The San Diego, CA-based manufacturer, one of the older and better established companies in the field, reported a year-over-year sales decline of 41% in its report of its first quarter 2021 financial results. CV Sciences’ revenue in the quarter was $4.8m compared to $8.3m in the same quarter a year previously.
The company also recorded a sequential decline. In the fourth quarter of 2020 the company brought in $5.2m.
Did pandemic accelerate changes in CBD market?
Company officials attributed the decline to the ongoing market disruptions caused by the global pandemic. Market observers were generally agreed that the CBD markets were ripe for some sort of adjustment after several years of strong double growth, but the changes in consumers’ buying habits coupled with intermittent closures of retail locations seems to have accelerated that trend.
At the NoCo Hemp Expo in Denver, CO in March, an event focused in large part on the supply side of the picture, the mood was one of caution. Commodities analyst Julie Lerner said there has been a sharp contraction in the market for hemp raw material meant for CBD extraction. She warned prospective hemp farmers not to plant this year unless they had a purchase contract in place, forecasting that hemp crops put in on speculation will have trouble finding buyers.
CV Sciences’ CEO Joseph Dowling did say in an earnings call with analysts that the company had been able to improve the company’s margin on its products slightly and was looking forward to better times ahead. Dowling said CV Sciences is strengthening its digital sales capabilities while at the same time having grown its retail footprint over the past year.
Practitioner channel seen as big new opportunity
In addition, the company has launched a practitioner channel product lineup that Dowling said capitalizes on CV Sciences’ strengths.
“Our ProCBD product line is the only high strength line on the market, supported by published investigations, randomized controlled clinical studies, and post marketing safety review. A focus on science is critically important to this discerning channel,” Dowling said.
“This channel has a much higher barrier-to-entry with products that must be backed by science, and by companies with a track record that can be trusted. We are certainly in that company, and we believe the medical practitioner channel will become a significant component of our revenue mix in the future,” he added.
Dowling said the introduction now will position the company to reap the benefits as medical practices return to a more ‘normal’ mode of operation as the pandemic concerns recede.
“The pandemic had a really significant impact on medical practitioners, where they really sort of had to transition to remote visitation with their clients. And that had a huge impact on product sales. We see that changing significantly, certainly in the second half of 2021,” he said.
A transcript of the earnings call was posted on the site seekingalpha.com.