Silicon Investor - Rite-AID (RAD) Overdone or Done In?

[Glenn Petersen] Rite Aid files for bankruptcy amid slowing sales, opioid litigation PUBLISHED S...

Glenn Petersen — 10/16/2023 3:31:27 AM

Rite Aid files for bankruptcy amid slowing sales, opioid litigation

PUBLISHED SUN, OCT 15 202310:48 PM EDT
UPDATED 4 HOURS AGO
Gabrielle Fonrouge @IN/GABRIELLE-FONROUGE @FONROUGEGAB
Melissa Repko @IN/MELISSA-REPKO @MELISSA_REPK
Annika Kim Constantino @ANNIKAKIMC
CNBC.COM

KEY POINTS

Drugstore chain Rite Aid filed for Chapter 11 bankruptcy protection in New Jersey.
It also appointed Jeffrey Stein as its new CEO to steer the company through its restructuring plan.
The company has been grappling with slowing sales, mounting debt and lawsuits alleging it contributed to the nation’s opioid epidemic.
Rite Aid faces steep competition from its rivals, which have leaned into health care models to offset losses from their retail businesses.

Rite Aid filed for Chapter 11 bankruptcy protection in New Jersey on Sunday and said it would begin restructuring to significantly reduce its debt.

The company said it reached a deal with creditors on a restructuring plan that includes evaluating its retail footprint and closing underperforming locations.

Rite Aid also said lenders agreed to provide $3.45 billion in new funding to “provide sufficient liquidity” as it embarks on its restructuring plan.

The beleaguered drugstore chain has been grappling with slowing sales, mounting debt and a slew of lawsuits that allege the company helped fuel the nation’s opioid epidemic by oversupplying painkillers.

During its most recent quarter ended June 3, revenue fell to $5.6 billion, down from $6.01 billion in the year-ago period. Net losses widened to $306.7 million, or $5.56 per share, compared to a net loss of $110.2 million, or $2.03 per share, in the same period a year earlier.

As a result of the rough quarter, Rite Aid lowered its fiscal 2024 outlook and warned investors it expects to lose between $650 million and $680 million for the full year, which is slated to end in late February.

Rite Aid’s retail pharmacy segment has long been a key growth driver for the company, but that hasn’t been enough to offset its mounting losses.

Plummeting demand for Covid vaccines and testing, a membership reduction in the company’s prescription drug plan and a loss of customers from its Elixir pharmacy benefits business have contributed to a slowdown in revenue at the struggling drug chain.

On Sunday, the company appointed Jeffrey Stein as its new chief executive officer and chief restructuring officer as well as a member of its board. Elizabeth Burr had been serving as interim CEO since January and will remain on the company’s board.

Rite Aid Chairman Bruce Bodaken said in a statement, “Jeff is a proven leader with a strong track record of guiding companies through financial restructurings. We look forward to benefitting from his contributions and leveraging his expertise as we strengthen Rite Aid’s foundation and position the business for long-term success.”

Stein said he has “tremendous confidence in this business and the turnaround strategy that has been developed in recent months.”

An existential crisis for drugstores
Drugstores like Rite Aid have faced an existential crisis as shoppers increasingly turn to retailers like Amazon, Target, Walmart and others for toothpaste, shampoo and other staples — often at a cheaper price and with the convenience of delivery to customers’ doors.

Rite Aid has also struggled to keep up with its bigger rivals, CVS and Walgreens, as those companies have pivoted to a health care focus and made sizable investments to match.

CVS has opened in-store Minute Clinics, which resemble walk-in urgent care facilities, and turned more of its stores into HealthHubs, or locations with a longer list of medical services.

It has expanded its reach in health care by acquiring Caremark, one of the largest pharmacy benefits managers, health insurer Aetnaand, most recently, primary-care company Oak Street Health.

Walgreens has also struck pricey deals to expand its reach in health care. It’s become the majority owner of primary-care company VillageMD and plans to open up doctor offices next to many of its drugstores.

Newer — and well-capitalized — health-care entrants have also intensified the competitive threat. Amazon closed its acquisition of primary-care provider One Medical in a $3.9 billion deal earlier this year and acquired online pharmacy PillPack in 2018. Walmart, which has pharmacies in its thousands of stores, has opened a growing network of medical clinics in parts of the country.

The opioid crisis

Rite Aid’s financial position and competitive disadvantages are compounded by the many lawsuits it’s facing that allege the company contributed to the nation’s opioid epidemic by knowingly filling prescriptions for painkillers that did not meet legal requirements.

The Department of Justice filed a suit against Rite Aid earlier this year, claiming that it violated the Controlled Substances Act by filling thousands of unlawful prescriptions for controlled substances such as fentanyl and oxycodone.

Rite Aid has asked a court to dismiss the department’s lawsuit and denied allegations that it filled unlawful opioid prescriptions.

— CNBC’s Christine Wang contributed to this report.

Rite Aid files for bankruptcy amid slowing sales, opioid litigation (cnbc.com)

[MrChaos] If there is an attorney on this board. Why would the FTC sue? on what grounds? w...

MrChaos — 4/19/2017 2:20:50 PM

If there is an attorney on this board. Why would the FTC sue? on what grounds? who, if all shareholders approved it? After all, don't they have to approve it?

