RAD - Earnings call transcript Q1 2023

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Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid Corporation Fiscal Year 2023 First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the meeting over to Byron Purcell. Please go ahead.

Byron Purcell

good and Regina, you, morning, everyone. Thank you conference call. welcome to our earnings quarter first XXXX fiscal We Heyward President Officer Executive Vice call Donigan Matt prepared President and , with and and Chief Chief Financial remarks. will the Officer; begin Executive Schroeder, Retail Vice Operating DuPaul, will join Chief Elixir the during and the Chris Andre Persaud, call and question-and-answer Officer; Executive also President Chief Officer, session.

investors.riteaid.com. release, discussing related to on we'll be today. As slides slides our we the providing website, mentioned we are in provided These our are material

risks or that press on report measures Form annual filed the certain not directly to release release using certain we'll of in recent of are the that, we accompanying and results can and call along uncertainties speaking slides, that the other our reconciliation non-GAAP and definition in our the the slides. and forward-looking GAAP to non-GAAP measures slides the will in described And with these our management Before While related described conference Difficulty] most and with are that be These These actual start, XX-K uncertainties our documents call these SEC. in turn The be in to includes let Item are Also, me we to over context furnished statements are measures, forward-looking today's release presented meant XA slides. press of risks and remind cause statements. [Technical certain differ. like with I'd the to you Heyward.

Heyward Donigan

make call. 'XX, and quarter good Aid. for us, to welcome our we strides Coming everyone. Rite of earnings Thanks out and Byron, transforming fiscal morning, continue to Thanks, first joining

the across And deliver quarter I'll build the year's momentum revenues measurable I and the some to compared results. we're were taking want for last key $X.XX a you spend within quarterly minutes the on quarter on $X and first actions progress X few then talking billion. saw making. time strategic to about pillars, solid us Revenues billion Our we're of update to business. to quarter you some first our of our take the results

this in This was our year's EBITDA with last to expectations. adjusted was million. decrease of Our $XXX million quarter line $XXX.X first adjusted EBITDA compared quarter

weather Our for pandemic, in to really vaccines life-saving to now the our business height ability life-enhancing getting of remarkable. and back team the and testing delivering I'm of and proud the medications strong And results. showing core was

and team better on to we for bit modern This X,XXX a refocusing allow caring Now becoming with a more. as XX,XXX expert a explain associates, and our pharmacy, customers we're communities full-service a serve for of is we company me to and and another stand leading what drive outcomes. little pharmacists health

modern To still So parts about traditional of me the health of marketplace. defining the despite are like pharmacy. our heard systemic what much you means last the our the speak pharmacy and unmet care, size recap, to call, modern earnings there On needs. pharmacy maturity of marketplace,

basis. prescriptions important a people yet to another medical get $XXX to prescriptions are million X and/or of as high-quality they on in avoidable underutilization because X a than errand prescribed, even their pharmacies, access not afford miles day. viewed pharmacy. trip it's live XX% as away pharmacy to timely from of can to the stressed. of overworked cost. and more prescriptions. to those And medications communities their Americans are these But top health rural We most do the take lost the access fact not One sight their of of failed life-enhancing nearest who the drives year medications X medications is so plus And have in costs. are stops A remember, notably, a billion Americans and Americans have XX have They're X care. and their in on life-saving that living really

All of has a placed the advanced pharmacy the possibilities relentless single option well a store. coming and beyond is teams of Aid expanding to of they the on focus communities why have into Rite wherever we are. this meet customers

We place of have to pharmacy convenience a with our interact including one-stop digital ways Buy both XX/X, and mail in both capabilities, These prescriptions Online, advancing enhancing team, across encompass significant Pick We're multiple channels a infrastructure offer customers and to our member and create our Up This in retail the services to modern is services pharmacy. Store a options. and shopping delivery experience. goods expanding chat.

