Rite Aid touts sufficient liquidity, pays down nearest debt maturity

By Devika Patel

Knoxville, Tenn., April 21 – Rite Aid Corp. has plenty of liquidity to fund the upcoming fiscal year, despite conducting a $165 million tender for its 2025 notes last quarter, bringing the amount outstanding to $320 million.

The company is focused on repurchasing its 2025 notes, since they are the first ones to mature. There was $600 million of 2025 notes a year ago.

“During the quarter, we completed a tender offer for $165 million of our 2025 notes,” executive vice president and chief financial officer Matt Schroeder said on the company’s fourth quarter and year ended March 4 earnings conference call on Thursday.

“Over the past year, we have reduced the amount of our outstanding 2025 notes, which is our nearest term maturity, from $600 million to $320 million.

“We are assessing options to address the remainder of these maturities, more to come as we progress throughout the year.

“The 2025 bonds are the things that were the most focused on, given that they’re the earliest ones to mature,” Schroeder said.

The company had better-than-expected fourth quarter adjusted EBITDA.

The fourth quarter had an extra week, compared to the same period last year, adding about $10 million of adjusted EBITDA to the total.

“Q4 adjusted EBITDA of $129 million was above the midpoint of our guidance and better than analyst expectations of $101 million and prior year Q4 of $106 million,” interim chief executive officer Elizabeth Burr said on the call.

“Both our fourth quarter and full year results benefited from an extra week in fiscal 2023, which contributed approximately $10 million in adjusted EBITDA,” Schroeder said.

Management believes there is sufficient liquidity to fund the company through fiscal 2024.

“We have $1.5 billion in liquidity at the end of fiscal year 2023, which we believe is more than enough to get us through fiscal 2024,” Burr said.

Cash and cash equivalents were $157,151,000 as of March 4, 2023, compared to $39,721,000 as of Feb. 26, 2022.

Long-term debt, less current maturities, was $2,925,258,000 as of March 4, 2023, compared to $2,732,986,000 as of Feb. 26, 2022.

Current maturities of long-term debt and lease financing obligations were $6,332,000 as of March 4, 2023, compared to $5,544,000 as of Feb. 26, 2022.

At the end of the fiscal year, Rite Aid had a leverage ratio of 6.5x.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

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