When CEO Dawn Lepore came aboard from Schwab
Revenues rose about 6% year over year to $102.6 million, and net losses were halved to $2.2 million from last year. The big news was the $1.6 million the company achieved in positive EBITDA results from operations. I thought this pro forma way of thinking died with the dot-com boom, but I guess not. With rare exceptions, "adjusted EBITDA" profitability is nothing to write home about, and investors should be looking for real GAAP profitability. Still, gross margins improved 150 basis points to 22% year over year, and the company has stated that its cost rationalization is complete. Now, according to management, drugstore.com will focus on growth opportunities.
I certainly hope so. Drugstore.com predicts revenues of $415 million-$420 million in 2006, up a scant 15% since 2004. In the same period, the company expects net losses of roughly $13 million-15 million. That's not a huge improvement over 2004's $21 million loss (after adjusting for a $27 million asset write-down that year). For all its cost-cutting, the company has only managed to improve gross margins about 100 basis points since CEO Lepore's arrival.
Granted, revenues are up $55 million since 2004, while net losses have decreased $5 million over the same time frame. Still, I would have preferred better results, especially given the substantial return on investment that online advertising can now generate for a firm. Perhaps drugstore.com should reexplore talks with online giant Amazon.com
CEOs like Mark Hurd at Hewlett-Packard
Phurther pharmacy Phoolishness:
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