NEW YORK, October 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 United States District Court for the Eastern District of Pennsylvaniaand registered under 22-cv-04201, is on behalf of a class consisting of all persons and entities other than defendants who purchased or otherwise acquired Rite Aid securities between April 14, 2022 and September 28, 2022both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of 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 principal officers.
If you are a shareholder who purchased or otherwise acquired securities of Rite Aid during the Class Period, you have until December 19, 2022 ask the court to name you as the 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 making inquiries by email are encouraged to include their mailing address, phone number and number of shares purchased.
[Click here for information about joining the class action]
Rite Aid, through its subsidiaries, operates a chain of retail pharmacies in the United States. The Company operates through two segments, retail pharmacy and pharmaceutical services. The Pharmacy Services segment offers an integrated suite of pharmacy benefit management (“PBM”) offerings through, among othersthe company’s Elixir subsidiary, including technology solutions, mail delivery services, specialty pharmacy, network and rebate administration, claims resolution and pharmacy rebate programs.
In Rite Aid’s Q4 2022 Earnings Call on April 14, 2022President and CEO of Rite Aid, the accused Heyward Rutledge Donigan (“Donigan”), addressed the growth of Elixir’s PBM services business during the ending sales season January 1, 2023stating that (i) in the past few months, Elixir had already “sold 35,000 new members” (compared to a total of 55,000 new members the previous year), (ii) Elixir was a finalist for an additional 150,000 new members, and “results showed that once we’re finalists, we win contracts 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, 2022appearing in Rite Aid’s 2022 Annual Meeting of Shareholders Notice and Proxy Statement, Defendant Donigan said: “[o]Our Elixir sales and account teams are ramping up, and we are executing more efficiently by consolidating functions. And the market is taking notice: we’ve added 34,000 people covered by Elixir’s PBM services since January 1, 2022and many more are in the works.”
In Rite Aid’s first quarter 2023 earnings call on June 23, 2022Defendant Donigan stated regarding the PBM services business that “[o]Our strong network contracts, new remittance capabilities, innovative clinical services, and expertise in government programs have enabled us to add 80,000 new lives for January 1, 2023 start date. That’s more new life than we sold last year. And besides, the sales season is still ongoing, and we have almost a million lives left in the pipeline for January 1, 2023.” In the same appeal, the chief operating officer of Elixir, defendant Chris DuPaulindicated that “we had a good start to the selling season, especially on the health plans side” and “we feel really good about the direction our lives are going [1/1/23]. . .”
The Complaint alleges that, throughout the Class Period, the 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 statements to the contrary, the number of new members (i.e., “lives”) that the service company Elixir PBM added during the sale season ending on January 1, 2023 was in material decline; (ii) Rite Aid was likely to recognize a significant charge for 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 material times.
On September 29, 2022Rite Aid announced a $252.2 million the goodwill impairment charge related to the Company’s subsidiary Elixir. In a conference call later that day, Rite Aid’s Chief Financial Officer, Matt Schröderexplained that the large impairment charge related to Elixir based on “an update to our estimate of lives for 2023 based on the last selling season”, and that Rite Aid “expected at[ed] Lives to come down.”
At this news, Rite Aid’s share price plummeted $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, Parisand Tel Aviv, is recognized as one of the leading law firms in the areas of corporate litigation, securities and antitrust. 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 the tradition he established, fighting for the rights of victims of securities fraud, breaches of fiduciary duty and corporate misconduct. The firm recovered numerous multimillion-dollar damages on behalf of class members. See www.pomlaw.com
Robert S. Willoughby
888-476-6529 ext. 7980
SOURCE Pomerantz LLP