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 September 2, 2023

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.)
PO Box 3165, Harrisburg, Pennsylvania (Address of principal executive offices)	17105 (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 56,542,469 shares of its $1.00 par value common stock outstanding as of October 3, 2023.

RITE AID CORPORATION

TABLE OF CONTENTS

	Cautionary Statement and Cautionary Note Regarding Forward-Looking Statements	3
	PART I FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of September 2, 2023 and March 4, 2023	8
	Condensed Consolidated Statements of Operations for the Thirteen Week Periods Ended September 2, 2023 and August 27, 2022	9
	Condensed Consolidated Statements of Comprehensive Loss for the Thirteen Week Periods Ended September 2, 2023 and August 27, 2022	10
	Condensed Consolidated Statements of Operations for the Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022	11
	Condensed Consolidated Statements of Comprehensive Loss for the Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022	12
	Condensed Consolidated Statements of Stockholders’ Deficit for the Thirteen and Twenty-Six Week Periods Ended September 2, 2023	13
	Condensed Consolidated Statements of Stockholders’ Deficit for the Thirteen and Twenty-Six Week Periods Ended August 27, 2022	14
	Condensed Consolidated Statements of Cash Flows for the Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022	15
	Notes to Condensed Consolidated Financial Statements	16
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results	54
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	76
ITEM 4.	Controls and Procedures	77
	PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	78
ITEM 1A.	Risk Factors	78
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
ITEM 3.	Defaults Upon Senior Securities	82
ITEM 4.	Mine Safety Disclosures	82
ITEM 5.	Other Information	83
ITEM 6.	Exhibits	85

2

CAUTIONARY STATEMENT

On October 15, 2023, the Company and certain of its direct and indirect subsidiaries (collectively, the “Company Parties” or the “Debtors”) reached an agreement in principle (the “Restructuring Term Sheet”) with certain holders of the Company’s 7.500% Senior Secured Notes due 2025 (the “7.500% Secured Notes”) and 8.000% Senior Secured Notes due 2026 (the “8.000% Secured Notes”) and the indentures relating to the same (such holders, the “Consenting Noteholders”) on the terms of a comprehensive restructuring package to be implemented through the Chapter 11 Cases (as defined below). Capitalized terms used but not otherwise defined in the “Restructuring Transactions” sections of this Current Report on Form 10-Q have the meanings given to them in the Restructuring Term Sheet, which is filed as Exhibit 10.38 to this Form 10-Q and incorporated herein by reference. The Restructuring Term Sheet remains subject to definitive documentation, including the execution of a restructuring support agreement (the “Restructuring Support Agreement”). Under the Restructuring Term Sheet, the Consenting Noteholders have agreed, subject to certain terms and conditions more fully described herein, to support a financial and operational restructuring (the “Restructuring”) of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to a plan of reorganization (the “Plan”) filed in the cases commenced under chapter 11 (the “Chapter 11 Cases”) of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”). In addition to the Restructuring Term Sheet, the Company and its direct and indirect subsidiaries entered into two senior secured debtor-in-possession financing arrangements (“DIP Financing”), pursuant to which certain lenders have agreed to provide the Company with various loan commitments in the aggregate principal amount of not less than $3.45 billion. The DIP Financing, and the credit facilities provided for thereunder, are further described in Note 10, Indebtedness and Credit Agreements, of this Form 10-Q.

To implement the Plan and secure approval of the DIP Financing, on October 15, 2023, the Company Parties filed voluntary petitions to commence the Chapter 11 Cases in the Bankruptcy Court (the “Petition Date”). Each Company Party will continue to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption In re Rite Aid Corporation., et al., Case No. 23-18993 (MBK). The Debtors filed with the Bankruptcy Court certain motions seeking a variety of customary “first day” relief, including authority to pay employee wages and benefits, to pay vendors and suppliers for goods and services provided both before and after the Petition Date, and to continue honoring insurance and tax obligations as they come due. In addition, the Company filed with the Bankruptcy Court (a) a motion seeking approval of the DIP Financing in the form of the DIP Credit Agreements (as defined and described below), and (b) a motion seeking approval of certain procedures relating to the marketing and auction (if necessary) of all or some of the Company’s assets. At the Debtors’ “first day hearing” on October 16, 2023, the Bankruptcy Court approved all first day relief from the bench, pending entry of the revised forms of order. The Company filed the revised forms of order to the Bankruptcy Court immediately following the first day hearing, and the Company expects that the Bankruptcy Court will enter the orders approving the first day relief in the immediate term. Bankruptcy Court filings and information related to the Chapter 11 Cases are available at: https://restructuring.ra.kroll.com/RiteAid.

Substantial doubt about the Company’s ability to continue as a going concern exists in light of its Chapter 11 Cases. The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive Restructuring, successfully emerge from the Chapter 11 Cases and generate sufficient liquidity following the Restructuring to meet its obligations and operating needs.

Although management believes that the Restructuring of the Company through the Chapter 11 Cases will appropriately position the Company upon emergence, the commencement of these proceedings constituted an event of default (and an acceleration event) under certain of the Company’s debt agreements, enforcement of any remedies in respect of which is automatically stayed as a result of the Chapter 11 proceedings. There are a number of risks and uncertainties associated with the Company’s bankruptcy, including, among others that: (a) the Company’s Plan may never be confirmed or become effective, (b) the Restructuring Term Sheet may be terminated by one or more of the parties thereto, (c) the Bankruptcy Court may grant or deny motions in a manner that is adverse to the Company and its subsidiaries, and (d) the Chapter 11 Cases may be converted into cases under chapter 7 of the Bankruptcy Code.

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The transactions and Restructuring contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated on the expected terms, if at all. As a result, the Company has concluded that management’s plans at this stage do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

Additionally, the Company cannot assure you that its creditors or stockholders will receive any recovery from the bankruptcy proceedings. As a result, the Company expects that its securities, including its currently outstanding shares of common stock, will be highly speculative during the pendency of the Chapter 11 Cases and will pose substantial risks and trading prices for its securities may bear little or no relationship to the actual recovery, if any, by holders of its securities in bankruptcy proceedings. Additionally, if the Company fails to regain compliance with the New York Stock Exchange’s continued listing standards, its common stock may be subject to delisting or trading in the over-the-counter (“OTC”) market. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.

On October 14, 2023, McKesson Corporation (“McKesson”) sent notice to the Company purporting to terminate the Eleventh Amendment to Supply Agreement by and between Rite Aid Corporation and McKesson Corporation, dated as of February 28, 2019 (the “McKesson Corporation Supply Agreement”) based on the occurrence of a termination event. The Company and McKesson have negotiated an agreement in principle to ensure no disruption to the Company’s business and operations, which agreement in principle includes a reservation of rights for both parties as to the purported termination. To the extent such agreement in principle is not executed, is not approved by the Bankruptcy Court, or is approved but subsequently terminates, the Company would vigorously contest such purported termination as null, void, and without effect. Subsequently, to the extent (a) such termination is not rescinded or (b) the Company does not prevail as to the invalidity of the termination event, the termination of the McKesson Corporation Supply Agreement may result in a material adverse impact on the Company’s business and operations.

CAUTIONARY NOTE 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:

● our ability to fund our planned operations for the next twelve months and our ability to continue as a going concern;

● the adverse impact of the Chapter 11 Cases on our business, financial condition, and results of operations;

● our ability to successfully consummate the Restructuring and emerge from the Chapter 11 Cases, including by satisfying the conditions and milestones in the Restructuring Term Sheet;

● our ability to improve our liquidity and long-term capital structure and to address our debt service obligations through the Restructuring;

● our ability to make the required payments under the agreements governing our debt obligations;

● our ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Restructuring and the Chapter 11 Cases;

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● the effects of the Restructuring and the Chapter 11 Cases on the Company and the interests of various constituents;

● risks and uncertainties associated with the Restructuring, including our ability to receive approvals for debtor-in-possession financing, obtain confirmation of the Plan under the Chapter 11 Cases and successfully consummate the Restructuring;

● our ability to receive any required approvals of the Plan and the responses of our securityholders, other stakeholders and customers, including those party to the Restructuring Term Sheet;

● our ability to monetize certain assets;

●our ability to achieve the benefits of our efforts of our multi-year performance acceleration program;

● subject to the successful outcome of the Restructuring, the nature, cost, impact and outcome of pending and future litigation, other legal or regulatory proceedings, or governmental investigations and actions, including those related to opioids, which could adversely affect our business, financial condition and results of operations, “usual and customary” pricing, government payor programs, business practices, or other matters;

● the impact of widespread health developments, such as 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 challenges 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 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 strategy, attract and retain a sufficient number of our target consumers, integrate operations such as Elixir, our pharmacy benefit management (“PBM”) operations, 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 PBM operations;

● general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions, including continued impacts of inflation or other pricing environment factors on our costs, liquidity 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 seek to reduce payments to retail pharmacies and 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 purchasing cost 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 and the Affordable Care Act (or “ACA”), and decisions of agencies and courts including the United States Supreme

5

Court regarding those and other matters relevant to Rite Aid Corporation or its operations, and any regulations enacted thereunder may occur;

● 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;

● our ability to sell our Centers of Medicare and Medicaid Services (“CMS”) receivables, in whole or in part, and on reasonably available terms, which could negatively impact our liquidity 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;

● the impact of stores currently being closed and future decisions to close additional stores and distribution centers or undertake additional refinancing activities, which could result in further charges;

● our ability to manage expenses, our liquidity 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 and clients, 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, the risk that we cannot meet client guarantees and the impact of pricing decisions on our ability to retain our customer base;

● our ability to manage the transition to a new chief executive officer and other management;

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

● any negative impact of exiting the Medicare Part D Insurance market on our business, financial conditions and results of operations;

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

● changes in future exchange or interest rates or credit ratings, changes in tax laws, regulations, rates and policies;

● our ability to maintain the listing of our common stock on the New York Stock Exchange (the “NYSE”), and the resulting impact of either (i) a delisting or (ii) remedies taken to prevent a delisting on our results of operations and financial condition; and

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

6

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 March 4, 2023 (the “Fiscal 2023 10-K”), which we filed with the SEC on May 1, 2023, and our Quarterly Report on Form 10-Q for the thirteen weeks ended June 3, 2023, which we filed on July 11, 2023, as well as in “Part I – Item 1A. Risk Factors” of the Fiscal 2023 10-K and in “Part II – Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of the risk factors described herein and in our Fiscal 2023 10-K.

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)

	September 2,		March 4,
	2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	92,926	$	157,151
Accounts receivable, net		1,472,755		1,149,958
Inventories, net of LIFO reserve of $554,932 and $539,932		1,993,873		1,900,744
Prepaid expenses and other current assets		179,099		93,194
Total current assets		3,738,653		3,301,047
Property, plant and equipment, net		790,001		907,771
Operating lease right-of-use assets		2,239,043		2,497,206
Goodwill		90,436		507,936
Other intangibles, net		201,572		250,112
Deferred tax assets		12,368		12,368
Other assets		53,879		50,922
Total assets	$	7,125,952	$	7,527,362
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt and lease financing obligations	$	3,773,356	$	6,332
Accounts payable		1,428,286		1,494,611
Accrued salaries, wages and other current liabilities		894,079		724,529
Current portion of operating lease liabilities		422,233		502,403
Total current liabilities		6,517,954		2,727,875
Long-term debt, less current maturities		—		2,925,258
Long-term operating lease liabilities		2,373,953		2,372,943
Lease financing obligations, less current maturities		11,718		12,580
Other noncurrent liabilities		188,597		130,482
Total liabilities		9,092,222		8,169,138
Commitments and contingencies		—		—
Stockholders’ deficit:
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 56,486 and 56,629		56,486		56,629
Additional paid-in capital		5,920,361		5,917,964
Accumulated deficit		(7,928,265)		(6,601,517)
Accumulated other comprehensive loss		(14,852)		(14,852)
Total stockholders’ deficit		(1,966,270)		(641,776)
Total liabilities and stockholders’ deficit	$	7,125,952	$	7,527,362

See accompanying notes to condensed consolidated financial statements.

8

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

	Thirteen Week Period Ended
	September 2, 2023		August 27, 2022
Revenues	$	5,646,081	$	5,901,069
Costs and expenses:
Cost of revenues		4,550,485		4,746,574
Selling, general and administrative expenses		1,458,466		1,193,553
Facility exit and impairment charges		310,761		45,845
Goodwill and intangible asset impairment charges		295,490		252,200
Interest expense		72,658		52,533
Gain on debt modifications and retirements, net		—		(41,312)
Gain on sale of assets, net		(24,087)		(29,001)
		6,663,773		6,220,392
Loss before income taxes		(1,017,692)		(319,323)
Income tax expense		2,338		11,967
Net loss	$	(1,020,030)	$	(331,290)
Computation of loss attributable to common stockholders:
Net loss attributable to common stockholders — basic and diluted	$	(1,020,030)	$	(331,290)
Basic and diluted loss per share	$	(18.44)	$	(6.07)

See accompanying notes to condensed consolidated financial statements.

9

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

	Thirteen Week Period Ended
	September 2, 2023		August 27, 2022
Net loss	$	(1,020,030)	$	(331,290)
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		—		—
Change in fair value of interest rate cap		—		—
Total other comprehensive income		—		—
Comprehensive loss	$	(1,020,030)	$	(331,290)

See accompanying notes to condensed consolidated financial statements.

10

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Revenues	$	11,299,243	$	11,915,652
Costs and expenses:
Cost of revenues		9,025,121		9,564,428
Selling, general and administrative expenses		2,713,689		2,411,482
Facility exit and impairment charges		330,762		112,416
Goodwill and intangible asset impairment charges		446,990		252,200
Interest expense		137,878		100,652
Gain on debt modifications and retirements, net		—		(41,312)
Gain on sale of assets, net		(32,280)		(58,197)
		12,622,160		12,341,669
Loss before income taxes		(1,322,917)		(426,017)
Income tax expense		3,831		15,464
Net loss	$	(1,326,748)	$	(441,481)
Computation of loss attributable to common stockholders:
Net loss attributable to common stockholders — basic and diluted	$	(1,326,748)	$	(441,481)
Basic and diluted loss per share	$	(24.02)	$	(8.11)

See accompanying notes to condensed consolidated financial statements.

11

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Net loss	$	(1,326,748)	$	(441,481)
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		—		—
Change in fair value of interest rate cap		—		—
Total other comprehensive income		—		—
Comprehensive loss	$	(1,326,748)	$	(441,481)

See accompanying notes to condensed consolidated financial statements.

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RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands, except per share amounts)

(unaudited)

								Accumulated
				Additional				Other
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
BALANCE MARCH 4, 2023	56,629	$	56,629	$	5,917,964	$	(6,601,517)	$	(14,852)	$	(641,776)
Net loss							(306,718)				(306,718)
Other comprehensive loss:
Comprehensive loss											(306,718)
Issuance of restricted stock	256		256		(256)						—
Shares issued under the performance-based incentive plans	44		44		(44)						—
Exchange of restricted shares for taxes	(18)		(18)		(28)						(46)
Cancellation of restricted stock	(203)		(203)		203						—
Amortization of restricted stock balance					1,201						1,201
Amortization of performance-based incentive plans					(109)						(109)
BALANCE JUNE 3, 2023	56,708	$	56,708	$	5,918,931	$	(6,908,235)	$	(14,852)	$	(947,448)
Net loss							(1,020,030)				(1,020,030)
Other comprehensive loss:
Comprehensive loss											(1,020,030)
Exchange of restricted shares for taxes	(113)		(113)		(68)						(181)
Cancellation of restricted stock	(109)		(109)		109						—
Amortization of restricted stock balance					1,261						1,261
Amortization of performance-based incentive plans					128						128
BALANCE SEPTEMBER 2, 2023	56,486	$	56,486	$	5,920,361	$	(7,928,265)	$	(14,852)	$	(1,966,270)

See accompanying notes to condensed consolidated financial statements.

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RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(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)
Net loss							(331,290)				(331,290)
Other comprehensive loss:
Comprehensive loss											(331,290)
Issuance of restricted stock	1,141		1,141		(1,141)						—
Exchange of restricted shares for taxes	(182)		(182)		(1,284)						(1,466)
Cancellation of restricted stock	(2)		(2)		2						—
Amortization of restricted stock balance					3,323						3,323
Stock-based compensation expense					111						111
Amortization of performance-based incentive plans					1,300						1,300
BALANCE AUGUST 27, 2022	56,580	$	56,580	$	5,915,521	$	(6,293,062)	$	(15,437)	$	(336,398)

See accompanying notes to condensed consolidated financial statements.

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RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Operating activities:
Net loss	$	(1,326,748)	$	(441,481)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization		134,924		138,637
Facility exit and impairment charges		330,762		112,416
Goodwill and intangible asset impairment charges		446,990		252,200
LIFO charge		15,000		10,121
Gain on sale of assets, net		(32,280)		(58,197)
Change in allowances for uncollectible accounts receivable		(19,959)		(1,671)
Stock-based compensation expense		2,149		8,069
Gain on debt modifications and retirements, net		—		(41,312)
Changes in deferred taxes		—		6,133
Changes in operating assets and liabilities:
Accounts receivable		(303,973)		(211,673)
Inventories		(108,129)		(77,405)
Accounts payable		(34,299)		(43,343)
Operating lease right-of-use assets and operating lease liabilities		(33,978)		(31,713)
Other assets		(88,771)		(10,870)
Other liabilities		205,151		(61,372)
Net cash used in operating activities		(813,161)		(451,461)
Investing activities:
Payments for property, plant and equipment		(76,869)		(122,243)
Intangible assets acquired		(15,217)		(15,356)
Proceeds from dispositions of assets and investments		29,125		41,003
Proceeds from sale-leaseback transactions		5,454		45,986
Net cash used in investing activities		(57,507)		(50,610)
Financing activities:
Net proceeds from revolver		837,000		677,000
Principal payments on long-term debt		(1,978)		(152,011)
Change in zero balance cash accounts		(27,939)		(12,931)
Financing fees paid for early debt redemption		(51)		(881)
Payments for taxes related to net share settlement of equity awards		(227)		(2,019)
Deferred financing costs paid		(362)		—
Net cash provided by financing activities		806,443		509,158
(Decrease) increase in cash and cash equivalents		(64,225)		7,087
Cash and cash equivalents, beginning of period		157,151		39,721
Cash and cash equivalents, end of period	$	92,926	$	46,808

See accompanying notes to condensed consolidated financial statements.

15

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

(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 and twenty-six week periods ended September 2, 2023 are not necessarily indicative of the results to be expected for the full year, particularly as a result of the filing of the Chapter 11 Cases. 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 2023 10-K.

Going Concern

As of the date the accompanying unaudited condensed consolidated financial statements were issued (the “issuance date”), management evaluated the significance of the following adverse conditions in accordance with ASC 205-40, Going Concern.

As disclosed in Note 16, Subsequent Events, on October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet. The Company filed a voluntary petition for reorganization under Chapter 11 (the “Chapter 11 filing” or “bankruptcy filing”) of the United States Bankruptcy Code in the District of New Jersey and expects to continue to manage its operations as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as a debtor-in-possession, the Company is authorized to continue to operate as an ongoing business but not to engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Elixir Insurance (“EI”) was excluded from the Chapter 11 filing due to regulatory factors.

The bankruptcy filing represents an adverse event that creates substantial uncertainty regarding the Company’s ability to recover its assets and satisfy its liabilities in the ordinary course of business. In this regard, while management believes the Company will be able to emerge from bankruptcy and continue to operate as a viable going concern, management can provide no assurance that: (a) the Company’s Plan may never be confirmed or become effective, (b) the Debtors’ voting creditors may reject the Plan embodying the restructuring transactions contemplated by the Restructuring Term Sheet, (c) the Bankruptcy Court may grant or deny motions in a manner that is adverse to the Company and its subsidiaries, and (d) the Chapter 11 Cases may be converted into cases under chapter 7 of the Bankruptcy Code.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, management can provide no assurance that the transactions described therein will be consummated.

16

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

While management believes the reorganization through the Chapter 11 proceedings will appropriately position the Company upon its re-emergence from bankruptcy, the commencement of these proceedings constituted an event of default (and an acceleration event) under certain of the Company’s debt agreements, for which enforcement of any remedies by the lenders have been automatically stayed as a result of the Chapter 11 proceedings. However, management can provide no assurance that the lenders will ultimately be able to exercise their remedies, which may include, among others, a cessation of the Company’s operations and liquidation of its assets. As a result of the foregoing acceleration event, all of the Company’s outstanding indebtedness, including indebtedness subject to cross-default provisions, has been classified as current debt in the accompanying unaudited condensed consolidated balance sheet of the Company as of September 2, 2023. See Note 10. Indebtedness and Credit Agreement.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive restructuring, successfully emerge from the Chapter 11 and generate sufficient liquidity following the Restructuring to meet its obligations and operating needs as they become due. The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
In thousands	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Retail Pharmacy Segment:
Pharmacy sales	$	3,319,057	$	2,971,236	$	6,616,031	$	6,024,684
Front-end sales		1,124,017		1,231,590		2,291,363		2,492,796
Other revenue		27,853		28,965		55,862		59,667
Total Retail Pharmacy Segment		4,470,927		4,231,791		8,963,256		8,577,147
Pharmacy Services Segment		1,209,858		1,727,241		2,406,012		3,453,098
Intersegment elimination		(34,704)		(57,963)		(70,025)		(114,593)
Total revenue	$	5,646,081	$	5,901,069	$	11,299,243	$	11,915,652

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 year 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 six month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent six months with no additional purchase requirement. New and existing customers who were not already

17

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

eligible for program benefits also had the opportunity to earn additional discounts on purchases made through each six 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 September 2, 2023, the Company recognized additional contract deferrals of $707 as a reduction of revenues. The Retail Pharmacy Segment had accrued contract liabilities of $2,560 and $2,030 as of September 2, 2023 and March 4, 2023, respectively.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another rate affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of Interbank Offered Rates (“IBORs”) and, particularly, the risk of cessation of LIBOR, regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients and exceptions in Topic 848. The Company adopted ASU 2020-04 effective December 1, 2022 and the adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

2. Restructuring

Beginning in fiscal 2019, the Company initiated a series of plans designed to reorganize its executive management team, improve its cost structure, free up working capital, rebrand its retail pharmacy and pharmacy services business, and launch its Store of the Future format. Other strategic initiatives included the expansion of the Company’s digital business, replacing and updating the Company’s financial systems to improve efficiency, and closing unprofitable stores. In December 2022, the Company announced a new multi-year performance acceleration program, which allows it to fast-track initiatives that will improve sales, script volume and operating margins, and free up cash. This program has given the Company visibility into the profitability opportunities it can drive over the next three years by focusing on improvements and growth in its core businesses. These and future activities, including those designed to enhance the

18

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Company’s liquidity and capital structure, are expected to provide future growth opportunities, expense efficiency benefits, as well as reduce its level of corporate leverage and are reflected into its plan of reorganization. The Company also engaged professional advisors to assist with the exploration of strategic alternatives, including the filing of the Chapter 11 Cases. In connection with the Chapter 11 Cases, the Company has incurred, and expects to continue to incur, significant professional fees and other costs. As part of its reorganization, the Company expects to implement a revised business plan to bolster core strengths, address operational challenges, reinforce liquidity, reduce leverage, optimize store footprint, and address litigation. As mentioned herein, there can be no assurance as to whether the Chapter 11 Cases will be successful, including the Company’s ability to achieve its operational, strategic, and financial goals.

For the thirteen week period ended September 2, 2023, the Company incurred total restructuring-related costs of $85,709, 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)	$	926	$	—	$	926
Professional and other fees relating to restructuring activities(b)		82,484		2,299		84,783
Total restructuring-related costs	$	83,410	$	2,299	$	85,709

For the thirteen week period ended August 27, 2022, the Company incurred total restructuring-related costs of $12,805, 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)	$	913	$	—	$	913
Professional and other fees relating to restructuring activities(c)		7,529		4,363		11,892
Total restructuring-related costs	$	8,442	$	4,363	$	12,805

For the twenty-six week period ended September 2, 2023, the Company incurred total restructuring-related costs of $163,839, 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)	$	1,366	$	—	$	1,366
Professional and other fees relating to restructuring activities(b)		158,513		3,960		162,473
Total restructuring-related costs	$	159,879	$	3,960	$	163,839

19

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

For the twenty-six week period ended August 27, 2022, the Company incurred total restructuring-related costs of $35,451, 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)	$	12,201	$	616	$	12,817
Professional and other fees relating to restructuring activities(c)		13,612		9,022		22,634
Total restructuring-related costs	$	25,813	$	9,638	$	35,451

A summary of restructuring-related liabilities associated with the programs noted above, which are included in accrued salaries, wages and other current liabilities, is as follows:

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance as of March 4, 2023	$	7,658	$	42,154	$	49,812
Additions charged to expense		440		77,690		78,130
Cash payments		(2,738)		(33,962)		(36,700)
Balance as of June 3, 2023	$	5,360	$	85,882	$	91,242
Additions charged to expense		926		84,783		85,709
Cash payments		(2,052)		(106,782)		(108,834)
Balance as of September 2, 2023	$	4,234	$	63,883	$	68,117

(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, including its performance acceleration programs as well as costs incurred in connection with preparation for the Chapter 11 Cases.

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

3. Loss Per Share

Basic loss per share is computed by dividing loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted loss per share reflects the potential dilution that

20

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

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 loss of the Company, subject to anti-dilution limitations.

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders — basic and diluted	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Denominator:
Basic and diluted weighted average shares		55,306		54,548		55,242		54,453
Basic and diluted loss per share	$	(18.44)	$	(6.07)	$	(24.02)	$	(8.11)

Due to their antidilutive effect, 16 and 539 potential shares related to stock options have been excluded from the computation of diluted loss per share for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. Also, excluded from the computation of diluted loss per share for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022 are restricted shares of 1,074 and 1,811, respectively, which are included in shares outstanding.

4. Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week Period				Twenty-Six Week Period
	Ended				Ended
	September 2,			August 27,	September 2,		August 27,
	2023		2022		2023		2022
Impairment charges	$	290,694	$	34,738	$	302,432	$	69,774
Facility exit charges		20,067		11,107		28,330		42,642
	$	310,761	$	45,845	$	330,762	$	112,416

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.

21

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

(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.

As further discussed in Note 1, Basis of Presentation and Significant Accounting Policies, the Company concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of issuance of the unaudited consolidated financial statements. As a result of this triggering event, the Company performed an analysis of the carrying value of its long-lived assets using Level 3 inputs.

During the twenty-six week period ended September 2, 2023, long-lived assets with a carrying value of $620,106, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $317,674, resulting in an impairment charge of $302,432 of which $290,694 relates to the thirteen week period ended September 2, 2023. During the twenty-six week period ended August 27, 2022, long-lived assets with a carrying value of $86,534, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $16,760, resulting in an impairment charge of $69,774 of which $34,738 related to the thirteen week period ended August 27, 2022. 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.

22

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

The following table presents fair values for those assets measured at fair value on a non-recurring basis at September 2, 2023 and August 27, 2022:

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		September 2, 2023
Long-lived assets held for use	$	—	$	2,653	$	313,218	$	315,871	$	(301,417)
Long-lived assets held for sale	$	—	$	1,803	$	—	$	1,803	$	(1,015)
Total	$	—	$	4,456	$	313,218	$	317,674	$	(302,432)

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		August 27, 2022
Long-lived assets held for use	$	—	$	11,645	$	—	$	11,645	$	(64,942)
Long-lived assets held for sale	$	—	$	5,115	$	—	$	5,115	$	(4,832)
Total	$	—	$	16,760	$	—	$	16,760	$	(69,774)

The above assets reflected in the caption ‘Long-lived assets held for sale’ have not been reclassified to assets held for sale due to their immateriality.

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				Twenty-Six Week Period
	Ended				Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Balance—beginning of period	$	49,773	$	43,402	$	49,772	$	18,688
Provision for present value of executory costs for leases exited		14,846		2,816		20,444		29,315
Changes in assumptions and other adjustments		(762)		(436)		(2,852)		(627)
Interest accretion		74		237		608		335
Cash payments		(3,950)		(4,073)		(7,991)		(5,765)
Balance—end of period	$	59,981	$	41,946	$	59,981	$	41,946

23

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

5. Fair Value Measurements

The Company utilizes the three-level valuation hierarchy as described in Note 4, 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 September 2, 2023 and March 4, 2023, the Company has $4,189 and $7,457, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of prepaid expenses and other current assets. The Company believes the carrying value of these investments approximates their fair value.

The fair value for Secured Overnight Financing Rate (“SOFR”) 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 $3,767,350 and $3,165,382 respectively, as of September 2, 2023. The carrying amount and estimated fair value of the Company's total long-term indebtedness was $2,925,258 and $2,368,328, respectively, as of March 4, 2023.

6. Income Taxes

The Company recorded income tax expense of $2,338 and $11,967 for the thirteen week periods ended September 2, 2023 and August 27, 2022, respectively. The Company recorded income tax expense of $3,831 and $15,464 for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. The effective tax rate for the thirteen week periods ended September 2, 2023 and August 27, 2022 was (0.2)% and (3.8)%, respectively. The effective tax rate for the twenty-six week periods ended September 2, 2023 and August 27, 2022 was (0.3)% and (3.6)%, respectively. The effective tax rate for the thirteen and twenty-six week periods ended September 2, 2023 was net of an adjustment of (25.3)% and (25.8)%, respectively, to adjust the valuation allowance against deferred tax assets. The effective tax rate for the thirteen and twenty-six week periods ended August 27, 2022 was net of an adjustment of 88.4% and 57.0%, respectively, to adjust the valuation allowance against deferred tax assets, primarily resulting from a Pennsylvania law change that reduced the corporate net income tax rate causing a reduction to the valuation allowance of $380,509.

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 $4,001 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.

24

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

The Company continues to maintain a valuation allowance against net deferred tax assets of $1,990,424 and $1,649,193, 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 September 2, 2023 and March 4, 2023, respectively. As further discussed in Note 1, Basis of Presentation and Significant Accounting Policies, the Company concluded that there is substantial doubt about its ability to continue as a going concern. The Company considered this, as well as the impact of the Chapter 11 proceedings as part of its current evaluation of valuation allowance established for deferred tax assets for which future realization is uncertain. Additional discussion regarding the Restructuring on deferred tax assets can be found in Note 16, Subsequent Events.

7. 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 $7,333 as of June 30, 2023. EI was in excess of the minimum required amounts in these states as of September 2, 2023. EI is not a Debtor in the Chapter 11 Cases.

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 by 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 year 2021 CMS receivable, for $258,116, of which $239,360 was received on August 12, 2021 and the remainder was received in fiscal 2023 upon 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

25

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

(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 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 and the remainder was received in fiscal 2023 upon 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.

On October 13, 2022, the Company entered into a receivable purchase agreement (the “October 2022 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the October 2022 Receivable Purchase Agreement, the Company sold $195,487, a portion of its calendar 2022 CMS receivable, for $180,405, of which $166,917 was received on October 13, 2022. The remaining $13,488, which is included in accounts receivable, net as of September 2, 2023, 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 $15,082, which is included as a component of (gain) loss on sale of assets, net during the thirteen week period ended November 26, 2022.

On October 13, 2022, concurrent with the October 2022 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “October 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 October 2022 Indemnity Agreement. Based on its evaluation of the October 2022 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the October 2022 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the October 2022 Indemnity Agreement.

During the thirteen week period ended November 26, 2022, the Company incurred additional fees of $1,937, which are included as a component of (gain) loss on sale of assets, net related to the sale of the 2021 CMS receivable to Bank of America. The additional fees were incurred due to a CMS delay in settling the 2021 receivable.

26

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

On February 3, 2023, the Company entered into a receivable purchase agreement (the “February 2023 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the February 2023 Receivable Purchase Agreement, the Company sold $278,390, a portion of its calendar 2022 CMS receivable, for $261,771, of which $242,562 was received on February 3, 2023. The remaining $19,209, which is included in accounts receivable, net as of September 2, 2023, 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 $16,619, which is included as a component of (gain) loss on sale of assets, net during the fourteen-week period ended March 4, 2023.

On February 3, 2023, concurrent with the February 2023 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “February 2023 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 February 2023 Indemnity Agreement. Based on its evaluation of the February 2023 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the February 2023 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the February 2023 Indemnity Agreement.

During the fourteen-week period ended March 4, 2023, the Company incurred additional fees of $2,573, which are included as a component of (gain) loss on sale of assets, net related to the sale of the 2021 CMS receivable to Bank of America. The additional fees were incurred due to a CMS delay in settling the 2021 receivable.

As of September 2, 2023 and March 4, 2023 accounts receivable, net included $32,697 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 September 2, 2023, and March 4, 2023, accounts receivable, net included $255,916 and $45,201 due from CMS.

The Inflation Reduction Act of 2022 contains several provisions affecting Medicare, which will take effect over various periods of time from 2023 to 2029. Based on the Company’s current analysis of the provisions, it does not believe that this legislation will have a material impact on the financial statements.

On June 4, 2023, the Company decided to exit the Medicare Part D Individual Insurance market, effective January 1, 2024. As of September 2, 2023, Elixir Insurance operated in eleven markets, with approximately 274,000 Medicare Part D Individual members. The Company expects to service its exiting members in the 2023 plan year through December 31, 2023. Additionally, the Chapter 11 Cases does not impact its ability or intent to support EI through December 31, 2023.

8. Manufacturer Rebates Receivables

The Pharmacy Services Segment has manufacturer rebates receivables due directly from manufacturers and from our rebate aggregator of $411,549 and $357,699 included in accounts receivable, net of an allowance for uncollectible rebates of $13,280 and $8,680, as of September 2, 2023 and March 4, 2023, respectively.

27

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

9. Goodwill and Other Intangible Assets

Goodwill and indefinite-lived assets, such as certain trademarks acquired in connection with acquisition transactions, are not amortized, but are instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate it may be more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, the Company performs a quantitative goodwill impairment test. The fair value estimates used in the quantitative impairment test are calculated using an average of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions. The approaches, which qualify as Level 3 within the fair value hierarchy, incorporate a number of market participant assumptions including future growth rates, discount rates, income tax rates and market activity in assessing fair value and are reporting unit specific. If the carrying amount exceeds the reporting unit’s fair value, the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the Company considers the income tax effect of any tax deductible goodwill when measuring a goodwill impairment loss.

As further discussed in Note 16, Subsequent Events, the Company concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of issuance of the unaudited consolidated financial statements. As a result of overall lower current year projections, the Company concluded that a quantitative assessment was necessary and tested its goodwill and intangible assets for impairment.

During the thirteen week period ended September 2, 2023, the Company completed a qualitative and quantitative impairment assessment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services Segment exceeded its fair value principally due to further erosion of the future cash flow projections for fiscal years ending after fiscal 2024 due to an inability to execute management’s business strategies for the 2024 selling season. The unfavorable results of the selling season became apparent during the thirteen week period ended September 2, 2023, which resulted in lower renewals of existing customers as well as less new business earned. This resulted in goodwill and the CMS license intangible incurring impairment charges of $266,000 and $29,490, respectively for the thirteen week period ended September 2, 2023. The qualitative and quantitative impairment assessment of the Retail Pharmacy Segment resulted in no adjustment to the carrying values as the fair value of its reporting unit exceeds its carrying amount.

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.

During the thirteen week period ended June 3, 2023, the Company recorded a goodwill impairment charge of $151,500. As of September 2, 2023 and March 4, 2023, accumulated impairment losses for the Pharmacy Services Segment was $1,592,412 and $1,174,912, respectively.

28

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Below is a summary of the changes in the carrying amount of goodwill by segment for the twenty-six week period ended September 2, 2023:

	Retail		Pharmacy
	Pharmacy		Services		Total
Balance, March 4, 2023		43,492		464,444		507,936
Goodwill impairment		—		(417,500)		(417,500)
Balance, September 2, 2023	$	43,492	$	46,944	$	90,436

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. The following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of September 2, 2023 and March 4, 2023.

	September 2, 2023								March 4, 2023
							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)	$	203,632	$	(184,551)	$	19,081	3	years	$	201,919	$	(182,957)	$	18,962	3	years
Prescription files		1,030,619		(935,466)		95,153	5	years		1,029,665		(928,478)		101,187	5	years
Customer relationships(a)		386,000		(313,062)		72,938	8	years		388,000		(306,139)		81,861	9	years
CMS license		57,500		(57,500)		—	0	years		57,500		(23,798)		33,702	4	years
Total finite	$	1,677,751	$	(1,490,579)		187,172			$	1,677,084	$	(1,441,372)	$	235,712
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,692,151	$	(1,490,579)	$	201,572			$	1,691,484	$	(1,441,372)	$	250,112

(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.

Amortization expense for these intangible assets and liabilities was $16,590 and $33,723 for the thirteen and twenty-six week periods ended September 2, 2023, respectively. Amortization expense for these intangible assets and liabilities was $18,420 and $39,046 for the thirteen and twenty-six week periods ended August 27, 2022, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2024—$55,339; 2025—$44,505; 2026—$34,144; 2027—$27,154 and 2028—$19,674.

29

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

10. Indebtedness and Credit Agreement

Following is a summary of indebtedness and lease financing obligations as of September 2, 2023 and March 4, 2023:

	September 2,		March 4,
	2023		2023
Secured Debt:
Senior secured revolving credit facility due August 2026 ($2,037,000 and $1,200,000 face value less unamortized debt issuance costs of $13,467 and $16,117)		2,023,533		1,183,883
FILO Term Loan due August 2026 ($400,000 face value less unamortized debt issuance costs of $1,782 and $2,090)		398,218		397,910
		2,421,751		1,581,793
Second Lien Secured Debt:
7.500% senior secured notes due July 2025 ($320,002 face value less unamortized debt issuance costs of $1,986 and $2,529)		318,016		317,473
8.000% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $9,719 and $11,259)		840,199		838,659
		1,158,215		1,156,132
Unguaranteed Unsecured Debt:
7.70% notes due February 2027 ($185,691 face value less unamortized debt issuance costs of $347 and $398)		185,344		185,293
6.875% fixed-rate senior notes due December 2028 ($2,046 face value less unamortized debt issuance costs of $6 and $6)		2,040		2,040
		187,384		187,333
Lease financing obligations		17,724		18,912
Total debt		3,785,074		2,944,170
Current maturities of long-term debt and lease financing obligations		(3,773,356)		(6,332)
Long-term debt and lease financing obligations, less current maturities	$	11,718	$	2,937,838

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 “Prior Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Prior Amended Credit Agreement”), which provided for facilities consisting of a $2,700,000 senior secured asset-based revolving credit facility and a $450,000 “first-in, last-out” senior secured term loan facility, the proceeds of which were used in December 2018 to refinance its prior $2,700,000 existing credit agreement.

On August 20, 2021, the Company entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Prior Credit Agreement to provide for a $2,800,000 senior secured asset-based revolving credit facility (the “Prior Senior Secured Revolving Credit Facility”) and a $350,000 “first-in, last-out” senior secured term loan facility (“Prior Senior Secured Term Loan” and together with the Prior Senior Secured Revolving Credit Facility, collectively, the “Prior Amended Facilities”). The Prior Amended Facilities extended

30

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

the Company’s debt maturity profile and provided additional liquidity. Borrowings under the Prior Senior Secured Revolving Credit Facility bore 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 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 Prior Amended Credit Agreement). Borrowings under the Prior Senior Secured Term Loan bore 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%.

On December 1, 2022, the Company entered into the Third Amendment to Credit Agreement (the “Third Amendment”), which, among other things, amended the Prior Amended Credit Agreement (the Prior Amended Credit Agreement, as modified by the Third Amendment, the “Existing Credit Agreement”) to provide for a $2,850,000 senior secured asset-based revolving credit facility (the “Existing Senior Secured Revolving Credit Facility”) and a $400,000 “first-in, last-out” senior secured term loan facility (the “Existing Senior Secured Term Loan” and, together with the Existing Senior Secured Revolving Credit Facility, collectively, the “Existing Facilities”), replaced the LIBOR rate with a Term SOFR-based rate as the applicable benchmark for the Existing Facilities, included COVID-19 vaccines in the borrowing base under the Existing Senior Secured Revolving Credit Facility, subject to limitations and conditions as specified in the Existing Credit Agreement, and increased the interest rate applicable to loans under the Existing Senior Secured Term Loan to (x) a base rate (determined in a customary manner) plus a margin of 2.00% or (y) an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.00%.

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 Existing Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Existing Credit Agreement). The Existing 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 Existing Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. As of September 2, 2023, the Company had approximately $2,437,000 of borrowings outstanding under the Existing Facilities and had letters of credit outstanding under the Existing Senior Secured Revolving Credit Facility in a face amount of approximately $210,198, which resulted in remaining borrowing capacity under the Existing Senior Secured Revolving Credit Facility of $602,802. If at any time the total credit exposure outstanding under the Existing Senior Secured Revolving Credit Facility exceeds the borrowing base, the Company will be required to repay amounts outstanding to eliminate such shortfall.

The Existing Credit Agreement restricts the Company and all of its subsidiaries including the subsidiaries that guarantee its obligations under the Existing Facilities and the secured 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 Existing 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 Existing Facilities or (ii) availability under the Existing Senior Secured Revolving Credit Facility is less than or equal to $283,250 for three consecutive business days or less than or equal to $206,000 on any day (a “cash sweep period”), the funds in the

31

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

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 Existing Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Existing Facilities.

With the exception of EI, substantially all of the Company’s 100% owned subsidiaries guarantee the obligations under the Existing Facilities and the secured guaranteed notes. The Company’s obligations under the Existing 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 Existing 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 Existing 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 Existing Facilities and the secured 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 Existing Facilities and applicable notes, are minor.

The Existing 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 Existing 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 Existing 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 Existing 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 Existing 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 Existing Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Existing Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Existing Facilities are not in default and the Company maintains availability under its revolver of more than $375,950.

The Existing 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 Existing Senior Secured Revolving Credit Facility is less than $206,000 or (ii) on the third consecutive business day on which availability under the Existing Senior Secured Revolving Credit Facility is less than $257,500 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 $257,500. As of September 2, 2023, the availability under the Existing Senior Secured Revolving Credit Facility was at a level that did not trigger the Existing Credit Agreement’s financial covenant. The Existing 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.

32

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

The Existing 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.

As of September 2, 2023, the Company was in full compliance with the provisions and covenants associated with its debt agreements. The commencement of the Chapter 11 proceedings constituted an event of default that accelerated the Company’s obligations under the Unguaranteed Notes and the Secured Notes. Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 proceedings. See Note 16, Subsequent Events, for further information.

DIP ABL Credit Agreement

As further discussed in Note 16, Subsequent Events, subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP ABL Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP ABL Borrower, the “DIP ABL Loan Parties”), expect to enter into that certain debtor-in-possession credit agreement (the “DIP ABL Credit Agreement”) with the lenders from time to time party thereto (the “DIP ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP ABL Agent”), on the terms and conditions set forth therein. Pursuant to the DIP ABL Credit Agreement, the DIP ABL Lenders have agreed, upon the terms and conditions set forth therein, to make available to the DIP ABL Borrower a superpriority senior secured debtor-in-possession asset-based credit facility in the aggregate principal amount of $3.25 billion, consisting of (x) a $2.85 billion revolving credit facility (the “DIP Revolving Facility”), and (y) a $400 million first-in last-out term loan facility (the “DIP FILO Facility,” and, together with the DIP Revolving Facility, the “DIP ABL Facilities”) in order to (a) repay all outstanding obligations arising under, or related to, the Existing Credit Agreement and the Existing Facilities, (b) fund the Chapter 11 Cases, (c) provide working capital for the DIP ABL Loan Parties during the pendency of the Chapter 11 Cases, and (d) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP ABL Facilities, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The DIP ABL Loan Parties’ obligations under the DIP ABL Credit Agreement will be secured by liens on substantially all of the personal property of the DIP ABL Loan Parties, subject to certain exceptions.

The DIP ABL Facilities will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Revolving Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.25%. Additionally, the Company is required to pay a fee of 0.50% per annum on the daily unused amount of the commitments under the DIP Revolving Facility. The interest rate applicable to loans under the DIP FILO Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 5.25%, which margin is subject to downward adjustment to 4.75% upon the occurrence of certain paydown events, and a 1.00% upfront fee payable upon the Closing Date.

The DIP ABL Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP ABL Borrower and its restricted subsidiaries’ ability to,

33

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP ABL Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP ABL Lenders’ rights or liens granted under the DIP ABL Credit Agreement.

DIP Term Loan Credit Agreement

As further discussed in Note 16, Subsequent Events, subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP Term Loan Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP Term Loan Borrower, the “DIP Term Loan Parties”), expect to enter into that certain debtor-in-possession term loan agreement (the “DIP Term Loan Credit Agreement,” and, together with the DIP ABL Credit Agreement, the “DIP Credit Agreements”) with the lenders from time to time party thereto (the “DIP Term Loan Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Term Loan Agent”), on the terms and conditions set forth therein. Pursuant to the DIP Term Loan Credit Agreement, the DIP Term Loan Lenders have agreed, upon the terms and conditions set forth therein, including the approval of the Bankruptcy Court, to make available to the DIP Term Loan Borrower a senior secured debtor-in-possession term loan credit facility in the aggregate principal amount of $200 million (the “DIP Term Loan Facility,” together with the DIP ABL Facility and the DIP FILO Facility, the “DIP Facilities”) in order to (a) fund the Chapter 11 Cases, (b) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP Term Loan Facility, and (c) provide working capital for the DIP Term Loan Parties during the pendency of the Chapter 11 Cases, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The obligations under the DIP Term Loan Credit Agreement will be secured by liens on substantially all of the real and personal property of the DIP Term Loan Parties, subject to certain exceptions.

The DIP Term Loan Facility will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Term Loan Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 7.50%.

The DIP Term Loan Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP Term Loan Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Term Loan Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP Term Loan Lenders’ rights or liens granted under the DIP Term Loan Credit Agreement.

34

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

In connection with the Chapter 11 Cases, the Debtors filed the DIP Motion seeking Bankruptcy Court approval of their entry into and performance under the DIP Credit Agreements and use of cash collateral, as well as certain related relief [Docket No. 38]. The Debtors the Bankruptcy Court has approved the DIP Motion on an interim basis from the bench, pending entry of a revised interim Order, which the Debtors expect to be entered in the immediate term. The Debtors will seek the Bankruptcy Court’s approval of the DIP Motion on a final basis in the coming weeks.

Fiscal 2023 and 2024 Transactions

On June 13, 2022, the Company commenced a series of cash tender offers to purchase up to $150,000 aggregate principal amount of the Company’s 7.500% Secured Notes, 8.000% Secured Notes, 7.70% Notes due 2027 (the “7.70% Notes”) and 6.875% Notes due 2028 (the “6.875% Notes,” together with the 7.70% Notes, the “Unguaranteed Notes”), subject to prioritized acceptance levels, a subcap of $100,000 with respect to the 7.500% Secured Notes and proration. On June 29, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $114,942 of its 7.500% Secured Notes, $51,695 aggregate principal amount of its 7.70% Notes and $26,955 aggregate principal amount of its 6.875% Notes. In connection therewith, the Company recorded a gain on debt retirement of $41,312, which included unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows during the second quarter of fiscal 2023.

On November 3, 2022, the Company announced the commencement of a cash tender offer to purchase up to $200,000 aggregate purchase price (not including any accrued and unpaid interest) of the Company’s 7.500% Secured Notes, subject to proration. On November 30, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $160,497 of its 7.500% Secured Notes and on December 9, 2022, pursuant to the final settlement, the Company purchased an additional aggregate principal amount of $4,559 of its 7.500% Secured Notes. In connection therewith, the Company recorded a gain on debt retirement of $38,978, which includes unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows during the third quarter of fiscal 2023.

On December 1, 2022, the Company entered into the Third Amendment in order to, among other things, increase the aggregate principal amount of commitments under the Existing Senior Secured Revolving Credit Facility from $2,800,000 to $2,850,000 and increase the aggregate principal amount of loans outstanding under the Existing Senior Secured Term Loan from $350,000 to $400,000. As a result of the Third Amendment, the Company has increased its liquidity by $100,000. In connection therewith, the Company recorded a loss on debt modification and retirement of $148, which includes unamortized debt issuance costs. The related loss on debt modification and retirement is included in the results of operations and cash flows during the fourth quarter of fiscal 2023.

Maturities

The commencement of the Chapter 11 proceedings constituted an event of default that accelerated the Company’s obligations under the Unguaranteed Notes and the Secured Notes (without any action on the part of such noteholders). Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 proceedings. See Note 16, Subsequent Events, for further information.

35

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

11. 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 and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022		September 2, 2023		August 27, 2022
Operating lease cost	$	148,896	$	157,956	$	301,568	$	317,801
Financing lease cost:
Amortization of right-of-use asset		775		863		1,594		1,672
Interest on long-term finance lease liabilities		454		503		921		1,004
Total finance lease costs	$	1,229	$	1,366	$	2,515	$	2,676
Short-term lease costs		2,086		585		1,310		1,042
Variable lease costs		44,646		43,652		90,879		86,297
Less: sublease income		(3,104)		(3,393)		(5,841)		(6,616)
Net lease cost	$	193,753	$	200,166	$	390,431	$	401,200

Supplemental cash flow information related to leases for the twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	330,492	$	350,177
Operating cash flows paid for interest portion of finance leases		921		1,004
Financing cash flows paid for principal portion of finance leases		1,969		1,940
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		163,569		155,710
Finance leases		—		—

36

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Supplemental balance sheet information related to leases as of September 2, 2023 and March 4, 2023 (in thousands, except lease term and discount rate):

	September 2,			March 4,
	2023			2023
Operating leases:
Operating lease right-of-use asset	$	2,239,043		$	2,497,206
Short-term operating lease liabilities	$	422,233		$	502,403
Long-term operating lease liabilities		2,373,953			2,372,943
Total operating lease liabilities	$	2,796,186		$	2,875,346
Finance leases:
Property, plant and equipment, net	$	12,674		$	13,576
Current maturities of lease financing obligations	$	6,006		$	6,332
Lease financing obligations, less current maturities		11,718			12,580
Total finance lease liabilities	$	17,724		$	18,912
Weighted average remaining lease term
Operating leases		7.3			7.5
Finance leases		8.0			8.0
Weighted average discount rate
Operating leases		7.5	%		6.5	%
Finance leases		10.5	%		9.0	%

The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 2, 2023:

	September 2, 2023
	Finance		Operating
Fiscal year	Leases		Leases(1)		Total
2024 (remaining twenty-six weeks)	$	5,301	$	335,247	$	340,548
2025		5,048		622,993		628,041
2026		1,883		500,523		502,406
2027		1,500		472,118		473,618
2028		1,500		399,881		401,381
Thereafter		10,174		1,280,351		1,290,525
Total lease payments		25,406		3,611,113		3,636,519
Less: imputed interest		(7,682)		(814,927)		(822,609)
Total lease liabilities	$	17,724	$	2,796,186	$	2,813,910

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $23 million due in the future under noncancelable leases.

