Novabay Pharmaceuticals (NBY) Q2 2024 earnings summary

Executive summary

• Eye care business achieved another quarter of growth, primarily through Avenova-branded OTC online sales, with first-half 2024 eye care sales reaching $4.8 million and a full-year target of $10 million.

• Net loss of $1.6M for Q2 2024, improved from $4.0M in Q2 2023; six-month net loss was $5.2M, down from $5.8M year-over-year.

• Sales and marketing spend for the quarter decreased 13% year-over-year, reflecting improved digital marketing efficiency and a growing base of loyal, recurring customers.

• Subscription sales accounted for approximately 24% of all online Avenova revenue in the first half of 2024, with most subscribers purchasing monthly.

• DERMAdoctor subsidiary was divested in March 2024 for $1.1M, streamlining operations and reducing cash burn.

Financial highlights

• Q2 2024 net sales were $2.4 million, up 8% in eye care product sales year-over-year, but down from $3.5 million in Q2 2023 due to a large, non-recurring wound care order last year.

• Gross margin improved to 66% in Q2 2024 from 49% in Q2 2023, driven by a higher mix of eye care products.

• Q2 2024 net loss attributable to common stockholders was $1.6 million ($1.37/share), compared to $4 million ($44.43/share) in Q2 2023, which included a $2 million non-cash adjustment.

• For the first half of 2024, net sales were $5 million (vs. $5.9 million in 2023), with eye care sales rising to $4.8 million from $4.4 million.

• Cash and cash equivalents at June 30, 2024: $0.8M, down from $2.9M at year-end 2023.

Outlook and guidance

• Management is confident in reaching the $10 million eye care sales target for 2024.

• Q3 is expected to see incremental growth, with a stronger Q4 anticipated due to physician channel and back-to-school promotions.

• Company expects 2024 expenses to exceed revenues and anticipates continued operating losses and negative cash flows until revenue growth supports operations.

• Management is evaluating capital-raising strategies, cost reductions, and potential strategic transactions to address liquidity needs.

• Strategic partnerships and potential fundamental transactions are a main focus for the remainder of the year.