Summary..............................................................................................................................................................1
EconomicAnalysis.........................................................................................................................................2
·TheU.S.economywashitbytheCOVID-19epidemicin2020,butthen
experiencedarecovery.......................................................................................................................2
·TheresilienceoftheUSeconomyinatightmonetarypolicy:theroleof
consumerspendingandthesavingsrate................................................................................3
Industryanalysis.............................................................................................................................................4
·U.S.PharmaceuticalIndustryRemainsaWorldLeader,butEmployment
EnvironmentforServiceWorkersBecomesIncreasinglyDifficult.............................4
·PESTELAnalysis..................................................................................................................................6
·RiteAidCompetition...........................................................................................................................7
Companyanalysis...........................................................................................................................................8
（1）Overview..........................................................................................................................................8
（2）Businessanalysis......................................................................................................................9
·LatestNewsofthegroup.................................................................................................................9
·RiteAidbusinessmodel................................................................................................................10
·KeyCompanies&MarketShareInsights.............................................................................11
·Products&Branding.......................................................................................................................11
·Businesspartners.............................................................................................................................12
·SupplierandChannel......................................................................................................................13
SWOTAnalysis..............................................................................................................................................14
Financialanalysis.........................................................................................................................................15
·Capitalization.......................................................................................................................................15
·Salesanalysis......................................................................................................................................15
·Coststructureandrevenuestreams......................................................................................16
·InterpretationofBalanceSheets...............................................................................................16
·InterpretationofIncomestatement..........................................................................................17
·Profitability............................................................................................................................................18
·Liquidity..................................................................................................................................................19
·Conclusion.....................................................................................................................................................20
1
Summary
RiteAidisoneofthelargestdrugstorechainsintheUnitedStatesandoneof
theFortune500Americancompanies.RiteAidopenedasashopinScranton,
Pennsylvania,in1962asThrifDDiscountCenterchangeditscurrentname
andwentpublicin1968.In2023,RiteAidfiledforbankruptcyunderChapter
11oftheUnitedStatesBankruptcyCode.
·Highleverage&Lowoperatingprofit
Frequentacquisitionsandmergershaveledtohighlevelsofcorporate
Thelargeamountofexternaldebtborrowedisnotsupportedby
correspondingoperatingincome,andthecompanyhasbeenlosingmoneyfor
years.
·Besetbyaseriesoflawsuits
Morethan1,000federal,stateandlocallawsuitsclaimingitfilledhundredsof
thousandsofillegalprescriptionsforpainkillers.RiteAidhasfiledfor
bankruptcyprotectionandplanstosellpartofitsbusinessasitattemptsto
restructurewhiledealingwithlossesandopioid-relatedlawsuits.
·InvestmentSuggestions&Forecasts
ThesharepriceofRiteAidhasdeclinedby95.85percentoverthepastyear
toaslowas0.22USD—RiteAidFileforCh.11bankruptcyonOctober15.
Undertheplan,shareholdersgetnorecovery,andshareswillbecanceled.
Whatinvestorsneedtounderstandisthatthesestocksareusuallyextremely
risky.
Evenifthecompanyeventuallysucceedsinreorganizingandrecoveringfrom
bankruptcy,newsharesmaybeissuedtoreplacetheoldones.RADstockis
ratedastrongsell.
2
EconomicAnalysis
experiencedarecovery
Firstly,lookingattheGrossDomesticProduct(GDP)figures,theUSeconomy
hasbeengrowingbetween2019and2023.However,inthesecondquarterof
2020U.S.GDPfellto19,913.143,whichcouldbeattributedtotheimpactof
theCOVID-19pandemicontheeconomy.Theeconomythenbegantorecover
to22,600.185inthefirstquarterof2021andcontinuedtogrowin2022and
2023.
Secondly,theGrossDomesticProductpercapita(GDPpercapita)alsoshows
ayearlygrowthtrend.ThisshowsthattheeconomicgrowthintheUnitedStates
Asfarasunemploymentisconcerned,thedatashowsthattheunemployment
rateintheUnitedStatespeakedat14.7percentinApril2020,whichcouldalso
beattributedtotherecessioncausedbytheCOVID-19pandemic.However,
from2021onwards,theunemploymentrategraduallydeclinedandpickedup
inOctober2023to3.9percent.
