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Rite Aid Corporation (NYSE:RAD) and drug supplier McKesson Corp (NYSE:MCK) have reached a settlement, securing the continued fulfillment of customer prescriptions throughout Rite Aid's ongoing bankruptcy proceedings.
The lawsuit against McKesson alleged that the distributor improperly tried to terminate the drug supply agreement just before Rite Aid's bankruptcy declaration, claiming that McKesson demanded an immediate $700 million payment for outstanding contractual dues.
This development emerged shortly after Rite Aid filed for Chapter 11 bankruptcy in New Jersey.
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Citing a court hearing in Trenton, Reuters noted that attorney Joshua Sussberg, representing Rite Aid, announced the settlement, assuring McKesson would supply drugs throughout Rite Aid's bankruptcy case.
In return, Rite Aid will expedite the payments for new drug shipments and ensure that new deliveries take precedence over other creditor payments.
A spokesperson for McKesson confirmed the dispute's resolution, ensuring the company's commitment to supply Rite Aid throughout the bankruptcy proceedings.
Rite Aid's reliance on McKesson spans two decades, with the pharmacy chain paying McKesson a substantial $9 billion in 2023, as revealed in court filings.
The daily reliance on McKesson's deliveries reflects Rite Aid's minimal drug inventory.
The finalized settlement is pending court approval, with U.S. Bankruptcy Judge Michael Kaplan presiding over the case.
Price Action: MCK shares closed at $455.25, and RAD shares closed at $0.65 on Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
