On Sunday, Rite Aid, a Major U.S. Pharmacy chain, filed for bankruptcy due to opioids-related lawsuits and falling sales. They are trying to cope with all the issues by developing a restructuring plan after obtaining $3.45 billion in fresh financing.
There have been lawsuits against them, of which Rite Aid has settled almost $30 million! The lawsuits are based on allegations against Rite Aid, where they are blamed for oversupplying prescribed opioids. With a financial restructuring plan, the company has developed an agreement with the creditors.
Further, the plan they are developing is based on reducing the debt the company faces. It is through resolving the litigation claims. It is through an equitable method that Rite Aid is producing documents in bankruptcy court.
The dead rent costs are quite disturbing for Rite Aid, and they are worried about the underperforming stores, especially because their output is not as much as their input. Recently, there have been over 200 locations where the company is struggling, leading to company closure.
In the court documents, it has been mentioned that there are 45000 employees under their management, of which 6100 are pharmacists. On a yearly basis, pharmacists give approximately 200 million prescriptions.
There was $134 million in cash with Rite Aid as of Sunday. Hence, they could borrow $524 million in liquidity and $390 million. The financial position of the company is quite low. Therefore, they have filed for bankruptcy.
The long-term debt of $3.3 billion has been a significant burden, according to Neil Saunders, the GlobalData retail analyst. The losses they are facing currently have been a rough $2.9 billion. It is disturbing for the firm, and they are working hard to create a viable entity.
Ultimately, the day-to-day business can be evaluated concerning cash, which the company doesn’t have! They were trying to get by everyday before they filed for bankruptcy.
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