ECONOMY
Rite Aid May Be Headed For Bankruptcy Amid Opioid Lawsuits
Courtesy of riteaid/Instagram
Rite Aid’s stock price plummeted on Friday after multiple outlets reported the company was on the verge of filing for bankruptcy due to pending opioid lawsuits.
The pending bankruptcy was reported by The Wall Street Journal and Bloomberg, citing sources familiar with the plan for a Chapter 11 filing.
Philadelphia-based Rite Aid is facing a raft of lawsuits alleging it unlawfully filled thousands of opioid prescriptions, including a civil lawsuit filed by the U.S. Department of Justice earlier this year. The DOJ said the pharmacy chain violated the Controlled Substances Act by repeatedly filling prescriptions with “obvious red flags.”
Hundreds of federal lawsuits against the company were consolidated, and further lawsuits are moving through state courts.
“Anytime you have an Earnings Per Share of -18.66 you company is always at risk of going bankrupt. Rite Aid has been in steady decline over the past five years and now that the stock is under $1 per share, shareholders should have serious concerns about it going bankrupt,” said Ted Jenkin, founder and CEO of Atlanta-based oXYGen Financial.
“One big class action lawsuit can hurt a company of any size, but with the thin working capital Rite Aid has at this time, it’s facing a difficult uphill battle right now to stay solvent,” Jenkin said.
If Rite Aid files for Chapter 11 bankruptcy, those lawsuits would pause, and they could be consolidated further.
TMX contributed to this article.
