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Rite Aid Files for Bankruptcy, Plans to Reinvent as Modern Pharmacy

Published Oct 19, 2023 18:48
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Once the largest pharmacy chain in America, Rite Aid (NYSE:US90274J5618=UBSS) filed for bankruptcy protection on Thursday, with a vision to reinvent itself as a “modern neighborhood pharmacy.” As part of its restructuring plan, the company intends to close 154 stores across more than 10 states in an effort to enhance financial stability and reduce rental costs. Pennsylvania, California, and New York will be most affected by these closures, with additional closures planned as the company addresses its $3.3 billion debt, not including pending opioid lawsuits.

The decision follows a challenging period for Rite Aid, which employs nearly 45,000 people including 6,100 pharmacists. The company has been grappling with declining sales and over a thousand lawsuits related to illegal painkiller prescriptions. A failed merger attempt with Walgreens in 2017 and a nearly 80 percent fall in stock value this year have further compounded the firm's difficulties. Major creditors of the company include McKesson (NYSE:MCK) and Humana (NYSE:HUM) Health.

In a bid to alleviate its financial burdens, Rite Aid has secured up to $3.45 billion in financing as part of its bankruptcy restructuring. The company also plans to sell its pharmacy benefits company Elixir to MedImpact Healthcare Systems.

Jeffrey Stein, the newly appointed CEO of Rite Aid, expressed optimism about the company's future post-bankruptcy. However, Rite Aid currently lags far behind CVS Pharmacy and Walgreens in terms of store count. While Rite Aid operates over 2,000 stores across 17 states, CVS Pharmacy, and Walgreens run nearly 10,000 and almost 9,000 stores nationwide respectively.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Rite Aid Files for Bankruptcy, Plans to Reinvent as Modern Pharmacy
 

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