Rite Aid files for bankruptcy, plans to close stores

Rite Aid bankruptcy overview: 

• Who: Rite Aid filed for Chapter 11 bankruptcy.
• Why: The company will fund a restructuring that will include closing stores with a $3.45 billion bankruptcy loan.
• Where: The Rite Aid bankruptcy was filed in federal court in New Jersey.

Rite Aid has filed for federal Chapter 11 bankruptcy protection and will fund a restructuring that includes closing stores and a $3.45 billion bankruptcy loan. A federal court in New Jersey approved the “First Day” motions of the filing for Rite Aid to access those funds, according to a news release.

“With the support of certain of our lenders and the majority of our bondholders, we look forward to moving through this process and emerging as a stronger company, well-positioned for long-term success,” Jeffrey S. Stein, chief executive officer and chief restructuring officer of Rite Aid, said in the release.

The company has 2,100 retail pharmacies in 17 states and reported $24 billion in revenue in fiscal year 2023 but also had $750 million in losses that it blames on litigation costs from opioid-related lawsuits. The company employs more than 6,100 pharmacists.

The Rite Aid bankruptcy restructuring will significantly reduce the company’s debt while increasing its financial flexibility, Rite Aid said. 

Rite Aid pharmacists filled hundreds of thousands of prescriptions between May 2014 and June 2019 for controlled substances such as Oxycontin and fentanyl that lacked a legitimate medical purpose, the United States Justice Department said earlier this year. The department said the pharmacy violated the False Claims Act and Controlled Substances Act. 

“According to our complaint, Rite Aid’s pharmacists repeatedly filled prescriptions for controlled substances with obvious red flags, and Rite Aid intentionally deleted internal notes about suspicious prescribers,” Associate Attorney General Vanita Gupta said at the time. “These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally out of Rite Aid’s stores.”

Rite Aid will sell Elixir Solutions to MedImpact Healthcare Systems as part of bankruptcy proposal

MedImpact Healthcare Systems will take over Rite Aid’s Elixir Solutions business as part of the process, though the transaction is subject to higher and better offers, court approval and other customary conditions, Rite Aid said. 

Elixir will continue its normal operations during the sale process.

Rite Aid disclosed that it suffered a major data breach in May that the drugstore chain says may have compromised its customers’ personal information. 

Do you shop at Rite Aid stores? Let us know in the comments.

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