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REFINITIV STREETEVENTS
       EDITED TRANSCRIPT
       RAD.N - Q4 2021 Rite Aid Corp Earnings Call

       EVENT DATE/TIME: APRIL 15, 2021 / 12:30PM GMT

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©2021 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without the prior written
consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

CORPORATE PARTICIPANTS
Heyward Rutledge Donigan Rite Aid Corporation - President CEO & Director
James Joseph Peters Rite Aid Corporation - COO
Matthew Schroeder Rite Aid Corporation - CFO & Executive VP
Trent Kruse Rite Aid Corporation - SVP of IR & Treasury

CONFERENCE CALL PARTICIPANTS
Elizabeth Hammell Anderson Evercore ISI Institutional Equities, Research Division - Associate
George Robert Hill Deutsche Bank AG, Research Division - MD & Equity Research Analyst
Glen Joseph Santangelo Guggenheim Securities, LLC, Research Division - Analyst
Karru Martinson Jefferies LLC, Research Division - Analyst
Kevin Hartman Goldman Sachs Group, Inc., Research Division - Business Analyst
Michael Roman Minchak JPMorgan Chase & Co, Research Division - Analyst
William Michael Reuter BofA Securities, Research Division - MD

PRESENTATION
Operator
Hello, and thank you for standing by, and welcome to Rite Aid Corporation Full Year 2021 Q4 Earnings Conference Call. (Operator Instructions)
Please be advised that today's conference is being recorded.

I would now like to turn the call over to your speaker today, Trent Kruse, Senior Vice President of Investor Relations and Treasury. Please go ahead.

Trent Kruse - Rite Aid Corporation - SVP of IR & Treasury
All right. Thank you, Michelle, and good morning, everyone. We welcome you to our fiscal 2021 fourth quarter and full year earnings conference
call. On the call with me this morning are Heyward Donigan, Jim Peters and Matt Schroeder. As we mentioned in our release, we are providing
slides related to the material we will be discussing today. These slides are provided on our website, www.riteaid.com, under the Investor Relations
Information tab. While management will not be speaking directly to the slides, these slides are meant to facilitate your review of the company's
results and to be used as a reference document following 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 presented 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 and Item 1A of our most recent annual report or Form 10-K and in other documents that we file or furnish to the SEC.

Also, we will be using certain non-GAAP measures in our release and in the accompanying slides. The definition of the non-GAAP measures, along
with the reconciliation to the related GAAP measure, are described in our press release and slides.

And with that, let me turn the call over to Heyward. Heyward?

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Thanks, Trent, and good morning, everyone. I probably don't need to say this, but this past year was truly a year like no other. And as we begin our
fiscal year, we had only just heard rumbling about COVID-19. And we certainly didn't expect that 1 year later, we'd be playing a crucial role in testing
and vaccinating Americans in an effort to end this unprecedented global health care pandemic that upended all of our lives as we know it.

As our teams were battling on the front line throughout the year, COVID-19 enabled us to live our purpose of not only keeping our communities
healthy but to get some thriving. So serving our customers has never been more challenging, but as we demonstrated, we are really up for the
task. And the entire Rite Aid team is honored to play an integral role in helping bring an end to this pandemic.

Before I discuss the quarterly results and some of our key accomplishments over the past year, I just want to pause and recognize all of our associates
across the company. I am so proud of the way our team has stepped up to help each other, our customers and our communities. Together, we've
met the many challenges this past year presented. We served our communities and neighborhoods with unmatched determination, hustle and
spirit. We supported our team members in new and inspiring ways. We pushed our strategy forward despite the incredible external challenges we
face. And we will continue to focus on delivering value for all of our stakeholders.

It was also a year in which our RxEvolution strategy was not only validated but proven essential. I'm really eager to share more on how our strategy
came to life throughout the year. But first, a few headlines on the fourth quarter results which were clearly challenging due to COVID and on
weather.

As we previewed a few weeks back, a confluence of external factors impacted our performance. We experienced a nearly 37% decline in cough,
cold and flu-related categories and the resulting impact on margins as these are high-margin categories. This decline was greater than we anticipated
and was, of course, driven by everyone continuing to mask up and also certainly from kids not being back socializing at school. We also experienced
a greater than 14% decline in acute prescriptions, resulting from the continued impact of COVID-19 on the deferral of elective procedures and
doctor's visits, et cetera.

But despite these external factors, we continued growing share in the front end during the quarter, drove a nearly 170% increase in digital sales
and delivered an almost 4% increase in revenue at Elixir. We've seen share in revenue growth throughout the year, and that gives us confidence
in our overall plans on track.

In one of the most extraordinary times in history, the numbers certainly do not tell the whole story. Just over a year ago, at our Analyst Day, we
told you we would be a demonstrably different company within the next year. And we have delivered on that promise, making substantial changes
to position us for profitable growth.

We redefined the role of the pharmacists, our customers' expectations of them and even their daily workflows. We introduced lean tools and
processes to free up our pharmacists' time to further enable their ability to proactively engage with customers and be whole health advocates. All
Rite Aid pharmacists received specialized training this year to qualify them as integrated pharmacy specialists.

