CV Sciences [stock_market_widget type="inline" template="generic" color="default" assets="CVSI" markup="(OTCQB: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] generated revenue of $14.9 million for the first quarter of 2019 after tying up a supply deal with national drug store chain CVS.
The Nevada-based CBD producer increased the number of stores it supplies by more than 1,000 during the quarter and that helped spark 85% year-on-year revenue growth. Its products, led by the bestselling PlusCBD Oil, were stocked in 3,308 stores as of March 31, 2019, a 48% increase from Dec. 31, 2018.
“As anticipated, since the passage of the 2018 Farm Bill, we have seen significant interest in the hemp-derived CBD category across retailers and channels, and we are in discussions with multiple retailers for new retail placements,” said chief executive Joseph Dowling. He pledged to invest in expansion in order to meet growing demand among retailers and consumers for hemp-based CBD wellness products.
The firm believes its deal with CVS will usher in a new era that sees more national food retailers, drug store chains and mass merchandisers list CBD products.
Golden Handshake Triggers Operating Loss
CV Sciences stock opened at $5.12 on Wednesday, May 8, but that decreased to $4.96 when trading opened on Thursday, May 9. Within 15 minutes of trading it was down to $4.64, its lowest since mid-March.
The firm reported an operating loss of $9.4 million in the Q1 2019, compared to an operating income of $700,000 during the same period in 2018. It attributed this primarily to the retirement package put together for Michael Mona Jr., who stepped down in January, leaving Dowling to run the company. His son and co-founder, Michael Mona III, was previously president, but that position was eliminated and he is now chief operating officer.
Diluted net loss per share was $0.10 in Q1 2019, compared to net income of $0.01 per share in Q1 2018. It ended the first quarter with cash of $13.6 million, up by $1 million after it generated $800,000 from operations during those three months.
California Dreaming
Its second bestselling SKU is now its balm and it pledged to maintain a pipeline of innovation going forward. It is also trying to streamline its business, while it remains in talks with various retailers as it bids to increase its sales footprint across the U.S.
It applied for an uplisting on the Nasdaq in July 2018, but it has not yet secured that listing, although it is confident it will.
One main challenge it faces is cracking California, the largest market in the U.S. and an economic powerhouse with a population of 40 million people. The Golden State was the first to legalize medicinal marijuana, but there are debates over the legality of CBD there and California Public Health Officials recently seized $140,000 worth of CBD-infused beverages from a warehouse in LA.
Assembly Bill 228 is attempting to clarify the legality of hemp-derived CBD and permit derivatives to be infused in food, beverages, or cosmetics. It has passed through two legislative committees with unanimous support, so Dowling is confident that the situation will be resolved quickly. He hailed Gov. Gavin Newsom as forward-thinking when it comes to cannabis and he expects his firm to receive a strong boost if CBD is properly legalized in California.