A securities class action has been filed in the USDC – E.D.PA. against Rite Aid Corporation (RAD) on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Rite Aid securities between April 14, 2022 through September 28, 2022 (the “Class Period”). If you wish to serve as lead plaintiff, you must move the Court no later than December 19, 2022.
The Complaint alleges that throughout the Class Period, 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:
- 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;
- the Company 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; and
- as a result, the Company’s public statements were materially false and misleading at all relevant times.
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 triggered by a change in Rite Aid’s estimate of lives covered by Elixir for 2023 based on the latest selling season.
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, injuring investors, and wiping millions of dollars of investor wealth.