NovaBay Pharmaceuticals, Inc. (NBY) Bundle
Understanding NovaBay Pharmaceuticals, Inc. (NBY) Revenue Streams
Understanding NovaBay Pharmaceuticals, Inc. Revenue Streams
The primary revenue sources for NovaBay Pharmaceuticals, Inc. include product revenue from their eyecare and wound care products. The company focuses on branded products such as Avenova Spray and NeutroPhase.
Breakdown of Primary Revenue Sources
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Product Revenue, Net:
Period Eyecare Products Wound Care Products Total Product Revenue Three Months Ended September 30, 2024 $2,170,000 $0 $2,424,000 Three Months Ended September 30, 2023 $2,064,000 $100,000 $2,471,000 Nine Months Ended September 30, 2024 $6,391,000 $0 $7,435,000 Nine Months Ended September 30, 2023 $5,759,000 $1,600,000 $8,326,000 -
Other Revenue, Net:
Period Other Revenue Three Months Ended September 30, 2024 $17,000 Three Months Ended September 30, 2023 $10,000 Nine Months Ended September 30, 2024 $37,000 Nine Months Ended September 30, 2023 $28,000
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the total sales net decreased by 11% to $7,472,000 from $8,354,000 in the same period of 2023. The product revenue net also reflected a decrease of 11% from the prior year.
Contribution of Different Business Segments to Overall Revenue
The contribution of eyecare products to overall revenue increased to $7,200,000 for the nine months ended September 30, 2024, from $6,700,000 in the previous year. Conversely, revenue from wound care products decreased to $300,000 from $1,600,000.
Analysis of Significant Changes in Revenue Streams
The significant changes in revenue streams are primarily attributed to the divestiture of the DERMAdoctor brand, which impacted overall sales. The decrease in wound care revenue was due to the absence of a large one-time order that had been fulfilled in the previous year. The eyecare segment saw growth due to increased online sales.
| Revenue Source | 2024 (YTD) | 2023 (YTD) | Change ($) | Change (%) |
|---|---|---|---|---|
| Eyecare Products | $7,200,000 | $6,700,000 | $500,000 | 7.5% |
| Wound Care Products | $300,000 | $1,600,000 | ($1,300,000) | (81.25%) |
| Total Product Revenue | $7,435,000 | $8,326,000 | ($891,000) | (11%) |
A Deep Dive into NovaBay Pharmaceuticals, Inc. (NBY) Profitability
A Deep Dive into NovaBay Pharmaceuticals' Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $4.979 million, compared to $5.001 million for the same period in 2023. This results in a gross profit margin of approximately 66.6% for 2024, slightly down from 59.9% in 2023.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024, was $4.550 million, compared to an operating loss of $3.094 million for the same period in 2023. This indicates a worsening operating profit margin, with a margin of approximately -60.9% in 2024 versus -37.1% in 2023.
Net Profit Margin: The net loss attributable to common stockholders for the nine months ended September 30, 2024, was $7.396 million compared to $7.528 million for the same period in 2023. The net profit margin for 2024 is approximately -98.9%, slightly improving from -90.0% in 2023.
Trends in Profitability Over Time
Over the past year, the company has experienced fluctuations in profitability metrics. The gross profit has shown minor declines while both operating and net losses have increased significantly, indicating challenges in managing operational costs effectively.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies in the pharmaceuticals sector typically exhibit gross margins around 70% and net margins of approximately -20%. NovaBay's gross margin of 66.6% is close to the industry average, while the net margin of -98.9% reflects significant underperformance compared to peers.
Analysis of Operational Efficiency
The cost of goods sold for the nine months ended September 30, 2024, was $2.493 million, down from $3.353 million in 2023, marking a 26% decrease. This indicates improved cost management in relation to production. However, total operating expenses increased to $9.529 million in 2024 from $8.095 million in 2023, primarily driven by a 28% increase in general and administrative expenses.
| Metric | 2024 Amount | 2023 Amount | Change (%) |
|---|---|---|---|
| Gross Profit | $4.979 million | $5.001 million | -0.4% |
| Operating Loss | $4.550 million | $3.094 million | 47.1% |
| Net Loss | $7.396 million | $7.528 million | -1.8% |
| Cost of Goods Sold | $2.493 million | $3.353 million | -26% |
| Total Operating Expenses | $9.529 million | $8.095 million | 17.7% |
Debt vs. Equity: How NovaBay Pharmaceuticals, Inc. (NBY) Finances Its Growth
Debt vs. Equity: How NovaBay Pharmaceuticals Finances Its Growth
As of September 30, 2024, NovaBay Pharmaceuticals reported total liabilities of $2.805 million and total stockholders' equity of $1.072 million, indicating a challenging financial structure with a significant reliance on debt financing. The company has a debt-to-equity ratio of approximately 2.61, which is considerably higher than the industry average of around 0.5 to 1.0.
