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Rite Aid (RAD)

Q2 2012 Earnings Call

September 22, 2011 8:30 am ET


Frank G. Vitrano - Chief Administrative Officer, Chief Financial Officer and Senior Executive Vice President

John T. Standley - Chief Executive Officer, President, Director and Member of Executive Committee

Matt Schroeder - Group Vice President of Strategy & Investor Relations and Treasurer


Karru Martinson - Deutsche Bank AG, Research Division

John Heinbockel - Guggenheim Securities, LLC, Research Division

Mary Ross Gilbert - Imperial Capital, LLC, Research Division

Karen Eltrich - Goldman Sachs Group Inc., Research Division

Carla Casella - JP Morgan Chase & Co, Research Division

Justin Van Vleck - Morgan Stanley, Research Division

John W. Ransom - Raymond James & Associates, Inc., Research Division

Matthew Galati - UBS Investment Bank, Research Division

Emily Shanks - Lehman Brothers

Matthew J. Fassler - Goldman Sachs Group Inc., Research Division

Joseph Stauff - Susquehanna Financial Group, LLLP, Research Division

Edward J. Kelly - Crédit Suisse AG, Research Division

Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division



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Good morning. My name is Sandrel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid Second Quarter Fiscal 2012 Conference Call. [Operator Instructions] And now let's turn the conference over to Matt Schroeder. Please go ahead.

Matt Schroeder

Thank you, Sandrel, and good morning, everyone. We welcome you to our second quarter conference call. On the call with me are John Standley, our President and Chief Executive Officer; and Frank Vitrano, our Chief Financial and Chief Administrative Officer. On today's call, John will give an overview of our second quarter results and discuss our business. Frank will discuss the key financial highlights and fiscal 2012 outlook, and then we will take questions.

As we mentioned in our release, we are providing slides related to the material we will be discussing today, including annual earnings and sales guidance on our website,, under the Investor Relations Information tab for conference calls. This guidance is a point-in-time estimate made early in the fiscal year. The company expressly disclaims any current intention to update it.

This conference call and the related slides will be available on the company's website until the next earnings call, unless the company withdraws them earlier, and should not be relied upon thereafter. We will not be referring to the slides directly in our remarks but hope you will find them helpful as they summarize some of the key points made on the call.

Before we start, I'd like to remind you that today's conference call includes certain forward-looking statements. These forward-looking statements are made in the context of certain risks and uncertainties that can cause actual results to differ. These risks and uncertainties are described in our press release, in Item 1A of our most recent annual report on Form 10-K and other documents we file or furnish to the Securities and Exchange Commission. Also we will be using a non-GAAP financial measure. The definition of the non-GAAP financial measure, along with the reconciliations to the related GAAP measure, are described in our press release. With these remarks, I'd now like to turn it over to John.

John T. Standley

Thank you, Matt, and thank you, everyone, for joining us this morning to review our fiscal 2012 second quarter results. I'm pleased to report that our results for the quarter demonstrate that our continued company-wide focus on taking better care of and meeting the needs of our customers is paying off.

We have increased same-store sales for 3 consecutive quarters as initiatives such as wellness+, immunizations and wellness store renovations help us become more relevant to today's consumer. In addition, we continue to run our business more efficiently and improve overall performance, evidenced by the fact that our adjusted EBITDA has also increased for 3 consecutive quarters. While we will get more into the details of our second quarter results shortly, I want to start today by discussing some of the exciting new Rite Aid health and wellness initiatives we are just rolling out that uniquely focus on meeting customers’ needs in a dynamic and ever-changing health care environment and that we believe will help further Rite Aid’s top line growth as we move forward.

Just last week, Rite Aid, in collaboration with OptumHealth, announced that we are bringing the latest in quality, convenient online health care to Rite Aid customers in the Greater Detroit area with the introduction of NowClinic online care services, which is now available inside select Rite Aid pharmacies. NowClinic offers Rite Aid customers realtime access to convenient medical care, information and resources from doctors and OptumHealth nurses. Rite Aid and OptumHealth are the first to provide a virtual clinic in a retail pharmacy setting.

Earlier this month, we also joined the Diabetes Prevention and Control Alliance, and we'll support patients enrolled in the alliances program to help provide people with diabetes better control their condition. In-store pharmacists in select Rite Aid locations will consult quarterly with enrolled patients to evaluate their success adhering to prescribe diabetes regimens and to review patients’ test results for blood pressure, blood glucose and cholesterol. This support is available now to program participants at select New York City Rite Aid stores in Brooklyn, Queens and the Bronx and is coming to select stores in Washington, D.C., in mid-October.

And next week, we will also introduce in all Rite Aid stores our first wellness+ program extension called wellness+ diabetes, which will feature an exclusive collaboration with WebMD, a leading online consumer health information destination, to provide wellness+ diabetes members with a multifaceted free program that offers resources, management lifestyle tools and in-store savings to people living with diabetes and their caregivers.

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