8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): June 16, 2016 (June 16, 2016)

Rite Aid Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-5742	23-1614034
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

30 Hunter Lane, Camp Hill, Pennsylvania 17011

(Address of principal executive offices, including zip code)

(717) 761-2633

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.    Results of Operations and Financial Condition.

On June 16, 2016, Rite Aid Corporation (the “Company”) reported its financial position and results of operations as of and for the thirteen week period ended May 28, 2016. The press release includes non-GAAP financial measures, “Adjusted EBITDA,” “Adjusted Net Income” and “Adjusted Net Income per Diluted Share.” The Company uses these non-GAAP measures in assessing its performance in addition to net income, the most directly comparable GAAP financial measure. A reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share to net income is included in the press release, which is furnished as Exhibit 99.1 hereto.

The Company believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare the Company’s operating performance with its competitors. The Company defines Adjusted EBITDA as net income excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs related to store closings, debt retirements and other items (including stock-based compensation expense, merger and acquisition- related costs, severance for distribution center closures, gain or loss on sale of assets and revenue deferrals related to the Company’s customer loyalty program). The Company references this non-GAAP financial measure frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to historical periods and external comparisons to competitors. In addition, incentive compensation is based in part on Adjusted EBITDA and the Company bases certain of its forward-looking estimates and budgets on Adjusted EBITDA.

The Company defines Adjusted Net Income as net income excluding the impact of amortization of EnvisionRx intangible assets, merger and acquisition-related costs, loss on debt retirements and LIFO adjustments. The Company calculates Adjusted Net Income per Diluted Share using the Company’s above-referenced definition of Adjusted Net Income. The Company believes Adjusted Net Income and Adjusted Net Income per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare the Company’s operating performance over multiple periods.

Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share should not be considered in isolation from, and are not intended to represent alternative measures of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Company’s definitions of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share may not be comparable to similarly titled measurements reported by other companies or similar terms in the Company’s debt facilities.

In addition, a copy of the Company’s Earnings Release Supplement for the first quarter of fiscal 2017 is being furnished as Exhibit 99.2 to this Form 8-K.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits.

99.1 Press Release, dated June 16, 2016

99.2 First Quarter Fiscal 2017 Supplemental Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RITE AID CORPORATION
Dated: June 16, 2016	By:	/s/ James J. Comitale
		Name:	James J. Comitale
		Title:	Senior Vice President, General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated June 16, 2016.
99.2	First Quarter Fiscal 2017 Supplemental Information

EX-99.1

Exhibit 99.1

Press Release

For Further Information Contact:

INVESTORS:	MEDIA:
Matt Schroeder	Susan Henderson
(717) 214-8867	(717) 730-7766
or investor@riteaid.com

FOR IMMEDIATE RELEASE

Rite Aid Reports Fiscal 2017 First Quarter Results

· Revenues of $8.2 Billion for the First Quarter, Up 23.1 Percent Year-Over-Year

· First Quarter Adjusted Net Income Per Diluted Share of $0.01, Compared to the Prior Year First Quarter Adjusted Net Income Per Diluted Share of $0.02

· First Quarter Net Loss Per Diluted Share of $0.00, Compared to the Prior Year’s First Quarter Net Income Per Diluted Share of $0.02

· Adjusted EBITDA of $286.0 Million for the First Quarter, Compared to the Prior Year’s Adjusted EBITDA of $299.3 Million

CAMP HILL, Pa. (June 16, 2016) - Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended May 28, 2016.

For the first quarter, the company reported revenues of $8.2 billion, a net loss of $4.6 million, or $0.00 per diluted share, Adjusted net income of $14.5 million, or $0.01 per diluted share and Adjusted EBITDA of $286.0 million, or 3.5 percent of revenues.

“Our results for the first quarter reflect strong performance in our Pharmacy Services Segment and our front-end business as well as good overall expense control,” said Chairman and CEO John Standley. “Our challenge was pharmacy reimbursement rate pressure, which we were unable to offset largely due to drug purchasing efficiencies that did not meet our expectations. While drug cost reductions will continue to be short of our expectations in the near term, we anticipate improvements over the second half of the fiscal year. As we work to meet this challenge, we remain focused on executing our highly successful sales initiatives like wellness+ with Plenti and the Wellness store program while also making strategic investments for growth and delivering a consistently outstanding customer experience.”

