10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 28, 2022

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number: 1-5742

RITE AID CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	23-1614034 (I.R.S. Employer Identification No.)
30 Hunter Lane, Camp Hill, Pennsylvania (Address of principal executive offices)	17011 (Zip Code)

Registrant’s telephone number, including area code: (717) 761-2633.

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report):

Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	RAD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “Large Accelerated Filer,” “Accelerated Filer,” “Smaller Reporting Company” and “Emerging Growth Company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ⌧ Accelerated Filer ◻ Non-Accelerated Filer ◻ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange act). Yes ☐ No ⌧

The registrant had 55,626,790 shares of its $1.00 par value common stock outstanding as of June 22, 2022.

RITE AID CORPORATION

TABLE OF CONTENTS

	Cautionary Statement Regarding Forward-Looking Statements	3
	PART I FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of May 28, 2022 and February 26, 2022	6
	Condensed Consolidated Statements of Operations for the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021	7
	Condensed Consolidated Statements of Comprehensive Loss for the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021	8
	Condensed Consolidated Statements of Stockholders’ Equity for the Thirteen Week Period Ended May 28, 2022	9
	Condensed Consolidated Statements of Stockholders’ Equity for the Thirteen Week Period Ended May 29, 2021	10
	Condensed Consolidated Statements of Cash Flows for the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021	11
	Notes to Condensed Consolidated Financial Statements	12
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results	37
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	51
ITEM 4.	Controls and Procedures	52
	PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	53
ITEM 1A.	Risk Factors	53
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
ITEM 3.	Defaults Upon Senior Securities	53
ITEM 4.	Mine Safety Disclosures	53
ITEM 5.	Other Information	53
ITEM 6.	Exhibits	53

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report, as well as our other public filings or public statements, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.

Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

● the impact of widespread health developments, including the continued impact of the global coronavirus (“COVID-19”) pandemic, the changing consumer behavior and preferences (including preferred shopping locations, vaccine hesitancy and the emergence of new variants), and the impact of those factors on the broader economy, financial and labor markets, wages, availability and access to credit and capital, our front-end and pharmacy operations and services, supply chain including shipping delays, container and trucker shortages, port congestion and other logistics problems, our associates and executive and administrative personnel, our third-party service providers (including suppliers, vendors and business partners), and customers. In addition, continued shortages of pharmacists, pharmacy technicians and other employee turnover as a result of the ongoing “great resignation” occurring throughout the economy, and the impact of potential vaccine mandates in the markets in which we operate, may inhibit our ability to maintain store hours at preferred levels. Any of these developments could result in a material adverse effect on our business, financial conditions and results of operations;

● our ability to successfully implement our RxEvolution strategy, attract and retain a sufficient number of our target consumers, integrate operations such as Elixir and any acquisitions, implement and integrate information technology and digital services, obtain permits required for store remodels, and improve the operating performance of our stores and pharmacy benefit management (“PBM”) operations;

● our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of recent actions by the United States Federal Reserve), and our ability to satisfy our obligations and the other covenants contained in our debt agreements;

● the nature, cost and outcome of pending and future litigation, other legal or regulatory proceedings, or governmental investigations, including those related to Opioids, “usual and customary” pricing or other matters;

● general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions, including impacts of inflation or other pricing environment factors on our costs and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer spending or deterioration in consumer financial position, whether due to inflation or other factors, as well as other factors specific to the markets in which we operate;

● the severity and resulting impact of the cough, cold and flu season;

● the impact on retail pharmacy business as PBM payors incent or mandate movement away from retail pharmacies to PBM mail order pharmacies;

● our ability to achieve the benefits of our efforts to reduce the costs of our generic drugs;

● the risk that changes in federal or state laws or regulations, including to those relating to labor or wages, the Health Care Education Affordability Reconciliation Act, the repeal of all or part of the Patient Protection or the Affordable Care Act (or “ACA”), and decisions of agencies and courts including the United States Supreme Court regarding those and other matters relevant to the Company or its operations, and any regulations enacted thereunder may occur;

3

● the impact of the loss of one or more major third party payor contracts and the risk that providers and state contract changes may occur;

● the risk that we may need to take further impairment charges if our future results do not meet our expectations;

● our ability to sell our Centers of Medicare and Medicaid Services (“CMS”) receivables, in whole or in part, which could negatively impact our liquidity and leverage ratio if we do not consummate a sale;

● our ability to grow prescription count, realize front-end sales growth, and improve and grow the operations of our PBM;

● our ability to achieve cost savings and the other benefits of our organizational restructuring within our anticipated timeframe, if at all;

● decisions to close additional stores and distribution centers or undertake additional refinancing activities, which could result in further charges;

● our ability to manage expenses and our investments in working capital;

● the continued impact of gross margin pressure in the PBM industry due to continued consolidation and client demand for lower prices while providing enhanced service offerings;

● risks related to breaches of our (or our vendors’) information or payment systems or unauthorized access to confidential or personal information of our associates or customers;

● our ability to maintain our current pharmacy services business and obtain new pharmacy services business, including maintaining renewals of expiring contracts, avoiding contract termination rights that may permit certain of our clients to terminate their contracts prior to their expiration, early price renegotiations prior to contract expirations and the risk that we cannot meet client guarantees;

● our ability to manage our Medicare Part D Plan medical loss ratio (“MLR”) and meet the financial obligations of the plan;

● the risk that we could experience deterioration in our current Star rating with the CMS or incur CMS penalties and/or sanctions;

● the expiration or termination of our Medicare or Medicaid managed care contracts by federal or state governments;

● changes in future exchange or interest rates (including the impact on our variable rate indebtedness) or credit ratings, changes in tax laws, regulations, rates and policies; and

● other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (the “SEC”).

We undertake no obligation to update or revise the forward-looking statements included in this report, whether as a result of new information, future events or otherwise, after the date of this report. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences are discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results” included herein and in our Annual Report on Form 10-K for the fiscal year ended February 26, 2022 (the “Fiscal 2022 10-K”), as well as in “Part I – Item 1A. Risk Factors” of the Fiscal 2022 10-K, which we filed with the SEC on April 25, 2022. To the extent that COVID-19 adversely affects our business and

4

financial results, it may also have the effect of heightening many of the risk factors described herein and in our Fiscal 2022 10-K.

5

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)

	May 28,		February 26,
	2022		2022
ASSETS
Current assets:
Cash and cash equivalents	$	56,060	$	39,721
Accounts receivable, net		1,449,745		1,343,496
Inventories, net of LIFO reserve of $487,173 and $487,173		1,974,759		1,959,389
Prepaid expenses and other current assets		88,860		106,749
Total current assets		3,569,424		3,449,355
Property, plant and equipment, net		985,121		989,167
Operating lease right-of-use assets		2,723,405		2,813,535
Goodwill		879,136		879,136
Other intangibles, net		282,950		291,196
Deferred tax assets		20,071		20,071
Other assets		89,666		86,543
Total assets	$	8,549,773	$	8,529,003
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	5,016	$	5,544
Accounts payable		1,461,238		1,571,261
Accrued salaries, wages and other current liabilities		787,591		780,632
Current portion of operating lease liabilities		574,392		575,651
Total current liabilities		2,828,237		2,933,088
Long-term debt, less current maturities		3,026,456		2,732,986
Long-term operating lease liabilities		2,526,607		2,597,090
Lease financing obligations, less current maturities		14,392		14,830
Other noncurrent liabilities		162,457		151,976
Total liabilities		8,558,149		8,429,970
Commitments and contingencies		—		—
Stockholders’ equity:
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 55,623 and 55,752		55,623		55,752
Additional paid-in capital		5,913,210		5,910,299
Accumulated deficit		(5,961,772)		(5,851,581)
Accumulated other comprehensive loss		(15,437)		(15,437)
Total stockholders’ equity		(8,376)		99,033
Total liabilities and stockholders’ equity	$	8,549,773	$	8,529,003

See accompanying notes to condensed consolidated financial statements.

6

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Revenues	$	6,014,583	$	6,160,985
Costs and expenses:
Cost of revenues		4,817,854		4,876,110
Selling, general and administrative expenses		1,217,929		1,245,362
Facility exit and impairment charges		66,571		8,831
Interest expense		48,119		49,121
Loss on debt retirements, net		—		396
Gain on sale of assets, net		(29,196)		(6,558)
		6,121,277		6,173,262
Loss before income taxes		(106,694)		(12,277)
Income tax expense		3,497		780
Net loss	$	(110,191)	$	(13,057)
Computation of loss attributable to common stockholders:
Net loss attributable to common stockholders—basic and diluted	$	(110,191)	$	(13,057)
Basic and diluted loss per share	$	(2.03)	$	(0.24)

See accompanying notes to condensed consolidated financial statements.

7

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Net loss	$	(110,191)	$	(13,057)
Other comprehensive income:
Defined benefit pension plans:
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 income tax expense		—		123
Change in fair value of interest rate cap		—		27
Total other comprehensive income		—		150
Comprehensive loss	$	(110,191)	$	(12,907)

See accompanying notes to condensed consolidated financial statements.

8

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(unaudited)

								Accumulated
				Additional				Other
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
BALANCE FEBRUARY 26, 2022	55,752	$	55,752	$	5,910,299	$	(5,851,581)	$	(15,437)	$	99,033
Net loss							(110,191)				(110,191)
Other comprehensive loss:
Comprehensive loss											(110,191)
Issuance of restricted stock	61		61		(61)						—
Exchange of restricted shares for taxes	(63)		(63)		(490)						(553)
Cancellation of restricted stock	(127)		(127)		127						—
Amortization of restricted stock balance					3,324						3,324
Stock-based compensation expense					201						201
Amortization of performance-based incentive plans					(190)						(190)
BALANCE MAY 28, 2022	55,623	$	55,623	$	5,913,210	$	(5,961,772)	$	(15,437)	$	(8,376)

See accompanying notes to condensed consolidated financial statements.

9

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(unaudited)

								Accumulated
				Additional				Other
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
BALANCE FEBRUARY 27, 2021	55,143	$	55,143	$	5,897,168	$	(5,313,103)	$	(24,054)	$	615,154
Net loss							(13,057)				(13,057)
Other comprehensive loss:
Changes in Defined Benefit Plans, net of $0 tax expense									123		123
Change in fair value of interest rate cap									27		27
Comprehensive loss											(12,907)
Exchange of restricted shares for taxes	(2)		(2)		(33)						(35)
Cancellation of restricted stock	(48)		(48)		48						—
Amortization of restricted stock balance					1,618						1,618
Stock-based compensation expense					150						150
BALANCE MAY 29, 2021	55,093	$	55,093	$	5,898,951	$	(5,326,160)	$	(23,904)	$	603,980

See accompanying notes to condensed consolidated financial statements.

10

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Operating activities:
Net loss	$	(110,191)	$	(13,057)
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation and amortization		70,073		75,859
Facility exit and impairment charges		66,571		8,831
LIFO credit		—		(3,993)
Gain on sale of assets, net		(29,196)		(6,558)
Change in allowances for uncollectible accounts receivable		3,763		—
Stock-based compensation expense		3,334		2,811
Loss on debt retirements, net		—		396
Changes in operating assets and liabilities:
Accounts receivable		(104,458)		(149,487)
Inventories		(15,827)		11,918
Accounts payable		(137,572)		50,527
Operating lease right-of-use assets and operating lease liabilities		(14,812)		(5,909)
Other assets		751		7,978
Other liabilities		15,327		34,559
Net cash (used in) provided by operating activities		(252,237)		13,875
Investing activities:
Payments for property, plant and equipment		(73,176)		(59,164)
Intangible assets acquired		(12,248)		(5,436)
Proceeds from dispositions of assets and investments		30,839		2,448
Proceeds from sale-leaseback transactions		—		7,456
Net cash used in investing activities		(54,585)		(54,696)
Financing activities:
Net proceeds from revolver		291,000		39,000
Principal payments on long-term debt		(977)		(91,941)
Change in zero balance cash accounts		33,691		51,957
Financing fees paid for early debt redemption		—		(2)
Payments for taxes related to net share settlement of equity awards		(553)		(35)
Deferred financing costs paid		—		(580)
Net cash provided by (used in) financing activities		323,161		(1,601)
Increase (decrease) in cash and cash equivalents		16,339		(42,422)
Cash and cash equivalents, beginning of period		39,721		160,902
Cash and cash equivalents, end of period	$	56,060	$	118,480

See accompanying notes to condensed consolidated financial statements.

11

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

1. Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2022 10-K.

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	May 28,		May 29,
	2022		2021
In thousands	(13 Weeks)		(13 weeks)
Retail Pharmacy segment:
Pharmacy sales	$	3,053,449	$	2,997,044
Front-end sales		1,261,206		1,321,699
Other revenue		30,701		32,939
Total Retail Pharmacy segment		4,345,356		4,351,682
Pharmacy Services segment		1,725,857		1,872,282
Intersegment elimination		(56,630)		(62,979)
Total revenue	$	6,014,583	$	6,160,985

The Retail Pharmacy segment offered a chain-wide loyalty card program titled wellness+. Individual customers were able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earned points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. The wellness+ program was terminated as of July 1, 2020, with benefits earned as of that date available to be used through the end of calendar 2020. Beginning in December 2020, the Company granted temporary extensions of benefits to certain previous members that were eligible for a discount as of the end of each previous 6 month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent 6 months with no additional purchase requirement. New and existing customers who were not already eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each 6 month period. A final extension was granted on December 31, 2021 through February 26, 2022 at which point all discounts were terminated.

A new loyalty program, Rite Aid Rewards, was initiated on February 27, 2022. Customers that enroll in the new program earn points for each dollar spent on front of store purchases as well as for eligible pharmacy prescriptions. Points can then be converted into a “Rite Aid Rewards” coupon that can be tendered as payment in a future purchase. Each point is worth $0.002. Customers must accumulate 1,000 points and create an online account in order to convert

12

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

earned points to a “Rite Aid Rewards” coupon. Unused/unconverted points expire after 90 days. Unredeemed “Rite Aid Rewards” coupons expire 30 days after conversion from points earned.

Points earned pursuant to the Rite Aid Rewards program represent a performance obligation. The value of unredeemed Rite Aid Rewards points is deferred as a contract liability (included in other current liabilities). As members redeem points in the form of a Rite Aid Rewards coupon or when points or unredeemed Rite Aid Rewards coupons expire, the Retail Pharmacy segment recognizes the redeemed/expired portion of the deferred contract liability into revenue. For the thirteen week period ended May 28, 2022, the Company recognized $713 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $5,577 and $0 as of May 28, 2022 and February 26, 2022, respectively.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the recognition of deferred tax liabilities and the methodology for calculating income taxes in the interim period. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU was effective for fiscal years beginning after December 15, 2020 (fiscal 2022). The Company adopted ASU 2019-12 effective February 28, 2021 and the adoption of this standard did not have a material impact on the Company’s financial position.

2. Acquisition

On December 18, 2020, pursuant to that certain stock purchase agreement, dated as of October 7, 2020, by and between the Company and Bartell Drug Company (“Bartell”), the Company acquired Bartell (the “Acquisition”), a Washington corporation, for approximately $89,724 in cash, subject to certain customary post-closing working capital adjustments. The Company financed the Acquisition with borrowings under its Senior Secured Revolving Credit Facility together with cash on hand. Bartell operated 67 retail drug stores and one distribution center in the greater Seattle, Washington area. Bartell operates as a 100 percent owned subsidiary of the Company within its Retail Pharmacy segment.

The Company’s condensed consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021 include Bartell’s results of operations. The Company’s condensed consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the Acquisition date.

13

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The following allocation of the purchase price and the estimated transaction costs is final:

Final purchase price
Cash consideration	$	89,724
Total		89,724
Final purchase price allocation
Cash and cash equivalents	$	3,494
Accounts receivable		23,860
Inventories		67,745
Prepaid expenses and other current assets		1,857
Total current assets		96,956
Property and equipment		28,229
Operating lease right-of-use assets		143,651
Intangible assets(1)		68,700
Other assets		1,805
Total assets acquired		339,341
Accounts payable		24,166
Accrued salaries, wages and other current liabilities		20,335
Current portion of operating lease liabilities		24,617
Total current liabilities		69,118
Long-term operating lease liabilities		124,023
Other long-term liabilities		166
Total liabilities assumed		193,307
Deferred tax liabilities recorded on purchase		13,951
Net assets acquired		132,083
Bargain purchase gain		(42,359)
Total purchase price	$	89,724

(1)            Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes a final valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s final estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation include:

14

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

	Estimated Fair Value		Estimated Useful Life (In Years)
Prescription files	$	54,300	10
Tradename		14,400	Indefinite
Total	$	68,700

During the thirteen week period ended February 27, 2021, the Company recorded a gain on Bartell acquisition of $47,705 primarily due to fair value adjustments related to prescription files and the tradename compared to book values. During the thirteen week period ended November 27, 2021, in connection with determining its final purchase price allocation, the Company recorded a loss on Bartell acquisition of $5,346 primarily due to contract termination charges, inventory valuation adjustments and changes in deferred income taxes, resulting in a net bargain purchase gain of $42,359. The Company believes that the bargain purchase gain was primarily the result of the decision by the Bartell stockholders to sell their interests as Bartell had been experiencing increasing borrowings under its credit agreements to meet its operating needs and increasing net losses. The agreed upon purchase price reflected the fact the seller would have needed to incur further significant debt to cover the operating costs of Bartell, which would have required amendments to its credit arrangements. With the Company’s existing infrastructure, scale and expertise, the Company believes that it has access to the necessary synergies to allow necessary operational improvements to be implemented more efficiently than the seller was capable of.

During the thirteen week periods ended May 28, 2022 and May 29, 2021, acquisition costs of $0 and $3,886 were expensed as incurred.

3. Restructuring

Beginning in fiscal 2019, the Company initiated a series of restructuring plans designed to reorganize its executive management team, reduce managerial layers, and consolidate roles. In March 2020, the Company announced the details of its RxEvolution strategy, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in its front-end offering to free up working capital and update its merchandise assortment, assessing its pricing and promotional strategy, rebranding its retail pharmacy and pharmacy services business, launching its Store of the Future format and further reducing SG&A and headcount, including integrating certain back office functions in the Pharmacy Services segment both within the segment and across Rite Aid. Other strategic initiatives include the expansion of the Company’s digital business, replacing and updating the Company’s financial systems to improve efficiency, and movement to a common client platform at Elixir. In April 2022, the Company announced further strategic initiatives to reduce costs through the closure of unprofitable stores, reducing corporate administration expenses and improving efficiencies in worked payroll and other store labor costs as well as expense reductions at the Pharmacy Services segment. These and future restructuring activities are expected to provide future growth and expense efficiency benefits. There can be no assurance that the Company’s current and future restructuring charges will achieve the cost savings and remerchandising benefits in the amounts or time anticipated.

15

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

For the thirteen week period ended May 28, 2022, the Company incurred total restructuring-related costs of $22,646, which are included as a component of SG&A. These costs are as follows:

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	11,288	$	616	$	11,904
Professional and other fees relating to restructuring activities (b)		6,083		4,659		10,742
Total restructuring-related costs	$	17,371	$	5,275	$	22,646

For the thirteen week period ended May 29, 2021, the Company incurred total restructuring-related costs of $5,932, which are included as a component of SG&A. These costs are as follows:

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	—	$	506	$	506
Professional and other fees relating to restructuring activities (b)		1,621		3,805		5,426
Total restructuring-related costs	$	1,621	$	4,311	$	5,932

A summary of activity for the thirteen week period ended May 28, 2022 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows:

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance at February 26, 2022	$	4,257	$	4,463	$	8,720
Additions charged to expense		11,904		10,742		22,646
Cash payments		(5,231)		(11,727)		(16,958)
Balance at May 28, 2022	$	10,930	$	3,478	$	14,408

(a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts.

(b) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities.

The Company anticipates incurring approximately $60,000 during fiscal 2023 in connection with its continued restructuring activities.

16

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

4. Income (Loss) Per Share

Basic income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company, subject to anti-dilution limitations.

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders— basic and diluted	$	(110,191)	$	(13,057)
Denominator:
Basic and diluted weighted average shares		54,348		53,852
Basic and diluted loss per share	$	(2.03)	$	(0.24)

Due to their antidilutive effect, 700 and 773 potential shares related to stock options have been excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. Also, excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021 are restricted shares of 1,247 and 1,240, respectively, which are included in shares outstanding.

5. Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Impairment charges	$	35,036	$	4,313
Facility exit charges		31,535		4,518
	$	66,571	$	8,831

Impairment Charges

These amounts include the write-down of long-lived assets at locations that were assessed for impairment because of management’s intention to relocate or close the location or because of changes in circumstances that indicated the carrying value of an asset may not be recoverable.

17

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

● Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

● Level 2—Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

● Level 3—Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

Non-Financial Assets Measured on a Non-Recurring Basis

Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 2 and Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 2 inputs is determined by evaluating the current economic conditions in the geographic area for similar use assets. The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases or decreases in actual cash flows may result in valuation changes. During the thirteen week period ended May 28, 2022, long-lived assets with a carrying value of $39,228, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $4,192, resulting in an impairment charge of $35,036. During the thirteen week period ended May 29, 2021, long-lived assets with a carrying value of $4,313, primarily right-of-use assets in connection with leased office spaces, were written down to their fair value of $0, resulting in an impairment charge of $4,313. If our actual future cash flows differ from our projections materially, certain stores that are either not impaired or partially impaired in the current period may be further impaired in future periods.

The following table presents fair values for those assets measured at fair value on a non-recurring basis at May 28, 2022 and May 29, 2021:

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 28, 2022
Long-lived assets held for use	$	—	$	4,192	$	—	$	4,192	$	(35,036)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	4,192	$	—	$	4,192	$	(35,036)

18

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 29, 2021
Long-lived assets held for use	$	—	$	—	$	—	$	—	$	(4,313)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—	$	(4,313)

The above assets reflected in the caption Long-lived assets held for sale are separate and apart from the Assets to be Sold and due to their immateriality have not been reclassified to assets held for sale.

Facility Exit Charges

As part of the Company's ongoing business activities, the Company assesses stores and distribution centers for potential closure or relocation. Decisions to close or relocate stores or distribution centers in future periods would result in facility exit charges and inventory liquidation charges, as well as impairment of assets at these locations. When a store or distribution center is closed, the Company records an expense for unrecoverable costs and accrues a liability equal to the present value at current credit adjusted risk-free interest rates of any anticipated executory costs which are not included within the store or distribution center's respective lease liability under Topic 842. Other store or distribution center closing and liquidation costs are expensed when incurred.

The following table reflects changes in the Company’s closed store liability relating to closed store and distribution center charges for new closures, changes in assumptions and interest accretion:

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Balance—beginning of period	$	18,688	$	3,443
Provision for present value of executory costs for leases exited		26,499		1,708
Changes in assumptions and other adjustments		(191)		1,493
Interest accretion		98		7
Cash payments		(1,692)		(516)
Balance—end of period	$	43,402	$	6,135

6. Fair Value Measurements

The Company utilizes the three-level valuation hierarchy as described in Note 5, Facility Exit and Impairment Charges, for the recognition and disclosure of fair value measurements.

Financial instruments other than long-term indebtedness include cash and cash equivalents, accounts receivable and accounts payable. These instruments are recorded at book value, which we believe approximate their fair values due to their short term nature. In addition, as of May 28, 2022 and February 26, 2022, the Company has $7,186 and $7,406, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of other assets. The Company believes the carrying value of these investments approximates their fair value.

19

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility is estimated based on the quoted market price of the financial instrument which is considered Level 1 of the fair value hierarchy. The fair values of substantially all of the Company’s other long-term indebtedness are estimated based on quoted market prices of the financial instruments which are considered Level 1 of the fair value hierarchy. The carrying amount and estimated fair value of the Company’s total long-term indebtedness was $3,026,456 and $2,677,190, respectively, as of May 28, 2022. The carrying amount and estimated fair value of the Company's total long-term indebtedness was $2,732,986 and $2,661,122, respectively, as of February 26, 2022.

7. Income Taxes

The Company recorded an income tax expense of $3,497 and $780 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was (3.3)% and (6.4)%, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was net of an adjustment of (37.6)% and (18.5)%, respectively, to adjust the valuation allowance against deferred tax assets.

The Company recognizes tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities.

The Company believes that it is reasonably possible that a decrease of up to $25,130 in unrecognized tax benefits related to state exposures may be necessary in the next twelve months; however, management does not expect the change to have a material impact on the results of operations or the financial position of the Company.

The Company regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain. Management will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. The Company continues to maintain a valuation allowance against net deferred tax assets of $1,862,823 and $1,822,710, which relates to federal and state deferred tax assets that may not be realized based on the Company's future projections of taxable income at May 28, 2022 and February 26, 2022, respectively.

8. Medicare Part D

The Company offers Medicare Part D benefits through Elixir Insurance (“EI”), which has contracted with CMS to be a Prescription Drug Plan (“PDP”) and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bearing entity regulated under state insurance laws or similar statutes.

EI is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these laws and regulations, EI must file quarterly and annual reports with the National Association of Insurance Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus under formulas established by certain states and must, in certain circumstances, request and receive the approval of certain state regulators before making dividend payments or other capital distributions to the Company. The Company does not

20

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

believe these limitations on dividends and distributions materially impact its financial position. EI is subject to minimum capital and surplus requirements in certain states. The minimum amount of capital and surplus required to satisfy regulatory requirements in these states is $8,323 as of March 31, 2022. EI was in excess of the minimum required amounts in these states as of May 28, 2022.

The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidies, reinsurance amounts, and coverage gap discount amounts ultimately payable to or receivable from CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported.
​

On August 12, 2021, the Company entered into a receivable purchase agreement (the “August 2021 Receivable Purchase Agreement”) with Bank of America, N.A. (the “Purchaser”).

Pursuant to the terms and conditions set forth in the August 2021 Receivable Purchase Agreement, the Company sold $271,829, a portion of its calendar 2021 CMS receivable, for $258,116, of which $239,360 was received on August 12, 2021. The remaining $18,756, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,713, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended August 28, 2021.

On August 12, 2021, concurrent with the August 2021 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “August 2021 Indemnity Agreement”), whereby the Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the August 2021 Indemnity Agreement. Based on its evaluation of the August 2021 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the August 2021 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the August 2021 Indemnity Agreement.

On January 24, 2022, the Company entered into a receivable purchase agreement (the “January 2022 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the January 2022 Receivable Purchase Agreement, the Company sold $400,680, a portion of its calendar 2021 CMS receivable, for $387,035, of which $359,388 was received on January 24, 2022. The remaining $27,647, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,645, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended February 26, 2022.

On January 24, 2022, concurrent with the January 2022 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “January 2022 Indemnity Agreement”), whereby the Company has agreed to

21

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the January 2022 Indemnity Agreement. Based on its evaluation of the January 2022 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the January 2022 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the January 2022 Indemnity Agreement.

As of May 28, 2022 and February 26, 2022 accounts receivable, net included $36,147 and $34,898 due from the Purchaser, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance for the respective calendar years from CMS.

As of May 28, 2022, and February 26, 2022, accounts receivable, net included $155,397 and $63,203 due from CMS.

9. Manufacturer Rebates Receivables

The Pharmacy Services Segment has manufacturer rebates receivables due directly from manufacturers and from our rebate aggregator of $563,389 and $535,620 included in accounts receivable, net of an allowance for uncollectible rebates of $15,295 and $18,796, as of May 28, 2022 and February 26, 2022, respectively.

10. Goodwill and Other Intangible Assets

At May 28, 2022, the goodwill related to the Pharmacy Services segment is at risk of future impairment if the fair value of this segment, and its associated assets, decrease in value due to further declines in its operating results or an inability to execute management’s business strategies. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates. If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. As of May 28, 2022, the Pharmacy Services segment had goodwill of $835,644.

There was no goodwill impairment charge for the thirteen week period ended May 28, 2022. At May 28, 2022 and February 26, 2022, accumulated impairment losses for the Pharmacy Services segment was $803,712.

22

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of May 28, 2022 and February 26, 2022.

	May 28, 2022								February 26, 2022
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Non-compete agreements and other(a)	$	199,351	$	(179,046)	$	20,305	3	years	$	197,651	$	(178,958)	$	18,693	3	years
Prescription files		1,026,342		(914,911)		111,431	5	years		1,030,169		(918,773)		111,396	6	years
Customer relationships(a)		388,000		(291,770)		96,230	9	years		388,000		(286,090)		101,910	10	years
CMS license		57,500		(17,478)		40,022	4	years		57,500		(15,372)		42,128	5	years
Claims adjudication and other developed software		58,985		(58,423)		562	0	years		58,985		(56,316)		2,669	1	years
Backlog		11,500		(11,500)		—	0	years		11,500		(11,500)		—	0	years
Total finite	$	1,741,678	$	(1,473,128)		268,550			$	1,743,805	$	(1,467,009)	$	276,796
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,756,078	$	(1,473,128)	$	282,950			$	1,758,205	$	(1,467,009)	$	291,196

(a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

The Company is continuing to reposition its approach to the Elixir Insurance Part D business including an expectation of a purposeful shrinkage of the business. As a result, at the end of fiscal 2022, the Company adjusted the remaining amortization period of the CMS License to 5 years. Prior to such adjustment, the remaining life was 19 years.

Amortization expense for these intangible assets and liabilities was $20,626 and $20,460 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2023—$71,185; 2024—$57,613; 2025—$46,393; 2026—$35,802 and 2027—$28,815.

23

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

11. Indebtedness and Credit Agreement

Following is a summary of indebtedness and lease financing obligations at May 28, 2022 and February 26, 2022:

	May 28,		February 26,
	2022		2022
Secured Debt:
Senior secured revolving credit facility due August 2026 ($1,000,000 and $709,000 face value less unamortized debt issuance costs of $16,992 and $18,010)		983,008		690,990
FILO Term Loan due August 2026 ($350,000 face value less unamortized debt issuance costs of $2,211 and $2,344)		347,789		347,656
		1,330,797		1,038,646
Second Lien Secured Debt:
7.5% senior secured notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $6,311 and $6,824)		593,689		593,176
8.0% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $13,628 and $14,397)		836,290		835,521
		1,429,979		1,428,697
Unguaranteed Unsecured Debt:
7.7% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $609 and $642)		236,777		236,744
6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $98 and $102)		28,903		28,899
		265,680		265,643
Lease financing obligations		19,408		20,374
Total debt		3,045,864		2,753,360
Current maturities of long-term debt and lease financing obligations		(5,016)		(5,544)
Long-term debt and lease financing obligations, less current maturities	$	3,040,848	$	2,747,816

Credit Facility

On December 20, 2018, the Company entered into a senior secured credit agreement (as amended by the First Amendment to Credit Agreement, dated as of January 6, 2020, the “Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Amended Credit Agreement”), which Credit Agreement provided for facilities consisting of a $2,700,000 senior secured asset-based revolving credit facility (“Initial Senior Secured Revolving Credit Facility”) and a $450,000 “first-in, last out” senior secured term loan facility (“Initial Senior Secured Term Loan,” and together with the Initial Senior Secured Revolving Credit Facility, collectively, the “Initial Facilities”). In December 2018, the Company used proceeds from the Initial Facilities to refinance its prior $2,700,000 existing credit agreement.

