NovaBay Pharmaceuticals Reports First Quarter 2022 Financial Results

Rhea-AI Summary

NovaBay Pharmaceuticals reported a 46% increase in total sales for Q1 2022, totaling $2.6 million, driven by the acquisition of DERMAdoctor. Avenova Spray unit sales rose 15%, despite a decline in revenue from $1.6 million to $1.4 million due to unexpected returns. Gross margins fell to 58% from 75% in the prior year, attributed to these returns. Operating expenses increased to $3.9 million including costs related to DERMAdoctor. Net loss decreased to $111,000 from $1.5 million year-over-year.

Positive

• Total sales rose 46% to $2.6 million in Q1 2022.
• Avenova Spray unit sales increased by 15%.
• Diversified product portfolio and strong presence in eyecare and skincare markets.
• Operational synergies from consolidated warehouse operations.

Negative

• Avenova Spray revenue decreased from $1.6 million to $1.4 million due to product returns.
• Gross margin declined to 58% from 75% year-over-year due to increased product returns.
• Operating expenses rose to $3.9 million, including integration costs.

• Avenova^® Spray unit sales increased 15% with record-high units sold through the OTC channel
• Announced launch of two next-generation OTC DERMAdoctor products this week building on momentum of top-selling collections, bringing new OTC product introductions to five since the beginning of 2022
• Increased total sales by 46% by executing on growth strategy including the DERMAdoctor acquisition to build on established presence in the eyecare and skincare markets
• Benefitted from operational synergies through consolidated warehouse operations

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

EMERYVILLE, Calif.--(BUSINESS WIRE)-- NovaBay^® Pharmaceuticals, Inc. (NYSE American: NBY) reports financial results for the three months ended March 31, 2022 and provides a business update. Financial results for the first quarter of 2022 include the operations of the DERMAdoctor business, which was acquired on November 5, 2021.

“Total sales grew 46% during the first quarter and Avenova Spray unit sales increased 15% with record-high unit sales through the over-the-counter (OTC) channel,” said Justin Hall, NovaBay CEO. “With the DERMAdoctor acquisition, we have successfully diversified our product portfolio and established a strong presence in both the large and growing eyecare and skincare markets as a foundation for continued topline growth. We also are benefitting from consolidated warehouse operations, which provides us greater control over product fulfillment and our supply chain.

“We are focused on growth by introducing uniquely formulated, highly effective products, expanding into new markets with existing products and investing in our consumer marketing. Early this week, we announced the launch of two new DERMAdoctor OTC products expanding our Kakadu C and Calm Cool + Corrected collections. These next-generation products feature breakthrough skincare science and reflect the depth of our expertise in innovative product creation as we build on the momentum of our popular skincare families,” he added. “As we execute on our strategy throughout the year, we expect the majority of 2022 topline growth to come in the second half of this year.”

First Quarter Financial Results

Net product revenue for the first quarter of 2022 was $2.6 million, an increase of 46% from $1.8 million for the prior-year period, and included $0.9 million of DERMAdoctor product sales. Avenova Spray sales for the first quarter of 2022 were $1.4 million, compared with $1.6 million for the first quarter of 2021, with the decrease due to an unanticipated return of expired Avenova Spray units purchased by retail pharmacy distributors in 2019 and 2020. Although the possibility of additional future returns remains, our overall exposure has declined over time as the higher volumes of inventory purchased prior to the launch of our OTC product and the COVID-19 pandemic become no longer subject to return. The return in the retail pharmacy channel was partially offset by a 15% increase in the number of Avenova Spray units sold in the first quarter of 2022, reflecting an increase in OTC and physician-dispensed units.

Gross margin on net product revenue for the first quarter of 2022 was 58%, compared with 75% for the first quarter of 2021, with the decrease primarily due to the unanticipated increase in product returns.

Operating expenses for the first quarter of 2022 were $3.9 million, compared with $2.9 million for the first quarter of 2021, and included $0.7 million in DERMAdoctor operating expenses. Sales and marketing expenses remained unchanged at $1.7 million for the first quarters of 2022 and 2021. The first quarter of 2022 included $0.4 million of sales and marketing costs incurred for DERMAdoctor sales, which were partially offset by a lower number of field sales representatives employed in the 2022 period. General and administrative (G&A) expenses for the first quarter of 2022 were $2.2 million, compared with $1.2 million for the first quarter of 2021, and included $0.2 million in DERMAdoctor G&A costs, one-time costs associated with a special meeting of stockholders and higher compensation costs. With the majority of the integration costs behind us, we anticipate our ongoing recurring G&A expenses to decrease.

Research and development (R&D) expenses for the first quarter of 2022 were $28 thousand, compared with $5 thousand for the prior-year period.

Unrealized gain on changes in fair value of warrant liability for the first quarter of 2022 was $2.1 million. There was no comparable gain or loss in the prior-year period.