-More-

Rite Aid FY 2017 Q1 Press Release - page 2

First Quarter Summary

Revenues for the quarter were $8.2 billion compared to revenues of $6.6 billion in the prior year’s first quarter, an increase of $1.5 billion or 23.1 percent. Retail Pharmacy Segment revenues were $6.7 billion and increased 0.4 percent compared to the prior year period primarily as a result of an increase in same store sales. Revenues in the company’s Pharmacy Services Segment, which was acquired on June 24, 2015, were $1.6 billion.

Same store sales for the quarter increased 0.4 percent over the prior year, consisting of a 0.1 percent increase in pharmacy sales and a 1.2 percent increase in front-end sales. Pharmacy sales included an approximate 198 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.6 percent over the prior year period. Prescription sales accounted for 68.9 percent of total drugstore sales, and third party prescription revenue was 98.0 percent of pharmacy sales.

Net loss was $4.6 million or $0.00 per diluted share compared to last year’s first quarter net income of $18.8 million or $0.02 per diluted share. The decline in operating results is due primarily to an increase in amortization expense related to EnvisionRx, a higher LIFO charge and a decline in Adjusted net income.

Adjusted net income and Adjusted net income per diluted share (which is reconciled to net (loss) income on the attached table) was $14.5 million or $0.01 per diluted share compared to last year’s first quarter Adjusted net income of $23.7 million or $0.02 per diluted share. The decline in Adjusted net income and Adjusted net income per share is due to a decrease in Adjusted EBITDA, partially offset by lower income tax and interest expense.

Adjusted EBITDA (which is reconciled to net (loss) income on the attached table) was $286.0 million or 3.5 percent of revenues for the first quarter compared to $299.3 million or 4.5 percent of revenues for the same period last year. The decline in Adjusted EBITDA is due to a decrease of $54.4 million in the Retail Pharmacy Segment driven by lower pharmacy margin due to lower reimbursement rates that were not offset by purchasing efficiencies and script count growth. An improvement in front end gross profit offset inflationary increases in selling, general and administrative expenses. The decline in Retail Pharmacy Segment Adjusted EBITDA was partially offset by $41.2 million of Pharmacy Services Segment Adjusted EBITDA.

In the first quarter, the company opened 4 stores, relocated 4 stores, and remodeled 79 stores, bringing the total number of wellness stores chainwide to 2,126. The company also acquired 1 store and closed 6 stores, resulting in

a total store count of 4,560 at the end of the first quarter. The company also opened 2 clinics in the first quarter, bringing the total to 80.

As previously announced on October 27, 2015, Rite Aid and Walgreens Boots Alliance, Inc. (“WBA”) entered into

a definitive agreement under which WBA will acquire all outstanding shares of Rite Aid for $9.00 per share in cash, for a total enterprise value of approximately $16.6 billion, including acquired net debt. The board of directors of both companies and Rite Aid’s shareholders have approved the transaction, which is subject to certain conditions, including, among others, the receipt of approval under applicable antitrust laws and other customary closing conditions. The transaction is expected to close in the second half of calendar 2016.

Rite Aid is one of the nation’s leading drugstore chains with 4,560 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through Rite Aid’s website at www.riteaid.com.

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Rite Aid FY 2017 Q1 Press Release - page 3

Cautionary Statement Regarding Forward Looking Statements

Statements in this release that are not historical and statements regarding the expected timing of the closing of the proposed merger and the ability of the parties to complete such transaction considering the various closing conditions and any assumptions underlying any of the foregoing, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, our high level of indebtedness and our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our debt agreements, general economic, market and competitive conditions, our ability to improve the operating performance of our stores in accordance with our long term strategy, the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order, our ability to manage expenses and our investments in working capital, outcomes of legal and regulatory matters, changes in legislation or regulations, including healthcare reform, our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs and risks related to the proposed merger. These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K, in the definitive proxy statement that we filed with the Securities and Exchange Commission on December 21, 2015 in connection with the proposed merger, and in other documents that we file or furnish with the Securities and Exchange Commission, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Additionally, there can be no assurance that the proposed merger will be completed, or if it is completed, that it will close within the anticipated time period or that the expected benefits of the proposed merger will be realized. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Rite Aid expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

Reconciliation of Non-GAAP Financial Measures

The company separately reports financial results on the basis of Adjusted Net Income, Adjusted Net Income per diluted share, and Adjusted EBITDA, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income, Adjusted Net Income per diluted share and Adjusted EBITDA to net income, which are the most directly comparable GAAP financial measures. Adjusted Net Income and Adjusted Net Income per diluted share exclude amortization of EnvisionRx intangible assets, merger and acquisition-related costs, loss on debt retirements and LIFO adjustments. Adjusted EBITDA is defined as net income excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility closing and impairment, inventory write-downs related to store closings, debt retirements and other items (including stock-based compensation expense, merger and acquisition-related costs, severance for distribution center closures, gain or loss on sale of assets and revenue deferrals related to our customer loyalty program).