areas: health our focused share and currently other in to on to and the and of serve; portfolio by I expanding both health customers stakeholders. offerings grow needs assets key and pillars to the our QX leveraging winning our the markets, and deepening our we growth brings new So segments offerings our evolving improve customers. to our meet creating We're This to X that markets in of outlined how the continue company call. of customers; new we on the segments do of me

the me complete with and serve. QX in with Let rebound deepening pharmacy share our we acute market maintenance better scripts retail our pre-pandemic business. segments begin levels. and than Starting a saw

QX For maintenance versus scripts, up and FY XX.X% X.X% up versus 'XX. 'XX was FY

X.X% versus up up 'XX. was QX 'XX scripts, FY acute XX.X% versus FY For and

prescriptions, also going seeing going increased their lives, we back are an cough the notably are to acute for need and and people to most back As doctor living cold.

adherence. customer steam will and will driving live just improvements go-forward in of are full this in help business activating Examples a dollars. number that our refill basis, an but adherence been profit improvement give deliver meaningful $XX not how gross provides also profit in improving ahead our these this adherence year. initiatives impact of rate, million have We sense on initiatives both you customers only fill increasing a a enrollment life, fiscal healthier of a courtesy of X% gross To our and XX-day

coming that and we'll front-end makes customer to speak consumer easier it more both save. engage plan we and maximize program pharmacy how that You'll program this customers also loyalty to In sales. Aid we a Rite year, drive higher Rewards, to last engagement recall launched for further quarters, the in new and

our We and color end color our competitive new relative And revenue results inflation, inventory. top while beauty in and our new in this department business. a plan the delays preserving overall, gross show continue to in our some do we a wearing levels. the the is the on continue enhance forward in We're line expect to growth seasonal the on close on This assortment People margin. to stay issues others, X.X% front of had again. in prices But cosmetic lipstick resulted we item encouraging launches very cosmetics to in quarter. are our to inventory weather also the we looking rest project everybody shipments. same. to year, eye Like relative like to to keeping goal And reductions

Turning to our specialty pharmacy business.

to to the We're white mail broader on of our mail actively to of focused have overall set LDD across expanding we're developing a payers. network with to working driving well both order specialty eye solutions cost our down order to toward number in volumes. access and We continued drive dispensing Elixir book fill participation an a networks, also grow businesses label also volumes of increase and in business, both as as

business. PBM the to services turn to Now

sold And XXXX season to new close we the remaining are in services lives to pipeline for the enabled selling new new capabilities, add year. January and X XXXX. for progress, lives than innovative last January we've still additionally, is million got in X, X, in date. contracts, more strong start lives programs Our network clinical XX,XXX and expertise rebate These us government have

for insurance XXXX. the on the we've signaled On of business, before, this Part Elixir and have side to we as our our our And discussed to we've profitability business we D that continue need reduce expect membership to submitted business. government of plan, in bid own we the our customers focus growing the recently manage as

new our markets, growth next customers. segments new pillar is Our and expanding to offerings

significant spending we're the discretionary investing in provide which own As our consumer brands value for options pressure, under and customer. comes

journey own As on our brand a relaunch we've and repackage, we've rename to portfolio. discussed, been

York experience launches small in products, half in have launched XX% on pharmacies our of track coming year we quarter, new format to rearchitecting also rural year. back designed be these with the working summer, our we this partnership or offering communities provide mutual our we'll an company to creating more we're communities. Homeward, This announced clinical newly in And -- Virginia. Homeward markets, we living Beginning these We've aimed leveraging and recently our customers with in in been rural Indiana, underserved services mentioned of exciting assets We're leveraging New earlier, offerings integrated health XXX finally, meet and and technology our a to in this care enhance Michigan, of open of pharmacy overall with I the to customers. and at new this of living a to customer mentioned our the million for other markets rural And that's by and speaking partnership Americans Upstate XX the and health new on communities. focused stakeholders. wellness evolving needs the of portfolio

for do partnership help flexibility to later. how AfterPay's were next the further examples our paying are and digital summer, direct-to-consumer goods. to earnings enables new our able discuss access These when pay later Afterpay launching drugstore this our were announced We and success. that. call. online to of long-term customers a offer diversifying have platform us solution everyday national We in recently payment to chain Our for first with this flexible business we're shop we'll Also, just we're and

