NBY - Earnings call transcript Q3 2021 | NovaBay Pharmaceuticals, Inc.

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Operator

Good day, and welcome to the NovaBay Pharmaceuticals Third Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jody Cain. ahead. go Please

Jody Cain

Cain today’s Jody Thank for you This with in call. participating is LHA.

of results. there impact results could and from In Hall, and Joining the any This available federal and are different remind the the by Product recent NovaBay uncertainties about best forward-looking me NovaBay’s These Justin anticipated today’s DERMAdoctor like statements impact would Andy the its NovaBay’s new any to Chief Officer. on Kunin, COVID-XX change results potential risks of pandemic. and information I and the this General outlook its particular, that is Chief and comments include results of the of statements the for Jones, future that at Financial laws. Audrey Officer; operations, Dr. listeners company’s operations Chief duration Counsel; Officer subsidiary ongoing made call uncertainty during on materially time within acquisition securities forward-looking acquired could to financial estimate cause discussion. based actual and that NovaBay’s will from newly management the be COVID-XX is meaning of contemplated involve means Executive

call required obligation law. over NovaBay the no or XXXX. filings Securities accurate only November risks as to of uncertainties, For or like as and live contains is that content the call reflect a information Furthermore, list XX, description Hall. I’d of of and at the date Justin to And please statements by with undertakes events review sec.gov. and Commission NovaBay’s the update Exchange revise broadcast, circumstances this to except now, of turn any conference to the

Justin?

Justin Hall

you call our everyone, shareholders would to The call. Thank and us. and the today’s welcome today’s is for Jody. I you, purpose new entire DERMAdoctor twofold. team afternoon, joining Good to of like thank

quarter is first to The performance. review NovaBay’s third

of is NovaBay’s on transaction This $XX DERMAdoctor. in was the the DERMAdoctor talk Kansas more and Last second financing we the just one to – the this the City closed investment after this private of community, acquisition I in became and for important strong closing we purpose underlying placement. as appreciate with company. the about officially call The we Friday, when financials reception days million was an endorsement team received the which was acquisition. We strategy see and DERMAdoctor of days the

from DERMAdoctor That a us strong growth Now will ever, future. said, is our the period than more people sales year more ever company. revenues Avenova business. capabilities with same than about a using XX% than unit extremely year-to-date increased one Avenova the continue product on product time all we to I’m as high unattainable last an before. previously Avenova are put optimistic reaching today as have ever development see NovaBay’s new trajectory performance over

DERMAdoctor to product acquisition. new QX our to pipeline, the standalone period the I’ll Before turn over discussing from performance review and NovaBay’s a to financial prior call Andy

Andy Jones

per channel million that’s sales both third were million year’s for affected Thank higher increased Avenova focus is sales compared margin product for lower everybody. the personnel by in third Net year overall digital prior and from expenses by XXXX operating a due more primarily quarter offset $X.X legal And headcount which as quarter $X.XX market XXXX. sales compared per modestly of or a $X.X period. $X.X third XXXX OTC Gross $X.XX Total slightly of $X.X was for underlying from loss Avenova the this OTC mix. decrease XX% the which unchanged a or loss the due loss $X.X million to an quarter, third of million this Avenova Justin, channel eliminated XX% We for quarter sales for $X.X ago expenses The included XXXX in XXXX XX%, you, with unit of net warrant is liability. quarter prior afternoon, was warrants with year million was on total improvement or change the XX% lower good over-the-counter a on we the advertising part share, quarter. fair year the the year the unit from ago. million revenue share. This and down costs. non-cash to and loss was increased Avenova

no there was this comparable So year. amount

to financial results. year-to-date Turning briefly our

in XXXX, versus mainly $X.X or sales expenses marketing expenses as and months were to ago warrant of net for period, This invested for loss the first or year. $X.XX we attributable per included the margin XX% of $X.X KNXX XX%, we for margin of increased are last million Masks share. Avenova for the improvement to first $X.X first year a the Gross Avenova improvement PPE of for million. For nine million $X.X months both included share liability year other of programs. and months XXXX, $X.X million Total XXXX months million PPE sales an lower sales period. from OTC of with the sales months sales first digital loss increased sales that and nine $X.X nine the with XXXX nine higher were $X.X nine a which months prior sales non-cash compared and the eliminated year of unit related XX% per $X.X million Total Net in of million operating nine which of included unit which net was the of is $X.XX products. first first an XXXX, total XX% advertising for increased from million loss products. was has the this the

