Rite Aid filed for bankruptcy on Monday for the second time in less than two years after a previous restructuring reduced the pharmacy chain’s debt but failed to address its long-term business challenges.
Rite Aid, one of the largest pharmacy retailers, has struggled in recent years due to high debt, inflationary pressures and increased competition. The company listed liabilities in the range of $1 billion to $10 billion in a Chapter 11 petition filed in New Jersey bankruptcy court.
Rite Aid plans to sell all of its assets to one or more buyers in bankruptcy.
The Pennsylvania-based company already has started talks with potential national and regional strategic acquirers, and it will try to minimize disruption to employees and pharmacy customers during the bankruptcy sale process, Rite Aid CEO Matt Schroeder said in a statement.
“As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible,” Schroeder said.
The company told employees it will cut jobs after failing to secure additional financing from its lenders, Bloomberg News reported earlier in the day, citing an internal letter from Schroeder.
Rite Aid previously filed for Chapter 11 protection in October 2023 after reporting $750 million in losses for the previous fiscal year.
The company used its previous bankruptcy in 2023 to cut $2 billion in debt, close hundreds of stores, sell its pharmacy benefit company, Elixir, and negotiate settlements with its lenders, drug distribution partner McKesson and other creditors.
The previous bankruptcy also resolved hundreds of lawsuits alleging that Rite Aid ignored red flags when filling suspicious prescriptions for addictive opioid pain drugs.
But despite those settlements, Rite Aid still had $2.5 billion in debt when it emerged from bankruptcy as a private company owned by its lenders in 2024.
Rite Aid enters its second bankruptcy with a smaller retail footprint. It operated about 2,000 pharmacies in 2023 but now has only 1,240 stores across the US with recent closures significantly reducing its presence in markets such as Ohio and Michigan.
Pharmacy chains, such as Rite Aid, Walgreens and CVS have been under pressure as falling drug margins and competition from Walmart and Amazon have led to a closure of hundreds of stores.
The store closures have exacerbated concerns about the emergence of “pharmacy deserts” – areas where residents lack access to a local pharmacy to fill their prescriptions, leaving them without a convenient and reliable source for essential medications, according to U.S. lawmakers and trade groups including the National Community Pharmacists Association.
Walgreens, facing significant losses, recently agreed to a $10 billion buyout by private equity firm Sycamore Partners – a dramatic decline from its $100 billion valuation a decade ago, underscoring the severe challenges facing traditional pharmacy retailers.
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