Pharmacy chain Rite Aid has filed for bankruptcy and secured $3.45 billion in fresh financing to support its restructuring plan. The company aims to reduce its debt and resolve litigation claims related to opioid-related lawsuits. Rite Aid’s revenue fell in the last fiscal quarter, and it has announced the closure of some underperforming stores. The bankruptcy filing will not impact its business operations or reporting requirements.
PHILADELPHIA (AP) – Major U.S. pharmacy chain Rite Aid announced on Sunday that it has filed for bankruptcy and secured $3.45 billion in fresh financing. This move comes as the company faces declining sales and numerous lawsuits related to the opioid crisis.
In 2022, Rite Aid settled for up to $30 million to resolve lawsuits that accused the company of contributing to an oversupply of prescription opioids. As part of its efforts to cut its debt and position itself for future growth, Rite Aid reached an agreement with its creditors on a financial restructuring plan. The bankruptcy filing is a crucial step in this process.
The company stated that the plan will significantly reduce its debt and help resolve litigation claims in a fair manner. This development comes in the wake of a complaint filed by the Justice Department in March. The complaint alleges that Rite Aid knowingly filled hundreds of thousands of unlawful prescriptions for controlled substances between May 2014 and June 2019. The company and its pharmacists are accused of ignoring warning signs indicating the illegality of these prescriptions.
As part of the restructuring process, Rite Aid appointed Jeffrey Stein, the head of a financial advisory firm, as its new CEO. Stein replaces Elizabeth Burr, who was serving as the interim CEO and will remain on the company’s board.
Despite the bankruptcy filing and noncompliance with listing standards, Rite Aid reassured stakeholders that its business operations and reporting requirements with the U.S. Securities and Exchange Commission would not be affected. The company also stated that it would continue to pay wages and other costs as usual, although it plans to close some “underperforming” stores among its 2,100 pharmacies located across 17 states.
Rite Aid had previously reported a decline in revenue, with $5.7 billion in the fiscal quarter ending in June 2023, compared to $6.0 billion in the same period the previous year. The company also recorded a net loss of $306.7 million during this quarter.
As Rite Aid undergoes this restructuring process, it hopes to emerge stronger and more financially stable. The next few months will be crucial in determining the future trajectory of the company and its ability to navigate the challenges it faces in the competitive pharmacy industry..