Overview of Debt Levels
NovaBay's financial statements reveal that its current liabilities amounted to $1.984 million, which includes:
- Accounts payable: $396,000
- Accrued liabilities: $1.147 million
- Unsecured Convertible Notes: $51,000
- Operating lease liabilities: $390,000
The company had previously issued Secured Convertible Notes, which were fully repaid in the third quarter of 2024, amounting to $3.3 million aggregate principal. The repayment was facilitated by proceeds from a public offering.
Debt-to-Equity Ratio and Comparison to Industry Standards
The calculated debt-to-equity ratio of 2.61 significantly exceeds the industry standard, indicating a heavier reliance on debt to finance operations compared to peers. A higher ratio may suggest increased financial risk, as the company has to manage higher interest obligations.
Recent Debt Issuances and Credit Ratings
In March 2024, NovaBay issued Unsecured Convertible Notes totaling $525,000, convertible into approximately 3.75 million shares of common stock. This issuance reflects the company's strategy to leverage its equity while managing cash flow needs. The existing credit ratings have not been explicitly stated but the company's reliance on convertible debt suggests a cautious approach to maintaining creditworthiness.
Balancing Debt Financing and Equity Funding
To balance its financing structure, NovaBay has engaged in several equity financing activities. For instance, in September 2024, the company raised $2.9 million through a public offering. Additionally, the company has made efforts to convert preferred stock into common stock, which has resulted in a slight increase in common stock equity. The total additional paid-in capital as of September 30, 2024, stood at $183.262 million, reflecting efforts to bolster equity.
| Debt Category | Amount (in thousands) |
|---|---|
| Secured Convertible Notes | $0 |
| Unsecured Convertible Notes | $51 |
| Accrued Liabilities | $1,147 |
| Operating Lease Liabilities | $390 |
| Total Current Liabilities | $1,984 |
| Total Liabilities | $2,805 |
| Total Stockholders' Equity | $1,072 |
This table summarizes the company's current debt structure and highlights the significant reliance on accrued liabilities and convertible notes as part of its financing strategy.
Assessing NovaBay Pharmaceuticals, Inc. (NBY) Liquidity
Assessing NovaBay Pharmaceuticals' Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated by dividing total current assets of $2.3 million by total current liabilities of $1.984 million, resulting in a current ratio of 1.16.
Quick Ratio: The quick ratio, which excludes inventory from current assets, is calculated with current assets of $2.3 million, accounts receivable of $1.1 million, and total current liabilities of $1.984 million. The quick ratio is approximately 1.10.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stands at $316,000 as of September 30, 2024. This is a decrease from $1.4 million as of December 31, 2023, indicating potential liquidity concerns.
Cash Flow Statements Overview
| Cash Flow Activity | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|
| Net Cash Used in Operating Activities | ($4,211) | ($3,539) |
| Net Cash Provided by Investing Activities | $1,070 | ($16) |
| Net Cash Provided by Financing Activities | $1,000 | $1,936 |
| Net Decrease in Cash | ($2,353) | ($1,898) |
| Cash and Cash Equivalents at End of Period | $1,253 | $3,655 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $1.253 million, down from $3.655 million at the end of the previous year. The company has experienced a net loss of $6.011 million for the nine months ended September 30, 2024, compared to a net loss of $5.532 million for the same period in 2023. Additionally, the company has an accumulated deficit of $182.245 million.
The company has made monthly redemptions of $193,000 on Secured Convertible Notes since June 2023, which is expected to continue until the notes are repaid in full, further impacting liquidity.
Is NovaBay Pharmaceuticals, Inc. (NBY) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, key valuation metrics such as Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios are critical. As of 2024, the company's financial ratios are as follows:
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | N/A (Net loss reported) |
| Price-to-Book (P/B) Ratio | 3.62 (Calculated as Market Value per Share / Book Value per Share) |
| Enterprise Value-to-EBITDA (EV/EBITDA) | N/A (Negative EBITDA) |
The stock price trends over the last 12 months have shown considerable volatility. The stock price was approximately $0.25 at the beginning of 2024, and it has fluctuated significantly, reaching a high of $0.75 before experiencing a recent decline to around $0.35 as of September 2024.
Regarding dividends, the company currently does not pay dividends, reflecting its focus on reinvesting in its operations. The payout ratio is thus 0%.
Analyst consensus on the stock valuation indicates a mixed outlook. According to recent reports, analysts have issued the following ratings:
| Rating | Number of Analysts |
|---|---|
| Buy | 2 |
| Hold | 3 |
| Sell | 1 |
The overall sentiment suggests caution among investors, with a majority recommending a hold position due to the company's ongoing financial challenges and recent operational changes.
In summary, the valuation metrics indicate that the company is currently under financial strain, with key ratios reflecting its net losses and lack of dividends. The market sentiment is carefully balanced, reflecting both potential and risk.
