drugstore.com, inc. Acquires Custom Nutrition Services; New Service Offers Personalized Vitamin and Nutrition Packs to Consumers

BELLEVUE, Wash.--(BUSINESS WIRE)--April 29, 2003--drugstore.com, inc. (Nasdaq:DSCM), the leading online retailer of health, beauty, wellness, personal care, and pharmacy products, today announced an agreement to acquire privately-held Custom Nutrition Services (CNS) of Carlsbad, California.

CNS provides personalized nutrition services to consumers in the form of an online assessment (Vitamin Assessment) of an individual's specific nutritional supplement needs, and then delivers the personalized vitamins, minerals, herbs, and supplements in pharmaceutical grade, daily dose package (CustomPak(TM)). CNS is the exclusive online distributor for CustomPaks from Dr. Andrew Weil at www.DrWeil.com and The Pritikin Longevity Center at www.Pritikin.com. Jason Brown, founder of Custom Nutrition Service, will serve as Vice President, Specialty Retail for drugstore.com, inc.

Under terms of the agreement, drugstore.com, inc. will acquire CNS for $5.3 million, which includes a combination of cash, equity, and assumption of debt. The agreement also provides additional value to be earned over the next three years via a revenue share arrangement. As a result of the acquisition, drugstore.com, inc. is revising upward its top line sales guidance for the 2nd quarter to be in the range of $56 million to $60 million. The Company anticipates that integration costs associated with the transaction will increase the company's anticipated 2nd quarter GAAP net loss by $300,000 to $500,000 from the previous net loss guidance range of $4.8 million to $5.8 million. The Company believes it will have a neutral bottom line impact on the expected 2003 annual results and should contribute positively to fiscal year 2004 profitability projections and be accretive on an earnings per share basis.

"We are very excited about the Custom Nutrition Services acquisition because it exemplifies the power and promise of the Internet -- the ability to provide highly personalized health care solutions to consumers in a cost effective and efficient manner," said Kal Raman, president and CEO of drugstore.com, inc. "Consumers want to buy vitamins and nutritional supplements but are uncertain as to which supplements they should be taking and in what combinations. Now they can go online to the drugstore.com(TM) Web site and receive a personalized assessment of their supplement needs and have customized vitamin and supplement packs delivered right to their door step."

"We recognize that for a supplement program to be effective, it must be personalized to meet the needs of each individual," said Jason Brown. "Our online Vitamin Assessment program, which was designed by physicians, dietitians, and nutritionists, provides specific vitamin and nutritional supplement recommendations based on each person's age, gender, medical and family history, diet, lifestyle, and medications. The vitamins and supplements are manufactured according to strict guidelines for quality control, and all product ingredients are tested both prior to and after manufacturing to ensure that all the ingredients and doses are correct."

The Vitamin Assessment feature educates consumers about their individual supplement needs, and the CustomPak(TM) program delivers custom-packaged vitamins and supplements -- typically a one month's supply of daily-dose packages -- right to the consumer's doorstep. drugstore.com(TM) customers can also take advantage of assessments through CNS's brand partners, Dr. Andrew Weil at www.DrWeil.com and The Pritikin Longevity Center at www.Pritikin.com. The drugstore.com(TM) Web site has the capacity and technology to support the different nutritional philosophies of these brand partners whose assessments and CustomPak(TM) programs reflect the very unique approach of each of their science advisory boards. For example, www.Pritikin.com focuses on lifestyle-related disease conditions and overall health and wellness, and www.DrWeil.com focuses on integrative medicine and optimum health. Each of the above programs uses different assessments to assist users in identifying an appropriate supplement program and provides results specific to the unique underlying principles of each brand.

The Vitamin Assessment and CustomPak(TM) programs will be available on the drugstore.com(TM) Web site in late summer.

Benefits of the CustomPak(TM) supplement programs include:

1. CustomPak(TM) supplements are healthcare professional-level
brands with pharmaceutical grade packaging for the highest

2. Quality ingredients in controlled dosages take account for
drug-nutrient interactions

3. Daily-dose packets are simple, convenient, and sanitary

4. Delivered direct to you, eliminates shopping in multiple

5. Monthly delivery provides a preventive regimen for optimal

About drugstore.com
drugstore.com, inc. (Nasdaq:DSCM) is the leading online health, beauty, wellness, personal care, and pharmacy solution in the world. The drugstore.com(TM) online store provides a convenient, private, and informative shopping experience that encourages consumers to purchase products essential to healthy, everyday living. The online store offers thousands of brand-name personal health care products at competitive prices; a full-service, licensed retail pharmacy; and a wealth of health-related information, buying guides, and other tools designed to help consumers make informed purchasing decisions. Consumers can personalize their shopping experiences with shopping lists, e-mail reminders for replenishing regularly used products, and private e-mail access to pharmacists and beauty experts for questions.

drugstore.com, inc. has been awarded the Verified Internet Pharmacy Practice Sites (VIPPS) certification by the National Association of Boards of Pharmacy (NABP) as a fully licensed facility exercising the best safe pharmacy practices in compliance with federal and state laws and regulations.

"The historical results contained in this press release are preliminary and unaudited. In addition, this press release contains forward-looking statements regarding future events or the future financial and operational performance of drugstore.com. Words such as "expects", "believes", "anticipates", "intends", "may", "will", "plan" "continue" "forecast", "remains", "would", "should" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on current expectations, are not guarantees of future performance and involve assumptions, risks, and uncertainties. Actual performance may differ materially from those contained or implied in such forward-looking statements. Risks and uncertainties that could lead to such differences could include, among other things: effects of changes in the economy, consumer spending, the stock market, changes affecting the Internet, online retailing and advertising, drugstore.com's limited operating history, the unpredictability of future revenues and expenses and potential fluctuations in revenues and operating results, risks related to business combinations and strategic alliances, consumer trends, the level of competition, seasonality, the timing and success of expansion efforts, risks related to systems interruptions, possible governmental regulation, and the ability to manage a rapidly growing business. Additional information, regarding factors that potentially could affect drugstore.com's business, financial condition and operating results is included in drugstore.com's filings with the Securities and Exchange Commission, including in the prospectus dated March 15, 2000 relating to drugstore.com's public offering of common stock, in the prospectus on Form S-3, effective October 2, 2000 and in our periodic filings with the SEC on Forms 10K and 10Q. drugstore.com expressly disclaims any intent or obligation to update any forward-looking statement, except as otherwise specifically stated by it."

About Custom Nutrition Services

Custom Nutrition Services was founded in 2000 to provide consumers with comprehensive nutritional supplement recommendations along with the delivery of personalized custom nutrition packs on a monthly basis.

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