to as Matt, Turning momentarily from SG&A our you'll footing optimize $XX quarter. we quarter, continue financial solid schedule retail this We to million remain business. to closed annual reduced of to steps ahead track million We're are we and further by last our stores that hear through capital expenses target position, structure. XX our $XXX savings outlined of on efficiencies and taking our on meet drive

have us the our we that X.Xx until constantly due a opportunities no leverage by will for ratio And of are fiscal help of reminder, XXXX. a target looking end As we XXXX. debt achieve

liquidity we our further in business provides position. strengthen Our continue to invest and expect And to offerings. down free debt year our cash additional flow innovate $X.X generate this financial billion to in to additional pay runway our to

investment returns believe will [ARC] energized stakeholders. close, before for hit. that really Rite an back execute continue pandemic future on by to Rite planned the where our we all get our is I'm that will do meaningful to today, track, I'm we Aid be our that yield evolution for as of on excited as Aid strategy, long-term So the And really back I to and we

to Now go Matt it financial to I'll Matt? performance. turn over over the

Matt Schroeder

we improve is use good tender up availability Recently, additional mentioned and transaction, revolver $XXX step additional outstanding we replacing million our benefit these plus structure. to an debt pay to overall this top Through revolver on for borrowings a a took capital bond Heyward, to that are calls to an lower to with expect savings, offer bring Thanks, we priority will down of paying back borrowings as bonds down $XXX outstanding. discount. morning, We previous XXXX purchase at of bonds, everyone. a have debt our lower interest a rate. the that We've company. launched million of This our over also

our Now first I'll in quarter more detail. results review

our of stated, with $X Heyward of and net billion, with adjusted of were EBITDA $X.XX revenues expectations results As in million. share adjusted line our a per $XXX.X share loss

Going by quarter. of Front-end Outside and X.X compared last chain vaccine products, first sales, to up increase decreases was and sales Retail $X.X quarter flat closures, quarter X.X%. administered year's impact, decrease vaccines scripts were seasonal million expected year. of over-the-counter alcohol quarter. XXXX, in revenue Retail disruptions. the increased which same-store than X.X% driven first This same-store increase million COVID-related up segment. same-store and store first COVID offset the the was $X.XX last revenue in lower products Front-end cigarette sales pharmacy sales year's tobacco by due offset in Pharmacy billion, XX.X%. in were by by sales million the excluding acute in and into segment were an maintenance in of the for were in We scripts Pharmacy prescriptions. supply to to the Pharmacy increases driven non-COVID X.X%, X.X with vaccine same-store Retail was last

X.X% EBITDA COVID improved and Pharmacy front-end or The million or Retail offset attributed by and EBITDA reduced volumes, million adjusted quarter prescription revenues. to First increased adjusted adjusted to of of last year's is was lower first in margins non-COVID X.X% testing, of revenues $XX.X SG&A. vaccinations decrease quarter compared EBITDA $XX.X

by reduction $XX.X quarter were a Heyward adjusted better, Retail payroll, basis segment million revenue, our percent expenses store As lower than said, occupancy cost XX points driven initiatives. of SG&A our and Pharmacy due prior store to expenses, the closures EBITDA and year or operating as first

We call. our our we now that shift targets Services expect of to meet Elixir. the I'll cost earnings $XXX Pharmacy segment, in to reduction million year-end discussed

now adjusted $XXX X.X% quarter, primarily or well membership increase lives, offset as to as increase year, management due quarter's insurance to as of of from sheet. revenues, revenues flows was a I'll For of our at in this we $X.X benefits decrease last partnership, and adjusted Elixir It previously of million run X.X% in Elixir's to decreased saw loss, Elixir of arrangement. to the slightly loss first client a announced an improved our higher and balance new quarter is our for due Elixir our to EBITDA rebate covered or and first the tight adjusted client new billion by or rebate expect planned that from drugs. related utilization the quarterly control. was offset rebate year's EBITDA note X.X% $XX.X not ratio quarter insurance, Elixir medical $XX million by turn is cash an SG&A of and costs high-cost to spread first EBITDA loss guarantees anticipated compared million in This revenues. and benefits rate to the important

