NovaBay Pharmaceuticals, Inc.

NovaBay Pharmaceuticals, Inc. Executes 1-for-5 Reverse Stock Split: What Investors Need to Know

NovaBay Pharmaceuticals (NBY) has just implemented a 1-for-5 reverse stock split, a critical move for its market presence. This summary breaks down what this means for investors.

Event Description: NovaBay Pharmaceuticals has completed a 1-for-5 reverse stock split, a key financial move to bolster its stock price and market position. This means that for every five shares an investor previously held, they now own one. The company's stock will start trading on the NYSE American on this new, adjusted basis under the CUSIP number: 66987P 508.

Event Date/Timeline: The reverse stock split took effect on February 20, 2026. Shares will begin trading on the NYSE American on this new, adjusted basis at market open on February 23, 2026.

Why This Happened: Meeting Listing Requirements and Addressing Challenges

NovaBay implemented this reverse stock split primarily because its stock price was trading significantly below the NYSE American's minimum bid price requirement. For an extended period, NovaBay's stock traded below the $0.20 per share minimum bid price needed to maintain its listing. Companies risk delisting if they do not meet this requirement for 10 consecutive trading days. By consolidating shares, NovaBay aims to:

• Regain Exchange Compliance: Immediately boost its per-share price to meet NYSE American's listing standards and prevent delisting.
• Improve Market Perception: A higher stock price can make the company appear more stable and appealing to institutional investors, who often avoid "penny stocks" (shares trading below $1 or a few dollars).
• Enhance Liquidity and Attractiveness: A higher price point can sometimes lead to increased trading activity and broader investor interest.

This action highlights the company's ongoing financial performance challenges, which have contributed to its low stock valuation. While the reverse split addresses the symptom (a low stock price), the company's underlying business performance remains the critical factor for long-term success.

Impact on Your Investment: Shares, Value, and Fractional Shares

For investors, the mechanics are straightforward:

• Share Count: Your total number of shares will decrease by a factor of five. For instance, if you owned 500 shares, you will now own 100 shares.
• Share Price: The price per share will theoretically increase by a factor of five. If the stock closed at $0.50 before the split, it would open around $2.50 after the split.
• Total Value (Initially): Your total investment value should remain the same immediately after the split. The change affects the number of shares and their individual price, not the overall value of your holding.
• Fractional Shares: If the reverse split results in you owning a fraction of a share (e.g., 1.4 shares), NovaBay will pay cash instead of issuing fractional shares. This cash payment will be based on the common stock's closing price on the reverse split's effective date. You will not receive physical fractional shares or have them rounded up.
• Percentage Ownership: Your percentage ownership of NovaBay Pharmaceuticals remains unchanged.

Corporate Structure and Financial Impact

Beyond the immediate impact on individual shareholders, the reverse stock split also affects NovaBay's corporate capital structure:

• Authorized Shares: The total number of authorized common stock shares will remain unchanged. This creates a larger proportion of authorized but unissued shares, giving the company greater flexibility for potential future equity financings or other corporate needs.
• Par Value: The common stock's par value per share will be proportionally adjusted to reflect the reverse stock split.
• Market Capitalization: While the total market capitalization theoretically remains unchanged immediately after the split, the higher per-share price can make the stock more appealing to institutional investors and potentially improve liquidity. This, in turn, can indirectly influence future valuation and capital raising efforts.

The Road Ahead: Beyond the Split

While the reverse stock split offers NovaBay immediate relief from delisting concerns, it does not solve fundamental business challenges. It essentially "buys time" for the company to execute its strategic objectives. Investors should be aware of these key considerations:

• Volatility: Reverse splits often lead to increased stock price volatility in the short term as the market adjusts to the new share structure.
• Underlying Business Performance: This move's long-term success depends entirely on NovaBay's ability to improve its core business operations, increase sales, and achieve sustained profitability. The company's strategy, including product development, market expansion, and cost management, will be crucial.
• Risk of Further Decline: If NovaBay fails to show significant improvements in its financial results and operational performance, the stock price could eventually decline again, regardless of the split.
• Potential for Dilution: Companies often conduct reverse splits to make their stock more appealing for future capital raises. If NovaBay needs to raise additional capital through new stock offerings, this could dilute existing shareholders, especially if underlying business issues persist.

What Investors Should Monitor

As a NovaBay investor, it's critical to look beyond the immediate stock price adjustment and focus on the company's future actions and financial health:

• Financial Reports: Closely monitor upcoming earnings reports, SEC filings (10-K, 10-Q), and investor calls for concrete evidence of improved sales, reduced losses, and a clear path to profitability.
• Strategic Updates: Pay attention to announcements regarding new product launches, market penetration, partnerships, or cost-saving initiatives.
• Cash Position: Evaluate the company's cash burn rate and its ability to fund operations without excessive reliance on further equity financing.
• Sustained Compliance: Observe whether the stock maintains its price above the NYSE American's minimum bid requirement over the long term.

This reverse stock split is a tactical move to maintain listing and improve market perception. However, your investment's true value will ultimately depend on NovaBay's ability to deliver on its business strategy and achieve sustainable financial performance. As always, conduct your own thorough research and consider your investment goals and risk tolerance.