Cv Sciences Inc

Good afternoon, ladies and gentlemen, and welcome to the CV Sciences Q1 2026 earnings call. All participants will be in a listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star, then zero. Please note that this event is being recorded. I will now like to hand the conference over to Brendan Hawkins, Investor Relations. Please go ahead, sir.

Thank you, and good afternoon, everyone. With us today with prepared remarks are CD Sciences Chief Executive Officer Joseph Dowling and your GRASR Chief Financial Officer. After the prepared remarks, we will take questions from the analyst community. I'd like to remind you that during this call, management's prepared remarks may contain forward-looking statements. These forward-looking statements are subject to risk and uncertainties, that may cause actual results to differ materially from those anticipated by CV Sciences at this time. When used in this call, the words anticipate, could, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to CV Sciences are as such a forward-looking statement. Finally, please note that in today's call, management will refer to non-GAAP financial measures in which CB Sciences excludes certain expenses from its GAAP financial results. Please refer to CB Sciences' press release from earlier this afternoon for a full reconciliation of its non-GAAP performance measures to the most comparable GAAP financial measures. As I just mentioned, this afternoon the company issued a press release announcing its financial results. Participants on this call may not have already done so, may wish to look at the press release as the company provides a summary of the results on this call. The press release may be found at cvsciences.com. I'd like to now turn the call over to CV Sciences' Chief Executive Officer, Mr. Joseph Dowling. Joe?

Good afternoon, everyone. Thank you for joining our call. Earlier today, we issued a press release reporting results where our first quarter ended March 31, 2026. We continue to make progress against our top priorities of maintaining strong margins, reducing our cost structure, and moving the business toward sustainable profitability. We are pleased with our first quarter performance, particularly given the challenging market and regulatory environment facing our economy and industry. Despite these headwinds, we remain focused on our core objectives of scaling the business, driving cost efficiency, and achieving profitability and positive cash flow. At the same time, we are advancing our transition into a global health and wellness company, reaching several important milestones during the quarter. Some of the significant highlights during Q1 included We generated revenue of $3.2 million, slightly down when compared to $3.3 million for the fourth quarter of 2025. While revenue declined sequentially on a quarterly basis, our first quarter revenue demonstrates our resilience in a difficult operating environment. Our gross margin held steady at 48.9%, compared to 50.5% for the fourth quarter of 2025, demonstrating our ability to control cost of sales during an economic environment of rising expenses. Operating expenses were reduced by 13.3% to 1.9 million, compared to 2.2 million for the first quarter of 2025, reflecting our ongoing focus on cost discipline. We achieved an adjusted EBITDA loss of 0.1 million for the first quarter of 2026 compared to 0.3 million loss for the first quarter of 2025. We continue to make meaningful adjusted EBITDA improvement from prior periods. And we maintained our position as the number one selling hemp extract brand in the natural product retail sales channel and continue to gain market share according to SPNS, the leading provider of syndicated data and insights for the natural organic and specialty products industry. Our primary goal as a company is to grow profitably and achieving greater scale is critical to that objective. Our strategy is centered on product innovation cost efficiency, and strategic M&A. We are making strong progress in diversifying and expanding our product portfolio. We will continue to innovate and launch new cannabinoid-focused products, aligning these efforts with the unfolding regulatory environment. We continue to believe in the long-term strength and viability of the CBD market. Our Plus Health branded product line represents a new line of cannabinoid-free supplements and other food products designed to support optimized health, performance and vitality. This brand platform allows us to leverage our existing infrastructure while diversifying beyond cannabinoid-based products. During the first quarter of 2026, we launched our new Plus Health Empower product, an innovative functional nutritional product that combines performance and wellness in a single convenient format. Our new Empower product contains 20 grams of protein, 5 grams of creatine, active probiotics, and supports strength, recovery, mental clarity, and gut health. We believe this product positions us well across a broad consumer base with our customers increasingly interested in creatine for energy, performance, and healthy aging. Early feedback from consumers and retailers has been very encouraging. Looking ahead, we plan to launch multiple non-cannabinoid products throughout 2026. These products are expected to drive organic growth, leverage our existing infrastructure and help offset revenue pressure from regulatory challenges. We also plan to expand into select international markets through our European subsidiary, Cultured Foods. Cultured Foods remains a key component of our innovation strategy. In addition to being a manufacturer and distributor, It provides us with in-region production capabilities for European and global markets. We expect cultured foods to play an increasing role in new product launches in 2026. Our pet category continues to build momentum with our plus CBD pet line. Our hip and joint health and calming care chews remain strong performers and are supported by strong research. We continue to expand our relationship with Chewy, strengthening our presence in the fast-growing online pet category. Turning to cost efficiency, we continue to make progress on cost efficiency in Q1 2026. Operating expenses declined by 13.3% when compared with Q1 2025. And we continue to identify additional opportunities to streamline operations. Strategic insourcing of manufacturing is a key driver of future margin expansion. By bringing certain manufacturing capabilities in-house, we can reduce costs, improve speed to market, and gain greater control over production. Importantly, we are now approaching cash flow breakeven even in a constrained revenue and rising cost environment. And the last focus area that I will cover this afternoon is M&A, which remains an important part of our growth strategy. Over the past two years, we completed the acquisitions of cultured foods and elevated soft gels, both of which are contributing to scale, efficiency, and diversification, and a more flexible and efficient supply chain. We continue to evaluate additional opportunities that offer strong strategic and financial alignment, and we remain actively engaged with our advisors. On the regulatory front, the regulatory environment continues to be very complicated. We are working with several advocacy organizations to support the development of clear science-based regulations. Inconsistent federal guidance continues to create challenges, including increased costs and uneven state regulations. As we stated in our year-end call, the November 2025 Appropriations Act could have mixed implications for the industry. It could serve as a catalyst for long overdue regulatory clarity. If unchanged, This act will require us to modify our product offering away from certain products, which we are prepared to do if needed. We did have some good news recently at the federal level. On April 1, 2026, the Centers for Medicare and Medicaid Services, CMS, introduced the Substance Access Beneficiary Engagement Incentive, BEI, for eligible participants in select CMS Innovation Center models. The program allows approved participants subject to CMS requirements and oversight to provide eligible beneficiaries with up to $500 annually in qualifying hemp-derived products. Participating organizations purchase and provide the products directly to patients. CMS guidance states that eligible products include non-intoxicating full-spectrum CBD products with up to three milligrams of naturally occurring THC per serving. In addition, the FDA issued a limited enforcement discretion letter covering eligible, orally administered hemp-derived CBD products provided under certain healthcare program conditions, which we believe provides additional regulatory clarity. During Q1, we focus on preparing for this new healthcare channel. We expect the early phase of the program rollout to focus on implementation with clear visibility into patient engagement and adoption expected later in the year and into 2027. Other recent federal developments supporting increased research and potential rescheduling of cannabis, as well as efforts to modernize the regulatory framework for hemp-derived products are encouraging. We are actively monitoring these developments and positioning the company to capitalize on emerging regulatory changes and opportunities. In summary, while industry challenges remain, We are positioning the company to diversify, scale, and grow profitably. We have streamlined our operations, improved cost efficiency, and built a lean organization capable of leveraging our strengths as we move forward. With that, I will turn the call over to Jorn.