NovaBay Pharmaceuticals Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

NovaBay Pharmaceuticals (NYSE American: NBY) reported Q2 2024 financial results, highlighting an 8% increase in eyecare product revenue driven by higher Avenova sales through online channels. The company saw a 16% growth in Amazon Subscribe & Save customers during H1 2024, with subscriber sales accounting for 24% of all online Avenova sales year-to-date. Sales and marketing expenses decreased by 13%, reflecting efficient digital marketing optimization. NovaBay's Q2 2024 total net sales were $2.4 million, with a gross margin of 66%. The company reported a net loss of $1.6 million, or $1.37 per share. Post-quarter, NovaBay completed a $3.9 million financing to strengthen its balance sheet.

Positive

• Eyecare product revenue increased 8% driven by higher Avenova sales through online channels
• 16% growth in Amazon Subscribe & Save customers during H1 2024
• Subscriber sales accounted for 24% of all online Avenova sales year-to-date
• Sales and marketing expenses decreased by 13% due to efficient digital marketing
• Gross margin improved to 66% in Q2 2024 from 49% in Q2 2023
• $3.9 million financing completed in July 2024 to strengthen the balance sheet

Negative

• Total net sales decreased to $2.4 million in Q2 2024 from $3.5 million in Q2 2023
• Net loss of $1.6 million reported for Q2 2024
• Cash and cash equivalents decreased to $0.8 million as of June 30, 2024, from $2.9 million at the end of 2023

Insights

Financial Analyst

NovaBay's Q2 2024 results show mixed signals. Eyecare product revenue grew 8%, driven by online sales and an expanding subscription base. This recurring revenue stream is promising, accounting for 24% of online Avenova sales. However, total sales decreased year-over-year due to the absence of a large wound care order.

The company's focus on digital marketing efficiency is paying off, with sales and marketing expenses down 13%. Gross margin improved significantly from 49% to 66%, mainly due to product mix. The $3.9 million financing in July strengthens their balance sheet, but cash position remains tight at $0.8 million as of June 30.

While the net loss narrowed, it's still substantial at $1.6 million for Q2. The company's goal of $10 million in eyecare revenue for 2024 seems ambitious given the current run rate. Investors should monitor cash burn and revenue growth closely in coming quarters.

Market Research Analyst

NovaBay's shift towards online channels and subscription-based sales is a smart move in the current market landscape. The 16% increase in Subscribe & Save customers on Amazon.com indicates growing brand loyalty and provides a stable revenue base. This aligns with broader e-commerce trends and consumer preferences for convenience.

However, the company's heavy reliance on a single product line (Avenova) poses risks. The loss of wound care revenue highlights the need for product diversification. The eyecare market is competitive and NovaBay will need to continue innovating to maintain growth.

The improved gross margin suggests better pricing power or cost management, but sustained profitability remains a challenge. The recent capital raise buys time, but the company needs to accelerate revenue growth or further cut costs to achieve breakeven. Investors should watch for any new product developments or strategic partnerships that could expand NovaBay's market reach.

• Eyecare product revenue increased 8% driven by higher sales of Avenova^®-branded products through online channels
• Sales and marketing expenses declined 13% reflecting efficient growth through digital marketing optimization
• Balance sheet strengthened with $3.9 million financing in July

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, 2024 and provides a business update.

“Revenue growth was driven by higher Avenova sales through online channels including an expanded subscription customer base,” said Justin Hall, CEO of NovaBay. “The number of Subscribe & Save customers on Amazon.com increased 16% during the first half of the year. In fact, subscriber sales on Amazon.com and Avenova.com accounted for approximately 24% of all online Avenova sales year to date. These recurring sales create predictable revenue, provide a strong foundation for future growth and allow us to efficiently manage our sales and marketing spend, which decreased 13% for the quarter. These repeat sales also give us confidence in achieving our goal of 2024 net revenue from our eyecare business of approximately $10.0 million.

“Following the close of the quarter we completed a capital raise that strengthened our balance sheet, allowing us to pursue strategic and fundamental transactions from a position of strength,” he added.