We introduced the new Rite Aid brand to showcase the company's focus on delivering whole health, the perfect fusion of traditional medicines
and alternative remedies. We've implemented extensive changes to our merchandising, replacing thousands of products and adjusting our
presentation standards to highlight the better-for-you characteristics that our growth target customer craves.

We refreshed the exterior of over 1,200 Rite Aid stores and launched an all-new website and new mobile app. We opened our first 3 flagship store
remodels, and we continue to be pleased with both the sales and margin performance in these stores.

We completed the strategic acquisition of Bartell in Seattle, which we identified as a key market for Rite Aid. We rebranded our Pharmacy Services
Segment, Elixir, to signal the move to crafted resolutions for our target customer, and we launched our exciting new member portal.

We refinanced and extended the maturities of a significant portion of our debt while also executing on a number of sale-leaseback opportunities
to generate cash and further our debt reduction efforts.

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We continue to build an outstanding team and shifted our entire corporate team and call center associates to remote without missing a beat. We
delivered new solutions and innovated to meet customer needs for COVID testing and vaccine administration of the communities we serve.

And importantly, we supported our associates as they were in stores, same hours. We didn't close stores ever since the beginning of the pandemic.
We associated -- we supported them and their families by providing numerous programs such as hero bonuses for our frontline associates, pandemic
pay, administrative leave for associates who didn't feel comfortable coming to work due to health concerns and expanded resources to assist
associates with the stress created by the pandemic. And we provided much needed assistance to thousands of associates through our Rite Aid
associate relief fund.

We doubled down our focus to support diversity, equity and inclusion. We hired a diversity leader and are developing a long-term plan. We're
proud of the leading diversity of our Board, and we're making good progress in increasing diversity across our team.

It's also critically important to us to ensure equity in vaccine administration. So we're using the CDC vulnerability index to prioritize underserved
communities for COVID-19 testing and vaccine. We've partnered with government and nonprofit leaders from local mayors all the way up to the
White House to support our efforts to keep communities healthy and thriving through events such as COVID-19 vaccine clinics. To date, we posted
nearly 700 clinics across our footprint, which, as noted before, is in both urban and remote areas with highly -- high socially vulnerable index. And
finally, we progressed our ESG initiatives and performance through fleet fuel reduction, decreased energy usage and our continued management
of toxic chemicals.

Now let me provide an update on Elixir. As you know, we've been working to integrate the Rite Aid and Elixir businesses, systems and processes
as well as our management. And through this work, we identified an opportunity to further streamline the management structure of Elixir. As such,
I want to let you know that Dan Robson has left the company, and I will now oversee both Rite Aid and Elixir on a day-to-day basis.

Just as background, so you know, I have extensive experience with the health plan business, and I've been working with PBMs my whole career.
My expertise will serve our Elixir business well during this important time in our turnaround. Now more than ever, we're bullish on Elixir. It's clear
that the market wants a sophisticated, scalable and nimble alternative.

Following our executive briefings with key benefit consultants last year, we're experiencing an increase in opportunities within our target segments.
In fact, we're seeing strong membership growth in our sales pipeline and have recently been awarded over 200,000 new lives with an annualized
script count of over 6 million with still most decisions pending in this current sales cycle. The coming months will be very busy with both proposals,
contract negotiations and implementation.

So the market is speaking very clearly to us. And we must concentrate all our efforts towards capitalizing on this great opportunity. To this end, a
number of existing team members and capable leaders in key areas like marketing, communications, clinical and customer care are stepping up
to help us win new business at Elixir.

We're also adding seasoned PBM leaders in sales and account management. All of these leaders know what our clients want and have been
instrumental in our recent wins. We're going to give the Elixir team every tool they need to win more business.

We continue to improve on our operational and technology capabilities. Our pricing in our clinical products are very competitive. And we will
continue to employ every component of the Rite Aid enterprise to keep pushing forward with market innovation. In fact, we're focused on putting
forward Rite Aid-anchored limited networks in relevant territories and customer-oriented health solutions with significant clinical and analytic
capabilities powered now by Rite Aid and Health Dialog.

This is a really exciting time at Elixir with many opportunities in front of us. And so I'll be working very closely with the Rite Aid, Elixir and the Health
Dialog team to ensure we're focused on our objectives.

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

So before passing it over to Jim, I just want to make a few closing comments. While we've made much progress in the last year, much work remains.
As we look to fiscal year 2022, there remains significant uncertainty and limited visibility to the pace and magnitude of COVID recovery, such as
seen in the recent spikes we're currently dealing with in Michigan. This could lead to a range of potential financial outcomes in our retail business.

Despite the short-term challenges, our teams are clear on what needs to be done: Win today and in the future by creating real health care value,
improving the consumer engagement and transforming our work to improve financial performance.

With these initiatives well underway, we're accelerating our actions for the more nimble, efficient and effective Rite Aid. We have and will continue
to effectively manage through this crisis while positioning our business for current and long-term success. We will continue to partner with the
government and community leaders to ensure no communities are left behind in the fight against COVID-19. And we'll likewise continue to provide
fast, effective and free COVID testing in all of our drive-thru locations. And as more doses become available, we stand ready to ramp up our vaccine
efforts to help bring an end to the pandemic.

