Rite Aid (RAD) shares dropped in early trading as the company filed for Chapter 11 bankruptcy amid slowing sales, increasing debt, and ongoing opioid lawsuits.

Yahoo Finance's Seana Smith and Brad Smith discuss the news. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- All right, let's talk a little bit more about some of the movers today. And Rite Aid shares on the move as a drugstore chain files for chapter 11 bankruptcy protection. You can see shares up another 17%. The company saying that lenders agreed to extend over $3.4 billion in new funding to help with liquidity as it restructures.

Rite Aid also saying that it plans on closing underperforming locations. The company has been struggling for years now. Now, it's been dealing with slowing sales, growing debt. And also, lawsuits alleging the company oversupplied painkillers, which fueled the country's opioid epidemic. When it comes to those lawsuits, facing over 8,000 lawsuits, just to put that in perspective for everyone out there.

So this is a company obviously been struggling now for quite some time. We've been talking about their mounting debt now for a while. They're also facing an increase in competition from some of their rivals, some of the other players in this space looking to offset some of their losses in the retail business with more exposure to the pharmacy side of things. So it has raised $3.45 billion to fund its operations while in bankruptcy. It does expect, like we said, to continue to operate most of its stores and continue to serve its customers. But many, obviously, expected this would ultimately happen.

- Yeah, we've already seen settlements, as we had mentioned earlier on the show. And again, for this conversation, between Walgreens, and CVS, and so now only right that Rite Aid would also have to go through these similar type of proceeding here. And ultimately, as we think about Rite Aid and kind of chronologs-- well, you know the word.

In the chronological order that's played out here for Rite Aid, I mean, it's a company that's had to sell off 1,900 of its locations. In what was an attempted full buyout of the company by Walgreens many years ago, they only were able to get about 1,900 locations. After that, you had Rite Aid continuing to operate many of these pharmacies trying to figure out, OK, how would they make sure that they got foot traffic back in the door?

How would they make sure that even at the peak of some of the COVID administration, and vaccine administration, and even tests that they were still seeing people opt to buy there versus buying at some of the other larger chains there in Rite Aid for what we had seen for many years, for decades, this was one of the larger players in the PBM side, in the Pharmacy Benefits Management side. But however, as that started to wane even for some of the largest players and move over to some of the convenience factors that are out there, whether that be a PillPack, whether that be a cost plus, I think that's certainly taken a chunk out of that business for a company in Rite Aid, as well, as well as not having the same type of footprint that they did before they had sold off so many locations to Walgreens. So we'll continue to watch this proceeding for bankruptcy for Rite Aid and bring you the latest there.