BTI

Download the Complete Report Here Key Takeaways: Best-in-class execution enabled AIIR to grow through a severe supply-chain disruption while protecting the underlying earnings base. Revenue rose 3.7% y/y to $206.9 million in 1H26 from $199.5 million, gross profit increased 2.4% to $116.8 million from $114.0 million, and adjusted EBITDA was stable at $71.7 million despite FSM shipment volumes declining 9.0%. Global Travel Retail volumes fell 46.5%, while FSM shipments excluding GTR declined 6.6%, reflecting the closure of the Strait of Hormuz, which historically carried approximately 70% of shipment volumes. The disruption was most acute in March, when shipment volumes declined 38.6%, before returning to growth in June. Importantly, customer purchase orders remained intact and wholesaler inventories declined, confirming that the shortfall reflected shipment availability rather than weaker end demand. Revenue growth and stable adjusted EBITDA through the disruption underscore the strength and resilience of a category-leading franchise with an estimated 36%-44% volume share across its operating markets. Strong pricing power more than offset shipment pressure, supported by the category’s relatively low consumer spend. FSM revenue increased 3.4% y/y to $204.7 million despite the 9.0% shipment decline, reflecting 14.0% price/mix growth as AIIR front-loaded 2026 pricing to offset higher logistics and raw-material costs and prioritized supply to higher-ASP markets. The ability to deliver double-digit price/mix without meaningful share erosion underscores the strength of the franchise, particularly given annual U.S. shisha spend of around $110 versus more than $2,000 for cigarettes, close to $1,000 for pod-based vapes and around $400 for nicotine pouches. This relatively low spend provides room to offset cost inflation through pricing without materially affecting affordability. The 14.0% 1H contribution should moderate in 2H as comparisons toughen and mix shifts toward lower-ASP markets, while AIIR expects approximately 4%-6%+ price/mix in a normal year, supported by category leadership, innovation and premiumization. Supply-chain redesign is turning the 1H disruption into a longer-term resilience investment. AIIR is using the event to structurally de-risk its supply chain rather than simply restore the prior logistics model. Following the Hormuz closure, the company established alternative outbound routes through Oman and Saudi Arabia and diversified inbound raw-material sourcing, reducing reliance on a corridor that historically carried ~70% of shipments. AIIR incurred $3.8 million of extraordinary disruption costs in 1H26, primarily from air freight and temporarily elevated ingredient procurement, while additional land and sea rerouting costs and logistics inflation remained within adjusted operating earnings. Manufacturing diversification is also accelerating, with the Romania facility expected to be commissioned by year-end 2026 and operational in 2027 alongside UAE and Poland production. The near-term cost burden is weighing on 2026 profitability, but the redesigned network should meaningfully reduce the risk that future regional disruptions translate into another sharp interruption in shipments. Geographic diversification helped contain the disruption, with strength in the Americas and MEAA offsetting continued pressure in Europe. Reported earnings were impacted by Nasdaq listing-related charges, while underlying operating profitability remained substantially more stable. Reported EBITDA was a loss of $52.1 million versus positive $61.0 million in 1H25, while net loss was $81.8 million versus $32.0 million of profit and EPS was $(0.57) versus $0.22. The gap to $71.7 million of adjusted EBITDA was driven primarily by $48.2 million related to equity issued at listing, $47.7 million of listing-related cash expenses and $12.4 million of share-based compensation, with smaller adjustments for public-company readiness, supply-chain disruption and accelerated PMTA spending. Listing-associated costs totaled approximately $103 million and account for most of the 1H impact, while share-based compensation will continue through remaining vesting periods and some incremental public-company costs will remain in the ongoing expense base. PMTA spending is expected to step down materially in 2027, helping narrow the gap between reported and underlying earnings over time. NGC is beginning to build an additive growth layer alongside the resilient core. Revenue increased 37.5% y/y to $2.2 million from $1.6 million, supported by OOKA and the European Crown Switch rollout, while adjusted EBITDA loss improved to $7.9 million from $9.3 million. At only ~1% of consolidated revenue, NGC remains immaterial to current group revenue, although the $7.9 million adjusted EBITDA loss remains a drag on group profitability. Importantly, management sees effectively no cannibalization from NGCs, with Al Fakher U.S. shipment volumes remaining resilient from 2018-25 even as vape volumes increased ~3x and nicotine pouch volumes ~40x. This gives AIIR a differentiated growth setup versus traditional tobacco companies, as Crown Switch, OOKA and other NGC platforms can add revenue without needing to offset structural decline in the core business. OOKA remains a longer-duration premiumization lever within the existing shisha occasion, with management expecting gradual adoption through the medium term and launch-market economics indicating ~20x revenue and ~15x gross profit per kilogram versus traditional molasses. First-half cash conversion was held back by working capital, primarily due to shipment timing and a sharp receivables build. Cash used in operating activities was $0.1 million in 1H26 versus $9.0 million generated in 1H25 despite $71.7 million of adjusted EBITDA, as trade and other receivables absorbed $58.8 million of cash, inventories used $3.8 million and higher trade and other payables contributed $9.1 million. Current receivables increased to $127.8 million from $93.2 million at 2025-end, while inventories rose only $6.3 million to $61.6 million from $55.3 million and trade and other payables increased to $127.0 million from $99.1 million. Management expects working capital to normalize as shipment cadence improves in 2H, which should support a meaningful recovery in cash conversion after the disruption-heavy first half. For context, 2025 operating cash flow of $115.9 million represented approximately 83% of adjusted EBITDA. Balance-sheet flexibility remains intact despite sizable listing-related and strategic cash outflows. Cash declined to $85.4 million at June 30 from $119.5 million at 2025-end, while total borrowings stood at $430.2 million and net debt at $344.8 million, equivalent to 2.48x LTM adjusted EBITDA. First-half outflows included $28.9 million related to reorganization transactions, $13.4 million of interest paid, approximately $5.3 million of combined property, plant and intangible investment and $5.0 million of acquisition payments. Management expects year-end leverage to remain broadly stable versus 2025 after absorbing listing costs and the Greentank investment, before deleveraging resumes over the medium term. The capital-light model is increasingly creating optionality for shareholder returns as near-term cash demands normalize. 2026 capex is expected at $15-$18 million and the effective tax rate at approximately 15%, while no buybacks are currently included in 2026 or medium-term guidance. Management has also identified ordinary dividends and special dividends as potential future distribution mechanisms and explicitly indicated that it does not intend to accumulate excess capital indefinitely. With leverage already at approximately 2.5x and normalized cash conversion historically strong, capital allocation should increasingly balance continued deleveraging, selective NGC investment and potential shareholder returns. 2H26 should mark a shift back toward volume-led growth as supply normalization, channel replenishment and geographic mix replace exceptional 1H pricing as the primary drivers. 2026 FSM shipment volumes are expected to be broadly stable y/y despite an approximately 1.5% GTR headwind, requiring a meaningful rebound after the 9.0% 1H decline. In contrast, price/mix should moderate materially from the 14.0% achieved in 1H as prior-year comparisons become tougher and shipments normalize into lower-ASP markets. The earnings setup therefore shifts from pricing-led resilience in 1H toward volume recovery in 2H, supported by intact purchase orders, depleted channel inventory and improved shipment availability. Management guides to 4%-6% 2026 revenue growth and low-to-mid-single-digit adjusted EBITDA growth. Based on the midpoint of the revenue range and 4% EBITDA growth within that outlook, 2026 revenue can be estimated at approximately $419.7 million and adjusted EBITDA at $144.9 million. This implies 2H revenue of approximately $212.8 million, +6% y/y, and adjusted EBITDA of approximately $73.1 million, +8%. EBITDA growth remains below AIIR’s historical high-single-digit trajectory due to incremental public-company costs, factory-footprint reorganization and elevated logistics/raw-material expenses, partly offset by U.S. tariff refunds and excise-duty drawbacks; management also indicated that some macro conservatism is embedded in the topline outlook. Net financing costs are expected to remain broadly stable in 2026. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. The valuation thesis remains anchored in the resilience and cash-generation potential of the core FSM franchise, with additional upside from normalization and NGC optionality. AIIR continues to demonstrate strong pricing power, leading market shares and resilient end demand, while the 1H26 disruption appears to have delayed shipments rather than impaired the underlying franchise. With volumes recovering, temporary supply-chain and listing-related costs expected to ease, and medium-term growth supported by share gains, premiumization and new-market expansion, the earnings profile should normalize without requiring a meaningful contribution from NGCs. Crown Switch and other NGC initiatives, continued deleveraging and potential shareholder returns therefore represent incremental sources of value creation rather than assumptions required to support the core valuation case. AIIR now trades materially below the SPAC transaction valuation, providing a more attractive entry point as earnings normalize. As of the 8/21 close, AIIR has a market capitalization of approximately $1.24 billion and enterprise value of approximately $1.56 billion, well below the $1.75 billion transaction EV. Based on management-guidance-derived 2026 revenue of $419.7 million and adjusted EBITDA of $144.9 million, increasing to $440.7 million and $156.5 million, respectively, in 2027, AIIR trades at approximately 3.7x 2026E EV/Sales and 10.8x EV/EBITDA, declining to 3.5x and 10.0x in 2027E. The forward earnings progression requires only modest margin expansion, with adjusted EBITDA margin increasing from approximately 34.5% in 2026E to 35.5% in 2027E. The discount to tobacco and nicotine peers appears meaningful relative to AIIR’s forward growth profile. On 2026E figures, AIIR trades at approximately 3.0x P/S and 10.8x EV/EBITDA versus peer averages of 4.0x and 12.5x, respectively. On 2027E, the multiples decline to approximately 2.8x and 10.0x versus peer averages of 3.8x and 11.4x. This implies an approximately 14% discount to peers on forward EV/EBITDA, despite AIIR’s expected ~5% revenue growth and ~8% adjusted EBITDA growth in 2027 comparing favorably with peer-average growth of approximately 4% and 5%. Some discount is warranted given AIIR’s lower 2026E adjusted EBITDA margin of 34.5% versus the 40.9% peer average, but the current valuation does not appear to fully reflect the combination of core earnings resilience, improving growth and NGC optionality. Value creation should increasingly be driven by execution against visible operating and strategic catalysts. Near-term catalysts include successful 2H shipment recovery following the 9.0% 1H decline, normalization of working capital and cash conversion, continued U.S. and Saudi share gains, and improving European profitability as shipment timing normalizes. Beyond 2026, continued deleveraging and potential shareholder returns should strengthen the equity story, while Crown Switch PMTA acceptance and subsequent U.S. commercialization would provide incremental upside not assumed in the 2027E figures derived from management’s FSM growth framework. Delivery against these milestones should support a narrowing of the current discount to peers and the prior transaction valuation, while weaker shipment recovery, persistent cash absorption or higher NGC investment without commercial traction would justify a continued discount. Read Exec Edge’s Initiation on AIR Global PLC Here Download the Complete Report Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post AIR Global’s Best-in-Class 1H Performance Amid Disruptions, 2H Recovery – Quarterly Update Report appeared first on ExecEdge.

Altria Group, Inc. MO missed second-quarter consensus expectations, but adjusted earnings still increased year over year and management raised the low end of its 2026 earnings outlook. That combination puts more weight on execution in the second half. Pricing, smokeable margins and cigarette import and export benefits support the earnings path. Cigarette volume declines, weaker oral tobacco results and higher capital spending remain the main offsets. Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote Adjusted second-quarter earnings were $1.48 per share, up 2.8% year over year but below the Zacks Consensus Estimate of $1.50. Higher adjusted operating companies income and a lower share count supported the increase. Net revenues rose 0.1% to $6.11 billion. Revenues net of excise taxes increased 1.2% to $5.356 billion, below the consensus mark of $5.362 billion. Altria narrowed 2026 adjusted earnings guidance to $5.61-$5.72 per share from $5.56-$5.72. The revision leaves the upper end unchanged while lifting the lower end by 5 cents. The new range implies 3.5-5.5% growth from adjusted earnings of $5.42 per share in 2025. Management narrowed the range after first-half adjusted earnings increased 4.9% to $2.80 per share. Smokeable price realization was 4.5% in the second quarter, led by Marlboro pricing and partly offset by Basic mix. Adjusted smokeable operating companies income increased 2.4% to $3.02 billion, while margin expanded 30 basis points to 64.8%. Management continues to expect a greater benefit from cigarette import and export activity in the second half than in the first half. It expects that benefit to be more balanced between the third and fourth quarters. Domestic cigarette shipment volume declined 3.2% in the second quarter, or an estimated 4.5% after adjusting for trade inventory movements. Oral Tobacco Products revenues fell 5.3%, while adjusted operating companies income declined 8% as lower volume and higher promotional investment weighed on results. Capital expenditure expectations increased to $375-$450 million from $300-$375 million. Peer execution also raises the competitive bar. Philip Morris International Inc. PM said smoke-free products generated about 42% of first-half 2026 net revenues, while British American Tobacco p.l.c. BTI reported 18% growth in first-half New Category revenues. The Zacks Consensus Estimate calls for third-quarter earnings of $1.50 per share and fourth-quarter earnings of $1.40. The full-year 2026 earnings estimate stands at $5.67 per share. The consensus sales estimates are $5.33 billion for the third quarter and $5.09 billion for the fourth quarter. Those figures provide the next operating benchmarks as investors assess whether pricing and second-half benefits are offsetting volume and spending pressure. Image Source: Zacks Investment Research The narrowed guidance provides a clearer 2026 earnings range, but the operating path still depends on pricing, margin discipline and the timing of second-half benefits. Volume pressure and weaker oral tobacco profitability leave less room for execution slippage. MO currently carries a Zacks Rank #3 (Hold), a VGM Score of C, Value Score of C, Growth Score of C and Momentum Score of D. The Style Score framework favors A and B grades, particularly alongside Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks, while a Zacks Rank #3 can still support holding an existing position. MO’s C and D scores point to a more mixed near-term setup. You can see the complete list of today’s Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO) : Free Stock Analysis Report Philip Morris International Inc. (PM) : Free Stock Analysis Report British American Tobacco p.l.c. (BTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in British American Tobacco p.l.c.? Here are five stocks we like better. BAT delivered in-line first-half results: Constant-currency revenue rose 2.9%, adjusted operating profit increased 3.5% and adjusted diluted EPS climbed 7.9%. Growth was supported by the U.S. and modern oral products, while APMEA remained weak. New categories continued gaining traction: Smokeless products reached 19.8% of group revenue, with new-category revenue up 18% and modern oral revenue up 66%. BAT added 4.1 million smokeless consumers, bringing the total to 35 million. BAT maintained its financial outlook but expects investment pressures: The company forecast full-year revenue and adjusted operating-profit growth at the lower end of its target range, while EPS growth is expected near the midpoint of its 5%-8% range. It expanded its Fit2Win savings target to £700 million by 2028 and reaffirmed its progressive dividend and £1.3 billion 2026 share buyback. 5 High-Yield Stocks to Shield Your Portfolio From the Storm British American Tobacco (NYSE:BTI) said its first-half 2026 results were in line with expectations on a constant-currency basis, supported by growth in U.S. nicotine products, continued momentum for its Velo modern oral brand and resilient combustibles performance in the U.S. and AME region. The company reported 2.9% growth in group revenue, 3.8% growth in adjusted gross profit and 3.5% growth in adjusted profit from operations on a constant-currency basis. Adjusted diluted earnings per share increased 7.9% in the first half. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now 3 Dividend-Backed Consumer Staples to Reinforce Your Portfolio Interim CFO Javed Iqbal said reported results included several largely non-cash adjusting items, including about £800 million related primarily to annual amortization of U.S. trademarks, a £370 million Fit2Win-related adjustment and a £149 million credit following the settlement of historical litigation. Smokeless products represented 19.8% of group revenue, an increase of 160 basis points from the prior year. BAT added 4.1 million smokeless consumers over the past 12 months, bringing its total to 35 million. → 3 Value ETFs to Consider as Growth Stocks Lag Behind Top 4 High-Yield Dividend Stocks to Add to Your Portfolio New-category revenue rose 18%, led by a 66% increase in modern oral revenue. The company said Velo’s performance was strong across all three regions. Vapor revenue increased 5.3%, supported by a return to double-digit volume and revenue growth in the U.S., while heated-products revenue declined nearly 12% as inventory movements and competition in value segments weighed on glo. New-category gross profit increased by more than £120 million, while category contribution rose 55% to £269 million. Iqbal said the improvement reflected more disciplined investment and growing scale benefits. