Rite Aid said it will close more underperforming stores.
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Drugstore chain
Rite Aid
filed for bankruptcy late Sunday saying it will close more of its stores and it named a new CEO as part of a restructuring.
Rite Aid (ticker: RAD) is facing a number of lawsuits related to the country’s opioid epidemic and the company said Chapter 11 bankruptcy filing will allow it to resolve litigation claims in an “equitable manner.”
The pharmacy chain is the latest company embroiled in the opioid crisis to file for bankruptcy. In August, drugmaker
Mallinckrodt
(MNKTQ) filed for its second bankruptcy in three years, helping it reduce settlement payments by roughly $1 billion for its alleged role in the epidemic. The plan was approved last week.
Rite Aid
said it has secured $3.45 billion in new financing from lenders to support the company through the bankruptcy process. In a separate release, the company said Jeffrey Stein will take over as CEO with immediate effect, replacing Elizabeth Burr, who has held the role on an interim basis since January.
The stock was down about 6% in premarket trading Monday. On Friday, shares dropped 16.8% Friday and have fallen more than 80% in 2023.
The Justice Department sued Rite Aid in March, alleging it knowingly violated filled unlawful prescriptions for controlled substances, ignored red flags, and helped fuel the country’s opioid epidemic. The DOJ’s suit joined an existing whistleblower lawsuit filed in October 2019 in Ohio. Rite Aid has denied all the allegations.
The filing puts the lawsuits on hold, The Wall Street Journal reported.
“The court-supervised process provides Rite Aid with legal tools to accelerate our footprint optimization in an efficient and orderly manner,” Stein said in a statement.
Rite Aid said it has entered an agreement for MedImpact, a pharmacy benefit management firm, to acquire its Elixir Solutions business.
Shares in
CVS Health
(CVS), one of Rite Aid’s biggest competitors, jumped 2% ahead of the open Monday.
Walgreens Boots Alliance,
another rival, was up 0.2%.
Write to Callum Keown at [email protected]
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