cbdMD (NYSEAMERICAN:YCBD) reported higher fiscal second-quarter revenue and said its core business continued to recover, while management pointed to near-term costs tied to the Bluebird Botanicals acquisition and investments in a developing Medicare-related pathway for hemp-derived CBD products.
On the company’s earnings call for the quarter ended March 31, 2026, Chief Executive Officer and Chief Financial Officer Ronan Kennedy said cbdMD posted net sales of $5.6 million, up 19% from the prior-year period and 12% sequentially from the fiscal first quarter. Kennedy said the increase was not solely attributable to the company’s mid-January acquisition of Bluebird Botanicals, noting that excluding Bluebird, core revenue increased by about $500,000 year over year and about $300,000 sequentially.
Wholesale Growth Lifts Revenue, Pressures Margin
Chief Accounting Officer Bradley Whitford said gross margin was 58% in the quarter, down from 62% in the prior-year period. He attributed the decline mostly to a shift toward wholesale revenue, including the company’s Herbal Oasis THC beverage brand, as well as incremental costs from state-level regulatory changes requiring repacking and new testing.
Direct-to-consumer sales remained cbdMD’s largest channel at about 67% of revenue, while wholesale accounted for 33%, up from 23% in the prior-year quarter. Kennedy said wholesale revenue rose 65% year over year, reflecting execution in the core cbdMD brand and progress with Herbal Oasis.
Whitford said the company is reviewing pricing, product mix and its supply chain while implementing initiatives aimed at improving product quality, documentation, formulations and gross margins.
The company reported a loss from operations of approximately $801,000, compared with a loss of $486,000 in the year-earlier quarter. Excluding a one-time non-cash stock vesting item, loss from operations was $405,000. Net loss attributable to common shareholders was approximately $876,000, or $0.08 per share, compared with a net loss of approximately $1.4 million, or $1.90 per share, in the prior-year quarter.
Whitford said the per-share improvement was primarily driven by the elimination of the company’s Series A preferred dividend during fiscal 2025 and the conversion of the Series A into common stock. Adjusted non-GAAP EBITDA loss was $220,000, which Whitford said reflected added payroll and other expenses related to Bluebird without a full quarter of Bluebird revenue, as well as spending directed toward the CMS Substance Access Beneficiary Engagement Incentive program.
Bluebird Acquisition Expected to Turn Accretive
cbdMD closed the acquisition of Bluebird Botanicals’ assets in mid-January. Kennedy described Bluebird as a longstanding CBD brand with a loyal customer base and said the transaction was the company’s first acquisition in years, enabled by work to repair the balance sheet and regain full NYSE American continued listing compliance.
Kennedy said Bluebird was a drag on earnings in the second quarter because cbdMD absorbed transition and integration costs without receiving a full quarter of revenue. He said Bluebird began generating a positive contribution in March, and management expects the acquisition to become a positive contributor to both revenue and earnings in the fiscal third quarter as integration progresses and synergies are realized.
In response to a question from Maxim Group Equity Research Associate Tom McGovern, Kennedy said Bluebird was “pretty much fully integrated,” had a good March and a “very strong April.” He said cbdMD has begun realizing team synergies, integrating more of the supply chain and leveraging parts of the product portfolio with Bluebird’s customer base.
Kennedy also said the company is reviewing SKU overlap and managing changes through inventory sell-through to minimize potential inventory impairments.
Medicare-Related CBD Pathway Seen as Longer-Term Opportunity
Kennedy said the regulatory environment has shifted significantly in recent months, citing bipartisan legislative proposals addressing restrictive hemp language, the partial rescheduling of cannabis to Schedule III in late April, and the April 1 activation of the CMS Substance Access Beneficiary Engagement Incentive, which he described as the first federally supported pathway for hemp-derived CBD products in Medicare.
He said cbdMD accelerated its entry into the CMS pathway ahead of its original fiscal 2026 plan, creating near-term costs in the quarter. Kennedy said the company has established a dedicated clinical and healthcare channel, is in active conversations with accountable care organizations and others, and is expanding the clinical evidence base behind its products.
“This is not a near-term revenue story,” Kennedy said, adding that the company expects the early phase to be driven by implementation, with provider adoption developing over the next 12 to 18 months.
During the question-and-answer session, Kennedy said the healthcare system is complicated and that cbdMD still needs to educate medical groups on the science and safety of hemp products. He said the company must also demonstrate economic benefits for participants in the pathway.
State Regulations Remain a Headwind
Kennedy said state-level regulatory volatility continues to create costs and operational complexity. He cited packaging changes, repacking costs, new testing requirements and customer confusion, as well as restrictions that narrow which products cbdMD can sell and where it can sell them.
Asked by McGovern which products are most affected, Kennedy said the impact is primarily on full-spectrum products containing hemp-derived delta-9, with a larger effect on Herbal Oasis. He cited Alabama as an example, saying it was a strong market for the company in the December quarter before a law change effective in early January effectively halted the hemp-derived product category there.
Kennedy said cbdMD is working to stay nimble with supply chain and inventory management and is engaging with customers, distributors and state officials to ensure products meet evolving requirements.
The company also continues to engage in Washington on federal hemp legislation. Kennedy said cbdMD supports efforts including the Hemp Act, the Cannabinoid Safety and Regulation Act, the Hemp Planting Predictability Act and its Senate companion. He said the company is also preparing for multiple regulatory scenarios ahead of a November 2026 effective date for an act referenced on the call, including reformulation, new ingredients, packaging and labeling changes, channel mix shifts and supply chain flexibility.
Liquidity, Break-Even and Reverse Split Discussed
Whitford said cash used in operating activities was approximately $723,000, reflecting an accounts receivable build of about $435,000 tied to revenue growth and wholesale term customers, as well as an incremental $240,000 inventory build excluding inventory acquired in the Bluebird transaction.
Asked by Adam Waldo of Lismore Partners about liquidity and cash burn, Kennedy said cbdMD had made inventory investments ahead of growth and expects to be more efficient with inventory going forward. He said the company anticipates improved cash burn or EBITDA and does not expect the same working capital build requirements as in the last two quarters.
Waldo also asked about shareholder approval of a reverse stock split proposal. Kennedy said there is currently no plan to execute a reverse split and that the authorization was intended as a protective tool, allowing the company to respond quickly if needed amid market volatility or potential listing-related changes.
In a later exchange, Waldo asked about revenue levels needed for free cash flow break-even. Kennedy said the company’s modeling indicates a break-even top line “well below” $7 million in quarterly revenue, while noting that the quarter included one-time expenses tied to the Bluebird transaction.
Looking ahead, Kennedy said cbdMD intends to keep focusing on high-velocity SKUs, disciplined customer acquisition and wholesale expansion across cbdMD, Paw CBD, Herbal Oasis and Bluebird. He said the company expects Bluebird to contribute positively in the fiscal third quarter and plans to continue evaluating disciplined acquisition opportunities in hemp and adjacent health and wellness categories.
About cbdMD (NYSEAMERICAN:YCBD)
cbdMD, Inc (NYSEAMERICAN: YCBD) is a Charlotte, North Carolina–based producer and distributor of hemp-derived cannabidiol (CBD) products. Since its founding in 2018, the company has focused on developing a diverse portfolio of wellness offerings designed for human and pet use. Its product range includes tinctures, capsules, gummies, topicals, and pet-specific formulations, each developed to comply with U.S. Food and Drug Administration (FDA) guidelines for hemp-derived substances.
The company operates a vertically integrated business model, sourcing U.S.-grown hemp and overseeing manufacturing processes in cGMP-certified facilities.
