NovaBay fails to gain shareholder approval for dissolution

In a recent development, NovaBay Pharmaceuticals, Inc. (NYSE American: NBY), a pharmaceutical company specializing in eyecare products, did not receive the necessary shareholder vote to proceed with its proposed liquidation and dissolution. The decision was made during the company’s reconvened meeting on January 30, 2025, where stockholders representing approximately 49% of the outstanding shares voted in favor of the dissolution, falling short of the over 50% requirement. According to InvestingPro data, the company’s stock has experienced a dramatic 88% decline over the past year, with financial health metrics indicating significant challenges. The platform’s analysis shows an overall Financial Health Score of 1.97, rated as "FAIR."

The vote was part of a series of proposals that had been put forward for consideration following the sale of NovaBay’s Avenova brand and related assets to PRN Physician Recommended Nutriceuticals, LLC, which marked the divestiture of the company’s main revenue-generating operations. This strategic move comes as InvestingPro data reveals concerning financial metrics, including negative EBITDA of -$5.4M and a leveraged free cash flow of -$4.74M in the last twelve months. The initial proposal to liquidate and dissolve the company was linked to a Plan of Complete Liquidation and Dissolution (the "Plan of Dissolution"), which required majority shareholder approval.

Despite not achieving the necessary support for the liquidation and dissolution, the company’s board is considering holding a new special meeting to seek approval for the Plan of Dissolution. NovaBay completed the asset sale transaction on January 17, 2025, and also sold its wound care trademarks and inventory to Phase One Health, LLC earlier in January. For deeper insights into NovaBay’s financial situation, InvestingPro subscribers have access to comprehensive analysis, including 8 additional ProTips and detailed financial metrics that help explain the company’s current position and future prospects.

The board maintains that continuing with the voluntary liquidation and dissolution is in the best interests of the company and its shareholders. If approved in a future meeting, NovaBay plans to file a Certificate of Dissolution with the State of Delaware and proceed with the dissolution process, which is expected to take a minimum of nine months as per Delaware law.

NovaBay’s board has the discretion to delay or not file the Certificate of Dissolution if it deems the action no longer aligns with the company’s and shareholders’ best interests. The company aims to settle its debts and distribute any remaining assets to its stakeholders, including common and preferred stockholders, unsecured convertible note holders, and warrant holders.

The company’s future actions regarding the dissolution will be subject to stockholder approval, and additional information will be provided to stakeholders as the process progresses. The proposed dissolution remains subject to change, and the board may abandon the Plan of Dissolution if it determines that it is no longer beneficial for the company and its stockholders. The information provided in this article is based on a press release statement from NovaBay Pharmaceuticals, Inc.

In other recent news, NovaBay Pharmaceuticals has been making significant moves in its corporate structure. The company extended the contract of its Chief Executive Officer and General Counsel, Justin M. Hall, through December 31, 2025, ensuring continuity in its leadership. In parallel, NovaBay has been urging its stockholders to vote in favor of two major proposals: the sale of its Avenova business to PRN Physician Recommended Nutriceuticals, LLC for $11.5 million, and the voluntary liquidation and dissolution of the company. This was unanimously recommended by the Board of Directors at NovaBay and was also endorsed by Institutional Shareholder Services (ISS), a leading advisory firm.

Recently, NovaBay agreed to a revised offer from PRN to sell its eyecare business for an increased purchase price of $11.5 million. The updated agreement removes certain contingencies and includes a secured promissory note from PRN to NovaBay, adding assurances of PRN’s funding capabilities. These developments are subject to approval from NovaBay’s stockholders, with a special meeting scheduled for this purpose. These are the latest developments in NovaBay’s corporate strategy as the company navigates its future course.

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