Rite Aid, a U.S. pharmacy chain, filed for bankruptcy protection for the second time in two years, highlighting the struggles faced by traditional pharmacy retailers like Walgreens and CVS. This latest filing comes amidst a challenging market characterized by declining drug margins and increased competition from retail giants like Walmart and Amazon, which have led to numerous store closures across the sector.
Walgreens, grappling with substantial losses, has recently agreed to a $10 billion buyout by Sycamore Partners, a stark contrast to its former $100 billion valuation, illustrating the severe pressures on brick-and-mortar pharmacies. In its previous bankruptcy in 2023, Rite Aid managed to reduce its debt by $2 billion, close numerous stores, divest its pharmacy benefit company Elixir, and settle various lawsuits related to its handling of opioid prescriptions. However, despite these reforms, Rite Aid emerged with $2.5 billion in debt and remained a private entity owned by its lenders.
As per the latest court filing, Rite Aid’s assets and liabilities are estimated between $1 billion and $10 billion. The company has struggled to secure additional capital from lenders, essential for ongoing operations. CEO Matthew Schroeder’s internal letter indicated plans to reduce the workforce at its Pennsylvania corporate offices. Since 2023, Rite Aid has contracted its number of pharmacies from around 2,000 to approximately 1,250, with significant market exits in areas like Ohio and Michigan, further diminishing its footprint in the competitive retail pharmacy landscape.
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