American pharmaceutical distribution giant Rite Aid has filed for bankruptcy in a bid to restructure its debt after years of losses and declining sales. The company also faces multimillion-dollar lawsuits over opioid prescriptions, including a Justice Department lawsuit filed in March. The documents registered by the company show that it has assets of $7,650 million and total debts of $8,598 million (around 8,160 million euros). The pharmaceutical wholesaler McKesson Corporation is on the list of creditors with $668 million; The US Bank Trust National Association with 200 million dollars, the latter from a bond maturing in 2027, and the insurer Humana Health with 137 million.
The company said in a statement that it has reached a preliminary agreement with some of its senior secured bondholders on the terms of a financial restructuring plan that will “significantly reduce the Company’s debt, increase its financial flexibility and enable it to implement key initiatives.” .” ” Implementation was carried out through a voluntary, court-supervised process under Chapter 11 of the US Bankruptcy Code.
As part of the process, Rite Aid received a commitment of $3.45 billion in new financing from some of its lenders. The company hopes this financing will provide sufficient liquidity for its restructuring, which will include store closures, a likely asset sale and the layoff of some of its 47,000 employees.
In a separate statement today, Rite Aid announced the appointment of turnaround expert Jeffrey Stein as the company’s new CEO, chief turnaround officer and member of the company’s board of directors. He replaces Elizabeth Burr as the company’s managing director, who has served as interim CEO since January 2023 and remains a director.
“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy.” “In doing so, we will be better positioned to deliver healthcare products and services now and in the future “to provide services that our customers and their families trust,” the new company boss said in a statement.
Rite Aid Corporation is a chain of pharmacies and convenience stores based in Philadelphia, Pennsylvania, founded in 1962 and going public in 1968. As of March 4, the closing date of its last fiscal year, the company had more than 2,300 stores. focuses primarily on the states of Pennsylvania, California, New York, Michigan and Ohio. According to the annual report, the company had sales of $24,091 million this year but suffered a loss of $750 million. The company has been in the red continuously for six years. It has fallen more than 80% on the stock market so far this year. The company was worth $13 billion at the end of the last century, when it was the largest pharmacy chain in the United States. It is now worth less than 40 million after management errors, ill-considered corporate processes and accounting scandals plunged the company into an almost permanent crisis.
Rite Aid has not been able to withstand competition from other industry giants such as Walgreens and CVS, which have been joined by Amazon and Wal-Mart. In late 2015, Walgreens announced an agreement to purchase Rite Aid, but the deal was ultimately reduced to half its stores amid fears that competition regulators would veto it. Walgreens then announced it would purchase 2,186 stores and other assets from Rite Aid for $5.175 million, although 1,932 stores were ultimately transferred for $4.38 billion.
Although the operation helped clean up their accounts, it drastically reduced their size and deepened the operational crisis. There are also legal problems when prescribing opioids. According to the Justice Department, Rite Aid filled hundreds of thousands of prescriptions that did not meet legal requirements. “These practices opened the floodgates for the illegal flow of millions of opioid pills and other controlled substances from Rite Aid stores,” prosecutor Vanita Gupta said in filing the lawsuit.
The misuse of opioids as painkillers caused a public health crisis that has killed more than 650,000 people in the United States, mostly from overdoses. The pharmaceutical companies agreed to pay damages amounting to several million US dollars, part of which was still being litigated, and the large pharmacy chains Walgreens, CVS and Walmart also agreed in principle to pay a total of around 13.8 billion US dollars in November 2022. Dollar.
Rite Aid’s bankruptcy is the latest to affect the retail sector in the United States and has changed the landscape of its malls, where chains such as Toys R Us and Bed, Bath & Beyond have disappeared.
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