Ceremony Support filed for Chapter 11 chapter safety in New Jersey on Sunday and mentioned it will start restructuring to considerably cut back its debt.
The corporate appointed Jeffrey Stein as its new chief govt officer and chief restructuring officer in addition to a member of its board. Elizabeth Burr had been serving as interim CEO since January and can stay on the corporate’s board.
Ceremony Support Chairman Bruce Bodaken mentioned in a press release, “Jeff is a confirmed chief with a powerful monitor report of guiding firms by monetary restructurings. We stay up for benefitting from his contributions and leveraging his experience as we strengthen Ceremony Support’s basis and place the enterprise for long-term success.”
Stein mentioned he has “great confidence on this enterprise and the turnaround technique that has been developed in current months.”
The beleaguered drugstore chain has been grappling with slowing gross sales, mounting debt and a slew of lawsuits that allege the corporate helped gas the nation’s opioid epidemic by oversupplying painkillers.
Throughout its most up-to-date quarter ended June 3, income fell to $5.6 billion, down from $6.01 billion within the year-ago interval. Internet losses widened to $306.7 million, or $5.56 per share, in comparison with a web lack of $110.2 million, or $2.03 per share, in the identical interval a yr earlier.
Because of the tough quarter, Ceremony Support lowered its fiscal 2024 outlook and warned traders it expects to lose between $650 million and $680 million for the total yr, which is slated to finish in late February.
Ceremony Support’s retail pharmacy phase has lengthy been a key development driver for the corporate, however that hasn’t been sufficient to offset its mounting losses.
Plummeting demand for Covid vaccines and testing, a membership discount within the firm’s prescription drug plan and a lack of prospects from its Elixir pharmacy advantages enterprise have contributed to a slowdown in income on the struggling drug chain.
Drugstores like Ceremony Support have confronted an existential disaster as consumers more and more flip to retailers like Amazon, Goal, Walmart and others for toothpaste, shampoo and different staples — usually at a less expensive value and with the comfort of supply to prospects’ doorways.
CVS has opened in-store Minute Clinics, which resemble walk-in pressing care amenities, and turned extra of its shops into HealthHubs, or areas with an extended record of medical companies.
It has expanded its attain in well being care by buying Caremark, one of many largest pharmacy advantages managers, well being insurer Aetna and, most not too long ago, primary-care firm Oak Road Well being.
Walgreens has additionally struck expensive offers to broaden its attain in well being care. It’s turn out to be the bulk proprietor of primary-care firm VillageMD and plans to open up physician workplaces subsequent to lots of its drugstores.
Newer — and well-capitalized — health-care entrants have additionally intensified the aggressive menace. Amazon closed its acquisition of primary-care supplier One Medical in a $3.9 billion deal earlier this yr and acquired on-line pharmacy PillPack in 2018. Walmart, which has pharmacies in its 1000’s of shops, has opened a rising community of medical clinics in components of the nation.
Ceremony Support’s monetary place and aggressive disadvantages are compounded by the numerous lawsuits it’s going through that allege the corporate contributed to the nation’s opioid epidemic by knowingly filling prescriptions for painkillers that didn’t meet authorized necessities.
The Division of Justice filed a swimsuit in opposition to Ceremony Support earlier this yr, claiming that it violated the Managed Substances Act by filling 1000’s of illegal prescriptions for managed substances resembling fentanyl and oxycodone.
Ceremony Support has requested a court docket to dismiss the division’s lawsuit and denied allegations that it crammed illegal opioid prescriptions.
— CNBC’s Christine Wang contributed to this report.