(Image via medcitynews.com)
Business Manager: Brendan Flaherty
Email: bflaherty1@umassd.edu
Rite Aid, a pharmaceutical company similar to CVS and Walgreens, is filing for bankruptcy over plummeting sales, increasing debt, and claims against them for misuse of opioids.
So where did this all start, and how can Rite Aid ever think to come back from all these setbacks?
Rite Aid has filed for “Chapter 11 bankruptcy protection in New Jersey,” according to an article from The New York Times.
This means they have raked in about $3.45 billion in liquidity funds to help it through bankruptcy. This large sum has come from various sources, including the business’s lenders.
These funds are meant to help the business deal with its short-term debts and help the business make its way out of the rut it has found itself in.
The company has had to follow through with many procedures and changes to stay afloat after all is said and done.
Such changes include closing various sites known for underperformance, a change in CEO, and a sizable shrinking of the company as a whole.
But what were the ultimate reasons for the company’s downfall?
In reality, it was a combination of many more minor troubles that kept amounting until it eventually caused the company to consider bankruptcy. Such issues include a decline in sales, stock prices falling, an opioid lawsuit, and rising crime in stores, according to an article from MSN.
Regarding the sales side of the matter, the business has been carrying a large amount of debt on its shoulders, with $3.3 Billion in debt as of June 2023 and not enough assets to cover it all.
According to Sarah Foss, the global head of Debtwire, the whole situation can be described as “just kind of the perfect storm,” as described in an article from The New York Times.
The most troubling aspect of the whole ordeal is the problem of the Opioid misuse claims, a problem that can’t be fixed as easily as the other problems can.
The recent climb in Opioid addictions has caused people to blame pharmaceutical companies for abusing powerful drugs by filling out illegal prescriptions.
The whole issue has put the company in a “no-win situation” where they could be found guilty no matter what step they may take, according to an MSN article.
If the company were to deny the prescriptions made by the doctors, they could get in trouble for overstepping their abilities and face criticism from organizations like the American Medical Association.
Alternatively, they could stay the course and continue to give out the opioids as they are prescribed and hope that the misuse is not on an employee level but on an external factor.
A few other named companies have given out settlement funds to escape the blame, such as Walmart, CVS, and Walgreens, costing them a few billion dollars each easily.
Rite Aid and other pharmaceutical companies can only hope that the prescriptions were made legally and that businesses worldwide have been adhering to these correctly and accurately.
The possibility of the pharmacies committing “widespread systemic wrongdoing… is exceedingly unlikely,” according to an MSN article.
It is awful to think about just how much the opioid epidemic has affected both the people and the pharmacies through the filed lawsuits.
The only winners from this whole matter might, in fact, be the lawyers associated with the lawsuits against the once-great pharmacy.
Some might see Rite Aid as the messenger in the matter and that the real problem is drug manufacturers and prescribers. Rite Aid was just an easy target for court filings.
While the business has filed for bankruptcy, this doesn’t exactly spell the ending for Rite Aid.
The company has incorporated new CEO Jeffery Stein, who is, sourced from a New York Times article, the “founder of Stein Advisors, a financial advisory firm that focuses on fixing troubled companies.”
Although, yes, there has been a sizable restructuring of the company and plenty of closings, there is yet a chance for the pharmaceutical company to make it through these troubling times.