- Product sales increased 15% for the quarter and 41% for the
year, driven by increasingly diversified revenue streams
- Wound care revenue increased 143% year over year
- Digital marketing program optimization continued to drive
higher product sales on lower marketing spend
- Eyecare portfolio recently expanded with the introduction of
the Avenova® oral supplement and Eyeganics Organic Tears
Conference call begins at 4:30 p.m. Eastern
time today
NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports
financial results for the three and 12 months ended December 31,
2022 and provides a business update. Financial results for 2022
include DERMAdoctor®, which NovaBay acquired on November 5,
2021.
“Product sales for the fourth quarter increased 15% over the
prior-year period, with continued increases in Avenova Spray unit
sales through the online channel. Our Avenova companion products
and our wound care products contributed more towards our overall
sales than ever before,” said Justin Hall, NovaBay CEO.
“Importantly, for the full year 2022 we lowered marketing spend by
4% while increasing revenue by 41%. We accomplished this by
optimizing digital marketing programs for new and existing products
in the direct-to-consumer sales channel.
“We recently added a differentiated, high-quality OTC product to
our eyecare portfolio, further reinforcing NovaBay as a one-stop
destination for customers seeking relief from the symptoms of dry
eye and other common eye frustrations,” he added. “Our new oral
supplements are formulated with the rare maqui berry, which is
shown to be highly effective for relief of dry eye symptoms. We
also began co-promoting Eyeganics Organic Tears, the only
USDA-certified organic lubricating drop for those affected by
chemicals found in certain other artificial tears. We now offer a
broader selection of best-in-class products in our core eyecare
segment.”
Fourth Quarter Financial Results
Net product revenue for the fourth quarter of 2022 was $3.6
million, an increase of 15% from $3.2 million for the prior-year
period, and included $2.1 million of Avenova-branded product sales,
$1.0 million of DERMAdoctor product sales and $0.1 million of
PhaseOne® and $0.3 million of NeutroPhase® branded wound care
product sales.
Gross margin on net product revenue for the fourth quarter of
2022 was 48%, compared with 53% for the fourth quarter of 2021,
with the decrease primarily due to higher sales of lower margin
skincare and wound care products.
Sales and marketing expenses were $1.9 million for the fourth
quarter of 2022, compared with $2.2 million for the fourth quarter
of 2021. The decrease reflected lower Avenova digital advertising
and related consulting expenses, partially offset by the addition
of sales and marketing expenses for DERMAdoctor. General and
administrative (G&A) expenses for the fourth quarter of 2022
were relatively flat at $2.4 million for the fourth quarter of
2022, compared with $2.7 million for the fourth quarter of 2021.
Research and development (R&D) expenses for the fourth quarter
of 2022 were $66 thousand, compared with $9 thousand for the
prior-year period, with the increase due mainly to new product
development under the DERMAdoctor brand.
NovaBay recorded non-cash impairment charges of $6.7 million due
to the reduced value of DERMAdoctor’s goodwill, intangible, and
other assets. There were no comparable charges in the fourth
quarter of 2021.
Non-cash gain on changes in fair value of warrant liability for
the fourth quarter of 2022 was $1.0 million, compared with a
non-cash gain for the fourth quarter of 2021 of $4.6 million.
Non-cash gain on changes in fair value of contingent liability for
the fourth quarter of 2022 was $0.3 million. There was no
comparable item for the fourth quarter of 2021.
Other expense, net for the fourth quarter of 2022 was $98
thousand, compared with other expense, net for the fourth quarter
of 2021 of $1.6 million.
Net loss attributable to common stockholders for the fourth
quarter of 2022 was $8.2 million, or $4.33 per share, compared with
a net loss attributable to common stockholders for the fourth
quarter of 2021 of $0.9 million, or $0.69 per share, with the
change mostly due to the non-cash impairment charges to goodwill,
intangible, and other assets.
Full Year Financial Results
Net product revenue for 2022 was $14.4 million, an increase of
41% from $10.2 million for 2021, with the increase primarily
reflecting the addition of DERMAdoctor.
Gross margin on net product revenue for 2022 was 54%, compared
with 64% for 2021, with the decline primarily due to increased
sales of lower margin skincare and wound care products.
For 2022, sales and marketing expenses decreased by 4%, and
G&A expenses increased by 3%, both compared with 2021. R&D
expenses were $174 thousand for 2022, versus $44 thousand for
2021.
Non-cash loss on the modification of common stock warrants for
2022 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 $276 thousand-each
predominantly related to the warrant reprice transaction completed
in September 2022 (the “2022 Warrant Reprice Transaction”).
