Napa, CA – Rite Aid, the third-largest pharmacy chain in the United States, has filed for Chapter 11 bankruptcy for the second time in less than two years. The Philadelphia-based company, which operates over 1,200 stores nationwide, is facing significant financial difficulties, with liabilities ranging from $1 billion to $10 billion. The filing, made this week in New Jersey bankruptcy court, marks a critical turning point for the drugstore giant, which had hoped that a previous restructuring in 2023 would stabilize its finances.
As part of its bankruptcy proceedings, Rite Aid has announced plans to close or sell all of its 347 locations in California. While most stores will remain open for the time being, Rite Aid has revealed that it will cease purchasing new inventory, likely leading to empty shelves in the coming months. The company is also discontinuing its customer rewards program and will no longer honor gift cards or accept returns and exchanges starting next month.
“While we have continued to face financial challenges, intensified by the rapidly evolving retail and healthcare landscapes in which we operate, we are encouraged by meaningful interest from a number of potential national and regional strategic acquirers,” said Rite Aid CEO Matt Schroeder 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.”
The closure of its California stores is part of a larger effort to sell off assets, including customer prescription files, inventory, and store locations. Rite Aid has stated that it will stop operating several of its distribution centers and gradually unload store locations as it seeks a buyer.
Rite Aid’s struggles are not unique to the company. Like its competitors CVS and Walgreens, Rite Aid has been grappling with a combination of challenges, including thinner profit margins on prescription drugs, increasing theft, and legal settlements tied to its role in the opioid crisis. Additionally, changing consumer habits, with more shoppers turning to online retailers and discount stores, have contributed to declining sales.
The pharmacy chain’s troubles have been building for years. While Rite Aid once operated nearly 2,000 stores as recently as 2023, it now has roughly 1,240 locations. The company’s first bankruptcy filing in 2023 followed years of mounting losses and store closures, leaving the company struggling to regain stability.
The news of Rite Aid’s financial troubles comes as the retail pharmacy landscape continues to evolve, with chains facing increasing pressure from both legal and financial challenges. The company’s ongoing search for a buyer and plans to restructure indicate that Rite Aid is attempting to navigate its way out of crisis, though the future of many locations and jobs remains uncertain.
As Rite Aid works to sell its assets and minimize the impact on its employees and customers, those who rely on its services will be watching closely to see how the situation unfolds in the coming months.