Rite Aid Files for Bankruptcy: High Debt & Opioid Lawsuits
Rite Aid, burdened by debt and opioid lawsuits, files for bankruptcy. Plans to close stores, sell subsidiary, and resolve litigation.
Rite Aid, a U.S. drugstore chain burdened with a significant amount of debt, has taken the step of filing for bankruptcy protection. The company's decision is primarily driven by its high debt, declining revenue, intensifying competition, and ongoing litigation related to the opioid crisis. In order to address these issues, Rite Aid plans to close its underperforming stores, sell its pharmacy benefit company Elixir, and resolve the lawsuits surrounding its sale of addictive opioid medications.
To provide context, Rite Aid currently finds itself with $4 billion in debt, $8.6 billion in total liabilities, and $7.65 billion in assets. To support its restructuring efforts, the company has secured a $3.45 billion bankruptcy loan from its existing lenders.
In an attempt to alleviate some of its financial burden, Rite Aid has received a $575 million offer from pharmacy benefit company MedImpact Healthcare Systems for its subsidiary, Elixir. However, the company intends to explore other potential offers for this business and may also consider selling parts or all of its retail operations. Additionally, Rite Aid is hopeful that it can achieve a fair settlement for the opioid litigation through the bankruptcy process.
Unfortunately, Rite Aid's bankruptcy filing has sparked a dispute with drug distributor McKesson, which currently supplies 98% of the prescription medicines sold by the chain.
Rite Aid's decision to file for bankruptcy adds to the growing list of companies, such as Mallinckrodt and Endo International, that have taken this route due to the legal challenges they face regarding their alleged involvement in fueling the opioid epidemic in the United States.
Despite these significant challenges, Rite Aid is committed to remaining open for business throughout the bankruptcy proceedings and will continue to serve its customers. The company is determined to navigate through this difficult period and emerge even stronger.
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