News that Rite Aid is going to once again file for bankruptcy and sell off its assets doesn’t mean shuttered brick-and-mortar stores will re-open under a CVS Health or Walgreens banner.
Rite Aid last week announced that it is “pursuing a strategic and value-maximizing sale process for substantially all of its assets,” the company said. “To facilitate this process, the company and its subsidiaries commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of New Jersey.”
It’s the second bankruptcy filing for Rite Aid in less than two years. Less than seven months ago, Rite aid emerged from federal bankruptcy protection and would operate in 16 states after shedding more than 500 stores during the bankruptcy proceedings.
But the plan under new Rite Aid management hasn’t worked out so closures of stores is already under way and the company is no longer honoring “reward points” and will “no longer honor Rite Aid gift cards or accept any return or exchanges beginning June 5, 2025.” As of Monday, Rite Aid operated 1,240 stores in the U.S. with most of them located in California, Pennsylvania and New York, according to the drugstore chain’s store locator.
“During this process, Rite Aid customers can continue to access pharmacy services and products in stores and online, including prescriptions and immunizations,” Rite Aid said last week. “In connection with the sale process and court-supervised proceedings, the company is working to facilitate a smooth transfer of customer prescriptions to other pharmacies. Rite Aid employees assisting with this process will continue to receive pay and benefits.”
Though CVS, Walgreens and other pharmacies may acquire Rite Aid prescription files as is common when drugstores are liquidated, sold or leave markets, brick and mortar acquisitions of Rite Aid stores are unlikely.
CVS and Walgreens executives have already told their investors and others that they believe the retail pharmacy market has excess capacity.
Before Walgreens announced plans earlier this year to become privately held in a takeover by the investment firm Sycamore Partners for more than $10 billion, the drugstore giant was in the process of closing hundreds of stores. Walgreens had planned 1,200 store closures in the U.S. by 2027.
Meanwhile, CVS, too, is closing stores and testing smaller store formats that use a much smaller retail footprint. CVS is also reformatting some existing stores to include its Oak Street Health centers.
The push for new sizes and formats has taken on more urgency because both CVS and Walgreens have large amounts of debt and face escalating pressure from flat or falling sales of general merchandise in the front of their stores.
Under new chief executive officer David Joyner, CVS has said it believes the retail pharmacy market has too much capacity and opened too many brick and mortar stores several years ago.
“We plan to open a dozen or more smaller format CVS Pharmacy locations in select communities nationally over the next year,” CVS said earlier this year. “The new pharmacies will be introduced in select neighborhoods to help bridge gaps in care and make it easier for patients to access medications, immunizations, and other pharmacist-provided health care services.”