Now none of this will be or has been easy, but I have faith in the leaders we've put in place as well as the frontline associates, who have truly earned
their stripes as hometown heroes throughout the pandemic. And we'll continue to work together to deliver the operational excellence needed to
achieve our objective of generating free cash flow, reducing our debt and improving our leverage ratio.

Important work lies ahead of us, but I'm inspired by the significant progress we've made as a team and optimistic that we'll achieve our goals with
RxEvolution.

So now I'll turn it over to Jim for some additional comments on our overall progress in the Retail Pharmacy Segment. Jim?

James Joseph Peters - Rite Aid Corporation - COO
Thank you, Heyward. In a year full of challenges, the fourth quarter was certainly no exception. While we no doubt felt the impact, our teams
continue to deliver significant progress on our strategies while also ramping our efforts around COVID-19 vaccine administration.

And this effort is not only taking place within the 4 walls of our stores. As Heyward mentioned, we have continued to schedule hundreds and
hundreds of off-site clinics through partnerships with government officials, church leaders and community organizers to help meet the very real
challenge of improving vaccine uptake in underserved communities. We're doing all we can to maximize the number of shots in arms we can
deliver each and every day.

We are maintaining a critical focus on our vaccination efforts and continuing to deliver on our strategies. We're just 1 year into our RxEvolution
transformation. And this year has shown signs of real progress and validation of our strategy. And we are encouraged that we are focused on the
right opportunities looking ahead.

Just consider the critical work to truly unlock the value of our pharmacists. We deeply believe, as we've said before, that well before we even knew
what COVID-19 was, that the elevated role of the pharmacist will be critical to the future success of Rite Aid and the health care system more broadly.
This conviction has come to life over this past year as our pharmacists have risen to become indispensable in our nation's effort to defeat COVID
and keep its people safe.

Whether around our work to stand up and administer testing across all of our drive-thru locations, our pharmacist is engaging with customers
around the importance of both traditional medicines and alternative remedies. For the herculean effort to administer the COVID-19 vaccine with
speed, agility and grace, it is abundantly clear how critical a role pharmacists play in improving the health of people and the neighborhoods and
communities we serve.

We believe and have seen that pharmacists truly are the ultimate last-mile connector in health care. And we believe the key role pharmacists have
played on the national states throughout this pandemic bodes well for a future that expands the scope of practice for pharmacists in ways that
better support the overall health care system.

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Access and trust have long been hallmarks of our pharmacists. We will continue to emphasize the increasing menu of immunizations, diagnostics
and a wider spectrum of remedies that keep our customers thriving in between doctor's visits.

Let me now take a couple of minutes to provide the latest update around COVID-19 testing and vaccinations. As it pertains to testing, we have
recently extended our testing contract with Health and Human Services. We administered nearly 1.9 million COVID tests in fiscal 2021 and continue
to provide access to no-charge PCR, self-swab, pain-free testing across all of our drive-thru locations. We are offering free testing to individuals
ages 4 and up and providing same-day appointment availability in most locations.

On the vaccine front, we are a proud partner in the communities and neighborhoods we serve and are truly embracing our role in helping in this
pandemic. We administered about 500,000 vaccines during Q4 and have already administered over 2 million COVID vaccines in the first quarter-to-date
as we've been experiencing an acceleration of both the timing and the number of doses administered. We are receiving doses of all 3 current
FDA-approved COVID vaccines, Pfizer, Moderna and J&J, from the federal government and are now eligible to vaccinate in all states in which we
operate. We are administering COVID vaccines in the majority of our stores with room to expand volume as supply becomes available.

And perhaps most emblematic of our team's hustle, under the directive from the Biden administration to prioritize educators during the month
of March, Rite Aid provided more vaccinations to educators, childcare workers and support staff than any of the national pharmacies participating
in the Federal Retail Pharmacy Partnership.

Now looking at Q4, we faced a historically soft cough, cold and flu season that significantly impacted our results with acute scripts associated with
cough, cold and flu down over 40%. And we were impacted by the February snowstorms that disrupted our supply chain and foot traffic, particularly
in our Northeast markets.

However, as we look at Q1 to-date results, we have seen acute script growth return to positive levels and are seeing continued strength in
maintenance prescriptions, leading to quarter-to-date increases on 30 day-adjusted comp scripts. Our neighborhood pharmacists continue to
establish themselves as among the most trusted and accessible clinical touch points in their communities. And we're excited to continue our efforts
to truly unlock their full potential.

We're also continuing to make progress on our retail and digital experience efforts and bringing a revitalized Rite Aid to consumers. Through our
remerchandising initiative, 75% of our categories have now been reset to our new elevated merchandising standards, which support whole health
and reflect on-trend products that have the attributes our target growth consumer demands.

Results so far have been very encouraging for the lines of merchandise that we focused on to appeal to this target growth customer with several
categories. Categories like immunity, sleep, stress, cognitive health, clean and internal beauty, natural baby care, natural pet are all seeing double
and even triple-digit increases to prior year. We continue to enhance the categories that are core to our whole health positioning with items and
brands that contain the attributes that our target growth consumer seeks, organic, non-GMO, cruelty-free and eco-friendly, to name a few. We
introduced a number of terrific new national brands to our customers in fiscal 2021, including Honest Baby, Olly, Thayers, Vital Proteins and, for
our pet lovers, the ever popular Blue Buffalo brand.

