Rite Aid is getting ready to close hundreds of stores as it gets ready to file for bankruptcy, reports the Wall Street Journal.
The Philadelphia-based retailer has over 2,100 locations, and the ones which are not closed will either be sold or taken over by creditors. It’s speculated that as many as 500 stores could be closed.
According to an internal report obtained by the Wall Street Journal, one group of bondholders wants to liquidate a significant number of stores, but the exact number is still being discussed.
Rite Aid’s debt, close to $3.3 billion, has become too much to bear and the retailer is facing several opioid lawsuits.
Rite Aid is involved in more than 1,000 federal cases that were consolidated into a multidistrict litigation in Ohio, the Wall Street Journal reports, and is currently looking at similar cases in state courts which accuse the retailer of contributing to the opioid epidemic.
In March, the federal government sued Rite Aid, accusing the retailer of filling hundreds of thousands of prescriptions for illegal drugs including opioids between May 2014 and June 2019. The Department of Justice believes Rite Aid ignored any guidance that has been given to pharmacists about illegal drug distribution.
Rite Aid is also involved in other lawsuits, including one filed in the U.S. District Court for the Southern District of New York accusing the pharmacy of misleading shoppers about the health benefits of its Oral Care Dry Mouth Discs.
The company’s 2023 first quarter results were bleak. For Q1, Rite Aid reported a net loss of $306.7 million (vs. $110.2 million in losses in Q1 2022), adjusted net loss of $40.1 million and Adjusted EBITDA of $91.7 million.
Revenues came in at $5.65 billion, which was about $350 million less year-over-year. At the time, Rite Aid blamed the poor results on the reduction in the company’s Prescription Drug Plan membership and the loss of commercial clients at pharmacy services provider Elixir. The retailer is facing a predicted net loss of up to $680 million during fiscal year 2023.
Rite Aid closed 25 stores during the first three months of the year, and since 2021 the retailer has shuttered 180 locations. Over the last few years, Rite Aid has looked at merging with other companies, including Walgreens Boots Alliance and Albertsons, to help with its capital stress.
