D&K Healthcare Q3 Revenue Increases 42% And EPS Rise 40%; Posts All-time Quarterly Revenue, EBITDA, Net Income And EPS Records

Business Wire, April 24, 2002

Business Editors

ST. LOUIS--(BUSINESS WIRE)--April 24, 2002

Raises FY 2002 Net Sales Guidance to $2.4 Billion and

EPS Guidance to $1.39 (Adjusted for 2-For-1 Stock Split)

D&K Healthcare Resources, Inc. (NASDAQ: DKWD) today reported all-time record quarterly net sales, earnings before interest, taxes, depreciation and amortization (EBITDA), net income and diluted earnings per share for its fiscal third quarter ended March 31, 2002.

                       Summary Financial Results
   (in millions, except per share data, and adjusted for the 2-for-1
                 stock split effective April 12, 2002)
----------------------------------------------------------------------
                Q3`02    Q3`01   Change    YTD `02   YTD `01    Change
----------------------------------------------------------------------
Net Sales       $695.2  $490.5      42%   $1,816.0   $1,196.6      52%
EBITDA          $ 16.7   $ 9.7      73%     $ 37.5     $ 22.2      69%
Net Income      $  7.3   $ 3.2     128%     $ 15.5      $ 6.5     138%
Diluted EPS     $ 0.49   $0.35      40%     $ 1.05     $ 0.73      44%
Diluted Shares    14.8     9.2      61%       14.7        9.0      62%

J. Hord Armstrong, III, Chairman and Chief Executive Officer, commented, "D&K surpassed every performance goal we set for the quarter and year to date, establishing a number of all-time records. Given the benefits of our expanded capital base, our strong operating performance and the positive long-term trends in pharmaceutical demand, we are increasing our guidance for FY 2002 net sales to $2.4 billion and raising our FY 2002 EPS guidance to $1.39, reflecting the impact of the recently completed 2-for-1 stock split. Our previous FY 2002 guidance was $2.3 billion in net sales with EPS of $1.33, adjusted for the split."

Martin D. Wilson, President and Chief Operating Officer, added, "D&K generated sales of $277.3 million in the independent and regional pharmacy trade class in the third quarter, an increase of $87.9 million, or 46.4%, over the third quarter of last year, reflecting our high level of personalized service. Revenue from the Diversified Healthcare acquisition in June 2001 represented 51.2% of the increase, with the remaining 48.8% coming from same store sales growth and new customer wins.

"D&K's national pharmacy chain business achieved sales of $385.8 million in the third quarter, an increase of 41.0%, or $112.1 million. The improvement in this trade class over the same period last year is largely due to strong relationships with both suppliers and the chains, which we have been able to optimize with our improved capital structure. It is worth noting that our inventories at March 31, 2002 were $430 million, as we took advantage of attractive purchasing opportunities and positioned D&K to support its sales growth."

Mr. Wilson continued, "Consolidated gross margin for the quarter totaled 4.36%, compared to 4.19% last year. Illustrating the significant operating leverage in our business model, our operating margin for the quarter increased over 25% to 2.25%, up from 1.80% in the third quarter of fiscal 2001."

Thomas S. Hilton, Senior Vice President and Chief Financial Officer, added, "The combination of enhanced capital resources, excellent execution, operational efficiencies and favorable interest rates contributed to this record setting quarter. Looking forward, we are expecting the gross margin for fiscal 2002 to be approximately 4.2%. Operating margin for fiscal 2002 should slightly exceed 1.8%. Total weighted average borrowings increased $62 million over third quarter last year to $248 million during the quarter, but were offset by a 320 basis point decline in weighted average interest rates compared to the same period last year, substantially accounting for the 14.4% decrease in net interest expense."

About D&K Healthcare Resources

With trailing twelve month revenues of $2.27 billion, St. Louis-based D&K Healthcare Resources, Inc., is a wholesale distributor of pharmaceutical and related healthcare and beauty aid products to independent and regional pharmacies, national pharmacy chains and other healthcare providers. D&K currently services customers in 24 states primarily in the Midwest and South from distribution facilities in Cape Girardeau, MO; Weston, FL; Lexington, KY; Minneapolis, MN; Aberdeen, SD; and Owensboro, KY. D&K also offers a variety of additional services to its customers, including inventory management, services designed to contain costs, information technology systems and various marketing programs related to generic pharmaceuticals and other products. In addition, D&K owns a 70% equity interest in Pharmaceutical Buyers, Inc., a recognized alternate-site group purchasing organization. D&K invites you to visit its Web site at http://www.dkwd.com.

Safe Harbor Provisions

This press release may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are inherently subject to risks and uncertainties. D&K's actual results could differ materially from those currently anticipated due to a number of factors, including without limitation, the competitive nature of the wholesale pharmaceutical distribution industry, with many competitors having substantially greater resources than D&K, and D&K's customers and suppliers generally having the right to terminate or reduce their purchases or shipments on relatively short notice, the changing business and regulatory environment of the healthcare industry in which D&K operates, changes in interest rates and other factors set forth in reports and other documents filed by D&K with the Securities and Exchange Commission from time to time. D&K undertakes no obligation to publicly update or revise any forward-looking statements.