The drugstore chain Rite Aid filed for Chapter 11 bankruptcy and announced a change in leadership as the retailer attempts to solve ongoing financial and legal challenges.
The company announced on Oct. 15 that it has voluntarily entered bankruptcy proceedings in order to “accelerate its ongoing business transformation” and to “significantly reduce” its debts as well as to “resolve litigation claims in an equitable manner.”
“Rite Aid is continuing to deliver leading healthcare products and services across its retail and online platforms for the nearly one million customers it serves daily,” the chain said in a press release. “The Company remains committed to improving health outcomes and delivering on its purpose to help people achieve whole health for life.”
Rite Aid has obtained $3.45 billion in financing to assist with the bankruptcy process. The company is waiting on court approval for several components of its plan, including continuing to pay employee wages and offer benefits without interruption, per AP News.
There are just over 2,100 Rite Aid locations across the United States. The chain’s competitors, CVS and Walgreens, each have about 9,000 locations nationwide.
Rite Aid has been entangled in a number of legal disputes in recent years. The drugstore chain has entered into multiple multimillion-dollar settlements stemming from its role in the opioid crisis. This includes agreeing to pay $10.5 million in July of 2022 to settle three lawsuits filed in different counties in Ohio while denying any wrongdoing. Rite Aid also agreed to pay up to $30 million for opioid crisis recovery efforts in West Virginia in August of 2022.
In March, the U.S. Justice Department sued Rite Aid, accusing the chain of unlawfully filling hundreds of thousands of prescriptions for controlled substances. The DOJ contends that, between May of 2014 and June of 2019, the company filled prescriptions that “were medically unnecessary, lacked a medically accepted indication, or were not issued in the usual course of professional practice.”
“Rite Aid knew of its obligations under federal and state law to prevent the diversion of controlled substances and to refrain from filling unlawful prescriptions,” stated the DOJ. “Nevertheless, 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. Rite Aid pharmacists ignored these red flags, making either no effort or a patently inadequate effort to resolve the red flags.”
Jeffery S. Stein has taken over as Rite Aid’s chief executive officer, its chief restructuring officer and as a member of its Board of Directors. In a separate announcement on Oct. 15, the chain said Stein “has particular expertise in supporting companies that are driving meaningful business transformations and undergoing financial restructurings.”
“After a thorough and thoughtful search process, the Board unanimously agreed that Jeff is the right executive to lead Rite Aid through its transformation,” said Rite Aid Chairman Bruce Bodaken. “We look forward to benefitting from his contributions and leveraging his expertise as we strengthen Rite Aid’s foundation and position the business for long-term success.”
“My priorities will include overseeing the actions now underway to strengthen the Company’s financial position and further advance its journey to reach its full potential as a modern neighborhood pharmacy,” said Stein. “I have tremendous confidence in this business and the turnaround strategy that has been developed in recent months.”
Stein replaces Elizabeth “Busy” Burr, who has served as Rite Aid’s interim CEO since January 2023. Burr will remain a member of the company’s board.
