Dive Brief:
- Rite Aid on Wednesday said it has failed to meet the New York Stock Exchange’s continued listing standards. The retailer is no longer in compliance with NYSE standards on minimum stock price and market capitalization. The NYSE listing standards require a $1.00 average closing share price over a 30 trading-day period.
- As of midday Thursday, Rite Aid’s stock was trading at about 50 cents on the NYSE. Rite Aid now has 10 business days to formally confirm if it will seek to regain compliance and six months to do so. But the company said it, “can provide no assurances that it will be able to regain compliance with the NYSE’s continued listing standards.”
- News that Rite Aid faces delisting comes weeks after reports emerged that the company, which has $3.3 billion in debt, may seek to close up to 500 of its 2,200 locations as part of a possible Chapter 11 bankruptcy filing.
Dive Insight:
The company’s stock will remain on the NYSE during the remedial period. Rite Aid said its noncompliance with listing standards does not affect ongoing business operations or U.S. Securities and Exchange Commission reporting requirements. It also does not trigger any violation of its debt obligations.
According to a Wednesday securities filing, as of Sept. 27, Rite Aid’s 30 trading-day average market capitalization was approximately $49.97 million and its 30 trading-day average closing price was 88 cents per share. The company as of June 3 also said it had a stockholders’ deficit of about $947 million.
Rite Aid acknowledged in its announcement that it “has been engaged in reviewing and continues to review strategic alternatives to recapitalize, refinance or otherwise optimize its capital structure.” As a result of that ongoing review, the company may pursue “one or more significant corporate transactions or other remedial measures.”
The company in June reported quarterly revenues of $5.7 billion, down from $6 billion year over year. Rite Aid also reported a net loss last quarter of nearly $307 million versus $110 million a year ago.
James Gellert, CEO and executive chairman of financial analytics firm RapidRatings, told Retail Dive in an email last month that Rite Aid’s FHR rating, which was 21 out of 100, “leaves no doubt about its impending bankruptcy.” Rapid Ratings says an FHR score of 21 indicates that a company has a high risk of default and is “experiencing low levels of efficiency and unsustainable business practice.”
“The days of relying on easy capital to delay the inevitable have ended, as rising interest rates and stricter lending standards reshape the financial landscape,” he said. “In this new reality, companies like Rite Aid with weakened financial health must confront their financial challenges head-on.”
One of the company’s other challenges includes pending lawsuits that allege Rite Aid contributed to the U.S. opioid abuse epidemic by knowingly and unlawfully filling hundreds of thousands of opioid painkiller prescriptions.
