WSJ: Rite Aid plans 400-500 store closures in pending bankruptcy filing

[cathandler]

Bondholders expected to push for even more. What regions do you think would be hardest hit?
https://nypost.com/2023/09/22/strugglin ... an-report/

[norcalriteaidclerk]

Here's what I have noticed since closures got back underway around mid-august:for every three West Coast locations closed, seven East Coast locations have been lost.Some areas out West have seen fewer closures compared to other areas:some closures have occurred in San Diego and the Inland Empire,but Los Angeles county has seen few closures.Norcal closures have also been few,while whatever pnw closures have occurred have mostly been in Western Washington mainly due to bartell overlap.

Out east we're seeing closures left and right.The West Coast remains very viable despite bad merchandising decisions under heyward donigan.Maybe the next CEO can restore what has made the Western operations great.

[storewanderer]

The question at this point is how many stores can actually be sold to CVS/Walgreens as ongoing stores.

And how many locations simply close with the prescription files transferred to a nearby CVS/Walgreens?

I am shaken by this quote which I read last night:
"The company has proposed to close roughly 400 to 500 stores in bankruptcy, and either sell or let creditors take over its remaining operations, according to the report."

So basically it is like they are just giving up. Throwing in the towel IF the above is true...

Did the last CEO really kill the company to the point that it has come to this? At least they got all those great new logo signs up. At least someone's buddy at a marketing agency and sign shops made money.

Also it appears Elixr (sp) has been completely mismanaged the past few years. What was previously a growing enterprise just quit growing under the last CEO. Now is the time where I start to put the blame on what has happened here on the last CEO. I've been careful not to place blame in the past, but it is now clear if the company is in such shambles that they just want to walk away and give it to creditors that the damage done by this last CEO was far beyond what meets the eye of an outside observer.

As far as the east vs. west thing goes the amount of closures in SoCal is somewhat surprising to me. It is interesting how busy stores can be losing money with how screwed up the pharmacy reimbursement situation has gotten. Also based on the specific stores they've chosen to close in OR, plus the distribution center, we will see what happens in OR. WA they are obviously having too many stores since buying Bartell, over 200 stores in that state.

[jamcool]

Mebbe who ever buys the stores in the West will bring back the Thrifty name. Also, who gets the Thrifty Ice Cream brand if the whole RA operation goes defunct?

[ClownLoach]

Mebbe who ever buys the stores in the West will bring back the Thrifty name. Also, who gets the Thrifty Ice Cream brand if the whole RA operation goes defunct?

It's an asset. Someone will have a chance to buy it. That brand and operation are worth good money. If they liquidate Rite Aid then it will be an asset the bankruptcy court offers for sale.

[ClownLoach]

The question at this point is how many stores can actually be sold to CVS/Walgreens as ongoing stores.

And how many locations simply close with the prescription files transferred to a nearby CVS/Walgreens?

I am shaken by this quote which I read last night:
"The company has proposed to close roughly 400 to 500 stores in bankruptcy, and either sell or let creditors take over its remaining operations, according to the report."

So basically it is like they are just giving up. Throwing in the towel IF the above is true...

Did the last CEO really kill the company to the point that it has come to this? At least they got all those great new logo signs up. At least someone's buddy at a marketing agency and sign shops made money.

Also it appears Elixr (sp) has been completely mismanaged the past few years. What was previously a growing enterprise just quit growing under the last CEO. Now is the time where I start to put the blame on what has happened here on the last CEO. I've been careful not to place blame in the past, but it is now clear if the company is in such shambles that they just want to walk away and give it to creditors that the damage done by this last CEO was far beyond what meets the eye of an outside observer.

As far as the east vs. west thing goes the amount of closures in SoCal is somewhat surprising to me. It is interesting how busy stores can be losing money with how screwed up the pharmacy reimbursement situation has gotten. Also based on the specific stores they've chosen to close in OR, plus the distribution center, we will see what happens in OR. WA they are obviously having too many stores since buying Bartell, over 200 stores in that state.

I wonder how long the pharmacy reimbursement issue has been going on specifically with Rite Aid and their handling of prescriptions.

I recall five years ago or thereabouts I had a prescription that I got from an urgent care center for an inhaler to help treat a bad case of bronchitis. There was a Rite Aid in the same center as the urgent care so I had them send over the prescription. About an hour goes by and Rite Aid calls and says the prescription is ready for pickup. It was charged at my normal copay which at the time was about $15.

The next day I get a voicemail from the urgent care. "Hi, we are so sorry but we realized that we prescribed that inhaler and that one is not covered by your insurance. It's going to be hundreds of dollars for you to get it filled. If you come by we will discuss other options and get you a new prescription for an inhaler your insurance will cover."

