RAD - Embedded Expectations Analysis - 2021 08 09
Rite Aid Corporation (RAD:USA) currently trades at a discount to Uniform assets, witha 0.9x Uniform P/B. At these levels, the market is pricing in expectations for profitability to remain muted, and management may have concerns about realizing Elixir's potential, continued wage inflation, and the recovery of the acute business.
Specifically, management may lack confidence in their ability to sustain Q1 results, maintain market share growth, and continue their current pace of vaccine administration. In addition, they may be concerned about persisting headwinds in the acute business, continued wage inflation, and the remodeling of flagship stores. Furthermore, management may be exaggerating the permanence of COVID vaccines, the potential of the DoorDash partnership, and the post-pandemic vulnerability of people to coughs and colds. Moreover, they may lack confidence in their ability to realize Elixir's potential in the near term, expand its EBITDA margin, and leverage its integration with Rite Aid and Health Dialog to improve health outcomes for clients.
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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