A MAJOR pharmacy chain has revealed its game plan moving forward from its Chapter 11 bankruptcy filing this week.
As Rite Aid prepares for potential store closing sales, the drug store giant is working out the details of shuttering all of its roughly 1,240 locations – but with a caveat.
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Founded in 1962, Rite Aid is a national drugstore chain in the US with thousands of locations – a major competitor to pharmacies like CVS and Walgreens.
Pharmacy chains have been struggling over the past few years due to a handful of factors, including decreasing prescription reimbursement, high theft rates, and rising costs.
Shifting consumer habits have also impacted the industry, as customers spend more of their dollars at online retailers and rivals like as Amazon and Walmart that offer more competitive pricing.
The temporary financial boost that drug stores saw during the pandemic due to their role in issuing vaccines has also played a role.
As a result of these hardships, drug stores across the US are having difficulty turning profits, with roughly one out of three US retail pharmacies having shut down since 2010,
Rite Aid has been hit hard by these industry wide challenges, filing for Chapter 11 bankruptcy on Monday.
It was the “only viable path forward for Rite Aid,” a company spokesperson shared with The U.S. Sun.
Rite Aid CEO Matt Schroeder noted that the company’s troubles boiled down to financial hardships that were “intensified by the rapidly evolving retail and healthcare landscapes.”
The company currently has 1,240 locations in 15 US states and is planning to initiate a process of selling all or a portion of its stores to a buyer.
Rite Aid is currently “in active discussions with multiple potential buyers,” according to the spokesperson.
Rite Aid will also “initiate store closing sales” at its stores and eventually close down all the locations it has not sold, per its bankruptcy filing.
The spokesperson clarified that any store operations or assets not sold through the bankruptcy process would no longer be owned or operated by Rite Aid.
“This means that over the next few months, all Rite Aid distribution centers will close, and all stores will either close or be operated by a new owner,” said the Rite Aid representative.
The pharmacy giant shared that it has acquired $1.94 billion in new financing to keep its store fleet operational throughout the bankruptcy proceedings and potential sale.
PRESCRIPTION PROBLEMS
As Rite Aid undergoes its Chapter 11 bankruptcy process, the pharmacy giant is working to ensure a smooth transition for its customers.
“As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible,” said the CEO.
Rite Aid customers will still be able to access pharmacy services and products in stores and online, including prescriptions and immunizations, the company shared in a news release.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
The company said it is working to transfer customer prescriptions to other pharmacies.
Shoppers can utilize the Rite Aid store locator tool to source contact information for their local store.
BANKRUPTCY BUST
Rite Aid’s bankruptcy filing this week marks the second time in under two years.
The company first filed for Chapter 11 in October 2023 due to a variety of factors, including pressure from rivals like Walgreens and CVS in such a competitive industry.
Rite Aid also struggled due to slumping sales and the rapid rise of e-commerce, with both factors making it tough for the company to repay its debt.
The pharmacy chain had nearly $4 billion in debt at the time, struggling to manage payouts from several lawsuits tied to its role in the opioid epidemic.
Rite Aid is not the only drug store chain struggling to stay afloat.
Walgreens is also on the list of major pharmacy companies closing spots, with 500 locations slated to shutter.
Meanwhile, CVS has confirmed that one million patients across 17 states will lose coverage as the CEO warned of “pharmacy deserts.”
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