Rite Aid returns to bankruptcy protection as it seeks to sell most assets
Rite Aid is again seeking bankruptcy protection as the struggling drugstore chain says it will try to sell substantially all of its assets.
The company said Monday that its stores will remain open as it returns to Chapter 11 bankruptcy proceedings.
The company said it will work to ensure that customer prescriptions are transferred to other pharmacies as it goes through the sale process. The drugstore chain has lined up from some of its lenders $1.94 billion in new financing which help fund it through the sale and bankruptcy proceedings.
The company initially filed for bankruptcy protection in October 2023, with plans to sell parts of its business and restructure. The company ran more than 2,300 stores in 17 states before the filing.
Rite Aid said then that its initial voluntary Chapter 11 filing would allow it to slash debt and resolve litigation. The company sold its relatively small pharmacy benefits management business, Elixir Solutions, for around $576 million.
Rite Aid emerged from Chapter 11 nearly a year later as a private company. The drugstore chain said in a statement that it came out of the process stronger, 'with a rightsized store footprint, more efficient operating model, significantly less debt and additional financial resources.'
Rite Aid's creditors took ownership of the chain, which shrank to 1,245 stores in 15 states, according to its website.
A spokeswoman said in March that the company was 'laser focused' on its retail pharmacies, including restocking its stores.
But in early May, empty white shelves dotted a store that sits a few miles from Rite Aid's corporate headquarters in Philadelphia. The only rolls of wrapping paper in the store were some Christmas-themed offerings that leaned next to empty shelf space beneath a sign advertising 'Great Value!'
The location also had a limited selection of profitable beauty products and drugstore staples such as Qtips and cotton balls.
Retail analyst Neil Saunders said such a look encourages shoppers not to return.
'They're actively pushing customers away,' said Saunders, managing director of the consulting and data analysis firm GlobalData.
Rite Aid was attempting to turn around its business in a tough environment for drugstores. Major chains and independent pharmacies have been closing stores and struggling with several challenges.
Prescription profitability has grown tight. The chains also are dealing with increased theft, court settlements over opioid prescriptions and shoppers who are drifting more to online shopping and discount retailers.
Walgreens, which has more than six times as many stores as Rite Aid, agreed in March to be acquired by the private equity firm Sycamore Partners.
Philadelphia-based Rite Aid was founded in 1962 in Scranton, Pennsylvania, as Thrif D Discount Center. The company had struggled with debt, posted annual losses for several years and was cutting costs and closing stores well before its initial bankruptcy filing.
Rite Aid also explored sale offers.
Walgreens attempted to buy it for about $9.4 billion a decade ago, when Rite Aid ran more than 4,600 stores. But the larger drugstore chain eventually scaled back its ambition and bought less than half that total to get the deal past antitrust regulators.
In 2018, Rite Aid called off a separate merger with the grocer Albertsons.
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Jonathan Poet contributed to this report from Philadelphia.
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