New Rite Aid (RADCQ) 25 Jun 202021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Rite Aid Corporation FY '21 Q1 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Byron Purcell. Thank you. Please go ahead, sir.

Thank you, and good morning, everyone. our first to call. earnings you welcome fiscal quarter XXXX conference We

Dan Elixir; the are Officer. comments Jim business Executive Officer; today with On Peters, President Donigan, Operating update On will me concerning Chief on on today’s Heyward call, on call provide take Chief Matt and will Dan Schroeder, will business. President and Heyward and Chief Robson, strategy. Financial of introductory our retail Matt results, quarter Jim trends first questions. business. an our will the update and the provide will services provide an an update we pharmacy Officer; provide then

website, we’re we information Relations under we in today. the are discussing tab. As related our to slides providing will our www.riteaid.com be the material release, Investor These mentioned on slides provided

helpful not remarks, them be find on the to hope call. you’ll key made as referring summarize will points in they but We our some the of them

conference to in The GAAP we non-GAAP Annual in context Before the certain on release, press of we the measure These measures of XX-K, of Securities slides. press can and Form like our and These I’d that our we related reconciliation with certain in and XA certain definition using in are along forward-looking in release other to Item file cause our start, slides. are the that furnish our of accompanying Also, or the risks be documents remind uncertainties to in non-GAAP release and Exchange a uncertainties will described call statements in described measures, the Commission. presented risks differ. recent results statements. in our that includes forward-looking are actual most today's and you Report

turn With these remarks, like now it over Heyward. to to I’d

this Byron, and of by and is Aid surrounding thanks the joining communities of a the crucial other, everyone unprecedented and justice. resolve and diversity challenges And COVID-XX dialogue associates the the serve being our us. tested Rite to like about was quarter, the no for Thanks, we events racial

to this than from fulfill more responded of our solution passing forward in to team Meanwhile, continue our our proud great communities Floyd in over be expansion confidence organization been during the death our can can of fulfill more actions us need, better take challenges. gives health during First, it positive conversations has of communities. that stores. of XX change test. local our role going can COVID-XX I agent my lines although elevate our including in at to an of The serve a Aid crisis, strategy be advance our team important we serving position this far the is Rite the work this how sparked COVID testing level. do these of our working our together And to And me part day how our within showing of every have a the time front up communities. couldn't we and the team's on about events purpose surrounding healthcare to George the to this our care, we eyes, communities for new be to even an higher and role great of all In while will is that important

much items. chain and number few with safety In moving and we pharmacies, of implemented our impacted our of exceptions, crisis as COVID-XX our our customers the our and experienced kept needed of is challenge. in as very With we and for measures a levels. our stores business medications open all team know stores results up stock significantly as was that quickly retail usual possible was ways. and executed QX, size our terms of highest maintenance essential results the first, and the visited headline advanced of supply the we a At was still Basket all at for favorable hours, and kept unprecedented a shelf only in

to grew Jim end As XX%. later, sales will a excluding tobacco this speak front result, and

We end during in a competitors market this our surge front from time also gained saw share activity. and e-commerce

quarter the we quarter. incurred in front reduction we the significant expenses, to a in adjusted associates were began had see prescriptions and keep safe. on acute investments in As into scripts our a making on, costs as to surgeries postponed. negative critical for the customers and closed the COVID-XX acute and And account necessary those and impact decline EBITDA doctor's our offices Taking essential $XX end went also incremental in increase elective sales, net increased million

So now we've completed segment, of the announce at entire I'm Services EnvisionRxOptions, turning is be that soon to new hiring and leadership renamed to pleased to which recruiting team Elixir. our our Pharmacy

D of and our organization, integration all in in a and new the this of Elixir between network this rolled experiences, along increased fall. within this improvements in strong to the Together, assets under EnvisionRxOptions to circumstances on in with be year, in market adjusted over integration new experience related services a digital pharmacy of strong an team efforts Rite of pharmacy our will leaders just knowledge and Elixir gross of Our results team primarily sales new QX. profit expertise. includes including with management. Medicare strong team right top which was up this And our leaders who bring all increase EBITDA rebuild combination We're the synergies. Revenue membership. extensive perspective out Part and fresh our which delivered by new $XX launch investing grew the Aid, resulting significantly also brand, driven prior challenging million from organizational And is of

by with from And Aid, we million encouraged am growth Rite to the than even compared more results year period. in $XXX.X for revenue segments. bullish strong increased our and $XXX.X these with overall adjusted of operations I this So all remain future. in of about EBITDA continuing prior delivered I million both change, XX%

in fundamentals were the And business way. create from a many positive believe even does crisis. before better strong our are than to COVID I COVID prepared we of now uncertainty, emerge While the

an Our extraordinary job team doing delivering operational of excellence. is

our of because fact, RX customers the execution industry committed digital remain work, new this spirit. our experiences. becoming destination support strategy. evolution dominant this mid-market value we alternative a schedule and of to where being we meets health, traditional Through medicine our pharmacists body, We're In retail redefining a revitalizing the of unlocking committed by are to and and being our bold our strategy, mind, remedies on with PBM, to for also great whole

GenX multigenerational and households, including consumer, care needs parents Five for those meeting in approach women who because are and of on new purchasing We dialed and Buy the target the It's habits call they these children, an for. drive influence all of Get pets. care consumers Free One, our millennial I

remerchandising all important testing. not In beginning stages The how have front are We license. are have the really of pharmacists brand. elevating of proven of merchandising by pharmacists initiatives levels which administering in healthcare. our We're new an attributable roles COVID growth provide and precious consumer up brand. this and in just care case time, focused before their exciting we new new engagement to to sales the given have our has launched seen providing our role of encouraging, essential of serve is that seen the in COVID, of this our the crisis target that yet the of are a our never on the end percent And modest being their to top the is supported new and increase at we communities and shopper, in we're freeing time pharmacies

As on this our facade our end by with signs merchandising this track our And store exteriors our look. as to implement the have redone. of this new a updates in we and call, we're be concert XX store fresh new brand reminder, all completed a of And new exterior year, will completely our of new launch with fall. logo,

