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Prominent American Pharmacy Chain Rite Aid Initiates Bankruptcy Proceedings

by Lucas Garcia
10 comments
Rite Aid Bankruptcy

Rite Aid, a leading pharmacy chain in the United States, announced on Sunday that it has entered into bankruptcy proceedings and secured $3.45 billion in new financing. This move is part of a broader financial restructuring strategy aimed at mitigating declining revenues and addressing lawsuits related to the opioid crisis.

Last year, Rite Aid agreed to a settlement of up to $30 million to put to rest lawsuits accusing the pharmacy of contributing to the excessive distribution of prescription opioids. The company revealed that it had come to terms with its creditors concerning a financial restructuring plan intended to reduce its outstanding debts and set the stage for future expansion. The filing for bankruptcy is a component of this restructuring plan.

According to Rite Aid, the restructuring will “substantially alleviate the firm’s debt burden” and assist in “settling ongoing legal disputes in a fair manner.”

In a separate development, the U.S. Justice Department lodged a formal complaint against Rite Aid in March of this year. The complaint accused the pharmacy chain of consciously processing hundreds of thousands of unauthorized prescriptions for controlled substances between May 2014 and June 2019. Furthermore, it alleged that both the pharmacists and the company disregarded “warning signs” that the prescriptions were illicit.

The action by the Justice Department was precipitated by the reports of three whistleblowers who were formerly employed at Rite Aid pharmacies.

Jeffrey Stein, who leads a financial advisory firm, took over as the CEO of Rite Aid effective Sunday, succeeding Elizabeth Burr. Burr had been serving as the interim CEO and will continue to be a member of Rite Aid’s board of directors.

Earlier in the month, Rite Aid informed the New York Stock Exchange that it had fallen out of compliance with listing standards. However, the company’s shares continue to be listed and traded during a grace period.

The New Jersey bankruptcy filing and the failure to meet listing standards will not have an impact on Rite Aid’s daily business operations or its reporting obligations to the U.S. Securities and Exchange Commission, the company stated.

In terms of employee remuneration and other expenses, Rite Aid confirmed that payments would proceed as normal. Nevertheless, it plans to shut down some of its “underperforming” stores within its network of over 2,100 pharmacies across 17 states.

In its most recent financial report, Rite Aid disclosed that its revenue declined to $5.7 billion for the fiscal quarter ending on June 3, compared to $6.0 billion the previous year. The company also reported a net loss of $306.7 million for the quarter.

Frequently Asked Questions (FAQs) about Rite Aid Bankruptcy

What led to Rite Aid filing for bankruptcy?

Rite Aid filed for bankruptcy as part of a broader financial restructuring strategy aimed at mitigating declining revenues and addressing ongoing lawsuits related to the opioid crisis.

How much in new financing has Rite Aid secured?

Rite Aid has secured $3.45 billion in new financing as it carries out its financial restructuring plan.

What is the primary objective of Rite Aid’s financial restructuring?

The main objective of the financial restructuring is to significantly reduce the company’s debt burden while resolving ongoing legal disputes in an equitable manner.

What legal challenges is Rite Aid facing?

Rite Aid settled lawsuits in 2022 alleging that it contributed to an oversupply of prescription opioids. In addition, the U.S. Justice Department filed a formal complaint against Rite Aid, accusing it of knowingly processing unauthorized prescriptions for controlled substances between May 2014 and June 2019.

Who is the new CEO of Rite Aid?

Jeffrey Stein, who leads a financial advisory firm, took over as the CEO of Rite Aid effective on the same Sunday that the bankruptcy was announced.

What is the status of Rite Aid’s listing on the New York Stock Exchange?

Earlier in the month before the bankruptcy filing, Rite Aid informed the New York Stock Exchange that it was not in compliance with listing standards. However, the company’s shares continue to be listed and traded during a grace period.

Will the bankruptcy affect Rite Aid’s business operations?

According to Rite Aid, the bankruptcy filing and noncompliance with NYSE listing standards will not impact the company’s day-to-day business operations or its reporting obligations to the U.S. Securities and Exchange Commission.

Are there plans to close any Rite Aid stores?

Rite Aid plans to shut down some of its “underperforming” stores within its network of over 2,100 pharmacies across 17 states.

What was Rite Aid’s financial performance in the most recent fiscal quarter?

In its most recent financial report, Rite Aid disclosed that its revenue declined to $5.7 billion for the fiscal quarter ending on June 3, compared to $6.0 billion the previous year. The company also reported a net loss of $306.7 million for the quarter.

More about Rite Aid Bankruptcy

  • Rite Aid Official Announcement
  • U.S. Justice Department Complaint Against Rite Aid
  • New York Stock Exchange Listing Standards
  • Overview of Opioid-related Lawsuits
  • Rite Aid’s Recent Financial Reports
  • Profile of Jeffrey Stein, New Rite Aid CEO

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10 comments

Dan_the_Man October 16, 2023 - 11:08 am

So they got a new CEO just as they’re filing for bankruptcy? Talk about a hot seat, Jeffrey Stein’s got his work cut out for him.

Reply
Mike J. October 16, 2023 - 4:28 pm

Wow, didn’t see that coming. Rite Aid filing for bankruptcy is big news. Guess the opioid lawsuits really took a toll.

Reply
FinancialGuru October 16, 2023 - 6:00 pm

non-compliance with NYSE and now this? They better have a solid restructuring plan if they’re gonna survive all this mess.

Reply
JennyQ October 16, 2023 - 8:02 pm

With more than 2,100 stores, how many are they planning to close? Kinda worrying if you ask me.

Reply
Investor101 October 16, 2023 - 8:25 pm

Diversify, diversify, diversify. This is why I never put all my eggs in one basket, especially in pharma.

Reply
PharmaInsider October 16, 2023 - 9:18 pm

closing “underperforming” stores seems like a good move, but is it too little too late?

Reply
Emily October 17, 2023 - 12:00 am

they settled for 30 mil but their net loss is 306.7 mil. sounds like the lawsuits were just the tip of the iceberg.

Reply
Vicky_S October 17, 2023 - 1:54 am

Changing CEOs in the middle of all this. brave or foolish? Time will tell.

Reply
Sarah_W October 17, 2023 - 1:57 am

Whoa, 3.45 billion in new financing. That’s huge. What’re they planning to do, rebuild the entire company from ground up?

Reply
CryptoDude October 17, 2023 - 9:15 am

If they’re settling legal disputes and restructuring debt, wonder if they’ll also explore blockchain for supply chain or something. Just a thought.

Reply

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