Drugstore.com Reports Huge Net Loss,Remains Optimistic About Goals

Drugstore.com Reports Huge Net Loss,Remains Optimistic About Goals

BELLEVUE, Wash.--Despite having increased revenue and announcing that it plans to post a positive Earnings Before Interest, Taxes, Depreciation and Amortization(EBITDA) in 2003, drugstore.com had less than stellar earnings for its fourth quarter and fiscal year (4Q01, FY01), ended Dec. 30. Net sales were up 20.2 percent to $43.5 million while gross margin increased from 14.5 percent to 18.5 percent of sales. Operating expenses rose four-fold to $186.7 million from $36.2 million spent in the same period last year; the increase came from $163.4 million in impairment and restructuring charges, amortization of intangible assets and amortization of stock-based compensation. This led to a greater net loss of $182.9 million, or $2.75 per share lost, in relation to the $43.2 million, or $.68 per share lost, lost in 4Q00.

For its fiscal year, drugstore.com rang up 32.1 percent more sales, recording $145.3 million in FY01 compared to $110 million in FY00. Gross margin was 16.9 percent of sales, up from FY00's 8.4 percent, and operating expenses climbed to $275.9 million from $161 million. While it had been able to hold off a further net loss in fiscal 2000 (a slight improvement to $43.2 million compared to $43.5 million), the company had a net loss for FY01 of $282.8 million, or $4.33 per share lost.

Kal Raman, president and chief executive officer, stated that he is pleased with this year's results, including increasing the company's gross margin. The company also reported that it increased its customer base by 225,000 in 4Q01 to 2.4 million and reduced its cash use to $9.7 million, ending the year with $79 million. According to the company, this was enough cash to break even.