37

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

During the thirteen and twenty-six week periods ended September 2, 2023, the Company sold three owned and operated stores to independent third parties. Net proceeds from the sales were $5,454 for the thirteen and twenty-six week periods ended September 2, 2023. 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 transactions resulted in a loss of $706 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended September 2, 2023

During the thirteen and twenty-six week periods ended August 27, 2022, the Company sold three owned and operated properties, including the Pontiac, MI and Liverpool, NY distribution centers and one retail store to independent third parties. Net proceeds from the sales were $45,986 for the thirteen and twenty-six week periods ended August 27, 2022. 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 for the retail store and over a minimum lease term of three years for the distribution centers. 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 transactions resulted in a gain of $23,313 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended August 27, 2022.

Additionally, certain of the Company’s lease obligations and other outstanding contracts include events of default, cross default or cross acceleration provisions, which could result in rights to accelerate or terminate obligations, including upon the commencement of the Chapter 11 proceedings. However, the exercise or enforcement of any remedies have been automatically stayed as a result of such proceedings.

12. Retirement Plans

Net periodic pension expense (income) for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022, for the Company’s defined benefit plan includes the following components:

	Defined Benefit				Defined Benefit
	Pension Plan				Pension Plan
	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Service cost	$	73	$	107	$	146	$	214
Interest cost		1,581		1,263		3,162		2,527
Expected return on plan assets		(1,474)		(1,402)		(2,948)		(2,804)
Net periodic pension expense (income)	$	180	$	(32)	$	360	$	(63)

The Company is not required to make any contributions to its company-sponsored pension plans in fiscal 2024 but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first half of fiscal 2024.

38

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

13. Segment Reporting

The Company has two reportable segments, Retail Pharmacy Segment and Pharmacy Services Segment.

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
September 2, 2023:
Total Assets	$	5,530,289	$	1,605,604	$	(9,941)	$	7,125,952
Goodwill		43,492		46,944		—		90,436
March 4, 2023:
Total Assets	$	5,487,845	$	2,049,107	$	(9,590)	$	7,527,362
Goodwill		43,492		464,444		—		507,936

(1) As of September 2, 2023 and March 4, 2023, intersegment eliminations include intersegment accounts receivable of $9,941 and $9,590, 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.

39

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
September 2, 2023:
Revenues	$	4,470,927	$	1,209,858	$	(34,704)	$	5,646,081
Gross Profit		978,602		116,994		—		1,095,596
Adjusted EBITDA(2)		(26,477)		43,186		—		16,709
Depreciation and amortization		56,985		12,044		—		69,029
LIFO charge		7,500		—		—		7,500
Stock-based compensation expense		773		295		—		1,068
Additions to property and equipment and intangible assets		37,894		6,689		—		44,583
August 27, 2022:
Revenues	$	4,231,791	$	1,727,241	$	(57,963)	$	5,901,069
Gross Profit		1,043,036		111,459		—		1,154,495
Adjusted EBITDA(2)		31,484		47,065		—		78,549
Depreciation and amortization		56,679		11,885		—		68,564
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		4,496		239		—		4,735
Additions to property and equipment and intangible assets		46,343		5,832		—		52,175
Twenty-Six Week Period Ended
September 2, 2023:
Revenues	$	8,963,256	$	2,406,012	$	(70,025)	$	11,299,243
Gross Profit		2,065,465		208,657		—		2,274,122
Adjusted EBITDA(2)		43,572		64,852		—		108,424
Depreciation and amortization		112,454		22,470		—		134,924
LIFO charge		15,000		—		—		15,000
Stock-based compensation expense		1,496		653		—		2,149
Additions to property and equipment and intangible assets		78,333		13,753		—		92,086
August 27, 2022:
Revenues	$	8,577,147	$	3,453,098	$	(114,593)	$	11,915,652
Gross Profit		2,140,393		210,831		—		2,351,224
Adjusted EBITDA(2)		105,166		73,513		—		178,679
Depreciation and amortization		112,787		25,850		—		138,637
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		7,598		471		—		8,069
Additions to property and equipment and intangible assets		124,894		12,705		—		137,599

(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.

40

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

(2) See “Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Other Non-GAAP Measures” in Management’s Discussion and Analysis of Financial Condition and Results for additional details.

The following is a reconciliation of net loss to Adjusted EBITDA for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Net loss	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Interest expense		72,658		52,533		137,878		100,652
Income tax expense		2,338		11,967		3,831		15,464
Depreciation and amortization		69,029		68,564		134,924		138,637
LIFO charge		7,500		10,121		15,000		10,121
Facility exit and impairment charges		310,761		45,845		330,762		112,416
Goodwill and intangible asset impairment charges		295,490		252,200		446,990		252,200
Gain on debt modifications and retirements, net		—		(41,312)		—		(41,312)
Stock-based compensation expense		1,068		4,735		2,149		8,069
Restructuring-related costs		85,709		12,805		163,839		35,451
Inventory write-downs related to store closings		8,414		1,094		10,471		9,049
Litigation and other contractual settlements		205,041		20,093		216,091		38,364
Gain on sale of assets, net		(24,087)		(29,001)		(32,280)		(58,197)
Other		2,818		195		5,517		(754)
Adjusted EBITDA	$	16,709	$	78,549	$	108,424	$	178,679

14. 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. Subject to applicable bankruptcy law, substantial damages are sought from the Company in virtually all of these matters, even if a specific amount is not specified. 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.

41

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Unless specifically noted otherwise, 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 at the current stage of such litigation and legal proceedings.

The Company’s accruals for certain outstanding legal matters or regulatory proceedings are considered material, individually and in the aggregate, to the Company’s consolidated financial position. This includes most significantly the accruals taken for the Humana and Schmuckley matters described below, as well as other matters. 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 were 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 may exceed reimbursement pursuant to any applicable insurance. Such proceedings may also require significant attention of management.

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; (ix) changes in priorities following any change in political administration at the state or federal level; and/or (x) the impact, results and settlements of similar claims made against competitors and other industry participants. Additionally, the Company may determine that a settlement is in its best interest, even if it believes that it has meritorious defenses and has not previously accrued for the matter.

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 the classification of certain positions as exempt from overtime requirements, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (collectively, the “California Cases”).

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 August 2022, the Company agreed to settle a putative class action regarding reimbursement for cell phone and mileage expenses for shift supervisors and managers/assistant managers for $1.29 million, which remains subject to court approval. A previously-settled putative wage and hour class action brought on behalf of drivers and other ice cream plant associates for $0.8 million has been paid and resolved.

42

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

The Company has also reached an agreement in principle to resolve 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”). In December 2022, the parties reached an agreement in principle to resolve the individual plaintiff’s claims as well as those of the class, resulting in the federal court issuing an order of judgment and a new matter filed in New York state court, which the parties have agreed to resolve for $6.45 million. The parties’ settlement agreement has been approved by the court and includes a provision allowing the Company to terminate the agreement if certain participation thresholds are not met.

The Company has aggressively defended itself and challenged the merits of these employment 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.

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 voluntarily dismissed. 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. The Company is defending itself in a second putative class action lawsuit against similar pricing allegations filed in the United States District Court for the Eastern District of Pennsylvania, which is stayed pending the Company’s appeal to the United States Court of Appeals for the Third Circuit regarding the denial of a motion to compel arbitration as to one of the named plaintiffs.

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 continues to believe 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 (the “court”) for vacatur of the Arbitration Award, as is its right under the Federal Arbitration Act (“FAA”).

Argument on Humana’s petition to confirm the Arbitration Award and the Company’s motion for vacatur of the Arbitration Award was held May 10, 2023. On August 4, 2023, the court issued a decision denying the Company’s motion for vacatur and granting Humana’s petition to confirm the Arbitration Award. At this time, the Company has

43

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

accrued $136.8 million in regards to the Arbitration Award damages plus post-judgment interest. The Company entered into an agreement with Humana that tolled the enforcement of the judgment until October 15, 2023.

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 to several Pharmacy Benefit Managers, all but one of which are not owned by plaintiffs, with which Rite Aid and the insurers had independent contracts. On May 22, 2023, the Company won a defense verdict in the jury trial of 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. The court denied the Centene entities’ request for post-trial relief and the deadline has passed for Centene to appeal. 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’s Department of Justice’s Bureau of Medical Fraud and Elder Abuse filed a complaint in intervention. The Company filed a motion to dismiss Relator’s and the State of California’s respective complaints in January 2018, and 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. The parties have resolved the matter, except fees for relator’s counsel, for $60.0 million.

44

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

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, without limitation, 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 and the Company is exploring possible avenues for resolving some or all of its portfolio of opioids-related litigation, although no assurance can be given that the litigation will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

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.

As previously disclosed, on December 13, 2022, a qui tam complaint filed by three former Rite Aid pharmacy personnel (Andrew White, Mark Rosenberg, and Ann Wegelin) (collectively, “qui tam Relators”) was unsealed by the federal District Court for the Northern District of Ohio in an order that also directed the United States Department of Justice to file within 90 days a complaint intervening or partially intervening in the Second Amended Complaint (the “Complaint”). On February 23, 2023, the following states, which were listed in the Complaint, declined to intervene: Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington and the District of Columbia. California subsequently did not intervene. On March 13, 2023, the United States Department of Justice filed its complaint in the federal District Court for the Northern District of Ohio against Rite Aid (“DOJ’s Complaint”) alleging violations of the federal False Claims Act and Controlled Substances Act related to the dispensing of controlled substances, primarily opioids. DOJ’s Complaint seeks damages under the False Claims Act, civil penalties under the Controlled Substances Act, damages in connection with alleged payment by mistake (on behalf of Federal Healthcare Programs), and damages in connection with alleged unjust enrichment. The Company has filed a motion to dismiss DOJ’s Complaint to which DOJ has responded. The qui tam relators voluntarily dismissed their complaint. The parties are engaging in discussions to explore the possibility of resolving the matter, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

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

45

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

(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.

Following the Company’s response to a 2020 CID from the Federal Trade Commission (“FTC”) with respect to consumer protection laws, the Company is seeking to negotiate a resolution with the FTC. The allegations relate to certain business practices that the Company has not engaged in for nearly three years, and the Company currently believes that any resolution of that CID would not likely require a monetary payment. During the course of the Company’s discussions with the FTC Staff in connection with its response to that CID, the FTC Staff also requested certain information from the Company related to compliance with the Company’s 2010 FTC Consent Order. The Company cooperated with the request, however, the FTC Staff informed the Company that absent an agreed resolution, it would recommend that the FTC file a complaint against the Company for violation of the Consent Order, including a request for a monetary payment and other relief. The FTC has now combined the two matters, requested additional information related to privacy and data security matters, and is seeking a single resolution of all open matters, such that discussions related to one matter may affect the ability to resolve another. Discussions continue about a potential agreed resolution, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

The Company has received CIDs from the Department of Justice related to the Medicare Part D plan sponsored by a subsidiary of the Company. 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, where the parties have engaged in a mediation process which remains ongoing. The Company is defending four putative class actions in federal courts regarding alleged privacy breaches, three of which involve technologies alleged to track consumer information and one of which involves a data security incident.

The Rite Aid Employee Benefit Administration Committee (“EBAC”) received a letter from the Department of Labor alleging EBAC had violated ERISA in its management of the Rite Aid Master Retirement Savings Trust as to a specific investment. Discussions are underway about a potential agreed resolution, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

The Company is defending a putative shareholder class action now captioned In re Rite Aid Securities Litigation, filed in the United States District Court for the Eastern District of Pennsylvania (formerly Page). The matter names Rite Aid Corporation and certain executives individually as defendants and raises claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 related to alleged misstatements and omissions concerning the growth of Elixir’s PBM services businesses. The Company has filed a motion to dismiss and intends to aggressively defend against the allegations and challenge their merit. The Company is also defending a putative shareholder class action currently captioned Holland v. Rite Aid Corporation et al., filed in the United States District Court for the Northern District of

46

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Ohio. The matter names Rite Aid Corporation and certain former and current executives individually as defendants and raises claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 related to the DOJ’s Complaint and alleged misstatements and omissions concerning the Company’s risk for regulatory action and litigation related to controlled substances practices.  This matter is also in early stages, but the Company intends to aggressively defend against the allegations and challenge their merit.

Effect of Automatic Stay

Subject to certain exceptions under the Bankruptcy Code, the filing of the Company Parties’ Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Company Parties or their property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of the Company Parties’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above, there are certain exceptions to the automatic stay.

15. Supplementary Cash Flow Data

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for interest	$	128,544	$	94,557
Cash payments (refunds) for income taxes, net	$	3,541	$	(10,359)
Equipment financed under capital leases	$	832	$	1,235
Gross borrowings from revolver	$	2,119,000	$	1,838,000
Gross repayments to revolver	$	1,282,000	$	1,161,000

Significant components of cash provided by Other Liabilities of $205,151 for the twenty-six week period ended September 2, 2023 include cash provided from an increase in accruals for litigation matters and restructuring-related expenses.

Cash used in Other Assets of $88,771 for the twenty-six week period ended September 2, 2023 is comprised primarily of prepaid rent and property insurance.

16. Subsequent Events

Commitments, Contingencies and Guarantees

Certain litigation matters occurred during the twenty-six week period ended September 2, 2023 or prior, but had subsequent updates through the issuance of this report. See further discussion in Note 14.

Restructuring Term Sheet

On October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial and operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet.

47

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Under the Restructuring Term Sheet, the Consenting Noteholders have agreed, subject to certain terms and conditions, to support the Restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the Plan to be filed in the Chapter 11 Cases. Capitalized terms used but not otherwise defined in this “Restructuring Term Sheet” section of this Current Report on Form 10-Q have the meanings given to them in the Restructuring Term Sheet and the Plan, as applicable. Elixir Insurance (“EI”) was excluded from the Chapter 11 filing.

The Plan will be based on the restructuring transactions set forth in the Restructuring Term Sheet (such transactions described in, and in accordance with the Restructuring Agreement and the Term Sheet, the “Restructuring Transactions”), which, among other things, contemplates:

● each holder of a claim on account of the DIP ABL Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit ABL Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP ABL Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit ABL Facility;

● each holder of a claim on account of the DIP FILO Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit FILO Term Loan Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP FILO Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit FILO Term Loan Facility;

● each holder of a DIP Term Loan Claim shall receive, in full and final satisfaction of its claim, payment in full, in Cash;

● to the extent any allowed ABL Facility Claim remains outstanding on the Effective Date, each holder of an ABL Facility claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, or reinstatement of the Allowed ABL Facility Claim under the Exit ABL Facility;

● to the extent any allowed FILO Term Loan Facility Claim remains outstanding on the Effective Date, each holder of a FILO Term Loan Facility Claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, of all ABL Facility Claims, or reinstatement of the Allowed FILO Term Loan Facility Claims under the FILO Term Loan Facility;

● each holder of an allowed Senior Secured Notes Claim, in full satisfaction of its claim, shall receive (a) in the event of a Plan Restructuring, [(i) 100% of the common equity (the “New Common Stock”) of New Rite Aid, subject to dilution by the Management Incentive Plan, and any equity-linked securities issued to the holders of allowed General Unsecured Claims, plus (ii) its pro rata share of the takeback facility, if applicable; or (b) in the event the Restructuring Transaction is not a Plan Restructuring, [its pro rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery]];

● each holder of an allowed General Unsecured Claim, in full satisfaction of its claim, subject to (A) the DIP Term Loan Claims, the ABL Facility Claims, and the FILO Term Loan Facility Claims being

48

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

satisfied in full, in Cash, or such other treatment acceptable to the DIP Lenders and / or the ABL Lenders and the FILO Lenders, as applicable, in their sole discretion, and (B) the satisfaction of any Allowed Adequate Protection Claims, shall receive [[__]% of an equity-linked instrument in New Rite Aid (form and terms to be determined), calculated as of the Effective Date and equal to the product of a formula calculated as the (midpoint value of owned real estate not encumbered prior to the Petition Date, less the costs and expenses to be paid by, or estimated to be paid by, the Debtors’ Estates to administer the Chapter 11 Cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of the equitized Senior Secured Notes Claims)];

● each Intercompany Claim shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Claim, or such other treatment as is reasonably determined by the Debtors;

● each Intercompany Interest shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Interest, or such other treatment as is reasonably determined by the Debtors;

● all Existing Equity Interests in Rite Aid will be cancelled and extinguished, and Holders of Existing Equity Interests in Rite Aid shall receive no recovery on account of such Interests; and

● Section 510(b) Claims shall be discharged, cancelled, released, and extinguished without any distribution to Holders of such Claims.

The Restructuring Term Sheet contains milestones for the progress of the Chapter 11 Cases (the “Milestones”), which include the dates by which the Debtors are required to, among other things, obtain certain orders of the Court and consummate the Debtors’ emergence from bankruptcy. Among other dates set forth in the Restructuring Term sheet, the agreement contemplates that the Court shall have entered an order confirming the Plan no later than [__] months after the Petition Date.

Although the Company intends to pursue the Restructuring as contemplated by the Restructuring Term Sheet, there can be no assurance that the Company will be successful in entering into a Restructuring Support Agreement on the terms set forth in the Restructuring Term Sheet and the terms of the Restructuring Support Agreement and Plan may be subject to material change. In addition, the transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated on the expected terms, if at all.

The Company has significant deferred tax assets, including NOLs. The impact of the Restructuring on the Company’s NOLs will depend on whether the Restructuring is structured as (i) a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company, (ii) a recapitalization of the Company, or (iii) some other alternative structure. If structured as a taxable disposition, the Company anticipates that NOLs of the Company (if any) remaining after the Restructuring will not be available to the Company after consummating the Restructuring. If structured as a recapitalization, the Company anticipates that it will experience an ownership change, and thus NOLs of the Company (if any) remaining after the Restructuring will be subject to limitation, such that the Company may not derive all of the benefits of any such remaining NOLs after consummating the Restructuring. However, the application

49

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

of the rules under IRC Section 382(l)(5) could mitigate such limitation and protect the continued existence of the Company’s NOLs. There is uncertainty as to whether the Company would qualify for the benefits of IRC 382(l)(5). As stated previously in the income tax footnote, the Company will continue to monitor all available evidence related to deferred tax assets for which future realization is uncertain.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated.

Chapter 11 Restructuring

Voluntary Petitions for Reorganization

To implement the Plan, on the Petition Date, the Company Parties filed the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court. Each Company Party will continue to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption In re Rite Aid Corporation, et al., Case No. 23-18993 (MBK). Documents filed on the docket of and other information related to the Chapter 11 Cases are available at https://restructuring.ra.kroll.com/RiteAid. Documents and other information available on such website are not part of this document and shall not be deemed incorporated by reference in this document. To ensure the Company Parties’ ability to continue operating in the ordinary course of business and minimize the effect of the Restructuring on the Company Parties’ customers and employees, the Company Parties filed with the Bankruptcy Court motions seeking a variety of “first-day” relief, including authority to pay employee wages and benefits, and pay vendors and suppliers for all goods and services, each of which was approved on an interim basis by the Bankruptcy Court. In addition, the Company filed with the Bankruptcy Court (a) a motion seeking approval of the DIP Financing in the form of the DIP Credit Agreements (as defined and described below), and (b) a motion seeking approval of certain procedures relating to the marketing and auction (if necessary) of all or some of the Company’s assets. At the Debtors’ “first day hearing” on October 16, 2023, the Bankruptcy Court approved all first day relief from the bench, pending entry of the revised forms of order. The Company filed the revised forms of order to the Bankruptcy Court immediately following the first day hearing, and the Company expects that the Bankruptcy Court will enter the orders approving the first day relief in the immediate term.

Effect of Chapter 11 Cases & Automatic Stay on Pre-Petition Debt Obligations

The commencement of the Chapter 11 Cases above constituted an event of default that accelerated substantially all of the Company’s obligations under the documents governing the Existing Credit Facilities, the Guaranteed Notes, and the Unguaranteed Notes, among others. Indeed, the Company’s debt instruments and agreements described within this Quarterly Report provide that, as a result of the commencement of the Chapter 11 Cases, the principal amount, together with accrued and unpaid fees and interest thereon, and in the case of the indebtedness outstanding under the senior notes, premium, if any, thereon, shall be immediately due and payable. Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors’ rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

50

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Additionally, in connection with the Chapter 11 Cases, the Company has incurred, and expects to continue to incur, significant professional fees and other costs in connection with the Chapter 11 Cases. There can be no assurance that the Company’s current liquidity is sufficient to allow us to satisfy our obligations related to the Chapter 11 Cases or to pursue confirmation of the Plan.

McKesson Corporation

On October 14, 2023, McKesson Corporation (“McKesson”) sent notice to the Company purporting to terminate the Eleventh Amendment to Supply Agreement by and between Rite Aid Corporation and McKesson Corporation, dated as of February 28, 2019 (the “McKesson Corporation Supply Agreement”) based on the occurrence of a termination event. The Company and McKesson have negotiated an agreement in principle to ensure no disruption to the Company’s business and operations, which agreement in principle includes a reservation of rights for both parties as to the purported termination. To the extent such agreement in principle is not executed, is not approved by the Bankruptcy Court, or is approved but subsequently terminates, the Company would vigorously contest such purported termination as null, void, and without effect. Subsequently, to the extent (a) such termination is not rescinded or (b) the Company does not prevail as to the invalidity of the termination event, the termination of the McKesson Corporation Supply Agreement may result in a material adverse impact on the Company’s business and operations.

Elixir Stalking Horse APA

On October 15, 2023, Hunter Lane, LLC, a subsidiary of the Company, and certain of Hunter Lane, LLC’s subsidiaries (collectively, the “Sellers”) entered into an asset purchase agreement (the “Elixir Stalking Horse APA”) with a buyer, MedImpact Healthcare Systems, Inc. (the “Buyer”), pursuant to which the Buyer has agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Sellers, which, collectively constitute the “Elixir Assets.” The Sellers are Debtors in the Chapter 11 Cases.

The acquisition of the Elixir Assets by the Buyer pursuant to the Elixir Stalking Horse APA is subject to approval of the Bankruptcy Court and one or more auctions, if necessary, to solicit higher or otherwise better bids. On October 15, 2023, the Debtors filed a motion (the “Bidding Procedures Motion”) seeking approval of, among other things, certain marketing, auction, and bidding procedures (“Bidding Procedures”), pursuant to which the Debtors will solicit and select the highest or otherwise best offer(s) for the sale or sales of the Elixir Assets and the Debtors’ retail asset portfolio. The Bidding Procedures Motion additionally seeks Bankruptcy Court approval of the Elixir Stalking Horse APA and designation of the Buyer as the “stalking horse” bidder for the Elixir Assets. The Debtors anticipate that the Bankruptcy Court will enter an order approving the relief requested in the Bidding Procedures Motion after a hearing scheduled for October 16. 2023.

In accordance with the Bidding Procedures, if the Debtors receive any higher or otherwise better bids by November 16, 2023, the Debtors expect to conduct an auction for the Elixir Assets by November 20, 2023. As the stalking horse bidder, the Buyer’s offer to purchase the Elixir Assets, as set forth in the Elixir Stalking Horse APA, serves as the minimum or bid floor on which the Debtors, their creditors, other stakeholders, and other bidders may rely. Other interested bidders will be permitted to participate in the auction for the Elixir Assets, if, in accordance with the Bidding Procedures, such interested bidders submit qualifying offers that are higher or otherwise better than the stalking horse bid.

51

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

Under the terms of the Elixir Stalking Horse APA, the Buyer has agreed, subject to Bankruptcy Court approval and absent any higher or otherwise better bid, to acquire the Elixir Assets from the Sellers for $575 million (the “Purchase Price”), subject to certain adjustments in accordance with the terms and conditions of the Elixir Stalking Horse APA, plus the assumption of specified liabilities related to the Elixir Assets. If the Sellers receive a better or otherwise higher bid and the Bankruptcy Court approves the Sellers’ consummation of an alternative sale of the Elixir Assets to any purchaser other than the Buyer, the Sellers will pay the Buyer a break-up fee and reimbursement of certain expenses associated with the negotiation, drafting, and execution of the Elixir Stalking Horse APA, not to exceed 3.5% of the Purchase Price in the aggregate, subject to approval by the Bankruptcy Court.

Adoption of Accounting Standards Codification ("ASC") 852 - Reorganizations

For periods occurring after the Petition Date, the Company will adopt Financial Accounting Standards Board ASC Topic 852 - Reorganizations, which specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. These requirements include distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business.

The Company is currently assessing whether or not it qualifies for fresh start accounting upon emergence from Chapter 11. If the Company were to meet the requirements to adopt the fresh start accounting rules, its assets and liabilities would be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on its unaudited condensed consolidated balance sheets.

Shareholder Matters

On September 28, 2023, the Company received a written notification (the “Notice”) from the NYSE stating that the Company is no longer in compliance with NYSE continued listing standards set forth in Section 802.01B (the “Minimum Market Capitalization Standard”) and Section 802.01C (the “Minimum Stock Price Standard”) of the NYSE’s Listed Company Manual due to the fact that (i) the Company’s average total market capitalization over a consecutive 30 trading-day period was less than $50,000 and, at the same time, its stockholders’ equity was less than $50,000; and (ii) the average closing price of the Company’s common stock was less than $1.00 per share over a consecutive 30 trading-day period.

In accordance with the NYSE’s rules, on October 12, 2023, the Company provided the NYSE with notice of its receipt of the notification and of its current intention to pursue measures to cure the deficiencies. The Company has six months from receipt of the notice to regain compliance with the NYSE’s Minimum Stock Price Standard, or until the Company’s next annual meeting of stockholders if stockholder approval is required, and eighteen months from receipt of the notice to regain compliance with the NYSE’s Minimum Market Capitalization Standard. The Company has forty-five days from receipt of the Notice to submit a business plan that demonstrates compliance with the Minimum Market Capitalization Standard within such eighteen months cure period. Upon receipt of such plan, the NYSE would have up to forty-five days to review and determine whether the Company has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the cure period. The NYSE may either accept the plan, at which time the Company would be subject to ongoing quarterly monitoring for compliance with the plan, or the NYSE may not accept the plan and the Company would be subject to suspension and delisting proceedings (earlier than the cure periods noted above).

52

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen and Twenty-Six Week Periods Ended September 2, 2023 and August 27, 2022

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

(unaudited)

On October 16, 2023, the NYSE announced that it had determined to commence proceedings to delist the Company’s common stock from the NYSE. Trading in the Company’s common stock was immediately suspended. The NYSE reached its decision that the Company’s common stock is no longer suitable for listing pursuant to the NYSE Listed Company Manual Section 802.01D after the Company’s October 16, 2023 disclosure that the Company commenced the Chapter 11 Cases. The Company expects that such delisted securities may be subject to trading in the OTC market.

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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 2,200 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 1.5 million covered lives, including approximately 0.3 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.

Significant Event

Chapter 11 Restructuring

Restructuring Term Sheet

On October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial and operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet.

Under the Restructuring Term Sheet, the Consenting Noteholders have agreed, subject to certain terms and conditions, to support the Restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the Plan to be filed in the Chapter 11 Cases. Capitalized terms used but not otherwise defined in this “Restructuring Term Sheet” section of this Current Report on Form 10-Q have the meanings given to them in the Restructuring Term Sheet and the Plan, as applicable.

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The Plan will be based on the restructuring transactions set forth in the Restructuring Term Sheet (such transactions described in, and in accordance with the Restructuring Agreement and the Term Sheet, the “Restructuring Transactions”), which, among other things, contemplates:

● each holder of a claim on account of the DIP ABL Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit ABL Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP ABL Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit ABL Facility;

● each holder of a claim on account of the DIP FILO Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit FILO Term Loan Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP FILO Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit FILO Term Loan Facility;

● each holder of a DIP Term Loan Claim shall receive, in full and final satisfaction of its claim, payment in full, in Cash;

● to the extent any allowed ABL Facility Claim remains outstanding on the Effective Date, each holder of an ABL Facility claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, or reinstatement of the Allowed ABL Facility Claim under the Exit ABL Facility;

● to the extent any allowed FILO Term Loan Facility Claim remains outstanding on the Effective Date, each holder of a FILO Term Loan Facility Claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, of all ABL Facility Claims, or reinstatement of the Allowed FILO Term Loan Facility Claims under the FILO Term Loan Facility;

● each holder of an allowed Senior Secured Notes Claim, in full satisfaction of its claim, shall receive (a) in the event of a Plan Restructuring, [(i) 100% of the common equity (the “New Common Stock”) of New Rite Aid, subject to dilution by the Management Incentive Plan, and any equity-linked securities issued to the holders of allowed General Unsecured Claims, plus (ii) its pro rata share of the takeback facility, if applicable; or (b) in the event the Restructuring Transaction is not a Plan Restructuring, [its pro rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery]];

● each holder of an allowed General Unsecured Claim, in full satisfaction of its claim, subject to (A) the DIP Term Loan Claims, the ABL Facility Claims, and the FILO Term Loan Facility Claims being satisfied in full, in Cash, or such other treatment acceptable to the DIP Lenders and / or the ABL Lenders and the FILO Lenders, as applicable, in their sole discretion, and (B) the satisfaction of any Allowed Adequate Protection Claims, shall receive [[__]% of an equity-linked instrument in New Rite Aid (form and terms to be determined), calculated as of the Effective Date and equal to the product of a formula calculated as the (midpoint value of owned real estate not encumbered prior to the Petition Date, less the costs and expenses to be paid by, or estimated to be paid by, the Debtors’ Estates to administer the Chapter 11 Cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of the equitized Senior Secured Notes Claims)];

● each Intercompany Claim shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Claim, or such other treatment as is reasonably determined by the Debtors;

● each Intercompany Interest shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Interest, or such other treatment as is reasonably determined by the Debtors;

● all Existing Equity Interests in Rite Aid will be cancelled and extinguished, and Holders of Existing Equity Interests in Rite Aid shall receive no recovery on account of such Interests; and

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● Section 510(b) Claims shall be discharged, cancelled, released, and extinguished without any distribution to Holders of such Claims.

The Restructuring Term Sheet contains milestones for the progress of the Chapter 11 Cases (the “Milestones”), which include the dates by which the Debtors are required to, among other things, obtain certain orders of the Court and consummate the Debtors’ emergence from bankruptcy. Among other dates set forth in the Restructuring Term Sheet, the agreement contemplates that the Court shall have entered an order confirming the Plan no later than [__] months after October 15, 2023 (the “Petition Date”).

Although the Company intends to pursue the Restructuring as contemplated by the Restructuring Term Sheet, there can be no assurance that the Company will be successful in entering into a Restructuring Support Agreement on the terms set forth in the Restructuring Term Sheet and the terms of the Restructuring Support Agreement and Plan may be subject to material change. In addition, the transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated on the expected terms, if at all.

The Company has significant deferred tax assets, including NOLs. The impact of the Restructuring on the Company’s NOLs will depend on whether the Restructuring is structured as (i) a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company, (ii) a recapitalization of the Company, or (iii) some other alternative structure. If structured as a taxable disposition, the Company anticipates that NOLs of the Company (if any) remaining after the Restructuring will not be available to the Company after consummating the Restructuring. If structured as a recapitalization, the Company anticipates that it will experience an ownership change, and thus NOLs of the Company (if any) remaining after the Restructuring will be subject to limitation, such that the Company may not derive all of the benefits of any such remaining NOLs after consummating the Restructuring. However, the application of the rules under IRC Section 382(l)(5) could mitigate such limitation and protect the continued existence of our NOLs. There is uncertainty as to whether we would qualify for the benefits of IRC 382(l)(5).  As stated previously in the income tax footnote, the Company will continue to monitor all available evidence related to deferred tax assets for which future realization is uncertain.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated.

Voluntary Petitions for Reorganization

To implement the Plan, on the Petition Date, the Company Parties filed the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court. Each Company Party will continue to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption In re Rite Aid Corporation, et al., Case No. 23-18993 (MBK). Documents filed on the docket of and other information related to the Chapter 11 Cases are available at https://restructuring.ra.kroll.com/RiteAid. Documents and other information available on such website are not part of this document and shall not be deemed incorporated by reference in this document. To ensure the Company Parties’ ability to continue operating in the ordinary course of business and minimize the effect of the Restructuring on the Company Parties’ customers and employees, the Company Parties filed with the Bankruptcy Court motions seeking a variety of “first-day” relief, including authority to pay employee wages and benefits, and pay vendors and suppliers for all goods and services, each of which was approved on an interim basis by the Bankruptcy Court from the bench, pending entry of the revised forms of order. The Company filed the revised forms of order to the Bankruptcy Court immediately following the first day hearing, and the Company expects that the Bankruptcy Court will enter the orders approving the first day relief in the immediate term.

Taken together, these actions are intended to allow us to continue our commitment to meeting the healthcare needs of the communities we serve.

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For further information, refer to Note 16 of the notes to the unaudited condensed consolidated financial statements.

Restructuring

Beginning in fiscal 2019, we initiated a series of plans designed to reorganize our executive management team, reduce managerial layers, improve our cost structure, free up working capital, rebrand our retail pharmacy and pharmacy services business, and launch our Store of the Future format. Other strategic initiatives included the expansion of our digital business, replacing and updating our financial systems to improve efficiency, and closing unprofitable stores. In December 2022, we announced a new multi-year performance acceleration program, which allows us to fast-track initiatives that will improve sales, script volume and operating margins, and free up cash. This program has given us visibility into the profitability opportunities we can drive over the next three years by focusing on improvements and growth in our core businesses. These and future activities, including those designed to enhance our liquidity and capital structure, are expected to provide future growth opportunities, expense efficiency benefits, as well as reduce our level of corporate leverage and are reflected into our plan of reorganization. We also engaged professional advisors to assist with the exploration of strategic alternatives, including the filing of Chapter 11 Cases. In connection with the Chapter 11 Cases, we incurred, and expect to continue to incur, significant professional fees and other costs. As part of our reorganization, we expect to implement a revised business plan to bolster core strengths, address operational challenges, reinforce liquidity, reduce leverage, optimize store footprint and address litigation. As mentioned herein, there can be no assurance as to whether the Chapter 11 Cases will be successful, including our ability to achieve our operational, strategic, and financial goals. Additionally, 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.

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.

The COVID-19 pandemic had an impact on our operating results for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022 and will continue to have an impact on several factors underlying our operating results and liquidity in fiscal 2024. 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 September 2, 2023 was $1,020.0 million or $18.44 per basic and diluted share compared to a net loss of $331.3 million or $6.07 per basic and diluted share for the thirteen week period ended August 27, 2022. Our net loss for the twenty-six week period ended September 2, 2023 was $1,326.7 million or $24.02 per basic and diluted share compared to a net loss of $441.5 million or $8.11 per basic and diluted share for the twenty-six week period ended August 27, 2022.

The increase in net loss for the thirteen and twenty-six week periods ended September 2, 2023 was due primarily to an increase in litigation charges relating primarily to the Humana and Schmuckley matters, higher facility exit and impairment charges driven by store closures, higher restructuring-related charges, higher goodwill and intangible asset impairment charges, a decrease in Adjusted EBITDA, and a gain on debt modifications and retirements in the prior year second quarter.

Our Adjusted EBITDA for the thirteen and twenty-six week periods ended September 2, 2023 was $16.7 million or 0.3% of revenues and $108.4 million or 1.0% of revenues, respectively, compared to $78.5 million or 1.3% of revenues and $178.7 million or 1.5% of revenues, respectively, for the thirteen and twenty-six week periods ended August 27, 2022.

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The decrease in Adjusted EBITDA for the thirteen week period ended September 2, 2023 was due to declines in both the Retail Pharmacy Segment and Pharmacy Services Segment. Adjusted EBITDA decreased $58.0 million in the Retail Pharmacy Segment due primarily to a decrease in Adjusted EBITDA gross profit of $61.5 million, partially offset by a decrease in Adjusted EBITDA selling, general and administrative expenses of $3.5 million. Adjusted EBITDA in the Pharmacy Services Segment decreased $3.9 million due primarily to the decline in revenues associated with lower Elixir Prescription Drug Plan (“PDP”) membership and lost commercial clients, partially offset by improved procurement economics and reductions in selling, general and administrative expenses (“SG&A”).

The decrease in Adjusted EBITDA for the twenty-six week period ended September 2, 2023 was due to declines in both the Retail Pharmacy Segment and Pharmacy Services Segment. Adjusted EBITDA decreased $61.6 million in the Retail Pharmacy Segment due primarily to a decrease in Adjusted EBITDA gross profit of $69.9 million, partially offset by a decrease in Adjusted EBITDA SG&A of $8.3 million. Adjusted EBITDA in the Pharmacy Services Segment decreased $8.7 million due primarily to the decline in revenues associated with lower Elixir PDP membership, partially offset by reductions in SG&A expense.

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.

Consolidated Results of Operations

Revenues and Other Operating Data

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands except per share amounts)
Revenues(a)	$	5,646,081		$	5,901,069		$	11,299,243		$	11,915,652
Revenue decline		(4.3)	%		(3.5)	%		(5.2)	%		(2.9)	%
Net loss	$	(1,020,030)		$	(331,290)		$	(1,326,748)		$	(441,481)
Net loss per diluted share	$	(18.44)		$	(6.07)		$	(24.02)		$	(8.11)
Adjusted EBITDA(b)	$	16,709		$	78,549		$	108,424		$	178,679
Adjusted Net Loss(b)	$	(408,462)		$	(48,823)		$	(448,569)		$	(95,464)
Adjusted Net Loss per Diluted Share(b)	$	(7.39)		$	(0.90)		$	(8.12)		$	(1.75)

(a) Revenues for the thirteen and twenty-six week periods ended September 2, 2023 exclude $34,704 and $70,025, respectively, of inter-segment activity that is eliminated in consolidation. Revenues for the thirteen and twenty-six week periods ended August 27, 2022 exclude $57,963 and $114,593, 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 4.3% and 5.2% for the thirteen and twenty-six week periods ended September 2, 2023, compared to a decrease of 3.5% and 2.9% for the thirteen and twenty-six week periods ended August 27, 2022. Revenues for the thirteen week period ended September 2, 2023 were impacted by a $517.4 million decrease in Pharmacy Services Segment revenues, partially offset by a $239.1 million increase in Retail Pharmacy Segment revenues. Revenues for the twenty-six week period ended September 2, 2023 were impacted by a $1,047.1 million decrease in Pharmacy Services Segment revenues, partially offset by a $386.1 million increase in Retail Pharmacy Segment revenues.

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

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Costs and Expenses

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands)
Cost of revenues(a)	$	4,550,485		$	4,746,574		$	9,025,121		$	9,564,428
Gross profit		1,095,596			1,154,495			2,274,122			2,351,224
Gross margin		19.4	%		19.6	%		20.1	%		19.7	%
Selling, general and administrative expenses	$	1,458,466		$	1,193,553		$	2,713,689		$	2,411,482
Selling, general and administrative expenses as a percentage of revenues		25.8	%		20.2	%		24.0	%		20.2	%
Facility exit and impairment charges		310,761			45,845			330,762			112,416
Goodwill and intangible asset impairment charges		295,490			252,200			446,990			252,200
Interest expense		72,658			52,533			137,878			100,652
Gain on debt modifications and retirements, net		—			(41,312)			—			(41,312)
Gain on sale of assets, net		(24,087)			(29,001)			(32,280)			(58,197)

(a) Cost of revenues for the thirteen and twenty-six week periods ended September 2, 2023 exclude $34,704 and $70,025, respectively, of inter-segment activity that is eliminated in consolidation. Cost of revenues for the thirteen and twenty-six week periods ended August 27, 2022 exclude $57,963 and $114,593, respectively, of inter-segment activity that is eliminated in consolidation.

Gross Profit and Cost of Revenues

Gross profit decreased by $58.9 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. Gross profit decreased by $77.1 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period ended August 27, 2022. Gross profit for the thirteen week period ended September 2, 2023 includes a decrease of $64.4 million in our Retail Pharmacy Segment, partially offset by an increase of $5.5 million in our Pharmacy Services Segment. Gross profit for the twenty-six week period ended September 2, 2023 includes a decrease of $74.9 million in our Retail Pharmacy Segment and a decrease of $2.2 million in our Pharmacy Services Segment. Gross margin was 19.4% for the thirteen week period ended September 2, 2023 compared to 19.6% for the thirteen week period ended August 27, 2022. Gross margin was 20.1% for the twenty-six week period ended September 2, 2023 compared to 19.7% for the twenty-six week period ended August 27, 2022. 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 increased by $264.9 million for the thirteen week period ended September 2, 2023, compared to the thirteen week period ended August 27, 2022. The increase in SG&A for the thirteen week period ended September 2, 2023 includes an increase of $269.2 million relating to our Retail Pharmacy Segment, partially offset by a decrease of $4.3 million relating to our Pharmacy Services Segment. SG&A increased by $302.2 million for the twenty-six week period ended September 2, 2023, compared to the twenty-six week period ended August 27, 2022. The increase in SG&A for the twenty-six week period ended September 2, 2023 includes an increase of $324.6 million relating to our Retail Pharmacy Segment, partially offset by a decrease of $22.4 million relating to our Pharmacy Services Segment. Please see the section entitled “Segment Analysis” below for additional details regarding SG&A.

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Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week				Twenty-Six Week
	Period Ended				Period Ended
	September 2,			August 27,	September 2,		August 27,
	2023		2022		2023		2022
Impairment charges	$	290,694	$	34,738	$	302,432	$	69,774
Facility exit charges		20,067		11,107		28,330		42,642
	$	310,761	$	45,845	$	330,762	$	112,416

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results—Facility Exit and Impairment Charges” included in our Fiscal 2023 10-K for a detailed description of our impairment and lease termination methodology.

Goodwill and Intangible Asset Impairment Charges

During the thirteen week period ended June 3, 2023, we completed a qualitative goodwill impairment assessment, at which time it was determined after evaluating results, events, and circumstances that were not known in prior quarters that a quantitative assessment was necessary for the Pharmacy Services Segment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services Segment exceeded its fair value principally due to projected performance at EI. Unfavorable drug costs and utilization trends that became apparent during the thirteen week period ended June 3, 2023, resulted in an unfavorable MLR which also increased the projected working capital needs of the business and subsequently contributed to the decision to exit the Individual Part D market, effective January 1, 2024. This resulted in goodwill impairment charges of $151.5 million for the thirteen week period ended June 3, 2023.

As further discussed in Note 16, Subsequent Events, we concluded that there is substantial doubt about our ability to continue as a going concern within one year from the date of issuance of the unaudited consolidated financial statements. As a result of overall lower current year projections, we concluded that a quantitative assessment was necessary and tested our goodwill and intangible assets for impairment.

During the thirteen week period ended September 2, 2023, we completed a qualitative and quantitative impairment assessment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services Segment exceeded its fair value principally due to further erosion of the future cash flow projections for fiscal years ending after fiscal 2024 due to an inability to execute management’s business strategies for the 2024 selling season. The unfavorable results of the selling season became apparent during the thirteen week period ended September 2, 2023, which resulted in lower renewals of existing customers as well as less new business earned. This resulted in goodwill and the CMS license intangible incurring impairment charges of $266.0 million and $29.5 million, respectively for the thirteen week period ended September 2, 2023. The qualitative and quantitative impairment assessment of the Retail Pharmacy Segment resulted in no adjustment to the carrying values as the fair value of its reporting unit exceeds its carrying amount.

Interest Expense

Interest expense was $72.7 million and $137.9 million for the thirteen and twenty-six week periods ended September 2, 2023, respectively, compared to $52.5 million and $100.7 million for the thirteen and twenty-six week periods ended August 27, 2022, respectively. The weighted average interest rate on our indebtedness for the twenty-six week periods ended September 2, 2023 and August 27, 2022 was 7.6% and 5.9%, respectively. We have variable interest rate debt and in the current rising interest rate environment, our interest expense may increase.

Income Taxes

We recorded income tax expense of $2.3 million and $12.0 million for the thirteen week periods ended September 2, 2023 and August 27, 2022, respectively. We recorded income tax expense of $3.8 million and $15.5 million for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. The effective tax

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rate for the thirteen week periods ended September 2, 2023 and August 27, 2022 was (0.2)% and (3.8)%, respectively. The effective tax rate for the twenty-six week periods ended September 2, 2023 and August 27, 2022 was (0.3)% and (3.6)%, respectively. The effective tax rate for the thirteen and twenty-six week periods ended September 2, 2023 was net of an adjustment of (25.3)% and (25.8)%, respectively, to adjust the valuation allowance against deferred tax assets. The effective tax rate for the thirteen and twenty-six week periods ended August 27, 2022 was net of an adjustment of 88.4% and 57.0%, respectively, to adjust the valuation allowance against deferred tax assets, primarily resulting from a Pennsylvania law change that reduced the corporate net income tax rate causing a reduction to the valuation allowance of $380.5 million.

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 $4.0 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 our results of operations or the financial position.

We continue to maintain a valuation allowance against net deferred tax assets of $1,990.4 million and $1,649.2 million, which relates to federal and state deferred tax assets that may not be realized based on our future projections of taxable income at September 2, 2023 and March 4, 2023, respectively. As further discussed in the “Significant Event” section above, we concluded that there is substantial doubt about our ability to continue as a going concern. We considered this, as well as the impact of the Chapter 11 proceedings as part of our current evaluation of valuation allowance established for deferred tax assets for which future realization is uncertain. Additional discussion regarding the Restructuring on deferred tax assets can be found in the “Significant Event” section above.

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
September 2, 2023:
Revenues	$	4,470,927	$	1,209,858	$	(34,704)	$	5,646,081
Gross Profit		978,602		116,994		—		1,095,596
Adjusted EBITDA(*)		(26,477)		43,186		—		16,709
August 27, 2022:
Revenues	$	4,231,791	$	1,727,241	$	(57,963)	$	5,901,069
Gross Profit		1,043,036		111,459		—		1,154,495
Adjusted EBITDA(*)		31,484		47,065		—		78,549
Twenty-Six Week Period Ended
September 2, 2023:
Revenues	$	8,963,256	$	2,406,012	$	(70,025)	$	11,299,243
Gross Profit		2,065,465		208,657		—		2,274,122
Adjusted EBITDA(*)		43,572		64,852		—		108,424
August 27, 2022:
Revenues	$	8,577,147	$	3,453,098	$	(114,593)	$	11,915,652
Gross Profit		2,140,393		210,831		—		2,351,224
Adjusted EBITDA(*)		105,166		73,513		—		178,679

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(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.

Retail Pharmacy Segment Results of Operations

Revenues and Other Operating Data

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands)
Revenues	$	4,470,927		$	4,231,791		$	8,963,256		$	8,577,147
Revenue growth (decline)		5.7	%		(1.1)	%		4.5	%		(0.6)	%
Same store sales growth		8.7	%		5.6	%		8.4	%		5.1	%
Pharmacy sales growth		11.7	%		1.1	%		9.8	%		1.5	%
Same store prescription count growth, adjusted to 30-day equivalents		3.6	%		3.1	%		4.1	%		2.0	%
Same store pharmacy sales growth		14.2	%		8.0	%		13.6	%		7.3	%
Pharmacy sales as a % of total retail sales		74.7	%		70.7	%		74.3	%		70.7	%
Front-end sales decline		(8.7)	%		(5.8)	%		(8.1)	%		(5.2)	%
Same store front-end sales decline		(5.7)	%		(0.3)	%		(5.0)	%		(0.4)	%
Front-end sales as a % of total retail sales		25.3	%		29.3	%		25.7	%		29.3	%
Adjusted EBITDA(*)	$	(26,477)		$	31,484		$	43,572		$	105,166
Store data:
Total stores (beginning of period)		2,284			2,361			2,309			2,450
New stores		—			—			2			—
Store acquisitions		—			—			—			—
Closed stores		(31)			(9)			(58)			(98)
Total stores (end of period)		2,253			2,352			2,253			2,352
Relocated stores		1			1			1			2
Remodeled and expanded stores		—			11			—			13

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

Revenues

Revenues increased 5.7% for the thirteen week period ended September 2, 2023 compared to a decrease of 1.1% for the thirteen week period ended August 27, 2022. The increase in revenues for the thirteen week period ended September 2, 2023 was driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID-19 vaccine and testing revenue as well as store closures.

Pharmacy same store sales increased by 14.2% for the thirteen week period ended September 2, 2023 compared to an increase of 8.0% for the thirteen week period ended August 27, 2022. 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 3.6% for the thirteen week period ended September 2, 2023 driven primarily by an increase in non-COVID-19 same store prescriptions of 5.8%, with same store maintenance prescriptions increasing 6.5% and other same store acute prescriptions increasing 3.5%. The pharmacy sales increase was also driven by the increase in sales of Ozempic and other weight-loss drugs, which have both a high sales and cost per script.

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Front-end same store sales decreased 5.7% during the thirteen week period ended September 2, 2023 compared to a decrease of 0.3% during the thirteen week period ended August 27, 2022. Front-end same store sales, excluding tobacco products, decreased 5.3%. Front-end same store sales were driven by decreases in seasonal, general merchandise, such as toys and electronics, alcohol, consumables (dairy and grocery), beauty, and diagnostic care.

Revenues increased 4.5% for the twenty-six weeks ended September 2, 2023 compared to a decrease of 0.6% for the twenty-six weeks ended August 27, 2022. The increase in revenues for the twenty-six week period ended September 2, 2023 was driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID-19 vaccine and testing revenue as well as store closures.