Rite Aid progress important to the coming life, making. clients passion doubling the role and and to on Elixir. realizing reducing expenses our we're of And areas excited In future we and exchange invest morning. the as demonstrate whole for front shifting cash and opportunities, of time, continue healthcare. through every our we to addition, is new continue this liquidity corporate strong this, integration critical year resources maturities top flow at momentum, our vision crucial have I plays this announced while on associates taking that where more we're to and on customers debt spirit synergies to and down who reflected same in the about by and At have by growth free address of steps A our the our key amazed than the to bond generate XX,XXX expect day activity have we and come work lines pharmacy am serve

I'd on our like introduce to on updates that, is going QX the about side. and Jim Jim exciting details Jim? pharmacy additional the performance to with progress our you strategic retail Peters. some So give

Thank you, Heyward.

a I forward As execute signal tirelessly Heyward of pushing our pandemic decisiveness during uncertainties all our of To us. nimbleness emerge unrest, quarter that continue the situation, and challenged can proved so deploy global me competitive unfathomable for in to serving evolution quarter. an our am to highest mentioned, this the unprecedented that civic remarkable to first and level RX communities team the the proud and perils ways associates was and while response amidst will strategy. at as advantages we bravely,

I supply maintaining developing led managing we new XXx being than with our more and the organization. to our thriving our hours that sanitary stock, am becoming of store we confident to and over will achieve procedures realized health there collaborating at a much keep store chain that historical organization company associates growing wherever the around, and work whole destination peaked our do by for Our way can stay differentiated possible, in And demand while to in across important and turning vision the and e-commerce implementing swiftly before more and was ever safe levels.

crisis Heyward by the the in to unchartered XX grow With prescriptions. of all able In a territory. this basis points. of And XX% mentioned we nearly despite earlier, that terms COVID-XX prescription came pharmacy acute put business were our in reduction count the same-store quarter, factors

continued immunization as result, quarter, to we And look guidance needs once if adult simply began the of these to hits which free looking the in delivery. this defer store key CDC we by during to country resume minimize trends expanded stores Immunization the issued While of to The this hold rates surrounding robust see we success surprisingly parts updated beginning according and forth to our our its to business, the as prescription a uncertainty themselves XX% during to of committee market compared and leverage reopen. our quarter, the to delivery the forward protocols. home field helping dropped as to to leadership our to recently And continuing to area schedule we all COVID. the flu meet put its early immunizations to has too its baseline customers. immunizations on not guidance growth service increased our have we're tell vaccinating as directed advisory to prescription deliveries from was We're protect trends resume A teams with with later customers of will CDC COVID-XX, the some immunization summer. practices. positive to vaccine additional the forward exposure the it's providing QX

and Rite us that United partnership need apparent now rapid our week more help like at we our than time this have capacity trusted to XX,XXX record nowhere for home pharmacists, States launch sites in XX fact, of stores, Human heightened our was While more customers Rite therapy strong quarter. with we affected management. Through execution and testing with of earlier to Aid successful spoke Health department about engage and to medication each orders they during Customers when during conduct Aid with to weeks at MTM most. the traffic customers stay-at-home stores. services their tests we our more than Services, through were COVID and I three clinical drove willing the experienced engagement a

our Our response pharmacists key can as play evolving of highlights role customer's care extensions our the teams. clinical

role pharmacists to and their in help Aid expanding customers, our they communities Rite are Our prove healthcare and ways stakeholders. fully continued key that prepared capable of

role of is Aid's strategy, at know, to pharmacy change the designed is new Rite heart our you fundamentally which in healthcare. As

we providers before, times As and they consumers healthcare believe everyday mentioned up Aid a opportunity doctor's interactions these communities to to a in serve. stores lines costs. as health visit as health the and outcomes believe partners in XX in significant their year, consumers We helping between true guide Rite better important type and I've decisions support activate help play Rite leverage conduit per to in plans and to engage own visits there's and front will to increasingly consumers on an lower serve the Aid and role

front will Moving This solutions by to more tobacco when that and general forward, items. products, had end and with retail a continue services. by of items. over a was paper and set products business, care experience aggressively capabilities connected XX% excluding supports quarter strong counter being robust a sanitizers, In driven sales same-store cleaning products seasonal liquor, we held growth our products, wipes, the some are include build we prescriptions that increasing whole

also brand We're which going results continue important passionately items increased marketplace. consumables, markets and of work seeing channel we as brand serve to overhaul our going reports, crisis. and demand is progress commitment, and health We These XXX beauty, they York major most in our a associates through support the own Rite gains can gains assortment will New in these contributors This dedication, market And were have that increase. as across feel by gives assured markets But to to QX. of segments, basis own the market elevated testament sales were exclude hard City forward, and all continue market with front wellness tobacco, work all points momentum and brand share business in to perseverance. rest COVID-XX our see being own including our general offering launch our efforts basis cards, to major fully merchandise, greeting IRI strong whole we we're share Amazon the share an end points the in-store market the addition, items XX.XX%, we within XXX to delivered and cigarettes held. to the health, gains the to notable the of outstanding of which customers our liquor. to the our importantly, marketplace, end of of additional California among across for associates that front drove to of during but the unit quality these team According competition. Aid know retail and the live delivered as some execution we differentiate In penetration our products increase standard drugstore trends key recognizing to the that so success continue are this critical from us merchandising up that their share to increased

scale of In brand fall. preparation brand our terms fun a that marketing, full excited assets be to support fresh in and we're new new this for building launch very

exterior as with completed. mentioned, refreshes wave underway today, sit Heyward As we actively first is here of XX store the already

build attributable rigorous including from integrated is where Commencing new get we exciting launched and Over to an are team signal initiatives not to to consumer, stages really mentioned, to reflecting primary as exciting Rite digital an the our sales. this with brand milestone her new for fleet new brand. next engagement communities replaced several pylons beauty, thriving, and away identity. signage that from key begin as our in growth new this areas their idea ones yet outward the to in facades on of print beauty we she the months, to needs with circular still our laser launch up are end shopper, fall. this of take as Heyward sales of growth earlier, women and which and to are continue shift GenX pets. mentioned their we beginning consumer immunity, identified the even front focused We're their to see that millennial and our on Through brand official come we've are needs who research, target already and given stress, as encouraging, meeting have care our themselves, children, that is within. Aid being we sleep, And remerchandising work starts of change help this updated to officially will reach the focus cleaned our notice and our target target is And growth early and parents our resources

