Rite Aid declares bankruptcy

After months of rumors, pharmacy chain Rite Aid on Sunday filed for Chapter 11 bankruptcy protection to restructure its finances amid soaring debt fueled by opioid-related lawsuits.

The Philadelphia-based company also appointed restructuring veteran Jeffrey Stein as its new CEO and chief restructuring officer, succeeding Elizabeth “Busy” Burry who had served as interim CEO since January.

Rite Aid said it had secured $3.45 billion in new financing from its lenders to keep it afloat during the bankruptcy process.

The company, burdened by $3.3 billion in debt, said it intends to “accelerate” the closures of underperforming stores under its court-supervised restructuring plan.

Late last month, The Wall Street Journal had reported that Rite Aid planned to close 400 to 500 of its more than 2,200 locations in 17 states.

“The court-supervised process provides Rite Aid with legal tools to accelerate our footprint optimization in an efficient and orderly manner,” Stein, founder and managing partner of restructuring firm Stein Advisors, said in a statement. “We look forward to working closely with our landlords to determine the best path forward for each of our stores.”

Rite Aid also said it had entered into an agreement with pharmacy benefit solutions company MedImpact Healthcare Systems to acquire its Elixir pharmacy services unit. Elixir Insurance, the company said, will be operating normally during the bankruptcy process.

Earlier this month, Rite Aid received a delisting warning from the New York Stock Exchange for failing to meet minimum market capitalization and share price requirements.

Rite Aid’s stock closed Friday at 65 cents per share.

“I have tremendous confidence in this business and the turnaround strategy that has been developed in recent months,” Stein said in a statement. “I look forward to working closely with the board, management team and our lenders and bond holders as we better position Rite Aid to deliver on our purpose of bringing people whole health for life.”

Rite Aid has been named in more than 1,000 state and federal lawsuits claiming it accelerated the country’s opioid epidemic by oversupplying the highly addictive prescription painkillers.