Pharmacy same store sales increased by 13.6% for the twenty-six week period ended September 2, 2023 compared to an increase of 7.3% in the twenty-six week period ended August 27, 2022. 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 4.1% for the twenty-six week period ended September 2, 2023 driven primarily by an increase in non-COVID-19 same store prescriptions of 6.6%, with same store maintenance prescriptions increasing 7.0% and other same store acute prescriptions increasing 5.2%. The pharmacy sales increase was also driven by the increase in sales of Ozempic and other weight-loss drugs, which have both a high sales and cost per script.

Front-end same store sales decreased 5.0% during the twenty-six week period ended September 2, 2023 compared to a decrease of 0.4% during the twenty-six week period ended August 27, 2022. Front-end same store sales, excluding tobacco products, decreased 4.5%. Front-end same store sales were driven by decreases in general merchandise, such as toys and electronics, alcohol, seasonal, consumables (dairy and grocery), beauty, and diagnostic and upper respiratory care.

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.

Costs and Expenses

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands)
Cost of revenues	$	3,492,325		$	3,188,755		$	6,897,791		$	6,436,754
Gross profit		978,602			1,043,036			2,065,465			2,140,393
Gross margin		21.9	%		24.6	%		23.0	%		25.0	%
FIFO gross profit(*)		986,102			1,053,157			2,080,465			2,150,514
FIFO gross margin(*)		22.1	%		24.9	%		23.2	%		25.1	%
Selling, general and administrative expenses	$	1,370,016			1,100,775			2,542,589			2,217,989
Selling, general and administrative expenses as a percentage of revenues		30.6	%		26.0	%		28.4	%		25.9	%

(*)  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 $64.4 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. Gross profit decreased $74.9 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period ended August 27, 2022. The decrease in gross profit for the thirteen and twenty-six week periods ended September 2, 2023 was driven by the decline in front-end sales, COVID-19 vaccinations and testing, and increased shrink expense, partially offset by the increase in prescriptions filled, better than expected recovery rates, and the impact of generic drug settlements.

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Gross margin was 21.9% of sales for the thirteen week period ended September 2, 2023 compared to 24.6% of sales for the thirteen week period ended August 27, 2022. Gross margin was 23.0% of sales for the twenty-six week period ended September 2, 2023 compared to 25.0% of sales for the twenty-six week period ended August 27, 2022. The decline in gross margin as a percentage of revenues for the thirteen and twenty-six week periods ended September 2, 2023 was 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 $7.5 million and $15.0 million for the thirteen and twenty-six week periods ended September 2, 2023, respectively, compared to LIFO charges of $10.1 million for the thirteen and twenty-six week periods ended August 27, 2022. The LIFO charges for the thirteen and twenty-six week periods ended September 2, 2023 were mostly due to higher anticipated front-end inflation in fiscal 2024.

Selling, General and Administrative Expenses

SG&A expenses increased $269.2 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. SG&A expenses increased $324.6 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period August 27, 2022. The increase in SG&A expenses for the thirteen and twenty-six week periods ended September 2, 2023 is due primarily to litigation charges relating primarily to the Humana and Schmuckley matters and higher restructuring-related charges.

SG&A expenses as a percentage of revenues for the thirteen week period ended September 2, 2023 was 30.6% compared to 26.0% for the thirteen week period ended August 27, 2022. SG&A expenses as a percentage of revenues for the twenty-six week period ended September 2, 2023 was 28.4% compared to 25.9% for the twenty-six week period ended August 27, 2022. The increase in SG&A expenses as a percentage of revenues for the thirteen and twenty-six week periods ended September 2, 2023 was due primarily to the items noted above.

Pharmacy Services Segment Results of Operations

Revenues and Other Operating Data

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands)
Revenues	$	1,209,858		$	1,727,241		$	2,406,012		$	3,453,098
Revenue decline		(30.0)	%		(9.0)	%		(30.3)	%		(8.4)	%
Adjusted EBITDA(*)	$	43,186		$	47,065		$	64,852		$	73,513

(*)   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 $517.4 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. Revenues decreased $1,047.1 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period ended August 27, 2022. The known loss of a large commercial client and the decline in Elixir Individual Part D Insurance membership driven by change in our pricing strategy were the largest drivers of the decline. The enterprise impact of the Elixir Insurance membership changes on revenues was $401.5 million and $778.8 million for the thirteen and twenty-six week periods ended September 2, 2023, respectively. The remaining revenue decrease primarily driven by the loss of the large commercial client was $115.9 million and $268.3 million for the thirteen and twenty-six week periods ended September 2, 2023, respectively.

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Costs and Expenses

	Thirteen Week Period Ended						Twenty-Six Week Period Ended
	September 2,			August 27,			September 2,			August 27,
	2023			2022			2023			2022
	(dollars in thousands)
Cost of revenues	$	1,092,864		$	1,615,782		$	2,197,355		$	3,242,267
Gross profit		116,994			111,459			208,657			210,831
Gross margin		9.7	%		6.5	%		8.7	%		6.1	%
Selling, general and administrative expenses	$	88,450			92,778			171,100			193,493
Selling, general and administrative expenses as a percentage of revenues		7.3	%		5.4	%		7.1	%		5.6	%

Gross Profit and Cost of Revenues

Gross profit increased $5.5 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. The increase in gross profit was primarily due to improved procurement economics, partially offset by the decline in revenues associated with lost clients, as mentioned above.

Gross margin was 9.7% of sales for the thirteen week period ended September 2, 2023 compared to 6.5% of sales for the thirteen week period ended August 27, 2022. The increase in gross margin was due primarily to improved procurement economics and the change in business mix as we continue to reposition our business.

Gross profit decreased $2.2 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period ended August 27, 2022. The decrease in gross profit was primarily due to the decline in revenues associated with lost clients, as noted above, and an increase in the MLR at EI, partially offset by improved procurement economics.

Gross margin was 8.7% of sales for the twenty-six week period ended September 2, 2023 compared to 6.1% of sales for the twenty-six week period ended August 27, 2022. The increase in gross margin was due primarily to improved procurement economics and the change in business mix as we continue to reposition our business.

Selling, General and Administrative Expenses

SG&A expenses decreased $4.3 million for the thirteen week period ended September 2, 2023 compared to the thirteen week period ended August 27, 2022. SG&A expenses decreased $22.4 million for the twenty-six week period ended September 2, 2023 compared to the twenty-six week period ended August 27, 2022. The decrease for the thirteen and twenty-six week periods ended September 2, 2023 was due primarily to decreased litigation and other contractual settlements, further consolidation of administrative functions as well as reductions in cost structure to support the lower membership base.

SG&A expenses as a percentage of revenue was 7.3% for the thirteen week period ended September 2, 2023 compared to 5.4% for the thirteen week period ended August 27, 2022. SG&A expenses as a percentage of revenue was 7.1% for the twenty-six week period ended September 2, 2023 compared to 5.6% for the twenty-six week period ended August 27, 2022. The increase in the thirteen and twenty-six week periods ended September 2, 2023 SG&A expenses as a percentage of revenues was due primarily to 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 credit agreements. 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 September 2, 2023 was $605.1

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million, which consisted of revolver borrowing capacity of $602.8 million and invested cash of $2.3 million. Total liquidity as of October 13, 2023 was $408.8 million, which consisted of revolver borrowing capacity of $390.0 million and invested cash of $18.8 million.

On October 15, 2023, we voluntarily commenced the Chapter 11 Cases in the Bankruptcy Court to modify our capital structure, including restructuring portions of our debt, and resolve potential legal liabilities, the initiation of which proceedings constituted an Event of Default under the Existing Credit Agreement. We intend to use the Chapter 11 process to provide a fair, orderly, efficient and legally binding mechanism to implement the Restructuring Term Sheet that provides for a financial and operational restructuring designed to strengthen our balance sheet and reduce our total debt, improving our financial position and allowing us to continue driving our strategic priorities and investing in the business. See also “Significant Event” above and “DIP ABL Credit Agreement” and “DIP Term Loan Credit Agreement” below.

As of the date the accompanying unaudited condensed consolidated financial statements were issued (the “issuance date”), management evaluated the significance of the following adverse conditions in accordance with ASC 205-40, Going Concern. The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, management can provide no assurance that the transactions described therein will be consummated.

The bankruptcy filing represents an adverse event that creates substantial uncertainty regarding our ability to recover our assets and satisfy our liabilities in the ordinary course of business. In this regard, while management believes we will be able to emerge from bankruptcy and continue to operate as a viable going concern, management can provide no assurance that: (a) our prearranged plan of reorganization may never be confirmed or become effective, (b) the Debtors’ voting creditors may reject the Plan embodying the restructuring transactions contemplated by the Restructuring Term Sheet, (c) the Bankruptcy Court may grant or deny motions in a manner that is adverse to us and our subsidiaries, and (d) the Chapter 11 Cases may be converted into cases under chapter 7 of the Bankruptcy Code.

While management believes the reorganization through the Chapter 11 proceedings will appropriately position us upon our re-emergence from bankruptcy, the commencement of these proceedings constituted an event of default (and an acceleration event) under certain of our debt agreements, for which enforcement of any remedies by the lenders have been automatically stayed as a result of the Chapter 11 proceedings. However, management can provide no assurance that the lenders will ultimately be able to exercise their remedies, which may include, among others, a cessation of our operations and liquidation of our assets.

These uncertainties raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is contingent upon, among other things, our ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive restructuring, successfully emerge from the Chapter 11 and generate sufficient liquidity following the Restructuring to meet our obligations and operating needs as they become due. The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

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 “Prior Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Prior Amended Credit Agreement”), which provided for facilities consisting of a $2.7 billion senior secured asset-based revolving credit facility and a $450.0 million “first-in, last out” senior secured term loan facility, the proceeds of which were used in December 2018 to refinance our prior $2.7 billion existing credit agreement.

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On August 20, 2021, we entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Prior Credit Agreement to provide for a $2.8 billion senior secured asset-based revolving credit facility (the “Prior Senior Secured Revolving Credit Facility”) and a $350.0 million “first-in, last-out” senior secured term loan facility (“Prior Senior Secured Term Loan” and together with the Prior Senior Secured Revolving Credit Facility, collectively, the “Prior Amended Facilities”). The Prior Amended Facilities extended our debt maturity profile and provided additional liquidity. Borrowings under the Prior Senior Secured Revolving Credit Facility bore 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 Prior Amended Credit Agreement).  Borrowings under the Prior Senior Secured Term Loan bore interest at a rate per annum equal to, at our 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%.

On December 1, 2022, we entered into the Third Amendment to Credit Agreement (the “Third Amendment”), which, among other things, amended the Prior Amended Credit Agreement (the Prior Amended Credit Agreement, as modified by the Third Amendment, the “Existing Credit Agreement”) to provide for a $2.85 billion senior secured asset-based revolving credit facility (the “Existing Senior Secured Revolving Credit Facility”) and a $400.0 million “first-in, last-out” senior secured term loan facility (the “Existing Senior Secured Term Loan” and, together with the Existing Senior Secured Revolving Credit Facility, collectively, the “Existing Facilities”), replaced the LIBOR rate with a Term SOFR-based rate as the applicable benchmark for the Existing Facilities, included COVID-19 vaccines in the borrowing base under the Existing Senior Secured Revolving Credit Facility, subject to limitations and conditions as specified in the Existing Credit Agreement, and increased the interest rate applicable to loans under the Existing Senior Secured Term Loan to (x) a base rate (determined in a customary manner) plus a margin of 2.00% or (y) an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.00%.

We are required to pay fees between 0.250% and 0.375% per annum on the daily unused amount of the commitments under the Existing Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Existing Credit Agreement). The Existing 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 Existing Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. As of September 2, 2023, we had $2,437.0 million of borrowings outstanding under the Existing Facilities and had letters of credit outstanding under the Existing Senior Secured Revolving Credit Facility in a face amount of approximately $210.2 million, which resulted in remaining borrowing capacity under the Existing Senior Secured Revolving Credit Facility of $602.8 million. If at any time the total credit exposure outstanding under the Existing Senior Secured Revolving Credit Facility exceeds the borrowing base, we will be required to repay amounts outstanding to eliminate such shortfall.

The Existing Credit Agreement restricts us and all of our subsidiaries, including the subsidiaries that guarantee our obligations under the Existing Facilities, the secured guaranteed notes and unsecured 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 store and lockbox deposit accounts and cash necessary to cover our current liabilities). The Existing 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 Existing Facilities or (ii) availability under the Existing Senior Secured Revolving Credit Facility is less than or equal to $283.3 million for three consecutive business days or less than or equal to $206.0 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 Existing Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Existing Facilities.

With the exception of EI, substantially all of our 100% owned subsidiaries guarantee the obligations under the Existing Facilities and the secured guaranteed notes. Our obligations under the Existing Facilities and the Subsidiary

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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 Existing 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 Existing 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 our Existing Facilities and the secured guaranteed notes are full and unconditional and joint and several. We have no independent assets or operations. Other than EI, the subsidiaries, including joint ventures, that do not guarantee the Existing Facilities and applicable notes, are minor.

The Existing 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 Existing Facilities and 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 Existing 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 Existing 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 Existing 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 Existing Credit Agreement also contains certain restrictions on the amount of secured first priority debt we are able to incur. The Existing Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Existing Facilities are not in default and we maintain availability under the Existing Senior Secured Revolving Credit Facility of more than $375.95 million.

The Existing 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 Existing Senior Secured Revolving Credit Facility is less than $206.0 million or (ii) on the third consecutive business day on which availability under the Existing Senior Secured Revolving Credit Facility is less than $257.5 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 $257.5 million. As of September 2, 2023, the availability under the Existing Senior Secured Revolving Credit Facility was at a level that did not trigger the Existing Credit Agreement’s financial covenant. The Existing 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 Existing 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 secured notes contain restrictions on the amount of additional secured and unsecured debt that we may incur. As of September 2, 2023, we had the ability to draw the full amount of our Existing Senior Secured Revolving Credit Facility and enter into certain sale and leaseback transactions. In addition to certain specified debt baskets, we have the ability to incur additional indebtedness should we then satisfy a fixed charge coverage ratio. We also have certain limitations in our unguaranteed unsecured notes on the amount of secured debt that we may incur.

As of September 2, 2023, we were in full compliance with the provisions and covenants associated with our debt agreements. The commencement of the Chapter 11 proceedings constituted an event of default that accelerated our obligations under the Unguaranteed Notes and the Secured Notes. Accordingly, all long-term debt was classified as

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current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 proceedings.

DIP ABL Credit Agreement

Subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP ABL Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP ABL Borrower, the “DIP ABL Loan Parties”), expect to enter into that certain debtor-in-possession credit agreement (the “DIP ABL Credit Agreement”) with the lenders from time to time party thereto (the “DIP ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP ABL Agent”), on the terms and conditions set forth therein. Pursuant to the DIP ABL Credit Agreement, the DIP ABL Lenders have agreed, upon the terms and conditions set forth therein, to make available to the DIP ABL Borrower a superpriority senior secured debtor-in-possession asset-based credit facility in the aggregate principal amount of $3.25 billion, consisting of (x) a $2.85 billion revolving credit facility (the “DIP Revolving Facility”), and (y) a $400 million first-in last-out term loan facility (the “DIP FILO Facility,” and, together with the DIP Revolving Facility, the “DIP ABL Facilities”) in order to (a) repay all outstanding obligations arising under, or related to, the Existing Credit Agreement and the Existing Facilities, (b) fund the Chapter 11 Cases, (c) provide working capital for the DIP ABL Loan Parties during the pendency of the Chapter 11 Cases, and (d) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP ABL Facilities, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The DIP ABL Loan Parties’ obligations under the DIP ABL Credit Agreement will be secured by liens on substantially all of the personal property of the DIP ABL Loan Parties, subject to certain exceptions.

The DIP ABL Facilities will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Revolving Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.25%. Additionally, the Company is required to pay a fee of 0.50% per annum on the daily unused amount of the commitments under the DIP Revolving Facility. The interest rate applicable to loans under the DIP FILO Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 5.25%, which margin is subject to downward adjustment to 4.75% upon the occurrence of certain paydown events, and a 1.00% upfront fee payable upon the Closing Date.

The DIP ABL Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP ABL Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP ABL Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP ABL Lenders’ rights or liens granted under the DIP ABL Credit Agreement.

DIP Term Loan Credit Agreement

Subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP Term Loan Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP Term Loan Borrower, the “DIP Term Loan Parties”), expect to enter into that certain debtor-in-possession term loan agreement (the “DIP Term Loan Credit Agreement,” and, together with the DIP ABL Credit Agreement, the “DIP Credit Agreements”) with the lenders from time to time party thereto (the “DIP Term Loan Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Term Loan Agent”), on the terms and conditions set forth therein. Pursuant to the DIP Term Loan Credit Agreement, the DIP Term Loan Lenders have agreed, upon the terms and conditions set forth therein, including the approval of the Bankruptcy Court, to make available to the DIP Term Loan Borrower a senior secured debtor-in-possession term loan credit facility in the aggregate principal amount of $200 million (the “DIP Term Loan Facility,” together with the DIP ABL Facility and the DIP FILO Facility, the “DIP Facilities”) in order to (a) fund the Chapter 11 Cases, (b) make certain other payments as more fully provided in the

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Bankruptcy Court orders approving the DIP Term Loan Facility, and (c) provide working capital for the DIP Term Loan Parties during the pendency of the Chapter 11 Cases, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The obligations under the DIP Term Loan Credit Agreement will be secured by liens on substantially all of the real and personal property of the DIP Term Loan Parties, subject to certain exceptions.

The DIP Term Loan Facility will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Term Loan Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 7.50%.

The DIP Term Loan Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP Term Loan Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Term Loan Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP Term Loan Lenders’ rights or liens granted under the DIP Term Loan Credit Agreement.

In connection with the Chapter 11 Cases, the Debtors filed the DIP Motion seeking Bankruptcy Court approval of their entry into and performance under the DIP Credit Agreements and use of cash collateral, as well as certain related relief [Docket No. 38]. The Debtors expect that the Bankruptcy Court will grant the DIP Motion on an interim basis on or about October 16, 2023. The Debtors will seek the Bankruptcy Court’s approval of the DIP Motion on a final basis in the coming weeks.

Elixir Stalking Horse APA

On October 15, 2023, Hunter Lane, LLC, a subsidiary of the Company, and certain of Hunter Lane, LLC’s subsidiaries (collectively, the “Sellers”) entered into an asset purchase agreement (the “Elixir Stalking Horse APA”) with a buyer, MedImpact Healthcare Systems, Inc. (the “Buyer”), pursuant to which the Buyer has agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Sellers, which, collectively constitute the “Elixir Assets.” The Sellers are Debtors in the Chapter 11 Cases.

The acquisition of the Elixir Assets by the Buyer pursuant to the Elixir Stalking Horse APA is subject to approval of the Bankruptcy Court and one or more auctions, if necessary, to solicit higher or otherwise better bids. On October 15, 2023, the Debtors filed a motion (the “Bidding Procedures Motion”) seeking approval of, among other things, certain marketing, auction, and bidding procedures (“Bidding Procedures”), pursuant to which the Debtors will solicit and select the highest or otherwise best offer(s) for the sale or sales of the Elixir Assets and the Debtors’ retail asset portfolio. The Bidding Procedures Motion additionally seeks Bankruptcy Court approval of the Elixir Stalking Horse APA and designation of the Buyer as the “stalking horse” bidder for the Elixir Assets. The Debtors anticipate that the Bankruptcy Court will enter an order approving the relief requested in the Bidding Procedures Motion after a hearing scheduled for October 16. 2023.

In accordance with the Bidding Procedures, if the Debtors receive any higher or otherwise better bids by November 16, 2023, the Debtors expect to conduct an auction for the Elixir Assets by November 20, 2023. As the stalking horse bidder, the Buyer’s offer to purchase the Elixir Assets, as set forth in the Elixir Stalking Horse APA, serves as the minimum or bid floor on which the Debtors, their creditors, other stakeholders, and other bidders may rely. Other interested bidders will be permitted to participate in the auction for the Elixir Assets, if, in accordance with the Bidding Procedures, such interested bidders submit qualifying offers that are higher or otherwise better than the stalking horse bid.

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Under the terms of the Elixir Stalking Horse APA, the Buyer has agreed, subject to Bankruptcy Court approval and absent any higher or otherwise better bid, to acquire the Elixir Assets from the Sellers for $575 million(the “Purchase Price”), subject to certain adjustments in accordance with the terms and conditions of the Elixir Stalking Horse APA, plus the assumption of specified liabilities related to the Elixir Assets. If the Sellers receive a better or otherwise higher bid and the Bankruptcy Court approves the Sellers’ consummation of an alternative sale of the Elixir Assets to any purchaser other than the Buyer, the Sellers will pay the Buyer a break-up fee and reimbursement of certain expenses associated with the negotiation, drafting, and execution of the Elixir Stalking Horse APA, not to exceed 3.5% of the Purchase Price in the aggregate, subject to approval by the Bankruptcy Court.

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 7.500% Secured Notes and the 8.000% Secured Notes (collectively, the "Guaranteed Notes"). As discussed in Note 10 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 7.500% Secured Notes, the 8.000% Secured 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 Existing 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 Existing Senior Secured Term Loan) (collectively, the “ABL priority collateral”), which, in each case, also secure the Existing Facilities.

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.

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	September 2,		March 4,
In millions	2023		2023
Due from EI	$	243.6	$	18.0
Other current assets		3,432.9		3,184.5
Total current assets	$	3,676.5	$	3,202.5
Operating lease right-of-use assets	$	2,239.0	$	2,497.2
Goodwill		90.4		507.9
Other noncurrent assets		1,083.7		1,256.0
Total noncurrent assets	$	3,413.1	$	4,261.1
Current maturities of long-term debt and lease financing obligations	$	3,773.4	$	6.3
Due to EI		—		—
Other current liabilities		2,716.2		2,665.9
Total current liabilities	$	6,489.6	$	2,672.2
Long-term debt less current maturities	$	—	$	2,925.3
Long-term operating lease liabilities		2,374.0		2,372.9
Other noncurrent liabilities		192.3		135.1
Total noncurrent liabilities	$	2,566.3	$	5,433.3

	Thirteen Week Period Ended		Twenty-Six Week Period Ended
In millions	September 2, 2023		September 2, 2023
Revenues(a)	$	5,572.4	$	11,160.4
Cost of revenues(b)		4,478.9		8,882.9
Gross profit		1,093.5		2,277.5
Net loss	$	(1,017.4)	$	(1,313.5)
Net loss attributable to Rite Aid	$	(1,020.0)	$	(1,326.7)

(a) Includes $(12.1) million and $2.7 million of revenues generated from the non-guarantor for the thirteen and twenty-six week periods ended September 2, 2023.

(b) Includes $(12.1) million and $2.6 million of cost of revenues incurred in transactions with the non-guarantor for the thirteen and twenty-six week periods ended September 2, 2023.

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

Cash used in operating activities was $813.2 million and $451.5 million for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. Operating cash flow was negatively impacted by the build of the CMS receivable, increases in rebates receivable, increases in inventory due to seasonal build and inflation, and prepaid rent. These amounts were partially offset by lower manufacturer rebates receivables.

Cash used in investing activities was $57.5 million and $50.6 million for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. During the twenty-six week period ended September 2, 2023, we spent $76.9 million on the purchase of property, plant and equipment, $15.2 million on prescription file buys, received proceeds of $29.1 million from the sale of assets and investments and received proceeds of $5.5 million from sale-leasebacks.

Cash flow provided by financing activities was $806.4 million and $509.2 million for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. Cash provided by financing activities for the

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twenty-six weeks ended September 2, 2023 reflects incremental revolver borrowings, partially offset by the change in our zero balance accounts due to timing of payments.

Capital Expenditures

During the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022 capital expenditures were as follows:

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
New store construction, store relocation and store remodel projects	$	2,681	$	13,898	$	7,129	$	25,673
Technology enhancements, improvements to distribution centers and other corporate requirements		38,297		35,169		69,740		96,570
Purchase of prescription files from other retail pharmacies		3,605		3,108		15,217		15,356
Total capital expenditures	$	44,583	$	52,175	$	92,086	$	137,599

Future Liquidity

We are highly leveraged. Substantial doubt about our ability to continue as a going concern exists in light of our Chapter 11 Cases, which were initiated to modify our capital structure, including restructuring portions of our debt and resolve potential legal liabilities. We intend to use the Chapter 11 process to provide a fair, orderly, efficient and legally binding mechanism to implement a Restructuring Term Sheet that provides for a financial restructuring designed to strengthen our balance sheet and reduce our total debt, improving our financial position and allowing us to continue driving our strategic priorities and investing in the business. Consequently, our future cash from operations and access to capital markets may not provide adequate resources to fund our working capital needs, capital expenditures and strategic investments for the foreseeable future. We may look to make additional investments in our business to further our strategic objectives, including targeted acquisitions, the performance acceleration program, technology investments 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. As a result of the current market volatility and rising interest rate environment, we cannot assure you whether any of such transactions will be consummated, whether we will achieve the benefits of any such transaction, or whether our cost of capital will increase, any of which could have an impact on our future liquidity.

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 2023 10-K, which we filed with the SEC on May 1, 2023.

Factors Affecting Our Future Prospects

For a discussion of risks related to our financial condition, restructuring plan of reorganization, operations and industry, refer to “Management’s Discussion and Analysis of Financial Condition and Results” included herein and in our Fiscal 2023 10-K, and our Quarterly Report on Form 10-Q for the thirteen weeks ended June 3, 2023, as well as in “Part I – Item 1A. Risk Factors” of the Fiscal 2023 10-K, and within Part II, Item 1A of this Quarterly Report on Form 10-Q.

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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 exit 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, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). 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.

We present these non-GAAP financial measures in order to provide transparency to our investors because they are measures that management uses to assess both management performance and the financial performance of our operations and to allocate resources. In addition, management believes that these measures may assist investors with understanding and evaluating our initiatives to drive improved financial performance and enables investors to supplementally compare our operating performance with the operating performance of our competitors including with those of our competitors having different capital structures. While we have excluded certain of these items from historical non-GAAP financial measures, there is no guarantee that the items excluded from non-GAAP financial measures will not continue into future periods. For instance, we expect to continue to experience charges for facility exit and impairment charges and inventory write-downs related to store closures as we continue to complete a multi-year strategic initiative designed to improve overall performance. We also expect to continue to experience and report restructuring-related charges associated with continued execution of our strategic initiatives.

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, including companies in our industry.

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The following is a reconciliation of our net loss to Adjusted EBITDA for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
	(dollars in thousands)
Net loss	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Interest expense		72,658		52,533		137,878		100,652
Income tax expense		2,338		11,967		3,831		15,464
Depreciation and amortization		69,029		68,564		134,924		138,637
LIFO charge		7,500		10,121		15,000		10,121
Facility exit and impairment charges		310,761		45,845		330,762		112,416
Goodwill and intangible asset impairment charges		295,490		252,200		446,990		252,200
Gain on debt modifications and retirements, net		—		(41,312)		—		(41,312)
Stock-based compensation expense		1,068		4,735		2,149		8,069
Restructuring-related costs		85,709		12,805		163,839		35,451
Inventory write-downs related to store closings		8,414		1,094		10,471		9,049
Litigation and other contractual settlements		205,041		20,093		216,091		38,364
Gain on sale of assets, net		(24,087)		(29,001)		(32,280)		(58,197)
Other		2,818		195		5,517		(754)
Adjusted EBITDA	$	16,709	$	78,549	$	108,424	$	178,679

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 and twenty-six week periods ended September 2, 2023 and August 27, 2022. 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. Adjusted Net Income (Loss) per Diluted Share is calculated using our above-referenced definition of Adjusted Net Income (Loss):

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	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
	(dollars in thousands)
Net loss	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Add back - Income tax expense		2,338		11,967		3,831		15,464
Loss before income taxes		(1,017,692)		(319,323)		(1,322,917)		(426,017)
Adjustments:
Amortization expense		16,590		18,420		33,723		39,046
LIFO charge		7,500		10,121		15,000		10,121
Goodwill and intangible asset impairment charges		295,490		252,200		446,990		252,200
Gain on debt modifications and retirements, net		—		(41,312)		—		(41,312)
Restructuring-related costs		85,709		12,805		163,839		35,451
Litigation and other contractual settlements		205,041		20,093		216,091		38,364
Adjusted loss before income taxes		(407,362)		(46,996)		(447,274)		(92,147)
Adjusted income tax expense (a)		1,100		1,827		1,295		3,317
Adjusted net loss		(408,462)	$	(48,823)	$	(448,569)	$	(95,464)
Net loss per diluted share	$	(18.44)	$	(6.07)	$	(24.02)	$	(8.11)
Adjusted net loss per diluted share	$	(7.39)	$	(0.90)	$	(8.12)	$	(1.75)

(a) The fiscal year 2024 and 2023 adjustments to the income tax provision include adjustments to the GAAP basis tax provision commensurate with non-GAAP adjustments and certain discrete tax items, when applicable, was used for the thirteen and twenty-six weeks ended September 2, 2023 and August 27, 2022, 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).
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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. Interest rates have been rising, including as a result of efforts of the US Federal Reserve to combat inflation. We cannot assure you whether interest rates will continue to rise in the upcoming fiscal year.

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As of September 2, 2023, the total debt principal was $3,794.7 million, all of which was classified as current as a result of the filing of the Chapter 11 Cases. The total debt principal as of September 2, 2023 was comprised of the following:

	Total		Weighted Average Interest Rate	Fair Value
		(Dollars in millions)
Long-term debt, including current portion, excluding financing lease obligations
Variable-rate instruments:	$	2,437.0	7.09%	$	2,437.0
Fixed-rate instruments:		1,357.7	7.84%		728.4
Debt principal	$	3,794.7		$	3,165.4

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 SOFR. If the market rates of interest for SOFR changed by 100 basis points as of September 2, 2023, our annual interest expense would change by approximately $24.4 million.

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

During the thirteen week period ended September 2, 2023, we implemented a new human resource and payroll system, which is utilized to manage human resource information and transactions more effectively for recruiting, learning and development, performance, and payroll. Other than updates to specific controls related to the foregoing, 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.

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PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

The information in response to this item is incorporated herein by reference to Note 14, Commitments, Contingencies and Guarantees, of the Consolidated Condensed Financial Statements of this Quarterly Report.

ITEM 1A.  Risk Factors

Except for the risk factors included below, there have been no material changes to the risk factors previously disclosed in “Part I — Item 1A. Risk Factors” in our Fiscal 2023 10-K, filed with the SEC on May 1, 2023.

The plan of reorganization under Chapter 11 of the Bankruptcy Code (the "Plan") contemplates the cancellation of our ordinary shares without any value being delivered to shareholders. Any trading in our ordinary shares during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our ordinary shares.

The Plan contemplates the cancellation of our ordinary shares. We have a significant amount of indebtedness and other liabilities that are senior to our current ordinary shares in our capital structure, and the Plan contemplates value being distributed in respect of such indebtedness and liabilities and not our shares. In addition, our existing ordinary shares have substantially decreased in value leading up to the Chapter 11 Cases. Accordingly, any trading in our ordinary shares during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our ordinary shares.

We are subject to risks and uncertainties associated with our Chapter 11 Cases.

The Chapter 11 Cases could have a material adverse effect on our business, financial condition, results of operations and cash flows. So long as the Chapter 11 Cases continue, our senior management may be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing on our business operations. Bankruptcy Court protection also may make it more difficult to retain management and the key personnel necessary to the success and growth of our business. In addition, during the period of time we are involved in the Chapter 11 Cases, our customers and suppliers may lose confidence in our ability to reorganize our business successfully and may seek to establish alternative commercial relationships.

Other significant risks associated with the Chapter 11 Cases that could result in material adverse effects on our business, financial condition, results of operations, and cash flows include or relate to the following:

•our ability to obtain the Bankruptcy Court’s approval with respect to motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases, including maintaining control as debtors-in-possession;

• our ability to consummate the Plan;

• the effects of the filing of the Chapter 11 Cases on our business and the interests of various constituents, including our shareholders;

• the high costs of Chapter 11 Cases and related fees;

• our ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Chapter 11 Cases;

•Bankruptcy Court rulings in the Chapter 11 Cases as well as the outcome of all other pending litigation and the outcome of the Chapter 11 Cases in general;

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•the length of time that we will operate with Chapter 11 protection and any resulting risk that we will not satisfy the milestones specified in the Restructuring Term Sheet and in our agreement with our secured lenders with respect to our use of their cash collateral;

•the availability of operating capital during the pendency of the Chapter 11 Cases, including any event that could terminate our right to continued access to the cash collateral of our lenders to use as operating capital;

•third-party motions in the Chapter 11 Cases, including motions which may be filed by the creditors’ committee that will be appointed in the Chapter 11 Cases, which may interfere with our ability to consummate the Plan;

• the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations;

• the feasibility of the Plan in light of possible changes in our business and its prospects;

• the adequacy of our cash balances at the time of our projected exit from the Chapter 11 Cases; and

• our ability to continue as a going concern.

Because of the risks and uncertainties associated with the Chapter 11 Cases, we may not be able to accurately predict or quantify the ultimate impact the Chapter 11 Cases may have on our business, financial condition, results of operations and cash flows, nor can we accurately predict the ultimate impact the Chapter 11 Cases may have on our corporate or capital structure.

The Chapter 11 Cases raise substantial doubt regarding our ability to continue as a going concern.

The Chapter 11 Cases are being jointly administered under the caption In re Rite Aid Corporation., et al. Under Chapter 11 of the Bankruptcy Code, certain claims in existence prior to our filing of the petition for relief under the Bankruptcy Code are stayed while we continue business operations as a debtor-in-possession. Our operations and our ability to develop and execute our business plan are subject to significant risks and uncertainties associated with Chapter 11 Cases. These conditions raise substantial doubt about our ability to continue as a going concern.

Delays in the Chapter 11 Cases may increase the risks of our being unable to consummate the Plan and increase our costs associated with the Chapter 11 Cases.

The Restructuring Term Sheet contemplates the consummation of the Plan, but there can be no assurance that we will be able to consummate the Plan. A prolonged Chapter 11 proceeding could adversely affect our relationships with customers, suppliers and employees, among other parties, which in turn could adversely affect our business, financial condition, results of operations and cash flows and our ability to continue as a going concern. A weakening of our financial condition, cash flows and results of operations could adversely affect our ability to implement the Plan (or any other plan of reorganization). If we are unable to consummate the Plan, we may be forced to liquidate our assets.

The Restructuring Term Sheet is subject to significant conditions and milestones that may be difficult for us to satisfy.

There are certain material conditions we must satisfy under the Restructuring Term Sheet, including the timely satisfaction of milestones in the Chapter 11 Cases, which include the consummation of the Plan. Our ability to timely complete such milestones is subject to risks and uncertainties, many of which are beyond our control.

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If the Restructuring Term Sheet is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.

The Restructuring Term Sheet contains a number of termination events, upon the occurrence of which certain parties to the Restructuring Term Sheet may terminate the agreement. If the Restructuring Term Sheet is terminated as to all parties thereto, each of the parties thereto will be released from its obligations in accordance with the terms of the Restructuring Term Sheet. Such termination may result in the loss of support for the Plan by the parties to the Restructuring Term Sheet, which could adversely affect our ability to confirm and consummate the Plan. If the Plan is not consummated, there can be no assurance that the Chapter 11 Cases would not be converted to Chapter 7 liquidation cases or that any new plan would be as favorable to holders of claims against the Debtors as contemplated by the Restructuring Term Sheet.

Even if the Plan is consummated, we may not be able to achieve our stated goals or continue as a going concern.

Even if the Plan or any other Chapter 11 plan of reorganization is consummated, we may continue to face a number of risks, such as changes in economic conditions, changes in our industry, changes in demand for our products and services and increasing expenses. Some of these risks become more acute when a case under the Bankruptcy Code continues for a protracted period without indication of how or when the case may be completed. As a result of these risks and others, we cannot guarantee that the Plan will achieve our stated goals or that we will be able to continue as a going concern.

Furthermore, even if our debt and other liabilities are reduced or discharged through the Plan, we may need to raise additional funds through public or private debt or equity financing or other various means to fund our business after the completion of the Chapter 11 Cases. Our access to additional financing may be limited, if it is available at all. Therefore, adequate funds may not be available when needed or may not be available on favorable terms, or at all.

In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.

Upon a showing of cause, the Bankruptcy Court may convert our Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to our creditors than those provided for in the Plan because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

As a result of the Chapter 11 Cases, our historical financial information may not be indicative of our future performance, which may be volatile.

During the Chapter 11 Cases, we expect our financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the filing of the Chapter 11 Cases. In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to our historical consolidated financial statements, including as a result of revisions to our operating plans pursuant to the Plan. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting may be different from historical trends.

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We may be subject to claims that will not be discharged in the Chapter 11 Cases, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to consummation of a plan of reorganization. With few exceptions, all claims that arose prior to confirmation of a plan of reorganization (i) would be subject to compromise and/or treatment under the plan of reorganization and/or (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the plan of reorganization. Any claims not ultimately discharged pursuant to the plan of reorganization could be asserted against the reorganized entities and may have an adverse effect on our business, financial condition, results of operations and cash flows on a post-reorganization basis.

The pursuit of the Chapter 11 Cases has consumed, and will continue to consume, a substantial portion of the time and attention of our management, which may have an adverse effect on our business, financial condition, results of operations and cash flows, and we may experience increased levels of employee attrition.

While the Chapter 11 Cases continue, our management will be required to spend a significant amount of time and effort focusing on the Chapter 11 Cases instead of focusing exclusively on our business operations. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, our financial condition and results of operations, particularly if the Chapter 11 Cases are protracted.

Furthermore, during the pendency of the Chapter 11 Cases, we may experience increased levels of employee attrition, and our employees may face considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate and retain key employees or take other measures intended to motivate and incentivize key employees to remain with us through the pendency of the Chapter 11 Cases is limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, the longer the Chapter 11 Cases continue, the more likely it is that vendors and employees will lose confidence in our ability to reorganize our business successfully.

Aspects of the Chapter 11 Cases limit the flexibility of our management team in running our business.

While we operate our business under supervision by the Bankruptcy Court, we are required to obtain approval of the Bankruptcy Court, and in some cases certain other parties, prior to engaging in activities or transactions outside the ordinary course of business. Bankruptcy Court approval of non-ordinary course activities entails preparation and filing of appropriate motions with the Bankruptcy Court, negotiation with various parties-in-interest, and one or more hearings. Parties-in-interest may be heard at any Bankruptcy Court hearing and may raise objections with respect to these motions. This process may delay major transactions and limit our ability to respond quickly to opportunities and events in the marketplace. Furthermore, in the event the Bankruptcy Court does not approve a proposed activity or transaction, we would be prevented from engaging in activities, transactions and internal restructurings that we believe are beneficial to us, which may have an adverse effect on our business, financial condition, results of operations and cash flows.

The Company’s primary pharmaceutical supplier relationship is subject to dispute that may result in termination.

Additionally, on October 14, 2023, McKesson Corporation (“McKesson”) sent notice to the Company purporting to terminate the Eleventh Amendment to Supply Agreement by and between Rite Aid Corporation and McKesson Corporation, dated as of February 28, 2019 (the “McKesson Corporation Supply Agreement”) based on the occurrence of a termination event. The Company and McKesson have negotiated an agreement in principle to ensure no disruption

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to the Company’s business and operations, which agreement in principle includes a reservation of rights for both parties as to the purported termination.

To the extent such agreement in principle is not executed, is not approved by the Bankruptcy Court, or is approved but subsequently terminates, the Company would vigorously contest such purported termination as null, void, and without effect. Subsequently, to the extent (a) such termination is not rescinded or (b) the Company does not prevail as to the invalidity of the termination event, the termination of the McKesson Corporation Supply Agreement may result in a material adverse impact on the Company’s business and operations.

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 second quarter of fiscal 2024.

	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
June 4, 2023 to July 1, 2023	1	$	1.82	—	—
July 2, 2023 to July 29, 2023	111	$	1.61	—	—
July 30, 2023 to September 2, 2023	1	$	0.82	—	—

ITEM 3.  Defaults Upon Senior Securities

Not applicable.

ITEM 4.  Mine Safety Disclosures

Not applicable.

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ITEM 5.  Other Information

Appointment of, and Consulting Agreement with, Jeffrey S. Stein

On October 15, 2023, the Company announced that Jeffrey S. Stein, age 53, was appointed by the Company’s board of directors (“Board”) to serve as the Company’s Chief Executive Officer, Chief Restructuring Officer and a member of the Board, effective immediately. Mr. Stein succeeds Elizabeth (“Busy”) Burr, who had served as Interim CEO of the Company since January 2023. Ms. Burr will continue to serve on the Board.

Mr. Stein brings more than three decades of experience as a leader and executive director at both public and private companies. Mr. Stein is Founder and Managing Partner of Stein Advisors LLC, a financial advisory firm that provides consulting services to public and private companies experiencing significant challenges, including financial and operational restructuring, complex contract renegotiation and litigation, and increased regulatory oversight. He has served as an Executive Chairman, Chief Executive Officer, and Chief Restructuring Officer and as a director on board committees including audit, compensation, corporate governance, finance, restructuring and risk management. Mr. Stein has been on the Board of Ambac Financial Group, Inc., Troika Media Group, Inc., GWG Holdings, Inc., NWC Health PLC and Westmoreland Coal Company. Mr. Stein previously served as Chief Executive Officer and Chief Restructuring Officer of GWG Holdings, Inc. from 2022 to present and as Chief Restructuring Officer of Liberty Steel Group Holdings Pte. Ltd., Whiting Petroleum Corporation, Philadelphia Energy Solutions, LLC and Westmoreland Coal Company from 2017 to 2019.

Prior to founding Stein Advisors LLC in 2010, Mr. Stein was a Co-Founder and Principal of Durham Asset Management LLC, a global event-driven distressed debt and special situations equity asset management firm. From 2003 through 2009, Mr. Stein served as Co-Director of Research at Durham responsible for the identification, evaluation and management of investments for the various Durham portfolios. From 1997 to 2002, Mr. Stein served as Co-Director of Research at The Delaware Bay Company, Inc., a boutique research and investment banking firm focused on the distressed debt and special situations equity asset classes. Earlier in his career, he was an Associate and then an Assistant Vice President in the Capital Preservation & Restructuring Group at Shearson Lehman Brothers. Mr. Stein received a B.A. in Economics from Brandeis University and an MBA in Finance and Accounting from New York University.

There are no arrangements or understandings between Mr. Stein and any other person pursuant to which he was selected as an officer and director.

In connection with Mr. Stein’s appointment, the Company entered into a Consulting Agreement with Mr. Stein dated as of October 15, 2023 (the “Stein Consulting Agreement”). Pursuant to the Stein Consulting Agreement, Mr. Stein will receive a monthly consulting fee in the amount of $300,000, which will be pro-rated for any partial months and paid in advance on the first day of each month. Mr. Stein will also be reimbursed for reasonable expenses associated with traveling on Company business and will not be eligible to participate in any benefit plan or arrangement of the Company. In addition to the foregoing, and subject to Mr. Stein’s continued service with the Company through the applicable Vesting Date (as defined below), he will be entitled to receive a reorganization success bonus (“Reorganization Success Bonus”) equal to $20,000,000, which will be reduced by 50% of the consulting fee paid after the ninth month of his service under the Stein Consulting Agreement. If earned, the Reorganization Success Bonus will be paid in a cash lump sum on the Vesting Date. If Mr. Stein’s consultancy is terminated by him for good reason or by the Company for a reason other than cause (and other than due to Mr. Stein’s inability to perform services due to his death or physical or mental impairment) and such termination occurs (i) before the Company files a bankruptcy petition under Chapter 11 of the Bankruptcy Code, then he will be entitled to receive a lump sum cash payment within thirty (30) days of his termination date, in the amount of $10,000,000 or (ii) after the Company files a voluntary petition under Chapter 11 of the Bankruptcy Code, then he will receive the Reorganization Success Bonus, to the extent it becomes payable in accordance with the terms of the Stein Consulting Agreement within eighteen (18) months after his termination, which will be paid in a cash lump sum within five (5) days the Reorganization Success Bonus becomes payable. The Stein Consulting Agreement also subjects Mr. Stein to certain confidentiality obligations, nonsolicitation restrictions for a period of six (6) months and mutual non-disparagement obligations for three (3) years following the end of the consulting arrangement.

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For purposes of the Stein Consulting Agreement, “Vesting Date” means the earlier to occur of (i) consummation of (a) a change-of-control transaction implemented through a process under Chapter 11 of the Bankruptcy Code for all or substantially all of the assets of the Company, or (b) any out-of-court recapitalization or restructuring of the majority of the Company’s secured funded debt, through which the Company is contemplated to continue to operate as a going concern for the foreseeable future and (ii) the day before the consummation of the effective date of a confirmed plan of reorganization under Chapter 11 of the Bankruptcy Code.

The Stein Consulting Agreement superseded the Company’s prior consulting arrangement with Mr. Stein entered into on July 11, 2023, and pursuant to which Mr. Stein received a monthly consulting fee of $500,000 and reimbursement for reasonable expenses associated with performing his services to the Company, which included provision of strategic and operational consulting services to identify and explore the Company’s refinancing/restructuring options (intended to be deleveraging and value accretive to the Company) and to assess options to optimize the Company’s capital structure, among other services. The prior consulting arrangement also subjected Mr. Stein to certain confidentiality obligations, nonsolicitation restrictions for a period of three (3) months and mutual non-disparagement obligations for three (3) years following the end of the consulting arrangement.

The above description of the Stein Consulting Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Stein Consulting Agreement, a copy of which is filed as Exhibit 10.35 hereto.

Amended and Restated Incentive Agreement with Matthew Schroeder

On October 11, 2023, the Board approved an amended and restated retention incentive agreement with Matthew Schroeder, the Company’s Chief Financial Officer (the “A&R Incentive Agreement”). The A&R Incentive Agreement replaces that certain retention incentive agreement entered into between the Company and Mr. Schroeder on April 28, 2023, which the Company filed as Exhibit 10.36 to its Form 10-Q on July 11, 2023 (the “Prior Incentive Agreement”).

Pursuant to the A&R Incentive Agreement, in lieu of being granted any short-term and/or long-term cash and or equity compensation in respect of fiscal year 2024, and in addition to retaining the original payment of $1,500,000 (the “Original Retention Amount”) subject to repayment terms under Prior Incentive Agreement, Mr. Schroeder will receive a lump sum cash payment in the amount of $3,062,106 on or before October 18, 2023 (the “Additional Retention Amount”). The Original Retention Amount and Additional Retention Amount are subject to Mr. Schroeder’s prompt and full repayment of the after-tax value of such amount if he resigns from the Company without good reason (as such term is defined in Mr. Schroeder’s employment agreement with the Company) or is terminated by the Company with cause prior to one of the following repayment expiration dates, as applicable: (i) April 28, 2024 (solely in respect of the Original Retention Amount), (ii) the effective date of a plan of reorganization under Chapter 11 of the Bankruptcy Code or (iii) the effective date of a sale of all or substantially all of the assets of the Company. If Mr. Schroeder’s employment is terminated by the Company without cause, or by Mr. Schroeder for good reason, or if his employment terminates due to his death or disability prior to an applicable repayment expiration date, then obligation to repay the Original Retention Amount and Additional Retention Amount will lapse, provided that Mr. Schroeder (or his estate) executes and does not revoke a general release of claims in favor of the Company.

The above description of the A&R Incentive Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the A&R Incentive Agreement, a copy of which is filed as Exhibit 10.36 hereto.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard

On October 16, 2023, the NYSE announced that it had determined to commence proceedings to delist the Company’s common stock from the NYSE. Trading in the Company’s common stock was immediately suspended. The NYSE reached its decision that the Company’s common stock is no longer suitable for listing pursuant to the NYSE Listed Company Manual Section 802.01D after the Company’s October 16, 2023 disclosure that the Company commenced the Chapter 11 Cases. The Company expects that such delisted securities may be subject to trading in the OTC market.

