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Healthcare Corporation of America Announces $1,000,000 of New Financing

Date:  April 07, 2014

DENVILLE, N.J., April 7, 2014 /PRNewswire/Healthcare Corporation of America (OTCQB:HCCA) (the "Company") announced today the closing of $1,000,000 in new financing as well as plans to focus its activities in 2014 on providing comprehensive services related to two key business segments: Pharmacy Benefit Management (“PBM”) and 340B software solutions. 

The Company issued one year junior secured notes in the aggregate principal amount of $1,000,000 bearing interest at 8% per annum and warrants to purchase 2,000,000 shares of the Company’s common stock at an exercise price equal to the lowest of the equity price or equity conversion price in the Company’s next capital raise. The junior notes are convertible at a price and on terms identical to those in the Company’s next capital raise. The proceeds of the new financing will be used to fund general working capital purposes. The notes require that additional capital be raised in the near term so as to help ensure the Company’s continued operation and growth. The Company has filed a Form 8-K with the Securities and Exchange Commission that includes a detailed description of the new convertible notes. Access to the Current Report on Form 8-K can also be found on the SEC section of the Company’s website at www.hccarx.com .

The Company also announced that its focus on the PBM business segment will continue to be on the non-local government lines of the fixed rate market, as well as on expanding the Company’s efforts to attract self-insured clients. The Company will leverage its proprietary technologies, software, consulting services and in-house analytical expertise, together with its mail order pharmacy and high quality customer service.

Since launching its successful 340BasicsSM software solution and services program in the summer of 2013, the Company has entered into agreements with seven customers with first and second quarter 2014 go-live dates. The annual revenue run rate from these customers is estimated to be approximately $1 million. The Berkeley Research Group estimates that 340B drug purchases will grow from $6 billion in 2010 to an anticipated $12 billion by 2016, and the Company seeks to capitalize on this rapid expansion over the next few years.

The Company plans to market other value-added services for both business segments, building upon its unique clinical programs and analytical capabilities combining prescription utilization data with medical/lab informatics. In addition, the Company will offer audit services, specialty medication management and mail order prescription services to PBMs and other prospective clients.     

The Company has also decided to move away from the less profitable fixed rate local government line in the PBM business segment. This business line, which accounted for approximately 70% of the Company’s 2013 revenues generated considerable operating losses. It is anticipated that this line will decline over future months due to price increases the Company will be implementing effective on clients’ annual contract renewal dates. Management believes that this shift in emphasis within the PBM business segment will improve the Company’s profitability.

“I am very excited about the long term prospects of Healthcare Corporation of America” said Natasha Giordano, President and Chief Executive Officer, who joined the Company earlier this year. “We are an innovative PBM and 340B focused business with satisfied customers, great technology and extremely talented employees. We are fully committed to the exciting and broad PBM market and have developed the support of a number of strategic and influential partners, including third party administrators and health plans, who promote the Company as their preferred PBM.

“I am also very encouraged by the rapid growth and acceptance in the marketplace of our proprietary 340BasicsSM product. The 340B market includes thousands of federally qualified health centers and hospitals across the country, representing a large additional market opportunity for our Company. 

“Our 340BasicsSM software solution gives HCCA a distinct competitive advantage in the rapidly expanding 340B line of business by delivering real-time eligibility processing and 340B management services to help eligible covered entities including federally qualified health centers and hospitals, significantly improve their 340B capture rate and overall savings.  We plan to leverage this and our other newly refined products and client targeting strategies to enhance long term growth and profitability for the benefit of our clients and shareholders.”

About Healthcare Corporation of America

Based in Denville, N.J., Healthcare Corporation of America's (HCCAE) (www.hccarx.com) mission is to reduce prescription drug costs for clients while improving the quality of care for its members and their families. The Company is a proven industry leader that offers comprehensive Pharmacy Benefit Management (PBM) services to employers, unions, and third party administrators. The Company also provides innovative, proprietary 340BasicsSM software and turnkey solutions that enable real-time eligibility processing to help covered entities and hospitals improve their capture rate and manage all processes related to the Federal 340B Drug Discount Program. The Company’s deep industry expertise, unique clinical programs and innovative software and services facilitate our intensive auditing capabilities for both PBM and 340B programs for maximum financial savings, compliance, as well as improved quality of care for its clients and members.

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result  of various factors, including the risk that this new financing will be inadequate to ensure the continued operation and growth of the Company, the fact that the Company may be unable to raise additional working capital in the near term so as to allow for and support the Company’s continued operation, and those factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the company does not assume a duty to update these forward-looking statements.

​CONTACT: Yoram Bibring, Chief Financial Officer
Tel. 973 983 6300 

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