One of the largest pharmacy chains in the United States filed for bankruptcy protection on Sunday.
Rite Aid announced it had initiated a voluntary court-supervised Chapter 11 process.
The Philadelphia-based company will use filing to restructure its financials amid mounting debt and thousands of federal, state, and local lawsuits. The company’s legal trouble stems from allegations that the pharmacy chain intentionally filled illegal prescriptions for painkillers despite having a legal obligation not to fill them.
By undergoing a supervised restructuring process, Rite Aid explained it would have the legal tools to access additional liquidity, resolve litigation claims, and accelerate the company’s store footprint optimization plan.
The drugstore chain also said it received $3.45 billion in lender financing to help support it throughout the bankruptcy process.
“It was always a matter of when, not if, Rite Aid would file for bankruptcy,” said Neil Saunders, managing director of GlobalData, per Axios. “The company has been deep in the red for the past six years, notching up combined net losses of $2.9 billion.”
Meanwhile, Rite Aid separately announced the appointment of Jeffrey Stein as the company’s new CEO, chief restructuring officer, and member of its board of directors.
“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company,” Stein said in a statement. “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives, and accelerating the execution of our turnaround strategy.”
In doing so, Stein claimed the company would be better able to deliver healthcare products and services to customers over the long term.
“We remain focused on serving our customers and communities, and we are grateful that they continue to choose our stores and pharmacies for their healthcare needs,” he said.
Rite Aid’s alleged role in the present opioid epidemic has placed the company under the national spotlight.
Earlier this year, the U.S. Department of Justice filed a lawsuit against Rite Aid for allegedly filling unlawful prescriptions for controlled substances knowingly.
“Rite Aid pharmacists repeatedly filled prescriptions for controlled substances that had obvious, and often multiple, red flags indicating misuse related to the prescription itself, the prescriber, the customer, or a combination of factors,” the lawsuit states.
The lawsuit further alleges that from May 2014 to June 2019, Rite Aid was aware that its pharmacists were routinely and pervasively filling prescriptions for controlled substances without actually resolving obvious red flags.
According to data from the CDC, nearly 91,800 Americans died from drug overdoses in 2020, marking a 31% increase from the year prior. CDC data also indicates that an estimated 107,622 Americans died from drug overdoses in 2021, an increase of nearly 15% from 2020.