I checked the insurance website and sure enough it was not covered at all.

Rite Aid had already dispensed it, collected usual and customary copay, and never contacted me about it after. They must have lost a fortune with how crazy drug prices are these days. I'm guessing they have no recourse once they've dispensed and charged for it if the error is on their behalf.

I know that does not happen at CVS, their systems double and triple check everything to make sure they get paid... Even if Caremark is the insurance. Sounds like there are still issues with certain drugs, but Rite Aid must have been running some kind of antiquated system that didn't or couldn't check to see if insurance would pay my prescription? Yet the doctors office systems could see it easily...

[ClownLoach]

I find it interesting that the discussion here calls for first the closure of another 500-ish stores, then the creditors taking over.

That might indicate there is an agreement being worked out for the creditors and possibly a PE firm to run as a going concern. Which means they won't just hold the standard auction and Gordon Brothers, Hilco or whoever else bids to liquidate. Unfortunately there could also be a deal being made for CVS and Walgreens to split up the stores as going concerns, with the unwanted locations being the 500 closures. Because it's a bankruptcy antitrust considerations would be irrelevant and FTC approval not needed.

We all know that there is a market especially for a proper "West Coast Drugstore" which as of recent years had diminished to only Bartell before RA stupidly bought it and then mismanaged the merger. I'm sure they lost half or more of the customer base at Bartell with the system issues and other aggravation they caused. Walmart, Costco and CVS probably have split those lost customers who may never return.

Maybe Bartell gets sold back to local ownership who gives a damn about the concept and restores it? Might be too late.

[SO_CAL_RETAIL_SLUT]

Watching the RAD space very, very closely on the west coast. All indicators are that the west coast is basically "gone" - unless someone is able to purchase it. Remember when RAD try to merge with WAG? When that didn't work, the FTC still placed more roadblocks in terms of divestitures to WAG's, and slimmed down the number of stores several times that were eventually sold.

As much as some would like to RAD sold to others, there really is nobody who wants to purchase moribund RAD (other than pharmacy files), and frankly, RAD doesn't have the money to litigate a protracted fight with the FTC and any state attorney generals for the sale of stores to others.

The west coast stores, including Bartells's are doomed. Has RAD ever settled litigation with the NLRB over the forcibly imposed labor agreement for stores covered with UFCW Local 8?

RAD, as many publicly-traded companies has several in-process and pending litigation cases - the big one being the opioid case. The opioid case is the one that should send them over the cliff.

Share price as of Friday, September 22, 2023 closed at .59c a share!

Watching for signs in the stores: empty and/or shelves/peg racks not as full, pharmacy orders not being fulfilled due to medication supply issues. The Thrifty ice cream plant in El Monte, CA reducing/halting production - although, their ice cream is much more commercially available at other retailers/restaurants, etc. besides Rite Aid.

If RAD closes up shop, where in the hell will I get my Thrifty ice cream?

I'm excited about the potential for the sub-leasing and sale of the California locations - some of which are located at very prime spots with low rents!

Also, a poster mentioned in another thread that Mr. Murdoch (owner of Dow Jones/Wall Street Journal) supposedly wrote an incorrect byline on August 25, 2023 about RAD's potential bankruptcy filing. I guess the poster will need to file another complaint with Mr. Murdoch himself - as two of his reporters filed a byline on September 22, 2023 as to the estimate of the number of RAD stores that will be shut down. Where is Mr. Murdoch receiving his information?...lol

If for some miracle the west coast stores can be "saved", which is doubtful, I think they would have a better chance as a going concern by reverting to "Thrifty Drug Stores" - no PayLess. Bartell's is shut down or sold.

The coming days will be fun to watch, keep an eye out for any bankruptcy filings in PACER while I enjoy Yom Kippur!

SO_CAL_RETAIL_SLUT

[norcalriteaidclerk]

I still find the notion of an outright shutdown of west coast operations very dubious.Based on region-specific store closure ratios mentioned elsewhere in this thread,I find it more realistic that RAD could exit New England(adequate store count in New Hampshire devalued by token presences in neighboring states),eastern New York(including NYC/Long Island where Manhattan will soon be down to four locations as opposed to 27 at this time three years ago),the northeastern part of New Jersey that is part of the NYC metro,and Virginia(remaining stores are mostly in the Hampton Roads which is getting hit hard by recent closures and infamously home to disgraced former CEO Heyward Donigan though there are some locations left in greater Richmond).Even their core home market of central and eastern Pennsylvania has been getting hit hard by left-and-right closures.We're clearly not seeing the left-and-right closures out west(more scattered than concentrated)though Western Washington still has saturation/overlap if the Bartell factor is figured in.