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ITEM 6.  Exhibits

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

Exhibit Numbers	Description	Incorporation By Reference To
2.1	Receivable Purchase Agreement, dated as of October 13, 2022, by and between Elixir Insurance Company and Part D Receivable Trust 2020-1 (Series F)	Exhibit 2.1 Filed to Form 8-K, filed on October 14, 2022
2.2	Indemnity Agreement, dated as of October 13, 2022 by and between Rite Aid Corporation and Part D Receivable Trust 2020-1 (Series F)	Exhibit 2.2 Filed to Form 8-K, filed on October 14, 2022
2.3	Receivable Purchase Agreement, dated as of February 3, 2023, by and between Elixir Insurance Company and Part D Receivable Trust 2020-1 (Series G)	Exhibit 2.1 Filed to Form 8-K, filed on February 3, 2023
2.4	Indemnity Agreement, dated as of February 3, 2023, by and between Rite Aid Corporation and Part D Receivable Trust 2020-1 (Series G)	Exhibit 2.2 to Form 8-K, filed on February 3, 2023
3.1	Amended and Restated Certificate of Incorporation	Exhibit 3.1 to Form 10-K, filed on April 23, 2014
3.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	Exhibit 3.1 to Form 8-K, filed on April 18, 2019
3.3	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

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Exhibit Numbers		Description	Incorporation By Reference To
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
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	Exhibit 4.10 to Form 10-Q, filed on July 6, 2022
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	Exhibit 4.11 to Form 10-Q, filed on July 6, 2022
4.12		Supplemental Indenture, dated as of September 19, 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	Exhibit 4.12 to Form 10-Q, filed on January 4, 2023
4.13		Supplemental Indenture, dated as of September 19, 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	Exhibit 4.13 to Form 10-Q, filed on January 4, 2023
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

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Exhibit Numbers		Description	Incorporation By Reference To
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 to 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		Third Amendment to Credit Agreement, dated as of December 1, 2022, 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/A, filed on December 6, 2022
10.14		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
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	†*	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
10.17	†**	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
10.18	†	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
10.19	†	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
10.20	†	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
10.21	†	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
10.22	†	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
10.23	†	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
10.24	†	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
10.25	†	Rite Aid Corporation Amended and Restated 2020 Omnibus Equity Plan, as amended	Appendix B-1 to Schedule 14A (Definitive Proxy Statement) filed on June 10, 2022
10.26	†	Rite Aid Corporation Amended and Restated 2020 Omnibus Equity Plan	Appendix B-1 to Schedule 14A (Definitive Proxy Statement) filed on May 20, 2021

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Exhibit Numbers		Description	Incorporation By Reference To
10.27	†	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
10.28	†	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
10.29	†	Offer Letter, by and between Rite Aid Corporation and Steven K. Bixler dated September 11, 2022	Exhibit 10.1 to Form 8-K, filed on September 12, 2022
10.30	†	Separation Agreement by and between Rite Aid Corporation and Heyward Donigan dated January 7, 2023	Exhibit 10.1 to Form 8-K filed on January 9, 2023
10.31	†	Offer Letter by and between Rite Aid Corporation and Elizabeth “Busy” Burr dated January 7, 2023	Exhibit 10.2 to Form 8-K filed on January 9, 2023
10.32	†	Letter Agreement with Matthew Schroeder dated as of April 28, 2023	Exhibit 10.36 to Form 10-Q, filed on July 11, 2023
10.33	†	Letter Agreement with Justin Mennen dated as of April 28, 2023	Exhibit 10.37 to Form 10-Q, filed on July 11, 2023
10.34	†	Separation Agreement by and between Rite Aid Corporation and Justin Mennen dated July 27, 2023	Filed herewith
10.35	†	Consulting Agreement by and between Rite Aid Corporation and Jeffrey S. Stein, dated as of October 15, 2023	Filed herewith
10.36	†	Amended and Restated Letter Agreement with Matthew C. Schroeder, dated as of October 11, 2023	Filed herewith
10.37	†	Amended and Restated Employment Agreement by and between Rite Aid Corporation and Matthew C. Schroeder, dated as of October 11, 2023	Filed herewith
10.38		Restructuring Term Sheet, dated October 15, 2023, by and between the Debtors and the Consenting Noteholders	Filed herewith
10.39		Form of Debtor-In-Possession Credit Agreement, by and among Rite Aid Corporation, each lender from time to time party thereto, Bank of America, N.A., as administrative and collateral agent, Wells Fargo Bank, National Association, as syndication agent, Capital One, National Association, BMO Bank N.A., Fifth Third Bank, National Association, MUFG Bank, LTD., PNC Bank, National Association, Truist Bank and ING Capital LLC, as co-documentation agents and BofA Securities, Inc., Wells Fargo Bank, National Association, Capital One, National Association, BMO Bank N.A., Fifth Third Bank, National Association, MUFG Bank, LTD., PNC Capital Markets LLC, Truist Securities, Inc., and ING Capital LLC, as joint lead arrangers and joint bookrunners	Exhibit 10.2 to Form 8-K, filed on October 16, 2023
10.40		Form of Debtor-In-Possession Term Loan Agreement, by and among Rite Aid Corporation, each lender from time to time party thereto, Bank of America, N.A., as administrative agent and collateral agent, BofA Securities, Inc., Capital One, National Association, Wells Fargo Bank, National Association, PNC Capital Markets LLC, BMO Bank, N.A. and Truist Securities, Inc., as joint lead arrangers and joint bookrunners	Exhibit 10.3 to Form 8-K, filed on October 16, 2023
10.41		Asset Purchase Agreement, dated as of October 15, 2023, by and among MedImpact Healthcare Systems, Inc., MI OpCo Holdings, Inc. and Hunter Lane, LLC and its subsidiaries named therein	Exhibit 10.4 to Form 8-K, filed on October 16, 2023
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

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Exhibit Numbers	Description	Incorporation By Reference To
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.

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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: October 17, 2023	RITE AID CORPORATION
	By:	/s/ MATTHEW C. SCHROEDER
		Matthew C. Schroeder
		Executive Vice President and Chief Financial Officer
Date: October 17, 2023	By:	/s/ STEVEN BIXLER
		Steven Bixler
		Senior Vice President and Chief Accounting Officer

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EX-10.34

Exhibit 10.34

MAILING ADDRESS

P.O. Box 3165

Harrisburg, PA 17105

(717) 761-2633

July 27, 2023

Justin Mennen

9035 Old Southwick Pass

Alpharetta, GA 30022

Re:Separation of Employment

Dear Justin:

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 December 7, 2018, as amended (the “Employment Agreement”).

1.Separation of Employment. Your last day of employment with the Company is July 28, 2023 (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 Digital and Technology 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. The Parties have agreed that your separation of employment from the Company is not occurring pursuant to Sections 5.1, 5.2, or 5.3 of your Employment Agreement and that, therefore, no separation benefits (including pay in lieu of notice) referenced in your Employment Agreement are triggered by your separation of employment from the Company.

2.Consideration. 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 a lump sum payment of Nine Hundred Thousand Dollars and Zero Cents ($900,000.00) as consideration for this Agreement, less all applicable withholdings and deductions, within thirty (30) days of the Release Effective Date. You shall also retain the retention payment of Seven Hundred Fifty Thousand Dollars and Zero Cents ($750,000.00) made pursuant to the letter agreement between You and the Company dated April 28, 2023. 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.

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 worker’s compensation benefits or for an occupational disease; (B) any whistleblower claims arising under the Sarbanes-Oxley Act or Dodd-Frank Wall Street Reform and Consumer Protection Act; (C) claims to require the Company to honor its commitments set forth in this Agreement; (D) claims for indemnification and officers and directors liability insurance coverage under Section 4.8 of the Employment Agreement, the Company’s charter, by-laws or applicable law; and/or (E) claims that cannot be waived as a matter of law pursuant to federal, state, or local law (collectively, clauses (A) through (E) are the “Excluded Claims”).

(b)You shall receive all amounts of accrued but unpaid base salary through the separate date and reimbursement for reasonable and necessary expenses incurred through the date of separation. You further acknowledge and agree that 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, and (f) you have the full power, capacity and authority to enter into this Agreement.

5.Review and Revocation Period.

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(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, 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 Jessica Kazmaier, Executive Vice President and Chief Human Resources Officer, Rite Aid Corporation by email at jkazmaier@riteaid.com.

(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 Ms. Kazmaier by email 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 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.

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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.

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 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 4.8 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

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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.

RITE AID CORPORATIONJUSTIN L. MENNEN

/s/ Jessica Kazmaier​ ​​ ​​ ​​ ​/s/ Justin L. Mennen​ ​​ ​​ ​

Jessica KazmaierJustin L. Mennen

EVP, Chief Human Resources Officer

Date: ​ ​July 28, 2023​ ​​ ​​ ​​ ​Date: ​ ​July 28, 2023​ ​​ ​​ ​

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APPENDIX A

July 27, 2023

Rite Aid Corporation

PO Box 3165

Harrisburg, PA 17105

To Whom it may Concern:

I hereby irrevocably resign, effective as of July 28, 2023, from all positions and offices I hold with the Company and its subsidiaries, including as Chief Digital and Technology Officer.

Very truly yours,

/s/ Justin L. Mennen​ ​​ ​​ ​​ ​

Justin L. Mennen

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EX-10.35

Exhibit 10.35

FINAL FORM v2

CONSULTING AGREEMENT

This Consulting Agreement (this “Agreement”) is made and entered into as of October 15, 2023, by and among RITE AID CORPORATION (the “Company”), STEIN ADVISORS LLC (the “Consultant”) and JEFFREY S. STEIN (“Stein”), for purposes of Sections 2(a), 2(c)(6), 2(f) through 2(h), 4, 5, 6, 7, 8(h), and 8(i)).

WHEREAS, the Company and Stein are party to that certain Consulting Agreement, dated as of July 11, 2023 (the “Prior Agreement”); and

WHEREAS, the Company and Stein desire to terminate the Prior Agreement and to transition Stein’s role from a consultant under the Prior Agreement to the Consultant’s roles described herein by entering into the terms of this Agreement, which shall supersede the terms and conditions of the Prior Agreement in its entirety, and the Consultant desires to enter into this Agreement and to accept such positions, subject to the terms and conditions of this Agreement, and by entering into this Agreement, the Consultant waives any and all claims the Consultant and/or Stein may have to terminate the Consultant’s or Stein’s services for Good Reason (as defined in the Prior Agreement or this Agreement) on the basis of the Consultant’s entry into this Agreement.

NOW, THEREFORE, in consideration of the respective agreements and covenants set forth in this Agreement, the receipt of which is hereby acknowledged, the parties hereby agree to be legally bound as follows:

AGREEMENTS

1.Term. The Company agrees to engage the Consultant, effective as of October 15, 2023 (the “Effective Date”), and the Consultant agrees to be engaged by the Company, upon the terms and conditions set forth in this Agreement, until either the Company or the Consultant gives written notice to the other party of its intent to terminate this Agreement (which may be done by either party for any or no reason) in accordance with Section 3 (with the duration of the Consultant’s service hereunder, the “Term”).

2.Terms of Consulting Arrangement.

(a)Agents. Stein will provide the services hereunder personally and use of the term “Consultant” shall be deemed to refer to Stein in his capacity as the service provider under this Agreement. The Consultant will obtain the Company’s prior written consent before using any other agent to perform the services hereunder.

(b)Location. The Consultant shall not be required to provide services hereunder from any specific location, although the Company and Consultant acknowledge that (i) the Consultant’s primary work location will be in the New Canaan, Connecticut metropolitan area and (ii) the Consultant will be required to travel to other locations as reasonably required for the effective performance of the services hereunder.

(c)Positions; Description of Services; Reporting.

(1)During the Term, the Consultant will make Stein available to serve as the Company’s Chief Executive Officer and Chief Restructuring Officer and Stein will so serve. Stein will also be appointed as a member of the Company’s Board of Directors (the “Board”).

(2)In the capacity as Chief Executive Officer, the Consultant will have the duties, authorities, and responsibilities commensurate with the duties, authorities, and responsibilities of persons in similar capacities in similarly sized companies, and all employees of the Company will report directly or indirectly to the Consultant. In the capacity as Chief Restructuring Officer, the Consultant will have the duties and responsibilities customarily associated with such position and such other related duties and responsibilities reasonably assigned to the Consultant from time to time by the Board or a duly authorized committee thereof, including, without limitation, the following:

A.identifying and exploring the Company’s refinancing/restructuring options that are intended to be deleveraging and value accretive to the Company;

B.assessing options to optimize the Company’s capital structure;

C.managing and implementing the restructuring plan(s) of the Company and its subsidiaries;

D.exploring and recommending asset acquisition(s), disposition(s), merger(s), or other strategic transaction(s);

E.communicating and/or negotiating with outside constituents, including, but not limited to, lenders to the Company;

F.developing and implementing cash management strategies and processes designed to enhance liquidity;

G.reviewing and analyzing the revised business plan(s), including financial and operating budgets;

H.reviewing and recommending changes that would enhance the efficiency and cost effectiveness of the Company’s corporate organization;

I.evaluating the Company’s management team and determining the appropriate resources of management, including evaluating and staffing the Company’s senior management team; and

J.managing all outside advisors to the Company regarding the reorganization of the Company (excluding any advisors to the Board or any committee of the Board).

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(3)In providing the services hereunder, the Consultant will report directly and exclusively to the Board or a duly authorized committee thereof.

(4)Upon the termination of the Term, the Consultant’s services hereunder will cease and the Consultant will promptly deliver to the Company and not keep in the Consultant’s possession, recreate, or deliver to any other person or entity, any and all property that belongs to the Company or its affiliates or that belongs to any other third party and is in the Consultant’s possession as a result of the consulting relationship with the Company, whether created by the Consultant or another person. For the avoidance of doubt, property that is covered by this paragraph includes information and files in electronic form. Notwithstanding anything to the contrary in the foregoing, if the Term terminates, but the Consultant continues providing services to, or otherwise becomes employed by, the Company (in either case, in a position expressly agreed by the Company), this subsection (c)(4) shall not apply and have no force or effect. Upon the termination of the Term, unless otherwise requested by the Board or a duly authorized committee thereof, the Consultant and Stein will be deemed, as of the date of termination and without any other required action, to have resigned from the Board and all other positions held at the Company and its affiliates. The Consultant and Stein, at the Board’s (or a duly authorized Board committee) request, will promptly sign and return such documentation that the Board or such committee deems reasonable and necessary to reflect such resignation(s). For the sake of clarity, such documentation will not include a release of claims or any new obligations by which the Consultant must abide.

(5)During the Term, the Consultant agrees to devote substantially a full-time working schedule to the business and affairs of the Company to properly complete the services hereunder, and when so doing shall use his reasonable best efforts to faithfully, effectively, and efficiently perform such services. The specific days and hours during which the Consultant will perform the services hereunder will be determined by the Consultant, subject to alteration dependent on the reasonable business needs of the Company, but generally expected to be consistent with normal business hours, and the Consultant agrees to use reasonable best efforts to be available when requested by the Company with reasonable notice. Nothing herein shall prohibit the Consultant from engaging in other for-profit activities during the Term, so long as such activities do not materially interfere or conflict with the Consultant’s performance of his services hereunder or create (or are reasonably likely to create) an actual business or fiduciary conflict.

(6)Each of the Consultant and Stein will comply in all material respects with the Company’s policies for executive officers of the Company including (but not limited to) the Company’s Code of Business Ethics and Conduct, in each case, to the extent, and in the form, provided to the Consultant.

(d)Compensation.

(1)Consulting Fee. During the Term, the Consultant shall receive a monthly consulting fee of US$300,000 (“Consulting Fee”), which shall be pro-rated for partial months and paid in advance on the first day of each month commencing during the Term; provided that an aggregate amount equal to 50% of the total Consulting Fees paid following the ninth month of the Term shall be deducted from the Success Bonus (as defined below).

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(2)Reorganization Success Bonus. Subject to the Consultant’s continued service through the Vesting Date (as defined below), the Company will pay the Consultant a reorganization success bonus (the “Success Bonus”) equal to US$20,000,000, which shall be reduced by 50% of the Consulting Fee paid after ninth month of the Term. The Success Bonus shall be considered earned and vested on the Vesting Date and will be paid in a cash lump sum on the Vesting Date. The “Vesting Date” means the earlier to occur of (i) consummation of a Success Event (as defined on Exhibit A) described in prongs (a) and (c) of such definition and (ii) the day before the consummation of a Success Event described in prong (b) of such definition; provided, that notwithstanding the occurrence of the Vesting Date or the payment of any Success Bonus, the Company expects that the Consultant shall continue to provide services under this Agreement through the earlier to occur of the conclusion of any proceeding by the Company under the Bankruptcy Code and the determination by the Board, or a duly authorized Board committee, that the Consultant’s services no longer are needed.

(3)Expenses and Lodging. The Consultant is authorized to incur reasonable business expenses that, in his reasonable business judgment, are necessary or appropriate to carry out his services under this Agreement, including the Consultant’s reasonable expenses associated with traveling. The Consultant shall be entitled to reimbursement for such expenses upon submission of receipts and subject to the Company’s standard procedures and policies for consultant expenses. The Consultant will reasonably promptly remit invoices for expenses incurred hereunder, which shall be paid within 30 days of receipt of such invoice.

(e)No Benefits. Neither the Company nor any of its affiliates will provide the Consultant with any benefits, nor will the Consultant be entitled to participate in any benefit plan or arrangement of the Company or any of its affiliates (the “Company Group Benefit Plans”). If, for any reason, any government agency, court, or other entity determines that the Consultant is entitled to participate in any Company Group Benefit Plan for the period during which the Consultant is providing services to the Company, then the Consultant hereby waives his right to receive any benefits under such Company Group Benefit Plan. Further, if for any reason the waiver contained in the immediately preceding sentence is determined to be invalid or unenforceable, and a determination is made that the Consultant is entitled to any benefits under any such Company Group Benefit Plan for the period during which the Consultant is providing services to the Company, then the Consultant agrees to irrevocably waive any such benefits (and will promptly complete and return any documents reasonably specified by the Company for such purpose).

(f)Independent Contractor Status; Tax Consequences. The Consultant and Stein acknowledge that, during the Term, the Consultant’s relationship with the Company will be that of an independent contractor, and neither the Consultant nor Stein will be an employee of the Company. The Consultant represents and warrants that he is customarily engaged in an independently established trade, occupation, or business of the same or similar nature as the services to be performed hereunder. The Company makes no representations or warranties with respect to the tax consequences of the payments and any other consideration provided to the Consultant or made on the Consultant’s behalf under the terms of this Agreement. The Consultant and Stein agree and understand that the Consultant is responsible for payment, if any, of local, state, and/or federal taxes on the payments made hereunder by the Company. The Consultant and Stein represent and agree that the Company is not required to withhold or pay any income, payroll, social security, or other federal, state, or local taxes, make any insurance contributions, including

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for unemployment or disability, or obtain workers’ compensation insurance on behalf of the Consultant or Stein. However, the Company reserves the right to withhold payroll taxes and other amounts to the extent required by applicable law. For the avoidance of doubt, the Consultant has requested and will receive an IRS Form 1099-MISC or Form 1099-NEC, as appropriate, from the Company for the services under this Agreement. The Consultant acknowledges and agrees that the Consultant is obligated to report as income all compensation received by the Consultant pursuant to this Agreement.

(g)No Prior Restrictions. The Consultant and Stein represent and warrant that the Consultant’s and Stein’s services relationship with the Company will not violate, or cause the Consultant or Stein to be in breach of, any obligation or covenant made to any former employer or other third party, and each agrees that, during the course of the Consultant’s and Stein’s services relationship with the Company, the Consultant and Stein will not take any action that would violate or breach any legal obligation that the Consultant or Stein may have to any former employer or other third party.

(h)Indemnification. In the event the Company does not withhold the payroll taxes and other amounts required to be withheld by applicable law described in Section 2(f), the Consultant shall indemnify the Company for income taxes and the employee portion of any payroll taxes if it is finally determined the Company was required to withhold; provided that, this indemnification obligation will apply only if the Company reasonably promptly notifies the Consultant of such claim and the Consultant fails to demonstrate the relevant taxes were paid by the Consultant or its affiliates (the “Consultant Indemnification”).  During the Consultant’s and Stein’s provision of the services hereunder, the Company agrees to indemnify and hold the Consultant and Stein each harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses, and expenses (including reasonable attorneys’ fees and legal expenses) as a result of any claim or proceeding (whether civil, criminal, administrative, or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative, or investigative), against the Consultant or Stein and that may arise out of or relate to the Consultant’s or Stein’s provision of the services as an advisor to the Company or in any such capacity or similar capacity with an affiliate of the Company or other entity at the request of the Company, and to promptly advance to the Consultant (or Stein) or the Consultant’s (or Stein’s) representatives such fees and expenses upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Consultant, Stein, or by someone on the Consultant’s or Stein’s behalf to repay such amount if it shall ultimately be determined that the Consultant or Stein, as the case may be, is not entitled to be indemnified by the Company (the “Indemnification”); provided that (i) Indemnification shall only be provided to the extent the Consultant or Stein, as the case may be, acted in good faith and in a manner the Consultant or Stein, as the case may be, reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, the Consultant or Stein, as the case may be, had no reasonable cause to believe the Consultant’s or Stein’s, as the case may be, conduct was unlawful and (ii) the Indemnification shall not apply with respect to the Consultant Indemnification. If the Consultant or Stein has any knowledge of any actual or threatened action, suit, or proceeding, whether civil, criminal, administrative, or investigative, as to which the Consultant or Stein may request indemnity under this provision, the Consultant or Stein will provide the Company prompt written notice thereof; provided that the failure to give such notice shall not affect the Consultant’s or Stein’s right to Indemnification. The Company shall be entitled to assume the defense of any such

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proceeding, and the Consultant and Stein will use reasonable efforts to cooperate with such defense. To the extent that the Consultant or Stein, in good faith, determines that there is an actual or potential conflict of interest between the Consultant or Stein and the Company in connection with the defense of a proceeding, the Consultant or Stein shall so notify the Company and shall be entitled to separate representation at the Company’s expense by counsel that the Consultant or Stein shall select (provided that the Company may reasonably object to the selection of counsel within ten business days after notification thereof), which counsel shall cooperate, and coordinate the defense, with the Company’s counsel and minimize the expense of such separate representation to the extent consistent with the Consultant’s and/or Stein’s separate defense. The provisions herein with respect to the Indemnification shall continue in effect after the termination of the Consultant’s or Stein’s service with the Company.

3.Termination of Service.

(a)Death. The Consultant’s service hereunder shall terminate automatically upon the Consultant’s death during the Term.

(b)Cause. The Company may terminate the Consultant’s services hereunder for Cause at any time during the Term and without advance written notice. For purposes of this Agreement, “Cause” shall be limited to the Consultant’s (i) refusal to perform any material services hereunder (other than as a result of the Consultant’s physical or mental incapacity) that continues after written notice and opportunity to cure from the Company, (ii) the commission of an intentional and material act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company as reasonably determined by the Company, (iii) conviction of, or plea of no contest or nolo contendere to, any felony or any crime that involves fraud, dishonesty, or moral turpitude or that causes material harm, financial or otherwise, to the Company, (iv) willful failure to reasonably cooperate (other than due to the Consultant’s death or disability) in any audit or investigation of the business or financial practices of the Company that continues after written notice from the Board and 30 days to cure; or (v) willful and material violation of any federal, state, or local law or regulation applicable to the Company or its business that demonstrably and materially adversely affects the Company that is not promptly (i.e., within 30 days) cured after written notice from the Company. For purposes of the previous sentence, no act or failure to act on the Consultant’s part shall be deemed “willful” unless done, or omitted to be done, by the Consultant not in good faith and without reasonable belief that the Consultant’s action or omission was in the best interest of the Company. The Consultant’s actions, or failures to act, based upon authority given pursuant to a resolution duly adopted by the Board or (with respect to legal matters only) upon and in conformance with the recommendation of counsel for the Company is conclusively presumed to be in good faith and in the best interests of the Company.

(c)“Good Reason” means the occurrence of any of the following, without the Consultant’s written consent: (i) a material breach of this Agreement by the Company, (ii) any material diminution of the Consultant’s titles, duties, responsibilities, or authority, including any adverse change in the Consultant’s positions, or (iii) a reduction of the Consulting Fee or the Success Fee, or failure to pay the same. In order to terminate the Consultant’s service for Good Reason, each of the following conditions must be satisfied: (A) the Consultant must provide written notice to the Company within 60 days of the Consultant’s actual knowledge of the first occurrence of the alleged event; (B) the Company must fail to cure such occurrence in all material

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respects within ten days following receipt of the Consultant’s written notice described in clause (A); and (C) if the Company fails to cure as described in clause (B), the Consultant must actually terminate employment within the 30-day period following the expiration of the Company’s ten-day cure period.

(d)Notice of Termination. The Company may terminate the Consultant’s services hereunder at any time with or without Cause, in each case, upon written notice delivered in accordance with this Section 3(d). Any termination hereunder, whether by the Company for Cause or without Cause or by the Consultant for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 8(d). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the services hereunder under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date.

(e)Date of Termination. “Date of Termination” means (i) if the Consultant’s service is terminated by the Company for or without Cause, the Consultant’s date of receipt of the Notice of Termination, (ii) if the Consultant’s service is terminated by the Consultant for or without Good Reason, the date of the Notice of Termination, or (iii) if the Consultant’s service is terminated by reason of the Consultant’s death, the date of the Consultant’s death.

4.Obligations of the Company upon Termination. Upon a termination of the Consultant’s service hereunder, the Company shall have no further payment obligations to the Consultant, his agents, or any of their legal representatives, other than for (a) the payment in a lump sum in cash within five days after the Date of Termination (or such earlier date as required by applicable law) of that portion of the Consulting Fee accrued through the Date of Termination to the extent not previously paid, and any expense reimbursement accrued and unpaid, and (b) if such termination is by the Consultant for Good Reason or by the Company for a reason other than Cause and other than due to the Consultant’s inability to perform services hereunder due to his death or his physical or mental impairment and such termination occurs (i) before the Company files a voluntary petition under Chapter 11 of the United States Code (the “Bankruptcy Code”), payment in a lump sum in cash within 30 days after the Date of Termination in the amount of US$10,000,000; or (ii) after the Company files a voluntary petition under Chapter 11 of the Bankruptcy Code, payment of the Success Bonus, to the extent it becomes payable in accordance with the terms of this Agreement within 18 months after such termination, which shall be paid in a lump sum in cash within five days after the date it becomes payable.

5.Confidential Information.

(a)The Consultant acknowledges that the Company has trade, business, and financial secrets and other confidential and proprietary information (collectively, the “Confidential Information”) that has been and will be provided to the Consultant during the Consultant’s service relationship with the Company. Confidential information includes, but is not limited to, sales materials, technical information, strategic information, business plans, processes,

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and compilations of information, records, specifications, and information concerning customers or vendors, customer lists, and information regarding methods of doing business.

(b)The Consultant is aware that the Company has implemented policies to keep its Confidential Information secret, including those policies limiting the disclosure of information on a need-to-know basis, requiring the labeling of documents as “confidential,” and requiring the keeping of information in secure areas. The Consultant acknowledges that the Confidential Information has been developed or acquired by the Company through the expenditure of substantial time, effort, and money and provides the Company with an advantage over competitors who do not know or use such Confidential Information. The Consultant acknowledges that all such Confidential Information is the sole and exclusive property of the Company and its affiliates.

(c)During, and all times following, the Consultant’s service relationship with the Company, the Consultant and Stein shall hold in confidence and not directly or indirectly disclose, use, copy, or make lists of any Confidential Information, except (i) to the extent determined appropriate by the Consultant or Stein in his reasonable discretion to provide services hereunder to the Company; (ii) where such information is, at the time of disclosure by the Consultant or Stein, generally available to the public other than as a result of any direct or indirect act or omission of the Consultant or Stein in breach of this Agreement; or (iii) where the Consultant or Stein is compelled by legal process. The Consultant and Stein agree to use reasonable efforts to give the Company prompt written notice of any and all attempts to compel disclosure of any Confidential Information, to the extent that it or he is legally permitted to do so. Such written notice shall include either (A) the subpoena(s) or order(s) (or other similar documents) compelling such disclosure, or (B) a reasonable description of the information to be disclosed, the court, government agency, or other forum through which the disclosure is sought, and the date by which the information is to be disclosed, and a copy of the subpoena, order or other process used to compel disclosure, in each case to the extent legally permitted to do so.

(d)The Consultant and Stein will take such precautions as deemed reasonable to prevent disclosure of Confidential Information in it or his possession or control to any unauthorized individual or entity. The Consultant and Stein further agree not to use, whether directly or indirectly, any Confidential Information for the benefit of any person, business, corporation, partnership, or any other entity other than the Company.

(e)In accordance with the Defend Trade Secrets Act of 2016, the Consultant and Stein are hereby notified by the Company that the Consultant and Stein will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. The Consultant and Stein are further notified by the Company that, if the Consultant or Stein files a lawsuit for retaliation by an employer for reporting a suspected violation of law, then the Consultant or Stein may disclose the employer’s trade secrets to the Consultant’s or Stein’s attorney, as applicable, and use the trade secret information in the court proceeding if the Consultant or Stein, as applicable: (I) files any document containing the trade secret under seal; and (II) does not disclose the trade secret, except pursuant to court order.

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Nothing in this paragraph shall be interpreted to mean that the Consultant or Stein is an employee of the Company or that the Company is the Consultant’s or Stein’s employer.

(f)The Consultant and Stein each may, and each is expected to, provide the Company with advice, suggestions, or feedback (collectively, the “Feedback”) relating to the Company’s business, products, and services (and improvements, enhancements, and improvements thereto), including in written or tangible form (collectively, the “Materials”). The Company may use such Feedback and Materials, and, to the extent that the Consultant and/or Stein has any intellectual or proprietary rights in such Feedback and Materials, the Consultant and Stein hereby grant the Company a non-exclusive, worldwide, perpetual, transferable, sublicensable, irrevocable, royalty free license under such rights, to use and exploit such Feedback and Materials for any purpose, including in connection with developing, maintaining, and improving its products and services. The Consultant and Stein will not disclose to the Company, or use for the benefit of the Company, any materials or technology that the Consultant and/or Stein do not own, that are subject to any restrictions on use by the Company, the Consultant, or Stein, or that infringe, or if used or implemented by the Company, would infringe, any third party’s intellectual property rights.

(g)As used in this Section 5, “Company” shall include the Company and any of its affiliates.

6.Mutual Non-Disparagement. During the Term and for three years thereafter, the Consultant and Stein agree not to intentionally make, or intentionally cause any other person to make, any public statement that is intended to criticize or disparage the Company, any of its affiliates, or any of their respective officers, managers or directors. During the Term and for three years thereafter, the Company agrees to use commercially reasonable efforts to cause its then-current officers and members of its Board not to intentionally make, or intentionally cause any other person to make, any public statement on behalf of the Company that is intended to criticize or disparage the Consultant or Stein. This Section 6 shall not be construed to prohibit any person from responding publicly to incorrect public statements, from making truthful statements when required by law, subpoena, court order, or the like or to enforce this Agreement, or from making internal (i.e., non-public) statements while discharging duties to the Company. Notwithstanding anything to the contrary contained herein, no provision of this Agreement shall be interpreted so as to impede any individual from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the United States Congress, and any agency inspector general, or making other disclosures under the whistleblower provisions of federal law or regulation.

7.Employee Non-Solicit. During the Term and for six months thereafter, the Consultant and Stein agree that the Consultant and Stein shall not, except in the furtherance of the Consultant’s duties hereunder, solicit, aid, or induce any employee or individual service provider of the Company or any of its subsidiaries to leave such employment or service or to accept employment with or render services to or with any other person, firm, corporation, or other entity unaffiliated with the Company and its subsidiaries or hire or retain any such employee or individual service provider. An employee or individual service provider shall be deemed covered by this Section 7 while so employed or engaged by the Company or any of its subsidiaries and for three

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months thereafter. An individual service provider shall be deemed covered by this Section 7 if such service provider is a natural person providing consulting services to the Company. For the avoidance of doubt, entity service providers will not be deemed to be covered by this Section 7. Notwithstanding the foregoing, the provisions of this Section 7 shall not be violated by (a) general advertising or solicitation not specifically targeted at Company-related persons or entities, or (b) during the three-month period described in this Section 7, with respect to an employee or other service provider who was first engaged by the Company specifically to assist the Consultant in its duties for the Company.

8.Miscellaneous.

(a)Survival and Construction. The Consultant’s obligations under this Agreement will be binding upon the Consultant’s administrators and will inure to the benefit of the Company and its subsidiaries, successors, and assigns. The language of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against any of the parties. The section and paragraph headings used in this Agreement are intended solely for the convenience of reference and shall not in any manner amplify, limit, modify, or otherwise be used in the interpretation of any of the provisions hereof.

(b)Definitions. As used in this Agreement, “affiliate” means, with respect to a person, any other person controlling, controlled by or under common control with the first person; the term “control”, and correlative terms, means the power, whether by contract, equity ownership, or otherwise, to direct the policies or management of a person; and “person” means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

(c)Other Matters. If the Company becomes subject to a proceeding under the Bankruptcy Code, then, if requested by the Consultant, the Company will use commercially reasonable efforts to obtain entry of an order of the U.S. bankruptcy court with jurisdiction over the Company’s bankruptcy case authorizing the Consultant to provide the services hereunder during the pendency of any such bankruptcy case on terms and conditions no less favorable than those set forth in this Agreement.

(d)Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, electronic mail, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Consultant:

Stein Advisors LLC

Jeffrey S. Stein

42 River Wind Road

New Canaan, CT 06840

Email: jstein@steinadvisorsllc.com

If to the Company:

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Rite Aid Corporation

1200 Intrepid Avenue, 2nd Floor

Philadelphia, PA 19112

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee if delivered via hand, on the next business day following sending if delivered (sent) via electronic mail, and on the second business day following posting if delivered by registered or certified mail, return receipt requested, postage prepaid.

(e)Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. A court or arbitrator is authorized hereunder to construe, judicially modify, or “blue pencil” any such provision in any such jurisdiction so as to thereafter be limited or reduced to the extent required to be enforceable in such jurisdiction in accordance with applicable law.

The parties acknowledge that the remedy at law for a breach by the other party of any of Sections 5 and 6 will be inadequate, and that the damages flowing from such breach will not be readily susceptible to being measured in monetary terms. Accordingly, upon a violation or threatened violation of any part of such sections, the applicable party shall be entitled to immediate injunctive relief (or other equitable relief) without having to demonstrate special or unique damages, and, notwithstanding Section 8(i) below, may obtain a temporary order from any court having proper jurisdiction restraining any future or further violation. No bond or other security shall be required in obtaining such equitable relief, and each party to this Agreement hereby consents to the issuance of such equitable relief. Nothing in this paragraph shall be deemed to limit any remedies at law or in equity for any breach by a party hereto of any of the parts of such sections that may be pursued or availed of by a party hereto.

(f)Section 409A Compliance. This Agreement is intended to comply with (or be exempt from, including as a “short-term deferral” under) Internal Revenue Code Section 409A (“Section 409A”), and the provisions of this Agreement shall be construed accordingly. To the extent that any in-kind benefits or reimbursements pursuant to this Agreement are taxable and constitute deferred compensation subject to Section 409A, any reimbursement payment due shall be paid on or before the last day of the Consultant’s taxable year following the taxable year in which the related expense was incurred. In addition, any such in-kind benefit or reimbursement is not subject to liquidation or exchange for another benefit and the amount of such benefit or reimbursement that the Consultant receives in one taxable year shall not affect the amount of such benefits and reimbursements that the Consultant receives in any other taxable year. The Consultant agrees to promptly submit and document any reimbursable expenses in accordance with the

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Company’s reasonable expense reimbursement policies for consultants in order to facilitate the timely reimbursement of such expenses.

Notwithstanding any other provision of this Agreement, (i) the Company makes no representation to the Consultant about the effect of Section 409A on the provisions of this Agreement or any other compensation arrangement of the Consultant, and the Company will have no liability to the Consultant in the event that either of them becomes subject to taxation (including taxes, penalties, and interest) under Section 409A (other than any reporting and/or withholding obligations that the Company may have under applicable tax law) or in the event either of them incurs other expenses on account of non-compliance or alleged non-compliance with Section 409A; (ii) if any other payments of money or provision of other benefits due to the Consultant hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A, or otherwise, such payment or other benefits shall be restructured, to the extent possible, in a manner determined by the Company that does not cause such an accelerated or additional tax; (iii) to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, the Consultant will not be considered to have terminated services with the Company for purposes of this Agreement, and no payment shall be due to the Consultant under this Agreement, until the Consultant would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A; (iv) each amount to be paid or benefit to be provided to the Consultant pursuant to this Agreement, which constitutes deferred compensation subject to Section 409A, shall be construed as a separate identified payment for purposes of Section 409A; and (v) if the Consultant is a “specified employee” within the meaning of Section 409A at the time of the Consultant’s separation from service, to the extent the Consultant agrees it is required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts otherwise payable upon the Consultant’s separation from service shall be delayed until the date six months and one day after the Consultant’s separation from service.

(g)No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at any time.

(h)Complete Agreement. The provisions of this Agreement constitute the entire and complete understanding and agreement between the parties with respect to the subject matter hereof, and this Agreement supersedes all prior and contemporaneous oral and written agreements, representations, and understandings of the parties, which are hereby terminated, including, without limitation, the Prior Agreement. Other than expressly set forth herein, the Consultant and the Company acknowledge and represent that there are no other promises, terms, conditions, or representations (oral or written) regarding any matter relevant hereto. This Agreement may be executed electronically and in two or more counterparts. Upon entry into this Agreement, the Consultant waives any and all claims the Consultant and/or Stein may have to terminate the Consultant’s services for Good Reason (as defined in the Prior Agreement or this Agreement) on the basis of the Consultant’s entry into this Agreement, and the Consultant and Stein acknowledge and agree that the payment described in Section 4(b) of the Prior Agreement is not owed and will not be paid to the Consultant and/or Stein. For purposes of clarity, the Prior Agreement will be deemed terminated and of no force or effect once this Agreement becomes

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effective (other than amounts owed for services under the Prior Agreement prior to the date of this Agreement).

(i)Arbitration. Provided that the Company has not filed a voluntary petition under the Bankruptcy Code, the Company, on the one hand, and the Consultant and Stein, on the other hand, agree to the resolution by binding arbitration of all claims, demands, causes of action, disputes, controversies, or other matters in question (“claims”), whether or not arising out of this Agreement or the Consultant’s or Stein’s service (or termination thereof), whether sounding in contract, tort, or otherwise and whether provided by statute or common law, that the Company may have against the Consultant or Stein, or that the Consultant or Stein may have against the Company or its parents, subsidiaries, and affiliates, and each of the foregoing entities’ respective officers, directors, employees, or agents in their capacity as such or otherwise; except that this Agreement to arbitrate shall not limit the Company’s right to seek equitable relief, including injunctive relief and specific performance, and damages and any other remedy or relief (including the recovery of attorney fees, costs, and expenses) in a court of competent jurisdiction for an alleged breach of Sections 5 or 6 of this Agreement, and the Consultant and Stein each expressly consents to the non-exclusive jurisdiction of the district courts of Connecticut for any such claims; provided that if the Company files a voluntary petition under the Bankruptcy Code, the Company may elect to adjudicate any claims (as defined herein) in a proceeding before the U.S. Bankruptcy Court with jurisdiction over the Company’s bankruptcy case. Subject to the preceding sentence, claims covered by this Agreement to arbitrate also include claims by the Consultant and/or Stein for breach of this Agreement, wrongful termination, discrimination and retaliation. In the event of any breach of this Agreement by the Company, it is expressly agreed that, notwithstanding any other provision of this Agreement, the only damages to which the Consultant and Stein shall be entitled is lost compensation in accordance with Section 2 and reimbursement of costs and expenses incurred by the Consultant and Stein in such dispute, as set forth below. The Company, the Consultant, and Stein agree that any arbitration shall be in accordance with the Federal Arbitration Act (“FAA”) and, to the extent an issue is not addressed by the FAA, with the then-current Commercial Arbitration Rules of the American Arbitration Association (“AAA”) or such other rules of the AAA as applicable to the claims being arbitrated. If a party refuses to honor its obligations under this Agreement to arbitrate, the other party may compel arbitration in either federal or state court. The arbitrator shall apply the substantive law of Connecticut (excluding, to the extent applicable, choice-of-law principles that might call for the application of some other state’s law), or federal law, or both as applicable to the claims asserted. The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement to arbitrate, including any claim that all or part of this Agreement is void or voidable and any claim that an issue is not subject to arbitration. The parties agree that venue for arbitration will be in Fairfield County, Connecticut, and that any arbitration commenced in any other venue will be transferred to Fairfield County, Connecticut, upon the written request of any party to this Agreement. Any and all of the arbitrator’s orders, decisions, and awards may be enforceable in, and judgment upon any award rendered by the arbitrator may be confirmed and entered by, any federal or state court having jurisdiction. All proceedings conducted pursuant to this Agreement to arbitrate, including any order, decision, or award of the arbitrator, shall be kept confidential by all parties. Notwithstanding anything to the contrary contained herein, the Company shall reimburse or pay the Consultant’s reasonable costs and expenses (including reasonable attorney’s fees) incurred in any dispute hereunder if the Consultant materially prevails on any significant issue in such dispute. THE COMPANY, THE

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CONSULTANT, AND STEIN EACH ACKNOWLEDGE THAT, BY SIGNING THIS AGREEMENT, EACH PARTY IS WAIVING ANY RIGHT THAT SUCH PARTY MAY HAVE TO A JURY TRIAL OR, EXCEPT AS EXPRESSLY PROVIDED HEREIN, A COURT TRIAL OF ANY CLAIM THAT SUCH PARTY MAY ALLEGE.

(j)Survival. Sections 5 and 6 of this Agreement, the agreement to arbitrate in Section 8(i) of this Agreement, and the provisions of this Agreement relating to the Success Bonus, shall survive the termination of this Agreement.

(k)Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of Connecticut without reference to principles of conflict of laws of Connecticut or any other jurisdiction, and, where applicable, the laws of the United States.

(l)Amendment. This Agreement may not be amended or modified at any time, except by a written instrument executed by the Company and the Consultant.

(m)Assignment. This Agreement is personal as to the Consultant, and accordingly, the Consultant’s obligations hereunder may not be assigned by it. This Agreement shall be assigned by the Company to any entity which is a successor in interest to all or substantially all of the Company’s business.

(n)Acknowledgment. The Consultant acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representatives or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Consultant and Stein each has hereunto set his hand and, pursuant to the authorization from the Board of Directors, the Company has caused this Agreement to be executed, all as of the day and year first above written.

CONSULTANT:
STEIN ADVISORS LLC
/s/ Jeffrey Stein
STEIN (for purposes of Sections 2(a), 2(c)(6), 2(f) through 2(h), 4, 5, 6, 7, 8(h), and 8(i)):
Jeffrey S. Stein
/s/ Jeffrey Stein
RITE AID CORPORATION
By:	/s/ Thomas Sabatino
Name: Thomas Sabatino
Title: EVP, Chief Legal Officer

[Signature Page to Consulting Agreement]

EXHIBIT A

The term “Success Event” means the first to occur of the following, in each case, however such result is achieved:

(a) A change-of-control transaction implemented through a process under Chapter 11 of the Bankruptcy Code, for all or substantially all of the assets of the Company, that is approved by the Board or a duly authorized committee thereof;

(b) The effective date of a confirmed plan of reorganization under Chapter 11 of the Bankruptcy Code for the Company; and/or

(c) The consummation of any out-of-court recapitalization or restructuring (through a single transaction or series of transactions) of the majority of the Company’s secured funded debt, through which the Company is contemplated to continue to operate as a going concern for the foreseeable future, and that is approved by the Board or a duly authorized committee thereof.

For purposes of this Exhibit A, the “Company” includes Rite Aid Corporation and its subsidiaries and controlled affiliates (taken as a whole), and any other entity that any of the foregoing may form or invest in to consummate any of the transactions described above, and will also include any successor to or assignee of all or a portion of the assets and/ or businesses of any of the foregoing entities howsoever any portion of such assets or businesses are assigned or transferred to such entities. A “Success Event” shall in no circumstance include liquidation through chapter 7 of the Bankruptcy Code.

A-1

EX-10.36

Exhibit 10.36

October 11, 2023

Matthew Schroeder

RE:Amended and Restated Retention Incentive

Dear Matt:

Reference is made to that certain Letter Agreement Re: Retention Incentive, by and between you and Rite Aid Hdqtrs. Corp. (the “Company” or “we”), dated on or about April 28, 2023 (the “Prior Agreement”). This Amended and Restated Letter Agreement (this “Agreement”) supersedes and replaces the Prior Agreement in its entirety, which shall have no further force or effect upon your execution of this Agreement.

We appreciate your continued service and would like to offer you additional incentives in order to encourage you to stay with us as we evolve our operations, grow our business and explore new strategic alternatives. In order to be eligible for this incentive you must sign and return this Agreement to Allison Fuller by October 12, 2023, acknowledging your agreement to the terms set forth herein.

Original Special Bonus

Pursuant to the Prior Agreement, you were awarded a bonus in an aggregate amount of $1,500,000 (referred to in the Prior Agreement as the “Special Bonus” and in this Agreement as the “Original Special Bonus”). The Original Special Bonus was advanced and pre-paid to you, and the Original Special Bonus will vest and no longer be subject to repayment based on your continued employment with the Company and its subsidiaries through an applicable Repayment Expiration Date (as defined below).

New Bonus

Pursuant to this Agreement, if you accept this offer, then within seven days of the date hereof, the Company will advance and pre-pay to you a new bonus in the amount of $3,062,106 (the “New Bonus”). The New Bonus will vest and no longer be subject to repayment based on your continued employment with the Company and its subsidiaries through an applicable Repayment Expiration Date.

Other Terms and Conditions

If you are terminated without Cause, resign for Good Reason, die or become disabled (in any case) prior to a Repayment Expiration Date, then you (or your estate, as applicable) will not have to repay the Original Special Bonus or the New Bonus, as long as you (or your estate, as applicable) sign(s) and do(es) not revoke a General Release of Claims in such form as may be required by the Company in its sole discretion. For the sake of clarity, the After-Tax Value (as defined below) of each of the Original Special

Bonus and the New Bonus is subject to repayment in full should you resign other than for Good Reason or be terminated for Cause prior to an applicable Repayment Expiration Date.

If you are required to repay the After-Tax Value of the Original Special Bonus or the New Bonus under this Agreement, then you agree to do so promptly, but in no event more than 30 days following your termination date. Upon your termination we may offset and/or reduce any other compensation we owe you, such as unpaid wages, by the amount you are required to repay. However, we will not reduce or offset any compensation if doing so would violate applicable law and/or would result in penalty taxes under Section 409A of the Internal Revenue Code. We reserve all other rights and remedies available to recoup the After-Tax Value of the Original Special Bonus and the New Bonus advanced under this Agreement, including the right to file a legal claim in court.

The Original Special Bonus and the New Bonus provided to you hereunder are in lieu of any short-term and/or long-term cash and/or equity compensation that you are typically awarded, or are (or may become) entitled to be awarded, in respect of fiscal year 2024, and you acknowledge and agree that the Original Special Bonus and the New Bonus are intended to, and do, replace such short-term and long-term opportunities for fiscal year 2024. You hereby acknowledge and agree that such replacement of your short-term and long-term opportunities with the Original Special Bonus and the New Bonus does not violate any agreement between you and the Company or any of its direct or indirect subsidiaries or affiliates (the “Company Group”) or any compensation plan, program or arrangement of any member of the Company Group, and do not constitute “good reason” pursuant to, or otherwise violate, any severance plan, employment agreement or any other compensation plan, program, agreement or arrangement of any member of the Company Group.

For purposes of this Agreement the following terms apply:

“After-Tax Value” means the gross amount of the unvested and forfeitable portion of the Original Special Bonus or the New Bonus, as the case may be, as of your termination date, net of any taxes you are required to pay in respect thereof and determined taking into account any tax benefit that may be available in respect of the repayment described above. The Company shall determine in good faith the After-Tax Value of the Original Special Bonus and the New Bonus, which determination shall be conclusive and binding.

“Cause” will have the meaning set forth in your employment agreement with Rite Aid Corporation (or a subsidiary thereof). If you do not have such an employment agreement, then “Cause” will have the meaning as is contained in the Company’s Amended and Restated 2020 Omnibus Equity Incentive Plan (the “Plan”).

“Change in Control” will have the meaning as is contained in the Plan.

“Good Reason” will have the meaning set forth in your employment agreement with Rite Aid Corporation (or a subsidiary thereof). If you do not have such an employment agreement, then the provisions set forth in this letter agreement as it relates to “Good Reason” will not apply to you.

“Repayment Expiration Date” means the first of occur of (i) with respect to the Original Special Bonus only, April 28, 2024, (ii) the effective date of a plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code and (iii) the effective date of a sale of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis (in the case of clause (iii), as determined by the Company’s Chief Executive Officer).  For the sake of clarity, prong (i) of this definition will not apply to the New Bonus.

2

The Board of Directors of the Company, or its Compensation Committee, has the sole authority and discretion to determine whether any termination is for Cause or Good Reason and whether a Repayment Expiration Date has occurred, and such determination will be final and binding on you and the Company.  If you wish to dispute any such determination, then such dispute will be resolved by arbitration before a single independent arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, taking place in Philadelphia, Pennsylvania and applying the law of the State of Pennsylvania. Both you and the Company waive all rights to a jury trial.

The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Pennsylvania without regard to principles of conflicts of laws thereof. The Company and its subsidiaries will have the authority and the right to deduct or withhold, or require you to remit to the Company or a subsidiary thereof, an amount sufficient to satisfy all federal, state, local and foreign taxes (including any employment tax obligations) required by law to be withheld with respect to the payment of any amounts hereunder. This Agreement replaces and supersedes any other agreements, arrangements, understandings or promises made to you by anyone, whether oral or written (including without limitation the Prior Agreement), and comprises the final, complete and exclusive agreement between you and the Company, solely with respect to the Original Special Bonus and the New Bonus, and may only be amended in a writing signed by both you and an authorized representative of the Company. This Agreement may be executed in counterparts and by .pdf, facsimile or other electronic means and, when so executed, will have the same force and effect as an original, and constitute a binding agreement on each of the parties.

You should be aware that in addition to your obligation to repay the After-Tax Value of each of the Original Special Bonus and the New Bonus under this Agreement, the Original Special Bonus and the New Bonus may also be subject to recoupment in certain corporate transactions.

Sincerely,

/s/ Jessica Kazmaier

Rite Aid Hdqtrs. Corp.

