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RAD needs to turn over front end sales to Dollar General or Dollar Tree. It can't compete with CVS or WBA selling like products for same or higher prices. Or how about bringing in a top level exec from one of these and give him a shot at top banana? It's obvious now that HD was a woke hiring, having a female face out in front with no retail experience or skill set. We've seen how well that turned out. The proxy verbage is a laugher. It reads like the Titanic Captain yelling "Full Speed Ahead" as the iceberg appears on the horizon. We're doing so great our share price hovers at 52 week lows! Come to the Annual in July and pat us on the back! The floundering of this company is fully intentional, IMO. The Omnibus theft plan should be suspended until such time they produce a GAAP profit and share price rises above $20.
mag1205 profile picture

"The Omnibus theft plan should be suspended until such time they produce a GAAP profit and share price rises above $20."

But will it happen with the thieves at the helm of Rite Aid?
RAD is now a speculation play, not a long term hold. Current prices should be used to dilute cost basis of current holdings i/e/o a solid buyout offer or activist entry. Analyzing all the nits of this company only leads to frustrations and the typical whys and wtf's. More than likely any offer falls somewhere between $10 and $25. It's not much, but reality is what it is. This current management team has cost common investors millions. Almost never will the team that drove you down have any idea or intention or ability to turn it around.

Couldn't agree more. Again, suspect that they are open to seeking a strategic alternative here. I'm sure they quietly got that message out.
Unfortunately they are damaged. With that, they have few choices. When someone with quality arrives, they will have to accept the takeover terms.
mag1205 profile picture

I agree with you that one of these days Rite Aid name will disappear and it's SP won't be what we (RAD investors) are led to believe.

Chumps (HD, Bodaken & the rest of the gang) will keep chipping away at RAD investors equity in the meantime.
mag1205 profile picture

Rite Aid is definitely a damaged company under current leadership.
Who would have ever thought RAD SP below 30 cents pre RS?
str8_chuter profile picture
Liquidity risk remains. Company bought itself a little more time but not nearly enough. Still $3.4 B in long term debt due within five years. Not sure how the company makes good on that absent selling off still more assets. Are there any unencumbered assets left to sell?
@str8_chuter There really aren't- RAD is definitely running out of assets to sell. As of the most recent 10-K they have 100 owned stores (which don't bring in much) and i think it's two distribution centers (that's where the real money is) and the corporate headquarters in Camp Hill which they'll be vacating at some point, but I really don't think there's a ton of demand for office real estate in central Pennsylvania.
Andrew Feazelle profile picture
I think they should just dilute shares to pay down debt, to the point of profitability, then slowly buy back those shares over 5 or 10 years.
muishin profile picture
@Andrew Feazelle It would make more sense for a debt to equity exchange with the secured noteholders. They can probably get a better deal than to dilute a $300 market cap company to pay off $3 billion in debt.
Andrew Feazelle profile picture
@muishin thank you. My mistake - I looked at market cap and somehow it got in my mind that was number of shares - I guess from the low number.
mag1205 profile picture
@Andrew Feazelle

Dilute RAD shares?
Are you kidding?

Their debit is not due until 2025.

Try getting rid of HD, Bodaken, Lofton & the rest of dead wood from Rite Aid HQ FIRST.
munhoi profile picture
these are some crazy swings 6-9 back down to 7 back up to 10 back down again

you have to guess the swings right to not lose
Steve Krol profile picture
Go to the casino instead; better odds there.
Peterd90 profile picture
Thanks for the quality article. Any buyer will look at their negative operating cash flow and a debt and operating lease laden balance sheet. They cant cover debt service and almost $2 billion in accrued expenses and accounts payable. Spear Point obviously did not know $3 billion of debt must be repaid upon a change in ownership
Down big again at the outset. How low does it have to go to draw some interest from anyone? Is it that people are now seeing the lack of vision, lack of intent, wasteful spending, and unqualified leadership embedded in RAD as a truism? 34 cents pre-split? AYFKM? And Bodaken and HD won't step down? Who is running this company? From it's valuation, obviously no one. And all the technical analysis be damned. The stock is only worth what someone else is willing to pay for it. And right now, that's very little.
Cyan007 profile picture
@kuttingedge I believe with a strategy to drive some foot traffic into stores, you can certainly produce more revenue and interest in window shopping.

