Market Overview

HealthWarehouse.com Reports Full Year 2018 Results

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Core consumer prescription year-over-year net sales grow 16%;
Automation
investment leads to record service levels

HealthWarehouse.com, Inc. (OTC:HEWA) announced today that its net sales
for 2018 increased 6% to $15,748,162 compared to $14,847,262 in 2017.
The 2018 annual results benefited from a strong fourth quarter during
which net sales increased 18% to $4,301,612 in 2018 compared to
$3,632,511 during the same period in 2017.

HealthWarehouse.com is a Verified Internet Pharmacy Practice Sites
(VIPPS) accredited online and mail-order pharmacy authorized to sell and
deliver prescription medications to all 50 states. The Company
attributed its 2018 sales performance to growth in core consumer
prescription sales along with strong customer retention and acquisition.

Joseph Peters, the Company's President and CEO, said "2018 was a banner
year in a number of areas, including overall and core consumer
prescription revenues, prescription volumes, efficiency levels and
processing times. The sales growth was in part due to once again being
featured by a nationally recognized consumer magazine as the most
affordable option for consumers to purchase their prescription
medication. We continue to believe the article further validates our
direct-to-consumer cash business model. As a result of our sales growth,
along with improved efficiencies, we generated approximately $316,000 in
Adjusted EBITDA during the fourth quarter." (Adjusted EBITDA and EBITDA
are non-GAAP financial measures and a reconciliation to GAAP measures is
provided below.)

"Our investment in new automation equipment during the year began to
show its positive operational impact in the fourth quarter results
including increased throughput, improved quality control and operating
efficiencies resulting in lower fulfillment costs," Peters added. "Our
team remains dedicated to providing customers with excellent pharmacy
experiences through compassion, convenience and transparency.
Additionally, we continue to evaluate funding options to support an
expansion of our marketing campaigns, an upgrade of our pharmacy
software, and the refinancing of our current debt obligations."

"In wrapping up 2018, we conducted a Net Promoter Score survey to gauge
the loyalty of our customer relationships. As a result, we are proud to
announce a "world-class" Net Promoter Score of 77. Compared to the
industry average for Online Shopping (45) and Pharmacy (28), this score
highlights the success of our efforts to provide excellent pharmacy
experience. Our customers noted our service, pricing, convenience, and
ordering platform as key drivers for the score they gave us. As we look
to 2019, we plan to build on these strong results and provide an
improved customer experience by investing in pharmacy software and
platform development," Peters added.

2018 Annual Overview:

Net Sales: Total net sales were $15,748,162 for the year ended
December 31, 2018 compared to $14,847,262 in 2017, an increase of
$900,900 or 6%. Core consumer prescription sales were $12,545,097 for
the year ended December 31, 2018 as compared to $10,842,910 in 2017, an
increase of $1,702,187 or 16%. The growth in prescription sales has been
aided by increased consumer awareness partially a result of being
featured in a prominent national magazine and higher customer retention
due to improved processing and service levels. Over-the-counter net
sales declined by 21% to $2,707,461 as compared to $3,436,832 in 2017
due to new regulatory requirements implemented in the first quarter.

Gross Profit: Gross profit for the year ended December 31, 2018
was $10,221,297, a $383,698 or 4% increase over the 2017 year due to
sales growth.

Operating Expenses: Operating expenses were $10,768,867 for the
year ended December 31, 2018, an increase of $1,409,274 or 15% as
compared to 2017. The annual results in 2018 included a $170,000 charge
to write down certain fixed assets. Other increases in 2018 were related
to staffing, stock-based compensation, software engineering fees,
advertising, depreciation, freight and other volume-related expenses.
The increase in staffing was related to higher pharmacy staffing levels
during the first half of the year due to workflow changes in preparation
for the automation equipment, and additional customer support and
retention staffing.

Net Income and Adjusted EBITDA: The Company reported a net loss
of $817,054 for the year ended December 31, 2018, compared to net income
of $371,775 for the year ended December 31, 2017. In 2018, Adjusted
EBITDA was $380,428, versus $856,118 for the same period of 2017.

2018 Fourth Quarter Overview:

Net Sales: Total net sales were $4,301,612 for the quarter ended
December 31, 2018 compared to $3,632,511 in 2017, an increase of
$669,101 or 18%. Core consumer prescription sales were $3,378,308 for
the quarter ended December 31, 2018 as compared to $2,619,380 in 2017,
an increase of $758,928 or 29%. The growth in prescription sales during
the fourth quarter benefited from higher customer retention resulting
from better processing and service levels. Over-the-counter net sales
declined by 18% to $707,149 for the fourth quarter of 2018 as compared
to $862,927 in the same 2017 period, due the continued impact of new
regulatory requirements implemented earlier in 2018.

