Rite Aid files for bankruptcy, names new CEO

Rite Aid filed for Chapter 11 bankruptcy protection and named a new CEO to lead it through the restructuring process, the company announced on October 15.

The pharmacy chain has struggled to keep up with competitors CVS and Walgreens as they invest heavily in healthcare. In recent years, Rite Aid has faced increasing debt, falling revenue, and multimillion-dollar opioid settlements.

Jeffrey Stein, the founder and managing partner of financial advisory firm Stein Advisors, was named Rite Aid’s new CEO, as executives said he has experience “guiding companies through financial restructurings.”

Rite Aid executives said that they’re working to ensure employees receive uninterrupted pay during the bankruptcy process, but an undisclosed number of stores are set to close. Employees from those stores, as well as customer prescriptions, will be transferred to new locations where possible. 

In the bankruptcy filings, Rite Aid reported $8.6 billion in total debt and $7.7 billion in assets. The bankruptcy plan is hoped to “significantly reduce” Rite Aid’s debt and help the company resolve its opioid litigation “in an equitable manner,” company executives said in a statement.

Rite Aid execs said the company’s received nearly $3.5 billion from lenders to support it through the bankruptcy process.

Rite Aid plans to sell the PBM to MedImpact Healthcare Systems, a pharmacy benefits company, though the deal is subject to “higher and better offers,” Rite Aid executives said in a statement. Elixir’s insurance arm is not part of the sale or the bankruptcy filings. The court has yet to approve the transaction.

Rite Aid said in an October 12 Securities and Exchange Commission notice that it wasn’t able to file its quarterly earnings on time without “unreasonable effort and expense,” as it was reviewing refinancing options. The company said it intends to file its earnings on or before October 17.

In its most recent earnings in June, Rite Aid reported $5.7 billion in revenue, down from $6 billion the year prior. The company also reported a net loss of $306.7 million and said it expects to lose between $650 million and $680 million in fiscal year 2024.

Earlier this month, Rite Aid received a notice from the New York Stock Exchange (NYSE) stating that the company was no longer in compliance with listing standards and faced delisting.

Rite Aid “can provide no assurances that it will be able to regain compliance with the NYSE’s continued listing standards,” the company said in a statement.

Rite Aid declined to comment further.