Rite Aid Files For Bankruptcy And Secures $3.45 Billion In Financing

Major U.S. pharmacy chain Rite Aid announced on Sunday that it has filed for bankruptcy and secured $3.45 billion in fresh financing as part of its ongoing restructuring efforts while facing declining sales and lawsuits related to opioids.

In 2022, Rite Aid reached a settlement of up to $30 million to resolve lawsuits alleging the chain’s involvement in an oversupply of prescription opioids. The company stated that it had come to terms with its creditors on a financial restructuring plan aimed at reducing its debt and positioning itself for future growth, with the bankruptcy filing being a part of this process.

The plan is expected to significantly decrease the company’s debt load and help resolve litigation claims fairly, according to Rite Aid.

In March, the U.S. Justice Department filed a complaint against Rite Aid, accusing the company of knowingly filling hundreds of thousands of unlawful prescriptions for controlled substances from May 2014 to June 2019. The complaint also alleged that pharmacists and the company ignored warning signs indicating the prescriptions were illegal. This action by the Justice Department was prompted by complaints from three whistleblowers who had previously worked at Rite Aid pharmacies.

Effective Sunday, Jeffrey Stein, who leads a financial advisory firm, assumed the role of Rite Aid’s CEO, replacing Elizabeth Burr, who had been serving as interim CEO and will continue to sit on Rite Aid’s board.

Earlier this month, Rite Aid informed the New York Stock Exchange that it was not in compliance with listing standards. During a grace period, the company’s stock will continue to be listed and traded.

Rite Aid clarified that the bankruptcy filing in New Jersey and the noncompliance with listing standards will not impact its business operations or its obligations for reporting to the U.S. Securities and Exchange Commission.

The company stated that it would continue to handle wage payments and other expenses as usual, but it also indicated that some “underperforming” stores among its more than 2,100 pharmacies in 17 states will be closed.

In the fiscal quarter ending June 3, Rite Aid reported a decrease in revenue to $5.7 billion, down from $6.0 billion in the previous year, with a net loss of $306.7 million.