Forinflation,theConsumerPriceIndexshowstherateofinflationintheUnited
States.From2019to2022,inflationcontinuestorise,thisisprimarilybelieved
tobetheresultoftheeconomicimpactsfromtheCOVID-19pandemic,
includingtheglobalsupplychaindisruptions,strongeconomicrecoveryand
associatedwidespreaddemandforgoods,andgovernmentstimuluspackages,
amongotherfactors.Forinstance,globalsupplychaindisruptionshave
resultedinshortagesinmaterialsandservices.Suchshortageshaveresulted
3
ininflationarycostincreasesforlabor,materials,andservices,andcould
continuetocausecoststoincreaseaswellasscarcityofcertainproducts.
Insummary,accordingtothedataprovided,theU.S.economywashitbythe
COVID-19epidemicin2020,butthenexperiencedarecovery.GDPpercapita
andemploymentrecoveredgradually,whileinflationwasrelativelyhigh.
consumerspendingandthesavingsrate
TheFedstarteditsinterestratehikingcycleinMarch2022,andatighter
monetarypolicywouldtheoreticallyhaveputabrakeoneconomicactivity.
However,theUSeconomyhasremainedresilientinthewakeoftheratehikes,
particularlyintermsofpersonalconsumption,whichgrewatarealyear-on-year
rateofbetween2.7%and1.4%fromMarch2022toMarch2023.Therelative
resilienceofconsumerspendingispartlyrelatedtothesolidmomentumof
wagegrowth,andpartlyduetothedeclineinbothbankdepositbalancesand
thepersonalsavingsrate,suggestingthatindividualsareusingmoreoftheir
bankdepositstosupporttheirday-to-dayconsumptionactivities.
WithUSbankingdepositsnowstandingatUS$17.2trillion,14.7%abovetheir
sizeinApril2020,itisbelievedthatthepopulationstillhasacertaindegreeof
abilitytosupporttheirdailyconsumptionwiththeirexcessdeposits.However,
thelatestpersonalsavingsrateisonly3.4%untilSeptember2023,whichis
lowerthantheaverageof7.2%between2009and2019.Thelowsavingsrate
shouldbeabletorestrainthedownwardtrendofbankingdeposits.
4
Industryanalysis
EnvironmentforServiceWorkersBecomesIncreasinglyDifficult
Asthebirthplaceofchaindrugstores,theU.S.retaildrugstoremarkethas
maturedovertheyears,bothintermsofservicemodelandcompetitionpattern.
In1965and1982,theUnitedStatesmadetwolarge-scalechangestothe
healthcarebill,establishingbroadgovernment-paidMedicare(fortheelderly)
andMedicaid(forlow-income),forcingemployerstopurchasecommercial
insurancefortheiremployees,andforcingindividualstoenrollincommercial
insurance.Employerswereforcedtopurchasecommercialinsurancefortheir
employees,andObamaevenforcedindividualstoenrollincommercial
insurance.TheU.S.governmentandbusinesshavecreatedapowerfulhealth
carepaymentsystem.
Inthepastdecade,theU.S.domesticdrugstorechainshaveexpandedtheir
marketsharethroughlarge-scaleintegrationandacquisition,andtheoverall
chainrateoftheindustryhasbeencontinuouslyimproved,whichhasformeda
highlyconcentratedcompetitivepattern.
Therevenueofpharmaciesanddrugstoresincreasedsteadilyfrom312.62
billionin2019to351.6billionin2022,ofwhichretailsalesgrewfrom23725.75
millionin2019to29376.33millionin2023.
5
Accordingtothedata,thesalespricesofprescriptionshasfluctuatedovertime.
However,in2023,prescriptiondrugpricesgenerallydeclineacrosstheindustry.
Laborproductivityinthepharmaceuticalindustryincreasedfrom7.1%in2019
to8.7%in2020beforedecliningto2.4%in2021,whilehourlycompensation
increasedfrom2019to2020beforefallingto0.6%in2021andrisingslightlyin
2022.ThesedatashowthatalthoughthesalesoftheU.S.pharmaceutical
industryhavebeengrowingsteadily,thereissomevolatilityindrugprices,and
theemploymentenvironment,aswellasthetreatmentofserviceworkersinthe
pharmaceuticalindustry,isbecomingincreasinglydifficult.
