Rite Aid exits bankruptcy; names insider as new CEO
Rite Aid has exited bankruptcy with a new CEO, a smaller store footprint and a lot less debt.
The retail pharmacy chain named company veteran Matt Schroeder as its new CEO. Rite Aid announced the appointment on the same day that it emerged from bankruptcy protection. Its reorganization plan was approved by a bankruptcy court judge earlier this summer.
Schroeder joined Rite Aid in 2000 as VP of financial accounting and rose through the company’s leadership ranks. Most recently, since 2019, he has served as the CFO. Prior to Rite Aid, Schroeder worked at Arthur Andersen LLP, where he was an audit manager.
As chief executive, Schroeder succeeds Jeffrey S. Stein, who has stepped down as CEO and chief restructuring officer in connection with Rite Aid's emergence from Chapter 11.
“Matt has served in various leadership positions during his tenure at Rite Aid and has a deep understanding of all aspects of our business,” said Bruce Bodaken, chair of Rite Aid’s board of directors during its Chapter 11 process. “He has shown outstanding leadership through this process and is an excellent fit for the Company as it advances as a stronger organization.”
Through the Chapter 11 process, Rite Aid has eliminated approximately $2.0 billion of total debt. The company has received approximately $2.5 billion in exit financing to support the business going forward.
In connection with its bankruptcy emergence, Rite Aid will operate as a private company. Ownership of the company transitioned to certain Rite Aid creditors, and all of Rite Aid’s existing common shares were canceled, pursuant to the Plan of Reorganization.
Kirkland & Ellis LLP served as Rite Aid’s legal advisor, Guggenheim Securities, LLC as investment banker and Alvarez & Marsal as transformation officer and financial advisor to the Company.
“I am honored to lead Rite Aid on its journey as we continue serving our customers and communities,” said Schroeder. “Thanks to the dedication of the entire organization, we are beginning our next phase as a transformed company. I see Rite Aid’s remarkable potential, and I look forward to working with the team as we remain committed to our purpose of helping our customers achieve whole health for life.”
Rite Aid filed for bankruptcy in October, listing estimated assets and liabilities in the range of $1 billion to $10 billion in its court filing. Since the filing, the company has closed hundreds of stores.
Before it filed for bankruptcy, Rite Aid faced 1,600 opioid lawsuits, including one by the Department of Justice of claiming that it knowingly processed “unlawful prescriptions for controlled substances,” which stands in violation of False Claims Act and Controlled Substances Act.
In a statement, outgoing CEO Stein called Rite Aid's emergence from bankruptcy "a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company."
"We are grateful for the ongoing support of our customers, associates and partners, and we look forward to continuing to provide leading pharmacy services designed to improve health and wellness outcomes across the communities we serve,” said Stein.
[READ MORE: Rite Aid to close all its stores in Michigan]
As of Sept. 3, 2024, Rite Aid operated 1,552 stores in 16 states, according to its website. The chain recently announced it would be closing all of its locations in Michigan.