September As of NovaBay equivalents of cash and XX, had XXXX, cash $X million.

proceeds this months ATM from nine of first facility. we net sale $X.X through the During stock common million the raised of of year, an

the operations. execute of acquisition mentioned, Justin and its fully last million financing of completed also the us on As closing we allows financing DERMAdoctor This to $XX a week. integrate

makes And integrate of total million, the $X.X this financial and this quarter reviewing the administrative DERMAdoctor be acquire financial is DERMAdoctor DERMAdoctor acquisition, We near-term. bottom the as incurred some DERMAdoctor to fourth to to approximately NovaBay’s will synergies of be as expected We a with the majority will impact our expect modest year. transaction double in expense continue accretive a which clear entity anticipate the DERMAdoctor immediately will addition of of the cost that revenues. sense. in standalone line

revenues believe that current fund past, our in sufficient quarter time. through pleased I’m the exceeding expect of said we reach to with fourth fiscal As million operations soon achieve we is XXXX. $XX profitability We as to tremendous year as XXXX. cash to the for profitability expect the we that to report now

Lastly, about the welcome I’d with the DERMAdoctor shared am I like very turn excited to team I’ll to that, the personally And back future. very, our family. over call Justin. and publicly to NovaBay

Justin Hall

Thanks, Andy.

for acquisition. the a turn DERMAdoctor as has will the on NovaBay to subsidiary vision that announce DERMAdoctor taken Audrey pleased at combined operate let’s to operations. role and a our companies with Officer. of to our Chief wholly-owned as Product Jeff continuing I’m lead Audrey Co-Founders post Now Kunin NovaBay broader

DERMAdoctor their a with Audrey with many be since business found markets. In the and DERMAdoctor a for skincare developer last our has been will As mentioned known products I’m to of Audrey a and multiple into us NovaBay on for some as of on our skincare discuss is about short in a industry fit Audrey announced combination, few truly the view introduced time, we’ve in products. in transformation Board working an dermatologist, unique our trailblazer of plans ideal certified products the both call, formulations as moments. NovaBay excited eyecare new new reasons. the the we proposed

As this implications. transaction Andy has mentioned, financial compelling

of second, third, office product distribution, and expand warehousing international to However, include the capabilities, and synergies, like benefits reiterate specifically new marketing benefits. fifth, I’d a development. little these points. These front each broader on product fourth, I’ll first, one diversification,

expands our First portfolio. the achieved Avenova lash premier conservable spray. with the acquisition as success product lid our We’ve including DERMAdoctor establishing and antimicrobial brand current greatly

being foothold we billion innovation high-growth scientifically significantly products market. highly dermatologist effective rewards in formulated in exceeded will risk reach be $XXX now to one skincare $XXX consumers. that resonate proud product estimates cosmetic strongly skincare This of proven for the eliminated products this company. XXXX. lucrative billion a have global and XXXX, are we accomplishment, we market the our While we the increased Further, that of market Researchandmarkets.com believe by by developed and we’ll and a with

allowing X.X in ago, more years our sales Second, products. campaigns. campaigns than product marketing consumers media and I’m We through online we expertise launched now effort bring expertise social presence through in promote units report all pleased skincare skill two-thirds digital engage to immense DERMAdoctor We over across and of through channels, print the that influencer are the developing and the with to OTC Avenova channel. strong media our a bring and advertising and brand sold to counter robust marketing social of sales

digital and sophisticated real-time reaching programs evaluate Our effectiveness include in to demographics. metrics target monitoring

