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Rite Aid Files for Chapter 11 Bankruptcy for Second Time

Rite Aid faces significant challenges as it files for Chapter 11 bankruptcy for the second time.

News Summary

Rite Aid has filed for Chapter 11 bankruptcy protection for the second time, citing significant financial challenges including a $750 million loss. As part of its restructuring, the company plans to close over 150 stores, lay off 1,100 corporate employees, and halt issuing rewards points. Rite Aid has secured $1.94 billion in new financing to support operations amid this transition, but the consequences of store closures raise concerns about access to pharmacy services, particularly in underserved areas.

Pennsylvania – Rite Aid has filed for Chapter 11 bankruptcy protection for the second time, announcing the latest filing on May 5, 2025. This decision comes as the company grapples with significant financial challenges, including a reported $750 million loss for the last fiscal year. As part of the bankruptcy proceedings, Rite Aid is embarking on a “strategic and value-maximizing sale process” for most of its assets.

In conjunction with the bankruptcy filing, Rite Aid plans to close over 150 stores, which includes 43 locations throughout Pennsylvania. This list of 151 closures is in addition to the 210 stores the company previously announced would shut down, marking a significant reduction in its retail footprint. Rite Aid currently operates more than 1,200 stores across various states, with a substantial presence in Pennsylvania.

As a result of the financial strain and restructuring efforts, Rite Aid will also lay off approximately 1,100 corporate employees based in York County and Philadelphia. These layoffs highlight the scale of the company’s efforts to realign its operations with its financial situation.

Rite Aid has secured agreements with major pharmacy chains, such as CVS Pharmacy, Walgreens, Albertsons, Kroger, and Giant Eagle, regarding its pharmacy assets. CVS Pharmacy is set to acquire prescription files from 625 Rite Aid pharmacies across 15 states and will operate a total of 64 Rite Aid stores located in Idaho, Oregon, and Washington. The bankruptcy court has already approved these asset transfers as part of the ongoing restructuring process.

Following its previous bankruptcy filing in October 2023, which allowed Rite Aid to shed $2 billion in debt and close hundreds of stores, the company’s financial landscape has not substantially improved. After emerging from that process, Rite Aid was left with $2.5 billion in debt and under the ownership of its lenders. The mounting financial challenges, coupled with ongoing lawsuits related to opioid prescriptions, have necessitated this latest bankruptcy filing.

In a notable shift in consumer policy, Rite Aid has decided to stop issuing rewards points for qualifying purchases effective May 6, 2025. Furthermore, the company will cease honoring gift cards and accepting returns or exchanges starting June 5, 2025. These actions indicate drastic measures being taken to streamline operations and conserve resources amid restructuring efforts.

Despite the planned store closures, Rite Aid has obtained $1.94 billion in new financing to support its operations during the bankruptcy process. This financial backing will enable the company to continue to pay employees and provide benefits throughout the proceedings, ensuring some level of operational continuity as Rite Aid navigates through this challenging phase.

Rite Aid’s commitment to maintaining access to pharmacy services remains a priority during this transitional period. However, there is growing concern over the increasing number of “pharmacy deserts”—areas lacking convenient access to pharmacies—stemming from the ongoing closures. The reduction in the number of operational stores may impact accessibility for many patients in need of pharmaceutical care.

As Rite Aid seeks to emerge from its latest bankruptcy proceedings, its future in the competitive pharmacy market hangs in the balance. Stakeholders and customers alike will be watching closely as the company embarks on this next chapter.