In October 2023, Rite Aid filed Chapter 11 bankruptcy as a result of suffering a loss of $750 and making a revenue of $24 billion for the fiscal year that ended in March. However, in a bid to save the company from having to be shut down and liquidating operations, the Philadelphia-based company was able to obtain a court verdict under a bankruptcy judge that approved its restructuring plan in June.
As a result of this successful financial restructuring Rite has emerged as a private company, this happened after the company canceled all existing common shares and some creditors were transferred certain ownership over the company. Through the bankruptcy, the company was also able to negotiate settlements with some of its lenders such as the drug distribution partner McKesson.
Not only this but the restructuring plan has resulted in significantly reducing the retail portfolio for the drugstore chain and has also resulted in top management being shuffled.
At one point in time, Rite had almost 4600 stores under its belt, at the time that it declared bankruptcy, this number went down to almost 2100, compared to 7 years ago, today Rite has less than one-third of the stores it did.
Since the bankruptcy was announced Rite has closed the doors of over 810 of its stores, a combined total of 414 stores have been shut down in Michigan and Ohio alone. According to the company to ensure that they remain financially and operationally healthy, it was important to withdraw from these states and consequently, Rite closed all of its stores in Michigan while only 4 remained in Ohio.
While the company has completely existed in the state of Nevada, its presence in other states like New York, New Jersey, California, Washington, Virginia, etc has diminished.
Leadership reshuffling has also resulted in Jeffrey S. Stein, CEO and chief restructuring officer of Rite Aid being replaced by Matt Schroeder as CEO. Schroeder has been attached to Rite since 2000 and most recently served in the capacity of the CFO.
About the transition Stein shared, “Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger, and more efficient company. We are grateful for the ongoing support of our customers, associates, and partners, and we look forward to continuing to provide leading pharmacy services designed to improve health and wellness outcomes across the communities we serve. I am excited about Rite Aid’s future as it continues to focus on executing its strategy and delivering for its customers and stakeholders.”
The goal for the company that has set its roots down in East Pennsboro Township near Camp Hill for decades now was to exit this bankruptcy with less debt and more financial resources. They knew that they needed to rethink the size of their store portfolio and come up with a more efficient operating model. The success of this restructuring plan has resulted in the company significantly eliminating its debt by $2 billion and gaining $2.5 billion in exit financing.