By this I mean get prices more in-line with what customers will purchase on the spot (even if this means some reduced revenue on specific items - but will equate to higher sales volume). Look at the strategy stores like Five Below have implemented: give customers a reason to swing by the conveniently located stores in their neighborhood, other than when they are sick.

Anyone have an extra $400m sitting around to force the issue?
DMK-not-REG profile picture
@kuttingedge Bodaken and Donigan will not give up control willingly. Either an institution or an activist will force the issue, and neither has done so, so we are in a freefall until a catalyst. Sad to see this happen, no one other than the retail shareholder cares.
@Cyan007 Seems like you just identified a buyer .....
Question: With the infamous Dr. Fauci now claiming there will be a Covid outbreak this fall in time for the election, whatever happened to the emergency use authorization given to Pfizer's PAXLOVID? You know, the drug that reduced risk of hospitalization or death by 89% (within three days of symptom onset) and 88% (within five days of symptom onset) compared to a placebo? Has the government intentionally slowed down it's production and distribution? Are politicians now so keen to stay in power they would sacrifice untold thousands needlessly? Why aren't people getting use of this now in early stages? Where does it say that government decides who gets access and who doesn't, who survives and who doesn't when it comes to infectious diseases? Is this drug being withheld to push a fourth worthless booster like Pelosi, Schiff, and Psaki got? And finally, wouldn't the availability of this drug at RAD help it's bottom line?
@muishin @ColdH2OfReason824
I just want to say I really enjoy the rational and eloquent explanations you have given even though I am more optimistic or blind then you both.
Thank you!
@SJJ1 my pleasure- I’ve had a strange fascination with this company for several years now.

I would encourage you to read the annual report when it comes out in a few weeks, open a spreadsheet, take notes, compare to prior years and quarters. There’s a lot of information with a lot more detail than the earnings releases.
I wish guidance was a little better and I think they are sandbagging it a little so they can raise and beat it. Also getting rid of the goodwill cleans things up and makes no cash difference so why not. I was very happy with the cost cutting moves I heard about and the progress at the pbm. The pay on scan seems like a good move as well. Overall I really don’t see why the stock is trading down today. I would have thought it would have gone above 10 today. The shorts definitely are good at manipulating this stock. That being said the management team has a lot to prove before anyone gives them credibility.
muishin profile picture
@SJJ1 The stock is trading down because the market doesn't find the management's guidance for FY23 credible. I listened to the call, George Hill and the analyst from Goldman Sachs were dumbfounded by their guidance. This is especially because the CFO told them plainly that vaccine shots were $20 to the EBITDA each. With 14 million shots in FY22, that's $280m to carve out of the $505m EBITDA. Management also was overly optimistic in projecting 20-30% of FY22 vaccine revenue for boosters in FY23. That means up to $84m in their guidance is for boosters. If you add $225m + $84m, you get $309m in the most optimistic scenario for boosters. Where does the other $190m in EBITDA come from? Management thinks they can get $170m of it from cost savings. If it was so easy, why wasn't this done before? The analysts and hedge funds are betting that management reverse-engineered the forward guidance to stay solvent since macro trends and reimbursement rates are huge headwinds for the retail pharmacy sector. The heavy volume today looks like the shorts that covered when it was $6 last week have re-entered. It's going to be a trading stock until management actually can show real growth in their numbers rather than talk.
@muishin I agree that action’s always speak louder then words, however how they were going to achieve those savings seems credible. Obviously it’s extremely disconcerting that it wasn’t done earlier. I think on vaccines etc. it seems to me that 20% of last years volume on vaccines is just way to conservative, and 50% is obviously a little to optimistic but I do believe 30%-40% is achievable and from checking the website it looks like it’s performing at about those levels depending on what area you check. So if you take 35% which is the mid point that’s 4.9 million times twenty that’s at least an additional 100 million of ebitda when they are only projecting about 56 million of ebitda. COVID is not going away and boosters and testing and meds to treat it and vitamins for it are going to be a reality for many people. Particularly for a large percentage of the demographic that shops at rite aid it will be essential. The store strategy is still not enough for me (why no minute clinics or health corners?) why not a bigger focus on convenience items, fresh made food, fresh grocery, beauty, or even alcohol. I will say anecdotally the shopping experience is improving but lots of improvements to still make. The investment in technology and in improving the warehouses is really necessary and file buys make sense too. The small format stores seem like a bad idea but some type of a franchise or license model could possibly work. Copying the cvs in target model is probably worth trying. It sounds like elixir is really headed in the rite direction and it’s the area of the business that I think wayward Heyward understands and excels at. I’m obviously long the stock so I’m biased but I really think a strategic like Albertsons, Walgreens, Aldi, lidl or Dollar general who want to do more in healthcare is going to bid on the company it’s just too cheap not to be acquired even considering the debt. I do think they should also try to negotiate with the landlords to bring down some of the rent costs and look at reducing hours and or staffing levels at certain times. They also need to automate the pharmacy similar to pill pack and Walgreens so they can be more efficient with pharmacist and pharmacy technician spend.
muishin profile picture
@SJJ1 Since in a complete company sale scenario where the bondholders are fully paid off, the equity holders still own the company and can control the asset sale. This is probably what the investment banks are pushing Rite Aid to do. In the Chain Store interview with Heyward, she mentioned she believes the company is worth more than the sum of its parts. To me, this may mean she had been pitched to sell the company but was being low-balled by an offer based on sum of its parts using EV/EBITDA multiplier in the range of 5-6X which times $480m does not even cover debt. So I think in order for equity to be in the money, they will still need to get EBITDA to $550-600m at a minimum and look for 7-8X based on PBM growth. The market thinks their EBITDA will go the other way below $400m
Ok. Somebody please explain to me all the good news here. HD says they exceeded their 2022 plan ... How much are they planning to steal from us in reward for this?
mag1205 profile picture