Our efforts enabled us to once again grow front-end market share as measured by IRI in the areas we operate in. And for the fourth consecutive
quarter, we grew that share in both dollars and units. Not only did we grow overall front-end market share in fiscal 2021, but we gained share with
our target growth consumer.

The work to reset our assortment and exit slow-moving categories allowed us to deliver a 25% improvement in front-end inventory turns in fiscal
2021 to approximately 3x, which is the best levels we've seen in many, many years. This also led to an approximately $180 million reduction in
inventory. These results are encouraging, and we look to build on this progress as we continue to enhance our offering in fiscal 2022 and beyond.

Another key merchandising opportunity for us is, of course, within our own brand portfolio. In fiscal 2021, own brand sales were up approximately
$15 million or 2%. While we grew own brand sales, penetration decreased slightly, due mostly to a handful of large own brand categories that were
disproportionately down due to COVID, chiefly among them, hand-dipped ice cream and the upper respiratory categories.

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As we look to our own brand opportunity in fiscal 2022, we've made significant progress in our portfolio transformation initiative, which will result
in a completely new own brand architecture, enhanced quality standards, new package designs and allow us to deliver a fully refreshed own brand
lineup this year. After launching over 300 new own brand items in fiscal 2021, our new product pipeline is well underway with nearly 200 more
new items in development already.

We have also continued to bring our new Rite Aid corporate brand identity to life across our fleet of stores, starting with refreshed and updated
exteriors, signage and pylons featuring our new branding. And we expect to complete our exterior refresh program this year. This is truly critical
work as it clearly signals to the communities that we serve there is indeed a whole new Rite Aid, and they need to come and check us out.

We also continue to make meaningful steps by opening our fourth and fifth flagship store remodels in March located in Virginia Beach and Meridian,
Ohio. Customer feedback to all of our pilot flagship stores continues to be overwhelmingly positive. And we are seeing strong performance in
these locations with both pharmacy sales and also front-end sales and margin meaningfully outperforming the rest of the stores in their respective
region. Beauty, health and personal care categories are performing particularly well in these pilot stores given our enhanced focus on these areas.

As we have noted before, we will continue to upgrade our entire fleet using a test-and-learn approach, one that is analytical and methodical that
-- in a way that guides the type of investment, the level of investment and the timing of investment on a market-by-market and store-by-store
basis. Beyond brick-and-mortar, we continue to push forward with initiatives to enhance the digital experience in ways never before seen at Rite
Aid.

In Q4, we saw strong sales growth across our digital channels with front-end digital revenue up approximately 170% compared to the prior year
period and up over 180% for the full year. This reflects sales not only from our elevated and redesigned website and mobile app, which now
showcases our new brand and deliver an enhanced user experience but also our partnerships with Amazon for own brand sales in Instacart and
Postmates for home delivery. Customers utilizing our new delivery services had a 120% higher average order value, demonstrating the enhanced
relationship we have with these digital consumers.

Our investment in scheduling, pickup and fulfillment services positions us for future growth across both health care and retail by enabling us to
meet our customers where they are. We expect these investments to have a continued halo effect across the rest of our business, attracting new
customers, driving bigger basket sizes, increasing product availability and improving sales across our chain. And finally, all of this work across our
retail business has allowed us to achieve our highest ever customer satisfaction scores of 3.8 out of 5.

In closing, this certainly has been a very challenging yet very rewarding years for our associates. And I cannot thank our teams enough for all they're
doing each and every day. For the past year, they have been sprinting America, working tirelessly with hustle and humility to best serve our
communities.

We are encouraged by the underlying positive signs that our strategy is taking hold. While COVID and the related historically soft peak flu season
have had an outsized impact on our overall results, we are well positioned to expand the breadth of clinical services and whole health merchandise
as life begins to return to normal.

We are confident in our strategy, the results we are currently seeing and energized by our efforts in our accelerated administration of COVID
vaccines. We look forward to continuing to drive progress on our key strategic initiatives. And we are embracing our critical role in helping to bring
the COVID pandemic to an end.

Thank you so much. And with that, I'll now turn it over to Matt for some comments on our financial performance. Matt?

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Thanks, Jim, and good morning, everyone. As we stated in our March 24 release, our fourth quarter did not meet our expectations due to the soft
cough, cold and flu season, the impact of COVID on acute script levels and SG&A expenses and the impact of weather in February on front-end

                                                                                                                                                                             7

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

sales and our supply chain. However, for as challenging as this pandemic has been, we made progress in a number of areas over the past fiscal
year.

We increased revenues in both the Retail and Pharmacy Services Segment. Even with pandemic-influenced acute script declines of 9%, we still
managed to have a positive comparable script count growth on a 30 day-adjusted basis for the year. We completed moving almost all of our bond
debt out to 2025 and beyond. And in the next few weeks, we plan on paying off the remaining $91 million of our 6.125% 2023 bonds using availability
under our revolving credit facility.

