After filing for bankruptcy in 2023 and coming out of it in 2024, Rite-Aid is doing it again and this time is likely going to be the end of Rite-Aid. The drug store business is in decline as evidenced by the large number of stores both CVS and Walgreens have been closing. Walgreens attempted to buy Rite-Aid once before but was shut down by the FTC so I think this time Rite-Aid will just sell individual stores to CVS and Walgreens, assuming there’s any that they would want. They’ve already closed ALL of their stores in Michigan so I think ultimately there will just be empty buildings that will be converted to something else.
Good news for CVS and Walgreens as it might buy them some increased sales in some areas for a while, but one has to wonder how much longer they’ll survive as well.
From Chain Store Age:
Rite Aid Corp. is moving forward with Chapter 11 bankruptcy proceedings as it pursues a sale.
Following recent rumors it was considering filing for bankruptcy for the second time in less than two years, Rite Aid and its subsidiaries have commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of New Jersey.
The retail pharmacy chain also announced that it is pursuing a “strategic and value-maximizing sale process” for substantially all of its assets and has received interest from potential national and regional suitors. During this process, Rite Aid customers will continue to have access to pharmacy services and products in stores and online, including prescriptions and immunizations.
In connection with the sale process and court-supervised proceedings, the company says it is working to facilitate a “smooth transfer” of customer prescriptions to other pharmacies. Rite Aid employees assisting with this transition will continue to receive pay and benefits.
Rite Aid intends to conduct the bankruptcy sale under section 363 of the U.S. Bankruptcy Code and has secured commitments from some of its existing lenders to gain access $1.94 billion in new financing.
This financing, along with cash from operations, is expected to provide sufficient funding during the sale and court-supervised process. The company intends to divest or monetize any assets that are not sold through the court-supervised process.
“While we have continued to face financial challenges, intensified by the rapidly evolving retail and healthcare landscapes in which we operate, we are encouraged by meaningful interest from a number of potential national and regional strategic acquirers,” said Matt Schroeder, CEO of Rite Aid. “As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”
Rite Aid has filed a number of customary motions with the bankruptcy court seeking authorization to support operations, including continued payment of employee wages and benefits.
The company initially filed for bankruptcy in October 2023, and emerged in September 2024 with a smaller footprint and a lot less debt. Through the Chapter 11 process, the company eliminated approximately $2 billion of total debt, closed hundreds of stores, and sold its pharmacy benefit company, Elixir.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor, to Rite Aid during its Chapter 11 proceedings and sale. Guggenheim Securities, LLC is serving as investment banker, and Alvarez & Marsal is serving as financial advisor to the company.
Rite Aid operated approximately 2,000-plus stores when it filed for bankruptcy in 2023. According to its website, Rite Aid currently operates 1,300-plus stores.