RAD - Embedded Expectations Analysis - 2021 02 24
Rite Aid Corporation (RAD:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 24.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their omnichannel capabilities, store remodeling costs, and weak flu and cold volumesSpecifically, management may lack confidence in their ability to mitigate drug cost-driven adjusted EBITDA declines, sustain retail pharmacy market share gains, and grow their specialty pharmacy business. Furthermore, they may be exaggerating the long-term potential of COVID-19 vaccines and the recovery of acute prescriptions, and they may be downplaying concerns about the impact of weak cough, cold, and flu volumes. Moreover, management may lack confidence in their ability to drive omnichannel member engagement and profitability with Elixir, and they may also be concerned about store remodeling costs and their current financial leverage
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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