On August 20, 2021, the Company entered in to the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Credit Agreement to provide for a $2,800,000 senior secured asset-based revolving credit facility (“Senior Secured Revolving Credit Facility” or “revolver”) and a $350,000 “first-in,

24

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

last out” senior secured term loan facility (“Senior Secured Term Loan” or “Term Loan” and together with the Senior Secured Revolving Credit Facility, collectively, the “Amended Facilities”) and incorporate customary “hardwired” LIBOR transition provisions. The Amended Facilities extend the Company’s debt maturity profile and provide additional liquidity. Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, a base rate (determined in a customary manner) plus a margin of between 0.25% to 0.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of between 1.25% and 1.75%, in each case based upon the Average ABL Availability (as defined in the Amended Credit Agreement). Borrowings under the Senior Secured Term Loan bear interest at a rate per annum equal to, at the Company’s option, (x) a base rate (determined in a customary manner) plus a margin of 1.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of 2.75%. The Company is required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Amended Credit Agreement). The Amended Facilities are scheduled to mature on August 20, 2026 (subject to a springing maturity if certain of the Company’s existing secured notes are not refinanced or repaid prior to the date that is 91 days prior to the stated maturity thereof).

The Company’s borrowing capacity under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 28, 2022, the Company had $1,350,000 of borrowings outstanding under the Amended Facilities and had letters of credit outstanding under the Senior Secured Revolving Credit Facility in a face amount of $127,696, which resulted in remaining borrowing capacity under the Senior Secured Revolving Credit Facility of $1,672,304. If at any time the total credit exposure outstanding under the Senior Secured Revolving Credit Facility exceeds the borrowing base, the Company will be required to repay amounts outstanding to eliminate such shortfall.

The Amended Credit Agreement restricts the Company and all of its subsidiaries that guarantee its obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes (collectively, the “Subsidiary Guarantors”) from accumulating cash on hand in excess of $200,000 at any time when revolving loans are outstanding (not including cash located in store and lockbox deposit accounts and cash necessary to cover current liabilities). The Amended Credit Agreement also states that if at any time (other than following the exercise of remedies or acceleration of any senior obligations or second priority debt and receipt of a triggering notice by the senior collateral agent from a representative of the senior obligations or the second priority debt) either (i) an event of default exists under the Amended Facilities or (ii) the sum of the Company’s borrowing capacity under the Senior Secured Revolving Credit Facility and certain amounts held on deposit with the senior collateral agent in a concentration account is less than $275,000 for three consecutive business days or less than or equal to $200,000 on any day (a “cash sweep period”), the funds in the Company’s deposit accounts will be swept to a concentration account with the senior collateral agent and will be applied first to repay outstanding revolving loans under the Amended Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Amended Facilities.

With the exception of EI, substantially all of Rite Aid Corporation’s 100% owned subsidiaries guarantee the obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes. The Company’s obligations under the Amended Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary

25

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations. The subsidiary guarantees related to the Company’s Amended Facilities, the secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. The Company has no independent assets or operations. Other than EI, the subsidiaries, including joint ventures, that do not guarantee the Amended Facilities and applicable notes, are minor.

The Amended Credit Agreement allows the Company to have outstanding, at any time, up to an aggregate principal amount of $1,500,000 in secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Amended Facilities and existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest maturity date of any Term Loan or Other Revolving Commitment (each as defined in the Amended Credit Agreement) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date). Subject to the limitations described in the immediately preceding sentence, the Amended Credit Agreement additionally allows the Company to issue or incur an unlimited amount of unsecured debt and disqualified preferred stock so long as a Financial Covenant Effectiveness Period (as defined in the Amended Credit Agreement) is not in effect; provided, however, that certain of the Company’s other outstanding indebtedness limits the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence or other exemptions are not available. The Amended Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Amended Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Amended Facilities are not in default and the Company maintains availability under its revolver of more than $365,000.

The Amended Credit Agreement has a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (i) on any date on which availability under the Senior Secured Revolving Credit Facility is less than $200,000 or (ii) on the third consecutive business day on which availability under the Senior Secured Revolving Credit Facility is less than $250,000 and, in each case, ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which availability under the revolver is equal to or greater than $250,000. As of May 28, 2022, the Company’s fixed charge coverage ratio was greater than 1.00 to 1.00, and the Company was in compliance with the Amended Credit Agreement’s financial covenant. The Amended Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens.

The Amended Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50,000 or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment, repurchase, redemption or defeasance of such debt.

26

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

Fiscal 2022 and 2023 Transactions

On April 28, 2021, the Company issued a notice of redemption for all of the 6.125% Notes that were outstanding on May 28, 2021, pursuant to the terms of the indenture of the 6.125% Notes. On May 28, 2021, the Company redeemed 100% of the remaining outstanding 6.125% Notes at par. In connection therewith, the Company recorded a loss on debt retirement of $396 which included unamortized debt issuance costs. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows.

On August 20, 2021, the Company entered into the Second Amendment in order to, among other things, increase the aggregate principal amount of commitments under the Senior Secured Revolving Credit Facility from $2,700,000 to $2,800,000 and decrease the aggregate principal amount of loans outstanding under the Senior Secured Term Loan from $450,000 to $350,000. In connection therewith, the Company recorded a loss on debt modification and retirement of $2,839 which included unamortized debt issuance costs. The debt repayment and related loss on debt modification and retirement is included in the results of operations and cash flows.

On June 13, 2022, the Company announced the commencement of a series of cash tender offers to purchase up to $150,000 aggregate principal amount of the Company’s 7.50% Senior Secured Notes due 2025 (the “2025 Notes”), 8.0% Senior Secured Notes due 2026, 7.70% Notes due 2027 (the “2027 Notes”) and 6.875% Notes due 2028 (the “2028 Notes”), subject to prioritized acceptance levels, a subcap of $100,000 with respect to the 2025 Notes and proration. On June 29, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $114,942 of its 2025 Notes, $51,695 aggregate principal amount of its 2027 Notes and $26,955 aggregate principal amount of its 2028 Notes. The Company anticipates that the purchase will be considered a debt retirement and accordingly, anticipates a gain on debt retirement during the second quarter of fiscal 2023.

Maturities

The aggregate annual principal payments of long-term debt for the remainder of fiscal 2023 and thereafter are as follows: 2023—$0; 2024—$0; 2025—$0; 2026—$600,000; 2027—$2,437,304 and $29,001 thereafter.

12. Leases

The Company leases most of its retail stores and certain distribution facilities under noncancelable operating and finance leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancelable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases.

27

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The following table is a summary of the Company’s components of net lease cost for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Operating lease cost	$	159,845	$	169,494
Financing lease cost:
Amortization of right-of-use asset		809		1,011
Interest on long-term finance lease liabilities		501		568
Total finance lease costs	$	1,310	$	1,579
Short-term lease costs		457		1,099
Variable lease costs		42,645		46,038
Less: sublease income		(3,223)		(3,343)
Net lease cost	$	201,034	$	214,867

Supplemental cash flow information related to leases for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	175,414	$	176,591
Operating cash flows paid for interest portion of finance leases		501		568
Financing cash flows paid for principal portion of finance leases		945		1,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		57,986		76,314
Finance leases		—		—

28

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

Supplemental balance sheet information related to leases as of May 28, 2022 and February 26, 2022 (in thousands, except lease term and discount rate):

	May 28,			February 26,
	2022			2022
Operating leases:
Operating lease right-of-use asset	$	2,723,405		$	2,813,535
Short-term operating lease liabilities	$	574,392		$	575,651
Long-term operating lease liabilities		2,526,607			2,597,090
Total operating lease liabilities	$	3,100,999		$	3,172,741
Finance leases:
Property, plant and equipment, net	$	13,151		$	13,950
Current maturities of long-term debt and lease financing obligations	$	5,016		$	5,544
Lease financing obligations, less current maturities		14,392			14,830
Total finance lease liabilities	$	19,408		$	20,374
Weighted average remaining lease term
Operating leases		7.5			7.7
Finance leases		8.7			8.7
Weighted average discount rate
Operating leases		6.0	%		6.0	%
Finance leases		9.8	%		10.0	%

The following table summarizes the maturity of lease liabilities under finance and operating leases as of May 28, 2022:

	May 28, 2022
	Finance		Operating
Fiscal year	Leases		Leases (1)		Total
2023 (remaining forty weeks)	$	6,065	$	519,021	$	525,086
2024		4,234		647,443		651,677
2025		3,149		554,618		557,767
2026		2,367		465,409		467,776
2027		1,500		383,097		384,597
Thereafter		12,048		1,302,201		1,314,249
Total lease payments		29,363		3,871,789		3,901,152
Less: imputed interest		(9,955)		(770,790)		(780,745)
Total lease liabilities	$	19,408	$	3,100,999	$	3,120,407

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases.

29

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

During the thirteen week period ended May 28, 2022, the Company did not enter into any sale-leaseback transactions. During the thirteen week period ended May 29, 2021, the Company sold two owned and operating stores to independent third parties. Net proceeds from the sales were $7,456 for the thirteen week period ended May 29, 2021. Concurrent with these sales, the Company entered into agreements to lease the properties back from the purchasers over a minimum lease term of 15 years. The Company accounted for these leases as operating lease right-of-use assets and corresponding operating lease liabilities in accordance with the Lease Standard. The transaction resulted in a gain of $3,688 which is included in the gain on sale of assets, net for the thirteen week period ended May 29, 2021.

The Company has additional capacity under its outstanding debt agreements to enter into additional sale-leaseback transactions.

13. Retirement Plans

Net periodic pension expense for the thirteen week periods ended May 28, 2022 and May 29, 2021, for the Company’s defined benefit plan includes the following components:

	Defined Benefit
	Pension Plan
	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Service cost	$	107	$	128
Interest cost		1,264		1,232
Expected return on plan assets		(1,402)		(1,313)
Amortization of unrecognized net loss		—		123
Net periodic pension expense	$	(31)	$	170

During the thirteen week period ended May 28, 2022 the Company contributed $0 to the Defined Benefit Pension Plan. During the remainder of fiscal 2023, the Company expects to contribute $0 to the Defined Benefit Pension Plan.

14. Segment Reporting

The Company has two reportable segments, its retail drug stores (“Retail Pharmacy”), and its pharmacy services (“Pharmacy Services”) segments.

The Retail Pharmacy segment’s primary business is the sale of prescription drugs and related consultation to its customers. Additionally, the Retail Pharmacy segment sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment offers a full range of pharmacy benefit management services including plan design and administration, formulary management and claims processing. Additionally, the Pharmacy Services segment offers specialty and mail order services, and drug benefits to eligible beneficiaries under the federal government’s Medicare Part D program.

30

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

The Company’s chief operating decision makers are its Chief Executive Officer, Chief Financial Officer and several other members of the Executive Leadership Team, (collectively the “CODM”). The CODM has ultimate responsibility for enterprise decisions. The CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy and Pharmacy Services segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. The CODM relies on internal management reporting that analyzes enterprise results on certain key performance indicators, namely, revenues, gross profit, and Adjusted EBITDA.

The following is balance sheet information for the Company’s reportable segments:

	Retail		Pharmacy
	Pharmacy		Services		Eliminations(1)		Consolidated
May 28, 2022:
Total Assets	$	6,101,168	$	2,464,224	$	(15,619)	$	8,549,773
Goodwill		43,492		835,644		—		879,136
February 26, 2022:
Total Assets	$	6,068,594	$	2,482,232	$	(21,823)	$	8,529,003
Goodwill		43,492		835,644		—		879,136

(1) As of May 28, 2022 and February 26, 2022, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,619 and $21,823, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products.

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
May 28, 2022:
Revenues	$	4,345,356	$	1,725,857	$	(56,630)	$	6,014,583
Gross Profit		1,097,357		99,372		—		1,196,729
Adjusted EBITDA(2)		73,682		26,448		—		100,130
Additions to property and equipment and intangible assets		78,551		6,873		—		85,424
May 29, 2021:
Revenues	$	4,351,682	$	1,872,282	$	(62,979)	$	6,160,985
Gross Profit		1,169,934		114,941		—		1,284,875
Adjusted EBITDA(2)		94,914		43,963		—		138,877
Additions to property and equipment and intangible assets		60,893		3,707		—		64,600

31

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

(1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis.

(2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details.

The following is a reconciliation of net income (loss) to Adjusted EBITDA for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	May 28,		May 29,
	2022		2021
	(13 weeks)		(13 weeks)
Net loss	$	(110,191)	$	(13,057)
Interest expense		48,119		49,121
Income tax expense		3,497		780
Depreciation and amortization		70,073		75,859
LIFO credit		—		(3,993)
Facility exit and impairment charges		66,571		8,831
Loss on debt retirements, net		—		396
Merger and Acquisition-related costs		—		3,886
Stock-based compensation expense		3,334		2,811
Restructuring-related costs		22,646		5,932
Inventory write-downs related to store closings		7,955		472
Litigation and other contractual settlements		18,271		14,000
Gain on sale of assets, net		(29,196)		(6,558)
Other		(949)		397
Adjusted EBITDA	$	100,130	$	138,877

15. Commitments, Contingencies and Guarantees

Legal Matters and Regulatory Proceedings

The Company is regularly involved in a variety of legal matters including arbitration, litigation (and related settlement discussions), audits by counter parties under our contracts, and other claims, and is subject to regulatory proceedings including audits, inspections, inquiries, investigations, and similar actions by health care, insurance, pharmacy, tax and other governmental authorities arising in the ordinary course of its business, including, without limitation, the matters described below. Substantial damages are sought from the Company in virtually all of these matters. The Company records accruals for outstanding legal matters and applicable regulatory proceedings when it believes it is probable that a loss has been incurred, and the amount can be reasonably estimated. The Company evaluates on a quarterly basis, developments in legal matters and regulatory proceedings that could affect the amount of any existing accrual or that warrant an accrual. If a loss contingency is not both probable and estimable, the Company typically does not establish an accrued liability. With respect to the litigation and other legal proceedings described

32

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

below, the Company is unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings.

None of the Company’s accruals for outstanding legal matters or regulatory proceedings are currently material, individually or in the aggregate, to the Company’s consolidated financial position. However, during the course of any proceeding, developments may result in the creation or an increase of an accrual that could be material. Additionally, unfavorable or unexpected outcomes in outstanding legal matters or regulatory proceedings could exceed any accrual and impact the Company’s financial position. Further, even if the Company is successful in its legal proceedings, the Company may incur significant costs and expenses defending itself or others that it is required to indemnify, and such costs and expenses may not be subject to or exceed reimbursement pursuant to any applicable insurance.

The Company’s contingencies are subject to significant uncertainties, many of which are beyond the Company’s control, including, among other factors: (i) the stage of any proceeding and delays in scheduling; (ii) whether class or collective action status is sought and the likelihood of a class being certified; (iii) the outcome of pending or potential appeals, motions and settlement discussions; (iv) the range and magnitude of potential damages, fines or penalties, which are often unspecified or indeterminate; (v) the impact of discovery on the matter; (vi) whether novel or unsettled legal theories are at issue or advanced; (vii) whether there are significant factual issues to be resolved including findings made by juries; (viii) the exercise of discretion in enforcement actions including in the case of certain government agency investigations, whether a qui tam lawsuit (“whistleblower” action) has been filed and whether the government agency makes a decision to intervene in the lawsuit following investigation; and/or (ix) changes in priorities following any change in political administration at the state or federal level.

Employment Litigation.

The Company is currently a defendant in several lawsuits filed in courts in California that contain allegations regarding violations of the California Business and Professions Code, various California employment laws and regulations, industry wage orders, wage-and-hour laws, rules and regulations pertaining primarily to failure to pay overtime, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (the “California Cases”). The Company also is defending a putative employment collective and class action filed in federal court in New York, which raises similar allegations in addition to others about the payment frequency for certain employees (the “New York Case”). Substantial damages are sought from the Company in virtually all of these matters. From time to time, one or more of these matters may be settled.

Some of the California Cases purport or may be determined to be class actions or representative actions under the California Private Attorneys General Act and seek substantial damages and penalties. In June 2021, the Company agreed to settle two of the California Cases in which the plaintiffs brought class-based claims alleging that they and all other similarly situated associates were not paid for time waiting for their bags to be checked. One set of cases involving store associates was settled for $9 million and has concluded, while the other involving distribution center associates was settled for $1.75 million and remains subject to court approval. On October 1, 2021, the Company agreed to settle for $12 million allegations made by a purported class of California store associates that it required such associates to purchase uniforms, and the matter has concluded. The Company has aggressively defended itself and challenged the merits of the lawsuits and, where applicable, allegations that the lawsuits should be certified as class or representative actions.

33

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

Usual and Customary Litigation.

The Company is named as a defendant in a number of lawsuits, including the cases below, that allege that the Company’s retail stores overcharged for prescription drugs by not submitting the price available to members of the Rite Aid’s Rx Savings Program as the pharmacy’s usual and customary price, and related theories. The Company is defending itself against these claims. Substantial damages are sought from the Company in virtually all of these matters.

The Company is a defendant in a putative consumer class action lawsuit in the United States District Court for the Southern District of California captioned Byron Stafford v. Rite Aid Corp. A separate lawsuit, Robert Josten v. Rite Aid Corp., was consolidated with this lawsuit in November, 2019. The lawsuit contains allegations that (i) the Company was obligated to charge the plaintiffs’ insurance companies its usual and customary prices for their prescription drugs; and (ii) the Company failed to do so because the prices it reported were not equal to or adjusted to account for the prices that Rite Aid offered to uninsured and underinsured customers through its Rx Savings Program. Although a stay pending the Company’s unsuccessful attempt to compel arbitration has been lifted, the cases are now stayed pending mediation of these matters and another lawsuit raising usual and customary pricing allegations filed in the United States District Court for the Eastern District of Pennsylvania.

On February 6, 2019, Humana, Inc., filed a claim pursuant to a binding arbitration provision of the parties’ agreement alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program prices as its usual and customary prices to Humana. An arbitration hearing was held in this matter in November 2021.  

On April 22, 2022, the arbitrator issued an Opinion and Final Award against the Company for breach of contract awarding Humana $122.6 million, which includes $40.7 million in prejudgment interest (the “Arbitration Award”). The Company believes that the Arbitration Award contains a number of significant factual and legal errors. On June 20, 2022, the Company both opposed Humana’s effort to confirm the Arbitration Award and petitioned the United States District Court for Western District of Kentucky for vacatur of the Arbitration Award, as is its right under the Federal Arbitration Act (“FAA”). As such, the Company has determined that it is not probable that a loss has occurred.

The FAA, as interpreted and applied by federal courts, permits vacatur when, among other things, an arbitrator’s decision: (1) is irreconcilable with the terms of a contract between the parties; (2) rests on a plain legal error that manifests disregard for the law; or (3) incorporates a refusal to consider pertinent, material evidence. Similarly, the FAA, as interpreted and applied by federal courts, permits modification of an arbitrator’s decision to correct an evident material miscalculation of figures. Although the Company cannot make any assurances of success in its efforts, it is the Company’s view that the errors in the Arbitration Award support both vacatur and modification under the FAA, the effect of either of which could be to set aside the Arbitration Award or reduce or eliminate the damages provided for in the Arbitration Award.

The Company is a defendant in two consolidated lawsuits pending in the United States District Court for the District of Minnesota filed in 2020 by various Blue Cross/Blue Shield plans that operate in eight different states (North Carolina, North Dakota, Alabama, Utah, Minnesota, Oregon, Washington and New Jersey) alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program pricing to several Pharmacy Benefit Managers with which Rite Aid and the insurers had independent contracts. The Company is also defending a lawsuit filed in Delaware state court in 2019 by multiple Centene entities alleging that the

34

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

Company overcharged for prescriptions by improperly reporting usual and customary prices that did not include Rx Savings Program pricing. The Company is defending a similar lawsuit filed in 2022 by WellCare in Florida state court.

Drug Utilization Review and Code 1 Litigation

In June 2012, qui tam plaintiff, Loyd F. Schmuckley (“Relator”) filed a complaint under seal against the Company alleging that it failed to comply with certain requirements of California’s Medicaid program between 2007 and 2014. In June 2013, the Company was served with a Civil Investigative Demand (“CID”) by the United States Attorney’s Office for the Eastern District of California regarding (1) the Company’s Drug Utilization Review and prescription dispensing protocol; and (2) the dispensing of drugs designated as “Code 1” by the State of California. Specifically, the Relator alleged that the Company did not perform special verification and documentation for certain medications known as “Code 1” drugs. While the complaint remained under seal, the United States Department of Justice conducted an extensive investigation and ultimately declined to intervene. Although numerous states declined to intervene, in September 2017, the State of California filed a complaint in intervention. The Company filed a motion to dismiss Relator’s and the State of California Department of Justice’s Bureau of Medical Fraud and Elder Abuse respective complaints in January 2018, the hearing was held on March 23, 2018. On September 5, 2018, the court issued an order denying the motion to dismiss. Substantial damages are sought from the Company in this matter. No trial date has been set and as discovery continues, the parties are participating in a mediation process.

Controlled Substances Litigation, Audits and Investigations

The Company, along with various other defendants, is named in multiple opioid-related lawsuits filed by counties, cities, municipalities, Native American tribes, hospitals, third-party payers, and others across the United States. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation (“JPML”) consolidated and transferred more than a thousand federal opioid-related lawsuits that name the Company as a defendant to the multi-district litigation (“MDL”) pending in the United States District Court for the Northern District of Ohio under In re National Prescription Opiate Litigation (Case No. 17-MD-2804). A significant number of similar cases that are not part of the MDL and name the Company as a defendant are also pending in state courts. On June 1, 2022, the JPML ordered that newly filed cases will no longer be transferred to the MDL. The plaintiffs in these opioid-related lawsuits generally allege claims that include public nuisance and negligence theories of liability resulting from the impacts of widespread opioid abuse against defendants along the pharmaceutical supply chain, including manufacturers, wholesale distributors, and retail pharmacies. At this stage of the proceedings, the Company is not able to predict the outcome of the opioid-related lawsuits in which it remains a defendant or estimate a potential range of loss regarding the lawsuits, and is defending itself against all relevant claims. From time to time, some of these cases may be settled, dismissed or otherwise terminated, and additional such cases may be filed.

The Company also has received warrants, subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, the federal and state governments regarding opioids and other controlled substances. The Company has been cooperating with and responding to these investigatory inquiries.

Substantial damages are sought from the Company in virtually all of these matters.

In April 2019, the Company initiated a coverage action styled Rite Aid Corporation et al. v. ACE American Ins. Co. et al. Through this action, the Company is seeking the recovery of defense costs and settlement and/or judgment

35

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 28, 2022 and May 29, 2021

(Dollars and share information in thousands, except per share amounts)

(unaudited)

costs that may be paid for the opioid-related lawsuits. The action seeks declaratory relief with respect to the obligations of the insurers under the policies at issue in the action and asserts claims for breach of contract and statutory remedies against one of these insurers. Although the trial court determined on the Company’s motion for partial summary judgment that this insurer was obligated to reimburse the Company for its defense costs, on January 10, 2022, the Delaware Supreme Court reversed the trial court’s order and ruled that the insurer had no duty to defend the first MDL suits set for trial based on the specific allegations at issue in those cases. The matter has been remanded to the lower court for further proceedings.

Miscellaneous Litigation and Investigations.

The U.S. Securities and Exchange Commission (“SEC”) is investigating trading in the Company’s securities that occurred in or around January 2017, and has subpoenaed information from the Company and certain employees in connection with that investigation. The Company is cooperating with the SEC in this matter. The Company has received a CID and requests for information with respect to consumer protection laws. The Company is also defending a lawsuit asserting numerous claims based on allegations surrounding the Company’s use of a certain font including in the Company’s rebranded logo.

16. Supplementary Cash Flow Data

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for interest	$	11,230	$	12,813
Cash payments for income taxes, net	$	13,290	$	556
Equipment financed under capital leases	$	—	$	1,585
Gross borrowings from revolver	$	860,000	$	1,546,000
Gross repayments to revolver	$	569,000	$	1,507,000

Significant components of cash provided by Other Liabilities of $15,327 for the thirteen week period ended May 28, 2022 include cash provided from an increase in accruals relating to store closures and litigation matters.

36

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results

Overview

We are a healthcare company with a retail footprint, providing our customers and communities with a high level of care and service through various programs we offer through our two reportable business segments, our Retail Pharmacy segment and our Pharmacy Services segment. We accomplish our goal of delivering comprehensive care to our customers through our retail drugstores and our PBM, Elixir. We also offer fully integrated mail-order and specialty pharmacy services through Elixir Pharmacy. Additionally, through Elixir Insurance (“EI”), Elixir also serves seniors enrolled in Medicare Part D. When combined with our retail platform, this comprehensive suite of services allows us to provide value and choice to customers, patients and payors and allows us to compete in today's evolving healthcare marketplace.

Retail Pharmacy Segment

Our Retail Pharmacy segment sells brand and generic prescription drugs and provides various other pharmacy services, as well as an assortment of front-end products including health and beauty aids, personal care products, seasonal merchandise, and a large private brand product line. Our Retail Pharmacy segment generates the majority of its revenue through the sale of prescription drugs and front-end products at our over 2,300 retail pharmacy locations across 17 states and through our e-commerce platform available at www.riteaid.com. We replenish our retail stores through a combination of direct store delivery of pharmaceutical products facilitated through our pharmaceutical Purchasing and Delivery Agreement with McKesson, and the majority of our front-end products through our network of distribution centers.

Pharmacy Services Segment

Our Pharmacy Services segment provides a fully integrated suite of PBM offerings including technology solutions, mail delivery services, specialty pharmacy, network and rebate administration, claims adjudication and pharmacy discount programs. Elixir also provides prescription discount programs and Medicare Part D insurance offerings for individuals and groups. Elixir provides services to various clients across its different lines of business, including major health plans, commercial employers, labor groups and state and local governments, representing approximately 2.3 million covered lives, including approximately 0.7 million covered lives through our Medicare Part D insurance offerings. Elixir continues to focus its efforts and offerings to its target market of small to mid-market employers, labor unions and regional health plans, including provider-led health plans and government sponsored Medicaid and Medicare plans.

Restructuring

Beginning in Fiscal 2019, we initiated a series of restructuring plans designed to reorganize our executive management team, reduce managerial layers, and consolidate roles. In March 2020, we announced the details of our RxEvolution strategy, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in our front-end offering to free up working capital and update our merchandise assortment, assessing our pricing and promotional strategy, rebranding our retail pharmacy and pharmacy services business, launching our Store of the Future format and further reducing SG&A and headcount, including integrating certain back office functions in the Pharmacy Services segment both within the segment and across Rite Aid. Other strategic initiatives include the expansion of our digital business, replacing and updating the Company’s financial systems to improve efficiency, and movement to a common client platform at Elixir. In April 2022, we announced further strategic initiatives to reduce costs through the closure of unprofitable stores, reducing corporate administration expenses and improving efficiencies in worked payroll and other store labor costs as well as expense reductions at our Pharmacy Services segment. These and future restructuring activities are expected to provide future growth and expense efficiency benefits. There can be no assurance that our current and future restructuring charges will achieve the cost savings and remerchandising benefits in the amounts or time anticipated.

37

Impact of COVID-19

In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization. The COVID-19 pandemic has severely impacted the economies of the United States and other countries around the world.

Since the onset of the COVID-19 pandemic, Rite Aid has been on the front lines of providing communities with essential care, services and products, including the administration of COVID-19 testing and vaccines. We have taken numerous steps to ensure that Rite Aid can continue providing these vital services during this time of great need, including hiring additional full and part-time associates to support our stores and distribution center teams, providing our front line associates with our Hero Pay and Hero Bonus programs and instituted a Pandemic Pay policy that ensures associates are compensated if diagnosed with the virus or quarantined due to exposure. We also implemented safety protocols to keep our associates and customers safe, and transitioned our office-based associates to a remote work environment. Our strong local presence and scale in communities in our markets enables us to play a central role in the response to COVID-19, as well as provide seamless support for our customers wherever they need it; at our stores and at their homes through our delivery services.

The COVID-19 pandemic had a significant impact on our operating results for the thirteen week periods ended May 28, 2022 and May 29, 2021 and will continue to have an impact on several factors underlying our operating results in fiscal 2023. Those factors include the number of individuals that receive a COVID-19 vaccine or booster; demand for COVID-19 testing; the timing and extent to which elective procedures return to pre-pandemic levels; the demand for flu and other immunizations and the length and severity of the upcoming cough, cold and flu season.

Overview of Financial Results

Our net loss for the thirteen week period ended May 28, 2022 was $110.2 million or $2.03 per basic and diluted share compared to a net loss of $13.1 million or $0.24 per basic and diluted share for the thirteen week period ended May 29, 2021. The increase in net loss for the thirteen week period ended May 28, 2022 was due primarily to higher facility exit and impairment charges driven by the Company’s previously announced store closure decisions and a decrease in Adjusted EBITDA. These items were partially offset by an increase in gain on sale of assets resulting from script file sales of certain of the store closures.

Our Adjusted EBITDA for the thirteen week period ended May 28, 2022 was $100.1 million or 1.7% of revenues compared to $138.9 million or 2.3% of revenues for the thirteen week period ended May 29, 2021. The decrease in Adjusted EBITDA for the thirteen week period ended May 28, 2022 was due to declines in both the Retail Pharmacy segment and the Pharmacy Services segment. Adjusted EBITDA decreased $21.2 million in the Retail Pharmacy segment due primarily to a decrease in gross profit, partially offset by a decrease in Adjusted EBITDA selling, general and administrative expenses of $40.5 million. Adjusted EBITDA in the Pharmacy Services segment decreased $17.5 million due primarily to the decline in revenues associated with lost clients and an increase in the medical loss ratio at EI, partially offset by higher retained rebates from our new rebate aggregation arrangement.

Please see the sections entitled “Segment Analysis” and “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” below for additional details.

38

Consolidated Results of Operations

Revenues and Other Operating Data

		Thirteen Week Period Ended
		May 28,			May 29,
		2022			2021
	(dollars in thousands except per share amounts)
Revenues(a)		$	6,014,583		$	6,160,985
Revenue (decline) growth			(2.4)	%		2.2	%
Net loss		$	(110,191)		$	(13,057)
Net loss per diluted share		$	(2.03)		$	(0.24)
Adjusted EBITDA(b)		$	100,130		$	138,877
Adjusted Net (Loss) Income (b)		$	(32,829)		$	20,934
Adjusted Net (Loss) Income per Diluted Share(b)		$	(0.60)		$	0.38

(a) Revenues for the thirteen week periods ended May 28, 2022 and May 29, 2021 exclude $56,630 and $62,979, respectively, of inter-segment activity that is eliminated in consolidation.

(b) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details.

