News
Article
Rite Aid Intends to File Second Bankruptcy, Raising Questions About Its Future
Author(s):
Key Takeaways
- Rite Aid plans a second Chapter 11 bankruptcy due to financial struggles and inability to secure capital.
- Significant job cuts are announced, especially at corporate offices, with many employees terminated or given notice.
An insider expressed skepticism about the company’s future, indicating that Rite Aid may be looking to close up shop entirely.
Rite Aid intends to file for a second bankruptcy and has announced widespread job cuts, according to reporting from Bloomberg News.1
An internal letter sent to employees from CEO Matthew Schroeder explained that the company was unable to secure additional capital from lenders, which was necessary in order to continue operating the business. The letter added that the chain plans to reduce the workforce at its corporate offices in Pennsylvania.1
Image credit: JHVEPhoto | stock.adobe.com
According to a Rite Aid pharmacist whose position was terminated today, there had been a sense that something was coming, although the scale and suddenness were surprising. In an interview with Pharmacy Times®, the pharmacist, who wishes to remain anonymous, said he received a letter via FedEx this morning informing him of his termination.
Although the company has announced job cuts and the bankruptcy filing, the pharmacist said it is “very, very likely that [this] is more widespread than job cuts.” Prior to this announcement, the company was already planning on shuttering around 100 stores in the coming months.
“In terms of the field, like pharmacists in the field, it sounds like they’re being retained until the end,” the pharmacist said. “I mean, we’re going to continue to close stores…. But in terms of our corporate teams, from my understanding, it seems like on my team alone, probably 80% of us have been eliminated today, and then there’s about 20% that are being told they have until June 4. I haven’t heard of a single corporate member that’s been told they have employment past June 4.”
In a town hall meeting a few months ago, the pharmacist said the outlook was positive. Now, in a company update today, employees were told that operations will continue as normal, but the company is entering another Chapter 11 bankruptcy and in search of a buyer for “all of our components.”
“It didn’t sound like we’re looking for a buyer for our company,” he told Pharmacy Times in an interview. “We’re looking for a buyer for our scripts, our drug processing systems, essentially everything. Bits and pieces, whatever can be sold, will be sold until we get to the point where we can cease operations, or we have to cease operations. But essentially selling as much to pay back our lenders as possible and then closing up shop.”
This follows the company’s first Chapter 11 bankruptcy filing in October 2023, which was largely attributed to significant debt and lawsuits related to the opioid crisis. A number of locations were closed in the aftermath of this first bankruptcy filing, and the company reduced its total debt by approximately $2 billion. It also sold its pharmacy benefit manager, Elixir.2,3
In September 2023, as Rite Aid announced its emergence from bankruptcy and plans to move forward, Schroeder was appointed as CEO. He had previously served as chief financial officer for the company.2
“I think this is really unprecedented,” the pharmacist said. “I don’t think any pharmacy chain this large has ceased to operate this suddenly, especially because we still have a little over 1200 stores, and they’re not spread out across the country.”
Importantly, the company has only said it intends to file for bankruptcy and cut jobs as of right now. This story will continue to develop.
