Rite Aid is reportedly preparing to file for bankruptcy within a few weeks to help restructure its debt and potentially halt ongoing lawsuits.
The move is said to be an attempt to address mass federal and state lawsuits Rite Aid faces over its alleged role in the opioid crisis, The Wall Street Journal first reported Friday. The Chapter 11 filing would cover its $3.3 billion in debt and pending legal allegations, the outlet reported. The plans are subject to change.
The drug retailer hasn’t yet agreed on a settlement with plaintiffs that allege it unlawfully filled hundreds of thousands of opioid prescriptions. The bankruptcy would reportedly pause the many legal claims against the retailer and allow it to consolidate and resolve them in one place.
In a one-line response to Fierce Healthcare on Monday, a Rite Aid spokesperson said, “We do not comment on rumors and speculation.”
Rite Aid reportedly faces more than a thousand federal lawsuits, which have been consolidated, plus a number of state cases and a civil lawsuit by the Department of Justice. The retailer has asked a court to dismiss the Justice Department’s lawsuit and denied allegations that it filled unlawful prescriptions for painkillers, the WSJ reported.
Purdue Pharma, Mallinckrodt and Endo International have all been bankrupted by opioid litigation. Each reached settlements of their opioid claims in bankruptcy, totaling more than $8 billion. However, much of the settlement hasn’t been paid as they work through the bankruptcy process.
In its quarterly results reported in June, Rite Aid reported a net loss of $306.7 million, nearly triple its net loss the same time last year. Its revenue was down to $5.7 billion from $6 billion the same time last year. The retailer is also in the “red zone” per CreditRiskMonitor, meaning the company’s bankruptcy risk potential is up to 50 times higher than average public companies.
In 2017, Rite Aid and Walgreens Boots Alliance terminated their planned $9.4 billion merger. The following year, Rite Aid and Albertsons also terminated their $24 billion merger plan.
Friday, the day the news was announced, Rite Aid’s stock plummeted, falling from a high of $1.52 a share to $0.71 cents by market close. As of Monday afternoon, it has slightly recovered to about $0.80 per share.