HD has learned the B.S. laguage from Bodaken that they have exceeded their 2022 plan.

She didn't have a plan & you are right that she along with Bodaken & Lofton try to sell their garbage and keep on leecing Rite Aid investors.
@kuttingedge I’m sure a lot! If useless steve wants to complain about something this would be worthwhile but wait steve doesn’t focus on real problems
@mag1205 exceeded pissed me off too! If one thing angered me the most it’s that.
Flipper2058 profile picture
Lack of meaningful free cash flow and a balance sheet super heavy in secured debt already means you are nuts to buy the stock.
The unsecured debt is free falling and this group would see full recovery before shareholders would see a dime.
RAD is a case where you need to do some "walking around" research. In the area I live, in addition to RAD, we have CVS and Walgreens. In addition, we have Costco pharmacy, Target pharmacy, Walmart pharmacy, and every supermarket chain has a pharmacy department in their stores. Virtually all the places I mentioned have lower prices on front-of-store items than RAD.

There is no reason to go to RAD as a customer. None whatsoever. There is no reason to buy the stock either.
mag1205 profile picture

I agree with you 100%.

Consumers are very price conscience and they will go little further to save few cents & Rite Aid stores are not competitive with the likes of Walmart, Target & Costco pharmacies.

They ought to become more price competitive in my opinion otherwise they are heaing for BK.
Steve Krol profile picture

In January 2009 I sent the RAD board this price comparison between the 2 drugstores in Olympia, Washington with lots of problems, not even 1/2 mile away from each other. Which drugstore would you go to for your front end items? Doubt much has changed

@mag1205 I don’t agree with you. I think the pricing strategy they are going with is buy more and save and just come in for convenience pay a premium. That being said they definitely have some pricing adjustments they should make and they probably need a few loss leaders to drive some traffic.
mag1205 profile picture
What a slow death for Rite Aid?
Where the hell are main RAD investors?
Get rid of all of the Executives & fire the entire RAD Board.
@mag1205 I really don’t agree! But the board should definitely go along with steve Krol. Both have been around way too long and are unable to get anything done that helps rite aid.
munhoi profile picture
if Walmart wasnt enough