Revenues

Revenues decreased 2.4% for the thirteen weeks ended May 28, 2022, compared to an increase of 2.2% for the thirteen weeks ended May 29, 2021. Revenues for the thirteen week period ended May 28, 2022 were impacted by a $6.3 million decrease in Retail Pharmacy segment revenues and a $146.4 million decrease in Pharmacy Services segment revenues.

Please see the section entitled “Segment Analysis” below for additional details regarding revenues.

Costs and Expenses

	Thirteen Week Period Ended
	May 28,			May 29,
	2022			2021
	(dollars in thousands)
Cost of revenues(a)	$	4,817,854		$	4,876,110
Gross profit		1,196,729			1,284,875
Gross margin		19.9	%		20.9	%
Selling, general and administrative expenses	$	1,217,929		$	1,245,362
Selling, general and administrative expenses as a percentage of revenues		20.2	%		20.2	%
Facility exit and impairment charges		66,571			8,831
Interest expense		48,119			49,121
Loss on debt retirements, net		—			396
Gain on sale of assets, net		(29,196)			(6,558)

(a) Cost of revenues for the thirteen week periods ended May 28, 2022 and May 29, 2021 exclude $56,630 and $62,979, respectively, of inter-segment activity that is eliminated in consolidation.

Gross Profit and Cost of Revenues

Gross profit decreased by $88.1 million for the thirteen week period ended May 28, 2022 compared to the thirteen week period ended May 29, 2021. Gross profit for the thirteen week period ended May 28, 2022 includes a decrease of $72.5 million in our Retail Pharmacy segment and a decrease of $15.6 million in our Pharmacy Services

39

segment. Gross margin was 19.9% for the thirteen week period ended May 28, 2022 compared to 20.9% for the thirteen week period ended May 29, 2021. Please see the section entitled “Segment Analysis” for a more detailed description of gross profit and gross margin results by segment.

Selling, General and Administrative Expenses

SG&A decreased by $27.4 million for the thirteen week period ended May 28, 2022, compared to the thirteen week period ended May 29, 2021. The decrease in SG&A for the thirteen week period ended May 28, 2022 includes a decrease of $38.8 million relating to our Retail Pharmacy segment, partially offset by an increase of $11.4 million relating to our Pharmacy Services segment. Please see the section entitled “Segment Analysis” below for additional details regarding SG&A.

Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week
	Period Ended
	May 28,		May 29,
	2022		2021
Impairment charges	$	35,036	$	4,313
Facility exit charges		31,535		4,518
	$	66,571	$	8,831

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results—Facility Exit and Impairment Charges” included in our Fiscal 2022 10-K for a detailed description of our impairment and lease termination methodology.

Interest Expense

Interest expense was $48.1 million and $49.1 million for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The weighted average interest rate on our indebtedness for the thirteen week periods ended May 28, 2022 and May 29, 2021 was 5.6% and 5.3%, respectively.

Income Taxes

We recorded an income tax expense of $3.5 million and $0.8 million for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was (3.3)% and (6.4)%, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was net of an adjustment of (37.6)% and (18.5)%, respectively, to adjust the valuation allowance against deferred tax assets.

We recognize tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities.

We believe that it is reasonably possible that a decrease of up to $25.1 million in unrecognized tax benefits related to state exposures may be necessary in the next twelve months; however, management does not expect the change to have a material impact on the results of operations or the financial position of the Company.

We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. We will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. We continue to maintain a valuation allowance against net deferred tax assets of $1,862.8 million and $1,822.7 million, which relates to federal and

40

state deferred tax assets that may not be realized based on our future projections of taxable income at May 28, 2022 and February 26, 2022, respectively.

Segment Analysis

We evaluate the Retail Pharmacy and Pharmacy Services segments’ performance based on revenue, gross profit, and Adjusted EBITDA. The following is a reconciliation of our segments to the condensed consolidated financial statements:

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
May 28, 2022:
Revenues	$	4,345,356	$	1,725,857	$	(56,630)	$	6,014,583
Gross Profit		1,097,357		99,372		—		1,196,729
Adjusted EBITDA(*)		73,682		26,448		—		100,130
May 29, 2021:
Revenues	$	4,351,682	$	1,872,282	$	(62,979)	$	6,160,985
Gross Profit		1,169,934		114,941		—		1,284,875
Adjusted EBITDA(*)		94,914		43,963		—		138,877

(1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis.

(*)   See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details.

41

Retail Pharmacy Segment Results of Operations

Revenues and Other Operating Data

	Thirteen Week Period Ended
	May 28,			May 29,
	2022			2021
	(dollars in thousands)
Revenues	$	4,345,356		$	4,351,682
Revenue (decline) growth		(0.1)	%		5.5	%
Same store sales growth		4.6	%		1.4	%
Pharmacy sales growth		1.9	%		14.1	%
Same store prescription count growth, adjusted to 30-day equivalents		0.9	%		11.2	%
Same store pharmacy sales growth		6.6	%		8.2	%
Pharmacy sales as a % of total retail sales		70.8	%		68.9	%
Front-end sales decline		(4.6)	%		(9.8)	%
Same store front-end sales decline		(0.5)	%		(12.0)	%
Front-end sales as a % of total retail sales		29.2	%		31.1	%
Adjusted EBITDA(*)	$	73,682		$	94,914
Store data:
Total stores (beginning of period)		2,450			2,510
New stores		—			1
Store acquisitions		—			—
Closed stores		(89)			(5)
Total stores (end of period)		2,361			2,506
Relocated stores		1			—
Remodeled and expanded stores		2			6

(*)   See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details.

Revenues

Revenues decreased 0.1% for the thirteen weeks ended May 28, 2022 compared to an increase of 5.5% for the thirteen weeks ended May 29, 2021. The decrease in revenues for the thirteen week period ended May 28, 2022 was driven by a reduction in COVID vaccine and testing revenue as well as store closures, offset by an increase in non-COVID prescriptions.

Pharmacy same store sales increased by 6.6% for the thirteen week period ended May 28, 2022 compared to an increase of 8.2% in the thirteen week period ended May 29, 2021. The increase in pharmacy same store sales is due to the increase in same store prescription count. Same store prescription count, adjusted to 30-day equivalents, increased 0.9% for the thirteen week period ended May 28, 2022 driven primarily by an increase in non-COVID same store prescriptions of 3.7%, with same store maintenance prescriptions increasing 1.4% and other same store acute prescriptions increasing 11.9%.

Front-end same store sales decreased 0.5% during the thirteen week period ended May 28, 2022 compared to a decrease of 12.0% during the thirteen week period ended May 29, 2021. Front-end same store sales, excluding cigarettes and tobacco products, were flat. Front-end same store sales were driven by increases in over-the-counter products, offset by decreases in alcohol and seasonal sales, due to supply chain disruptions.

We include in same store sales all stores that have been open at least one year. Relocated and acquired stores are not included in same store sales until one year has lapsed.

42

Costs and Expenses

	Thirteen Week Period Ended
	May 28,			May 29,
	2022			2021
	(dollars in thousands)
Cost of revenues	$	3,247,999		$	3,181,748
Gross profit		1,097,357			1,169,934
Gross margin		25.3	%		26.9	%
FIFO gross profit(*)		1,097,357			1,165,941
FIFO gross margin(*)		25.3	%		26.8	%
Selling, general and administrative expenses		1,117,214			1,156,039
Selling, general and administrative expenses as a percentage of revenues		25.7	%		26.6	%

(*)  See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details.

Gross Profit and Cost of Revenues

Gross profit decreased $72.5 million for the thirteen week period ended May 28, 2022 compared to the thirteen week period ended May 29, 2021. The decrease in gross profit was driven by the decline in COVID-19 vaccinations and testing. The gross profit headwind from reduced COVID related services was partially offset by an increase in prescriptions filled and improved front end gross margin.

Gross margin was 25.3% of sales for the thirteen week period ended May 28, 2022 compared to 26.9% of sales for the thirteen week period ended May 29, 2021. The decline in gross margin as a percentage of revenues is due primarily to the reduction in COVID-19 vaccinations and testing.

We use the last-in, first-out (“LIFO”) method of inventory valuation, which is estimated on a quarterly basis and is finalized at year end when inflation rates and inventory levels are final. Therefore, LIFO costs for interim period financial statements are estimated. LIFO charges were $0 for the thirteen week period ended May 28, 2022, compared to LIFO credits of $4.0 million for the thirteen week period ended May 29, 2021. The reduction in LIFO credits in the thirteen week period ended May 28, 2022 was mostly due to higher anticipated front-end inflation in fiscal 2023.

Selling, General and Administrative Expenses

SG&A expenses decreased $38.8 million for the thirteen week period ended May 28, 2022 due primarily to lower payroll, occupancy and other operating costs due to store closures and cost control initiatives. SG&A expenses as a percentage of revenues for the thirteen week period ended May 28, 2022 was 25.7% compared to 26.6% for the thirteen week period ended May 29, 2021. The decrease is due primarily to the items noted above.

Pharmacy Services Segment Results of Operations

Revenues and Other Operating Data

	Thirteen Week Period Ended
	May 28,			May 29,
	2022			2021
	(dollars in thousands)
Revenues	$	1,725,857		$	1,872,282
Revenue decline		(7.8)	%		(5.3)	%
Adjusted EBITDA(*)	$	26,448		$	43,963

(*)   See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” for additional details.

43

Revenues

Revenues decreased $146.4 million for the thirteen week period ended May 28, 2022 compared to the thirteen week period ended May 29, 2021. The decrease in revenues was primarily the result of a planned decrease in EI membership and a previously announced client loss due to industry consolidation, offset by higher retained rebates from our new rebate aggregation arrangement and increased utilization of higher cost drugs.

Costs and Expenses

	Thirteen Week Period Ended
	May 28,			May 29,
	2022			2021
	(dollars in thousands)
Cost of revenues	$	1,626,485		$	1,757,341
Gross profit		99,372			114,941
Gross margin		5.8	%		6.1	%
Selling, general and administrative expenses		100,715			89,323
Selling, general and administrative expenses as a percentage of revenues		5.8	%		4.8	%

Gross Profit and Cost of Revenues

Gross profit decreased $15.6 million for the thirteen week period ended May 28, 2022 compared to the thirteen week period ended May 29, 2021. The decrease in gross profit is primarily due to the decline in revenues associated with lost clients, as discussed above, and an increase in the medical loss ratio at EI, partially offset by higher retained rebates from our new rebate aggregation arrangement.

Gross margin was 5.8% of sales for the thirteen week period ended May 28, 2022 compared to 6.1% of sales for the thirteen week period ended May 29, 2021. The decline in gross margin is due primarily to the items noted above.

Selling, General and Administrative Expenses

SG&A expenses increased $11.4 million for the thirteen week period ended May 28, 2022 compared to the thirteen week period ended May 29, 2021 due primarily to increased litigation and other contractual settlements related to manufacturer audit disputes from the former rebate aggregation business and restructuring expenses, partially offset by further consolidation of administrative functions. SG&A expenses as a percentage of revenue was 5.8% for the thirteen week period ended May 28, 2022 compared to 4.8% for the thirteen week period ended May 29, 2021. The increase in the thirteen week period selling, general and administrative expenses as a percentage of revenues is due primarily to the items noted above and the loss of sales volume.

Liquidity and Capital Resources

General

We have two primary sources of liquidity: (i) cash provided by operating activities and (ii) borrowings under our revolving credit facility. Our principal uses of cash are to provide working capital for operations, to service our obligations to pay interest and principal on debt and to fund capital expenditures. Total liquidity as of May 28, 2022 was $1,709.5 million, which consisted of revolver borrowing capacity of $1,672.3 million and invested cash of $37.2 million.

Credit Facilities

On December 20, 2018, we entered into a senior secured credit agreement (as amended by the First Amendment to Credit Agreement, dated as of January 6, 2020, the “Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Amended Credit Agreement”), which Credit Agreement

44

provided for facilities consisting of a $2.7 billion senior secured asset-based revolving credit facility (“Initial Senior Secured Revolving Credit Facility”) and a $450.0 million “first-in, last out” senior secured term loan facility (“Initial Senior Secured Term Loan,” and together with the Initial Senior Secured Revolving Credit Facility, collectively, the “Initial Facilities”). In December 2018, we used proceeds from the Initial Facilities to refinance our prior $2.7 billion existing credit agreement.

On August 20, 2021, we entered in to the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Credit Agreement to provide for a $2.8 billion senior secured asset-based revolving credit facility (“Senior Secured Revolving Credit Facility”) and a $350 million “first-in, last out” senior secured term loan facility (“Senior Secured Term Loan,” and together with the Senior Secured Revolving Credit Facility, collectively, the “Amended Facilities”) and incorporate customary “hardwired” LIBOR transition provisions. The Amended Facilities extend our debt maturity profile and provide additional liquidity. Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to, at our option, (x) a base rate (determined in a customary manner) plus a margin of between 0.25% to 0.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of between 1.25% and 1.75%, in each case based upon the Average ABL Availability (as defined in the Amended Credit Agreement).  Borrowings under the Senior Secured Term Loan bear interest at a rate per annum equal to, at our option, of (x) a base rate (determined in a customary manner) plus a margin of 1.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of 2.75%. We are required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Senior Secured Revolving Credit Facility, depending on Average ABL Availability.  The Amended Facilities are scheduled to mature on August 20, 2026 (subject to a springing maturity if certain of our existing secured notes are not refinanced or repaid prior to the date that is 91 days prior to the stated maturity thereof).

Our borrowing capacity under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 28, 2022, we had approximately $1,350.0 million of borrowings outstanding under the Amended Facilities and had letters of credit outstanding under the Senior Secured Revolving Credit Facility in a face amount of approximately $127.7 million, which resulted in remaining borrowing capacity under the Senior Secured Revolving Credit Facility of $1,672.3 million. If at any time the total credit exposure outstanding under the Senior Secured Revolving Credit Facility exceeds the borrowing base, we will be required to repay amounts outstanding to eliminate such shortfall.

The Amended Credit Agreement restricts us and all of our subsidiaries, including the subsidiaries that guarantee our obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes (collectively, the “Subsidiary Guarantors”) from accumulating cash on hand in excess of $200.0 million at any time when revolving loans are outstanding (not including cash located in our store and lockbox deposit accounts and cash necessary to cover our current liabilities). The Amended Credit Agreement also states that if at any time (other than following the exercise of remedies or acceleration of any senior obligations or second priority debt and receipt of a triggering notice by the senior collateral agent from a representative of the senior obligations or the second priority debt) either (i) an event of default exists under the Amended Facilities or (ii) the sum of our borrowing capacity under our Senior Secured Revolving Credit Facility and certain amounts held on deposit with the senior collateral agent in a concentration account is less than $275.0 million for three consecutive business days or less than or equal to $200.0 million on any day (a “cash sweep period”), the funds in our deposit accounts will be swept to a concentration account with the senior collateral agent and will be applied first to repay outstanding revolving loans under the Amended Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Amended Facilities.

Our obligations under the Amended Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations.

45

The Amended Credit Agreement allows us to have outstanding, at any time, up to an aggregate principal amount of $1.5 billion in secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Amended Facilities and other existing indebtedness, provided that not in excess of $750.0 million of such secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest maturity date of any Term Loan or Other Revolving Commitment (each as defined in the Amended Credit Agreement) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date). Subject to the limitations described in the immediately preceding sentence, the Amended Credit Agreement additionally allows us to issue or incur an unlimited amount of unsecured debt and disqualified preferred stock so long as a Financial Covenant Effectiveness Period (as defined in the Amended Credit Agreement) is not in effect; provided, however, that certain of our other outstanding indebtedness limits the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence or other exemptions are not available. The Amended Credit Agreement also contains certain restrictions on the amount of secured first priority debt we are able to incur. The Amended Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Amended Facilities are not in default and we maintain availability under our revolver of more than $365.0 million.

The Amended Credit Agreement has a financial covenant that requires us to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (i) on any date on which availability under the Senior Secured Revolving Credit Facility is less than $200.0 million or (ii) on the third consecutive business day on which availability under the Senior Secured Revolving Credit Facility is less than $250.0 million and, in each case, ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which availability under the revolver is equal to or greater than $250.0 million. As of May 28, 2022, our fixed charge coverage ratio was greater than 1.00 to 1.00, and we were in compliance with the Amended Credit Agreement’s financial covenant. The Amended Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens.

The Amended Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if we fail to make any required payment on debt having a principal amount in excess of $50.0 million or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment repurchase, redemption or defeasance of such debt.

The indentures that govern our unsecured notes and secured notes contain restrictions on the amount of additional secured and unsecured debt that we may incur. As of May 28, 2022, we had the ability to issue additional secured and unsecured debt under the indentures governing our unguaranteed unsecured notes, including the ability to draw the full amount of our Senior Secured Revolving Credit Facility and enter into certain sale and leaseback transactions.

Guarantor Summarized Financial Information

Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 6.125% Notes, the 7.500% Notes and the 8.00% Notes (collectively, the "Guaranteed Notes"). As discussed in Note 11 to the condensed consolidated financial statements, the Guaranteed Notes were issued by us, as the parent company, and are guaranteed by substantially all of the parent company’s consolidated subsidiaries (the “guarantors” or “Subsidiary Guarantors”) except for EI (the “non-guarantor”). The parent company and guarantors are referred to as the “obligor group”. The Subsidiary Guarantors fully and unconditionally and jointly and severally guarantee the Guaranteed Notes. The 6.125% Notes and the obligations under the related guarantees are unsecured. The 7.500% Notes, the 8.00% Notes and the obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and other collateral to the extent it does not constitute ABL priority collateral (as defined below), and (ii) a second-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivables, payment intangibles, inventory, prescription files (including eligible script lists) and, intellectual property (prior to the repayment of the Senior Secured Term Loan) (collectively, the “ABL priority collateral”), which, in each case, also secure the Amended Facilities.

46

Under certain circumstances, subsidiaries may be released from their guarantees without consent of the note holders. Our subsidiaries conduct substantially all of our operations and have significant liabilities, including trade payables. If the subsidiary guarantees are invalid or unenforceable or are limited by fraudulent conveyance or other laws, the registered debt will be structurally subordinated to the substantial liabilities of our subsidiaries.

Condensed Combined Financial Information

The following tables include summarized financial information of the obligor group. Investments in and the equity in the earnings of EI, which is not a member of the obligor group, have been excluded. The summarized financial information of the obligor group is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated. The obligor group’s amounts due to/from and transactions with EI have been presented in separate line items, if material.

	May 28,		February 26,
In millions	2022		2022
Due from EI	$	95.7	$	26.5
Other current assets		3,361.0		3,314.9
Total current assets	$	3,456.7	$	3,341.4
Operating lease right-of-use assets	$	2,723.4	$	2,813.5
Goodwill		879.1		879.1
Other noncurrent assets		1,417.6		1,428.8
Total noncurrent assets	$	5,020.1	$	5,121.4
Due to EI	$	—	$	—
Other current liabilities		2,779.4		2,891.1
Total current liabilities	$	2,779.4	$	2,891.1
Long-term debt less current maturities	$	3,026.5	$	2,733.0
Long-term operating lease liabilities		2,526.6		2,597.1
Other noncurrent liabilities		152.7		142.7
Total noncurrent liabilities	$	5,705.8	$	5,472.8

	Thirteen Week Period Ended
In millions	May 28, 2022
Revenues (a)	$	5,877.8
Cost of revenues (b)		4,682.1
Gross profit		1,195.7
Net loss	$	(105.8)
Net loss attributable to Rite Aid	$	(110.2)

(a) Includes $36.1 million of revenues generated from the non-guarantor for the thirteen week period ended May 28, 2022.

(b) Includes $36.0 million of cost of revenues incurred in transactions with the non-guarantor for the thirteen week period ended May 28, 2022.

Net Cash Provided by/Used in Operating, Investing and Financing Activities

Cash used in operating activities was $252.2 million compared to cash provided by operating activities of $13.9 million for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. Operating cash flow was

47

negatively impacted by the build of the CMS receivable, increases in rebates receivable and timing of accounts payable payments.

Cash used in investing activities was $54.6 million and $54.7 million for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. During the thirteen week period ended May 28, 2022, we spent $73.2 million on the purchase of property, plant and equipment, $12.2 million on prescription file purchases and received proceeds of $30.8 million from prescription file sales driven by our store closures.

Cash flow provided by financing activities was $323.2 million compared to cash used by financing activities of $1.6 million for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. Cash provided by financing activities for the thirteen weeks ended May 28, 2022 reflects incremental revolver borrowings and the change in our zero balance accounts due to timing of payments.

Capital Expenditures

During the thirteen week periods ended May 28, 2022 and May 29, 2021 capital expenditures were as follows:

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
New store construction, store relocation and store remodel projects	$	11,775	$	33,294
Technology enhancements, improvements to distribution centers and other corporate requirements		61,401		25,870
Purchase of prescription files from other retail pharmacies		12,248		5,436
Total capital expenditures	$	85,424	$	64,600

The Company anticipates incurring approximately $250,000 of capital expenditures during fiscal 2023.

48

Future Liquidity

We are highly leveraged. Our high level of indebtedness could: (i) limit our ability to obtain additional financing; (ii) limit our flexibility in planning for, or reacting to, changes in our business and the industry; (iii) place us at a competitive disadvantage relative to our competitors with less debt; (iv) render us more vulnerable to general adverse economic and industry conditions, including those resulting from COVID-19 or a decline in the overall economy; and (v) require us to dedicate a substantial portion of our cash flow to service our debt. Based upon our current levels of operations, we believe that cash flow from operations together with available borrowings under the revolver and other sources of liquidity will be adequate to meet our requirements for working capital, debt service, capital expenditures and other strategic investments at least for the next twelve months. Based on our liquidity position, which we expect to remain strong, we do not expect to be subject to the minimum fixed charge covenant in the Amended Facilities in the next twelve months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in light of our operating performance, and other relevant circumstances, and we may evaluate alternative sources of liquidity, including further opportunities related to any receivable due to us from CMS, sale and leaseback transactions, and other transactions to optimize our asset base. From time to time, we may seek additional deleveraging or refinancing transactions, including entering into transactions to exchange debt for shares of common stock or other debt securities (including additional secured debt), issuance of equity (including preferred stock and convertible securities), repurchase or redemption of outstanding indebtedness, including our recent cash tender offers whereby we purchased $150.0 million of certain of our outstanding series of senior notes as announced on June 13, 2022, or seek to refinance our outstanding debt (including the Amended Facilities) or may otherwise seek transactions to reduce interest expense and extend debt maturities. We may also look to make additional investments in our business to further our strategic objectives, including targeted acquisitions or other transactions to optimize our asset base. Any of these transactions could impact our financial results, including additional changes or realization of cancellation of indebtedness-income.

Critical Accounting Policies and Estimates

For a description of the critical accounting policies that require the use of significant judgments and estimates by management, refer to “Management’s Discussion and Analysis of Financial Condition and Results—Critical Accounting Policies and Estimates” included in our Fiscal 2022 10-K, which we filed with the SEC on April 25, 2022.

Factors Affecting Our Future Prospects

For a discussion of risks related to our financial condition, operations and industry, refer to “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results” included in our Fiscal 2022 10-K.

Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures

In addition to net income (loss) determined in accordance with GAAP, we use certain non-GAAP measures, such as “Adjusted EBITDA”, in assessing our operating performance. We believe the non-GAAP measures serve as an appropriate measure in evaluating the performance of our business. We define Adjusted EBITDA as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments (which removes the entire impact of LIFO, and effectively reflects the results as if we were on a FIFO inventory basis), charges or credits for facility closing and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs and costs related to facility closures, gain or loss on sale of assets and the loss on Bartell acquisition). We reference this particular non-GAAP financial measure frequently in our decision-making because it provides supplemental information that facilitates internal comparisons to the historical periods and external comparisons to competitors. In addition, incentive compensation is primarily based on Adjusted EBITDA and we base certain of our forward-looking estimates on Adjusted EBITDA to facilitate quantification of planned business activities and enhance subsequent follow-up with comparisons of actual to planned Adjusted EBITDA.

49

The following is a reconciliation of our net income (loss) to Adjusted EBITDA for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
	(dollars in thousands)
Net loss	$	(110,191)	$	(13,057)
Interest expense		48,119		49,121
Income tax expense		3,497		780
Depreciation and amortization		70,073		75,859
LIFO credit		—		(3,993)
Facility exit and impairment charges		66,571		8,831
Loss on debt retirements, net		—		396
Merger and Acquisition‑related costs		—		3,886
Stock-based compensation expense		3,334		2,811
Restructuring-related costs		22,646		5,932
Inventory write-downs related to store closings		7,955		472
Litigation and other contractual settlements		18,271		14,000
Gain on sale of assets, net		(29,196)		(6,558)
Other		(949)		397
Adjusted EBITDA	$	100,130	$	138,877

The following is a reconciliation of our net income (loss) to Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share for the thirteen week periods ended May 28, 2022 and May 29, 2021. Adjusted Net Income (Loss) is defined as net income (loss) excluding the impact of amortization expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments (which removes the entire impact of LIFO, and effectively reflects the results as if we were on a FIFO inventory basis), goodwill and intangible asset impairment charges, restructuring-related costs, and the loss on Bartell acquisition. We calculate Adjusted Net Income (Loss) per Diluted Share using our above-referenced definition of Adjusted Net Income (Loss). We believe Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share are useful indicators of our operating performance over multiple periods.

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
	(dollars in thousands)
Net loss	$	(110,191)	$	(13,057)
Add back - Income tax expense		3,497		780
Loss before income taxes		(106,694)		(12,277)
Adjustments:
Amortization expense		20,626		20,460
LIFO credit		—		(3,993)
Loss on debt retirements, net		—		396
Merger and Acquisition‑related costs		—		3,886
Restructuring-related costs		22,646		5,932
Litigation and other contractual settlements		18,271		14,000
Adjusted (loss) income before income taxes		(45,151)		28,404
Adjusted income tax (benefit) expense (a)		(12,322)		7,470
Adjusted net (loss) income	$	(32,829)	$	20,934
Net loss per diluted share	$	(2.03)	$	(0.24)
Adjusted net (loss) income per diluted share	$	(0.60)	$	0.38

50

(a) The fiscal year 2023 and 2022 annual effective tax rates, calculated using a federal rate plus a net state rate that excluded the impact of state NOL’s, state credits and valuation allowance, was used for the thirteen weeks ended May 28, 2022 and May 29, 2021, respectively.

In addition to Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted Net (Loss) Income per Diluted Share, we occasionally refer to several other Non-GAAP measures, on a less frequent basis, in order to describe certain components of our business and how we utilize them to describe our results. These measures include but are not limited to Adjusted EBITDA Gross Margin and Gross Profit (gross margin/gross profit excluding non-Adjusted EBITDA items), Adjusted EBITDA SG&A (SG&A expenses excluding non-Adjusted EBITDA items), FIFO Gross Margin and FIFO Gross Profit (gross margin/gross profit before LIFO charges), and Free Cash Flow (Adjusted EBITDA less cash paid for interest, rent on closed stores, capital expenditures, restructuring-related costs and the change in working capital).

We include these non-GAAP financial measures in our earnings announcements in order to provide transparency to our investors and enable investors to better compare our operating performance with the operating performance of our competitors including with those of our competitors having different capital structures. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share or other non-GAAP measures should not be considered in isolation from, and are not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. Our definition of these non-GAAP measures may not be comparable to similarly titled measurements reported by other companies.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. Our major market risk exposure is changing interest rates. Increases in interest rates would increase our interest expense. We enter into debt obligations to support capital expenditures, acquisitions, working capital needs and general corporate purposes. Our policy is to manage interest rates through the use of a combination of variable-rate credit facilities, fixed-rate long-term obligations and derivative transactions.

The table below provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal payments and the related weighted average interest rates by expected maturity dates as of May 28, 2022.

																						Fair Value at
	2023			2024			2025			2026			2027			Thereafter			Total			May 28, 2022
	(Dollars in thousands)
Long-term debt, including current portion, excluding financing lease obligations
Fixed Rate	$	—		$	—		$	—		$	600,000		$	1,087,304		$	29,001		$	1,716,305		$	1,327,190
Average Interest Rate		0.00	%		0.00	%		0.00	%		7.50	%		7.93	%		6.88	%		7.76	%
Variable Rate	$	—		$	—		$	—		$	—		$	1,350,000		$	—		$	1,350,000		$	1,350,000
Average Interest Rate		0.00	%		0.00	%		0.00	%		0.00	%		2.43	%		0.00	%		2.43	%

Our ability to satisfy interest payment obligations on our outstanding debt will depend largely on our future performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations could be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed.

The interest rate on our variable rate borrowings, which include our revolving credit facility and our term loan facility, are based on LIBOR. If the market rates of interest for LIBOR changed by 100 basis points as of May 28, 2022, our annual interest expense would change by approximately $13.5 million.

51

A change in interest rates does not have an impact upon our future earnings and cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the debt matures. Increases in interest rates would also impact our ability to refinance existing maturities on favorable terms.

ITEM 4.  Controls and Procedures

(a)  Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b)  Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

52

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

The information in response to this item is incorporated herein by reference to Note 15, Commitments, Contingencies and Guarantees, of the Consolidated Condensed Financial Statements of this Quarterly Report.

ITEM 1A.  Risk Factors

In addition to the information set forth in this Quarterly Report, you should carefully consider the factors discussed in “Part I — Item 1A. Risk Factors” in our Fiscal 2022 10-K, which could materially affect our business, financial condition or future results.

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities. The table below is a listing of repurchases of common stock during the first quarter of fiscal 2023.

	Total			Total Number of Shares	Maximum Number of
	Number of	Average		Purchased as Part of	Shares that may yet be
	Shares	Price Paid		Publicly Announced	Purchased under the
Fiscal period:	Repurchased	Per Share		Plans or Programs	Plans or Programs
February 27, 2022 to March 26, 2022	50	$	9.05	—	—
March 27 to April 23, 2022	13	$	7.46	—	—
April 24 to May 28, 2022	—	$	—	—	—

ITEM 3.  Defaults Upon Senior Securities

Not applicable.

ITEM 4.  Mine Safety Disclosures

Not applicable.

ITEM 5.  Other Information

Not applicable.

ITEM 6.  Exhibits

(a) The following exhibits are filed as part of this report.

