Rite Aid customers can expect their local store to close or change ownership in the next few months, as the struggling drugstore chain goes through another bankruptcy filing.
The Rite Aid at 1331 Wilshire Blvd in Santa Monica is closed in May, with prescriptions transferring to a nearby CVS. This closure follows the 2022 shuttering of another local Rite Aid and comes amid significant financial struggles for the national chain. The company filed its second bankruptcy this week.
Rite Aid first filed Chapter 11 in October 2023, reporting $750 million in losses on $24 billion revenue. During that bankruptcy, it closed hundreds of stores, sold its pharmacy benefit company Elixir, and negotiated settlements with creditors. The company faces ongoing challenges including a Justice Department lawsuit over illegal prescriptions, opioid litigation settlements, staffing shortages, prescription drug shortages, and competition from online retailers like Amazon. Unlike competitors CVS and Walgreens, Rite Aid has been slower to diversify into additional healthcare services.
During this second process the company plans to sell customer prescription files, inventory and other assets as it closes distribution centers and unloads store locations. Stores will remain open for now, but the company isn't buying new inventory so bare shelves are likely become more common.
"I think what we'll progressively see is the stores will become more and more spartan," said retail analyst Neil Saunders. The company runs 1,245 stores in 15 states, according to its website. It has a heavy presence in New York, Pennsylvania and California, which alone has 347 locations.
Here's what customers can expect next.
How long will stores remain open? Rite Aid says a few months for most of its stores. All locations will eventually close or be sold to a new owner. Until then, customers will still be able to fill prescriptions, get immunizations and shop in the stores or online. Rite Aid has said that it will stop issuing customer rewards points for purchases. It also will no longer honor gift cards or accept returns or exchanges starting next month.
What will happen to my prescription records?
Rite Aid will try to sell them to another drugstore, grocer or retailer with a pharmacy. The company says it is working to put together a "smooth transfer" of customer prescriptions to other pharmacies. But there's no guarantee those files will wind up at a retailer near the location that is closing.
That may be challenging because some Rite Aid stores are in rural areas, miles away from another pharmacy, noted Saunders, managing director of the consulting and data analysis firm GlobalData. Prescription files can be valuable assets because they can connect the acquiring drugstore with a regular customer if that person sticks with the new store.
How did Rite Aid get to this point? Philadelphia-based Rite Aid had been closing stores and struggling with losses for years before its first bankruptcy filing in 2023. The company says its "only viable path forward" is a return to Chapter 11 bankruptcy proceedings. The company said in letter to vendors that it has been hit with several financial challenges that have grown more intense.
Rite Aid and its competitors have been dealing with tighter profits on their prescriptions, increased theft, court settlements over opioid prescriptions and customers who are drifting to online shopping and discount retailers. Walgreens, which has more than six times as many stores as Rite Aid, agreed in March to be acquired by the private equity firm Sycamore Partners. CVS Health also has closed stores.
Tom Murphy, Associated Press
