Pomerantz Named Lead Counsel in Securities Suit Against Rite Aid

On Friday, June 16th, U.S. District Judge Kelley Hodge of the U.S. District Court for the Eastern District of Pennsylvania named Pomerantz LLP as Lead Counsel on behalf of the plaintiffs in In re Rite Aid Corporation Sec. Lit. no. 2:22-cv-04201. The case alleges that Rite Aid misled investors about the growth of its Elixir pharmacy benefit management program.

With over 2,000 stores, Rite Aid is one of America’s largest pharmacies. In 2015, in order to compete with companies like Walgreens and CVS, Rite Aid purchased a pharmacy benefit management company called EnvisionRx, which they rebranded Elixir. Rite Aid leadership was positive about Elixir’s prospects. In a 2022 earnings call, Rite Aid President and CEO Heyward Rutledge Donigan claimed that Elixir would add 80,000 new “lives” to its coverage by January 1st, 2023, as compared to 55,000 new members added the prior year. However, on September, 29th, 2022, it was revealed that the number of “lives” covered were actually in decline and that Rite Aid would pay a $252.2 million goodwill impairment charge in connection with Elixir. On this news, Rite Aid’s stock price fell $1.97 per share, or 28.02%, to close at $5.06 on September 29th, 2022.

Former President and CEO of Rite Aid, Heyward Donigan, Rite Aid Executive Vice President and Chief Financial Officer Matt Schroeder, and Elixir Chief Operating Officer Chris DePaul are also named as defendants in the matter.