We grew market share in both the front end and pharmacy in a highly competitive environment. We completed our acquisition of Bartell Drugs,
solidifying our leadership position in the Seattle market. And finally, we ended the year with over $1.7 billion in liquidity, which gives us ample
flexibility and runway to execute our strategic initiatives.

Our adjusted EBITDA for fiscal 2021 was $438 million. While we benefited in the first quarter of the fiscal year from increased demand for certain
front-end products and in the back half of the year from demand for COVID testing, the pandemic had a negative impact on our results due to the
year-over-year decline in acute scripts of 9%; the 37% decline in cough, cold and flu-related sales in the front-end sales in the fourth quarter;
increased SG&A costs related to hero pay adjustments, hero bonuses, increased cleaning, pandemic pay and supplies; and in an increase in medical
loss ratio at Elixir Insurance, which was partially caused by additional costs from member stockpiling maintenance prescriptions.

Now I'll review our fourth quarter results in more detail. Revenues for the quarter were up $190 million or 3.3% from the prior year's fourth quarter
driven by the inclusion of revenues from the Bartell stores and an increase in PBM revenues. Fourth quarter net loss was $18.5 million or $0.34 per
share compared to last year's fourth quarter net loss from continuing operations of $343.5 million or $6.43 per share. Recall that income tax expense
in the prior year's fourth quarter was impacted by a $321 million charge related to an increase in the valuation allowance against the company's
deferred tax assets.

Current year's results benefited from a $48 million bargain purchase gain on our acquisition of Bartell as well as a net gain on the sale of assets of
$52 million resulting primarily from the sale-leaseback of our Lancaster and Woodland distribution centers that we completed in the fourth quarter.
Fourth quarter adjusted EBITDA was $41.3 million compared to last year's fourth quarter adjusted EBITDA of $135.6 million.

Now let's discuss the key drivers of operating results in our business segments. Retail Pharmacy Segment revenue for the quarter was $4.1 billion,
which was $121 million higher than last year's fourth quarter due primarily to the acquisition of Bartell Drugs. Retail pharmacy same-store sales
decreased 30 basis points with same-store prescription count down 90 basis points due to an over 14% reduction in acute prescriptions.

Front-end same-store sales, excluding cigarettes and tobacco products, decreased 5%. The decline in front-end same-store sales was driven by the
decline in cough, cold and flu-related categories and difficult weather conditions.

Fourth quarter adjusted EBITDA was $6 million or 0.2% of revenues compared to last year's fourth quarter adjusted EBITDA of $85.2 million or 2.1%
of revenues. The decline in adjusted EBITDA is largely due to the soft cough, cold and flu season, COVID impacts and the challenging weather
conditions that we detailed in our March 24 release.

I'll now shift to our Pharmacy Services Segment, Elixir. For the fourth quarter, Elixir saw revenues increase $69 million or 3.8% to $1.9 billion due
primarily to changes in member mix and benefit packages and Medicare Part D revenue with the new calendar year.

Elixir's fourth quarter adjusted EBITDA was $35.2 million or 1.9% of revenues versus last year's fourth quarter adjusted EBITDA of $50.4 million or
2.8% of revenues. The decline in adjusted EBITDA is due to a decrease in gross profit associated with contract renewals on our small group business.
Going forward, we expect margins to stabilize across the book of business, along with membership growth in target segments.

I'll now turn to our cash flows and balance sheet. Our cash flow statement for the quarter shows a source of cash from operating activities of $359
million. We generated positive cash flow from the sale of the remainder of our calendar 2020 CMS receivable and through a reduction in inventory
levels driven by our working capital efficiency initiatives.

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Cash used in investing activities was $63.8 million for the quarter. The purchase of Bartell used net cash of $86 million. We completed a sale-leaseback
of our Lancaster and Woodland distribution centers as well as a few additional store sale-leaseback transactions that generated total proceeds of
$89 million in the quarter. We continue to explore additional sale-leaseback options on owned stores, where we see attractive cost of funds to
generate cash to pay down debt.

Our net debt balance was approximately $2.9 billion at the end of our fiscal year. Although our leverage ratio is not as low as we would like it to
be due to the reduction in EBITDA, we remain committed to reducing debt and our goal of a leverage ratio in the 4x range.

Now let's turn to guidance. The pandemic will continue to have an impact on several external factors in fiscal 2022. These factors include the amount
of individuals that receive a COVID vaccine, demand for COVID testing, the timing and extent to which elective procedures increase to pre-pandemic
levels, the demand for flu and other immunizations and the length and severity of this year's cough, cold and flu season. Due to the wide range of
outcomes that could result from these factors, the company is currently only providing guidance for its first quarter of fiscal 2022.

Our results for the first quarter of fiscal 2022 will be significantly impacted by the amount of COVID vaccinations administered during the quarter
and the related impact on revenues, gross profit and expenses with the high end of our first quarter guidance based upon the assumption that
our COVID vaccine activity for the remainder of the quarter will be consistent with what we have seen quarter-to-date. Also included in our guidance
assumptions are a meaningful reduction in front-end sales compared to last year's pandemic-driven surge and continued deferral of elective
procedures and the related impact on acute scripts. We also expect continued reimbursement rate pressure at retail and a return of Elixir EBITDA
to recent run rate levels due to good network management and expense control initiatives.

