Rite Aid filed for Chapter 11 bankruptcy in New Jersey on Sunday and will restructure to reduce its debt. The big question is which stores will close and which will remain open.
Rite Aid On Shakey Ground
US pharmacy chain Rite Aid Corp. filed for bankruptcy to close unprofitable stores, address lawsuits over its role in the opioid pandemic, and rework a debt load of roughly $4 billion.
The company is $3.3 billion in debt and has over 1,000 federal lawsuits alleging they oversupplied opioids, according to experts. And growing cheaper competition from retailers like Amazon, Walmart, and Target contributed to slow sales.
Rite Aid, however, has assured customers that it is not going out of business and will continue to serve customers in-store and online.
“We recognize the important role we play in serving you and meeting your healthcare needs, so we want to make sure you understand what this means for you,” Jeffrey S. Stein, the newly appointed CEO of Rite Aid, wrote in a letter addressed to Rite Aid customers on Sunday.
Stein said customers would still be able to pick up prescriptions, get them delivered, or even accrue or use Rite Aid Rewards points.
Rite Aid’s return policy will remain the same, and the stores are expected to “generally” offer the same products and selections, according to an online FAQ page concerning the Chapter 11 filing.
The company, which began in 1962 as a single drugstore in Scranton, Pennsylvania, employs around 45,000 people across more than 2,000 locations.
In 2015, it entered the pharmacy benefit manager business, serving as a middleman between insurers and patients that helps process prescriptions. It’s now planning to sell that business, called Elixir, in bankruptcy.
According to court papers, hit hard by the pandemic, Rite Aid began a series of debt swaps and pay-downs between 2020 and 2022 to try to cut its interest expenses. It also closed around 200 underperforming stores and entered sale-leaseback deals.
In its bankruptcy filing, the company listed $8.6 billion in total debts and $7.6 billion in assets. The company has not yet released a full list of store closures.
“If your local store is one of those affected, we will make every effort to ensure you have access to health services, whether at another Rite Aid or other nearby pharmacy,” Stein wrote in Sunday’s letter to customers. “We will also work to transfer prescriptions accordingly so that there is no disruption of services.”
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