drugstore.com Announces Strong First Quarter Financial (1-2)
Thursday April 26, 4:33 pm Eastern Time
Press Release
drugstore.com Announces Strong First Quarter Financial Results
BELLEVUE, Wash.--(BUSINESS WIRE)--April 26, 2001-- drugstore.com(TM)(Nasdaq:DSCM - news), the leading Internet retailer of health, beauty, wellness and pharmacy products, today announced its first-quarter financial results, which ended April 1, 2001.
Net sales, gross profit and pro forma net loss beat Wall Street consensus forecasts.
First-quarter net sales increased 44 percent over first quarter of 2000, to $32.8 million and gross profit increased to $5.0 million or 15.3 percent. Average net sales per order was $62, up from $39 in the first quarter of 2000. Pro forma net loss for the quarter (excluding restructuring charges, amortization of intangible assets and amortization of stock based compensation) improved by 44 percent over first quarter of 2000 to $21.8 million, or $0.33 per share. In addition, the company added 171,000 new customers, bringing its customer base to over 1.8 million, and orders from repeat customers grew to 68% of the total orders in the quarter.
``We continue to deliver on our promises -- quarter after quarter after quarter,'' said drugstore.com's President and CEO Kal Raman. ``Our first-quarter results demonstrate -- once again -- that we continue to satisfy customers and make significant improvements on all the key financial and operational metrics. I'm more confident in our strategy to achieve sustainable growth and reach profitability with the cash we have in the bank.''
Net loss on a GAAP basis was $41.7M, or $0.64 per share, and reflected a restructuring charge of $7.3 million. On January 19th, 2001 the company announced a reduction in work force and operating expenses. The restructuring charge primarily consists of the termination of a lease for new and expanded office space and the write-off of leasehold improvements associated with vacated facilities.
The company ended the quarter with $114 million of cash and marketable securities.
Highlights of First Quarter 2001 (all comparisons are made with
prior year quarter)
Net sales increased $10.1 million or 44% to $32.8 million
Net sales per order increased 1.5 times to $62
Gross profit improved to 15.3% or $5 million from (0.6%) or ($0.1) million dollars a year ago.
Marketing and sales expenses declined by $8.1 million, and as a percent of net sales declined from 84% to 33%.
Pro forma net loss improved by $17.1 million or 44% to $21.8 million
Customer base grew to 1,840,000 customers
Cash and marketable securities were $114 million at April 1, 2001
Outlook for Q2 2001
The company expects second quarter 2001 net sales to be in the range of $32 million to $33 million. It anticipates second quarter losses before interest, taxes and amortization to be between $21 million and $22 million. Additionally, drugstore.com expects to add approximately 170,000 new customers, and second quarter gross margins are anticipated to be in the range of 15 to 16 percent.
For the year ending 2001, the company expects net sales to be unchanged, relative to prior guidance, and in the range of $135 million to $145 million. In addition, drugstore.com believes gross margin for the year will be between 15% and 16%, and EBITDA loss will be in the $55 million to $60 million range, leaving the company with a very healthy cash balance at the end of 2001.
``We have consistently made the right investments and smart decisions to build our leadership position in this growing category,'' said Peter Neupert, Chairman. ``As more and more consumers turn to the Web for health information and e-commerce, we will be there, to provide them with innovative services, enabling manufacturers to reach consumers in new ways.''
About drugstore.com
drugstore.com (Nasdaq:DSCM - news) is a leading online drugstore and information site offering A Very Healthy Way to Shop(TM) for health, beauty, wellness, personal care, and pharmacy products. The drugstore.com(TM) Web site provides a convenient, private, and informative shopping experience that encourages consumers to purchase products essential to healthy, everyday living. The drugstore.com Web store offers thousands of brand-name personal health care products at competitive prices; a full-service, licensed retail pharmacy; and a wealth of health-related information, buying guides, and other tools designed to help consumers make informed purchasing decisions.
drugstore.com has been awarded the Verified Internet Pharmacy Practice Sites (VIPPS) certification by the National Association of Boards of Pharmacy (NABP) as a fully licensed facility exercising the best safe pharmacy practices in compliance with federal and state laws and regulations. drugstore.com has also been rated the top Health category site by Forrester PowerRankings, which provides objective rankings of the leading eCommerce sites.
In addition to Amazon.com, drugstore.com also has strategic relationships with Rite Aid Corporation (NYSE:RAD - news; PSE:RAD) General Nutrition Companies, and WellPoint Health Networks (NYSE:WPT - news). drugstore.com and A Very Healthy Way to Shop are trademarks of drugstore.com, inc.
The historical results contained in this press release are preliminary and unaudited. In addition, this press release contains forward-looking statements regarding future events or the future financial and operational performance of drugstore.com. Words such as ``expects'', ``believes'',``anticipates'' and similar expressions are intended to identify forward-looking statements. Actual performance may differ materially from those contained or implied in such forward-looking statements. Risks and uncertainties that could lead to such differences could include, among other things: drugstore.com's limited operating history, the unpredictability of future revenues and expenses and potential fluctuations in revenues and operating results, risks related to business combinations and strategic alliances, consumer trends, the level of competition, seasonality, the timing and success of expansion efforts, risks related to systems interruptions, possible governmental regulation, and the ability to manage a rapidly growing business. Additional information, regarding factors that potentially could affect drugstore.com's business, financial condition and operating results is included in drugstore.com's filings with the Securities and Exchange Commission, including in the prospectus dated March 15, 2000 relating to drugstore.com's public offering of common stock, in the prospectus on Form S-3, effective October 2, 2000 and in drugstore.com's Annual Report on Form 10-K for fiscal 2000.
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