It's a long, hard road back to respectability, and Rite Aid (NYSE:RAD) isn't quite there yet. Rocked by a huge scandal in the late 1990s, the nation's third-largest freestanding pharmacy chain still has a long way to go before it's back to some semblance of its former self.

For the second quarter, revenue was basically flat, though technically up about 0.2%. Same-store sales climbed a half-percent, with some weakness in pharmacy sales offset by better performance in front-end (non-pharmacy) sales. Rite Aid's gross margins were basically stable, though selling, general, and administrative expenses ticked up very slightly.

To get a better picture of profitability, I think you need to strip away the various charges related to impairments, store closings, and debt as well as various gains on sales or debt modifications. If you do so, you see that operating income fell about 20% and pre-tax income was cut in half. That said, at least it was positive (as opposed to the pre-tax loss according to generally accepted accounting principles).

The company's cash flow picture is also a bit odd. If you look at trailing six-month cash flow as reported, you see operating cash flow up 35%. But I don't think that's the real story. See, Rite Aid included the proceeds from a receivables securitization in the operating cash flow number, boosting it by about $140 million. Without that, operating cash flow actually declined 25%. Personally, I think it's sort of odd to include what I would consider a financing event in the operating portion: I'm not saying it's deceptive or wrong, I'm just saying that I think investors would do well to subtract it when considering the company's cash flow outlook.

Rite Aid certainly has a tough row to hoe. Rivals like Walgreen (NYSE:WAG) and Wal-Mart (NYSE:WMT) are two very well-run operators, and CVS (NYSE:CVS) and Albertsons (NYSE:ABS) aren't patsies either. Making matters worse, many health plans are switching to mail-order pharmacy benefit plans, and that's not the sort of market shift that Rite Aid really needs while it's still trying to fix the business.

Can Rite Aid make it back? Sure, I don't see why not. But I'm not sure how much of the benefit will go to common-stock holders, because the company has a lot of potentially dilutive financing on the books. Intrepid, not to mention patient, investors may see potential here, but I think there are far better turnaround ideas to be had.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).