The Kroger Co. has reached an agreement in principle with plaintiffs to settle the majority of opioid claims that have been or could be brought against the Company by states, subdivisions, and Native American tribes.
Along with the execution of certain non-monetary conditions that remain in discussion, Kroger has agreed to pay up to $1.2 billion to states and subdivisions and $36 million to Native American tribes in funding for abatement efforts (both to be paid over 11 years in equal installments), and approximately $177 million to cover attorneys’ fees and costs (to be paid over 6 years in equal installments). The timing of the settlement payments over multiple years, most of which are tax deductible, results in an after-tax net present value to Kroger of approximately $870 million. Initial payments would begin in December 2023. Kroger expects to recognize a $1.4 billion charge during the second quarter of 2023, which will negatively impact earnings per diluted share of $1.54 on a GAAP basis. This does not affect adjusted earnings per diluted share results for 2023, which are provided on a basis that excludes adjustment items.
States, subdivisions, and the Native American tribes will have an opportunity to opt-in to participate in the settlement, and Kroger will have full discretion to determine whether there is sufficient participation for the settlement to become effective. If all conditions are satisfied, the settlement would allow for the full resolution of all claims on behalf of participating states, subdivisions and tribes.
This is an important milestone in the Company’s efforts to resolve the pending opioid litigation and support abatement efforts. Kroger has long served as a leader in combatting opioid abuse and remains committed to patient safety.
This settlement is not an admission of wrongdoing or liability by Kroger and Kroger will continue to vigorously defend against any other claims and lawsuits relating to opioids that the final agreement does not resolve.
The Company will provide more detail on the settlement during its Second Quarter 2023 Earnings Call on Friday, September 8 at 10:00AM ET.
