Rite Aid files for second bankruptcy

July 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

July 2025 Issue

For the second time in two years, pharmaceutical chain Rite Aid has filed for Chapter 11 bankruptcy protection.

According to Matt Schroeder, chief executive of Rite Aid, the company has experienced a number of financial challenges “intensified by the rapidly evolving retail and healthcare landscapes”, which drove the company to file for bankruptcy in the US Bankruptcy Court for the District of New Jersey in early May.

Rite Aid previously filed for Chapter 11 in October 2023 after reporting $750m in losses for the previous fiscal year. The company used its previous bankruptcy to reduce its existing debt load by $2bn, close hundreds of locations, sell its pharmacy benefit company Elixir, and negotiate settlements with its lenders, drug distribution partner McKesson, and other creditors. Rite Aid also used the previous bankruptcy to resolve hundreds of lawsuits which alleged that the company had ignored red flags when filling suspicious prescriptions for addictive opioid pain drugs. Yet, despite these efforts, Rite Aid still had $2.5bn in debt when it emerged from bankruptcy as a private company owned by its lenders in 2024.

Rite Aid is a distant third-largest nationwide standalone pharmacy chain in the US, and the seventh largest pharmacy overall, when considering big box chains. At the time of the filing, Rite Aid operated 1240 stores across 15 states, roughly half of the number it had just two years ago, and said that its customers would be able to access pharmacy services and that it is “working to facilitate a smooth transfer of customer prescriptions to other pharmacies”. The company’s second bankruptcy filing will not see the company execute certain store closures as it did during the previous filing; instead, it will be shutting all of its existing locations.

During the Chapter 11 process, Rite Aid customers can continue to access pharmacy services and products in stores and online, including prescriptions and immunisations. Rite Aid employees assisting with the transfer of prescriptions will continue to receive pay and benefits.

To support the company during its sale process, Rite Aid has secured commitments from certain of its existing lenders to access $1.94bn in new financing. This financing, along with cash from operations, is expected to provide sufficient funding during the sale and court-supervised process. The company intends to divest or monetise any assets that are not sold through the court-supervised process.

“For more than 60 years, Rite Aid has been a proud provider of pharmacy services and products to our loyal customers,” said Mr Schroeder. “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. As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”

The company is in discussions with a number of interested parties, including national and regional strategic acquirers, which may purchase certain locations.

Rite Aid has attracted interest from would-be acquirers in the past. In 2015, Walgreens offered to acquire the company, but the potential deal attracted significant scrutiny from US regulators who feared the combination would violate federal antitrust laws and reduce competition in the drug store market. As a result, the companies agreed to a smaller, $4.4bn deal in 2017, which saw Walgreens acquire just under 2000 Rite Aid locations, leaving Rite Aid unable to compete at the scale of its larger rivals.

Richard Summerfield