(GoRealNewsNow.com) – In a sign of the Biden/Harris economy, and despite securing a huge $3.45 billion financing deal, Rite Aid, a well-known US pharmacy chain, has ultimately failed and is now bankrupt.
The Philadelphia-based company declared Chapter 11 bankruptcy due to increasing debt and a drop in sales and is also facing multiple lawsuits.
Rite Aid’s sales declined significantly after the Department of Justice sued them in March. The lawsuit alleged that Rite Aid didn’t listen to warning signs when they unlawfully dispensed a vast number of controlled substance prescriptions. Rite Aid mentioned in an official statement that the bankruptcy would offer a platform to settle the several lawsuits claiming the company provided excessive opioids.
There have also been significant changes within the company. Jeffrey Stein, founder of Stein Advisors, a firm specializing in assisting struggling companies, will now lead as the CEO. He is taking over from Elizabeth Burr, who had been the interim CEO since January. Stein remarked, “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.” He emphasized the company’s dedication to its customers and their healthcare needs.
Rite Aid plans to shut down nearly 500 stores that aren’t performing well out of its total of over 2,100 nationwide stores. The company suggests selling these locations or handing them over to creditors and plans to move workers from these stores to other sites if possible.
To help address its debt, Rite Aid has tentatively agreed with some of its main noteholders on a plan to decrease the amount they owe. Moreover, an independent pharmacy firm, MedImpact Healthcare Systems, intends to purchase Rite Aid’s Elixir Solutions branch. This move is a part of a court-overseen sale process.
Recent financial reports show a decrease in Rite Aid’s revenue. As of June 3, their revenue was $5.6 billion, a drop from $6.01 billion the previous year, as reported by NBC News. Their net losses also increased to $306.7 million. The company’s total debt stood at $8.6 billion as of June, with some repayments scheduled for 2025.
Lastly, Rite Aid has reported their assets and liabilities, estimating them between $1 billion to $10 billion, in their court documents filed with the U.S. Bankruptcy Court in New Jersey.