LOS ANGELES, Oct. 25, 2022 (GLOBE NEWSWIRE) -- The Portnoy Law Firm advises Rite Aid Corporation (“Rite Aid” or the “Company”) (NYSE: RAD) investors that a class action has been filed on behalf of investors. Rite Aid investors that lost money on their investment are encouraged to contact Lesley Portnoy, Esq.
Investors are encouraged to contact attorney Lesley F. Portnoy, by phone 844-767-8529 or email: lesley@portnoylaw.com, to discuss their legal rights, or click here to join the case via www.portnoylaw.com. The Portnoy Law Firm can provide a complimentary case evaluation and discuss investors’ options for pursuing claims to recover their losses.
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 an 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, Heyward Rutledge Donigan (“Donigan”), addressed the growth of Elixir’s PBM services business during the selling season ending January 1, 2023. Donigan represented 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, 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, Donigan stated 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, 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]…”
Plaintiff alleges that Defendants made materially false and misleading statements throughout the Class Period. Specifically, Plaintiff alleges that Defendants 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.
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 “expect[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.
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The Portnoy Law Firm represents investors in pursuing claims against caused by corporate wrongdoing. The Firm’s founding partner has recovered over $5.5 billion for aggrieved investors. Attorney advertising. Prior results do not guarantee similar outcomes.
Lesley F. Portnoy, Esq.
Admitted CA and NY Bar
lesley@portnoylaw.com
310-692-8883
www.portnoylaw.com
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