CV Sciences, Inc. Reports Fiscal Year-End 2023 Financial Results

SAN DIEGO, March 28, 2024

Fiscal 2023, Fourth Quarter 2023 and Recent Financial and Operating Highlights

• Generated revenue of $16.0 million for fiscal 2023 compared to $16.2 million for 2022; Revenue of $3.8 million for the fourth quarter 2023 compared to $4.1 million in the third quarter 2023;
• Recognized gross margin of 44.3% for fiscal year 2023, a significant improvement from 34.2% for 2022; Gross margin of 45.8% for the fourth quarter 2023, a sequential improvement from 45.1% for the third quarter 2023;
• Cash balance of $1.3 million at year end compared to $0.6 million at the end of 2022;
• Generated cash flow from operations of $2.3 million in the fiscal year 2023 compared to cash used in operations of $1.9 million in 2022; cash flow from operations in 2023 included employee retention credit (ERC) under the CARES Act for a total of $2.5 million;
• Continued to reduce operating expenses, excluding the benefit from reversal of accrued payroll taxes, by 20% to $9.9 million for fiscal year 2023 compared to $12.4 million for 2022;
• Further established number one position as top-selling hemp extract brand in the natural product retail sales channel, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry;
• Launched +PlusCBD^TM Reserve Collection Extra Gummies and Reserve Collection 30ct softgels to support stress relief and relaxation (Q1 2023);
• Launched +PlusCBD^TM Daily Balance, a new line of THC-free gummies and softgels (Q1 2023);
• Received formal notice of patent issuance from Japan Patent Office for formulations containing CBD and nicotine for treating smokeless tobacco addiction (Q1 2023);
• Received employee retention credit (ERC) under the CARES Act for a total of $2.5 million and extinguished outstanding note payable with Streeterville (Q1 2023);
• Reversed accrued payroll tax associated with RSU release to founder in 2019 due to the expiration of the statute of limitations (Q1 2023);
• Received preliminary approval of proposed settlement of shareholder derivative lawsuit (Q1 2023);
• Launched +PlusCBD^TM Reserve Collection Extra Gummies to support healthy sleep, faster recovery, deeper relaxation and a brighter mood (Q2 2023);
• Launched +PlusCBD^TM Reserve Sleep Gummies, specifically designed for better sleep (Q3 2023);
• Expanded +PlusCBD^TM Pet product offering with the launch of pet chews for hip and joint health and calming care chews (Q1 2024);
• Acquired Cultured Foods^TM, a leading manufacturer and distributor of alternative plant-based vegan foods, providing the Company with manufacturing and distribution foothold in the EU that will allow for leverage of our key strengths and competencies (Q4 2023); and
• Continued to build an efficient and cost effective consumer products platform and continue to evaluate inbound and outbound merger, sale, acquisition or other options for the Company.

"We are very pleased with our fiscal year 2023 results. In a challenging environment, our revenues stayed flat at $16 million in FY23 compared to prior year. Our 44.3% gross margin in FY23 is significantly improved from 34.2% in FY22," stated Joseph Dowling, Chief Executive Officer of CV Sciences. "Our 2023 progress demonstrates our continuous commitment to innovation and cost-efficient execution as we move closer to profitability and positive cash flow. As the CBD category consolidates, we have increased our market share in key sales channels, including the natural product retail channel. We will continue to focus our resources on new product development, as evidenced by our pet line expansion with our recent launch of pet chews for hip and joint health and calming care. During FY23, with the acquisition of Cultured Foods, we launched our transition to a global health and wellness company that will use M&A as a vehicle to leverage the strengths and assets of our Company."

Operating Results - Full Year 2023 Compared to Full Year 2022

Sales for fiscal 2023 were $16.0 million, a decrease of 1.2% from $16.2 million in 2022. The decline is primarily due to lower B2C sales of $0.4 million because of lower average order value. B2B sales increased by $0.2 million or 1.5% to $9.2 million in 2023.  The total number of units sold during fiscal 2023 decreased by 6.7%, partially offset by increases in average sales price per unit. We generated an operating income of $3.4 million in fiscal 2023, compared to an operating loss of $6.8 million in, mostly due to the reversal of accrued payroll tax of $6.2 million, improved gross margins and lower operating expenses. The Company had negative adjusted EBITDA of $2.3 million for fiscal 2023, an improvement of 62%, compared to negative adjusted EBITDA of $6.1 million in 2022.

Fourth Quarter 2023 Results