Attached files
Exhibit 99.2
drugstore.com, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Three Months Ended April 4, 2010
(in thousands, except share and per share data)
| Historical Consolidated (1) |
Pharmacy Pro Forma Adjustments (3) |
Pro Forma | ||||||||||
| Net sales |
$ | 118,328 | $ | (7,395 | ) | $ | 110,933 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
83,634 | (5,881 | ) | 77,753 | ||||||||
| Fulfillment and order processing |
12,861 | (886 | ) | 11,975 | ||||||||
| Marketing and sales |
11,015 | (108 | ) | 10,907 | ||||||||
| Technology and content |
6,612 | (4 | ) | 6,608 | ||||||||
| General and administrative |
6,711 | (16 | ) | 6,695 | ||||||||
| Amortization of intangible assets |
48 | — | 48 | |||||||||
| Total costs and expenses |
120,881 | (6,895 | ) | 113,986 | ||||||||
| Operating loss |
(2,553 | ) | (500 | ) | (3,053 | ) | ||||||
| Interest income, net |
(63 | ) | — | (63 | ) | |||||||
| Loss from continuing operations |
$ | (2,616 | ) | $ | (500 | ) | $ | (3,116 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
102,605,614 | — | 102,605,614 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
drugstore.com, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended January 3, 2010
(in thousands, except share and per share data)
| Historical Consolidated (1) |
Pharmacy Pro Forma Adjustments (3) |
Pro Forma | ||||||||||
| Net sales |
$ | 412,832 | $ | (37,258 | ) | $ | 375,574 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
293,545 | (30,195 | ) | 263,350 | ||||||||
| Fulfillment and order processing |
45,759 | (3,868 | ) | 41,891 | ||||||||
| Marketing and sales |
38,293 | (566 | ) | 37,727 | ||||||||
| Technology and content |
24,880 | (16 | ) | 24,864 | ||||||||
| General and administrative |
17,247 | (82 | ) | 17,165 | ||||||||
| Amortization of intangible assets |
477 | — | 477 | |||||||||
| Total costs and expenses |
420,201 | (34,727 | ) | 385,474 | ||||||||
| Operating loss |
(7,369 | ) | (2,531 | ) | (9,900 | ) | ||||||
| Interest income, net |
46 | — | 46 | |||||||||
| Loss from continuing operations |
$ | (7,323 | ) | $ | (2,531 | ) | $ | (9,854 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.07 | ) | $ | (0.03 | ) | $ | (0.10 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
96,950,189 | — | 96,950,189 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
drugstore.com, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended December 28, 2008
(in thousands, except share and per share data)
| Historical Consolidated (1) |
Pharmacy Pro Forma Adjustments (3) |
Pro Forma | ||||||||||
| Net sales |
$ | 366,579 | $ | (44,365 | ) | $ | 322,214 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
263,697 | (36,166 | ) | 227,531 | ||||||||
| Fulfillment and order processing |
43,377 | (4,481 | ) | 38,896 | ||||||||
| Marketing and sales |
33,591 | (1,127 | ) | 32,464 | ||||||||
| Technology and content |
23,011 | (16 | ) | 22,995 | ||||||||
| General and administrative |
19,034 | (35 | ) | 18,999 | ||||||||
| Amortization of intangible assets |
867 | — | 867 | |||||||||
| Total costs and expenses |
383,577 | (41,825 | ) | 341,752 | ||||||||
| Operating loss |
(16,998 | ) | (2,540 | ) | (19,538 | ) | ||||||
| Interest income, net |
631 | — | 631 | |||||||||
| Loss from continuing operations |
$ | (16,367 | ) | $ | (2,540 | ) | $ | (18,907 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.17 | ) | $ | (0.03 | ) | $ | (0.20 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
96,481,787 | — | 96,481,787 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
drugstore.com, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended December 30, 2007
(in thousands, except share and per share data)
| Historical Consolidated (1) |
Pharmacy Pro Forma Adjustments (3) |
Pro Forma | ||||||||||
| Net sales |
$ | 339,331 | $ | (50,143 | ) | $ | 289,188 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
248,308 | (41,935 | ) | 206,373 | ||||||||
| Fulfillment and order processing |
39,817 | (4,952 | ) | 34,865 | ||||||||
| Marketing and sales |
30,080 | (1,704 | ) | 28,376 | ||||||||
| Technology and content |
18,258 | (18 | ) | 18,240 | ||||||||
| General and administrative |
20,928 | (43 | ) | 20,885 | ||||||||
| Amortization of intangible assets |
1,234 | — | 1,234 | |||||||||
| Total costs and expenses |
358,625 | (48,652 | ) | 309,973 | ||||||||
| Operating loss |
(19,294 | ) | (1,491 | ) | (20,785 | ) | ||||||
| Interest income, net |
1,675 | — | 1,675 | |||||||||
| Loss from continuing operations |
$ | (17,619 | ) | $ | (1,491 | ) | $ | (19,110 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.18 | ) | $ | (0.02 | ) | $ | (0.20 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
95,350,046 | — | 95,350,046 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
drugstore.com, inc.
