EMERYVILLE, Calif.--(BUSINESS WIRE)--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.
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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. | ||||||||
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 | ||||||||||||||||||
Contacts
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