as deliver consumer growth demands. target committed ever elevated We as are the experience, an omni-channel to

strategy. whenever hit channels to key that just ensure our taking fulfillment In tirelessly e-commerce experience begun e-commerce experience, unprecedented to we experienced capacity and then evolution team was they lot our the that we products moving we COVID-XX accelerated X growth what quarters support course want RX and during prior infrastructure scale. with digital to response of And This we to before now to our a all a as invest Of to best-in-class is already steps And need increase only all beginning. noted worked the weeks, hands like and rapidly of focused XXX%. had of And to our about deck are service where these components our a as direct digital demand deliver to efforts points a on this spike are at touch strengthen and the customers important aggressively in we've I've look across access learned in that. frictionless fully is on by however calls, It team them. the part and continued have we our crisis. the COVID-XX will matter

up. and more have the do in use demand, we wallet. efficiency position we have leverage profitability share now of with to to and We're gains not let We will a optimize to

us we pivot adjusting time. see real in optimize and frequently as testing will more You and

this customers and allowing receive and quarter new In customers Instacart, to provided healthcare new addition partnership launching essential convenient nationwide to by order grocery with for we a we from of of delivery conveniently outlet e-commerce, And Instacart locations to stores directly success. early limited from quarter, signals items our our more a this homes. than X,XXX expanded markets to their delivered with a number

basis to revenue from order XX% year. and overall In we average increases last saw in units plus growth, addition at XX% plus same-store per transaction value at

ahead, Pay all of the In receiving excellent through, been recently the to we've in successful and and feedback at will expansion for our we which enhanced to expedites shaped offering, Tele our pickup, curbside progress Buy addition, stores. we of customers the response and new completed spike drive And prescription looking making and Store out consumer and and Pickup from Aid be In we and accelerated in-store pharmacists. Online Go and Rite from Health, including pickup significantly a are In Pay preferences the Care. new COVID-XX launch by COVID-XX, Virtual emerging options. both drive demand rolling Go through

Before to all strategy. they I I'd tirelessly for do, according the missing are turn it all entire like team to our COVID-XX executing will during in beat Aid our and while doing RX communities over, have thank they they crisis, plan a Rite all our as not done, sincerely serve all they evolution

associates while but look Dan I now to us like the vision just Robson update amazing have team, an for that, look dedicated get Elixir. we recognizing on to healthy, our progress, Our not get ahead help to And future. thriving. to as to with we together, work over it Dan? and for important turn customers of these critical our forward I'd work the fully realize passionate to such efforts with make have done a to continuing

Jim. Thanks,

about COVID-XX last you our over From we impacted how on encountered team operations. a update the we continuity to no has important X has standpoint, to The key initiatives, business. months. business is our talk well have performed Before disruption it

quarter, COVID-XX. attributable in was mail our business the increase partially to For

in medication the network. In addition, increase maintenance utilization retail we in saw an

moderate to office surgical downturn strip membership, We workforces. in rightsizing down their due procedures. doctor volume of Moreover, are are a elective visits, the the somewhat deferral as employers is seeing

material Although on on have these close our we forward to trends trends. a impact not these keep will moving business, had a continue eye

pharmacy progress, initiatives, team includes EnvisionRxOptions place. in especially team on new right now combination our that execution mentioned, leadership we our leaders is of making just are Elixir's significant And Regarding Heyward as the key new Elixir experience between Rite as leaders organizational knowledge, and perspective services, well who fresh Aid as as is a within market along extensive Integration with bring expertise. forward and Elixir moving strong with planned.

as operational eliminate drive will to taken have as as unnecessary of our in yesterday continues operations. action and to aspects recently daily integration immediate expense. continue quarters coming realize synergies This leadership through process We team all

is rebranding underway. well Our also

experience, place platform for plan technology XXXX. initiative this will of have best-in-class and a to one portals implementing establish the engaging Also strides capabilities, prior in We consolidate complete products new business. for streamlined will digital integrated making is Elixir And big into to a in winning investments establish end foundation we and with improved, customers. differentiated, be These which a were our new infrastructure.

All results -- that into target enhance XXXX to world project the of value this that our is season. pleased with today. all I these initiatives a all move selling is as our am long-term will that our and given proposition markets in we happening

increase our our D strategy. First quarter Medicare was was increasing principally increase XX.X% This the by $XXX significant was prior prior year to optimize to efforts or XX.X%. million by membership. Revenue by in $XX.X continued due of EBITDA an driven revenue the Part million increase in with favorable, This improving network strong first including on year. quarter results primarily compared or margin, focus were to the adjusted

edits to selling the Elixir's and in due the Medicare up well within members. Elixir to D enterprise for business Medicare growth our Medicare no this client D strengthening RFPs to June Elixir to of a prescriptions season. as focus early early are national, of deferred. the for reopening. highly strong with both being on well see business Part other X, our commercial, for by reimplemented continues longer space. X, we of COVID, In Medicare season are order with Due soon Part regional retention occurred as refill seeing will selling on refill edits the have Part plans. health XX-day XX% COVID-XX. have as to on guidance by of PBM light Many maintenance new that, turning provider rate are states approximately as we XXXX up is too XX% opportunity XXXX. will XXXX. Specialty XXXX revenues are utilization medications year-over-year and While July XX% Also Part wave focused increased our to utilizing and year-over-year capitalizing our D we D mail on members due Pharmacy, membership limits at revenues win state-by-state EBITDA are these led already as Most exciting, employers,

are is believe We also our the independent only a by that is mid-market owned be to PBM about excited differentiator opportunity clients. a we pharmacy, which our to

