A Rite Aid store stands in Brooklyn on August 28, 2023 in New York City.
Spencer Platt | Getty Images
Rite Aid has filed for Chapter 11 bankruptcy protection in New Jersey, announcing plans to restructure and reduce its debt significantly.
The company has reached a deal with creditors for a restructuring plan that includes evaluating its retail footprint and closing underperforming locations.
Rite Aid has also secured $3.45 billion in new funding from lenders to support its restructuring plan.
This drugstore chain has been struggling with declining sales, increasing debt, and facing multiple lawsuits regarding its alleged role in the opioid epidemic.
In its most recent quarter, Rite Aid reported a decline in revenue and widened net losses.
As a result, the company has lowered its fiscal 2024 outlook and expects significant losses for the year.
Despite Rite Aid’s strong presence in the retail pharmacy segment, it has been unable to offset its mounting losses.
Competition from retailers like Amazon, Target, and Walmart, who offer lower prices and convenient doorstep delivery, has further impacted Rite Aid’s performance.
Rivals CVS and Walgreens have made substantial investments in healthcare, intensifying the challenges faced by Rite Aid.
Rite Aid’s financial difficulties are exacerbated by ongoing lawsuits accusing the company of illegally filling opioid prescriptions.
The Department of Justice has filed a suit against Rite Aid, alleging violations of the Controlled Substances Act.
Rite Aid has denied these allegations and is seeking dismissal of the lawsuit.
— CNBC’s Christine Wang contributed to this report.
An existential crisis for drugstores
Drugstores like Rite Aid are facing significant challenges as consumers increasingly turn to online retailers for everyday essentials.
Rite Aid has struggled to keep up with competitors CVS and Walgreens, who have diversified their services and invested heavily in healthcare.
Newer entrants in the healthcare industry, such as Amazon and Walmart, have also posed a competitive threat to traditional drugstores.
The opioid crisis
Rite Aid’s financial troubles are compounded by numerous lawsuits accusing the company of contributing to the opioid epidemic.
The Department of Justice has filed a lawsuit against Rite Aid, alleging violations of the Controlled Substances Act.
Rite Aid has denied these allegations and is fighting the lawsuit in court.
— CNBC’s Christine Wang contributed to this report.
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