As the cannabis, hemp, and CBD space gets back into gear, Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) could be interesting to watch. The action here takes place in the wake of the company’s announcement of its financial results for the first quarter ended March 31, 2020, including organic consolidated revenue of $21.5 million vs. $21.7 million in Q1-2019, Gross profit of $15.0 million, 69.8% of consolidated revenue, Adjusted EBITDA loss of $5.7 million, and Direct-to-Consumer eCommerce sales grew 29.4% year-over-year.
According to the release, on
March 22, 2020 Charlotte’s Web entered into an arrangement to acquire Abacus
Health Products, Inc. in an all-stock transaction. The transaction is expected
to close in late Q2 or early Q3 of this year subject to customary closing
conditions, certain regulatory approvals and approval of the shareholders of
Abacus, after which Abacus shareholders would own approximately 15% of
Charlotte’s Web effective outstanding common shares.
Charlotte’s Web Holdings Inc
(OTCMKTS:CWBHF) bills itself as a company that develops and distributes
hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp
oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.
Charlotte’s Web Holdings, Inc.
sells its products online as well as through distributors, and brick and mortar
The company was formerly known
as Stanley Brothers Holdings Inc. and changed its name to Charlotte’s Web
Holdings, Inc. in July 2018. The company was incorporated in 2018 and is
headquartered in Boulder, Colorado.
According to company
materials, “Charlotte’s Web Holdings, Inc. is the market leader in the
production and distribution of innovative hemp-based cannabidiol
(“CBD”) wellness products. Founded by the Stanley Brothers, the
Company’s premium quality products start with proprietary hemp genetics that
are responsibly manufactured into whole plant hemp extracts naturally
containing a full spectrum of phytocannabinoids, including CBD, terpenes,
flavonoids and other beneficial hemp compounds. Industrial hemp products are
non-intoxicating. Charlotte’s Web current product categories include tinctures
(liquid products), capsules, topical, as well as pet products. Charlotte’s Web
hemp-based whole plant extracts are sold through select distributors, brick and
mortar retailers, and online through the Company’s website.”
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As noted above, CWBHF just announced financial results for the first quarter ended March 31, 2020.
The chart shows 57% added to
share values of the name over the past month of action. Moreover, the name has
registered increased average transaction volume recently, with the past month
seeing 75% over what the stock has registered over the longer term.
“First quarter revenue
was ahead of expectations driven by our strong DTC Ecommerce sales enabled by
our new technical platform and capabilities. Operationally we have not had any
business disruptions from COVID-19 and have adapted well to the remote working
environment,” said Deanie Elsner, CEO of Charlotte’s Web.
“Strategically we implemented several strategies during the quarter to
address the F/D/M channel, with new topical products, new pricing and the
announcement of our intent to acquire Abacus Health. We also launched CW Labs
to drive break-through Innovation and to support the need for more science and
data. These moves have been well received by our customers across all channels
and we continue to execute on our plan for 2020.”
Currently trading at a market
capitalization of $469M, CWBHF has
a significant war chest ($75.5M) of cash on the books, which must be weighed
relative to about $42.2M in total current liabilities. One should also note
that debt has been growing over recent quarters. CWBHF is pulling in trailing
12-month revenues of $125.6M. In addition, the company is seeing major top-line
growth, with y/y quarterly revenues growing at 0.1%. This is an exciting story,
and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares
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Disclosure: we hold no position in $CWBHF, either long or
short, and we have not been compensated for this article.