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In the past few months, huge national retailers like Bed, Bath & Beyond, Tuesday Morning and Christmas Tree Shops have shuttered all of their locations amid bankruptcy, and now, a massive pharmacy chain is declaring bankruptcy as well.
Rite Aid just filed for Chapter 11 bankruptcy. According to the court filing with the US Bankruptcy Court for the District of New Jersey, the company estimated assets at $7.65 billion but debts of $8.6 billion. While the fate of their 2,100 stores and 42,000 employees is uncertain, the bankruptcy allows for Rite Aid to restructure and hopefully continue.
They said in a statement that they have already secured $3.5 billion in financing and debt reduction agreements, and they plan to quickly close stores and sell off parts of the business, like their prescription benefit provider Elixir Solutions. They also hired a new CEO, Jeff Stein, to help guide them through the challenging times. He stated, "With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy. In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on — now and into the future."
While Rite Aid was hit hard by consumers spending less and going to big box stores for prescriptions more, the biggest issue for the company are financial challenges relating to opioid lawsuits, especially one from the U.S. government over what the Department of Justice feels were red flags that Rite Aid failed to detect around filling opioid and painkiller prescriptions. The chain is reportedly facing over a thousand federal lawsuits that have been consolidated into one. Bankruptcy would effectively end those lawsuits.
Rite Aid already had plans to close hundreds of locations. Updates on which stores will be affected is likely to come out in the the weeks to come.