Finally, I'll our Matt? PBM Matt option strong With as QX that, over for independent mid-market comments our the now employers on a to systems, health is self turn performance. resonating marketplace health some financial for it an and in units. essential position as plans, insured

in year's share million were in or both which or strong per compared this Adjusted $X.XX diluted for and and first We quarter COVID-XX segments. the in or $X good million the to were first impacts walk the results, call, quarter revenue million a was $XX.X provide diluted of loss in was year million and the $XXX net pharmacy from impacted Elixir, current prior million quarter per morning. the SG&A an The On loss diluted $XX.X quarter net services potential a up quarter for $X of morning, gross at COVID-XX the guidance. discuss retail on an compared the primarily due was in remainder net Dan, morning's investments. negatively we by for also Net Revenues in EBITDA our will prior in million quarter. performance or the year improvement year the strong expenses and $X.XX fiscal interest our from first billion, the on this year's Thanks, bond the a or last growth our the quarter share Adjusted in our business some by expense, quarter. $X.XX prior I due retail the related fee for $X.XX loss and details that profit XXXX rationale was quarter offset share and COVID-XX XX.X% approximately versus loss the saw the through current diluted in exchange in of WBA from announced impacts share income per pharmacy withdrawing current quarter. million of to in TSA adjusted to $XXX.X per in partially adjusted decrease $X.X segment prior but higher was increase The benefited reduction our to $XXX.X loss of quarter. a year.

We completed obligations agreement. WBA revenue last segment which in center have million completed first have TSA of $X.X quarter sale was was distribution the than year's the Retail for the billion, the to May pharmacy under quarter. our and $XXX higher last

in sales in XX-day growth quarter elective XX with same-store prescriptions by Our offset a office in tobacco excluding XX-day segment basis, doctor's retail COVID-XX and pharmacy connection by reduction in prescriptions of XX.X% X.X%. visits from acute by prescription driven increased of basis pandemic. XX% resulting count the was postponement increase the a revenue adjusted the up up of on with X.X% procedures points driven in maintenance in increase same-store by surgical sales end sales an Front were same-store same-store after cigarette and sales. Pharmacy

focus adherence driving medication where gross the a last and was basis than pharmacy worse as interventions, $XX market to in broad strong gain gross to segment Total XX to well better revenues. will as growth quarter pursuing first of quarter script in margin presence. We immunization continue our points retail networks percent access and dollars year's and on prescription have markets new as through profit million was by file aggressively further buys working we

part no $XX an inventory This to a will basis reserve than During charge exiting and not EBITDA first on revenues. million restructuring longer charge we establish initiative. gross worse a quarter points we the one-time product rebranding our are quarter, adjusted of of recorded EBITDA. last carry prior lines by percent million year's $XX of as and favorable to in XX year is was Adjusted profit included as

due in primarily higher merchandise end on quarter gross to members. basis a to which last by lower end in segment as improvements we decline profit for first increased was the associates, show in EBITDA a our impact markdowns first quarter. as plus a higher wellness sales point percent revenues sales. The to margin of offer our on negative year's temporary and increase front had our volume was on XX Our EBITDA adjusted of is million points appreciation gross discounts SG&A the $XX.X Also, to quarter, in front adjusted expense XX driven Retail gross higher basis margin. our pharmacy

$XX.X The due Pandemic adjusted was Hero in our measures Pay million sanitation and included adjusted year. related to SG&A to safe. increase and which customers cleaning EBITDA Our and COVID-XX last programs, Hero EBITDA SG&A keep our XX worse store and than was and Pay, Bonus basis points primarily associates expenses,

of $XX exited $X we related we longer to to were and expense our to no expenses clean TSA. year in programs, SG&A While most benefited add our going forward. million fee the sanitize SG&A an stores have Prior expect quarter million additional temporary expenses that do from have these we as results also per to TSA income

membership. and cost EBITDA. from improvements of million $XX.X year's services adjusted in million benefited revenues $XXX an network first as pharmacy our increase we revenues management last adjusted had Elixir segment $XX.X D quarter billion, services segment good $X of grow pharmacy Adjusted primarily of an revenues which million or control. segment in and XX%, is services was than pharmacy to Our increase Medicare better EBITDA the for to continue our Pharmacy Part EBITDA due increased

material While with commercial membership on due plan did not we impact reduction layoffs they the COVID-XX, to some in results. associated quarter did have a see

calendar temporary offset receivable, from of the generic our in the The capitation to inventory disruptions continue $XXX year the use hedge operating from timing execute CMS, monthly inventory partially Medicare end to receipt Part XXXX our reductions differences we from payment and build front as management compared quarter. any million pharmacy impacted negatively against supply for our by shows activities cash of and inventory cash of in $XX year D initiatives. million the the quarter on flow a in operating the in any in chain, use by to operating cash current a Our statement cash from the activities of was prior at quarter quarter activities in growth

first cash billion Our at the $X EBITDA. end our was ratio debt leverage of balance and adjusted of the X.Xx quarter net was

XXXX, approximately third quarters expect strong to no ongoing our and the to leverage quarter very our maturity the that XXXX we address receivable furthers fourth initiatives. is transaction debt needed receivable. that announced of in we expected liquidity strategic securitize maturing improve as execute had the then worse flexibility XXXX do of Today, We get the debt the grows, in fiscal until our second efforts Our with CMS ratio to $X.X but we runway our billion profile. and the to when and

while an debt ample business. improve minutes now maintaining the maturity how COVID-XX providing interest on our to minimizing secured profile up will to liquidity our exchange impact million new transaction due to $XXX for in notes This XXXX to X.XXX% offering in are and overall of I'll $XXX expense. million We in notes update of our XXXX a cash. combination senior due spend few impact and continues November a

same-store compared the in period Same-Store the from of excluding a weeks points were prescription Our acute front down through end, in same of to and due lessening XX.X%. first to June, XX declines, year increased increased period counts the to compared prescription demand, with benefit impact basis first same to in the which June prior X X front tobacco end revenues prior weeks of continue the year. the increasing X.X% cigarettes sales,

front Regarding drugs have supply on essential so in supply that brand we improved and in-stock basis. back demand, chain, generic end we on stock levels our current is good, our regular of substantially merchandise and high a are

nature d protracted have and risks several COVID-XX our opportunities potential pandemic, potential the business. of identified to we Given