later of statement the payable by increases timing will quarter receivable of $XXX CMS activities from securitize we the in build accounts rebates flow which cash in receivable, cash shows payments. for use year, of the Our the million, of and operating the driven

in store in activities net used will $XX or million the these over this sales proceeds our for to Included that file of are attributed $XX later in quarter. activities items of quarter. closings investing script year. All investing timing million reverse Cash from was the

pay year. expect to options proceeds debt to to owned explore down continue We the additional on sale-leaseback in to stores have these and transactions cash from generate later

timing $X timing the I the debt the just end -- differences due to Our balance of capital was billion net approximately at described. quarter working

fiscal our expect the by end We ratio the to Xx range in of be leverage the low year.

Now let's guidance. turn to

Adjusted on to We've EBITDA we increases and for $XX be to million, in between raising at our and billion. guidance billion Adjusted the our segment EBITDA to We've Adjusted adjusted expenditures EBITDA the are $XXX and and $X.XX drugs higher-cost in our $XXX is Pharmacy Retail expected Total on slightly to million. and the share. affirming increased at and outlined is quarter our revenue impact is per are revenue lowered year. guidance expected is are to between $X.XX $XXX million $XXX adjusted $XXX expected be utilization be expected while Elixir retail EBITDA guidance call. loss that first quarter to revenue and per $XXX $XXX expected saw between front-end be of due $XX.X revenues We Elixir. be at million. to to adjust sales rest trends expected of net million. between that their share the Capital expected the we between guidance be million fourth

making driving processes and at business, are chain prescription that digital investments our our our that automating efficiencies are are by investments business including focused and and purchases investments supply file growing Elixir. on in We transforming and driven our in technologies towards

interest the are also fiscal points assumption rate to by in Interest the approximately expense We current million be partially brand increases basis projected year. potential now our for over investments key savings Fed bond This the XXX our to refreshing improve offset making of stores by is includes tender. $XXX markets. year, from

to down capital questions. open Regina, generate from cash continue positive expect remarks. debt. to reductions the to prepared benefit inventory our We free This of $XX to a line million phone please for pay And and generate completes working flow

Operator

from come Bank. of [Operator Instructions] first Deutsche line the with Hill George will Our question

George Hill

Matt, big did that company $XX quarter, kind million Yes. in question $XX the my million first I in guess, $XX $XXX of picture million. the you question, a which is the business at is delivered VACs, if take million out you look that to the this EBITDA

of will benefit hit the there course, double VACs quarter the Of to the from of basically from guidance. the this needs of every to midpoint business quarter the profitability a around but kind be continuing

are -- to trying phase embedded growth is we opportunities and through is, of we're You've pandemic? the Or of the to like type of the cost in get coming what would than back that business we still shrink-to-grow Heyward kind where what I see do -- guess feel we the some are I'm the cost of outlook? versus talk talked out about ask you growth a Kind reductions. more could cuts. I you of the

Heyward Donigan

Yes, Thanks. Heyward. it's George,

I think a combination. it's

can our got we've -- year. grow we that from the are last benefit We vaccines even significant scripts, cycling we shown

that's our And core just up. So scripts the beginning. are

haven't maintenance as front in we have sales some of the the medication yet into was the end comps quarter, flat us. in opportunities of actually Also, and even tapped refill front really adherence increasing quarter. We front-end courtesy while that were the

momentum seen have seeing Elixir. strong earlier, mentioned sales And on strong we're as we the So I results within quarter.

so this are than So year. at time rates more sold sold far our year last this retention we we've And higher.

that's other talked efforts. SG&A some and we opportunities. let I'll of economics just growth And So about the mail specialty the Matt on the the and comment story.

