HealthWarehouse.com Reports Results for Third Quarter 2020

Elects New Board Member; Receives BBB Torch Award for Marketplace Ethics

CINCINNATI--()--HealthWarehouse.com, Inc. (OTC: HEWA) announced today that its net sales for the third quarter of 2020 were $4,004,462. It reported a loss from operations of $15,693 for the quarter but positive cash flow, as reflected by its internal measure of Adjusted EBITDA as defined below, which was $188,631 in the third quarter.

HealthWarehouse.com is an online mail-order pharmacy authorized to sell and deliver prescription medications to all 50 states and is one of the first accredited digital pharmacies approved by the National Association of Boards of Pharmacy (NABP).

Shareholders of the Company elected a new independent director, Sara Mannix, to the Board of Directors at their virtual annual meeting held on October 7, 2020. Mannix is CEO of Mannix Marketing, a digital marketing and search engine optimization company. In addition, the Shareholders reelected the three existing Board Members and the Series B preferred director and approved a number of proposals including the increase in the number of authorized common shares, a 50-to-1 reverse split of the common shares, and increased the awards available under the 2014 equity incentive plan.

Joseph Peters, President and CEO of HealthWarehouse.com, said, “We are happy to have Sara on the Board, and look forward to her valuable contributions as we evaluate and implement an strategy to position the Company for future sales growth amidst the changing landscape in marketing and advertising during the pandemic.”

The Company also announced an agreement with the holders of its Series C Preferred stock, who retracted a previous notice of redemption and agreed to terms to convert their positions to common shares. The new agreement will enable the Company to continue the improvement to its balance sheet and capital structure.

HealthWarehouse.com was recently named a 2020 Torch Award winner by the Better Business Bureau. The award honors companies for the strength of their commitment to exceptional ethical business practices.

Our mission is to provide affordable healthcare through honesty and compassion. Receiving this award is an honor, and a testament to the drive and dedication of our incredible team at HealthWarehouse.com,” Peters added.

Healthwarehouse.com is an essential business and continues to operate during the pandemic. Over sixty percent of its 110 employees work remotely; a dedicated fulfillment team continues to operate on-site.

We continue to adjust operations and be as agile as possible in our procedures in the ever-changing landscape the pandemic has brought us,” Peters added. “The HealthWarehouse.com team has done an incredible job in remaining dedicated to our mission. Everyone on-site and off-site has risen to the challenge and continues to provide the excellent pharmacy services that our patients have come to know and love.”

2020 Overview:

Net Sales: Total net sales for the three and nine months ended September 30, 2020 were $4,004,462 and $13,089,244, respectively, a decrease of $31,014 (1%) and an increase of $1,204,080 (10%), respectively, over the same periods in 2019. Prescription sales including fulfillment were $3,223,364 and $10,018,051, respectively, for the three and nine months ended September 30, 2020; they represent increases of $3,961 and $641,769 (7%), respectively, over the same periods in 2019. Over-the-counter sales were $689,564 and $2,727,382, respectively, for the three and nine months ended September 30, 2020, a decrease of $46,468 (6%) and an increase of $450,268 (20%), respectively, over the same periods in 2019. The year-to-date revenue increase was due to increased order volumes resulting from higher levels of website traffic and conversions, increased third-party fulfillment revenues, and customer retention efforts.

Gross Profit: Gross profit for the three and nine months ended September 30, 2020, was $2,761,159 and $8,633,926, respectively, resulting in increases of $115,401 and $796,156, respectively, compared with results for the same periods of 2019. The increases were the result of higher sales volume and purchasing initiatives with our vendors.

Operating Expenses: Selling, general and administrative expenses were $2,731,321 and $8,651,345, respectively, for the three and nine months ended September 30, 2020, and increases of $142,027 (5%) and $926,567 (12%), respectively, compared to the same periods of 2019. The increases were primarily from higher variable expenses, including advertising, marketing, shipping, supplies and payment processing expenses, as well as salary expense related to engineering staff expansion and hero bonuses paid to all employees.

Net Income and Adjusted EBITDA: The Company reported net losses of $15,693 and $177,420, respectively, for the three and nine months ended September 30, 2020, compared with net losses of $4,830 and $83,201, respectively, for the same periods in 2019.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”), as adjusted for stock-based compensation and certain non-recurring charges (“Adjusted EBITDA”), were $188,631 for the three months and $450,680 for the nine months ended June 30, 2020. That compares with Adjusted EBITDA of $199,500 and $563,032, respectively, for the three and nine months ended June 30, 2019. EBITDA and Adjusted EBITDA are non-GAAP financial measures. Definitions of these non-GAAP terms and a reconciliation to GAAP measures are provided below.

