CV Sciences (CVSI +0.44%), a consumer wellness company known for its hemp-derived CBD (cannabidiol) and plant-based products, reported first quarter results on May 14, 2025, for the period ended March 31. The release highlighted a 10.0% drop in GAAP revenue to $3.6 million compared to the prior year, steady gross margins of 46.0%, and ongoing cost controls. With no analyst estimates available, performance was measured against recent internal progress: revenue again trended down, but operating efficiency and continued product innovation offered some positives. The company returned to operating income (GAAP) of $11,000, driven by a one-time payroll tax reversal, though underlying profitability metrics, like adjusted EBITDA, remained negative.
| Metric | Q1 2025 | Q1 2024 | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $(0.00) | $(0.00) | — |
| Revenue | $3.6 million | $4.0 million | (10.0%) |
| Gross Margin | 46.0% | 46.3% | (0.3) pp |
| Adjusted EBITDA | $(0.3 million) | $(0.5 million) | N/A |
| Operating Income (Loss) | $11 thousand | $(620 thousand) | — |
| Cash | $0.8 million | N/A | N/A |
Business overview and recent focus
CV Sciences develops, manufactures, and markets health-focused consumer products with a main emphasis on hemp-derived cannabidiol (CBD) supplements, topical solutions, and emerging plant-based food items. It operates in a highly regulated and evolving sector, serving both consumers and retailers through direct-to-consumer and wholesale channels.
Expansion into new categories has become central for the business, especially as core CBD revenues contract amidst rising regulation. The company’s recent focus includes driving operational efficiency, diversifying via new non-cannabinoid products, and leveraging acquisitions for cost savings and further innovation. Key success factors for its business include managing regulatory compliance, broadening distribution, and maintaining brand credibility in a crowded space.
Quarter in review: Financial and product developments
The company’s revenue (GAAP) fell 10.0% compared to the prior year period, as lower unit sales outweighed a slight increase in average product pricing. Management cited tighter state regulations and temporary out-of-stock issues for some of its best-selling items, caused by manufacturing delays from contract partners. Despite these headwinds, 35% of sales came from newly launched products since January 2023—a signal that new offerings are gaining early traction. Overall gross margin held steady, noticeably better than the previous quarter (Q4 2024), thanks to cost savings and a greater focus on higher-margin products.
Operating costs continued to decline, supported by disciplined spending in selling, general, and administrative lines, which fell 12% year over year. Total operating expenses (GAAP) came down to $1.65 million, benefiting from a noteworthy $0.5 million reversal of previously accrued payroll tax—an adjustment that transformed operating income to a small gain of $11,000 compared to a loss in the prior year quarter. Without this one-time boost, however, adjusted EBITDA was still negative at $0.3 million, albeit a substantial improvement over the prior year’s $0.5 million loss (Q1 2024).
Product and channel dynamics shifted further in the period. The +PlusCBD CBD supplement brand kept its lead in natural product retail based on third-party data, but the overall CBD category remains fragmented and highly competitive, with ongoing revenue contraction. To counteract market and regulatory risks, the company began rolling out the Lunar Fox range—a selection of vegan, plant-based foods rooted in European expertise and now available both online and through select U.S. retailers. Management also continued investing in insourcing production, supported by the acquisition of Elevated Softgels, with the aim to lift gross margins even higher as the year progresses, with management anticipating further improvements in the second half of 2025.
Direct-to-consumer channels represented 44.8% of revenue, almost unchanged from the prior year, illustrating stable consumer demand online. Notably, sales through this channel fell 9% sequentially, reflecting typical seasonal trends. At the same time, the company drove forward with 34 new product launches initiated since January 2023, underlining a clear pivot toward innovation and brand diversification.
Balance sheet, cash, and forward look
The company closed the quarter with $0.8 million in cash, a modest increase from the end of fiscal 2024, aided by fresh financing from an institutional investor and ongoing improvements in cash usage. Net cash used in operations (GAAP) was $0.1 million, supporting goals of cost discipline and liquidity preservation. Inventory (GAAP) was reduced by about $0.5 million from December 31, 2024 to March 31, 2025, showing ongoing attention to working capital management and the conversion of raw materials—like hemp oil—into finished or monetizable goods.
However, leadership indicated that further improvements in gross margin are expected in the second half of 2025 as more products are manufactured in-house and synergy benefits from acquisitions materialize. The company anticipates a small amount of cash burn in the short term, aiming for a return to positive cash generation as the year progresses.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
