NBY - Earnings call transcript Q2 2024 | NovaBay Pharmaceuticals, Inc.

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Operator

Good day, and welcome to the NovaBay Pharmaceuticals Second Quarter 2024 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Jody Cain, please go ahead.

Jody Cain

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

from and General me Officer. NovaBay Interim Pharmaceuticals Officer Executive Hall, Justin Counsel; Financial are Chief Joining and Law, Tommy

control like that any and meaning is the circumstances materially anticipated contemplated of uncertainty outlook the during securities company's best laws. based results NovaBay's to comments at about This will I'd is be statements economy. change impact on different estimate forward-looking discussion. could that federal and upon listeners results. involve time cause forward-looking there impact means financial by results circumstances risks beyond include the broader any call the that results information In management made operations, the today's of within available could such statements and These remind to for uncertainties from this particular, that actual

available the filings list Exchange Commission, a review please For NovaBay's are sec.gov. description uncertainties, and Securities and and risks at with of which

Furthermore, NovaBay the XXXX. only reflect circumstances, the required XX, call August statements that content or to live broadcast, update law. date except information conference of revise or the as by to of no of obligation this undertakes events is accurate as contains

Hall. turn call to like I'd now And over to the Justin

Justin?

Justin Hall

everyone, us. thank joining Thank you, Jody. Good afternoon, and you for

growth We online channels. OTC our our are sales eyecare another branded quarter products through in of reporting of business, Avenova driven by

spend giving $X.X growth for $XX marketing For XX% confidence sales million the reached revenue with year. eyecare reaching million, year. the the This prior down growth quarter is sales us first our half XXXX, over of for of in the products efficient goal and approximately from

given marketing a our our lowering rise sales who growing to while loyal high of has revenue. extremely our marketing customers product generate digital expenses the testament is base Our into of which reoccurring quality ability an products to continue to expertise eyecare

and several customers Over has repeat steadily the years, past grown our consistently. of base

Amazon, since months up on up beginning with channel, Solution by Save XXXX of surprise is that Subscribe is of satisfaction increased high since number XX,XXX Lid beginning It's X given & Avenova the exceedingly the our fact, a with first XX% largest impressive formidable these rating the that Avenova & products for customers and In customers our the XXXX XX% and of for XXX% more sales is X.X Lash the increases an online averaging stars. than no XXXX. of

The importance our base of cannot overstated. loyal customer be

the for accounted online half sales of approximately for revenue of Avenova subscription fact, year. In first all XX% this

provides turn which with Importantly, sales, to to which marketing upon spend. our efficiently future sales from us reoccurring predictable customers and revenue these build in sales allows us manage

that business condition recognition our products standard in that attribute address also complex the eyecare that a branded our dry multifaceted more may eye Avenova manage. be step now regimen. one than to each stubborn at-home require treatment growth We approach to and product dry expansion of of in can eye We portfolio the have

sooth Lash health. physical irritated scientifically the our lubricating to Lid as Our to eye best-in-class instant Solution eyedrops relief, & as warm eyes Avenova monitor portfolio developed flagship includes for eyelid compress a well and i-Chek

population on condition increased U.S. fact rapidly XXX of is The $X.X exceed Eyecare and computer by factors the aging this impacting expected dry The dry awareness Dry by XXXX. that recent complex screen heighten survey billion eye of Report. the U.S. that corroborated eye growing smart and eye, market can across in dry optometrists the be was a is was Eyes condition the usage, Among to XXXX prevalence published a and improve diagnostic Eye capabilities. our of the time

leading of respondents of XX% their estimated in patients their moderately eye generating than some expected months. revenue for coming in Dry extremely important eye in ranked XXXX. to the of more exceeded only the up from focus found by and for and care over of This specialization X/X dry diagnosis survey, account is XX% primary the second eye XX% to XX dry area disease. than of have to practices only According respondents that eye as it's was form their treatment more clinical

to Importantly, collections. a nature may recommended Avenova our the bundles eye. that report to approach a essential personalized in further multifactorial successful dry we In eye, expanded management dry provide of personalized the treatment the be of manage product effort help