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RITE AID CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

	May 28, 2016			February 27, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	144,840		$	124,471
Accounts receivable, net		1,679,166			1,601,008
Inventories, net of LIFO reserve of $1,020,147 and $1,006,396		2,623,886			2,697,104
Prepaid expenses and other current assets		107,293			128,144
Total current assets		4,555,185			4,550,727
Property, plant and equipment, net		2,257,795			2,255,398
Goodwill		1,713,475			1,713,475
Other intangibles, net		964,709			1,004,379
Deferred tax assets		1,544,890			1,539,141
Other assets		218,893			213,890
Total assets	$	11,254,947		$	11,277,010
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	25,640		$	26,848
Accounts payable		1,663,436			1,542,797
Accrued salaries, wages and other current liabilities		1,290,693			1,427,250
Total current liabilities		2,979,769			2,996,895
Long-term debt, less current maturities		6,899,025			6,914,393
Lease financing obligations, less current maturities		49,737			52,895
Other noncurrent liabilities		734,912			731,399
Total liabilities		10,663,443			10,695,582
Commitments and contingencies		-			-
Stockholders' equity:
Common stock		1,048,768			1,047,754
Additional paid-in capital		4,835,634			4,822,665
Accumulated deficit		(5,245,798	)		(5,241,210	)
Accumulated other comprehensive loss		(47,100	)		(47,781	)
Total stockholders' equity		591,504			581,428
Total liabilities and stockholders' equity	$	11,254,947		$	11,277,010

RITE AID CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
Revenues	$	8,184,181		$	6,647,561
Costs and expenses:
Cost of revenues		6,289,881			4,788,031
Selling, general and administrative expenses		1,793,247			1,699,585
Lease termination and impairment charges		5,781			5,022
Interest expense		105,113			123,607
Loss on sale of assets, net		1,056			39
		8,195,078			6,616,284
(Loss) income before income taxes		(10,897	)		31,277
Income tax (benefit) expense		(6,309	)		12,441
Net (loss) income	$	(4,588	)	$	18,836
Basic and diluted (loss) earnings per share:
Numerator for (loss) earnings per share:
(Loss) Income attributable to common stockholders - basic and diluted	$	(4,588	)	$	18,836
Denominator:
Basic weighted average shares		1,042,437			986,691
Outstanding options and restricted shares, net		-			22,461
Diluted weighted average shares		1,042,437			1,009,152
Basic and diluted (loss) income per share	$	(0.00	)	$	0.02

RITE AID CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
Net (loss) income	$	(4,588	)	$	18,836
Other comprehensive income (loss):
Defined benefit pension plans:
Amortization of prior service cost, net transition obligation and net actuarial losses included in net periodic pension cost, net of $451 and $398 tax expense		681			597
Total other comprehensive income		681			597
Comprehensive (loss) income	$	(3,907	)	$	19,433

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL SEGMENT OPERATING INFORMATION

(Dollars in thousands)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
Retail Pharmacy Segment
Revenues (a)	$	6,675,548		$	6,647,561
Cost of revenues (a)		4,870,181			4,788,031
Gross profit		1,805,367			1,859,530
LIFO charge		13,751			5,987
FIFO gross profit		1,819,118			1,865,517
Gross profit as a percentage of revenues		27.04	%		27.97	%
LIFO charge as a percentage of revenues		0.21	%		0.09	%
FIFO gross profit as a percentage of revenues		27.25	%		28.06	%
Selling, general and administrative expenses		1,723,903			1,699,585
Selling, general and administrative expenses as a percentage of revenues		25.82	%		25.57	%
Cash interest expense		99,682			102,762
Non-cash interest expense		5,429			20,845
Total interest expense		105,111			123,607
Adjusted EBITDA		244,827			299,263
Adjusted EBITDA as a percentage of revenues		3.67	%		4.50	%
Pharmacy Services Segment
Revenues (a)	$	1,602,359
Cost of revenues (a)		1,513,426
Gross profit		88,933
Gross profit as a percentage of revenues		5.55	%
Adjusted EBITDA		41,175
Adjusted EBITDA as a percentage of revenues		2.57	%

(a) - Revenues and cost of revenues includes $93,726 of inter-segment activity that is eliminated in consolidation.

