Sign in

You're signed outSign in or to get full access.

PL

PANACEA LIFE SCIENCES HOLDINGS, INC. (PLSH)·Q3 2019 Earnings Summary

Executive Summary

  • Q3 2019 revenue fell sequentially to $0.06M from $0.14M in Q2 as the company ramped brand development and marketing; net loss per common share widened to $(0.05) vs. $(0.03) in Q2, and gross margin turned negative as costs outpaced early sales .
  • Management highlighted catalysts for Q4/Q1: harvest tracking “above plan” at ~30,000 lbs of top flower (vs. 20,000 lbs initial estimate), and secured over $0.75M of harvest orders to monetize beginning in Q4; Exactus launched an e-commerce marketplace (Exactushemp.com) and added Green Goddess Extracts and LeVor cosmetics brands .
  • Directional guidance: revenue and gross margins expected to improve in Q4 as lower-cost harvest inventory flows through; working capital expected to become a source of cash with stronger product sales .
  • Risk counterpoints: operating loss increased (Q3 OpEx $2.06M; loss from operations $(2.10)M) and the company disclosed substantial doubt about going concern absent additional financing; accumulated deficit reached $15.71M by Q3 .

What Went Well and What Went Wrong

  • What Went Well

    • Harvest outperformance: “Our 2019 harvest is tracking above plan with most recent estimates of 30,000 pounds of top flower” (initial 20,000 lbs plan) .
    • Commercial traction pipeline: “We expect a strong fourth quarter with orders to date totaling over $750,000” tied to fall harvest monetization .
    • Strategic expansion: acquisitions of Green Goddess Extracts and LeVor Collection broadened product offerings and brand portfolio; QR-coded traceability highlighted in consumer packaging and quality differentiation strategy .

  • What Went Wrong

    • Revenue deceleration and margin pressure: Q3 revenue $0.06M vs. $0.14M in Q2, with gross profit negative $(0.04)M; management cited increased marketing, compensation, and higher non-cash stock-based comp costs impacting profitability .
    • Higher operating loss: loss from operations widened to $(2.10)M in Q3 from $(1.11)M in Q2, reflecting OpEx build ahead of harvest monetization and brand launches .
    • Liquidity and going concern: the company disclosed substantial doubt about continuing as a going concern without new capital; accumulated deficit rose to $15.71M and cash was $5,686 at quarter-end .

Financial Results

MetricQ1 2019Q2 2019Q3 2019
Total Net Revenues ($USD Millions)$0.016 $0.140 $0.060
Net Revenues - Related Party ($USD Millions)$0.000 $0.041 $0.012
Gross Profit ($USD Millions)$0.003 $0.036 $(0.040)
Gross Margin %21% (derived from )26% (derived from )-67% (derived from )
Total Operating Expenses ($USD Millions)$2.599 $1.142 $2.063
Loss from Operations ($USD Millions)$(2.596) $(1.105) $(2.103)
Net Loss available to common ($USD Millions)$(2.279) $(0.955) $(1.934)
EPS (Net Loss available to common, Basic & Diluted)$(0.12) $(0.03) $(0.05)

Segment/Revenue Breakdown:

Revenue ComponentQ1 2019Q2 2019Q3 2019
Net Revenues (External) ($USD Millions)$0.016 $0.099 $0.048
Net Revenues - Related Party ($USD Millions)$0.000 $0.041 $0.012

KPIs and Balance Highlights:

KPI / BalanceQ1 2019Q2 2019Q3 2019
Cash and Cash Equivalents ($USD Millions)$1.173 $0.665 $0.006
Inventory ($USD Millions)$0.423 $1.048 $2.333
Orders secured tied to harvest ($USD Millions)N/AN/A$0.750+
Top flower harvest (lbs)N/AN/A~30,000 (expected)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2019None disclosed“Expect revenue to improve in the fourth quarter as product from the fall harvest is monetized; orders to date totaling over $750,000” Introduced directional improvement
Gross MarginQ4 2019None disclosed“Expect gross margins to improve as it begins using lower cost inventory from its fall harvest” Introduced directional improvement
Working CapitalQ4 2019 and forwardNone disclosed“With the growth of product sales, we anticipate working capital to be a source of cash” New directional commentary

Earnings Call Themes & Trends

(Note: Q3 earnings call was scheduled for Nov 14, 2019; transcript not found. Themes reflect disclosures across filings and the Q3 press release.)

