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NovaBay Pharmaceuticals Reports First Quarter 2023 Financial Results

  • Sales of eyecare products increased with higher sales of Avenova Spray related companion products
  • Sales and marketing spend reduced by 17% through optimized digital marketing programs
  • Launched DERMAdoctor® Comfort + Joy Psoriasis Therapeutic Moisturizing Cream

Conference call begins at 4:30 p.m. Eastern time today

NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports financial results for the three months ended March 31, 2023 and provides a business update.

“Net product revenue from our Avenova-branded eyecare products increased over the prior year driven by higher sales of Avenova Spray sold through our physician-dispensed channel and by increased interest in our Avenova companion products,” said Justin Hall, NovaBay CEO. “On the expense side, we benefitted from our focus on digital marketing optimization, which led to a 17% decline in sales and marketing costs.

“Pursuant to our ongoing strategy of capitalizing on our brand recognition and diversifying our revenue sources, so far this year we’ve introduced three new branded products and launched our first co-promoted product. Most recently, we introduced the first DERMAdoctor product formulated to relieve the itching, irritation and redness from psoriasis, a condition that afflicts about eight million Americans. In our wound care vertical, we shipped a $1 million order for NeutroPhase® Skin and Wound Cleanser to our partner China Pioneer and will record this sale in the second quarter,” he added. “Proceeds from our recent financing that closed in the second quarter of 2023 will further support our goal of achieving profitability.”

First Quarter Financial Results

Net product revenue for the first quarter of 2023 was $3.1 million, compared with $3.3 million for the prior-year period, and included $2.2 million of Avenova-branded eyecare product sales, $0.8 million of DERMAdoctor skincare product sales and $0.1 million of PhaseOne® wound care product sales.

Gross margin on net product revenue for the first quarter of 2023 improved to 62%, compared with 55% for the first quarter of 2022, with the increase primarily due to channel and product mix that favored sales of higher-margin products and the reduction of product returns when compared to the first quarter of 2022.

Total operating expenses for the first quarter of 2023 were $3.7 million, a 13% decrease from $4.2 million for the first quarter of 2022. Sales and marketing expenses for the first quarter of 2023 were $1.7 million, compared with $2.0 million in the prior year, with the decrease reflecting lower Avenova digital advertising costs. General and administrative expenses for the first quarter of 2023 were $2.0 million, compared with $2.2 million for the first quarter of 2022, with the decrease due primarily to lower variable compensation costs.

Net loss attributable to common stockholders for the first quarter of 2023 was $1.7 million, or $0.85 per share, compared with a net loss attributable to common stockholders for the first quarter of 2022 of $0.1 million, or $0.08 per share, which included a non-cash gain on changes in fair value of warrant liability of $2.1 million and a non-cash gain on changes in fair value of contingent liability of $0.2 million in the first quarter of 2022 with no similar non-cash gains in the first quarter of 2023.

NovaBay had cash and cash equivalents of $3.7 million as of March 31, 2023, compared with $5.4 million as of December 31, 2022. Subsequent to the close of the quarter, NovaBay completed a private placement of convertible debentures and warrants for aggregate gross proceeds of $3.0 million before deducting placement agent fees and other offering expenses.

Conference Call

NovaBay management will host an investment community conference call today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the Company’s financial and operational results and answer questions. Participants can pre-register for the conference call here. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.

Stockholders and other interested parties may also participate in the conference call by dialing 866-777-2509 from within the U.S. or 412-317-5413 from outside the U.S., and requesting the NovaBay Pharmaceuticals call.

A live webcast of the call will be available here and will be archived for 90 days. A replay of the call will be available beginning two hours after the call ends through June 1, 2023 by dialing 877-344-7529 from within the U.S., 855-669-9658 from Canada or 412-317-0088 from outside the U.S. and Canada, and entering the conference identification number 7090076.

About NovaBay Pharmaceuticals, Inc.:

NovaBay Pharmaceuticals, Inc. develops and sells scientifically created and clinically proven eyecare, skincare and wound care products. NovaBay’s leading product, Avenova® Antimicrobial Lid & Lash Solution, is proven in laboratory testing to have broad antimicrobial properties as it removes foreign material including microorganisms and debris from the skin around the eye, including the eyelid. Avenova Antimicrobial Lid & Lash Solution is available direct to consumer primarily through online distribution channels such as Amazon, and is also available by prescription and dispensed by eyecare professionals for blepharitis and dry-eye disease. DERMAdoctor® offers more than 30 OTC dermatologist-developed skincare products through the DERMAdoctor website, well-known traditional and digital beauty retailers, and international distributors. NovaBay also manufactures and sells effective, yet gentle and non-irritating wound care products. The PhaseOne® brand is distributed through commercial partners in the U.S. for professional use only, and the NeutroPhase® brand is distributed in China by Pioneer Pharma (Hong Kong) Company Ltd.

