Rite Aid Goes Bust...West Coast Stores??

[buckguy]

The number of opioid prescriptions has dropped significantly in the past several years. Norco used to be one of the most commonly filled prescriptions. Now it is rare to get a Norco prescription.

The drug distributers are limiting supplies to pharmacies. There are times when the pharmacy can't get any Norco in stock.

The problem with filling opioid prescriptions was that there was not enough staffing to call and verify every single Norco prescription years ago. With paper prescriptions it was easy to create fake prescriptions. Later on, electronic prescriptions made spotting fake prescriptions much easier. They should eliminate paper prescriptions for opioid medications. Ten years ago Norco prescriptions could be left on the pharmacy voice-mail and that was good enough to fill a prescription.

The pharmacy business has changed dramatically in less than 10 years. Now trying to fill a Norco prescription has many hurdles to jump through. Even if you have a legitimate reason for a prescription, it is still very difficult to find a pharmacy that can dispense it.

Why are doctors not being punished for writing too many opioid prescriptions? Why doesn't the government go after the doctors? Why try to get money from pharmacy chains?

Physicians have been lost licenses and pill mill practices have been closed. The Prescription Monitoring Programs have been used to facilitate this. Numerous books, documentaries, articles have covered this. In the past, there also was lax attention to providers who had lost licenses in one state and moved to another, which was another problem.

Pharmacies in many places are concerned that monitoring programs will discipline them even if they are dispensing opioid used for treatment like Buprenorphine. This is a bigger issue than supply.

If pharmacies were not exercising their due diligence with controlled substance prescriptions, then they are legally liable. If you run a business that is subject to regulation, then good luck with conduct that's counter to that.

You seem to rely on hearsay and anecdote, which always needs verification. I've been doing work related to the opioid epidemic for for quite awhile.

[ClownLoach]

Let's keep some of this speculation reigned in a bit...

Although this is partially speculation, I do think it's worthy to mention that the lease rejection list was available and complete immediately instead of months down the road which further indicates this bankruptcy is really more a planned reorganization versus the "gone bust chaos" that is typical of other retailers where there was no intent to survive but rather just plotting to collect as many paychecks for the executives as possible before the wheels finally fell off (ahem, BB&B, Toys R Us, and so forth). I don't know anyone at Rite Aid nor have ever worked there but it looks like they put in a healthy effort over these weeks of rumors to build a very well crafted restructuring plan that salvages the profitable parts of the organization and allows for a new future with clean books. The transparency is far better than most retail bankruptcies where there is usually smoke and mirrors until one day it's converted to a liquidation and the black and yellow banners of defeat are raised. I do not see that at Rite Aid at all.

One interesting factor I do see is that the closing store filing indicates that the leases and stores are abandoned as of 10/15/2023 which means that they could theoretically just pull everything out rapidly and transfer it elsewhere then close "instantly" if necessary or if a landlord were to demand something to that effect. So I wonder how many, if any, of these closures will result in closing sales versus just straight up disappearing into the night?

There will be a "Wave 2" of store closures and that will stem from the typical post bankruptcy filing back and forth with landlords which is different from advanced decisions by the company. They assuredly have a list of stores that are unprofitable or projected as such in the future, and they'll use the BK as leverage to try to see if landlords will cave and give them big rent reductions that enable them to stay. That is the "400+ store closures" we have read speculation about, which is likely a bigger number like 600 or so targeted but they probably expect a third of landlords to decide it's better to keep Rite Aid with lower rent versus pay the costs of fixing up the site and marketing it to other retailers which may or many not pay much more than RAD is proposing for a new lease. I would imagine we won't hear the rest of those stores until about 90 days go by, although there may be some one-off situations where the company and landlord decide they're too far apart and both parties want to separate ASAP instead of waiting for the lease rejection deadline filing.

I think the CFO is running the show and put this whole thing together. Also the only reason this ship stayed afloat as long as it did. The only thing the "board of directors" has done right is keep that CFO.

They would have been out of business years ago without that long term CFO. But given the common shareholders end up wiped out here, the CFO is not going to be very well liked when all is said and done. But he will be the reason the company stays in business. And as bad as it is to wipe out the equity of the common shareholders, it would be even worse to also end up out of business/firing all the employees along with that equity loss. At least this way parts of the business can continue and employment can continue.

