CV Sciences, Inc. (OTCQB:CVSI) a hemp-focused wellness company announced on Thursday it's acquiring Extract Labs, Inc., a manufacturer and distributor of premium cannabinoid products including gummies, topicals and tinctures.

What Happened

The company noted that it has entered into a definitive agreement to purchase Extract Labs for the following considerations:

• cash payment of $400,000, less the amount of certain holdbacks and adjustments; and
• the issuance of shares of CV Sciences' common stock valued at $1 million based on the sixty-day volume weighted average price of CV Sciences' common stock.

Additionally, under the deal, Extract Labs sellers will be eligible to receive up to $600,000 of additional shares of CV Sciences' common stock if Extract Labs satisfies certain revenue targets during the first year following the closing date.

Read Also: CV Sciences Q3: Revenue Stable Amid New Launches, Financing

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Why It Matters

Extract Labs' branded products are sold through a range of sales channels from business-to-business (B2B) to business-to-consumer (B2C).

Moreover, Extract Labs, which is GMP-certified and FDA-registered, has operational flexibility that allows for low to large minimum order quantity production runs, making the use of capital and the ability to increase speed to market for new product development more efficient.

CV Sciences says it expects the transaction will create the opportunity to increase its sales to current and new clients.

"The acquisition synergies are expected to increase our revenue and customer base, allow us to leverage our key assets, optimize operations and processes, and drive long-term growth and shareholder value," said CEO Joseph Dowling. "Extract Labs is a stand-alone profitable business and our plan is to increase its existing revenue base and further leverage its existing capacity."

What's Next

The acquisition is expected to close during the first quarter of 2025, subject to customary conditions precedent. The company also plans to in-source production of certain of its key products.

"We are planning to in-source the manufacturing of select +PlusCBD branded products providing an opportunity for meaningful cost savings. Extract Labs manufacturing capability will provide us with greater control over our supply chain and accelerate our new product development cycle," Dowling said.

CVSI Price Action

CV Sciences' shares traded 9.09% lower at $0.04 per share after the market close on Thursday afternoon.

• Hemp-Focused CV Sciences Reports Flat Revenue And Over 8% YoY Increase In Gross Profit In Q2