Exhibit Numbers		Description	Incorporation By Reference To
2.1	**	Amended and Restated Asset Purchase Agreement, dated September 18, 2017, among Rite Aid Corporation, Walgreens Boots Alliance, Inc. and Walgreen Co.	Exhibit 2.1 to Form 8-K, filed on September 19, 2017
2.2		Receivable Purchase Agreement, dated as of August 12, 2021, by and between Envision Insurance Company and Part D Receivable Trust 2020-1 (Series D)	Exhibit 2.1 to Form 8-K, filed on August 13, 2021
2.3		Indemnity Agreement, dated as of August 12, 2021 by and between Rite Aid Corporation and Part D Receivable Trust 2020-1 (Series D)	Exhibit 2.2 to Form 8-K, filed on August 13, 2021

53

Exhibit Numbers	Description	Incorporation By Reference To
2.4	Receivable Purchase Agreement, dated as of January 24, 2022 February 19, 2020, by and between Envision Insurance Company and Part D Receivable Trust 2020-1 (Series E)	Exhibit 2.1 to Form 8-K, filed on January 24, 2022
2.5	Indemnity Agreement, dated as of January 24, 2022 by and between Rite Aid Corporation and Part D Receivable Trust 2020-1 (Series D)	Exhibit 2.2 to Form 8-K, filed on January 24, 2022
3.1	Amended and Restated Certificate of Incorporation	Exhibit 3.1 to Form 8-K, filed on April 18, 2019
3.2	Amended and Restated By-Laws	Exhibit 3.1 to Form 8-K, filed on April 17, 2020
4.1	Indenture, dated as of August 1, 1993, between Rite Aid Corporation, as issuer, and Morgan Guaranty Trust Company of New York, as trustee, related to the Company’s 7.70% Notes due 2027	Exhibit 4A to Registration Statement on Form S-3, File No. 033-63794, filed on June 3, 1993
4.2	Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and U.S. Bank Trust National Association (as successor trustee to Morgan Guaranty Trust Company of New York) to the Indenture dated as of August 1, 1993, between Rite Aid Corporation and Morgan Guaranty Trust Company of New York, relating to the Company’s 7.70% Notes due 2027	Exhibit 4.1 to Form 8-K filed on February 7, 2000
4.3	Indenture, dated as of December 21, 1998, between Rite Aid Corporation, as issuer, and Harris Trust and Savings Bank, as trustee, related to the Company’s 6.875% Notes due 2028	Exhibit 4.1 to Registration Statement on Form S-4, File No. 333-74751, filed on March 19, 1999
4.4	Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and Harris Trust and Savings Bank to the Indenture, dated December 21, 1998, between Rite Aid Corporation and Harris Trust and Savings Bank, related to the Company’s 6.875% Notes due 2028	Exhibit 4.4 to Form 8-K, filed on February 7, 2000
4.5	Indenture, dated as of February 5, 2020, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., related to the Company’s 7.500% Senior Secured Notes due 2025	Exhibit 4.1 to Form 8-K filed on February 5, 2020
4.6	Description of the Company’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934	Exhibit 4.9 to Form 10-K filed on April 27, 2020
4.7	Indenture, dated as of July 27, 2020, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., related to the Company’s 8.000% Senior Secured Notes due 2026	Exhibit 4.1 to Form 8-K filed on July 27, 2020
4.8	Supplemental Indenture, dated as of August 27, 2021, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of February 5, 2020, related to the Company’s 7.500% Senior Secured Notes due 2025	Exhibit 4.12 to Form 10-Q filed on October 5, 2021
4.9	Supplemental Indenture, dated as of August 27, 2021, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of July 27, 2020, related to the Company’s 8.000% Senior Secured Notes due 2026	Exhibit 4.13 to Form 10-Q filed on October 5, 2021

54

Exhibit Numbers		Description	Incorporation By Reference To
4.10		Supplemental Indenture, dated as of March 31, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of February 5, 2020, related to the Company's 7.500% Senior Secured Notes due 2025	Filed herewith
4.11		Supplemental Indenture, dated as of March 31, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of July 27, 2020, related to the Company’s 8.000% Senior Secured Notes due 2026	Filed herewith
10.1	†	2010 Omnibus Equity Plan	Exhibit 10.1 to Form 8-K, filed on June 25, 2010
10.2	†	Amendment No. 1, dated September 21, 2010, to the 2010 Omnibus Equity Plan	Exhibit 10.7 to Form 10-Q, filed on October 7, 2010
10.3	†	Amendment No. 2, dated January 16, 2013, to the 2010 Omnibus Equity Plan	Exhibit 10.8 to Form 10-K, filed on April 23, 2013
10.4	†	2012 Omnibus Equity Plan	Exhibit 10.1 to Form 8-K, filed on June 25, 2012
10.5	†	Amendment No. 1, dated January 16, 2013, to the 2012 Omnibus Equity Plan	Exhibit 10.10 to Form 10-K, filed on April 23, 2013
10.6	†	2014 Omnibus Equity Plan	Exhibit 10.1 to Form 8-K, filed on June 23, 2014
10.7	†	Form of Award Agreement	Exhibit 10.2 to Form 8-K, filed on May 15, 2012
10.8	†	Executive Incentive Plan for Officers of Rite Aid Corporation	Exhibit 10.1 to Form 8-K, filed on February 24, 2012
10.9	†	Employment Agreement by and between Rite Aid Corporation and Jocelyn Konrad dated as of August 18, 2015	Exhibit 10.1 to Form 10-Q, filed on January 6, 2016
10.10		Credit Agreement, dated as of December 20, 2018, among Rite Aid Corporation, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent.	Exhibit 10.1 to Form 8-K, filed on December 20, 2018
10.11		First Amendment to Credit Agreement, dated as of January 6, 2020, among Rite Aid Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.	Exhibit 10.1 to Form 8-K, filed on January 7, 2020
10.12		Second Amendment Credit Agreement, dated as of August 20, 2021, among Rite Aid Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent	Exhibit 9.01 to Form 8-K, filed on August 23, 2021
10.13		Amended and Restated Collateral Trust and Intercreditor Agreement, including the related definitions annex, dated as of June 5, 2009, among Rite Aid Corporation, each subsidiary named therein or which becomes a party thereto, Wilmington Trust Company, as collateral trustee, Citicorp North America, Inc., as senior collateral processing agent, The Bank of New York Trust Company, N.A., as trustee under the 2017 7.5% Note Indenture (as defined therein) and The Bank of New York Mellon Trust Company, N.A., as trustee under the 2016 10.375% Note Indenture (as defined therein), and each other Second Priority Representative and Senior Representative which becomes a party thereto	Exhibit 10.3 to Form 8-K, filed on June 11, 2009

55

Exhibit Numbers		Description	Incorporation By Reference To
10.14	†	Amendment to Employment Agreement by and between Rite Aid Corporation and Jocelyn Z. Konrad, dated as of March 12, 2019	Exhibit 10.32 to Form 10-Q, filed on July 11, 2019
10.15	†	Amendment to Employment Agreement by and between Rite Aid Corporation and Matthew C. Schroeder, dated as of March 12, 2019	Exhibit 10.33 to Form 10-Q, filed on July 11, 2019
10.16	†	Amendment to Employment Agreement by and between Rite Aid Corporation and Brian Hoover, dated as of March 12, 2019	Exhibit 10.34 to Form 10-Q, filed on July 11, 2019
10.17	†	Amendment to Employment Agreement by and between Rite Aid Corporation and Brian Hoover, dated as of December 5, 2017	Exhibit 10.35 to Form 10-Q, filed on July 11, 2019
10.18	†	Amendment to Employment Agreement by and between Rite Aid Corporation and Brian Hoover, dated as of August 10, 2016	Exhibit 10.36 to Form 10-Q, filed on July 11, 2019
10.19	†	Employment Agreement by and between Rite Aid Corporation and Brian Hoover, dated as of January 1, 2001	Exhibit 10.37 to Form 10-Q, filed on July 11, 2019
10.20	†*	Eleventh Amendment to Supply Agreement by and between Rite Aid Corporation and McKesson Corporation, dated as of February 28, 2019	Exhibit 10.38 to Form 10-Q, filed on July 11, 2019
10.21	†**	Employment Agreement by and between Rite Aid Corporation and Heyward Donigan, dated August 8, 2019	Exhibit 10.1 to Form 8-K, filed on August 12, 2019
10.22	†	Employment Inducement Award Agreement by and between Rite Aid Corporation and Heyward Donigan, dated August 12, 2019	Exhibit 10.2 to Form 8-K, filed on August 12, 2019
10.23	†	Employment Agreement dated October 2, 2019 by and between Rite Aid Corporation and James Peters	Exhibit 10.1 to Form 8-K, filed on October 2, 2019
10.24	†	Employment Agreement by and between Rite Aid Corporation and Jessica Kazmaier, dated as of March 12, 2019	Exhibit 10.43 to Form 10-K filed on April 27, 2020
10.25	†	Amendment to Employment Agreement by and between Jessica Kazmaier, dated as of November 6, 2019	Exhibit 10.44 to Form 10-K filed on April 27, 2020
10.26	†	Employment Agreement by and between Justin Mennen, dated as of December 7, 2018	Exhibit 10.45 to Form 10-K filed on April 27, 2020
10.27	†	Amendment to Employment Agreement by and between Justin Mennen, dated November 6, 2019	Exhibit 10.46 to Form 10-K filed on April 27, 2020
10.28	†	Employment Agreement by and between Rite Aid Corporation and Andre Persaud, dated as of January 28, 2020	Exhibit 10.47 to Form 10-K filed on April 27, 2020
10.29	†	Employment Agreement by and between RxOptions, LLC and Dan Robson, dated as of December 12, 2019	Exhibit 10.48 to Form 10-K filed on April 27, 2020
10.30	†	Employment Agreement by and between Rite Aid Corporation and Paul D. Gilbert, as of July 29, 2020	Exhibit 10.46 to Form 10-Q filed on October 6, 2020
10.31	†*	Separation Agreement by and between Rite Aid Corporation and Dan Robson, as of January 27, 2021	Exhibit 10.32 to Form 10-K filed on April 27, 2021
10.32	†	Rite Aid Corporation Amended and Restated 2020 Omnibus Equity Plan	Appendix B-1 to Schedule 14A (Definitive Proxy Statement) filed on May 20, 2021
10.33	†	Form Award Agreement (Executive) under the Rite Aid Corporation 2020 Omnibus Equity Plan	Exhibit 10.2 to Form 8-K filed on July 8, 2020
10.34	†	Form Award Agreement (Non-employee Director) under the Rite Aid Corporation 2020 Omnibus Equity Plan	Exhibit 10.3 to Form 8-K filed on July 8, 2020
10.35		Separation Agreement by and between Rite Aid Corporation and Jocelyn Konrad, dated as of March 7, 2022	Filed herewith

56

Exhibit Numbers	Description	Incorporation By Reference To
10.36	Separation Agreement by and between Rite Aid Corporation and James Peters, as of March 7, 2022	Filed herewith
22	List of Subsidiary Guarantors	Filed herewith
31.1	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended	Filed herewith
31.2	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended	Filed herewith
32	Certification of CEO and CFO pursuant to 18 United States Code, Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document.	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith
104	Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith

*     Confidential portions of this Exhibit were redacted pursuant to Item 601(b)(10) of Regulation S-K and Rite Aid Corporation agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request.

**   Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and Rite Aid Corporation agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request.

†     Management contract or compensatory plan or arrangement.

57

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 thereunto duly authorized.

Date: July 6, 2022	RITE AID CORPORATION
	By:	/s/ MATTHEW C. SCHROEDER
		Matthew C. Schroeder
		Executive Vice President and Chief Financial Officer
Date: July 6, 2022	By:	/s/ BRIAN T. HOOVER
		Brian T. Hoover
		Senior Vice President and Chief Accounting Officer

58

EX-4.10

Exhibit 4.10

SUPPLEMENTAL INDENTURE

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of March 31, 2022, among Tonic Procurement Solutions, LLC, an Ohio limited liability company (the “New Subsidiary Guarantor”), a subsidiary of Rite Aid Corporation (or its successor), a Delaware corporation (the “Company”), the Company on behalf of itself and the Subsidiary Guarantors (the “Existing Subsidiary Guarantors”) under the indenture referred to below, and The Bank of New York Mellon Trust Company, N.A., a banking association organized under the laws of the United States of America, as trustee (in such capacity, “Trustee”) and as notes collateral agent (in such capacity, “Notes Collateral Agent”) under the indenture referred to below.

W I T N E S S E T H :

WHEREAS the Company and the Existing Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “Indenture”) dated as of February 5, 2020, as amended on August 27, 2021, providing for the issuance of an unlimited aggregate principal amount of 7.500% Senior Secured Notes due 2025 (the “Securities”);

WHEREAS Section 4.09 of the Indenture provides that under certain circumstances the Company is required to cause the New Subsidiary Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee all the Company’s obligations under the Securities pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and

WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Existing Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:

1.Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees, jointly and severally, on a senior secured basis, with all other Subsidiary Guarantors, to unconditionally guarantee the Company’s obligations under the Securities and the Indenture on the terms and subject to the conditions set forth in Article X of the Indenture and to be bound by all other applicable provisions of the Indenture.

2.Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

3.Governing Law.THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT REFERENCE TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.

4.Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture and shall not be responsible for the recitals contained herein, all which recitals are made solely by the other parties hereto.

5.Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

6.Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

TONIC PROCUREMENT SOLUTIONS, LLC

By: /s/ Matthew Schroeder​ ​Name:Matthew SchroederTitle:Vice President & Assistant Secretary

RITE AID CORPORATION, on behalf of itself and the existing subsidiary guarantors

By: /s/ Paul Gilbert​ ​Name:Paul GilbertTitle:Executive Vice President, General Counsel and Corporate Secretary

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as trustee

By: /s/ Manjari Dahlia Purkayastha​ ​​ ​Name:Manjari Dahlia PurkayasthaTitle:Vice President

2022-03-29

09:31-07:00

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as notes collateral agent,

By: /s/ Manjari Dahlia Purkayastha​ ​​ ​Name:Manjari Dahlia PurkayasthaTitle:Vice President

2022-03-29

09:31-07:00

[Signature Page to Supplemental Indenture for the 2025 Notes]

EX-4.11

Exhibit 4.11

SUPPLEMENTAL INDENTURE

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of March 31, 2022, among Tonic Procurement Solutions, LLC, an Ohio limited liability company (the “New Subsidiary Guarantor”), a subsidiary of Rite Aid Corporation (or its successor), a Delaware corporation (the “Company”), the Company on behalf of itself and the Subsidiary Guarantors (the “Existing Subsidiary Guarantors”) under the indenture referred to below, and The Bank of New York Mellon Trust Company, N.A., a banking association organized under the laws of the United States of America, as trustee (in such capacity, “Trustee”) and as notes collateral agent (in such capacity, “Notes Collateral Agent”) under the indenture referred to below.

W I T N E S S E T H :

WHEREAS the Company and the Existing Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “Indenture”) dated as of July 27, 2020, as amended on August 27, 2021, providing for the issuance of an unlimited aggregate principal amount of 8.000% Senior Secured Notes due 2026 (the “Securities”);

WHEREAS Section 4.09 of the Indenture provides that under certain circumstances the Company is required to cause the New Subsidiary Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee all the Company’s obligations under the Securities pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and

WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Existing Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:

1.Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees, jointly and severally, on a senior secured basis, with all other Subsidiary Guarantors, to unconditionally guarantee the Company’s obligations under the Securities and the Indenture on the terms and subject to the conditions set forth in Article X of the Indenture and to be bound by all other applicable provisions of the Indenture.

2.Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

3.Governing Law.THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT REFERENCE TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.

4.Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture and shall not be responsible for the recitals contained herein, all which recitals are made solely by the other parties hereto.

5.Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

6.Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

TONIC PROCUREMENT SOLUTIONS, LLC

By: /s/ Matthew Schroeder​ ​Name:Matthew SchroederTitle:Vice President & Assistant Secretary

RITE AID CORPORATION, on behalf of itself and the existing subsidiary guarantors

By: /s/ Paul Gilbert​ ​Name:Paul GilbertTitle:Executive Vice President, General Counsel and Corporate Secretary

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as trustee

By: /s/ Manjari Dahlia Purkayastha​ ​​ ​Name:Manjari Dahlia PurkayasthaTitle:Vice President

2022-03-29

09:31-07:00

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as notes collateral agent,

By: /s/ Manjari Dahlia Purkayastha​ ​​ ​Name:Manjari Dahlia PurkayasthaTitle:Vice President

2022-03-29

09:31-07:00

[Signature Page to Supplemental Indenture for the 2026 Notes]

EX-10.35

Exhibit 10.35

March 7, 2022

Jocelyn Z. KonradRite Aid Corporation30 Hunter LaneCamp Hill, PA 17011

Re:Separation of Employment

Dear Jocy:

This letter agreement (this “Agreement”) confirms our understanding and agreement with respect to your separation of employment with Rite Aid Corporation (the “Company,” each a “Party” and together with you, the “Parties”). Capitalized terms not otherwise defined herein will have the meanings attributed to them in the employment agreement by and between you and the Company dated August 15, 2015, as amended (the “Employment Agreement”).

1. Separation of Employment. Your last day of employment with the Company is March 7, 2022 (the “Separation Date”). As of the Separation Date, you irrevocably resign from all positions you currently hold with the Company and its subsidiaries, including as EVP, Chief Pharmacy Officer, and you agree to execute the resignation letter attached hereto as Appendix A. You agree that, following the Separation Date, you will not represent yourself to be associated in any capacity with the Company or any of its subsidiaries or affiliates.

2. Accrued Benefits; Severance.

(a) Whether or not this Agreement becomes effective pursuant to its terms, the Company will pay you the Accrued Benefits (as defined in Appendix B hereto), and pay in lieu of notice, as set forth in Section 2(g ) of Appendix B hereto, less all applicable withholdings and deductions.

(b) Provided that this Agreement becomes effective on the Release Effective Date (as defined in Section 5(c) below) and you remain in compliance in all material respects with this Agreement, the Company will pay you the severance amount and fulfill the obligations set forth on Appendix B items 2(a) through 2(f), in each case less all applicable withholdings and deductions, at the time and in the form set forth on Appendix B for each item (the “Release Consideration”).

3. Release.

(a) You hereby release, discharge and forever acquit the Company, and its affiliates and subsidiaries and each of their past, present and future stockholders, directors, employees, agents, successors and assigns of the foregoing, in their personal and representative capacities (individually, “Company Party,” and collectively, the “Company Parties”), from liability for, and hereby waive, any and all claims, charges, liabilities, causes of action, rights, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, benefits, obligations, damages, demands or liabilities of every nature, kind and description, in law, equity or

otherwise, whether known or unknown, suspected or unsuspected (collectively, “Claims”) which you or your heirs, executors, administrators, spouse, relatives, successors or assigns ever had, now have or may hereafter claim to have by reason of any matter, cause or thing whatsoever: (i) arising from the beginning of time through the date upon which you execute this Agreement including, but not limited to (A) any such Claims relating in any way to your employment relationship with the Company or any other Company Parties, and (B) any such Claims arising under any federal, state, local or foreign statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act (the “ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, the Pennsylvania Equal Pay Law and any other federal, state, local or foreign law (statutory, regulatory or otherwise) that may be legally waived and released; (ii) relating to wrongful employment termination; or (iii) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company or any of the other Company Parties and you, including, without limitation, the Employment Agreement and any incentive compensation plan or equity plan with any Company Party. Notwithstanding the above, this release does not extend to (A) claims for Accrued Benefits; (B) claims for worker’s compensation benefits or for an occupational disease; (C) any whistleblower claims arising under the Sarbanes-Oxley Act or Dodd-Frank Wall Street Reform and Consumer Protection Act; (D) claims to require the Company to honor its commitments set forth in this Agreement; (E) claims for indemnification and officers and directors liability insurance coverage under Section 4.7 of the Employment Agreement, the Company’s charter, by-laws or applicable law; and/or (F) claims that cannot be waived as a matter of law pursuant to federal, state, or local law (collectively, clauses (A) through (F) are the “Excluded Claims”).

(b) You further acknowledge and agree that, except with respect to the Accrued Benefits, the Company Parties have fully satisfied any and all obligations whatsoever owed to you arising out of your employment with the Company or any other Company Party, and that no further payments or benefits are owed to you by the Company or any other Company Party except as provided for in this Agreement.

4. Attorney Consultation; Voluntary Agreement. You acknowledge that (a) the Company has advised you to consult with an attorney of your own choosing before signing this Agreement, (b) you have been given the opportunity to seek the advice of counsel, (c) you have carefully read and fully understand all of the provisions of this Agreement, including the release in Section 3 (the “Release”), (d) the Release specifically applies to any rights or claims you may have against the Company Parties pursuant to the ADEA, (e) you are entering into this Agreement knowingly, freely and voluntarily in exchange for good and valuable consideration to which you are not otherwise entitled, including the payments and benefits referenced in items 2(a) through 2(f) of Appendix B of this Agreement and (f) you have the full power, capacity and authority to enter into this Agreement.

2

5. Review and Revocation Period.

(a) You have twenty-one days following your receipt of this Agreement to review its terms, including the Release, and to reflect upon them and consider whether you want to sign it, although you may sign it sooner; provided, however, that you may not sign this Agreement prior to the Separation Date. You acknowledge and agree that changes to this Agreement (including Appendix B), whether material or immaterial, do not restart the running of this twenty-one day period. You understand and agree that you may consent to this Agreement, including the Release, by signing and returning this Agreement within the applicable time frame to the CHRO (as defined on Appendix B).

(b) You may revoke your consent to the Release within the seven day period beginning on the date you execute this Agreement (such seven day period being referred to herein as the “Release Revocation Period”). To be effective, such revocation must be in writing signed by you and delivered to the Company at the above address before 11:59 p.m., Eastern Standard time, on the last day of the Release Revocation Period.

(c) In the event of such revocation by you, the Release shall be of no force or effect, and you will not have any rights and the Company will not have any obligations under Section 2(b) of this Agreement. Provided that you do not revoke your consent to the Release within the Release Revocation Period, the Release shall become effective on the eighth (8th) calendar day after the date upon which you execute this Agreement (the “Release Effective Date”).

6. Restrictive Covenants. You acknowledge and agree that the confidentiality obligations and the restrictive covenants and agreements set forth in Sections 6 and 7 of the Employment Agreement, respectively, and any other written restrictive covenants and confidentiality agreements in effect with the Company, are incorporated herein by reference and fully made a part hereof for all purposes and remain in full force and effect. You agree to keep the contents of this Agreement strictly confidential except as necessary to obtain the advice of your tax and legal advisors.

7. Cooperation. You agree that, at mutually agreeable times, you will meet with representatives of the Company, or its respective parent or subsidiary company representatives and provide any information you acquired during the course of your employment relating in any way to any legal disputes involving the Company. You further agree that you will cooperate fully with the Company relating to any such litigation matter or other legal proceeding in which you were involved or on which you have knowledge by virtue of your employment with the Company, including any existing or future litigation or other legal proceeding involving the Company, whether administrative, civil or criminal in nature in which and to the extent the Company deems your cooperation necessary. You will be entitled to reimbursement by the Company of reasonable costs and expenses incurred by you in connection with complying with your obligations under Section 7 of this Agreement.

3

8. Non-Disparagement. You agree that you will not make any negative comments or disparaging remarks, in writing, orally or electronically (“Disparaging Remarks”), about the Company or any of the other Company Parties and their respective products and services. The Company agrees to instruct members of its senior management team not to, for as long as such individuals remain affiliated with the Company, make any Disparaging Remarks about you; provided, however, that nothing in this Section 8 shall prohibit you from (a) making truthful and accurate statements or disclosures that are required by applicable law or legal process; (b) making any voluntary disclosure of information or documents concerning possible violations of law to any governmental agency or legislative body, or any self-regulatory organization; or (c) exercising protected rights to the extent that such rights, by law, cannot be waived by agreement.

9. Permitted Disclosures. Pursuant to 18 U.S.C. § 1833(b), you will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Company that (a) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to your attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding if you (I) file any document containing the trade secret under seal and (II) do not disclose the trade secret except pursuant to court order. Nothing in this Agreement or any other agreement you have with the Company is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section. Further, nothing in any agreement you have with the Company will prohibit or restrict you from making any voluntary disclosure of information or documents related to any violation of law to any governmental agency or legislative body, or any self-regulatory organization, in each case, without advance notice to the Company.

10. No Admission. Nothing herein will be deemed to constitute an admission of wrongdoing by you or any of the Company Parties. Neither this Agreement nor any of its terms may be used as an admission or introduced as evidence as to any issue of law or fact in any proceeding, suit or action, other than an action to enforce this Agreement.

11. Counterparts. This Agreement may be executed in counterparts, and each counterpart, when so executed and delivered, will be deemed to be an original and both counterparts, taken together, will constitute one and the same Agreement. A faxed, .pdf-ed or other e-sign signature such as through DocuSign will operate the same as an original signature.

12. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the Company and any successor organization which shall succeed to the Company by acquisition, merger, consolidation or operation of law, or by acquisition of assets of the Company and any assigns. You may not assign this Agreement, except with respect to the rights provided under Section 2 of this Agreement, which will inure to the benefit of your heirs, executors and administrators. In the event of your death at any time, your estate will receive all unpaid payments and benefits due you under this Agreement, including under Appendix B.

4

13. Severability; Blue-Penciling. The provisions of this Agreement are severable and the invalidity of any one or more provisions will not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the scope of such provision to the extent necessary to make it enforceable, and that this Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

14. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to any conflict of law principles thereof that would give rise to the application of the laws of any other jurisdiction.

15. Entire Agreement/No Oral Modifications. This Agreement including Appendix B constitutes the entire agreement between you and any of the Company Parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, representations, arrangements or agreements relating thereto, whether written or oral, including but not limited to the Employment Agreement, provided, however, that (i) Section 4.7 of the Employment Agreement shall survive the Separation Date, (ii) Sections 6 and 7 of the Employment Agreement shall remain in effect, for the duration and on the terms set forth therein, and (iii) any other defined terms contained in the Employment Agreement shall not be superseded hereby to the extent necessary for the interpretation, application, or enforcement of this Agreement. You represent that in executing this Agreement, you have not relied on any representation or statement not set forth herein. No amendment or modification of this Agreement shall be valid or binding on the Parties unless in writing and signed by both Parties.

***

5

IN WITNESS WHEREOF, the Parties have signed this Agreement as of the dates indicated below.

Rite Aid CorporationJocelyn Z. Konrad

By:/s/ Jessica KazmaierName: Jessica Kazmaier/s/Jocelyn Z. KonradTitle: EVP and CHRO

Date: March 23, 2022Date: March 23, 2022

APPENDIX A

March 7, 2022

Rite Aid Corporation30 Hunter LaneCamp Hill, PA 17011

To Whom it may Concern:

I hereby irrevocably resign, effective as of March 7, 2022, from all positions and offices I hold with the Company and its subsidiaries, including as Chief Pharmacy Officer.

Very truly yours,

/s/ Jocelyn Konrad​ ​​ ​Jocelyn Z. Konrad

APPENDIX B

ACCRUED BENEFITS AND SEVERANCE BENEFITS

The term “CHRO” means and refers to Jessica Kazmaier, Executive Vice President and Chief Human Resources Officer, Rite Aid Corporation, 30 Hunter Lane, Camp Hill, PA 17011 or by e-mail at jkazmaier@riteaid.com.

1. Accrued Benefits: The Company will pay you (i) your Base Salary earned through the Separation Date; (ii) any reimbursements owed to you pursuant to Section 4.2 of the Employment Agreement for expenses incurred prior to the Separation Date; and (iii) the amounts accrued and credited to your account under the Company’s 401(k) Savings Plan, and other applicable tax-qualified retirements plans in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (the “Accrued Benefits”). You acknowledge that there is no accrued or unpaid vacation payable to you under the Company’s unlimited paid time off policy.

2. Severance Benefits: You will be paid or provided with the following payments/benefits:

a. $1,224,000 representing two (2) times your current Base Salary, payable in equal installments over the two year period following the Release Effective Date in accordance with the Company’s regular payroll practices, commencing with the first regular payroll date that occurs after the Release Effective Date. Notwithstanding the foregoing, to the extent necessary to avoid adverse tax consequences, and except as described below, any payment to which you become entitled under the Agreement, or any arrangement or plan referenced in this Agreement, that constitutes “deferred compensation” under Internal Revenue Code Section 409A (“409A”), and is (a) payable upon your termination of employment; (b) at a time when you are a “specified employee” as defined by 409A shall not be made until the first payroll date after the earliest of: (1) the expiration of the six (6) month period (the “Deferral Period”) measured from the date of your “separation from service” within the meaning of such term under 409A; or (2) your date of death following such separation from service. Upon the expiration of the Deferral Period, any payments that would have otherwise been made during that period (whether in a single sum or in installments) will be paid in a single cash lump sum payment to you (or your beneficiary, as applicable). Each installment or amount to be paid or benefit to be provided to you will be construed as a “separate identified payment” for purposes of 409A to the fullest extent permitted therein.

b. Payment of your annual bonus for FY 2022 based on actual performance following determination by the Compensation Committee (or the Board) that the Company has achieved or exceeded its annual performance targets for the fiscal year, paid at the same time as annual performance bonus amounts are paid to the Company’s similarly situated active associates generally in respect of FY 2022.

c. Payment of a pro rata portion of your annual bonus for FY 2023 based on actual performance (as determined on a basis consistent with the methodology applied to the

8

Company’s senior leadership team) following determination by the Compensation Committee (or the Board) that the Company has achieved or exceeded its annual performance targets for the fiscal year, determined by multiplying your then Annual Target Bonus (on the date hereof, one hundred percent (100%) of your Base Salary) by a fraction (x) the numerator of which is the number of days between the beginning of the then current fiscal year of the Company and the date of termination of employment and (y) the denominator of which is 365, paid at the same time as annual performance bonus amounts are paid to the Company’s executive team in respect of FY 2023.

d. Accelerated vesting as of the Release Effective Date with respect to those stock options and time-based restricted stock awards that would have vested within the two (2) year period following the Separation Date.

e. $54,876.48 representing payments equal to the aggregate cost of COBRA continuation coverage (COBRA premiums) for you and your eligible dependents for eighteen (18) months following the Separation Date, plus six (6) additional months’ of COBRA premiums, paid in a lump sum within ten (10) days following the Release Effective Date.

f. Payment with respect to the 2019 – 2021 PSU awards for which the performance period has ended as of February 26, 2022, to the extent vested based on actual performance after certification by the Committee, paid at the same time as such PSU payments are made to other active PSU award recipients generally.

g. $51,000 representing payment of thirty (30) days’ Base Salary in lieu of the notice period provided in the Employment Agreement, payable in a lump sum as soon as practicable following the Separation Date in accordance with the Company’s regular payroll schedule.

h. Once the Company confirms that its information has been removed or “wiped”, you may retain the MacBook and printer previously provided to you by the Company.

9

EX-10.36

Exhibit 10.36

March 7, 2022

James Peters

Rite Aid Corporation

30 Hunter Lane

Camp Hill, PA 17011

Re:Separation of Employment

Dear Jim:

This letter agreement (this “Agreement”) confirms our understanding and agreement with respect to your separation of employment with Rite Aid Corporation (the “Company,” each a “Party” and together with you, the “Parties”). Capitalized terms not otherwise defined herein will have the meanings attributed to them in the employment agreement by and between you and the Company dated October 2, 2019 (the “Employment Agreement”).

1.Separation of Employment. Your last day of employment with the Company is March 7, 2022 (the “Separation Date”).  As of the Separation Date, you irrevocably resign from all positions you currently hold with the Company and its subsidiaries, including as Chief Operating Officer, and you agree to execute the resignation letter attached hereto as Appendix A.  You agree that, following the Separation Date, you will not represent yourself to be associated in any capacity with the Company or any of its subsidiaries or affiliates.

