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Rite Aid Corporation


The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of Pennsylvania on behalf of those who acquired Rite Aid Corporation (“Rite Aid” or the “Company”) (NYSE: RAD) securities between April 14, 2022 through September 28, 2022 (the “Class Period”). Investors have until December 19, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
 
Rite Aid, through its subsidiaries, operates a chain of retail drugstores in the U.S. The Company operates through two segments, Retail Pharmacy and Pharmacy Services.
 
In Rite Aid's Q4 2022 earnings call on April 14, 2022, Rite Aid's President and CEO, Defendant Heyward Rutledge Donigan (“Donigan”), addressed the growth of Elixir's PBM services business during the selling season ending January 1, 2023, stating that (i) in the past few months, Elixir had already “sold 35,000 new members” (as against a total of 55,000 new members in the prior year), (ii) Elixir was a finalist for 150,000 additional new members, and “results have shown that once we get to finalist, we're winning deals 35% of the time,” and (iii) Elixir had “a current pipeline of nearly 1 million members and growing.”
 
In a letter to shareholders, dated June 10, 2022, appearing in Rite Aid's 2022 Notice of Annual Meeting of Stockholders and Proxy Statement, Defendant Donigan stated, “[o]ur Elixir account and sales teams are gaining momentum, and we are executing more efficiently by consolidating functions. And the market is noticing—we have added 34,000 individuals covered by Elixir's PBM services since January 1, 2022, with many more in the pipeline.”
 
In Rite Aid's Q1 2023 earnings call on June 23, 2022, Defendant Donigan stated concerning the PBM services business that “[o]ur strong network contracts, new rebate capabilities, innovative clinical services and expertise in government programs have enabled us to add 80,000 new lives for January 1, 2023 start date. These are more new lives than we sold last year. And additionally, the selling season is still in progress, and we've got close to 1 million lives remaining in the pipeline for January 1, 2023.” On the same call, Elixir's COO, Defendant Chris DuPaul, advised that “we've had a pretty strong start to our selling season, particularly on the health plan side,” and “we're feeling really good about where our lives are headed going into [1/1/23]. . .”
 
On September 29, 2022, Rite Aid announced a $252.2 million charge for the impairment of goodwill related to the Company's Elixir subsidiary. On an earnings call held later in the day, Rite Aid's Chief Financial Officer, Matt Schroeder, explained that the large impairment charge was related to Elixir based on “an update to our estimate of lives for 2023 based on the latest selling season,” and that Rite Aid “expected[ed] lives to go down.” On this news, the price of Rite Aid shares declined by $1.97 per share, or approximately 28.02%, from $7.03 per share to close at $5.06 on September 29, 2022.
 
The lawsuit alleges that, throughout the Class Period, Defendants misled investors and/or failed to disclose that: (i) despite representations to the contrary, the number of new members (i.e., “lives”) that the Elixir PBM services business was adding during the selling season ending on January 1, 2023 was in material decline; and (ii) Rite Aid was likely to recognize a significant charge for the impairment of goodwill related to Elixir due to a decrease in “lives” covered by Elixir's PBM services business.
 

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