NBY - Earnings call transcript Q1 2022 | NovaBay Pharmaceuticals, Inc.

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Operator

Good afternoon and welcome to NovaBay Pharmaceuticals First Quarter 2022 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. ma'am. ahead, go Please

Jody Cain

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

DERMAdoctor NovaBay into Hall, include Chief are any the Ukraine. and and and from and its DERMAdoctor call listeners the broader is me Joining Justin during made and the could based would of to economic this NovaBay’s the Jones, and that I comments control the economy at General management Chief Andy the information Russia Officer. company’s between will Financial today’s This by like impact In remind COVID-XX integration available Counsel; Officer boarder results statements and operations the uncertainties means results. that forward-looking estimate statements and and circumstances outlook the results beyond there NovaBay’s of impact pandemic any risks conflict impact contemplated meaning operations, particular, financial materially federal for company's on on securities that circumstances from such results of cause about involve actual acquisition, to uncertainty within COVID-XX the as laws. be the best different These change the that forward-looking could is its could anticipated that Executive time discussion.

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

Justin Hall

joining Thank X% and increased over-the-counter high Good from thank sales quarter reporting by everyone, XX% Spray another you, year-over-year, for by Avenova by I'm our channel, of you which record afternoon, to us. pleased unit begin and Jody. through QX.

team reporting call. like also DERMAdoctor NovaBay and are to today's in progress integrating and operations DERMAdoctor I'd We the welcome to

our Importantly, gains component on we expanding eye presence and with products week, various our within skincare products of executing key A to Earlier of strategy we highly-effective initiatives build large in portfolios most we growing is Avenova anti-aging further and the common edge new our DERMAdoctor top-line conditions. aggressively markets. our of on solving care are the generation for collections. problem drive popular announced cutting and this DERMAdoctor next launch as two

Audrey extensive pores lines, were appearance dermatologist Kunin, products DERMAdoctor. and skincare, reduce board-certified appearance. and brighter, Using newest and these she formulas more for of unique discoloration Our to youthful created help clinically who our Product Officer, of wrinkles, a proven the is Chief Founder a her by knowledge of devised fine

environmental toxins Retinol. product C these new skin vitamin high selling Kakadu acid product radical emulsion Kakadu damage or caused of C Joining ingredients C, combination our fight effective hydrating with and exfoliate retinol a light. combines to potency top This and with is by highly E. free creates family The vitamin to particular ultraviolet ferulic resurface

You oranges. may than a contains is plum, XX the remote average which in territory, C more know on Kakadu vitamin Florida times harvested that Australian

balanced of with our a the third + is Corrected Serum specifically marks this and combined Retinol Cool natural performance gently Corrected, eczema is Calm natural Cool with Oil. is Also, that skin Bakuchiol, high keeping based created skin-soothing late development products and we have rosacea Cool + several those skin and Calm March, told, product new introduced and features that far or Corrected more in a and gentle collagen XXXX, we moisturize All hydrated. to launched Hydrating production. and are Bakuchiol launch. plant designed This which in have five or and new Our with skin Alternative remove under since Cleansing product for makeup exfoliant prepared pH commercial are to for new luxe retinol ingredient a + our cellular while the This moisturizer skin turnover Calm a call into calming serum prone benefits. last soap-free collection. That's increases expansion so sensitive year alternative being

vision common conditions. and our complement new of offering clinically scientifically and are developed proven offerings proprietary address OTC of yet All corporate effective, yet our underserved and that products gentle, purpose importantly,

our of through available conveniently are products amazon.com. All

However, market larger allows investment our avenova.com launch. which our own committing websites, a under associated are low to dermadoctor.com. executed they are cost through before available test broader with acceptance of us being model course and All a launches to commercial

tapping product through create in brand pipeline, through includes our media and by distribution influencer that our Audrey's to Among growth consumers upon and to programs a leader, into as expertise we programs we're building NovaBay across thought our our engage and complementary our presence robust media of sets existing skincare expand with developing consumer pursuing popular digital DERMAdoctor marketing This online the leveraging campaigns. marketing allow collective strong teams channels social skill of are these, to our position social products. interviews and all with publications. Beyond

quoted This year Well appearance been with Just also on made the + this guest month, the QVC entitled a Corrected Cool featuring the Daily, Get Oprah as in articles time past Gorgeous Audrey Balm. Wear on and Ready, Audrey Eczema Elise. Network DERMAdoctor program + appearing in Good Women's Daily. Calm second her has in

key this business-to-consumer to online DERMAdoctor's appearances is in retailer store now is later on tmall.com, Audrey China managing new is our the leading To additional QVC China. in expect partner make flagship Expanding to which activities year. this end, marketing a markets We international priority.

