CV Sciences’ revenue dives, but new products, increased distribution point to brighter future, company says

By Hank Schultz contact

- Last updated on GMT

©Getty Images - coffeekai
©Getty Images - coffeekai

Related tags: CBD and Hemp, Cbd

CBD manufacturer CV Sciences has reported a sharp drop in revenue, but company officials said wider distribution and new launches—including a product that contains no CBD—promise a bright future.

In its second quarter earnings statement filed yesterday, CV Sciences report $5.4 million in revenue.  That compares to $16.9 million in the second quarter of 2019, or a 68% drop. The company lost $3.4 million in the quarter, compared to a gain of $3.4 million in the same period a year previously.

Regulatory uncertainty, pandemic play role in sales decline

In an earnings call with stock analysts, CFO Joerg Grasser attributed the fall to the continued regulatory uncertainty, increased competition and the dislocations caused by the pandemic crisis.

“Our revenue decline was mostly in the natural product retail channel, as our retail partners needed to either close the stores or saw significantly less foot traffic,” ​Grasser said.  A transcript of the call has been posted on the site​.

Grasser said that even as sales have fallen, CV Sciences continues to increase its retail distribution, including signing up three new major supermarket chains during the quarter.

“We ended the second quarter with PlusCBD oil branded products sold in more than 6,300 retail stores nationwide up from almost 5,800 stores at March 31 and up from about 4,600 retail stores at the end of the second quarter of 2019,”​ Grasser said.

New immunity line launched

CEO Joseph Dowling said the company is responding to the current crisis by launching a line of combination formulas aimed at immunity.  The first product in the line is called CV Acute and is planned for sale through selected retailers and online.  This is the first product from the company that does not contain CBD.  More details about the precise makeup of the formula have yet to be made available.

In addition, Dowling said the company has launched a lower cost line called Happy Lane, which is billed as a ‘zero THC’ product.  The line, which retails for less than $20, is aimed at the convenience store channel. The company's flagship PlusCBD Oil in a dropper bottle sells for about $67.

Breaking into Amazon market

A huge benefit for a CBD-free product is that is can be sold on Amazon, Dowling said.

“A huge digital strategy gap for all CBD companies is the inability to sell on Amazon. Because of the regulatory uncertainty, Amazon is not allowing CBD to be sold on their site. So now we have our new immunity product line that does not contain CBD as an ingredient, and there's no restriction to be sold on major e-commerce sites, including Amazon,”​ Dowling said.

Cash enough to support development pipeline

Dowling said that the company has managed its cash position carefully enough that it will be able to weather the current crisis. The company reported $8.1 million in cash on hand at the end of the quarter. The key, he said, is not to lose momentum in the meantime.

“We are not worried about the short-term revenue and financial challenges that we and our industry currently face. We are focused on balancing the uncertainty of this pandemic and ensuring that we don't do anything that slows our innovation pipeline or otherwise inhibits our ability to grow our company,”​ he said.

“As challenging as the current environment is, we don't see any change to the long-term trajectory of the CBD product category or new categories, including our new immunity line and our ability to be a major player in these markets. We are also confident that FDA regulations will emerge and we will be there to lead the way with applicable science and regulatory support,​” he added.

Despite the brave face Dowling put on the company’s future prospects, stock traders have not seemed as sanguine.  The company’s stock price has declined over the past 24 months from a recent high of more than $6 a share in August of 2018, to less than $4 in late August of last year to about 60 cents today.

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