Survival Of The Fittest: Drugstore.com Reports First Quarterly Profit

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This isn’t exactly new news, since its earnings were reported last Wednesday, but it’s a fact worth highlighting these days: Drugstore.com is now effectively a profitable business as it has been able to turn an operating profit for the fourth quarter of 2008, the first time since it went public in 1999.

The company would have gotten there sooner, if it weren’t for the fact that the state of New Jersey settled against the company in a sales tax case, costing the company $2.5 million and resulting in a quarterly loss for Q4 2007, when the company had originally thought it would be turning an operating profit.

The company this week reported quarterly net sales of just south of $94 million and net income of $289,000, and jumped to profitability thanks to an increase in customers (+400,000 new customers in Q4 alone) and solid sales of over-the-counter products. The company achieved fourth quarter gross margins of 28.5% and the highest adjusted EBITDA in the history of the company of $5.2 million, which is up 243% over Q4 2007.

For the year, Drugstore.com reported net sales of $366.6 million, a net loss of $8.3 million and an operating cash flow of $9.9 million for 2008.

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