adjustments we can improve effectiveness the quick optimize make Importantly, and spend. ad to

products. enhance excited DERMAdoctor an exciting advance successful to DERMAdoctor strategies We’re the base. to customer This is these bringing in about and opportunity business

international Third, with growth future products see We to The NovaBay has – these through expand years forward America, throughout opportunities. acquisition DERMAdoctor’s DERMAdoctor and with world. and The the sales over developed in international to we of many benefit office and are markets. to Asia. front continue and a products and North relationships look opportunity sold DERMAdoctor to South continue to synergies. established of relationships, the Avenova Europe international large relates see distributors significant warehouse America, and leveraging to further DERMAdoctor network we and distribute retailers distributors growing we’ll fourth CelleRx have into the team relationships

shipping, to DERMAdoctor These storage, and can expenses, to functions. to expect savings accounting anticipate DERMAdoctor existing from operations from consolidate all example, third-party providers G&A operations we warehouse We and of warehouse include team. NovaBay. finance With now shifting course logistics. his picking, share respect the cost with some packing, For

and eyecare of a track both DERMAdoctor most innovative award-winning her markets. This proven but record Audrey products we new the in at and highly team’s presence skincare our Lastly, scientifically expand creating products. experienced gain capabilities in to importantly, developing has proven group

With acquisition with product categories DERMAdoctor DERMAdoctor, new clinically now including created has of idea product NovaBay effective and generation, clinical which proprietary capabilities, development the have has trust. consumers packaging, love formulations, and to testing, product come marketing. formulation,

to created the products innovative revenues immediately new with excited the a extremely all this With path accelerate our eyecare towards acquisition, ability and we development new are market brands. highly across strategic numerous of of diversified one profitability. skincare across We our NovaBay a and about have

the call over to Kunin. Now to Audrey like I’d turn

Audrey Kunin

KP DERMAdoctor expressing XX over Duty, sells and Misbehavin’, our products to Thanks, Justin, C, Calm full and Ain’t be + team at speak families, NovaBay. Revenge. the within enthusiasm can here. as DERMAdoctor Wrinkle to joining I Corrected, pleasure and the Cool for Kakadu such

products Our such are SkinStore course of through website. beauty our sold Amazon.com and Costco, Macy’s, such as digital QVC.com, through retailers, retailers, as major and dermadoctor.com

about distribution audience composed of approximately We resources. are DERMAdoctor a on marketing awareness, platform, NovaBay’s million excited has in utilizing QVC’s is and expanding an sales and financial partner brand very which televised QX And viewers. air for our importantly, of XX XXXX

focus been correct innovative DERMAdoctor skin creating target which on Our common has solving dermatologic at concerns. always problem solutions,

SKUs hypoallergenic currently Our are effective. expect to eczema. products this XXXX. that as keratosis at popular that We new of common skin a approach skin skincare, in both in available can been We’ll eyecare be We targeting has we of manufactured expand first continue intend to stages NovaBay, solutions joining as and for market. to and well an half the anti-aging, approach pipeline develop pilaris as development in In with problem-solving developing extensive various clinical launching new of variety formulations address least commercially categories, clean such four have of in the yet concerns, conditions.

existing solutions Duty we’ll Kakadu create Calm Corrected are XXXX, new families. and + developing We KP ones. expand innovative Similarly within families and scientifically Cool for C, the both

We’re bringing to strategy product in the eyecare this the same development markets. solutions

gland in dry have eye, We intolerance as address and XXXX meibomian identified to XXXX. inflammation, bacterial lens dysfunction, blepharitis, concerns and contact

lid range of a under brand, the furthering all and Avenova develop health. to for to mission lash is plan our address products needs Our

working our to goal continue in like longstanding with now we It accelerated have be that, innovative back strong been with backing creating partner to growth. and And the turn has NovaBay. excited it I’d NovaBay of very to Justin. We’re pipeline to problem-solving to a skincare