at for are continued include, capabilities. our flu but to related fall, increase potential testing CDC certain to, of membership drugs, risk a in the in to protracted expansion acute the recently for recession, second shots related demand pre-COVID demand of increased potential shortages not issued but and our of with visit that continued guidance not Elixir business a cleaning COVID-XX elective could could for with the to supply potential reductions a continue the acute opportunities economic immunizations, potential stresses shutdown importance potential these in levels, increased soft -- we prescription which in demand; of sanitation returned generic prescription to selling expecting demand immunizations, are depress Our slower limited related increased products an activities, to demand, wave COVID-XX for end The costs, include, XXXX and continued softness result are season. outpatient impact and surgery Elixir front COVID-XX potential the which limited our and

the future the And as business are not our short are we forecast to business. our consequently, economic our pandemic, this Given and related and at items potential we in previously a on midterm outlined significant time these position the to and related macro the in of the of risk amount volatility guidance. accurately a opportunities impact, impacts around withdrawing uncertainty

generate to cash do XXXX are free to flow in taking following steps expect the fiscal and We so.

closely are manage continuing and We to reduce costs.

taken center release reduce XXX both services pharmacy as eliminated our advertising, stated call office this and we morning, We've across in we travel retail other pharmacy shrink, to As such expenses. steps our corporate and also have rent, positions segments. expenses

these result million We our that over 'XX not million. annualized expect $XX were initiatives savings in guidance and $XX included of of savings fiscal in to original in an

million to to continue and expect investment methodologies using our to over lean will of a capital these initiatives pursue generate fiscal benefit inventory initiatives our $XXX working in XXXX. reduce We

move XX to planned slowdown our into XXXX. in completely in initiative. a and remodel to execute from original of future format XX, plan of fiscal fiscal in in continue COVID-XX. and remainder new our store down We of relaunch, our will remodels brand permitting will construction plan which activity XXXX, beginning of the caused to now We those be our due the in fall The by done the stores

capital reducing planned also into capital to expenditures some XXXX, million are We million. fiscal fiscal XXXX and deferring therefore $XXX fiscal other $XXX our are for 'XX of guidance announced previously originally from expenditures

ratio have completes in even we my we and debt phone now face is And of previously, steps goal, opening your the we we of our that, And that with achieve to be the our ensure the presentation. this said questions. leverage lines improving critical. taking reducing This portion for will are As unprecedented uncertainty.

first our the JPMorgan. Instructions] you. Lisa question Gill line And from from comes of Thank [Operator

is open. line Your

why risks morning, and and just good very to that Thanks for go everyone. all the I much you you're back talked want guidance. details. about Thanks the pulling to the Matt,

you a sales all same-store beginning have your first parts end So above well-stocked especially in we of great done what and well are anticipating, off, were job of the June. here keeping front

win I but been and don't utilized of to a they're think the you for you're and the wave to impact the what's economic understand to about second and from new have think have be a there just I perspective, at shifts that like? to point my pharmaceuticals perhaps lot selling some that you So potential seeing been mail risks for opportunity as question. it's season? going pretty first comment around about level back for inelastic those retention retention come coming downturn, store an that, we some made of that Is going right, Can and Elixir being selling probably the that then level that have generally ultimately, has season order selling secondly, as of unusual you're what to that, to prescription And business, the you're you in mail filled. season. the any would talk not a the people back

to order, back although deep that to look really impacting answer, of worry we to going a pharmacy retail not now, will if aware then all traffic guidance results certainly a we're we're the too situation. believe long, really much size. But think actually to it's we this regard that on pharmacy a will believe think to and mail all market Yes. about can and for of. as we year, and that. we XXXX strong Matt because Lisa, actually -- add right business, jump not we minute and very But a We in I these distributed I'd basket strong to reflect we're continue our sales stimulus we because think view continue With as the will some still it's well, be was having about that we'd seeing new have sales of Yes, Heyward. I'm merchandise. continue results that talk don't really and have and very questions, share we to risk business. increase but as recession will and like going our have multi not on the to anticipating improve it I

Elixir the delivery. now seeing the side so to And we're significant an a business. benefits migration increase mail order of in the of on We're seeing

and in will every they across are the XXX% markets. saying been with any Store, and resurges, get We're be And can ranges, been different because isn't ups for is hospitals downs whole of way get that a not or not a then retention The we're they going again. the business open flares they up? offering it We're to down, shipping filled about continue business doctors risk so regard Elixir, the market, prescribing having they're services. really that's therefore get We the opening ways us worried that question in delivery we surges, The are offering die Buy and Pickup going COVID So Online at pharmacy and risk myriad to you prescriptions. rate. in there's so to are level can had seeing And watch. thing related pharmacy, hospitals really people prescriptions the we will different to which scripts. doctors different them for We there really store. XX% is to The to pandemic back as to acute for prescriptions projecting in want. aren't open

in reasons are making good changes rates interested are we they retention the you right having that we we're the of not face So new a that not talked so making now, which for everything would changes, the particular why effect but People reverse because in not about. with really -- pandemic sales normally they're on of much sort activity it's would cycle as us, on, seeing in else going as is this have. -- because

helpful. That’s

say And, Sorry. anything Matt, do you want to else?

two prescription potential either able risk the had for people the points. to the how doctor, but about surge. have just I limited you up guidance of Heyward, weeks this to think the hold to that, in going and for going sales expected, of and on seeing your we you we've I just a all fact still wave helpful. me, guess was really you The understand that volumes like to basis like I you're seen really June end of period I where you quarter, did original right, front openings, have this well I not the actually to when time, talked or second I No, were that's seen first during said, reopenings, declines, about say, would are even then XX that

couple of things seeing weeks what closer in. understand of Are towards you here in So this materialize would side are end or I it that of trying we're I'm all June, than the are sitting to because is to the just guess just you're first different you be obviously much the seeing your to you than caution on things starting that saw June? seats

that. Yes, Matt, I will let handle you

are Yes. first basically last end Lisa, we're not weeks the of the -- seeing I -- through week. X are we of I would mean, June --

I what So they to is no believe the change going reason There that to there they're end the think, of are. in are trends June.

