Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Fernanda Tronco

Popular troubled essential retail chain exits Chapter 11 bankruptcy

Despite healthcare being one of the most profitable and fastest-growing industries in the U.S., not all companies are guaranteed success, leaving some to inevitably slip through the cracks.

Even the top U.S. pharmacy companies like CVS ( (CVS) ), Walgreens ( (WBA) ), and Walmart ( (WMT) ) have suffered multiple store closures in the past years post-pandemic. 

Related: Walmart reveals latest deal to outdo Amazon

According to a study, healthcare profits are estimated to grow by 7% from $583 billion in 2022 to $819 billion in 2027.  

Despite the COVID-19-induced economic decline, as well as labor shortages and high inflation rates, the healthcare industry greatly profited from the pandemic.

However, by the end of the pandemic, drugstores were confronted with store closing due to a decrease in the need for locations and having to reduce costs.

The troubled pharmacy's bankruptcy filing

The troubled pharmacy's unsatisfactory earnings reports leading up to the bankruptcy were a key indication of the company's ultimate filing of Chapter 11 on October 12, 2023. 

According to the company's annual report for 2023, the pharmacy chain reported losses of $750 million and revenue of $24 billion, with negative revenue growth of 1.9%. 

Due to its immense losses, the pharmacy faced the closure of 271 underperforming stores between June and August, on top of an additional 520 on the day it filed for bankruptcy.  

Related: After Chapter 11 bankruptcy closures, retail stores find new life

According to the company's Q1 earnings report, its last publicly registered quarterly results, revenue of $5.7 billion was reported, yielding a 5% decrease from last fiscal year's Q1.

The company also suffered a net loss of nearly $307 million, totaling a 178% increase compared to the year prior.

A private redemption

After facing many losses and a bankruptcy filing, Rite Aid successfully completed its financial restructuring process, which aided the exit from its Chapter 11 filing on Tuesday.

According to Rite Aid's press release, the company has eliminated approximately $2 billion of total debt and received around $2.5 billion in exit financing to support the business.

More bankruptcy:

In addition to the paid-off debt, all prior common shares have been canceled, giving Rite Aid creditors full ownership of the company. This transition grants the pharmacy chain the right to become a private company. 

“Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company,” said former CEO Jeffrey S. Stein in a press release. “I am excited about Rite Aid’s future as it continues to focus on executing its strategy and delivering for its customers and stakeholders.”

Rite Aid's status from public to private is not the only major change for the company; its executive board has also undergone a huge leadership transition.

On Tuesday, Rite Aid announced that Matt Schroeder, its former VP and CFO, will succeed Jeffrey S. Stein as the new CEO.  

“I am honored to lead Rite Aid on its journey as we continue serving our customers and communities,” said Schroeder. “Thanks to the dedication of the entire organization, we are beginning our next phase as a transformed company. I see Rite Aid’s remarkable potential, and I look forward to working with the team as we remain committed to our purpose of helping our customers achieve whole health for life.”

Related: Veteran fund manager sees world of pain coming for stocks

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.