- Product revenue growth of 69% resulting from diversified
revenue streams, including DERMAdoctor products in the third
quarter of 2022
- DERMAdoctor® skincare product sales at highest level since the
acquisition a year ago
- Achieved continued online Avenova® Spray unit growth
- Optimized digital marketing programs drove higher sales on
lower expenses
Conference call begins at 4:30 p.m. Eastern
Time today
NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports
financial results for the three and nine months ended September 30,
2022 and provides a business update. Financial results for the
first nine months of 2022 include DERMAdoctor, which NovaBay
acquired on November 5, 2021.
“Revenues grew an impressive 69% as we benefitted from the
DERMAdoctor acquisition and our expanded product portfolio.
Highlights of the quarter include the most DERMAdoctor product
sales since the acquisition and continued year-over-year growth in
online Avenova Spray unit sales. Avenova companion products and our
branded wound care products also made solid contributions to
revenue during the quarter,” said Justin Hall, NovaBay CEO.
“Notably, we achieved this growth while optimizing our digital
marketing programs, with lower sales and marketing spend over the
prior year even with the additional expenses to promote DERMAdoctor
products.
“We are excited about our prospects going forward,” he added.
“The initiatives we put in place earlier this year are gaining
traction and we received a significant order for DERMAdoctor
products from a major U.S. retailer. Additionally, we expect to
benefit from growing DERMAdoctor online sales in international
markets, in particular in China as our digital marketing programs
get underway in that country.”
Third Quarter Financial Results
Net product revenue for the third quarter of 2022 was $3.8
million, an increase of 69% from $2.3 million for the prior-year
period, and included $2.2 million of Avenova-branded product sales,
$1.3 million of DERMAdoctor product sales, and $0.3 million of
PhaseOne® branded wound care product sales.
Gross margin on net product revenue for the third quarter of
2022 was 62%, compared with 69% for the third quarter of 2021, with
the decrease primarily due to higher sales of lower margin
DERMAdoctor and wound care products.
Sales and marketing expenses were $1.8 million for the third
quarter of 2022, compared with $2.1 million for the third quarter
of 2021. The third quarter of 2022 included lower Avenova digital
advertising and related consulting expenses, which were partially
offset by sales and marketing expenses incurred for DERMAdoctor
products. General and administrative (G&A) expenses for the
third quarter of 2022 were $1.0 million, compared with $1.8 million
for the third quarter of 2021, and included $0.2 million in
DERMAdoctor G&A expenses and $0.1 million from the amortization
of intangibles related to the DERMAdoctor acquisition, offset by
lower variable compensation expenses. Research and development
(R&D) expenses for the third quarter of 2022 were $41 thousand,
compared with $10 thousand for the prior-year period.
Operating expenses for the third quarter of 2022 were $2.8
million, compared with $3.8 million for the third quarter of
2021.
For the three months ended September 30, 2022, non-cash loss on
the modification of common stock warrants was $1.9 million,
non-cash gain on changes in fair value of warrant liability was
$2.4 million, non-cash retained earnings reduction due to
adjustment to the Series B preferred stock conversion price was
$5.7 million, and other expense was $171 thousand–each related to
the warrant reprice transaction completed in September 2022 (the
“2022 Warrant Reprice Transaction”). There were no comparable items
for the three months ended September 30, 2021.
Net loss attributable to common stockholders for the third
quarter of 2022 was $5.8 million, or $0.10 per share, compared with
a net loss attributable to common stockholders for the third
quarter of 2021 of $2.3 million, or $0.05 per share.
Nine Month Financial Results
Net product revenue for the nine months ended September 30, 2022
was $10.7 million, an increase of 53% from $7.0 million for the
nine months ended September 30, 2021.
Gross margin on net product revenue for the first nine months of
2022 was 56%, compared with 69% for the first nine months of
2021.
For the nine months ended September 30, 2022, sales and
marketing expenses decreased slightly and G&A expenses
increased 12%, both compared with the nine months ended September
30, 2021. R&D expenses were $108 thousand for the first nine
months of 2022, versus $36 thousand for the prior-year period.
For the nine months ended September 30, 2022, non-cash loss on
the modification of common stock warrants was $1.9 million,
non-cash retained earnings reduction due to adjustment to the
Series B preferred stock conversion price was $5.7 million, and
other expense was $178 thousand–each related to the 2022 Warrant
Reprice Transaction. For the same period, non-cash gain on changes
in fair value of warrant liability was $4.5 million, which was
related to both the 2022 Warrant Reprice Transaction and the
November 2021 Warrants, and non-cash gain on changes in fair value
of contingent liability was $219 thousand, which was related to the
DERMAdoctor acquisition.
The net loss attributable to common stockholders for the nine
months ended September 30, 2022 was $8.1 million, or $0.15 per
share, compared with a net loss for the nine months ended September
30, 2021 of $5.7 million, or $0.13 per share.