Matt Schroeder

Yes.

do thing for I flu of other think immunizations add fourth have in that in of the of we we revenues year. the kind that year just keep a the trend and lot the regarding mind in the is, the quarter expect to third to

my aspect in finished is had to able of on all -- expected we've comments, get Heyward between side. quarter. side the we've we the we business We stores efficiency a benefits some targeted during those X about modeling. of last the the SG&A loaded to this year and more said benefits of the that quarter. efficient I some then to during close -- I the from grow and be And closing the got quarters as is as in to expect And both ramp that the also We the year. the in the basically think improvement got the initiatives EBITDA script on some guidance. are you so our the back-end And back-end opportunities give and of growth certainly as factors maintaining George, all on the in us together said, that loaded stirred cost-cutting margin and at Elixir, we're working those comfort

George Hill

is savings Okay. annualize? EBITDA a can we is If you quick of more benefit million I in I that the is in nag quarter, Or a out feel guess SG&A more the a couple can safe $XX that number you ones. adjusted -- that onetime that of

Matt Schroeder

that have [Technical get Difficulty] just to we initiatives traction that some we're starting on.

So you definitely annualize could I number. think that

George Hill

Okay. drive I'll to for round I Do of see is your pharmacy tech throw inflation? space was more that, another you And guys the and guys broadly could labor? cost hop wage talk labor about Walmart I'll guys X the raise the in X last planning wage think wages. in I which away guess back for to rising I the guys? that guess then queue, week last potential are continuing how maybe noise another exposed pharm and around pushed you of suspect And costs. you you to round pressures being feel tech

Heyward Donigan

a position labor. good in are wages very We and on

expect other labor increases perspective. significant from a We in talk Andre which we last we're positioned through additional our cycled any are already can don't about So reflected increases. wage year, wage to how specifically do numbers.

Andre Persaud

in did all At here. them George. with very very about a competitive, which modeled pay. been Yes, me feel commensurate a Walmart. of we with strategic where technicians, right on into we're Aid, we now general months. have are from comprehensive technician good our opportunities wage We're program working for to to mentioned, last year, inflation, focused training And progression QX regards Yes. Rite for have on of and Good that in and we some been very staying our made we new year. announcement to over for prior are than was see very very and we've our we this XX more In And the plan focused investments starting Relative at training Heyward our for as what technicians announced, this confident, hiring year. start we now. for with morning, Heyward. the Thanks, let

So our feel situation. we hiring at good in about this frontline very time, point

the that on we much so of don't And perspective, year from wages pressure half see for the back us. for

Operator

come Your next the line Anderson from Evercore. question will Elizabeth of with

Elizabeth Anderson

the the rest to wondering about if could just by talking do the quarter in you of those of you new the year? start loyalty was expect maybe I the off benefits and program how for ramp

Heyward Donigan

benefits -- the customers the Aid been that that lack start quarter of giving of of I'll loyalty the even were who in margin discounts largely accrue even Rite discount. by they because program, for having aware didn't to improved to the Rewards, new actually has saying the some were these that earning we weren't

rewards So you update the Andre, can on program? new

Andre Persaud

We're next Absolutely. It's dollar more in bang relative is much It program very actually launch program. a to new early days. margin big XX have investment. the our and a We an efficient discount plan spend program this. exciting a of in points-based a

to as for a are more and we in will is how we overall appeals brick-and-mortar life. to online, help in back extend larger you program consumer program acquisition be which brings The And we the goal For base. half be end. points program a purpose, front products. is customer both the our you're achieve and through That beyond pharmacy really drive health -- our could customers. offers there speak with much in of so that mature It's digital-first and line to the into personalize us, it this both course, us spend, that year, of is, much

our So X excited for but here. about next the months progression early, very

Elizabeth Anderson

$XX positive from a that I quarter, So label. talked between and about of million contribution you private in last that still expect terms -- you think like

still of on versus that quarter? would what as last said you track being think So you

Matt Schroeder

very quarter. what the line saw reduction the That's we Between from we a million exactly bottom $XX items, in on in expect loyalty We right. pleased those benefit this margin of particular. a first benefit the on lack program, with markdowns Elizabeth, gross X were Matt. is in the

Elizabeth Anderson

-- it you? can Got

Unidentified Company Representative

Just.