2.Accrued Benefits; Severance.

(a)Whether or not this Agreement becomes effective pursuant to its terms, the Company will pay you the Accrued Benefits (as defined in Appendix B hereto), and pay in lieu of notice, as set forth in item 2(g) of Appendix B hereto, less all applicable withholdings and deductions.

(b)Provided that this Agreement becomes effective on the Release Effective Date (as defined in Section 5(c) below) and you remain in compliance in all material respects with this Agreement, the Company will pay you the severance amount and fulfill the obligations set forth on Appendix B items 2(a) through 2(f), less all applicable withholdings and deductions, at the time and in the form set forth on Appendix B for each item (the “Release Consideration”).

3.Release.

(a)You hereby release, discharge and forever acquit the Company, and its affiliates and subsidiaries and each of their past, present and future stockholders, directors, employees, agents, successors and assigns of the foregoing, in their personal and representative capacities (individually, “Company Party,” and collectively, the “Company Parties”), from liability for, and hereby waive, any and all claims, charges, liabilities, causes of action, rights, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, benefits, obligations, damages, demands or liabilities of every nature, kind and description, in law, equity or otherwise, whether known or unknown, suspected or unsuspected  (collectively, “Claims”) which you or your heirs, executors, administrators, spouse, relatives, successors or assigns ever had, now have or may hereafter claim to have by reason of any matter, cause or thing whatsoever: (i) arising from the beginning of time through the date upon which you execute this Agreement

including, but not limited to (A) any such Claims relating in any way to your employment relationship with the Company or any other Company Parties, and (B) any such Claims arising under any federal, state, local or foreign statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act (the “ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, the Pennsylvania Equal Pay Law and any other federal, state, local or foreign law (statutory, regulatory or otherwise) that may be legally waived and released; (ii) relating to wrongful employment termination; or (iii) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company or any of the other Company Parties and you, including, without limitation, the Employment Agreement and any incentive compensation plan or equity plan with any Company Party. Notwithstanding the above, this release does not extend to (A) claims for Accrued Benefits; (B) claims for worker’s compensation benefits or for an occupational disease; (C) any whistleblower claims arising under the Sarbanes-Oxley Act or Dodd-Frank Wall Street Reform and Consumer Protection Act; (D) claims to require the Company to honor its commitments set forth in this Agreement; (E) claims for indemnification and officers and directors liability insurance coverage under Section 4.6 of the Employment Agreement, the Company’s charter, by-laws or applicable law; and/or (F) claims that cannot be waived as a matter of law pursuant to federal, state, or local law (collectively, clauses (A) through (F) are the “Excluded Claims”).

(b)You further acknowledge and agree that, except with respect to the Accrued Benefits, the Company Parties have fully satisfied any and all obligations whatsoever owed to you arising out of your employment with the Company or any other Company Party, and that no further payments or benefits are owed to you by the Company or any other Company Party except as provided for in this Agreement.

4.Attorney Consultation; Voluntary Agreement.  You acknowledge that (a) the Company has advised you to consult with an attorney of your own choosing before signing this Agreement, (b) you have been given the opportunity to seek the advice of counsel, (c) you have carefully read and fully understand all of the provisions of this Agreement, including the release in Section 3 (the “Release”), (d) the Release specifically applies to any rights or claims you may have against the Company Parties pursuant to the ADEA, (e) you are entering into this Agreement knowingly, freely and voluntarily in exchange for good and valuable consideration to which you are not otherwise entitled, including the payments and benefits referenced in items 2(a) through 2(f) of Appendix B of this Agreement and (f) you have the full power, capacity and authority to enter into this Agreement.

5.Review and Revocation Period.

(a)You have forty-five days following your receipt of this Agreement to review its terms, including the Release, and to reflect upon them and consider whether you want to sign it, although you may sign it sooner; provided, however, that you may not sign this Agreement prior to the Separation Date. You acknowledge and agree that changes to this Agreement (including Appendix B), whether material or immaterial, do not restart the running of this forty-five day period. You understand and agree that you may consent to this Agreement, including the Release, by signing and returning this Agreement within the applicable time frame to the CHRO (as defined on Appendix B).

(b)You may revoke your consent to the Release within the seven day period beginning on the date you execute this Agreement (such seven day period being referred to herein as the “Release Revocation Period”). To be effective, such revocation must be in writing signed by you and delivered to the Company at the above address before 11:59 p.m., Eastern Standard time, on the last day of the Release Revocation Period.

2

(c)In the event of such revocation by you, the Release shall be of no force or effect, and you will not have any rights and the Company will not have any obligations under Section 2(b) of this Agreement. Provided that you do not revoke your consent to the Release within the Release Revocation Period, the Release shall become effective on the eighth (8th) calendar day after the date upon which you execute this Agreement (the “Release Effective Date”).

6.Restrictive Covenants. You acknowledge and agree that the confidentiality obligations and the restrictive covenants and agreements set forth in Sections 6 and 7 of the Employment Agreement, respectively, and any other written restrictive covenants and confidentiality agreements in effect with the Company, are incorporated herein by reference and fully made a part hereof for all purposes and remain in full force and effect. You agree to keep the contents of this Agreement strictly confidential except as necessary to obtain the advice of your tax and legal advisors.

7.Cooperation. You agree that, at mutually agreeable times, you will meet with representatives of the Company, or its respective parent or subsidiary company representatives and provide any information you acquired during the course of your employment relating in any way to any legal disputes involving the Company. You further agree that you will cooperate fully with the Company relating to any such litigation matter or other legal proceeding in which you were involved or on which you have knowledge by virtue of your employment with the Company, including any existing or future litigation or other legal proceeding involving the Company, whether administrative, civil or criminal in nature in which and to the extent the Company deems your cooperation necessary. You will be entitled to reimbursement by the Company of reasonable costs and expenses incurred by you in connection with complying with your obligations under Section 7 of this Agreement.

8.Non-Disparagement. You agree that you will not make any negative comments or disparaging remarks, in writing, orally or electronically (“Disparaging Remarks”), about the Company or any of the other Company Parties and their respective products and services. The Company agrees to instruct members of its senior management team not to, for as long as such individuals remain affiliated with the Company, make any Disparaging Remarks about you; provided, however, that nothing in this Section 8 shall prohibit you from (a) making truthful and accurate statements or disclosures that are required by applicable law or legal process; (b) making any voluntary disclosure of information or documents concerning possible violations of law to any governmental agency or legislative body, or any self-regulatory organization; or (c) exercising protected rights to the extent that such rights, by law, cannot be waived by agreement.

9.Permitted Disclosures. Pursuant to 18 U.S.C. § 1833(b), you will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Company that (a) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to your attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding if you (I) file any document containing the trade secret under seal and (II) do not disclose the trade secret except pursuant to court order. Nothing in this Agreement or any other agreement you have with the Company is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section. Further, nothing in any agreement you have with the Company will prohibit or restrict you from making any voluntary disclosure of information or documents related to any violation of law to any governmental agency or legislative body, or any self-regulatory organization, in each case, without advance notice to the Company.

3

10.No Admission. Nothing herein will be deemed to constitute an admission of wrongdoing by you or any of the Company Parties. Neither this Agreement nor any of its terms may be used as an admission or introduced as evidence as to any issue of law or fact in any proceeding, suit or action, other than an action to enforce this Agreement. Notwithstanding the foregoing, Parties acknowledge that the separation of employment is not a Termination of Executive’s Employment by the Company for Cause as reflected in Section 5.1 of Employment Agreement.

11.Counterparts. This Agreement may be executed in counterparts, and each counterpart, when so executed and delivered, will be deemed to be an original and both counterparts, taken together, will constitute one and the same Agreement. A faxed, .pdf-ed or other e-sign signature such as through DocuSign will operate the same as an original signature.

12.Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the Company and any successor organization which shall succeed to the Company by acquisition, merger, consolidation or operation of law, or by acquisition of assets of the Company and any assigns. You may not assign this Agreement, except with respect to the rights provided under Section 2 of this Agreement, which will inure to the benefit of your heirs, executors and administrators. In the event of your death at any time, your estate will receive all unpaid payments and benefits due you under this Agreement, including under Appendix B.

13.Severability; Blue-Penciling. The provisions of this Agreement are severable and the invalidity of any one or more provisions will not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the scope thereof, the Parties hereto agree that said court in making such determination shall have the power to reduce the scope of such provision to the extent necessary to make it enforceable, and that this Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

14.Governing Law. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to any conflict of law principles thereof that would give rise to the application of the laws of any other jurisdiction.

15.Entire Agreement/No Oral Modifications. This Agreement including Appendix B constitutes the entire agreement between you and any of the Company Parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, representations, arrangements or agreements relating thereto, whether written or oral, including but not limited to the Employment Agreement, provided, however, that (i) Section 4.6 of the Employment Agreement shall survive the Separation Date, (ii) Sections 6 and 7 of the Employment Agreement shall remain in effect, for the duration and on the terms set forth therein, and (iii) any other defined terms contained in the Employment Agreement shall not be superseded hereby to the extent necessary for the interpretation, application, or enforcement of this Agreement. You represent that in executing this Agreement, you have not relied on any representation or statement not set forth herein. No amendment or modification of this Agreement shall be valid or binding on the Parties unless in writing and signed by both Parties.

***

4

IN WITNESS WHEREOF, the Parties have signed this Agreement as of the dates indicated below.

Rite Aid Corporation	James Peters
By: /s/ Paul Gilbert_______ Paul Gilbert EVP, Secretary and General Counsel Date: April 13, 2022	__/s/ James Peters__________________James Peters Date: April 13, 2022

APPENDIX A

March 7, 2022Rite Aid Corporation30 Hunter LaneCamp Hill, PA 17011

To Whom it may Concern:

I hereby irrevocably resign, effective as of March 7, 2022, from all positions and offices I hold with the Company and its subsidiaries, including as Chief Operating Officer.

Very truly yours,

/s/ James Peters_________________ James Peters

APPENDIX B

ACCRUED BENEFITS AND SEVERANCE BENEFITS

The term “CHRO” means and refers to Jessica Kazmaier, Executive Vice President and Chief Human Resources Officer, Rite Aid Corporation, 30 Hunter Lane, Camp Hill, PA 17011 or by e-mail at jkazmaier@riteaid.com.

1. Accrued Benefits: The Company will pay you (i) your Base Salary earned through the Separation Date; (ii) any reimbursements owed to you pursuant to Section 4.2 of the Employment Agreement for expenses incurred prior to the Separation Date; and (iii) the amounts accrued and credited to your account under the Company’s 401(k) Savings Plan, and other applicable tax-qualified retirements plans in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (the “Accrued Benefits”). You acknowledge that there is no accrued or unpaid vacation payable to you under the Company’s unlimited paid time off policy.

2. Severance Benefits: You will be paid or provided with the following payments/benefits:

a. $3,712,500 representing two (2) times the sum of your current Base Salary and Annual Target Bonus, payable in equal installments over the two year period following the Release Effective Date in accordance with the Company’s regular payroll practices, commencing with the first regular payroll date that occurs after the Release Effective Date. Notwithstanding the foregoing, to the extent necessary to avoid adverse tax consequences, and except as described below, any payment to which you become entitled under the Agreement, or any arrangement or plan referenced in this Agreement, that constitutes “deferred compensation” under Internal Revenue Code Section 409A (“409A”), and is (a) payable upon your termination of employment; (b) at a time when you are a “specified employee” as defined by 409A shall not be made until the first payroll date after the earliest of: (1) the expiration of the six (6) month period (the “Deferral Period”) measured from the date of your “separation from service” within the meaning of such term under 409A; or (2) your date of death following such separation from service.Upon the expiration of the Deferral Period, any payments that would have otherwise been made during that period (whether in a single sum or in installments) will be paid in a single cash lump sum payment to you (or your beneficiary, as applicable). Each installment or amount to be paid or benefit to be provided to you will be construed as a “separate identified payment” for purposes of 409A to the fullest extent permitted therein.

b. Payment of your annual bonus for FY 2022 based on actual performance following determination by the Compensation Committee (or the Board) that the Company has achieved or exceeded its annual performance targets for the fiscal year, paid at the same time as annual performance bonus amounts are paid to the Company’s similarly situated active associates generally in respect of FY 2022.

c. Payment of a pro rata portion of your annual bonus for FY 2023 at the same time as is paid to other eligible participants in the bonus plan, following determination by the Compensation Committee (or the Board) of the Company’s performance under the applicable annual performance goals for the fiscal year, determined by multiplying the performance level achieved (relative to Executive’s Annual Target Bonus amount) by a

7

fraction (x) the numerator of which is the number of fiscal periods (months) in which Executive is employed (in this case, this amounts to 9/30 months, or 0.3 months, and (y) the denominator of which is 12, which would result in the payment of $25,781.25 at target), paid at the same time as annual performance bonus amounts are paid to the Company's executive team in respect of FY 2023.

d. Accelerated vesting as of the Release Effective Date with respect to those stock options and time-based restricted stock awards that would have vested within the two (2) year period following the Separation Date; any vested stock options shall remain exercisable for a period of ninety (90) days following the Separation Date. E*Trade will be instructed to promptly reflect the vested awards in your E*Trade account.

e. (i) $41,560.92 representing payments equal to the aggregate cost of COBRA continuation coverage in respect of medical, vision and dental coverage for you and your eligible dependents for eighteen (18) months following the Separation Date, and (ii) $5,000 in respect of your financial planning allowance, in each case paid in a lump sum within ten (10) days following the Release Effective Date.

f. Continued use of Clarks Summit office for remainder of the current lease (but in no event longer than 6 months), subject to Rite Aid’s existing obligations to pay rent. You agree to reimburse the Company for any incremental costs or expenses due to your use during the remaining term and to abide by any notice requirements in the lease (which shall promptly be provided to the Company if received by or given by you).

g. $68,750 representing payment of thirty (30) days’ Base Salary in lieu of the notice period provided in the Employment Agreement, payable in a lump sum as soon as practicable following the Separation Date in accordance with the Company’s regular payroll schedule.

8

EX-22

Exhibit 22

List of Guarantor Subsidiaries

The Guaranteed Notes are jointly and severally guaranteed on a full and unconditional basis by Rite Aid Corporation (incorporated in Delaware) and the following 100% owned subsidiaries of Rite Aid Corporation as of May 28, 2022:

Entity	Jurisdiction of Incorporation or Organization
Harco, Inc.	Alabama
K & B Alabama Corporation	Alabama
Rite Aid Lease Management Company (a California corporation)	California
Thrifty Corporation (a California corporation)	California
Thrifty PayLess, Inc. (a California corporation)	California
Rite Aid of Connecticut, Inc.	Connecticut
1515 West State Street Boise, Idaho, LLC (a Delaware limited liability company)	Delaware
Ascend Health Technology, LLC (a Delaware limited liability company)	Delaware
Design Rx Holdings, LLC (a Delaware limited liability company)	Delaware
Eckerd Corporation (a Delaware corporation)	Delaware
Elixir Puerto Rico, Inc. (a Delaware corporation)	Delaware
Genovese Drug Stores, Inc. (a Delaware corporation)	Delaware
Health Dialog Services Corporation (a Delaware corporation)	Delaware
Hunter Lane, LLC (a Delaware limited liability company)	Delaware
JCG (PJC) USA, LLC (a Delaware limited liability company)	Delaware
JCG Holdings (USA), Inc. (a Delaware corporation)	Delaware
Juniper Rx, LLC	Delaware
K & B, Incorporated (a Delaware corporation)	Delaware
Maxi Drug North, Inc. (a Delaware corporation)	Delaware
Maxi Drug South, L.P. (a Delaware limited partnership)	Delaware
Maxi Drug, Inc. (a Delaware corporation)	Delaware
Munson & Andrews, LLC (a Delaware limited liability company)	Delaware
Name Rite, LLC (a Delaware limited liability company)	Delaware
P.J.C. Distribution, Inc. (a Delaware corporation)	Delaware
P.J.C. Realty Co., Inc. (a Delaware corporation)	Delaware
PJC Lease Holdings, Inc. (a Delaware corporation)	Delaware
PJC Manchester Realty LLC (a Delaware limited liability company)	Delaware
PJC Peterborough Realty LLC	Delaware
PJC Revere Realty LLC (a Delaware limited liability company)	Delaware
PJC Special Realty Holdings, Inc. (a Delaware corporation)	Delaware
RediClinic Associates, Inc. (a Delaware corporation)	Delaware
RediClinic LLC (a Delaware limited liability company)	Delaware
RediClinic of PA, LLC (a Delaware limited liability company)	Delaware

Entity	Jurisdiction of Incorporation or Organization
Rite Aid Corporation (PARENT)	Delaware
Rite Aid Drug Palace, Inc. (a Delaware corporation)	Delaware
Rite Aid Hdqtrs. Corp. (a Delaware corporation)	Delaware
Rite Aid Hdqtrs. Funding, Inc. (a Delaware corporation)	Delaware
Rite Aid of Delaware, Inc. (a Delaware corporation)	Delaware
Rite Aid Online Store Inc. (a Delaware corporation)	Delaware
Rite Aid Payroll Management Inc. (a Delaware corporation)	Delaware
Rite Aid Realty Corp. (a Delaware corporation)	Delaware
Rite Aid Specialty Pharmacy LLC (a Delaware limited liability company)	Delaware
Rite Aid Transport, Inc. (a Delaware corporation)	Delaware
Rite Investments Corp. (a Delaware corporation)	Delaware
Rite Investments Corp., LLC (a Delaware limited liability company)	Delaware
Rx Choice, Inc. (a Delaware corporation)	Delaware
The Jean Coutu Group (PJC) USA, Inc. (a Delaware corporation)	Delaware
Thrift Drug Inc. (a Delaware corporation)	Delaware
Advance Benefits, LLC	Florida
Elixir Savings, LLC
First Florida Insurers of Tampa, LLC	Florida
Rite Aid of Georgia, Inc.	Georgia
Rite Aid of Indiana, Inc.	Indiana
Rite Aid of Kentucky, Inc.	Kentucky
K & B Louisiana Corporation	Louisiana
K & B Services, Incorporated	Louisiana
Rite Aid of Maine, Inc.	Maine
GDF, Inc.	Maryland
READ'S, Inc.	Maryland
Rite Aid of Maryland, Inc.	Maryland
PJC of Massachusetts, Inc. (a Massachusetts corporation)	Massachusetts
PJC Realty MA, Inc. (a Massachusetts corporation)	Massachusetts
1740 Associates, LLC	Michigan
Apex Drug Stores, Inc.	Michigan
PDS-1 Michigan, Inc.	Michigan
Perry Distributors, Inc.	Michigan
Perry Drug Stores, Inc.	Michigan
RDS Detroit, Inc.	Michigan
Rite Aid of Michigan, Inc.	Michigan
Laker Software, LLC	Minnesota
K & B Mississippi Corporation	Mississippi
Elixir Rx Solutions, LLC	Missouri
Elixir Rx Solutions of Nevada	Nevada
Rite Aid of New Hampshire, Inc.	New Hampshire
Lakehurst and Broadway Corporation	New Jersey
Rite Aid of New Jersey, Inc.	New Jersey

Entity	Jurisdiction of Incorporation or Organization
Rite Aid of New York, Inc. (a New York corporation)	New York
Rite Aid Rome Distribution Center, Inc. (a New York corporation)	New York
EDC Drug Stores, Inc.	North Carolina
Rite Aid of North Carolina, Inc.	North Carolina
4042 Warrensville Center Road - Warrensville Ohio, Inc.	Ohio
5600 Superior Properties, Inc.	Ohio
Broadview and Wallings-Broadview Heights Ohio, Inc.	Ohio
Elixir Rx Solutions, LLC	Ohio
Gettysburg and Hoover - Dayton, Ohio, LLC	Ohio
Elixir Pharmacy, LLC	Ohio
Rite Aid of Ohio, Inc.	Ohio
Elixir Rx Options, LLC	Ohio
The Lane Drug Company	Ohio
Tonic Procurement, LLC	Ohio
Rite Aid of Pennsylvania, LLC (Formerly Rite Aid of Pennsylvania, Inc.)	Pennsylvania
PJC of Rhode Island, Inc.	Rhode Island
Rite Aid of South Carolina, Inc.	South Carolina
K & B Tennessee Corporation	Tennessee
Rite Aid of Tennessee, Inc.	Tennessee
K & B Texas Corporation (a Texas corporation)	Texas
RCMH, LLC (a Texas limited liability company)	Texas
Rx Initiatives, L.L.C.	Utah
Maxi Green, Inc.	Vermont
PJC of Vermont, Inc.	Vermont
Rite Aid of Vermont, Inc.	Vermont
Rite Aid of Virginia, Inc.	Virginia
Rite Aid of Washington, D.C., Inc.	Wash. D.C.
5277 Associates, Inc.	Washington
The Bartell Drug Company	Washington
Rite Aid of West Virginia, Inc.	West Virginia
Design Rx, LLC	Wyoming
Design Rxclusives, LLC	Wyoming

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Heyward Donigan, President and Chief Executive Officer, certify that:

1.            I have reviewed this quarterly report on Form 10-Q of Rite Aid Corporation (the “Registrant”);

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.            The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.            Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.            Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.            The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.            Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: July 6, 2022
	By:	/s/ HEYWARD DONIGAN
		Heyward Donigan
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Matthew C. Schroeder, Executive Vice President and Chief Financial Officer, certify that:

1.            I have reviewed this quarterly report on Form 10-Q of Rite Aid Corporation (the “Registrant”);

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.            The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.            Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d.            Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.            The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.            Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: July 6, 2022
	By:	/s/ MATTHEW C. SCHROEDER
		Matthew C. Schroeder
		Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Rite Aid Corporation (the “Company”) for the quarterly period ended May 28, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Heyward Donigan, as President and Chief Executive Officer of the Company, and Matthew C. Schroeder, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ HEYWARD DONIGAN
Name:	Heyward Donigan
Title:	President and Chief Executive Officer
Date:	July 6, 2022
/s/ MATTHEW C. SCHROEDER
Name:	Matthew C. Schroeder
Title:	Executive Vice President and Chief Financial Officer
Date:	July 6, 2022

XML

Document and Entity Information - shares	3 Months Ended
	May 28, 2022	Jun. 22, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	May 28, 2022
Current Fiscal Year End Date	--03-04
Entity File Number	1-5742
Entity Registrant Name	RITE AID CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	23-1614034
Entity Address, Address Line One	30 Hunter Lane
Entity Address, City or Town	Camp Hill
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17011
City Area Code	717
Local Phone Number	761-2633
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	RAD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		55,626,790
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000084129
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	May 28, 2022	Feb. 26, 2022
Current assets:
Cash and cash equivalents	$ 56,060	$ 39,721
Accounts receivable, net	1,449,745	1,343,496
Inventories, net of LIFO reserve of $487,173 and $487,173	1,974,759	1,959,389
Prepaid expenses and other current assets	88,860	106,749
Total current assets	3,569,424	3,449,355
Property, plant and equipment, net	985,121	989,167
Operating lease right-of-use assets	2,723,405	2,813,535
Goodwill	879,136	879,136
Other intangibles, net	282,950	291,196
Deferred tax assets	20,071	20,071
Other assets	89,666	86,543
Total assets	8,549,773	8,529,003
Current liabilities:
Current maturities of long-term debt and lease financing obligations	5,016	5,544
Accounts payable	1,461,238	1,571,261
Accrued salaries, wages and other current liabilities	787,591	780,632
Current portion of operating lease liabilities	574,392	575,651
Total current liabilities	2,828,237	2,933,088
Long-term debt, less current maturities	3,026,456	2,732,986
Long-term operating lease liabilities	2,526,607	2,597,090
Lease financing obligations, less current maturities	14,392	14,830
Other noncurrent liabilities	162,457	151,976
Total liabilities	8,558,149	8,429,970
Commitments and contingencies
Stockholders' equity:
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 55,623 and 55,752	55,623	55,752
Additional paid-in capital	5,913,210	5,910,299
Accumulated deficit	(5,961,772)	(5,851,581)
Accumulated other comprehensive loss	(15,437)	(15,437)
Total stockholders' equity	(8,376)	99,033
Total liabilities and stockholders' equity	$ 8,549,773	$ 8,529,003

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	May 28, 2022	Feb. 26, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Inventory, LIFO Reserve	$ 487,173	$ 487,173
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	75,000	75,000
Common stock, shares issued	55,623	55,752
Common stock, shares outstanding	55,623	55,752

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 6,014,583	$ 6,160,985
Costs and expenses:
Cost of revenues	4,817,854	4,876,110
Selling, general and administrative expenses	1,217,929	1,245,362
Facility exit and impairment charges	66,571	8,831
Interest expense	48,119	49,121
Loss on debt retirements, net		396
Gain on sale of assets, net	(29,196)	(6,558)
Total costs and expenses	6,121,277	6,173,262
Loss before income taxes	(106,694)	(12,277)
Income tax expense	3,497	780
Net loss	(110,191)	(13,057)
Net loss	(110,191)	(13,057)
Computation of loss attributable to common stockholders:
Net loss attributable to common stockholders - basic	(110,191)	(13,057)
Net loss attributable to common stockholders - diluted	$ (110,191)	$ (13,057)
Basic loss per share:
Basic loss per share	$ (2.03)	$ (0.24)
Diluted loss per share:
Diluted loss per share	$ (2.03)	$ (0.24)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS $ in Thousands	3 Months Ended
	May 29, 2021 USD ($)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (13,057)
Defined benefit pension plans:
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 income tax expense	123
Change in fair value of interest rate cap	27
Total other comprehensive income	150
Comprehensive loss	$ (12,907)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Amortization of net actuarial losses included in net periodic pension cost, income tax expense	$ 0	$ 0

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive (Loss)	Total
Balance - beginning of period at Feb. 27, 2021	$ 55,143	$ 5,897,168	$ (5,313,103)	$ (24,054)	$ 615,154
BALANCE (in shares) at Feb. 27, 2021	55,143
Increase (Decrease) in Stockholders' Deficit
Net loss			(13,057)		(13,057)
Other comprehensive loss:
Changes in Defined Benefit Plans, net of $0 tax expense				123	123
Change in fair value of interest rate cap				27	27
Comprehensive loss					(12,907)
Exchange of restricted shares for taxes	$ (2)	(33)			(35)
Exchange of restricted shares for taxes (in shares)	(2)
Cancellation of restricted stock	$ (48)	48
Cancellation of restricted stock (in shares)	(48)
Amortization of restricted stock balance		1,618			1,618
Stock-based compensation expense		150			150
Balance - end of period at May. 29, 2021	$ 55,093	5,898,951	(5,326,160)	(23,904)	603,980
BALANCE (in shares) at May. 29, 2021	55,093
Balance - beginning of period at Feb. 26, 2022	$ 55,752	5,910,299	(5,851,581)	(15,437)	99,033
BALANCE (in shares) at Feb. 26, 2022	55,752
Increase (Decrease) in Stockholders' Deficit
Net loss			(110,191)		(110,191)
Other comprehensive loss:
Comprehensive loss					(110,191)
Issuance of restricted stock	$ 61	(61)
Issuance of restricted stock (in shares)	61
Exchange of restricted shares for taxes	$ (63)	(490)			(553)
Exchange of restricted shares for taxes (in shares)	(63)
Cancellation of restricted stock	$ (127)	127
Cancellation of restricted stock (in shares)	(127)
Amortization of restricted stock balance		3,324			3,324
Stock-based compensation expense		201			201
Amortization of performance-based incentive plans		(190)			(190)
Balance - end of period at May. 28, 2022	$ 55,623	$ 5,913,210	$ (5,961,772)	$ (15,437)	$ (8,376)
BALANCE (in shares) at May. 28, 2022	55,623

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Changes in defined benefit plans, tax expense	$ 0	$ 0

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Operating activities:
Net loss	$ (110,191)	$ (13,057)
Net loss from continuing operations	(110,191)	(13,057)
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation and amortization	70,073	75,859
Facility exit and impairment charges	66,571	8,831
LIFO credit		(3,993)
Gain on sale of assets, net	(29,196)	(6,558)
Change in allowances for uncollectible accounts receivable	3,763
Stock-based compensation expense	3,334	2,811
Loss on debt retirements, net		396
Changes in operating assets and liabilities:
Accounts receivable	(104,458)	(149,487)
Inventories	(15,827)	11,918
Accounts payable	(137,572)	50,527
Operating lease right-of-use assets and operating lease liabilities	(14,812)	(5,909)
Other assets	751	7,978
Other liabilities	15,327	34,559
Net cash (used in) provided by operating activities	(252,237)	13,875
Investing activities:
Payments for property, plant and equipment	(73,176)	(59,164)
Intangible assets acquired	(12,248)	(5,436)
Proceeds from dispositions of assets and investments	30,839	2,448
Proceeds from sale-leaseback transactions		7,456
Net cash used in investing activities	(54,585)	(54,696)
Financing activities:
Net proceeds from revolver	291,000	39,000
Principal payments on long-term debt	(977)	(91,941)
Change in zero balance cash accounts	33,691	51,957
Financing fees paid for early debt redemption		(2)
Payments for taxes related to net share settlement of equity awards	(553)	(35)
Deferred financing costs paid		(580)
Net cash provided by (used in) financing activities	323,161	(1,601)
Increase (decrease) in cash and cash equivalents	16,339	(42,422)
Cash and cash equivalents, beginning of period	39,721	160,902
Cash and cash equivalents, end of period	$ 56,060	$ 118,480

XML

Basis of Presentation and Significant Accounting Policies

3 Months Ended

May 28, 2022

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

1. Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2022 10-K.

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	May 28,		May 29,
	2022		2021
In thousands	(13 Weeks)		(13 weeks)
Retail Pharmacy segment:
Pharmacy sales	$	3,053,449	$	2,997,044
Front-end sales		1,261,206		1,321,699
Other revenue		30,701		32,939
Total Retail Pharmacy segment		4,345,356		4,351,682
Pharmacy Services segment		1,725,857		1,872,282
Intersegment elimination		(56,630)		(62,979)
Total revenue	$	6,014,583	$	6,160,985

The Retail Pharmacy segment offered a chain-wide loyalty card program titled wellness+. Individual customers were able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earned points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. The wellness+ program was terminated as of July 1, 2020, with benefits earned as of that date available to be used through the end of calendar 2020. Beginning in December 2020, the Company granted temporary extensions of benefits to certain previous members that were eligible for a discount as of the end of each previous 6 month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent 6 months with no additional purchase requirement. New and existing customers who were not already eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each 6 month period. A final extension was granted on December 31, 2021 through February 26, 2022 at which point all discounts were terminated.

A new loyalty program, Rite Aid Rewards, was initiated on February 27, 2022. Customers that enroll in the new program earn points for each dollar spent on front of store purchases as well as for eligible pharmacy prescriptions. Points can then be converted into a “Rite Aid Rewards” coupon that can be tendered as payment in a future purchase. Each point is worth $0.002. Customers must accumulate 1,000 points and create an online account in order to convert

earned points to a “Rite Aid Rewards” coupon. Unused/unconverted points expire after 90 days. Unredeemed “Rite Aid Rewards” coupons expire 30 days after conversion from points earned.

