Everyone has a trusty pharmacy they’ve depended on for years, if not decades. It helped us get through the toughest colds and pounding migraines and even eased our hunger with its delightful snack assortment.
Finding a reliable pharmacy with all the necessities can be difficult, which is why it’s inconceivable to imagine our go-to pharmacy suddenly shutting down.
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Having no other option but to find a new pharmacy that has yet to earn our trust is burdening enough. However, when one has been a loyal customer for years, more things come to an end than we realize.
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For over 60 years, Rite Aid has been many Americans’ go-to pharmacy for any medical needs. It operates a full-service pharmacy and drugstore chain with convenient retail and pharmacy services solutions across 15 states.
Rite Aid files for Chapter 11 bankruptcy.
Image source: Brown/AFP via Getty Images
Rite Aid files for Chapter 11 bankruptcy twice
This beloved pharmacy saw its end approaching when it filed for Chapter 11 bankruptcy for the first time in October 2023. It had over $4 billion in funded debt and annual debt service obligations of over $200 million.
In this first filing, Rite Aid (RAD) received a commitment for $3.45 billion in debtor-in-possession financing to allow operations to continue while reorganizing its business.
The company emerged from its bankruptcy nightmare the following year, with around $2.5 billion in debt and $2.5 billion in exit financing.
However, less than two years later, its nightmare returned. Rite Aid filed for Chapter 11 bankruptcy for the second time with the U.S. Bankruptcy Court for the District of New Jersey on May 5.
The filing will lead to the effective closing of 178 locations in New York and 18 in Long Island. At the time of the first filing, Rite Aid had around 2,000 pharmacies, but now has approximately 1,200 locations.
The company has secured $1.94 billion in new financing from existing lenders, allowing the remaining stores to stay open and continue operations to generate more revenue while navigating the bankruptcy.
Related: Major healthcare company files for Chapter 11 bankruptcy
Nonetheless, Rite Aid is looking for a buyer to acquire the business, but if no suitable new owner is found, it plans to liquidate all locations, as stated in the court documents.
The company justified this second filing by claiming that adverse macroeconomic factors have challenged it since the Covid pandemic. It was also burdened by many underperforming locations whose leases it couldn’t exit, paired with elevated labor costs, declining reimbursement rates from third-party payors, declining demand, and increased shrink costs.
Rite Aid also revealed that before it filed for bankruptcy the first time, vendors began to impose more restrictive payment terms and lower credit limits. These prevented it from obtaining adequate inventory, leading to sales declines that caused vendors to tighten trade terms even more.
Important dates for Rite Aid customers are revealed amid bankruptcy
Pennsylvania Attorney General Dave Sunday issued a warning to all Rite Aid customers on May 12 about upcoming deadlines amid the company’s recent bankruptcy filing.
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He states customers have until June 5 to use gift cards and coupons or make any returns and exchanges. After that date, no redemptions can be made or will be accepted.
BonusCash and rewards points are no longer issued and will expire, according to the terms and conditions.
“I am encouraging Rite Aid customers to make returns and exchanges and redeem gift cards and rewards points as soon as possible,” stated Sunday in the warning. “These deadlines are approaching fast, and accrued points and gift card balances will soon become valueless.”
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