Quarterly report pursuant to Section 13 or 15(d)

SEGMENT INFORMATION

v3.19.3
SEGMENT INFORMATION
 9 Months Ended
Sep. 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 nine months ended September 30, 2019 and 2018 (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2019
 
2018
 
2019
 
2018
Consumer Products
 
 
 
 
 
 
 
Product sales, net
$
12,603

 
$
13,601

 
$
44,368

 
$
34,020

Gross profit
8,428

 
9,946

 
30,938

 
24,567

Research and development expense
437

 
171

 
1,815

 
363

Selling, general and administrative expense
8,646

 
5,870

 
36,230

 
15,916

Operating income (loss)
$
(655
)
 
$
3,905

 
$
(7,107
)
 
$
8,288

 
 
 
 
 
 
 
 
Specialty Pharmaceutical
 
 
 
 
 
 
 
Product sales, net
$
—

 
$
—

 
$
—

 
$
—

Gross profit
—

 
—

 
—

 
—

Research and development expense
1,107

 
359

 
2,759

 
762

Selling, general and administrative expense
11

 
20

 
31

 
36

Operating loss
$
(1,118
)
 
$
(379
)
 
$
(2,790
)
 
$
(798
)
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
Product sales, net
$
12,603

 
$
13,601

 
$
44,368

 
$
34,020

Gross profit
8,428

 
9,946

 
30,938

 
24,567

Research and development expense
1,544

 
530

 
4,574

 
1,125

Selling, general and administrative expense
8,657

 
5,890

 
36,261

 
15,952

Operating income (loss)
$
(1,773
)
 
$
3,526

 
$
(9,897
)
 
$
7,490


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