• Eyecare product revenue increased 8% driven by higher sales of Avenova^®-branded products through online channels
• Sales and marketing expenses declined 13% reflecting efficient growth through digital marketing optimization
• Balance sheet strengthened with $3.9 million financing in July

Conference call begins at 4:30 p.m. Eastern time today

NovaBay^® Pharmaceuticals, Inc. (NYSE American: NBY) reports financial results for the three and six months ended June 30, 2024 and provides a business update.

“Revenue growth was driven by higher Avenova sales through online channels including an expanded subscription customer base,” said Justin Hall, CEO of NovaBay. “The number of Subscribe & Save customers on Amazon.com increased 16% during the first half of the year. In fact, subscriber sales on Amazon.com and Avenova.com accounted for approximately 24% of all online Avenova sales year to date. These recurring sales create predictable revenue, provide a strong foundation for future growth and allow us to efficiently manage our sales and marketing spend, which decreased 13% for the quarter. These repeat sales also give us confidence in achieving our goal of 2024 net revenue from our eyecare business of approximately $10.0 million.

“Following the close of the quarter we completed a capital raise that strengthened our balance sheet, allowing us to pursue strategic and fundamental transactions from a position of strength,” he added.

Second Quarter Financial Results

Financial results for the three and six months ended June 30, 2024 and 2023 do not include results from DERMAdoctor, which was divested on March 25, 2024 and is accounted for in discontinued operations. Financial information about discontinued operations is available under “Divestiture and Discontinued Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which will be filed with the Securities and Exchange Commission (the “SEC”) later today.

Total sales, net for the second quarter of 2024 were $2.4 million. Essentially all net sales for the quarter were derived from sales of eyecare products, which increased 8% over the prior year due to more Avenova^®-branded products sold through online channels. Total sales, net for the second quarter of 2023 were $3.5 million, which included $2.2 million from eyecare products and $1.3 million from wound care products, including a large order of NeutroPhase^®-branded wound care products with no comparable order in the 2024 period.

Gross margin on net sales for the second quarter of 2024 was 66%, compared with 49% for the second quarter of 2023, with the improvement primarily due to product mix.

Sales and marketing expenses for the second quarter of 2024 were $1.0 million, a 13% decrease from $1.2 million for the prior-year period, reflecting continued efficiencies in digital advertising and lower professional services. General and administrative (G&A) expenses for the second quarters of 2024 and 2023 remained consistent at $1.6 million. Research & development (R&D) expenses for the second quarter of 2024 were $9 thousand, versus $22 thousand for the prior-year period.

Non-cash items for the second quarter of 2024 included a loss on the change in fair value of warrant liabilities of $80 thousand and a loss on adjustments to the fair value of embedded derivative liability of $83 thousand. Non-cash items for the second quarter of 2023 included a gain on changes in fair value of warrant liabilities of $216 thousand and a gain on change in fair value of embedded derivative liability of $40 thousand. Accretion of interest and amortization of discounts on convertible notes for the second quarter of 2024 was $0.3 million, compared with $0.5 million for the second quarter of 2023.

Other expense, net for the second quarter of 2024 was $69 thousand, compared with $0.4 million for the second quarter of 2023, with the decrease due primarily to higher financing costs in the prior-year period.

Net loss attributable to common stockholders for the second quarter of 2024 was $1.6 million, or $1.37 per share. This compares with a net loss attributable to common stockholders for the second quarter of 2023 of $4.0 million, or $44.43 per share, which included a $2.0 million non-cash increase to accumulated deficit due to an adjustment to the preferred stock conversion price.

Six Month Financial Results

Total sales, net for the six months ended June 30, 2024 was $5.0 million, compared with $5.9 million for the six months ended June 30, 2023.

Gross margin on net sales for the first half of 2024 increased to 67% from 57% for the first half of 2023.

For the six months ended June 30, 2024, sales and marketing expenses decreased 14% and G&A expenses increased 19%, both compared with the six months ended June 30, 2023. R&D expenses were $28 thousand for the first half of 2024, versus $32 thousand for the prior-year period.

Net loss attributable to common stockholders for the first half of 2024 was $5.2 million, or $5.57 per share, compared with a net loss for the first half of 2023 of $5.8 million, or $77.42 per share.

NovaBay had cash and cash equivalents of $0.8 million as of June 30, 2024, compared with $2.9 million as of December 31, 2023. In July 2024, the Company completed an underwritten public offering raising gross proceeds of $3.9 million.

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 833-816-1121 from within the U.S. or 412-317-1862 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 September 3, 2024 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 3413491.

About NovaBay Pharmaceuticals, Inc.

NovaBay's leading product Avenova^® Antimicrobial Lid & Lash Solution is often recommended by eyecare professionals for blepharitis and dry eye disease. Manufactured in the U.S., Avenova spray is formulated with NovaBay's patented, proprietary, stable and pure form of hypochlorous acid. All Avenova products are available directly to consumers through online distribution channels such as Amazon.com and Avenova.com.

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, expanded access to our products through new and existing sales channels, 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 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 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 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 the Company’s latest Form 10-K/Q filings and registration statements, as may be amended from time to time, with the SEC, especially under the heading “Risk Factors.” The forward-looking statements in this release speak only as of this date, and the Company 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

Financial tables follow

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