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? Tadeu said BAT is concentrating investments in categories and markets with the strongest potential returns. The company has exited or reduced its presence in certain vapor markets where it believes regulation or enforcement does not provide a level playing field for legal manufacturers. BAT shipped 7.9 billion modern oral pouches in the first half. Modern oral volume share across its top markets increased by more than eight percentage points to 39%. BAT said Velo holds a 62% volume share in its top APMEA modern oral markets and a 68.5% value share. U.S. revenue increased 8.5%, while adjusted operating profit rose 10.1%. New-category revenue grew nearly 60%, driven by Velo Plus, whose revenue increased more than 200%, and by Vuse’s return to double-digit volume and revenue growth. U.S. combustibles revenue rose 5%, aided by price mix, excise-duty drawback and positive trade inventory movements. However, BAT said volume share declined 80 basis points and value share declined 40 basis points amid continued growth in deep-discount cigarettes and heightened competition. Tadeu said the company had held its U.S. combustible volume share since January after investing behind its portfolio and commercial execution. He noted that approximately 2 percentage points of the 5% U.S. combustible revenue increase came from trade inventory movements that are expected to unwind in the second half. BAT plans to increase investment in the U.S. during the second half, including the launch of Velo Max and a phased rollout of adult-focused Vuse flavors. Vuse flavors are scheduled to begin rolling out in the third quarter to about 25,000 outlets, followed by another 25,000 outlets in the fourth quarter, subject to retailer commitments around adult-only sales and identification checks. Velo Max, a higher-moisture product, is expected to launch in the third quarter with two additional strengths and four new flavors. Tadeu said the product would complement the existing Velo Plus range, but BAT did not provide pricing details. The company also pointed to enforcement actions against unauthorized vapor products in the U.S. Tadeu said more than 18 million unauthorized vapor products had been seized through federal collaboration, while about half of industry vapor volume is now covered by state directory and enforcement frameworks. BAT said these actions helped support a return to growth in the legal vapor market during the first half. In AME, total revenue grew 0.9%, with combustible revenue up 2.55% and new-category revenue up 1.9%. Strong combustible delivery in Brazil, Turkey and Mexico was partly offset by BAT’s exit from Cuba, competitive pressure in Germany and Romania, and lower direct leaf sales. The company expects AME performance to accelerate in the second half as targeted commercial actions and product launches contribute. APMEA revenue declined 6.3%, primarily because of combustibles. Growth in Pakistan and Indonesia was more than offset by regulatory pressures and illicit trade in Bangladesh and Australia, as well as the timing of inventory movements in Vietnam. Adjusted profit in the region fell 16.5%. BAT expects a sequential recovery in APMEA during the second half, helped by commercial investments, a softer comparison in Australia and the planned third-quarter Japanese launch of Hyper Pro+. The company said modern oral revenue in APMEA increased 43%, while vapor revenue declined 28% due to strategic market exits and selective resource allocation. Group operating margin increased 30 basis points to 43.7% on a constant-currency basis. BAT expanded its Fit2Win transformation program, identifying a further £100 million of optimization savings. The company now expects annualized Fit2Win savings of £700 million by 2028, including £500 million by 2027. Total one-off costs associated with the program are now expected to reach £950 million, of which £840 million will be treated as adjusting items. BAT expects most costs to be incurred in 2026, with the remaining balance in 2027. The company reaffirmed its expectation to reach its target leverage range of two to 2.5 times by year-end and said it remains on track to generate more than £50 billion in free cash flow by 2030. BAT also plans to continue its progressive dividend and its £1.3 billion 2026 share repurchase program. For the full year, BAT expects revenue and adjusted operating profit growth at the lower end of its target range, reflecting around a 1% transactional foreign-exchange headwind and increased investment in U.S. products, heated-product launches and combustibles. Iqbal said full-year EPS growth is now expected toward the middle of BAT’s 5% to 8% range, aided by lower finance costs and strong cash conversion. British American Tobacco plc (BTI) is a multinational tobacco manufacturer and nicotine products company headquartered in London. Founded in 1902 as a joint venture to commercialize tobacco products outside the United States, the company has grown into one of the world's largest tobacco firms with a long history in manufacturing and global distribution of combustible tobacco products. BAT's core business remains the manufacture and sale of cigarettes and other tobacco products under a portfolio of well-known consumer brands, including Dunhill, Lucky Strike, Pall Mall, Kent and Rothmans. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "British American Tobacco H1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Group Revenue: Increased by 2.9% on a constant currency basis. Adjusted Gross Profit: Rose 3.8% on a constant currency basis. Adjusted Profit from Operations: Grew 3.5% on a constant currency basis. Adjusted Diluted EPS: Up 7.9%. New Category Revenue Growth: Accelerated to 18%, driven by Modern Oral (up 66%) and Vapor (up 5.3%). Heated product revenue declined nearly 12%. New Category Contribution: Up 55% at constant rates, reaching 269 million. Combustible Volumes: Down 4.7%. Combustible Revenue: Grew 2.1%, driven by a robust price mix of 6.8%. Group Operating Margin: Up 30 basis points to 43.7%. US Total Revenue: Up 8.5%. US Adjusted Operating Profit: Up 10.1%. US New Category Revenue: Increased by nearly 60%. US Combustible Revenue: Grew 5%. AME Total Revenue: Growth of 0.9%. AME Adjusted Operating Profit: Increased 1.1%. APMEA Revenue: Down 6.3%. APMEA Adjusted Profit: Declined 16.5%. Net Finance Cost (Full Year Guidance): Expected to be around 1.65 billion. Underlying Tax Rate (Full Year Guidance): Between 24% and 25%. Full Year EPS Growth Guidance: Now expected to be toward the middle of the 5% to 8% range. Share Buyback: 1.3 billion in 2026. Warning! GuruFocus has detected 6 Warning Sign with BTI. Is BTI fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. New category revenue grew 18%, driven by a 66% surge in Modern Oral, with Velo capturing ~90% of category value growth in the US. Group revenue increased 2.9% and adjusted diluted EPS rose 7.9%, with EPS guidance upgraded to the middle of the 5%-8% range. US multi-category delivery was strong, with Vuse returning to double-digit growth and Velo+ growing over 200%, driving total US revenue up 8.5%. New category contribution improved 55% to 269 million, reflecting disciplined investment and increasing scale benefits. Strong cash generation supports a 1.3 billion share buyback in 2026, with leverage expected within the 2-2.5x target range by year-end. Heated product revenue declined nearly 12%, impacted by inventory movements and competitive intensity in the value segment. APMEA region revenue fell 6.3%, with slower-than-expected recovery due to regulatory pressures and illicit volume in Bangladesh and Australia. US combustible volume share declined 80 basis points, reflecting growth in the discount segment and heightened competitive activity. Vapor revenue in AME declined 14% due to regulatory changes in Poland, and APMEA vapor revenue fell 28% from strategic market exits. Full-year revenue and operating profit guidance is at the lower end of the mid-term algorithm, absorbing ~1% transactional FX headwind and active investment choices. Q: On U.S. E-vapor, do you see the illicit enforcement tailwind continuing into early H2? And for the launch of Vuse flavors in H2, could you give more color on the number of outlets targeted and the types of flavors? A: (Tadeu Marroco, CEO) We are encouraged by the FDA's prioritization guidance, which allows legal manufacturers to offer substantiated products and create a more level playing field. We expect to continue seeing traction from legal vapor markets. For the flavor rollout, we will begin in Q3 with distribution to approximately 25,000 outlets, expanding to another 25,000 in Q4. We are being very thoughtful, ensuring retailers commit to ID scanning and underage access prevention compliance. Q: On U.S. Combustibles, you registered plus 5% top-line growth in H1, significantly ahead of the value flat to plus 1% growth framework. How should we think about the U.S. Combustibles algo for the full year '26? A: (Tadeu Marroco, CEO) The 5% performance is well ahead of the algorithm, partly due to beneficial trade inventory movements (around 2% of the 5%). Underlying performance is more like 3%. We intend to continue investing behind our portfolio in H2 to address the growing low-discount segment. Therefore, we expect a more moderate performance in H2, much closer to the algorithm, though possibly still slightly higher. Q: On nicotine pouches in the U.S., could you help us with the speed of launching Velo Max, its likely economics compared to Velo Plus, and how you've seen competition impacting dynamics? A: (Tadeu Marroco, CEO) We have a well-established network from Velo Plus, so the launch of Velo Max will be faster. It will complement Velo Plus with higher moisture, new strengths, and flavors. The category is competitive, but Velo Plus has strong retention rates (7%) and we are leaders in 11 states. All category growth in H1 came from Velo Plus. We believe we have the capabilities and product to maintain our position. Q: On the full year '26 guidance, could you elaborate on the moving parts for the second-half, specifically how the 2.9% organic sales growth might develop? A: (Tadeu Marroco, CEO) We expect H2 to be better than H1. APMEA is a clear recovery story, with H2 2026 expected to be better than H1 2026 due to lapping softer comparatives like in