Rite Aid is reportedly preparing for a Chapter 11 bankruptcy filing that could take place within weeks, according to the Wall Street Journal. Quoting people familiar with the situation, the Journal reported that the move would help address the numerous lawsuits related to the retailer’s alleged role in the sale of opioids. Rite Aid provided no comment.
Rite Aid faces more than one thousand federal lawsuits that were consolidated into a multidistrict litigation in Ohio, multiple state lawsuits and one suit filed by the U.S. Department of Justice in March 2023. The DOJ suit alleged that Rite Aid dispensed controlled substances in violation of the False Claims Act and the Controlled Substances Act.
Other pharmacy chains, including Walgreens and CVS, reached financial settlements of similar suits for approximately $10 billion in November 2022. According to the WSJ, a bankruptcy filing would allow Rite Aid to treat these claims as general unsecured liabilities.
Even without these lawsuits, Rite Aid has had a tough year. For its Q1, which ended June 3, 2023, the retailer generated $5.7 billion in revenues, a 6% decrease from the same period in 2022. Rite Aid’s net losses nearly tripled, rising from $110.2 million in Q1 2022 to $306.7 million in Q1 2023.
The retailer has been struggling for financial stability via potential mergers for several years, first with Walgreens Boots Alliance and then with Albertsons, but neither deal was consummated. In December 2021 Rite Aid closed 63 stores as it sought to create a “healthy foundation for growth,” and in April 2022 Rite Aid refused an unsolicited $3.6 billion takeover offer.