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA

(In thousands)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
Reconciliation of net (loss) income to adjusted EBITDA:
Net (loss) income	$	(4,588	)	$	18,836
Adjustments:
Interest expense		105,113			123,607
Income tax (benefit) expense		(6,309	)		12,441
Depreciation and amortization		138,788			109,649
LIFO charge		13,751			5,987
Lease termination and impairment charges		5,781			5,022
Other		33,466			23,721
Adjusted EBITDA	$	286,002		$	299,263
Percent of revenues		3.49	%		4.50	%

RITE AID CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

ADJUSTED NET INCOME

(Dollars in thousands, except per share amounts)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
Net (loss) income	$	(4,588	)	$	18,836
Add back - Income tax (benefit) expense		(6,309	)		12,441
(Loss) income before income taxes		(10,897	)		31,277
Adjustments:
Amortization of EnvisionRx intangible assets		20,315			-
LIFO charge		13,751			5,987
Merger and Acquisition-related costs		2,756			2,084
Adjusted income before income taxes		25,925			39,348
Adjusted income tax expense		11,459			15,661
Adjusted net income	$	14,466		$	23,687
Adjusted net income per diluted share:
Numerator for adjusted net income per diluted share:
Adjusted net income	$	14,466		$	23,687
Denominator:
Basic weighted average shares		1,042,437			986,691
Outstanding options and restricted shares, net		17,187			22,461
Diluted weighted average shares		1,059,624			1,009,152
Adjusted net income per diluted share	$	0.01		$	0.02

RITE AID CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

	Thirteen weeks ended May 28, 2016			Thirteen weeks ended May 30, 2015
OPERATING ACTIVITIES:
Net (loss) income	$	(4,588	)	$	18,836
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization		138,788			109,649
Lease termination and impairment charges		5,781			5,022
LIFO charge		13,751			5,987
Loss on sale of assets, net		1,056			39
Stock-based compensation expense		11,144			7,370
Changes in deferred taxes		(5,749	)		9,540
Excess tax benefit on stock options and restricted stock		(883	)		(2,820	)
Changes in operating assets and liabilities:
Accounts receivable		(74,530	)		11,027
Inventories		59,440			56,204
Accounts payable		115,646			79,715
Other assets and liabilities, net		(99,912	)		67,266
Net cash provided by operating activities		159,944			367,835
INVESTING ACTIVITIES:
Payments for property, plant and equipment		(106,077	)		(141,037	)
Intangible assets acquired		(16,381	)		(14,293	)
Proceeds from dispositions of assets and investments		3,088			2,838
Net cash used in investing activities		(119,370	)		(152,492	)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		-			1,800,000
Net payments to revolver		(20,000	)		(141,000	)
Principal payments on long-term debt		(5,721	)		(5,577	)
Change in zero balance cash accounts		2,262			(34,275	)
Net proceeds from the issuance of common stock		2,371			3,378
Excess tax benefit on stock options and restricted stock		883			2,820
Deferred financing costs paid		-			(34,459	)
Net cash (used in) provided by financing activities		(20,205	)		1,590,887
Increase in cash and cash equivalents		20,369			1,806,230
Cash and cash equivalents, beginning of period		124,471			115,899
Cash and cash equivalents, end of period	$	144,840		$	1,922,129
SUPPLEMENTAL CASH FLOW INFORMATION
Payments for property, plant and equipment	$	106,077		$	141,037
Intangible assets acquired		16,381			14,293
Total cash capital expenditures		122,458			155,330
Equipment received for noncash consideration		632			545
Equipment financed under capital leases		1,553			800
Gross capital expenditures	$	124,643		$	156,675