Points earned pursuant to the Rite Aid Rewards program represent a performance obligation. The value of unredeemed Rite Aid Rewards points is deferred as a contract liability (included in other current liabilities). As members redeem points in the form of a Rite Aid Rewards coupon or when points or unredeemed Rite Aid Rewards coupons expire, the Retail Pharmacy segment recognizes the redeemed/expired portion of the deferred contract liability into revenue. For the thirteen week period ended May 28, 2022, the Company recognized $713 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $5,577 and $0 as of May 28, 2022 and February 26, 2022, respectively.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the recognition of deferred tax liabilities and the methodology for calculating income taxes in the interim period. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU was effective for fiscal years beginning after December 15, 2020 (fiscal 2022). The Company adopted ASU 2019-12 effective February 28, 2021 and the adoption of this standard did not have a material impact on the Company’s financial position.

XML

Acquisition

3 Months Ended

May 28, 2022

Acquisition

Acquisition

2. Acquisition

On December 18, 2020, pursuant to that certain stock purchase agreement, dated as of October 7, 2020, by and between the Company and Bartell Drug Company (“Bartell”), the Company acquired Bartell (the “Acquisition”), a Washington corporation, for approximately $89,724 in cash, subject to certain customary post-closing working capital adjustments. The Company financed the Acquisition with borrowings under its Senior Secured Revolving Credit Facility together with cash on hand. Bartell operated 67 retail drug stores and one distribution center in the greater Seattle, Washington area. Bartell operates as a 100 percent owned subsidiary of the Company within its Retail Pharmacy segment.

The Company’s condensed consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021 include Bartell’s results of operations. The Company’s condensed consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the Acquisition date.

The following allocation of the purchase price and the estimated transaction costs is final:

Final purchase price
Cash consideration	$	89,724
Total		89,724
Final purchase price allocation
Cash and cash equivalents	$	3,494
Accounts receivable		23,860
Inventories		67,745
Prepaid expenses and other current assets		1,857
Total current assets		96,956
Property and equipment		28,229
Operating lease right-of-use assets		143,651
Intangible assets(1)		68,700
Other assets		1,805
Total assets acquired		339,341
Accounts payable		24,166
Accrued salaries, wages and other current liabilities		20,335
Current portion of operating lease liabilities		24,617
Total current liabilities		69,118
Long-term operating lease liabilities		124,023
Other long-term liabilities		166
Total liabilities assumed		193,307
Deferred tax liabilities recorded on purchase		13,951
Net assets acquired		132,083
Bargain purchase gain		(42,359)
Total purchase price	$	89,724

(1)            Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes a final valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s final estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation include:

	Estimated Fair Value		Estimated Useful Life (In Years)
Prescription files	$	54,300	10
Tradename		14,400	Indefinite
Total	$	68,700

During the thirteen week period ended February 27, 2021, the Company recorded a gain on Bartell acquisition of $47,705 primarily due to fair value adjustments related to prescription files and the tradename compared to book values. During the thirteen week period ended November 27, 2021, in connection with determining its final purchase price allocation, the Company recorded a loss on Bartell acquisition of $5,346 primarily due to contract termination charges, inventory valuation adjustments and changes in deferred income taxes, resulting in a net bargain purchase gain of $42,359. The Company believes that the bargain purchase gain was primarily the result of the decision by the Bartell stockholders to sell their interests as Bartell had been experiencing increasing borrowings under its credit agreements to meet its operating needs and increasing net losses. The agreed upon purchase price reflected the fact the seller would have needed to incur further significant debt to cover the operating costs of Bartell, which would have required amendments to its credit arrangements. With the Company’s existing infrastructure, scale and expertise, the Company believes that it has access to the necessary synergies to allow necessary operational improvements to be implemented more efficiently than the seller was capable of.

During the thirteen week periods ended May 28, 2022 and May 29, 2021, acquisition costs of $0 and $3,886 were expensed as incurred.

XML

Restructuring

3 Months Ended

May 28, 2022

Restructuring

Restructuring

3. Restructuring

Beginning in fiscal 2019, the Company initiated a series of restructuring plans designed to reorganize its executive management team, reduce managerial layers, and consolidate roles. In March 2020, the Company announced the details of its RxEvolution strategy, which includes building tools to work with regional health plans to improve patient health outcomes, rationalizing SKU’s in its front-end offering to free up working capital and update its merchandise assortment, assessing its pricing and promotional strategy, rebranding its retail pharmacy and pharmacy services business, launching its Store of the Future format and further reducing SG&A and headcount, including integrating certain back office functions in the Pharmacy Services segment both within the segment and across Rite Aid. Other strategic initiatives include the expansion of the Company’s digital business, replacing and updating the Company’s financial systems to improve efficiency, and movement to a common client platform at Elixir. In April 2022, the Company announced further strategic initiatives to reduce costs through the closure of unprofitable stores, reducing corporate administration expenses and improving efficiencies in worked payroll and other store labor costs as well as expense reductions at the Pharmacy Services segment. These and future restructuring activities are expected to provide future growth and expense efficiency benefits. There can be no assurance that the Company’s current and future restructuring charges will achieve the cost savings and remerchandising benefits in the amounts or time anticipated.

For the thirteen week period ended May 28, 2022, the Company incurred total restructuring-related costs of $22,646, which are included as a component of SG&A. These costs are as follows:

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	11,288	$	616	$	11,904
Professional and other fees relating to restructuring activities (b)		6,083		4,659		10,742
Total restructuring-related costs	$	17,371	$	5,275	$	22,646

For the thirteen week period ended May 29, 2021, the Company incurred total restructuring-related costs of $5,932, which are included as a component of SG&A. These costs are as follows:

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	—	$	506	$	506
Professional and other fees relating to restructuring activities (b)		1,621		3,805		5,426
Total restructuring-related costs	$	1,621	$	4,311	$	5,932

A summary of activity for the thirteen week period ended May 28, 2022 in the restructuring-related liabilities associated with the programs noted above, which is included in accrued salaries, wages and other current liabilities, is as follows:

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance at February 26, 2022	$	4,257	$	4,463	$	8,720
Additions charged to expense		11,904		10,742		22,646
Cash payments		(5,231)		(11,727)		(16,958)
Balance at May 28, 2022	$	10,930	$	3,478	$	14,408

(a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts.

(b) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities.

The Company anticipates incurring approximately $60,000 during fiscal 2023 in connection with its continued restructuring activities.

XML

Income (Loss) Per Share

3 Months Ended

May 28, 2022

Income (Loss) Per Share

Income (Loss) Per Share

4. Income (Loss) Per Share

Basic income (loss) per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company, subject to anti-dilution limitations.

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders— basic and diluted	$	(110,191)	$	(13,057)
Denominator:
Basic and diluted weighted average shares		54,348		53,852
Basic and diluted loss per share	$	(2.03)	$	(0.24)

Due to their antidilutive effect, 700 and 773 potential shares related to stock options have been excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. Also, excluded from the computation of diluted income (loss) per share for the thirteen week periods ended May 28, 2022 and May 29, 2021 are restricted shares of 1,247 and 1,240, respectively, which are included in shares outstanding.

XML

Facility Exit and Impairment Charges

3 Months Ended

May 28, 2022

Facility Exit and Impairment Charges

Facility Exit and Impairment Charges

5. Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Impairment charges	$	35,036	$	4,313
Facility exit charges		31,535		4,518
	$	66,571	$	8,831

Impairment Charges

These amounts include the write-down of long-lived assets at locations that were assessed for impairment because of management’s intention to relocate or close the location or because of changes in circumstances that indicated the carrying value of an asset may not be recoverable.

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

● Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

● Level 2—Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

● Level 3—Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

Non-Financial Assets Measured on a Non-Recurring Basis

Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 2 and Level 3 inputs as defined in the fair value hierarchy. The fair value of long-lived assets using Level 2 inputs is determined by evaluating the current economic conditions in the geographic area for similar use assets. The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest (which is Level 1). The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located. Significant increases or decreases in actual cash flows may result in valuation changes. During the thirteen week period ended May 28, 2022, long-lived assets with a carrying value of $39,228, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $4,192, resulting in an impairment charge of $35,036. During the thirteen week period ended May 29, 2021, long-lived assets with a carrying value of $4,313, primarily right-of-use assets in connection with leased office spaces, were written down to their fair value of $0, resulting in an impairment charge of $4,313. If our actual future cash flows differ from our projections materially, certain stores that are either not impaired or partially impaired in the current period may be further impaired in future periods.

The following table presents fair values for those assets measured at fair value on a non-recurring basis at May 28, 2022 and May 29, 2021:

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 28, 2022
Long-lived assets held for use	$	—	$	4,192	$	—	$	4,192	$	(35,036)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	4,192	$	—	$	4,192	$	(35,036)

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 29, 2021
Long-lived assets held for use	$	—	$	—	$	—	$	—	$	(4,313)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—	$	(4,313)

The above assets reflected in the caption Long-lived assets held for sale are separate and apart from the Assets to be Sold and due to their immateriality have not been reclassified to assets held for sale.

Facility Exit Charges

As part of the Company's ongoing business activities, the Company assesses stores and distribution centers for potential closure or relocation. Decisions to close or relocate stores or distribution centers in future periods would result in facility exit charges and inventory liquidation charges, as well as impairment of assets at these locations. When a store or distribution center is closed, the Company records an expense for unrecoverable costs and accrues a liability equal to the present value at current credit adjusted risk-free interest rates of any anticipated executory costs which are not included within the store or distribution center's respective lease liability under Topic 842. Other store or distribution center closing and liquidation costs are expensed when incurred.

The following table reflects changes in the Company’s closed store liability relating to closed store and distribution center charges for new closures, changes in assumptions and interest accretion:

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Balance—beginning of period	$	18,688	$	3,443
Provision for present value of executory costs for leases exited		26,499		1,708
Changes in assumptions and other adjustments		(191)		1,493
Interest accretion		98		7
Cash payments		(1,692)		(516)
Balance—end of period	$	43,402	$	6,135

XML

Fair Value Measurements

3 Months Ended

May 28, 2022

Fair Value Measurements

Fair Value Measurements

6. Fair Value Measurements

The Company utilizes the three-level valuation hierarchy as described in Note 5, Facility Exit and Impairment Charges, for the recognition and disclosure of fair value measurements.

Financial instruments other than long-term indebtedness include cash and cash equivalents, accounts receivable and accounts payable. These instruments are recorded at book value, which we believe approximate their fair values due to their short term nature. In addition, as of May 28, 2022 and February 26, 2022, the Company has $7,186 and $7,406, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of other assets. The Company believes the carrying value of these investments approximates their fair value.

The fair value for LIBOR-based borrowings under the Company’s senior secured credit facility is estimated based on the quoted market price of the financial instrument which is considered Level 1 of the fair value hierarchy. The fair values of substantially all of the Company’s other long-term indebtedness are estimated based on quoted market prices of the financial instruments which are considered Level 1 of the fair value hierarchy. The carrying amount and estimated fair value of the Company’s total long-term indebtedness was $3,026,456 and $2,677,190, respectively, as of May 28, 2022. The carrying amount and estimated fair value of the Company's total long-term indebtedness was $2,732,986 and $2,661,122, respectively, as of February 26, 2022.

XML

Income Taxes

3 Months Ended

May 28, 2022

Income Taxes

Income Taxes

7. Income Taxes

The Company recorded an income tax expense of $3,497 and $780 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was (3.3)% and (6.4)%, respectively. The effective tax rate for the thirteen week periods ended May 28, 2022 and May 29, 2021 was net of an adjustment of (37.6)% and (18.5)%, respectively, to adjust the valuation allowance against deferred tax assets.

The Company recognizes tax liabilities in accordance with the guidance for uncertain tax positions and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities.

The Company believes that it is reasonably possible that a decrease of up to $25,130 in unrecognized tax benefits related to state exposures may be necessary in the next twelve months; however, management does not expect the change to have a material impact on the results of operations or the financial position of the Company.

The Company regularly evaluates valuation allowances established for deferred tax assets for which future realization is uncertain. Management will continue to monitor all available evidence related to the net deferred tax assets that may change the most recent assessment, including events that have occurred or are anticipated to occur. The Company continues to maintain a valuation allowance against net deferred tax assets of $1,862,823 and $1,822,710, which relates to federal and state deferred tax assets that may not be realized based on the Company's future projections of taxable income at May 28, 2022 and February 26, 2022, respectively.

XML

Medicare Part D

3 Months Ended

May 28, 2022

Medicare Part D

Medicare Part D

8. Medicare Part D

The Company offers Medicare Part D benefits through Elixir Insurance (“EI”), which has contracted with CMS to be a Prescription Drug Plan (“PDP”) and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bearing entity regulated under state insurance laws or similar statutes.

EI is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these laws and regulations, EI must file quarterly and annual reports with the National Association of Insurance Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus under formulas established by certain states and must, in certain circumstances, request and receive the approval of certain state regulators before making dividend payments or other capital distributions to the Company. The Company does not

believe these limitations on dividends and distributions materially impact its financial position. EI is subject to minimum capital and surplus requirements in certain states. The minimum amount of capital and surplus required to satisfy regulatory requirements in these states is $8,323 as of March 31, 2022. EI was in excess of the minimum required amounts in these states as of May 28, 2022.

The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidies, reinsurance amounts, and coverage gap discount amounts ultimately payable to or receivable from CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported.
​

On August 12, 2021, the Company entered into a receivable purchase agreement (the “August 2021 Receivable Purchase Agreement”) with Bank of America, N.A. (the “Purchaser”).

Pursuant to the terms and conditions set forth in the August 2021 Receivable Purchase Agreement, the Company sold $271,829, a portion of its calendar 2021 CMS receivable, for $258,116, of which $239,360 was received on August 12, 2021. The remaining $18,756, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,713, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended August 28, 2021.

On August 12, 2021, concurrent with the August 2021 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “August 2021 Indemnity Agreement”), whereby the Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the August 2021 Indemnity Agreement. Based on its evaluation of the August 2021 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the August 2021 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the August 2021 Indemnity Agreement.

On January 24, 2022, the Company entered into a receivable purchase agreement (the “January 2022 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the January 2022 Receivable Purchase Agreement, the Company sold $400,680, a portion of its calendar 2021 CMS receivable, for $387,035, of which $359,388 was received on January 24, 2022. The remaining $27,647, which is included in accounts receivable, net as of May 28, 2022, is payable to the Company, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance from CMS. In connection therewith, the Company recognized a loss of $13,645, which is included as a component of loss (gain) on sale of assets, net during the thirteen week period ended February 26, 2022.

On January 24, 2022, concurrent with the January 2022 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “January 2022 Indemnity Agreement”), whereby the Company has agreed to

indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered or incurred by the Purchaser resulting from the occurrence of certain events as specified in the January 2022 Indemnity Agreement. Based on its evaluation of the January 2022 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the January 2022 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the January 2022 Indemnity Agreement.

As of May 28, 2022 and February 26, 2022 accounts receivable, net included $36,147 and $34,898 due from the Purchaser, subject to final CMS claim reconciliation adjustments, upon receipt of the final remittance for the respective calendar years from CMS.

As of May 28, 2022, and February 26, 2022, accounts receivable, net included $155,397 and $63,203 due from CMS.

XML

Manufacturer Rebates Receivables

3 Months Ended

May 28, 2022

Manufacturer Rebates Receivables

Manufacturer Rebates Receivables

9. Manufacturer Rebates Receivables

The Pharmacy Services Segment has manufacturer rebates receivables due directly from manufacturers and from our rebate aggregator of $563,389 and $535,620 included in accounts receivable, net of an allowance for uncollectible rebates of $15,295 and $18,796, as of May 28, 2022 and February 26, 2022, respectively.

XML

Goodwill and Other Intangible Assets

3 Months Ended

May 28, 2022

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

10. Goodwill and Other Intangible Assets

At May 28, 2022, the goodwill related to the Pharmacy Services segment is at risk of future impairment if the fair value of this segment, and its associated assets, decrease in value due to further declines in its operating results or an inability to execute management’s business strategies. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates. If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. As of May 28, 2022, the Pharmacy Services segment had goodwill of $835,644.

There was no goodwill impairment charge for the thirteen week period ended May 28, 2022. At May 28, 2022 and February 26, 2022, accumulated impairment losses for the Pharmacy Services segment was $803,712.

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of May 28, 2022 and February 26, 2022.

	May 28, 2022								February 26, 2022
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Non-compete agreements and other(a)	$	199,351	$	(179,046)	$	20,305	3	years	$	197,651	$	(178,958)	$	18,693	3	years
Prescription files		1,026,342		(914,911)		111,431	5	years		1,030,169		(918,773)		111,396	6	years
Customer relationships(a)		388,000		(291,770)		96,230	9	years		388,000		(286,090)		101,910	10	years
CMS license		57,500		(17,478)		40,022	4	years		57,500		(15,372)		42,128	5	years
Claims adjudication and other developed software		58,985		(58,423)		562	0	years		58,985		(56,316)		2,669	1	years
Backlog		11,500		(11,500)		—	0	years		11,500		(11,500)		—	0	years
Total finite	$	1,741,678	$	(1,473,128)		268,550			$	1,743,805	$	(1,467,009)	$	276,796
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,756,078	$	(1,473,128)	$	282,950			$	1,758,205	$	(1,467,009)	$	291,196

(a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

The Company is continuing to reposition its approach to the Elixir Insurance Part D business including an expectation of a purposeful shrinkage of the business. As a result, at the end of fiscal 2022, the Company adjusted the remaining amortization period of the CMS License to 5 years. Prior to such adjustment, the remaining life was 19 years.

Amortization expense for these intangible assets and liabilities was $20,626 and $20,460 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2023—$71,185; 2024—$57,613; 2025—$46,393; 2026—$35,802 and 2027—$28,815.

XML

Indebtedness and Credit Agreements

3 Months Ended

May 28, 2022

Indebtedness and Credit Agreements

Indebtedness and Credit Agreements

11. Indebtedness and Credit Agreement

Following is a summary of indebtedness and lease financing obligations at May 28, 2022 and February 26, 2022:

	May 28,		February 26,
	2022		2022
Secured Debt:
Senior secured revolving credit facility due August 2026 ($1,000,000 and $709,000 face value less unamortized debt issuance costs of $16,992 and $18,010)		983,008		690,990
FILO Term Loan due August 2026 ($350,000 face value less unamortized debt issuance costs of $2,211 and $2,344)		347,789		347,656
		1,330,797		1,038,646
Second Lien Secured Debt:
7.5% senior secured notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $6,311 and $6,824)		593,689		593,176
8.0% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $13,628 and $14,397)		836,290		835,521
		1,429,979		1,428,697
Unguaranteed Unsecured Debt:
7.7% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $609 and $642)		236,777		236,744
6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $98 and $102)		28,903		28,899
		265,680		265,643
Lease financing obligations		19,408		20,374
Total debt		3,045,864		2,753,360
Current maturities of long-term debt and lease financing obligations		(5,016)		(5,544)
Long-term debt and lease financing obligations, less current maturities	$	3,040,848	$	2,747,816

Credit Facility

On December 20, 2018, the Company entered into a senior secured credit agreement (as amended by the First Amendment to Credit Agreement, dated as of January 6, 2020, the “Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Amended Credit Agreement”), which Credit Agreement provided for facilities consisting of a $2,700,000 senior secured asset-based revolving credit facility (“Initial Senior Secured Revolving Credit Facility”) and a $450,000 “first-in, last out” senior secured term loan facility (“Initial Senior Secured Term Loan,” and together with the Initial Senior Secured Revolving Credit Facility, collectively, the “Initial Facilities”). In December 2018, the Company used proceeds from the Initial Facilities to refinance its prior $2,700,000 existing credit agreement.

On August 20, 2021, the Company entered in to the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Credit Agreement to provide for a $2,800,000 senior secured asset-based revolving credit facility (“Senior Secured Revolving Credit Facility” or “revolver”) and a $350,000 “first-in,

last out” senior secured term loan facility (“Senior Secured Term Loan” or “Term Loan” and together with the Senior Secured Revolving Credit Facility, collectively, the “Amended Facilities”) and incorporate customary “hardwired” LIBOR transition provisions. The Amended Facilities extend the Company’s debt maturity profile and provide additional liquidity. Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, a base rate (determined in a customary manner) plus a margin of between 0.25% to 0.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of between 1.25% and 1.75%, in each case based upon the Average ABL Availability (as defined in the Amended Credit Agreement). Borrowings under the Senior Secured Term Loan bear interest at a rate per annum equal to, at the Company’s option, (x) a base rate (determined in a customary manner) plus a margin of 1.75% or (y) an adjusted LIBOR rate (determined in a customary manner) plus a margin of 2.75%. The Company is required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Amended Credit Agreement). The Amended Facilities are scheduled to mature on August 20, 2026 (subject to a springing maturity if certain of the Company’s existing secured notes are not refinanced or repaid prior to the date that is 91 days prior to the stated maturity thereof).

The Company’s borrowing capacity under the Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At May 28, 2022, the Company had $1,350,000 of borrowings outstanding under the Amended Facilities and had letters of credit outstanding under the Senior Secured Revolving Credit Facility in a face amount of $127,696, which resulted in remaining borrowing capacity under the Senior Secured Revolving Credit Facility of $1,672,304. If at any time the total credit exposure outstanding under the Senior Secured Revolving Credit Facility exceeds the borrowing base, the Company will be required to repay amounts outstanding to eliminate such shortfall.

The Amended Credit Agreement restricts the Company and all of its subsidiaries that guarantee its obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes (collectively, the “Subsidiary Guarantors”) from accumulating cash on hand in excess of $200,000 at any time when revolving loans are outstanding (not including cash located in store and lockbox deposit accounts and cash necessary to cover current liabilities). The Amended Credit Agreement also states that if at any time (other than following the exercise of remedies or acceleration of any senior obligations or second priority debt and receipt of a triggering notice by the senior collateral agent from a representative of the senior obligations or the second priority debt) either (i) an event of default exists under the Amended Facilities or (ii) the sum of the Company’s borrowing capacity under the Senior Secured Revolving Credit Facility and certain amounts held on deposit with the senior collateral agent in a concentration account is less than $275,000 for three consecutive business days or less than or equal to $200,000 on any day (a “cash sweep period”), the funds in the Company’s deposit accounts will be swept to a concentration account with the senior collateral agent and will be applied first to repay outstanding revolving loans under the Amended Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Amended Facilities.

With the exception of EI, substantially all of Rite Aid Corporation’s 100% owned subsidiaries guarantee the obligations under the Amended Facilities, the secured guaranteed notes and unsecured guaranteed notes. The Company’s obligations under the Amended Facilities and the Subsidiary Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on all of the Subsidiary Guarantors’ cash and cash equivalents, accounts receivable, inventory, prescription files (including eligible script lists), intellectual property (prior to the repayment of the Senior Secured Term Loan) and certain other assets arising therefrom or related thereto (including substantially all of their deposit accounts, collectively, the “ABL priority collateral”) and (ii) a second-priority lien on all of the Subsidiary

Guarantors’ equipment, fixtures, investment property (other than equity interests in subsidiaries), intellectual property (following the repayment of the Senior Secured Term Loan) and all other assets that do not constitute ABL priority collateral, in each case, subject to customary exceptions and limitations. The subsidiary guarantees related to the Company’s Amended Facilities, the secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes, are full and unconditional and joint and several. The Company has no independent assets or operations. Other than EI, the subsidiaries, including joint ventures, that do not guarantee the Amended Facilities and applicable notes, are minor.

The Amended Credit Agreement allows the Company to have outstanding, at any time, up to an aggregate principal amount of $1,500,000 in secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock in addition to borrowings under the Amended Facilities and existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt, split-priority debt, unsecured debt and disqualified preferred stock shall mature or require scheduled payments of principal prior to 90 days after the latest maturity date of any Term Loan or Other Revolving Commitment (each as defined in the Amended Credit Agreement) (excluding bridge facilities allowing extensions on customary terms to at least the date that is 90 days after such date). Subject to the limitations described in the immediately preceding sentence, the Amended Credit Agreement additionally allows the Company to issue or incur an unlimited amount of unsecured debt and disqualified preferred stock so long as a Financial Covenant Effectiveness Period (as defined in the Amended Credit Agreement) is not in effect; provided, however, that certain of the Company’s other outstanding indebtedness limits the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence or other exemptions are not available. The Amended Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Amended Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Amended Facilities are not in default and the Company maintains availability under its revolver of more than $365,000.

The Amended Credit Agreement has a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio of 1.00 to 1.00 (i) on any date on which availability under the Senior Secured Revolving Credit Facility is less than $200,000 or (ii) on the third consecutive business day on which availability under the Senior Secured Revolving Credit Facility is less than $250,000 and, in each case, ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which availability under the revolver is equal to or greater than $250,000. As of May 28, 2022, the Company’s fixed charge coverage ratio was greater than 1.00 to 1.00, and the Company was in compliance with the Amended Credit Agreement’s financial covenant. The Amended Credit Agreement also contains covenants which place restrictions on the incurrence of debt, the payments of dividends, the making of investments, sale of assets, mergers and acquisitions and the granting of liens.

The Amended Credit Agreement provides for customary events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50,000 or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity or require the repayment, repurchase, redemption or defeasance of such debt.

Fiscal 2022 and 2023 Transactions

On April 28, 2021, the Company issued a notice of redemption for all of the 6.125% Notes that were outstanding on May 28, 2021, pursuant to the terms of the indenture of the 6.125% Notes. On May 28, 2021, the Company redeemed 100% of the remaining outstanding 6.125% Notes at par. In connection therewith, the Company recorded a loss on debt retirement of $396 which included unamortized debt issuance costs. The debt repayment and related loss on debt retirement is included in the results of operations and cash flows.

On August 20, 2021, the Company entered into the Second Amendment in order to, among other things, increase the aggregate principal amount of commitments under the Senior Secured Revolving Credit Facility from $2,700,000 to $2,800,000 and decrease the aggregate principal amount of loans outstanding under the Senior Secured Term Loan from $450,000 to $350,000. In connection therewith, the Company recorded a loss on debt modification and retirement of $2,839 which included unamortized debt issuance costs. The debt repayment and related loss on debt modification and retirement is included in the results of operations and cash flows.

On June 13, 2022, the Company announced the commencement of a series of cash tender offers to purchase up to $150,000 aggregate principal amount of the Company’s 7.50% Senior Secured Notes due 2025 (the “2025 Notes”), 8.0% Senior Secured Notes due 2026, 7.70% Notes due 2027 (the “2027 Notes”) and 6.875% Notes due 2028 (the “2028 Notes”), subject to prioritized acceptance levels, a subcap of $100,000 with respect to the 2025 Notes and proration. On June 29, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $114,942 of its 2025 Notes, $51,695 aggregate principal amount of its 2027 Notes and $26,955 aggregate principal amount of its 2028 Notes. The Company anticipates that the purchase will be considered a debt retirement and accordingly, anticipates a gain on debt retirement during the second quarter of fiscal 2023.

Maturities

The aggregate annual principal payments of long-term debt for the remainder of fiscal 2023 and thereafter are as follows: 2023—$0; 2024—$0; 2025—$0; 2026—$600,000; 2027—$2,437,304 and $29,001 thereafter.

XML

Leases

3 Months Ended

May 28, 2022

Leases

Leases

12. Leases

The Company leases most of its retail stores and certain distribution facilities under noncancelable operating and finance leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancelable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases.

The following table is a summary of the Company’s components of net lease cost for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Operating lease cost	$	159,845	$	169,494
Financing lease cost:
Amortization of right-of-use asset		809		1,011
Interest on long-term finance lease liabilities		501		568
Total finance lease costs	$	1,310	$	1,579
Short-term lease costs		457		1,099
Variable lease costs		42,645		46,038
Less: sublease income		(3,223)		(3,343)
Net lease cost	$	201,034	$	214,867

Supplemental cash flow information related to leases for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	175,414	$	176,591
Operating cash flows paid for interest portion of finance leases		501		568
Financing cash flows paid for principal portion of finance leases		945		1,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		57,986		76,314
Finance leases		—		—

Supplemental balance sheet information related to leases as of May 28, 2022 and February 26, 2022 (in thousands, except lease term and discount rate):

	May 28,			February 26,
	2022			2022
Operating leases:
Operating lease right-of-use asset	$	2,723,405		$	2,813,535
Short-term operating lease liabilities	$	574,392		$	575,651
Long-term operating lease liabilities		2,526,607			2,597,090
Total operating lease liabilities	$	3,100,999		$	3,172,741
Finance leases:
Property, plant and equipment, net	$	13,151		$	13,950
Current maturities of long-term debt and lease financing obligations	$	5,016		$	5,544
Lease financing obligations, less current maturities		14,392			14,830
Total finance lease liabilities	$	19,408		$	20,374
Weighted average remaining lease term
Operating leases		7.5			7.7
Finance leases		8.7			8.7
Weighted average discount rate
Operating leases		6.0	%		6.0	%
Finance leases		9.8	%		10.0	%

The following table summarizes the maturity of lease liabilities under finance and operating leases as of May 28, 2022:

	May 28, 2022
	Finance		Operating
Fiscal year	Leases		Leases (1)		Total
2023 (remaining forty weeks)	$	6,065	$	519,021	$	525,086
2024		4,234		647,443		651,677
2025		3,149		554,618		557,767
2026		2,367		465,409		467,776
2027		1,500		383,097		384,597
Thereafter		12,048		1,302,201		1,314,249
Total lease payments		29,363		3,871,789		3,901,152
Less: imputed interest		(9,955)		(770,790)		(780,745)
Total lease liabilities	$	19,408	$	3,100,999	$	3,120,407

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases.

During the thirteen week period ended May 28, 2022, the Company did not enter into any sale-leaseback transactions. During the thirteen week period ended May 29, 2021, the Company sold two owned and operating stores to independent third parties. Net proceeds from the sales were $7,456 for the thirteen week period ended May 29, 2021. Concurrent with these sales, the Company entered into agreements to lease the properties back from the purchasers over a minimum lease term of 15 years. The Company accounted for these leases as operating lease right-of-use assets and corresponding operating lease liabilities in accordance with the Lease Standard. The transaction resulted in a gain of $3,688 which is included in the gain on sale of assets, net for the thirteen week period ended May 29, 2021.

The Company has additional capacity under its outstanding debt agreements to enter into additional sale-leaseback transactions.

XML

Retirement Plans

3 Months Ended

May 28, 2022

Retirement Plans

Retirement Plans

13. Retirement Plans

Net periodic pension expense for the thirteen week periods ended May 28, 2022 and May 29, 2021, for the Company’s defined benefit plan includes the following components:

	Defined Benefit
	Pension Plan
	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Service cost	$	107	$	128
Interest cost		1,264		1,232
Expected return on plan assets		(1,402)		(1,313)
Amortization of unrecognized net loss		—		123
Net periodic pension expense	$	(31)	$	170

During the thirteen week period ended May 28, 2022 the Company contributed $0 to the Defined Benefit Pension Plan. During the remainder of fiscal 2023, the Company expects to contribute $0 to the Defined Benefit Pension Plan.

