Rite Aid filed for Chapter 11 bankruptcy protection Sunday, after being embroiled in legal battles for allegedly filling unlawful opioid prescriptions.
The bankruptcy was not a surprise. Rite Aid on Thursday filed a notice to the US Securities and Exchange Commission that it would be unable to file its latest quarterly financial report because it was looking at “strategic alternatives,” which is Wall Street speak for “considering bankruptcy.”
In that filing, the company said it expected its losses would increase significantly in the past quarter, which is saying something, considering it lost about three quarters of a billion dollars between March 2022 and March 2023 — and another $307 billion between March and May this year.
At the beginning of June, the last time the company filed a financial report, Rite Aid had just $135.5 million of cash on hand.
In by far the worst financial position of America’s largest nationwide drug store chains, Rite Aid was fighting a losing battle against mounting debt, exacerbated by its legal troubles stemming from accusations of filing unlawful opioid prescriptions for customers.
The Department of Justice filed suit against the company in March, claiming that it knowingly processed “unlawful prescriptions for controlled substances.” That stands in violation of the False Claims Act and Controlled Substances Act.
Walgreens, CVS and others settled similar lawsuits over the past few years, but they remain in better financial shape and were largely able to weather the tens of billions of dollars owed to various government agencies in settlements.
This is a breaking news story. It will be updated.
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