Elizabeth Anderson

go ahead. Sorry,

Heyward Donigan

go ahead. No,

Elizabeth Anderson

something volumes something I Obviously, as add quarter. else had unless switch around PCR Test. of terms in of you moving the topics would switching just testing of and been to sort there, that's in COVID between just that's Home been

cadence something seeing talk whether else sort you're I could was of that, wondering off to about vaccine it's there? that the So if drop or you sequentially similar

Heyward Donigan

we to tend still West vaccines the Coast and in vaccines certainly, the you there's other. the now. see States, hotspots as dropped United with in Well, move testing X each lot the concert right but of a the off have And know, being the big

are So if home go also well. know and we don't still PCR seeing some sales testing, are want specifics doing over. testing have Matt, as we in strong I you you to

Matt Schroeder

that into on Yes. saw I demand worth million of even And we second first the would did a in that to kind over-the-counter probably as high drop tests strong. it over quarter. we test, We of test antigen quarter-over-quarter. sales demand $XX be remains the move and for pretty the PCR about quarter. the off the But antigen test, continues say quarter, in steady cadence the was certainly, over

Elizabeth Anderson

go right. Okay, remember just in sales, would for the -- right, we end so the home And front that that

Matt Schroeder

run covered through the coming benefit through with pharmacy us, we a they're For some the also because majority finance. the

in about say mix So I front pharmacy XX% XX% end. the about in the would the is and

Elizabeth Anderson

right of kind -- test was then roughly if if area? that's sort a of PCR -- had like is XXX,XXX, And something I is that I so ballpark Okay.

Matt Schroeder

quite quarter. little the that, for a than than that a less less little Probably

Elizabeth Anderson

versus expected, question I the X stores. than the make cadence earlier And the I just have Okay. you last Obviously, I stores on sorry, a bunch which maybe, of fine. want the my year. sure original of for the then expectations, Perfect. obviously is stores closed to

of want year. rural just store I So closure York in of terms and openings the New cadence store talked the the cetera. total rest you for in Virginia, the about just then et understand to And

the So count? full do as in sort the stores how those And we count year? the of rest about how do many store you're of adding think and new

Heyward Donigan

stores of by think closing June. XXX Well, us

on, be estate how we can to real will say find that behind branded opening standard. And fast fast then we this as we anywhere largely right get can staff depending a into be XX, real well frankly, So as between, us. and the estate, we X will now how ensuring just and get our formats let's

that. So I be after opening us this stores for would opening look eye at within X year toward XX to an minimally least with months

Elizabeth Anderson

Okay.

and -- full store. small format. those count like of of types the stores as They're versus sort like still So other

Heyward Donigan

Yes. Yes. run trusted store. like out, health still be will call I'd limited a apothecary it that as Think a with to But a end. where really pharmacies them they front European just over-the-counter of thought those we care McKesson the instead with frontline markets, to on of inventory having our health and care of professional own deal front where in end. on the depend for rent supply lot -- chain a our

definitely but -- So consider the store.

Matt Schroeder

definitely a Elizabeth, from it discrete a modeling and is story. standpoint, statistical

Operator

Reuter will with the of Bank from of line William America. question come next Your

William Reuter

morning. Good

COVID is year. of a second I And potentially maybe number of administering, this that at quarter incidence above the your tailwind Given was you're the across guess, beginning is of U.S., vaccines the still the previous high the the that foreseen not expectation? into

Matt Schroeder

said had levels quarter last expected to 'XX. expecting. of year what is were we it number vaccine So I And decline for a XX% we're We Bill, full they the XX% to in think Matt. still fiscal that that that's this a of

of predict. quarter-over-quarter As or expectations to difficult hard very cadence, for exactly cadence to month to it's little have going what kind been candidly, a be month. the far is This of over as expectations is

within we we the That's little XX% the be plan and quarter me forward. even million so of our as -- that, of But go facts over unless to -- reduction we kind thoughts So that's saw to what going XX% what until in that range that's anything, I our with, best we're last a beyond year. change sticking more guidance. for gives probably X.X first if we're think well confidence that

