EMERYVILLE, Calif.—NovaBay Pharmaceuticals
(NYSE American: NBY) saw net sales dip for the three months ended March 31, 2018, despite an uptick in unit volume. The company, which makes Avenova eyelid and eyelash cleaner, reported that unit volume through the retail pharmacy channel for the first quarter of 2018 increased 12 percent versus the prior-year period. However, net sales were $2.9 million, compared with $3.7 million for the first quarter of 2017. NovaBay attributed the decrease to a significant increase in rebates following health insurance deductible resets at the beginning of the year.
Gross margin on net sales for the first quarter of 2018 was 91 percent, an increase from 84 percent for the prior-year period. Cash used in operations for the first quarter of 2018 was $0.5 million, a significant improvement from cash usage of $2.0 million in the prior-year period.
“In combination with the sales force reduction at the end of 2017, we paused our planned sales force expansion in a seasonally slow revenue quarter to focus on identifying the most profitable territories,” said Mark M. Sieczkarek, NovaBay’s chairman, president and CEO. “Although we experienced growth in unit volume for the quarter versus the prior-year period, our net revenue declined due to the increased impact of rebates. Pharmaceutical manufacturers are reporting that the outsized impact of rebates negatively impacted sales across many products during the first quarter, including Avenova.
“We flattened our sales organization to streamline communications and improve training and strategic execution,” Sieczkarek said. “We are currently recruiting sales representatives in underserved territories. We will continue to hire new representatives before the end of 2018 in parallel with the progress we make on increasing insurance coverage on Avenova sales by managed care organizations.”
NovaBay’s sales and marketing expenses for the first quarter of 2018 were $3.4 million, compared with $3.7 million for the first quarter of 2017, with the decrease due primarily to a reduction in the number of sales representatives, partially offset by higher marketing expenses, the company said. General and administrative expenses for the first quarter of 2018 were $1.6 million, compared with $3.1 million for the prior-year period, with the decrease due primarily to lower stock-based compensation expense and lower professional services and consulting fees. R&D expenses for the first quarter of 2018 were $46,000, compared with $62,000 for the first quarter of 2017.
NovaBay posted an operating loss of $2.4 million, an improvement from an operating loss of $3.8 million for the first quarter of 2017. Net loss for the first quarter of 2018 was $2.2 million, compared with a net loss for the first quarter of 2017 of $4.0 million.