Gross Profit: Gross profit for the quarter ended December 31,
2018 was $2,790,774, a $360,264 or 15% increase over the 2017 fourth
quarter due to sales growth.

Operating Expenses: Operating expenses were $2,933,660 for the
quarter ended December 31, 2018, an increase of $359,538 or 14% as
compared to the same quarter in 2017. The quarterly results in 2018
included a $170,000 charge to write down certain fixed assets. Other
increases in 2018 were related to accounting services, staffing,
stock-based compensation, freight and other volume-related expenses. The
increase in staffing was related to additional customer support and
retention staffing, which was offset by lower pharmacy staffing
resulting from efficiency gains from the automation equipment.

Net Income and Adjusted EBITDA: The Company reported a net loss
of $215,964 for the fourth quarter of 2018 compared to a net loss of
$175,879 during the same period in 2017. For the fourth quarter,
Adjusted EBITDA was $315,716 in 2018 compared to $23,210 in 2017.

     
HEALTHWAREHOUSE.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
For the Three Months Ended For the Year Ended
December 31, December 31,
2018 2017 2018 2017
 
Net sales $ 4,301,612 $ 3,632,511 $ 15,748,162 $ 14,847,262
 
Cost of sales   1,510,838     1,202,001     5,526,865     5,009,663  
 
Gross profit 2,790,774 2,430,510 10,221,297 9,837,599
 
Operating expenses:

Selling, general and administrative expenses

2,763,660 2,574,122 10,598,867 9,359,593

Impairment of fixed assets

  170,000     -     170,000     -  

Total operating expenses

  2,933,660     2,574,122     10,768,867     9,359,593  
 
Net income (loss) from operations (142,886 ) (143,612 ) (547,570 ) 478,006
 
Interest expense   (73,078 )   (32,267 )   (269,484 )   (106,231 )
 
Net income (loss) (215,964 ) (175,879 ) (817,054 ) 371,775
 
Preferred stock:
Series B convertible contractual dividends   (85,558 )   (85,557 )   (342,233 )   (342,232 )
 
Net income (loss) attributable to common stockholders $ (301,522 ) $ (261,436 ) $ (1,159,287 ) $ 29,543  
 
Per share data:
Net income (loss) - basic $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.01
Net income (loss) - diluted $ (0.00 ) $ (0.00 ) $ (0.02 ) $ 0.01
Series B convertible contractual dividends $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.01 )
 
Net income (loss) attributable to common stockholders:
- basic $ (0.01 ) $ (0.01 ) $ (0.02 ) $ 0.00  
- diluted $ (0.01 ) $ (0.01 ) $ (0.02 ) $ 0.00  
 
Weighted average common shares outstanding:
- basic   48,889,100     46,950,787     48,695,935     45,214,968  
- diluted   48,889,100     46,950,787     48,695,935     51,880,200  
 
           

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

 
 
For the Three Months Ended For the Year Ended
December 31, December 31,
2018 2017 2018 2017
 
Net income (loss) $ (215,964 ) $ (175,879 ) $ (817,054 ) $ 371,775
Non-GAAP adjustments:
Interest expense 73,078 32,267 269,484 106,231
Depreciation and amortization 41,316 16,358 123,862 77,065
Stock-based compensation 247,286 127,581 626,329 351,076
Loss on disposition of equipment - - 7,807 -
Impairment of fixed assets 170,000 - 170,000 -

Gain on settlement of accounts payable and accrued expenses

- - - (139,479 )
Proxy solicitation costs - - - 37,113
Severance   -     22,883     -     52,337  
 
Adjusted EBITDA $ 315,716   $ 23,210   $ 380,428   $ 856,118  
 

About HealthWarehouse.com

HealthWarehouse.com, Inc. (OTC:HEWA) is a trusted VIPPS accredited
online pharmacy based in Florence, Kentucky. The Company is focused on
the out of pocket prescription market, which is expected to exceed $50
billion in 2019. With a mission to provide affordable healthcare to
every American by focusing on technology that is revolutionizing
prescription delivery, HealthWarehouse.com has become the largest VIPPS
accredited online pharmacy in the United States exclusively servicing
the cash market.

HealthWarehouse.com is licensed or authorized to ship prescription
medication to all 50 states and only sells drugs that are FDA-approved
and legal for sale in the United States. 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. 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.

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 is commonly used.
In addition to adjusting net loss to exclude interest, depreciation and
amortization, Adjusted EBITDA also excludes stock-based compensation,
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.

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