Australia. AME will also see improvement from investments. In the U.S., we don't expect the 5% combustible growth to continue due to necessary portfolio investments. This leads to a full-year top-line at the low end of our range, which allows us to make the right long-term investments for sustainable growth. Q: At the trading update, the business lowered its expectation for global cigarette industry volumes from minus 2% to minus 2.5%. It now seems to be minus 3%. What is driving this? A: (Tadeu Marroco, CEO) The reduction from 2.5% to 3% is primarily driven by Brazil, which experienced a massive excise shock with a meaningful price increase taking effect on August 1st. This will have significant implications for the size of that large market. Q: On Velo in the U.S., following the rollout of Velo Max, how many SKUs do you expect to have by year-end? And your key competitor received a modified risk grant order. Do you think this moves the needle, and will you pursue this for Velo? A: (Tadeu Marroco, CEO) We will have five strengths across the Velo family. Regarding the MRTPA, it is welcome for the category's advocacy, especially with the FDA, but it has less commercial impact in the local market. We have our own MRTPA applications for Velo and may receive one in due time. It is more important for the proper regulation of the category, which we see as the lowest-risk new category. Q: On the new categories portfolio, you've made decisions to exit some vape markets and reprioritize in heated. Is this work now complete? A: (Tadeu Marroco, CEO) Most of the actions have been taken, but there will likely be some impact still coming in H2 of this year. We exited markets in Asia where there is no proper regulatory environment or enforcement, making it impossible for a legal company to compete. In AME, exits were driven by legislation changes in Poland and the UK. We will continue to reassess for the best returns on our investments. Q: On your vapor business in Europe, it has been under pressure. How should we think about this business in the medium term? A: (Tadeu Marroco, CEO) The major drag is from Poland. However, we have strong positions in other key markets like Germany, where Vuse Ultra is making inroads. In France, we face competition but have a strong pipeline. We feel confident in our ability to sustain our leadership position in the European vapor markets we have selected to participate in. Q: On free cash conversion, it was stronger than usual in H1. What are the drivers, and does this point to better full-year conversion? A: (Javed Iqbal, Interim CFO) The strong conversion is due to lower net financing costs from debt repayment using ITC proceeds, and a continued focus by the finance and commercial teams on cash generation. This gives us confidence that we will deliver another year of more than 95% cash conversion for the full year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Proposed Transaction Set to Transform Balance Sheet; BEI Healthcare Access Pathway Activated April 1ST; Adjusted EBITDA Continues to Improve Louisville, Colorado--(Newsfile Corp. - May 13, 2026) - Charlotte's Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) ("Charlotte's Web" or the "Company"), a botanical wellness innovation company and the market leader in cannabidiol (CBD) hemp extract wellness products, today announced results for the quarter ended March 31, 2026. All amounts are expressed in U.S. dollars. TRANSACTION AND SUBSEQUENT EVENTS UPDATE Proposed Transaction and $10M Investment During the first quarter of 2026, Charlotte's Web announced a transaction with BT DE Investments Inc. ("BAT"), a subsidiary of British American Tobacco p.l.c. (LSE: BATS and NYSE: BTI), to amend and convert BAT's outstanding convertible debenture of approximately $54 million, plus accrued interest, and complete a concurrent $10 million private placement. Upon completion, the transaction would eliminate Charlotte's Web's largest outstanding balance sheet liability, remove approximately $3 million in annual interest costs, strengthen shareholders' equity, and add $10 million in new capital to support the Company's participation in the developing CMS healthcare-access opportunity and other medical channel opportunities. Following completion of the transaction BAT would hold approximately 40% of the Company's then-issued and outstanding common shares on a non-diluted basis, representing a total equity commitment of approximately $75 million. Completion of the transaction is subject to TSX approval and is pending approval of Charlotte's Web shareholders at the Annual General and Special Meeting of shareholders scheduled to be held on May 28, 2026. "Charlotte's Web exited the first quarter with the right elements in place to position us for future growth. With a significantly enhanced capital structure and balance sheet on the horizon, along with our first-class product-quality systems and rapidly emerging healthcare-channel infrastructure, we are well prepared to pursue the fast-evolving federally authorized CBD opportunities," said Bill Morachnick, Chief Executive Officer. "Following the April 1 activation of the CMS Substance Access Beneficiary Engagement Incentive , we are moving from preparation to deployment while continuing support for federal regulatory clarity and advancing DeFloria through the FDA Botanical Drug Pathway." Centers for Medicare & Medicaid Services Pilot Program Activated Subsequent to quarter-end, on April 1, 2026, the Centers for Medicare & Medicaid Services ("CMS"), through the Center for Medicare & Medicaid Innovation, made available the Substance Access Beneficiary Engagement Incentive ("BEI") to eligible participants in select CMS Innovation Center models, including the ACO REACH Model and the Enhancing Oncology Model. The optional BEI allows approved model participants, subject to CMS requirements, safeguards, physician oversight, and implementation-plan review, to cover eligible hemp-derived products of up to $500 annually per eligible beneficiary. Qualifying products are purchased by participating organizations and furnished directly to eligible beneficiaries. CMS provides that eligible hemp-derived CBD products include non-intoxicating full-spectrum products containing up to 3 milligrams of naturally occurring THC per serving. Complementing this CMS guidance, FDA Commissioner Martin A. Makary issued a limited enforcement-discretion letter for eligible orally administered hemp-derived CBD products furnished under specified healthcare-program conditions, providing important regulatory clarity for eligible ingestible CBD products furnished through the BEI. Charlotte's Web's first-quarter activities focused on preparing for this emerging healthcare channel. Management expects the early phase of the BEI to be implementation-led, with visibility into participating-organization adoption and patient engagement expected to develop through the second half of the year. The BEI program remains subject to ongoing legal and administrative scrutiny, and the Company is monitoring any risks, litigation and implications. However, the Company feels the underlying policy direction favors companies like Charlotte's Web that have robust compliance infrastructure, clinical data, and manufacturing controls. DeFloria Phase 2 Clinical Program DeFloria, Inc. continues to advance AJA001 Oral Solution, an investigational botanical drug candidate for irritability associated with autism spectrum disorder ("ASD"). DeFloria is a collaboration between Charlotte's Web, AJNA BioSciences, and British American Tobacco. Charlotte's Web owns approximately one-third of DeFloria and holds exclusive commercial manufacturing rights for AJA001 upon potential FDA approval. The Phase 2 clinical program, designed to evaluate safety, tolerability, and early signals of therapeutic effectiveness in adolescents and adults with ASD, remains substantially advanced across key program elements, including clinical site selection, protocol optimization, and manufacturing readiness. The Company expects Phase 2 trial initiation in mid-2026, subject to the completion of customary development activities, regulatory requirements, and alignment of required resources. While the pathway remains subject to clinical, regulatory, financing, and commercialization risks, management believes DeFloria represents a compelling long-term opportunity to extend Charlotte's Web's botanical science platform into FDA-regulated pharmaceutical development. FIRST QUARTER 2026 BUSINESS REVIEW Medical Channel Advancement Charlotte's Web advanced its medical and healthcare-practitioner channel during the quarter, supported by long-standing practitioner relationships, quality infrastructure, clinical safety data, and a science-led approach to hemp-derived CBD wellness. The Company has established relationships and patient-advocacy communities for more than a decade, including work with organizations such as Realm of Caring, the Arthritis Foundation, and the U.S. Pain Foundation. These relationships have supported education, responsible access, consumer safety, and evidence-informed dialogue around hemp-derived CBD. The Company expanded its Medical product portfolio, which was developed for the healthcare practitioner channel and aligns with common wellness use cases, including sleep, stress support, physical comfort, and overall wellness. During the quarter, Charlotte's Web launched the CBD Clinic medical portal, a practitioner-facing resource designed to provide greater visibility into the Company's portfolio of products, expand access to clinical education, and offer information to support evidence-informed understanding of CBD. The April 1, 2026 activation of the BEI further expands the opportunity for compliant, quality-led producers such as Charlotte's Web to access healthcare markets. Manufacturing Internalization The Company's transition to in-house gummy production, operational in 2025, is now substantially complete, with the majority of its gummy manufacturing conducted at the Company's Louisville, Colorado, cGMP