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NovaBay Pharmaceuticals Signs Agreement to Acquire DERMAdoctor

Wednesday, September 29, 2021

NovaBay® Pharmaceuticals, Inc. announces it has entered into a definitive agreement to acquire DERMAdoctor, LLC, a privately-held company that commercializes dermatologist-developed skincare products, including all of its inventory, products and intellectual property, for a purchase price of $15.0 million, comprised of $12.0 million in cash at closing and up to an additional $3 million in earnout payments contingent upon the DERMAdoctor business achieving predetermined financial targets for the 2022 and the 2023 fiscal years.

DERMAdoctor produces and sells more than 30 products under lines that include Ain’t Misbehavin’, Calm Cool + Corrected, Kakadu C, KP Duty, and Wrinkle Revenge. Its products are designed to address acne, aging skin, dark spots, dry skin, eczema, fine lines and wrinkles, enlarged pores, hyperhidrosis, keratosis pilaris, oily skin, rosacea and sensitive skin. DERMAdoctor sells its products through major retailers such as Macy’s, QVC, Costco, digital beauty retailers such as SkinStore and Amazon, as well as its own website. DERMAdoctor also has a large and growing network of international distributors and retailers.

“Having evaluated various strategic opportunities to expand NovaBay’s commercial presence in the beauty industry with complementary product offerings, DERMAdoctor stood out as the ideal fit commercially, while also supporting the goals of reaching profitability and enhancing stockholder value,” said Justin Hall, NovaBay CEO. “This acquisition will significantly increase NovaBay’s presence in the U.S. beauty market with the addition of over 30 products currently sold by DERMAdoctor, which were developed under the leadership of Dr. Audrey Kunin, a well-known leader in the skincare product industry. The DERMAdoctor skincare products have been clinically formulated to be highly effective yet gentle on skin, characteristics of our own CelleRx Clinical Reset. We plan to employ our commercial organization’s expertise and industry relationships in combination with those of DERMAdoctor in order to broaden the distribution and future growth of our combined products to an expanded and more diverse customer base.”

“While we expect DERMAdoctor existing product sales to double our topline revenue, the combined company platform significantly expands our opportunities for future growth. We will be investing in new products and new brands, with Dr. Audrey Kunin providing both creative and strategic direction. Along with expected revenue growth, we also expect to achieve operating and expense synergies as a result of this transaction. With higher sales and expense synergies from combining DERMAdoctor with our operations, we finally have a clear path to profitability,” he added.

DERMAdoctor’s co-founders, Audrey Kunin and Jeff Kunin, will continue in the executive leadership of DERMAdoctor after the transaction. Dr. Audrey Kunin will serve as NovaBay’s Chief Product Officer for all new product development, Dr. Jeff Kunin will remain as DERMAdoctor’s President and the entire 13-member DERMAdoctor team will continue with DERMAdoctor after the transaction. In addition, Dr. Audrey Kunin is expected to join the NovaBay board of directors after the closing of the transaction. NovaBay plans for the DERMAdoctor business to continue its operations from its current headquarters in Riverside, Missouri.

“This is truly an exciting opportunity to advance and enhance the DERMAdoctor business by introducing our clinically formulated skincare products to a larger number of prospective customers utilizing the proven sales, marketing and distribution capabilities of NovaBay,” said Dr. Audrey Kunin. “We designed DERMAdoctor products with synergistic blends of science and technology to be elegant, hypoallergenic, multitasking, problem-solving and highly effective. We created DERMAdoctor to address the all-too-common skincare concerns that were overlooked by the beauty industry, providing hassle-free, highly effective, prestige treatments that are non-irritating to skin. With the infrastructure and support of NovaBay, we will be able to create, innovate, and sell like never before. We are looking forward to joining forces with the NovaBay team to drive our brands, new and old, to even greater success.”

The parties are targeting a closing of the transaction in the fourth quarter 2021, subject to customary closing conditions. The description of the transaction contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the transaction, a copy of which will be subsequently filed by NovaBay with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K.

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