Unaudited Pro forma Consolidated Balance Sheets
April 4, 2010
(in thousands, except share data)
| Historical Consolidated (2) |
Pharmacy Pro Forma Adjustments |
Pro Forma | ||||||||
| ASSETS |
||||||||||
| Current assets: |
||||||||||
| Cash and cash equivalents |
$ | 17,101 | $ | (3,327) | (6) | $ | 18,921 | |||
| 5,147 | (4) | |||||||||
| Marketable securities |
12,523 | 12,523 | ||||||||
| Accounts receivable, net of allowances |
12,897 | (1,011) | (6) | 11,886 | ||||||
| Inventories |
40,967 | (647) | (4) | 40,320 | ||||||
| Other current assets |
3,841 | (72) | (5) | 3,769 | ||||||
| Total current assets |
87,329 | 90 | 87,419 | |||||||
| Fixed assets, net |
23,706 | (28) | (5) | 23,678 | ||||||
| Other intangible assets, net |
14,716 | 14,716 | ||||||||
| Goodwill |
57,576 | 57,576 | ||||||||
| Other long-term assets |
159 | 159 | ||||||||
| Total assets |
$ | 183,486 | $ | 62 | $ | 183,548 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||
| Current liabilities: |
||||||||||
| Accounts payable |
$ | 39,821 | $ | (4,010) | (6) | $ | 35,811 | |||
| Accrued compensation |
5,005 | (307) | (6) | 4,698 | ||||||
| Accrued marketing expenses |
3,813 | 3,813 | ||||||||
| Other current liabilities |
1,780 | (21) | (6) | 1,759 | ||||||
| Current portion of long-term debt |
13,113 | 13,113 | ||||||||
| Total current liabilities |
63,532 | (4,338) | 59,194 | |||||||
| Long-term debt, less current portion |
10 | 10 | ||||||||
| Deferred income taxes |
4,032 | 4,032 | ||||||||
| Other long-term liabilities |
1,484 | 1,484 | ||||||||
| Stockholders’ equity: |
||||||||||
| Common stock, $.0001 par value, stated at amounts paid in: |
||||||||||
| Authorized shares - 250,000,000, |
||||||||||
| Issued and outstanding shares - 105,888,472 shares issued and 105,782,916 shares outstanding |
888,546 | 888,546 | ||||||||
| Treasury stock, at cost, 105,556 shares |
(151) | (151) | ||||||||
| Accumulated other comprehensive loss |
(120) | (120) | ||||||||
| Accumulated deficit |
(773,847) | 4,400 | (7) | (769,447) | ||||||
| Total stockholders’ equity |
114,428 | 4,400 | 118,828 | |||||||
| Total liabilities and stockholders’ equity |
$ | 183,486 | $ | 62 | $ | 183,548 | ||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
UNAUDITED PRO FORMA FINANCIAL DATA
On July 30, 2010, we completed our previously announced sale of our mail-order pharmacy assets to BioScrip, Inc. The disposition was made pursuant to an Asset Purchase Agreement, dated as of May 5, 2010, as amended on July 14, 2010 and July 29, 2010, between drugstore.com, inc. and DS Pharmacy, Inc., our wholly owned subsidiary, and BioScrip, Inc. and BioScrip Pharmacy Services, Inc., its wholly owned subsidiary.
