12% increase in revenues, and positive cash flow following software launch
HealthWarehouse.com, Inc. (OTCQB:HEWA) announced today its results of operations for the year ended December 31, 2023. The Company reported net sales for the year of $20.3 million, a 12% increase over the year ended December 31, 2022, resulting from 18% growth in direct-to-consumer and partner services prescription revenues, offset in part by a decline in over-the-counter product sales.
The Company reported a net loss of $1.8 million for the year and negative cash flow of $16,000, as reflected by its internal non-GAAP measure of Adjusted EBITDA as defined below. Positive cash flow of $175,000 from the second half of 2023 nearly offset negative cash flow of $190,000 during the first half of the year, which was negatively impacted by costs related to the launch of new software.
HealthWarehouse.com, a technology company with a focus on healthcare e-commerce, sells and delivers prescription and over-the-counter medications to all 50 states as an Approved Digital Pharmacy through the National Association of Boards of Pharmacy (NABP). HealthWarehouse.com provides a platform focused on increasing access to and reducing costs of healthcare products for consumers and business partners nationwide.
Joseph Peters, President and CEO, commented, “We are happy to report an increase in overall revenue as a result of growth in our prescription business units. Thanks to our wonderful team and their dedication to providing world-class service, we have successfully transitioned to our new pharmacy software in June, and in the fourth quarter returned to our standard of generating positive cash flow. We now have a scalable pharmacy platform to service more customers each year.”
HealthWarehouse.com continues to invest in proprietary technology to remain at the forefront of new developments and offerings in the world of healthcare, focusing on patient experience, operational efficiency, and scalability.
“With our upgrades in technology and infrastructure substantially completed, our efforts in 2024 are focused on improving the effectiveness of our operations, to grow our customer base and improve the customer experience we provide. Going into the new year, we are proud to announce record breaking processing times for our prescription customers,” added Peters.
Accolades continue to roll in for the company’s superior service. HealthWarehouse.com was named a top online pharmacy and featured partner by Forbes Health, placing first in the Forbes study among online pharmacies for its skill at filling multiple prescriptions in a single order.
The Company also announced that it will hold its Annual Meeting of Shareholders virtually on May 16, 2024. Shareholders of record as of April 8, 2024, will receive notice of the meeting and instructions for attending in the proxy materials to be distributed soon after the record date.
2023 Annual Overview
Net Sales: Net sales increased from $18.1 million for the year ended December 31, 2022, to $20.2 million for the year ended December 31, 2023, an increase of $2.1 million, or 11.8%. Prescription sales were $17.4 million for the year ended December 31, 2023, as compared with $14.7 million for the year ended December 31, 2022. The increase of $2.7 million, or 18.2%, was due to increases in order volume in partner services (B2B) and higher average sales per order in the direct-to-consumer (B2C) business, resulting from a higher volume of brand medication sales. Net sales of over-the-counter products decreased by 17.9% from $3.2 million in the year ended December 31, 2022, to $2.6 million in the year ended December 31, 2023, due to lower marketplace sales.
Gross Profit: Gross profit for the year ended December 31, 2023, was $12.2 million, an increase of $232,000, or 2.0%, compared with the same period in 2022, due to the increase in sales volume, partly offset by lower gross margins. Gross margin percentage decreased to 60.0% for the year ended December 31, 2023, from 65.8% for the year ended December 31, 2022. The primary factors of the decrease were lower B2C prescription margins due to more brand-name prescription drug sales and lower partner services (B2B) margins.
Operating Expenses: Selling, general and administrative expenses totaled $13.8 million for the year ended December 31, 2023, compared with $12.7 million for the year ended December 31, 2022, an increase of $1.1 million, or 8.4%. Expense increases included salaries, bad debt, shipping and shipping supplies, software and engineering, and non-cash expenses, including stock-based compensation, and depreciation and amortization expenses related to the new software and equipment installed during the year. The Company incurred additional salary and shipping expenses during the software transition in excess of $191,000 which negatively impacted the results. The increases were offset by a reduction in marketing and advertising expenses.
Net Income and Adjusted EBITDA: The Company reported a net loss of $1.8 million in 2023 compared to a net loss of $952,000 in 2022. Earnings before interest, taxes, depreciation and amortization (“EBITDA”), as adjusted for stock-based compensation and certain non-recurring charges (“Adjusted EBITDA”), were negative $16,000 for 2023 and positive $147,000 in 2022. EBITDA and Adjusted EBITDA are non-GAAP financial measures. Definitions of these non-GAAP terms and a reconciliation to GAAP measures are provided below.
2023 Fourth Quarter Overview
Net Sales: Total net sales were $4.9 million for the fourth quarter ended December 31, 2023, a decrease of $35,000, or 0.7%, compared with the fourth quarter of 2022. Prescription sales were $4.3 million for the fourth quarter, an increase of $423,000, or 10.9%, due to growth in both the B2C and B2B businesses. Over-the-counter sales declined by 47.3% to $522,000 due to reduced B2C marketplace sales offset by an increase in B2B over-the-counter product sales.
Gross Profit: Gross profit for the fourth quarter of 2023 was $3.0 million, a $84,000 or 2.8% decrease compared with the fourth quarter of 2022. Lower gross margins offset higher revenues in both the B2C and B2B prescription business, and lower B2C over-the-counter sales reduced gross profit. Gross margin was 60.1% in the fourth quarter of 2023 versus 61.4% in the same period in 2022. The decrease was due to lower margins on B2C and B2B prescription sales due to higher branded product sales.
