Rite Aid (RAD) shares fell by 3 percent during regular trading on Monday and by 2.5 percent post market on the same day. The fall has been attributed to a report that said that the pharma chain was considered a Chapter 11 bankruptcy filing. The drugstore company has large opioid liabilities. However, there is no confirmation about the filing, nor has there been a timeline mentioned by the unidentified sources.
In June, Bloomberg reported that there was a group of secured bond holders, who were working with advisors, to rework the debt of the drugstore chain. Rite Aid has debt to the tune of $2.9 billion. Some of this debt is due in 2025 and 2026.
During its earnings call in late June, the company’s CFO said that it was in talks with its lenders. The call during its first quarter earnings reports also noted that the company was looking at several options to address its debts that would mature in 2025.
Rite Aid drug store chain has been hit with losses as the chain struggles to keep stores open after the loss of COVID-19 vaccines and test sales. It has closed several stores across the nation including some in New York City and Sacramento.
Rite Aid is also facing a lawsuit from the U.S. government that said that the drugstore chain as well as its employees did not take notice of “obvious red flags” while dispensing opioid prescriptions. This contributed to the opioid epidemic that remains one of the biggest killers in the nation. These prescriptions were filled from May 2014 through June 2019.
Earlier the company was involved in an accounting scandal. The company made disastrous deals, which then led to accounting practices that were illegal, to show profits that existed only in paper/digital form. This accounting scandal and other related conspiracies resulted in former Chairman and CEO of Rite Aid, Martin Grass getting an eight-year prison term, in 2004.
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