drugstore.com Has Strong Fourth-Quarter

Drugstore.com proves it can buck a trend. The online peddler of pharmaceuticals and health-related
products on Monday said it experienced a 90 percent increase in net sales during its fourth
quarter, and investors were rewarding the company justly.

Preliminary, unaudited net sales show at least $35 million for the
quarter, which ended Dec. 31, 2000. “The increase reflects our ability to
adapt to change and our focus on getting big while playing smart,” said
Kelly McGinnis, director of corporate communications. “Holiday sales also
worked in our favor. Customers made gift purchases while replenishing their
own orders, which gave us an added boost.”

The company stock price opened at 2 13/16 on Monday
and, as of 11 a.m., was still up 37.5 percent at 1 23/32.

“Despite a tough external market, we were able to nearly double our net
sales in the fourth quarter while continuing to increase our gross margins
and lower our operating losses,” said Peter Neupert, chairman and CEO said. “This further validates that the
drugstore category is a unique and very attractive business for online
consumers.”

The company’s strong fourth quarter performance represented at least a 90
percent increase in net sales over the same period in 1999, with net sales
for the quarter surpassing all sales for fiscal year 1999.

Neupert also reported preliminary, unaudited gross margin of more than 13
percent for the company’s fourth quarter versus a negative 16.3 percent for
the same period in 1999. In addition, drugstore.com added 257,000 new
customers in the fourth quarter of 2000.

drugstore.com expects to release more detailed financial results for
fiscal year 2000 later this month.

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