HEALTH

Record net sales by drugstore.com driven by OTC growth

BY Michael Johnsen

BELLEVUE, Wash. Drugstore.com reported record net sales of $120.6 million for the first quarter ended March 30, up 10 percent and driven by over-the-counter order growth, the company stated Monday.

Drugstore.com posted a net loss of $2.7 million for the quarter, or $0.03 per share, and EBITDA of $2 million, a 45 percent improvement as compared to the first quarter of 2007.

“The first quarter of 2008 demonstrates that we are executing on our strategy—delivering core OTC sales growth of 15.5 percent, growing Beauty.com 38 percent year-over-year while expanding overall gross margins by 150 basis points year-over-year,” stated Dawn Lepore, chief executive officer and chairman of drugstore.com. “We believe our revenue growth was ahead of current e-commerce trends in OTC and prestige beauty, offering evidence that we can drive growth even in a tougher economic environment without sacrificing margin. Additionally, we are pleased with the benefits we are seeing from our improved operational efficiencies and grew contribution margin dollars 22 percent year-over-year, exceeding $20 million for the first time in company history. Based on growing sales and expanding margins, we reported positive adjusted EBITDA that almost doubled from the first quarter of 2007, despite investing over $1.3 million on our profitability initiatives.”

Core OTC revenues grew by approximately 16 percent to $64.4 million in the quarter, the online druggist reported. OTC net sales grew by more than 15 percent to $64.9 million.

Along with its financial results, drugstore.com noted its chief financial officer There du Pont will be resigning to run a private foundation effective May 29. Du Pont will continue as a consultant for the company until the end of August. In his stead, drugstore.com is promoting two senior financial executives—Rob Potter, current vice president, chief accountant, will be named vice president, chief accounting officer and Tracy Wright, current vice president of financial planning and analysis, will become vice president and chief finance officer.

“Rob and Tracy have each been with drugstore.com over four years and have stepped up to spearhead the finance team,” Lepore said. “They share over 34 years of combined corporate finance experience and I feel very confident that they are the right team to lead our finance organization. We have also recently hired Jon Axelsson from Wawa, who brings over 20 years of experience in warehousing and transportation operations, to take over There’s operational responsibilities and to continue to drive margin improvement. Jon has an impressive background from Wawa, Federal Express, UPS, and QVC, and will serve as senior director of operations.”

For the second quarter of 2008, the company is targeting net sales in the range of $118 million to $122 million, net loss in the range of $2 million to $3 million, and adjusted EBITDA in the range of $2 million to $3 million.

Due to the challenging economic environment, drugstore.com revised its initial fiscal year 2008 guidance, with net sales targets now between $490 million and $500 million, a net income or loss in the range of a $3 million loss to a $1 million gain and adjusted EBITDA in the range of $16 million to $20 million.

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Study suggests daily aspirin supplement may reduce risk of breast cancer

BY Michael Johnsen

LONDON A study published Thursday in the journal Breast Cancer Research suggested that a daily aspirin regimen may help reduce the risk of breast cancer, though there were no similar associations in other non-steroidal anti-inflammatory drugs.

“Breast cancer risk was not significantly associated with NSAID use, but daily aspirin use was associated with a modest reduction in [estrogen-receptor positive] breast cancer,” the authors concluded. “Our results provide support for further evaluating relationships by NSAID type and breast cancer subtype.”

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AHIP census shows HSA subscribers up 35 percent on last year

BY Michael Johnsen

WASHINGTON More than 6.1 million Americans are covered by Health Savings Account-eligible insurance plans, a 35 percent increase since last year, a new census released Wednesday by America’s Health Insurance Plans found.

“Employers and individuals across the country and across the age spectrum are choosing HSA plans, which are now an important part of the portfolio of coverage options offered by health plans,” statetd Karen Ignagni, president and chief executive officer of AHIP.

There was an increase of approximately 1.6 million Americans enrolled in an HSA plan since January 2007. Previous censuses found that 4.5 million were enrolled in January 2007, 3.2 million were enrolled in January 2006, and 1 million were enrolled in March 2005.

And HSA plan enrollment as a percentage of individuals with private coverage is estimated to be the highest in Minnesota (9.2 percent), Louisiana (9 percent), Washington, D.C. (8.7 percent), Vermont (7.5 percent) and Colorado (7.1 percent), the report found.

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