It’s a tough time to be a pharmacy chain, but Rite Aid could be bowing out of the drugstore wars sooner than we think. After a rocky two years, during which the retailer lost almost half of its physical footprint, Rite Aid is allegedly contemplating a second bankruptcy, according to multiple reports. In other words, it might be time to transfer your prescriptions elsewhere.
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If Rite Aid does choose to file, it would be the pharmacy chain’s second insolvency in less than three years. In Oct. 2023, Rite Aid filed for Chapter 11 bankruptcy after falling into crippling debt and getting slammed with thousands of federal, state, and local lawsuits alleging that it had illegally fulfilled opioid prescriptions. On top of that, the chain was also struggling with declining sales on the heels of the COVID-19 pandemic.
In an interview with The New York Times, Sarah Foss, the global head of legal and restructuring at the financial services company Debtwire, said Rite Aid found itself in "the perfect storm"—leaving it with no choice but to file.
"I think Chapter 11 is really the only option for somebody like a Rite Aid to get all of this settled. On a basic level, what bankruptcy does is it allows you to settle it all in one forum," she said at the time.
As a result of the initial filing, Rite Aid cut roughly 1,000 stores from its portfolio.
Today, the chain operates 1,247 locations across the country, with a majority on the East Coast. These states include California, Connecticut, Delaware, Idaho, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Vermont, Virginia, and Washington.
However, that could all change should Rite Aid file for another Chapter 11 bankruptcy.
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Speaking with the Wall Street Journal, people close to the matter alluded to the fact that Rite Aid’s "recent financial restructuring failed to put the drugstore chain on a sustainable path." In March 2024, company ownership was transferred to a group of senior bondholders as part of the deal. But if positive news doesn’t come to light soon, the retailer could find itself facing bankruptcy again.
Conversely, Rite Aid could avoid a Chapter 11 filing by "pursuing a sale of some or all of its business," the sources said. Whether the sale happens "inside or outside of bankruptcy," the drugstore will likely have to shutter more locations. Sources said that Rite Aid has tapped law firm Paul Weiss to help oversee the decision-making process.
As of this reporting, Rite Aid hasn’t publicly confirmed or commented about a potential second bankruptcy filing, or which of its remaining locations would be the first to go.
But since the beginning of the year, there have been a handful of store closures. This month alone, Rite Aids in New Jersey and Oregon have gone out of business. And a location in Santa Monica, California, is set to shutter in May.