facility. Capital expenditures related to insourcing projects declined significantly year over year, reflecting the completion of major equipment investments. In-house manufacturing is expanding across multiple gummy and topical products and is expected to improve gross margin as production volumes scale and startup-phase inefficiencies are resolved. OTCQX Best Market Qualification Subsequent to quarter-end, Charlotte's Web qualified for trading on the OTCQX Best Market, an upgrade from the OTCQB Venture Market. OTCQX is the highest marketplace tier of the OTC Markets and is designed for established, investor-focused companies that meet higher financial and governance standards. Management believes the upgrade enhances the Company's visibility and accessibility for U.S. investors. FIRST QUARTER FINANCIAL REVIEW "Our Q1 2026 results reflect continued progress on the operational fundamentals of the business," said Erika Lind, Chief Financial Officer. "Lower first-quarter revenue reflects our decision to exit select lower-margin retail relationships last September and reduce the cost structure required to support those accounts. While this reduces near-term revenue, it improves the quality of our product and channel mix, and is expected to support stronger gross margin, operating margin, and cash flow over time. We are focused on profitable revenue, disciplined resource allocation, and building a more scalable business. Our core online consumer channel demonstrated healthy engagement, while operational discipline further improved cash flow. Year-over-year SG&A declined 17.7%, and Adjusted EBITDA(1) improved by $1.1 million. Q1 net loss of $13.1 million was driven primarily by an $8.9 million non-cash fair value adjustment on the BAT convertible debenture, which will cease to impact our bottom line after Q2 of this year assuming completion of the transaction with BAT. Completion of the BAT transaction would eliminate the debenture and add $10 million to cash and working capital, meaningfully strengthening our balance sheet to support our healthcare opportunity and broader growth strategy." The following table sets forth selected financial information for the periods indicated: Consolidated net revenue for the first quarter ended March 31, 2026, was $11.2 million, compared to $12.3 million in the first quarter of 2025. The year-over-year revenue decrease of 9.0% primarily reflected the retail channel restructuring initiated in September 2025, as previously disclosed. The Company's online consumer channel, targeted digital marketing efficiency, healthcare-practitioner channel development, and diversified botanical wellness portfolio are the core foundations for sustainable revenue growth. Gross profit in Q1 2026 was $5.2 million, or 46.6% of revenue, compared to $6.2 million, or 50.8% of revenue, in Q1 2025. The year-over-year margin compression reflected several factors, including higher production costs as the Company continued scaling in-house manufacturing, the flow-through of previously outsourced inventory at legacy cost levels, modestly increased online promotional investment to support customer acquisition, and the impact of lower sales volume on fixed cost absorption. These factors were partially offset by a favorable product mix and the continued underlying benefits from manufacturing internalization. The legacy inventory cost effect is transitional and is expected to diminish as production normalizes under fully insourced economics. Management expects gross margin to trend toward the Company's target range of approximately 50% as insourced production efficiencies scale, transitional cost items normalize, and the benefits of channel restructuring are fully realized. Total SG&A expenses were $9.5 million in Q1 2026, a year-over-year improvement of 17.7% from $11.6 million in Q1 2025. This reduction reflects the continued benefit of the Company's comprehensive cost optimization program, including personnel cost realignment, and reduced depreciation and amortization from exiting the MLB agreement ($0.7 million vs. $1.6 million in the prior year period), which has now reduced SG&A by approximately $33.6 million, or 44.5%, over the past two years. Charlotte's Web believes it has substantially completed its operating cost reset and expects quarterly SG&A to remain in a normalized range of approximately $10 million, reflecting a lean, appropriately scaled cost base to support growth as strategic catalysts materialize. Net loss for Q1 2026 was $13.1 million, or $(0.08) per share, compared to a net loss of $6.2 million, or $(0.04) per share, in Q1 2025. The Q1 2026 net loss includes a non-cash charge of $8.9 million related to the change in fair value of financial instruments, primarily the mark-to-market adjustment on the BAT convertible debenture derivative liability. This non-cash item reflects accounting recognition of changes in the estimated fair value of the Company's outstanding convertible debenture conversion feature and associated derivatives and is not indicative of cash performance or operating results. Upon closing of the BAT transaction, subject to customary closing conditions, and shareholder approval at the May 28, 2026 Annual General and Special Meeting of the Shareholders, this derivative liability will be eliminated from the balance sheet. Excluding this non-cash item, along with depreciation, amortization, interest, and share-based compensation, Adjusted EBITDA(1) improved to a loss of $1.7 million in Q1 2026, from a loss of $2.8 million in Q1 2025, an improvement of approximately $1.1 million year-over-year. Cash and cash equivalents as of March 31, 2026, were $5.2 million, compared to $8.0 million as of December 31, 2025, and $19.4 million as of March 31, 2025. Net cash used in operating activities in Q1 2026 was $2.8 million, essentially flat compared to $2.8 million in Q1 2025, reflecting continued operating cost discipline despite the year-over-year revenue decline. Capital expenditures were minimal at $21 thousand as the Company's in-house manufacturing insourcing project, which drove $0.5 million in capital expenditures in Q1 2025, has been substantially completed. The BAT transaction, subject to customary closing conditions and shareholder approval on May 28, 2026, is expected to provide $10 million in new equity capital and eliminate the Company's largest balance sheet liability, the convertible debenture carried at $51.5 million as of March 31, 2026. This transaction would significantly strengthen the Company's balance sheet, improve shareholders' equity, and remove approximately $3 million in annual interest costs, meaningfully improving the Company's cash flow profile on a go-forward basis. Financial Position Cash as of March 31, 2026, was $5.2 million, compared to $8.0 million at December 31, 2025. The quarterly decrease primarily reflects operating cash usage of $2.8 million, consistent with the prior year period despite lower topline revenue and gross margin. Benefiting from a declining operating expense base, anticipated gross margin improvements from scaled in-house production, and the proposed BAT transaction which provides $10 million in new equity capital, management expects the Company's liquidity position to strengthen meaningfully upon completion of the transaction. Management believes existing cash and cash equivalents will provide sufficient liquidity to fund operations and planned capital expenditures for the next 12 months. Consolidated Financial Statements and Management's Discussion and Analysis The Company's consolidated financial statements and accompanying notes for the three months ended March 31, 2026 and 2025, and related management's discussion and analysis of financial condition and results of operations ("MD&A"), are reported in the Company's 10-Q filing on the Securities and Exchange Commission website at www.sec.gov and on SEDAR+ at www.sedarplus.ca and will be available on the Investor Relations section of the Company's website at https://investors.charlottesweb.com. Analyst Conference Call Management will not host a quarterly analyst call this quarter. The Company hosts two earnings calls per year. The next quarterly analyst call will follow the release of the Company's second-quarter financial results in August 2026. A recording of the Company's most recent earnings webcast in March 2026 (2025 year-end) is available on the Investor Relations section of the Company's website at https://investors.charlottesweb.com. About Charlotte's Web Holdings, Inc. Charlotte's Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is a botanical wellness innovation company and a market leader in hemp extract wellness, offering Charlotte's Web whole-plant full-spectrum CBD extracts, as well as broad-spectrum CBD and cannabinoid isolates. The Company's hemp extracts have naturally occurring botanical compounds including cannabidiol ("CBD"), CBN, CBC, CBG, THC, terpenes, flavonoids, and other beneficial compounds. Charlotte's Web product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery, immunity), CBN gummies, hemp-derived THC microdose gummies, functional mushroom gummies, CBD capsules, CBD topical creams, and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte's Web maintains stringent control over product quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte's Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and are available online through the Company's website at www.charlottesweb.com. Shares of Charlotte's Web trade on the Toronto Stock Exchange (TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol "CWBHF". Subscribe to Charlotte's Web investor news. (1) Non-GAAP Measures: The press release contains non-GAAP measures, including EBITDA and Adjusted EBITDA. Please refer to the section in the tables captioned "Non-GAAP Measures" below for additional information and a reconciliation to GAAP for all Non-GAAP metrics. Additional Information and Where to Find It In connection with the proposed transaction, Charlotte's Web has filed with the SEC a