RAD - Embedded Expectations Analysis - 2020 12 15
Rite Aid Corporation (RAD:USA) currently trades at a discount relative to UAFRS-based (Uniform) assets, with a 0.9x Uniform P/B. At these levels, the market has bullish expectations for the firm, but management may have concerns about their expenses for safety and cleanliness, revenue growth, and RediClinics demandSpecifically, management may lack confidence in their ability to become a market leader in mid-market pharmacy benefit management (PBM), and they may be concerned about additional expenses related to keeping stores safe and clean. Moreover, management may l ack confidence in the sustainability of revenue and net income growth. Furthermore, they may be concerned about their ability to integrate Elixir, increase working capital, and grow same-store scripts. Additionally, they may be exaggerating the effectiveness of the RxEvolution strategy and their new app. Management may also be concerned about RediClinics demand, flu season, and brand penetration. Finally, they may lack confidence in their ability to deliver a strong member experience and win new businesses with mid-sized employers and regional health plans
Rite Aid is a pharmacy retail healthcare company. The company's Retail Pharmacy segment sells brand and generic prescription drugs, as well as an assortment of front-end products including health and beauty aids, personal care products, seasonal merchandise, and a private brand product line. The company's Pharmacy Services segment provides pharmacy benefit management (PBM) options through its EnvisionRxOptions and MedTrak PBMs, respectively. EnvisionRxOptions also provides mail-order and specialty pharmacy services through EnvisionPharmacies; a claims adjudication software platform in Laker Software; and a national Medicare Part D prescription drug plan through its EnvisionRx Plus product offering.
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