NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports financial results for the three and nine months ended September 30, 2021 and provides a business update.
“This has been a great year for NovaBay. Avenova revenue has increased by 16% over the same period last year and we’ve cut our net loss per share in half. Unit sales have reached an all-time high as more people are using Avenova than ever before. Most importantly, with the closing of the DERMAdoctor acquisition, we have executed on our strategic initiative of expanding our commercial portfolio with new, exciting science-based products,” said Justin Hall, NovaBay CEO. “I’m enthused about the Company’s strong strategic position in the large and growing skincare market. The combined NovaBay and DERMAdoctor teams have already begun vigorously working to drive the expansion of our top and bottom lines.
“Going forward, DERMAdoctor will operate as a wholly owned subsidiary of NovaBay with co-founders Drs. Audrey and Jeffrey Kunin continuing to lead DERMAdoctor operations. I’m pleased to announce that Audrey has taken on a broader role at NovaBay as our Chief Product Officer,” added Mr. Hall. “Audrey is a board-certified dermatologist, a known trailblazer in the skincare industry and the developer of the many unique formulations found in DERMAdoctor products. In the short time since we announced our proposed business combination, Audrey has been working with us on new products to be introduced in both the skincare and the eyecare markets.”
“Some of the most popular DERMAdoctor products are centered around the Calm Cool + Corrected, Kakadu C, and KP Duty families. To expand on their success, we plan to launch two new products into the Calm Cool + Corrected family in the first quarter of 2022. Then in the second quarter, we anticipate launching one new product into the Kakadu C family and another product into the well-established KP Duty family. All of these additions will be omnichannel products contributing to the incremental growth of the DERMAdoctor brand,” said Dr. Audrey Kunin. “Also, keep an eye out for me on QVC in the coming months.”
“DERMAdoctor is immediately accretive to the Company’s bottom line, with sales of DERMAdoctor’s existing products anticipated to double NovaBay’s revenues,” said Mr. Hall. “With the continued sales growth of both NovaBay and DERMAdoctor products, along with the revenue from totally new products, we now have a clear path to profitability by the end of 2022. I believe that achieving and sustaining profitability through double digit revenue growth will be the ultimate driver of shareholder value.”
Third Quarter Financial Results
Net product revenue for the third quarter of 2021 was $1.8 million and consisted primarily of sales of Avenova. For the third quarter of 2021, total Avenova unit sales increased 11% and Avenova online unit sales increased 26%, both compared with the prior-year period. Net product revenue was $2.2 million for the third quarter of 2020, which included $1.8 million of Avenova sales, $0.2 million of PhaseOne private-label skin and wound care product sales, and $0.1 million of personal protective equipment (PPE) product sales. There were no PhaseOne or PPE product sales in the third quarter of 2021. PhaseOne revenue is expected in the fourth quarter of 2021.
Gross margin on net product revenue for the third quarter of 2021 was 73%, compared with 75% for the third quarter of 2020.
Operating expenses for the third quarter of 2021 were $3.6 million, compared with $3.7 million for the third quarter of 2020. Sales and marketing expenses were $1.9 million, compared with $1.7 million a year ago, with the increase due to higher digital advertising costs partially offset by lower sales personnel headcount. General and administrative (G&A) expenses of $1.8 million decreased slightly from $1.9 million for the third quarter of 2020 primarily due to lower legal expenses. Research and development (R&D) expenses for the third quarter of 2021 declined to $10 thousand from $125 thousand for the prior-year period.
Non-cash loss on the change of fair value of warrant liability for the third quarter of 2020 was $1.6 million. The warrants underlying this loss have been eliminated and no comparable result was recorded for the third quarter of 2021.
Net loss for the third quarter of 2021 was $2.3 million, or $0.05 per share, an improvement from the net loss for the third quarter of 2020 of $3.2 million, or $0.08 per share.
Nine Month Financial Results
Net product revenue for the nine months ended September 30, 2021 was $5.8 million, compared with $8.0 million for the nine months ended September 30, 2020, which included the sale of KN95 masks and other PPE products. For the first nine months of 2021, total Avenova unit sales increased 39% and Avenova over-the-counter unit sales increased 67%, both compared with the prior-year period.
Gross margin on net product revenue for the first nine months of 2021 was 73%, improving from the 61% for the first nine months of 2020.
For the nine months ended September 30, 2021, sales and marketing expenses increased by 14% to $5.3 million, G&A expenses decreased slightly by 2% to $4.5 million and R&D expenses decreased by 86% to $36 thousand, all compared with the nine months ended September 30, 2020.
Non-cash loss on the change of fair value of warrant liability for the first nine months of 2020 was $5.2 million. There was no comparable result recorded for the first nine months of 2021.
