Rite Aid Files for Chapter 11 Bankruptcy

October 16, 2023

CNBC
  • Rite Aid enters Chapter 11 bankruptcy protection in New Jersey.
  • Company grapples with declining sales, opioid litigation, and stiff competition.
  • Jeffrey Stein takes the helm as CEO for restructuring efforts.

Rite Aid, the drugstore chain, has filed for Chapter 11 bankruptcy protection in New Jersey amid declining sales, rising debts, and multiple lawsuits related to the nation’s opioid crisis. Jeffrey Stein has been appointed as CEO and chief restructuring officer to guide the company through restructuring. Rite Aid has negotiated a deal with creditors to reduce its debt significantly, including reevaluation of its retail footprint and the closure of underperforming locations. The company has secured $3.45 billion in new funding from lenders to ensure liquidity during the restructuring. Despite lower demand for Covid vaccines and testing, a decrease in its prescription drug plan membership, and loss of customers from Elixir, its pharmacy benefits business, Rite Aid remains optimistic. The company faces stiff competition from larger rivals such as CVS and Walgreens, which have pivoted towards a healthcare focus. Furthermore, Rite Aid is dealing with lawsuits alleging its contribution to the opioid crisis through unlawful filling of opioid prescriptions, which the company denies.

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