Adjustments to the fair value of warrant liabilities for 2022
resulted in a non-cash gain of $5.4 million compared with a
non-cash gain of $4.6 million for 2021. Adjustments to the fair
value of contingent liability for 2022 resulted in a non-cash gain
of $0.6 million, with no comparable adjustment for 2021.
The net loss attributable to common stockholders for 2022 was
$16.3 million, or $10.10 per share, compared with a net loss
attributable to common stockholders for 2021 of $6.6 million, or
$4.81 per share. The net loss in 2022 included non-cash impairment
charges of $6.7 million due to the reduced value of DERMAdoctor’s
goodwill, intangible, and other assets.
NovaBay had cash and cash equivalents of $5.4 million as of
December 31, 2022, compared with $7.5 million as of December 31,
2021.
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 April 13, 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 6368470.
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), 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.
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.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value amounts)
December 31,
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
5,362
$
7,504
Accounts receivable, net of allowance for
doubtful accounts ($19 and $0 at December 31, 2022 and December 31,
2021, respectively)
1,973
1,668
Inventory, net of allowance for excess and
obsolete inventory and lower of cost or estimated net realizable
value adjustments ($499 and $641 at December 31, 2022 and December
31, 2021, respectively)
3,437
3,220
Prepaid expenses and other current
assets
560
778
Total current assets
11,332
13,170
Operating lease right-of-use assets
1,831
411
Property and equipment, net
119
193
Goodwill
348
4,528
Other intangible assets, net
2,280
5,200
Other assets
489
476
TOTAL ASSETS
$
16,399
$
23,978
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Current liabilities:
Accounts payable
$
1,080
$
1,045
Accrued liabilities
2,724
2,092
Line of credit
—
105
Operating lease liabilities
453
200
Total current liabilities
4,257
3,442
Operating lease
liabilities-non-current
1,588
246
Warrant liability
—
9,558
Contingent earnout liability
—
561
Total liabilities
5,845
13,807
Commitments & contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000
shares authorized;
Series B preferred stock; 12 and 14 shares
issued and outstanding at December 31, 2022 and December 31, 2021,
respectively
570
680
Series C preferred stock; 2 and no shares
issued and outstanding at December 31, 2022 and December 31, 2021,
respectively
2,403
—
Common stock, $0.01 par value; 150,000 and
100,000 shares authorized, 2,035 and 1,365 shares issued and
outstanding at December 31, 2022 and December 31, 2021,
respectively
652
478
Additional paid-in capital
165,081
150,900
Accumulated deficit
(158,152
)
(141,887
)
Total stockholders' equity
10,554
10,171
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
16,399
$
23,978
NOVABAY PHARMACEUTICALS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share data)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Sales: Product revenue, net $
3,631
$
3,167
$
14,374
$
10,180
Other revenue, net
12
5
30
24
Total sales, net
3,643
3,172
14,404
10,204
Cost of goods sold
1,888
1,495
6,623
3,689
Gross profit
1,755
1,677
7,781
6,515
Operating expenses: Research and development
66
9
174
44
Sales and marketing
1,938
2,150
7,798
8,093
General and administrative
2,440
2,713
7,489
7,240
Goodwill, intangible, and other asset impairment
6,737
-
6,737
-
Total operating expenses
11,181
4,872
22,198
15,377
Operating loss
(9,426
)
(3,195
)
(14,417
)
(8,862
)
Non-cash loss on modification of common stock warrants
-
-
(1,922
)
-
Non-cash gain on changes in fair value of warrant liability
976
4,615
5,446
4,615
Non-cash gain on changes in fair value of contingent liability
342
-
561
-
Other expense, net
(98
)
(1,579
)
(276
)
(1,577
)
Loss before provision for income taxes
(8,206
)
(159
)
(10,608
)
(5,824
)
Provision for income taxes
—
-
—
-
Net loss $
(8,206
)
$
(159
)
$
(10,608
)
$
(5,824
)
Less: Preferred deemed dividend
-
735
-
735
Less: Retained earnings reduction related to preferred stock down
round feature triggered
-
-
5,657
-
Net loss attributable to common stockholders $
(8,206
)
$
(894
)
$
(16,265
)
$
(6,559
)
Net loss per share attributable to common
stockholders (basic and diluted) $
(4.33
)
$
(0.69
)
$
(10.10
)
$
(4.81
)
Weighted-average shares of common stock
used in computing net loss per share attributable to common
stockholders (basic and diluted)
1,893
1,295
1,610
1,365
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230330005709/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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