Total revenues are expected to be between $6.1 billion and $6.3 billion in the first quarter with Retail Pharmacy Segment same-store sales expected
to range from a decline of 9% to a decline of 7% over the first quarter of fiscal 2021. Net income or loss is expected to be between a loss of $10
million and income of $10 million. And adjusted EBITDA for the quarter is expected to be between $115 million and $140 million.

In addition, I want to provide some annual direction on a few key metrics. Capital expenditures are expected to be approximately $300 million
with continued focus on investments in digital, store remodels and file buys. Interest expense is projected to be approximately $200 million. And
we expect to generate a working capital benefit of $100 million from further inventory reductions. I hope this information is useful, and we plan
to provide further updates on our expectations as the year progresses.

In closing, we began fiscal 2022 and with a newly branded and integrated PBM poised to take full advantage of its large and growing addressable
market, an enhanced store footprint and merchandise assortment, more than 6,400 pharmacists that are whole health advisers serving their
communities and an incredible and energized team. We are ready to pursue the numerous growth opportunities we have ahead of us across both
of our segments.

This completes our prepared remarks, and we are now ready to open the phone lines for your questions.

QUESTIONS AND ANSWERS
Operator
(Operator Instructions) The first question comes from George Hill from Deutsche Bank.

George Robert Hill - Deutsche Bank AG, Research Division - MD & Equity Research Analyst
Matt, you started to talk a little bit about the expectations for the vaccine. I guess could you talk -- I guess could you or Heyward provide any
numbers around the expectations for the vaccine contribution in the fiscal first quarter and maybe about how you're thinking about it for the year?
And I think a question that a lot of investors are asking right now, at least as it relates to your fiscal 1Q, is like -- is that going to be peak vaccine, I
guess, is the way to think about it. And then I have a follow-up.

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Yes. So Matt?

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Sure. So George, I think I'll try to pick off these in no particular order. It's -- I think it's still very early to figure out exactly what the amount and
trajectory of ultimate vaccine numbers are going to be, which is one of the reasons we haven't given full year guidance. I do think it's a reasonable
expectation that we would do more vaccines in the first quarter than we would do in any other quarter for the rest of the year. But some of that is
largely things that are out of our control based upon just the pace, the supply, I think kind of the ever-changing goals of the administration to get
people vaccinated.

But having said that, I think it's our expectation at this point that the Q1 is the highest vaccine quarter. As I said in my comments, I think our guidance
is kind of based around a range of outcomes that contemplates that the high end would be that we continue on the same pace for the rest of this
quarter that we've had in the first part of the quarter.

And I think as far as contribution, these vaccines obviously provide benefits to the bottom line, I think roughly comparable to script benefits. It's a
bit of a moving target to figure that out as well because there are costs that are incremental to giving these vaccines, and they can vary even based
upon the type of vaccine that we're giving. Whether it's Pfizer, Moderna or J&J, the labor cost can vary based upon the model. And there's also
costs related to advertising, supplies, even cost of schedule to stand up a scheduling system and other types of things.

So a lot of kind of moving pieces, George, and again, one of the reasons that we're not giving full year guidance just yet, but I hope that answers
some of your questions.

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Well, also, George, we are carrying on the supply chain to produce these vaccines. Unfortunately for J&J but fortunately, I guess, for us, we aren't
doing that much J&J administration. But -- you can see we're primarily doing Pfizer and Moderna, but you can see how a disruption in the supply
chain could really affect us. So -- and we are seeing a disruption in the supply chain. So just to some degree, the range is just also depending on
the supply chain continuing to ramp up. You had a follow-up, George?

George Robert Hill - Deutsche Bank AG, Research Division - MD & Equity Research Analyst
Okay. Yes. Yes. I think that was super helpful. And the follow-up, Heyward, was kind of like talking about the other side of the vaccine. Maybe could
you talk about what I would call the front-end attachment rate or the basket size of the customers who are coming in for the vaccine? And talk
about any initiatives the company is taking to kind of use the vaccine opportunity as a way to increase customer stickiness and engagement.

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Well, it's super exciting. I've been to stores that are doing vaccines, and it's super exciting to see the customers come out of the consultation room.
They are cheering and they're euphoric. And so then they put a big basket (inaudible) the store and buy candy, Easter baskets, wine, chocolate --
I mean ice cream. So there's wonderful sense of going back to life again. And I'll let Jim comment on the specifics.

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

James Joseph Peters - Rite Aid Corporation - COO
Yes. Thanks, Heyward. George, it's really interesting. About 75% of the folks that are coming to Rite Aid for a vaccine are actually net new to Rite
Aid. These are not, by and large, our existing customers. So we know many of them are driving quite long distances to receive the vaccine, others
are not. But we may see them at different locations. So we're taking advantage of the opportunity in such a euphoric state to really give them as
much of a Rite Aid experience as we can, a new Rite Aid experience.

Many of these people who hadn't been to a Rite Aid store have been blown away by the noticeable changes that they've seen. Someone described
it to me as not seeing a child, a 5-year-old child since they were 2. The parent doesn't always notice that growth. But man, when you come and see
a person that has grown 3 years in that age time frame, it's similar to the impact that it had on this particular individual who had been to a Rite Aid
years ago and was blown away by the new Rite Aid that they saw with new merchandise, our new storefront, our new brand identity, the cleanliness
of the store, the service levels that we engage in and we emphasize with our front-end and pharmacy associates.

