Major U.S. pharmacy chain Rite Aid filed for bankruptcy Sunday and has obtained $3.45 billion in fresh financing as it carries out a restructuring plan while coping with falling sales and opioid-related lawsuits.
In 2022, Rite Aid settled for up to $30 million to resolve lawsuits alleging pharmacies contributed to an oversupply of prescription opioids. It said it had agreed with its creditors on a financial restructuring plan to cut its debt and position itself for future growth and that the bankruptcy filing was part of that process.
The plan will “significantly reduce the company’s debt” while helping to “resolve litigation claims equitably,” Rite Aid said.
In March, the Justice Department filed a complaint against Rite Aid, alleging it knowingly filled hundreds of thousands of unlawful prescriptions for controlled substances in the period between May 2014 and June 2019. It also accused pharmacists and the company of ignoring “red flags,” indicating the prescriptions were illegal.
The Justice Department acted after three whistleblowers who had worked at Rite Aid pharmacies filed a complaint.
Jeffrey Stein, who heads a financial advisory firm, was appointed Rite Aid’s CEO as of Sunday, replacing Elizabeth Burr, who was interim CEO and remained on Rite Aid’s board.
Earlier this month, Rite Aid notified the New York Stock Exchange that it was not in compliance with listing standards. During a grace period, the company’s stock continues to be listed and traded.
The bankruptcy filing in New Jersey and noncompliance with listing standards would not affect the company’s business operations or its U.S. Securities and Exchange Commission reporting requirements, it said.
Rite Aid said it was arranging to pay wages and other costs as usual, though some “underperforming” stores among its more than 2,100 pharmacies in 17 states will be closed.
It earlier reported that its revenue fell to $5.7 billion in the fiscal quarter that ended June 3, down from $6.0 billion a year earlier, logging a net loss of $306.7 million.