definitive proxy statement on Schedule 14A and may file other documents with the SEC regarding the proposed transaction. This release is not a substitute for the proxy statement or any other document that Charlotte's Web may file with the SEC. INVESTORS IN, AND SECURITY HOLDERS OF, CHARLOTTE'S WEB ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CHARLOTTE'S WEB AND THE PROPOSED TRANSACTION AND RELATED MATTERS. The definitive proxy statement and other relevant materials for the proposed transaction have been mailed or otherwise made available to shareholders of Charlotte's Web as of April 6, 2026. Investors and security holders may obtain free copies of the proxy statement (when available) and other documents filed with the SEC by Charlotte's Web through the website maintained by the SEC at www.sec.gov or by contacting Charlotte's Web at 700 Tech Court, Louisville, CO 80027 or by telephone at (720) 484-8930. Participants in the Solicitation Charlotte's Web and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction under the rules of the SEC. Information regarding the persons who may be deemed participants in the solicitation of proxies in connection with the proposed transaction will be set forth in the proxy statement when it is filed with the SEC. You can find more information about the Company's directors and executive officers in its Annual Report for the year ended December 31, 2025, on Form 10-K filed with the SEC on March 31, 2026, and its Definitive Annual Meeting Proxy Statement filed with the SEC on April 29, 2025. You may obtain a free copy of these documents as indicated above. No Offer or Solicitation This press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Forward-Looking Information Certain information provided herein constitutes forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements are typically identified by words such as "may", "will", "should", "could", "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements are not guarantees of future performance, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions, expected future development, and other factors that it believes are appropriate and reasonable. Specifically, this press release contains forward-looking statements relating to, but not limited to: completion of the transaction with BAT, including obtaining the necessary TSX and shareholder approval of the transaction; benefits to the Company of completing the transaction with BAT; use of proceeds of the transaction; the Company's beliefs regarding product eligibility under CMS programs and the Company's opportunities in connection therewith; the potential scope and impact of federal healthcare frameworks for hemp-derived products; potential impacts as a result of the HEMP Act; advancement of the legislation and federal framework including under the Hemp Act; the Company's competitive positioning, and its ability to participate in federal healthcare programs; sales volume and gross margin expectations; anticipated timing for, and business impact of, in-house manufacturing of topical ‎and gummy products; future expectations for SG&A expenses; regulatory developments and the impact of developments on both consumer action and the Company's opportunities and operations; activities relating to, and sponsorship of, legislation to advance regulatory framework; the impact of insourcing on operating margins, capital expenditures and R&D; anticipated future financial results the impact of certain activities on the Company's business and financial condition and anticipated trajectory; the timing and outcomes from DeFloria's clinical trials, including strategic value for the Company's shareholders and potential commercial opportunities for Charlotte's Web; the ability of AJA001 to address irritability associated with ASD; the Company's activities relating to its medical channel advancement and the impacts thereof; trend of gross margin levels; inventory cost effects; expectations on SG&A ranges going forward; and management expectations around cash reserves providing sufficient liquidity to fund operations and planned expenditures. The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: receipt of TSX and shareholder approval for the transaction; successful completion of the transaction; expectations around cost reduction, run rate, revenue growth and expectations around cash flow improvement in 2026; regulatory regime changes; anticipated product development and sales; the success of sales and marketing activities; product development and production expectations; outcomes from R&D activities; the Company's ability to deal with adverse growing conditions in a timely and cost-effective manner; the availability of qualified and cost-effective human resources; compliance with contractual and regulatory obligations and requirements; availability of adequate liquidity and capital to support operations and business plans; continued product placement on various product channels; anticipated development of new products; anticipated consumer trends and corresponding product innovation; the Company's ability to increase online traffic and demographic exposure through new products and marketing and omni-channel expansion; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: supply and distribution chains; the market for the Company's products; revenue fluctuations; regulatory changes; loss of customers and retail partners; retention and availability of talent; organizational changes, marketing plans and operational platform upgrades, and the impact of these initiatives on retail expansion, operational efficiencies, cash flow,‎ revenue and e-commerce monetization; expectations relating to IT upgrades, marketing optimization and operational integrations; the impact of the Company's product innovations on product development, expansion activities and the corresponding ‎results thereof; competing products; share price volatility; loss of proprietary information; product acceptance; internet and system infrastructure functionality; information technology security; available capital to fund operations and business plans; crop risk; economic and political considerations; failure to receive TSX and shareholder approval of the transaction; and including but not limited to those risks and uncertainties discussed under the heading "Risk Factors" in the Company's most recently filed Annual Report on Form 10-K, and other risk factors contained in other filings with the Securities and Exchange Commission available on www.sec.gov and filings with Canadian securities regulatory authorities available www.sedarplus.ca. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty, as these are interdependent, and the Company's future course of action depends on management's assessment of all information available at the relevant time. Any forward-looking statement in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. Except as required by applicable law, the Company assumes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements. For further information, contact: Erika Lind Chief Financial Officer [email protected] Cory Pala Director of Investor Relations (720) 484-8930 [email protected] CHARLOTTE’S WEB HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars, except share and per share amounts) (1) Non-GAAP Measures -EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is not a recognized performance measure under U.S. GAAP. The term EBITDA consists of net income (loss) and excludes interest, taxes, depreciation, and amortization. Adjusted EBITDA also excludes other non-cash items such as changes in fair value of financial instruments (Mark-to-Market), Share-based compensation, and impairment of assets. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. The non-GAAP financial measures do not have a standardized meaning prescribed under U.S. GAAP and therefore may not be comparable to similar measures presented by other issuers. The primary purpose of using non-GAAP financial measures is to provide supplemental information we believe may be useful to investors and to enable them to evaluate our results the same way we do. We also present non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis and comparing our results with those of other companies by excluding items we do not believe are indicative of our core operating performance. Specifically, we use these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware, however, that not all companies define these non-GAAP measures consistently. (1) EBITDA and Adjusted EBITDA are non-GAAP financial measures with reconciliations provided in the tables below. Adjusted EBITDA for the three months ended March 31, 2026, and 2025 is as follows: To view the source version of this press release, please visit https://www.newsfilecorp.com/release/297275