TopicPrevious Mentions (Q1 2019)Previous Mentions (Q2 2019)Current Period (Q3 2019)Trend
Supply chain & farming (EOW)Acquired 50.1% of EOW; farming leases ~200 acres; build-out for 2019 grow Continued farm lease disclosures; irrigation and farming spend; ROU lease accounting Harvest tracking above plan; expected 30,000 lbs top flower Improving operational execution
Product/brand portfolioEarly-stage CBD product plans via C2M supply agreement No brand acquisitions yet; planning and supply advances Acquired Green Goddess Extracts; acquired LeVor Collection (cosmetics) Expanded SKUs/brands
E-commerce / DTCNot mentionedNot mentionedLaunched Exactushemp.com marketplace New DTC channel
Regulatory/legalLegacy Digital Diagnostics/KDI demands; arbitration clauses noted Ongoing legal disclosures; no material cash settlements Ongoing legal matters; no material change disclosed Stable background risk
Capital raising & liquidityRaised $3.31M (private placement); disclosed going concern Raised $5.48M YTD; disclosed going concern Cash $0.006M; accumulated deficit $15.71M; going concern risk reaffirmed Elevated financing need
Inventory & monetizationInventory build tied to seeds/fertilizers Inventory rose to $1.05M Inventory $2.33M; orders $0.75M expected to monetize in Q4 Monetization visibility improving

Management Commentary

  • “We continue to execute our plan to differentiate our products by providing a traceable supply of quality hemp for all of our CBD products... QR coding on every label allows consumers to view the batch records as well as... Certificates of Analysis (COA). We believe the Green Goddess and LeVor Collection brands will enable us to expand our product line while leveraging our production of premium hemp.” — Emiliano Aloi, President .
  • “Our 2019 harvest is tracking above plan with most recent estimates of 30,000 pounds of top flower. We expect a strong fourth quarter with orders to date totaling over $750,000... With the growth of product sales, we anticipate working capital to be a source of cash.” — Emiliano Aloi, President .

Q&A Highlights

  • An earnings call was scheduled for Nov 14, 2019 (4:30 p.m. ET), with replay details provided, but a transcript was not available in the document set searched; no Q&A themes can be extracted .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2019 EPS and revenue was not available via the estimates tool at the time of this analysis; comparisons to consensus cannot be provided. Values from S&P Global were unavailable due to a data access error.

Key Takeaways for Investors

  • Near-term catalysts: monetization of ~30,000 lbs harvest and $0.75M+ orders in Q4 should lift revenue and gross margin as lower-cost inventory replaces purchased inputs .
  • Strategic breadth: acquisitions (Green Goddess, LeVor) plus the launch of Exactushemp.com expand channels and product lines, supporting future sales scalability if execution remains disciplined .
  • Watch liquidity closely: cash fell to $0.006M at Q3-end and management disclosed substantial doubt about going concern without further financing; timely capital raises are critical to sustain operations and execute on harvest monetization .
  • Operating leverage path: Q3 OpEx rose to $2.06M; as revenues scale in Q4/Q1, monitor conversion of inventory to sales, gross margin recovery, and OpEx control to reduce losses from operations .
  • Related-party exposure: prior quarters included related-party sales and supplier advances (C2M); continue monitoring governance and pricing discipline as DTC/wholesale channels scale .
  • Legal backdrop: legacy disputes noted but not cash-intensive; remains a background risk rather than primary driver near term .
  • Execution bar for DTC: success of Exactushemp.com and brand portfolios will be evidenced by sequential revenue growth and improved gross margins in Q4/Q1; watch KPI reporting on orders, conversion rates, and returns .