6
·PESTELAnalysis
Political
1.Thestrongpoliticalstructuresandinstitutionssupportgrowthand
developmentforRiteAidCorporation.
2.Itisimportantforgovernmentandpoliticalinstitutionsandbodiestomonitor
competitionintheindustry.Thiswillensurethatcompaniesareusingfair
playfortheirproducts,andalsobusinesstacticsandstrategies
Economic
1.Ahigherinflationratewouldleadtoalowerdisposableincome,andthus
couldleadtoloweroverallexpanding,whichcouldharmbusinessesand
companies,aswellaslowerconsumerconfidence.
2.Thehigherconsumerspendingisalsoreflectiveofhigherpurchasingpower,
whichisimportantforincreasingoverallconsumptionpatterns,andhealth
oftheeconomy.
Social
1.AhigherportionoftheyoungerpopulationisbeneficialforRiteAid
Corporationasitwillallowthecompanyalargerconsumerpopulationbase.
2.InadditionayoungerpopulationwillalsopromiseRiteAidCorporationwith
moreskilledandeducatedworkersandhumanresources,therebyadding
breadthanddepthtothetalentpool.
3.Anincreasingportionofthepopulationisadoptinghealthandwellness
trends.Thehealthandwellnesstrendhasalsotranslatedintoconsumption
decisionsandpatterns.
Technological
1.Thecountryhasastronginfrastructurewithregardstotechnology.Thereis
ahighrateoftechnologicaldevelopmentandadvancement.
7
2.Thecountry,andallconsumermarketsenjoyahighrateofinternet
penetration.RiteAidCorporationhasalsomadeuseofthehighinternet
penetrationtoreachconsumers,andformarketingandpromotional
strategiestobeabletodirectlyinteractwithconsumersandgatherfeedback.
3.Thereisahighleveloflocalaswellasinternationalinvestmentinthe
technologicalR&Dofthecountry.Thehighinvestmenthelpsinadvancing
industries,andequippingthemwithnew,andmoreflexibleaswellas
effectivewaysforbusinessoperationandotherbusinessprocesses
Environmental
1.Thereisanincreasedfocusonenvironmentalsustainabilityandrecycling.
RiteAidCorporationhaslaunchedspecificsitesfordisposingoffproducts
toberecycled.
2.Thecountryhashighregulationsforwastemanagementandcontrol.
3.Thecountryasawholeitallitsindustriesisgraduallymovingtowardsthe
useofrenewableenergyforoperationsandbusinessprocesses.
Legal
1.Thecountryandthemarketismadeupofdiverspopulation.RiteAid
Corporation,asaresult,hasalwaysbeencomfortablewithdiversityinits
workforce,andhasframedinternalcompanypoliciestosupportdiversity.
2.TheControlledSubstancesActisanactoftheUnitedStatesthatregulates
theproduction,sale,storage,use,importandexportofcontrolled
substances.
3.TheFalseClaimActof1863(FCA),alsoknownastheLincolnAct,isa
federallawintheUnitedStatesthatholdsaccountableindividualsand
businesses(usuallyfederalcontractors)whodefraudgovernment
fraudagainstthegovernment.
·RiteAidCompetition
Competitioninthedrugstoreretailhasbeenincreasingwithcompanieslike
WalgreensandCVSexpandtheiroperationsthroughmergersand
acquisitions.Also,AmazonappearstobeafuturethreattoRiteAid.RiteAidis
alsodisadvantagedbythefactthatitlacksanationalscalebuthasregional
concentration,whichisunlikeotherlargecompetitors.
In2012,fivemajorchainsinthedrugstoreindustrycontrolledover60%ofthe
business.Forinstance,RiteAid,CVS,andWalgreenswereconsideredthe
bigthreeintheindustry.However,thishaschanged,especiallyforRiteAid.
Theretailoperationshavebeenunderpressure,asshownbythefront-end
salesatRiteAid.Also,thefactthatWalmarthasmadeitswaytothetopfive
8
positionsshowsthatsupermarketchainsalsohaveasignificantmarketshare
intheindustry.