Net loss attributable to common stockholders for the first quarter of 2022 was $111 thousand, or $0.00 per share, compared with net loss attributable to common stockholders for the first quarter of 2021 of $1.5 million, or $0.04 per share.

NovaBay had cash and cash equivalents of $5.6 million as of March 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 to 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.

Shareholders 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 http://novabay.com/investors/events and will be archived for 90 days. A replay of the call will be available beginning two hours after the call ends through June 2, 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 entering the conference identification number 9711049.

About NovaBay Pharmaceuticals, Inc:

NovaBay Pharmaceuticals, Inc. is a pharmaceutical company that develops and sells scientifically created and clinically proven consumer products for the eyecare and skincare markets. Avenova^® is the most prescribed antimicrobial lid and lash spray in the eyecare market. In November 2021, NovaBay acquired DERMAdoctor, LLC, a company offering more than 30 dermatologist-developed skincare products sold through traditional domestic retailers, digital beauty channels and international distributors.

Forward-Looking Statements

Except for historical information herein, matters set forth in this press release are forward-looking within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements about the commercial progress, the transaction in which the Company acquired DERMAdoctor and the future integration and performance of DERMAdoctor, potential opportunities for revenue accretion and future financial performance of NovaBay. This release contains forward-looking statements that 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 and current product offerings, potential future product offerings including through strategic acquisitions, such as the acquisition of DERMAdoctor, or licensing opportunities, expanded access to our products, and any future revenue that may result from selling these products, as well as generally the Company’s expected future financial results. These statements involve known and unknown 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 the 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 possibility that the available market for the Company’s products will not be as large as expected, the Company’s products will not be able to penetrate one or more targeted markets, and revenues will not be 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 filed 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,
		2022				2021
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	5,641			$	7,504
Accounts receivable, net of allowance for doubtful accounts ($0 at March 31, 2022 and December 31, 2021)			2,300				1,668
Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($522 and $641 at March 31, 2022 and December 31, 2021, respectively)			3,785				3,220
Prepaid expenses and other current assets			752				778
Total current assets			12,478				13,170
Operating lease right-of-use assets			2,331				411
Property and equipment, net			187				193
Goodwill			4,528				4,528
Other intangible assets, net			5,109				5,200
Other assets			161				476
TOTAL ASSETS		$	24,794			$	23,978
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Accounts payable		$	1,556			$	1,045
Accrued liabilities			2,763				2,092
Line of credit			—				105
Operating lease liabilities			465				200
Total current liabilities			4,784				3,442
Operating lease liabilities-non-current			1,922				246
Warrant liability			—				9,558
Contingent earnout liability			342				561
Total liabilities			7,048				13,807
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; 13 and 14 issued and outstanding at March 31, 2022 and December 31, 2021, respectively			609				680
Common stock, $0.01 par value; 150,000 and 100,000 shares authorized, 51,419 and 47,766 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively			514				478
Additional paid-in capital			158,621				150,900
Accumulated deficit			(141,998	)			(141,887	)
Total stockholders' equity			17,746				10,171
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	24,794			$	23,978

NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (in thousands except per share data)
		Three Months Ended March 31,
		2022				2021
Sales:
Product revenue, net		$	2,623			$	1,801
Other revenue, net			6				6
Total sales, net			2,629				1,807
Product cost of goods sold			1,113				455
Gross profit			1,516				1,352
Operating expenses:
Research and development			28				5
Sales and marketing			1,687				1,680
General and administrative			2,183				1,187
Total operating expenses			3,898				2,872
Operating loss			(2,382	)			(1,520	)
Unrealized gain on changes in fair value of warrant liability			2,056				—
Unrealized gain on changes in fair value of contingent liability			219				—
Other (expense) income, net			(4	)			2
Loss before provision for income taxes			(111	)			(1,518	)
Provision for income taxes			—				—
Net loss and comprehensive loss		$	(111	)		$	(1,518	)
Net loss per share attributable to common stockholders (basic and diluted)		$	0.00			$	(0.04	)
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)			50,088				41,782

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220512005405/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

Source: NovaBay Pharmaceuticals, Inc.

FAQ

What were NovaBay's total sales for Q1 2022?

NovaBay reported total sales of $2.6 million for Q1 2022, a 46% increase from the prior year.

How did Avenova Spray sales perform in Q1 2022?

Avenova Spray sales for Q1 2022 were $1.4 million, down from $1.6 million in Q1 2021 due to product returns.

What is the gross margin reported by NovaBay for Q1 2022?

NovaBay's gross margin for Q1 2022 was 58%, down from 75% in the same quarter of the previous year.

What is the net loss attributable to common stockholders for Q1 2022?

The net loss attributable to common stockholders for Q1 2022 was $111,000, compared to $1.5 million in Q1 2021.

What major business development occurred for NovaBay recently?

NovaBay announced the acquisition of DERMAdoctor, contributing to diversified product offerings and growth in its portfolio.