PHILADELPHIA — Rite Aid Corp. is “pursuing a strategic and value-maximizing sale process for substantially all of its assets” in connection with a new Chapter 11 bankruptcy filing, the company said.
While its stores are open, the company said it is working to transfer prescriptions to other pharmacies. Rite Aid employees assisting with this process will continue to receive pay and benefits.
According to Bloomberg, in a memo to employees, CEO Matt Schroeder announced that the company will cut jobs at its corporate offices. In the memo, he stated that the filing is a response to the company's inability to secure additional capital to continue operations.
Rite Aid had reportedly been evaluating a range of options, including selling part or all of its business, in a bid to avoid another bankruptcy. There was speculation that a Chapter 7 filing, which would require the company to liquidate its assets, was in the works.
“For more than 60 years, Rite Aid has been a proud provider of pharmacy services and products to our loyal customers," said Schroeder. "While we have continued to face financial challenges, intensified by the rapidly evolving retail and healthcare landscapes in which we operate, we are encouraged by meaningful interest from a number of potential national and regional strategic acquirers. As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”
“I will be forever grateful to our thousands of associates for their commitment to Rite Aid and its mission, and I thank our entire team — from store associates to corporate employees — for their dedication to our customers and our company. With their support, we have played a critical role in supporting the healthcare needs of countless Americans across the communities that we are honored to serve.”
To support it during its sale process, which it intends to conduct under section 363 of the U.S. Bankruptcy Code, the company has secured commitments from certain of its existing lenders to access $1.94 billion in new financing. This financing and cash from operations are expected to provide sufficient funding during the sale and court-supervised process. The company intends to divest or monetize any assets that are not sold through the court-supervised process. Rite Aid has filed a number of customary motions with the court seeking authorization to support operations, including continued payment of employee wages and benefits.
Filings and other information related to the court-supervised proceedings are available at https://restructuring.ra.kroll.com/RiteAid2025, by calling the Company’s claims agent, Kroll, toll-free at (888) 575-9318, or +1 (646) 930-4577 for calls originating outside of the U.S. or Canada, or by emailing Kroll at RiteAid2025Info@ra.kroll.com.
Information for landlords is available by contacting A&G Realty Partners at http://www.agrep.com/index.php/active-projects.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor, Guggenheim Securities, LLC is serving as investment banker, and Alvarez & Marsal is serving as financial advisor to the company. Joele Frank, Wilkinson Brimmer Katcher, is serving as strategic communications advisor.
The company filed for Chapter 11 in October 2023, citing $750 million in losses and $24 billion in revenue for the fiscal year ending March 2023. At the time, it operated over 2,000 stores and employed around 47,000 people. It emerged from bankruptcy in September as a private company, having closed hundreds of locations and sold its pharmacy benefits manager, Elixir, and reached settlements with creditors, including drug distribution partner McKesson.
Despite those measures, Rite Aid now operates roughly 1,300 stores and remains a distant third in the U.S. pharmacy retail market, behind Walgreens and CVS. The industry has seen significant shifts recently, including a leveraged buyout of Walgreens by Sycamore Partners.
Rite Aid’s continued struggles stem from a range of challenges, including legal liabilities from opioid-related lawsuits. Last year, the company reached a settlement with the U.S. Department of Justice over allegations it filled unlawful prescriptions violating the False Claims Act and the Controlled Substances Act.
