By: Dylan Sikes - AllPennyStocks.com News

Thursday, April 2, 2015

As Gabriel Levitt highlights in the Congress Blog on The Hill website, there is debates in Washington over online pharmacies, more specifically, the “Safe and Affordable Drugs from Canada Act” introduced by Senators John McCain (R-AZ) and Amy Klobuchar (D-MN). In short, the bill’s purpose is to allow Americans to order medications from licensed Canadian pharmacies. Technically, Americans aren’t allowed to import medications for their own use, although the FDA has never prosecuted any of the five million citizens that the U.S. Centers for Disease Control and Prevention estimates do so annually. Florence, Kentucky-based HealthWarehouse.com, Inc. (OTCQB:HEWA) understandably doesn’t like the idea of the bill and in January penned letters to Senators McCain and Klobuchar, as well as to Kentucky Senators Paul Rand (R) and Mitch McConnel (R) and Ohio Congressman John Boehner (R), urging support of options in the U.S. rather than looking to Canada to provide lower cost medications.

HealthWarehouse.com touts itself as the largest VIPPS (Verified Internet Pharmacy Practice Sites) accredited online pharmacy in the United States. VIPPS accreditation is the answer to rogue online sites, requiring pharmacies to meet nationally endorsed standards of pharmacy practice, requirements specific to each state it services, compliance with standards of privacy, authentication and security of prescriptions and more. HealthWarehouse.com is licensed in all 50 states and sells a range of legal generic, branded, over-the-counter and pet prescription medications.

According to the company’s website, operating from its state-of-the-art facility just south of Cincinnati, Ohio, it can handle more than 5,000 prescriptions per day and currently services nearly half a million unique customers. The shelves in the 28,000 square foot warehouse have almost 1,500 different prescription drugs, which the company hopes to grow to more than 5,000 in the near future. For comparison, when Drugstore.com (and its other sites, Beauty.com and SkinStore.com) was bought by industry juggernaut Walgreens (NYSE:WAG) in 2011 for $409 million, Drugstore.com had over 3 million customers, more than 60,000 products and tallied $456 million in sales in 2010.

The online pharmacy business is highly competitive, to say the least, as the Affordable Care Act has led to millions of additional insured Americans and increased pressure on employers to contain costs, lending to more traffic at online pharmacies. This is, of course, against the backdrop of a booming e-commerce sector in general.

HealthWarehouse.com on Thursday issued press discussing its 2014 full-year financial results. Net sales fell 40.1% from $10.23 million in 2013 to $6.13 million last year, a decrease that the company attributed to shedding non-profitable business relations to focus on the higher margin out of pocket cash prescription market, which is expected to reach $80 billion in 2015. The company also cited cash constraints limiting advertising and inability “to maintain over-the-counter inventories to satisfy incoming orders” as impacting sales.

With the transition beginning, gross margin increased from 50.0% in 2013 to 59.3% in 2014. Selling, general and administrative expenses were also shaved by 28.9% to $5.37 million. Net loss for the year totaled $1.78 million compared to $5.49 million a year earlier.

Lalit Dhadphale, HealthWarehouse.com’s President and CEO was optimistic about the shift in strategy, saying in the announcement, “While this transition negatively impacted revenue growth, we continue to realize improved gross margins and operating efficiencies from the implementation of our 2013/2014 initiatives as operating losses continue to shrink. With these right-sizing measures in place and the completion of the capital raise ($1.65 million) in the second half of last year, we are turning our attention toward renewing revenue growth through new marketing initiatives and improved customer experience with improvements to our website.”

Mr. Dhadphale added the combination of improved margins and top line growth should align the company for profitability going forward.

In early trading activity on Thursday, no shares of HEWA have changed hands, leaving the stock where it ended on Wednesday at 9.3 cents, equating to a market capitalization of $3.49 million based upon 37.57 million shares outstanding.

Copyright © 2015 AllPennyStocks.com. All rights reserved. Republication or redistribution of AllPennyStocks.com's content is expressly prohibited without the prior written consent of AllPennyStocks.com. AllPennyStocks.com shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.