The net loss for the nine months ended September 30, 2021 was $5.7 million, or $0.13 per share, compared with a net loss for the nine months ended September 30, 2020 of $9.3 million, or $0.28 per share.
NovaBay had cash and cash equivalents of $9.0 million as of September 30, 2021, compared with $12.0 million as of December 31, 2020. During the nine months ended September 30, 2021, the Company raised net proceeds of $1.8 million from the sale of common stock through an ATM facility.
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. Shareholders and other interested parties may 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 December 2, 2021 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 10161592.
This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
About NovaBay Pharmaceuticals
NovaBay Pharmaceuticals, Inc. is 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 and CelleRx® is a breakthrough product in the beauty category. In November 2021, NovaBay acquired DERMAdoctor, LLC, a company commercializing 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 Pharmaceuticals, Inc. 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-Q/K filings as well as the Company’s Preliminary Proxy Statement filing 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
NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except par value amounts) | ||||||||
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,028 | $ | 11,952 | ||||
Accounts receivable, net of allowance for doubtful accounts ($0 at September 30, 2021 and December 31, 2020) | 843 | 1,106 | ||||||
Inventory, net of allowance for excess and obsolete inventory ($149 and $236 at September 30, 2021 and December 31, 2020, respectively) | 969 | 608 | ||||||
Prepaid expenses and other current assets | 657 | 576 | ||||||
Total current assets | 11,497 | 14,242 | ||||||
Operating lease right-of-use assets | 170 | 436 | ||||||
Property and equipment, net | 96 | 84 | ||||||
Other assets | 476 | 476 | ||||||
TOTAL ASSETS | $ | 12,239 | $ | 15,238 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Liabilities: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,354 | $ | 302 | ||||
Accrued liabilities | 1,325 | 2,115 | ||||||
Operating lease liabilities | 195 | 416 | ||||||
Total current liabilities | 2,874 | 2,833 | ||||||
Operating lease liabilities-non-current | 1 | 87 | ||||||
Total liabilities | 2,875 | 2,920 | ||||||
Commitments & contingencies (please refer to Note 8) | ||||||||
Stockholders' equity: | ||||||||
Preferred stock: 5,000 shares authorized; none issued and outstanding at September 30, 2021 and December 31, 2020 | — | — | ||||||
Common stock, $0.01 par value; 100,000 and 75,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 44,943 and 41,782 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 450 | 418 | ||||||
Additional paid-in capital | 150,643 | 147,963 | ||||||
Accumulated deficit | (141,729 | ) | (136,063 | ) | ||||
Total stockholders' equity | 9,364 | 12,318 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 12,239 | $ | 15,238 | ||||
NOVABAY PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (in thousands except per share data) | ||||||||||||||||
Three Months Ended
| Nine Months Ended
| |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Sales: | ||||||||||||||||
Product revenue, net | $ | 1,834 | $ | 2,167 | $ | 5,761 | $ | 8,038 | ||||||||
Other revenue, net | 6 | 3 | 19 | 8 | ||||||||||||
Total sales, net | 1,840 | 2,170 | 5,780 | 8,046 | ||||||||||||
Product cost of goods sold | 493 | 536 | 1,562 | 3,157 | ||||||||||||
Gross profit | 1,347 | 1,634 | 4,218 | 4,889 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 10 | 125 | 36 | 249 | ||||||||||||
Sales and marketing | 1,855 | 1,692 | 5,323 | 4,675 | ||||||||||||
General and administrative | 1,771 | 1,879 | 4,527 | 4,633 | ||||||||||||
Total operating expenses | 3,636 | 3,696 | 9,886 | 9,557 | ||||||||||||
Operating loss | (2,289 | ) | (2,062 | ) | (5,668 | ) | (4,668 | ) | ||||||||
Non-cash loss on changes in fair value of warrant liability | — | (1,589 | ) | — | (5,224 | ) | ||||||||||
Non-cash gain on changes in fair value of embedded derivative liability | — | 1 | — | 3 | ||||||||||||
Other income, net | — | 429 | 2 | 605 | ||||||||||||
Loss before provision for income taxes | (2,289 | ) | (3,221 | ) | (5,666 | ) | (9,284 | ) | ||||||||
Provision for income taxes | — | — | - | (1 | ) | |||||||||||
Net loss and comprehensive loss | $ | (2,289 | ) | $ | (3,221 | ) | $ | (5,666 | ) | $ | (9,285 | ) | ||||
Net loss per share (basic and diluted) | $ | (0.05 | ) | $ | (0.08 | ) | $ | (0.13 | ) | (0.28 | ) | |||||
Weighted-average shares of common stock used in computing net loss per share (basic and diluted) | 44,921 | 40,037 | 43,100 | $ | 32,614 | |||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20211111006031/en/
Contacts:
Justin Hall
Chief Executive Officer and General Counsel
510-899-8800
jhall@novabay.com