Justin Hall

Audrey. Thanks,

that we preliminary a meeting for on proxy be to with virtually SEC XX. a special may have December stockholders seen held of the statement You filed

of month as the stockholder XXXX If you XX, proxy receive a date, are towards record NovaBay will the statement in mail. end the of October the you the

all We that are in vote favor asking you of proposals.

or phone statement to in will mail, online. by You shares the vote proxy instructions your receive by

first of of to acquisition. as forward proposals support is two $XX move million allowing us combined a pertain company. The proposals to all our passage DERMAdoctor to key financing recent in The the

proposal shares issuances. XX% I first the is the shareholders. for concerned the second about that that share authorizes the acquisition beyond that intrinsic approval definitely of in however, interest these are DERMAdoctor We new go value The need And dilution, both of to in best current both proposals underlie stockholder warrants. of some threshold there us immediate are everyone NovaBay. NYSE our to to for advance know shareholders authorizes the I want assure all shareholder creates for approval and of the proposals vision the who

skincare with footprint and complimentary transaction. that skill to for will the want I market. and and growing expanded DERMAdoctor stronger company reiterate sets my enthusiasm a the DERMAdoctor in NovaBay I So eyecare create expect the faster

anticipated this couldn’t XXXX. future. we end enhance shareholder you targeting achievement, believe I greatly What questions. we ready to the will that, Operator, revenue by our more acquisition, excited profitability take your by value. I attention. afforded we’re And the thank are with Importantly, about growth of be for

Operator

Thank you.

will [Operator the Instructions] now We question-and-answer begin session.

Justin Hall

for question, the to While want urge shareholders statement. in vote our first proxy to proposals I all we’re waiting for our

webcast by you investor we’ll beginning Healthcare of holding XX XX, that with want presentation, to Francisco, the the like phone, we’ll and also Wainwright which to questions presenting website you have J.P. mention be in-person be H.C. corporate the posted to call We XX. our Conference, at also I shares at being X-XXX-XXX-XXXX. or If would your held vote Conference BioConnect meetings the view January Morgan invite be BioConnect Virtual San our both January to events through will XXXX. in please

for Okay, operator, first question. the ready we’re

Operator

Thank you.

question comes go first Our Ladenburg Cohen Jeffrey Please from ahead. with Thalmann.

Jeffrey Cohen

you? Andy Audrey. How are Justin, and Hi,

Justin Hall

Very good. Hi, Jeff.

Andy Jones

Thanks, Jeff.

Jeffrey Cohen

acquisition end, our to the few from we’re a pretty questions just think speed up integration. So I on

in months you Is closed in quarter. so said would correct? that from you week, the three Justin, built mean two DERMAdoctor So last that out of fourth

Justin Hall

Yes. correct. That’s

So date close November the official X. was Friday

pretty it’s So months. two much correct. a That’s

Jeffrey Cohen

expected anticipated to but at what’s see it. quarter? quarter your what’s can report I the share Got share And the account. XX.X, Okay. account fourth for this the

Justin Hall

Yes.

have XX you about million we now the been already in as right the So issued outstanding, have, said, placement. shares shares private preferred

are statement. a We filing registration

approval. common I week. those think be after until next convertible outstanding that’ll stock But shares not are shareholder into

that and And shareholder for all shares is year the preferred So a convert portion only of date is there’s the XX. approval shareholders small on approval a of set before will preferred the for end. XX. December it from the shares shareholders high current the likelihood the But contingent upon the

Jeffrey Cohen

Okay. what’s count. share preferred the total And

Andy Jones

into total which would share count price. common the XX.X price of stock So million at the XX,XXX, $X.XX the at preferred is convert conversion conversion shares

Jeffrey Cohen

Okay.

two [indiscernible] those top So and it’d between between now on be somewhere plus now. numbers XX.X

Andy Jones

Yes.

everything. XX So – at after converting – XX XX most shares million million to

Justin Hall

be the that of would It the Yes. conversion be would before end unlikely year. there much

Jeffrey Cohen

there raise cash, anticipated quarter. closed today? may this quarter, acquisition of this $X as to DERMAdoctor us in you as well as million far estimate And cash give be where the as it. was the Could Got with

