The recent Rite Aid (RAD) annual report (let's call it AR19) was like a song from Fiddler on the Roof: "On the one hand, but on the other hand." This has been the case for years due to RAD's acquisitions, store closings and sales, capex, impairments, refinancings, special fees, offsets, and accounting changes. It is difficult to unravel this Gordian Knot to determine whether the company is actually a viable going concern or is simply a cash cow for insiders, but my unraveling attempts point to the latter.

For instance, from AR19 p. 44, SG&A as percentage of revenue decreased slightly, but this was due to a fee from Walgreens Boots Alliance (WBA), partially offset by other costs. Without that fee the SG&A numbers would not have been as favorable. The whole AR19 is replete with such back-and-forth data, so the financial future of the company remains obscure.

Many have written or commented about mismanagement at RAD; I won't go over old ground in that area. The question for investors is whether the company has reached a bottom (or, at least, a really big dip), or whether this is just another step on the downward staircase to further losses and possible dilution - again, I think it's the latter.

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