Embattled Rite Aid CEO Martin Grass has resigned, having come under fire for his company’s tumbling stock price, the mountain of debt he accumulated trying to expand the company and the revelation that the company would restate several years of earnings.
The nation’s third -biggest pharmacy chain, founded by Grass’father Alex, announced his departure after the market closed.
Rite Aid also said its bank had agreed to extend its loan by a year and that investment banker Leonard Green would invest $300 million in return for a 9.5 percent stake.
Company officials refused to say whether Grass’s resignation was a condition for the new loan, but bank officials would not have been the only ones unhappy with his leadership.
Wall Street analysts and large shareholders had begun to demand his resignation, saying it was the only way to restore confidence in the company. Several were openly hostile on a recent conference call.
Rite Aid got the message.
President Timothy Noonan, who was appointed acting CEO, issued a statement that “all our shareholders, vendors, management, pharmacists and associates should find reassurance in today’s announcement.”
Rite Aid has suffered a series of embarrassments under Grass’ watch.
The recent purchases of PCH Health Systems and the Thrifty Payless drugstore chain were costly and an unexpected drag on earnings, forcing him to restate several years worth.
Grass recently began selling off stores from the Thrifty Drug chain.
The state of Florida has sued Rite Aid, alleging that it charged uninsured prescription drugs customers more than insured ones.
And the state of Washington charged Rite Aid with selling expired baby formula, fining it $1 millio.
Rite Aid has also been embarrassed by reports of ties between it and the Grass family, and vendor complaints that Rite Aid wouldn’t pay its bills.
Rite Aid began the year trading at 50. It now trades at just under 10.