Announces Results for the Fourth Quarter and Full Year 2012

Fourth Quarter Revenue Up 26% Year-Over-Year With Continued Strength in New Customers and Order Growth

Total Active Customers of 1.7 Million

BOCA RATON, Fla., Feb. 28, 2013 (GLOBE NEWSWIRE) --, Inc. (Nasdaq:VITC), a leading online retailer of health and wellness products, today reported financial results for the fourth quarter and full year ended December 31, 2012. The number of shipped orders on increased 23% year-over-year in the fourth quarter with new customers up 28% compared to the fourth quarter of 2011.

The Company reported net sales of $85.0 million for the fourth quarter of 2012, a 26% increase from net sales of $67.4 million for the fourth quarter of 2011. Gross profit in the fourth quarter increased 23% year-over-year to $19.2 million – the highest quarterly result in the Company's history. Non-GAAP adjusted EBITDA for the fourth quarter of 2012 was a loss of $1.0 million compared to a loss of $1.7 million in the fourth quarter of 2011, excluding certain items. The Company reported an operating loss of $3.2 million in the fourth quarter of 2012 and in the fourth quarter of 2011, excluding certain items.

For the full year 2012, net sales increased 27% year-over-year to $330.7 million. The number of shipped orders on increased 26% in 2012, as the number of new customers increased 45% from 2011.

"During 2012, we continued to execute on our initiative to grow our customer base as we added nearly 940,000 new customers on our website – bringing our total active customer base to 1.7 million at year-end," stated Jeffrey Horowitz, Chief Executive Officer. "We also continue to expand our product offerings with the addition of over 5,000 net SKUs during the year in our core Vitamin, Mineral, Herb, and Supplement business and in complementary healthy living categories, such as natural beauty care, sports nutrition and health foods. We also achieved numerous customer satisfaction and service awards during the year, as we are always focused on serving the needs of our customers. As we move into 2013, we remain focused on expanding our customer base and improving the efficiency of our operations."

Fourth Quarter Financial Highlights

Customer Acquisition: The Company added 227,000 new customers in the fourth quarter of 2012 on its website, an increase of 28% year-over-year. In total, the Company added 296,000 new customers in the fourth quarter of 2012, an increase of 17% year-over-year.

Active Customer Base: The number of active customers from the Company's website was 1.7 million at the end of the fourth quarter, up 30% year-over-year. The Company ended the fourth quarter of 2012 with 2.1 million total active customers, up 52% year-over-year.

Number of Shipped Orders: The Company shipped 1.1 million orders generated from its website, up 23% year-over-year. The Company shipped 1.2 million total orders in the fourth quarter of 2012, up 21% year-over-year.

Average Order Value: The Company's AOV from its website was $75.03, a 3% year-over-year increase. Total AOV for the fourth quarter of 2012 was $71.17, an increase of 4% year-over-year.

Gross Margin: Gross margin was 22.6% in the fourth quarter of 2012, compared to 23.2% in the fourth quarter of 2011.

Fulfillment Expense: As a percentage of sales, fulfillment expense was 10.4% for the fourth quarter of 2012 compared to 9.9% in the fourth quarter of 2011. Excluding fees related to the Company's current freight savings program, which is expected to expire in mid-2014, fulfillment expense as a percentage of sales was 9.5% in the fourth quarter of 2012 compared to 9.0% of sales in the fourth quarter of 2011. Fulfillment expense on a per order shipped basis increased 9% year-over-year, excluding fees related to the Company's freight savings program.

Sales & Marketing Expense: Sales and marketing expense was $7.2 million or 8.4% of sales in the fourth quarter of 2012, compared to $6.1 million or 9.0% of sales in the fourth quarter of 2011.   

Balance Sheet: The Company had cash and cash equivalents of $32.2 million as of December 31, 2012, an increase of $19.2 million from December 31, 2011.

E-Commerce Metrics

A copy of historical e-commerce metrics is available on the Company's website at

Conference Call Information

The Company will host a conference call to discuss these results and will provide additional comments and details at that time. Participating on the call will be Jeff Horowitz, the Company's Chief Executive Officer and Brian Helman, the Company's Chief Financial Officer.

The conference call is scheduled to begin today at 10:00 a.m. EST. The call will be broadcast live over the Internet hosted on the Investor Relations section of's website at, and will be archived online through March 14, 2013. In addition, you may dial (877) 705-6003 to listen to the live broadcast.

