Who owns Rite Aid? Reason behind drug retail giant filing for bankruptcy explained

Rite Aid filed for bankruptcy on October 15, 2023. The company has reportedly been suffering a lot due to the burden of debts alongside lawsuits filed against them. CNBC stated that the company has made a restructuring plan with the creditors to review the overall sales and close the locations that are going through a loss.

The company was established in 1962 by Alex Grass and was initially known as Thrift D Discount Center. In 1968, the company was renamed Rite Aid Corporation.

According to Investopedia, in 2015, Walgreens announced that it would buy Rite Aid in a bid of $9.4 billion. However, that deal didn't go according to plan and Walgreen bought around half of the company's stores for $5.18 billion.

The company revealed in a statement that they collected funds worth $3.45 billion from the lenders, as per USA Today. Although they have closed a few locations in the last few months, a spokesperson for the company refused to reveal the number of stores that would be shut down in the future.

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Rite Aid is struggling with sales along with numerous lawsuits

Rite Aid has filed for Chapter 11 bankruptcy protection in New Jersey. The decision was taken after a reduction in sales alongside the lawsuits filed against the company related to opioids.

The company is also facing problems because of the debt worth $3.3 billion they have taken from the creditors. As mentioned earlier, they reached an agreement with the creditors and finalized a new strategy to reduce the amount of debt and work on the company's development. The restructuring plans came at the time when the company appointed a new CEO Jeffrey Stein.

Forbes stated that the company has reportedly suffered losses of almost $306.7 million. The company has been charged with filing illegal prescriptions for opioid painkillers and they have been sued multiple times for the same.

In another complaint filed in March 2023, the Justice Department alleged that the company intentionally "filled unlawful prescriptions for controlled substances." United States Attorney's Office stated that they were also accused of violating the Controlled Substances Act.

Associate Attorney General Vanita Gupta claimed at the time that the company's prescriptions were not made as per the rules. She added that the company also "deleted internal notes about suspicious prescribers."

"These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally out of Rite Aid's stores," Gupta noted.

The New York Times stated that the company has been facing competition from CVS, Walgreens Boots Alliance, and Amazon. The company's stock has also been affected because of the losses.

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Rite Aid planned to file for bankruptcy in August 2023

According to USA Today, reports of Rite Aid filing for bankruptcy emerged in August this year. This was to get help in dealing with opioid lawsuits that have been filed against them.

Yahoo Finance stated that the company was reportedly planning to close down 400 stores. The outlet stated that the company's stock went down by 90% in 2022. The company also spoke to the outlet and said that they have shut down 239 stores since 2021.

"Like all retail businesses, we regularly review each of our locations to ensure we are meeting the needs of our customers, communities and the overall business," the company told the outlet.

The company was operating 2,284 locations until June 3, 2023, and they closed 27 stores this year.