Rite Aid plummets; CEO Heyward Donigan cites Covid for cautious outlook

Ritual help CEO Heyward Donigan told CNBC on Thursday that she was “cautiously optimistic” that the US would avoid another round of stringent Covid restrictions despite the presence of another round of stringent Covid restrictions Delta variant.

“We all hope that enough people get vaccinated so that the variant doesn’t become so significant that our stores close again,” continued Donigan “Squawk Box.”

Still, the CEO said the drugstore chain had been prudent with its financial projections, in part because the impact of the coronavirus pandemic on business was unpredictable.

Rite Aid’s shares fell about 14% Thursday, bringing the company’s market value below $ 1 billion as Wall Street was digested mixed results in the first quarter and weaker profit forecasts.

Rite Aid’s forecast for adjusted EBITDA – earnings before interest, taxes, depreciation and amortization – was $ 440 million and $ 480 million, respectively, for fiscal 2022, lower than its estimated $ 524 million.

“We are very cautious because we missed last quarter due to the complete meltdown, I call it, from cough, cold, flu – both in the pharmacy and in the front end because there was just no cough, cold, flu,” said Donigan alluding to the youngest surprisingly calm flu season in the US and Its Impact on Rite Aid.

“We just didn’t know how far down, how vaporized this business would actually be. So when we look ahead, we think we need to be very careful and prudent in our forecast,” said Donigan, the former CEO of Pennsylvania- based Rite Aid since August 2019.

“We expect some improvement. We don’t expect a complete improvement,” added Donigan.

She also admitted, “It’s very difficult, it remains very difficult to predict, annual results in a retail pharmacy in the middle of a pandemic because we’re … still in the thick of it to some extent.”

The company forecast full-year sales between $ 25.1 billion and $ 25.5 billion, which, according to FactSet, exceeded Wall Street’s expectations of $ 24.66 billion.

The prospects of Rite Aid are not taken into account potential Covid vaccine boosters or vaccinations for children under the age of 12, noted Donigan. Studies are currently underway to investigate the vaccine in children under the age of 12.

The Food and Drug Administration has released Pfizer ‘s Covid vaccination for Use in children aged 12 to 15 a little over a month ago. Modern, which also makes a two-dose vaccine, has asked the FDA to extend his emergency use authorization to cover teenagers aged 12 to 17.

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