Rite Aid comes out of Chapter 11 bankruptcy
The company cut about $2B worth of total debt and added $2.5 billion in exit financing.
Photo courtesy of Rite Aid
The Rite Aid Corporation said it has successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, cutting about $2 billion worth of total debt and adding $2.5 billion in exit financing.
The company said it would now have a "rightsized store footprint, more efficient operating model, significantly less debt and additional financial resources."
In connection with the emergence, Rite Aid will operate as a private company. Ownership of the company transitioned to certain Rite Aid creditors, and all of the company's existing common shares were canceled in anticipation of the reorganization plan.
WHAT'S THE IMPACT?
When Rite Aid filed for bankruptcy in 2023, one of the contributing factors was the high number of lawsuits – more than 1,600 – that were draining its resources. Late last year, the drugstore chain became the first large company facing mass opioid liabilities to file Chapter 11 without any agreement with opioid plaintiffs, who may end up getting very little from Rite Aid, according to The Wall Street Journal.
The restructuring process includes implementing a proposed transaction for pharmacy benefit solutions company MedImpact Healthcare Systems to acquire Rite Aid's pharmacy benefits manager, Elixir Solutions, which was not part of the bankruptcy.
Separately, Rite Aid has announced that Matt Schroeder, who most recently served as chief financial officer, has been appointed chief executive officer. He succeeds Jeffrey S. Stein, who joined the Company as CEO and chief restructuring officer to lead the court-supervised Chapter 11 process.
THE LARGER TREND
When it filed for Chapter 11 protection in October 2023, Rite Aid said it would initially shutter 154 stores. It has closed more than 520 locations in bankruptcy, or about a quarter of the 2,111 stores that the retailer had been operating when it sought court protection, according to CBS News.
Rite Aid is a full-service pharmacy that employs more than 6,100 pharmacists and operates more than 2,100 retail pharmacy locations across 17 states.
Last year, the Department of Justice filed a complaint in intervention in a whistleblower lawsuit brought under the False Claims Act against Rite Aid Corporation and various subsidiaries alleging that Rite Aid knowingly filled unlawful prescriptions for controlled substances. The government's complaint also alleges violations of the Controlled Substances Act.
Rite Aid has denied the allegations.
Other companies facing opioid litigation, including drugmakers Purdue Pharma, Mallinckrodt, Endo and Insys Therapeutics, had all lined up settlements with at least some opioid plaintiffs before filing for bankruptcy, the WSJ report said.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
