Nearly a year after filing for Chapter 11, Rite Aid announced on September 3 that the company has exited the bankruptcy process and will move forward as a private company.
The retail pharmacy chain filed for bankruptcy in October 2023 as it struggled to keep up with competitors CVS and Walgreens, in addition to mounting debt, falling revenue, and multimillion-dollar opioid settlements.
In a press release, Rite Aid executives said the company “has successfully completed its financial restructuring and emerged from Chapter 11, marking a new beginning as a stronger company with a rightsized store footprint, more efficient operating model, significantly less debt, and additional financial resources.”
The company eliminated roughly $2 billion of its debt during the bankruptcy process and received an additional $2.5 billion in exit financing, according to the press release.
Matt Schroeder, Rite Aid’s CFO, who has been with the company since 2000, was named CEO moving forward. He will replace Jeffrey Stein, who served as CEO and chief restructuring officer during the bankruptcy process.
“Matt has served in various leadership positions during his tenure at Rite Aid and has a deep understanding of all aspects of our business,” Bruce Bodaken, chair of the chain’s board of directors during the bankruptcy process, said in a statement. “He has shown outstanding leadership through this process and is an excellent fit for the company as it advances as a stronger organization.”
Stein said in a statement that he believes “Rite Aid is well-positioned for future success.”
Looking back. When Rite Aid filed for bankruptcy last October, the company reported $8.6 billion in total debt and $7.7 billion in assets. The company also settled opioid lawsuits for up to $30 million in 2022, NPR reported.
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At the time of the filing, executives said they hoped the restructuring would “significantly reduce” Rite Aid’s debt and help the company resolve its opioid litigation “in an equitable manner,” Healthcare Brew previously reported.
Rite Aid executives also said at that time that the company would close down 154 of its stores, though to date it has actually closed more than 520 stores, CBS News reported on September 4.
In February, as part of the bankruptcy process, Rite Aid sold off its pharmacy benefit management (PBM) business, Elixir, to MedImpact Healthcare Systems, a pharmacy benefits company, for $576.5 million. Rite Aid had purchased the PBM in 2015 for roughly $2 billion, and in 2022, faced a class-action lawsuit alleging the chain had made “false and/or misleading statements” to investors about the business’s status, Healthcare Brew previously reported.
In December 2023, Rite Aid suffered another blow when the Federal Trade Commission (FTC) banned the company from using artificial intelligence-based facial recognition technology in its stores for five years after ruling the company hadn’t taken “reasonable” precautions to prevent harm to customers. The tech had wrongfully identified thousands of Rite Aid customers (especially women and people of color) as shoplifters, according to the FTC.
“Rite Aid’s reckless use of facial surveillance systems left its customers facing humiliation and other harms, and its order violations put consumers’ sensitive information at risk,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement at the time.