Like many retailers, Rite Aid Corporation (RAD) has been struggling with low-profit margins and negative cash flow for years. In fact, Rite Aid has not seen consistent profits since the 1990s. The main issue being low prices at stores with generally low demand due to ever-growing competition. The company has made a significant effort to expand its pharmacy and other health-related revenue, but it has a long way to go.

Rite Aid has also made an effort to reduce leverage by reducing debt and growing its reliance on leasing. Still, the company's total liabilities are extremely high, particularly considering its chronic lack of cash flow. COVID gave the company a temporary boost to sales, but its stock price recently plummeted toward long-term lows and those sales slowed. The company does not have significant cash reserves and has an awful Caa1 credit rating which signals a very high default risk.

READ FULL ARTICLE HERE