding | 1,500,000 | ||||
Threshold amount of debt | $ 750,000 | ||||
Number of days relating to debt threshold | 90 days | ||||
Minimum principal balance for which non-payment causes default | $ 50,000 | ||||
Senior secured credit facility | Minimum | |||||
Credit facility | |||||
Fixed charge coverage ratio | 1 | ||||
Senior secured revolving credit facility due December 2023 | |||||
Credit facility | |||||
Maximum borrowing capacity | $ 2,700,000 | ||||
Letters of credit outstanding | $ 127,696 | ||||
Additional borrowing capacity | 1,672,304 | ||||
Senior secured revolving credit facility due December 2023 | Minimum | |||||
Credit facility | |||||
Additional borrowing capacity | 365,000 | ||||
Threshold availability on thirtieth consecutive day | 250,000 | ||||
Senior secured revolving credit facility due December 2023 | Maximum | |||||
Credit facility | |||||
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements | 200,000 | ||||
Threshold availability on the third consecutive business day | 250,000 | ||||
FILO term loan due December 2023 | |||||
Credit facility | |||||
Maximum borrowing capacity | 450,000 | ||||
Principal amount of debt | 450,000 | ||||
FILO term loan due August 2026 [Member] | |||||
Credit facility | |||||
Maximum borrowing capacity | $ 350,000 | ||||
Principal amount of debt | 350,000 | $ 2,211 | |||
FILO term loan due August 2026 [Member] | LIBOR | |||||
Credit facility | |||||
Percentage points added to the reference rate | 2.75% | ||||
FILO term loan due August 2026 [Member] | Citibank's base rate | |||||
Credit facility | |||||
Percentage points added to the reference rate | 1.75% | ||||
Senior secured revolving credit facility due August 2026 [Member] | |||||
Credit facility | |||||
Maximum borrowing capacity | $ 2,800,000 | ||||
Principal amount of debt | $ 1,000,000 | $ 709,000 | |||
Period triggering springing maturity | 91 days | ||||
Senior secured revolving credit facility due August 2026 [Member] | Minimum | |||||
Credit facility | |||||
Credit facility commitment fee (as a percent) | 0.25% | ||||
Senior secured revolving credit facility due August 2026 [Member] | Maximum | |||||
Credit facility | |||||
Credit facility commitment fee (as a percent) | 0.375% | ||||
Senior secured revolving credit facility due August 2026 [Member] | LIBOR | Minimum | |||||
Credit facility | |||||
Percentage points added to the reference rate | 1.25% | ||||
Senior secured revolving credit facility due August 2026 [Member] | LIBOR | Maximum | |||||
Credit facility | |||||
Percentage points added to the reference rate | 1.75% | ||||
Senior secured revolving credit facility due August 2026 [Member] | Citibank's base rate | Minimum | |||||
Credit facility | |||||
Percentage points added to the reference rate | 0.25% | ||||
Senior secured revolving credit facility due August 2026 [Member] | Citibank's base rate | Maximum | |||||
Credit facility | |||||
Percentage points added to the reference rate | 0.75% | ||||
Senior secured revolving credit facility due January 2020 | |||||
Credit facility | |||||
Maximum borrowing capacity | $ 2,700,000 | ||||
6.125% senior notes due April 2023 | |||||
Credit facility | |||||
Debt instrument, stated interest rate (as a percent) | 6.125% |
Indebtedness and Credit Agree_5
Indebtedness and Credit Agreement - Transactions and Maturity (Details) - USD ($) | 3 Months Ended | |||||
Jun. 13, 2022 | May 28, 2021 | May 28, 2022 | May 29, 2021 | Jun. 29, 2022 | Feb. 26, 2022 | |
Indebtedness and credit agreements | ||||||
Gain (loss) on debt retirements, net | $ (396,000) | |||||
Maturities | ||||||
2023 | $ 0 | |||||
2024 | 0 | |||||
2025 | 0 | |||||
2026 | 600,000 | |||||