A telephonic playback will be available from 1:00 p.m. EST, February 28, 2013, through March 14, 2013. Participants can dial (877) 870-5176 to hear the playback. The pass code is 409321.

About, Inc., Inc. (Nasdaq:VITC) is a leading online retailer of health and wellness products, including dietary supplements such as vitamins, minerals, herbs and other botanicals, amino acids and metabolites, as well as cosmetics, organic body and personal care products, pet products, sports nutrition and health foods., Inc. sells these products directly to consumers through its website,, Inc. strives to offer its customers the broadest selection of healthy living products, while providing superior customer service and timely and accurate delivery.

Forward-Looking Statements

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made herein, which include statements regarding the Company's future growth prospects, the Company's customer acquisition strategy and expectations regarding the pace of customer and product growth, the Company's plans with respect to new product introductions and mix, the Company's expectations relating to fulfillment expenses, and the Company's expectations regarding improved operating efficiencies, involve known and unknown risks and uncertainties, which may cause the Company's actual results in current or future periods to differ materially from those anticipated or projected herein. Those risks and uncertainties include, among other things, significant competition in the Company's industry; unfavorable publicity or consumer perception of the Company's products on the Internet; the incurrence of material product liability and product recall costs; costs of compliance and the Company's failure to comply with government regulations; inability to defend intellectual property claims; the Company's failure to keep pace with the demands of customers for new products; the current global economic climate; disruptions in the Company's information technology systems, and the lack of long-term experience with human consumption of some of the Company's products with innovative ingredients. Those and other risks are more fully described in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K for the full year ended December 31, 2012 and in the Company's subsequent filings with the Securities and Exchange Commission made prior to or after the date hereof.

