Rite Aid is a major American drugstore chain. The company was founded in 1962 with the name “Thrift D Discount Center” by Alex Grass in Scranton Philadelphia. It later developed into a public company and received its current name in 1968. In 2023, Rite Aid employs over 45,000 people at more than 2,000 retail stores in 17 states.
On Oct. 15, 2023, the company filed for bankruptcy due to a large debt and thousands of lawsuits alleging involvement in the opioid crisis.
Problems The Company Faces
In recent years the company has struggled to keep up with other major drugstore chains like Walgreens and CVS. While facing debt the organization also faces a major accusation.
The U.S. government accuses the drug store chain of ignoring red flags while filling illegal opioid prescriptions. The company also faces over 1,500 lawsuits dealing with opioids. These come from local governments, hospitals, and individuals.
The lawsuit accuses the company of filling prescriptions for addictive painkillers that did not meet legal requirements. In March, the Justice Department filed a complaint against Rite Aid. While dealing with this Rite Aid has $4 billion in debt.
Drug stores also deal with other problems like a shortage in technicians/pharmacists and prescription drug shortages. It had already been closing stores to cut spending while having a debt of $3.3 million.
Bankruptcy and Opioid Lawsuit
On Sunday Rite Aid filed for bankruptcy protection. As a result, the company will also be closing its underperforming stores. The company has faced annual losses for a few years and has been cutting costs as it deals with long-term financial problems. It expects a net loss of $680 million in the current fiscal year.
The alleged involvement in the opioid crisis only adds to their mounting debt. They are looking at a $1 billion charge. The company has already reached many settlements over this allegation. Last year the company reached a settlement with West Virginia for up to $30 million. Federal officials say the drugstore chain has filled hundreds of thousands of illegal prescriptions.
The company’s filing with the U.S. bankruptcy court listed over $8 billion in total debt and over $7 million in assets.
Rite Aid plans to use their bankruptcy to their advantage. in fact, They will use this to resolve legal disputes and sell some of their businesses. The company appointed a new CEO Jeff Stein.
In a statement, Jeff said “My priorities will be overseeing the actions that are now underway to strengthen the company’s financial position and advance the journey to reach its full potential as a modern neighborhood pharmacy,” and “I have confidence in this business and the turnaround strategy that has been developed in recent months.”
what this means for local pharmacies
It was reported that Rite Aid might close 400 to 500 of its stores. As Rite Aid continues to shrink it will open opportunities for its rivals to boost their sales. Many other pharmacies like CVS has faced walk outs and other problems as well.
The company said despite their closing customers will still be able to get prescriptions from nearby stores. It isn’t specified when the stores will be closing but patients prescriptions are expected to be transferred to other pharmacy’s.
Some Rite Aid stores will continue to fill prescriptions, and customers will still be able to visit its shop online.
By Jamarion Thomas
Sources
NBC News: Rite Aid bankruptcy means pharmacies will keep dwindling
Pharmacy Times: Rite Aid Initiates Voluntary Chapter 11 Process to Aid Company Financial Restructuring
USA Today: Rite Aid has filed for bankruptcy. What it means for the pharmacy chain and its customers
First and featured image courtersy of mike mozart’s Flickr page – Creative Commons License
First insert image courtesy of soq’s Flickr Page – Creative Commons License