NovaBay had cash and cash equivalents of $3.9 million as of
September 30, 2022, compared with $7.5 million as of December 31,
2021. The Company received approximately $2.1 million in gross
proceeds from the 2022 Warrant Reprice Transaction completed in
September 2022.
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 at
https://investors.novabay.com/events/ and will be archived for 90
days. A replay of the call will be available beginning two hours
after the call ends through December 5, 2022 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 1836583.
About NovaBay Pharmaceuticals, Inc.:
NovaBay Pharmaceuticals, Inc. develops and sells scientifically
created and clinically proven eyecare and skincare products.
NovaBay’s leading product, Avenova® Antimicrobial Lid & Lash
Solution, is often prescribed by eyecare professionals for
blepharitis and dry-eye disease and is also available directly to
eyecare consumers through online distribution channels such as
Amazon. 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,
the size of the potential market for our products, the Company’s
products not being able to penetrate one or more targeted markets,
the Company’s ability to regain compliance with the continued
listing standards of the NYSE American, the expected timing of, our
ability to complete, and impact of the reverse stock split (as
recently approved by the Company’s stockholders), the Company’s
ability to continue as a going concern and revenues (or the
execution on capital raise opportunities such as the previously
disclosed, pending private placement to sell Series C Preferred
Stock and related series of warrants) 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.
Socialize and Stay Informed on
NovaBay’s Progress Like us on Facebook Follow us on
Twitter Connect with NovaBay on LinkedIn Visit NovaBay’s
Website
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)
September 30,
December 31,
2022
2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
3,868
$
7,504
Accounts receivable, net of allowance for
doubtful accounts ($8 at September 30, 2022 and $0 at December 31,
2021)
2,133
1,668
Inventory, net of allowance for excess and
obsolete inventory and lower of cost or estimated net realizable
value adjustments ($455 and $641 at September 30, 2022 and December
31, 2021, respectively)
4,068
3,220
Prepaid expenses and other current
assets
544
778
Total current assets
10,613
13,170
Operating lease right-of-use assets
1,937
411
Property and equipment, net
217
193
Goodwill
4,528
4,528
Other intangible assets, net
4,928
5,200
Other assets
153
476
TOTAL ASSETS
$
22,376
$
23,978
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Current liabilities:
Accounts payable
$
1,097
$
1,045
Accrued liabilities
2,168
2,092
Line of credit
—
105
Operating lease liabilities
445
200
Total current liabilities
3,710
3,442
Operating lease liabilities
non-current
1,713
246
Warrant liability
2,827
9,558
Contingent earnout liability
342
561
Total liabilities
8,592
13,807
Commitments & contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000
shares authorized; 12 and 14 issued and outstanding at September
30, 2022 and December 31, 2021, respectively
570
680
Common stock, $0.01 par value; 150,000 and
100,000 shares authorized, 64,988 and 47,766 shares issued and
outstanding at September 30, 2022 and December 31, 2021,
respectively
650
478
Additional paid-in capital
162,510
150,900
Accumulated deficit
(149,946
)
(141,887
)
Total stockholders' equity
13,784
10,171
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
22,376
$
23,978
NOVABAY PHARMACEUTICALS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands except per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Sales:
Product revenue, net
$
3,816
$
2,259
$
10,743
$
7,012
Other revenue, net
10
6
18
19
Total sales, net
3,826
2,265
10,761
7,031
Product cost of goods sold
1,451
712
4,735
2,194
Gross profit
2,375
1,553
6,026
4,837
Operating expenses:
Research and development
41
10
108
36
Sales and marketing
1,835
2,061
5,860
5,942
General and administrative
956
1,771
5,049
4,527
Total operating expenses
2,832
3,842
11,017
10,505
Operating loss
(457
)
(2,289
)
(4,991
)
(5,668
)
Non-cash loss on modification of common
stock warrants
(1,922
)
—
(1,922
)
—
Non-cash gain on changes in fair value of
warrant liabilities
2,414
—
4,470
—
Non-cash gain on changes in fair value of
contingent liability
—
—
219
—
Other (expense) income, net
(171
)
—
(178
)
2
Loss before provision for income taxes
(136
)
(2,289
)
(2,402
)
(5,666
)
Provision for income taxes
—
—
—
—
Net loss and comprehensive loss
$
(136
)
$
(2,289
)
$
(2,402
)
$
(5,666
)
Less: Retained earnings reduction due to
adjustment to Series B Preferred Stock conversion price
5,657
—
5,657
—
Net loss attributable to common
stockholders
$
(5,793
)
$
(2,289
)
$
(8,059
)
$
(5,666
)
Net loss per share (basic and diluted)
$
(0.10
)
$
(0.05
)
$
(0.15
)
$
(0.13
)
Weighted-average shares of common stock
used in computing net loss per share (basic and diluted)
56,133
44,921
53,007
43,100
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221114005934/en/
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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