EMERYVILLE, Calif.—NovaBay Pharmaceuticals (NYSE American: NBY), makers of Avenova eyelid cleaner, reported a decline in net sales for the three and 12 months ended December 31, 2018. NovaBay’s net sales for 2018 were $12.5 million compared with $18.2 million for 2017. Gross margin on net product revenue was 88 percent for 2018, up from 85 percent for 2017. The operating loss for 2018 was $7.9 million compared with an operating loss of $7.3 million for 2017.

Sales and marketing expenses for 2018 decreased 7 percent to $12.8 million, general and administrative expenses decreased 33 percent to $5.8 million, and research and development expenses decreased 37 percent to $0.3 million, all compared with 2017. The net loss for 2018 was $6.5 million, compared with a net loss for 2017 of $7.4 million, or $0.48 per share.

NovaBay’s net sales for the fourth quarter of 2018 were $3.6 million compared with $6.3 million for the fourth quarter of 2017. The company attributed the decrease primarily to lower insurance reimbursement resulting in a lower average selling price of Avenova, along with a $1.3 million reduction in non-Avenova sales. Gross margin on net product revenue was 88 percent for the fourth quarter of 2018 compared with 85 percent for the prior-year period, with the improvement due to product mix.

Sales and marketing expenses for the fourth quarter of 2018 were $3.2 million compared with $3.3 million for the fourth quarter of 2017. General and administrative expenses for the fourth quarters of 2018 and 2017 were unchanged at $1.5 million. Research and development expenses for the fourth quarters of 2018 and 2017 were $0.1 million.

The operating loss for the fourth quarter of 2018 was $1.6 million compared with operating income of $0.4 million for the fourth quarter of 2017. The net loss for the fourth quarter of 2018 was $1.3 million compared with net income for the fourth quarter of 2017 of $0.8 million.

“We recently completed the restructuring of our sales organization and now have sales representatives deployed in territories that are profitable or on the verge of profitability,” said Justin Hall, interim president and CEO. “In light of our smaller sales organization, we are revising our outlook for 2019 net sales to be in the range of $6 million to $8 million, with a significant narrowing in operating expenses over 2018 through various cost-management initiatives,” he added. “We believe this shift in focus to long-term profitable growth is in the interest of our shareholders and will facilitate future access to capital.”