Companyanalysis
（1）Overview
theFortune500Americancompanies.ItopenedasashopinScranton,
Pennsylvaniain1962asThrifDDiscountCenter,changeditsnametoits
currentname,andwentpublicin1968.
RiteAidbecamethethird-largestretailpharmacychainintheU.S.in1981,
andtheyexpandedintotheWestCoastandGulfCoastregionsin1996,
addingmorethan1,000shopstotheCompanythroughtheacquisitionsof
ThriftyPayLessHoldings,Inc.andHarco,Inc.andK&BInc.
9
In2014,theyacquiredHealthDialog,whichprovidespersonalizedhealthcare
guidanceanddiseasemanagementservicesthroughreal-timeonlineand
telephonehealthservices.
In2015theyexpandedourportfoliobyacquiringEnvisionRx(nowElixir),a
full-servicepharmacybenefitmanagement(PBM)company.
In2018,Walgreenspurchasednearly2,000RiteAidstoresforoverfourbillion
U.S.dollars.Currently,Pennsylvaniaisthestatewiththehighestnumberof
RiteAidstoresinthecountry.
narrowedaspeoplestockeduponhandsanitizers,cleaning,andbeauty
products.
In2020RiteAidacquiredBartellDrugs.ThenumberofRiteAidstoresinthe
UnitedStatesdecreasedwithtime,goingfrom4,667in2012to2,309asof
In2023,unabletopay$3.45billionindamagesfortheopioidepidemic,
Code.Riteaidcurrentshareprice:$0.22US.
（2）Businessanalysis
·LatestNewsofthegroup
RiteAid(NYSE:RAD)filedforChapter11bankruptcyprotectioninNewJersey
torestructureover$3billionindebt,includingitsopioid-relatedliabilities.With
thisprocess,RiteAid(RAD)hasreceivedacommitmentfor$3.45billioninnew
financingfromcertainlenders.Philadelphia-basedRiteAidlisted(RAD)both
10
assetsandliabilitiesintherangeof$1billionto$10billionintheChapter11
petition,accordingtoaBloombergreport.TheRiteAid(RAD)bankruptcy
comesasthedrugstorechain,oneofthebiggestinthecountry,hasbeen
burdenedbybillionsofdollarsofdebt.
RiteAid(RAD)announcedtheappointmentofJeffreyS.Steinaschief
executiveofficer,chiefrestructuringofficer,andamemberofthecompany’s
board,effectiveimmediately.SteinsucceedsElizabethBurr,whohasserved
asInterimCEOsinceJanuary.BurrwillcontinueinherroleasaDirectoronthe
Company’sBoard.
RiteAid(RAD)alsoannouncedthatitenteredintoanagreementwith
MedImpactHealthcare,anindependentpharmacybenefitsolutionscompany,
towhichMedImpactwillacquireRiteAid’sElixirSolutionsbusiness.Underthe
termsoftheagreement,MedImpactwillserveasthe“stalkinghorsebidder”in
acourt-supervisedsaleprocessunderthebankruptcycode.
ElixirSolutionsoperatesnormallyandcontinuestoserveclients,plansponsors,
drugmakersMallinckrodt(OTC:MNKTQ),Endo(OTC:ENDPQ),andPurdue
shortinterestis33.5%.
·RiteAidbusinessmodel
TheRiteAidbusinessmodelcanvasiscalledamass-marketbusinessmodel.
Thereisnosignificantdifferencebetweentheirdifferentcustomersegments.
Theorganizationtargetsalltheconsumersthatarelookingforretailpharmacies.
Thesepeoplearelookingfortheirproductsandservices.
Therearetwofundamentalprimaryvaluepropositionsorstrategicfactorsused
byRiteAid.Theyincludecostreductionandconvenience.
·Costreduction:Theorganizationdecreasesthecostsbyusingarangeof
alternatives.Itoperatesawellness+loyaltyprogramwithPlenti.Thisprogram
offerstheconsumersgreatin-doorsavingsandthecapabilityofredeeming
coupons.Thecompanymemberscanalsoearnpointsforbuying,whichcan
beupto20%offonnon-salespricing.