amazon is coming to

Amazon to Expand Healthcare Services to New Cities, Customers
The tech giant has added three new businesses to the lineup of companies offering Amazon Care to their employees and plans to expand in-person care services to 20 new cities in 2022.
munhoi profile picture
first it was department store retail apocalypse , now its pharmacy retail store apoocalypse , just dump them all rad, wag, cvs

no one goes to them for anything anymore except for looting them

they are all headed for the crapper IMHO
munhoi profile picture
@munhoi meant rad, wba, cvs

typo walgreens is wba
@munhoi your a regular genius they only do 450 billion in sales combined
Remember AMD 9 years ago ? They were saying oh it may go out of business . Well more needs to be said about RAD ? If they find the right leadership they pull out of this very easy.
Steve Krol profile picture
Very true. The key remains for the institutional holders to take action with their vote. A director that does not receive at least 50% of the vote, MUST resign immediately. Remove Bodaken (and his side kick Lofton)
Steve Krol profile picture
While it is always easy to blame leadership in any company when the stock price is down, in this case it is true. The various directors over the years were put in place to protect the management , NOT its shareholders:

1. Robert Miller- Chairman and CEO in 1999 did not even live in the local Harrisburg area, its Corporate location, as his primary residence, according to local press
2. His replacement in 2010, a former colleague, Mary Sammons botched
the Eckerd integration (sound familiar with the Bartell integration
botching compliments of Donigan now?)
3. Her replacement Standley in 2012 was noted in court documents as spending his time looking for a buyer for the company, NOT to make RAD
4. And now Donigan, simply not leadership material for the size of RAD

And who is to blame for the above? Each and every "country club" board
looking the other way for way too long. Job one is removing Bodaken as Chairman now, who threw millions of dollars out the window for management goodies, not its employees or store execution where the cash registers are! Further, he allowed a deeply conflicted Albertsons merger to
go all the way to its demise.

Remove him, he is the first problem that needs to be addressed.
mag1205 profile picture
@Steve Krol

Steve, I hear that Vanguard is a major shareholder of RAD then in the hell no one at Vanguard cares about their investment?

What's really going on with big RAD investors?
mag1205 profile picture
RAD down 27% to $6.20

Did HD, Bodaken & Lofton steal more of Rite Aid?

Fire these bastar*s.

Rite Aid NOW 30 cent stock and very soon will declare bankruptcy.
@mag1205 they are not going to declare bankruptcy
v.c profile picture
@mag1205 With $1 price HD, Bodaken & Lofton will get 10% of the company every year. They don't care if this goes to $1. They get 1M worth of shares for doing nothing. Here is the example.

An SEC filing shows that EVP, Chief Information Office Justin Mennen on March 22 acquired 26,207 shares for which he paid nothing. He now holds a total of 96,207 shares.


@SJJ1 I invested heavily and exited with a huge loss. When you get a chance better to exit. Don't listen to Steve Korl. He keeps telling if the board is changed RAD will become like Amazon, and stock will go 10X. He opposed a takeover at $180. There is no hope for Rite aid. John Standley spent 250K one every store. HD came out with a plan to redesign every store by spending 250K to 500K so she can sell dog chow. After looking at the presentation I sold all shares.
@v.c I wish I was smart enough or lucky enough to have done the same - unfortunately I have continued to average down ( which seems the only way way Rad goes is down). I still have some hope though I sure feel like a fool for over a year now. On a positive note I have felt like a fool and then soon like a genius before not sure that will be the case here. What still attracts me to Rite Aid is you have a 24+billion dollar Revenue company that does 5+billion dollars a year in gross profit and its basically breaks even and covers it’s debt payments on 3+billion dollars in debt and spends enough on capex for things to not totally fall apart (although on a 1-10 scale I give the website a 1.5 and the app maybe a 2). What that means to me is anything you layer on top of it should be gravy - unfortunately what scares me and what the pandemic showed is when you laid on lots of potential extra profit dollars with vaccines and testing these morons completely blew it (honestly I don’t even know how they screwed it up so much, it seems like gross negligence.)

I think new owners would figure out how to layer on new businesses like real convenience, coffee, food, fresh grocery and better health and beauty and of course health corners and or something like minute clinics just copy the cvs and Walgreens playbook it’s not rocket science.