The biggest risk I see is if the DOJ takes them out and basically destroys the company to try and get what it feels it is owed in the lawsuits over the opioids. This is the one thing hanging over Rite Aid that wasn't hanging over all those other retail bankruptcies. In theory that is a liability of the old pre-bankrupt enterprise, but the way this government operates, they will use any recourse necessary to get this money even if it somehow means bending the law. I hope I'm wrong here and they just take their lawsuit and go away.

It seems unions don't have the power they did in the past to prevent closures and such, but I do not see the government wanting to push the issue of putting a largely union retailer out of business to try to milk the last few dollars they have in the bank. The politics should be adequate to save them.

There is no fortune to be made from the government liquidating Rite Aid. The fact some of these pill companies made it through bankruptcy unscathed by the federal government means that if they really got greedy and wanted more money then there are far deeper pockets they can go after. Rite Aid is small potatoes versus those other guys. They can't close everyone down; ultimately they lose money in the long run.

[babs]

The Rite Aid DC is Wilsonville, Oregon is officially closing on April 5th. No word on what their plans are after that. Interesting that they have only 136 employees. They easily had over 500 employees back in the hay days.

https://www.oregonlive.com/business/202 ... -jobs.html

[reymann]

i feel like whatever is remaining after the second wave will likely be divested to walgreens and CVS to save face with the DOJ. i would trust walgreens more with the thrifty ice cream than i would with CVS.

[babs]

i feel like whatever is remaining after the second wave will likely be divested to walgreens and CVS to save face with the DOJ. i would trust walgreens more with the thrifty ice cream than i would with CVS.

CVS would seem to be the obvious buyer of their NW stores.

[ClownLoach]

i feel like whatever is remaining after the second wave will likely be divested to walgreens and CVS to save face with the DOJ. i would trust walgreens more with the thrifty ice cream than i would with CVS.

It's already all been sold to their creditors. There isn't anything to sell to CVS or Walgreens.

[Super S]

The Rite Aid DC is Wilsonville, Oregon is officially closing on April 5th. No word on what their plans are after that. Interesting that they have only 136 employees. They easily had over 500 employees back in the hay days.

https://www.oregonlive.com/business/202 ... -jobs.html

That isn't a good sign. I wonder if Rite Aid has a smaller distribution center they will be using since they do not have the depth of merchandise that PayLess did (which justified a bigger building) A lack of distribution facilities will make the chain less attractive to a buyer unless it ends up being CVS or Walgreens which already have distribution in place. Remember when Albertsons divested all those stores to Haggen, there were no distribution centers as part of that, and I feel that was part of why Haggen tanked so quickly.

[BillyGr]

i feel like whatever is remaining after the second wave will likely be divested to walgreens and CVS to save face with the DOJ. i would trust walgreens more with the thrifty ice cream than i would with CVS.

It's already all been sold to their creditors. There isn't anything to sell to CVS or Walgreens.

The question being, what prevents those creditors from attempting to make money by selling off stores (be it separately or a bunch in an area) or a brand like Thrifty to others? Seems like the answer is nothing.

[ClownLoach]

i feel like whatever is remaining after the second wave will likely be divested to walgreens and CVS to save face with the DOJ. i would trust walgreens more with the thrifty ice cream than i would with CVS.

It's already all been sold to their creditors. There isn't anything to sell to CVS or Walgreens.

The question being, what prevents those creditors from attempting to make money by selling off stores (be it separately or a bunch in an area) or a brand like Thrifty to others? Seems like the answer is nothing.

They're going to be the owners of the entire Rite Aid enterprise which will basically be a debt free profit engine. Why go through the trouble and expense they're currently going through in the prepackaged bankruptcy to save the company then liquidate it? Plus they're making new leases, new contracts etc. as part of the restructuring. If they wanted to sell it in pieces they would have already arranged to do that.

Any store a competitor wanted has been for sale up until now with the filing, and as we know many stores were sold for their prescription files. Many closures have been reported here as not making sense because they are good stores, and that is a likely result of the RAD corporate office basically taking bids on any existing asset for immediate cash liquidity to keep the company running while their lawyers and experts were working over the creditors to convince them to accept equity in a new company instead of forcing a complete liquidation and closure of Rite Aid nationwide (which is most likely what they would have preferred).

