HealthCentral.com Agrees to Acquire DrugEmporium.com 

HealthCentral.com has agreed to acquire the assets of DrugEmporium.com, the Internet subsidiary of Drug Emporium, Inc..

DrugEmporium.com is a full-service online drugstore and pharmacy licensed to fill prescriptions in all 50 states of the USA. 

Drug Emporium, Inc. will receive preferred stock from HealthCentral.com convertible into 2.4 million common shares, and the opportunity to earn additional amounts of convertible preferred stock if certain revenue targets from additional sources of revenue are met. HealthCentral.com will assume certain liabilities of DrugEmporium.com, primarily made up of certain trade accounts payable and certain hardware/software leases. 

Assets acquired by HealthCentral.com include the DrugEmporium.com website with all related software and hardware, a leased 60,000 square foot distribution center and automated prescription fulfillment center, located in Louisville, Kentucky, and at least $3 million in inventory. The closing of the transaction, which is subject to compliance with applicable regulation requirements, is expected to occur before the end of the third quarter.

HealthCentral also will sign a 10-year Services Agreement with the parent company of DrugEmporium.com, Drug Emporium, Inc., which owns, operates or franchises 177 brick-and-mortar drugstores. This Services Agreement includes in-store promotional support at Drug Emporium's retail stores, inclusion of HealthCentral.com in Drug Emporium advertising materials, the option of in-store customer pick-up of prescriptions and other over-the-counter products ordered via HealthCentral.com e-commerce sites, access to the Drug Emporium electronic purchasing system, and the opportunity to take advantage of other synergies with Drug Emporium, Inc.

HealthCentral.com expects that this acquisition will accelerate its path to profitability by reducing its cash burn. Management believes that the group purchasing power of Drug Emporium will result in lower product costs, in addition to other cost-reducing synergies.

DrugEmporium.com was the first online drugstore when it debuted in 1997. The company currently sells more than 25,000 items, including prescription and non-prescription medications, nutrition and wellness products, cosmetics, health and beauty items, and household necessities. 

DrugEmporium.com has grown rapidly since its relaunch in August 1999. The company recently reported sales of $1.2 million for the quarter ending May 27, 2000, a 32% increase over the previous quarter. Prescription orders nearly tripled during the same period, which was the first full quarter of operation for the new, state-of-the-art DrugEmporium.com pharmacy fulfillment center in Louisville, Kentucky being acquired by HealthCentral.com.

"This will allow us to consolidate our shipping into one location licensed to fill prescriptions in all 50 states. Drug Emporium has a superior software system already in place. It is a great advantage to have our own facility. Not only will we be able to give our current customers better service, but we can leverage the buying power of Drug Emporium,'' said Fred Toney, Executive Vice President and Chief Financial Officer of HealthCentral.com.

07/25/00 SOURCE: HealthCentral.com