Accepted, Acknowledged and Agreed:

/s/ Matthew C. Schroeder​ ​​ ​

Name

October 11, 2023​ ​​ ​​ ​

Date

3

EX-10.38

Exhibit 10.38

Execution-Version

RSA
RSA	● The Company and the ad hoc group of senior secured noteholders (the “Secured AHG”) shall enter into a restructuring support agreement (“RSA”) consistent with the terms set forth herein and as otherwise agreed by the Company and Consenting Noteholders that hold at least 66.67% of the aggregate principal amount of Secured Notes outstanding as of the petition date. ● RSA effectiveness shall be subject to the following CP (in addition to other customary CPs): o RSA shall be entered into by holders of at least 66.67% of the aggregate principal amount of Secured Notes outstanding as of the petition date (such participating holders, the “Consenting Noteholders”); o RSA shall contain, among other terms, (i) a covenant by the Debtors to make commercially reasonable efforts to sell, transfer, or otherwise monetize the CMS Receivable and to keep the professionals for the Required Consenting Noteholders and DIP ABL/FILO/Term Loan Lenders reasonably informed on the status thereof; (ii) will commence a process to sell, transfer, or otherwise monetize the CMS Receivable, which process shall be on terms acceptable to DIP ABL/FILO/Term Loan Lenders, the Consenting Noteholders holding at least 66.67% of the Secured Notes held by all Consenting Noteholders (the “Required Consenting Noteholders”), and which process the Debtors, the Required Consenting Noteholders, and DIP ABL/FILO/Term Loan Lenders shall negotiate in good faith; and (iii) the Debtors will use good faith efforts to commence a RFP process to solicit third-party bids to become the Debtors’ primary pharmaceutical provider and to keep the professionals for the Required Consenting Noteholders and DIP ABL/FILO/Term Loan Lenders reasonably informed on the status thereof. o Company shall enter into agreement(s) on or before the Petition Date concerning the treatment of key critical vendors’ claims and contract(s) (as applicable) both during the chapter 11 case and on a post-emergence basis on terms acceptable to the Company and the Required Consenting Noteholders o Agreement on the Paydown Escrow Schedule and Cash Collateral provisions (defined and set forth below)among the Company, the ABL, and the Required Consenting Noteholders ● The RSA shall provide that (a) the Consenting Noteholders reserve all rights as to Definitive Documents (to be defined in the RSA), including Global Bidding Procedures Order, the Interim DIP Order, the Interim Store Closing Order, the Confirmation Scheduling Order, the Plan, and the Disclosure Statement, that are filed within the first 30 days of the Petition Date, and no consent or approval by the Consenting Noteholders shall be deemed to have been given by a failure to object to such pleadings, (b) the Debtors and Consenting Noteholders shall negotiate in good faith on the form of all Definitive Documents, including amendments to any filed pleadings, and (c) upon the second business day following the date upon which the Final DIP Order is entered, the Required Consenting Noteholders shall have the option to terminate the RSA if any Definitive Documents, including any motions that have already been filed or orders that have already been entered, are not in form and substance acceptable to the Required Consenting Noteholders or otherwise inconsistent with the terms set herein.
Implementation
Mechanism	Chapter 11 Plan of Reorganization / Section 363 Process.  The restructuring transactions will be effectuated through a chapter 11 plan (the “Plan Restructuring”) on terms acceptable to the Company and the Required Consenting Noteholders (the “Plan”) if, in addition to the satisfaction of other customary conditions and unless otherwise agreed by the Company and the Required Consenting Noteholders, (i) the Required Consenting Noteholders

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	determine no later than two business days before the voting deadline in the Disclosure Statement Order that treatment and quantum of administrative expense and priority claims under the Plan is acceptable, (ii) the Confirmation Order is entered on or before the applicable milestone set forth below, and (iii) an Acceptable Sale Termination Event (as defined below) has not occurred (the “Plan Conditions”).  To effectuate the restructuring transactions described herein, the Company Parties shall file a Plan that is materially consistent with this Term Sheet. ● Required Consenting Noteholders to credit bid to purchase RAD 2.0 (defined as RAD Retail Business, excluding [400] stores contemplated for closure, subject to Designation Rights Arrangement) (the “AHG Credit Bid”). ● If the Plan Conditions are satisfied on or before the applicable confirmation milestone set forth below, the AHG Credit Bid shall be effectuated pursuant to the Plan. ● “Reorganized Rite Aid” is defined as RAD 2.0, less any additional stores closed pursuant to the Additional GOB Sales (defined below), less the assets sold in the PBM Sale, less any other assets sold pursuant to the Retail Sale Process. If the Plan Conditions are not satisfied on or before the milestone set forth below, the AHG Credit Bid, subject to the results of the Retail Sale Process, shall be implemented pursuant to a sale order under section 363 of the Bankruptcy Code (the “Sale Order”) and a liquidating chapter 11 plan (in the event of the AHC Credit Bid, the “Credit Bid – 363 Sale”; and in the event of an alternative sale, the “Alternative Sale Transaction”). Regardless of whether the parties are pursuing a Plan Restructuring, the Company will file a motion seeking approval of the AHG Credit Bid under section 363 (the “Sale Motion”) such that the hearing to approve the Sale Motion and entry of the Sale Order may occur on or before the applicable milestones set forth below if the Plan is not confirmed on or before the applicable confirmation milestone.
AHG Credit Bid	● AHG Credit Bid shall be subject to the following CPs, in addition to other customary CPs: o Reasonably acceptable inventory and working capital on an enterprise and per-store basis; o Acceptable go-forward agreements with key vendors, including on treatment of any prepetition/administrative claims; o Acceptable exit financing from ABL/FILO lenders; and o NewCo to have access to sufficient liquidity at emergence / consummation of the sale. ● Company and the AHG to engage in good faith discussions on Rite Aid 2.0 store footprint, with additional stores identified for closure to be incorporated into GOB process
Treatment of Claims & Interests under a Plan	ABL / FILO Claims	Repaid in full in cash at exit or upon consummation of third-party sales, unless ABL/FILO lenders agree to roll into exit financing
	Senior DIP TL Claims	Repaid in full in cash at exit or upon consummation of third-party sales

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	Senior Secured Notes Claims (if any)	In the event of the Plan Restructuring, 100% of the new common stock in Reorganized Rite Aid, subject to dilution on account of the new stock issued pursuant to the Management Incentive Plan (the “New Common Stock”) and any equity-linked instruments issued to Holders of Allowed General Unsecured Claims, plus takeback debt in an amount to be determined by the Required Consenting Noteholders and the Company; or In the event the Restructuring Transaction is not a Plan Restructuring, [its Pro Rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery.]
	Admin/Priority Claims	Treatment and quantum on terms acceptable to the Required Consenting Noteholders.
	Unsecured Trade Claims	Subject to same treatment as General Unsecured Claims (excl. Trade Claims), described below.
	General Unsecured Claims (excl. Trade Claims)	Subject to (i) DIP Term Loan Claims and ABL/FILO Claims being satisfied in full, in cash, or such other treatment acceptable to the DIP Term Loan Lenders and/or ABL/FILO lenders, as applicable, in their sole discretion, and (ii) the satisfaction of any Allowed Adequate Protection Claims, [---]% of an equity-linked instrument in Reorganized Rite Aid (form and terms to be determined), calculated as of the Plan Effective Date and equal to the product of a formula calculated as the (Midpoint Value of owned Real Estate not encumbered prior to the Petition Date, less the costs and expenses paid by, or estimated to be paid by, the Debtors’ estates to administer the chapter 11 cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of equitized Senior Secured Notes Claims)
	Equity	Cancelled
	MIP	MIP at NewCo or Reorganized Rite Aid, as applicable, to be determined and allocated by the board of such entity
Treatment of Claims & Interests if AHG Credit Bid Implemented Through a 363 Sale	● See Paydown and Escrow Schedule. ● All proceeds, other than an agreed Wind-Down Budget, shall be used to repay DIP Term Loan Claims, ABL/FILO Claims, Secured Notes Claims, and, if applicable, any general unsecured claims in accordance with the priority set forth in Exhibit A (and otherwise in in accordance with Financing Order), or an otherwise agreed waterfall among the ABL/FILO Lenders, Company, and Required Consenting Noteholders. ● Wind-Down Budget shall include an amount sufficient to fund the Professional Fee Escrow,administrative expense claims and priority claims (in an amount to be negotiated and acceptable to the Required Consenting Noteholders, the  DIP Term Loan lenders, ABL/FILO lenders and the Company Parties as a condition precedent of the effectiveness of the Sale Order as set forth above), [WARN obligations], and other amounts to be agreed among the DIP Term Loan lenders, the ABL/FILO Lenders, Company, and Required Consenting Noteholders.
Store Rationalization	● The AHG Credit Bid shall include the exclusive right, whether implemented through a Plan Restructuring or otherwise, exercisable in the Required Consenting Noteholders’ sole discretion, to designate the assumption, assumption and assignment, or rejection of store leases (the “Designation Rights”) as set forth in that certain store rationalization agreement between the Company Parties and the Consenting Noteholders, pursuant to which the stores designated for rejection shall become subject to a GOB sale process on terms acceptable to the Company Parties and the Required Consenting Noteholders (the “Additional GOB Sales”). ● The following provisions apply with respect to the Designation Rights:

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	o The Required Consenting Noteholders will have reasonable consent rights on sell vs. pour decisions with respect to all stores/assets subject to the GOB process. o The proceeds of prescription file sales in connection with of GOB sales (other than (x) Initial GOB Sales and (y) GOB sales conducted in connection with an exercise of remedies by ABL / FILO Lenders or DIP Term Loan Lenders or after a Cash Collateral Termination Event) representing [the excess above borrowing base advance amounts, determined in a manner acceptable to the ABL / FILO Lenders, the DIP Term Loan Lenders, and the Required Consenting Noteholders] to repay the DIP ABL facility and result in a corresponding permanent availability reserve. ● It shall be a condition to closing of the AHG Credit Bid, whether such credit bid is effectuated through the Plan or through the Sale Order, that, prior to the day that is 120 days after the Petition Date, the Debtors shall have obtained an extension of the deadline to assume or reject the leases subject to the AHG Credit Bid to 210 days after the Petition Date.
PBM Sale	● Sale of the PBM business to a third party if determined to be value-maximizing (based on good-faith discussions and consultation  between Company, DIP Term lenders, ABL / FILO Lenders, and Required Consenting Noteholders); provided that the RSA will include a termination right exercisable by the Required Consenting Noteholders if the Company receives a Qualified Bid (other than any AHG Credit Bid) for the PBM business that is acceptable to the Required Consenting Noteholders that the Debtors decline to accept (an “Acceptable PBM Sale Termination Event”) ● PBM Sale Timeline Deadlines, subject to Court availability • November 17, 2023 – Qualified Bid Deadline • November 29, 2023 – Auction • December 8, 2023 – Sale Hearing ● See Paydown and Escrow Schedule.
CMS Receivable	● See Paydown and Escrow Schedule below and RSA provisions above. ● The sale, transfer, encumbrance, or monetization of the CMS Receivable and the process thereto shall be in accordance with this term sheet, the DIP ABL/FILO/Term Loan facilities and the Paydown and Escrow Schedule/priority set forth in Exhibit A.
Retail Business Sale	● Company to run third party sale process for retail business, with to-be-agreed adjustment mechanics to the extent there are value-maximizing third party bids for particular assets, regions, or the Company as a whole ● Closing of any sales to occur as soon as possible following receipt of necessary regulatory approvals ● Retail Business Sale Timeline Deadlines, subject to Court availability o November 16, 2023 – Initial Indications of Interest Deadline o December 7, 2023 – Qualified Bid Deadline

Execution-Version

	o December 15, 2023 – Auction o January 8, 2024 • Disclosure Statement Hearing on updated Plan and Disclosure Statement, as updated to reflect auction results • Approval Hearing: Third-party 363 Sales o Approval Hearing: • AHG Credit Bid: (i) if Plan Restructuring à February 19, 2024 and (ii) if Credit-Bid 363 Sale à February 26, 2024 ● Third-party sales executable by Company in its business judgment in consultation with the Required Consenting Noteholders, ABL/FILO Lenders, and DIP Term Lenders. ● The Required Consenting Noteholders shall have (i) an RSA termination right if (a) the Debtor seek approval of a Qualified Bid (other than the AHG Credit Bid) that the Required Consenting Noteholders do not support or (b) the Debtors refuse to seek approval of a Qualified Bid (other than the AHG Credit Bid) that is supported by the Required Consenting Noteholders, includes aggregate consideration of a value in excess of an amount to be agreed relative to the assets proposed to be sold in connection with such Qualified Bid, and is otherwise value maximizing and agreed to by and DIP ABL/FILO/Term Loan Lenders and (ii) a covenant that the Debtors will seek in good faith to maximize value to the greatest extent possible in pursuit of Qualified Bids (other than the AHG Credit Bid), take all such necessary actions to achieve that outcome, and work in good faith with the Consenting Noteholders in connection with such efforts. ● Allocation of sale proceeds to be in accordance with the priority set forth in Exhibit A (and otherwise in in accordance with Financing Order), or otherwise on terms acceptable to the Company, DIP Term lenders, ABL/FILO Lenders, and Required Consenting Noteholders
Critical Vendors / First Day Relief	All payments under first day motions (critical vendor, etc.) above $1 million to a single party (or group of affiliated parties) will be subject to Required Consenting Noteholders’ approval.
Case Milestones	● Milestones acceptable, subject to ongoing discussions and agreements on other open terms. ● October 15, 2023 – Petition Date; file “First Day Pleadings”, including Plan and Disclosure Statement. o Filing of store closing motion, which seeks authorization to establish procedures for the Company to conduct store closing sales, including sales (or pours) of prescription assets. o Filing of lease rejection motion, which seeks to reject unexpired leases of non-residential real property and abandon certain personal property on the premises of the rejected lease. o Filing of confirmation scheduling motion. ● October 17, 2023

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o Entry of Global Bidding Procedures Order o Entry of Interim DIP Order o Entry of Interim Store Closing Order o Entry of Confirmation Scheduling Order ● November 16, 2023 o Entry of Final DIP Order o Entry of Final Store Closing Order o Entry of First Lease Rejection Order o Entry of Bar Date Order ● December 7, 2023 – agreed form of Credit Bid APA among the Company and Consenting Noteholders consistent with the terms set forth herein ● January 8, 2024 o File Sale Motion (regardless of whether the parties are still seeking to consummate the Plan Restructuring as of such date) to approve AHG Credit Bid o Obtain entry of order approving third-party bids resulting from the retail business sale process ● January 14, 2024 – Entry of Disclosure Statement Order ● February 19, 2024 – Entry of Confirmation Order ● February 26, 2024 - Entry the Sale Order if either (a) the Plan Conditions are not satisfied or (b) the Plan Conditions are satisfied but the Plan is not confirmed, in each case, on or before February 19

Adequate Protection For Senior Secured Notes Claims

Secured noteholders to consent to Company’s use of secured noteholders’ prepetition collateral, including cash collateral. The cash collateral order shall include the following forms of adequate protection for the secured noteholders: ● (a) to the extent of any diminution in value of the secured noteholders’ collateral,  (i) valid, binding, enforceable, and perfected security interests in, and liens on, the Debtors’ assets, including pre-petition unencumbered assets (the “Unencumbered Assets”) of the Company as of the Petition Date, which liens and security interests shall be junior and subordinate to the carve-out and otherwise have the priority set forth in Exhibit A and (ii) allowed superpriority administrative expense claims as provided for in sections 503(b) and 503(7) of the Bankruptcy Code, subject to the carve-out and other priority terms set forth in Exhibit A; provided that, for the avoidance of doubt, such liens shall not prime the DIP Term Loan Lenders’ first-priority liens on the Unencumbered Assets.

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	● (b) payment of the reasonable and documented prepetition and postpetition fees and expenses of Secured Notes Trustee (including Riker Danzig LLP) and the advisors to the Secured AHG (including Paul, Weiss, FTI, Evercore, and local counsel); ● (c) the milestones set forth in this term sheet and otherwise set forth in the DIP documents; ● (d) all reporting provided to the prepetition ABL Lenders and the DIP Lenders, including copies of the DIP Budget,(ii) weekly reporting and conference calls with the advisors to the Ad Hoc Group on status of the Retail Business sale process, (iii) weekly reporting on the status of lease renegotiations by property, including any settlements achieved with any landlords by property, and (iv) other customary reporting as reasonably requested by the advisors to the Ad Hoc Group; ● (e) consent rights on payments on account of prepetition claims pursuant to any first day relief or otherwise in excess of $1 million to any single party or group of affiliated parties, including on account of 503(b)(9) claims; ● (f) subject to entry of the Final DIP Order, standard 506(c) waiver, standard waiver of the equities of the case doctrine under section 552(b), and standard marshaling waiver; and ● (g) the provisions set forth in the Paydown and Escrow Schedule.
Cash Collateral	● The Required Consenting Noteholders shall have the right to terminate the Debtors’ use of cash collateral upon (a) the breach of any “ABL/FILO Case Milestone” (subject to the extension rights of the ABL/FILO/DIP TL agents for 10 BD in accordance with the ABL/FILO/DIP TL facilities) in effect as of the petition date, which may not be further extended, modified, or amended for the purposes of these provisions without the prior written consent of the Required Consenting Noteholders or (b) if the Plan is not confirmed or the order approving the Credit-Bid 363 Sale is not entered on or before [February 26, 2024]  (each, a “Cash Collateral Termination Event”) ● If any Cash Collateral Termination Event exists, holders of at least 66.67% in aggregate principal amount of the Secured Notes outstanding at the time of such Cash Collateral Termination Event (the “Required Secured Noteholders”) may elect to send a written notice to the ABL Agent, the DIP Agents, the Debtors and the Committee ( a “Cash Collateral Standstill Notice”), informing such parties that a Cash Collateral Termination Event has occurred and is continuing, and upon the expiration of 5 business days, the Required Secured Noteholders may elect to send a notice (“Cash Collateral Termination Notice”) to the Debtors and the ABL/TL Agents terminating the Debtors’ use of Cash Collateral effective as of the 30th day following delivery of such Cash Collateral Termination Notice (such date, the “Cash Collateral Termination Date”) ● Following the occurrence of the Cash Collateral Termination Date, the ABL/FILO Agent and the DIP TL Agent retains the right to consent to the use cash collateral solely for the purpose of conducting a sale of all or substantially all of the DIP Collateral (i) on terms and conditions acceptable to the ABL/FILO Agent and the DIP TL Agent, (ii) with respect to Notes Priority Collateral, on terms and conditions acceptable to the Required Secured Noteholders; and (iii) with respect to DIP Collateral that is not Notes Priority Collateral, in good-faith consultation with, and reasonable updates to, the Required Secured Noteholders.
Paydown and Escrow Schedule	With respect to the application of (i) [PBM Sale Proceeds]1 and (ii) CMS Receivable Proceeds: ● First $200 million to repay the DIP FILO Facility

¹ Definitive documentation to include agreed formula for aggregate proceeds calculation.

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	● Second $250 million escrowed solely for the benefit of the Second Lien Notes and to pay down the Second Lien Notes ● Third, $100 million to repay the DIP ABL Facility (with a 100% corresponding permanent availability reserve) ● Any additional proceeds shall be shared 50/50 between the DIP ABL Facility on the one hand and the Second Lien Notes on the other hand provided: o Any amounts paid to the DIP ABL Facility shall result in a corresponding permanent availability reserve; and o Any amounts paid to the Second Lien Notes shall be escrowed solely for the benefit of the Second Lien Notes Any amounts escrowed for the benefit of the Second Lien Notes shall be held in an interest-bearing escrow account and not be used for any other purpose and shall be escrowed solely for the benefit of the Second Lien Notes to be released upon the earliest of (a) the effective date of the Plan;  (b) consummation of a Sale approving the AHG Credit Bid and pursuant to such Sale, each of the ABL/FILO/DIP TL Facilities has either been paid in full in cash, consensually converted to an exit facility, or received such other treatment acceptable to the respective ABL/FILO/DIP TL Lenders in their sole discretion, or (c) consummation of a Sale approving a sale of substantially all of the Debtors’ assets to one or more third party purchasers and pursuant to such Sale, each of the ABL/FILO/DIP TL Facilities has either been paid in full in cash, consensually converted to an exit facility, or received such other treatment acceptable to the respective ABL/FILO/DIP TL Lenders in their sole discretion, provided, if the Second Lien Notes are otherwise paid in full, in Cash, from the proceeds of the Retail Sale Process, such escrowed amounts shall be released back to the applicable Debtor for distribution in accordance with the Plan.  Notwithstanding the foregoing, upon the earliest to occur of (a) a DIP Termination Event, (b) Cash Collateral Termination Date or (c) any (x) termination of the RSA, or (y) breach by the Required Secured Noteholders that would give rise to a termination by the Debtors of the RSA, any amounts previously escrowed for the benefit of the Second Lien Notes shall be applied in accordance with the lien priorities set forth in Exhibit A/Financing Order; provided that (1) any application of escrowed funds (as a result of the occurrence of any event described in clauses (a) or (b)) to the payment of any revolving loans under the ABL/FILO/DIP TL shall be accompanied by a permanent reserve against the borrowing base and (2) any application of escrowed funds (as a result of the occurrence of any event described in cause (c)) to the payment of any revolving loans under the ABL/FILO/DIP TL may, at the sole discretion of the ABL Agent, be accompanied by a permanent reserve against the borrowing base.
	Nothing set forth in the RSA or any related document shall be deemed to amend or otherwise modify the terms and conditions of the ABL/FILO/DIP TL facilities or the Financing Orders.  The exercise of all rights and remedies with respect to collateral shall at all times remain subject to the Pre-Petition ICA and the Financing Order.
Other Key Provisions To Be Set Forth in RSA	D&O Indemnification.  Under the restructuring transactions, all indemnifications currently in place (whether in the by-laws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Company Parties, as applicable, shall be assumed and survive the effectiveness of the restructuring. D&O Policy Assumption.  On the Plan Effective Date, the applicable Company Parties shall be deemed to have assumed all unexpired directors’, managers’, and officers’ liability insurance policies. Releases and Exculpation.  The Plan shall contain customary releases and exculpations, which, for the avoidance of doubt, shall be supported by the Secured AHG pursuant to the RSA to which this term sheet will be appended. Fiduciary Out.  The RSA shall contain a customary “fiduciary out” that each Debtor (and the Board thereof, including any special committee thereof) may exercise.

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Exhibit A

Priority	Assets of the Type Constituting both DIP Shared Collateral and ABL Priority Collateral, and Proceeds of Avoidance Actions with Respect to such Assets		Assets of the Type Constituting both DIP Shared Collateral and Split-Lien Priority Collateral and Proceeds of Avoidance Actions with Respect to such Assets		DIP Term Loan Exclusive Collateral
1st Priority	Carve Out		Carve Out		Carve Out
2nd Priority	Permitted Prior Liens		Permitted Prior Liens		Permitted Prior Liens
3rd Priority	DIP ABL Liens	DIP Term Loan Liens	Notes Adequate Protection Liens		DIP Term Loan Liens
4th Priority	Prepetition ABL Adequate Protection Liens		Notes Liens		Notes Adequate Protection Liens
5th Priority	Prepetition ABL Liens		DIP ABL Liens	DIP Term Loan Liens	Prepetition ABL Adequate Protection Liens
6th Priority	Notes Adequate Protection Liens		Prepetition ABL Adequate Protection Liens
7th Priority	Notes Liens		Prepetition ABL Liens

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Defined Terms:

“DIP Shared Collateral” means the Debtors’ interest in all assets and properties (whether tangible or intangible), other than DIP Term Loan Exclusive Collateral, whether now owned by or owing to, or hereafter acquired by, or arising in favor of, the Debtors (including under any trade names, styles, or derivations thereof), and whether owned or consigned by or to, or leased from or to, the Debtors, and regardless of where located, of the type that would constitute Prepetition Collateral (but for application of section 552(b) of the Bankruptcy Code) and, upon entry of the Final Order, proceeds of Avoidance Actions (other than proceeds of Avoidance Actions constituting DIP Term Loan Exclusive Collateral).

“ABL Priority Collateral” has the meaning set forth in the Prepetition Intercreditor Agreement.

“Split-Lien Priority Collateral” has the meaning set forth in the Prepetition Intercreditor Agreement.

“DIP Term Loan Exclusive Collateral” means the Debtors’ interest in all of following assets and properties, whether now owned by or owing to, or hereafter acquired by, or arising in favor of, the Debtors, and whether owned or consigned by or to, or leased from or to, the Debtors, and regardless of where located: (a) all real property and interests therein (including both fee and leasehold interests); (b) all proceeds of leasehold interests; (c) all equity interests in the direct or indirect subsidiaries of Rite Aid; (d) all other assets of the Debtors, other than to the extent constituting DIP Shared Collateral; (e) all “Commercial Tort Claims” (as defined in Article 9 of the Uniform Commercial Code) related to the foregoing; (f) all insurance policies relating to the foregoing; (g) except to the extent constituting DIP Shared Collateral, all “Documents”, all “General Intangibles”, all “Instruments” and all “Letter-of-Credit Rights” (as each quoted term is defined in Article 9 of the Uniform Commercial Code) related to the foregoing; (h) all collateral and guarantees given by any other person with respect to any of the foregoing, and all “Supporting Obligations” (including “Letter-of-Credit Rights”) (as each quoted term is defined in Article 9 of the Uniform Commercial Code) with respect to any of the foregoing; (i) all books and records to the extent relating to any of the foregoing; (j) all products and proceeds of the foregoing; and (k) upon entry of the Final DIP Order, proceeds of avoidance actions with respect to assets of the type referred to in clauses (a) through (d) of this definition;provided that DIP Term Loan Exclusive Collateral shall not include the Debtors’ real property leases (but shall include all proceeds of such leases) to the extent a grant of a security interest therein would violate or invalidate such lease or create a right of termination in favor of any other party thereto after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code and the Bankruptcy Code.

EX-10.37

Exhibit 10.37

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of October 11, 2023 (the “Effective Date”), by and between Rite Aid Corporation, a Delaware corporation (the “Company”), and Matthew C. Schroeder (the “Executive”).

WHEREAS, Executive is currently employed by the Company pursuant to that certain Employment Agreement, dated as of August 21, 2000, and amended as of March 12, 2019, by and between Executive and the Company (the “Prior Agreement”); and

WHEREAS, Executive desires to continue to provide the Company with his services and the Company desires to continue to employ Executive in the capacity of Chief Financial Officer on the terms and subject to the conditions set forth herein, and by entering into this Agreement, Executive waives any and all claims Executive may have to terminate Executive’s employment for Good Reason (as defined in the Prior Agreement or this Agreement) on the basis of Executive’s entry into this Agreement.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.Term of Employment.

The term of Executive’s employment under this Agreement shall commence on the Effective Date and, unless earlier terminated pursuant to Section 5 below, shall continue until terminated in accordance with Section 5 (the “Term”). For purposes of this Agreement, except as otherwise provided herein, the phrases “year during the Term” or “during any year of the Term” or similar language shall refer to each 12-month period commencing on the Effective Date or applicable anniversaries thereof.

2.Position and Duties.

2.1Generally. During the Term, Executive shall continue to serve as the Chief Financial Officer and shall have such officer level duties, responsibilities and authority as are customary for this position and shall have such other officer level duties, responsibilities and authorities as shall be reasonably assigned by the Company from time to time consistent with such position. Executive shall devote substantially all of Executive’s business time, attention, knowledge and skills faithfully and to the best of Executive’s ability, to the duties and responsibilities reasonably assigned by the Company in furtherance of the business affairs and activities of the Company and its subsidiaries, affiliates and strategic partners. Executive shall report to the Chief Executive Officer. Contemporaneously with termination of Executive’s employment with the Company for any reason, Executive shall automatically resign from all offices and positions Executive holds with the Company or any subsidiary without any further action on the part of Executive or the Company.

2.2Other Activities. Anything herein to the contrary notwithstanding, nothing in this Agreement shall prelude Executive from engaging in the following activities: (i) serving on the board of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations and/or charitable organizations, subject to the Company’s approval, which shall not be unreasonably withheld, (ii) engaging in charitable activities and community affairs, and (iii) managing Executive’s personal investments and affairs, provided that Executive’s activities pursuant to clauses (i), (ii) or (iii) do not violate Sections 6 or 7 below or materially interfere with the proper performance of Executive’s duties and responsibilities under this Agreement. Executive shall at all times be subject to, observe and carry out such rules, regulations, policies, directions, and restrictions as the Company may from time to time reasonably establish for officers of the Company or similarly situated employees generally.

3.Compensation.

3.1Base Salary. During the Term, as compensation for Executive’s services hereunder, Executive shall receive a salary at the annualized rate of $789,173 per year (“Base Salary” as may be increased from time to time), which shall be paid in accordance with the Company’s normal payroll practices and procedures, less such deductions or offsets required by applicable law or otherwise authorized by Executive.

3.2Annual Performance Bonus. Executive shall participate each fiscal year during the Term in the Company’s annual bonus plan as adopted and approved by the Board or the Compensation Committee from time to time. Executive’s annual target bonus opportunity pursuant to such plan (the “Annual Target Bonus”) shall equal 100% of the Base Salary in effect for Executive as of the beginning of such fiscal year. Payment of any bonus earned shall be made in accordance with the terms of the Company’s annual bonus plan as in effect for the year for which the bonus is earned.

3.3Equity Awards. Executive will be eligible to participate during the Term in the Company’s Long Term Incentive Plan (“LTIP”). Executive’s target long term incentive opportunity shall be 250% of Executive’s Base Salary. In the discretion of the Board, on each regular grant date occurring during the Term, Executive will be granted long-term incentive awards under the Company’s Amended and Restated 2020 Omnibus Equity Incentive Plan or any successor plan thereto, pursuant to the LTIP valued at 250% of Base Salary calculated in a manner consistent with and containing the same terms and conditions as other senior executives of the Company.

4.Additional Benefits.

4.1Employee Benefits. During the Term, Executive shall be entitled to participate in the employee benefit plans (including, but not limited to medical, dental and life insurance plans, short-term and long-term disability coverage and 401(k) plans) in which senior executive employees of the Company are generally eligible to participate, subject to satisfaction of any eligibility requirements and the other generally applicable terms of such plans. Nothing in this Agreement shall prevent the Company from amending or terminating any employee benefit plans of the Company from time to time as the Company deems appropriate.

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4.2Expenses. During the Term, the Company shall reimburse Executive for any expenses reasonably incurred by Executive in furtherance of Executive’s duties hereunder, including without limitation, travel, meals and accommodations, upon submission of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company may from time to time adopt or as may be required in order to permit such payments to be taken as proper deductions by the Company or any subsidiary under the Internal Revenue Code of 1986, as amended, and the rules and regulations adopted pursuant thereto now or hereafter in effect (the “Code”).

4.3Vacation. Executive shall be entitled to take paid vacation during each year of the Term without any limitation thereon, subject to the reasonable business needs of the Company. Paid time off shall not accrue or carry over from year to year or be paid out in lieu of use thereof upon termination of employment, except to the extent required by applicable law.

4.4Automobile Allowance. During the Term, the Company shall provide Executive with an automobile allowance of $1,000.00 per month.

4.5Annual Financial Planning Allowance. During the Term, the Company shall provide Executive with an annual financial planning allowance in the amount of $5,000.00.

4.6Indemnification. The Company shall (a) indemnify and hold Executive harmless, to the full extent permitted under applicable law, for, from and against any and all losses, claims, costs, expenses, damages, liabilities or actions (including security holder actions, in respect thereof) relating to or arising out of Executive’s employment with and service as an officer of the Company, and (b) pay all reasonable costs, expenses and attorney’s fees incurred by Executive in connection with or relating to the defense of any such loss, claim, cost, expense, damage, liability or action, subject to Executive’s undertaking to repay in the event it is ultimately determined that Executive is not entitled to be indemnified by the Company. Following termination (except for termination by the Company for Cause (as defined below)) of Executive’s employment or service with the Company or any subsidiaries of the Company, the Company shall cause any director and officer liability insurance policies applicable to Executive prior to such termination to remain in effect for six (6) years following the date of termination of employment.

5.Termination.

5.1Termination of Executive’s Employment by the Company for Cause. The Company may terminate Executive’s employment hereunder for Cause. Such termination shall be effected by written notice thereof delivered by the Company to Executive, indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination, and shall be effective as of the date of such notice in accordance with Section 12 hereof. “Cause” as determined in reasonable good faith by a committee comprised of three (3) senior officers (one of which shall be Executive’s supervisor) of the Company, shall mean (i) Executive’s willful misconduct in the performance of the duties or responsibilities of his position with the Company or any subsidiary, or refusal to timely carry out any material lawful directive of the Chief Executive Officer; (ii) Executive’s misappropriation of any material funds or property of the Company or any subsidiary; (iii) the commission by Executive of a material act of fraud toward

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the Company or any subsidiary; or (iv) the improper use or willful disclosure by Executive of any confidential or proprietary information of the Company, or any subsidiary in violation of any confidentiality or proprietary agreement to which Executive is a party that causes, or is reasonably expected to cause, material injury to the Company, in each case, that is not cured (if possible of cure) to the reasonable satisfaction of the Board of Directors of the Company (the “Board”), or the Compensation Committee thereof, within thirty (30) days after the Company’s written notice to Executive specifying the failure. For purposes of this definition, no failure or refusal on the part of Executive shall be deemed “willful” if done, or omitted to be done, by Executive in the reasonable belief that his failure or refusal was in the best interest of the Company or that the requested act was unlawful.

5.2Compensation upon Termination by the Company for Cause or by Executive without Good Reason. In the event of Executive’s termination of employment (i) by the Company for Cause or (ii) by Executive voluntarily without Good Reason:

(a)Executive shall be entitled to receive (i) all amounts of earned but unpaid Base Salary through the effective date of such termination, (ii) reimbursement for reasonable expenses incurred by Executive through the date of notice of such termination, to the extent otherwise provided under Section 4.2 above and (iii) all other vested payments and benefits to which Executive may otherwise be entitled pursuant to the terms of the applicable benefit plan or arrangement through the effective date of such termination ((i), (ii) and (iii), the (“Accrued Benefits”)), with the amounts set forth in clauses (i) and (ii) to be paid within thirty (30) days of the termination date or such earlier date as may be required by applicable law. All other rights of Executive (and, except as provided in Section 5.6 below, all obligations of the Company) hereunder or otherwise in connection with Executive’s employment with the Company shall terminate effective as of the date of such termination of employment and Executive shall not be entitled to any payments or benefits not specifically described in this subsection (a) or (b) below.

(b)Any portion of any restricted stock or any other equity incentive awards as to which the restrictions have not lapsed or as to which any other conditions shall not have been satisfied prior to the date of termination shall be forfeited as of the termination date and any portion of Executive’s stock options that have vested and become exercisable prior to the date of termination shall remain exercisable for a period of ninety (90) days following the date of termination of employment (or, such later date as may be permitted by the relevant stock option or equity plan, or, if earlier, until the expiration of the respective terms of the options), whereupon all such options shall terminate; provided, however, in the event of termination of Executive by the Company for Cause, any stock options that have not been exercised prior to the date of termination shall immediately terminate as of such date.

Any termination of Executive’s employment by Executive voluntarily without Good Reason shall be effective upon a thirty (30) day notice to the Company or such earlier date as the Company determines in its discretion and designates in writing. A termination of Executive’s employment by the Company for Cause or by Executive other than for Good Reason shall not constitute a breach of this Agreement.

5.3Compensation upon Termination of Executive’s Employment by the Company Other Than for Cause or by Executive for Good Reason. Executive’s employment

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hereunder may be terminated by the Company other than for Cause or by Executive for Good Reason. In the event that Executive’s employment hereunder is terminated by the Company other than for Cause or by Executive for Good Reason:

(a)Executive shall be entitled to receive (i) the Accrued Benefits, (ii) an amount equal to two times the sum of Executive’s Base Salary plus Annual Target Bonus as of the date of termination of employment, such amount payable in equal installments pursuant to the Company’s standard payroll procedures for management employees over a period of two (2) years following the date that the release of claims (referred to below) becomes irrevocable (provided, if as of the date of termination the release of claims could become irrevocable in either of two taxable years of Executive, payments shall not commence before the first day of the later such taxable year), and (iii) continued health insurance coverage for Executive and his immediate family for a period of two years following the date of termination of employment (or reimbursement to Executive for the cost of purchasing health insurance coverage substantially comparable to the coverage provided by the Company, excepting payments for such periods that the Company provides such coverage). Executive shall also receive any unpaid annual bonus earned for any completed fiscal year preceding the date of termination, payable in a lump sum within 30 days following the termination date.

(b)The stock option awards held by Executive shall vest and become immediately exercisable and the restrictions with respect to any awards of non-performance based restricted stock (“Restricted Stock”) shall lapse, in each case to the extent such options would otherwise have become vested and exercisable (or such restrictions would have lapsed) had Executive remained in the employ of the Company for a period of two (2) years following the date of termination. Such portion of Executive’s stock options (together with any portion of Executive’s stock options that have vested and become exercisable prior to the date of termination) shall remain exercisable for a period of ninety (90) days following the date of termination of employment (or, such later date as may be permitted by the relevant stock option or equity plan, or, if earlier, until the expiration of the respective terms of the options), whereupon all such options shall terminate. Any remaining portion of Executive’s stock options that have not vested (or deemed to have vested) as of the date of termination shall terminate as of such date; and all shares of Restricted Stock as to which the restrictions shall not have lapsed as of the date of termination shall be forfeited as of such date.

(c)In addition, Executive shall also be entitled to receive a pro rata annual bonus for the year of termination determined by multiplying Executive’s then Annual Target Bonus 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, payable in a lump sum within 30 days following the termination date.

(d)All other rights of Executive (and, except as provided in Section 5.6 below, all obligations of the Company) hereunder or otherwise in connection with Executive’s employment with the Company shall terminate effective as of the date of such termination of employment and Executive shall not be entitled to any payments or benefits not specifically described in 5.3(a) through (c).

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Any termination of employment pursuant to this Section 5.3 shall be effective upon thirty (30) days’ written notice thereof or the Company may elect in its sole discretion to reduce or eliminate the notice period and pay Executive’s Base Salary for some or all of the notice period in lieu of notice. A termination of Executive’s employment by the Company other than for Cause or by Executive for Good Reason shall not constitute a breach of this Agreement. To be eligible for the payment, benefits and stock rights described in Section 5.3(a)(ii) and (iii), (b) and (c) above, Executive must execute within sixty (60) days of the date of termination, not revoke, and abide by a release (which shall be substantially in the form attached hereto as Appendix A) of all claims, reasonably cooperate with the Company in the event of litigation and comply in all material respects with Executive’s obligations under Sections 6 and 7 below; provided that no breach of this sentence will be deemed to have occurred until the Company has provided written notice to Executive within thirty (30) days of such alleged breach providing reasonable detail of the circumstances of such breach and thirty (30) days for Executive to cure such circumstance in all material respects to the reasonable satisfaction of the Board (or Compensation Committee thereof).

5.4Definition of Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one of the following:

(a)any material adverse alteration in Executive’s titles, positions, duties, authorities or responsibilities with the Company or its subsidiaries from those specified in this Agreement, as the same may be augmented from time to time;

(b)the assignment to Executive of any duties or responsibilities materially inconsistent with Executive’s status as Chief Financial Officer of the Company; or

(c)including without limitation any decrease in Executive’s Base Salary or Annual Target Bonus opportunity to which Executive has not agreed in writing;

(d)a material breach of this Agreement by the Company; or

(e) a relocation of the geographic location of Executive’s principal place of employment by more than 35 miles; provided, that, a relocation shall not include Executive’s travel for business in the course of performing Executive’s duties hereunder.

provided, however, that Executive has provided written notice (which shall set forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provisions of this Agreement on which Executive relies) to the Company of the existence of any condition described in any one of the subparagraphs (a), (b), or (c) within thirty (30) days of Executive’s knowledge of the initial existence of such condition, and the Company has not cured the condition within ten (10) days of the receipt of such notice. Any termination of employment by Executive for Good Reason pursuant to Section 5.3 must occur no later than the date that is the three (3) month anniversary of Executive’s knowledge of the initial existence of the condition giving rise to the termination right.

5.5Compensation upon Termination of Executive’s Employment by Reason of Executive’s Death or Total Disability. In the event that Executive’s employment with the Company is terminated by reason of Executive’s death or Total Disability (as defined below):

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(a)Executive or Executive’s estate, as the case may be, shall be entitled to receive (i) the Accrued Benefits, (ii) any other benefits payable under the then current disability and/or death benefit plans, as applicable, in which Executive is a participant and (iii) continued health insurance coverage for Executive and/or his immediate family, as applicable (or reimbursement to Executive for the cost of purchasing health insurance coverage substantially comparable to the coverage provided by the Company, excepting payments for such periods that the Company provides such coverage), for a period of two years following the date of termination of employment.

(b)All stock option awards held by Executive shall vest and become immediately exercisable and the restrictions with respect to any awards of Restricted Stock shall lapse, in each case to the extent such options would otherwise have become vested and exercisable (or such restrictions would have lapsed) had Executive remained in the employ of the Company for a period of two (2) years following the date of death or Total Disability as the case may be. Such portion of Executive’s stock options (together with any portion of Executive’s stock options that have vested and become exercisable prior to the date of termination) shall remain exercisable for a period of ninety (90) days following the date of termination of employment (or, such later date as may be permitted by the relevant stock option or equity plan, or, if earlier, until the expiration of the respective terms of the options), whereupon all such options shall terminate. Any remaining portion of Executive’s stock options that have not vested (or deemed to have vested) as of the date of termination shall terminate as of such date; and all shares of Restricted Stock as to which the restrictions shall not have lapsed (after application of this Section 5.5(b)) as of the date of termination shall be forfeited as of such date.

(c)All other rights of Executive (and, except as provided in Section 5.6 below, all obligations of the Company) hereunder or otherwise in connection with Executive’s employment with the Company shall terminate effective as of the date of such termination of employment and Executive shall not be entitled to any payments or benefits not specifically described in Section 5.5(a) and (b).

“Total Disability” shall mean any physical or mental disability that has prevented Executive from (a)(i) performing one or more of the essential functions of Executive’s position for a period of not less than ninety (90) days in any twelve (12) month period and (ii) that is expected to be of permanent or indeterminate duration but expected to last at least twelve (12) continuous months or result in death of Executive as reasonably determined (y) by a physician selected by the Company or its insurer or (z) pursuant to the Company’s benefit programs; or (b) reporting to work for ninety (90) or more consecutive business days and being unable to engage in any substantial activity.

5.6Survival. In the event of any termination of Executive’s employment, Executive and the Company nevertheless shall continue to be bound by the terms and conditions set forth in Section 4.6 and Sections 6 through 10 hereof, which shall survive the expiration of the Term; provided, however, the indemnification obligations in Section 4.6 shall not survive expiration of the Term in the event of termination of Executive’s employment by the Company for Cause.

5.7Change in Control Best Payments Determination. Any other provision of this Agreement to the contrary notwithstanding, if any portion of any payment or benefit under this

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Agreement either individually or in conjunction with any payment or benefit under any other plan, agreement or arrangement (all such payments and benefits, the “Total Payments”) would constitute an “excess parachute payment” within the meaning of Internal Revenue Code Section 280G, that is subject to the tax imposed by Section 4999 of such Code (the “Excise Tax”), then the Total Payments to be made to Executive shall be reduced, but only to the extent that Executive would retain a greater amount on an after-tax basis than she would retain absent such reduction, such that the value of the Total Payments that Executive is entitled to receive shall be $1 less than the maximum amount which the Employee may receive without becoming subject to the Excise Tax. For purposes of this Section 5.7, the determination of whichever amount is greater on an after-tax basis shall be (x) based on maximum federal, state and local income and employment tax rates and the Excise Tax that would be imposed on Executive and (y) made at the Company’s expense by independent accountants selected by the Company and Executive (which may be the Company’s income tax return preparers if Executive so agrees), which determination shall be binding on both Executive and the Company. Any such reduction as may apply under this Section 5.7 shall be applied in the following order: (i) payments that are payable in cash the full amount of which are treated as parachute payments under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity the full amount of which are treated as parachute payments under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will next be reduced pro-rata. The Company agrees to act in good faith and to use its commercially reasonable best efforts to submit to a shareholder vote a recommendation to approve the portion of the 280G Payments that exceed $1 less than three (3) times Executive’s “base amount” (as defined in Section 280G(b)(5)(3)(A) of the Code) in accordance with Section 280G(b)(5) of the Code, to the extent the Company is eligible to submit a shareholder vote at the applicable time, subject to Executive’s execution of an agreement waiving Executive’s right to receive or such 280G Payments unless otherwise approved by the applicable shareholders. If such shareholder approval is not obtained, then the Total Payments to be made to Executive shall be reduced, but only to the extent that Executive would retain a greater amount on an after-tax basis than she would retain absent such reduction, such that the value of the Total Payments that Executive is entitled to receive shall be $1 less than the maximum amount which the Employee may receive without becoming subject to the Excise Tax, as described herein.

5.8No Other Severance or Termination Benefits. Except as expressly set forth herein, Executive shall not be entitled to damages or to any severance or other benefits upon termination of employment with the Company under any circumstances and for any or no reason, including, but not limited to any severance pay under any Company severance plan, policy or practice.

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6.Protection of Confidential Information.

Executive acknowledges that during the course of Executive’s employment with the Company, its subsidiaries, affiliates and strategic partners, Executive has been, and will continue to be, exposed to documents and other information regarding the confidential affairs of the Company, its subsidiaries, affiliates and strategic partners, including without limitation, information about their past, present and future financial condition, pricing strategy, prices, suppliers, cost information, business and marketing plans, the markets for their products, key personnel, past, present or future actual or threatened litigation, trade secrets and other intellectual property, current and prospective customer lists, operational methods, acquisition plans, prospects, plans for future development and other business affairs and information about the Company and its subsidiaries, affiliates and strategic partners not readily available to the public (the “Confidential Information”). Executive further acknowledges that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character. In recognition of the foregoing, Executive covenants and agrees as follows:

6.1No Disclosure or Use of Confidential Information. At no time shall Executive divulge, disclose, or otherwise use any Confidential Information (other than as Executive determines in good faith is reasonably necessary or appropriate to perform Executive’s duties under this Agreement and in furtherance of the Company’s best interests), unless and until such information is readily available in the public domain by reason other than Executive’s improper disclosure or use thereof in violation of the first clause of this Section 6.1. Executive acknowledges that Company is the owner of, and that Executive has no rights to, any trade secrets, patents, copyrights, trademarks, know-how or similar rights of any type, including any modifications or improvements to any work or other property developed, created or worked on by Executive during the Term of this Agreement.

6.2Return of Company Property, Records and Files. Upon the termination of Executive’s employment at any time and for any reason, or at any other time the Board may so reasonably direct, Executive shall promptly deliver to the Company’s offices all of the property and equipment of the Company, its subsidiaries, affiliates and strategic partners (including any cell phones, pagers, credit cards, personal computers, etc.) and any and all documents, records, and files, including any notes, memoranda, customer lists, reports or any and all other documents, including any copies thereof, whether in hard copy form or on a computer disk or hard drive, which relate to the Company, its subsidiaries, affiliates, strategic partners, successors or assigns, and/or their respective past and present officers, directors, employees or consultants (collectively, the “Company Property, Records and Files”); it being expressly understood that, upon termination of Executive’s employment at any time and for any reason, Executive shall not be authorized to retain any of the Company Property, Records and Files, any copies thereof or excerpts therefrom.

7.Noncompetition and Other Matters.

7.1Noncompetition. During the Term and, as applicable, for the two-year period immediately following the date of termination of Executive’s employment either (x) by the Company for Cause or (y) by Executive other than for Good Reason, Executive will not directly, or indirectly knowingly cause any other person on behalf of the Executive to, engage in

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Competition with the Company or any of its subsidiaries in the Restricted Area (as defined below). “Competition” shall mean engaging in any activity for a Competitor of the Company or any of its subsidiaries, whether as a principal, agent, partner, officer, director, employee, independent contractor, investor, consultant or stockholder (except as a less than five percent (5%) shareholder of a publicly traded company) or otherwise. A “Competitor” shall mean (a) Walgreens Boots Alliance (d/b/a Walgreens), (b) CVS Health Corporation and (c) any business that engages in the primary business of the Company or its subsidiaries as of Executive’s termination date. The “Restricted Area” means those states within the United States in which the Company, including its subsidiaries, conducts its business as of the termination date, including the District of Columbia and Puerto Rico.

7.2Noninterference. During the Term and for the two-year period immediately following the date of termination of Executive’s employment at any time and for any reason (the “Restricted Period”), Executive shall not, directly or indirectly, solicit, induce, or attempt to solicit or induce any officer, director, employee, agent or consultant of the Company or any of its subsidiaries, affiliates, strategic partners, successors or assigns to terminate his, her or its employment or other relationship with the Company or its subsidiaries, affiliates, strategic partners, successors or assigns for the purpose of associating with any competitor of the Company or its subsidiaries, affiliates, strategic partners, successors or assigns, or otherwise encourage any such person or entity to leave or sever his, her or its employment or other relationship with the Company or its subsidiaries, affiliates, strategic partners, successors or assigns for any other reason.

7.3Nonsolicitation. During the Restricted Period, Executive shall not, directly or indirectly, solicit, induce, or attempt to solicit or induce any customers, clients, vendors, suppliers or consultants then under contract to the Company or its subsidiaries, affiliates, strategic partners, successors or assigns, to terminate, limit or otherwise modify his, her or its relationship with the Company or its subsidiaries, affiliates, strategic partners, successors or assigns, for the purpose of associating with any competitor of the Company or its subsidiaries, affiliates, strategic partners, successors or assigns, or otherwise encourage such customers, clients, vendors, suppliers or consultants then under contract to terminate his, her or its relationship with the Company or its subsidiaries, affiliates, strategic partners, successors or assigns for any reason. During the Restricted Period, Executive shall not hire, either directly or through any employee, agent or representative, any field and corporate management employee of the Company or any subsidiary or any such person who was employed by the Company or any subsidiary within 180 days of such hiring.

7.4Defend Trade Secrets Act; Whistleblower Protection. Pursuant to Section 7 of the Defend Trade Secrets Act of 2016 (which added 18 U.S.C. § 1833(b)), Executive acknowledges that Executive shall not have criminal or civil liability under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an 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 filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement 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. In addition, nothing in this Agreement prohibits Executive from: (i) reporting possible violations of federal

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law or regulations, including any possible securities laws violations, to any governmental agency or entity including, but not limited to, the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the U.S. Congress or any agency Inspector General, or otherwise participating, assisting or testifying in any proceeding or investigation by any such agency or entity; (ii) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; or (iii) otherwise fully participating in any federal whistleblower programs, including, but not limited to, any such programs managed by the U.S. Securities and Exchange Commission and/or the Occupational Safety and Health Administration. Moreover, nothing in this Agreement prohibits or prevents Executive from receiving individual monetary awards or other individual relief by virtue of participating in such federal whistleblower programs. Nothing in this Agreement requires Executive to obtain prior authorization from the Company before engaging in any conduct described in this paragraph, or to notify the Company that Executive has engaged in any such conduct. This Section 7.4 will replace and supersede any provision of any plan, policy or agreement that is inconsistent with the terms hereof.

8.Rights and Remedies upon Breach.

If Executive breaches, or threatens to commit a breach of, any of the provisions of Sections 6 or 7 above (the “Restrictive Covenants”), the Company and its subsidiaries, affiliates, strategic partners, successors or assigns shall have the following rights and remedies, each of which shall be independent of the others and severally enforceable, and each of which shall be in addition to, and not in lieu of, any other rights or remedies available to the Company or its subsidiaries, affiliates, strategic partners, successors or assigns at law or in equity.