Justin Hall

roughly Yes. we’ll We at would end something the anticipate end be million, million, at of this that, the like $X year. year $X.X that

Jeffrey Cohen

it. Got

Okay. your XX And is that plus then for XX number plus? XXXX, guidance

Justin Hall

is. It

Jeffrey Cohen

Got is number? And next cash year, or by end a number your a GAAP the it. that profitability guidance of

Andy Jones

or a… number cash I’m a sorry,

Jeffrey Cohen

talk GAAP a Or profitable QX assume number getting it’s about when you XXXX.

Andy Jones

both, likely shooting we’re I Yes. it. got I’ve both. for

Jeffrey Cohen

margins of mid-XX% will And do in been Okay. combined business? the margins. let’s on the you know from range. hovering What expect Got that be the call to ramifications it ramifications it. low I DERMAdoctor your have

Andy Jones

Yes.

So a question. good

but of and XXs margins times. more been and channels little in their a talked us. improved they’ve lower direct-to-consumer And their think we’ve on recently, rates about the bit focus has DERMAdoctor sort I and So like online

the So as we dust will combined be margins to we’ll that, that their somewhere that continue once XX% close anticipate and to settles, company. a improve

Jeffrey Cohen

I it. got

And Okay. just let check here. me

Thanks for all for our of them that does off. it think questions. I taking

Andy Jones

Jeff. Thank you,

Justin Hall

Jeff. Thanks,

Audrey Kunin

Thanks, Jeff.

Operator

from go Capital. next Ascendiant Please with Our ahead. question comes Woo Edward

Edward Woo

think to time on the that And new idea team. Are Yes. for year. four have, normal said call My all your cycle first half you mentioned I getting they you is, it from product – the development for the to of you next your will skincare products? welcome to to I shelf? want question SKUs Audrey in what’s

Audrey Kunin

reveal I that referring there’s don’t new was that within DERMAdoctor process. Avenova to SKUs anything working Well, the also just four on am on I skincare really our the to but have products brand. yet pipeline,

new And to obviously typically vary. company, takes it from commercialization. inception to so to As can idea I’m of XX that the months

makes little just multiple it pipeline we a to another. in one to the So try case in have than speeds sooner market

Edward Woo

there in it a Great. product is development? business is – intensive very And capital

Justin Hall

Yes.

So one. that Ed, yes, I’ll take

been I and very a to of commercializing to product pharmaceutical whereas have a is what already FDA where is is so come counter both market. it and years or Andy And products telling the dollars over intensive we device are typically that background commercialization in the medical from people of products new we that in capital new existing. be And all on that’s products time, will of millions monograph measured an the done bring

the the measured time months is is measured So in thousands the of to and market in dollars. investment

Edward Woo

Great. stronger areas or international Are where are there international congratulations particular either on definitely you And reach. Europe? Asia the

Justin Hall

Yes. I’ll let Audrey answer that.

Audrey Kunin

wonderful one entire than is wonderful very Actually our have business Middle have distributors DERMAdoctor for East. the the fortes. they Middle of decade, and been a I more over working East across a Yes. a with built

Justin Hall

luck. answering you for good Well, wish Great. my thanks I guys questions and

Audrey Kunin

Thank Ed. you,

Justin Hall

Ed. Thanks,

Andy Jones

you. Thank

Operator

session. conference to like for I Justin Hall turn over back closing This the question-and-answer our remarks. to concludes any would

Justin Hall

and today interest us joining in you Thank again your once for NovaBay.

progress DERMAdoctor calls in March bright future envision. we a investor company’s XXXX. our the fourth excited look quarter extremely reporting about the our acquisition have and day. are very In of forward to meantime, please We with during transformation nice the We

Operator

The attending you conference presentation. is concluded. Thank today’s for now

You may now disconnect.

NovaBay Pharmaceuticals (NBY) 13 Nov 212021 Q3 Earnings call transcript