This article first appeared on GuruFocus. Release Date: March 31, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Charlotte's Web Holdings Inc (CWBHF) announced a significant financial transaction with British American Tobacco, converting $55 million in debt into equity, eliminating a major liability and saving $3 million in annual interest. The company received a $10 million equity investment from British American Tobacco, providing fresh capital to support strategic initiatives. Charlotte's Web Holdings Inc (CWBHF) is participating in the Center for Medicare & Medicaid Innovation pilot program, allowing seniors access to CBD products through a federally authorized Medicare pilot. The company reported a 15.8% sequential revenue increase in Q4 2025, driven by direct-to-consumer momentum and product diversification. Charlotte's Web Holdings Inc (CWBHF) has significantly reduced its SG&A expenses by 44.5% over the past two years, demonstrating effective cost management and positioning for profitability. The company reported a net loss of $11.4 million for Q4 2025, compared to a net loss of $3.4 million in Q4 2024, indicating ongoing financial challenges. Gross margin was impacted by a $1.3 million inventory charge related to the disposal of legacy gummy products, reducing the margin by about 10 percentage points. The company's revenue growth remains modest, with a full-year increase of only 0.5% year-over-year. There is uncertainty surrounding federal regulatory developments, including potential THC content restrictions that could impact the CBD industry. The success of the CMMI pilot program is uncertain, with gradual adoption expected and no immediate significant revenue impact anticipated. Warning! GuruFocus has detected 5 Warning Signs with CWBHF. Is CWBHF fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more details about the participating centers in the CMMI program? A: The participating centers are established health care organizations enrolled in specific CMS innovation models, such as ACO Reach and the Enhanced Oncology Model (EOM). These are not new facilities but existing physician practices and health care systems managing Medicare patient populations. The initial cohort addresses approximately 2 million Medicare beneficiaries, with potential expansion as additional models come online. Q: Who funds the $500 per patient per year under the DEI, and how do patients access the products? A: The participating ACOs and EOMs purchase the eligible hemp-derived CBD products using their own funds and furnish them to Medicare beneficiaries. The economic rationale is that these products contribute to better patient outcomes and lower total costs of care. Charlotte's Web has built a portal for ACO and EOM programs to access the products, which are then drop-shipped to the patient's home. Q: What revenue does Charlotte's Web expect from the CMMI pilots in 2026 and 2027? A: The pilot program is in its early stages, starting tomorrow. While there is potential for growth, significant revenue is not expected immediately. The focus is on building education for channel participants and scaling the program over the next 12 to 18 months. The Medicare Advantage program could significantly expand the addressable market, but specifics are still pending. Q: How will the CMS program be reconciled with the potential hemp ban effective November 2026? A: Currently, there is a potential ban on hemp-derived products with more than 0.4 milligrams of THC per container, which conflicts with the CMS program allowing up to 3 milligrams per serving. Charlotte's Web is working with resources in Washington, D.C., to align federal regulations with science-backed approaches. The outcome is uncertain, but efforts are underway to ensure consistency. Q: Why did management and the Board decide on the BAT transaction at this time? A: The BAT transaction was driven by extraordinary opportunities, such as the Medicare pilot programs and DeFloria FDA pathway, requiring proper capitalization and a debt-free position. Although the conversion price is lower than the original, the implied enterprise value per dollar of revenue is higher today, reflecting the company's growth potential and strategic opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Anticipated CMMI Medicare Pilot Program Participation, Regulatory Momentum, and Cost Structure Improvements Position Company for Growth and Pathway to Profitability LOUISVILLE, Colo., March 31, 2026 /CNW/ - (TSX: CWEB) (OTC: CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), a botanical wellness innovation company and the market leader in cannabidiol (CBD) hemp extract wellness products, today announced results for the quarter and year ended December 31, 2025. All amounts are expressed in U.S. dollars, unless otherwise stated. SUBSEQUENT MATERIAL EVENTS BAT Transaction Prior to this earnings release, Charlotte's Web announced a transaction (the "Transaction") with BT DE Investments Inc. ("BAT"), a subsidiary of British American Tobacco p.l.c. (LSE: BATS and NYSE: BTI), comprised of two components: (i) the amendment and conversion of BAT's outstanding C$75.3 million (approximately US$54 million at current exchange rates for estimation purposes) convertible debenture, in addition to all accrued interest (C$14.2 million, or approximately US$10 million); and (ii) a concurrent additional equity investment by BAT of US$10 million (approximately C$13.9 million) by way of a private placement. Following completion of the Transaction, BAT will hold approximately 40% of the Company's then-issued and outstanding common shares on a non-diluted basis. The debenture conversion eliminates Charlotte's Web's largest outstanding balance sheet liability and significantly strengthens shareholders' equity, while removing approximately $3 million in annual interest costs. The net proceeds of the cash will be used to support the Company's participation in the anticipated Centers for Medicare & Medicaid Innovations (CMMI) Medicare pilot program and other permitted purposes if the CMMI program does not proceed. The Transaction is subject to TSX approval and the approval of Charlotte's Web shareholders at the Annual General and Special Meeting scheduled to be held on or about May 28, 2026. CMMI Medicare Pilot Program and CMS Beneficiary Engagement Incentive (BEI) On December 18, 2025, the Washington Administration announced a Center for Medicare and Medicaid Innovation ("CMMI") Medicare pilot program, the first federal initiative designed to enable federally authorized CBD access for senior patients through Medicare. Charlotte's Web is participating as a CBD launch partner for the pilot, beginning with senior oncology patients, with a broader expansion to additional Medicare beneficiary segments expected in 2027. Subsequently, on March 20, 2026, the Centers for Medicare & Medicaid Services ("CMS") issued related guidance establishing the Beneficiary Engagement Incentive ("BEI"), the specific mechanism through which the CMMI pilot will operate. The guidance confirmed that hemp-derived CBD products, including non-intoxicating full-spectrum products containing up to 3 mg per serving of tetrahydrocannabinols, are eligible under the program. Charlotte's Web believes that its core portfolio of full-spectrum CBD wellness products qualifies under this federally authorized incentive program, with participating healthcare organizations permitted to fund up to $500 per beneficiary annually toward eligible CBD wellness products beginning in April 2026. Under the BEI, participating healthcare organizations, primarily accountable care organizations ("ACOs") and oncology model providers, may elect to purchase eligible hemp-derived CBD products from compliant suppliers using their own funds and furnish them to aligned Medicare beneficiaries for symptom management. Costs are covered by the participating organization from its own program economics. CBD wellness products may help reduce reliance on higher-cost treatments, and participating organizations have a financial incentive to help their patients achieve better outcomes at lower cost. Participants in the ACO REACH Model and the Enhancing Oncology Model ("EOM") may begin offering the BEI effective April 1, 2026, with the Long-term Enhanced ACO Design (LEAD) Model following on January 1, 2027. Regulatory Developments and Federal Policy Momentum Federal policy developments during and after the fourth quarter of 2025 represented some of the most meaningful progress for hemp-derived CBD since the 2018 Farm Bill, signaling a potential turning point for the industry. HEMP Act Driving a federal legislative framework is the Hemp Enforcement, Modernization, and Protection Act (the "HEMP Act"), introduced by Congressman Morgan Griffith, Chairman of the House Energy and Commerce Subcommittee on Health. This congressional committee is responsible for FDA oversight. The HEMP Act presents a science-driven federal framework that preserves access to responsibly produced full-spectrum CBD products. The HEMP Act is expected to proceed through regular committee order. Some industry stakeholders also believe the legislation could advance through Congress' September Continuing Resolution. Policy momentum has been further driven by congressional and executive actions. In November 2025, Congress passed the Agriculture, Rural Development, FDA, and Related Agencies Appropriations Act as part of a government funding agreement that included restrictions on the total THC content of hemp-derived products, with an implementation window set for late 2026. Subsequently, a December 18, 2025, Executive Order directed senior White House leadership to work with Congress to update the statutory definition of hemp-derived cannabinoid products, ensuring continued access to full-spectrum CBD while preserving Congressional intent to restrict products that may pose health risks. Simultaneously, the Administration announced a Center for Medicare and Medicaid Innovation ("CMMI") Medicare care innovation pilot program, underscoring a broader federal interest in research and evidence development to support hemp-derived wellness products. "2025 was a defining year for Charlotte's Web," said Bill Morachnick, Chief Executive Officer. "Our participation as a launch partner for the CMMI Medicare pilot marks a landmark breakthrough, bringing physician-authorized CBD access into the healthcare system for seniors, with Charlotte's Web at the forefront. We see this as an early model for potential healthcare integration across additional segments of Medicare's approximately 67 million beneficiaries. Alongside the Presidential Executive Order and growing bipartisan momentum for a rational federal framework, we believe our industry is at a pivotal inflection point. We've built this Company for moments exactly like this." DeFloria: Advancing Cannabinoid Pharmaceutical Development DeFloria, Inc., a collaboration between Charlotte's Web, Ajna BioSciences, and British American Tobacco, achieved significant clinical and regulatory milestones in 2025, advancing AJA001 Oral Solution as the most advanced cannabinoid drug program utilizing the FDA's Botanical Drug Pathway. In 2025, the FDA completed its review of Phase 1 data and cleared DeFloria to proceed with Phase 