In fact,if it came to that,a split into separate east and west companies would be a lot more sensible(especially if the western entity is debt-free).If WBA was to persue a second crack at RAD stores the east stores would be of a lowered antitrust risk than the attempted outright merger which failed to receive the blessing of the FTC.The west(it would also include the Thrifty ice cream business and associated trademarks as well as Bartell Drugs;stores would most logically be branded as Bartell in Washington,Idaho,and northern Oregon including Portland while California and Nevada locations as well as those in southern Oregon would take the Thrifty name)could be attractive to overseas entities(Shoppers Drug Mart/Loblaws,Watsons,Sanborns to name a few)looking to gain a foothold in the states.Private equity(Leonard Green,etc.)if at all would depend on the group.The west coast operations can be saved if spun off to the right buyer(s)...and it can be done.

I do have my reasons(which won't be mentioned in detail for various reasons)for mistrusting the WSJ as well as sister media entities under the same majority ownership and not simply because I'm a 25-year RAD veteran.

[Alpha8472]

The question at this point is how many stores can actually be sold to CVS/Walgreens as ongoing stores.

And how many locations simply close with the prescription files transferred to a nearby CVS/Walgreens?

I am shaken by this quote which I read last night:
"The company has proposed to close roughly 400 to 500 stores in bankruptcy, and either sell or let creditors take over its remaining operations, according to the report."

So basically it is like they are just giving up. Throwing in the towel IF the above is true...

Did the last CEO really kill the company to the point that it has come to this? At least they got all those great new logo signs up. At least someone's buddy at a marketing agency and sign shops made money.

Also it appears Elixr (sp) has been completely mismanaged the past few years. What was previously a growing enterprise just quit growing under the last CEO. Now is the time where I start to put the blame on what has happened here on the last CEO. I've been careful not to place blame in the past, but it is now clear if the company is in such shambles that they just want to walk away and give it to creditors that the damage done by this last CEO was far beyond what meets the eye of an outside observer.

As far as the east vs. west thing goes the amount of closures in SoCal is somewhat surprising to me. It is interesting how busy stores can be losing money with how screwed up the pharmacy reimbursement situation has gotten. Also based on the specific stores they've chosen to close in OR, plus the distribution center, we will see what happens in OR. WA they are obviously having too many stores since buying Bartell, over 200 stores in that state.

I wonder how long the pharmacy reimbursement issue has been going on specifically with Rite Aid and their handling of prescriptions.

I recall five years ago or thereabouts I had a prescription that I got from an urgent care center for an inhaler to help treat a bad case of bronchitis. There was a Rite Aid in the same center as the urgent care so I had them send over the prescription. About an hour goes by and Rite Aid calls and says the prescription is ready for pickup. It was charged at my normal copay which at the time was about $15.

The next day I get a voicemail from the urgent care. "Hi, we are so sorry but we realized that we prescribed that inhaler and that one is not covered by your insurance. It's going to be hundreds of dollars for you to get it filled. If you come by we will discuss other options and get you a new prescription for an inhaler your insurance will cover."

I checked the insurance website and sure enough it was not covered at all.

Rite Aid had already dispensed it, collected usual and customary copay, and never contacted me about it after. They must have lost a fortune with how crazy drug prices are these days. I'm guessing they have no recourse once they've dispensed and charged for it if the error is on their behalf.

I know that does not happen at CVS, their systems double and triple check everything to make sure they get paid... Even if Caremark is the insurance. Sounds like there are still issues with certain drugs, but Rite Aid must have been running some kind of antiquated system that didn't or couldn't check to see if insurance would pay my prescription? Yet the doctors office systems could see it easily...

I work in a pharmacy. The computer program will tell you right away if the insurance does not cover a certain medication. I don't know how Rite Aid could give you the drug and charge you a copay. If a drug is not covered the computer will tell you it is not covered and not even give you a copay amount.

I do not know how an error like that could happen. Many years ago before computers, pharmacies used books that listed drugs and their copays for each insurance. The pharmacy would bill you for your copay and then go get the money from the insurance to pay for the rest later.

The downside was if your insurance coverage was terminated or not in effect, then the pharmacy would lose money. The pharmacy would then call you back and ask you to pay the full cost of the drug.

The drug reimbursement problem that has been leading to pharmacy debt has gotten really bad in the past few years. It was always bad for Medicaid insurance. If a pharmacy accepts Medicaid insurance you lose money on most drugs such as insulin, name brand drugs, injection medications, etc. You are lucky to make a small profit on common blood pressure or cholesterol medications.

I believe that is why Rite Aid stopped accepting California Medi-Cal (which is Medicaid in California) a few years ago.

However, not accepting Medicaid means you lose customers who would otherwise come in to shop.