Rite Aid Corp (fka RADCQ)

[$BL$]

3-Oct-2013

Quarterly Report



ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview

Net income for the thirteen and twenty-six week periods ended August 31, 2013 was $32.8 million and $122.5 million, respectively, compared to a net loss of $38.8 million and $66.9 million for the thirteen and twenty-six week periods ended September 1, 2012. The improvement in our operating results was driven primarily by higher gross profit from generic drugs, lower selling, general and administrative expenses (SG&A), the settlement of a prescription drug antitrust matter and lower interest expense, partially offset by continued reimbursement rate pressures and a higher loss on debt retirement.

Adjusted EBITDA for the thirteen and twenty-six week periods ended August 31, 2013 was $341.6 million and $686.4 million, respectively, compared to $218.7 million and $492.8 million for the thirteen and twenty-six week periods ended September 1, 2012. The improvement in Adjusted EBITDA was largely driven by the continued benefit of new generic introductions on pharmacy gross margin as well as improved front-end gross margin, strong expense control and the settlement of a prescription drug antitrust matter.