HEALTHWAREHOUSE.COM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

For the Three Months Ended

 

For the Nine Months Ended

September 30,

 

September 30,

2020

 

2019

 

2020

 

2019

 
Net sales

$

4,004,462

 

$

4,035,476

 

$

13,089,244

 

$

11,885,164

 

 
Cost of sales

 

1,243,303

 

 

1,389,718

 

 

4,455,318

 

 

4,047,393

 

 
Gross profit

 

2,761,159

 

 

2,645,758

 

 

8,633,926

 

 

7,837,771

 

 
Selling, general and administrative expenses

 

2,731,321

 

 

2,589,294

 

 

8,651,345

 

 

7,724,778

 

 
Net income (loss) from operations

 

29,838

 

 

56,464

 

 

(17,419

)

 

112,993

 

 
Interest expense

 

(45,530

)

 

(61,294

)

 

(160,001

)

 

(196,194

)

 

-

 

 

-

 

 

-

 

 

-

 

Net loss

 

(15,692

)

 

(4,830

)

 

(177,420

)

 

(83,201

)

 
Preferred stock:
Series B convertible contractual dividends

 

(85,559

)

 

(85,559

)

 

(256,675

)

 

(256,675

)

 
Net loss attributable to common stockholders

$

(101,251

)

$

(90,389

)

$

(434,095

)

$

(339,876

)

 
Per share data:
Net loss - basic and diluted

$

(0.00

)

$

(0.00

)

$

(0.00

)

$

(0.00

)

Series B convertible contractual dividends

$

(0.00

)

$

(0.00

)

$

(0.01

)

$

(0.01

)

 
Net loss attributable to common stockholders - basic and diluted $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.01 )
 
Weighted average common shares outstanding - Basic and diluted

 

50,851,971

 

 

50,041,900

 

 

50,761,665

 

 

49,797,154

 

 

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 EBITDA and Adjusted EBITDA, which are commonly used. In addition to adjusting net loss to exclude interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA also excludes stock-based compensation, and certain nonrecurring charges. EBITDA and Adjusted EBITDA are not measures 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 lenders and other shareholders an additional view of the Company’s operations that, when coupled with 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.

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

 

Three Months Ended

 

 

Nine Months Ended

September 30,

 

 

September 30,

(Unaudited)

2020

 

2019

 

 

2020

 

2019

 
Net loss

$

(15,693

)

$

(4,830

)

$

(177,420

)

$

(83,201

)

Interest expense

 

45,530

 

 

61,294

 

 

160,001

 

 

196,194

 

Depreciation and amortization

 

33,319

 

 

42,800

 

 

100,282

 

 

128,337

 

EBITDA (non-GAAP)

 

63,156

 

 

99,264

 

 

82,863

 

 

241,330

 

Adjustments to EBITDA:
Stock-based compensation

 

125,475

 

 

100,236

 

 

367,817

 

 

321,702

 

 
Adjusted EBITDA

$

188,631

 

$

199,500

 

$

450,680

 

$

563,032

 

 

About HealthWarehouse.com

HealthWarehouse.com, Inc. (OTC Pink: HEWA) is America's Leading Online Pharmacy and a pioneer in affordable healthcare. Based in Florence, Kentucky, the Company's services are available nationwide, shipping FDA approved prescription medication and over-the-counter products direct to patients' doors. As one of the first National Association of Boards of Pharmacy (“NABP”) Accredited Digital Pharmacies, HealthWarehouse.com services the mission of providing affordable healthcare and incredible patient services to help Americans in all 50 states. Learn more at www.HealthWarehouse.com.

Forward-Looking Statements

This announcement and the information incorporated by reference herein contain “forward­looking 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. More information about factors that potentially could affect HealthWarehouse.com's financial results is included in HealthWarehouse.com's audited Annual Reports and Quarterly Reports available at otcmarkets.com for periods since 2016, and its filings for prior periods with the Securities and Exchange Commission.

Contacts

Joseph Peters, (800) 748-7001

Contacts

Joseph Peters, (800) 748-7001