going things. Although, we're to on keep certainly an eye

pulling for such reason is a wide outcomes the guidance, there's of range just think here. I Lisa, there's

based of going to laid the where certain are types what it's very risk predict I variability environment way in outcomes given out that here, we're I the the, going in think, upon kind the just unknown of and outcomes think those into to and we're of go. difficult an I these which factors kind of

So community sense investing it's of, that we false from think standpoint find helpful. forecast a thing right of our ability not do giving the from I a those would to of of outcomes to kind guidance, we standpoint think in the the the pulling range think

you, Thank helpful. Matt. very That's

next Our George bank. the comes from of question Deutsche from line Hill

Your is open. line

cost turn guys morning guys for able are $XX finding to kind have a now million with number cost what on guidance how closer given the taking going good I like COVID, you this Hey, thanks guess, the at million COVID looks $XX the related, up bumped another guess, that just I be are guess was going be? you I over incremental aren't much the Heyward, is And found XX, just the question things then kind included right? I'm you costs savings finding think question how sure with in continuing to you an doing question. in do rocks to quarter. I make of in could rate want I run more the XX, guess, and look it get and right guys the of to to savings? targeted which And to you quarter. not million We're for that's was the one-time expecting there results, $XX that I COVID a a item, item,

question. Matt then the and on jump in things, I'll two let last Well,

the great way first thing of over turning a about thinking those. -- is it's The you're rocks,

more to and this center have organization what's this many most cost example more about our into savings turnover of into said in are rocks, all. recent we cut dig we, we didn't and more the I call stellar is beautiful initiatives, the a efficient. organization. is identifying As at field become to opportunity And cutting in The parts and that find

have the customers merchandise, our go delighted. to didn't store, sales business, it really So our our cut our critical forward teams, into business to anything the that's pharmacy and making

is Matt some talk and the I'll want about of be going see on during there year. the the balance we that costs but you -- will comment ongoing to the that Matt, let are that? that business money regard while customers. advancing do I for ability the then us And so. really to for we're business invest anticipate the still uncover a will what continued So we saying continue with is to to our some to of one-time COVID, it, one-time in opportunities and And cleaning to save

Sure.

that I quarter -- the thing As I cleaning thing is is look costs kind on year SG&A. our George, I to the said would steps $X at of of process. that in we would year cost I in this savings per add versus we're about the rate kind And only other would million expecting say run my and script, did last

offices So the the year Rite well there's -- beginning just a functions to supported stated integrate really retail other businesses, that then reductions back forward in reduction our focused said, And that's, last the or we retail of fiscal Elixir process. And office pretty as force continuous significant This in both of about wave various Heyward that back spend, is opportunities advertising. really office a the Elixir that some also objective of Aid on second of continued cost as the of at back integrate the of our business. moving as and had between overall. was just some part

also more cost also to a As advantage to has with cost print be reach allowing and efficient the being and paper better of we more things. get go that more distribution and digital of way but us to our the of customers, effective those and types

are to we said, Heyward going as continue look So to for opportunities here.

George. work, And earnest continue on working will great merchandising. And reductions really as advance is also work, continuing resolve Thanks, inventory we business. some Yes. we're still an tied to which pharmacy in our our our capital lean and we which advance in deployment seeing of from lean outcomes side the to are our to

that. appreciate you. I Thank Okay.

And our next the line comes from Robert Jones from question of Goldman Sachs.

open. Your is line

I more importantly, you front situation? guess guess like maybe mean, quarter, gains current that we actions of what out you And allowed do can hopefully talked market you that maybe to the on were customers I then of those share market progress that in about some to as for Thanks I do specifically end the share? your the retain gain feel Great. probably just questions. the you what

let I'll Jim answer that. Yes.

in position Look, you. it's to all, according information was strong. peers very say Pre stronger channel of the Thank during in-stock we than from Heyward. been our the our IRI. COVID-XX event, that the -- Sure, first I drug would get

are teams, dialogue aid, management like standing supply, leadership maintain in as room as literally with And paper mask, market pending gains. delivery maintain supply and shortages, even things day and our teams methods. on increases the manage our did the chain sales They high constant supply, held on supply -- that the chain that's liquor well priorities. sanitizer, it. during literally hand, of things clearly continuously And our of sought took suppliers category and these supply changing So in the that management other were meetings to every of especially kinds on that evident alternative like those demand part action to and first share fulfillment pandemic, daily side, anticipate war to sources category expedited items

So on really the outperformed asked front a you result. end, we peers as had as our

associates store customers. maintained which originally deployed during shelves also strongly they executed We largely serve protocols, extremely and hours safety operating as replenish our

So partnership associates and with it chain, a was really between management, proud outcomes category store we're of. net-net, field supply

Thanks so much. Great.

And our Santangelo Glen next of Guggenheim. question from comes from the line

open. Your line is

amount a to impacted that for COVID expenses. by dig on that you didn't $XX thanks I Heyward, your impact the adjusted Yes, had It number say has we've more. wanted bit in EBITDA question. my SG&A, $XX in million. just COVID had on this little taking a I million you mean, talked million but fair suggest the $XX the incremental release in about that

the a You on COVID obviously front particularly and of from end some profit, the bump big gross sales. the on got revenue

$X really a how be million to triangulate go And heard trying and incurred if that forward I'm quarter? will in of out on sounds you SG&A expenses the cleaning So of incremental costs on sort figure for like I much it basis. correctly, you

programs to XQ of costs think and like temporary I like into place, you XQ assess had Pay, as those how about think all rest fiscal we those Hero in year? the is we're and what trying migrated should we the

Hero do just example, reason. have to to yes, some -- we the many It's quarantining, bridge out continue on so those Pay, costs good us for The going Bonuses, don't to a obviously costs little have for we're of people Sure. Matt, period for the why do that? were calling of for one-time. continue you people

Sure.