2027 | 2,437,304 | |||||
thereafter | 29,001 | |||||
6.125% senior notes due April 2023 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 6.125% | |||||
Gain (loss) on debt retirements and modification | $ (396,000) | |||||
Percentage of outstanding principal amount redeemed | 100% | |||||
6.875% fixed-rate senior notes due December 2028 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 6.875% | 6.875% | ||||
Face amount of debt repurchased | $ 26,955,000 | |||||
Principal amount of debt | $ 29,001,000 | $ 29,001,000 | ||||
7.7% notes due February 2027 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | 7.70% | ||||
Face amount of debt repurchased | 51,695,000 | |||||
Principal amount of debt | $ 237,386,000 | $ 237,386,000 | ||||
7.5% senior notes due July 2025 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | |||
Debt Instrument, Sun Cap Amount | $ 100,000,000 | |||||
Face amount of debt repurchased | $ 150,000,000 | $ 114,942,000 | ||||
Principal amount of debt | $ 600,000,000 | $ 600,000,000 | ||||
8.0% senior secured notes due 2026, | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 8% | |||||
7.70% senior secured notes due 2027 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 7.70% | |||||
6.875% senior secured notes due 2028 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 6.875% | |||||
8.0% senior secured notes due 2026 | ||||||
Indebtedness and credit agreements | ||||||
Debt instrument, stated interest rate (as a percent) | 8% | 8% | ||||
Principal amount of debt | $ 849,918,000 | $ 849,918,000 | ||||
Senior secured credit facility | ||||||
Indebtedness and credit agreements | ||||||
Gain (loss) on debt retirements and modification | (2,839,000) | |||||
FILO term loan due August 2026 [Member] | ||||||
Indebtedness and credit agreements | ||||||
Principal amount of debt | 350,000,000 | 2,211,000 | ||||
Senior secured revolving credit facility due August 2026 [Member] | ||||||
Indebtedness and credit agreements | ||||||
Principal amount of debt | $ 1,000,000,000 | $ 709,000,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Operating lease cost | $ 159,845 | $ 169,494 |
Financing lease cost: | ||
Amortization of right-of-use asset | 809 | 1,011 |
Interest on long-term finance lease liabilities | 501 | 568 |
Total finance lease costs | 1,310 | 1,579 |
Short-term lease costs | 457 | 1,099 |
Variable lease costs | 42,645 | 46,038 |
Less: sublease income | (3,223) | (3,343) |
Net lease cost | $ 201,034 | $ 214,867 |
Buildings | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 5 years | |
Initial terms of noncancellable finance leases | 5 years | |
Buildings | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 22 years | |
Initial terms of noncancellable finance leases | 22 years | |
Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 3 years | |
Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Initial terms of noncancellable operating leases | 10 years |
Leases - Supplemental cash flow
Leases - Supplemental cash flow information related to leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows paid for operating leases | $ 175,414 | $ 176,591 |
Operating cash flows paid for interest portion of finance leases | 501 | 568 |
Financing cash flows paid for principal portion of finance leases | 945 | 1,111 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 57,986 | 76,314 |
Finance leases | $ 0 | $ 0 |
Leases - Supplemental BS Inform
Leases - Supplemental BS Information (Details) - USD ($) $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
Operating leases: | ||
Operating lease right-of-use assets | $ 2,723,405 | $ 2,813,535 |
