Rite Aid Enters Bankruptcy Again

Rite Aid Corp. (Philadelphia) said it plans to sell of virtually all its assets, but will continue operating its stores for now. The company made that announcement as it launched voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of New Jersey.

During that process, Rite Aid said it is working “to facilitate a smooth transfer of customer prescriptions to other pharmacies. Rite Aid employees assisting with this process will continue to receive pay and benefits.”

“While we have continued to face financial challenges, intensified by the rapidly evolving retail and healthcare landscapes in which we operate, we are encouraged by meaningful interest from a number of potential national and regional strategic acquirors,” said CEO Matt Schroeder. “As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”

This is Rite Aid’s second trip into bankruptcy; the first started in October 2023 and ended the following September. During that process, company eliminated roughly $2 billion in debt, closed several hundred stores and sold its pharmacy benefit company, Elixir.

In its coverage of the news, USA Today noted that Rite Aid, along with such competitors as Walgreens and CVS, have struggled due falling drug margins and competition from such giants as Walmart and Amazon. The result: the pharmacy chains have closed hundreds of stores. Rite Aid currently has about 1250 locales, roughly half the number it operated at its peak.

To support Rite Aid during the sale process, the company said it has secured commitments from some of its existing lenders to access $1.94 billion in new financing. That funding, along with cash from operations, is expected to provide sufficient funding during the sale and court-supervised process.