Rite Aid Bankrupt Due To Sales Drop & Opioid Lawsuits

Rite Aid Bankrupt Due To Sales Drop & Opioid Lawsuits

Introduction

Rite Aid, a prominent U.S. pharmacy chain, has recently declared bankruptcy and secured $3.45 billion in fresh funding as part of its restructuring strategy in response to declining sales and legal issues related to opioid lawsuits.

In 2022, the company settled for up to $30 million to resolve allegations that its pharmacies contributed to an oversupply of prescription opioids. This bankruptcy filing is a crucial step in their efforts to cut debt and position themselves for future growth, according to Rite Aid.

The restructuring plan aims to significantly reduce the company's debt while addressing litigation claims fairly. Rite Aid cited ongoing costs associated with underperforming stores as a major challenge, having closed over 200 struggling locations in recent years. The company employs 45,000 individuals, including over 6,100 pharmacists, who fill nearly 200 million prescriptions annually. Rite Aid reported having $134 million in cash, the ability to borrow up to $390 million, and $524 million in liquidity.

In March, the Justice Department filed a complaint against Rite Aid, alleging that the company knowingly filled hundreds of thousands of unlawful prescriptions for controlled substances between May 2014 and June 2019. The complaint also accused both pharmacists and the company of disregarding warning signs indicating the illegality of these prescriptions. This action was prompted by three whistleblowers who had previously worked at Rite Aid pharmacies.

In September, Rite Aid announced plans to close 400 to 500 stores across the U.S. The company, which operates more than 2,100 pharmacies in 17 states, has now revealed its intention to close additional underperforming stores, without specifying the number or timing of these closures.