effective with of like bloggers building brings platforms And are capabilities. China. TikTok customers network partner in brand marketing Social influencers to social attract media ways an media along strong and extensive new our

throughout Spray simply three can't our our world. Spray lastly, to bundle continue on bottles now Avenova appealing kitted of international network Amazon, which they those that of a to we to ways And live drive who tell as products We without the evaluate to Avenova retailers is particularly bottles, are and us sales product. our leverage distributors offering

We sold savings than most to of now our providing customers. sale a to a product ever taking sample bundle before. this have loyal bundled more DERMAdoctor is at encourage opportunities. include advantage The customers We're slight loyal cross-selling to discount

Avenova many struggling is All bundle that kitted issues Kansas allows with operations. our a in facility over a margin inflation placed operational By to now website DERMAdoctor’s margins. and related and combining effects we supply consolidating City. the have fulfillment product our sale on especially through on time in are Our This high chain. synergy companies the DERMAdoctor warehouse being warehouse been chain capitalize fulfilled of when gain with control is by orders greater our supply critical operations, fulfillment, during us

Now, performance. QX to the Andy? over Andy I'd like turn financial to review call to our Jones

Andy Jones

good everybody. Thank afternoon, you, Justin, and

acquisition we As DERMAdoctor in XXXX. the a November closed reminder,

QX $X.X which quarter. early $X.X XXXX was and in sales the our were the hold. the So took million again first quarter, the of place to XXXX period We in XXXX well quarter. XX% our for overall as of costs units offset as DERMAdoctor decrease year derive of this This compares prescription our in by sales costs. returns, increase. purchased purchased were in selling the of in of the of average by when offset results. a $X.X XXXX with quarter revenue increase can an $X.X with Spray XXXX. product million first product included to lower NeutroPhase XXXX quarter. accrual Spray XX% for which at Special future of DERMAdoctor personnel during the of become past compared result in full from and Product million, at in volumes Meeting increase of Sales $X.X of with Avenova million. year onetime marketing for that and sold the have products although of with an prior COVID-XX Avenova the was return quarter a longer rate for XXXX therefore and accrual The as estimated current for no exposure Avenova as accrual channel, period XXXX the for in we channel. down launched XXXX. is product versus physician-dispensed pharmacy costs, took That's sales $X.X actual return. associated the said, marketing expenses combined higher the as our for increase pandemic historical in product incurred the in This by non-recurring million in DERMAdoctor decrease future. were costs comparable the than from declining no our always pharmacy reflect up number was decrease million and in NovaBay expired a returns Spray XX%, and that sales year XXXX inventory quarter data net through year return financial was $X.X the higher quarter QX and the is million and well period, increase retail accordingly results Total QX operating XXXX, XXXX in for over of from rate million, marketing DERMAdoctor period year impact million There The margin our $X.X and and unchanged is in as the for distributors prior increased XXXX and/or in sales returns the subject in costs NovaBay ago. prior million expenses G&A the future sales. unanticipated DERMAdoctor expenses includes OTC of risk additional through sales headcount, of million XXXX revenue from quarter Avenova $X.X partially G&A our of first as time course That were actual for the quarter for with returns prescription sold an decrease of our revenue the reflects a were Spray a decline the in first XXXX. The well price $X.X Stockholders units OTC units $X.X Gross

for period were the G&A prior offset a for an an expenses of impacted reduction receipt year by reimbursement. Additionally, the insurance or

is With do incurring $X,XXX we ongoing prior for expenses of with And levels. XXXX will significant G&A and the the release that the new This our behind we products quarter anticipate costs were majority first the R&D can from us, create, this decrease year of develop integration R&D for expenses that of DERMAdoctor compares period. financing reflective current $XX,XXX. costs. fact without and

