drugstore.com inc. Achieves GAAP Profitability in the Fourth Quart...( - Highest Revenues Gross Margins ...),Health

- Highest Revenues, Gross Margins and Net Income in Company History

BELLEVUE, Wash., Feb. 6 /PRNewswire-FirstCall/ -- drugstore.com, inc. (Nasdaq: DSCM), a leading online provider of health, beauty, vision, and pharmacy products, today announced its financial results for the fourth quarter and fiscal year ended December 30, 2007. The company reported quarterly net sales of $118.2 million and net income of $156,000, or $0.00 per share. The company achieved record gross margins in the fourth quarter of 24.6%, up 300 basis points year-over-year, and reported adjusted EBITDA of approximately $4.0 million. Adjusted EBITDA is a non-GAAP financial measure defined as earnings before interest, taxes, depreciation, and amortization of intangible assets and non-cash marketing expense, adjusted to exclude the impact of stock-based compensation expense.

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For the year, the company reported net sales of $445.7 million, a net loss of $9.0 million or $0.09 per share, and adjusted EBITDA of $9.1 million, reflecting an adjusted EBITDA improvement of approximately $6.8 million over fiscal year 2006. Additionally, the company reported operating cash flow of $7.8 million for 2007 compared to operating cash used of $1.1 million in the previous year.

"I am very pleased to announce that we reached GAAP profitability in the fourth quarter for the first time in company history," said Dawn Lepore, chief executive officer and chairman of the board of drugstore.com, inc. "During the quarter, we delivered record results across many of our key metrics including prestige beauty sales increasing 57%
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