EMERYVILLE, Calif.—NovaBay Pharmaceuticals, Inc. (NYSE American: NBY) reported financial results for the three months ended March 31, 2023. Net product revenue for the first quarter of 2023 was $3.1 million, compared with $3.3 million for the prior-year period, and included $2.2 million of Avenova-branded eyecare product sales, $0.8 million of DERMAdoctor skin care product sales, and $0.1 million of PhaseOne wound care product sales. “Net product revenue from our Avenova-branded eyecare products increased over the prior year driven by higher sales of Avenova spray sold through our physician-dispensed channel and by increased interest in our Avenova companion products,” said Justin Hall, NovaBay CEO.

“On the expense side, we benefited from our focus on digital marketing optimization, which led to a 17 percent decline in sales and marketing costs.

He added, “Pursuant to our ongoing strategy of capitalizing on our brand recognition and diversifying our revenue sources, so far this year we’ve introduced three new branded products and launched our first co-promoted product. Most recently, we introduced the first DERMAdoctor product formulated to relieve the itching, irritation and redness from psoriasis, a condition that afflicts about eight million Americans. In our wound care vertical, we shipped a $1 million order for NeutroPhase skin and wound cleanser to our partner China Pioneer and will record this sale in the second quarter. Proceeds from our recent financing that closed in the second quarter of 2023 will further support our goal of achieving profitability.”

Net loss for the first quarter of 2023 was $1.7 million compared with a net loss for the first quarter of 2022 of $0.1 million, which included a non-cash gain on changes in fair value of warrant liability of $2.1 million and a non-cash gain on changes in fair value of contingent liability of $0.2 million in the first quarter of 2022 with no similar non-cash gains in the first quarter of 2023.

Gross margin on net product revenue for the first quarter of 2023 improved to 62 percent, compared with 55 percent for the first quarter of 2022, with the increase primarily due to channel and product mix that favored sales of higher-margin products and the reduction of product returns when compared to the first quarter of 2022.

Total operating expenses for the first quarter of 2023 were $3.7 million, a 13 percent decrease from $4.2 million for the first quarter of 2022. Sales and marketing expenses for the first quarter of 2023 were $1.7 million, compared with $2.0 million in the prior year, with the decrease reflecting lower Avenova digital advertising costs. General and administrative expenses for the first quarter of 2023 were $2.0 million, compared with $2.2 million for the first quarter of 2022, with the decrease due primarily to lower variable compensation costs.

NovaBay had cash and cash equivalents of $3.7 million as of March 31, 2023, compared with $5.4 million as of December 31, 2022. Subsequent to the close of the quarter, NovaBay completed a private placement of convertible debentures and warrants for aggregate gross proceeds of $3.0 million before deducting placement agent fees and other offering expenses.