S&P lowers Rite Aid view to negative

S&P said it revised the outlook on Rite Aid Corp. to negative from stable and affirmed the B issuer credit rating.

The agency also said it affirmed the CCC+ ratings on the company's unsecured notes due 2027 and 2028 and removed them from CreditWatch with positive implications, where they were placed in April.

The positive watch in April was in response to an announced merger with Albertsons Cos. Inc., but the companies said this week that they've terminated those merger plans.

The 6 recovery ratings indicate 0 to 10% expected default recovery.

S&P also said it affirmed the B- rating on the company's guaranteed unsecured debt due 2023.

The 5 recovery rating indicates 10% to 30% expected default recovery.

The outlook revision reflects a belief that Rite Aid's downward revision of its EBITDA guidance signals further business challenges within a highly competitive drugstore sector, which is evolving from acquisitions, new entrants and complex shifts in the U.S. health care system, S&P said.

Rite Aid now expects its adjusted EBITDA will be in the $540 million to $590 million range, down from previous guidance of $615 million to $675 million, the agency said.

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