Pharmacy chain struggles to recover from second bankruptcy in two years
Rite Aid announced this week it will close all 178 of its remaining New York stores as part of a new bankruptcy proceeding, marking another significant contraction for the troubled pharmacy retailer that once operated thousands of locations nationwide.
The company filed for Chapter 11 bankruptcy protection on Monday in the U.S. Bankruptcy Court for the District of New Jersey, its second such filing in less than two years. According to company statements, Rite Aid will be “pursuing a strategic and value-maximizing sale process for substantially all of its assets,” with closures or ownership transfers affecting all its New York locations over the coming months.
The first wave of employee layoffs is expected to begin June 4, according to internal communications. As stores wind down operations, Rite Aid stated it will work with customers to ensure prescriptions are transferred to other pharmacies.
“For more than 60 years, Rite Aid has been a proud provider of pharmacy services and products to our loyal customers,” said Matt Schroeder, Chief Executive Officer of Rite Aid. “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 acquirors.”
The retailer initially filed for bankruptcy in October 2023 after reporting $750 million in losses during the previous fiscal year. Despite emerging from that process in September 2024 with approximately $2 billion less debt, the company continued to struggle with inventory management and increasing competitive pressures.
Analysts point to several factors contributing to Rite Aid’s continued decline. The company has been hampered by legal battles related to alleged improper handling of opioid prescriptions, increased competition from larger chains like CVS and Walgreens, and mounting pressure from e-commerce giants entering the pharmacy space.
“The first bankruptcy did little to resolve the chain’s issues, and it has been teetering on the edge of survival for quite some time,” said Neil Saunders, managing director of GlobalData, a data analytics company. He added that with Walgreens no longer positioned to acquire Rite Aid outright, the most likely outcome is that other retailers will “cherry pick” individual stores to purchase while the remainder close permanently.
The closures reflect broader challenges in the pharmacy retail sector. Even industry leaders face headwinds, with Walgreens recently agreeing to a buyout by private equity firm Sycamore Partners for significantly less than its valuation from a decade ago. CVS has also announced plans to close hundreds of locations this year.
For New York residents who rely on Rite Aid for prescriptions, the company has set up resources to assist with transfers to other pharmacies. Customers can contact their local store or call the company’s customer service line at 1-800-RITE-AID for assistance.
Observers note that while Rite Aid has expressed hopes of finding buyers for some locations, the chain’s financial performance and competitive landscape make a complete revival increasingly unlikely. The company’s footprint has already shrunk dramatically, from approximately 2,100 stores in 17 states just prior to its first bankruptcy to roughly 1,240 locations today.
The recent filing indicates liabilities between $1 billion and $10 billion, demonstrating that despite previous restructuring efforts, the company failed to establish a sustainable financial footing in a rapidly evolving retail environment.
