RITE Aid is continuing its nationwide closures as it winds down operations, with over 1,000 pharmacy spots officially on the chopping block as of this week.
Following the retailer’s second Chapter 11 bankruptcy filing in two years amid a backdrop of industry wide struggles, experts are warning shoppers of so-called “pharmacy deserts.”
Rite Aid is continuing with its mass shutdowns, with over 1,000 stores set to close[/caption]
Rite Aid, once a leader in the pharmacy space, is turning off the lights at the majority of its stores following its bankruptcy filing in May this year.
The filing marked the chain’s second bankruptcy in under two years, following a previous filing in October 2023.
The retailer announced it would close or sell off all of its 1,200 stores, with Rite Aid having already marked over 1,000 locations for closure since its May 5 filing, per court documents.
The pharmacy giant has shared multiple rounds of closure notices.
Rite Aid announced that 123 stores across eight states would be shut down in its most recent update on June 27, with California, Pennsylvania, and New York seeing the greatest number of closures.
The announcement brought Rite Aid’s shutdowns in June to almost 600 and increased the total number of stores on the chopping block to 1,070.
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.
Although a majority of the company’s stores are closing, some will be acquired by other companies and will continue to operate under new ownership.
Rite Aid is also selling off pharmacy assets such as prescription files and some physical stores to rivals such as CVS, Walgreens, and Albertsons.
PHARMA FAIL
The company’s decision to shutter the thousands of stores was pushed by a variety of factors, including long term “financial challenges,” Rite Aid CEO Matt Schroeder admitted in a press release announcing the Chapter 11 filing.
Rite Aid faced mounting debt, dropping sales, and rising competition, especially from larger pharmacy chains such as CVS and Walgreens, as well as retail giants like Walmart and Amazon.
Legal battles related to opioid prescriptions further strained the company’s finances.
Rite Aid’s financial difficulties were ultimately “intensified by the rapidly evolving retail and healthcare landscapes in which we operate,” said Schroeder.
The retail pharmacy industry as a whole is facing significant difficulties, with other major players like CVS and Walgreens similarly in the process of shutting down hundreds of stores.
The mass shutdowns across the country will reduce Americans’ access to crucial health screenings and medications, sparking growing concerns among healthcare experts about the rise of “pharmacy deserts.”
BRANDS HARD HIT BY BANKRUPTCIES
Many chains have struggled to adapt to a post-Covid retail landscape, with several companies filing for bankruptcy
JoAnn Fabrics and Crafts announced it would close all 800 stores after filing for bankruptcy twice in a year.
Hooters announced plans to file for Chapter 11 bankruptcy protection in February.
Liberated Brands announced that it would be closing all 122 retail locations for its boardsport fashion brands Quiksilver, Billabong, and Volcom.
Forever 21 shut down its headquarters after filing for bankruptcy and laying off 358 employees.
Macy’s announced major restructuring plans amid mass store closures.
These are areas where residents have limited access to pharmacies and must travel far to access essential medications and healthcare services.
Over 48.4 million Americans, or one in seven, already found it difficult to access a drugstore prior to the Rite Aid shutdowns, per March research from healthcare company GoodRx.
That’s an uptick from 41.2 million in 2021, with roughly 45% of US counties now at risk of being classified as pharmacy deserts, according to the firm.
“Many of the counties hardest hit by pharmacy closures already had limited access. Now, they’re losing their last remaining pharmacies, creating healthcare deserts with no immediate solutions in place,” Tori Marsh, senior director of research at GoodRx, told Newsweek.
“While this report paints a troubling picture, it also highlights the importance of tools that help people find pharmacies, compare prices, and explore mail-order options, especially in underserved areas,” she added.
“Without action, pharmacy deserts will continue to expand and deepen disparities.”
Walgreens is faltering amid industry wide challenges, announcing more shutters with “closing down” banners added to 54 locations in 17 states.
Plus, a first-of-its-kind law put another pharmacy giant under pressure to close all its stores in a single state – the chain said the chaos was avoidable.
Rite Aid is struggling to stay afloat amid industry wide challenges[/caption]
