NovaBay Pharmaceuticals Reports Second Quarter 2022 Financial Results

Rhea-AI Summary

NovaBay Pharmaceuticals, Inc. (NBY) reported a 43% increase in product revenue for Q2 2022, reaching $3.0 million compared to $2.1 million last year. The growth is attributed to successful digital marketing initiatives and the acquisition of DERMAdoctor products. Year-to-date revenue also surged 44% to $5.7 million. However, gross margins dipped to 51% from 71% due to higher sales of DERMAdoctor products. The company incurred a net loss of $2.2 million, consistent with the previous year. As of June 30, 2022, cash reserves were $3.9 million.

Positive

• 43% revenue increase year-over-year.
• Successful launch of seven new OTC products.
• Continued growth in online unit sales of Avenova Spray.

Negative

• Gross margin decreased to 51% from 71% year-over-year.
• Net loss increased to $2.2 million with constant per-share loss.

• Product revenue increased by 43% year-over-year, fueled by a growing product portfolio in the eyecare and skincare markets
• Continued year-over-year growth in online Avenova^® Spray unit sales
• Launched seven new OTC Avenova and DERMAdoctor^® products since the beginning of 2022

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 and six months ended June 30, 2022 and provides a business update. Financial results for the first six months of 2022 include the operations of the DERMAdoctor business, which was acquired on November 5, 2021.

“The strategy to expand and diversify our portfolio of high-quality products is paying off with product revenue increasing 43% over the prior year. We are also reporting another quarter of year-over-year growth in online Avenova Spray unit sales, reflecting the success of our digital marketing initiatives,” said Justin Hall, NovaBay CEO. “We achieved this growth by optimizing our digital marketing programs, while holding our sales and marketing spend steady, even with the additional expenses associated with promoting DERMAdoctor products.

“We have executed on multiple initiatives to build upon our established presence in the large and growing eyecare and skincare markets, with more to come,” he added. “So far this year we have launched seven new over-the-counter products under our Avenova and DERMAdoctor brands, and engaged a leading marketing firm in China to drive DERMAdoctor sales in that country. More recently, we increased access to select DERMAdoctor products through the addition of two popular U.S. online retailers and launched an Avenova Spray consumer campaign for wearers of lash extensions, leveraging our expertise in the beauty category to address an entirely new customer demographic in a large and growing market.

“Given the timing of our initiatives, and the anticipated seasonal fall increase for skincare products and a significant order from a major U.S. retailer for our top-selling DERMAdoctor product, we continue to expect the majority of our growth in 2022 to come in the second half of the year,” concluded Mr. Hall.

Second Quarter Financial Results

Net product revenue for the second quarter of 2022 was $3.0 million, an increase of 43% from $2.1 million for the prior-year period, and included $0.6 million of DERMAdoctor product sales, $1.8 million of Avenova-branded product sales and $0.6 million of NeutroPhase^® and PhaseOne^® branded wound care product sales.

Sales and marketing expenses were unchanged at $1.8 million for the second quarters of 2022 and 2021. The second quarter of 2022 included $0.7 million of sales and marketing costs incurred for DERMAdoctor, which were partially offset by lower Avenova digital advertising costs. General and administrative (G&A) expenses for the second quarter of 2022 were $1.9 million, compared with $1.6 million for the second quarter of 2021, and included $0.5 million in DERMAdoctor G&A costs and $0.1 million from the amortization of intangibles related to the DERMAdoctor acquisition, partially offset by a decrease in professional services, consultants and employee costs. Research and development (R&D) expenses for the second quarter of 2022 were $40 thousand, compared with $21 thousand for the prior-year period.

Gross margin on net product revenue for the second quarter of 2022 was 51%, compared with 71% for the second quarter of 2021, with the decrease primarily due to sales of DERMAdoctor products and higher sales of branded wound care products.

Operating expenses for the second quarter of 2022 were $3.7 million, compared with $3.4 million for the second quarter of 2021, and included $1.1 million in DERMAdoctor expenses.

Net loss attributable to common stockholders for the second quarter of 2022 was $2.2 million, or $0.04 per share, compared with a net loss attributable to common stockholders for the second quarter of 2021 of $1.9 million, or $0.04 per share.

Six Month Financial Results

Net product revenue for the six months ended June 30, 2022 was $5.7 million, an increase of 44% from $3.9 million for the six months ended June 30, 2021.

Gross margin on net product revenue for the first half of 2022 was 54%, compared with 73% for the first half of 2021.