COVID, to reduction front from think three the So, volume expense. script, I a of Glen, SG&A main million $XX of estimate increased estimate the there our prescription is by expect we in of net the driven impacts are acute definitely what trends an end and script and an the to the would due be declines incremental COVID, then the the -- the number

consider kind what a would was EBITDA take a If variance I SG&A, look adjusted things. for of you -- SG&A of couple the at and our expense quarter

to say of parts the up through we last in that and some in TSA year. expenses for about the not that of First first quarter had quarter cleaning expenses activity of there of quarter about And PPE ramp was we million the And that probably think There us incremental our staffing. volumes Hero intense most cost you due benefited that cost surge continue in costs. or that rest number the is the quarter. doesn't during plus this some to then, so is variance million to of all for cleaning the all, the COVID have hotspots, in the expect of in impact buying shields and to of we to due $XX the like of the a the I from Bonus, increased of of kind it's type Pay, do that in front between stores, there's in of really in rest in a to replicate end that SG&A it's putting costs WBA we really just is while cleaning that of is got where cleaning fees Hero would accelerated the things that then that some $X the the due kind

wrapping helpful SG&A that's kind hopefully and around the your head impact. of So

that's I on -- the if just helpful. -- really could No, could Thanks no, sheet. quick lot, balance one ask I a that Maybe follow-up Matt.

interest in So ultimately I lot. and moving you successful and about to expense, there I meaningfully $XXX restructure? what expense on if relates number else goal full what that think within what's would interest of outside thinking is restructuring give try that And appreciate leave guidance anything of sort everything left interest it's debt we to this that the want You were restructure XXXX year about you're out million as be expense, XXXX? a Thanks next -- don't us the that does as piece, this year. but from it of

for exact pin goal down to time. would get get in XXXX don't I full notes. we're If the an the Yes. be left we would And those April certainly timeframe. over about those have shooting $XXX us Glen, we period million to of want million that exchange, $XXX the to out a at of

with of they interest we type can some from could trying interest on time an have in get anything work going on think to current looking really past annual from else nothing to probably -- to I a This expense additional do is a have in impact about exchange pretty of by of at our our benefit but basis we expense it that. I standpoint you rates guidance see maturity been guidance, couple our million. as way expense. have original expect annual won't our altogether. on some get of interest -- over on really And the our we're if of it, continue $X that months, to increase LIBOR as stay low focused out material

Okay. Thank you. Very helpful.

our from America. next from William question Reuter And comes of Bank

open. is line Your

have I Good two. morning. just

So types the of comment but any terms on lives in be in the quarter, could of what that sounds etcetera. quarters? like it a you noted XQ, revenue It terms or impact first of it what didn't there be XQ, of of you in Is the the next seen and EBITDA membership. can you've way one, reductions couple you've impacting plan commercial seen bit little first lower maybe impact will

okay, Bill. Yes, -- Heyward. is Matt This

Go ahead, ahead. go Yes, Matt.

had and/or keeping a business number our risk something material to impact yet. something even put I say on, to would but would we're that on I probably our -- not something is characterize a that's eye

a I just that Lisa, think to and want in of eye their we're the a that we it's talking people The sudden, only employment. -- that's about. keep plan, it, But which everyone's not escalates would to, is book risk because Makes risk along if all seeing a keeping even them business, not, significant of taking just be benefit now. long on my furloughing recession material recession as their -- right any caution, I because of It's on an of happen, and that I but William, unlike immediate, was mind, not there commercial commercial Medicaid, or erosion it's people, with unemployment if should out think standing. one a the should grow. book eye business on the The based are sense?

million? tendering make you sense. going in to my then of terms number you're come does That $XXX with maximum the the And of X.XXX%, up follow-up, exchange, to how as did be

get that. the want I in to much on don't weeds too

a think to while of I not on we're trying our maturity as much having trying impact always extend debt. to things, of this we out obviously cost these do balance negative too

pass I it Thank you. Okay. to others. will

Your next Karru Martinson question is Jefferies. from from

is open. ahead. line Please go Your

morning. Good

Just all that of shifting? in just reduction, terms buys remodel your change to file CapEx from or the the does here, is include any that

will buys, file the from Karru. Nothing in. I jump

There's other pretty trying of candidly. that, that as many were a it's as a we into to able We I 'XX XX important, Most to well. as talked do of from on fiscal source fit can, of still not defer the file necessary to couple items remodels that deferring are They're great while return. about. we the buys focused were

pursuing to emphasize we’re Yes. file very I buys. that want just aggressively

in serve. goals One revenue script we our our is strategic increase of our that to key markets

one so tool to important our we very arsenal do And look as that’s in that.

or And then does with that GNC change filing, does out? the store, play your there and relationship in are that how co-locations

that? you on comment can Jim,

Sure.

as First, to GNC our and products operating us this has provide to been customers. continue over during their to a decades. us terrific two with period partner restructuring we to for we for And expect continue them partner

no will into believe and insight to anything real So we on, reason than have other we continuing are change. no that, that

more door their that places In retail they've fact, to may will Rite things business stores, publicly decrease of like Aid. that wholesale one would they which front happen actually said of intuitively that drive the kind in kind of own is

housekeeping. And lastly just on Okay.

they the are proceeds? they the Walgreens those business? May, How being proceeds through? of sale the treated? in do Are reinvested being flow excess DC in Are With how to those

Matt?

be reinvested in business, the will Karru. They

Thank Congrats very guys. on much, right. All you. quarter. you the Thank

Thanks.

question from Casella next from is Your JPMorgan. Carla

Carla, Your is open. is line line your open.

receivable, it Sorry the The us that. end can quarter? that CMS the amount of about the was you at give

Matt?

disclose, of would get to expect we the before CMS would pretty the number it was the not receivable say similar point what be we kind That’s year a where to that Carla. over growth we last year I it. in that we securitize to

if of you the the store a got but And talked I don't then plans heard for and closure you the great. Okay, year on questions plan? lot open know cadence I CapEx, the the I about that --

Well, of look new close we strategy Ironically, our stores first, to we was at the of planning stores. And through of we're planning now. the down to lens protest. are this the close course, one burned some during

market and the socioeconomic the the remodel that. So we're making do to a little some plan Matt, you than at new store stores. growth, we potential on had We're closure store close with in potential demographic at decisions the information. bit for past. differently let looking looking will the comment merchandising, We I

Yes, we do.