·Convenience:Thisorganizationgivesyousimpleaccessibilitybymakingsome
ofitsserviceseasilyusable.TheyhaveasubsidiaryknownasRediClinicthat
canbeusedtooperateretailclinicsinmanyregions.Theiroutletsarefilledwith
11
board-certifiednurse.
·KeyCompanies&MarketShareInsights
Themarketishighlycompetitive.SomeofthemajorplayersareCVSPharmacy,
Walgreens,HealthMart,andRiteAid.Therearemorethan29,881pharmacies
across8pharmacychainsintheUS.Marketplayersadoptthisstrategyto
expandtheoutreachoftheirserviceinthemarketandincreasetheavailability
oftheirserviceindiversegeographicalareas.
ahugegapwithWalgreensandCVS.Thesemajorplayersareconstantly
focusingonlaunchingofbrickandmortarpharmaciesandonlinepharmacies
withvarioustechnologicaladvancementsforthedistributionofdrugsand
enteringintostrategicpartnershipswithotherplayerstoexpandtheirproduct
portfolio.
Additionally,riseinnumberofprescriptionfilledinthecountrybyleading
marketshareoftheplayer.
·Products&Branding
RiteAidCorporation,throughitssubsidiaries,operatesachainofretail
drugstoresintheUnitedStates.Thecompanyoperatesthroughtwosegments,
RetailPharmacyandPharmacyServices.
TheRetailPharmacysegmentsellsprescriptiondrugsandprovidesvarious
12
otherpharmacyservicesandanassortmentofproductscomprisingover-thecountermedications,healthandbeautyaids,personalcareproducts,seasonal
merchandise,cosmetics,householditems,foodandbeverages,greetingcards,
seasonalandseasonalmerchandise,petcare,andavarietyofothereveryday
andconvenienceproducts,aswellasbrandandgenericprescriptiondrugs;
andaprivatebrandproductline.
ThePharmacyServicessegmentprovidesintegratedsuiteofpharmacybenefit
management(PBM)offerings,includingtechnologysolutions,maildelivery
services,specialtypharmacy,networkandrebateadministration,claims
adjudication,andpharmacydiscountprograms,aswellasdrugbenefitsunder
individualsandgroups.
RiteAid’scommitmenttoprovidetheperfectfusionoftraditionalmedicineand
alternativeremedies.Thebrandrefreshincludesanewbrandidentity(logo)
thatisrollingoutacrossthechain,wholehealthmerchandise,arefreshed
digitalexperience,anditsnewStoreoftheFuturestoreprototypecurrently
pilotinginselectmarkets.“StoresoftheFuture”revolutionizetheclassicdrug
storeexperiencebybringingpharmacistsoutfrombehindthecounterandinto
theopen,enablingthemtobeeasilyaccessibletoofferadvicetocustomers.
RiteAidalsohavebeautyambassadorsinselectstorestoofferguidanceon
thecompany’supdated,on-trendbeautyproductmix,whichincludesashift
towardnatural,chemical-freeoptions.
Riteaidisalsoaimingtobecomethedominantpharmacybenefitmanagement
(PBM)companyinthemiddlemarket.
i
·Businesspartners
RiteAidenteredintoapartnershipinJanuary1999toopenGNCmini-stores
withinRiteAidpharmacies,andinJune1999,RiteAidenteredintoa
partnershipwithdrugstore.comtoallowRiteAidcustomerstotoplacemedical
prescriptionordersonlineforsame-dayin-storepickup.
InMarch2018,WalgreensandRiteAidagreedtopurchase1,932RiteAid
storesandthreedistributioncentersfor$4.3billion.
AmazonannouncedinJune2019thatAmazonshopperswillbeabletopickup
theirgroceriesatdesignatedcounterswithinmorethan100RiteAidstoresin
theUnitedStates.Thenewservice,dubbedCounter,launchesintheU.S.
followingsuccessattheNextclothingchainintheU.K.andGiuntiAlPunto
Librerie,FermopointandSisalPaystoresinItaly.
13
InMay2022,RiteAidpartneredwithHomeward,aruralhomecarestartup.
clinicalservicesandhaveaccesstoHomewardmobilecareunits.
