Major U.S. pharmacy chain Rite Aid has announced its filing for bankruptcy and securing $3.45 billion in fresh financing. The move comes as the company faces declining sales and lawsuits related to the opioid crisis.
In 2022, Rite Aid reached a settlement of up to $30 million to resolve lawsuits alleging its contribution to the oversupply of prescription opioids. The company has now struck a deal with its creditors for a financial restructuring plan aimed at reducing its debt and positioning it for future growth. The bankruptcy filing is a part of this process.
Rite Aid has stated that the plan will not only significantly reduce its debt, but also help settle litigation claims in a fair manner.
In March, the Justice Department filed a complaint against Rite Aid, accusing the company of knowingly filling hundreds of thousands of unlawful prescriptions for controlled substances between May 2014 and June 2019. The complaint further alleged that the company and its pharmacists ignored warning signs indicating the illegality of these prescriptions.
Three whistleblowers, former employees of Rite Aid pharmacies, brought the complaint to the attention of the Justice Department.
Effective from Sunday, Jeffrey Stein, heading a financial advisory firm, has been appointed as Rite Aid’s CEO, replacing Elizabeth Burr, who served as interim CEO and will continue to be a part of Rite Aid’s board.
Earlier this month, Rite Aid notified the New York Stock Exchange of its non-compliance with listing standards. However, the company’s stock continues to be listed and traded during a grace period.
The bankruptcy filing in New Jersey and the non-compliance with listing standards will not impact Rite Aid’s business operations or its reporting requirements with the U.S. Securities and Exchange Commission, according to the company.
Rite Aid has assured the arrangement for regular payment of wages and other costs, although it will be closing some “underperforming” stores among its 2,100 pharmacies across 17 states.
In its latest fiscal quarter ending June 3, Rite Aid reported a decrease in revenue to $5.7 billion, compared to $6 billion in the previous year, resulting in a net loss of $306.7 million.
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