8.1Specific Performance. The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction by injunctive decree or otherwise, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company or its subsidiaries, affiliates, strategic partners, successors or assigns and that money damages would not provide an adequate remedy to the Company or its subsidiaries, affiliates, strategic partners, successors or assigns.

8.2Accounting. The right and remedy to require Executive to account for and pay over to the Company or its subsidiaries, affiliates, strategic partners, successors or assigns, as the case may be, all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive as a result of any transaction or activity constituting a breach of any of the Restrictive Covenants.

8.3Severability of Covenants. Executive acknowledges and agrees that the Restrictive Covenants are reasonable and valid in geographic and temporal scope and in all other respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full force and effect without regard to the invalid portions.

8.4Modification by the Court. If any court determines that any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or scope of such provision, such court shall have the power (and is hereby instructed by the parties) to modify or reduce the duration or scope of such provision, as the case may be (it being the intent of the

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parties that any such modification or reduction be limited to the minimum extent necessary to render such provision enforceable), and, in its modified or reduced form, such provision shall then be enforceable.

8.5Enforceability in Jurisdictions. Executive intends to and hereby confers jurisdiction to specifically enforce the Restrictive Covenants by issuing an injunction in aid of arbitration upon the courts of any jurisdiction within the geographic scope of such covenants. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants unenforceable by reason of the breadth of such scope or otherwise, it is the intention of Executive that such determination not bar or in any way affect the right of the Company or its subsidiaries, affiliates, strategic partners, successors or assigns to the relief provided herein in the courts of any other jurisdiction within the geographic scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, such covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants.

8.6Extension of Restriction in the Event of Breach. In the event that Executive breaches any of the provisions set forth in this Section 8, the length of time of the Restricted Period shall be extended for a period of time equal to the period of time during which Executive is in breach of such provision.

9.No Violation of Third-Party Rights. Executive represents, warrants and covenants that Executive:

(i)will not, in the course of employment, infringe upon or violate any proprietary rights of any third party (including, without limitation, any third-party confidential relationships, patents, copyrights, mask works, trade secrets, or other proprietary rights);

(ii)is not a party to any conflicting agreements with third parties, which will prevent Executive from fulfilling the terms of employment and the obligations of this Agreement;

(iii)does not have in Executive’s possession any confidential or proprietary information or documents belonging to others and will not disclose to the Company, use, or induce the Company to use, any confidential or proprietary information or documents of others; and

(iv)agrees to respect any and all valid obligations which Executive may now have to prior employers or to others relating to confidential information, inventions, discoveries or other intellectual property which are the property of those prior employers or others, as the case may be.

Executive agrees to indemnify and save harmless the Company from any loss, claim, damage, cost or expense of any kind (including without limitation, reasonable attorney fees) to which the Company may be subjected by virtue of a breach by Executive of the foregoing representations, warranties, and covenants.

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10.Arbitration.

Except as necessary for the Company and its subsidiaries, affiliates, strategic partners, successors or assigns or Executive to specifically enforce or enjoin a breach of this Agreement (to the extent such remedies are otherwise available), the parties agree that any and all disputes that may arise in connection with, arising out of or relating to this Agreement, or any dispute that relates in any way, in whole or in part, to Executive’s employment with the Company or any subsidiary, affiliate or strategic partner, the termination of that employment or any other dispute by and between the parties or their subsidiaries, affiliates, strategic partners, successors or assigns, shall be submitted to final and binding arbitration in the Commonwealth of Pennsylvania according to the National Employment Dispute Resolution Rules and procedures of the American Arbitration Association at the time in effect. The Company shall be responsible for any filing, administrative or arbitrator fees that exceed the amount it would cost to file a claim in a court of competent jurisdiction in the Commonwealth of Pennsylvania. This arbitration obligation extends to any and all claims that may arise by and between the parties or their subsidiaries, affiliates, strategic partners, successors or assigns, and expressly extends to, without limitation, claims or causes of action for wrongful termination, impairment of ability to compete in the open labor market, breach of an express or implied contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of emotional distress, disability, loss of future earnings, and claims under the Pennsylvania Constitution, the United States Constitution, and applicable state and federal fair employment laws, federal and state equal employment opportunity laws, and federal and state labor statutes and regulations, including, but not limited to, the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, the Americans With Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security Act of 1974, as amended, the Age Discrimination in Employment Act of 1967, as amended, and any other state or federal law. Executive understands that by entering into this Agreement, Executive is waiving Executive’s rights to have a court determine Executive’s rights, including under federal, state or local statutes prohibiting employment discrimination, including sexual harassment and discrimination on the basis of age, race, color, religion, national origin, disability, veteran status or any other factor prohibited by governing law. Executive further understands that there is no intent herein to interfere with the Equal Employment Opportunity Commission’s right to enforce the laws it oversees or Executive’s right to file an administrative charge of employment discrimination or a similar state or local administrative agency.

11.Assignment.

Neither this Agreement, nor any of Executive’s rights or obligations hereunder, may be assigned or otherwise subject to hypothecation by Executive. The Company may assign its rights and obligations hereunder, and Executive hereby consents to any such assignment, in whole or in part, (i) to any of the Company’s subsidiaries, affiliates, or parent corporations; or (ii) to any other successor or assign in connection with the sale of all or substantially all of the Company’s assets or stock or in connection with any merger, acquisition and/or reorganization involving the Company.

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12.Notices.

All notices and other communications under this Agreement shall be in writing and shall be given by fax or first-class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three (3) days after mailing or twenty-four (24) hours after transmission of a fax to the respective persons named below:

If to the Company: Rite Aid Corporation 30 Hunter Lane Camp Hill, Pennsylvania 17011 Attention: General Counsel

If to Executive: Matthew C. Schroeder, at Executive’s last address shown on the payroll records of the Company.

Any party may change such party’s address for notices by notice duly given pursuant hereto.

13.General.

13.1No Offset or Mitigation. The Company’s obligation to make the payments provided for in, and otherwise to perform its obligations under this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against Executive or others whether in respect of claims made under this Agreement or otherwise. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts, benefits and other compensation payable or otherwise provided to Executive under any of the provisions of this Agreement, and such amounts shall not be reduced, regardless of whether Executive obtains other employment.

13.2Governing Law. This Agreement is executed in Pennsylvania and shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to conflicts of laws principles thereof which might refer such interpretations to the laws of a different state or jurisdiction. Any court action instituted by Executive relating in any way to this Agreement shall be filed exclusively in state or federal court in the Commonwealth of Pennsylvania and Executive consents to the jurisdiction and venue of said courts in any action instituted by or on behalf of the Company against Executive.

13.3Entire Agreement. This Agreement sets forth the entire understanding of the parties relating to Executive’s employment with the Company and cancels and supersedes all agreements, arrangements and understandings relating thereto made prior to the date hereof, written or oral, between Executive and the Company and/or any subsidiary or affiliate, including, without limitation, the Prior Agreement.

13.4Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by the parties, or in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same. No waiver by any party of the breach of any term or covenant contained in this

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Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

13.5Conflict with Other Agreements. Executive represents and warrants that neither Executive’s execution of this Agreement nor the full and complete performance of Executive’s obligations hereunder will violate or conflict in any respect with any written or oral agreement or understanding with any person or entity.

13.6Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon the Company (and its successors and assigns) and Executive and Executive’s heirs, executors and personal representatives.

13.7Withholding. Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

13.8Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.

13.9No Assignment. The rights and benefits of Executive under this Agreement may not be anticipated, assigned, alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process except as required by law. Any attempt by Executive to anticipate, alienate, assign, sell, transfer, pledge, encumber or charge the same shall be void. Payments hereunder shall not be considered assets of Executive in the event of insolvency or bankruptcy.

13.10Survival. This Agreement shall survive the termination of Executive’s employment and the expiration of the Term to the extent necessary to give effect to its provisions.

13.11Captions. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

13.12Counterparts. This Agreement may be executed by the parties hereto in separate counterparts; each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument.

14.Compliance with Code Section 409A.

(a)Interpretation: The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code (“409A”), to the extent subject thereto, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to

15

the contrary, Executive shall not be considered to have terminated employment with the Company for purposes of any payments under this Agreement which are subject to 409A until Executive has incurred a “separation from service” from the Company within the meaning of 409A.

(b)Payment of Benefits: To the extent necessary to avoid adverse tax consequences, and except as described below, any payment to which Executive becomes entitled under the Agreement, or any arrangement or plan referenced in this Agreement, that constitutes “deferred compensation” under 409A, and is (a) payable upon Executive’s termination; (b) at a time when Executive is 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 Executive’s “separation from service” within the meaning of such term under 409A; or (2) the date of Executive’s death.

On the first payroll date after the expiration of the Deferral Period, all payments that would have been made during the Deferral Period (whether in a single lump sum or in installments) shall be paid as a single lump sum to Executive or, if applicable, Executive’s beneficiary, and all remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. This section shall not apply to any payment that meets the short term deferral exception to 409A or constitutes “separation pay” as described in Treasury Regulation Section 409A-l(b)(9) (in general, payments (i) that are made on an involuntary separation from service which (ii) do not exceed the lesser of two (2) times (x) Executive’s annualized compensation for the taxable year preceding the year in which the separation from service occurs or (y) the Code Section 401(a)(l7) limit on compensation for the year in which separation from service occurs and (iii) are paid in total by the end of the second calendar year following the calendar year in which the separation from service occurs).

For purposes of 409A, each payment and each installment described in this Agreement shall be considered a separate and distinct payment from each other payment or installment and to the extent required by 409A, a payment due upon termination of employment will only be paid upon Executive’s separation from service within the meaning of such term under 409A. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

(c)Reimbursements; Offsets: To the extent required by 409A, with regard to any provision that provides for the reimbursement of costs and expenses, or for the provision of in­ kind benefits: (i) the right to such reimbursement or in-kind benefit shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses or in-kind benefits available or paid in one (1) year shall not affect the amount available or paid in any subsequent year; and (iii) such payments shall be made on or before the last day of Executive’s taxable year in which the expense occurred. Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment or benefit under this Agreement that constitutes “nonqualified deferred compensation” for purposes of 409A be subject to offset by any other amount unless otherwise permitted by 409A.

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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date first written above.

RITE AID CORPORATION

/s/ Thomas J. Sabatino‌

By:Thomas J. Sabatino‌

Its: Executive Vice President & General Counsel

EXECUTIVE

/s/ Matthew C. Schroeder‌

Appendix A to Amended and Restated Employment Agreement

Date

Name Address City, State Zip

Re:Severance Agreement and General Release

Dear [Name]:

We are interested in resolving cooperatively your separation of employment with Rite Aid Corporation (the “Company”), which will take place on [DATE], (your “Separation Date”). Toward this end, we propose the following Severance Agreement, which includes a General Release.

Whereas, the Company has previously entered into an amended and restated employment agreement with you, dated [DATE] (the “Employment Agreement”), which contains among other things, certain provisions regarding severance compensation payable upon termination of your employment with the Company under certain circumstances. Other than what is expressly set forth herein, the terms and conditions of the Employment Agreement shall remain in full force and effect.

The terms and conditions set forth in Paragraph 1 below will apply regardless of whether you decide to sign this Severance Agreement and General Release. However, you will not be eligible to receive the payments and benefits set forth in Paragraph 2 below unless you sign on or after the Separation Date and do not revoke this Severance Agreement and General Release, within the time period specified below.

You may consider for twenty-one (21) days whether you wish to sign this Severance Agreement and General Release starting on the Separation Date. Since this Severance Agreement and General Release (“Agreement”) is a legal document, you are advised to review it with an attorney prior to signing it.

1.General Terms of Termination. As noted above, whether or not you sign this Agreement:

(a)Your last day of employment with the Company is your Separation Date. You will be paid for all time worked up to and including your termination.

(b)You will be paid for earned but unused vacation days and any properly documented reasonable expenses incurred in connection with your employment through your Separation Date.

(c)Except as contemplated by the Employment Agreement, your eligibility to participate in all other group benefits except Company sponsored health insurance including

medical dental, vision and prescription as an employee of the Company will end on the last day of the calendar month in which separation occurs.

(d)You acknowledge (i) receipt of all compensation and benefits due through the Separation Date as a result of services performed for the Company with the receipt of a final paycheck, except as provided in this Agreement; (ii) you have reported to the Company any and all work-related injuries incurred during employment; (iii) the Company properly provided any leave of absence because of your or your family member’s health condition and you have not been subjected to any improper treatment, conduct or actions due to a request for or taking such leave; and (iv) you have provided the Company with written notice of any and all concerns regarding suspected ethical and compliance issues or violations on the part of the Company or any of the Released Parties.

2.Separation Payment. Except with respect to the Accrued Benefits as defined in the Employment Agreement, if you sign this Agreement, agreeing to be bound by the General Release in Paragraph 3 below and the other terms and conditions of this Agreement described below, and comply with the requirements of this Paragraph 2 (other than the Accrued Benefits), you will receive the compensation and benefits as contemplated by the Employment Agreement. You will not be eligible for the payment and benefits described in this Paragraph 2 unless: (i) you sign this Agreement no later than twenty-one (21) days after you receive it, promptly return the Agreement to the Company after you sign it, and do not timely revoke it; and (ii) you have returned all Company property and documents in accordance with Paragraph 15 below.

3.General Release. In consideration of the benefits provided by the Company, you personally and for your heirs, executors, administrators, successors and assigns, fully, finally and forever release and discharge the Company and its parents, subsidiaries, and affiliates, as well as their respective successors, assigns, officers, owners, directors, agents, representatives, attorneys, and employees (collectively, the “Released Parties”), of and from all claims, demands, actions, causes of action, suits, damages, losses, and expenses, of any and every nature whatsoever, (a) as a result of actions or omissions occurring through the date Employee signs this Agreement or (b) arising at any time under or relating to any agreements between you and any Releasee existing as of the Separation Date. Specifically included in this waiver and release are, among other things, any and all claims under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Pennsylvania Human Relations Act, or any other federal, state or local statute, rule, ordinance, or regulation, as well as any claims under common law for tort, contract, or wrongful discharge (the “Released Claims”). The above release does not waive claims (i) for unemployment or workers’ compensation benefits, (ii) for vested rights under ERISA-covered employee benefit plans as applicable on the date Employee signs this Agreement, (iii) to the extent prohibited by law, as a whistleblower under the Sarbanes-Oxley Act or Dodd-Frank Wall Street Reform and Consumer Protection Act, (iv) to interpret or enforce this Agreement, (v) that may arise after Employee signs this Agreement and (iv) which cannot be released by private agreement. Nothing in this release generally prevents you from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the EEOC, NLRB or any other federal, state or local agency charged with the enforcement of any employment laws, although by signing this release you waive the right to individual relief based on claims asserted in such a charge or complaint, except with the NLRB or anywhere else such a waiver is prohibited.

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4.The parties agree and acknowledge that this Agreement and the considerations exchanged herein shall not constitute and shall not be interpreted as an admission on the part of the Company of a violation of any statute, law, or ordinance or of any other wrongdoing by the Company.

5.The parties further agree that this Agreement is in full, complete, and final settlement by you of any and all claims, actions, causes of action, damages, or costs against the Company resulting from or pertaining to the Released Claims, your employment with, treatment at, severance from, or separation of employment from the Company.

6.The parties agree that this Agreement shall supersede and replace any and all prior written or oral agreements previously entered into between them, which agreements shall be null and void and of no consequence, except that the parties agree that this paragraph does not apply to any agreements referenced in this Agreement or to any applicable confidentiality, noncompetition, noninterference, and/or nonsolicitation agreements.

7.The parties agree that the laws of the Commonwealth of Pennsylvania shall apply to the terms and conditions of this Agreement, and they consent to the exclusive jurisdiction of the Pennsylvania courts with respect to the enforcement of this Agreement.

8.You agree not to seek future employment with and waive any and all claims or rights to reemployment or reinstatement to your former position or any position within the Company or any of its affiliates.

9.You understand and agree that in the event any claim, suit, or action whatsoever shall be commenced by you, your heirs, executors, or administrators against the Company, based upon the Released Claims, this Agreement shall constitute a complete defense to any such claim, suit, or action.

10.Except as specifically set forth herein, you waive any common law and/or statutory right to recover attorneys’ fees and costs, if any.

11.It is intended that this Agreement, and all payments or income to you contemplated by it, comply with, or are exempt from, the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder. This Agreement shall be construed, administered, and governed in a manner consistent with this intent.

12.It is agreed that the terms and provisions of this Agreement are to remain strictly confidential and that any disclosure of the terms of this Agreement by you to any employee or former employee of the Company, or to any other person, other than your legal counsel, tax advisors, or your immediate family members is not permitted.

13.You agree that you will not make any disparaging statements, oral or written, regarding the Company to any person, firm or other entity. The Company agrees that members of its senior management team will not disparage you for so long as they remain members of such management team.

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14.Regardless of whether you sign this Agreement, and as a condition of receiving the consideration set forth in Paragraph 2 above, you must return to your supervisor, retaining no copies, all Company property, including computers, wireless devices, papers, files, documents, reference guides, equipment, keys, access key tag/card, identification cards, credit cards, software, computer access codes, disks, supplies and institutional manuals, and you shall not retain any copies, duplicates, reproductions or excerpts of any of the foregoing, whether in hardcopy or electronic format and are prohibited from using or disclosing confidential and/or proprietary information that you accrued in the course of your employment with the Company.

15.You agree to make yourself reasonably available at mutually agreeable times to reasonably cooperate with the Company with respect to any legal proceedings that the Company believes, in its sole discretion, may be in any way related to your employment with the Company. Such reasonable cooperation encompasses your assistance with matters preliminary to the investigation of any legal proceedings and assistance during and throughout any litigation or legal proceeding, including, but not limited to, participating in any fact-finding or investigation, speaking with the Company’s attorneys, testifying in depositions Upon submission of appropriate documentation, you shall be reimbursed for reasonable out-of-pocket expenses incurred in rendering such cooperation, which shall not include any attorneys’ fees, testifying at hearings or at trial, and assisting with any post-litigation matter or appeal. Nothing in this paragraph should be construed as suggesting or implying in any way that you should testify untruthfully.

16.No provision of this Agreement shall be construed or enforced in a manner that would prevent Employee from testifying fully and truthfully under oath in any court, arbitration or administrative agency proceeding, or from filing a charge or providing complete and truthful information in the course of any government investigation. No provision of this Agreement shall be construed or enforced in a manner that would interfere with Employee’ s rights under the National Labor Relations Act, if any, to discuss or comment on terms and conditions of employment.

17.You are advised to consult with an attorney prior to signing this Agreement. You have 21 days from the Separation Date to consider whether to sign this Agreement (the “Consideration Period”). You must return this signed Agreement to the Company’s representative set forth below within the Consideration Period but not prior to the Separation Date. If you sign and return this Agreement before the end of the Consideration Period, it is because you freely chose to do so after carefully considering its terms. Additionally, you shall have seven (7) days from the date of the signing of this Agreement to revoke this Agreement by delivering a written notice of revocation within the seven-day revocation period to the same person as you returned this Agreement. If the revocation period expires on a weekend or holiday, you will have until the end of the next business day to revoke. This Agreement will become effective on the eighth day after you sign this Agreement provided you do not revoke your consent to this Agreement prior to such day. Any modification or alteration of any terms of this Agreement by you voids this Agreement in its entirety. You agree with the Company that changes, whether material or immaterial, do not restart the commencement of the Consideration Period.

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18.In the event that, any one or more provisions (or portion thereof) of this Agreement is held to be invalid, unlawful or unenforceable for any reason, the invalid, unlawful or unenforceable provision (or portion thereof) shall be construed or modified so as to provide the Company with the maximum protection that is valid, lawful and enforceable, consistent with the intent of the Company and you in entering into this Agreement. If such provision (or portion thereof) cannot be construed or modified so as to be valid, lawful and enforceable, that provision (or portion thereof) shall be construed as narrowly as possible and shall be severed from the remainder of this Agreement (or provision), and the remainder shall remain in effect and be construed as broadly as possible, as if such invalid, unlawful or unenforceable provision (or portion thereof) had never been contained in this Agreement.

19.No changes to this Agreement can be effective except by another written agreement signed by you and by the Company’s authorized representative.

20.You and the Company execute this Agreement voluntarily, with full knowledge of its significance, and you acknowledge that you have read and fully understand the meaning of this Agreement, intend to be legally bound by the Agreement, and that no inducement, duress, or coercion caused either party to enter into this understanding.

PLEASE READ CAREFULLY

1.THIS AGREEMENT CONSTITUTES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. IT DOES NOT WAIVE RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE DATE IT IS EXECUTED;

2.YOU AGREE THAT YOU ARE WAIVING RIGHTS AND CLAIMS YOU MAY HAVE IN EXCHANGE FOR CONSIDERATION IN ADDITION TO THINGS OF VALUE TO WHICH YOU ARE ALREADY ENTITLED;

3.YOU UNDERSTAND THAT YOU HAVE THE RIGHT TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT;

4.YOU UNDERSTAND THAT YOU HAVE TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT;

5.YOU UNDERSTAND THAT YOU HAVE SEVEN (7) DAYS FOLLOWING YOUR EXECUTION OF THIS AGREEMENT TO REVOKE IT AND THAT THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. REVOCATION MUST BE IN WRITING AND TIMELY DELIVERED TO: GENERAL COUNSEL AT THOMAS.SABATINO@RITEAID.COM.

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In witness whereof, the parties hereto have executed this Agreement on the day and date indicated below.

RITE AID CORPORATION

‌By: ‌‌Its:‌

Dated:‌

EXECUTIVE

‌

Dated:‌

A-24

APPENDIX A TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT

GENERAL RELEASE OF CLAIMS

This General Release of Claims (this “Release”) is made and entered into by Matthew Schroeder (“Employee”) pursuant to Section 5.3 of the Amended and Restated Employment Agreement between Employee and Rite Aid Corporation (the “Company”), dated as of October 11, 2023 (the “Employment Agreement”).

1.Release.

(a)Employee hereby releases, discharges and forever acquits the Company, and its affiliates and subsidiaries and each of their past, present and future stockholders, members, partners, directors, managers, employees, agents, attorneys, heirs, legal representatives, successors and assigns, in their personal and representative capacities (individually, “Company Party,” and collectively, the “Company Parties”), from liability for, and hereby waives, 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 Employee or Employee’s 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 Employee signs this Release including, but not limited to (A) any such Claims relating in any way to Employee’s 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 Employee, including, without limitation, the Employment Agreement and any incentive compensation plan or equity plan with any Company Party; provided, however, that nothing in this release will release or impair any rights that cannot be waived under applicable law, rights to receive the Accrued Benefits and severance payments and benefits set forth on Section 5.3 of the Employment Agreement, any rights to vested benefits or any rights to indemnification (the “Excluded Claims”).

(b)Employee further acknowledges and agrees that, except with respect to the Excluded Claims and the payments and benefits set forth on Section 5.3 of the Employment Agreement, the Company Parties have fully satisfied any and all obligations whatsoever owed to Employee arising out of Employee’s employment with the Company or any other Company Party, and that no further payments or benefits are owed to Employee by the Company or any other Company Party.

2.Attorney Consultation; Voluntary Agreement. Employee acknowledges that (i) the Company has advised Employee to consult with an attorney of Employee’s own choosing before signing this Release, (ii) Employee has been given the opportunity to seek the advice of counsel, (iii) Employee has carefully read and fully understand all of the provisions of this Release, (iv) this Release specifically applies to any rights or claims Employee may have against the Company Parties pursuant to the ADEA, (v) Employee is entering into this Release knowingly, freely and voluntarily in exchange for good and valuable consideration to which Employee is not otherwise entitled, including the severance payments and benefits set forth on Section 5.3 of the Employment Agreement, and (vi) Employee has the full power, capacity and authority to enter into this Release.

3.Review and Revocation Period.

(a)Employee has twenty-one (21) days following Employee’s receipt of this Release to review its terms and to reflect upon them and consider whether Employee wants to sign it, although Employee may sign it sooner; provided, however, that Employee may not sign this Release prior to the last day of Employee’s employment with the Company. Employee understands and agrees that Employee may consent to this Release by signing and returning this Release within the applicable time frame to General Counsel, Rite Aid Corporation by e-mail at [thomas.sabatino@riteaid.com].

(b)Employee may revoke Employee’s consent to, and the effectiveness of, this Release within the seven day period beginning on the date Employee executes this Release (such seven day period being referred to herein as the “Release Revocation Period”). To be effective, such revocation must be in writing signed by Employee and delivered to the Company 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 Employee, this Release shall be of no force or effect, and Employee will not have any rights and the Company will not have any obligations under Section 5.3 of the Employment Agreement. Provided that Employee does not revoke Employee’s consent to this Release within the Release Revocation Period, this Release shall become effective on the eighth (8th) calendar day after the date upon which Employee executes this Release (the “Release Effective Date”).

4.No Admissions. Nothing herein shall be deemed to constitute an admission of wrongdoing by Employee or any of the Company Parties. Neither this Release 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 Release.

5.Entire Agreement. This Release sets forth the entire understanding of the parties on the subject hereof and cancels and supersedes all agreements, arrangements and understandings relating thereto made prior to the date hereof, written or oral, between Employee and the Company and/or any subsidiary or affiliate; provided, however, that any post­employment restrictive covenants and confidentiality obligations under the Employment Agreement shall remain in full force and effect in accordance with their terms.

* * *

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IN WITNESS WHEREOF, Employee has signed this Release as of the date indicated below.

[NAME]

​ ​[NAME]

Date:​ ​

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 September 2, 2023:

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

Entity	Jurisdiction of Incorporation or Organization
RediClinic of PA, LLC (a Delaware limited liability company)	Delaware
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	Florida
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 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, Jeffrey S. Stein, Chief Executive Officer and Chief Restructuring 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: October 17, 2023
	By:	/s/ JEFFREY S. STEIN
		Jeffrey S. Stein
		Chief Executive Officer and Chief Restructuring 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: October 17, 2023
	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 September 2, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jeffrey S. Stein, as Chief Executive Officer and Chief Restructuring 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 her or 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/ JEFFREY S. STEIN
Name: Jeffrey S. Stein
Title: Chief Executive Officer and Chief Restructuring Officer
Date: October 17, 2023
/s/ MATTHEW C. SCHROEDER
Name:	Matthew C. Schroeder
Title:	Executive Vice President and Chief Financial Officer
Date:	October 17, 2023

XML

Document and Entity Information - shares	6 Months Ended
	Sep. 02, 2023	Oct. 03, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 02, 2023
Document Transition Report	false
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	PO Box 3165
Entity Address, City or Town	Harrisburg
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17105
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	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		56,542,469
Entity Central Index Key	0000084129
Current Fiscal Year End Date	--03-02
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Current assets:
Cash and cash equivalents	$ 92,926	$ 157,151
Accounts receivable, net	1,472,755	1,149,958
Inventories, net of LIFO reserve of $554,932 and $539,932	1,993,873	1,900,744
Prepaid expenses and other current assets	179,099	93,194
Total current assets	3,738,653	3,301,047
Property, plant and equipment, net	790,001	907,771
Operating lease right-of-use assets	2,239,043	2,497,206
Goodwill	90,436	507,936
Other intangibles, net	201,572	250,112
Deferred tax assets	12,368	12,368
Other assets	53,879	50,922
Total assets	7,125,952	7,527,362
Current liabilities:
Current maturities of long-term debt and lease financing obligations	3,773,356	6,332
Accounts payable	1,428,286	1,494,611
Accrued salaries, wages and other current liabilities	894,079	724,529
Current portion of operating lease liabilities	422,233	502,403
Total current liabilities	6,517,954	2,727,875
Long-term debt, less current maturities		2,925,258
Long-term operating lease liabilities	2,373,953	2,372,943
Lease financing obligations, less current maturities	11,718	12,580
Other noncurrent liabilities	188,597	130,482
Total liabilities	9,092,222	8,169,138
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $1 per share; 75,000 shares authorized; shares issued and outstanding 56,486 and 56,629	56,486	56,629
Additional paid-in capital	5,920,361	5,917,964
Accumulated deficit	(7,928,265)	(6,601,517)
Accumulated other comprehensive loss	(14,852)	(14,852)
Total stockholders' deficit	(1,966,270)	(641,776)
Total liabilities and stockholders' deficit	$ 7,125,952	$ 7,527,362

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
Inventories, net of LIFO reserve	$ 554,932	$ 539,932
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	75,000	75,000
Common stock, shares issued	56,486	56,629
Common stock, shares outstanding	56,486	56,629

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 5,646,081	$ 5,901,069	$ 11,299,243	$ 11,915,652
Costs and expenses:
Cost of revenues	4,550,485	4,746,574	9,025,121	9,564,428
Selling, general and administrative expenses	1,458,466	1,193,553	2,713,689	2,411,482
Facility exit and impairment charges	310,761	45,845	330,762	112,416
Goodwill and intangible asset impairment charges	295,490	252,200	446,990	252,200
Interest expense	72,658	52,533	137,878	100,652
Gain on debt modifications and retirements, net		(41,312)		(41,312)
Gain on sale of assets, net	(24,087)	(29,001)	(32,280)	(58,197)
Total costs and expenses	6,663,773	6,220,392	12,622,160	12,341,669
Loss before income taxes	(1,017,692)	(319,323)	(1,322,917)	(426,017)
Income tax expense	2,338	11,967	3,831	15,464
Net loss	(1,020,030)	(331,290)	(1,326,748)	(441,481)
Computation of loss attributable to common stockholders:
Net loss attributable to common stockholders - basic	(1,020,030)	(331,290)	(1,326,748)	(441,481)
Net loss attributable to common stockholders - diluted	$ (1,020,030)	$ (331,290)	$ (1,326,748)	$ (441,481)
Basic loss per share:
Basic loss per share	$ (18.44)	$ (6.07)	$ (24.02)	$ (8.11)
Diluted loss per share:
Diluted loss per share	$ (18.44)	$ (6.07)	$ (24.02)	$ (8.11)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (1,020,030)	$ (331,290)	$ (1,326,748)	$ (441,481)
Defined benefit pension plans:
Amortization of net actuarial losses included in net periodic pension cost, net of $0 and $0 income tax expense
Change in fair value of interest rate cap
Total other comprehensive income
Comprehensive loss	$ (1,020,030)	$ (331,290)	$ (1,326,748)	$ (441,481)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Amortization of net actuarial losses included in net periodic pension cost, net of income tax expense	$ 0	$ 0	$ 0	$ 0

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - 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. 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)
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
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					(441,481)
Comprehensive loss					(441,481)
BALANCE - end of period at Aug. 27, 2022	$ 56,580	5,915,521	(6,293,062)	(15,437)	(336,398)
BALANCE (in shares) at Aug. 27, 2022	56,580
BALANCE - beginning 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
Increase (Decrease) in Stockholders' Deficit
Net loss			(331,290)		(331,290)
Comprehensive loss					(331,290)
Issuance of restricted stock	$ 1,141	(1,141)
Issuance of restricted stock (in shares)	1,141
Exchange of restricted shares for taxes	$ (182)	(1,284)			(1,466)
Exchange of restricted shares for taxes (in shares)	(182)
Cancellation of restricted stock	$ (2)	2
Cancellation of restricted stock (in shares)	(2)
Amortization of restricted stock balance		3,323			3,323
Stock-based compensation expense		111			111
Amortization of performance-based incentive plans		1,300			1,300
BALANCE - end of period at Aug. 27, 2022	$ 56,580	5,915,521	(6,293,062)	(15,437)	(336,398)
BALANCE (in shares) at Aug. 27, 2022	56,580
BALANCE - beginning of period at Mar. 04, 2023	$ 56,629	5,917,964	(6,601,517)	(14,852)	(641,776)
BALANCE (in shares) at Mar. 04, 2023	56,629
Increase (Decrease) in Stockholders' Deficit
Net loss			(306,718)		(306,718)
Comprehensive loss					(306,718)
Issuance of restricted stock	$ 256	(256)
Issuance of restricted stock (in shares)	256
Shares issued under the performance-based incentive plans	$ 44	(44)
Shares issued under the performance-based incentive plans (in shares)	44
Exchange of restricted shares for taxes	$ (18)	(28)			(46)
Exchange of restricted shares for taxes (in shares)	(18)
Cancellation of restricted stock	$ (203)	203
Cancellation of restricted stock (in shares)	(203)
Amortization of restricted stock balance		1,201			1,201
Amortization of performance-based incentive plans		(109)			(109)
BALANCE - end of period at Jun. 03, 2023	$ 56,708	5,918,931	(6,908,235)	(14,852)	(947,448)
BALANCE (in shares) at Jun. 03, 2023	56,708
BALANCE - beginning of period at Mar. 04, 2023	$ 56,629	5,917,964	(6,601,517)	(14,852)	(641,776)
BALANCE (in shares) at Mar. 04, 2023	56,629
Increase (Decrease) in Stockholders' Deficit
Net loss					(1,326,748)
Comprehensive loss					(1,326,748)
BALANCE - end of period at Sep. 02, 2023	$ 56,486	5,920,361	(7,928,265)	(14,852)	(1,966,270)
BALANCE (in shares) at Sep. 02, 2023	56,486
BALANCE - beginning of period at Jun. 03, 2023	$ 56,708	5,918,931	(6,908,235)	(14,852)	(947,448)
BALANCE (in shares) at Jun. 03, 2023	56,708
Increase (Decrease) in Stockholders' Deficit
Net loss			(1,020,030)		(1,020,030)
Comprehensive loss					(1,020,030)
Exchange of restricted shares for taxes	$ (113)	(68)			(181)
Exchange of restricted shares for taxes (in shares)	(113)
Cancellation of restricted stock	$ (109)	109
Cancellation of restricted stock (in shares)	(109)
Amortization of restricted stock balance		1,261			1,261
Amortization of performance-based incentive plans		128			128
BALANCE - end of period at Sep. 02, 2023	$ 56,486	$ 5,920,361	$ (7,928,265)	$ (14,852)	$ (1,966,270)
BALANCE (in shares) at Sep. 02, 2023	56,486

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022
Operating activities:
Net loss	$ (1,326,748)	$ (441,481)
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization	134,924	138,637
Facility exit and impairment charges	330,762	112,416
Goodwill and intangible asset impairment charges	446,990	252,200
LIFO charge	15,000	10,121
Gain on sale of assets, net	(32,280)	(58,197)
Change in allowances for uncollectible accounts receivable	(19,959)	(1,671)
Stock-based compensation expense	2,149	8,069
Gain on debt modifications and retirements, net		(41,312)
Changes in deferred taxes		6,133
Changes in operating assets and liabilities:
Accounts receivable	(303,973)	(211,673)
Inventories	(108,129)	(77,405)
Accounts payable	(34,299)	(43,343)
Operating lease right-of-use assets and operating lease liabilities	(33,978)	(31,713)
Other assets	(88,771)	(10,870)
Other liabilities	205,151	(61,372)
Net cash used in operating activities	(813,161)	(451,461)
Investing activities:
Payments for property, plant and equipment	(76,869)	(122,243)
Intangible assets acquired	(15,217)	(15,356)
Proceeds from dispositions of assets and investments	29,125	41,003
Proceeds from sale-leaseback transactions	5,454	45,986
Net cash used in investing activities	(57,507)	(50,610)
Financing activities:
Net proceeds from revolver	837,000	677,000
Principal payments on long-term debt	(1,978)	(152,011)
Change in zero balance cash accounts	(27,939)	(12,931)
Financing fees paid for early debt redemption	(51)	(881)
Payments for taxes related to net share settlement of equity awards	(227)	(2,019)
Deferred financing costs paid	(362)
Net cash provided by financing activities	806,443	509,158
(Decrease) increase in cash and cash equivalents	(64,225)	7,087
Cash and cash equivalents, beginning of period	157,151	39,721
Cash and cash equivalents, end of period	$ 92,926	$ 46,808

XML

Basis of Presentation and Significant Accounting Policies

6 Months Ended

Sep. 02, 2023

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 and twenty-six week periods ended September 2, 2023 are not necessarily indicative of the results to be expected for the full year, particularly as a result of the filing of the Chapter 11 Cases. 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 2023 10-K.

Going Concern

As of the date the accompanying unaudited condensed consolidated financial statements were issued (the “issuance date”), management evaluated the significance of the following adverse conditions in accordance with ASC 205-40, Going Concern.

As disclosed in Note 16, Subsequent Events, on October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet. The Company filed a voluntary petition for reorganization under Chapter 11 (the “Chapter 11 filing” or “bankruptcy filing”) of the United States Bankruptcy Code in the District of New Jersey and expects to continue to manage its operations as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as a debtor-in-possession, the Company is authorized to continue to operate as an ongoing business but not to engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Elixir Insurance (“EI”) was excluded from the Chapter 11 filing due to regulatory factors.

The bankruptcy filing represents an adverse event that creates substantial uncertainty regarding the Company’s ability to recover its assets and satisfy its liabilities in the ordinary course of business. In this regard, while management believes the Company will be able to emerge from bankruptcy and continue to operate as a viable going concern, management can provide no assurance that: (a) the Company’s Plan may never be confirmed or become effective, (b) the Debtors’ voting creditors may reject the Plan embodying the restructuring transactions contemplated by the Restructuring Term Sheet, (c) the Bankruptcy Court may grant or deny motions in a manner that is adverse to the Company and its subsidiaries, and (d) the Chapter 11 Cases may be converted into cases under chapter 7 of the Bankruptcy Code.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, management can provide no assurance that the transactions described therein will be consummated.

While management believes the reorganization through the Chapter 11 proceedings will appropriately position the Company upon its re-emergence from bankruptcy, the commencement of these proceedings constituted an event of default (and an acceleration event) under certain of the Company’s debt agreements, for which enforcement of any remedies by the lenders have been automatically stayed as a result of the Chapter 11 proceedings. However, management can provide no assurance that the lenders will ultimately be able to exercise their remedies, which may include, among others, a cessation of the Company’s operations and liquidation of its assets. As a result of the foregoing acceleration event, all of the Company’s outstanding indebtedness, including indebtedness subject to cross-default provisions, has been classified as current debt in the accompanying unaudited condensed consolidated balance sheet of the Company as of September 2, 2023. See Note 10. Indebtedness and Credit Agreement.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive restructuring, successfully emerge from the Chapter 11 and generate sufficient liquidity following the Restructuring to meet its obligations and operating needs as they become due. The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
In thousands	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Retail Pharmacy Segment:
Pharmacy sales	$	3,319,057	$	2,971,236	$	6,616,031	$	6,024,684
Front-end sales		1,124,017		1,231,590		2,291,363		2,492,796
Other revenue		27,853		28,965		55,862		59,667
Total Retail Pharmacy Segment		4,470,927		4,231,791		8,963,256		8,577,147
Pharmacy Services Segment		1,209,858		1,727,241		2,406,012		3,453,098
Intersegment elimination		(34,704)		(57,963)		(70,025)		(114,593)
Total revenue	$	5,646,081	$	5,901,069	$	11,299,243	$	11,915,652

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 year 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 six month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent six 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 six 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 September 2, 2023, the Company recognized additional contract deferrals of $707 as a reduction of revenues. The Retail Pharmacy Segment had accrued contract liabilities of $2,560 and $2,030 as of September 2, 2023 and March 4, 2023, respectively.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another rate affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of Interbank Offered Rates (“IBORs”) and, particularly, the risk of cessation of LIBOR, regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients and exceptions in Topic 848. The Company adopted ASU 2020-04 effective December 1, 2022 and the adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

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Restructuring

6 Months Ended

Sep. 02, 2023

Restructuring

Restructuring

2. Restructuring

Beginning in fiscal 2019, the Company initiated a series of plans designed to reorganize its executive management team, improve its cost structure, free up working capital, rebrand its retail pharmacy and pharmacy services business, and launch its Store of the Future format. Other strategic initiatives included the expansion of the Company’s digital business, replacing and updating the Company’s financial systems to improve efficiency, and closing unprofitable stores. In December 2022, the Company announced a new multi-year performance acceleration program, which allows it to fast-track initiatives that will improve sales, script volume and operating margins, and free up cash. This program has given the Company visibility into the profitability opportunities it can drive over the next three years by focusing on improvements and growth in its core businesses. These and future activities, including those designed to enhance the

Company’s liquidity and capital structure, are expected to provide future growth opportunities, expense efficiency benefits, as well as reduce its level of corporate leverage and are reflected into its plan of reorganization. The Company also engaged professional advisors to assist with the exploration of strategic alternatives, including the filing of the Chapter 11 Cases. In connection with the Chapter 11 Cases, the Company has incurred, and expects to continue to incur, significant professional fees and other costs. As part of its reorganization, the Company expects to implement a revised business plan to bolster core strengths, address operational challenges, reinforce liquidity, reduce leverage, optimize store footprint, and address litigation. As mentioned herein, there can be no assurance as to whether the Chapter 11 Cases will be successful, including the Company’s ability to achieve its operational, strategic, and financial goals.

For the thirteen week period ended September 2, 2023, the Company incurred total restructuring-related costs of $85,709, 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)	$	926	$	—	$	926
Professional and other fees relating to restructuring activities(b)		82,484		2,299		84,783
Total restructuring-related costs	$	83,410	$	2,299	$	85,709

For the thirteen week period ended August 27, 2022, the Company incurred total restructuring-related costs of $12,805, 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)	$	913	$	—	$	913
Professional and other fees relating to restructuring activities(c)		7,529		4,363		11,892
Total restructuring-related costs	$	8,442	$	4,363	$	12,805

For the twenty-six week period ended September 2, 2023, the Company incurred total restructuring-related costs of $163,839, 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)	$	1,366	$	—	$	1,366
Professional and other fees relating to restructuring activities(b)		158,513		3,960		162,473
Total restructuring-related costs	$	159,879	$	3,960	$	163,839

For the twenty-six week period ended August 27, 2022, the Company incurred total restructuring-related costs of $35,451, 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)	$	12,201	$	616	$	12,817
Professional and other fees relating to restructuring activities(c)		13,612		9,022		22,634
Total restructuring-related costs	$	25,813	$	9,638	$	35,451

A summary of restructuring-related liabilities associated with the programs noted above, which are included in accrued salaries, wages and other current liabilities, is as follows:

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance as of March 4, 2023	$	7,658	$	42,154	$	49,812
Additions charged to expense		440		77,690		78,130
Cash payments		(2,738)		(33,962)		(36,700)
Balance as of June 3, 2023	$	5,360	$	85,882	$	91,242
Additions charged to expense		926		84,783		85,709
Cash payments		(2,052)		(106,782)		(108,834)
Balance as of September 2, 2023	$	4,234	$	63,883	$	68,117

(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, including its performance acceleration programs as well as costs incurred in connection with preparation for the Chapter 11 Cases.

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

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Loss Per Share

6 Months Ended

Sep. 02, 2023

Loss Per Share

Loss Per Share

3. Loss Per Share

Basic loss per share is computed by dividing loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted 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 loss of the Company, subject to anti-dilution limitations.

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders — basic and diluted	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Denominator:
Basic and diluted weighted average shares		55,306		54,548		55,242		54,453
Basic and diluted loss per share	$	(18.44)	$	(6.07)	$	(24.02)	$	(8.11)

Due to their antidilutive effect, 16 and 539 potential shares related to stock options have been excluded from the computation of diluted loss per share for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. Also, excluded from the computation of diluted loss per share for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022 are restricted shares of 1,074 and 1,811, respectively, which are included in shares outstanding.

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Facility Exit and Impairment Charges

6 Months Ended

Sep. 02, 2023

Facility Exit and Impairment Charges

Facility Exit and Impairment Charges

4. Facility Exit and Impairment Charges

Facility exit and impairment charges consist of amounts as follows:

	Thirteen Week Period				Twenty-Six Week Period
	Ended				Ended
	September 2,			August 27,	September 2,		August 27,
	2023		2022		2023		2022
Impairment charges	$	290,694	$	34,738	$	302,432	$	69,774
Facility exit charges		20,067		11,107		28,330		42,642
	$	310,761	$	45,845	$	330,762	$	112,416

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.

As further discussed in Note 1, Basis of Presentation and Significant Accounting Policies, the Company concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of issuance of the unaudited consolidated financial statements. As a result of this triggering event, the Company performed an analysis of the carrying value of its long-lived assets using Level 3 inputs.

During the twenty-six week period ended September 2, 2023, long-lived assets with a carrying value of $620,106, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $317,674, resulting in an impairment charge of $302,432 of which $290,694 relates to the thirteen week period ended September 2, 2023. During the twenty-six week period ended August 27, 2022, long-lived assets with a carrying value of $86,534, primarily right-of-use assets in connection with stores or leased office spaces, were written down to their fair value of $16,760, resulting in an impairment charge of $69,774 of which $34,738 related to the thirteen week period ended August 27, 2022. 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 September 2, 2023 and August 27, 2022:

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		September 2, 2023
Long-lived assets held for use	$	—	$	2,653	$	313,218	$	315,871	$	(301,417)
Long-lived assets held for sale	$	—	$	1,803	$	—	$	1,803	$	(1,015)
Total	$	—	$	4,456	$	313,218	$	317,674	$	(302,432)

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		August 27, 2022
Long-lived assets held for use	$	—	$	11,645	$	—	$	11,645	$	(64,942)
Long-lived assets held for sale	$	—	$	5,115	$	—	$	5,115	$	(4,832)
Total	$	—	$	16,760	$	—	$	16,760	$	(69,774)

The above assets reflected in the caption ‘Long-lived assets held for sale’ have not been reclassified to assets held for sale due to their immateriality.

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				Twenty-Six Week Period
	Ended				Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Balance—beginning of period	$	49,773	$	43,402	$	49,772	$	18,688
Provision for present value of executory costs for leases exited		14,846		2,816		20,444		29,315
Changes in assumptions and other adjustments		(762)		(436)		(2,852)		(627)
Interest accretion		74		237		608		335
Cash payments		(3,950)		(4,073)		(7,991)		(5,765)
Balance—end of period	$	59,981	$	41,946	$	59,981	$	41,946

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Fair Value Measurements

6 Months Ended

Sep. 02, 2023

Fair Value Measurements

Fair Value Measurements

5. Fair Value Measurements

The Company utilizes the three-level valuation hierarchy as described in Note 4, 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 September 2, 2023 and March 4, 2023, the Company has $4,189 and $7,457, respectively, of investments carried at amortized cost as these investments are being held to maturity, which are included as a component of prepaid expenses and other current assets. The Company believes the carrying value of these investments approximates their fair value.

The fair value for Secured Overnight Financing Rate (“SOFR”) 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 $3,767,350 and $3,165,382 respectively, as of September 2, 2023. The carrying amount and estimated fair value of the Company's total long-term indebtedness was $2,925,258 and $2,368,328, respectively, as of March 4, 2023.

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Income Taxes

6 Months Ended

Sep. 02, 2023

Income Taxes

Income Taxes

6. Income Taxes

The Company recorded income tax expense of $2,338 and $11,967 for the thirteen week periods ended September 2, 2023 and August 27, 2022, respectively. The Company recorded income tax expense of $3,831 and $15,464 for the twenty-six week periods ended September 2, 2023 and August 27, 2022, respectively. The effective tax rate for the thirteen week periods ended September 2, 2023 and August 27, 2022 was (0.2)% and (3.8)%, respectively. The effective tax rate for the twenty-six week periods ended September 2, 2023 and August 27, 2022 was (0.3)% and (3.6)%, respectively. The effective tax rate for the thirteen and twenty-six week periods ended September 2, 2023 was net of an adjustment of (25.3)% and (25.8)%, respectively, to adjust the valuation allowance against deferred tax assets. The effective tax rate for the thirteen and twenty-six week periods ended August 27, 2022 was net of an adjustment of 88.4% and 57.0%, respectively, to adjust the valuation allowance against deferred tax assets, primarily resulting from a Pennsylvania law change that reduced the corporate net income tax rate causing a reduction to the valuation allowance of $380,509.

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 $4,001 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 continues to maintain a valuation allowance against net deferred tax assets of $1,990,424 and $1,649,193, 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 September 2, 2023 and March 4, 2023, respectively. As further discussed in Note 1, Basis of Presentation and Significant Accounting Policies, the Company concluded that there is substantial doubt about its ability to continue as a going concern. The Company considered this, as well as the impact of the Chapter 11 proceedings as part of its current evaluation of valuation allowance established for deferred tax assets for which future realization is uncertain. Additional discussion regarding the Restructuring on deferred tax assets can be found in Note 16, Subsequent Events.

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Medicare Part D

6 Months Ended

Sep. 02, 2023

Medicare Part D

Medicare Part D

7. 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 $7,333 as of June 30, 2023. EI was in excess of the minimum required amounts in these states as of September 2, 2023. EI is not a Debtor in the Chapter 11 Cases.

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 by 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 year 2021 CMS receivable, for $258,116, of which $239,360 was received on August 12, 2021 and the remainder was received in fiscal 2023 upon 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 and the remainder was received in fiscal 2023 upon 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.

On October 13, 2022, the Company entered into a receivable purchase agreement (the “October 2022 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the October 2022 Receivable Purchase Agreement, the Company sold $195,487, a portion of its calendar 2022 CMS receivable, for $180,405, of which $166,917 was received on October 13, 2022. The remaining $13,488, which is included in accounts receivable, net as of September 2, 2023, 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 $15,082, which is included as a component of (gain) loss on sale of assets, net during the thirteen week period ended November 26, 2022.

On October 13, 2022, concurrent with the October 2022 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “October 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 October 2022 Indemnity Agreement. Based on its evaluation of the October 2022 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the October 2022 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the October 2022 Indemnity Agreement.

During the thirteen week period ended November 26, 2022, the Company incurred additional fees of $1,937, which are included as a component of (gain) loss on sale of assets, net related to the sale of the 2021 CMS receivable to Bank of America. The additional fees were incurred due to a CMS delay in settling the 2021 receivable.

On February 3, 2023, the Company entered into a receivable purchase agreement (the “February 2023 Receivable Purchase Agreement”) with Purchaser.

Pursuant to the terms and conditions set forth in the February 2023 Receivable Purchase Agreement, the Company sold $278,390, a portion of its calendar 2022 CMS receivable, for $261,771, of which $242,562 was received on February 3, 2023. The remaining $19,209, which is included in accounts receivable, net as of September 2, 2023, 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 $16,619, which is included as a component of (gain) loss on sale of assets, net during the fourteen-week period ended March 4, 2023.

