HEALTH

Drugstore.com delivers in three focus areas, CEO says

BY Michael Johnsen

BELLEVUE, Wash. So far, so good. Drugstore.com on Thursday announced that it is delivering on three areas of focus in what has become an exceedingly challenging retail environment.

“I’m very pleased to announce that we’ve made substantial progresses in all [three] of these areas in the first quarter, posting one of our strongest quarters to date, despite facing a very tough economy,” Dawn Lepore, Drugstore.com CEO and chairman, told analysts Wednesday evening.

The three focal points for Drugstore.com included a focus on growing its over-the-counter and vision businesses at a faster rate than overall e-commerce; a focus on driving bottom-line improvements and a focus on incremental growth for the year.

So the scorecard so far —OTC revenue grew over 11%, well ahead of recent e-commerce industry trends, and the beauty business grew at an even faster pace, increasing 14%, despite a decline in the beauty industry.

Gross margins were at 28.2%, delivering adjusted EBITDA of $5.6 million to the bottom line, which is more than double the adjusted EBITDA the previous-year period.

“I believe our record performance in the first quarter offers evidence that we can continue to grow in a difficult economic environment, while also improving the strategic positioning of the company,” Lepore said, suggesting that the online retailer will be able to maintain its improved performance through the remainder of the year.

Looking forward, Drugstore.com plans to launch its Medco Health Solutions-branded OTC web site in the second quarter, with a notable ramp in the second half of the year. “We believe our partnership is on track and we are in active conversations with other potential partners,” Lepore said.

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CDC updates swine flu cases to 91

BY Michael Johnsen

ATLANTA The Centers for Disease Control and Prevention updated the number of confirmed swine flu cases to 91 late Wednesday morning, up from 46 the day before, and confirmed one death.

Incidences of swine flu are now apparent in 10 states — Arizona (1), Califorina (14), Indiana (1), Kansas (2), Massachusetts (2), Michigan (2), Nevada (1), New York (51), Ohio (1) and Texas (16). The death occurred in Texas.

“The outbreak of disease in people caused by a new influenza virus of swine origin continues to grow in the United States and internationally,” the CDC stated. “The more recent illnesses and the reported death suggest that a pattern of more severe illness associated with this virus may be emerging in the U.S. Most people will not have immunity to this new virus and, as it continues to spread, more cases, more hospitalizations and more deaths are expected in the coming days and weeks.”

CDC has implemented its emergency response. The agency’s goals are to reduce transmission and illness severity, and provide information to help health care providers, public health officials and the public address the challenges posed by the new virus. Yesterday, CDC issued new interim guidance for clinicians on how to care for children and pregnant women who may be infected with this virus.

Young children and pregnant women are two groups of people who are at high risk of serious complications from seasonal influenza. In addition, CDC’s Division of the Strategic National Stockpile continues to send antiviral drugs, personal protective equipment and respiratory protection devices to all 50 states and U.S. territories to help them respond to the outbreak. The swine influenza A (H1N1) virus is susceptible to the prescription antiviral drugs Tamiflu (oseltamivir) and Relenza (zanamivir).

“This is a rapidly evolving situation and CDC will provide updated guidance and new information as it becomes available,” the agency stated.

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NPF: Dietary supplement industry contributes $60B to national economy

BY Michael Johnsen

WASHINGTON A new study funded by the Natural Products Foundation has determined the total economic contribution of the dietary supplement industry to exceed $60 billion dollars, or 0.5% of the national GDP, according to a statement issued Wednesday.

“Not only does the dietary supplement industry represent an important and growing component of the U.S. economy, it is interconnected in essential ways with many other industries,” wrote the study’s authors. “For example, the dietary supplement industry contributes to [spending] in other industries, such as retail and wholesale trade; real estate, rental and leasing; finance and insurance; professional, scientific, and technical services; and manufacturing.”

Dietary supplements generate more than $20 billion in annual consumer sales, but the industry’s overall economic contribution goes well beyond the direct purchase of goods, NPF stated.

The Economic Impact Report, completed by Dobson DaVanzo, a Washington-based economic research firm, is the first to quantify the dietary supplement industry’s total financial bearing on the national economy. It considers multiple tiers of contributing factors, including supply, production, research, direct employment, manufacturing and taxes, as well as these dynamics’ longterm financial effects.

“Most industry assessments typically focus on retail sales,” stated Tracy Taylor, NPF executive director. “Realistically though, sales are really just the tip of the iceberg. … The labor, materials and technology necessary to move any product from staging grounds to the final sale trigger a cascade of economic consequences,” she said. “Consider for example that the dietary supplement trade generates enough activity throughout production and sales to support over 450,000 jobs, and that industry concerns paid more than $10 billion dollars in taxes in 2006.”

Moreover, the dietary supplement industry’s influence is expanding, growing at a rate that exceeds inflation. While health care providers are usually given a “market basket” increase of between 2% and 3% to account for medical and other price increases, the dietary supplement industry is steadily growing at a rate of more than 5% per year.

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