drugstore.com inc. Reports Solid Revenue Growth and Record Gross Margins in the Third Quart...(marketing 2290 573 ...),Health

Stock-based

compensation 1,846 2,147 5,778 7,114

Depreciation 3,043 1,941 7,895 5,743

Interest income, net (137) (459) (516) (1,265)

Adjusted EBITDA $3,629 $2,068 $8,677 $5,132

NOTE 4: Supplemental information related to the company's adjusted EBITDA for the three and nine months ended September 28, 2008 and September 30, 2007 is presented for informational purposes only and is not prepared in accordance with generally accepted accounting principles. Adjusted EBITDA is defined as earnings before taxes, depreciation, and amortization of intangible assets and non-cash marketing expense, adjusted to exclude the impact of stock-based compensation expense.

SUPPLEMENTAL INFORMATION: Reconciliation of Forecasted Q4 2008 and FY 2008 Net Income (Loss) Range to Forecasted Q4 2008 and FY 2008 Adjusted EBITDA Range

Range Calculated As: Three Months Ended Twelve Months Ended

December 28, 2008 December 28, 2008

(In thousands, unless

otherwise indicated) Range High Range Low Range High Range Low

Net income (loss) $1,900 $400 $(6,675) $(8,175)

Amortization of

intangible assets 210 210 870 870

Amortization of

non-cash marketing 0 0 3,435 3,435

Stock-based

compensation 1,650 1,650 7,425 7,425

Depreciation 3,150 3,150 11,045 11,045

Interest income, net (110) (110) (625) (625)

Adjusted EBITDA $6,800 $5,300 $15,475 $13,975

SUPPLEMENTAL INFORMATION: Reconciliation of Net Cash Provided b
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