CV Sciences recently released its first quarter earnings of 2020, illustrating COVID-19’s widespread consequences on even some of the largest companies in the hemp industry.
The San Diego, Calif.-based cannabidiol (CBD) supplier and manufacturer reported first quarter revenue of $8.3 million, down 45% from the first quarter of 2019.
Last quarter, the company lowered its 2020 first quarter revenue expectations to between $6 million and $8 million in anticipation of fallout from the coronavirus. While the company slightly surpassed its revenue projections, it still represented a year-over-year decline of $6.6 million and a quarterly decline of 11%.
CEO Joseph Dowling attributed the sharp revenue decline to, in addition to COVID-19, increased market competition in the natural product category and the ongoing regulatory uncertainty of CBD.
The revenue declines comes even as CV Sciences’ number of stores has grown by 42%, from 3,308 stores in March 2019 to 5,799 stores as of March 2020.
Dowling said during a conference call May 8 that the company has taken initiatives, including lay-offs and salary reductions, to save an estimated $10 million across the company.
“We are pleased with our ability to deliver on expectations amid a very challenging environment,” Dowlings said. “To address the changing industry environment, we right-sized our operations during the quarter to reflect near-term business trends. During the first quarter, in connection with our enterprise-wide cost reduction efforts, we reduced our staff by approximately 20%, reduced salaries across our leadership team and implemented other cost savings initiatives across all company operations.”
Dowlings said last quarter that the company “decided to temporarily slow down our drug development efforts while we wait for certainty in terms of the breadth and scope of the patent protection we expect to obtain.”
Perhaps indicative of spending habits brought about by COVID-19, e-commerce sales for the company made up nearly a quarter of net revenue compared with 15% in the first quarter of 2019.
The company is trying to capitalize on those sales with the launch of its +PlusCBD Oil website, where it exclusively sells its products.
CV Sciences also announced it has received an allowance from the U.S. Patent and Trade Office for proprietary CBD and nicotine formulation as a treatment for smokeless tobacco addiction.The company’s full earnings report is available on its website.