Rite Aid, one of the largest pharmacy chains in the United States, and the only pharmacy local to Rio Linda, has taken the step of filing for bankruptcy as it grapples with a slew of difficulties, including plummeting sales and a barrage of over a thousand lawsuits related to alleged improper opioid prescription practices.
The company initiated its Chapter 11 bankruptcy proceedings in New Jersey, burdened by substantial debt and the weight of these legal actions at federal, state, and local levels, which accuse Rite Aid of filling thousands of illegal painkiller prescriptions.
Chapter 11 is a type of bankruptcy that allows a debtor to reorganize their business affairs, debts, and assets. It’s also known as “reorganization” bankruptcy. It allows a person or business to reorganize while obtaining protection from its creditors.
With over 45,000 employees, Rite Aid has grappled with intense competition from industry leaders such as CVS, Walgreens Boots Alliance, and Amazon. Declining sales have left the company with limited resources for business investments and mounting debt. As of June, Rite Aid reported $3.3 billion in debt, excluding the pending opioid litigation.
The company’s stock has plummeted nearly 80 percent since the beginning of the year, signifying a challenging year for the once-dominant drugstore chain. This confluence of difficulties has left the company with no choice but to seek relief through Chapter 11 bankruptcy proceedings.
Rite Aid has already closed several stores in recent months and is in the process of shuttering hundreds more, further undermining its competitive position. The diminished store network makes it less convenient for customers, leading many to choose rival pharmacies. The store closures have contributed to Rite Aid’s overall weaknesses.
Rite Aid’s bankruptcy marks a stark decline for a company that was once the largest drugstore chain in the United States, with a market value of nearly $13 billion in 1998. It has struggled to improve its fortunes and manage its financial challenges effectively.
Over the years, Rite Aid’s store count has significantly diminished, primarily due to a failed merger with Walgreens in 2017, which involved selling more than 2,000 stores to Walgreens. Although the sale generated cash and reduced debt, it also left Rite Aid in a more vulnerable competitive position. A subsequent merger attempt with grocery chain Albertsons in 2018 failed to materialize, further complicating Rite Aid’s prospects.
No plans to close the Rio Linda location at 6420 Rio Linda Boulevard have yet been disclosed.