Dry provide Our with Clean Eye Health, the Relieve & price. new personalized individuals Essentials and options a discounted Avenova Total bundles product Eye at

hygiene. from other hypochlorous The acid formulated new lid dry which lash and eye top our lid the lash the & our one Eye for product identified Avenova and disease Solution X on is Survey market. each specifically and The it of hypochlorous approaches hygiene approach for top as hypochlorous Care personalized bundles acid Lash with pure a daily cornerstone with Eyes of Lid patients of as in acid, proprietary is differentiating the sprays

seen have Avenova may Prime Day recent of our our record You regarding announcement sales products. Amazon

and XX% Day customers sales their subscribers. offered event, opportunity higher they loyal During which XX, higher while attracting XX% Prime on rely XXXX. discount products and XX XX% to on Prime July that Day providing than the them X-day customers great was with new reward with a to Over and held we Avenova pricing on year's convert were this X-day XXXX the us into than event,

I'd to to Now turn Tommy our like the financial Tommy? to over results. review call

Tommy Law

do the the for months But good and I'll review that Justin, financial everybody. we QX periods today the like from position. Discontinued filing cash heading and in that our start, XX-Q before afternoon, followed mention X you, by I'd to I'll today under the related found include and results results, all Divestiture Thank Form be the information can we be to Financial DERMAdoctor are DERMAdoctor. Operations. any results discussing not

X% online products, Avenova quarter million results. and sales products derived the products revenue of the OTC were included second million. net order care increased were sales Total for $X.X Those XXXX wound and unusually comprised XXXX was branded quarterly our to million of the channels. which from all sold for were over eyecare net which turning $X.X our sales million. year the branded Essentially, by prior Now the Total quarter $X.X for higher driven from of wound from product. an second quarter care of of large products, sales were through NeutroPhase eyecare $X.X

increase Gross was margin of improvement net the XXXX as benefit the a for second due for XX% of in our from of million and prior $X XX% expertise. digital revenue XXXX with XXXX. of efficiencies to continue wound quarter decrease care Sales second lower-margin sales on of declined product sales we the higher-margin advertising and to quarter compared quarter eyecare from The second products expenses from of the for year marketing in primarily products. the was XX%

and in embedded for derivative included gain second of change derivative fair -- on of of second liability loss quarters included of $XX,XXX. value consistent embedded and items value in change on XXXX the Noncash value on liabilities fair for remain expenses $XX,XXX and XXXX second of $X.X of and loss fair million. $XX,XXX. a at changes items of the change for a quarter the $XXX,XXX XXXX value warrant a gain liability G&A Noncash of fair change of a of XXXX of quarter a the liabilities in the on in warrant

due deficit of for second the $X.X to with of for was for $X.X second $XX.XX Other quarter stock of $X.XX stockholders was higher the primarily year to conversion of quarter of million quarter million increase per This with XXXX the second million for the the quarter XXXX, of decrease Accretion a prior to due compared million the XXXX to second and with adjustment share, expense price. quarter the $XX,XXX of period. interest loss costs convertible preferred Net stockholders on in common $X second was net attributable net amortization to for XXXX $X.X million compared of attributable the second noncash notes million or to XXXX. of compares a discounts which $X finance quarter XXXX common for $X.X included loss per with share. or accumulated

XXXX, of first half half XX, the of the compared large period. million months $X.X care order sales This $X.X $X increased million year the million Sales first sales which with ended the June XXXX ended the the XX, as XXXX, $X.X X product of Turning Net the for wound prior with months for from XX% XXXX to for product products months X the net of million. earlier. half from first results. mentioned June X of Gross eyecare for included to were for margin compares on XX% XXXX.

strategic initiative G&A expenses For XXXX, XX%, months The XX, including increase months X DERMAdoctor the sales due the XX% expense compared G&A the decreased primarily ended X with ended XXXX. in and nonreoccurring increased June expenses higher were to June XX, both marketing divestiture. costs, and

XXXX first half the with a expense XXXX. the of incurred million $X.X no divestiture also related DERMAdoctor to in We half in comparable the item first of

Net or for with XXXX loss for per attributable attributable first the half $X.XX $X.X This the net to common first common XXXX $XX.XX half compared of $X.X stockholders million a to or stockholders share. per was loss of of million share.

