Charlotte’s Web reports 4Q loss, lowers projections on FDA warnings, coronavirus

Charlotte’s Web Holdings lost $18.8 million last quarter, a plunge of 688% from the same period in 2018.

The Colorado CBD maker attributed the loss to slow adoption of its products in mainstream food, drug and mass retailers.

The results put the company’s profits down 688% from the same period in 2018, when the company made a profit of $3.2 million.

Charlotte’s Web cited regulatory uncertainty about CBD and the coronavirus pandemic as it ratcheted down its projected revenues for 2020, saying the company would grow 10% to 20% through the year with revenues “in the $20M range” for the first quarter of 2020.

Charlotte’s Web reported revenue of $22.8 million for the fourth quarter, up 1.3% from the prior year.

CEO Deanie Elsner told investors that the company missed sales targets because of

  • A slate of warnings from federal health regulators about CBD in November, which prompted retailers to slow plans to carry CBD products, particularly ingestible CBD, and
  • Competitive oversaturation in the natural channel.

Charlotte’s Web talked up its $68 million plan to acquire topical CBD maker Abacus Health Products. That’s because some 75% of food, drug and mass retailers carry only topical CBD products, not ingestible CBD products such as tinctures, for which Charlotte’s Web is known.

“Regulatory uncertainty is holding back ingestible sales in the (food, drug and mass retail) channel,” Elsner said.

Charlotte’s Web also talked up its new $10 million line of credit from J.P. Morgan, extendable to $20 million. The credit line is especially valuable given market turmoil caused by the coronavirus pandemic, CFO Russ Hammer said.

“We have the liquidity to withstand that,” he said.

Charlotte’s Web trades shares on the Toronto Stock Exchange as CWEB.