Stock Market News

Rite Aid files for Chapter 11 amid declining sales and opioid crisis lawsuits

2023.10.16 00:01


© Reuters.

Rite Aid (NYSE:), once the largest pharmacy chain in the US, has filed for Chapter 11 bankruptcy protection to a mounting debt crisis, declining sales, and ongoing lawsuits related to its alleged role in the opioid crisis. The company is grappling with major creditors including McKesson Corporation (NYSE:) and Humana (NYSE:) Health. The Justice Department has accused Rite Aid of filling excessive opioid prescriptions, a claim the company denies.

The pharmacy chain has faced stiff competition from larger rivals such as CVS, Walgreens Boots Alliance (NASDAQ:), and Amazon (NASDAQ:), which has led to falling sales and less money available for investment and debt repayment. As of June, Rite Aid had $3.3 billion in debt excluding pending opioid litigation. Its share price has plummeted nearly 81% since the beginning of the year, which aligns with the InvestingPro data showing a year-to-date price total return of -80.59%.

Sarah Foss of Debtwire sees Chapter 11 as the only feasible solution for Rite Aid to navigate this perfect storm of issues. The company has been implementing a downsizing strategy that includes closing stores and planning to shut hundreds more, further eroding its competitive position. This aligns with InvestingPro Tips highlighting that Rite Aid has been quickly burning through cash and its revenue has been declining at an accelerating rate.

Rite Aid’s pharmacy benefit manager, Elixir, which was acquired in 2015 for $2 billion, struggles to compete with industry giants due to its smaller scale. This puts Elixir at a disadvantage when negotiating larger contracts that could generate more cash flow. A failed merger with Walgreens in 2017 resulted in Rite Aid selling over 2,000 stores and three distribution centers to Walgreens for $5.18 billion. Another attempted merger with grocery chain Albertsons (NYSE:) was called off in 2018 due to lack of shareholder support.

During the pandemic, Rite Aid initially saw a sales boost as customers stocked up on sanitizers and beauty products. However, as customers started consolidating their trips to drugstores, Rite Aid’s impulse purchases declined significantly.

Rite Aid was originally established as Thrif D Discount Center in Scranton, Pennsylvania in 1962 before rebranding to Rite Aid in 1968. It underwent rapid expansion across the U.S., becoming the country’s largest drugstore chain at one point. In the late 1990s and early 2000s, Rite Aid was embroiled in a securities and accounting fraud case that forced it to restate earnings by $1.6 billion.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 64,712.34 0.59%
ethereum
Ethereum (ETH) $ 3,508.45 1.39%
tether
Tether (USDT) $ 0.999139 0.10%
bnb
BNB (BNB) $ 594.77 0.27%
solana
Solana (SOL) $ 133.00 3.30%
staked-ether
Lido Staked Ether (STETH) $ 3,506.37 1.47%
usd-coin
USDC (USDC) $ 0.999181 0.17%
xrp
XRP (XRP) $ 0.490488 0.87%
dogecoin
Dogecoin (DOGE) $ 0.123111 0.16%
the-open-network
Toncoin (TON) $ 7.13 2.26%
cardano
Cardano (ADA) $ 0.38081 1.52%
avalanche-2
Avalanche (AVAX) $ 27.39 0.41%
shiba-inu
Shiba Inu (SHIB) $ 0.000018 1.63%
tron
TRON (TRX) $ 0.116498 0.18%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 64,738.35 0.61%
chainlink
Chainlink (LINK) $ 14.26 0.21%
polkadot
Polkadot (DOT) $ 5.65 3.28%
bitcoin-cash
Bitcoin Cash (BCH) $ 389.20 0.28%
uniswap
Uniswap (UNI) $ 10.03 1.06%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,649.32 1.40%
near
NEAR Protocol (NEAR) $ 5.08 1.24%
litecoin
Litecoin (LTC) $ 73.77 0.43%
matic-network
Polygon (MATIC) $ 0.573502 0.71%
leo-token
LEO Token (LEO) $ 5.68 0.62%
dai
Dai (DAI) $ 0.999039 0.08%
pepe
Pepe (PEPE) $ 0.000011 4.15%
fetch-ai
Fetch.ai (FET) $ 1.58 11.23%
internet-computer
Internet Computer (ICP) $ 8.26 0.24%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.17%
ethereum-classic
Ethereum Classic (ETC) $ 24.08 0.44%
renzo-restaked-eth
Renzo Restaked ETH (EZETH) $ 3,515.51 1.38%
kaspa
Kaspa (KAS) $ 0.14291 0.87%
monero
Monero (XMR) $ 168.21 1.06%
aptos
Aptos (APT) $ 6.80 1.23%
render-token
Render (RNDR) $ 7.65 1.46%
hedera-hashgraph
Hedera (HBAR) $ 0.08123 0.44%
stellar
Stellar (XLM) $ 0.093533 0.61%
cosmos
Cosmos Hub (ATOM) $ 6.86 0.62%
mantle
Mantle (MNT) $ 0.821295 0.59%
arbitrum
Arbitrum (ARB) $ 0.810244 0.91%
okb
OKB (OKB) $ 42.62 0.88%
crypto-com-chain
Cronos (CRO) $ 0.093573 0.54%
filecoin
Filecoin (FIL) $ 4.38 1.74%
blockstack
Stacks (STX) $ 1.63 2.25%
first-digital-usd
First Digital USD (FDUSD) $ 0.997833 0.47%
immutable-x
Immutable (IMX) $ 1.56 0.28%
maker
Maker (MKR) $ 2,373.11 3.40%
vechain
VeChain (VET) $ 0.026617 0.37%
sui
Sui (SUI) $ 0.880775 2.52%
the-graph
The Graph (GRT) $ 0.222518 1.86%