![]() I doubt that the market will drive the shares this low because some traders are hoping for a change in the last item I just mentioned - poor management. Using the 6.0x multiple, the RAD share price would be only $1.58. I think a more realistic multiple is 6.0x given Rite Aid's terrible results for the last few years, their very high leverage, and their poor management. Using the midpoint EBITDA of $480 million and the total current enterprise value of $3.711 billion, the market is valuing RAD shares at an EBITDA multiple of 7.7x. Like most other companies, the two major factors impacting the difference between reported losses/income and adjusted EBITDA is depreciation of $73.9 million and interest expenses of $48.6 million. Their latest quarter adjusted EBITDA number was $106.2 million compared to a reported loss of $100.3 million. You wonder if Rite Aid would have gone into Ch.11 bankruptcy if it were not for the pandemic. They were allowed to remain open last year and they make money from vaccines. Rite Aid continues to benefit from the Covid-19 pandemic. Management's estimates also are dependent upon a more normal cold/flue season this year compared to last year. Their guidance was increased from $440 million-$480 million, which was based on expected increases in booster shots and vaccine mandates. The guidance for EBITDA for this year is $460 million-$500 million. They can only cut costs only so much-they need additional revenue. The analysts only ask softball questions and do not press the executives about what revenue numbers are needed to breakeven. Management just seems to shrug their shoulders when discussing these numbers during calls. While annual losses are not as bad as a few years ago, these figures are still terrible. According to their current guidance for the fiscal year, management is expecting a loss of $197 million-$221 million or about a $3.54-$3.97 loss per share. For the latest quarter, Rite Aid had a loss of $1.86 per share. There does not seem to be any end to their reporting of losses. There are four main reasons for my sell recommendationġ) Rite Aid keeps reporting losses with no reversal in sight.Ĥ) Potential government regulations of prescription drugs, including prices and distribution. Because I feel the current RAD stock price, which is currently trading at about $13.00 ($0.65 pre 1-20 reverse stock split) does not fully reflect the problems facing the company, I continue to rate RAD stock a sell. While this past August they were able to negotiate an extension of their credit facility to 2026, their total long-term debt is now higher than a year ago. Since my February 26 Seeking Alpha article, RAD shares have dropped over 32% compared to a 23% gain for the S&P 500. Management seems incapable of implementing needed changes to turn this company around. ( NYSE: RAD) continues to report huge losses and this retail pharmacy chain faces a bleak future. Rite Aid Corporation was founded in 1962 and is headquartered in Philadelphia, Pennsylvania.RiverNorthPhotography/iStock Unreleased via Getty Images In addition, it offers its products through online retail site. ![]() This segment serves health plans, commercial employers, labor groups, and state and local governments. The Pharmacy Services segment provides integrated suite of pharmacy benefit management (PBM) offerings, including technology solutions, mail delivery services, specialty pharmacy, network and rebate administration, claims adjudication, and pharmacy discount programs, as well as drug benefits under the federal government's Medicare Part D program and insurance offerings for individuals and groups. It also operates retail pharmacies and clinics and offers healthcare services, including administering immunizations for COVID-19, the flu, shingles, and others assists its customers with high blood pressure, cholesterol, and diabetes provides guidance on combating obesity and tobacco addiction and educates customers on managing medications and potential side effects. The Retail Pharmacy segment sells prescription drugs and provides various other pharmacy services and an assortment of products comprising over-the-counter medications, health and beauty aids, personal care products, seasonal merchandise, cosmetics, household items, food and beverages, greeting cards, seasonal and seasonal merchandise, pet care, and a variety of other everyday and convenience products, as well as brand and generic prescription drugs and a private brand product line. The company operates through two segments, Retail Pharmacy and Pharmacy Services. Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States.
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