For the six months ended June 30, 2022, sales and marketing expenses decreased modestly and G&A expenses increased 49% due to the DERMAdoctor acquisition, both compared with the six months ended June 30, 2021. R&D expenses were $68 thousand for the first six months of 2022 versus $26 thousand for the prior-year period.

For the first six months of 2022, non-cash gain on the changes of fair value of warrant liability was $2.1 million and non-cash gain on the changes in fair value contingent liability was $219 thousand. There were no comparable items for the first six months of 2021.

The net loss for the six months ended June 30, 2022 was $2.3 million, or $0.04 per share, compared with a net loss for the six months ended June 30, 2021 of $3.4 million, or $0.08 per share.

NovaBay had cash and cash equivalents of $3.9 million as of June 30, 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 August 17, 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 9678917.

About NovaBay Pharmaceuticals, Inc.:

NovaBay Pharmaceuticals, Inc. creates science-based, problem-solving, accessible solutions for improved well-being through its two brands, Avenova^® and DERMAdoctor^®. Avenova products are scientifically created and clinically proven to help patients and consumers with common eye irritations. DERMAdoctor products are premium dermatologist-developed skincare solutions sold through traditional domestic retailers, digital beauty channels and international distributors.

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 and current product offerings, 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 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 Company’s products not being able to penetrate one or more targeted markets, 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)
		June 30,				December 31,
		2022				2021
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	3,931			$	7,504
Accounts receivable, net of allowance for doubtful accounts ($0 at June 30, 2022 and December 31, 2021)			1,098				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 June 30, 2022 and December 31, 2021, respectively)			3,801				3,220
Prepaid expenses and other current assets			629				778
Total current assets			9,459				13,170
Operating lease right-of-use assets			2,217				411
Property and equipment, net			166				193
Goodwill			4,528				4,528
Other intangible assets, net			5,018				5,200
Other assets			156				476
TOTAL ASSETS		$	21,544			$	23,978
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Accounts payable		$	930			$	1,045
Accrued liabilities			2,257				2,092
Line of credit			—				105
Operating lease liabilities			470				200
Total current liabilities			3,657				3,442
Operating lease liabilities non-current			1,800				246
Warrant liability			—				9,558
Contingent earnout liability			342				561
Total liabilities			5,799				13,807
Commitments & contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; 12 and 14 issued and outstanding at June 30, 2022 and December 31, 2021, respectively			570				680
Common stock, $0.01 par value; 150,000 and 100,000 shares authorized, 53,513 and 47,766 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively			535				478
Additional paid-in capital			158,793				150,900
Accumulated deficit			(144,153	)			(141,887	)
Total stockholders' equity			15,745				10,171
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	21,544			$	23,978

NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (in thousands except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Sales:
Product revenue, net		$	3,043			$	2,126			$	5,666			$	3,927
Other revenue, net			2				7				8				13
Total sales, net			3,045				2,133				5,674				3,940
Product cost of goods sold			1,495				614				2,608				1,069
Gross profit			1,550				1,519				3,066				2,871
Operating expenses:
Research and development			40				21				68				26
Sales and marketing			1,752				1,788				3,439				3,468
General and administrative			1,910				1,569				4,093				2,756
Total operating expenses			3,702				3,378				7,600				6,250
Operating loss			(2,152	)			(1,859	)			(4,534	)			(3,379	)
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) income, net			(3	)			—				(7	)			2
Loss before provision for income taxes			(2,155	)			(1,859	)			(2,266	)			(3,377	)
Provision for income taxes			—				—				—				—
Net loss and comprehensive loss		$	(2,155	)		$	(1,859	)		$	(2,266	)		$	(3,377	)
Net loss per share (basic and diluted)		$	(0.04	)		$	(0.04	)		$	(0.04	)			(0.08	)
Weighted-average shares of common stock used in computing net loss per share (basic and diluted)			52,735				42,561				51,419				42,174

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005647/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 product revenue figures for Q2 2022?

NovaBay reported $3.0 million in product revenue for Q2 2022, a 43% increase from $2.1 million in Q2 2021.

How did the net loss for NovaBay in Q2 2022 compare to the previous year?

The net loss for Q2 2022 was $2.2 million, the same as in Q2 2021.

What was the gross margin for NovaBay in Q2 2022?

The gross margin was 51% for Q2 2022, down from 71% in the same period last year.

How much cash did NovaBay have as of June 30, 2022?

NovaBay had cash and cash equivalents of $3.9 million as of June 30, 2022.

What growth strategies did NovaBay employ in 2022?

NovaBay launched seven new OTC products and optimized digital marketing initiatives to drive sales.