Pomerantz Law Firm Announces the Filing of a Class Action Against Rite Aid Corporation and Certain Officers - RAD

NEW YORK, Oct. 19, 2022 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Rite Aid Corporation ("Rite Aid" or the "Company") (NYSE: RAD) and certain of its officers. The class action, filed in the United States District Court for the Eastern District of Pennsylvania, and docketed under 22-cv-04201, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Rite Aid securities between April 14, 2022 and September 28, 2022, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.

If you are a shareholder who purchased or otherwise acquired Rite Aid securities during the Class Period, you have until December 19, 2022 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.

[Click here for information about joining the class action]

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. The Pharmacy Services segment provides integrated suite of pharmacy benefit management ("PBM") offerings through, inter alia, the Company's Elixir subsidiary, including technology solutions, mail delivery services, specialty pharmacy, network and rebate administration, claims adjudication, and pharmacy discount programs. 

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]. . ."

The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements 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; (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; and (iii) as a result, the Company's public statements were materially false and misleading at all relevant times.

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, Rite Aid's stock price fell $1.97 per share, or 28.02%, to close at $5.06 per share on September 29, 2022.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com

CONTACT:
Robert S. Willoughby
Pomerantz LLP
[email protected]
888-476-6529 ext. 7980

SOURCE Pomerantz LLP