Forward-Looking Statements

This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts. Such forward-looking statements are based upon management’s current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements regarding our business strategies, commercial progress, current and potential future product offerings, the continuing integration of DERMAdoctor, expanded access to our products, and any future revenue, and the timing of such revenue, that may result from selling these products, as well as generally the Company’s expected future financial results. These statements involve risks, uncertainties and other factors that may cause actual results or achievements to be materially different and adverse from those expressed in or implied by these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to the integration of DERMAdoctor’s business with the Company’s business (and further related impairments to goodwill and intangible assets), the size of the potential market for our products, the Company’s products not being able to penetrate one or more targeted markets and the Company’s ability to continue as a going concern and revenues (or the execution on capital raise opportunities) not being sufficient to meet the Company’s cash needs. Other risks relating to NovaBay’s business, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in NovaBay’s latest Form 10-K/Q filings with the Securities and Exchange Commission, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and NovaBay disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law.

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Avenova Purchasing Information

For NovaBay Avenova purchasing information:

Please call 800-890-0329 or email sales@avenova.com

Avenova.com

DERMAdoctor Purchasing Information

For DERMAdoctor purchasing information:

Please call 877-337-6237 or email service@dermadoctor.com

DERMAdoctor.com

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

 

 

 

March 31,

 

December 31,

 

 

2023

 

2022

 

 

(Unaudited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,746

 

 

$

5,362

 

Accounts receivable, net of allowance for credit losses ($3 and $19 at March 31, 2023 and December 31, 2022, respectively)

 

 

1,835

 

 

 

1,973

 

Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($488 and $499 at March 31, 2023 and December 31, 2022, respectively)

 

 

3,797

 

 

 

3,437

 

Prepaid expenses and other current assets

 

 

516

 

 

 

560

 

Total current assets

 

 

9,894

 

 

 

11,332

 

Operating lease right-of-use assets

 

 

1,744

 

 

 

1,831

 

Property and equipment, net

 

 

119

 

 

 

119

 

Goodwill

 

 

348

 

 

 

348

 

Other intangible assets, net

 

 

2,242

 

 

 

2,280

 

Other assets

 

 

478

 

 

 

489

 

TOTAL ASSETS

 

$

14,825

 

 

$

16,399

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,148

 

 

$

1,080

 

Accrued liabilities

 

 

2,809

 

 

 

2,724

 

Operating lease liabilities

 

 

466

 

 

 

453

 

Total current liabilities

 

 

4,423

 

 

 

4,257

 

Operating lease liabilities-non-current

 

 

1,512

 

 

 

1,588

 

Total liabilities

 

 

5,935

 

 

 

5,845

 

Commitments & contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 5,000 shares authorized;

 

 

 

 

 

 

Series B Preferred Stock; 12 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

570

 

 

 

570

 

Series C Preferred Stock; 2 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

2,403

 

 

 

2,403

 

Common stock, $0.01 par value; 150,000 shares authorized, 2,035 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

652

 

 

 

652

 

Additional paid-in capital

 

 

165,156

 

 

 

165,081

 

Accumulated deficit

 

 

(159,891

)

 

 

(158,152

)

Total stockholders’ equity

 

 

8,890

 

 

 

10,554

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

14,825

 

 

$

16,399

 

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

2023

 

2022

Sales:

 

 

 

 

 

 

Product revenue, net

 

$

3,117

 

 

$

3,267

 

Other revenue, net

 

 

7

 

 

 

6

 

Total sales, net

 

 

3,124

 

 

 

3,273

 

 

 

 

 

 

 

 

Product cost of goods sold

 

 

1,188

 

 

 

1,459

 

Gross profit

 

 

1,936

 

 

 

1,814

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

26

 

 

 

28

 

Sales and marketing

 

 

1,653

 

 

 

1,985

 

General and administrative

 

 

1,991

 

 

 

2,183

 

Total operating expenses

 

 

3,670

 

 

 

4,196

 

Operating loss

 

 

(1,734

)

 

 

(2,382

)

 

 

 

 

 

 

 

Non-cash gain on changes in fair value of warrant liability

 

 

 

 

 

2,056

 

Non-cash gain on changes in fair value of contingent liability

 

 

 

 

 

219

 

Other expense, net

 

 

(5

)

 

 

(4

)

 

 

 

 

 

 

 

Net loss

 

$

(1,739

)

 

$

(111

)

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders (basic and diluted)

 

$

(0.85

)

 

$

(0.08

)

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (basic and diluted)

 

 

2,035

 

 

 

1,431

 

Contacts

NovaBay Contact

Justin Hall

Chief Executive Officer and General Counsel

510-899-8800

jhall@novabay.com

Investor Contact

LHA Investor Relations

Jody Cain

310-691-7100

jcain@lhai.com

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