·SupplierandChannel
Thecompanypurchasesallofourbranddrugsand,withlimitedexceptions,all
oftheGroups’genericdrugsfromasinglewholesaler,McKesson.McKesson
Corporationisthelargestplayerintraditionaldistributionandthesecondlargest
inspecialtydistribution.RiteAidisnotirreplaceableinthefaceofMcKesson.
Additionally,giventhatMcKessonactsasawholesalerfordrugspurchased
frommanufacturersworldwide,anydisruptioninthesupplyofagivendrug,
includingdisruptionsrelatedtoapandemicortoextremeweatherornatural
disasters,supplyshortagesofkeyingredients,orregulatoryactionsby
domesticorforeigngovernmentalagencies,orspecificactionstakenbydrug
manufacturers,couldadverselyimpactMcKesson’sabilitytofulfillourdemands,
whichcouldadverselyaffecttheGroup.
ThemainchannelusedintheRiteAidbusinessmodelisthenetworkofretail
drugstoreslocatedallacrossthecountry.RiteAidpromotesitsofferingstothe
consumersviasocialmediapages,loyaltyprograms,theirwebsite,digital
advertising,educationalprograms,andcontests.Theeducationalprograms
concentrateonspecifichealthconcerns.
TheRiteAidbusinessmodelprovidesadistributionofretailpharmacyproducts
anditalsodeliversrelatedservicestotheconsumers.Themainsourcesused
byRiteAidarephysicalones.Fortheirthousandsofretaildrugstoresspread
acrossthecountry,theymainlyutilizehumanresources.Theyalsomaintain
significanthumanresources.
14
SWOTAnalysis
StrengthsWeaknesses
1.Successfultrackrecordof
integratingcomplimentaryfirms
throughmergers&acquisitionto
streamlineitsoperationsandto
buildareliablesupplychain.
2.Automationofactivitiesbrought
consistencyofqualitytoRiteAid
productsandhasenabledthe
companytoscaleupandscale
downbasedonthedemand
conditionsinthemarket.
3.Reliablesuppliers–Ithasastrong
baseofreliablesupplierofraw
materialthusenablingthecompany
toovercomeanysupplychain
bottlenecks.
1.Ithasasubstantiallong-termdebt
andoperatesataloss.Financial
planningisnotdoneproperlyand
efficiently.
2.Thecompanyhasnotbeingableto
tacklethechallengespresentbythe
newentrantsinthesegment.
3.InvestmentinResearchand
Developmentisbelowthefastest
growingplayersintheindustry.
4.Organizationstructureisonly
compatiblewithpresentbusiness
modelthuslimitingexpansionin
adjacentproductsegments.
OpportunitiesThreats
1.Raised$3.45billiontofund
operationsduringbankruptcy.
2.AppointingJeffreyStein,founderof
SteinAdvisors.Thisfinancial
advisoryfirmrescuestroubled
businesses,asCEO.
3.Thenewstrategywillenablethefirm
tomaintainitsloyalcustomerswith
greatserviceandlurenew
customersthroughothervalue
orientedpropositions.
4.Newtrendsintheconsumer
behaviorcanopenupnewmarket
fortheRiteAid.
1.Thousandsoffederalandstate-local
lawsuitsrelatedtopainkillers.
2.Plannedcancellationofordinary
shareswithnopossibilityofvalueto
shareholders
3.Newtechnologiesdevelopedbythe
competitorormarketdisruptorcould
beaseriousthreattotheindustryin
mediumtolongtermfuture.
4.Risingrawmaterialcanposeathreat
totheRiteAidprofitability.
15
Financialanalysis
·Capitalization
Intermsofcapitalization,theGrouphasbeenhighlyleveragedforthelastfive
2023.Thecompanyfiledforbankruptcyprotection.
·Salesanalysis
third-partypayors(suchasinsurancecompanies,prescriptionbenefit
managementcompanies,governmentagencies,privateemployers,orother
managedcareproviders)thatagreetopayforalloraportionofacustomer’s
eligibleprescriptionpurchasesbasedonnegotiatedandcontracted
reimbursementrates.
AsubstantialportionofthePharmacyServicessegmentrevenueiscurrently
generatedfromalimitednumberofcustomers.