So -- and they have been buying more products in areas like beauty and candy and greeting cards, where we have not seen strong results in the
last year. So that's encouraging, and we believe it demonstrates that our customers are starting to feel a real sense of returning to normalcy and
hopefully beginning to get back to regular activities.

We are absolutely setting up merchandise displays for our customers and really focusing in on the types of products that would complement a
vaccination like the COVID vaccine, like setting up displays associated with pain relief and immunity and those types of things. So we have seen
attachment sales increase. And we've seen the lift particularly in our large clinic stores for obvious reasons. And we are engaging digitally in ways
that consider these 75% as brand-new greenfield opportunities for new long-term Rite Aid customers and doing all we can to think and continue
to engage with our existing 25% that we see.

Operator
And your next question will come from Glen Santangelo from Guggenheim.

Glen Joseph Santangelo - Guggenheim Securities, LLC, Research Division - Analyst
I just -- Heyward, I just want to follow up on George's vaccine question. I think what we're all kind of struggling with is, based on your guidance,
we're midway through the quarter, you already distributed 2 million vaccines. So based on that current trajectory, you'll have about 4 million
vaccines distributed in this fiscal first quarter. And based on the revenue per vaccine that people are talking about, whether it's -- maybe not $40
but maybe blended average of something at least close to that with pretty high gross margins, it seems like these vaccines are very profitable.

And so I guess what people wanted to try to understand is when you look at your 1Q adjusted EBITDA guidance of $115 million to $140 million, if
we assume some reasonable contribution from vaccines, it would kind of imply that the adjusted EBITDA on the core is a reasonable chunk below
that EBITDA guidance range. And so we're just trying to think about that as it relates to the full year given that the vaccine benefit is likely to be
transient. Hopefully, that makes sense. I know there are a lot of moving pieces.

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
I think, obviously, the first quarter, we hope we will have the continued payoff of the vaccines on the current trajectory. And yet on the other hand,
we do -- we have just seen what happened with J&J. So we have to be, what I'll call cautious and cautiously optimistic. But we have to be cautious
because if something happened with the Moderna plant next week, that would significantly impact our ability to deliver on those numbers. So
that's why we're being cautious in the first quarter.

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

The reality is as you go through the year, we still believe that in the June-July time frame, assuming the supply chain holds up, as you go through
the year, people will have been vaccinated. Those that want to be vaccinated will have been vaccinated. So one would assume that there will be
a slowdown of some significance in the fall.

And only the question, I guess, is do they actually approve vaccinations for kids under 16, under 18, depending on the vaccine. If they do not, you
could argue that maybe there is -- it turns into like a flu shot kind of episodic event or you say, hopefully, these kids get vaccinated but maybe not
for next year. So I think -- I don't know if that answers your question. Certainly, Matt can jump in, but I think that that's kind of the way we're thinking
about it.

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Glen, I would add a couple of other things to that. And I would focus on a couple of other points besides just the vaccine gross margin contribution.

First of all, there are costs to distributing these, as I laid out in both my comments and commentary to George. But I think the other thing you have
to keep in mind is that kind of underneath the vaccine benefit in the first quarter, which is going to be substantial, is we are still having weak cough
cold and flu results, which is -- does bleed over into the first quarter. And we are still seeing pressure on acute scripts because of people continuing
to defer doctors' visits, elective procedures and things like that.

So I think we've got this dynamic going on right now, where we've got this sizable benefit from the vaccine, but some of the negative impacts of
COVID are not over yet. And that's the part that I think makes it a little hard to kind of parse through the pieces of the first quarter and part of,
honestly, the reason why we're not giving guidance for the full year. There is still a wide range of outcomes depending on how some of these
factors that the pandemic has kind of put upon our retail business ultimately resolve themselves.

Operator
And your next question will come from Robert Jones from Goldman Sachs.

Kevin Hartman - Goldman Sachs Group, Inc., Research Division - Business Analyst
This is Kevin on for Bob this morning. Just wanted to ask one quick on testing. If there was anything you -- details you guys give us about what the
economics might look like on testing right now, how you're thinking about the EBITDA contribution that, that could have to fiscal 1Q. And just
more broadly, how you've seen test volumes trend just as of late as the vaccine has been rolled out.

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
I'll just start with the last part, and then I'll turn it over to Matt on the numbers. But the testing has been very unpredictable, just like everything
else. So if there's one word that is the theme of last year and this year, it's unpredictable.

At one point, we were seeing testing volumes [drop] off remarkably fast because I think people just got tired of COVID and they had gotten through
the holidays and didn't feel particularly at risk. And now all of a sudden, you see the new variant out, and Michigan is in bad shape. And so testing
is going up again.

So again, it's just really cyclical and highly unpredictable. Right now, we're seeing a spike. But Matt, you could talk about the economics and any
future predictions.