Short-term operating lease liabilities | 574,392 | 575,651 |
Long-term operating lease liabilities | 2,526,607 | 2,597,090 |
Total operating lease liabilities | 3,100,999 | 3,172,741 |
Finance leases: | ||
Property, plant and equipment, net | 985,121 | 989,167 |
Current maturities of long-term debt and lease financing obligations | $ 5,016 | $ 5,544 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Long-term Debt and Capital Lease Obligations, Current | Long-term Debt and Capital Lease Obligations, Current |
Lease financing obligations, less current maturities | $ 14,392 | $ 14,830 |
Total finance lease liabilities | $ 19,408 | $ 20,374 |
Weighted average remaining lease term | ||
Operating leases (in years) | 7 years 6 months | 7 years 8 months 12 days |
Finance leases (in years) | 8 years 8 months 12 days | 8 years 8 months 12 days |
Weighted average discount rate | ||
Operating leases (as a percent) | 6% | 6% |
Finance leases (as a percent) | 9.80% | 10% |
Finance Leased Assets [Member] | ||
Finance leases: | ||
Property, plant and equipment, net | $ 13,151 | $ 13,950 |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities under finance and operating leases (Details) - USD ($) $ in Thousands | May 28, 2022 | Feb. 26, 2022 |
Finance Leases, ASC842 | ||
2023 (remaining forty weeks) | $ 6,065 | |
2024 | 4,234 | |
2025 | 3,149 | |
2026 | 2,367 | |
2027 | 1,500 | |
Thereafter | 12,048 | |
Total lease payments | 29,363 | |
Less: imputed interest | (9,955) | |
Total finance lease liabilities | 19,408 | $ 20,374 |
Operating Leases, ASC842 | ||
2023 (remaining thirty-nine weeks) | 519,021 | |
2024 | 647,443 | |
2025 | 554,618 | |
2026 | 465,409 | |
2027 | 383,097 | |
Thereafter | 1,302,201 | |
Total lease payments | 3,871,789 | |
Less: imputed interest | (770,790) | |
Total operating lease liabilities | 3,100,999 | $ 3,172,741 |
Minimum sublease rentals | 34,000 | |
Operating and finance leases, ASC842 | ||
2023 (remaining thirty-nine weeks) | 525,086 | |
2024 | 651,677 | |
2025 | 557,767 | |
2026 | 467,776 | |
2027 | 384,597 | |
Thereafter | 1,314,249 | |
Total lease payments | 3,901,152 | |
Less: imputed interest | (780,745) | |
Total lease liabilities | $ 3,120,407 |
Leases - Sale Leaseback (Detail
Leases - Sale Leaseback (Details) $ in Thousands | 3 Months Ended |
May 29, 2021 USD ($) state | |
Leases | |
Number of facilities in sale/leaseback | state | 2 |
Sale/leaseback proceeds | $ 7,456 |
Leaseback term | 15 years |
Gain on sale-leaseback transactions | $ 3,688 |
Retirement Plans - Benefit obli
Retirement Plans - Benefit obligation and funded status (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Change in benefit obligations: | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
Defined Benefit Pension Plan | ||
Change in benefit obligations: | ||
Service cost | $ 107 | $ 128 |
Interest cost | 1,264 | 1,232 |
Expected return on plan assets | (1,402) | (1,313) |
Amortization of unrecognized net loss | 123 | |
Net periodic pension expense | (31) | $ 170 |
Change in plan assets: | ||
Employer contributions | 0 | |
Expected employer contribution during next fiscal year | $ 0 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet information (Details) $ in Thousands | 3 Months Ended | |
May 28, 2022 USD ($) segment | Feb. 26, 2022 USD ($) | |
Segment Reporting | ||
Number of reportable segments | segment | 2 | |
Total assets | $ 8,549,773 | $ 8,529,003 |
Goodwill | 879,136 | 879,136 |
Accounts receivable | 1,449,745 | 1,343,496 |
Operating segments | Retail Pharmacy | ||
Segment Reporting | ||
Total assets | 6,101,168 | 6,068,594 |
Goodwill | 43,492 | 43,492 |
Operating segments | Pharmacy Services | ||
Segment Reporting | ||
