Rite Aid (NYSE:RAD) Corp., a notable drugstore chain, has filed for chapter 11 bankruptcy, as it grapples with a staggering over $3.3 billion debt burden, largely stemming from opioid-related lawsuits. The company's shares have plummeted by 80.6% this year due to its non-compliance with the New York Stock Exchange's minimum pricing and valuation standards, leading to a six-month compliance recovery deadline.
In response to these financial challenges, Rite Aid has announced plans for additional store closures, supplementing the previous 200 shutdowns. The company also intends to appoint a new CEO, while Elizabeth Burr will maintain her role as interim CEO. This aligns with an InvestingPro Tip that highlights the company's declining trend in earnings per share and its operation with a significant debt burden.
The bankruptcy filing will pause any pending litigation against the company. Lenders have expressed their readiness to back Rite Aid's operations throughout the bankruptcy process, even as the InvestingPro Data shows a negative P/E ratio of 0.04, indicating that the company was not profitable over the last twelve months.
The firm continues to employ approximately 47,000 individuals across its 2,100 stores that remain operational. Despite the ongoing difficulties, it's important to note that Rite Aid's liquid assets exceed short term obligations, as indicated by one of the InvestingPro Tips. This could potentially provide some financial cushion during the bankruptcy process.
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