Second Quarter Financial Results

Financial results for the three and six months ended June 30, 2024 and 2023 do not include results from DERMAdoctor, which was divested on March 25, 2024 and is accounted for in discontinued operations. Financial information about discontinued operations is available under “Divestiture and Discontinued Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which will be filed with the Securities and Exchange Commission (the “SEC”) later today.

Total sales, net for the second quarter of 2024 were $2.4 million. Essentially all net sales for the quarter were derived from sales of eyecare products, which increased 8% over the prior year due to more Avenova^®-branded products sold through online channels. Total sales, net for the second quarter of 2023 were $3.5 million, which included $2.2 million from eyecare products and $1.3 million from wound care products, including a large order of NeutroPhase^®-branded wound care products with no comparable order in the 2024 period.

Gross margin on net sales for the second quarter of 2024 was 66%, compared with 49% for the second quarter of 2023, with the improvement primarily due to product mix.

Sales and marketing expenses for the second quarter of 2024 were $1.0 million, a 13% decrease from $1.2 million for the prior-year period, reflecting continued efficiencies in digital advertising and lower professional services. General and administrative (G&A) expenses for the second quarters of 2024 and 2023 remained consistent at $1.6 million. Research & development (R&D) expenses for the second quarter of 2024 were $9 thousand, versus $22 thousand for the prior-year period.

Non-cash items for the second quarter of 2024 included a loss on the change in fair value of warrant liabilities of $80 thousand and a loss on adjustments to the fair value of embedded derivative liability of $83 thousand. Non-cash items for the second quarter of 2023 included a gain on changes in fair value of warrant liabilities of $216 thousand and a gain on change in fair value of embedded derivative liability of $40 thousand. Accretion of interest and amortization of discounts on convertible notes for the second quarter of 2024 was $0.3 million, compared with $0.5 million for the second quarter of 2023.

Other expense, net for the second quarter of 2024 was $69 thousand, compared with $0.4 million for the second quarter of 2023, with the decrease due primarily to higher financing costs in the prior-year period.

Net loss attributable to common stockholders for the second quarter of 2024 was $1.6 million, or $1.37 per share. This compares with a net loss attributable to common stockholders for the second quarter of 2023 of $4.0 million, or $44.43 per share, which included a $2.0 million non-cash increase to accumulated deficit due to an adjustment to the preferred stock conversion price.

Six Month Financial Results

Total sales, net for the six months ended June 30, 2024 was $5.0 million, compared with $5.9 million for the six months ended June 30, 2023.

Gross margin on net sales for the first half of 2024 increased to 67% from 57% for the first half of 2023.

For the six months ended June 30, 2024, sales and marketing expenses decreased 14% and G&A expenses increased 19%, both compared with the six months ended June 30, 2023. R&D expenses were $28 thousand for the first half of 2024, versus $32 thousand for the prior-year period.

Net loss attributable to common stockholders for the first half of 2024 was $5.2 million, or $5.57 per share, compared with a net loss for the first half of 2023 of $5.8 million, or $77.42 per share.

NovaBay had cash and cash equivalents of $0.8 million as of June 30, 2024, compared with $2.9 million as of December 31, 2023. In July 2024, the Company completed an underwritten public offering raising gross proceeds of $3.9 million.

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 833-816-1121 from within the U.S. or 412-317-1862 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 September 3, 2024 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 3413491.

About NovaBay Pharmaceuticals, Inc.

NovaBay's leading product Avenova^® Antimicrobial Lid & Lash Solution is often recommended by eyecare professionals for blepharitis and dry eye disease. Manufactured in the U.S., Avenova spray is formulated with NovaBay's patented, proprietary, stable and pure form of hypochlorous acid. All Avenova products are available directly to consumers through online distribution channels such as Amazon.com and Avenova.com.