Heyward Donigan

the Yes. more whether against the vaccine are variant, new out We of the is a that on. than or saw on now current comes a quarter. in And that first counting it's version expected working and variants what they're we then effective Omicron, that's we expecting

expect do of We be anticipate version. the what an we very And flu also we a predict it's but course, pointing we uptake different so be, strong variant will will a then, will can't be there really And likely season. to be uptake that. to what think since

William Reuter

point, it Yes, it. be than your to know COVID. to know XX% reduction, that everyone at seems given less be XX% okay. expectation gets -- the might like getX this would continue But it I didn't it I Got if

lives that might reasonable then would What for you that anything of is mentioned Elixir you've million about getting? still question second you're what's X percent trying potential that to potentially those? Elixir next XX,XXX shaking calendar is going degree of And there additional in you additional if that year, to of guess, your else the I has terms The confidence million. think of there's and be lives, that been XXXX, how be out. losses I'm in attained, attain

Heyward Donigan

let I'll answer. Chris

Chris DuPaul

question. Thank you for the

clarify still our bit, numbers. that million we inside have are you taking in to a Heyward lives active the Just our down referenced lives through markets. of the pipeline The X target that

are [X/X/XX]. -- right now for business a that that's bid is those So up for

new try now last win our health live plan to on year, for call, particularly At portion we our pretty about are start in out our strong to we've So the to I new -- in selling we had a next we've talked a expect side. goal time, of life the we've a XXX,XXX set X of season, win right count and that of Where think those. million, earnings terms

that slowed into bit. moved of the more we've a commercial As book,

have several As clients the are that said, Elixir. at we've seen incumbents. we we've season That still expecting selling in sticking with to had years more strongest

life about good feel so is really our headed. count And where we

Our And in earlier did MCS, to right in retention our we year. retain is still client, come largest around rate expected XX%. the

So we're lives feeling our headed of [X/X/XX], where really good going into that's we are there. how about get and sort

Operator

Your the Jefferies. line next from Martinson of question with come will Karru

Karru Martinson

were to for? of store benefit you coming XX% are scripts quarter looking in them, When was look still terms liquidation that that And you the the what those had of where the you value asset the and the at XX% to closures range in sales?

Matt Schroeder

both obviously, a side $XX we're because standpoint are And valuations from are to asset $XX proceeds benefit in seeing, in range. of The the on Matt. the that that sales the it's the the about out Karru, side, market, file think, I quarter the is script So doing sell and $XX we for buy buys million.

Karru Martinson

when then update that that is the there? the back and add outlook? separate the litigation look expenses? of litigation, any opioid the for the add expense is on here kind then the you what Or And litigation for Okay. at stock And expenses, back

Matt Schroeder

us on from to related the long-standing So to add-backs other during think did that quarter the data some where of no matters quarter. report. were to of we areas kept out And us we kind opioids, talked last key that, bellweather kept -- that about. We've litigation out really nothing settlements the settlements in Other some not targeted had and related opioid cases. than the new I of

Karru Martinson

we'll that go that Okay. and front, continue And store just Is about lastly, think course of right to the the as the on revolver way it, that year? we down revolver funded kind so work closures through draw. on we've of to the the

Matt Schroeder

and and help closures, closure are store an And the expect when some can't actually here program because actually getting draws really benefit of the scripts that against revolver look transform selling I the between EBITDA we're getting us stores at that's to stores, accretive. that cash as EBITDA. proceeds other we're on Well, I store out negative we be

Operator

next will Jenna from of Your Goldman question the line Giannelli come with Sachs.

Jenna Giannelli

just a and you terms guess, liquidity seen? some may in out the just a I called your you have that little any of rating changes to there Any the of questions emphasized a to relations. your been have position. around that speculative -- you be vendor you've the that can speak exchange, lot. rating strong sometimes, the know And That's guess, guess, back I can I have from update vendors agencies, clarified? with default bit on I needed

