CV Sciences (CVSI -7.27%) ranked as the best-performing cannabis stock on the market in 2018. But so far this year, it's been a much different story. CV Sciences got off to a great start with shares rising 45% by late March. However, all of those gains have been given up, with the stock down 5% year to date as the company headed into its second-quarter update.

That Q2 update came after the market closed on Tuesday. Here's what you need to know about CV Sciences' Q2 results.

Hand holding CBD oil in a bottle with marijuana leaves in the background.

Image source: Getty Images.

By the numbers

CV Sciences reported Q2 revenue of $16.9 million, up 36% year over year. However, this result fell short of Wall Street analysts' expectations of Q2 revenue totaling $17.45 million.

The company announced net income in the second quarter of $1.2 million, or $0.01 per share, on a generally accepted accounting principles (GAAP) net income basis. In the prior-year period, CV Sciences' net income was $3.3 million, or $0.03 per share.

CV Sciences posted non-GAAP adjusted net income in Q2 of $3.4 million, or $0.03 per share. This reflected a slight decline from the prior-year period's adjusted net income of $3.6 million, or $0.03 per share. However, it came in a little higher than the consensus analysts' earnings estimate of $0.02 per share.

Behind the numbers

While CV Sciences' Q2 revenue didn't meet analysts' expectations, it set an all-time high for the company. The second quarter also marked the 14th consecutive quarter of sequential revenue growth. This continued growth stemmed primarily from CV Sciences' organic expansion of sales channels. The company reported that its products were carried in 4,591 stores nationwide as of June 30, 2019, up nearly 39% from the end of March.

But what about the earnings decline? The culprit was higher spending. CV Sciences' operating expenses increased nearly 86% year over year to $10.7 million. The company's non-GAAP earnings decline didn't look as bad compared to the prior-year period result, though, thanks to an adjustment related to stock-based compensation.

In addition to its financial results, CV Sciences highlighted several key developments during the second quarter, including:

  • The initiation of domestic sourcing efforts and committing to plan more than 500 acres of hemp in the U.S.
  • Plans to add a new 45,500-square-foot facility to boost its production capacity by 500%.
  • A published clinical study that demonstrated CV Sciences' PlusCBD oils can improve sleep, help reduce appetite, and enhance individuals' quality of life.

Looking ahead

CV Sciences CEO Joseph Dowling mentioned that nine new products have been launched so far this year and noted that the company has "further innovation scheduled for introduction during the second half of the year." Look for CV Sciences to expand its product offerings, particularly with national food, drug, and mass channel retailers.

Dowling also pointed to recent the expansion and strengthening of CBD markets in California, Texas, and Ohio thanks to legislative actions. The company should continue to benefit as more states pass legislation that allows easier access to hemp-based CBD products.