On February 3, 2023, concurrent with the February 2023 Receivable Purchase Agreement, the Company entered into an indemnity agreement (the “February 2023 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 February 2023 Indemnity Agreement. Based on its evaluation of the February 2023 Indemnity Agreement, the Company has determined that it is highly unlikely that the events covered under the February 2023 Indemnity Agreement would occur, and consequently, the Company has not recorded any indemnification liability associated with the February 2023 Indemnity Agreement.

During the fourteen-week period ended March 4, 2023, the Company incurred additional fees of $2,573, which are included as a component of (gain) loss on sale of assets, net related to the sale of the 2021 CMS receivable to Bank of America. The additional fees were incurred due to a CMS delay in settling the 2021 receivable.

As of September 2, 2023 and March 4, 2023 accounts receivable, net included $32,697 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 September 2, 2023, and March 4, 2023, accounts receivable, net included $255,916 and $45,201 due from CMS.

The Inflation Reduction Act of 2022 contains several provisions affecting Medicare, which will take effect over various periods of time from 2023 to 2029. Based on the Company’s current analysis of the provisions, it does not believe that this legislation will have a material impact on the financial statements.

On June 4, 2023, the Company decided to exit the Medicare Part D Individual Insurance market, effective January 1, 2024. As of September 2, 2023, Elixir Insurance operated in eleven markets, with approximately 274,000 Medicare Part D Individual members. The Company expects to service its exiting members in the 2023 plan year through December 31, 2023. Additionally, the Chapter 11 Cases does not impact its ability or intent to support EI through December 31, 2023.

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Manufacturer Rebates Receivables

6 Months Ended

Sep. 02, 2023

Manufacturer Rebates Receivables

Manufacturer Rebates Receivables

8. Manufacturer Rebates Receivables

The Pharmacy Services Segment has manufacturer rebates receivables due directly from manufacturers and from our rebate aggregator of $411,549 and $357,699 included in accounts receivable, net of an allowance for uncollectible rebates of $13,280 and $8,680, as of September 2, 2023 and March 4, 2023, respectively.

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Goodwill and Other Intangible Assets

6 Months Ended

Sep. 02, 2023

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

9. Goodwill and Other Intangible Assets

Goodwill and indefinite-lived assets, such as certain trademarks acquired in connection with acquisition transactions, are not amortized, but are instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate it may be more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, the Company performs a quantitative goodwill impairment test. The fair value estimates used in the quantitative impairment test are calculated using an average of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions. The approaches, which qualify as Level 3 within the fair value hierarchy, incorporate a number of market participant assumptions including future growth rates, discount rates, income tax rates and market activity in assessing fair value and are reporting unit specific. If the carrying amount exceeds the reporting unit’s fair value, the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the Company considers the income tax effect of any tax deductible goodwill when measuring a goodwill impairment loss.

As further discussed in Note 16, Subsequent Events, the Company concluded that there is substantial doubt about its ability to continue as a going concern within one year from the date of issuance of the unaudited consolidated financial statements. As a result of overall lower current year projections, the Company concluded that a quantitative assessment was necessary and tested its goodwill and intangible assets for impairment.

During the thirteen week period ended September 2, 2023, the Company completed a qualitative and quantitative impairment assessment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services Segment exceeded its fair value principally due to further erosion of the future cash flow projections for fiscal years ending after fiscal 2024 due to an inability to execute management’s business strategies for the 2024 selling season. The unfavorable results of the selling season became apparent during the thirteen week period ended September 2, 2023, which resulted in lower renewals of existing customers as well as less new business earned. This resulted in goodwill and the CMS license intangible incurring impairment charges of $266,000 and $29,490, respectively for the thirteen week period ended September 2, 2023. The qualitative and quantitative impairment assessment of the Retail Pharmacy Segment resulted in no adjustment to the carrying values as the fair value of its reporting unit exceeds its carrying amount.

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.

During the thirteen week period ended June 3, 2023, the Company recorded a goodwill impairment charge of $151,500. As of September 2, 2023 and March 4, 2023, accumulated impairment losses for the Pharmacy Services Segment was $1,592,412 and $1,174,912, respectively.

Below is a summary of the changes in the carrying amount of goodwill by segment for the twenty-six week period ended September 2, 2023:

	Retail		Pharmacy
	Pharmacy		Services		Total
Balance, March 4, 2023		43,492		464,444		507,936
Goodwill impairment		—		(417,500)		(417,500)
Balance, September 2, 2023	$	43,492	$	46,944	$	90,436

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. The following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of September 2, 2023 and March 4, 2023.

	September 2, 2023								March 4, 2023
							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)	$	203,632	$	(184,551)	$	19,081	3	years	$	201,919	$	(182,957)	$	18,962	3	years
Prescription files		1,030,619		(935,466)		95,153	5	years		1,029,665		(928,478)		101,187	5	years
Customer relationships(a)		386,000		(313,062)		72,938	8	years		388,000		(306,139)		81,861	9	years
CMS license		57,500		(57,500)		—	0	years		57,500		(23,798)		33,702	4	years
Total finite	$	1,677,751	$	(1,490,579)		187,172			$	1,677,084	$	(1,441,372)	$	235,712
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,692,151	$	(1,490,579)	$	201,572			$	1,691,484	$	(1,441,372)	$	250,112

(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.

Amortization expense for these intangible assets and liabilities was $16,590 and $33,723 for the thirteen and twenty-six week periods ended September 2, 2023, respectively. Amortization expense for these intangible assets and liabilities was $18,420 and $39,046 for the thirteen and twenty-six week periods ended August 27, 2022, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2024—$55,339; 2025—$44,505; 2026—$34,144; 2027—$27,154 and 2028—$19,674.

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Indebtedness and Credit Agreement

6 Months Ended

Sep. 02, 2023

Indebtedness and Credit Agreement

Indebtedness and Credit Agreement

10. Indebtedness and Credit Agreement

Following is a summary of indebtedness and lease financing obligations as of September 2, 2023 and March 4, 2023:

	September 2,		March 4,
	2023		2023
Secured Debt:
Senior secured revolving credit facility due August 2026 ($2,037,000 and $1,200,000 face value less unamortized debt issuance costs of $13,467 and $16,117)		2,023,533		1,183,883
FILO Term Loan due August 2026 ($400,000 face value less unamortized debt issuance costs of $1,782 and $2,090)		398,218		397,910
		2,421,751		1,581,793
Second Lien Secured Debt:
7.500% senior secured notes due July 2025 ($320,002 face value less unamortized debt issuance costs of $1,986 and $2,529)		318,016		317,473
8.000% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $9,719 and $11,259)		840,199		838,659
		1,158,215		1,156,132
Unguaranteed Unsecured Debt:
7.70% notes due February 2027 ($185,691 face value less unamortized debt issuance costs of $347 and $398)		185,344		185,293
6.875% fixed-rate senior notes due December 2028 ($2,046 face value less unamortized debt issuance costs of $6 and $6)		2,040		2,040
		187,384		187,333
Lease financing obligations		17,724		18,912
Total debt		3,785,074		2,944,170
Current maturities of long-term debt and lease financing obligations		(3,773,356)		(6,332)
Long-term debt and lease financing obligations, less current maturities	$	11,718	$	2,937,838

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 “Prior Credit Agreement”; and the Credit Agreement, as further amended by the Second Amendment (as defined below), the “Prior Amended Credit Agreement”), which provided for facilities consisting of a $2,700,000 senior secured asset-based revolving credit facility and a $450,000 “first-in, last-out” senior secured term loan facility, the proceeds of which were used in December 2018 to refinance its prior $2,700,000 existing credit agreement.

On August 20, 2021, the Company entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which, among other things, amended the Prior Credit Agreement to provide for a $2,800,000 senior secured asset-based revolving credit facility (the “Prior Senior Secured Revolving Credit Facility”) and a $350,000 “first-in, last-out” senior secured term loan facility (“Prior Senior Secured Term Loan” and together with the Prior Senior Secured Revolving Credit Facility, collectively, the “Prior Amended Facilities”). The Prior Amended Facilities extended

the Company’s debt maturity profile and provided additional liquidity. Borrowings under the Prior Senior Secured Revolving Credit Facility bore 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 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 Prior Amended Credit Agreement). Borrowings under the Prior Senior Secured Term Loan bore 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%.

On December 1, 2022, the Company entered into the Third Amendment to Credit Agreement (the “Third Amendment”), which, among other things, amended the Prior Amended Credit Agreement (the Prior Amended Credit Agreement, as modified by the Third Amendment, the “Existing Credit Agreement”) to provide for a $2,850,000 senior secured asset-based revolving credit facility (the “Existing Senior Secured Revolving Credit Facility”) and a $400,000 “first-in, last-out” senior secured term loan facility (the “Existing Senior Secured Term Loan” and, together with the Existing Senior Secured Revolving Credit Facility, collectively, the “Existing Facilities”), replaced the LIBOR rate with a Term SOFR-based rate as the applicable benchmark for the Existing Facilities, included COVID-19 vaccines in the borrowing base under the Existing Senior Secured Revolving Credit Facility, subject to limitations and conditions as specified in the Existing Credit Agreement, and increased the interest rate applicable to loans under the Existing Senior Secured Term Loan to (x) a base rate (determined in a customary manner) plus a margin of 2.00% or (y) an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.00%.

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 Existing Senior Secured Revolving Credit Facility, depending on Average ABL Availability (as defined in the Existing Credit Agreement). The Existing 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 Existing Senior Secured Revolving Credit Facility is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. As of September 2, 2023, the Company had approximately $2,437,000 of borrowings outstanding under the Existing Facilities and had letters of credit outstanding under the Existing Senior Secured Revolving Credit Facility in a face amount of approximately $210,198, which resulted in remaining borrowing capacity under the Existing Senior Secured Revolving Credit Facility of $602,802. If at any time the total credit exposure outstanding under the Existing Senior Secured Revolving Credit Facility exceeds the borrowing base, the Company will be required to repay amounts outstanding to eliminate such shortfall.

The Existing Credit Agreement restricts the Company and all of its subsidiaries including the subsidiaries that guarantee its obligations under the Existing Facilities and the secured 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 Existing 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 Existing Facilities or (ii) availability under the Existing Senior Secured Revolving Credit Facility is less than or equal to $283,250 for three consecutive business days or less than or equal to $206,000 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 Existing Facilities, and then held as collateral for the senior obligations until such cash sweep period is rescinded pursuant to the terms of the Existing Facilities.

With the exception of EI, substantially all of the Company’s 100% owned subsidiaries guarantee the obligations under the Existing Facilities and the secured guaranteed notes. The Company’s obligations under the Existing 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 Existing 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 Existing 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 Existing Facilities and the secured 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 Existing Facilities and applicable notes, are minor.

The Existing 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 Existing 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 Existing 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 Existing 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 Existing 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 Existing Credit Agreement also contains certain restrictions on the amount of secured first priority debt the Company is able to incur. The Existing Credit Agreement also allows for the voluntary repurchase of any debt or other convertible debt, so long as the Existing Facilities are not in default and the Company maintains availability under its revolver of more than $375,950.

The Existing 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 Existing Senior Secured Revolving Credit Facility is less than $206,000 or (ii) on the third consecutive business day on which availability under the Existing Senior Secured Revolving Credit Facility is less than $257,500 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 $257,500. As of September 2, 2023, the availability under the Existing Senior Secured Revolving Credit Facility was at a level that did not trigger the Existing Credit Agreement’s financial covenant. The Existing 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 Existing 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.

As of September 2, 2023, the Company was in full compliance with the provisions and covenants associated with its debt agreements. The commencement of the Chapter 11 proceedings constituted an event of default that accelerated the Company’s obligations under the Unguaranteed Notes and the Secured Notes. Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 proceedings. See Note 16, Subsequent Events, for further information.

DIP ABL Credit Agreement

As further discussed in Note 16, Subsequent Events, subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP ABL Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP ABL Borrower, the “DIP ABL Loan Parties”), expect to enter into that certain debtor-in-possession credit agreement (the “DIP ABL Credit Agreement”) with the lenders from time to time party thereto (the “DIP ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP ABL Agent”), on the terms and conditions set forth therein. Pursuant to the DIP ABL Credit Agreement, the DIP ABL Lenders have agreed, upon the terms and conditions set forth therein, to make available to the DIP ABL Borrower a superpriority senior secured debtor-in-possession asset-based credit facility in the aggregate principal amount of $3.25 billion, consisting of (x) a $2.85 billion revolving credit facility (the “DIP Revolving Facility”), and (y) a $400 million first-in last-out term loan facility (the “DIP FILO Facility,” and, together with the DIP Revolving Facility, the “DIP ABL Facilities”) in order to (a) repay all outstanding obligations arising under, or related to, the Existing Credit Agreement and the Existing Facilities, (b) fund the Chapter 11 Cases, (c) provide working capital for the DIP ABL Loan Parties during the pendency of the Chapter 11 Cases, and (d) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP ABL Facilities, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The DIP ABL Loan Parties’ obligations under the DIP ABL Credit Agreement will be secured by liens on substantially all of the personal property of the DIP ABL Loan Parties, subject to certain exceptions.

The DIP ABL Facilities will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Revolving Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.25%. Additionally, the Company is required to pay a fee of 0.50% per annum on the daily unused amount of the commitments under the DIP Revolving Facility. The interest rate applicable to loans under the DIP FILO Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 5.25%, which margin is subject to downward adjustment to 4.75% upon the occurrence of certain paydown events, and a 1.00% upfront fee payable upon the Closing Date.

The DIP ABL Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP ABL Borrower and its restricted subsidiaries’ ability to,

among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP ABL Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP ABL Lenders’ rights or liens granted under the DIP ABL Credit Agreement.

DIP Term Loan Credit Agreement

As further discussed in Note 16, Subsequent Events, subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP Term Loan Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP Term Loan Borrower, the “DIP Term Loan Parties”), expect to enter into that certain debtor-in-possession term loan agreement (the “DIP Term Loan Credit Agreement,” and, together with the DIP ABL Credit Agreement, the “DIP Credit Agreements”) with the lenders from time to time party thereto (the “DIP Term Loan Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Term Loan Agent”), on the terms and conditions set forth therein. Pursuant to the DIP Term Loan Credit Agreement, the DIP Term Loan Lenders have agreed, upon the terms and conditions set forth therein, including the approval of the Bankruptcy Court, to make available to the DIP Term Loan Borrower a senior secured debtor-in-possession term loan credit facility in the aggregate principal amount of $200 million (the “DIP Term Loan Facility,” together with the DIP ABL Facility and the DIP FILO Facility, the “DIP Facilities”) in order to (a) fund the Chapter 11 Cases, (b) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP Term Loan Facility, and (c) provide working capital for the DIP Term Loan Parties during the pendency of the Chapter 11 Cases, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The obligations under the DIP Term Loan Credit Agreement will be secured by liens on substantially all of the real and personal property of the DIP Term Loan Parties, subject to certain exceptions.

The DIP Term Loan Facility will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Term Loan Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 7.50%.

The DIP Term Loan Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP Term Loan Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Term Loan Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP Term Loan Lenders’ rights or liens granted under the DIP Term Loan Credit Agreement.

In connection with the Chapter 11 Cases, the Debtors filed the DIP Motion seeking Bankruptcy Court approval of their entry into and performance under the DIP Credit Agreements and use of cash collateral, as well as certain related relief [Docket No. 38]. The Debtors the Bankruptcy Court has approved the DIP Motion on an interim basis from the bench, pending entry of a revised interim Order, which the Debtors expect to be entered in the immediate term. The Debtors will seek the Bankruptcy Court’s approval of the DIP Motion on a final basis in the coming weeks.

Fiscal 2023 and 2024 Transactions

On June 13, 2022, the Company commenced a series of cash tender offers to purchase up to $150,000 aggregate principal amount of the Company’s 7.500% Secured Notes, 8.000% Secured Notes, 7.70% Notes due 2027 (the “7.70% Notes”) and 6.875% Notes due 2028 (the “6.875% Notes,” together with the 7.70% Notes, the “Unguaranteed Notes”), subject to prioritized acceptance levels, a subcap of $100,000 with respect to the 7.500% Secured Notes and proration. On June 29, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $114,942 of its 7.500% Secured Notes, $51,695 aggregate principal amount of its 7.70% Notes and $26,955 aggregate principal amount of its 6.875% Notes. In connection therewith, the Company recorded a gain on debt retirement of $41,312, which included unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows during the second quarter of fiscal 2023.

On November 3, 2022, the Company announced the commencement of a cash tender offer to purchase up to $200,000 aggregate purchase price (not including any accrued and unpaid interest) of the Company’s 7.500% Secured Notes, subject to proration. On November 30, 2022, pursuant to an early settlement, the Company purchased an aggregate principal amount of $160,497 of its 7.500% Secured Notes and on December 9, 2022, pursuant to the final settlement, the Company purchased an additional aggregate principal amount of $4,559 of its 7.500% Secured Notes. In connection therewith, the Company recorded a gain on debt retirement of $38,978, which includes unamortized debt issuance costs. The debt repayment and related gain on debt retirement is included in the results of operations and cash flows during the third quarter of fiscal 2023.

On December 1, 2022, the Company entered into the Third Amendment in order to, among other things, increase the aggregate principal amount of commitments under the Existing Senior Secured Revolving Credit Facility from $2,800,000 to $2,850,000 and increase the aggregate principal amount of loans outstanding under the Existing Senior Secured Term Loan from $350,000 to $400,000. As a result of the Third Amendment, the Company has increased its liquidity by $100,000. In connection therewith, the Company recorded a loss on debt modification and retirement of $148, which includes unamortized debt issuance costs. The related loss on debt modification and retirement is included in the results of operations and cash flows during the fourth quarter of fiscal 2023.

Maturities

The commencement of the Chapter 11 proceedings constituted an event of default that accelerated the Company’s obligations under the Unguaranteed Notes and the Secured Notes (without any action on the part of such noteholders). Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 proceedings. See Note 16, Subsequent Events, for further information.

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Leases

6 Months Ended

Sep. 02, 2023

Leases

Leases

11. 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 and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022		September 2, 2023		August 27, 2022
Operating lease cost	$	148,896	$	157,956	$	301,568	$	317,801
Financing lease cost:
Amortization of right-of-use asset		775		863		1,594		1,672
Interest on long-term finance lease liabilities		454		503		921		1,004
Total finance lease costs	$	1,229	$	1,366	$	2,515	$	2,676
Short-term lease costs		2,086		585		1,310		1,042
Variable lease costs		44,646		43,652		90,879		86,297
Less: sublease income		(3,104)		(3,393)		(5,841)		(6,616)
Net lease cost	$	193,753	$	200,166	$	390,431	$	401,200

Supplemental cash flow information related to leases for the twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	330,492	$	350,177
Operating cash flows paid for interest portion of finance leases		921		1,004
Financing cash flows paid for principal portion of finance leases		1,969		1,940
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		163,569		155,710
Finance leases		—		—

Supplemental balance sheet information related to leases as of September 2, 2023 and March 4, 2023 (in thousands, except lease term and discount rate):

	September 2,			March 4,
	2023			2023
Operating leases:
Operating lease right-of-use asset	$	2,239,043		$	2,497,206
Short-term operating lease liabilities	$	422,233		$	502,403
Long-term operating lease liabilities		2,373,953			2,372,943
Total operating lease liabilities	$	2,796,186		$	2,875,346
Finance leases:
Property, plant and equipment, net	$	12,674		$	13,576
Current maturities of lease financing obligations	$	6,006		$	6,332
Lease financing obligations, less current maturities		11,718			12,580
Total finance lease liabilities	$	17,724		$	18,912
Weighted average remaining lease term
Operating leases		7.3			7.5
Finance leases		8.0			8.0
Weighted average discount rate
Operating leases		7.5	%		6.5	%
Finance leases		10.5	%		9.0	%

The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 2, 2023:

	September 2, 2023
	Finance		Operating
Fiscal year	Leases		Leases(1)		Total
2024 (remaining twenty-six weeks)	$	5,301	$	335,247	$	340,548
2025		5,048		622,993		628,041
2026		1,883		500,523		502,406
2027		1,500		472,118		473,618
2028		1,500		399,881		401,381
Thereafter		10,174		1,280,351		1,290,525
Total lease payments		25,406		3,611,113		3,636,519
Less: imputed interest		(7,682)		(814,927)		(822,609)
Total lease liabilities	$	17,724	$	2,796,186	$	2,813,910

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $23 million due in the future under noncancelable leases.

During the thirteen and twenty-six week periods ended September 2, 2023, the Company sold three owned and operated stores to independent third parties. Net proceeds from the sales were $5,454 for the thirteen and twenty-six week periods ended September 2, 2023. 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 transactions resulted in a loss of $706 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended September 2, 2023

During the thirteen and twenty-six week periods ended August 27, 2022, the Company sold three owned and operated properties, including the Pontiac, MI and Liverpool, NY distribution centers and one retail store to independent third parties. Net proceeds from the sales were $45,986 for the thirteen and twenty-six week periods ended August 27, 2022. 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 for the retail store and over a minimum lease term of three years for the distribution centers. 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 transactions resulted in a gain of $23,313 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended August 27, 2022.

Additionally, certain of the Company’s lease obligations and other outstanding contracts include events of default, cross default or cross acceleration provisions, which could result in rights to accelerate or terminate obligations, including upon the commencement of the Chapter 11 proceedings. However, the exercise or enforcement of any remedies have been automatically stayed as a result of such proceedings.

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Retirement Plans

6 Months Ended

Sep. 02, 2023

Retirement Plans

Retirement Plans

12. Retirement Plans

Net periodic pension expense (income) for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022, for the Company’s defined benefit plan includes the following components:

	Defined Benefit				Defined Benefit
	Pension Plan				Pension Plan
	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Service cost	$	73	$	107	$	146	$	214
Interest cost		1,581		1,263		3,162		2,527
Expected return on plan assets		(1,474)		(1,402)		(2,948)		(2,804)
Net periodic pension expense (income)	$	180	$	(32)	$	360	$	(63)

The Company is not required to make any contributions to its company-sponsored pension plans in fiscal 2024 but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first half of fiscal 2024.

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Segment Reporting

6 Months Ended

Sep. 02, 2023

Segment Reporting

Segment Reporting

13. Segment Reporting

The Company has two reportable segments, Retail Pharmacy Segment and Pharmacy Services Segment.

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
September 2, 2023:
Total Assets	$	5,530,289	$	1,605,604	$	(9,941)	$	7,125,952
Goodwill		43,492		46,944		—		90,436
March 4, 2023:
Total Assets	$	5,487,845	$	2,049,107	$	(9,590)	$	7,527,362
Goodwill		43,492		464,444		—		507,936

(1) As of September 2, 2023 and March 4, 2023, intersegment eliminations include intersegment accounts receivable of $9,941 and $9,590, 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 and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	Retail		Pharmacy		Intersegment
	Pharmacy		Services		Eliminations(1)		Consolidated
Thirteen Week Period Ended
September 2, 2023:
Revenues	$	4,470,927	$	1,209,858	$	(34,704)	$	5,646,081
Gross Profit		978,602		116,994		—		1,095,596
Adjusted EBITDA(2)		(26,477)		43,186		—		16,709
Depreciation and amortization		56,985		12,044		—		69,029
LIFO charge		7,500		—		—		7,500
Stock-based compensation expense		773		295		—		1,068
Additions to property and equipment and intangible assets		37,894		6,689		—		44,583
August 27, 2022:
Revenues	$	4,231,791	$	1,727,241	$	(57,963)	$	5,901,069
Gross Profit		1,043,036		111,459		—		1,154,495
Adjusted EBITDA(2)		31,484		47,065		—		78,549
Depreciation and amortization		56,679		11,885		—		68,564
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		4,496		239		—		4,735
Additions to property and equipment and intangible assets		46,343		5,832		—		52,175
Twenty-Six Week Period Ended
September 2, 2023:
Revenues	$	8,963,256	$	2,406,012	$	(70,025)	$	11,299,243
Gross Profit		2,065,465		208,657		—		2,274,122
Adjusted EBITDA(2)		43,572		64,852		—		108,424
Depreciation and amortization		112,454		22,470		—		134,924
LIFO charge		15,000		—		—		15,000
Stock-based compensation expense		1,496		653		—		2,149
Additions to property and equipment and intangible assets		78,333		13,753		—		92,086
August 27, 2022:
Revenues	$	8,577,147	$	3,453,098	$	(114,593)	$	11,915,652
Gross Profit		2,140,393		210,831		—		2,351,224
Adjusted EBITDA(2)		105,166		73,513		—		178,679
Depreciation and amortization		112,787		25,850		—		138,637
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		7,598		471		—		8,069
Additions to property and equipment and intangible assets		124,894		12,705		—		137,599

(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 Management’s Discussion and Analysis of Financial Condition and Results for additional details.

The following is a reconciliation of net loss to Adjusted EBITDA for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Net loss	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Interest expense		72,658		52,533		137,878		100,652
Income tax expense		2,338		11,967		3,831		15,464
Depreciation and amortization		69,029		68,564		134,924		138,637
LIFO charge		7,500		10,121		15,000		10,121
Facility exit and impairment charges		310,761		45,845		330,762		112,416
Goodwill and intangible asset impairment charges		295,490		252,200		446,990		252,200
Gain on debt modifications and retirements, net		—		(41,312)		—		(41,312)
Stock-based compensation expense		1,068		4,735		2,149		8,069
Restructuring-related costs		85,709		12,805		163,839		35,451
Inventory write-downs related to store closings		8,414		1,094		10,471		9,049
Litigation and other contractual settlements		205,041		20,093		216,091		38,364
Gain on sale of assets, net		(24,087)		(29,001)		(32,280)		(58,197)
Other		2,818		195		5,517		(754)
Adjusted EBITDA	$	16,709	$	78,549	$	108,424	$	178,679

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Commitments, Contingencies and Guarantees

6 Months Ended

Sep. 02, 2023

Commitments, Contingencies and Guarantees

Commitments, Contingencies and Guarantees

14. 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. Subject to applicable bankruptcy law, substantial damages are sought from the Company in virtually all of these matters, even if a specific amount is not specified. 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.

Unless specifically noted otherwise, 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 at the current stage of such litigation and legal proceedings.

The Company’s accruals for certain outstanding legal matters or regulatory proceedings are considered material, individually and in the aggregate, to the Company’s consolidated financial position. This includes most significantly the accruals taken for the Humana and Schmuckley matters described below, as well as other matters. 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 were 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 may exceed reimbursement pursuant to any applicable insurance. Such proceedings may also require significant attention of management.

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; (ix) changes in priorities following any change in political administration at the state or federal level; and/or (x) the impact, results and settlements of similar claims made against competitors and other industry participants. Additionally, the Company may determine that a settlement is in its best interest, even if it believes that it has meritorious defenses and has not previously accrued for the matter.

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 the classification of certain positions as exempt from overtime requirements, failure to pay premiums for missed meals and rest periods, failure to provide accurate wage statements, and failure to reimburse business expenses (collectively, the “California Cases”).

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 August 2022, the Company agreed to settle a putative class action regarding reimbursement for cell phone and mileage expenses for shift supervisors and managers/assistant managers for $1.29 million, which remains subject to court approval. A previously-settled putative wage and hour class action brought on behalf of drivers and other ice cream plant associates for $0.8 million has been paid and resolved.

The Company has also reached an agreement in principle to resolve 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”). In December 2022, the parties reached an agreement in principle to resolve the individual plaintiff’s claims as well as those of the class, resulting in the federal court issuing an order of judgment and a new matter filed in New York state court, which the parties have agreed to resolve for $6.45 million. The parties’ settlement agreement has been approved by the court and includes a provision allowing the Company to terminate the agreement if certain participation thresholds are not met.

The Company has aggressively defended itself and challenged the merits of these employment 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.

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 voluntarily dismissed. 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. The Company is defending itself in a second putative class action lawsuit against similar pricing allegations filed in the United States District Court for the Eastern District of Pennsylvania, which is stayed pending the Company’s appeal to the United States Court of Appeals for the Third Circuit regarding the denial of a motion to compel arbitration as to one of the named plaintiffs.

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 continues to believe 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 (the “court”) for vacatur of the Arbitration Award, as is its right under the Federal Arbitration Act (“FAA”).

Argument on Humana’s petition to confirm the Arbitration Award and the Company’s motion for vacatur of the Arbitration Award was held May 10, 2023. On August 4, 2023, the court issued a decision denying the Company’s motion for vacatur and granting Humana’s petition to confirm the Arbitration Award. At this time, the Company has

accrued $136.8 million in regards to the Arbitration Award damages plus post-judgment interest. The Company entered into an agreement with Humana that tolled the enforcement of the judgment until October 15, 2023.

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 to several Pharmacy Benefit Managers, all but one of which are not owned by plaintiffs, with which Rite Aid and the insurers had independent contracts. On May 22, 2023, the Company won a defense verdict in the jury trial of 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. The court denied the Centene entities’ request for post-trial relief and the deadline has passed for Centene to appeal. 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’s Department of Justice’s Bureau of Medical Fraud and Elder Abuse filed a complaint in intervention. The Company filed a motion to dismiss Relator’s and the State of California’s respective complaints in January 2018, and 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. The parties have resolved the matter, except fees for relator’s counsel, for $60.0 million.

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, without limitation, 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 and the Company is exploring possible avenues for resolving some or all of its portfolio of opioids-related litigation, although no assurance can be given that the litigation will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

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.

As previously disclosed, on December 13, 2022, a qui tam complaint filed by three former Rite Aid pharmacy personnel (Andrew White, Mark Rosenberg, and Ann Wegelin) (collectively, “qui tam Relators”) was unsealed by the federal District Court for the Northern District of Ohio in an order that also directed the United States Department of Justice to file within 90 days a complaint intervening or partially intervening in the Second Amended Complaint (the “Complaint”). On February 23, 2023, the following states, which were listed in the Complaint, declined to intervene: Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington and the District of Columbia. California subsequently did not intervene. On March 13, 2023, the United States Department of Justice filed its complaint in the federal District Court for the Northern District of Ohio against Rite Aid (“DOJ’s Complaint”) alleging violations of the federal False Claims Act and Controlled Substances Act related to the dispensing of controlled substances, primarily opioids. DOJ’s Complaint seeks damages under the False Claims Act, civil penalties under the Controlled Substances Act, damages in connection with alleged payment by mistake (on behalf of Federal Healthcare Programs), and damages in connection with alleged unjust enrichment. The Company has filed a motion to dismiss DOJ’s Complaint to which DOJ has responded. The qui tam relators voluntarily dismissed their complaint. The parties are engaging in discussions to explore the possibility of resolving the matter, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

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.

Following the Company’s response to a 2020 CID from the Federal Trade Commission (“FTC”) with respect to consumer protection laws, the Company is seeking to negotiate a resolution with the FTC. The allegations relate to certain business practices that the Company has not engaged in for nearly three years, and the Company currently believes that any resolution of that CID would not likely require a monetary payment. During the course of the Company’s discussions with the FTC Staff in connection with its response to that CID, the FTC Staff also requested certain information from the Company related to compliance with the Company’s 2010 FTC Consent Order. The Company cooperated with the request, however, the FTC Staff informed the Company that absent an agreed resolution, it would recommend that the FTC file a complaint against the Company for violation of the Consent Order, including a request for a monetary payment and other relief. The FTC has now combined the two matters, requested additional information related to privacy and data security matters, and is seeking a single resolution of all open matters, such that discussions related to one matter may affect the ability to resolve another. Discussions continue about a potential agreed resolution, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

The Company has received CIDs from the Department of Justice related to the Medicare Part D plan sponsored by a subsidiary of the Company. 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, where the parties have engaged in a mediation process which remains ongoing. The Company is defending four putative class actions in federal courts regarding alleged privacy breaches, three of which involve technologies alleged to track consumer information and one of which involves a data security incident.

The Rite Aid Employee Benefit Administration Committee (“EBAC”) received a letter from the Department of Labor alleging EBAC had violated ERISA in its management of the Rite Aid Master Retirement Savings Trust as to a specific investment. Discussions are underway about a potential agreed resolution, although no assurance can be given that the matter will be resolved to the parties’ mutual satisfaction, or that a resolution will not include a monetary payment, and that the payment will not be material.

The Company is defending a putative shareholder class action now captioned In re Rite Aid Securities Litigation, filed in the United States District Court for the Eastern District of Pennsylvania (formerly Page). The matter names Rite Aid Corporation and certain executives individually as defendants and raises claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 related to alleged misstatements and omissions concerning the growth of Elixir’s PBM services businesses. The Company has filed a motion to dismiss and intends to aggressively defend against the allegations and challenge their merit. The Company is also defending a putative shareholder class action currently captioned Holland v. Rite Aid Corporation et al., filed in the United States District Court for the Northern District of

Ohio. The matter names Rite Aid Corporation and certain former and current executives individually as defendants and raises claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 related to the DOJ’s Complaint and alleged misstatements and omissions concerning the Company’s risk for regulatory action and litigation related to controlled substances practices.  This matter is also in early stages, but the Company intends to aggressively defend against the allegations and challenge their merit.

Effect of Automatic Stay

Subject to certain exceptions under the Bankruptcy Code, the filing of the Company Parties’ Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Company Parties or their property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of the Company Parties’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above, there are certain exceptions to the automatic stay.

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Supplementary Cash Flow Data

6 Months Ended

Sep. 02, 2023

Supplementary Cash Flow Data

Supplementary Cash Flow Data

15. Supplementary Cash Flow Data

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for interest	$	128,544	$	94,557
Cash payments (refunds) for income taxes, net	$	3,541	$	(10,359)
Equipment financed under capital leases	$	832	$	1,235
Gross borrowings from revolver	$	2,119,000	$	1,838,000
Gross repayments to revolver	$	1,282,000	$	1,161,000

Significant components of cash provided by Other Liabilities of $205,151 for the twenty-six week period ended September 2, 2023 include cash provided from an increase in accruals for litigation matters and restructuring-related expenses.

Cash used in Other Assets of $88,771 for the twenty-six week period ended September 2, 2023 is comprised primarily of prepaid rent and property insurance.

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Subsequent Events

6 Months Ended

Sep. 02, 2023

Subsequent Events.

Subsequent Events

16. Subsequent Events

Commitments, Contingencies and Guarantees

Certain litigation matters occurred during the twenty-six week period ended September 2, 2023 or prior, but had subsequent updates through the issuance of this report. See further discussion in Note 14.

Restructuring Term Sheet

On October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial and operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet.

Under the Restructuring Term Sheet, the Consenting Noteholders have agreed, subject to certain terms and conditions, to support the Restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the Plan to be filed in the Chapter 11 Cases. Capitalized terms used but not otherwise defined in this “Restructuring Term Sheet” section of this Current Report on Form 10-Q have the meanings given to them in the Restructuring Term Sheet and the Plan, as applicable. Elixir Insurance (“EI”) was excluded from the Chapter 11 filing.

The Plan will be based on the restructuring transactions set forth in the Restructuring Term Sheet (such transactions described in, and in accordance with the Restructuring Agreement and the Term Sheet, the “Restructuring Transactions”), which, among other things, contemplates:

● each holder of a claim on account of the DIP ABL Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit ABL Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP ABL Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit ABL Facility;

● each holder of a claim on account of the DIP FILO Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit FILO Term Loan Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP FILO Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit FILO Term Loan Facility;

● each holder of a DIP Term Loan Claim shall receive, in full and final satisfaction of its claim, payment in full, in Cash;

● to the extent any allowed ABL Facility Claim remains outstanding on the Effective Date, each holder of an ABL Facility claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, or reinstatement of the Allowed ABL Facility Claim under the Exit ABL Facility;

● to the extent any allowed FILO Term Loan Facility Claim remains outstanding on the Effective Date, each holder of a FILO Term Loan Facility Claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, of all ABL Facility Claims, or reinstatement of the Allowed FILO Term Loan Facility Claims under the FILO Term Loan Facility;

● each holder of an allowed Senior Secured Notes Claim, in full satisfaction of its claim, shall receive (a) in the event of a Plan Restructuring, [(i) 100% of the common equity (the “New Common Stock”) of New Rite Aid, subject to dilution by the Management Incentive Plan, and any equity-linked securities issued to the holders of allowed General Unsecured Claims, plus (ii) its pro rata share of the takeback facility, if applicable; or (b) in the event the Restructuring Transaction is not a Plan Restructuring, [its pro rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery]];

● each holder of an allowed General Unsecured Claim, in full satisfaction of its claim, subject to (A) the DIP Term Loan Claims, the ABL Facility Claims, and the FILO Term Loan Facility Claims being

satisfied in full, in Cash, or such other treatment acceptable to the DIP Lenders and / or the ABL Lenders and the FILO Lenders, as applicable, in their sole discretion, and (B) the satisfaction of any Allowed Adequate Protection Claims, shall receive [[__]% of an equity-linked instrument in New Rite Aid (form and terms to be determined), calculated as of the Effective Date and equal to the product of a formula calculated as the (midpoint value of owned real estate not encumbered prior to the Petition Date, less the costs and expenses to be paid by, or estimated to be paid by, the Debtors’ Estates to administer the Chapter 11 Cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of the equitized Senior Secured Notes Claims)];

● each Intercompany Claim shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Claim, or such other treatment as is reasonably determined by the Debtors;

● each Intercompany Interest shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Interest, or such other treatment as is reasonably determined by the Debtors;

● all Existing Equity Interests in Rite Aid will be cancelled and extinguished, and Holders of Existing Equity Interests in Rite Aid shall receive no recovery on account of such Interests; and

● Section 510(b) Claims shall be discharged, cancelled, released, and extinguished without any distribution to Holders of such Claims.

The Restructuring Term Sheet contains milestones for the progress of the Chapter 11 Cases (the “Milestones”), which include the dates by which the Debtors are required to, among other things, obtain certain orders of the Court and consummate the Debtors’ emergence from bankruptcy. Among other dates set forth in the Restructuring Term sheet, the agreement contemplates that the Court shall have entered an order confirming the Plan no later than [__] months after the Petition Date.

Although the Company intends to pursue the Restructuring as contemplated by the Restructuring Term Sheet, there can be no assurance that the Company will be successful in entering into a Restructuring Support Agreement on the terms set forth in the Restructuring Term Sheet and the terms of the Restructuring Support Agreement and Plan may be subject to material change. In addition, the transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated on the expected terms, if at all.

The Company has significant deferred tax assets, including NOLs. The impact of the Restructuring on the Company’s NOLs will depend on whether the Restructuring is structured as (i) a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company, (ii) a recapitalization of the Company, or (iii) some other alternative structure. If structured as a taxable disposition, the Company anticipates that NOLs of the Company (if any) remaining after the Restructuring will not be available to the Company after consummating the Restructuring. If structured as a recapitalization, the Company anticipates that it will experience an ownership change, and thus NOLs of the Company (if any) remaining after the Restructuring will be subject to limitation, such that the Company may not derive all of the benefits of any such remaining NOLs after consummating the Restructuring. However, the application

of the rules under IRC Section 382(l)(5) could mitigate such limitation and protect the continued existence of the Company’s NOLs. There is uncertainty as to whether the Company would qualify for the benefits of IRC 382(l)(5). As stated previously in the income tax footnote, the Company will continue to monitor all available evidence related to deferred tax assets for which future realization is uncertain.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated.

Chapter 11 Restructuring

Voluntary Petitions for Reorganization

To implement the Plan, on the Petition Date, the Company Parties filed the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court. Each Company Party will continue to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption In re Rite Aid Corporation, et al., Case No. 23-18993 (MBK). Documents filed on the docket of and other information related to the Chapter 11 Cases are available at https://restructuring.ra.kroll.com/RiteAid. Documents and other information available on such website are not part of this document and shall not be deemed incorporated by reference in this document. To ensure the Company Parties’ ability to continue operating in the ordinary course of business and minimize the effect of the Restructuring on the Company Parties’ customers and employees, the Company Parties filed with the Bankruptcy Court motions seeking a variety of “first-day” relief, including authority to pay employee wages and benefits, and pay vendors and suppliers for all goods and services, each of which was approved on an interim basis by the Bankruptcy Court. In addition, the Company filed with the Bankruptcy Court (a) a motion seeking approval of the DIP Financing in the form of the DIP Credit Agreements (as defined and described below), and (b) a motion seeking approval of certain procedures relating to the marketing and auction (if necessary) of all or some of the Company’s assets. At the Debtors’ “first day hearing” on October 16, 2023, the Bankruptcy Court approved all first day relief from the bench, pending entry of the revised forms of order. The Company filed the revised forms of order to the Bankruptcy Court immediately following the first day hearing, and the Company expects that the Bankruptcy Court will enter the orders approving the first day relief in the immediate term.

Effect of Chapter 11 Cases & Automatic Stay on Pre-Petition Debt Obligations

The commencement of the Chapter 11 Cases above constituted an event of default that accelerated substantially all of the Company’s obligations under the documents governing the Existing Credit Facilities, the Guaranteed Notes, and the Unguaranteed Notes, among others. Indeed, the Company’s debt instruments and agreements described within this Quarterly Report provide that, as a result of the commencement of the Chapter 11 Cases, the principal amount, together with accrued and unpaid fees and interest thereon, and in the case of the indebtedness outstanding under the senior notes, premium, if any, thereon, shall be immediately due and payable. Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors’ rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

Additionally, in connection with the Chapter 11 Cases, the Company has incurred, and expects to continue to incur, significant professional fees and other costs in connection with the Chapter 11 Cases. There can be no assurance that the Company’s current liquidity is sufficient to allow us to satisfy our obligations related to the Chapter 11 Cases or to pursue confirmation of the Plan.

McKesson Corporation

On October 14, 2023, McKesson Corporation (“McKesson”) sent notice to the Company purporting to terminate the Eleventh Amendment to Supply Agreement by and between Rite Aid Corporation and McKesson Corporation, dated as of February 28, 2019 (the “McKesson Corporation Supply Agreement”) based on the occurrence of a termination event. The Company and McKesson have negotiated an agreement in principle to ensure no disruption to the Company’s business and operations, which agreement in principle includes a reservation of rights for both parties as to the purported termination. To the extent such agreement in principle is not executed, is not approved by the Bankruptcy Court, or is approved but subsequently terminates, the Company would vigorously contest such purported termination as null, void, and without effect. Subsequently, to the extent (a) such termination is not rescinded or (b) the Company does not prevail as to the invalidity of the termination event, the termination of the McKesson Corporation Supply Agreement may result in a material adverse impact on the Company’s business and operations.

Elixir Stalking Horse APA

On October 15, 2023, Hunter Lane, LLC, a subsidiary of the Company, and certain of Hunter Lane, LLC’s subsidiaries (collectively, the “Sellers”) entered into an asset purchase agreement (the “Elixir Stalking Horse APA”) with a buyer, MedImpact Healthcare Systems, Inc. (the “Buyer”), pursuant to which the Buyer has agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Sellers, which, collectively constitute the “Elixir Assets.” The Sellers are Debtors in the Chapter 11 Cases.

The acquisition of the Elixir Assets by the Buyer pursuant to the Elixir Stalking Horse APA is subject to approval of the Bankruptcy Court and one or more auctions, if necessary, to solicit higher or otherwise better bids. On October 15, 2023, the Debtors filed a motion (the “Bidding Procedures Motion”) seeking approval of, among other things, certain marketing, auction, and bidding procedures (“Bidding Procedures”), pursuant to which the Debtors will solicit and select the highest or otherwise best offer(s) for the sale or sales of the Elixir Assets and the Debtors’ retail asset portfolio. The Bidding Procedures Motion additionally seeks Bankruptcy Court approval of the Elixir Stalking Horse APA and designation of the Buyer as the “stalking horse” bidder for the Elixir Assets. The Debtors anticipate that the Bankruptcy Court will enter an order approving the relief requested in the Bidding Procedures Motion after a hearing scheduled for October 16. 2023.

In accordance with the Bidding Procedures, if the Debtors receive any higher or otherwise better bids by November 16, 2023, the Debtors expect to conduct an auction for the Elixir Assets by November 20, 2023. As the stalking horse bidder, the Buyer’s offer to purchase the Elixir Assets, as set forth in the Elixir Stalking Horse APA, serves as the minimum or bid floor on which the Debtors, their creditors, other stakeholders, and other bidders may rely. Other interested bidders will be permitted to participate in the auction for the Elixir Assets, if, in accordance with the Bidding Procedures, such interested bidders submit qualifying offers that are higher or otherwise better than the stalking horse bid.

Under the terms of the Elixir Stalking Horse APA, the Buyer has agreed, subject to Bankruptcy Court approval and absent any higher or otherwise better bid, to acquire the Elixir Assets from the Sellers for $575 million (the “Purchase Price”), subject to certain adjustments in accordance with the terms and conditions of the Elixir Stalking Horse APA, plus the assumption of specified liabilities related to the Elixir Assets. If the Sellers receive a better or otherwise higher bid and the Bankruptcy Court approves the Sellers’ consummation of an alternative sale of the Elixir Assets to any purchaser other than the Buyer, the Sellers will pay the Buyer a break-up fee and reimbursement of certain expenses associated with the negotiation, drafting, and execution of the Elixir Stalking Horse APA, not to exceed 3.5% of the Purchase Price in the aggregate, subject to approval by the Bankruptcy Court.

Adoption of Accounting Standards Codification ("ASC") 852 - Reorganizations

For periods occurring after the Petition Date, the Company will adopt Financial Accounting Standards Board ASC Topic 852 - Reorganizations, which specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. These requirements include distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business.

The Company is currently assessing whether or not it qualifies for fresh start accounting upon emergence from Chapter 11. If the Company were to meet the requirements to adopt the fresh start accounting rules, its assets and liabilities would be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on its unaudited condensed consolidated balance sheets.

Shareholder Matters

On September 28, 2023, the Company received a written notification (the “Notice”) from the NYSE stating that the Company is no longer in compliance with NYSE continued listing standards set forth in Section 802.01B (the “Minimum Market Capitalization Standard”) and Section 802.01C (the “Minimum Stock Price Standard”) of the NYSE’s Listed Company Manual due to the fact that (i) the Company’s average total market capitalization over a consecutive 30 trading-day period was less than $50,000 and, at the same time, its stockholders’ equity was less than $50,000; and (ii) the average closing price of the Company’s common stock was less than $1.00 per share over a consecutive 30 trading-day period.

In accordance with the NYSE’s rules, on October 12, 2023, the Company provided the NYSE with notice of its receipt of the notification and of its current intention to pursue measures to cure the deficiencies. The Company has six months from receipt of the notice to regain compliance with the NYSE’s Minimum Stock Price Standard, or until the Company’s next annual meeting of stockholders if stockholder approval is required, and eighteen months from receipt of the notice to regain compliance with the NYSE’s Minimum Market Capitalization Standard. The Company has forty-five days from receipt of the Notice to submit a business plan that demonstrates compliance with the Minimum Market Capitalization Standard within such eighteen months cure period. Upon receipt of such plan, the NYSE would have up to forty-five days to review and determine whether the Company has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the cure period. The NYSE may either accept the plan, at which time the Company would be subject to ongoing quarterly monitoring for compliance with the plan, or the NYSE may not accept the plan and the Company would be subject to suspension and delisting proceedings (earlier than the cure periods noted above).

On October 16, 2023, the NYSE announced that it had determined to commence proceedings to delist the Company’s common stock from the NYSE. Trading in the Company’s common stock was immediately suspended. The NYSE reached its decision that the Company’s common stock is no longer suitable for listing pursuant to the NYSE Listed Company Manual Section 802.01D after the Company’s October 16, 2023 disclosure that the Company commenced the Chapter 11 Cases. The Company expects that such delisted securities may be subject to trading in the OTC market.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Sep. 02, 2023

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 and twenty-six week periods ended September 2, 2023 are not necessarily indicative of the results to be expected for the full year, particularly as a result of the filing of the Chapter 11 Cases. 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 2023 10-K.

Going Concern

Going Concern

As of the date the accompanying unaudited condensed consolidated financial statements were issued (the “issuance date”), management evaluated the significance of the following adverse conditions in accordance with ASC 205-40, Going Concern.

As disclosed in Note 16, Subsequent Events, on October 15, 2023, the Company Parties reached an agreement in principle with the Consenting Noteholders on the terms of a financial operational restructuring, the material terms of which are set forth in the Restructuring Term Sheet. The Company filed a voluntary petition for reorganization under Chapter 11 (the “Chapter 11 filing” or “bankruptcy filing”) of the United States Bankruptcy Code in the District of New Jersey and expects to continue to manage its operations as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as a debtor-in-possession, the Company is authorized to continue to operate as an ongoing business but not to engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Elixir Insurance (“EI”) was excluded from the Chapter 11 filing due to regulatory factors.

The bankruptcy filing represents an adverse event that creates substantial uncertainty regarding the Company’s ability to recover its assets and satisfy its liabilities in the ordinary course of business. In this regard, while management believes the Company will be able to emerge from bankruptcy and continue to operate as a viable going concern, management can provide no assurance that: (a) the Company’s Plan may never be confirmed or become effective, (b) the Debtors’ voting creditors may reject the Plan embodying the restructuring transactions contemplated by the Restructuring Term Sheet, (c) the Bankruptcy Court may grant or deny motions in a manner that is adverse to the Company and its subsidiaries, and (d) the Chapter 11 Cases may be converted into cases under chapter 7 of the Bankruptcy Code.

The transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, management can provide no assurance that the transactions described therein will be consummated.

