A potential bankruptcy plan could bring big changes to Rite Aid.
The struggling drug store chain is preparing a Chapter 11 bankruptcy plan which involves store liquidations, according to a report by The Wall Street Journal, which cited unnamed sources. Under the plan, Rite Aid would close 400 to 500 of its more than 2,100 stores and either sell or let creditors take over its remaining operations, the report said.
One group of bondholders wants to liquidate a larger number of stores, and there is an ongoing discussion on the number of stores to be closed, the Journal reported. The chain plans to hold an auction to sell its Elxir pharmacy unit and other valuable business assets, the report said.
Given the conversations remain ongoing, no decisions have been made at this time, Rite Aid said in a statement to Reuters.
In August, the Journal reported that Rite Aid was preparing to file for bankruptcy protection in a move to deal with its debt and lawsuits related to opioid prescriptions. Rite Aid, which has more than $3.3 billion in long-term debt, is facing more than 1,000 federal, as well as a number of state-level, lawsuits over allegations that the chain contributed to the country’s opioid crisis by oversupplying painkillers such as OxyContin.
The expected Chapter 11 filing would cover Rite Aid’s debt load and pending legal allegations that it oversupplied prescription painkillers.
In January, Rite Aid appointed board member Elizabeth (“Busy”) Burr as interim chief executive following the abrupt departure of Heyward Donigan. Her exit came as the company has struggled to compete with pharmacy rivals CVS Health and Walgreens, both of which has made extensive inroads into the broader field of health care.
Rite Aid in June reported a first-quarter net loss of $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. Revenues fell to $5.65 billion from $6.01 billion in the prior year.
For its fiscal 2024 year, Rite Aid expects net losses to range between $650 million and $680 million.