Rite Aid documents for bankruptcy faced with excessive debt and opioid lawsuits. Oct 16 (Reuters) – Debt-weighted down U.S. Drugstore chain Rite Aid (RAD.N) filed for bankruptcy protection past due on Sunday and said it’d near underperforming shops, promote its pharmacy benefit enterprise Elixir and resolve complaints over its sale of addictive opioid medicines.
Rite Aid, one of the biggest U.S. Pharmacy shops, stumbled under its high debt, sales declines, expanded competition, and opioid litigation, according to its court docket filings.
Founded in 1962, Rite Aid employs 45,000 people at more than 2,000 retail stores in 17 states and could stay open for business during the bankruptcy.
The business enterprise had $24 billion in revenue in fiscal year 2023, filling 200 million prescriptions in the beyond 12 months.
It also had $750 million in losses for the financial year 2023 whilst dealing with mounting litigation fees.
The U.S. Authorities have accused Rite Aid of ignoring “pink flags” while filling illegal opioid prescriptions, and the corporation faces 1,600 other opioid complaints from state and neighborhood governments, hospitals, and individuals.
Rite Aid, which has denied wrongdoing, said it hopes to attain an “equitable” agreement of opioid litigation in financial disaster.
Drug producers, drug distributors, and pharmacy chains have agreed to pay more than $50 billion in settlements to remedy court cases associated with the opioid disaster, which has brought about more than 1,000,000 U.S. Overdose deaths considering 1999.
Rite Aid has $4 billion in debt, $eight.6 billion in overall liabilities and $7.Sixty-five billion in assets, in keeping with court docket filings within the U.S. Bankruptcy Court for the District of New Jersey.
It plans to fund its restructuring with a $three.Forty-five billion bankruptcy loans are provided through its present lenders.
The employer said it has a $575 million offer in hand from pharmacy benefit corporation MedImpact Healthcare Systems for Elixir.
Rite Aid will be searching for better offers for that business, and it’ll additionally bear in mind selling a few or all of its retail commercial enterprises, in line with courtroom filings.
The financial disaster assertion caused a direct dispute with drug distributor McKesson (MCK.N), which gives 98% of the prescription drug treatments offered through Rite Aid. Rite Aid, which owes $seven hundred million on its drug supply agreement, sued McKesson early on Monday to prevent it from terminating its drug delivery agreement over that debt.
A McKesson spokesperson declined to touch upon the dispute, aside from mentioning it maintains to make shipments to Rite Aid as financial ruin lawsuits start.
Rite Aid closed two hundred shops earlier than its financial disaster, and it expects to close more as its Chapter 11 case proceeds.
The enterprise appointed Jeffrey Stein as its CEO and chief restructuring officer, changing intervening time CEO Elizabeth Burr.
Reporting with the aid of Leroy Leo, Abinaya Vijayaraghavan, and Mariam Sunny in Bengaluru; Editing with the aid of Arun Koyyur, Marguerita Choy, and Bill Berkrot