drugstore.com inc. Reports Solid Revenue Growth and Record Gross Margins in the Third Quart...(er pharmacy 904 963 ...),Health

7,326 6,932 22,483 20,851

Contribution margin:

OTC $13,688 $10,761 $41,504 $33,541

Vision 2,946 2,830 8,476 7,908

Mail-order pharmacy 1,155 1,103 3,606 3,180

$17,789 $14,694 $53,586 $44,629

SUPPLEMENTAL INFORMATION: Discontinued Operations Information:

Three Months Ended Nine Months Ended

September 28, September 30, September 28, September 30,

2008 2007 2008 2007

Net sales $23,303 $26,364 $81,911 $79,476

Cost of sales 19,289 23,098 70,458 70,266

Fulfillment and

order processing 897 1,084 3,285 3,273

Marketing and sales 2,290 572 3,435 1,717

827 1,610 4,733 4,220

Other, net 276 - 276 -

Net income from

discontinued

operations $1,103 $1,610 $5,009 $4,220

SUPPLEMENTAL INFORMATION: Reconciliation of Net Loss to Adjusted EBITDA (See Note 4 below):

Three Months Ended Nine Months Ended

September 28, September 30, September 28, September 30,

(In thousands, 2008 2007 2008 2007

unless otherwise

indicated)

Net loss $(3,619) $(2,374) $(8,576) $(9,167)

Amortization of

intangible assets 206 240 661 990

Amortization of

non-cash
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