up I look also But -- ones both take characterize Carla, at a stores we coming are always that We off the taking look, a our lease performing are don't would not and at closures material in store store closures. as modeling from and or a of would standpoint, stores targeted, number the as from the new I base, stores changes in any say expect either expectations.

annualize gross the in Okay. wellness you from more it year? see just how we And was that side. it? pressure trend much see terms purchases, wellness gross then to plus quantify on that the shift? comes the if one margin also how a when in there of Can a seasonality question of plus margin of you year should and you And Do is what the

will you wellness+. weigh want talk the if you to and numerics in answer on Jim can I Matt, about let

a was increased discounts. due pressure members the did that bit numeric from and get coming In gold of margin incremental disproportionate to and of members part lot silver a those and that from gross standpoint, are front pretty come our a increase of in seeing probably a good sales Sure. end markdowns the

this that's believe be seasonal. will don't something I So

And kind saw in some I we're out it's how growth I the just the of plays next that of tell the think think we that seeing where time sales will quarter. over few quarters.

essentially And just I would Thanks, Matt. of mix add customers. qualitatively,

sales. up silver most And bronze declines looking and total Overall, when at bronze sales than more silver and customers our and looking customer the creating when frequency basket kind of and loyal gold increases course, declined in increases. on drag saw down. offset drove at by our our size some gold trip of base, frequency, non-carded were we So visit shoppers

suggest I of that qualitative side what that's is the would question. So

significant one in margin. prescription gross maintenance a type there the acute between difference versus on margin more an just a And on pharmacy Is the prescription? side

Matt?

There is not.

earlier, are these question the really, is coming really share loyal in customers our which to results I customers. the to we are market and are most and asked neglected Somebody those the which answer, we is emerging and keep going gold new how customers volumes seeing strong and that

changing. So that we don't anticipate

And one we have call. one time -- more for

last Bryan from Hunt Fargo Your comes question Wells Securities. from

open. line is Your

allowing to you Thank for ask me question.

of you of Just how incremental the Instacart are many sales in gold at questioning unique from customers -- and When existing on Carla's versus silver? on question. with look the following e-com, answering those and line

Jim?

increased see new they've But gold part, We increased interactions in Sure. substantially. e-com of with have our our customers substantially site. because

drove the membership for for of chain. kind e-commerce first by a up as largely Aid immediately folks the in our time e-commerce we that moving Rite enrolling we see in of signed who And for who have up function e-commerce wellness. growth, to so first increases turn gold And

been anecdote that's that's to they've But not. positive. together, correlated it's and trend too a they've and really tell not early overall, whether or early or So

… right. my All second And question

Aid Rite I've one think sheltering one also sorry, happen order of one get that's have -- isn't products be to to e-commerce, been to in to online. about exciting now market. that's exciting I'm Aid is I beauties a me prescription able thing sent I able and And market my Rite thing the right been a that

us beyond footprint, So expand brick-and-mortar. think our to without way a also way current for of a this virtual as

Sorry, go ahead, Bryan.

can million -- All what and ability about talk is, thanks, the wondering lien debt you following be? your question And additional was you what that maybe question right. layer on limit up on my regulator might a within to again, when that $XXX amount, look at earlier I Heyward. second No, is that on second

Yes.

clearly that, all of think out debt Bryan, some documents. I spelled pretty is in our

this know take don't if on you'd Happy like. get call. So to on I one to that in I weeds that the want off-line, if

great. then be Yes. lastly, we of That talked lot would food follow delivery. the a And about retailers

market. For of go outside the and incremental purely Heyward touched to part, able being it most being of on kind you incremental, or

Rite Aid when do in use think incremental So that your customers? much how methodology you the you at growth a is of delivery, look existing versus of from shift of and

And Jim, do quantify. be to may you want start? Matt to able

Yes, honestly, tell. would say, I early I still too it's mean, to

part, our when numbers, our think I you do we look that. growth component in clearly of a delivery at is that believe our

can giving get their to drugs order the we on home delivery. Rx the through So that homes to side, people opportunity

otherwise in although part, gotten folks would that, in store. those it's was think probably, have who large anecdotal, I

the front end, I think contrary. quite the on

I in and higher concentration think tell, would, of a early of kind new. large too think, again, to I those net part, anecdotally have

appreciate of Very I and best your good. luck. time

Bryan. Thanks,

like remarks. would back to you. call Donigan Thank I to turn Heyward the over closing for

dialogue. for everyone questions. Well, Great your thanks,

earlier our a targeting, we dialogue has crucial to and great general and on customers. stuff of group. really the important call, of that are to dialogue at like as And you our racial I reminder, end regarding is justice. of just the racial customers final give we spoke important company. would issues happening I organization and Before some just really, millennial sort this equality really to led now that's going diversity right a with these conversations flavor environment, the The our justice within about

dialogue of terms in difficult in Aid at Philly I'm this important, neighbors communities what’s have our us recently by the communities. our bore well is brunt with some Rite not down. this Philadelphia. was And associates unfortunate burned of spirit the protest. the of looting for our serve. terms by amazed the A just as particularly our So of for being we our in We as really a responded happening the to stores example customers. within for work been is and amazed in how of our I'm occurred but what of human great really And communities, some us side really the and associates effects company, as of

our when closed. still of wake their of morning store, stores visit One were amazing team protest. went in simply neighbors them, And the after, helping And because already were they it's found when XX fact, in the thing was the severely was damaged The our was, the our pharmacy. on-site of we up. cleaning they neighborhood with said that Rite just talked we Aid that to

thankfully assured compassion discussions as Aid tolerance. about progress right happening real now so they difficult through discussed now well. our lot to us and that community. And make and they important that leave want coolest moments us at of that the to and right these But is rest moments helps care continue to noise. are the wanted being and didn't us equality throughout test as And the I thing. think there's a reopen just and it's Highlighting country Rite sometimes we There's our really important

challenging to come. forward and tough, And another so but quarter really looking productive to exciting

results. our again So that we we and for talk report in will us, on joining when QX concludes today's call. September Thanks

for and today's conference this you participating. Thank concludes call. Ladies gentlemen,

You may now disconnect.