liability $X.X operating value loss first value was fair reclassified in for QX recorded of year adjustments impact common for attributable the per loss in net $X.XX the This This with to changes the quarter no liability. million. for XXXX The value non-cash a per and XXXX was the million. longer million was during $XXX,XXX impact year on liability share. to fair operations. $X.X attributable compares equity warrant statement prior require quarter prior of the fair changes The of XXXX common will warrant quarter future, to the Our stockholders We our of loss or which of of $X.XX or an gain in first operating $X.X non-cash on quarter This of million. the was share. gain includes could of loss net stockholders quarter $X.X in

and year, launch of cash of under I'm report over that, coming our DERMAdoctor including the new the And back to with cost the quarter and names. the of the to we As cash to XXXX, equivalents believe I'll is of fund the pleased development and both cash current sufficient call effective had we throughout of first Avenova that million. $X.X turn end operations products Justin.

Justin Hall

NovaBay's enthusiastic I'm about Andy. Thanks, future.

in brands focused we large at quality customers eye brands two large growth. the and and who -- with stronger to and reoccurring on high We DERMAdoctor, margin predictable, growing -- creating broad Avenova products. expanded revenue and strategy care a offer product and skincare executing at are markets. high With faster established aimed are a mix a that's loyal aiming company from top-line our Both have predictably extremely

throughout marketing digital our out and building customers expanding the our innovative, and by developed year. to are and reach with products sales new customer scientifically OTC demographics organic brands with campaigns generating are planned We widen launches new, DERMAdoctor Avenova

executing the progress already strategy our we we year. have are more to as and We on through accomplish much

initiatives, our the expect in XXXX majority of half our year. in will come of timing second the the the growth of Given we

for questions. you With just take are will Operator, now ready started. We we're getting that, thank I your to attention.

Operator

Instructions] [Operator

Justin Hall

Before we XXXX forth I'd in like stockholders their passing take thank questions, our proposals all as support for in proxy. to our put

which Stockholders results the of to Meeting held was Annual that our We voting announce are at yesterday, pleased of passed. everything

with operator, questions. that we're for So ready

Operator

Thalmann. question first from Cohen Our Jeffrey Ladenburg will with come

Destiny Hance

How our we just commentary for Andy. circle throughout Andy, additional Jeff, given the potential Hi, actually is of the remainder we around first, the purposes. some back for year? margins returns taking be on Destiny maybe question. to thank throughout you those about the XXXX for should Justin This you and can modeling see could thinking your of

Andy Jones

good terms returns. of to Yes, of comfortable the to we the in with first Destiny, at talk quarter at so where end we're I you. for our accrual feel

I As of always of is pool believe risk mentioned, we there's returns risk that the But a time. increase. declining potential over and

time, this the on returns. impacts don't any at we anticipate So,

As around has XX% right has traditionally XX%. been DERMAdoctor you we've our mix margins. know, an product our on right been impact around and

year. this somewhere So the two, in on products of we'll between those land depending mix

Destiny Hance

the commentary you disruptions you're any you current pricing just all pressures? had the you had noticing? have to take I to bit warehouse. consolidating And talk kind then chain And could I'm more a from around about the inflationary if synergies offset wondering of supply know at some

Justin Hall

Yes, logistics that so put warehouse greater we our chain. we and over supply said, can the and are, the for grateful and into as have the components DERMAdoctor inventory fact timing we control and

in and to but course, the of chain. wouldn't So, rest seen the our supply wood I'll is, a increase, haven't I knock business with manufacturing, one business. affected prices of marginal year. the our impact on from material through think here, I least have we that thankfully, we a say materially And has There always at locked our

increase, also new on supply great. we chain as any pressure and obtain sort are our too it. be prices that But and about raise of customers. our be price or And not far So ability our we defer to as considering shouldn't want to purchases conscious consumers

say haven't I that but is implemented -- considering it, fair, think yet. be I'll that So to we're it

Destiny Hance

Or channels. of some COVID was additional how mention sales looking were think about of to more you in here the think sales heard additional after those do I that? here surge there terms reopening then to that trends? January? you And out anything do physician-dispensed the Is how in call from and Or just you