Whilewearenotlimitedinthenumberofcustomerswithwhichwecando
businessandresultsmayvaryovertime,ourtopfivecustomersaccountedfor
60.7%,whichincludes2.3%relatedtoapreviouslydisclosedclientloss,59.7%
and53.2%ofourPharmacyServicessegmentrevenueduringfiscal2022,
2021and2020,respectively.Thelargestpayor,CMS,represented41.1%,36.6%
and27.4%ofPharmacyServicessegmentrevenueduringfiscal2022,2021
and2020,respectively.
Itcanbeseenthatalimitednumberofcustomerswillcontinuetoaccountfora
significantpercentageofPharmacyServicessegmentrevenue,andthelossof
alloraportionofamajorcustomercoulddecreaserevenueandharmbusiness.
ThePharmacyServicesserveshealthplans,commercialemployers,labor
groups,andstateandlocalgovernments.Inaddition,itoffersitsproducts
throughanonlineretailsite.SalesofprescriptiondrugsfortheRetailPharmacy
segmentrepresentedapproximately71.2%,70.0%,66.7%,and67.0%ofthe
Company’stotaldrugstoresalesinfiscalyears2023,2022,2021,and2020,
respectively.
Theprescriptionsegmentheldthelargestmarketshareandisexpectedto
16
witnessthefastestgrowthduringtheforecastperiod.Thisisattributedtothe
increasingburdenofchronicdiseasesandthegrowingagingpopulation,driving
StatisticsReportfor2020,26.8millionpeoplearelivingwithdiabetes,indicating
asignificantneedforprescriptionmedicationstomanageandtreatchronic
diseases,therebycontributingtogrowingdemand.
·Coststructureandrevenuestreams
RiteAidusesacompletelycost-drivenstructureforitsbusiness.Theyare
constantlylookingtominimizetheexpensesbyusingsignificantautomation
andlowerpricevaluepropositions.Thebiggestcostdriverfortheorganization
isthecostoftherevenueswhichisavariableexpense.Thereareother
significantdriversaswellthatworkindifferentareasofadministration,
marketing,andsales.
Allofthemarefixedcosts.Thereisjustasinglerevenuestreamusedbythe
companyandthatis,revenuegeneratedfromthesaleoftheproducts.These
productsareprescribeddrugsandmerchandise.
·InterpretationofBalanceSheets
million.Thecompanyhasbeenintheredfrom2019to2023,withTotalCurrent
Liabilitiesincreasingby135.09%between2022and2023.
in2019to4119.1millionin2020andhasremainedmorestableinthefollowing
twoyears.
17
However,startingin2022,RiteAidbegantosellitsshopsonebyonein
exchangeforcapital,andin2023,comparedto2022,itdeclinedby9.57%.The
loseconfidenceinRiteAid.
·InterpretationofIncomestatement
costs,thebloatedSelling,generalandadministrativeexpensesarealsooneof
themajorreasonsforthelosses.
18
Ontopofthat,noneofthelargeamountsofexternaldebtborrowedbythe
companyhavegeneratedacorrespondingreturn.
·Profitability
excessivefinancialleverageandover-relianceonborrowedfundstoexpandits
profitabilityhasbeenperformingpoorly.
19
·Liquidity
highvalueanddecreasingyearbyyear.Itimpliesproblemswiththesolvency
andliquiditypositionofthecompany.In2022and2023,thecashratioforthe
Groupisaslowas0.01.
20
·Conclusion
Intermsofthecompany’sperformanceinthepastfiveyears,RiteAidhasbeen
highlyleveraged,Theprofitincomedoesnotsupporttheborrowedfundsand
hasbeeninthered.Opioid-relatedlawsuitsbecamethefinalstrawthatcrushed
thecompany.
Thegroupseemstohavelosttheconfidenceofitsshareholders,Theshare
priceofriteaidhasdeclinedby95.85percentoverthepastyeartoaslowas
0.22USD.
risky.Attheendofabankruptcyproceeding,theoriginalcommonstockholders
areusuallythelasttobepaidunderthebankruptcycodeand,inmostcases,
theymayreceivenothing.Evenifthecompanyeventuallysucceedsin
reorganisingandrecoveringfrombankruptcy,newsharesmaybeissuedto
replacetheoldones.
Accordingtothecompany’scurrentnews,Isuggestthatshareholdersholding