public shares. prefund offering trading XXXX. average million balance F-X, F-X $X.X preceding volume the XX% completed had underwritten sheet. with partial weighted our outstanding F-X the of offering share the and price approximately the Investors an a of approximately We the days late of month, to the calendar $X.X of lesser now immediately with day exercise proceeds which exercised X.X XXth remain to issuance. of and over-allotment. of each The have June an X reset outstanding exercise the price after million, public from as last a gross Turning We all raising since count underwriter's million or at for XX, included cash warrants equivalents cash the prices onetime awards current

back turn And I'll to the call Justin. now

Justin Hall

Thanks, Tommy.

options details providing strategic transactions a just a transaction month change that capital fundamentally Tommy time. completed raise Among fundamental would our at mentioned, allow a last pursue the we of strength. some to that possible and position As us we business, look and is more appropriate these to forward will from

U.S. customer sales to build in the on to We're market our allow reoccurring programs, of In to our best-in-class and loyal managing growing and us meantime, we dry continue sales on the Avenova sales optimized efficiently predictable which focus the our our continue expenses digital established base. eye from products. through our position marketing large

our performance, your for recent business overview of financial So and I that attention. you thank our with

we're ready Operator, to now take questions.

Operator

Instructions]. [Operator

comes with Our from Cohen Jeffrey Ladenburg Thalmann. first question

Destiny Buch

did I to if start. Tommy, know know on we just the this for actually is I'm but on around and curious lumpy anything to I that? call there commentary expect out of you kind of hard if or any stocking any predict, kind wondering other product. really it's and wanted should you based wound just have Justin you in care comparable Destiny Jeff. I'm revenue period, have some I the orders? to have

Justin Hall

Yes.

in not So we orders going year. be, XXXX. the as But large I to they in continue year then, into think, later should see see But some course, or they're remainder the to we'll some this XXXX. were orders as material of and of as

Destiny Buch

it. Got Okay.

largely changes unchanged, increased more working ROAS what's determine on return not? strategy? color another an So it. more or idea, using give give spend? of not it your efficiencies you metric there us got Is these that you ad a color there? Can Is on and for little idea marketing then some you're more can what's And us or to kind the in

Justin Hall

question It's Sure. because our a main good business. of it's a focus Absolutely.

become we're We better at are just doing. really trying what to

our spending where ago Save head, So a acquisition year where customers money approach the on the its we strategy funnel lot our really turned the we spending we're from of lot a moved Subscribe of a really and cost money shifted on customer in of and in & away focusing now. right top about

X to in reminders after just So Avenova, almost now buy product they tried or the years people market have lot product a the again. the of years, XX being and for with X need

best for realize & scenario not we is those that Best case it's product. become the Subscribe But personal So Save customers is to is. everybody a scenario customer. case a us for consumable because customers those

subscriptions also into our on I on good done of Amazon. really a So website job people think have and getting

efficient subscribe So somebody any and we for save that program, us. to money into we when that the need incredibly to money. make that don't is And get spend means that

who up those just need frees bit go little to money do or purchase a customers on to they repeat and that repeat after purchase. to new onetime acquisition more So a reminding that customer want go

don't changed have & and the that really of Subscribe them over top we So filling where the which from the XX to we've and years, the funnel, past to money is program, Save the growing community to inefficient into make of really strategy spend that users end money. getting focusing any

Destiny Buch

then now product? Can revenue monthly? portion program? Save of makes months? from your And then X often is curious, And months, are every Subscribe Okay. it also what color & Is X more how generated I'm those your it receiving it. you there? That give sense. customers Got Is

Justin Hall

Sure. Yes. Absolutely.

So share is remember Save. that to is revenue that our of that of all about Subscribe like and X/X & one easy metrics of the to from we comes online

So that's really substantial.

we So just single having our that every it's know month, going to of come it's know and going revenue, what X/X we be. to exactly in

And as make to that need don't any mentioned to I then earlier, we money. money spend

significant X/X. it's about So chunk a

get they There bit they people stretch like we every really more bottle about So And be of XX spray out with customers use and that. it are some month. thrifty their X so tend days. like to little a every buy may who to the

the it's X majority of & Save every looking Subscribe it's X XX end, our per month. the On buy customers days. But outside our data, at bottle

Destiny Buch

Okay. then going a third Got and do growth a up pretty it's in with volume? is, the QX? bit think Prime quarter, of the with of even Day, in to it. bump Day the sequentially, aligned that with And throughout remainder being you're there -- with of guess potential Or to we asking would QX I'm see still grow terms at still the QX Prime compared I you there is looking when year. the the be could QX the what is

Justin Hall

model. numbers in I stronger you're channel push the end a We do you're what QX. I the Destiny, for have plug a to year. and physician-dispensed fair into question. asking, understand looking a it's normally know We of towards the our

back-to-school a do push. also We

a QX. tend stronger we have So to

So at is strong looking what with in QX. increases pretty we're incremental QX a

Destiny Buch

Okay.

a remarks. model. channels, you that. commentary your bit that? That's physician-dispensed more in And can little on Got hear the for my talk when enough I prepared Okay. it. much I appreciate didn't about too touched we

Justin Hall

Yes.

