Hi there Ryan,
I appreciate you sharing your file with us. In your file, I noticed that the text entry field and the variable reference were on different slides.
After a bit of testing, I found that Storyline loses line breaks when the variable reference is on a different slide than the text entry field in the HTML5 output. Strange thing is, when the variable reference is on the same slide as the text entry field, everything works correctly. This screen recording explains it best.
We're going to keep looking into this behavior, and we'll keep you posted on any new information we uncover. Thanks so much for bringing this up to us, and I'm really sorry it's slowing you down!