The nation’s pharmacy retail sector has faced economic difficulties this year, leading major drugstore chains to file for Chapter 11 protection.
Rite Aid filed for Chapter 11 protection for a second time on May 5, 2025, and began liquidating all of its stores, which it estimated at the time to be about 1,240 locations.
Rite Aid closes all 1,288 of its stores
When the dust settled, Rite Aid filed 20 notices of store closing locations, designating all of its remaining 1,288 stores for closure.
The pharmacy chain filed for Chapter 11 bankruptcy for the first time on Oct. 15, 2023, and closed about 800 of its 2,100 stores at the time.
And now a major rival of Rite Aid has found itself weighed down by a massive civil judgment that has forced the company to file for bankruptcy protection.
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Omnicare files for bankruptcy protection
CVS Health’s long-term care pharmacy subsidiary Omnicare LLC and 110 affiliates filed for Chapter 11 bankruptcy protection on Sept. 22, seeking to resolve issues related to a recent $948.7 million U.S. Department of Justice civil judgment against the company, according to a statement.
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All litigation against the debtor is subject to an automatic stay while the bankruptcy case proceeds.
The company said that it will either implement a standalone restructuring or seek a sale of its assets.
Omnicare responds to bankruptcy filing
“Omnicare has been engaged in a civil lawsuit alleging technical violations of pharmacy law based on practices the government knew about and approved,” Omnicare President David Azzolina said in a statement.
“There were no allegations of harm to any Omnicare patients nor did the government allege that any patient got anything other than the medicine they needed when they needed it,” Azzolina said.
“The District Court nevertheless imposed an extreme and, we believe, unconstitutional penalty,” he said.
Why did Omnicare file for bankruptcy?
- The long-term care pharmacy filed for bankruptcy protection to address a $948.7 million civil judgment against it that was awarded to the U.S. Attorney’s Office.
A unanimous jury on April 29 found Omnicare, the nation’s largest long-term care pharmacy, liable for alleged fraudulent dispensing of drugs without valid prescriptions to elderly and disabled people in assisted-living facilities and other residential long-term care facilities, according to a U.S. Attorney’s Office statement.
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After a four-week trial, the jury ruled that Omnicare billed Medicare, Medicaid, and Tricare for over 3 million of alleged false claims, resulting in over $135.5 million in damages, the statement said.
The government is entitled to three times the amount of the assessed damages under the federal False Claims Act, or $406,778,442, plus statutory penalties to be determined by the court.
CVS Health also found liable
The jury also found Omnicare’s parent, CVS Health Corp., liable for causing Omnicare to submit alleged false claims, the statement said.
Omnicare, which provides pharmacy services to the long-term care market, including skilled nursing facilities, independent-living, and assisted-living facilities, filed its petition in the U.S. Bankruptcy Court for the Northern District of Texas, listing $100 million to $500 million in assets and $1 billion to $10 billion in liabilities.
Omnicare’s largest unsecured creditors:
- U.S. Attorney’s Office, owed $948.7 million.
- Omnicell Inc., owed over $727,000.
- Vakserve, owed over $455,000.
The Woonsocket, R.I., debtor’s largest creditors include the U.S. Attorney’s Office in the Southern District of New York, owed $948.7 million; Omnicell Inc., owed over $727,000 in a trade payable; and Vakserve, owed over $455,000 in a trade payable.
The debtor is seeking approval for up to $110 million in debtor-in-possession financing and use of cash collateral to provide sufficient liquidity to the company while the case proceeds, according to the statement.
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