Has CV Sciences Inc (OTCMKTS:CVSI) Exhausted Its Supply of Bad News?

Has CV Sciences Inc (OTCMKTS:CVSI) Exhausted Its Supply of Bad News?

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Shares of CV Sciences Inc (OTCMKTS:CVSI) may have just reacted to the proverbial “kitchen sink” quarter, with a splash to the downside that has been followed by the strangest thing seen on the stock’s chart for quite some time: the rare specter of “support”. The company just announced its financial results for the quarter ended September 30, 2019, highlighted by revenues of $12.6 million.

“We continued to execute our expansion efforts, growing our retail distribution by 18% during the third quarter. We added new national retail partners in both the food, drug and mass (FDM) and natural products channels and we continue to see strong retailer interest across all channels. We broadened our product offerings, with the launch of a new body care line, further expanding our presence in hemp-derived CBD topicals, while allowing us to capitalize on the growing interest of national retailers,” stated Joseph Dowling, Chief Executive Officer of CV Sciences.

CV Sciences Inc (OTCMKTS:CVSI) bills itself as a life science company that focuses on developing and commercializing novel therapeutics utilizing synthetic Cannabidiol (CBD).

CVSI operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division in manufacturing, marketing and selling plant-based CBD products to a range of market sectors, including nutraceutical, beauty care, specialty foods, and vape.

Following the CanX Acquisition in December 2015, CV Sciences commenced its preclinical drug development program during the second quarter of 2016. The Company’s drug development efforts include pursuing synthetic-based Cannabidiol drug candidates in areas that have the potential to provide significant improvements in therapeutic patient treatments with sizable addressable markets.

The company was formerly known as CannaVEST Corp. and changed its name to CV Sciences, Inc. in January 2016. CV Sciences, Inc. has primary offices and facilities in Las Vegas, Nevada and San Diego, California.

CV Sciences Inc is led by Michael J. Mona, JR. founder of CV Sciences, Mr. Mona possesses over 30 years of senior management experience in a range of industries including real estate/construction, industrial farming, chemical processing and consumer products. Mr. Mona is a recognized industry leader in hemp farming operations and chemical extraction and has established a global supply chain of hemp-derived products.

According to company materials, “CV Sciences, Inc. (CVSI) operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division in manufacturing, marketing and selling plant-based CBD products to a range of market sectors. CV Sciences, Inc. has primary offices and facilities in Las Vegas, Nevada and San Diego, California.”

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As noted above, CVSI just announced its financial results for the quarter ended September 30, 2019, highlighted by revenues of $12.6 million.

The stock has suffered a bit of late, with shares of CVSI taking a hit in recent action, down about -16% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -13%. Moreover, the name has seen interest climb, with an increase in recent trading volume of greater than 130% over what the stock has registered over the longer term.

Mr. Dowling continued, “We generated $12.6 million of third quarter revenue, representing a modest decline compared to the prior year, reflecting the uncertain regulatory environment for CBD resulting in state by state ambiguities that are impacting retailer activities, as well as the short-term impact of new competition in the natural product channel. We expect both of these near-term challenges to abate as the regulatory environment develops, providing more structured guidance on the CBD market and establishing quality standards that benefit all consumers and expand availability. We are encouraged by the recent USDA establishment of the U.S. domestic hemp production program, and look for additional regulation to be established, particularly by the FDA. There is a significant opportunity to expand the market across all channels of distribution by broadening product availability beyond topicals, currently the only products adopted in many national retail chains. Further regulatory clarity will expand availability of ingestibles, which account for many of our top selling products.”

Earning a current market cap value of $170M, CVSI has a significant war chest ($14.2M) of cash on the books, which compares with about $12.1M in total current liabilities. One should also note that debt has been growing over recent quarters. CVSI is pulling in trailing 12-month revenues of $58.6M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -7.3%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $CVSI stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CVSI, either long or short, and we have not been compensated for this article.

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