Arcadia Biosciences (NASDAQ: RKDA) saw its
revenues nearly double to $309,000 in the first quarter of 2020 versus the same
period a year ago. The company also reported a profit of $2.5 million versus a
loss of $12.6 million a year ago.
Looking ahead, Arcadia has forecast revenues of $10 million
for fiscal year 2020. The company’s GoodHemp product line, which focuses on
delivering genetically superior hemp seeds and extracts, remains a key part of
its growth strategy for the coming months.
In just two months after the roll-out of its GoodHemp seeds
catalog, the company received over $3 million in initial seed purchase
commitments, which is a sign of strong demand for genetically superior hemp
products in the market. Arcadia expects to recognize these revenues when
deliveries are made between Q2 and Q4 2020.
Arcadia’s plans were temporarily disrupted by the COVID-19
crisis as a couple of hemp growers decided to put their purchases of GoodHemp
seeds on hold last month until they got a better visibility into the economic
situation.
However, in the last ten days, the company has been seeing a
significant pickup in interest and activity and it is seeing hints of growers
moving ahead with their plantings. Historically, May has been one of the most
active months in terms of hemp seed sales in the Western US.
Arcadia’s hemp backlog stood at $3.7 million and this number
is expected to decline as the company starts fulfilling orders over the coming
months. The company expects to see significant hemp seed revenue in the second
quarter.
Arcadia also announced a partnership between its joint
venture Archipelago Ventures and Vivion Specialties Inc. to supply Hawaiian
hemp products in key markets like nutrition and personal care in North America.
This deal will give Arcadia access to Vivion’s vast network which spans 18
sales regions across the US and Canada.
However, the restrictions brought on by the pandemic have
led to delays in harvesting, processing and the initial shipments of the new
CBD line through this partnership. Currently, the company expects to open the
extraction facility in the second quarter and believes CBD sales should come
online in the third quarter of this year.
The incoming sales of CBD and hemp seeds as well as the
corresponding flowthrough of the aforementioned inventories are expected to help
in reducing the company’s cash burn going forward.
According to the company’s regulatory filings and data from the Hemp Business Journal and the Brightfield Group, the hemp CBD market is estimated to have generated $190 million in sales in the US in 2018. By 2022, this number is projected to reach $22 billion.
Arcadia’s stock has dropped 25% since the beginning of this year but gained 22% in the past one month.