Operating Expenses: Operating expenses were $3.6 million for the fourth quarter of 2023, an increase of $356,000, or 11.1%, compared with the same quarter in 2022. The increases in 2023 were related to increases in bad debt expense, salaries and non-cash expenses, including stock-based compensation, and depreciation and amortization expenses related to the new software and equipment. The increases were offset by a reduction in marketing and advertising, shipping and shipping supplies expenses. Bad debt expense of $428,000 resulted from the termination of a potential fourth quarter 2023 acquisition, and the subsequent bankruptcy filing of that company.
Net Income and (non-GAAP) Adjusted EBITDA: The Company reported a net loss of $649,000 for the fourth quarter of 2023, compared with a net loss of $219,000 during the same period in 2022. Adjusted EBITDA for the fourth quarter of 2023 was $121,000, compared with $56,000 in the fourth quarter of 2022.
HEALTHWAREHOUSE.COM, INC. AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (Audited) |
|||||||||||||||
|
|||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||||
| Dollars in thousands | |||||||||||||||
| Net sales | $ |
4,912 |
|
$ |
4,947 |
|
$ |
20,283 |
|
$ |
18,143 |
|
|||
| Cost of sales |
|
1,961 |
|
|
1,912 |
|
|
8,109 |
|
|
6,201 |
|
|||
| Gross profit |
|
2,951 |
|
|
3,035 |
|
|
12,174 |
|
|
11,942 |
|
|||
| Selling, general and administrative expenses |
|
3,567 |
|
|
3,211 |
|
|
13,796 |
|
|
12,726 |
|
|||
| Net loss from operations |
|
(616 |
) |
|
(176 |
) |
|
(1,622 |
) |
|
(784 |
) |
|||
| Interest expense |
|
(33 |
) |
|
(39 |
) |
|
(152 |
) |
|
(164 |
) |
|||
| Loss before taxes |
|
(649 |
) |
|
(215 |
) |
|
(1,774 |
) |
|
(948 |
) |
|||
| Income tax expense |
|
- |
|
|
(4 |
) |
|
- |
|
|
(4 |
) |
|||
| Net loss |
|
(649 |
) |
|
(219 |
) |
|
(1,774 |
) |
|
(952 |
) |
|||
| . | |||||||||||||||
| Preferred stock: | |||||||||||||||
| Series B convertible contractual dividends |
|
(86 |
) |
|
(86 |
) |
|
(342 |
) |
|
(342 |
) |
|||
| Net loss attributable to common stockholders | $ |
(735 |
) |
$ |
(305 |
) |
$ |
(2,116 |
) |
$ |
(1,294 |
) |
|||
| Per share data: | |||||||||||||||
| Net loss - basic and diluted | $ |
(0.01 |
) |
$ |
(0.00 |
) |
$ |
(0.03 |
) |
$ |
(0.01 |
) |
|||
| Series B convertible contractual dividends | $ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.01 |
) |
$ |
(0.01 |
) |
|||
| Net loss attributable to common stockholders - basic and diluted | $ |
(0.01 |
) |
$ |
(0.00 |
) |
$ |
(0.04 |
) |
$ |
(0.02 |
) |
|||
| Weighted average common shares outstanding - basic and diluted (In thousands) |
|
54,664 |
|
|
54,040 |
|
|
54,397 |
|
|
53,207 |
|
|||
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 income or 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 income, net loss or to net cash provided by or 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 Loss (GAAP) to Adjusted EBITDA (Non-GAAP)
Three Months Ended |
Twelve Months Ended | ||||||||||||||
December 31, |
December 31, | ||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Dollars in thousands |
|||||||||||||||
| Net income (loss) | $ |
(649 |
) |
$ |
(219 |
) |
$ |
(1,774 |
) |
$ |
(952 |
) |
|||
| Interest expense | 33 |
|
|
39 |
|
|
152 |
|
|
164 |
|
||||
| Depreciation and amortization | 79 |
|
|
38 |
|
|
254 |
|
|
139 |
|
||||
| EBITDA (non-GAAP) | (537 |
) |
|
(142 |
) |
|
(1,368 |
) |
|
(649 |
) |
||||
| Adjustments to EBITDA: | |||||||||||||||
| Stock-based compensation | 230 |
|
|
198 |
|
|
924 |
|
|
796 |
|
||||
| Bad debt expense | 428 |
|
|
- |
|
|
428 |
|
|
- |
|
||||
| Adjusted EBITDA | $ |
121 |
|
$ |
56 |
|
$ |
(16 |
) |
$ |
147 |
|
|||
About HealthWarehouse.com
HealthWarehouse.com, Inc. (OTCQB: HEWA), a technology company with a focus on healthcare e-commerce, sells and delivers prescription and over-the-counter medications to all 50 states as an Approved Digital Pharmacy through the National Association of Boards of Pharmacy (“NABP”). HealthWarehouse.com provides a platform focused on increasing access and reducing costs of healthcare products for consumers and business partners nationwide. Based in Florence, Kentucky, the Company operates America's Leading Online Pharmacy and is a pioneer in affordable healthcare. As one of the first National Association of Boards of Pharmacy Approved Digital Pharmacies, HealthWarehouse.com services the mission of providing affordable healthcare and incredible patient services to help Americans. Learn more at 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 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 and prior filings with the Securities and Exchange Commission.
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Contacts
Dan Seliga, Chief Financial Officer, (800) 748-7001
