Major nationwide pharmacy to shut ALL of its stores within weeks causing prescription chaos for thousands

Rite Aid is predicted to shut hundreds of stores within weeks after filing for bankruptcy for the second time in less than two years.

It operated about 2,000 pharmacies in 2023 but now has only 1,240 stores across the US with recent closures significantly reducing its presence in markets such as Ohio and Michigan.

Pennsylvania, California, New York, New Jersey and Washington were among the other states to take a hit.

While the Philadelphia headquartered public company looks for a new buyer, it says it has secured $1.94 billion in financing to keep stores operational during the transition period.

It is unknown how many stores are set to close, but the business says that it is looking to sell of all of its 'prescriptions, pharmacy and front-end inventory, and other assets'.

The announcement has triggered panic among those with existing prescriptions, but Rite Aid notes in a letter to customers that 'the majority of our stores will remain open and operating for the next few months where you can continue to access pharmacy services and products in stores and online, including prescriptions and immunizations'.

The news of potential store closures has exacerbated concerns about the emergence of 'pharmacy deserts'.

These refer to areas where residents lack access to a local pharmacy to fill their prescriptions, leaving them without a convenient and reliable source for essential medications, according to US lawmakers and trade groups including the National Community Pharmacists Association.

Rite Aid, one of the largest US pharmacy retailers, has struggled in recent years due to high debt, inflationary pressures and increased competition.

The company listed liabilities in the range of $1 billion to $10 billion in a Chapter 11 petition filed in New Jersey bankruptcy court.

Rite Aid plans to sell all of its assets to one or more buyers in bankruptcy.

The company already has started talks with potential national and regional strategic acquirers, and it will try to minimize disruption to employees and pharmacy customers during the bankruptcy sale process, Rite Aid CEO Matt Schroeder said in a statement.

'As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible,' Schroeder said.

The company told employees it will cut jobs after failing to secure additional financing from its lenders, citing an internal letter from Schroeder.

Rite Aid previously filed for Chapter 11 protection in October 2023 after reporting $750 million in losses for the previous fiscal year.

The company used its previous bankruptcy to cut $2 billion in debt, close hundreds of stores, sell its pharmacy benefit company Elixir and negotiate settlements with its lenders, drug distribution partner McKesson and other creditors.

The previous bankruptcy also resolved hundreds of lawsuits alleging that Rite Aid ignored red flags when filling suspicious prescriptions for addictive opioid pain drugs.

But despite those settlements, Rite Aid still had $2.5 billion in debt when it emerged from bankruptcy as a private company owned by its lenders in 2024.

Rite Aid enters its second bankruptcy with a smaller retail footprint.

Retail experts think that the company is moving out of areas where it cannot compete with much bigger chains CVS and Walgreens, which also owns Duane Reade.

Instead it is focusing where it can aim to be number two behind one or the other, such as in Pennsylvania.

Pharmacy chains such as Rite Aid and its rivals including Walgreens and CVS have been under pressure as falling drug margins and competition from Walmart and Amazon have led to closure of hundreds of stores.

Walgreens, facing significant losses, recently agreed to a $10 billion buyout by private equity firm Sycamore Partners - a dramatic decline from its $100 billion valuation a decade ago, underscoring the severe challenges facing traditional pharmacy retailers.

On top of Rite Aid's financial woes, it faced a series of lawsuits after being accused the company of overprescribing opioids.

In March 2023, the Justice Department sued the retailer for allegedly violating the federal False Claims Act and Controlled Substances Act.

The Department accused the big-name store of filling hundreds of thousands of prescriptions for controlled substances, including opioids, despite apparent 'red flags.'

It also alleged the company deleted internal notes about questionable prescriptions and told managers to tell pharmacists to 'be mindful of everything that is put in writing.'

Rite Aid has denied all allegations.