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Yes. I'll jump on and say that there are -- the testing brings a positive benefit to the bottom line. We haven't gone into quantifying what that benefit
is. I would say it's a benefit. It's not anything nearly as sizable as some of the impacts that we've talked about that had -- that weigh upon our
guidance, but it does have a positive impact for us. And I think it's something that -- over time, as we develop kind of the institutional muscle to
do this, I think it could be something that is a net positive for us in the longer term even after the contract of HHS ultimately expires.

Kevin Hartman - Goldman Sachs Group, Inc., Research Division - Business Analyst
Got it. That's helpful. And then just on a high level...

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
So one thing I would just say is think of testing in the future, not now but in the future as like flu testing, that it will be something that I think will
continue to be in everyone's arsenal for the rest of our lifetime, just not at these volumes most likely.

Kevin Hartman - Goldman Sachs Group, Inc., Research Division - Business Analyst
No, that makes sense. And then just one other one. One of your competitors recently called out accelerated generic deflation in the market. I was
just curious what you guys have been seeing as it relates to generic pricing, if you're seeing something similar and if there's anything in particular
that might be driving that.

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Matt?

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Yes. I would say we've seen some generic deflation in the marketplace. I think it's -- there's, in the retail, carving out like specialty drugs out of this.
There's really not been a lot of new generic introductions that impact retail. And so therefore, I think that puts pricing on the overall generic book.
I would say we've got that kind of baked into our guidance for the year. But I think what -- we've seen some deflation in the marketplace as well.

Operator
And your next question will come from Lisa Gill from JPMorgan.

Michael Roman Minchak - JPMorgan Chase & Co, Research Division - Analyst
It's Mike Minchak on for Lisa. So first, just wondering if you could talk about how the pandemic may have impacted some of your key longer-term
turnaround initiatives. Has there been any delay in those initiatives just given the near-term focus on vaccine administration and testing? And if
we look back to the Analyst Day last March, you laid out some longer-term targets for fiscal '23. Should we think about those targets still remaining
intact at this point?

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APRIL 15, 2021 / 12:30PM, RAD.N - Q4 2021 Rite Aid Corp Earnings Call

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
Everything is on track. I mean I think that's one of the most remarkable things that I even kind of reflect on and can't believe is that we have executed
on every strategic initiative that we set ourselves up for back at Analyst Day over a year ago. So it starts with the rebranding of both Elixir and Rite
Aid, which is complete. The only thing that isn't complete on the rebranding is that we haven't finished all the exterior rebrands. But we're halfway
through the fleet, which I think is pretty remarkable in and of itself because you can imagine how hard it was to do permitting and construction
in the middle of a pandemic. And we are halfway through a 2,400 store fleet.

So we have executed completely on our remerchandising strategy. We are actually -- we've changed out a significant amount of our merchandise
fleet-wide. And we have now eliminated all that inventory that wasn't turning, wasn't relevant to our target customer. And not only have we
executed on our remerchandising, it resulted in a 25% increase in inventory turns, which is a recent all-time high and also a significant reduction
to our working capital tied to inventory.

We have opened our new flagship stores as we committed to do. In those stores, we're showing pharmacy growth of over 300 bps higher than the
rest of the stores in the region. And front-end sales growth is nearly 400 bps higher than the rest of the stores in the region. All of this while improving
overall customer satisfaction and market share.

We've also executed on the cost savings initiatives that we committed to, both at Rite Aid but also on the initiatives of integrating both Rite Aid
and Elixir. Significant work there and significant savings generated. And then, of course, the acquisition of Bartell is well underway and progressing
better than planned, I guess I would say.

So I think there's a lot of noise in the pandemic. But the fact that we've been able to do all of that in addition to launching COVID testing, keeping
our stores clean, protecting our associates and our customers and getting people vaccinated, it's been quite a year. And so we remain committed
to do everything that we had set out to do.

Matthew Schroeder - Rite Aid Corporation - CFO & Executive VP
Yes. Mike, it's Matt. I would say as far as the long-term financial targets, obviously, those were pre-pandemic. A whole lot has happened since then.
I think that the assumptions underlying long-term growth that we see in this company -- potentially see in this company has not changed. But
given that we're not even giving full year guidance for '22 yet, I think we probably need to wait until we get kind of more on the backside of
pandemic impacts before we take a pen to specific long-term assumptions. But I think we still see a lot of growth opportunity in both sides of the
business.

Michael Roman Minchak - JPMorgan Chase & Co, Research Division - Analyst
Got it. That's helpful. And then maybe just a follow-up question on the PBM business. Can you talk about what you're seeing thus far for the selling
season till calendar '22 starts? And then maybe provide some color on the comment around the lower gross profit in the small group business. Has
there been any sort of shift in the model there? Is there something else unique that's driving that headwind?

Heyward Rutledge Donigan - Rite Aid Corporation - President CEO & Director
We -- so a couple of things. First of all, we have, as you know, a very robust small group business, formerly known as MedTrak. And frankly, that
business was very and remains profitable. We need to make sure that we maintain those crucial customers and did execute on some competitive
renewal pricing in that market that did impact our results for the quarter but was a crucial step in ensuring the continued competitive nature of
our positioning in that business. So that -- consider that kind of a onetime effort to ensure that we retain in a competitive environment those key
clients.

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