U.S. pharmacy chain Rite Aid announced Sunday that it has filed for bankruptcy and obtained $3.45 billion in financing as it carries out a restructuring plan, according to Reuters.
The company said falling sales and opioid-related lawsuits led to the filing.
In 2022, Rite Aid paid up to $30 million to resolve lawsuits alleging pharmacies contributed to an oversupply of prescription opioids. The pharmacy chain, along with others, were named as defendants in lawsuits that alleged they helped fuel the opioid crisis in the U.S.
The bankruptcy filing is meant to cut its debt and position itself for future growth, the company said. The move will halt lawsuits the drugstore chain is facing, Reuters reported.
The plan will “significantly reduce the company’s debt” while helping to “resolve litigation claims in an equitable manner,” Rite Aid said.
In March, the Justice Department filed a complaint against Rite Aid, alleging it knowingly filled hundreds of thousands of unlawful prescriptions for controlled substances from May 2014 to June 2019, The Associated Press reported.
[ Rite Aid sued by US, accused of ignoring ‘red flags’ for opioid prescriptions ]
The DOJ acted on reports from three whistleblowers who worked at Rite Aid pharmacies.
“We allege that Rite Aid filled hundreds of thousands of prescriptions that did not meet legal requirements,” Associate Attorney General Vanita Gupta said in a DOJ news release in March.
“According to our complaint, Rite Aid’s pharmacists repeatedly filled prescriptions for controlled substances with obvious red flags, and Rite Aid intentionally 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.”
Jeffrey S. Stein has been appointed chief executive officer, chief restructuring officer and a member of the company’s board of directors, effective immediately, the company announced.
“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company,” Stein said Sunday.
“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. 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.”
Stein continued, “We remain focused on serving our customers and communities, and we are grateful that they continue to choose our stores and pharmacies for their healthcare needs. We thank our associates for their ongoing hard work and dedication, and we extend our gratitude to our partners, suppliers and vendors for their continued support.”
In the Pittsburgh area, two locations have already closed.
The company has not yet released a full list of store closures.