Rite Aid Pharmacy Files for Bankruptcy

Facts

• Drugstore chain Rite Aid on Sunday filed for Chapter 11 bankruptcy protection, announcing it would start restructuring to significantly reduce debt while it deals with declining revenue and opioid litigation.¹
• By filing Chapter 11, the pharmacy can stay in business while restructuring its debts through a court-monitored process. Rite Aid, which filed in New Jersey, announced Sunday it has financed $3.45B to remain open.²
• Rite Aid’s bankruptcy comes after its last financial report, filed in June, showed the company with $3.3B in long-term debt and $135.5M of cash on hand. Over the past six years, the company has accrued nearly $3B in losses, with its debt exceeding its assets by nearly $1B.³
• In addition, Rite Aid has dealt with more than 1K federal, state, and local lawsuits over its alleged filling of illegal painkiller prescriptions. In March, the US Justice Dept. (DOJ) filed a complaint against the company for filling “unlawful prescriptions for controlled substances.”⁴
• Rite Aid has already agreed to a number of expensive settlements, including one for $30M with the state of West Virginia.⁵
• While remaining in business, Rite Aid will reportedly close 400 to 500 of its 2.2K stores. Rite Aid is the third largest standalone pharmacy, but like its competitors, it has been hurt by large retailers, including Amazon and Walmart, opening pharmacies.⁶

Sources: ¹CNBC, ²USA Today, ³CNN (a), ⁴ABC News, ⁵Associated Press and ⁶CNN (b).

Narratives

• Narrative A, as provided by Washington Post. While some people have a nostalgic bond to Rite Aid, the company has failed in many different areas. It took out loads of debt while bleeding cash yet continued to go down a path of destruction. Rite Aid simply can’t compete in the modern business environment, and customers will be fine finding an alternative to the decaying drugstore.
• Narrative B, as provided by The Hill. While some may not mourn Rite Aid’s self-inflicted bankruptcy, there are many customers who will struggle to have their prescriptions filled. Patients are already dealing with prescription shortages, and the closing of many more stores will be another obstacle for them.