It remains to be seen if any leases were also sold previously and if those stores will be reopening as a competitor. Both CVS and Walgreens are the only likely buyers and we all know that they have aggressive store closure programs either running or completed so outside of the PNW where they have a limited footprint I doubt they have any interest in adding more real estate except for a handful of instances where maybe it's a small town and RAD had a much nicer building and there's no availability/too expensive to replace their own store. But anything selling to a competitor would most likely be in the stores that closed before the filing and they would not be obligated to tell us, so if you see a recently closed Rite Aid with a CVS coming soon sign, well now you know. RAD could have required buyers to take the box empty too.

But at this point in time the checks are being written and the organization is being rewired. If the new owners flipped the entire organization that would make sense, but not piecemeal because again if they wanted to do that they could be doing it now with no lease termination penalties for non-transferable assets and such, no refusal by landlords or non compete agreement issues which the BK process supercedes etc. Basically the concept they'd sell it piecemeal now makes just as little sense as the oft commented idea that Kroger-Albertsons would have established SpinCo and then stores would have been sold out of that company. They were already for sale with no strings attached, so why would any buyer who could have paid next to nothing for the store and no restrictions on the purchase choose to wait and then pay a much higher price? Nobody would do that, it would be like having the option to buy a used car for $1000 sold direct by the owner who otherwise would take it to a dealer, and then you buy the same car from the dealer for $5000. Retail assets deteriorate quickly too when not managed properly or in times of distress (like a bankruptcy!) so again it would have been more viable to buy stores for conversion before, or right now at the beginning of the BK process but not later when the cost goes up drastically.

[BillyGr]

It's already all been sold to their creditors. There isn't anything to sell to CVS or Walgreens.

The question being, what prevents those creditors from attempting to make money by selling off stores (be it separately or a bunch in an area) or a brand like Thrifty to others? Seems like the answer is nothing.

They're going to be the owners of the entire Rite Aid enterprise which will basically be a debt free profit engine. Why go through the trouble and expense they're currently going through in the prepackaged bankruptcy to save the company then liquidate it? Plus they're making new leases, new contracts etc. as part of the restructuring. If they wanted to sell it in pieces they would have already arranged to do that.

Any store a competitor wanted has been for sale up until now with the filing, and as we know many stores were sold for their prescription files. Many closures have been reported here as not making sense because they are good stores, and that is a likely result of the RAD corporate office basically taking bids on any existing asset for immediate cash liquidity to keep the company running while their lawyers and experts were working over the creditors to convince them to accept equity in a new company instead of forcing a complete liquidation and closure of Rite Aid nationwide (which is most likely what they would have preferred).

It remains to be seen if any leases were also sold previously and if those stores will be reopening as a competitor. Both CVS and Walgreens are the only likely buyers and we all know that they have aggressive store closure programs either running or completed so outside of the PNW where they have a limited footprint I doubt they have any interest in adding more real estate except for a handful of instances where maybe it's a small town and RAD had a much nicer building and there's no availability/too expensive to replace their own store. But anything selling to a competitor would most likely be in the stores that closed before the filing and they would not be obligated to tell us, so if you see a recently closed Rite Aid with a CVS coming soon sign, well now you know. RAD could have required buyers to take the box empty too.

But at this point in time the checks are being written and the organization is being rewired. If the new owners flipped the entire organization that would make sense, but not piecemeal because again if they wanted to do that they could be doing it now with no lease termination penalties for non-transferable assets and such, no refusal by landlords or non compete agreement issues which the BK process supercedes etc. Basically the concept they'd sell it piecemeal now makes just as little sense as the oft commented idea that Kroger-Albertsons would have established SpinCo and then stores would have been sold out of that company. They were already for sale with no strings attached, so why would any buyer who could have paid next to nothing for the store and no restrictions on the purchase choose to wait and then pay a much higher price? Nobody would do that, it would be like having the option to buy a used car for $1000 sold direct by the owner who otherwise would take it to a dealer, and then you buy the same car from the dealer for $5000. Retail assets deteriorate quickly too when not managed properly or in times of distress (like a bankruptcy!) so again it would have been more viable to buy stores for conversion before, or right now at the beginning of the BK process but not later when the cost goes up drastically.

OK, that still leaves a brand like the ice cream. Since they could easily sell it to someone else and still make a deal to keep it in their existing stores (only since that was what was mentioned in the original post that you replied to that I replied to as well).