Total assets | 2,464,224 | 2,482,232 |
Goodwill | 835,644 | 835,644 |
Intersegment elimination | ||
Segment Reporting | ||
Total assets | (15,619) | (21,823) |
Long-term deferred tax liability | 0 | 0 |
Accounts receivable | $ 15,619 | $ 21,823 |
Segment Reporting - Revenues (D
Segment Reporting - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Segment Reporting | ||
Revenues | $ 6,014,583 | $ 6,160,985 |
Gross Profit | 1,196,729 | 1,284,875 |
Adjusted EBITDA | 100,130 | 138,877 |
Additions to property and equipment and intangible assets | 85,424 | 64,600 |
Retail Pharmacy | ||
Segment Reporting | ||
Revenues | 4,345,356 | 4,351,682 |
Operating segments | Retail Pharmacy | ||
Segment Reporting | ||
Revenues | 4,345,356 | 4,351,682 |
Gross Profit | 1,097,357 | 1,169,934 |
Adjusted EBITDA | 73,682 | 94,914 |
Additions to property and equipment and intangible assets | 78,551 | 60,893 |
Operating segments | Pharmacy Services | ||
Segment Reporting | ||
Revenues | 1,725,857 | 1,872,282 |
Gross Profit | 99,372 | 114,941 |
Adjusted EBITDA | 26,448 | 43,963 |
Additions to property and equipment and intangible assets | 6,873 | 3,707 |
Intersegment elimination | ||
Segment Reporting | ||
Revenues | $ (56,630) | $ (62,979) |
Segment Reporting - Adjusted EB
Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Segment Reporting | ||
Net loss | $ (110,191) | $ (13,057) |
Interest expense | 48,119 | 49,121 |
Income tax expense | 3,497 | 780 |
Depreciation and amortization | 70,073 | 75,859 |
LIFO credit | (3,993) | |
Facility exit and impairment charges | 66,571 | 8,831 |
Loss on debt retirements, net | 396 | |
Merger and Acquisition-related costs | 3,886 | |
Stock-based compensation expense | 3,334 | 2,811 |
Restructuring-related costs | 22,646 | 5,932 |
Inventory write-downs related to store closings | 7,955 | 472 |
Litigation and other contractual settlements | 18,271 | 14,000 |
Gain on sale of assets, net | (29,196) | (6,558) |
Other | (949) | 397 |
Adjusted EBITDA | $ 100,130 | $ 138,877 |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 22, 2022 USD ($) | Jan. 30, 2021 USD ($) lawsuit | May 28, 2022 state lawsuit | Oct. 01, 2021 USD ($) | |
Commitments, Contingencies and Guarantees | ||||
Number of claims settled | lawsuit | 2 | |||
Amount awarded to Humana | $ 122,600 | |||
Prejudgment interest awarded to Humana | $ 40,700 | |||
California Employment Litigation, Claims Related To Store Associates [Member] | ||||
Commitments, Contingencies and Guarantees | ||||
Potential settlement amount | $ 9 | |||
Number of claims settled | lawsuit | 1 | |||
California Employment Litigation, Claims Related To Distribution Center Associates [Member] | ||||
Commitments, Contingencies and Guarantees | ||||
Potential settlement amount | $ 1,750 | |||
California Employment Litigation, Claims Related to Uniforms | ||||
Commitments, Contingencies and Guarantees | ||||
Potential settlement amount | $ 12 | |||
Blue Cross Blue Shield Litigation [Member] | ||||
Commitments, Contingencies and Guarantees | ||||
Number of claims | lawsuit | 2 | |||
Number of states in which operated | state | 8 |
Supplementary Cash Flow Data (D
Supplementary Cash Flow Data (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 28, 2022 | May 29, 2021 | |
Supplementary Cash Flow Data | ||
Cash paid for interest | $ 11,230 | $ 12,813 |
Cash payments for income taxes, net | 13,290 | 556 |
Equipment financed under capital leases | 1,585 | |
Gross borrowings from revolver | 860,000 | 1,546,000 |
Gross repayments to revolver | 569,000 | 1,507,000 |
Significant components of cash provided by Other Liabilities | ||
Other liabilities | $ 15,327 | $ 34,559 |