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HealthWarehouse.com Reports 3Q and Year-to-Date 2017 Results

Online pharmacy net sales grew $1.2 million or 45%, 3Q 2017 versus 3Q 2016

CINCINNATI--(BUSINESS WIRE)-- HealthWarehouse.com, Inc. (OTC: HEWA) announced today that its net sales for the third quarter ended September 30, 2017 increased 45% to $3.9 million on a 50% increase in total orders shipped, compared with the same period in 2016.

The Company reported net income of $60,504 for the third quarter this year, compared with a net loss of $978,141 in the third quarter of 2016.

For the nine months ended September 30, 2017, net sales increased 50% to $11.2 million versus the same 2016 period, as total orders shipped increased 53%. Nine-months net income was $547,653 in 2017, compared with a year-earlier net loss of $1,311,259.

HealthWarehouse.com is a Verified Internet Pharmacy Practice Sites (VIPPS) accredited online and mail-order pharmacy licensed and/or authorized to sell and deliver prescriptions to all 50 states. The Company attributed its 2017 sales performance to growth in core consumer prescription and over-the-counter sales along with strong customer retention and acquisition.

“We started our year with strong performance, and are excited to see that momentum carry into the third quarter,” said Joseph Peters, the Company’s Interim President and CEO. “Our team consistently provides excellent pharmacy experiences through compassion, convenience, and transparency. Our increase in sales and customer retention can be attributed to our team’s commitment to providing the highest level of quality and customer care possible. We also launched a line of over-the-counter products on Amazon Marketplace which has resulted in an increase in new customers. Looking forward, we will focus on increasing our daily prescription capacity, growing our customer base, and helping more people save time and money on purchasing their prescription and over-the-counter medications. We are also working on initiatives to raise additional equity capital and reduce debt.”

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, as adjusted) was $187,436 for the third quarter this year, up from negative $13,105 in the third quarter of 2016. Adjusted EBITDA was $905,820 for the first nine months of 2017, compared with negative $91,959 for the same 2016 period. Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of Adjusted EBITDA to the Company’s GAAP net income is provided below.

2017 Overview

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 Change 2017 2016 Change
Core Consumer Pharmaceuticals
Net Sales $ 2,733,690 $ 2,127,145 28.5% $ 8,223,530 $ 5,722,165 43.7%
Shipments 69,512 54,714 27.0% 205,910 145,053 42.0%
Over-the-Counter Products
Net Sales $ 1,057,684 $ 481,503 119.7% $ 2,573,905 $ 1,432,432 79.7%
Shipments 36,074 15,861 127.4% 89,306 47,993 86.1%

Net Sales: Core consumer prescription sales remain the Company’s largest volume business, but sales of over-the-counter products are growing very rapidly, and more than doubled in the third quarter versus the prior year.

Consumer prescription sales increased 29% to $2,733,690 on a 27% shipment volume increase for the third quarter. Sales of the same products were up 44% to $8,236,530, on a 42% shipment volume increase through nine months.

Third-quarter over-the-counter product net sales grew 120% to $1,057,684 on a 127% increase in shipment volume. Through nine months, over-the-counter net sales increased 80% to $2,573,905, as shipment volume increased 86%.

Gross Profit: Gross profit continues to increase this year due to sales growth and improved procurement practices. Gross profit for the third quarter increased 41% to $2,528,619, and increased 55% to $7,407,088 through nine months.

SG&A Expenses: SG&A expenses for the third quarter were down 10% to $2,446,157 versus than a year ago, but up 13% to $6,785,471 for the nine-month period. The year-to-date increases were in advertising to support revenue growth and volume-related expenses such as increased staffing, freight costs and payment processing fees, and in legal costs. These increases were partially offset by lower costs resulting from improved fulfillment procedures and cost controls. Third-quarter 2016 SG&A expenses included $788,303 of proxy solicitation and severance costs.