When you take all that potential into account I still
Believe you could see a purchaser that comes to take over in the 32 to 48 a share range (I know it sounds crazy when today it’s at 7) but that only means a purchase price of 1.7 billion to 2.5 billion above the debt lots of companies should jump all over it particularly Albertsons or Walgreens but could be dollar general, lidl or even aldi I personally don’t see Amazon or Walmart being interested but you never know. I also have to imagine every shareholder would vote for it even complete morons like Steve Krol who keep encouraging good offers to be turned down. I also think it would get the doj blessing because they are to weak without being taken over. Unfortunately all these scenarios could also play out in bankruptcy court but the greedy management and board wouldn’t get anywhere near as much money if that happened so I imagine they will do everything possible to avoid that.
Every time I go into my local RAD, I leave with some great deals on various items. I haven't visited any other RADs, so not sure how their prices compare, but if they are similar, why isn't RAD doing better. Is it really just corrupt incompetent management?
Cyan007 profile picture

*checks pre-market*

Yup… management.
Steve Krol profile picture
Incompetent for sure, corrupt is a strong word so I choose to use the word "unethical" instead.

"The fish rots from the head first". By that I mean is that the Chairman of the Company may not be the face of Rite Aid, that is reserved for Donigan, but Chairman Bodaken together wit the rest of the board is supposed to give the marching orders for management.

My last article painstakingly already demonstrated the unethical decisions of the board/senior management, (also gone into detail when I sued RAD over the Albertsons deal) which you call corruption.
Those unethical activities removed 6 directors in short order; 3 in 2018 and the next 3 "walked the plank" shortly thereafter. That left Bodaken, Lofton and Syms. Syms was further removed (they called it a retirement, NOT) due to unethical conduct #3, notwithstanding Bodaken's full defense of her the year before at the 2019 Annual Meeting which was shameful.

Clearly, the whole board could not be removed in 2018 at the same time; someone has to hire new directors and a new CEO, so the Culpable 3-Bodaken,Syms,and Lofton won that lottery in 2018.

Bodaken has heard ever since he joined the board in 2013 about the horrendous customer service at our stores at every Annual Meeting, yet hires senior management with ZERO retail store experience, and further allows this management to go off on a tangent to not spend monies to DRAMATICALLY improve training/staffing on store service, but to build (until recently) "the store of the future" and new outdoor signage which the company is now being sued on as logo infringement . The problem is the customer does not care about a sign, it wants quick in, quick out with a pleasant staff.

When Bodaken left California Blue Cross/ Blue Shield, "a non-profit" no less, he took $20 million with him in "parting gifts" according to published reports. Three months after becoming Chairman of RAD by default he immediately changed the stock option formula from being earned over a 3 year period to being immediately vested. Add to this , that he has never purchased a single share of RAD stock out of his own wallet.

When someone tells you who he is, BELIEVE HIM.
He, and Lofton must be removed from the board in favor of retail store executives who remember who they are supposed to be working for-US
mag1205 profile picture
@Steve Krol

Are Vanguard people really dumb and don't care about their investment in Rite Aid?
Turnaround and RAD?
Outperform and RAD?

Two oxymorons .....
Captain America profile picture
Actually "bankruptcy" and "Wrong Aid" is more appropriate. It is only a matter of time.
@Captain America Actually, the axe has to fall on the C-suite. The dead wood has to be cut out, starting with HD and Board members Bodaken and Lofton. None of these folks could manage a standalone store, never mind this retail chain. What they have done to enrich themselves at the expense of both operations and shareholders is a direct violation of the fiduciary responsibility and trust that was placed with them when they took their positions. Far too much time has elapsed with no accountability for their ineptitude and flagrant mismanagement. Quarter after quarter, year after year, their results are always squat and their objectives lowered so as to reap more cash and stock for themselves. Others may talk all the details of bond ratings, debt structuring, manpower issues, cash flow, etc., but all I see is a company that is totally either unable or unwilling to make any effort to generate GAAP profit out of $24-25 billion in annual sales. The great savior PBM is a bust. HD, our tech genius, hasn't done squat with it. There is no actual retail talent at the executive level. And it shows. To us and to Wall Street. Time for heads to roll.
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