PetMed Express D/B/A 1-800-PETMEDS Announces First Quarter Financial Results

POMPANO BEACH, Fla.--(BUSINESS WIRE)--PetMed Express, Inc. (NASDAQ:PETS) today announced its financial results for the quarter ended June 30, 2008. Net income was $6.6 million, or $0.28 diluted per share, for the quarter ended June 30, 2008, compared to net income of $6.2 million, or $0.25 diluted per share, for the quarter ended June 30, 2007, a 10% increase to EPS. Net sales for the quarter ended June 30, 2008 were $68.4 million, compared to $59.0 million for the quarter ended June 30, 2007, an increase of 16%. New order sales increased by 17%, from $19.0 million to $22.1 million for the quarters ended June 30, 2007 and 2008, respectively.

Menderes Akdag, CEO and President, commented: “We are pleased to report a 17% increase in new order sales and that we acquired approximately 267,000 new customers in our first fiscal quarter compared to 236,000 for the same quarter in the prior year. We are also pleased to report that our reorder sales increased by 16%, to $46.2 million for the quarter ended June 30, 2008, compared to $40.0 million for the same quarter in the prior year. Our continuing focus will be on capturing additional market share, and improving reorders and our customer service levels in fiscal 2009. Additionally, the Company repurchased approximately 93,000 shares of its outstanding common stock for approximately $1,087,000 during the first quarter of fiscal 2009.”

This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter’s financial results. To access the call, which is open to the public, please dial (888) 455-1758 (toll free) or (210) 234-0009. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10:00 A.M. on July 21, 2008 until August 4, 2008 at 11:59 P.M. To access the replay, call (866) 491-2943 (toll free) or (203) 369-1729, and enter passcode 5500.

Founded in 1996, PetMed Express is America’s Largest Pet Pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats, and horses at competitive prices direct to the consumer through its 1-800-PetMeds toll free number and on the Internet through its website at www.1800petmeds.com.

This press release may contain “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, that involve a number of risks and uncertainties, including the Company’s ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such “forward-looking” statements are set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the PetMed Express Annual Report on Form 10-K for the year ended March 31, 2008. The Company’s future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Q and its Annual Report on Form 10-K.

For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995.

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
			June 30, 2008				March 31, 2008
			(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents		$	38,592,784			$	20,267,829
Temporary investments			2,025,000				4,780,000
Accounts receivable, less allowance for doubtful accounts of $61,930 and $32,040, respectively
			3,045,816				1,575,263
Inventories - finished goods			24,753,310				17,909,549
Prepaid expenses and other current assets			987,665				691,859
Total current assets			69,404,575				45,224,500
Long term investments			14,875,000				24,740,000
Property and equipment, net			1,960,433				1,903,294
Deferred income taxes			1,269,027				1,221,853
Intangible asset			365,000				365,000
Total assets		$	87,874,035			$	73,454,647
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	8,786,065			$	4,358,774
Income taxes payable			3,585,635				185,243
Accrued expenses and other current liabilities			2,250,042				1,876,655
Total liabilities			14,621,742				6,420,672
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,500 convertible shares issued and outstanding with a liquidation preference of $4 per share			8,898				8,898
Common stock, $.001 par value, 40,000,000 shares authorized; 23,724,240 and 23,734,067 shares issued, respectively			23,724				23,734
Additional paid-in capital			8,517,554				8,396,277
Retained earnings			65,260,552				58,639,343
Less treasury stock, at cost; 44,815 and 3,100 shares, respectively			(558,435	)			(34,277	)
Total shareholders' equity			73,252,293				67,033,975
Total liabilities and shareholders' equity		$	87,874,035			$	73,454,647

PETMED EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
			Three Months Ended
			June 30,
			2008			2007
Sales		$	68,366,683		$	59,027,235
Cost of sales			42,576,381			36,331,851
Gross profit			25,790,302			22,695,384
Operating expenses:
General and administrative			5,812,214			5,615,466
Advertising			10,060,123			8,482,781
Depreciation and amortization			155,552			127,934
Total operating expenses			16,027,889			14,226,181
Income from operations			9,762,413			8,469,203
Other income (expense):
Interest income, net			309,315			392,202
Other, net			160,383			231,656
Total other income (expense)			469,698			623,858
Income before provision for income taxes			10,232,111			9,093,061
Provision for income taxes			3,610,902			2,909,977
Net income		$	6,621,209		$	6,183,084
Net income per common share:
Basic		$	0.28		$	0.26
Diluted		$	0.28		$	0.25
Weighted average number of common shares outstanding:
Basic			23,523,297			24,149,321
Diluted			23,671,933			24,336,100

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
			Three Months Ended June 30,
			2008				2007
Cash flows from operating activities:
Net income		$	6,621,209			$	6,183,084
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			155,552				127,934
Share based compensation			304,041				359,469
Deferred income taxes			(47,174	)			(242,327	)
Bad debt expense			43,986				24,820
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable			(1,514,539	)			(762,207	)
Inventories - finished goods			(6,843,761	)			411,356
Prepaid expenses and other current assets			(295,807	)			(140,383	)
Accounts payable			4,427,291				(134,859	)
Income taxes payable			3,400,392				2,640,941
Accrued expenses and other current liabilities			373,387				1,035,442
Net cash provided by operating activities			6,624,577				9,503,270
Cash flows from investing activities:
Net change in investments			12,620,000				(6,300,000	)
Purchases of property and equipment			(212,690	)			(255,958	)
Net cash provided by (used in) investing activities			12,407,310				(6,555,958	)
Cash flows from financing activities:
Purchases of treasury stock			(1,086,816	)			(1,512,254	)
Proceeds from the exercise of stock options			348,200				240,444
Tax benefit related to stock options exercised			31,684				8,365
Net cash used in financing activities			(706,932	)			(1,263,445	)
Net increase in cash and cash equivalents			18,324,955				1,683,867
Cash and cash equivalents, at beginning of period			20,267,829				316,470
Cash and cash equivalents, at end of period		$	38,592,784			$	2,000,337
Supplemental disclosure of cash flow information:
Cash paid for income taxes		$	226,000			$	503,000
Retirement of treasury stock		$	562,658			$	257,630