A Rite Aid store in Kingston, New York, on May 15, 2023.
Thank you for reading this post, don't forget to subscribe!Angus Mordant | Bloomberg | Getty Images
Rite Aid lost more than $1 billion in the months before it filed for bankruptcy, the failed drugstore chain revealed in a Wednesday regulatory filing, as it warned investors it may not be able to keep its business running.
The warning, which came three days after Rite Aid filed for bankruptcy protection, was contained in a late quarterly filing that showed the company racked up more losses in the 13 weeks ending Sept. 2 than it did during its entire previous fiscal year.Â
During the quarter, Rite Aid posted $5.65 billion in revenue and a net loss of $1.02 billion, compared with $5.9 billion in sales and a net loss of $331 million in the year-ago period.Â
Rite Aid’s cost of goods sold and its selling, general and administrative expenses were in line with prior quarters. But its interest expense ballooned to $72.7 million, up from $52.5 million in the year-ago period. The company also took $310.8 million in facility exit and impairment charges, which largely came from asset write-offs at locations the company plans to close or relocate, the filing says.Â
The drugstore has spent the past several years buckling under the weight of slowing sales, long-term debt and lawsuits alleging it oversupplied painkillers and contributed to the nation’s opioid epidemic.Â
On Sunday, it filed for bankruptcy protection in New Jersey after a “confluence of operational and financial factors” left it with no other choice, court filings state.Â
Rite Aid has about $4 billion in debt and pays about $200 million in interest annually, court records say. With about $93 million in cash as of Sept 2., those payments have left Rite Aid unable to execute its turnaround strategy.
The company is also too small to compete against its better-funded rivals CVS and Walgreens, which have both been leaning into health-care models as Rite Aid stayed true to its pharmacy and retail focus.Â
Rite Aid warned its store footprint will get even slimmer with plans to close underperforming stores as part of the bankruptcy. It has sought court approval to close at least 154 stores in the near term and said more could come down the line.
Don’t miss these CNBC PRO stories:
- This bank just hiked its 1-year CD rate to a fresh high
- A low-cost way to protect against an S&P 500 drawdown as risks escalate
- How to invest $1 million for the next decade, according to private bankers and wealth advisors
- This highly profitable industry is booming as the population ages
- Bank of America sees risks for employers as insurance coverage of weight loss drugs grows
