Rite Aid Reportedly Considering Second Bankruptcy Filing

Rite Aid might be contemplating bankruptcy for a second time. According to a Wall Street Journal report, even though the drugstore giant emerged from Chapter 11 protection less than a year ago, it may need to restructure yet again. It appears the pharmacy’s efforts to turn things around may not be working.

However, Rite Aid may be weighing another option to avoid a second bankruptcy. The company could find a buyer for part or all of the business. Sources state that it has purportedly enlisted the Paul Weiss law firm to discuss viable options, which could include a second bankruptcy filing.

When Rite Aid filed for Chapter 11 protection in October 2023, it operated 2,000 stores and employed 47,000 people. When the bankruptcy case closed last year, only 1,300 locations remained open.

At its height, Rite Aid had over 5,000 stores as of May 2008. However. both internal and external factors have forced the company to make changes to stay afloat, including store closures and a bankruptcy filing.

Rite Aid’s Financial Problems

Leading up to Rite Aid’s financial troubles, the chain has been presented with several challenges. On top of multiple lawsuits related to the opioid crisis, the U.S. Department of Justice took the pharmacy to court in 2023 over violations related to the False Claims Act and Controlled Substances Act. The company ended up paying a multi-million dollar settlement for filling prescriptions that did not have a lawful medical purpose or were otherwise unnecessary.

Last year, Rite Aid was the subject of a massive data breach involving the personal information of 2.2 million people. A class action lawsuit was filed shortly thereafter. A little over a month ago, the chain asked to settle the pending suit by paying $6.8 million.

Among pharmacy chains, Rite Aid is the third largest, sitting behind rivals Walgreens and CVS. The entire industry has been struggling with various issues, including rising operating expenses and increased competition from Amazon and Walmart.

To cut costs, Walgreens announced it will close about 500 stores this year. The reduction of locations could help the company focus on better performing locations and adjust to changing market conditions.