Rite Aid Bankruptcy: Rite Aid’s stock plunged over 50% after the company was preparing for Chapter 11 bankruptcy. This decision was taken due to escalating opioid lawsuit costs. Yahoo Finance learned from a source that Rite Aid is filing for bankruptcy, which could close over 400 stores. When asked about bankruptcy intentions, Rite Aid said, “We do not comment on rumors and speculation.”
The company has encountered money issues before. Rite Aid’s stock has plummeted 90% in a year. The company’s market valuation was $41 million on Friday.
Rite Aid said that it had eliminated 239 stores since 2021. The company added, “Like all retail businesses, we regularly look at each of our locations to ensure we’re meeting the needs of our customers, the community, and the business as a whole.”
Only 2022 saw 145 Rite Aid stores disappear. The corporation will close more stores this year. Latest data reveals Rite Aid closed 27 shops on June 3, leaving 2,284 pharmacies open.
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This issue stems from an April US government lawsuit against Rite Aid. The Department of Justice said the business ignored “red flags” in opioid and painkiller prescription filling.
The reports told that opioid claimants can be “unsecured claimants” if the firm declares bankruptcy. If it files for bankruptcy, Rite Aid may be allowed to stop paying rent on closed stores. Retailers often save costs this way. The article also noted that Rite Aid handles over 1,000 federal prosecutions in Ohio.
A December photo in Los Angeles showed the Rite Aid emblem in front of a store, contrasting the company’s declining fortunes. In an April earnings call, Rite Aid interim CEO Elizabeth Burr addressed drug incidents. She stated, “Litigation is hard to forecast, as you may guess. But we may claim that our situation is similar to that of the rest of the business.”
Rite Aid’s annual report for May stated that while they expect to have enough cash flow to cover their capital needs, working capital, and debt service for the coming year, their ongoing legal battles may cost more than their insurance and strain their cash flow. This revelation was more dire.
The latest quarterly report reflects the company’s financial decline. In Q1 2024, Rite Aid’s sales fell 7% from $5.75 billion to $5.65 billion. The same quarter’s net loss was $306 million. Rite Aid’s future is uncertain as more claims are filed and its finances worsen. Retail pharmacy is watching how Rite Aid handles this issue and how it recovers.
Our Reader’s Queries
What is the Rite Aid scandal?
Rite Aid is facing a complaint filed in federal court by the FTC. The complaint alleges that the company used facial recognition technology powered by artificial intelligence between 2012 and 2020 to identify customers who may have been involved in shoplifting or other problematic behavior.
Will Rite Aid survive Chapter 11?
The retail store and pharmacy will remain open, but the company has announced plans to shut down stores that are not meeting expectations.
Is Walgreens buying Rite Aid?
In 2015, Walgreens made a strategic move by purchasing 42% of Rite Aid’s stores for $4.38 billion. This acquisition included stores under the Walgreens, Boots, and Duane Reade brands. The purchase allowed Walgreens to expand its reach and increase its market share in the United States and Britain.
Who bought Rite Aid out?
Towards the end of 2015, WBA made a decision to acquire Rite Aid along with its 4,600 stores in the United States. The deal was anticipated to be finalized by the end of 2016.