Rite Aid is a famous pharmacy brand selling medicines and essential items everywhere in America for years, which has once again come in the list of Chapter 11 Bankruptcy. The company has taken this decision in view of the market competition, legal action against the company and the debt it has had for years. Now the question is why did Rite Aid collapse? Now what will happen to its shareholders and customers, let’s know:
Why did Rite Aid Collapse?
For many years, Rite Aid company was seen in every city and village, but gradually the company started facing problems:
- Rite Aid was accused of promoting an epidemic like opioids by selling more pain-relieving medicines than needed. Because of this, the company sank both its money and reputation.
- The company took a lot of debt to run its stores and this debt became a problem for them. The company had taken a loan of about $3.3 billion so far.
- Talking about competition, companies like CVS and Walgreens left Rite Aid behind by investing in online services and technology.
- The lack of customers after Covid badly affected the stores in small towns.
What was the effect on Employees and Communities?
During bankruptcy, the company closes its loss-making stores. Rite Aid has also announced the closure of more than 150 stores, due to which people in rural areas started facing difficulty in getting medicines and health advice. This is a time of fear and uncertainty for the employees.
What will happen to RAD Stock?
This news is worrying for investors. In the last few years, the price of Rite Aid’s stock has fallen from $100 to $0.38. In bankruptcy, shareholders usually get money last, because first the creditors and banks are paid. Although some traders may try to profit from the stock’s surge, the company is unlikely to survive in the long term.
Will Rite Aid be able to make a comeback?
Bankruptcy does not mean defeat. Rite Aid will try to reduce its debt in the process and work on a new business model. According to CEO Matt Schroeder, we have to continue serving our customers, and this process will give us a fresh start. But experts believe that the pharmacy industry has no place for those lagging behind in the race of technology and online services.