Rite Aid, one of the largest drugstore chains in the United States, is reportedly negotiating with creditors over a bankruptcy plan that could include closing hundreds of stores. The company has been struggling to compete with larger rivals Walgreens and CVS Health, and has also been hit by lawsuits related to its role in the opioid epidemic.
According to a report in the Wall Street Journal, Rite Aid has proposed closing as many as 500 stores in bankruptcy. This would represent nearly a quarter of the company’s current store footprint. Rite Aid is also considering selling or letting creditors take over its remaining operations.
Rite Aid has been struggling financially for several years. The company has $3.3 billion in debt, and its stock price has fallen by more than 90% over the past five years. In addition to the challenges posed by its larger rivals, Rite Aid has also been hit by lawsuits from states and local governments alleging that it helped to fuel the opioid epidemic by filling unlawful prescriptions.
One of the lawsuits from the Justice Department alleges Rite Aid filled hundreds of thousands of illegal prescriptions, including those with “obvious red flags,” and intentionally deleted internal notes about suspicious prescribers.
“These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally out of Rite Aid’s stores,” Associate Attorney General Vanita Gupta said in March when the suit was filed.
Rite Aid has denied the allegations.
“Given the conversations remain ongoing, no decisions have been made at this time and we are focused on reaching an agreement with our financial stakeholders that will make Rite Aid stronger,” a Rite Aid spokesperson said, Forbes reported.
The potential store closures at Rite Aid would be a blow to employees and customers alike. The company employs over 100,000 people, and its stores serve millions of customers each year. However, the closures may be necessary for Rite Aid to survive in the long term.
BREAKING: Rite Aid Planning to Shut Down Hundreds of Stores in Bankruptcy – WSJ pic.twitter.com/S0b212nmKD
— Insider Paper (@TheInsiderPaper) September 22, 2023