EX-99.2

Exhibit 99.2

June 16, 2016

Investors are urged to review Rite Aid’s SEC filings . Statements , estimates, targets and other information included herein might be considered forward - looking . These statements and estimates are based upon various assumptions that may not prove to be correct . Such assumptions are inherently subject to significant uncertainties and contingencies, many of which are beyond the company’s control . No representation is made, and no assurance can be given, that such results can or will be attained . The risk factors associated with those uncertainties are described in Rite Aid’s most recent Form 10 - K, its Form 10 - Q’s and other filings with the SEC . Rite Aid assumes no obligation to update the information or the forward - looking statements contained herein, whether as a result of new information or otherwise . Also included herein are non - GAAP financial measures . The definition and purpose for using these measures are in Rite Aid’s Form 8 - K furnished to the SEC on the date hereof . Safe Harbor Statement

Q1 - Fiscal 2017 Summary ($ in millions, except per share amounts) Revenue 8,184.2$ 6,647.6$ Adjusted EBITDA 286.0$ 3.49% 299.3$ 4.50% Net (Loss)/Income (4.6)$ 18.8$ Adjusted Net Income 14.5$ 23.7$ Adjusted Diluted EPS 0.01$ 0.02$ 13 Weeks Ended May 28, 2016 13 Weeks Ended May 30, 2015

Q1 - Fiscal 2017 Reconciliation of Net (Loss) Income to Adjusted EBITDA ($ in thousands) Thirteen weeks ended May 28, 2016 Thirteen weeks ended May 30, 2015 Net (Loss)/Income (4,588)$ 18,836$ Adjustments: Interest expense 105,113 123,607 Income tax (benefit) expense (6,309) 12,441 Depreciation and amortization 138,788 109,649 LIFO charge 13,751 5,987 Lease termination and impairment charges 5,781 5,022 Other 33,466 23,721 Adjusted EBITDA 286,002$ 299,263$ Percent of revenues 3.49% 4.50%

Q1 - Fiscal 2017 Reconciliation of Net (Loss) Income to Adjusted Net Income ($ in thousands, except per share amounts) Thirteen weeks ended Thirteen weeks ended May 28, 2016 May 30, 2015 Net (loss)/income (4,588)$ 18,836$ Add back - Income tax (benefit) expense (6,309) 12,441 (Loss)/income before income taxes (10,897) 31,277 Adjustments: Amortization of EnvisionRx intangible assets 20,315 - LIFO charge 13,751 5,987 Merger and Acquisition-related costs 2,756 2,084 Adjusted income before income taxes 25,925 39,348 Adjusted income tax expense 11,459 15,661 Adjusted net income 14,466$ 23,687$ Adjusted net income per diluted share 0.01$ 0.02$

Q1 - Fiscal 2017 Summary RETAIL PHARMACY SEGMENT ($ in millions) Revenue 6,675.5$ 6,647.6$ Adjusted EBITDA Gross Profit 1,836.4$ 27.5% 1,882.2$ 28.3% Adjusted EBITDA SG&A 1,591.6$ 23.8% 1,582.9$ 23.8% Adjusted EBITDA 244.8$ 3.7% 299.3$ 4.5% 13 Weeks Ended May 28, 2016 13 Weeks Ended May 30, 2015

Q1 - Fiscal 2017 Summary RETAIL PHARMACY SEGMENT Retail Pharmacy Segment revenue increased $27.9 million or 0.4%, driven by a 1.2% increase in same store front end sales and a 0.6% increase in comparable script growth. Adjusted EBITDA Gross Profit decreased $45.8 million, with Adjusted EBITDA Gross Margin declining by 80 bps. This was driven by a decrease in pharmacy margin, due to lower reimbursement rates that were not offset by purchasing efficiencies and script count growth. Adjusted EBITDA SG&A increased by $8.7 million and was flat as a percent of revenues. Labor control was good this quarter.

Reconciliation of Adjusted EBITDA Gross Profit RETAIL PHARMACY SEGMENT ($ in thousands) Thirteen Weeks Ended Thirteen Weeks Ended May 28, 2016 May 30, 2015 Revenues 6,675,548$ 6,647,561$ Gross Profit 1,805,367 1,859,530 Addback: LIFO charge 13,751 5,987 Customer loyalty card program revenue deferral 13,037 12,725 Depreciation and amortization (COGS portion only) 3,938 3,805 Other 318 132 Adjusted EBITDA Gross Profit 1,836,411$ 1,882,179$ Adjusted EBITDA Gross Profit as a percent of revenue 27.51% 28.31%

