Philadelphia-Based Pharmacy Chain Files for Bankruptcy
Rite- Aid Pharmacy, headquartered in Philadelphia, has filed for chapter 11 bankruptcy. To stay afloat, Rite Aid has secured $3.5 billion in financing and debt reduction from lenders. Several local stores have closed in recent months and it plans to accelerate more store closures. In addition, it plans to sell off some of its businesses.
Rite Aid’s newly appointed CEO, Jeff Stein, stated the following:
"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," he said. "In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on -- now and into the future." (6abc)
Rite Aid’s financial strain is likely worsened due to the recent lawsuit filed by the Department of Justice. According to the DOJ, Rite Aid stands in violation of the False Claims Act and Controlled Substances Act for missing ‘obvious red flags’ when filling prescriptions for highly addictive pain killers or opiods. Rite Aid has also taken a hit due to stiff competition and the inability to adapt to the digital landscape.
Twenty-two Philly-area Rite Aid pharmacies have closed in the past year, causing many patients to look for other pharmacies.
Do you think the recent bankruptcy filing will help Rite Aid to sustain Rite Aid given the current economic climate?