Rite Aid bankruptcy means pharmacies will keep dwindling
From NJ Advance Media
Rite Aid, the drugstore giant, announced that it will file for Chapter 11 bankruptcy protection to restructure its debt and move closer to its goal of becoming an effective member of the competitive retail market. The company said that it plans to reduce its debt load by $3 billion, eliminate $700 million in annual costs, and refinance its current debt obligations. In addition, it will divest from its pharmacy business and transition to an advisory position in the stores it does not already own.
The move by Rite Aid is part of a larger trend of pharmacy chains struggling in an era of online shopping, and the consolidation of the industry. The move follows moves by competitors CVS Health, Walmart, and Walgreens to reduce their physical footprints. These companies have acquired smaller pharmacies and made strategic investments into online pharmacy services. Rite Aid has already begun to move in this direction, launching its own digital pharmacy, Rite Aid Digital Health.
Rite Aid’s bankruptcy move is not unexpected, as the company has struggled financially for the past few years. At one point, its stock was near the lowest it had ever been, around $1 per share. The company had to borrow heavily in order to stay afloat and remains the subject of multiple lawsuits since its announcement. Despite the news, many of its stores remain open and continue to provide essential medications and services to patients.
Rite Aid’s bankruptcy filing further highlights the risks and struggles that come with trying to remain competitive in the pharmacy retail market. The company’s restructuring plan is an attempt to survive in a competitive market, but it is uncertain at this point if it will be successful. Whatever the outcome, one thing is certain. Pharmacy services will not be as accessible as they once were as major pharmacy chains restructure in order to survive.