Reconciliation of Adjusted EBITDA SG&A RETAIL PHARMACY SEGMENT ($ in thousands) Thirteen Weeks Ended Thirteen Weeks Ended May 28, 2016 May 30, 2015 Total Revenues 6,675,548$ 6,647,561$ Selling, general and administrative expenses 1,723,903 1,699,585 Less: Depreciation and amortization (SG&A portion only) 113,263 105,844 Stock based compensation expense 11,143 7,370 Other 7,911 3,454 Adjusted EBITDA SG&A 1,591,586$ 1,582,917$ Adjusted EBITDA SG&A as a percent of revenue 23.84% 23.81%

Pharmacy Services Segment Results ($ in millions) Thirteen Weeks Ended May 28, 2016 Revenues 1,602.4$ Cost of Revenues 1,513.4 Gross Profit 89.0$ Selling General and Administrative Expense (69.3)$ Addback: Depreciation & Amortization 21.5 Adjusted EBITDA - Pharmacy Services Segment 41.2$

Q1 - FY 2017 Summary PHARMACY SERVICES SEGMENT Revenues were strong due to the addition of lives at both Envision and MedTrak and growth at Orchard. Gross profit increased over the comparable prior year period due to the increase in lives. Selling, general and administrative expenses increased over the comparable prior year period as headcount was added to handle the increase in lives.

FY 17 FRONT END SALES RX SALES SCRIPT COUNT FY 14 FY 15 0.4% - 0.3% - 0.2% - 0.7% 0.0% 1.1% 1.6% 2.0% 0.6% 0.3% 0.3% - 0.4% 1.2% - 3.8% 1.7% 3.5% 3.5% 4.6% 5.6% 7.2% 5.7% 3.9% 2.8% 1.2% - 0.8% 0.1% FY 16 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Comparable Store Sales Growth - 0.1% 0.0% 0.7% - 1.8% 2.3% 3.7% 4.5% 3.5% 1.6% 0.2% 0.2% 0.1% 0.6%

Wellness Store Renovations Comp results for Wellness stores continue to exceed the chain average (1)  Front - end sales growth outperformance of 228 bps in Q1 of Fiscal 2017 Script count growth outperformance of 154 bps in Q1 of Fiscal 2017 274 797 1,215 1,634 2,042 2,126 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Q1 Remodeled Stores Since 2012 (1) Calculation compares the comp results of Wellness stores remodeled in the last 24 months to the remainder of the chain.

Capitalization Table & Leverage May 28, 2016 February 27, 2016 Secured Debt: Senior secured revolving credit facility due January 2020 2,048,301$ 2,066,097$ Tranche 1 Term Loan (second lien) due August 2020 464,892 464,586 Tranche 2 Term Loan (second lien) due June 2021 497,134 496,993 Other secured 90 90 3,010,417 3,027,766 Unsecured Guaranteed Debt: 9.25% senior notes due March 2020 895,046 894,563 6.75% senior notes due June 2021 802,499 802,128 6.125% senior secured notes due April 2023 1,770,726 1,769,657 3,468,271 3,466,348 Unsecured Unguaranteed Debt: 7.7% notes due February 2027 293,248 293,206 6.875% fixed-rate senior notes due December 2028 127,179 127,163 420,427 420,369 Lease financing obligations 75,287 79,653 Total debt 6,974,402 6,994,136 Current maturities of long-term debt and lease financing obligations (25,640) (26,848) Long-term debt and lease financing obligations, less current maturities 6,948,762$ 6,967,288$ Leverage Ratio: Total Debt 6,974,402$ 6,994,136$ Add back: Unamortized debt issuance costs 88,550 93,349 Less: Invested cash 355 15 7,062,597$ 7,087,470$ Retail Pharmacy Segment Adjusted EBITDA (Last 12 months) 1,246,469$ 1,300,905$ Pro Forma Pharmacy Services Segment Adjusted EBITDA 155,000 155,000 1,401,469$ 1,455,905$ Debt : EBITDA Leverage Ratio 5.04 4.87 ($ in thousands) Note: Debt in the capitalization table is shown net of unamortized debt issuance costs.

Debt Maturity Profile Maturity table as of February 27, 2016. Note: Maturities reflect calendar year. $2,100 $1,600 $1,800 $295 $128 $470 $500 $905 $810 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 2016 2017 2018 2019 2020 2021 2022 2023 . . . . . . 2027 2028 ($ in millions) Second Lien ABL Funded ABL Unfunded Commitment Senior Unsecured Notes Senior Unsecured (Guaranteed) Notes C allable at 104.625