Rite Aid prepares bankruptcy filing, store closures amid opioid lawsuits

Ceremony Support (RAD) inventory fell greater than 50% Friday after The Wall Avenue Journal reported the retail pharmacy is getting ready to file for Chapter 11 chapter because it faces mounting prices associated to opioid lawsuits.

A supply aware of the matter confirmed to Yahoo Finance that chapter planning is underway, with a part of that plan more likely to embrace shuttering greater than 400 shops.

Requested about chapter preparations on Friday, Ceremony Support stated, “We don’t touch upon rumors and hypothesis.”

Over the previous 12 months, the corporate’s inventory has misplaced 90% of its worth. The corporate’s market cap as of Friday stood at $41 million, Yahoo Finance knowledge confirmed.

In a press release to Yahoo Finance, Ceremony Support stated: “Now we have closed 239 shops since 2021. Like all retail companies, we frequently evaluation every of our areas to make sure we’re assembly the wants of our prospects, communities and the general enterprise.”

In 2022, the corporate closed a deliberate 145 shops, with extra anticipated this 12 months. Within the newest quarter ended June 3, Ceremony Support closed 27 shops. As of June 3, it operated 2,284 pharmacy areas.

The preparations come after the corporate was sued by the US authorities in April over its failure to detect what the Division of Justice referred to as “pink flags” round its filling of prescriptions for opioids and different painkillers.

A chapter submitting would record these opioid claimants as unsecured claimants, based on the Journal. Moreover, the chapter may assist Ceremony Support reject lease funds at shops it plans to shut, a standard tactic utilized in retail chapter to restrict prices. The Journal additionally famous Friday the corporate is dealing with over a thousand federal lawsuits that have been consolidated in Ohio.

LOS ANGELES, CALIFORNIA - DECEMBER 21: The Rite Aid logo is displayed outside a Ride Aid store on December 21, 2022 in Los Angeles, California. Rite Aid Corp. shares were down almost 14 percent in midday trading after the pharmacy chain announced a third quarter revenue loss while lowering its full fiscal year revenue guidance.  (Photo by Mario Tama/Getty Images)

The Ceremony Support emblem is displayed exterior a Journey Support retailer on December 21, 2022 in Los Angeles, California. (Photograph by Mario Tama/Getty Pictures)

In April, Ceremony Support’s interim CEO, Elizabeth Burr, stated on the corporate’s earnings convention name in response to a query about opioid litigation, “I feel it is very troublesome, as you possibly can think about, to foretell litigation. And all we are able to let you know is that what we’re dealing with could be very in step with all people else within the business is dealing with.”

In its annual report filed in Might, Ceremony Support stated, “Though we consider we have now satisfactory sources of liquidity to fulfill our anticipated necessities for working capital, debt service and capital expenditures by no less than the following twelve months, the prices related to these authorized proceedings are not possible to estimate with certainty, may exceed any relevant insurance coverage protection, and will considerably affect such liquidity.”

Income in Ceremony Support’s most up-to-date quarter, the primary quarter of its fiscal 12 months 2024, fell about 7% to $5.65 billion. Its internet loss within the quarter totaled $306 million.

Comply with Josh @_JoshSchafer and @AnjKhem.

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