Rite Aid reportedly prepping bankruptcy filing

Rite Aid  reportedly is preparing to file for Chapter 11 bankruptcy protection  in a move to deal with its debt and lawsuits related to opioid prescriptions.

The news was first reported by The Wall Street Journal. According to the report, Rite Aid, which has more than $3.3 billion in long-term debt, is facing more than 1,000 federal, as well as a number of state-level,  lawsuits over allegations that the chain contributed to the country’s opioid crisis by oversupplying painkillers such as OxyContin. 

Also, the Department of Justice in March filed a civil lawsuit against the company, claiming that it knowingly processed “unlawful prescriptions for controlled substances,” which stands in violation of False Claims Act and Controlled Substances Act. A bankruptcy filing would put a pause to the lawsuits and potentially allow Rite Aid resolve them in a single forum. It also would allow the company to restructure its debt.

In January, Rite Aid appointed board member Elizabeth (“Busy”) Burr as interim chief executive following the abrupt departure of Heyward Donigan.  Her exit came as the company has struggled to compete with pharmacy rivals CVS Health and Walgreens, both of which has made extensive inroads into the broader field of health care

Rite Aid, which has more than  2,200 locations across 17 states,  in June reported a first-quarter net loss of $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. Revenues fell to $5.65 billion from $6.01 billion in the prior year.

For its  fiscal 2024 year, Rite Aid expects net losses to range between $650 million and $680 million.