Financial Data and Key Metrics Changes - For Q4 2018, net sales were $3.6 million, down from $6.3 million in the prior year, primarily due to low insurance reimbursement and a reduction in non-Avenova sales by $1.3 million [22][25] - The operating loss for Q4 2018 was $1.6 million, compared to an operating income of $392,000 in Q4 2017 [25] - The net loss for Q4 2018 was $1.3 million or $0.07 per share, compared to a net income of $793,000 or $0.02 per diluted share in Q4 2017 [25] - For the full year 2018, net sales were $12.5 million, down from $18.2 million in 2017, with a net loss of $6.5 million or $0.39 per share, compared to a net loss of $7.4 million or $0.48 per share in 2017 [26][27] Business Line Data and Key Metrics Changes - Avenova sales in the retail pharmacy channel for Q4 2018 were $3.3 million, accounting for 92% of total sales, while in-office direct channel sales were $282,000 [23] - Gross margin on net product revenue for Q4 2018 improved to 88% from 85% in the prior year, mainly due to product mix [24] Market Data and Key Metrics Changes - The company identified 15 profitable territories that generated 95% of Avenova prescriptions over the trailing six-month period, indicating a focused sales strategy [14][15] Company Strategy and Development Direction - The company announced a shift in its US commercial strategy, including changes in executive management and restructuring of the sales organization to support cost management and long-term profitable growth [6][12] - The focus is on maintaining access to Avenova for eye care professionals and patients while reducing reliance on rebates and coupons [19] - The company plans to explore new distribution channels to potentially increase overall unit volume [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to changes in the reimbursement environment, which are expected to negatively impact revenues in 2019 [13] - The company expects revenues for 2019 to be in the range of $6 million to $8 million, with a conservative estimate and potential upside from strategic initiatives [29] - Cost savings related to the reduction in force are expected to be $3.6 million over 2019, with a significant reduction in operating expenses anticipated [30] Other Important Information - The company received $2 million from a promissory note and has a commitment for an additional $3 million from an institutional fund [20] - Cash and cash equivalents were reported at $3.2 million as of December 31, 2018 [27] Q&A Session Summary Question: Could you reiterate your projected operating expenses in 2019? - Management expects operating expenses to be significantly lower than in 2018 [35] Question: What about selling and marketing expenses and G&A expenses? - G&A expenses might drop slightly, but selling and marketing expenses are expected to decrease significantly, with a minimum reduction of 30% [36] Question: At what revenue level do you expect to achieve breakeven? - Management indicated that breakeven is a corporate objective, but due to uncertainties in the reimbursement landscape, they do not have a fixed projection yet [37] Question: Will there be any more operational changes expected near-term? - Management stated that they are done with reductions in the field sales force and are focused on improving operational excellence [40] Question: Is there a timeline for bringing a permanent CEO or CFO? - Management indicated that this question is best answered by the Board, with no immediate plans [41] Question: What would make you comfortable to start the hiring process again for sales reps? - Management stated that hiring would resume once breakeven is reached and costs are stabilized [44]
NovaBay(NBY) - 2018 Q4 - Earnings Call Transcript