CV Sciences, Inc. Reports First Quarter 2019 Financial Results
- Record Quarterly Revenue
- Increased Retail Distribution By Over 1,000 Stores
LAS VEGAS, May 08, 2019 (GLOBE NEWSWIRE) — CV Sciences, Inc. (OTCQB:CVSI) (“CV Sciences” or the “Company”) announced today its financial results for the quarter ended March 31, 2019.
First Quarter 2019 Financial and Operating Highlights
- Record revenue of $14.9 million for the first quarter of 2019, an increase of 85% over the same quarter in 2018;
- Strong gross margin of 70.8% compared to gross margin of 68.9% in the first quarter of 2018
- Retail distribution increased to 3,308 stores as of March 31, 2019, a 48% increase from December 31, 2018;
- Expanded retail presence into the food, drug and mass channel and are in active discussions for further expansion of the PlusCBD Oil™ brand; and
- Generated $0.8 million of cash from operations, with cash balance increasing to $13.6 million at quarter end.
We continued to expand retail distribution of the PlusCBD Oil™ brand and drive sales growth during the first quarter. We generated 85% revenue growth over prior year, achieving another record quarter, with strong gross margin performance. The PlusCBD Oil™ brand is now available in over 3,300 stores nationwide, including national food, drug and mass merchandiser accounts.
Joseph Dowling, Chief Executive Officer of CV Sciences
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. We are making the investments across the organization to position ourselves to capitalize on the growing retailer and consumer demand.
“Our drug development program remains on track and we continue to anticipate filing an Investigational New Drug application in late 2019 / early 2020. We have the brand, the people and the unique business model focused on both consumer products and drug development to maximize our opportunity in the rapidly growing hemp CBD industry.”
Operating Results – First Quarter 2019 Compared to First Quarter 2018
Sales for the first quarter of 2019 were $14.9 million, an increase of 85% from $8.1 million in the first quarter of 2018. First quarter sales growth reflects the Company’s continued organic expansion into all sales channels, including food drug and mass, natural product retail, wholesale and direct-to-consumer channels. The Company’s retail store count increased to 3,308 stores nationwide at March 31, 2019, up from 2,238 stores as of December 31, 2018.
The Company recognized an operating loss of $9.4 million in the first quarter of 2019, compared to an operating income of $0.7 million in the first quarter of the prior year. The operating loss is primarily related to additional stock-based compensation and payroll expense associated with the retirement of the Company’s founder and former President and Chief Executive Officer.
As reported under U.S. generally accepted accounting principles (GAAP), first quarter 2019 net loss was $9.4 million, compared with a GAAP net income of $0.6 million in the same period in 2018. Diluted net loss per share was $0.10 for the first quarter of 2019 compared to a diluted net income per share of $0.01 for the same period in 2018.
Non-GAAP net income for the first quarter of 2019 was $1.5 million, or $0.01 per diluted share based on weighted average shares outstanding of 115.6 million. This compares with non-GAAP net income of $1.7 million or $0.02 per diluted share based on weighted average shares outstanding of 95.6 million for the same period in 2018.
Adjusted EBITDA for the first quarter of 2019 was $1.7 million or 11.3% of net revenue, compared to $1.8 million or 22.6% of net revenue, in the first quarter of 2018.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss these results today at 4:30 pm EDT/1:30 pm PDT. The webcast of the conference call will be available on the Investor Relations section of the Company’s web site at https://ir.cvsciences.com/news-events and at http://public.viavid.com/index.php?id=134448. Investors interested in participating in the live call can also dial (877) 407-0784 from the U.S. or international callers can dial (201) 689-8560. A telephone replay will be available approximately two hours after the call concludes and will be available through Wednesday, May 15, 2019, by dialing (844) 512-2921 from the U.S. or (412) 317-6671 from international locations, and entering confirmation code 13690537.
About CV Sciences, Inc.
CV Sciences, Inc. (OTCQB:CVSI) operates two distinct business segments: a consumer product division focused on manufacturing, marketing and selling hemp-based CBD products to a range of market sectors; and a drug development division focused on developing and commercializing novel therapeutics utilizing CBD. The Company’s PlusCBD Oil is the top-selling brand of hemp-derived CBD on the market, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry. CV Sciences, Inc. has primary offices and facilities in San Diego, California and Las Vegas, Nevada. Additional information is available from OTCMarkets.com or by visiting www.cvsciences.com.
CV SCIENCES, INC.
NON-GAAP FINANCIAL MEASURES
We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles for the United States (GAAP). The non-GAAP financial measures such as net income and loss per share and Adjusted EBITDA included in this press release are different from those otherwise presented under GAAP. We use non-GAAP measures internally to evaluate our performance and make financial and operational decisions that are presented in a manner that adjusts from their equivalent GAAP measures or that supplement the information provided by our GAAP measures. The non-GAAP financial measures exclude non-cash compensation expense for stock options and other non-recurring items. When evaluating the performance of our business and developing short and long-term plans, we do not consider share-based compensation charges. Although share-based compensation is necessary to attract and retain quality employees, our consideration of share-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Because of the varying availability of valuation methodologies and subjective assumptions, we believe that the exclusion of share-based compensation allows for more accurate comparison of our financial results to previous periods. In addition, we believe it useful to investors to understand the specific impact of the application of the fair value method of accounting for share-based compensation on our operating results.
Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation expense, amortization expense, interest and income tax expense, minus income tax benefit), further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. We use Adjusted EBITDA because we believe it more clearly highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since Adjusted EBITDA eliminates from our results specific financial items that have less bearing on our core operating performance.
We use Adjusted EBITDA in communicating certain aspects of our results and performance, including in this press release, and believe that Adjusted EBITDA, when viewed in conjunction with our GAAP results and the accompanying reconciliation, can provide investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation of Adjusted EBITDA is useful to investors in making period-to-period comparison of results because the adjustments to GAAP are not reflective of our core business performance.
A reconciliation from our GAAP net income (loss) to non-GAAP net income (loss) for the quarter ended March 31, 2019 and 2018 is detailed below:
A reconciliation from our net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the quarter ended March 31, 2019 and 2018 is detailed below: