Another troubled drugstore chain files for Chapter 11 bankruptcy
According to The Street, Since the end of the Covid-19 pandemic, the drugstore retail sector has experienced a wave of store closures as major pharmacy chains work to cut costs and mitigate losses. Leading the trend was CVS Health (CVS), which announced in 2021 that it would close 900 of its 9,900 stores. The company has been shutting down 300 stores each year from 2022 through 2024 as part of its cost-reduction strategy.
Following suit, Walgreens Boots Alliance (WBA) revealed in June 2023 that it would close up to 450 Walgreens locations across the U.S. and U.K. in an effort to simplify its operations. However, the closures didn’t stop with these two retail giants.
Rite Aid’s Bankruptcy and Closures
Rite Aid, one of the largest drugstore chains in the U.S., filed for Chapter 11 bankruptcy on October 15, 2023. The Philadelphia-based company took this step following a lawsuit brought by the U.S. Department of Justice in March 2023 under the False Claims Act, which alleged Rite Aid knowingly filled unlawful prescriptions for controlled substances. The company, facing around $3.3 billion in debt and a potential opioid settlement that could add another $1 billion to its liabilities, opted for Chapter 11 bankruptcy to negotiate a deal while under court protection.
Immediately after filing for bankruptcy, Rite Aid began closing stores, starting with 154 locations. As it nears its emergence from Chapter 11, the company has shuttered more than 520 of its over 1,200 stores that were operational when it filed for bankruptcy.
Struggles Among Smaller Pharmacy Chains
Smaller pharmacy chains have also found it increasingly difficult to compete with CVS, Walgreens, and Rite Aid, forcing some to file for Chapter 11 bankruptcy to restructure their businesses. One such case is Eastern Kentucky’s Rx Discount Pharmacy, which operates seven pharmacy and healthcare locations. On May 1, 2023, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Kentucky. The company did not provide a specific reason for its filing.
Medicine Shoppe Pharmacy Owner Files for Bankruptcy
In another significant development, CL Cressler Inc., the owner of seven Medicine Shoppe Pharmacy locations in Pennsylvania and New York, filed for Chapter 11 bankruptcy on August 29, 2023. The Camp Hill, Pa.-based company, which also operates under the name Care Capital Management, listed over $1.5 million in assets and $12.2 million in liabilities. According to its filing, there are funds available to distribute to unsecured creditors.
CL Cressler’s largest creditors include Commercial Finance Group, owed $6 million; Carol and Clyde Cressler, owed $3.7 million; and Cardinal Distribution, owed more than $1.2 million. Despite the bankruptcy, the company generated $50.8 million in gross revenue in 2023, following $61.5 million in gross revenue in 2022.
The seven Medicine Shoppe locations included in the bankruptcy filing are in Lancaster, Newport, and Mechanicsburg, Pa., as well as Binghamton, N.Y. The long-term care divisions in Pittsburgh, Camp Hill, Pa., and Binghamton, N.Y., are also part of the filing. However, the parent company of The Medicine Shoppe, St. Louis-based Medicine Shoppe International—a subsidiary of Cardinal Health (CAH)—is not involved in the bankruptcy and remains one of the nation’s largest pharmacy chains with nearly 500 locations across 43 states.