XML

Segment Reporting

3 Months Ended

May 28, 2022

Segment Reporting

Segment Reporting

14. Segment Reporting

The Company has two reportable segments, its retail drug stores (“Retail Pharmacy”), and its pharmacy services (“Pharmacy Services”) segments.

The Retail Pharmacy segment’s primary business is the sale of prescription drugs and related consultation to its customers. Additionally, the Retail Pharmacy segment sells a full selection of health and beauty aids and personal care products, seasonal merchandise and a large private brand product line. The Pharmacy Services segment offers a full range of pharmacy benefit management services including plan design and administration, formulary management and claims processing. Additionally, the Pharmacy Services segment offers specialty and mail order services, and drug benefits to eligible beneficiaries under the federal government’s Medicare Part D program.

The Company’s chief operating decision makers are its Chief Executive Officer, Chief Financial Officer and several other members of the Executive Leadership Team, (collectively the “CODM”). The CODM has ultimate responsibility for enterprise decisions. The CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, the Retail Pharmacy segment and the Pharmacy Services segment. The Retail Pharmacy and Pharmacy Services segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. The CODM relies on internal management reporting that analyzes enterprise results on certain key performance indicators, namely, revenues, gross profit, and Adjusted EBITDA.

The following is balance sheet information for the Company’s reportable segments:

	Retail		Pharmacy
	Pharmacy		Services		Eliminations(1)		Consolidated
May 28, 2022:
Total Assets	$	6,101,168	$	2,464,224	$	(15,619)	$	8,549,773
Goodwill		43,492		835,644		—		879,136
February 26, 2022:
Total Assets	$	6,068,594	$	2,482,232	$	(21,823)	$	8,529,003
Goodwill		43,492		835,644		—		879,136

(1) As of May 28, 2022 and February 26, 2022, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,619 and $21,823, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products.

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
May 28, 2022:
Revenues	$	4,345,356	$	1,725,857	$	(56,630)	$	6,014,583
Gross Profit		1,097,357		99,372		—		1,196,729
Adjusted EBITDA(2)		73,682		26,448		—		100,130
Additions to property and equipment and intangible assets		78,551		6,873		—		85,424
May 29, 2021:
Revenues	$	4,351,682	$	1,872,282	$	(62,979)	$	6,160,985
Gross Profit		1,169,934		114,941		—		1,284,875
Adjusted EBITDA(2)		94,914		43,963		—		138,877
Additions to property and equipment and intangible assets		60,893		3,707		—		64,600

(1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis.

(2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details.

The following is a reconciliation of net income (loss) to Adjusted EBITDA for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	May 28,		May 29,
	2022		2021
	(13 weeks)		(13 weeks)
Net loss	$	(110,191)	$	(13,057)
Interest expense		48,119		49,121
Income tax expense		3,497		780
Depreciation and amortization		70,073		75,859
LIFO credit		—		(3,993)
Facility exit and impairment charges		66,571		8,831
Loss on debt retirements, net		—		396
Merger and Acquisition-related costs		—		3,886
Stock-based compensation expense		3,334		2,811
Restructuring-related costs		22,646		5,932
Inventory write-downs related to store closings		7,955		472
Litigation and other contractual settlements		18,271		14,000
Gain on sale of assets, net		(29,196)		(6,558)
Other		(949)		397
Adjusted EBITDA	$	100,130	$	138,877

XML

Commitments, Contingencies and Guarantees

3 Months Ended

May 28, 2022

Commitments, Contingencies and Guarantees

Commitments, Contingencies and Guarantees

15. Commitments, Contingencies and Guarantees

Legal Matters and Regulatory Proceedings

The Company is regularly involved in a variety of legal matters including arbitration, litigation (and related settlement discussions), audits by counter parties under our contracts, and other claims, and is subject to regulatory proceedings including audits, inspections, inquiries, investigations, and similar actions by health care, insurance, pharmacy, tax and other governmental authorities arising in the ordinary course of its business, including, without limitation, the matters described below. Substantial damages are sought from the Company in virtually all of these matters. The Company records accruals for outstanding legal matters and applicable regulatory proceedings when it believes it is probable that a loss has been incurred, and the amount can be reasonably estimated. The Company evaluates on a quarterly basis, developments in legal matters and regulatory proceedings that could affect the amount of any existing accrual or that warrant an accrual. If a loss contingency is not both probable and estimable, the Company typically does not establish an accrued liability. With respect to the litigation and other legal proceedings described

below, the Company is unable to estimate the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings.

None of the Company’s accruals for outstanding legal matters or regulatory proceedings are currently material, individually or in the aggregate, to the Company’s consolidated financial position. However, during the course of any proceeding, developments may result in the creation or an increase of an accrual that could be material. Additionally, unfavorable or unexpected outcomes in outstanding legal matters or regulatory proceedings could exceed any accrual and impact the Company’s financial position. Further, even if the Company is successful in its legal proceedings, the Company may incur significant costs and expenses defending itself or others that it is required to indemnify, and such costs and expenses may not be subject to or exceed reimbursement pursuant to any applicable insurance.

The Company’s contingencies are subject to significant uncertainties, many of which are beyond the Company’s control, including, among other factors: (i) the stage of any proceeding and delays in scheduling; (ii) whether class or collective action status is sought and the likelihood of a class being certified; (iii) the outcome of pending or potential appeals, motions and settlement discussions; (iv) the range and magnitude of potential damages, fines or penalties, which are often unspecified or indeterminate; (v) the impact of discovery on the matter; (vi) whether novel or unsettled legal theories are at issue or advanced; (vii) whether there are significant factual issues to be resolved including findings made by juries; (viii) the exercise of discretion in enforcement actions including in the case of certain government agency investigations, whether a qui tam lawsuit (“whistleblower” action) has been filed and whether the government agency makes a decision to intervene in the lawsuit following investigation; and/or (ix) changes in priorities following any change in political administration at the state or federal level.

Employment Litigation.

The Company is currently a defendant in several lawsuits filed in courts in California that contain allegations regarding violations of the California Business and Professions Code, various California employment laws and regulations, industry wage orders, wage-and-hour laws, rules and regulations pertaining primarily to failure to pay overtime, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (the “California Cases”). The Company also is defending a putative employment collective and class action filed in federal court in New York, which raises similar allegations in addition to others about the payment frequency for certain employees (the “New York Case”). Substantial damages are sought from the Company in virtually all of these matters. From time to time, one or more of these matters may be settled.

Some of the California Cases purport or may be determined to be class actions or representative actions under the California Private Attorneys General Act and seek substantial damages and penalties. In June 2021, the Company agreed to settle two of the California Cases in which the plaintiffs brought class-based claims alleging that they and all other similarly situated associates were not paid for time waiting for their bags to be checked. One set of cases involving store associates was settled for $9 million and has concluded, while the other involving distribution center associates was settled for $1.75 million and remains subject to court approval. On October 1, 2021, the Company agreed to settle for $12 million allegations made by a purported class of California store associates that it required such associates to purchase uniforms, and the matter has concluded. The Company has aggressively defended itself and challenged the merits of the lawsuits and, where applicable, allegations that the lawsuits should be certified as class or representative actions.

Usual and Customary Litigation.

The Company is named as a defendant in a number of lawsuits, including the cases below, that allege that the Company’s retail stores overcharged for prescription drugs by not submitting the price available to members of the Rite Aid’s Rx Savings Program as the pharmacy’s usual and customary price, and related theories. The Company is defending itself against these claims. Substantial damages are sought from the Company in virtually all of these matters.

The Company is a defendant in a putative consumer class action lawsuit in the United States District Court for the Southern District of California captioned Byron Stafford v. Rite Aid Corp. A separate lawsuit, Robert Josten v. Rite Aid Corp., was consolidated with this lawsuit in November, 2019. The lawsuit contains allegations that (i) the Company was obligated to charge the plaintiffs’ insurance companies its usual and customary prices for their prescription drugs; and (ii) the Company failed to do so because the prices it reported were not equal to or adjusted to account for the prices that Rite Aid offered to uninsured and underinsured customers through its Rx Savings Program. Although a stay pending the Company’s unsuccessful attempt to compel arbitration has been lifted, the cases are now stayed pending mediation of these matters and another lawsuit raising usual and customary pricing allegations filed in the United States District Court for the Eastern District of Pennsylvania.

On February 6, 2019, Humana, Inc., filed a claim pursuant to a binding arbitration provision of the parties’ agreement alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program prices as its usual and customary prices to Humana. An arbitration hearing was held in this matter in November 2021.  

On April 22, 2022, the arbitrator issued an Opinion and Final Award against the Company for breach of contract awarding Humana $122.6 million, which includes $40.7 million in prejudgment interest (the “Arbitration Award”). The Company believes that the Arbitration Award contains a number of significant factual and legal errors. On June 20, 2022, the Company both opposed Humana’s effort to confirm the Arbitration Award and petitioned the United States District Court for Western District of Kentucky for vacatur of the Arbitration Award, as is its right under the Federal Arbitration Act (“FAA”). As such, the Company has determined that it is not probable that a loss has occurred.

The FAA, as interpreted and applied by federal courts, permits vacatur when, among other things, an arbitrator’s decision: (1) is irreconcilable with the terms of a contract between the parties; (2) rests on a plain legal error that manifests disregard for the law; or (3) incorporates a refusal to consider pertinent, material evidence. Similarly, the FAA, as interpreted and applied by federal courts, permits modification of an arbitrator’s decision to correct an evident material miscalculation of figures. Although the Company cannot make any assurances of success in its efforts, it is the Company’s view that the errors in the Arbitration Award support both vacatur and modification under the FAA, the effect of either of which could be to set aside the Arbitration Award or reduce or eliminate the damages provided for in the Arbitration Award.

The Company is a defendant in two consolidated lawsuits pending in the United States District Court for the District of Minnesota filed in 2020 by various Blue Cross/Blue Shield plans that operate in eight different states (North Carolina, North Dakota, Alabama, Utah, Minnesota, Oregon, Washington and New Jersey) alleging that the Company improperly submitted various usual and customary overcharges by failing to report its Rx Savings Program pricing to several Pharmacy Benefit Managers with which Rite Aid and the insurers had independent contracts. The Company is also defending a lawsuit filed in Delaware state court in 2019 by multiple Centene entities alleging that the

Company overcharged for prescriptions by improperly reporting usual and customary prices that did not include Rx Savings Program pricing. The Company is defending a similar lawsuit filed in 2022 by WellCare in Florida state court.

Drug Utilization Review and Code 1 Litigation

In June 2012, qui tam plaintiff, Loyd F. Schmuckley (“Relator”) filed a complaint under seal against the Company alleging that it failed to comply with certain requirements of California’s Medicaid program between 2007 and 2014. In June 2013, the Company was served with a Civil Investigative Demand (“CID”) by the United States Attorney’s Office for the Eastern District of California regarding (1) the Company’s Drug Utilization Review and prescription dispensing protocol; and (2) the dispensing of drugs designated as “Code 1” by the State of California. Specifically, the Relator alleged that the Company did not perform special verification and documentation for certain medications known as “Code 1” drugs. While the complaint remained under seal, the United States Department of Justice conducted an extensive investigation and ultimately declined to intervene. Although numerous states declined to intervene, in September 2017, the State of California filed a complaint in intervention. The Company filed a motion to dismiss Relator’s and the State of California Department of Justice’s Bureau of Medical Fraud and Elder Abuse respective complaints in January 2018, the hearing was held on March 23, 2018. On September 5, 2018, the court issued an order denying the motion to dismiss. Substantial damages are sought from the Company in this matter. No trial date has been set and as discovery continues, the parties are participating in a mediation process.

Controlled Substances Litigation, Audits and Investigations

The Company, along with various other defendants, is named in multiple opioid-related lawsuits filed by counties, cities, municipalities, Native American tribes, hospitals, third-party payers, and others across the United States. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation (“JPML”) consolidated and transferred more than a thousand federal opioid-related lawsuits that name the Company as a defendant to the multi-district litigation (“MDL”) pending in the United States District Court for the Northern District of Ohio under In re National Prescription Opiate Litigation (Case No. 17-MD-2804). A significant number of similar cases that are not part of the MDL and name the Company as a defendant are also pending in state courts. On June 1, 2022, the JPML ordered that newly filed cases will no longer be transferred to the MDL. The plaintiffs in these opioid-related lawsuits generally allege claims that include public nuisance and negligence theories of liability resulting from the impacts of widespread opioid abuse against defendants along the pharmaceutical supply chain, including manufacturers, wholesale distributors, and retail pharmacies. At this stage of the proceedings, the Company is not able to predict the outcome of the opioid-related lawsuits in which it remains a defendant or estimate a potential range of loss regarding the lawsuits, and is defending itself against all relevant claims. From time to time, some of these cases may be settled, dismissed or otherwise terminated, and additional such cases may be filed.

The Company also has received warrants, subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, the federal and state governments regarding opioids and other controlled substances. The Company has been cooperating with and responding to these investigatory inquiries.

Substantial damages are sought from the Company in virtually all of these matters.

In April 2019, the Company initiated a coverage action styled Rite Aid Corporation et al. v. ACE American Ins. Co. et al. Through this action, the Company is seeking the recovery of defense costs and settlement and/or judgment

costs that may be paid for the opioid-related lawsuits. The action seeks declaratory relief with respect to the obligations of the insurers under the policies at issue in the action and asserts claims for breach of contract and statutory remedies against one of these insurers. Although the trial court determined on the Company’s motion for partial summary judgment that this insurer was obligated to reimburse the Company for its defense costs, on January 10, 2022, the Delaware Supreme Court reversed the trial court’s order and ruled that the insurer had no duty to defend the first MDL suits set for trial based on the specific allegations at issue in those cases. The matter has been remanded to the lower court for further proceedings.

Miscellaneous Litigation and Investigations.

The U.S. Securities and Exchange Commission (“SEC”) is investigating trading in the Company’s securities that occurred in or around January 2017, and has subpoenaed information from the Company and certain employees in connection with that investigation. The Company is cooperating with the SEC in this matter. The Company has received a CID and requests for information with respect to consumer protection laws. The Company is also defending a lawsuit asserting numerous claims based on allegations surrounding the Company’s use of a certain font including in the Company’s rebranded logo.

XML

Supplementary Cash Flow Data

3 Months Ended

May 28, 2022

Supplementary Cash Flow Data

Supplementary Cash Flow Data

16. Supplementary Cash Flow Data

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for interest	$	11,230	$	12,813
Cash payments for income taxes, net	$	13,290	$	556
Equipment financed under capital leases	$	—	$	1,585
Gross borrowings from revolver	$	860,000	$	1,546,000
Gross repayments to revolver	$	569,000	$	1,507,000

Significant components of cash provided by Other Liabilities of $15,327 for the thirteen week period ended May 28, 2022 include cash provided from an increase in accruals relating to store closures and litigation matters.

XML

Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

May 28, 2022

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are of a recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Rite Aid Corporation (“Rite Aid”) and Subsidiaries (together with Rite Aid, the “Company”) Fiscal 2022 10-K.

Revenue Recognition

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen week periods ended May 28, 2022 and May 29, 2021:

	May 28,		May 29,
	2022		2021
In thousands	(13 Weeks)		(13 weeks)
Retail Pharmacy segment:
Pharmacy sales	$	3,053,449	$	2,997,044
Front-end sales		1,261,206		1,321,699
Other revenue		30,701		32,939
Total Retail Pharmacy segment		4,345,356		4,351,682
Pharmacy Services segment		1,725,857		1,872,282
Intersegment elimination		(56,630)		(62,979)
Total revenue	$	6,014,583	$	6,160,985

The Retail Pharmacy segment offered a chain-wide loyalty card program titled wellness+. Individual customers were able to become members of the wellness+ program. Members participating in the wellness+ loyalty card program earned points on a calendar year basis for eligible front-end merchandise purchases and qualifying prescription purchases. The wellness+ program was terminated as of July 1, 2020, with benefits earned as of that date available to be used through the end of calendar 2020. Beginning in December 2020, the Company granted temporary extensions of benefits to certain previous members that were eligible for a discount as of the end of each previous 6 month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent 6 months with no additional purchase requirement. New and existing customers who were not already eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each 6 month period. A final extension was granted on December 31, 2021 through February 26, 2022 at which point all discounts were terminated.

A new loyalty program, Rite Aid Rewards, was initiated on February 27, 2022. Customers that enroll in the new program earn points for each dollar spent on front of store purchases as well as for eligible pharmacy prescriptions. Points can then be converted into a “Rite Aid Rewards” coupon that can be tendered as payment in a future purchase. Each point is worth $0.002. Customers must accumulate 1,000 points and create an online account in order to convert

earned points to a “Rite Aid Rewards” coupon. Unused/unconverted points expire after 90 days. Unredeemed “Rite Aid Rewards” coupons expire 30 days after conversion from points earned.

Points earned pursuant to the Rite Aid Rewards program represent a performance obligation. The value of unredeemed Rite Aid Rewards points is deferred as a contract liability (included in other current liabilities). As members redeem points in the form of a Rite Aid Rewards coupon or when points or unredeemed Rite Aid Rewards coupons expire, the Retail Pharmacy segment recognizes the redeemed/expired portion of the deferred contract liability into revenue. For the thirteen week period ended May 28, 2022, the Company recognized $713 of deferred contract liability into revenue. The Retail Pharmacy segment had accrued contract liabilities of $5,577 and $0 as of May 28, 2022 and February 26, 2022, respectively.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the recognition of deferred tax liabilities and the methodology for calculating income taxes in the interim period. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU was effective for fiscal years beginning after December 15, 2020 (fiscal 2022). The Company adopted ASU 2019-12 effective February 28, 2021 and the adoption of this standard did not have a material impact on the Company’s financial position.

XML

Basis of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

May 28, 2022

Basis of Presentation and Significant Accounting Policies

Schedule of revenues

	May 28,		May 29,
	2022		2021
In thousands	(13 Weeks)		(13 weeks)
Retail Pharmacy segment:
Pharmacy sales	$	3,053,449	$	2,997,044
Front-end sales		1,261,206		1,321,699
Other revenue		30,701		32,939
Total Retail Pharmacy segment		4,345,356		4,351,682
Pharmacy Services segment		1,725,857		1,872,282
Intersegment elimination		(56,630)		(62,979)
Total revenue	$	6,014,583	$	6,160,985

XML

Acquisition (Tables)

3 Months Ended

May 28, 2022

Acquisition

Schedule of purchase price allocation

Final purchase price
Cash consideration	$	89,724
Total		89,724
Final purchase price allocation
Cash and cash equivalents	$	3,494
Accounts receivable		23,860
Inventories		67,745
Prepaid expenses and other current assets		1,857
Total current assets		96,956
Property and equipment		28,229
Operating lease right-of-use assets		143,651
Intangible assets(1)		68,700
Other assets		1,805
Total assets acquired		339,341
Accounts payable		24,166
Accrued salaries, wages and other current liabilities		20,335
Current portion of operating lease liabilities		24,617
Total current liabilities		69,118
Long-term operating lease liabilities		124,023
Other long-term liabilities		166
Total liabilities assumed		193,307
Deferred tax liabilities recorded on purchase		13,951
Net assets acquired		132,083
Bargain purchase gain		(42,359)
Total purchase price	$	89,724

(1)            Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes a final valuation prepared by an independent third party. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s final estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows. The estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation include:

Schedule of estimated fair value of intangible assets and related useful lives as included in the final purchase price allocation

	Estimated Fair Value		Estimated Useful Life (In Years)
Prescription files	$	54,300	10
Tradename		14,400	Indefinite
Total	$	68,700

XML

Restructuring (Tables)

3 Months Ended

May 28, 2022

Restructuring

Schedule of restructuring-related costs

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	11,288	$	616	$	11,904
Professional and other fees relating to restructuring activities (b)		6,083		4,659		10,742
Total restructuring-related costs	$	17,371	$	5,275	$	22,646

	Retail Pharmacy		Pharmacy
	segment		Services segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts (a)	$	—	$	506	$	506
Professional and other fees relating to restructuring activities (b)		1,621		3,805		5,426
Total restructuring-related costs	$	1,621	$	4,311	$	5,932

Schedule of restructuring-related liabilities

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance at February 26, 2022	$	4,257	$	4,463	$	8,720
Additions charged to expense		11,904		10,742		22,646
Cash payments		(5,231)		(11,727)		(16,958)
Balance at May 28, 2022	$	10,930	$	3,478	$	14,408

(a) – Severance and related costs reflect severance accruals, executive search fees, outplacement services and other similar charges associated with ongoing reorganization efforts.

(b) – Professional and other fees include costs incurred in connection with the identification and implementation of initiatives associated with restructuring activities.

XML

Income (Loss) Per Share (Tables)

3 Months Ended

May 28, 2022

Income (Loss) Per Share

Schedule of calculation of basic and diluted income (loss) per share

	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders— basic and diluted	$	(110,191)	$	(13,057)
Denominator:
Basic and diluted weighted average shares		54,348		53,852
Basic and diluted loss per share	$	(2.03)	$	(0.24)

XML

Facility Exit and Impairment Charges (Tables)

3 Months Ended

May 28, 2022

Facility Exit and Impairment Charges

Schedule of amounts relating to facility exit and impairment charges

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Impairment charges	$	35,036	$	4,313
Facility exit charges		31,535		4,518
	$	66,571	$	8,831

Schedule of fair value of long-lived assets measured on recurring and non-recurring basis

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 28, 2022
Long-lived assets held for use	$	—	$	4,192	$	—	$	4,192	$	(35,036)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	4,192	$	—	$	4,192	$	(35,036)

							Fair Values		Total
							as of		Charges
	Level 1		Level 2		Level 3		Impairment Date		May 29, 2021
Long-lived assets held for use	$	—	$	—	$	—	$	—	$	(4,313)
Long-lived assets held for sale	$	—	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	—	$	—	$	(4,313)

Schedule of closed store and distribution center charges related to new closures, changes in assumptions and interest accretion

	Thirteen Week Period
	Ended
	May 28,		May 29,
	2022		2021
Balance—beginning of period	$	18,688	$	3,443
Provision for present value of executory costs for leases exited		26,499		1,708
Changes in assumptions and other adjustments		(191)		1,493
Interest accretion		98		7
Cash payments		(1,692)		(516)
Balance—end of period	$	43,402	$	6,135

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

May 28, 2022

Goodwill and Other Intangible Assets

Schedule of Indefinite-Lived Intangible Assets [Table Text Block]

	May 28, 2022								February 26, 2022
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Non-compete agreements and other(a)	$	199,351	$	(179,046)	$	20,305	3	years	$	197,651	$	(178,958)	$	18,693	3	years
Prescription files		1,026,342		(914,911)		111,431	5	years		1,030,169		(918,773)		111,396	6	years
Customer relationships(a)		388,000		(291,770)		96,230	9	years		388,000		(286,090)		101,910	10	years
CMS license		57,500		(17,478)		40,022	4	years		57,500		(15,372)		42,128	5	years
Claims adjudication and other developed software		58,985		(58,423)		562	0	years		58,985		(56,316)		2,669	1	years
Backlog		11,500		(11,500)		—	0	years		11,500		(11,500)		—	0	years
Total finite	$	1,741,678	$	(1,473,128)		268,550			$	1,743,805	$	(1,467,009)	$	276,796
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,756,078	$	(1,473,128)	$	282,950			$	1,758,205	$	(1,467,009)	$	291,196

(a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	May 28, 2022								February 26, 2022
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Non-compete agreements and other(a)	$	199,351	$	(179,046)	$	20,305	3	years	$	197,651	$	(178,958)	$	18,693	3	years
Prescription files		1,026,342		(914,911)		111,431	5	years		1,030,169		(918,773)		111,396	6	years
Customer relationships(a)		388,000		(291,770)		96,230	9	years		388,000		(286,090)		101,910	10	years
CMS license		57,500		(17,478)		40,022	4	years		57,500		(15,372)		42,128	5	years
Claims adjudication and other developed software		58,985		(58,423)		562	0	years		58,985		(56,316)		2,669	1	years
Backlog		11,500		(11,500)		—	0	years		11,500		(11,500)		—	0	years
Total finite	$	1,741,678	$	(1,473,128)		268,550			$	1,743,805	$	(1,467,009)	$	276,796
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,756,078	$	(1,473,128)	$	282,950			$	1,758,205	$	(1,467,009)	$	291,196

(a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

XML

Indebtedness and Credit Agreements (Tables)

3 Months Ended

May 28, 2022

Indebtedness and Credit Agreements

Summary of indebtedness and lease financing obligations

	May 28,		February 26,
	2022		2022
Secured Debt:
Senior secured revolving credit facility due August 2026 ($1,000,000 and $709,000 face value less unamortized debt issuance costs of $16,992 and $18,010)		983,008		690,990
FILO Term Loan due August 2026 ($350,000 face value less unamortized debt issuance costs of $2,211 and $2,344)		347,789		347,656
		1,330,797		1,038,646
Second Lien Secured Debt:
7.5% senior secured notes due July 2025 ($600,000 face value less unamortized debt issuance costs of $6,311 and $6,824)		593,689		593,176
8.0% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $13,628 and $14,397)		836,290		835,521
		1,429,979		1,428,697
Unguaranteed Unsecured Debt:
7.7% notes due February 2027 ($237,386 face value less unamortized debt issuance costs of $609 and $642)		236,777		236,744
6.875% fixed-rate senior notes due December 2028 ($29,001 face value less unamortized debt issuance costs of $98 and $102)		28,903		28,899
		265,680		265,643
Lease financing obligations		19,408		20,374
Total debt		3,045,864		2,753,360
Current maturities of long-term debt and lease financing obligations		(5,016)		(5,544)
Long-term debt and lease financing obligations, less current maturities	$	3,040,848	$	2,747,816

XML

Leases (Tables)

3 Months Ended

May 28, 2022

Leases

Schedule of components of net lease cost

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Operating lease cost	$	159,845	$	169,494
Financing lease cost:
Amortization of right-of-use asset		809		1,011
Interest on long-term finance lease liabilities		501		568
Total finance lease costs	$	1,310	$	1,579
Short-term lease costs		457		1,099
Variable lease costs		42,645		46,038
Less: sublease income		(3,223)		(3,343)
Net lease cost	$	201,034	$	214,867

Schedule of supplemental cash flow information related to leases

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	175,414	$	176,591
Operating cash flows paid for interest portion of finance leases		501		568
Financing cash flows paid for principal portion of finance leases		945		1,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		57,986		76,314
Finance leases		—		—

Schedule of supplemental balance sheet information related to leases

	May 28,			February 26,
	2022			2022
Operating leases:
Operating lease right-of-use asset	$	2,723,405		$	2,813,535
Short-term operating lease liabilities	$	574,392		$	575,651
Long-term operating lease liabilities		2,526,607			2,597,090
Total operating lease liabilities	$	3,100,999		$	3,172,741
Finance leases:
Property, plant and equipment, net	$	13,151		$	13,950
Current maturities of long-term debt and lease financing obligations	$	5,016		$	5,544
Lease financing obligations, less current maturities		14,392			14,830
Total finance lease liabilities	$	19,408		$	20,374
Weighted average remaining lease term
Operating leases		7.5			7.7
Finance leases		8.7			8.7
Weighted average discount rate
Operating leases		6.0	%		6.0	%
Finance leases		9.8	%		10.0	%

Schedule of minimum lease payments, financing leases

	May 28, 2022
	Finance		Operating
Fiscal year	Leases		Leases (1)		Total
2023 (remaining forty weeks)	$	6,065	$	519,021	$	525,086
2024		4,234		647,443		651,677
2025		3,149		554,618		557,767
2026		2,367		465,409		467,776
2027		1,500		383,097		384,597
Thereafter		12,048		1,302,201		1,314,249
Total lease payments		29,363		3,871,789		3,901,152
Less: imputed interest		(9,955)		(770,790)		(780,745)
Total lease liabilities	$	19,408	$	3,100,999	$	3,120,407

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases.

Schedule of minimum lease payments, operating leases

	May 28, 2022
	Finance		Operating
Fiscal year	Leases		Leases (1)		Total
2023 (remaining forty weeks)	$	6,065	$	519,021	$	525,086
2024		4,234		647,443		651,677
2025		3,149		554,618		557,767
2026		2,367		465,409		467,776
2027		1,500		383,097		384,597
Thereafter		12,048		1,302,201		1,314,249
Total lease payments		29,363		3,871,789		3,901,152
Less: imputed interest		(9,955)		(770,790)		(780,745)
Total lease liabilities	$	19,408	$	3,100,999	$	3,120,407

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $34 million due in the future under noncancelable leases.

During the thirteen week period ended May 28, 2022, the Company did not enter into any sale-leaseback transactions. During the thirteen week period ended May 29, 2021, the Company sold two owned and operating stores to independent third parties. Net proceeds from the sales were $7,456 for the thirteen week period ended May 29, 2021. Concurrent with these sales, the Company entered into agreements to lease the properties back from the purchasers over a minimum lease term of 15 years. The Company accounted for these leases as operating lease right-of-use assets and corresponding operating lease liabilities in accordance with the Lease Standard. The transaction resulted in a gain of $3,688 which is included in the gain on sale of assets, net for the thirteen week period ended May 29, 2021.

XML

Retirement Plans (Tables)

3 Months Ended

May 28, 2022

Retirement Plans

Summary of net periodic pension expense for the defined benefit plans

	Defined Benefit
	Pension Plan
	Thirteen Week Period Ended
	May 28,		May 29,
	2022		2021
Service cost	$	107	$	128
Interest cost		1,264		1,232
Expected return on plan assets		(1,402)		(1,313)
Amortization of unrecognized net loss		—		123
Net periodic pension expense	$	(31)	$	170

XML

Segment Reporting (Tables)

3 Months Ended

May 28, 2022

Segment Reporting

Schedule of balance sheet information for the Company's reportable segments

	Retail		Pharmacy
	Pharmacy		Services		Eliminations(1)		Consolidated
May 28, 2022:
Total Assets	$	6,101,168	$	2,464,224	$	(15,619)	$	8,549,773
Goodwill		43,492		835,644		—		879,136
February 26, 2022:
Total Assets	$	6,068,594	$	2,482,232	$	(21,823)	$	8,529,003
Goodwill		43,492		835,644		—		879,136

(1) As of May 28, 2022 and February 26, 2022, intersegment eliminations include netting of the Pharmacy Services segment long-term deferred tax liability of $0 against the Retail Pharmacy segment long-term deferred tax asset for consolidation purposes in accordance with ASC 740, and intersegment accounts receivable of $15,619 and $21,823, respectively, that represents amounts owed from the Pharmacy Services segment to the Retail Pharmacy segment that are created when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products.