Justin Hall

So of that COVID is QX QX still and would of by impacted less was was say XXXX I XXXX I'll so. say

writing nationwide, So didn't in and see were their we shutdown, offices, a Avenova prescriptions. back doctors also really reselling of

is environmental I factors due a lot think it So of to there.

difference marketing ramping that within of say channel. But will environmental. mostly I just sort Although, we is are the physician-dispensed up our QX the digital

Destiny Hance

digital And compared what then discuss the be with Could maybe marketing. forward? initial sticking topic to you throughout is your to of customer And then acquisition your currently anticipated launch platforms? going costs

Justin Hall

couldn't this our Avenova June but When OTC of we our Because, people launched demand customer cost certain it. originally version following, and get small. the a we acquisition was had the so hands acquisition where in product, customer costs. on problem loyal up XXXX, of and pent Yes, this absurdly loved their sort

awareness within is our sort a as more move So acquisition brand arena, getting into of we initially, the the customer medical that arena. But lot clinical cost consumer advantage of took higher. we and

about so lash what brands people partnerships, in customer into through would talked a is we I've that of and one their break past. Avenova think market, seen us. initiatives customer extensions into of big than But and corporate have And that expanding co-brand we like in markets with costs in false product a or is Avenova new market that to themselves be eyelashes. established really own, how to the past And for co-market that our have and great the with acquisition will have higher the base

definitely new us segments. new entirely effective customers cost think to entirely acquire there ways in I are for So

Destiny Hance

question next my extension answered the about lash market. You

back just last reasons, great. how talk much throughout the Maybe in competitive to I'll questions that’s detail, of anticipate too DERMAdoctor. to not to currently, Could So you my couple but circle about products total you many pipeline maybe launch XXXX? for obviously,

Justin Hall

we're for Yes, evaluating purposes, so, competitive not really only say, but of those. can't all we

Destiny. to on Well, eye us sorry, your know. to have keep So you'll

Destiny Hance

with And Dr. us, are feedback, DERMAdoctor you additionally Okay, And touch your doing trends of curious, mentioned some sales after if you some Avenova that on you with last QVC? appearance Audrey's then for could the just I'm also of the then on fair enough. bundling products? lastly products. maybe

Justin Hall

gotten far kitted gone just year I them. are as And, Audrey really surprisingly, QVC And well. in QVC, boats. have And from off. them, really They they sooner. But and took really all wish these are things customers. of Yes, as products, both from rising DERMAdoctor, really, the it those new sort so itself, both out we love feedback one that when appearances addition. a have your not good bundles gotten promoting customers products we have of it's and and we've but bundles. a and person good kitted just Not the this relatable tide of, I had Avenova good world really feedback love her selling for very you done And you over only there a lifts

sales our also QVC saw in we her through So, an on website, and after increase DERMAdoctor then Amazon appearances. own

would So say they a big were success. I

Operator

Our next [Rafi question Ascendiant Markets. comes from Capital with Khaleed]

Edward Woo

is the question. Capital. Woo my Ascendiant changes for call. with A Thanks competitive quick environment? this Hi, in Any taking Edward

Justin Hall

Well, time. solid for been DERMAdoctor But a it long and the has is been And crowded for very and market years. brands very competitive. many both Avenova skincare have

been So, years recent for I the environment see around before. do in that not any haven't changes

Edward Woo

great. Okay,

Now, are macroeconomic seeing the you slowdowns?

Justin Hall

We have not yet.

eye but our consumer a ability so not always that. confidence, affect far any because sell, on in and keeping big And keeping seen to of on that have eye our are success we plays our an We business. part that

Operator

to I'd remarks. closing Officer, like back Justin Hall, Executive to turn the session. over question-and-answer any Chief our This concludes for conference the

Justin Hall

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

we meantime, and excited look progress about in forward We progress In extremely future envision. the a the during XXXX QX bright have We good investor call day. very to our our reporting August. are

Operator

has presentation. for Thank conference The attending today's you concluded. now

now disconnect. may You

NovaBay Pharmaceuticals (NBY) 12 May 222022 Q1 Earnings call transcript