Pharmacy giant Rite Aid faces an onslaught of lawsuits over its alleged role in the opioid epidemic and plans to file for bankruptcy protection.
Here’s What Happened
Rite Aid Corp (RAD.N) is preparing to file for bankruptcy in coming weeks to address lawsuits the drugstore chain is facing over its alleged role in the sale of opioids, the Wall Street Journal reported on Friday, citing people familiar with the plan.
Over the past year, the company’s stock has lost 90% of its value. Shares of the pharmacy retail chain operator closed down 51% at 71 cents.
Chapter 11 filing would cover Rite Aid’s more than $3.3 billion debt load and pending legal allegations that it oversupplied prescription painkillers.
The Department of Justice filed a lawsuit against Rite Aid earlier this year, claiming the company knowingly filled “unlawful prescriptions for controlled substances” in violation of the False Claims Act and Controlled Substances Act.
Reports had emerged last month that Rite Aid was mulling a Chapter 11 filing to address a financial crunch from opioid liabilities, a high debt load, a lackluster quarterly performance, and other market and economic factors.
For its fiscal 2024 first quarter ended June 3, Rite Aid posted a more extensive net loss, nearly tripling from a year ago, and saw revenues drop 6% year over year.
“We do not comment on rumors and speculation,” Joy Errico, senior vice president and chief communications officer at Rite Aid, stated in an email to Winsight Grocery Business on Friday.
Rite Aid operates more than 2,200 drug stores in 17 states, and its Elixir subsidiary provides pharmacy benefit management and other Rx services.
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