[Paul Lee] yes, IF !!!!

Paul Lee — 3/21/2017 8:26:59 AM

[more100] The uncertainty for some investors is why its this low, If FTC announced more li...

more100 — 3/21/2017 5:57:16 AM

The uncertainty for some investors is why its this low, If FTC announced more likely to approve then deny the stock would surge, right!

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[JakeStraw] Rite Aid’s RediClinic and MultiCare Health System Announce Joint Venture to Expa...

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[stock theif] nice post!!! A Guide to Yahoo Bashers aka Psyops 500.....from newly acquired fr...

stock theif — 4/3/2015 2:23:14 AM

nice post!!!

A Guide to Yahoo Bashers aka Psyops 500.....from newly acquired friends. 1 in a series of many, Please keep here.
You will recognize the Yahoo KVHI board as you scan and retain the following information.
Basher Techniques
Top 40 Most Common NFI Basher Tactics and Rules of Bashing

Be anonymous.
Use 10% fact. 90% suggestion. The facts will lend credibility to your suggestions.
Let others help you learn about the stock. Build rapport and a support base before initiating your Bashing routine.
Enter w/ humor and reply to all who reply to you.
Use multiple ISP's, handles and aliases.
Use two (2) or more aliases to simulate a discussion.
Do not start with an all out slam of the stock. Build softly.
Identify your foes (Longs) and the boards "guru" Use them to your advantage. Lead them do not follow their lead.
Only bash until the tide/momentum turns. Let doubt carry it the rest of the way.
Give the appearance of being open minded.
Be bold in your statements. People follow strength.
Write headlines in caps with catchy statements.
Pour it on as your position gains momentum. Not your personality.
Don't worry about being labeled a "Basher". Newbies won't know your history.
When identified put up a brief fight, then back off. Return in an hour unless your foe is weak in reasoning powers.
Your goal is to limit the momentum of the run. Not to tank the company or create a plunge in the stock; be subtle and consistent.
Kill the dreams of profits, not the company or the stock. Establish reduced expectations for the stock. Mock anyone who dissents.
Use questions to create negative/critical thinking. Statements to reinforce pseudo-facts.
DO NOT LIE, NAME CALL or USE PROFANITY, unless your ID is designed to disrupt the board using those tactics.
Encourage people to call the company. 99% won't. Discourage people from believing Press Releases. Again, encourage them to call the company. They won't out of laziness — they'll take your word for claims made. If they do call you can always find something that is inaccurate in how they report their findings.
If the company’s history/PR's are negative constantly point to that. Compile a list of these data prior to beginning your efforts.
If the price rises blame it on the hype or the PR, temporary mass reaction, the market, etc. Anything but the stock itself.
If other posters share your concerns, play on that and share theirs too.
Always cite low volume, even when it's not.
Three or four aliases can dominate a board and wear down the longs.
Bait the Longs into personal debates putting their focus/efforts on you and not the stock or facts. Introduce non-relevant issues for debate: e.g., political personalities, nuclear developments, etc. Divert their attention from facts.
Promote other stocks that would-be investors can turn to instead of the one you’re Bashing.
Do not fall for challenges on the "values" of what you are doing, it's a game and you are playing it with your own rules.
When in doubt, clog the board with meaningless posts, making it hard for anyone to read and get anything of value.
Use technical analysis as a predictor of “weakness” or a tool to sow doubt. TA can be interpreted any number of ways, so you will never be proven wrong and could gain a following of like-minded souls.
Always bash board regulars whenever they make a mistake. When no mistakes are present, create a straw man argument and attack that.
Bash and ridicule any analysis based on facts or fundamentals. Facts are not your friend.
Bash any attempts to post positives. Refer to company defenders or board gurus as pumpers or dreamers.
Imply that anyone with anything positive to say is “pumping and dumping.”
If possible, create one persona that is a long who is trying to get more info. Always frame questions from that persona in a “when did you stop beating your wife” manner. Try to avoid making overtly negative statements, but hint that you suspect something is afoul. Make negative statements in the guise of seeking answers, and then apologize but don’t retract when called on them.
Choose non-threatening ID’s. Old people are good, so are females. People tend to defer to those, so you will be given more leeway to create doubt and uncertainty. If possible, post a sympathy-creating circumstance now and then — death in the family, accident, job loss.
Have one ID be reasonable trader guy. He can make dispassionate observations which will just coincidentally be negative when needed, especially on any rallies and when any weakness appears in the stock price. Make sure he makes some positive statements when it doesn’t really matter to preserve the ID’s integrity.
Have one ID be set up as a long who has now turned on the stock/company. This can take months to set up, but is worth it. Post positives which contain little substance for at least 60 days, post about being a long time holder, post about having a bunch of shares. Then one day, post that in your opinion the tide has changed, so you have sold it all.
Accuse board regulars of being multi-posters. Or paid pumpers. Or anything negative that would call their posts into question.
AND THE GOLDEN BASHER RULE: Never admit to being a basher. Especially if you are being paid. Avoid any direct answers to direct questions about your bonafides. Deny everything, demand proof, attack attack attack.
Page Created/Last Updated: October 1, 2003 / October 22, 2003
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