HealthWarehouse.com, Inc. (OTCQB:HEWA), the only VIPPS accredited online and mail-order pharmacy licensed in all 50 states, today announced financial results for the first quarter ended March 31, 2014.
For the three months ended March 31, 2014 net sales declined to $1,716,964, a 28.8% decrease from the comparable period in 2013. The Company's gross margin improved to 57.4%, up from 48.7%, while the net loss narrowed by 92.5%, to ($305,641) from ($4,078,366). For the first quarter of 2014, HEWA reported positive adjusted EBITDAS of $57,801, vs. negative ($273,776) in the first quarter of 2013. The Company believes that Adjusted EBITDAS (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation), a non-GAAP financial measure, is useful in evaluating its operating performance compared to that of other companies in our industry.
Mr. Lalit Dhadphale, HealthWarehouse.com's President and CEO, commented, "In order to position our company for sustainable and profitable growth, in 2013 we made the decision to focus our business on the cash pay prescription market and wind down non-profitable business relations. With the Affordable Care Act coming into effect, consumers are taking personal responsibility for their healthcare costs as co-pays and deductibles continue to rise. Combined with the brand to generic transformation, the opportunity in the cash prescription market has never been larger."
"While this has impacted our revenue growth in the short term, our gross margins continue to improve as we focus on higher margin business. As we reduce operating expenses to "right size" the business and put legacy legal issues and expenses behind us, we have been able to record two consecutive quarters of positive EBITDAS. We expect continued positive results throughout 2014."
Q1 2014 Details:
- Net Sales: Declined by 28.8% due to the planned reduction in lower-margin business-to-business sales and cash flow constraints. Due to cash flow constraints, the Company was unable to expand its advertising efforts to grow its core online prescription business and was not able to maintain over-the-counter inventories to satisfy incoming orders.
- Gross Margin. Increased from 48.7% to 57.4% due to the elimination of unprofitable business relations and the reduction of lower-margin business-to-business sales relative to total sales. Management will continue to focus efforts on promoting and offering its higher margin product lines as part of the narrowing of its product offering.
- SG&A Expenses: Declined by 49.0%, primarily due to decreased legal expenses, decreased options expense and stock based compensation and a reduction in salary and contract labor expense. HEWA expects that its SG&A expenses, specifically legal and professional fees, will continue to decrease over time as outstanding litigation is resolved and internal controls over financial reporting will reduce the reliance on outside consulting and accounting professionals. The Company also expects to continue to benefit from the significant reduction in salary and related expense in 2014.
- Net Loss: Declined by over 92% as a result of the increased profit margins and reduced operating expenses as detailed above.