Schedule of reconciliation of the Company's business segments to the condensed consolidated financial statements

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
May 28, 2022:
Revenues	$	4,345,356	$	1,725,857	$	(56,630)	$	6,014,583
Gross Profit		1,097,357		99,372		—		1,196,729
Adjusted EBITDA(2)		73,682		26,448		—		100,130
Additions to property and equipment and intangible assets		78,551		6,873		—		85,424
May 29, 2021:
Revenues	$	4,351,682	$	1,872,282	$	(62,979)	$	6,160,985
Gross Profit		1,169,934		114,941		—		1,284,875
Adjusted EBITDA(2)		94,914		43,963		—		138,877
Additions to property and equipment and intangible assets		60,893		3,707		—		64,600

(1) Intersegment eliminations include intersegment revenues and corresponding cost of revenues that occur when Pharmacy Services segment customers use Retail Pharmacy segment stores to purchase covered products. When this occurs, both the Retail Pharmacy and Pharmacy Services segments record the revenue on a stand-alone basis.

(2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in MD&A for additional details.

Schedule of reconciliation of net (loss) income to Adjusted EBITDA

	May 28,		May 29,
	2022		2021
	(13 weeks)		(13 weeks)
Net loss	$	(110,191)	$	(13,057)
Interest expense		48,119		49,121
Income tax expense		3,497		780
Depreciation and amortization		70,073		75,859
LIFO credit		—		(3,993)
Facility exit and impairment charges		66,571		8,831
Loss on debt retirements, net		—		396
Merger and Acquisition-related costs		—		3,886
Stock-based compensation expense		3,334		2,811
Restructuring-related costs		22,646		5,932
Inventory write-downs related to store closings		7,955		472
Litigation and other contractual settlements		18,271		14,000
Gain on sale of assets, net		(29,196)		(6,558)
Other		(949)		397
Adjusted EBITDA	$	100,130	$	138,877

XML

Supplementary Cash Flow Data (Tables)

3 Months Ended

May 28, 2022

Supplementary Cash Flow Data

Schedule of supplementary cash flow data

	Thirteen Week Period Ended
	May 28, 2022		May 29, 2021
Cash paid for interest	$	11,230	$	12,813
Cash payments for income taxes, net	$	13,290	$	556
Equipment financed under capital leases	$	—	$	1,585
Gross borrowings from revolver	$	860,000	$	1,546,000
Gross repayments to revolver	$	569,000	$	1,507,000

XML

Basis of Presentation and Significant Accounting Policies - Sales (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Product Class
Total revenue	$ 6,014,583	$ 6,160,985
Intersegment elimination
Product Class
Revenues	(56,630)	(62,979)
Total revenue	(56,630)	(62,979)
Retail Pharmacy
Product Class
Other revenue	30,701	32,939
Total revenue	4,345,356	4,351,682
Pharmacy sales
Product Class
Revenues	3,053,449	2,997,044
Front end sales
Product Class
Revenues	1,261,206	1,321,699
Pharmacy Services
Product Class
Revenues	$ 1,725,857	$ 1,872,282

XML

Basis of Presentation and Significant Accounting Policies - FY thru Revenue (Details)		3 Months Ended	12 Months Ended
	Feb. 27, 2022 USD ($) Point	May 28, 2022 USD ($)	Feb. 26, 2022 USD ($)
Revenue Recognition
Measurement period		6 months
Liability recognized into revenue		$ 713,000
Retail Pharmacy
Revenue Recognition
Value of each reward point earned	$ 0.002
Minimum points required for conversion into rewards | Point	1,000
Threshold period for expiry of unconverted points	90 days
Threshold period for expiry of unredeemed rewards	30 days
Accrued contract liabilities		$ 5,577,000	$ 0
Prescription files
Intangible Assets
Remaining Weighted Average Amortization Period		5 years	6 years
Customer relationships
Intangible Assets
Remaining Weighted Average Amortization Period		9 years	10 years
CMS license
Intangible Assets
Remaining Weighted Average Amortization Period		4 years	5 years

XML

Acquisition (Details) - Bartell Drug Company $ in Thousands	Dec. 18, 2020 USD ($) item
Business Acquisition [Line Items]
Cash consideration | $	$ 89,724
Number of stores	67
Number of distribution centers	1
Percentage of ownership in subsidiary	100.00%

XML

Acquisition - Purchase price allocation (Details) - Bartell Drug Company - USD ($) $ in Thousands		3 Months Ended
	Dec. 18, 2020	Nov. 27, 2021	Feb. 27, 2021
Preliminary purchase price
Cash consideration	$ 89,724
Purchase price	89,724
Preliminary purchase price allocation
Cash and cash equivalents	3,494
Accounts receivable	23,860
Inventories	67,745
Prepaid expenses and other current assets	1,857
Total current assets	96,956
Property and equipment	28,229
Operating lease right-of-use assets	143,651
Intangible assets	68,700
Other assets	1,805
Total assets acquired	339,341
Accounts payable	24,166
Accrued salaries, wages and other current liabilities	20,335
Current portion of operating lease liabilities	24,617
Total current liabilities	69,118
Long-term operating lease liabilities	124,023
Other long term liabilities	166
Total liabilities assumed	193,307
Deferred tax liabilities recorded on purchase	13,951
Net assets acquired	132,083
Bargain purchase gain	(42,359)	$ (42,359)	$ (47,705)
Purchase price	$ 89,724

XML

Acquisition - Intangible assets acquired (Details) - Bartell Drug Company $ in Thousands	Dec. 18, 2020 USD ($)
Business Acquisition [Line Items]
Intangible assets acquired	$ 68,700
Trademarks
Business Acquisition [Line Items]
Intangible assets acquired	14,400
Prescription files
Business Acquisition [Line Items]
Intangible assets acquired	$ 54,300
Estimated Useful Life	10 years

XML

Acquisition - Acquisition costs (Details) - USD ($) $ in Thousands		3 Months Ended
	Dec. 18, 2020	May 28, 2022	Nov. 27, 2021	May 29, 2021	Feb. 27, 2021
Business Acquisition [Line Items]
Merger and Acquisition-related costs				$ 3,886
Bartell Drug Company
Business Acquisition [Line Items]
Bargain purchase gain	$ 42,359		$ 42,359		$ 47,705
Loss on Bartell acquisition			$ 5,346
Merger and Acquisition-related costs		$ 0		$ 3,886

XML

Restructuring (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Restructuring related liabilities
Restructuring expense	$ 22,646	$ 5,932
Anticipated restructuring-related costs	60,000
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member]
Restructuring related liabilities
Balance-beginning of period	8,720
Restructuring expense	22,646	5,932
Cash payments	(16,958)
Balance-end of period	14,408
Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	22,646
Severance and related costs
Restructuring related liabilities
Balance-beginning of period	4,257
Restructuring expense	11,904	506
Cash payments	(5,231)
Balance-end of period	10,930
Severance and related costs | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	11,904
Professional and other fees
Restructuring related liabilities
Balance-beginning of period	4,463
Restructuring expense	10,742	5,426
Cash payments	(11,727)
Balance-end of period	3,478
Professional and other fees | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	10,742
Retail Pharmacy | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member]
Restructuring related liabilities
Restructuring expense		1,621
Retail Pharmacy | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	17,371
Retail Pharmacy | Severance and related costs | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	11,288
Retail Pharmacy | Professional and other fees
Restructuring related liabilities
Restructuring expense		1,621
Retail Pharmacy | Professional and other fees | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	6,083
Pharmacy Services | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member]
Restructuring related liabilities
Restructuring expense		4,311
Pharmacy Services | Reorganization Of Executive Management Team, Ongoing Workforce Reduction And Consolidation, And Transformation Initiatives [Member] | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	5,275
Pharmacy Services | Severance and related costs
Restructuring related liabilities
Restructuring expense		506
Pharmacy Services | Severance and related costs | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	616
Pharmacy Services | Professional and other fees
Restructuring related liabilities
Restructuring expense		$ 3,805
Pharmacy Services | Professional and other fees | Selling, general and administrative expenses
Restructuring related liabilities
Restructuring expense	$ 4,659

XML

Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Numerator:
Net loss attributable to common stockholders - basic	$ (110,191)	$ (13,057)
Net loss attributable to common stockholders - diluted	$ (110,191)	$ (13,057)
Denominator:
Basic weighted average shares	54,348	53,852
Diluted weighted average shares	54,348	53,852
Basic loss per share	$ (2.03)	$ (0.24)
Diluted loss per share	$ (2.03)	$ (0.24)
Stock options
Antidilutive securities excluded from computation of income per share
Shares excluded from the computation of diluted income per share	700	773
Restricted stock
Antidilutive securities excluded from computation of income per share
Shares excluded from the computation of diluted income per share	1,247	1,240

XML

Facility Exit and Impairment Charges (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021	Feb. 26, 2022
Lease termination and impairment charges
Facility exit and impairment charges	$ 66,571	$ 8,831
Carrying value of long-lived assets	39,228	4,313
Operating right-of-use assets	2,723,405		$ 2,813,535
Nonrecurring basis
Lease termination and impairment charges
Impairment charges	35,036	4,313
Impairment Charges, Total	35,036	4,313
Impairment charges
Lease termination and impairment charges
Facility exit and impairment charges	35,036	4,313
Closed stores or stores approved for closure
Lease termination and impairment charges
Facility exit and impairment charges	$ 31,535	$ 4,518

XML

Facility Exit and Impairment Charges - Fair value (Details) - Nonrecurring basis - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Non Financial Assets Measured on a Non Recurring Basis
Fair value of Long-lived assets held for use	$ 4,192
Fair value of Total	4,192
Long-lived assets held and used, impairment charges	(35,036)	$ (4,313)
Total Charges	(35,036)	(4,313)
Total
Non Financial Assets Measured on a Non Recurring Basis
Fair value of Total	4,192	$ 0
Level 2
Non Financial Assets Measured on a Non Recurring Basis
Fair value of Long-lived assets held for use	4,192
Fair value of Total	$ 4,192

XML

Facility Exit and Impairment Charges - Closed Store Liability rollforward (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Closed store and distribution center charges
Provision for present value of executory costs for leases exited	$ 22,646	$ 5,932
Revenues and operating losses of closed stores or stores approved for closure
Loss before income taxes	(106,694)	(12,277)
Depreciation and amortization	70,073	75,859
Facility exit charges
Closed store and distribution center charges
Balance-beginning of period	18,688	3,443
Provision for present value of executory costs for leases exited	26,499	1,708
Changes in assumptions and other adjustments	(191)	1,493
Interest accretion	98	7
Cash payments	(1,692)	(516)
Balance-end of period	$ 43,402	$ 6,135

XML

Fair Value Measurements (Details) - USD ($) $ in Thousands	May 28, 2022	Feb. 26, 2022
Other Financial Instruments
Held to maturity investments	$ 7,186	$ 7,406
Level 1
Other Financial Instruments
Carrying value of total long-term indebtedness	3,026,456	2,732,986
Estimated fair value of total long-term indebtedness	$ 2,677,190	$ 2,661,122

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021	Feb. 26, 2022
Income Taxes
Income tax (benefit) expense	$ 3,497	$ 780
Estimated effective tax rate (as a percent)	3.30%	(6.40%)
Increase in valuation allowance to offset the current year deferred state tax benefits (as a percent)	(37.60%)	(18.50%)
Decrease in unrecognized tax benefits related to state exposures	$ 25,130
Valuation allowance against net deferred tax assets	$ 1,862,823		$ 1,822,710

XML

Medicare Part D (Details) - USD ($) $ in Thousands			3 Months Ended
	Jan. 24, 2022	Aug. 12, 2021	Feb. 26, 2022	Aug. 28, 2021	May 28, 2022	Mar. 31, 2022
Statutory Accounting Practices [Line Items]
Minimum amount of capital and surplus required by regulatory requirements						$ 8,323
Accounts receivable, net			$ 1,343,496		$ 1,449,745
Medicare Part D
Remaining receivable for receivables sold to third party			34,898		36,147
Accrued salaries, wages and other current liabilities			780,632		787,591
February 2021 Receivable Purchase Agreement
Medicare Part D
Amount of receivables sold under Receivable Purchase Agreement	$ 400,680
Sale price for receivables sold	387,035
Receipts from sale of receivables	$ 359,388
Remaining receivable for receivables sold to third party					27,647
Loss on sale of receivable			13,645
August 2021 Receivable Purchase Agreement
Medicare Part D
Amount of receivables sold under Receivable Purchase Agreement		$ 271,829
Sale price for receivables sold		258,116
Receipts from sale of receivables		$ 239,360
Remaining receivable for receivables sold to third party					18,756
Loss on sale of receivable				$ 13,713
EI (Elixir Insurance)
Statutory Accounting Practices [Line Items]
Accounts receivable, net			$ 63,203		$ 155,397

XML

Manufacturer Rebates Receivables (Details) - USD ($) $ in Thousands	May 28, 2022	Feb. 26, 2022
Manufacturer Rebates Receivables
Manufacturer rebates receivables	$ 563,389	$ 535,620
Allowance for Doubtful Accounts Receivable		$ 18,796
Manufacturers Rebates Receivables [Member]
Manufacturer Rebates Receivables
Allowance for Doubtful Accounts Receivable	$ 15,295

XML

Goodwill and Other Intangibles - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	Feb. 26, 2022
Goodwill
Accumulated impairment losses	$ 803,712	$ 803,712
Carrying amount of goodwill
Beginning Balance	879,136
Goodwill impairment	0
Ending Balance	879,136
Pharmacy Services
Goodwill
Accumulated impairment losses	$ 835,644

XML

Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	May 28, 2022	Feb. 26, 2022
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Goodwill impairment	$ 0
Accumulated impairment losses	803,712	$ 803,712
Gross Carrying Amount, Finite Lived	1,741,678	1,743,805
Accumulated Amortization	(1,473,128)	(1,467,009)
Net	268,550	276,796
Gross Carrying Amount, Total	1,756,078	1,758,205
Net, Total	282,950	291,196
Other intangibles, net	282,950	291,196
Trademarks
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Indefinite Lived	14,400	14,400
Noncompete agreements and other
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	199,351	197,651
Accumulated Amortization	(179,046)	(178,958)
Net	$ 20,305	$ 18,693
Remaining Weighted Average Amortization Period	3 years	3 years
Prescription files
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	$ 1,026,342	$ 1,030,169
Accumulated Amortization	(914,911)	(918,773)
Net	$ 111,431	$ 111,396
Remaining Weighted Average Amortization Period	5 years	6 years
Customer relationships
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	$ 388,000	$ 388,000
Accumulated Amortization	(291,770)	(286,090)
Net	$ 96,230	$ 101,910
Remaining Weighted Average Amortization Period	9 years	10 years
CMS license
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	$ 57,500	$ 57,500
Accumulated Amortization	(17,478)	(15,372)
Net	$ 40,022	$ 42,128
Remaining Weighted Average Amortization Period	4 years	5 years
Claims adjudication and other developed software
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	$ 58,985	$ 58,985
Accumulated Amortization	(58,423)	(56,316)
Net	$ 562	$ 2,669
Remaining Weighted Average Amortization Period	0 years	1 year
Backlog
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite Lived	$ 11,500	$ 11,500
Accumulated Amortization	$ (11,500)	$ (11,500)
Remaining Weighted Average Amortization Period	0 years	0 years
EI (Elixir Insurance) | CMS license
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Remaining Weighted Average Amortization Period	5 years	19 years

XML

Goodwill and Other Intangible Assets - Unfavorable lease intangibles and amortization expense (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Goodwill and Other Intangible Assets
Amortization expense for intangible assets and liabilities	$ 20,626	$ 20,460
Anticipated annual amortization expense for intangible assets and liabilities
2023	71,185
2024	57,613
2025	46,393
2026	35,802
2027	$ 28,815

XML

Indebtedness and Credit Agreements - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands	Jun. 13, 2022	May 28, 2022	Feb. 26, 2022	May 28, 2021	Dec. 20, 2018
Indebtedness and credit agreements
Lease financing obligations		$ 19,408	$ 20,374
Total Debt		3,045,864	2,753,360
Current maturities of long-term debt and lease financing obligations		5,016	5,544
Long-term debt and lease financing obligations, less current maturities		3,040,848	2,747,816
Senior Secured Debt [Member]
Indebtedness and credit agreements
Long-term debt		1,330,797	1,038,646
FILO term loan due December 2023
Indebtedness and credit agreements
Principal amount of debt					$ 450,000
FILO term loan due August 2026 [Member]
Indebtedness and credit agreements
Long-term debt		347,789	347,656
Principal amount of debt		350,000	2,211
Unamortized debt issuance costs		2,344
Senior secured revolving credit facility due August 2026 [Member]
Indebtedness and credit agreements
Long-term debt		983,008	690,990
Principal amount of debt		1,000,000	709,000
Unamortized debt issuance costs		16,992	18,010
Second Lien Secured Debt
Indebtedness and credit agreements
Long-term debt		1,429,979	1,428,697
7.5% senior notes due July 2025
Indebtedness and credit agreements
Long-term debt		$ 593,689	$ 593,176
Debt instrument, stated interest rate (as a percent)	7.50%	7.50%	7.50%
Principal amount of debt		$ 600,000	$ 600,000
Unamortized debt issuance costs		6,311	6,824
8.0% senior secured notes due 2026
Indebtedness and credit agreements
Long-term debt		$ 836,290	$ 835,521
Debt instrument, stated interest rate (as a percent)		8.00%	8.00%
Principal amount of debt		$ 849,918	$ 849,918
Unamortized debt issuance costs		13,628	14,397
6.125% senior notes due April 2023
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)				6.125%
Unguaranteed Unsecured Debt
Indebtedness and credit agreements
Long-term debt		265,680	265,643
7.7% notes due February 2027
Indebtedness and credit agreements
Long-term debt		$ 236,777	$ 236,744
Debt instrument, stated interest rate (as a percent)		7.70%	7.70%
Principal amount of debt		$ 237,386	$ 237,386
Unamortized debt issuance costs		609	642
6.875% fixed-rate senior notes due December 2028
Indebtedness and credit agreements
Long-term debt		$ 28,903	$ 28,899
Debt instrument, stated interest rate (as a percent)		6.875%	6.875%
Principal amount of debt		$ 29,001	$ 29,001
Unamortized debt issuance costs		$ 98	$ 102

XML

Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands		3 Months Ended
	Aug. 20, 2021	May 28, 2022	Feb. 26, 2022	May 28, 2021	Dec. 20, 2018
Credit facility
Cash sweep, 3-day minimum threshold		$ 275,000
Cash sweep, 1-day minimum threshold		$ 200,000
Rite Aid Lease Management Company
Credit facility
Ownership interest (as a percent)		100.00%
Senior secured credit facility
Credit facility
Outstanding borrowings		$ 1,350,000
Maximum amount of accumulated cash on hand		200,000
Amount of debt allowed to be outstanding		1,500,000
Threshold amount of debt		$ 750,000
Number of days relating to debt threshold		90 days
Minimum principal balance for which non-payment causes default		$ 50,000
Senior secured credit facility | Minimum
Credit facility
Fixed charge coverage ratio		1.00
Senior secured revolving credit facility due December 2023
Credit facility
Maximum borrowing capacity					$ 2,700,000
Letters of credit outstanding		$ 127,696
Additional borrowing capacity		1,672,304
Senior secured revolving credit facility due December 2023 | Minimum
Credit facility
Additional borrowing capacity		365,000
Threshold availability on thirtieth consecutive day		250,000
Senior secured revolving credit facility due December 2023 | Maximum
Credit facility
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements		200,000
Threshold availability on the third consecutive business day		250,000
FILO term loan due December 2023
Credit facility
Maximum borrowing capacity					450,000
Principal amount of debt					450,000
FILO term loan due August 2026 [Member]
Credit facility
Maximum borrowing capacity	$ 350,000
Principal amount of debt		350,000	$ 2,211
FILO term loan due August 2026 [Member] | LIBOR
Credit facility
Percentage points added to the reference rate	2.75%
FILO term loan due August 2026 [Member] | Citibank's base rate
Credit facility
Percentage points added to the reference rate	1.75%
Senior secured revolving credit facility due August 2026 [Member]
Credit facility
Maximum borrowing capacity	$ 2,800,000
Principal amount of debt		$ 1,000,000	$ 709,000
Period triggering springing maturity	91 days
Senior secured revolving credit facility due August 2026 [Member] | Minimum
Credit facility
Credit facility commitment fee (as a percent)	0.25%
Senior secured revolving credit facility due August 2026 [Member] | Maximum
Credit facility
Credit facility commitment fee (as a percent)	0.375%
Senior secured revolving credit facility due August 2026 [Member] | LIBOR | Minimum
Credit facility
Percentage points added to the reference rate	1.25%
Senior secured revolving credit facility due August 2026 [Member] | LIBOR | Maximum
Credit facility
Percentage points added to the reference rate	1.75%
Senior secured revolving credit facility due August 2026 [Member] | Citibank's base rate | Minimum
Credit facility
Percentage points added to the reference rate	0.25%
Senior secured revolving credit facility due August 2026 [Member] | Citibank's base rate | Maximum
Credit facility
Percentage points added to the reference rate	0.75%
Senior secured revolving credit facility due January 2020
Credit facility
Maximum borrowing capacity					$ 2,700,000
6.125% senior notes due April 2023
Credit facility
Debt instrument, stated interest rate (as a percent)				6.125%

XML

Indebtedness and Credit Agreement - Transactions and Maturity (Details) - USD ($)			3 Months Ended
	Jun. 13, 2022	May 28, 2021	May 28, 2022	May 29, 2021	Jun. 29, 2022	Feb. 26, 2022
Indebtedness and credit agreements
Gain (loss) on debt retirements, net				$ (396,000)
Maturities
2023			$ 0
2024			0
2025			0
2026			600,000
2027			2,437,304
thereafter			29,001
6.125% senior notes due April 2023
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)		6.125%
Gain (loss) on debt retirements and modification			$ (396,000)
Percentage of outstanding principal amount redeemed		100.00%
6.875% fixed-rate senior notes due December 2028
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)			6.875%			6.875%
Face amount of debt repurchased					$ 26,955,000
Principal amount of debt			$ 29,001,000			$ 29,001,000
7.7% notes due February 2027
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)			7.70%			7.70%
Face amount of debt repurchased					51,695,000
Principal amount of debt			$ 237,386,000			$ 237,386,000
7.5% senior notes due July 2025
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)	7.50%		7.50%			7.50%
Debt Instrument, Sun Cap Amount	$ 100,000,000
Face amount of debt repurchased	$ 150,000,000				$ 114,942,000
Principal amount of debt			$ 600,000,000			$ 600,000,000
8.0% senior secured notes due 2026,
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)	8.00%
7.70% senior secured notes due 2027
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)	7.70%
6.875% senior secured notes due 2028
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)	6.875%
8.0% senior secured notes due 2026
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)			8.00%			8.00%
Principal amount of debt			$ 849,918,000			$ 849,918,000
Senior secured credit facility
Indebtedness and credit agreements
Gain (loss) on debt retirements and modification			(2,839,000)
FILO term loan due August 2026 [Member]
Indebtedness and credit agreements
Principal amount of debt			350,000,000			2,211,000
Senior secured revolving credit facility due August 2026 [Member]
Indebtedness and credit agreements
Principal amount of debt			$ 1,000,000,000			$ 709,000,000

XML

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Property, Plant and Equipment [Line Items]
Operating lease cost	$ 159,845	$ 169,494
Financing lease cost:
Amortization of right-of-use asset	809	1,011
Interest on long-term finance lease liabilities	501	568
Total finance lease costs	1,310	1,579
Short-term lease costs	457	1,099
Variable lease costs	42,645	46,038
Less: sublease income	(3,223)	(3,343)
Net lease cost	$ 201,034	$ 214,867
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	5 years
Initial terms of noncancellable finance leases	5 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	22 years
Initial terms of noncancellable finance leases	22 years
Equipment | Minimum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	3 years
Equipment | Maximum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	10 years

XML

Leases - Supplemental cash flow information related to leases (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$ 175,414	$ 176,591
Operating cash flows paid for interest portion of finance leases	501	568
Financing cash flows paid for principal portion of finance leases	945	1,111
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	57,986	76,314
Finance leases	$ 0	$ 0

XML

Leases - Supplemental BS Information (Details) - USD ($) $ in Thousands	May 28, 2022	Feb. 26, 2022
Operating leases:
Operating lease right-of-use assets	$ 2,723,405	$ 2,813,535
Short-term operating lease liabilities	574,392	575,651
Long-term operating lease liabilities	2,526,607	2,597,090
Total operating lease liabilities	3,100,999	3,172,741
Finance leases:
Property, plant and equipment, net	985,121	989,167
Current maturities of long-term debt and lease financing obligations	$ 5,016	$ 5,544
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Long-term Debt and Capital Lease Obligations, Current	Long-term Debt and Capital Lease Obligations, Current
Lease financing obligations, less current maturities	$ 14,392	$ 14,830
Total finance lease liabilities	$ 19,408	$ 20,374
Weighted average remaining lease term
Operating leases (in years)	7 years 6 months	7 years 8 months 12 days
Finance leases (in years)	8 years 8 months 12 days	8 years 8 months 12 days
Weighted average discount rate
Operating leases (as a percent)	6.00%	6.00%
Finance leases (as a percent)	9.80%	10.00%
Finance Leased Assets [Member]
Finance leases:
Property, plant and equipment, net	$ 13,151	$ 13,950

XML

Leases - Maturity of lease liabilities under finance and operating leases (Details) - USD ($) $ in Thousands	May 28, 2022	Feb. 26, 2022
Finance Leases, ASC842
2023 (remaining forty weeks)	$ 6,065
2024	4,234
2025	3,149
2026	2,367
2027	1,500
Thereafter	12,048
Total lease payments	29,363
Less: imputed interest	(9,955)
Total finance lease liabilities	19,408	$ 20,374
Operating Leases, ASC842
2023 (remaining thirty-nine weeks)	519,021
2024	647,443
2025	554,618
2026	465,409
2027	383,097
Thereafter	1,302,201
Total lease payments	3,871,789
Less: imputed interest	(770,790)
Total operating lease liabilities	3,100,999	$ 3,172,741
Minimum sublease rentals	34,000
Operating and finance leases, ASC842
2023 (remaining thirty-nine weeks)	525,086
2024	651,677
2025	557,767
2026	467,776
2027	384,597
Thereafter	1,314,249
Total lease payments	3,901,152
Less: imputed interest	(780,745)
Total lease liabilities	$ 3,120,407

XML

Leases - Sale Leaseback (Details) $ in Thousands	3 Months Ended
	May 29, 2021 USD ($) state
Leases
Number of facilities in sale/leaseback | state	2
Sale/leaseback proceeds	$ 7,456
Leaseback term	15 years
Gain on sale-leaseback transactions	$ 3,688

XML

Retirement Plans - Benefit obligation and funded status (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Change in benefit obligations:
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Defined Benefit Pension Plan
Change in benefit obligations:
Service cost	$ 107	$ 128
Interest cost	1,264	1,232
Expected return on plan assets	(1,402)	(1,313)
Amortization of unrecognized net loss		123
Net periodic pension expense	(31)	$ 170
Change in plan assets:
Employer contributions	0
Expected employer contribution during next fiscal year	$ 0

XML

Segment Reporting - Balance Sheet information (Details) $ in Thousands	3 Months Ended
	May 28, 2022 USD ($) segment	Feb. 26, 2022 USD ($)
Segment Reporting
Number of reportable segments | segment	2
Total assets	$ 8,549,773	$ 8,529,003
Goodwill	879,136	879,136
Accounts receivable	1,449,745	1,343,496
Operating segments | Retail Pharmacy
Segment Reporting
Total assets	6,101,168	6,068,594
Goodwill	43,492	43,492
Operating segments | Pharmacy Services
Segment Reporting
Total assets	2,464,224	2,482,232
Goodwill	835,644	835,644
Intersegment elimination
Segment Reporting
Total assets	(15,619)	(21,823)
Long-term deferred tax liability	0	0
Accounts receivable	$ 15,619	$ 21,823

XML

Segment Reporting - Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Segment Reporting
Revenues	$ 6,014,583	$ 6,160,985
Gross Profit	1,196,729	1,284,875
Adjusted EBITDA	100,130	138,877
Additions to property and equipment and intangible assets	85,424	64,600
Retail Pharmacy
Segment Reporting
Revenues	4,345,356	4,351,682
Operating segments | Retail Pharmacy
Segment Reporting
Revenues	4,345,356	4,351,682
Gross Profit	1,097,357	1,169,934
Adjusted EBITDA	73,682	94,914
Additions to property and equipment and intangible assets	78,551	60,893
Operating segments | Pharmacy Services
Segment Reporting
Revenues	1,725,857	1,872,282
Gross Profit	99,372	114,941
Adjusted EBITDA	26,448	43,963
Additions to property and equipment and intangible assets	6,873	3,707
Intersegment elimination
Segment Reporting
Revenues	$ (56,630)	$ (62,979)

XML

Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Segment Reporting
Net loss	$ (110,191)	$ (13,057)
Interest expense	48,119	49,121
Income tax expense	3,497	780
Depreciation and amortization	70,073	75,859
LIFO credit		(3,993)
Facility exit and impairment charges	66,571	8,831
Loss on debt retirements, net		396
Merger and Acquisition-related costs		3,886
Stock-based compensation expense	3,334	2,811
Restructuring-related costs	22,646	5,932
Inventory write-downs related to store closings	7,955	472
Litigation and other contractual settlements	18,271	14,000
Gain on sale of assets, net	(29,196)	(6,558)
Other	(949)	397
Adjusted EBITDA	$ 100,130	$ 138,877

XML

Commitments, Contingencies and Guarantees (Details) $ in Thousands		1 Months Ended	3 Months Ended
	Apr. 22, 2022 USD ($)	Jan. 30, 2021 USD ($) lawsuit	May 28, 2022 state lawsuit	Oct. 01, 2021 USD ($)
Commitments, Contingencies and Guarantees
Number of claims settled | lawsuit		2
Amount awarded to Humana	$ 122,600
Prejudgment interest awarded to Humana	$ 40,700
California Employment Litigation, Claims Related To Store Associates [Member]
Commitments, Contingencies and Guarantees
Potential settlement amount		$ 9
Number of claims settled | lawsuit		1
California Employment Litigation, Claims Related To Distribution Center Associates [Member]
Commitments, Contingencies and Guarantees
Potential settlement amount		$ 1,750
California Employment Litigation, Claims Related to Uniforms
Commitments, Contingencies and Guarantees
Potential settlement amount				$ 12
Blue Cross Blue Shield Litigation [Member]
Commitments, Contingencies and Guarantees
Number of claims | lawsuit			2
Number of states in which operated | state			8

XML

Supplementary Cash Flow Data (Details) - USD ($) $ in Thousands	3 Months Ended
	May 28, 2022	May 29, 2021
Supplementary Cash Flow Data
Cash paid for interest	$ 11,230	$ 12,813
Cash payments for income taxes, net	13,290	556
Equipment financed under capital leases		1,585
Gross borrowings from revolver	860,000	1,546,000
Gross repayments to revolver	569,000	1,507,000
Significant components of cash provided by Other Liabilities
Other liabilities	$ 15,327	$ 34,559