BIG UPDATE: Another troubled drugstore chain files for Chapter 11 bankruptcy
Since the end of the COVID-19 pandemic, the drugstore retail sector has experienced hundreds of store closures as major pharmacy chains look to cut costs and mitigate losses.
CVS and Walgreens Lead the Closures
CVS Health (CVS) set the tone in 2021 when it announced plans to close 900 of its 9,900 stores, implementing closures of 300 stores each year through 2024. Following suit, Walgreens Boots Alliance (WBA) revealed in June 2023 that it would close up to 450 Walgreens locations in the U.S. and U.K. as part of a strategy to simplify its operations.
Rite Aid’s Bankruptcy Filing
The trend of significant pharmacy closures escalated with Rite Aid’s Chapter 11 bankruptcy filing on October 15, 2023. The Philadelphia-based chain’s decision came after the U.S. Department of Justice intervened in a whistleblower lawsuit, alleging the company filled unlawful prescriptions for controlled substances. With approximately $3.3 billion in debt at the time of filing, Rite Aid faced the prospect of an opioid settlement that could have added another $1 billion to its liabilities. The Chapter 11 filing allowed the company to negotiate under bankruptcy protection, resulting in the immediate closure of 154 locations and more than 520 stores shut down overall, reducing its footprint from over 1,200 stores.
Smaller Chains Struggling to Compete
Smaller pharmacy chains are also struggling to compete with giants like CVS, Walgreens, and Rite Aid. Many have resorted to Chapter 11 filings to restructure and stay afloat. For example, Rx Discount Pharmacy, a drugstore chain in Eastern Kentucky, filed for Chapter 11 bankruptcy reorganization on May 1, 2023, though the reasons for the filing were not specified in its petition.
Medicine Shoppe Owner Files for Bankruptcy
In a recent development, CL Cressler Inc., which owns 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 reported over $1.5 million in assets against more than $12.2 million in liabilities. The filing indicated that funds would be available for distribution 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 over $1.2 million. The company generated $50.8 million in gross revenue in 2023, down from $61.5 million in 2022, but did not disclose specific reasons for the bankruptcy filing.
The Broader Context
The seven Medicine Shoppe locations involved in this Chapter 11 filing are affiliated with Medicine Shoppe International, a Cardinal Health (CAH) company and one of the largest pharmacy chains in the U.S., operating nearly 500 locations across 43 states. Importantly, Medicine Shoppe International and Cardinal Health have not filed for bankruptcy.
