Despite healthcare being one of the most profitable and fastest-growing industries in the U.S., not all companies are guaranteed success, leaving some to inevitably slip through the cracks.
Even the top U.S. pharmacy companies like CVS ( (CVS) ), Walgreens ( (WBA) ), and Walmart ( (WMT) ) have suffered multiple store closures in the past years post-pandemic.
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According to a study, healthcare profits are estimated to grow by 7% from $583 billion in 2022 to $819 billion in 2027.
Despite the COVID-19-induced economic decline, as well as labor shortages and high inflation rates, the healthcare industry greatly profited from the pandemic.
However, by the end of the pandemic, drugstores were confronted with store closing due to a decrease in the need for locations and having to reduce costs.
The troubled pharmacy’s bankruptcy filing
The troubled pharmacy’s unsatisfactory earnings reports leading up to the bankruptcy were a key indication of the company’s ultimate filing of Chapter 11 on October 12, 2023.
According to the company’s annual report for 2023, the pharmacy chain reported losses of $750 million and revenue of $24 billion, with negative revenue growth of 1.9%.
Due to its immense losses, the pharmacy faced the closure of 271 underperforming stores between June and August, on top of an additional 520 on the day it filed for bankruptcy.
Related: After Chapter 11 bankruptcy closures, retail stores find new life
According to the company’s Q1 earnings report, its last publicly registered quarterly results, revenue of $5.7 billion was reported, yielding a 5% decrease from last fiscal year’s Q1.
The company also suffered a net loss of nearly $307 million, totaling a 178% increase compared to the year prior.
A private redemption
After facing many losses and a bankruptcy filing, Rite Aid successfully completed its financial restructuring process, which aided the exit from its Chapter 11 filing on Tuesday.
According to Rite Aid’s press release, the company has eliminated approximately $2 billion of total debt and received around $2.5 billion in exit financing to support the business.
More bankruptcy:
- Another popular retail chain files for Chapter 11 bankruptcy
- Another major retail chain may soon file Chapter 11 bankruptcy
- Fast casual restaurant chain files surprise Chapter 11 bankruptcy
In addition to the paid-off debt, all prior common shares have been canceled, giving Rite Aid creditors full ownership of the company. This transition grants the pharmacy chain the right to become a private company.
“Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company,” said former CEO Jeffrey S. Stein in a press release. “I am excited about Rite Aid’s future as it continues to focus on executing its strategy and delivering for its customers and stakeholders.”
Rite Aid’s status from public to private is not the only major change for the company; its executive board has also undergone a huge leadership transition.
On Tuesday, Rite Aid announced that Matt Schroeder, its former VP and CFO, will succeed Jeffrey S. Stein as the new CEO.
“I am honored to lead Rite Aid on its journey as we continue serving our customers and communities,” said Schroeder. “Thanks to the dedication of the entire organization, we are beginning our next phase as a transformed company. I see Rite Aid’s remarkable potential, and I look forward to working with the team as we remain committed to our purpose of helping our customers achieve whole health for life.”
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