A MAJOR pharmacy chain is shutting down hundreds of locations as it files for bankruptcy for a second time.
This month, the chain added 100 stores designated for closure, bringing the total to 700 stores slated for closure since May.
A major pharmacy is shutting locations down nationwide[/caption]
Rite Aid filed for bankruptcy for a second time in two years[/caption]
Rite Aid’s seventh round of closures will hit California, New York, and Pennsylvania the hardest; however, dozens of other states will also be affected.
The chain announced in May that it would file for Chapter 11 bankruptcy for the second time in two years.
“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 acquirors,” Matt Schroeder, Rite Aid’s CEO, told CNN.
“As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”
That month, Rite Aid listed the majority of its 1,240 stores for sale, The Hill reported.
Two dozen locations in Pennsylvania have closed since early May.
Locations in New Hampshire, New Jersey, Oregon, and Virginia have all seen at least one store shut down.
The bankruptcy filing comes just months after a failed corporate restructuring in September that left the chain on questionable footing.
In 2023, the pharmacy chain had around 2,000 locations, but now has 1,240 stores as it goes into another round of bankruptcies.
The company first filed for bankruptcy in October 2023 as it sank into $4 billion in debt following legal battles for allegedly filling unlawful opioid prescriptions.
After a year of restructuring, the company had cut its debt in half to $2 billion by September 2024.
Neil Saunders, the managing director of data analytics company GlobalData, told CNN he wasn’t shocked by Rite Aid filing for bankruptcy a second time.
Saunders said that the chain’s first filing didn’t solve any of the major problems the company had.
“The first bankruptcy did little to resolve the chain’s issues, and it has been teetering on the edge of survival for quite some time,” Saunders said.
Other retail experts weren’t shocked by the filing as the company struggled to keep the most basic products on its shelves.
The bankruptcy filings do not spell out whether the company will cease all operations.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
Saunders said that other pharmacy chains will likely begin to “cherry pick” which Rite Aid locations they want to buy.
In May, CVS agreed to acquire and operate 64 Rite Aid stores in Idaho, Oregon, and Washington.
Walgreens reached an agreement with the struggling chain to acquire prescription files from some of its pharmacy locations across nine states.
The chain previously stated that closing stores would allow for the transfer of customers’ prescriptions to other locations.