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, expanded access to our products through new and existing sales channels, 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 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 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 the Company’s latest Form 10-K/Q filings and registration statements, as may be amended from time to time, with the SEC, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and the Company 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

Financial tables follow

NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value amounts)
		June 30, 2024				December 31, 2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	751			$	2,924
Accounts receivable, net of allowance for credit losses ($3 at June 30, 2024 and December 31, 2023)			547				680
Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($204 and $264 at June 30, 2024 and December 31, 2023, respectively)			700				564
Prepaid expenses and other current assets			255				256
Current assets, discontinued operations			—				2,730
Total current assets			2,253				7,154
Operating lease right-of-use assets			1,128				1,296
Property and equipment, net			68				87
Other assets			476				478
Other assets, discontinued operations			—				19
TOTAL ASSETS		$	3,925			$	9,034
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Liabilities:
Current liabilities:
Accounts payable		$	1,235			$	906
Accrued liabilities			1,297				1,169
Secured Convertible Notes, net of discounts			655				1,137
Unsecured Convertible Notes, net of discounts			41				—
Operating lease liabilities			382				368
Current liabilities, discontinued operations			—				698
Total current liabilities			3,610				4,278
Warrant liabilities			—				334
Operating lease liabilities-non-current			932				1,108
Total liabilities			4,542				5,720
Commitments and contingencies
Stockholders’ (deficit) equity:
Preferred stock, $0.01 par value; 5,000 shares authorized;
Series B Preferred Stock; 1 and 6 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			6				275
Series C Preferred Stock; 0 and 1 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			—				1,675
Common stock, $0.01 par value; 150,000 shares authorized, 1,348 and 321 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively*			13				3
Additional paid-in capital*			179,392				176,210
Accumulated deficit			(180,028	)			(174,849	)
Total stockholders’ (deficit) equity			(617	)			3,314
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY		$	3,925			$	9,034

NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Sales:
Product revenue, net		$	2,387			$	3,523			$	5,011			$	5,855
Other revenue, net			13				11				20				18
Total sales, net			2,400				3,534				5,031				5,873
Cost of goods sold			808				1,795				1,645				2,534
Gross profit			1,592				1,739				3,386				3,339
Operating expenses:
Research and development			9				22				28				32
Sales and marketing			1,019				1,175				2,074				2,411
General and administrative			1,617				1,593				3,908				3,292
Loss on divestiture of subsidiary			—				—				865				—
Total operating expenses			2,645				2,790				6,875				5,735
Operating loss			(1,053	)			(1,051	)			(3,489	)			(2,396	)
Non-cash (loss) gain on changes in fair value of warrant liabilities			(80	)			216				114				216
Non-cash (loss) gain on change in fair value of embedded derivative liability			(83	)			40				(18	)			40
Accretion of interest and amortization of discounts on convertible notes			(300	)			(501	)			(733	)			(501	)
Other expense, net			(69	)			(432	)			(549	)			(432	)
Net loss from continuing operations			(1,585	)			(1,728	)			(4,675	)			(3,073	)
Net loss from discontinued operations			—				(308	)			(124	)			(702	)
Net loss			(1,585	)			(2,036	)			(4,799	)			(3,775	)
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price			—				(1,996	)			(380	)			(1,996	)
Net loss attributable to common stockholders		$	(1,585	)		$	(4,032	)		$	(5,179	)		$	(5,771	)
Basic and diluted net loss per share
Net loss per share from continuing operations*		$	(1.37	)		$	(41.04	)		$	(5.44	)		$	(68.00	)
Net loss per share from discontinued operations*			—				(3.39	)			(0.13	)			(9.42	)
Net loss per share attributable to common stockholders (basic and diluted)*		$	(1.37	)		$	(44.43	)		$	(5.57	)		$	(77.42	)
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (basic and diluted)*			1,155				91				930				75

* After giving retroactive effect to a 1-for-35 reverse stock split that became effective May 30, 2024.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240813722587/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 was NovaBay's (NBY) revenue growth for eyecare products in Q2 2024?

NovaBay reported an 8% increase in eyecare product revenue in Q2 2024, driven by higher sales of Avenova-branded products through online channels.

How much did NovaBay (NBY) raise in financing in July 2024?

NovaBay completed an underwritten public offering in July 2024, raising gross proceeds of $3.9 million to strengthen its balance sheet.

What was NovaBay's (NBY) net loss for Q2 2024?

NovaBay reported a net loss attributable to common stockholders of $1.6 million, or $1.37 per share, for Q2 2024.

How did NovaBay's (NBY) sales and marketing expenses change in Q2 2024?

NovaBay's sales and marketing expenses decreased by 13% in Q2 2024 compared to the prior-year period, reflecting continued efficiencies in digital advertising and lower professional services.