Rite Aid Corporation, a regional chain drugstore operation and related services, had its rating cut to a deeply speculative grade due to concern's about its liquidity as an operation. Moody's Investors Service opined that the drugstore chain could run into its credit limit if cash flow did not improve. Rite Aid stock closed Friday at 31 cents per share.
What's the point of this post? This financial crisis isn't the first for Rite Aid which has its corporate offices in Camp Hill, Pennsylvania. Rite Aid had to restate its earnings in 2000 for prior years 1997, 1998, and 1999. As a result three former executives were indicted in 2002 for fraud and accused of filing false documents to inflate its earnings.
What's the point of this post? The Pennsylvania Employees Benefits Trust Fund had and continues a long term arrangement with Rite Aid to fill a 90 day supply of chronic medications at its retail pharmacies. If one looks on the PEBTF webiste they will see the arrangement. This contract was a no-bid contract. Retail pharmacies are prevented from providing the PEBTF employees with the same benefit. Their trust fund managers will tell the public the contract saves them money. I ask- How do you know that when you never bid it out?
The contract is backed up by Medco, Fast Eddy Rendell's corporate sponsor.
There are many financially sound pharmacies in Pennsylvania. Why are they excluded? How has Rite Aid earned its place at that contract table? In this time of transparency maybe the PEBTF Board should be held accountable for answers.