In a significant victory for New Rite Aid, LLC, a bankruptcy court judge has ruled largely in favor of the pharmacy chain in its contract dispute with CVS Pharmacy, Inc. over the interpretation of asset purchase agreements worth tens of millions of dollars. The ruling, issued on July 28 by Judge Michael B. Kaplan of the United States Bankruptcy Court for the District of New Jersey, centered on two key provisions affecting the purchase price of pharmacy prescription files and records.
The court granted Rite Aid's emergency motion to enforce a sale order and compel CVS's performance under asset purchase agreements (APAs) signed in May 2025. The dispute, which arose during Rite Aid's ongoing liquidation process, focused on how certain contractual provisions should be interpreted when calculating purchase price adjustments for prescription files being sold to CVS.
"For the reasons discussed, the Court GRANTS Movant's Motion, in part," Judge Kaplan wrote in his 19-page opinion. The remaining unresolved issues between the parties will be addressed at a hearing scheduled for August 14, 2025.
At the heart of the dispute were two ambiguous contractual provisions: the "Holiday Exclusion Provision" and the "Prescription Filled Phrase" contained in the APAs. These provisions determine how prescription data is calculated during a defined "Lookback Period" prior to store closings, which directly impacts the final purchase price CVS must pay for Rite Aid's pharmaceutical customer files.
The court found that Rite Aid's interpretation of both provisions was correct based on the parties' prior course of dealings and performance. Judge Kaplan noted that CVS had previously accepted Rite Aid's calculation methodology without objection in multiple transactions dating back to October 2023.
"The extrinsic evidence introduced at the Evidentiary Hearing likewise confirms that in the prior agreements between Rite Aid and CVS, Rite Aid has calculated 'prescriptions filled' based on the number of prescriptions actually retrieved by [or dispensed to] patients," Judge Kaplan wrote. "Both sets of data have always represented prescriptions retrieved and paid for by patients. Again, testimony and other evidence confirm that CVS has never until most recently disputed this methodology."
The dispute arose after CVS entered into asset purchase agreements on May 15, 2025, to acquire certain assets from Rite Aid's retail locations in the Pacific Northwest region and various other states. The bankruptcy court had approved these agreements on May 21, 2025. Under the APAs, the price paid by CVS could be adjusted based on prescription volume during a defined lookback period.
At an evidentiary hearing held on July 25, the court heard testimony from several witnesses, including George Zhushma, Rite Aid's VP of Central Operations & Pharmacy Acquisitions, and three CVS representatives: Gui Serrano, Stephen Frumento, and Robin White.
Particularly damaging to CVS's position was evidence showing that as recently as June and July 2025, CVS employees had explicitly accepted Rite Aid's methodology for calculating "prescriptions filled." The court highlighted an internal email from CVS executive Stephen Frumento acknowledging that CVS was "fine counting sold scripts," even after the dispute had been articulated.
"In all, the Court finds that the unrebutted extrinsic evidence placed before the Court confirms that the parties negotiated and ultimately entered into the APAs at issue here, with a clear understanding that they would continue to treat and calculate 'prescriptions filled' in a manner that is consistent with their prior courses of dealing and performance," Judge Kaplan concluded.
The case is being closely watched as it affects the ongoing liquidation of Rite Aid, which filed for bankruptcy protection in 2023. The current chapter 11 proceedings involve New Rite Aid, LLC, which emerged from the first bankruptcy before entering liquidation proceedings in the current case.
The case is New Rite Aid, LLC, et al., Case No. 25-14861, in the United States Bankruptcy Court for the District of New Jersey.
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