About HealthWarehouse.com

HealthWarehouse.com, Inc. (OTC: HEWA) is an online pharmacy based in Florence, Kentucky, licensed and/or authorized to sell and deliver prescriptions in all 50 United States and the District of Columbia focusing on the out-of-pocket prescription drug market, a market that is expected to continue to grow. The Company sells directly to individual consumers who purchase prescription medications and OTC products over the Internet. HealthWarehouse.com is currently one of 55 Verified Internet Pharmacy Practice Websites (“VIPPS”) accredited by the National Association of Boards of Pharmacy (“NABP”). Visit HealthWarehouse.com online at http://www.HealthWarehouse.com.

Forward-Looking Statements

This announcement and the information incorporated by reference herein contain “forward looking statements” as defined in federal securities laws including but not limited to Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, which statements are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in forward looking statements or in management's expectations. Important factors which could cause or contribute to actual results being materially and adversely different from those described or implied by forward looking statements include, among others, risks related to competition, management of growth, access to sufficient capital to fund our business and our growth, new products, services and technologies, potential fluctuations in operating results, international expansion, outcomes of legal proceedings and claims, fulfillment center optimization, seasonality, commercial agreements, acquisitions and strategic transactions, foreign exchange rates, system interruption, cyber-attacks, access to sufficient inventory, government regulation and taxation, payments and fraud.

HEALTHWAREHOUSE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net sales $ 3,932,446 $ 2,716,982 $ 11,214,751 $ 7,468,754
Cost of sales 1,403,827 928,342 3,807,663 2,678,998
Gross profit 2,528,619 1,788,640 7,407,088 4,789,756
Selling, general and administrative expenses 2,446,157 2,728,240 6,785,471 6,009,026
Net income (loss) from operations 82,462 (939,600 ) 621,617 (1,219,270 )
Interest expense 21,958 38,541 73,964 91,989
Net income (loss) 60,504 (978,141 ) 547,653 (1,311,259 )
Preferred shares - Series B convertible dividends (73,582 ) (85,559 ) (256,675 ) (256,675 )
Net income (loss) attributable to
common stockholders $ (13,078 ) $ (1,063,700 ) $ 290,978 $ (1,567,934 )
Basic earnings (loss) per common share $ 0.00 $ (0.03 ) $ 0.01 $ (0.04 )
Diluted earnings (loss) per common share $ 0.00 $ (0.03 ) $ 0.01 $ (0.04 )
Weighted average common shares outstanding - basic 45,711,118 38,789,595 44,630,004 40,994,678
Weighted average common shares outstanding - diluted 45,711,118 38,789,595 51,280,117 40,994,678

Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP and Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income ( loss) $ 60,504 $ (978,141 ) $ 547,653 $ (1,311,259 )
Non-GAAP adjustments:
Interest expense 21,958 38,541 73,964 91,989
Depreciation and amortization 17,969 36,771 60,708 125,148
EBITDA 100,431 (902,829 ) 682,325 (1,094,122 )
Stock-based compensation 87,005 101,421 223,495 213,860
Proxy solicitation costs - 548,303 - 548,303
Severance - 240,000 - 240,000
Adjusted EBITDA $ 187,436 $ (13,105 ) $ 905,820 $ (91,959 )

Use of Non-GAAP Financial Measures

HealthWarehouse.com, Inc. (the "Company") prepares its consolidated financial statements in accordance with the United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding Adjusted EBITDA, which it defines as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) minus adjustments representing the value of stock issued for services and certain other nonrecurring charges. Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, Adjusted EBITDA is used internally in planning and evaluating the Company`s performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other shareholders an additional view of the Company’s operations that, when coupled with the GAAP results, provides a more complete understanding of the Company’s financial results.

Adjusted EBITDA should not be considered as an alternative to net loss or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the Company’s performance.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171107006850/en/

HealthWarehouse.com, Inc.
Joseph Peters, (800) 748-7001

Source: HealthWarehouse.com, Inc.