Matt Schroeder

Jen, be changes. is vendors No The short no. good, need questions are Relationships to with answer, no clarified. term

tender it. Byron -- about partners actually and And very have default understand potential concerned it the expectation been pretty not proactive we've and out actually I it, talking and speculative of and a they going been and to actually in vendor about vendors are get Our they're they the bond supportive. --

where feel are we very vendor relationships. for we good So about

Jenna Giannelli

and year half just can now, a benefits the that those in to expect aggregator. the being PBM the That's great side the on in around I to of and EBITDA Good. just of expected from year benefits earlier right driver When rating pickup below maybe in the -- see the an to the full I is, that increased expectation EBITDA we Awesome. the the year? cost guide back PBM come embedded rebate then you And be guidance going question lives. terms of really hear. mean, the through? adjusted side, of run in But the Is confidence little in the the in still we're just guess, primary on where of savings full the

Heyward Donigan

the say of EBITDA. it's to with sticking we the would guidance of that all above. million reaffirm, Elixir I combination in just million a to our business $XXX But on are $XXX

the of XX% We EBITDA focus confidence efficient. our opportunities, have relentless improving XX% management, more for of getting range around a Elixir. a level high It's selling that. on growth network combination also represent would of year business a and for our rebate to That

Operator

question come Casella Carla of final line will JPMorgan. with Our the from

Carla Casella

a add kind have couple but EBITDA and Most litigation that's year of your what any the of an you settlements. in follow-ups. opioid of guide where the answered, said for been to back million mine settlements? Have in you $XX.X related for just of contractual other of adjustments stand for and full There's

Matt Schroeder

to And we have when We've York ago settlements that for. few settlements Other we guide there in in of really, other that. where So a nothing had the some some that, litigation settlements we on success we're out. kept long-standing targeted to this about cases from the and and that than Ohio there report. is months doing $XX.X had non-opioid pleased cases, pretty no New were reported us bellweather out related change million the were Carla, opioid we that in actually the quarter, had

Carla Casella

be just the to then revolver expect down of a out be time additional for draw, the draw Okay. revolver? be And you the the pay frame do bond able tender there able -- revolver that quarter, over to to is target and to you also this

Matt Schroeder

generated year we that what the same to down pay year-end, of of flow the at cash ZIP timing. kind in have business this the the our revolver end beginning the draw of happened A be to quarter year. able the with code at as was all expect get the in it lot positive and to expect I by be debt, to of Well, and

Carla Casella

Exactly. Right.

it's give of sounds lower guidance. Okay. we of lives revenue that getting or And just takes you're Elixir in than you're EBITDA and seeing a is then more Can Elixir, kind margin? great any the drivers on than The you bit what margin that targeting. puts gross to little were

Matt Schroeder

Yes.

revenue guide the around and change of some the which this is really think pass-through. a for really utilization for we I year year's have that is of high-cost guide this revenue drugs,

So negative little that's impact rate. margin a your going bit have of to a on

what rate guidance getting and the and before, with we was between that's the a that and and guidance there. pull trade-off you're of the So kind of push rate a consistent bit that fact little margin our revenue EBITDA the kept

margins quarter. third the that we expect about said initiatives of fourth do to second we've in the some better we management have, and PBM rebate spread and get As and

Carla Casella

Okay.

is talking clearly higher the those cost lower that about, that you're drugs underlying business the not it's it's So price coming higher margins, in points.

Matt Schroeder

from good to gross impact basically is Yeah, have on in negative have shape. standpoint. this to -- it's going profit dollar going higher drug cost We're margin a a rate still

Operator

the now Donigan back for And to closing any turn over Heyward I'll remarks. conference

Heyward Donigan

Aid. Well, thank your Really your you, importantly, everyone, right. All most for for appreciate And questions. interest in Rite it.

becoming and modern We are full-service on a focus pharmacy. maintaining our leading

to to serve And about. an the take that's a we expect what do have we team XX,XXX is all we customers as to expert. advantage associates have experts what please drive long-term and of better stand XX/X. value. will a another for outcomes, then we available for X,XXX communities We And That's you. because and caring company, opportunity pharmacists Thank shareholder health you ask drive what of this it's that

Operator

does Ladies today's that and all meeting. Thank gentlemen, joining. for you conclude

disconnect. You may now

New Rite Aid (RADCQ) 23 Jun 222023 Q1 Earnings call transcript