Quarterly report pursuant to Section 13 or 15(d)

SEGMENT INFORMATION

v3.19.2
SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
SEGMENT INFORMATION
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SEGMENT INFORMATION
The Company operates in two distinct business segments: a consumer products segment in manufacturing, marketing and selling hemp-based CBD products to a range of market sectors; and a specialty pharmaceutical segment focused on developing and commercializing novel therapeutics utilizing CBD. The Company’s segments maintain separate financial information for which operating results are evaluated on a regular basis by the Company’s senior management in deciding how to allocate resources and in assessing performance. The Company evaluates its consumer products segment based on net product sales, gross profit and operating income or loss. The Company currently evaluates its specialty pharmaceutical segment based on the progress of its clinical development programs.
The following table presents information by reportable operating segment for the three and six months ended June 30, 2019 and 2018 (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Consumer Products
 
 
 
 
 
 
 
Product sales, net
$
16,854

 
$
12,349

 
$
31,765

 
$
20,419

Gross profit
11,951

 
9,060

 
22,510

 
14,622

Research and development expense
679

 
76

 
1,378

 
193

Selling, general and administrative expense
8,999

 
5,320

 
27,584

 
10,046

Operating income (loss)
$
2,273

 
$
3,664

 
$
(6,452
)
 
$
4,383

 
 
 
 
 
 
 
 
Specialty Pharmaceutical
 
 
 
 
 
 
 
Product sales, net
$
—

 
$
—

 
$
—

 
$
—

Gross profit
—

 
—

 
—

 
—

Research and development expense
1,009

 
366

 
1,652

 
403

Selling, general and administrative expense
10

 
1

 
20

 
15

Operating loss
$
(1,019
)
 
$
(367
)
 
$
(1,672
)
 
$
(418
)
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
Product sales, net
$
16,854

 
$
12,349

 
$
31,765

 
$
20,419

Gross profit
11,951

 
9,060

 
22,510

 
14,622

Research and development expense
1,688

 
442

 
3,030

 
596

Selling, general and administrative expense
9,009

 
5,321

 
27,604

 
10,061

Operating income (loss)
$
1,254

 
$
3,297

 
$
(8,124
)
 
$
3,965


The Company's specialty and pharmaceutical segment includes goodwill of $2.8 million as of June 30, 2019 and December 31, 2018. In addition, the Company's intangible assets of $3.8 million as of June 30, 2019 and December 31, 2018 are included in the specialty pharmaceutical segment. All other assets are included in the consumer products segment as of June 30, 2019 and December 31, 2018. The majority of the Company's sales are to U.S. based customers.