So the brand. role the physician-dispensed strategically of building channel sort in plays an outsized

our So and at for the one we of channel. success lowest sales is look acquisition customer online which cost, that metrics in the efficiency

Avenova stickiest customer is our acquisition lowest a Our learns and patient their when through doctor. customer cost about

online physician-dispensed creates new not it but channel. only its So it push customers to the really try independently channel, and own we sales its the the channel, own as introduces for on revenue and that that the sales way

incredibly important the that that's the for to because physician-dispensed how online to new sales customers us the So channel feeding is really channel efficient incredibly it's we're brand. And important into sales channel.

just Avenova push So are where we doctors have always have push a that, we continue and buy that revenue to our fold to doctors perspective, channels well. continuing loyal from and they month. online we the do outreach the we into channel. believers and a physician-dispensed as every us dwarf then who education events really And new bring But wholesale from sales continuous

Destiny Buch

this Tommy, then good. The solid. Okay. pretty one you. look And look is to They Got continue margins maybe, it. for

me level a that supply you more what scale? at of at do the level in level optimal revenue And chain? you're -- tell you optimal your bit really changes what economy can or So think about any

Tommy Law

supply No, in of there isn't really lot changes chain. a whole our

Justin Hall

Yes.

So Destiny, this over have improved we year our margins a year, large just low-margin because wound last care very order. didn't

So yes.

year. take had NeutroPhase, $X a you the we of didn't which we top line order last bit of that So million off have because little

top a year. low-margin curse but blessing of a bit a last little a We line, So and had larger a product. it's

bit. dragged quite So gross margin it our down a

consistent all They those So year right, steady. are Is that around what around XX%? unit. XX%. this you have the eyecare margins see is Tommy, remained And

Tommy Law

Yes.

Justin Hall

Yes.

to we that also that going forward. expect year, constant over past and remained remain steady So has the

Destiny Buch

curious another and own? you're how company Can I to international I the you then you some any going? on And markets. may. going of co-promotion international or agreements I'm in know if about with markets your Are some that's about talk And one collaborating there for on. a Okay. go bit looking you are direct Eyenovia partnerships then the have with more, agreement

Justin Hall

Yes.

easiest footprint. anticipate to have of -- existing it's the doing on our on go last we because for it's We question too us investment answer. don't just the have We to it expansion is own own. relationships. that be And would question existing all don't just don't heavy So any our an

working partnerships sorts So all are of sizes. partnerships and on we and

can the is transactions base our time, And main all partnerships focus and to possible So tell business think can is It's -- growing business us. for we I while the year. you, our this continues of is the eyecare of I Destiny, for really, efficient. year solid, our remainder the fundamental incrementally, then that at strategic remainder be are all for these and main will continue focus that really the partnerships

Operator

comes Our Capital. next Woo from Edward question Ascendiant with

Edward Woo

costs any on been there distribution in or Has change advertising Amazon?

Justin Hall

think you. increasing. because prices I Ed, advertising are to are costs Yes. -- hear And good question nice from industry-wide,

Fortunately, for us, we that. haven't really seen

our costs so And pretty consistent. tend to be

smaller really much and We eye, spend an pull back a mentioned, seen those a acquisition, And the ads But as when really an to Meta there. the comes from eye inefficient. those environment. close much are most try and keep on customer Google of the haven't increase also within Amazon of We become our advertising of our physician-dispensed I channel portion spend. and

Operator

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

Justin Hall

forward day. interest again, our the market large Thank in in you focus NovaBay. next to business. and an call providing quarterly on today for eyecare strategic joining a our nice established us look Thanks about eyecare We're and have growing our within update your and excited on We November.

Operator

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

disconnect. now may You

NovaBay Pharmaceuticals (NBY) 13 Aug 242024 Q2 Earnings call transcript