Key Risks Facing NovaBay Pharmaceuticals, Inc. (NBY)
Key Risks Facing NovaBay Pharmaceuticals, Inc.
Overview of Internal and External Risks:
The financial health of NovaBay Pharmaceuticals, Inc. is subject to various internal and external risks that can significantly impact its operations and market performance. These include:
- Industry Competition: The pharmaceutical industry is characterized by intense competition. The company faces challenges from established players and emerging biotech firms, which can affect market share and pricing strategies.
- Regulatory Changes: Changes in health regulations and compliance requirements can pose risks to product approval and market entry. The company must navigate complex regulatory landscapes to maintain product viability.
- Market Conditions: Economic downturns and shifts in consumer behavior can impact sales, especially for discretionary healthcare products. The company's reliance on online sales channels adds another layer of vulnerability to market fluctuations.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight several operational and financial risks:
- Net Losses: The company reported a net loss of $6.0 million for the nine months ended September 30, 2024, compared to a loss of $5.5 million for the same period in 2023 .
- Decreased Revenue: Product revenue decreased by $0.9 million, or 11%, to $7.4 million for the nine months ended September 30, 2024 .
- Loss on Divestiture: A loss of $0.9 million was incurred due to the divestiture of the DERMAdoctor subsidiary .
- Cash Flow Issues: Cash and cash equivalents decreased to $0.8 million as of September 30, 2024, down from $2.9 million at the end of 2023 .
Mitigation Strategies:
The company has implemented several strategies to mitigate these risks:
- Cost Management: Efforts to reduce operating expenses have been initiated, with sales and marketing expenses decreasing by 18% to $3.0 million for the nine months ended September 30, 2024 .
- Focus on Eyecare Products: The company has seen an increase in revenue from eyecare products, which was $7.2 million for the nine months ended September 30, 2024, indicating a shift towards higher-margin products .
- Compliance Planning: The company submitted a compliance plan to the NYSE American to address listing standards, aiming to regain compliance by October 2025 .
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Net Loss | Reported a net loss of $6.0 million for 9 months ending September 30, 2024 | $6.0 million |
| Revenue Decrease | Product revenue decreased by 11% to $7.4 million | $0.9 million |
| Loss on Divestiture | Incurred a loss of $0.9 million from DERMAdoctor divestiture | $0.9 million |
| Cash Decrease | Cash and cash equivalents decreased to $0.8 million | $2.1 million |
| Sales and Marketing Expenses | Reduced by 18% to $3.0 million | -$0.7 million |
Future Growth Prospects for NovaBay Pharmaceuticals, Inc. (NBY)
Future Growth Prospects for NovaBay Pharmaceuticals, Inc.
Analysis of Key Growth Drivers
NovaBay Pharmaceuticals is poised for growth driven by several key factors, particularly in product innovations and market expansions. The company’s primary product, Avenova, has shown promising sales trends, with revenue from eyecare products increasing by $0.5 million to $7.2 million for the nine months ended September 30, 2024, compared to $6.7 million for the same period in 2023.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a cautious outlook, with total net sales expected to stabilize after a decrease of 11% in product revenue, net, to $7.4 million for the nine months ended September 30, 2024, down from $8.3 million in the previous year. Operating losses have also increased, with a reported operating loss of $4.55 million for the nine months ended September 30, 2024, compared to $3.09 million for the same period in 2023.
Strategic Initiatives or Partnerships
The company has initiated strategic moves to enhance its market presence. The successful divestiture of its subsidiary, DERMAdoctor, resulted in a non-cash loss of $0.9 million for the nine months ended September 30, 2024. This move aims to streamline operations and refocus resources on core product lines. Additionally, partnerships with other eyecare product providers are being explored to expand product offerings.
Competitive Advantages that Position the Company for Growth
NovaBay's competitive advantages include a strong brand presence in the eyecare market and an established distribution network. The company has reported a gross profit of $4.98 million for the nine months ended September 30, 2024, reflecting effective cost management, particularly a 26% decrease in the cost of goods sold. Furthermore, the company's focus on digital marketing has led to a 25% reduction in sales and marketing expenses, enhancing its profitability potential.
| Key Financial Metrics | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Sales, Net | $7.47 million | $8.35 million | $(0.88 million) | (10.55%) |
| Gross Profit | $4.98 million | $5.00 million | $(0.02 million) | (0.40%) |
| Operating Loss | $(4.55 million) | $(3.09 million) | $(1.46 million) | 47.21% |
| Cash and Cash Equivalents | $0.78 million | $2.92 million | $(2.14 million) | (73.05%) |
Overall, the growth opportunities for the company hinge on its ability to innovate, expand its market reach, and strategically manage its operations to improve profitability while navigating a competitive landscape.
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Resources:
- NovaBay Pharmaceuticals, Inc. (NBY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NovaBay Pharmaceuticals, Inc. (NBY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NovaBay Pharmaceuticals, Inc. (NBY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.