Drug store chain Rite Aid filed for bankruptcy on Sunday and announced plans to close a number of its locations amidst intense legal battles and declining sales.
The 60 year old company has experienced annual losses for several years now and expects to see a net loss of $680 million this fiscal year.
The company is also facing an onslaught of more than a thousand lawsuits concerning the pharmacy’s illegal prescription of opioids.
Rite Aid currently plans to continue operations as it moves through the voluntary Chapter 11 bankruptcy process, which allows for the restructuring of the company’s debts via a court-controlled process.
Part of the company’s plan for restructuring includes the closure of underperforming locations.
Hundreds of lawsuits over illegal opioid prescriptions are also contributing to the company’s financial struggles.
Generally speaking, the lawsuits accuse Rite Aid of knowingly filling prescriptions for addictive opioid painkillers that did not meet legal standards.
The Justice Department filed a complaint against the company in March of this year alleging that Rite Aid pharmacies violated the False Claims Act and the Controlled Substances Act by “repeatedly fill[ing] prescriptions for controlled substances with obvious red flags” and “intentionally delet[ing] internal notes about suspicious prescribers.”
A subsequent motion by Rite Aid to dismiss the lawsuit called the government’s claims “hyperbolic.”
In 2015, drugstore chain Walgreens attempted to buy out Rite Aid $9.4 billion, but ultimately scaled back the purchase to just 1,900 of the chain’s locations in an effort to avoid garnering unwanted attention from antitrust regulators.
Three years later in 2018, Rite Aid called off another potential merger, this time with the grocery store chain Albertsons.
Rite Aid said in a statement to the press that the bankruptcy will “significantly reduce the company’s debt” and “resolve litigation claims in an equitable manner.”
At this point, nothing is certain with regard to how Rite Aid’s bankruptcy process will ultimately play out.