S&P trims Rite Aid

S&P said it trimmed Rite Aid Corp.’s issuer rating to CCC+ from B-.

“We expect Rite Aid's multiyear turnaround effort to slow down this year leading to a potentially unsustainable capital structure. We expect the decreased demand for vaccines associated with the Covid-19 pandemic last year to have a significant impact on Rite Aid's retail pharmacy division. This along with the planned closure of additional underperforming stores and ongoing challenges at Elixir, will lead to top line declines in consolidated revenues in fiscal 2023 despite improvements in acute prescription to pre-pandemic levels,” the agency said in a press release.

Previously, S&P said it had seen a turnaround in sales accelerating through fiscal 2023.

“While the company expects its EBITDA to grow by double digits over fiscal 2022 levels by the end of fiscal 2025, we expect the improvement in performance to be more gradual. We project the company's adjusted EBITDA will be at the low end of the $460 million-$500 million range by company calculations for the coming year,” S&P said.

The outlook is negative.

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