Philadelphia-based drugstore chain Rite Aid plans to close all of its U.S. locations — including 33 stores in Philly — and shutter its headquarters at the Navy Yard as part of its second bankruptcy filing in less than two years, the company said Monday.
The struggling pharmacy chain will look to sell the leases for its U.S. stores to one or more buyers, potentially enabling many of the stores to reopen under different brands. Rite Aid underwent a restructuring after its first bankruptcy filing in 2023 but continued to flounder under significant debt and competition from larger chains. The company is the third-largest standalone U.S. pharmacy chain behind CVS and Walgreens.
MORE: Wildwood's famed tram cars will soon be pulled on boardwalk by Ford Maverick trucks
"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," Rite Aid CEO Matt Schroeder said 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.”
Rite Aid has secured $1.94 billion in financing to continue operating its pharmacies over the next few months while seeking to offload its 1,245 U.S. stores, which span 15 states. Pennsylvania, New York and California make up the company's largest footprint with a combined 347 stores. In South Jersey, Rite Aid will close about 30 stores and a distribution center.
Rite Aid opened a new headquarters and collaboration center at the Navy Yard in 2022, touting the 23,000-square-foot space as a corporate hub for its remote employees. The company, founded in Scranton in 1962, also has corporate offices in Camp Hill about 100 miles west of Philadelphia. In addition to its leased stores, Rite Aid also will look to sell about 50 properties the company owns.
Rite Aid's financial struggles have been driven by a combination of tighter profit margins on prescriptions, the rise of online pharmacies and costly legal settlements related to the sale of opioid medications. Similar problems have forced larger competitors — including CVS and Walgreens — to close several thousand U.S. stores in recent years.
In the coming months, Rite Aid will transfer customer prescriptions to other pharmacy chains and grocers, and the company will immediately stop offering rewards points for purchases. Returns and exchanges will no longer be accepted beginning in June. Stores are expected to clear out in the coming months as Rite Aid stops restocking inventory.
When Rite Aid emerged from its first bankruptcy in September, the newly private company still carried about $2.5 billion in debt. It had already closed hundreds of U.S. stores, reducing its footprint in states including Ohio and Michigan. The company's bankruptcy filings list outstanding liabilities between $1 billion and $10 billion, Reuters reported.
Walgreens sought to acquire Rite Aid in 2015, but the deal was nixed by U.S. antitrust regulators. Two years later, Rite Aid sold about 2,000 of its stores to Walgreens in a smaller deal that left Rite Aid far behind its competitors. In March, Walgreens was acquired by private equity firm Sycamore Partners in a deal valued at $23.7 billion.
Neil Saunders, managing director of data analytics company GlobalData, told CNN Business he expects a range of drugstore and retail chains to "cherry pick" Rite Aid locations and reopen them. He said Rite Aid's debt became insurmountable despite the company's efforts to restructure.
“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,” Saunders said.
