American CBD giant Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) bounced back in its fiscal fourth quarter, after the pandemic disrupted its business for most of 2020.
On Thursday, the Colorado-based company reported revenue of US$26.9 million for the three months ended Dec. 31, up 7 per cent from the third quarter.
A key part to rebounding revenues in the quarter was executing its direct-to-consumer e-commerce sales, which Charlotte’s Web said climbed 21.2 per cent annually.
The firm said sales inched up to US$95.2 million from US$94.6 million a year before, as the Covid-19 outbreak led to a 29.5 per cent decline in business-to-business sales.
Charlotte’s Web’s net loss totalled US$47.2 million last year and US$14.7 million in the fourth quarter. Adjusted earnings before interest, taxes, depreciation and amortization in 2020 was a reported loss of US$20.2 million.
Last year, the company introduced a competitive pricing strategy for its hemp-derived CBD products. The firm said that helped boost sales and expand market share in the second half of the year, offsetting some of the pandemic headwinds.
“We turned a challenging start to 2020 into a strong finish, taking multiple actions and outperforming much of the competitive set to extend our brand and market share leadership,” Charlotte’s Web CEO Deanie Elsner said in a statement.
Advancing cannabidiol science and securing access to the U.S. THC market are other key parts to the company’s long-term growth strategy moving forward, Elsner added.
Charlotte’s Web CBD study finds no liver toxicity
To address the U.S. Food and Drug Administration’s request for more CBD data, Charlotte’s Web sponsored a third-party liver study. The firm says it’s been working with the agency in the hopes that it speeds up final regulations for the touted wellness extract.
On Tuesday, Charlotte’s Web said the landmark study found zero liver toxicity or disease detected in 839 participants.
After the FDA requested highly specific liver toxicity data last March in its letter to U.S. Congress, the firm teamed up with 11 other CBD companies to fund the study.
In 2020, Charlotte’s Web launched CW Labs, a research and development division, to further advance hemp science and clinical studies.
Elsner said her company has been able to protect its intellectual property, with five patents secured for proprietary cultivars.
Plans to expand, enter THC market
The company filed a complaint last April against AAXLL in a U.S. Northern District of California Court. The complaint alleged that the San Francisco-based CBD seller sold products that shared a terpene profile with hemp cultivars developed by Charlotte’s Web.
To solidify its leading U.S. CBD market share, Charlotte’s Web noted it completed an acquisition of Abacus Health.
The firm also signed a supply agreement last year with one of Israel’s largest medical cannabis producers, while increasing domestic distribution to more than 22,000 stores.
Hedging its future bets, Charlotte’s Web secured the option this month to enter the U.S. THC market.
The firm has signed a five-year, $8 million purchase agreement option with a cannabis company started by its founders, Stanley Brothers USA Holdings Inc.
The deal allows Charlotte’s Web to take over the weed business if the U.S. legalizes pot federally for a total price to be determined based upon revenue and EBITDA figures.
Charlotte’s Web made headway as it cut operating expenses by 10.4 per cent to US$23.6 million in the fourth quarter from $26.4 million in the previous three-month period.
The company’s cash and working capital as of Dec. 31 were US$52.8 million and US$113.6 million, respectively.
Shares of Charlotte’s Web climbed 6.5 per cent Thursday to C$5.89 on the Toronto Stock Exchange.
Top image via Charlotte’s Web