While management believes the reorganization through the Chapter 11 proceedings will appropriately position the Company upon its re-emergence from bankruptcy, the commencement of these proceedings constituted an event of default (and an acceleration event) under certain of the Company’s debt agreements, for which enforcement of any remedies by the lenders have been automatically stayed as a result of the Chapter 11 proceedings. However, management can provide no assurance that the lenders will ultimately be able to exercise their remedies, which may include, among others, a cessation of the Company’s operations and liquidation of its assets. As a result of the foregoing acceleration event, all of the Company’s outstanding indebtedness, including indebtedness subject to cross-default provisions, has been classified as current debt in the accompanying unaudited condensed consolidated balance sheet of the Company as of September 2, 2023. See Note 10. Indebtedness and Credit Agreement.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon, among other things, its ability to, subject to the approval by the Bankruptcy Court, implement a comprehensive restructuring, successfully emerge from the Chapter 11 and generate sufficient liquidity following the Restructuring to meet its obligations and operating needs as they become due. The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue to operate as a going concern, which contemplates that the Company will be able to realize assets and settle liabilities and commitments in the normal course of business for twelve months following the issuance date. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Revenue Recognition

Revenue Recognition

The following table disaggregates the Company’s revenue by major source in each segment for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
In thousands	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Retail Pharmacy Segment:
Pharmacy sales	$	3,319,057	$	2,971,236	$	6,616,031	$	6,024,684
Front-end sales		1,124,017		1,231,590		2,291,363		2,492,796
Other revenue		27,853		28,965		55,862		59,667
Total Retail Pharmacy Segment		4,470,927		4,231,791		8,963,256		8,577,147
Pharmacy Services Segment		1,209,858		1,727,241		2,406,012		3,453,098
Intersegment elimination		(34,704)		(57,963)		(70,025)		(114,593)
Total revenue	$	5,646,081	$	5,901,069	$	11,299,243	$	11,915,652

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 year 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 six month period such that those prior members were eligible to continue to receive that discount on purchases made through the subsequent six 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 six 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 September 2, 2023, the Company recognized additional contract deferrals of $707 as a reduction of revenues. The Retail Pharmacy Segment had accrued contract liabilities of $2,560 and $2,030 as of September 2, 2023 and March 4, 2023, respectively.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another rate affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of Interbank Offered Rates (“IBORs”) and, particularly, the risk of cessation of LIBOR, regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, which adds implementation guidance to the above ASU to clarify certain optional expedients and exceptions in Topic 848. The Company adopted ASU 2020-04 effective December 1, 2022 and the adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

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Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Sep. 02, 2023

Basis of Presentation and Significant Accounting Policies

Schedule of revenues

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
In thousands	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Retail Pharmacy Segment:
Pharmacy sales	$	3,319,057	$	2,971,236	$	6,616,031	$	6,024,684
Front-end sales		1,124,017		1,231,590		2,291,363		2,492,796
Other revenue		27,853		28,965		55,862		59,667
Total Retail Pharmacy Segment		4,470,927		4,231,791		8,963,256		8,577,147
Pharmacy Services Segment		1,209,858		1,727,241		2,406,012		3,453,098
Intersegment elimination		(34,704)		(57,963)		(70,025)		(114,593)
Total revenue	$	5,646,081	$	5,901,069	$	11,299,243	$	11,915,652

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Restructuring (Tables)

6 Months Ended

Sep. 02, 2023

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)	$	926	$	—	$	926
Professional and other fees relating to restructuring activities(b)		82,484		2,299		84,783
Total restructuring-related costs	$	83,410	$	2,299	$	85,709

	Retail Pharmacy		Pharmacy
	Segment		Services Segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts(a)	$	913	$	—	$	913
Professional and other fees relating to restructuring activities(c)		7,529		4,363		11,892
Total restructuring-related costs	$	8,442	$	4,363	$	12,805

	Retail Pharmacy		Pharmacy
	Segment		Services Segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts(a)	$	1,366	$	—	$	1,366
Professional and other fees relating to restructuring activities(b)		158,513		3,960		162,473
Total restructuring-related costs	$	159,879	$	3,960	$	163,839

	Retail Pharmacy		Pharmacy
	Segment		Services Segment		Total
Restructuring-related costs
Severance and related costs associated with ongoing reorganization efforts(a)	$	12,201	$	616	$	12,817
Professional and other fees relating to restructuring activities(c)		13,612		9,022		22,634
Total restructuring-related costs	$	25,813	$	9,638	$	35,451

Schedule of restructuring-related liabilities

	Severance and related		Professional and
	costs (a)		other fees (b)		Total
Balance as of March 4, 2023	$	7,658	$	42,154	$	49,812
Additions charged to expense		440		77,690		78,130
Cash payments		(2,738)		(33,962)		(36,700)
Balance as of June 3, 2023	$	5,360	$	85,882	$	91,242
Additions charged to expense		926		84,783		85,709
Cash payments		(2,052)		(106,782)		(108,834)
Balance as of September 2, 2023	$	4,234	$	63,883	$	68,117

(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, including its performance acceleration programs as well as costs incurred in connection with preparation for the Chapter 11 Cases.

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

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Loss Per Share (Tables)

6 Months Ended

Sep. 02, 2023

Loss Per Share

Schedule of calculation of basic and diluted loss per share

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Basic and diluted loss per share:
Numerator:
Net loss attributable to common stockholders — basic and diluted	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Denominator:
Basic and diluted weighted average shares		55,306		54,548		55,242		54,453
Basic and diluted loss per share	$	(18.44)	$	(6.07)	$	(24.02)	$	(8.11)

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Facility Exit and Impairment Charges (Tables)

6 Months Ended

Sep. 02, 2023

Facility Exit and Impairment Charges

Schedule of amounts relating to facility exit and impairment charges

	Thirteen Week Period				Twenty-Six Week Period
	Ended				Ended
	September 2,			August 27,	September 2,		August 27,
	2023		2022		2023		2022
Impairment charges	$	290,694	$	34,738	$	302,432	$	69,774
Facility exit charges		20,067		11,107		28,330		42,642
	$	310,761	$	45,845	$	330,762	$	112,416

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

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		September 2, 2023
Long-lived assets held for use	$	—	$	2,653	$	313,218	$	315,871	$	(301,417)
Long-lived assets held for sale	$	—	$	1,803	$	—	$	1,803	$	(1,015)
Total	$	—	$	4,456	$	313,218	$	317,674	$	(302,432)

							Fair Values		Total Charges
							as of		Twenty-Six Week Period Ended
	Level 1		Level 2		Level 3		Impairment Date		August 27, 2022
Long-lived assets held for use	$	—	$	11,645	$	—	$	11,645	$	(64,942)
Long-lived assets held for sale	$	—	$	5,115	$	—	$	5,115	$	(4,832)
Total	$	—	$	16,760	$	—	$	16,760	$	(69,774)

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

	Thirteen Week Period				Twenty-Six Week Period
	Ended				Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Balance—beginning of period	$	49,773	$	43,402	$	49,772	$	18,688
Provision for present value of executory costs for leases exited		14,846		2,816		20,444		29,315
Changes in assumptions and other adjustments		(762)		(436)		(2,852)		(627)
Interest accretion		74		237		608		335
Cash payments		(3,950)		(4,073)		(7,991)		(5,765)
Balance—end of period	$	59,981	$	41,946	$	59,981	$	41,946

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Sep. 02, 2023

Goodwill and Other Intangible Assets

Summary of the changes in the carrying amount of goodwill

	Retail		Pharmacy
	Pharmacy		Services		Total
Balance, March 4, 2023		43,492		464,444		507,936
Goodwill impairment		—		(417,500)		(417,500)
Balance, September 2, 2023	$	43,492	$	46,944	$	90,436

Schedule of indefinite-lived intangible assets

	September 2, 2023								March 4, 2023
							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)	$	203,632	$	(184,551)	$	19,081	3	years	$	201,919	$	(182,957)	$	18,962	3	years
Prescription files		1,030,619		(935,466)		95,153	5	years		1,029,665		(928,478)		101,187	5	years
Customer relationships(a)		386,000		(313,062)		72,938	8	years		388,000		(306,139)		81,861	9	years
CMS license		57,500		(57,500)		—	0	years		57,500		(23,798)		33,702	4	years
Total finite	$	1,677,751	$	(1,490,579)		187,172			$	1,677,084	$	(1,441,372)	$	235,712
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,692,151	$	(1,490,579)	$	201,572			$	1,691,484	$	(1,441,372)	$	250,112

(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

	September 2, 2023								March 4, 2023
							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)	$	203,632	$	(184,551)	$	19,081	3	years	$	201,919	$	(182,957)	$	18,962	3	years
Prescription files		1,030,619		(935,466)		95,153	5	years		1,029,665		(928,478)		101,187	5	years
Customer relationships(a)		386,000		(313,062)		72,938	8	years		388,000		(306,139)		81,861	9	years
CMS license		57,500		(57,500)		—	0	years		57,500		(23,798)		33,702	4	years
Total finite	$	1,677,751	$	(1,490,579)		187,172			$	1,677,084	$	(1,441,372)	$	235,712
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,692,151	$	(1,490,579)	$	201,572			$	1,691,484	$	(1,441,372)	$	250,112

(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.

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Indebtedness and Credit Agreement (Tables)

6 Months Ended

Sep. 02, 2023

Indebtedness and Credit Agreement

Summary of indebtedness and lease financing obligations

	September 2,		March 4,
	2023		2023
Secured Debt:
Senior secured revolving credit facility due August 2026 ($2,037,000 and $1,200,000 face value less unamortized debt issuance costs of $13,467 and $16,117)		2,023,533		1,183,883
FILO Term Loan due August 2026 ($400,000 face value less unamortized debt issuance costs of $1,782 and $2,090)		398,218		397,910
		2,421,751		1,581,793
Second Lien Secured Debt:
7.500% senior secured notes due July 2025 ($320,002 face value less unamortized debt issuance costs of $1,986 and $2,529)		318,016		317,473
8.000% senior secured notes due November 2026 ($849,918 face value less unamortized debt issuance costs of $9,719 and $11,259)		840,199		838,659
		1,158,215		1,156,132
Unguaranteed Unsecured Debt:
7.70% notes due February 2027 ($185,691 face value less unamortized debt issuance costs of $347 and $398)		185,344		185,293
6.875% fixed-rate senior notes due December 2028 ($2,046 face value less unamortized debt issuance costs of $6 and $6)		2,040		2,040
		187,384		187,333
Lease financing obligations		17,724		18,912
Total debt		3,785,074		2,944,170
Current maturities of long-term debt and lease financing obligations		(3,773,356)		(6,332)
Long-term debt and lease financing obligations, less current maturities	$	11,718	$	2,937,838

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Leases (Tables)

6 Months Ended

Sep. 02, 2023

Leases

Schedule of components of net lease cost

	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022		September 2, 2023		August 27, 2022
Operating lease cost	$	148,896	$	157,956	$	301,568	$	317,801
Financing lease cost:
Amortization of right-of-use asset		775		863		1,594		1,672
Interest on long-term finance lease liabilities		454		503		921		1,004
Total finance lease costs	$	1,229	$	1,366	$	2,515	$	2,676
Short-term lease costs		2,086		585		1,310		1,042
Variable lease costs		44,646		43,652		90,879		86,297
Less: sublease income		(3,104)		(3,393)		(5,841)		(6,616)
Net lease cost	$	193,753	$	200,166	$	390,431	$	401,200

Schedule of supplemental cash flow information related to leases

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	330,492	$	350,177
Operating cash flows paid for interest portion of finance leases		921		1,004
Financing cash flows paid for principal portion of finance leases		1,969		1,940
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		163,569		155,710
Finance leases		—		—

Schedule of supplemental balance sheet information related to leases

	September 2,			March 4,
	2023			2023
Operating leases:
Operating lease right-of-use asset	$	2,239,043		$	2,497,206
Short-term operating lease liabilities	$	422,233		$	502,403
Long-term operating lease liabilities		2,373,953			2,372,943
Total operating lease liabilities	$	2,796,186		$	2,875,346
Finance leases:
Property, plant and equipment, net	$	12,674		$	13,576
Current maturities of lease financing obligations	$	6,006		$	6,332
Lease financing obligations, less current maturities		11,718			12,580
Total finance lease liabilities	$	17,724		$	18,912
Weighted average remaining lease term
Operating leases		7.3			7.5
Finance leases		8.0			8.0
Weighted average discount rate
Operating leases		7.5	%		6.5	%
Finance leases		10.5	%		9.0	%

Schedule of minimum lease payments, financing leases

	September 2, 2023
	Finance		Operating
Fiscal year	Leases		Leases(1)		Total
2024 (remaining twenty-six weeks)	$	5,301	$	335,247	$	340,548
2025		5,048		622,993		628,041
2026		1,883		500,523		502,406
2027		1,500		472,118		473,618
2028		1,500		399,881		401,381
Thereafter		10,174		1,280,351		1,290,525
Total lease payments		25,406		3,611,113		3,636,519
Less: imputed interest		(7,682)		(814,927)		(822,609)
Total lease liabilities	$	17,724	$	2,796,186	$	2,813,910

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $23 million due in the future under noncancelable leases.

Schedule of minimum lease payments, operating leases

	September 2, 2023
	Finance		Operating
Fiscal year	Leases		Leases(1)		Total
2024 (remaining twenty-six weeks)	$	5,301	$	335,247	$	340,548
2025		5,048		622,993		628,041
2026		1,883		500,523		502,406
2027		1,500		472,118		473,618
2028		1,500		399,881		401,381
Thereafter		10,174		1,280,351		1,290,525
Total lease payments		25,406		3,611,113		3,636,519
Less: imputed interest		(7,682)		(814,927)		(822,609)
Total lease liabilities	$	17,724	$	2,796,186	$	2,813,910

(1) – Future operating lease payments have not been reduced by minimum sublease rentals of $23 million due in the future under noncancelable leases.

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Retirement Plans (Tables)

6 Months Ended

Sep. 02, 2023

Retirement Plans

Summary of net periodic pension expense for the defined benefit plans

	Defined Benefit				Defined Benefit
	Pension Plan				Pension Plan
	Thirteen Week Period Ended				Twenty-Six Week Period Ended
	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
Service cost	$	73	$	107	$	146	$	214
Interest cost		1,581		1,263		3,162		2,527
Expected return on plan assets		(1,474)		(1,402)		(2,948)		(2,804)
Net periodic pension expense (income)	$	180	$	(32)	$	360	$	(63)

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Segment Reporting (Tables)

6 Months Ended

Sep. 02, 2023

Segment Reporting

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

	Retail		Pharmacy
	Pharmacy		Services		Eliminations(1)		Consolidated
September 2, 2023:
Total Assets	$	5,530,289	$	1,605,604	$	(9,941)	$	7,125,952
Goodwill		43,492		46,944		—		90,436
March 4, 2023:
Total Assets	$	5,487,845	$	2,049,107	$	(9,590)	$	7,527,362
Goodwill		43,492		464,444		—		507,936

(1) As of September 2, 2023 and March 4, 2023, intersegment eliminations include intersegment accounts receivable of $9,941 and $9,590, 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
September 2, 2023:
Revenues	$	4,470,927	$	1,209,858	$	(34,704)	$	5,646,081
Gross Profit		978,602		116,994		—		1,095,596
Adjusted EBITDA(2)		(26,477)		43,186		—		16,709
Depreciation and amortization		56,985		12,044		—		69,029
LIFO charge		7,500		—		—		7,500
Stock-based compensation expense		773		295		—		1,068
Additions to property and equipment and intangible assets		37,894		6,689		—		44,583
August 27, 2022:
Revenues	$	4,231,791	$	1,727,241	$	(57,963)	$	5,901,069
Gross Profit		1,043,036		111,459		—		1,154,495
Adjusted EBITDA(2)		31,484		47,065		—		78,549
Depreciation and amortization		56,679		11,885		—		68,564
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		4,496		239		—		4,735
Additions to property and equipment and intangible assets		46,343		5,832		—		52,175
Twenty-Six Week Period Ended
September 2, 2023:
Revenues	$	8,963,256	$	2,406,012	$	(70,025)	$	11,299,243
Gross Profit		2,065,465		208,657		—		2,274,122
Adjusted EBITDA(2)		43,572		64,852		—		108,424
Depreciation and amortization		112,454		22,470		—		134,924
LIFO charge		15,000		—		—		15,000
Stock-based compensation expense		1,496		653		—		2,149
Additions to property and equipment and intangible assets		78,333		13,753		—		92,086
August 27, 2022:
Revenues	$	8,577,147	$	3,453,098	$	(114,593)	$	11,915,652
Gross Profit		2,140,393		210,831		—		2,351,224
Adjusted EBITDA(2)		105,166		73,513		—		178,679
Depreciation and amortization		112,787		25,850		—		138,637
LIFO charge		10,121		—		—		10,121
Stock-based compensation expense		7,598		471		—		8,069
Additions to property and equipment and intangible assets		124,894		12,705		—		137,599

(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 Management’s Discussion and Analysis of Financial Condition and Results for additional details.

Schedule of reconciliation of net loss to Adjusted EBITDA

	September 2,		August 27,		September 2,		August 27,
	2023		2022		2023		2022
	(13 weeks)		(13 weeks)		(26 weeks)		(26 weeks)
Net loss	$	(1,020,030)	$	(331,290)	$	(1,326,748)	$	(441,481)
Interest expense		72,658		52,533		137,878		100,652
Income tax expense		2,338		11,967		3,831		15,464
Depreciation and amortization		69,029		68,564		134,924		138,637
LIFO charge		7,500		10,121		15,000		10,121
Facility exit and impairment charges		310,761		45,845		330,762		112,416
Goodwill and intangible asset impairment charges		295,490		252,200		446,990		252,200
Gain on debt modifications and retirements, net		—		(41,312)		—		(41,312)
Stock-based compensation expense		1,068		4,735		2,149		8,069
Restructuring-related costs		85,709		12,805		163,839		35,451
Inventory write-downs related to store closings		8,414		1,094		10,471		9,049
Litigation and other contractual settlements		205,041		20,093		216,091		38,364
Gain on sale of assets, net		(24,087)		(29,001)		(32,280)		(58,197)
Other		2,818		195		5,517		(754)
Adjusted EBITDA	$	16,709	$	78,549	$	108,424	$	178,679

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Supplementary Cash Flow Data (Tables)

6 Months Ended

Sep. 02, 2023

Supplementary Cash Flow Data

Schedule of supplementary cash flow data

	Twenty-Six Week Period Ended
	September 2, 2023		August 27, 2022
Cash paid for interest	$	128,544	$	94,557
Cash payments (refunds) for income taxes, net	$	3,541	$	(10,359)
Equipment financed under capital leases	$	832	$	1,235
Gross borrowings from revolver	$	2,119,000	$	1,838,000
Gross repayments to revolver	$	1,282,000	$	1,161,000

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Basis of Presentation and Significant Accounting Policies - Sales (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Product Class
Revenues	$ 5,646,081	$ 5,901,069	$ 11,299,243	$ 11,915,652
Intersegment elimination
Product Class
Revenues	(34,704)	(57,963)	(70,025)	(114,593)
Retail Pharmacy Segment
Product Class
Other revenue	27,853	28,965	55,862	59,667
Revenues	4,470,927	4,231,791	8,963,256	8,577,147
Retail Pharmacy Segment | Pharmacy sales
Product Class
Revenues	3,319,057	2,971,236	6,616,031	6,024,684
Retail Pharmacy Segment | Front end sales
Product Class
Revenues	1,124,017	1,231,590	2,291,363	2,492,796
Pharmacy Services Segment
Product Class
Revenues	$ 1,209,858	$ 1,727,241	$ 2,406,012	$ 3,453,098

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Basis of Presentation and Significant Accounting Policies - FY thru Revenue (Details)		1 Months Ended
	Feb. 27, 2022 USD ($) Point	Dec. 31, 2020	Sep. 02, 2023 USD ($)	Mar. 04, 2023 USD ($)
Revenue Recognition
Accrued contract liabilities			$ 707,000
Wellness plus program
Revenue Recognition
Loyalty discount eligibility period		6 months
Rite aid rewards program | Retail Pharmacy Segment
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			$ 2,560,000	$ 2,030,000

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Restructuring (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Sep. 02, 2023	Jun. 03, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Restructuring related costs
Total restructuring-related costs	$ 85,709		$ 12,805	$ 163,839	$ 35,451
Term of profitability opportunities				3 years
Total restructuring-related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	85,709		12,805	$ 163,839	35,451
Total restructuring-related costs | Accrued salaries, wages and other current liabilities
Restructuring related costs
Balance-beginning of period	91,242	$ 49,812		49,812
Additions charged to expense	85,709	78,130
Cash payments	(108,834)	(36,700)
Balance-end of period	68,117	91,242		68,117
Severance and related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	926		913	1,366	12,817
Severance and related costs | Accrued salaries, wages and other current liabilities
Restructuring related costs
Balance-beginning of period	5,360	7,658		7,658
Additions charged to expense	926	440
Cash payments	(2,052)	(2,738)
Balance-end of period	4,234	5,360		4,234
Professional and other fees | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	84,783		11,892	162,473	22,634
Professional and other fees | Accrued salaries, wages and other current liabilities
Restructuring related costs
Balance-beginning of period	85,882	42,154		42,154
Additions charged to expense	84,783	77,690
Cash payments	(106,782)	(33,962)
Balance-end of period	63,883	$ 85,882		63,883
Retail Pharmacy Segment | Total restructuring-related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	83,410		8,442	159,879	25,813
Retail Pharmacy Segment | Severance and related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	926		913	1,366	12,201
Retail Pharmacy Segment | Professional and other fees | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	82,484		7,529	158,513	13,612
Pharmacy Services Segment | Total restructuring-related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	2,299		4,363	3,960	9,638
Pharmacy Services Segment | Severance and related costs | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs					616
Pharmacy Services Segment | Professional and other fees | Selling, general and administrative expenses
Restructuring related costs
Total restructuring-related costs	$ 2,299		$ 4,363	$ 3,960	$ 9,022

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Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Numerator:
Net loss attributable to common stockholders - basic	$ (1,020,030)	$ (331,290)	$ (1,326,748)	$ (441,481)
Net loss attributable to common stockholders - diluted	$ (1,020,030)	$ (331,290)	$ (1,326,748)	$ (441,481)
Denominator:
Basic weighted average shares	55,306	54,548	55,242	54,453
Diluted weighted average shares	55,306	54,548	55,242	54,453
Basic loss per share:
Basic loss per share	$ (18.44)	$ (6.07)	$ (24.02)	$ (8.11)
Diluted loss per share:
Diluted loss per share	$ (18.44)	$ (6.07)	$ (24.02)	$ (8.11)
Incentive Stock options
Antidilutive securities excluded from computation of income per share
Shares excluded from the computation of diluted income (loss) per share	16	539	16	539
Unvested Restricted stock
Antidilutive securities excluded from computation of income per share
Shares excluded from the computation of diluted income (loss) per share	1,074	1,811	1,074	1,811

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Facility Exit and Impairment Charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Lease termination and impairment charges
Facility exit and impairment charges	$ 310,761	$ 45,845	$ 330,762	$ 112,416
Impairment charges
Lease termination and impairment charges
Facility exit and impairment charges	290,694	34,738	302,432	69,774
Facility exit charges
Lease termination and impairment charges
Facility exit and impairment charges	$ 20,067	$ 11,107	$ 28,330	$ 42,642

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Facility Exit and Impairment Charges - Fair value (Details) - Nonrecurring basis - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets held, impairment charges			$ (301,417)	$ (64,942)
Long-lived assets held for sale, impairment charges			(1,015)	(4,832)
Total	$ (290,694)	$ (34,738)	(302,432)	(69,774)
Carrying value of long-lived assets	620,106	86,534	620,106	86,534
Level 1
Revenues from External Customers and Long-Lived Assets [Line Items]
Fair value of Long-lived assets held for use
Fair value of Long-lived assets held for sale
Total
Level 2
Revenues from External Customers and Long-Lived Assets [Line Items]
Fair value of Long-lived assets held for use	2,653	11,645	2,653	11,645
Fair value of Long-lived assets held for sale	1,803	5,115	1,803	5,115
Total	4,456	16,760	4,456	16,760
Level 3
Revenues from External Customers and Long-Lived Assets [Line Items]
Fair value of Long-lived assets held for use	313,218		313,218
Fair value of Long-lived assets held for sale
Total	313,218		313,218
Fair Value
Revenues from External Customers and Long-Lived Assets [Line Items]
Fair value of Long-lived assets held for use	315,871	11,645	315,871	11,645
Fair value of Long-lived assets held for sale	1,803	5,115	1,803	5,115
Total	$ 317,674	$ 16,760	$ 317,674	$ 16,760

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Facility Exit and Impairment Charges - Closed Store Liability rollforward (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Sep. 02, 2023	Jun. 03, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Closed store liability
Provision for present value of executory costs for leases exited	$ 85,709		$ 12,805	$ 163,839	$ 35,451
Facility Exit Charges
Closed store liability
Balance-beginning of period	49,773	$ 49,772	43,402	49,772	18,688
Provision for present value of executory costs for leases exited	14,846		2,816	20,444	29,315
Changes in assumptions and other adjustments	(762)		(436)	(2,852)	(627)
Interest accretion	74		237	608	335
Cash payments	(3,950)		(4,073)	(7,991)	(5,765)
Balance-end of period	$ 59,981	$ 49,773	$ 41,946	$ 59,981	$ 41,946

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Other Financial Instruments
Held to maturity investments	$ 4,189	$ 7,457
Level 1
Other Financial Instruments
Carrying value of total long-term indebtedness	3,767,350	2,925,258
Estimated fair value of total long-term indebtedness	$ 3,165,382	$ 2,368,328

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022	Mar. 04, 2023
Income Taxes
Income tax expense	$ 2,338	$ 11,967	$ 3,831	$ 15,464
Overall tax rate impact percent	(0.20%)	(3.80%)	(0.30%)	(3.60%)
Valuation allowance to offset the current year deferred state tax benefits (as a percent)	(25.30%)	88.40%	(25.80%)	57.00%
Adjustments to valuation allowance			$ (380,509)
Decrease in unrecognized tax benefits related to state exposures	$ 4,001		4,001
Valuation allowance against net deferred tax assets	$ 1,990,424		$ 1,990,424		$ 1,649,193

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Medicare Part D (Details) $ in Thousands					3 Months Ended							6 Months Ended
	Feb. 03, 2023 USD ($)	Oct. 13, 2022 USD ($)	Jan. 24, 2022 USD ($)	Aug. 12, 2021 USD ($)	Sep. 02, 2023 USD ($) item individual	Jun. 03, 2023 USD ($)	Mar. 04, 2023 USD ($)	Nov. 26, 2022 USD ($)	Aug. 27, 2022 USD ($)	Feb. 26, 2022 USD ($)	Aug. 28, 2021 USD ($)	Sep. 02, 2023 USD ($) item individual	Aug. 27, 2022 USD ($)	Jun. 30, 2023 USD ($)
Statutory Accounting Practices [Line Items]
Accounts receivable, net					$ 1,472,755		$ 1,149,958					$ 1,472,755
Medicare Part D
Loss (gain) on sale of assets, net					(24,087)				$ (29,001)			(32,280)	$ (58,197)
Goodwill, impairment charges					266,000	$ 151,500						417,500
Receivable Purchase Agreements
Statutory Accounting Practices [Line Items]
Accounts receivable, net					32,697		32,697					32,697
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
Loss on sale of receivable											$ 13,713
October 2022 Receivable Purchase Agreement
Statutory Accounting Practices [Line Items]
Accounts receivable, net					13,488							13,488
Medicare Part D
Amount of receivables sold under Receivable Purchase Agreement		$ 195,487
Sale price for receivables sold		180,405
Receipts from sale of receivables		$ 166,917
Loss on sale of receivable								$ 1,937
Loss (gain) on sale of assets, net								$ 15,082
January 2022 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
Loss on sale of receivable										$ 13,645
February 2023 Receivable Purchase Agreement
Statutory Accounting Practices [Line Items]
Accounts receivable, net					19,209							19,209
Medicare Part D
Amount of receivables sold under Receivable Purchase Agreement	$ 278,390
Sale price for receivables sold	261,771
Receipts from sale of receivables	$ 242,562
Loss (gain) on sale of assets, net							16,619
Most Current Receivable Purchase Agreement
Medicare Part D
Loss on sale of receivable							2,573
EI (Elixir Insurance)
Statutory Accounting Practices [Line Items]
Minimum amount of capital and surplus required by regulatory requirements														$ 7,333
Accounts receivable, net					$ 255,916		$ 45,201					$ 255,916
Medicare Part D
Number of markets | item					11							11
Number of individual members | individual					274,000							274,000

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Manufacturer Rebates Receivables (Details) - Pharmacy Services Segment - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Manufacturer Rebates Receivables
Manufacturer rebates receivables	$ 411,549	$ 357,699
Manufacturers Rebates Receivables
Manufacturer Rebates Receivables
Allowance for uncollectible accounts	$ 13,280	$ 8,680

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Sep. 02, 2023	Jun. 03, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022	Mar. 04, 2023
Goodwill, impairment charges	$ 266,000	$ 151,500		$ 417,500
Goodwill and intangible asset impairment charges	295,490		$ 252,200	446,990	$ 252,200
CMS license
Impairment of intangible assets	29,490
Pharmacy Services Segment
Accumulated impairment losses	$ 1,592,412			1,592,412		$ 1,174,912
Goodwill, impairment charges				$ 417,500

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Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Jun. 03, 2023	Sep. 02, 2023
Carrying amount of goodwill
Beginning Balance		$ 507,936	$ 507,936
Goodwill impairment	$ (266,000)	(151,500)	(417,500)
Ending Balance	90,436		90,436
Retail Pharmacy Segment
Carrying amount of goodwill
Beginning Balance		43,492	43,492
Ending Balance	43,492		43,492
Pharmacy Services Segment
Carrying amount of goodwill
Beginning Balance		$ 464,444	464,444
Goodwill impairment			(417,500)
Ending Balance	$ 46,944		$ 46,944

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Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite	$ 1,677,751	$ 1,677,084
Total Accumulated Amortization, Finite	(1,490,579)	(1,441,372)
Total Net, finite	187,172	235,712
Gross Carrying Amount, Total	1,692,151	1,691,484
Net, Total	201,572	250,112
Trademarks
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Total Accumulated Amortization, Indefinite Lived
Net Carrying Amount, Indefinite Lived	14,400	14,400
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	203,632	201,919
Total Accumulated Amortization, Finite	(184,551)	(182,957)
Total Net, finite	$ 19,081	$ 18,962
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	$ 1,030,619	$ 1,029,665
Total Accumulated Amortization, Finite	(935,466)	(928,478)
Total Net, finite	$ 95,153	$ 101,187
Remaining Weighted Average Amortization Period	5 years	5 years
Customer relationships
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite	$ 386,000	$ 388,000
Total Accumulated Amortization, Finite	(313,062)	(306,139)
Total Net, finite	$ 72,938	$ 81,861
Remaining Weighted Average Amortization Period	8 years	9 years
CMS license
Finite Lived And Indefinite Lived Intangible Assets By Major Class
Gross Carrying Amount, Finite	$ 57,500	$ 57,500
Total Accumulated Amortization, Finite	$ (57,500)	(23,798)
Total Net, finite		$ 33,702
Remaining Weighted Average Amortization Period	0 years	4 years

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Goodwill and Other Intangible Assets - Unfavorable lease intangibles and amortization expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Goodwill and Other Intangible Assets
Amortization expense for intangible assets and liabilities	$ 16,590	$ 18,420	$ 33,723	$ 39,046
Anticipated annual amortization expense for intangible assets and liabilities
2024	55,339		55,339
2025	44,505		44,505
2026	34,144		34,144
2027	27,154		27,154
2028	$ 19,674		$ 19,674

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Indebtedness and Credit Agreement - Indebtedness and lease financing obligations (Details) - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023	Jun. 13, 2022
Indebtedness and credit agreements
Lease financing obligations	$ 17,724	$ 18,912
Total debt	3,785,074	2,944,170
Current maturities of long-term debt and lease financing obligations	(3,773,356)	(6,332)
Long-term debt and lease financing obligations, less current maturities	11,718	2,937,838
Senior Secured Debt
Indebtedness and credit agreements
Long-term debt	2,421,751	1,581,793
FILO term loan due August 2026
Indebtedness and credit agreements
Long-term debt	398,218	397,910
Principal amount of debt	400,000	400,000
Unamortized debt issuance costs	1,782	2,090
Senior secured revolving credit facility due August 2026
Indebtedness and credit agreements
Long-term debt	2,023,533	1,183,883
Principal amount of debt	2,037,000	1,200,000
Unamortized debt issuance costs	13,467	16,117
Second Lien Secured Debt
Indebtedness and credit agreements
Long-term debt	1,158,215	1,156,132
7.5% senior secured notes due July 2025
Indebtedness and credit agreements
Long-term debt	$ 318,016	$ 317,473
Debt instrument, stated interest rate (as a percent)	7.50%	7.50%	7.50%
Principal amount of debt	$ 320,002	$ 320,002
Unamortized debt issuance costs	1,986	2,529
8.0% senior secured notes due November 2026
Indebtedness and credit agreements
Long-term debt	$ 840,199	$ 838,659
Debt instrument, stated interest rate (as a percent)	8.00%	8.00%	8.00%
Principal amount of debt	$ 849,918	$ 849,918
Unamortized debt issuance costs	9,719	11,259
Unguaranteed Unsecured Debt
Indebtedness and credit agreements
Long-term debt	187,384	187,333
7.7% notes due February 2027
Indebtedness and credit agreements
Long-term debt	$ 185,344	$ 185,293
Debt instrument, stated interest rate (as a percent)	7.70%	7.70%	7.70%
Principal amount of debt	$ 185,691	$ 185,691
Unamortized debt issuance costs	347	398
6.875% fixed-rate senior notes due December 2028
Indebtedness and credit agreements
Long-term debt	$ 2,040	$ 2,040
Debt instrument, stated interest rate (as a percent)	6.875%	6.875%	6.875%
Principal amount of debt	$ 2,046	$ 2,046
Unamortized debt issuance costs	$ 6	$ 6

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Indebtedness and Credit Agreement - Credit Facility (Details) - USD ($) $ in Thousands			6 Months Ended
	Dec. 01, 2022	Aug. 20, 2021	Sep. 02, 2023	Dec. 20, 2018
Rite Aid Lease Management Company
Credit facility
Ownership interest (as a percent)			100.00%
Senior secured revolving credit facility due December 2023
Credit facility
Maximum borrowing capacity				$ 2,700,000
FILO term loan due December 2023
Credit facility
Maximum borrowing capacity				450,000
FILO term loan due August 2026
Credit facility
Maximum borrowing capacity	$ 400,000	$ 350,000
FILO term loan due August 2026 | Maximum
Credit facility
Threshold availability on the third consecutive business day			$ 257,500
FILO term loan due August 2026 | LIBOR
Credit facility
Percentage points added to the reference rate		2.75%
FILO term loan due August 2026 | Citibank's base rate
Credit facility
Percentage points added to the reference rate	2.00%	1.75%
FILO term loan due August 2026 | SOFR
Credit facility
Percentage points added to the reference rate	3.00%
Senior secured revolving credit facility due August 2026
Credit facility
Maximum borrowing capacity	$ 2,850,000	$ 2,800,000
Period triggering springing maturity	91 days
Outstanding borrowings			2,437,000
Letters of credit outstanding			210,198
Additional borrowing capacity			602,802
Maximum amount of accumulated cash on hand			200,000
Amount of debt allowed to be outstanding			1,500,000
Cash sweep, 3-day minimum threshold			283,250
Cash sweep, 1-day minimum threshold			206,000
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 revolving credit facility due August 2026 | Minimum
Credit facility
Credit facility commitment fee (as a percent)	0.25%
Additional borrowing capacity			$ 375,950
Fixed charge coverage ratio			1.00
Threshold availability on thirtieth consecutive day			$ 257,500
Senior secured revolving credit facility due August 2026 | Maximum
Credit facility
Credit facility commitment fee (as a percent)	0.375%
Threshold availability on revolving credit facility to trigger fixed charge coverage requirements			$ 206,000
Senior secured revolving credit facility due August 2026 | LIBOR | Minimum
Credit facility
Percentage points added to the reference rate		1.25%
Senior secured revolving credit facility due August 2026 | LIBOR | Maximum
Credit facility
Percentage points added to the reference rate		1.75%
Senior secured revolving credit facility due August 2026 | Citibank's base rate | Minimum
Credit facility
Percentage points added to the reference rate		0.25%
Senior secured revolving credit facility due August 2026 | 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

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Indebtedness and Credit Agreement - DIP ABL Credit Agreement (Details) - DIP ABL Credit Agreement - Subsequent Events $ in Millions	Oct. 15, 2023 USD ($)
Indebtedness and credit agreements
Aggregate principal amount	$ 3,250
Revolving credit facility
Indebtedness and credit agreements
Aggregate principal amount	$ 2,850
Unused commitment fee percentage	0.50%
Revolving credit facility | SOFR
Indebtedness and credit agreements
Interest rate margin	3.25%
DIP FILO Facility
Indebtedness and credit agreements
Aggregate principal amount	$ 400
DIP FILO Facility | SOFR
Indebtedness and credit agreements
Interest rate margin	5.25%
Interest rate margin adjustment	4.75%
Upfront fee payable (as a percent)	1.00%

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Indebtedness and Credit Agreement - DIP Term Loan Credit Agreement (Details) - DIP Term Loan Credit Agreement - Subsequent Events $ in Millions	Oct. 15, 2023 USD ($)
Indebtedness and credit agreements
Aggregate principal amount	$ 200
SOFR
Indebtedness and credit agreements
Interest rate	7.50%

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Indebtedness and Credit Agreement - Elixir Stalking Horse APA (Details) - Elixir Assets - Subsequent Events $ in Millions	Oct. 15, 2023 USD ($)
Indebtedness and credit agreements
Purchase price	$ 575
Maximum break-up fee and reimbursement of expenses as a percent of purchase price	3.50%

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Indebtedness and Credit Agreement - Transactions (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	Dec. 09, 2022	Jun. 13, 2022	Mar. 04, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022	Dec. 01, 2022	Nov. 30, 2022	Nov. 03, 2022	Jun. 29, 2022	Aug. 20, 2021
Indebtedness and credit agreements
Gain (loss) on debt modifications and retirements, net		$ 41,312		$ 41,312		$ 41,312
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%		6.875%
Face amount of debt repurchased										$ 26,955
7.7% notes due February 2027
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)		7.70%	7.70%		7.70%
Face amount of debt repurchased										51,695
7.5% senior secured notes due July 2025
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)		7.50%	7.50%		7.50%
Debt instrument, subcap amount		$ 100,000
Gain (loss) on debt modifications and retirements, net	$ 38,978
Face amount of debt repurchased	$ 4,559	$ 150,000						$ 160,497	$ 200,000	$ 114,942
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 November 2026
Indebtedness and credit agreements
Debt instrument, stated interest rate (as a percent)		8.00%	8.00%		8.00%
Senior secured credit facility
Indebtedness and credit agreements
Gain (loss) on debt modifications and retirements, net			$ (148)
Liquidity							$ 100,000
FILO term loan due August 2026
Indebtedness and credit agreements
Maximum borrowing capacity							400,000				$ 350,000
Senior secured revolving credit facility due August 2026
Indebtedness and credit agreements
Maximum borrowing capacity							$ 2,850,000				$ 2,800,000

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Property, Plant and Equipment [Line Items]
Operating lease cost	$ 148,896	$ 157,956	$ 301,568	$ 317,801
Financing lease cost:
Amortization of right-of-use asset	775	863	1,594	1,672
Interest on long-term finance lease liabilities	454	503	921	1,004
Total finance lease costs	1,229	1,366	2,515	2,676
Short-term lease costs	2,086	585	1,310	1,042
Variable lease costs	44,646	43,652	90,879	86,297
Less: sublease income	(3,104)	(3,393)	(5,841)	(6,616)
Net lease cost	$ 193,753	$ 200,166	$ 390,431	$ 401,200
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	5 years		5 years
Initial terms of noncancellable finance leases	5 years		5 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	22 years		22 years
Initial terms of noncancellable finance leases	22 years		22 years
Equipment | Minimum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	3 years		3 years
Equipment | Maximum
Property, Plant and Equipment [Line Items]
Initial terms of noncancellable operating leases	10 years		10 years

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Leases - Supplemental cash flow information related to leases (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$ 330,492	$ 350,177
Operating cash flows paid for interest portion of finance leases	921	1,004
Financing cash flows paid for principal portion of finance leases	1,969	1,940
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	163,569	155,710
Finance leases

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Leases - Supplemental BS Information (Details) - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Operating leases:
Operating lease right-of-use assets	$ 2,239,043	$ 2,497,206
Short-term operating lease liabilities	422,233	502,403
Long-term operating lease liabilities	2,373,953	2,372,943
Total operating lease liabilities	2,796,186	2,875,346
Finance leases:
Property, plant and equipment, net	790,001	907,771
Current maturities of lease financing obligations	$ 6,006	$ 6,332
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	$ 11,718	$ 12,580
Total finance lease liabilities	$ 17,724	$ 18,912
Weighted average remaining lease term
Operating leases (in years)	7 years 3 months 18 days	7 years 6 months
Finance leases (in years)	8 years	8 years
Weighted average discount rate
Operating leases (as a percent)	7.50%	6.50%
Finance leases (as a percent)	10.50%	9.00%
Finance Leased Assets
Finance leases:
Property, plant and equipment, net	$ 12,674	$ 13,576

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Leases - Maturity of lease liabilities under finance and operating leases (Details) - USD ($) $ in Thousands	Sep. 02, 2023	Mar. 04, 2023
Finance Leases
2024 (remaining twenty-six weeks)	$ 5,301
2025	5,048
2026	1,883
2027	1,500
2028	1,500
Thereafter	10,174
Total lease payments	25,406
Less: imputed interest	(7,682)
Total finance lease liabilities	17,724	$ 18,912
Operating Leases
2024 (remaining twenty-six weeks)	335,247
2025	622,993
2026	500,523
2027	472,118
2028	399,881
Thereafter	1,280,351
Total lease payments	3,611,113
Less: imputed interest	(814,927)
Total operating lease liabilities	2,796,186	$ 2,875,346
Minimum sublease rentals	23,000
Finance and Operating Leases
2024 (remaining twenty-six weeks)	340,548
2025	628,041
2026	502,406
2027	473,618
2028	401,381
Thereafter	1,290,525
Total lease payments	3,636,519
Less: imputed interest	(822,609)
Total lease liabilities	$ 2,813,910

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Leases - Sale Leaseback (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023 USD ($) facility	Aug. 27, 2022 USD ($) store facility	Sep. 02, 2023 USD ($) facility	Aug. 27, 2022 USD ($) store facility
Sale Leaseback Transaction
Number of facilities in sale/leaseback | facility	3	3	3	3
Sale/leaseback proceeds	$ 5,454	$ 45,986	$ 5,454	$ 45,986
Gain (loss) on sale-leaseback transactions	$ (706)	$ 23,313	$ (706)	$ 23,313
Retail Store
Sale Leaseback Transaction
Number of stores sold | store		1		1
Leaseback term	15 years	15 years	15 years	15 years
Distribution Center
Sale Leaseback Transaction
Leaseback term		3 years		3 years

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Retirement Plans - Net periodic cost (Details) - Defined Benefit Pension Plan - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Net periodic pension expense
Service cost	$ 73	$ 107	$ 146	$ 214
Interest cost	$ 1,581	$ 1,263	$ 3,162	$ 2,527
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	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Expected return on plan assets	$ (1,474)	$ (1,402)	$ (2,948)	$ (2,804)
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	Selling, General and Administrative Expense	Selling, General and Administrative Expense
Net periodic pension expense (income)	$ 180	$ (32)	$ 360	$ (63)

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Segment Reporting - Balance Sheet information (Details) $ in Thousands	6 Months Ended
	Sep. 02, 2023 USD ($) segment	Mar. 04, 2023 USD ($)
Segment Reporting
Number of reportable segments | segment	2
Total Assets	$ 7,125,952	$ 7,527,362
Goodwill	90,436	507,936
Accounts receivable	1,472,755	1,149,958
Retail Pharmacy Segment
Segment Reporting
Goodwill	43,492	43,492
Pharmacy Services Segment
Segment Reporting
Goodwill	46,944	464,444
Operating Segments | Retail Pharmacy Segment
Segment Reporting
Total Assets	5,530,289	5,487,845
Goodwill	43,492	43,492
Operating Segments | Pharmacy Services Segment
Segment Reporting
Total Assets	1,605,604	2,049,107
Goodwill	46,944	464,444
Intersegment elimination
Segment Reporting
Total Assets	(9,941)	(9,590)
Goodwill
Accounts receivable	$ 9,941	$ 9,590

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Segment Reporting - Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022	Sep. 02, 2023	Aug. 27, 2022
Segment Reporting
Revenues	$ 5,646,081	$ 5,901,069	$ 11,299,243	$ 11,915,652
Gross Profit	1,095,596	1,154,495	2,274,122	2,351,224
Adjusted EBITDA	16,709	78,549	108,424	178,679
Depreciation and amortization	69,029	68,564	134,924	138,637
LIFO charge	7,500	10,121	15,000	10,121
Stock-based compensation expense	1,068	4,735	2,149	8,069
Additions to property and equipment and intangible assets	44,583	52,175	92,086	137,599
Retail Pharmacy Segment
Segment Reporting
Revenues	4,470,927	4,231,791	8,963,256	8,577,147
Operating Segments | Retail Pharmacy Segment
Segment Reporting
Revenues	4,470,927	4,231,791	8,963,256	8,577,147
Gross Profit	978,602	1,043,036	2,065,465	2,140,393
Adjusted EBITDA	(26,477)	31,484	43,572	105,166
Depreciation and amortization	56,985	56,679	112,454	112,787
LIFO charge	7,500	10,121	15,000	10,121
Stock-based compensation expense	773	4,496	1,496	7,598
Additions to property and equipment and intangible assets	37,894	46,343	78,333	124,894
Operating Segments | Pharmacy Services Segment
Segment Reporting
Revenues	1,209,858	1,727,241	2,406,012	3,453,098
Gross Profit	116,994	111,459	208,657	210,831
Adjusted EBITDA	43,186	47,065	64,852	73,513
Depreciation and amortization	12,044	11,885	22,470	25,850
Stock-based compensation expense	295	239	653	471
Additions to property and equipment and intangible assets	6,689	5,832	13,753	12,705
Intersegment elimination
Segment Reporting
Revenues	(34,704)	(57,963)	(70,025)	(114,593)
Gross Profit
Adjusted EBITDA
Depreciation and amortization
LIFO charge
Stock-based compensation expense
Additions to property and equipment and intangible assets

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Segment Reporting - Adjusted EBITDA (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
	Jun. 13, 2022	Sep. 02, 2023	Jun. 03, 2023	Aug. 27, 2022	May 28, 2022	Sep. 02, 2023	Aug. 27, 2022
Segment Reporting
Net loss		$ (1,020,030)	$ (306,718)	$ (331,290)	$ (110,191)	$ (1,326,748)	$ (441,481)
Interest expense		72,658		52,533		137,878	100,652
Income tax expense		2,338		11,967		3,831	15,464
Depreciation and amortization		69,029		68,564		134,924	138,637
LIFO charge		7,500		10,121		15,000	10,121
Facility exit and impairment charges		310,761		45,845		330,762	112,416
Goodwill and intangible asset impairment charges		295,490		252,200		446,990	252,200
Gain on debt modifications and retirements, net	$ (41,312)			(41,312)			(41,312)
Stock-based compensation expense		1,068		4,735		2,149	8,069
Restructuring-related costs		85,709		12,805		163,839	35,451
Inventory write-downs related to store closings		8,414		1,094		10,471	9,049
Litigation and other contractual settlements		205,041		20,093		216,091	38,364
Gain on sale of assets, net		(24,087)		(29,001)		(32,280)	(58,197)
Other		2,818		195		5,517	(754)
Adjusted EBITDA		$ 16,709		$ 78,549		$ 108,424	$ 178,679

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Commitments, Contingencies and Guarantees (Details) $ in Thousands		1 Months Ended		6 Months Ended
	Apr. 22, 2022 USD ($)	Dec. 31, 2022 USD ($)	Aug. 31, 2022 USD ($)	Sep. 02, 2023 USD ($) lawsuit state
Commitments, Contingencies and Guarantees
Number of punitive class actions | lawsuit				4
Number of punitive class actions involving technologies tracking consumer information | lawsuit				3
Number of punitive class actions involving data security incident | lawsuit				1
California Employment Litigation Claims Related To Reimbursement For Cell phone and Mileage Expenses
Commitments, Contingencies and Guarantees
Amount awarded to other party			$ 1,290
California Employment Litigation Claims Related To Wages And Hour Class Action
Commitments, Contingencies and Guarantees
Amount awarded to other party			$ 800
New York Employment Litigation Claims Related To Wages And Hour Class Action
Commitments, Contingencies and Guarantees
Amount awarded to other party		$ 6,450
Blue Cross Blue Shield Litigation
Commitments, Contingencies and Guarantees
Number of claims | lawsuit				2
Number of states in which operated | state				8
Humana Litigation
Commitments, Contingencies and Guarantees
Amount awarded to other party	$ 122,600
Amount of accrued damages				$ 136,800
Prejudgment interest awarded	$ 40,700
Civil Investigative Demand Regarding Code 1 Drugs
Commitments, Contingencies and Guarantees
Amount awarded to other party				$ 60,000

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Supplementary Cash Flow Data (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 02, 2023	Aug. 27, 2022
Supplementary Cash Flow Data
Cash paid for interest	$ 128,544	$ 94,557
Cash payments (refunds) for income taxes, net	3,541	(10,359)
Equipment financed under capital leases	832	1,235
Gross borrowings from revolver	2,119,000	1,838,000
Gross repayments to revolver	1,282,000	1,161,000
Significant components of cash provided by (used in) Other Liabilities (Other Assets)
Other Liabilities	205,151	(61,372)
Other Assets	$ (88,771)	$ (10,870)

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Subsequent Events (Details) - Subsequent Events - USD ($) $ in Thousands	Oct. 15, 2023	Sep. 28, 2023
Minimum
Subsequent Event [Line Items]
Average total market capitalization		$ 50,000
Financial and Operational Restructuring Plan
Subsequent Event [Line Items]
Equity Interests recoverable amount	$ 0
Professional and other fees | Financial and Operational Restructuring Plan
Subsequent Event [Line Items]
Percentage of restructuring plan	100.00%
Elixir Assets
Subsequent Event [Line Items]
Purchase price	$ 575,000
Maximum break-up fee and reimbursement of expenses as a percent of purchase price	3.50%