HempFusion Wellness' Shares Down On 84% YoY Higher Revenue In Second Quarter, E-commerce Revenues Spike 268%

Health and wellness CBD company HempFusion Wellness Inc. CBD CBDHF reported its financial results Tuesday for the second quarter ended June 30, 2021, posting revenue of $1.2 million, which compares to $983,496 in the previous quarter and $670,728 in the same period of 2020.

Second Quarter 2021 Financial Highlights

• Direct-to-consumer eCommerce sales increased 37% to $334,322 from $244,255 in Q1. Web-based sales increased 54% and DTC including Amazon AMZN, Walmart WMT, and Tmall increased 23% sequentially in Q2.
• B2B net revenue increased 22% to $898,620 in Q2 2021 from $739,241 in Q1 2021 and a 55% increase year-on-year compared to $579,910 in Q2 2020.
• International sales began to return following COVID, increasing by 68% to $203,296 in Q2 2021 from $75,994 in Q1 2021.
• Gross profit was $232,417 or 19% of net revenue versus -19% in the prior-year quarter, representing a 38% improvement reflective of more effective inventory management and improvements in managing production costs.
• Operating expenses were $6,568,503, an increase of 4% from $6,306,703 in Q1 2021, primarily attributed to acquisition-related expenses as well as marketing and digital-related expenses.
• Strong cash position ending the quarter at $11.4 million.

“With year over year growth in net revenues of 84%, year over year direct to consumer ecommerce revenues up 268%, and our leading regulatory preparedness, HempFusion’s momentum shows it to be the right company, at the right time, to lead this new category into the future,” Dr. Jason Mitchell, HempFusion CEO stated. “Additionally, subsequent to the quarter end, the Company closed on two accretive acquisitions and highly respected CBD brands, adding significant new distribution points and products,” Mitchell continued.

Second Quarter 2021 Business Highlights

• The Company launched its highly anticipated CBD Gummy line in early August 2021, utilizing HempFusion’s proprietary broad-spectrum hemp extract, never an isolate.
• In June 2021, HempFusion launched its new EU compliant Probulin in Boots Pharmacies in Ireland, establishing a foundation for further opportunities and expansion in retailers across Ireland, the United Kingdom and Europe.
• In early June 2021, HempFusion launched its sixth distribution channel, Private Label. The Company secured a 10 SKU private label deal with a leading national publicly traded grocery retailer. The initial order for approximately $250,000 was shipped in July 2021. The Company anticipates this particular account to generate north of $500,000 for 2021 and approximately $1 million or more in 2022. 
• HempFusion’s e-commerce business is growing. New customer acquisition increased online by 69.7% over Q1, 2021.
• In May 2021, HempFusion announced an exclusive partnership with two-time Olympic Gold Medalist and five-time World Champion, Kaillie Humphries. 

Subsequent to the quarter-end, HempFusion completed both of the previously announced acquisitions of Sagely Enterprises Inc. (Sagely Naturals) and APCNA Holdings LLC (Apothecanna). These acquisitions greatly expand the distribution footprint of the Company to over 15,000 locations providing the opportunity to expand with ingestible products.

Price Action 

Hemp Fusion shares were trading 8.31% lower at 23 cents per share at the time of writing Tuesday late morning. 

Photo: Courtesy of Kimzy Nanney on Unsplash