Discussion of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), uses the non-GAAP measure of adjusted EBITDA, defined as earnings before interest, taxes, depreciation, and amortization of intangible assets. To adjust for the impact of certain matters in 2011 and 2012, the Company has further adjusted its EBITDA calculation to exclude the impact of stock-based compensation expense and expenses from certain legal actions, settlements and related costs, severance costs, and certain other charges and credits. These non-GAAP measures are provided to enhance the user's overall understanding of the Company's current financial performance. Management believes that adjusted EBITDA provides useful information to the Company and to investors by excluding certain items that may not be indicative of the Company's core operating results. However, adjusted EBITDA should not be considered in isolation, or as a substitute for, or as superior to, net income/loss, cash flows, or other consolidated income/loss or cash flow data prepared in accordance with GAAP, or as a measure of the Company's profitability or liquidity. Although adjusted EBITDA is frequently used as a measure of operating performance, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. Operating income (loss) is the closest financial measure prepared by the Company in accordance with GAAP in terms of comparability to adjusted EBITDA. Attached at the end of this release is a reconciliation of reported operating income (loss) determined under GAAP to the presentation of adjusted EBITDA., Inc.
Consolidated Balance Sheets
(In thousands, except par value)
 As of
AssetsDecember 31, 2012December 31, 2011
Current Assets  
Cash and cash equivalents $ 32,152 $ 12,939
Accounts receivable, net 2,613 2,169
Inventory 33,319 34,822
Prepaid expenses 1,270 1,912
Other receivables 2,054 264
Other assets 93 2,344
Total current assets 71,501 54,450
Property and equipment, net 33,491 33,629
Restricted cash 225 225
Deposits 246 125
Goodwill 2,200 2,200
  2,671 2,550
 Total assets $ 107,663 $ 90,629
Liability and Stockholders' Equity  
Current Liabilities  
Accounts payable 28,696 30,250
Deferred revenue 5,414 4,573
Accrued expenses 6,545 6,425
Total current liabilities 40,655 41,248
Deferred tax liability 350 574
Total liabilities $ 41,005 $ 41,822
Commitments and Contingencies  
Stockholders' Equity  
Preferred stock, par value $.00001 per share; authorized 25,000;  
no shares issued and outstanding --  -- 
Common stock, par value $.00001 per share; authorized 100,000;  
33,500 and 27,975 shares issued and outstanding at  December 31, 2012, and December 31, 2011, respectively --  -- 
Additional paid-in capital 109,022 76,262
Warrants 4,262 -- 
Accumulated deficit (46,626) (27,455)
Total stockholders' equity 66,658 48,807
Total liabilities and stockholders' equity $ 107,663 $ 90,629, Inc.
Condensed Consolidated Statements of Operations 
(In thousands, except per share)
 Three Months Ended
 December 31, 2012December 31, 2011
 As  Excluding As  Excluding 
Net Sales $84,992  $84,992 $67,414  $67,414
Cost of Goods Sold 65,744  65,744 51,759  51,759
Gross Profit 19,248  19,248 15,655  15,655
Fulfillment 8,812  8,812 6,651  6,651
Sales & Marketing 7,153  7,153 6,074  6,074
General & Administrative  6,467  6,467 6,495 357 6,139
Total Operating Expenses 22,432  22,432 19,221  18,864
Operating Loss (3,184)  (3,184) (3,566)  (3,209)
Other Income  24  24 11  11
Loss Before Income Taxes (3,160)  (3,160) (3,555)  (3,199)
Income Tax Expense (13) --  (13) (13) --  (13)
Net Loss ($3,173)  ($3,173) ($3,568)  ($3,212)
Basic ($0.09)  ($0.09) ($0.13)  ($0.12)
Fully Diluted ($0.09)  ($0.09) ($0.13)  ($0.12)
Basic Shares Outstanding 33,450  33,450 27,900  27,900
Fully Diluted Shares Outstanding* 33,450  33,450 27,900  27,900
*The inclusion of common stock equivalents in the calculation of diluted earnings per share during the periods was anti-dilutive, Inc.
Condensed Consolidated Statements of Operations 
(In thousands, except per share)
 Year Ended
 December 31, 2012December 30, 2011
 As  Excluding As  Excluding 
Net Sales $330,680  $330,680 $260,523  $260,523
Cost of Goods Sold 254,527 102 254,425 200,596 (454) 201,050
Gross Profit 76,153  76,255 59,927  59,473
Fulfillment 33,505  33,505 22,290 94 22,196
Sales & Marketing 32,306  32,306 22,842 892 21,950
General & Administrative  29,614 480 29,134 29,620 2,893 26,727
Total Operating Expenses 95,425  94,945 74,752  70,873
Operating Loss (19,272)  (18,690) (14,825)  (11,400)
Other Income  154  154 47  47
Loss Before Income Taxes (19,118)  (18,536) (14,778)  (11,353)
Income Tax Expense (53)  (53) (53)  (53)
Net Loss ($19,171)  ($18,589) ($14,831)  ($11,406)
Basic ($0.59)  ($0.57) ($0.53)  ($0.41)
Fully Diluted ($0.59)  ($0.57) ($0.53)  ($0.41)
Basic Shares Outstanding 32,675  32,675 27,830  27,830
Fully Diluted Shares Outstanding* 32,675  32,675 27,830  27,830
*The inclusion of common stock equivalents in the calculation of diluted earnings per share during the periods was anti-dilutive - Revenue by Product Line 
($ in 000s) 
 Three Months Ended December 31,
Third-party products  $ 64,497 $ 50,688
Proprietary products 17,484 14,323
Freight 3,011 2,403
Net sales $ 84,992 $ 67,414
 Year Ended December 31,
Third-party products  $ 245,800 $ 190,542
Proprietary products 72,335 60,973
Freight 12,545 9,008
Net sales $ 330,680 $ 260,523
Adjusted EBITDA Calculation ($ in 000s)
 Three Months Ended December 31,
Reported operating loss ($3,184) ($3,566)
Depreciation and amortization 1,708 1,605
Stock-based compensation expense 475 (104)
- Severance/recruiting for executives --  357
Adjusted EBITDA ($1,001)($1,709)
 Year Ended December 31,
Reported operating loss ($19,272) ($14,825)
Depreciation and amortization 6,473 6,174
Stock-based compensation expense 1,999 1,008
- Loss on sale of inventory for manufacturing divestiture 102 
- Severance/recruiting for executives 473 1,482
- Financing fees 161 
- Credit from shipping provider  (454)
- Additional legal/consulting expenses  (153) 2,398
Adjusted EBITDA ($10,217)($4,217)
CONTACT: Investor Contact:
         Kathleen Reed
         Director of Investor Relations
         ICR, Inc.
         Katie Turner
         Managing Director