Under the terms of the agreement, BioScrip Pharmacy Services purchased substantially all of the assets of DS Pharmacy for a purchase price of $10.9 million, subject to adjustment for changes in inventory value and gross profit of the business. Of this total consideration, approximately $5.5 million will be paid into escrow in installments over the 12 months following the closing date of July 30, 2010. The final amount paid out of escrow will be determined after the 12-month period based on the profitability of the prescription pharmacy business during that period. Additionally, at closing, the parties entered into a 5-year marketing agreement allowing drugstore.com pharmacy customers to continue to order as they always have through the drugstore.com web store. BioScrip will pay drugstore.com a fee to continue to market the drugstore.com pharmacy, which will now be served by BioScrip. We consider the marketing service fees to be indirect cash inflows of our discontinued mail-order pharmacy segment, as the fees earned are not a significant source of ongoing future revenue. As a result, we have presented the operations of our mail-order pharmacy segment as discontinued operations beginning in the second quarter of 2010.
The following unaudited financial information are based upon our historical consolidated financial statements adjusted to give effect to the discontinuation of the pharmacy business. The unaudited pro forma consolidated statements of operations for the three-month period ended April 4, 2010 and the three years ended January 3, 2010, December 28, 2008, and December 30, 2007 give effect to the discontinuation of the pharmacy business as if the transaction occurred at the beginning of the period presented. The unaudited pro forma consolidated balance sheets as of April 4, 2010 gives effect to the discontinuation of the pharmacy business as if the transaction occurred on April 4, 2010.
The pro forma information is not necessarily indicative of the financial position or results of operations of future periods or indicative of results that would have actually occurred had the transaction been completed as of the date thereof or as of the beginning of the periods presented therein. The pro forma adjustments, as described in the accompanying notes to the pro forma consolidated balance sheet and statements of operations, are based upon available information and certain assumptions that we believe are reasonable. The pro forma financial information should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included in our Form 10-Q for the three-month period ended April 4, 2010 and in our Form 10-K for the year ended January 3, 2010.
drugstore.com, inc.
Notes to Unaudited Pro forma Consolidated Financial Statements
| (1) | Represents the Consolidated Statements of Operations included in our Form 10-Q for the three-month period ended April 4, 2010 or in our Form 10-K for the three year period ended January 3, 2010. |
| (2) | Represents the Consolidated Balance Sheet included in our Form 10-Q for the three-month period ended April 4, 2010. |
| (3) | Represents adjustments to eliminate the results of operations of the mail-order pharmacy business that are directly attributable to the Asset Purchase Agreement that will not continue. |
| (4) | Represents the initial proceeds received of $5.1 million consisting of an initial payment of $4.5 million and a payment of $647,000 for mail-order pharmacy inventory calculated based on the value of inventory on hand at April 4, 2010. |
| (5) | Represents mail-order pharmacy assets sold under the Asset Purchase Agreement. |
| (6) | Represents the net cash to be paid to liquidate assets and settle liabilities of the discontinued mail-order pharmacy business not acquired or assumed by the purchaser as part of the Asset Purchase Agreement. |
| (7) | Represents the gain on sale of the mail-order pharmacy business: |
| Initial payment received |
$ | 4,500 | ||
| Payment received from sale of inventory |
647 | |||
| Assets sold or disposed of at closing |
(747 | ) | ||
| Gain on sale of mail-order pharmacy business |
$ | 4,400 | ||