S&P rates Rite Aid notes CCC+, view to positive

Standard & Poor’s said it revised the outlook on Rite Aid Corp. to positive from stable.

The agency also said it affirmed all of the existing ratings on the company, including its B corporate credit rating.

S&P also said it assigned a CCC+ rating with a 6 recovery rating to Rite Aid’s proposed $1.8 billion of senior unsecured guaranteed notes. The 6 recovery rating reflects 0 to 10% expected default recovery.

The proceeds, along with $200 million equity contribution, will be used to finance the acquisition of Envision Pharmaceutical Services LLC, S&P said.

The outlook revision incorporates a belief that the acquisition of will provide Rite Aid with new growth opportunities and strengthen its competitive position in the evolving drug retailing industry to a more consumer-driven health care marketplace, the agency said.

Rite Aid’s store-renovation strategy, its Wellness 65+ loyalty program and merchandise innovations are expected to continue to drive stronger front-end sales, S&P said.

Higher drug utilization and expanded health care services also will help drive script count growth and stronger sales in the pharmacy department, the agency added.

The outlook is positive and incorporates an expectation that Rite Aid successfully integrates Envision, S&P said.

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