2 clinical trials for AJA001, a treatment for irritability associated with autism spectrum disorder (ASD). The Phase 1 trial demonstrated that AJA001 was well-tolerated across a wide dosage range with favorable pharmacokinetic profiles, establishing the foundation for Phase 2 evaluation of safety, tolerability, and effectiveness in adolescents and adults with ASD. According to the CDC, ASD affects approximately 1 in 31 children in the United States, and existing treatments are limited and often poorly tolerated. AJA001 employs Charlotte's Web's proprietary full-spectrum CBD hemp extract derived from its patented cultivars, representing a multi-compound botanical approach rather than traditional single-molecule synthetic drugs. DeFloria's progress carries substantial strategic value for Charlotte's Web shareholders: Validation of Botanical Science: Clinical advancement of Charlotte's Web's proprietary genetics through FDA-regulated pathways validates the therapeutic potential of the Company's hemp formulations and strengthens the scientific foundation underlying its consumer products. Manufacturing Rights: Charlotte's Web holds exclusive commercial manufacturing rights for AJA001 upon potential FDA approval, representing a significant long-term revenue opportunity in the multi-billion-dollar ASD treatment market. Equity Ownership: Charlotte's Web owns approximately one-third of DeFloria, providing direct participation in value creation from pharmaceutical development milestones and potential commercialization. Phase 2 Clinical Program Update DeFloria has been actively preparing for entry into its Phase 2 clinical program, with key elements including clinical site selection, protocol optimization, and manufacturing readiness now substantially advanced. Building on the favorable safety and pharmacokinetic data from Phase 1, which established the dosing parameters for Phase 2 evaluation, the Company expects to initiate its Phase 2 trial in mid-2026, subject to the completion of customary development activities and the alignment of required resources. Phase 2 represents a pivotal milestone for AJA001, designed to evaluate safety, tolerability, and early signals of therapeutic effectiveness in adolescents and adults with ASD. Drawing on Charlotte's Web's extensive real-world experience within the ASD community and the consistency of outcomes observed with similar cannabinoid profiles, the Company is optimistic about AJA001's potential to address irritability associated with ASD—an area with significant unmet need and limited well-tolerated treatment options. "Our partnership with Ajna and BAT through DeFloria demonstrates our leadership in advancing hemp-derived compounds from consumer wellness into FDA-regulated pharmaceutical development, and it reflects the same commitment to science-backed innovation that drives our core business," said Mr. Morachnick. 2025 Business Review Charlotte's Web executed a transformational year in 2025, advancing strategic initiatives across product innovation, operational efficiency, and healthcare channel development. The Company extended its leadership beyond traditional CBD with the launch of Brightside™ precision low-dose hemp THC gummies, expanded minor cannabinoid and functional mushroom offerings, and established its fastest-growing category in comprehensive sleep support. On the manufacturing side, Charlotte's Web completed full internalization of Brightside™ gummy production, with approximately 75% of total gummy production expected to transition to in-house manufacturing in 2026. The Company's manufacturing operations received zero findings on its most recent NSF 455-2 Dietary Supplement cGMP audit, reflecting the highest level of compliance readiness across its production facilities. This progress, combined with the establishment of a Scientific Advisory Board to support the Company's expanding medical practitioner channel, positions Charlotte's Web at the intersection of consumer wellness and healthcare integration, where emerging federal policy developments are creating significant new opportunities. Financial Review The following table sets forth selected financial information for the periods indicated: Consolidated net revenue for Q4 2025 was $13.3 million, up 4.7% year-over-year from $12.7 million in Q4 2024. The increase primarily reflects direct-to-consumer momentum for the Company's 2025 diversified botanical wellness innovations, including the new Brightside™ low-dose hemp THC gummy offerings, expanded sleep and functional mushroom portfolios, and new minor cannabinoid formulations featuring CBG and CBN. Gross profit was $5.0 million, or 37.5% of revenue in Q4 2025, compared to $5.1 million, or 40.2% of revenue in Q4 2024. Reported gross margin reflected an inventory charge of $1.3 million related to the disposal of legacy gummy product that did not meet the Company's quality standards, impacting margin by approximately 10 percentage points. Adjusting for this non-recurring item, the underlying gross margin performance demonstrated meaningful improvement gains from recent B2B channel optimizations and manufacturing internalization. In-house manufacturing benefitted gross margin in the quarter, validating the Company's strategy. Management expects gross margin to normalize toward the Company's historical 50% range as production efficiencies continue to scale. Direct-to-consumer promotional efficiency is also improving, with targeted cohort-based campaigns replacing broad discounting and driving stronger revenue conversion without margin dilution. Total selling, general, and administrative ("SG&A") expenses were $10.6 million for the quarter, unchanged year‑over‑year and higher sequentially. The fourth quarter included several discrete, non‑recurring items that impacted quarterly comparability, including a $0.6 million state sales tax audit accrual, incremental marketing costs related to the termination of an agency agreement, and the absence of a one‑time rent accrual correction recorded in the third quarter. Excluding these items, the Company's underlying operating expense base remained consistent with the structurally lower cost profile achieved during 2025. SG&A declined year‑over‑year across the first three quarters of the year, reflecting the successful execution of cost reduction initiatives designed to better align expenses with revenue. Charlotte's Web believes it has largely completed its operating cost reset and expects quarterly SG&A to remain in a normalized range of approximately $10 million to $11 million. Total net loss for Q4 2025 was $11.5 million, or $(0.07) per share, versus a net loss of $3.4 million, or $(0.02) per share, in Q4 2024. Adjusted EBITDA(1) loss for the quarter was $(4.4) million, compared with Adjusted EBITDA(1) of $0.3 million in Q4 2024. Net cash used in operating activities declined to $1.9 million in the fourth quarter, compared to $5.5 million in Q3 2025 and $1.8 million in Q4 2024. Quarterly cash usage reflects the timing of cash outlays relative to accrual‑based expense recognition, and the fourth quarter improvement demonstrates continued progress in converting earnings improvements into cash flow. Fiscal Year 2025 Financial Review On a year-over-year basis, consolidated net revenue for the twelve months ended December 31, 2025, was $49.9 million, compared to $49.7 million for the twelve-month period in 2024. This represented a year-over-year increase of 0.5%, marking the first annual revenue increase since 2021 and following four consecutive quarters of sequential growth established in 2024. Growth was driven by the expansion of the Company's product portfolio into adjacent wellness categories and by improvements in digital marketing efficiency through targeted, cohort-based consumer engagement strategies. Gross profit for the year ended December 31, 2025, was $21.7 million, or 43.5%, compared to $21.3 million, or 42.8%, for the year ended December 31, 2024. Reported gross margin was impacted by discrete items for both years. 2025 included zero-margin DeFloria extract reimbursement supporting Phase 2 clinical trials during the year, gummy insourcing startup costs, the B2B channel restructuring in the third quarter, and a charge related to substandard product disposal in the fourth quarter. In-house gummy manufacturing provided a net gross margin benefit in the fourth quarter and is modelled to further support margin improvement as production scales. Total SG&A expense for 2025 was $42.0 million, compared to $53.3 million in the prior year. The $11.3 million, or 21.2%, decrease reflects the successful execution of the Company's comprehensive cost optimization strategy, which has reduced SG&A by approximately $33.6 million, or 44.5%, over the past two years. The year-over-year decrease was primarily driven by lower personnel costs resulting from workforce optimization initiatives implemented in the second half of 2024, the elimination of significant amortization and media expenses, and continued reductions from contract renegotiations, software optimizations, and improved operating efficiencies. An operating loss of $20.3 million in 2025 represented a 36.6% improvement from $32.0 million in 2024. Net loss for 2025 was $29.7 million, or $(0.19) per share, basic and diluted, compared to a net loss of $29.8 million, or $(0.19) per share, basic and diluted, in 2024. The net loss in 2025 included a $6.4 million net non-cash change in the fair value of the Company's debt derivative and its investment in DeFloria. Excluding depreciation, amortization, and interest, the Adjusted EBITDA(1) loss for 2025 was $12.9 million, as compared to an Adjusted EBITDA(1) loss of $12.6 million for 2024, which included a higher inventory provision than 2025. Financial Position Cash as of December 31, 2025, was $8.0 million, compared to $21.7 million in the prior year. With a declining operating expense base, anticipated gross margin improvements from in-house production, and steady consumer demand across new categories, management expects continued improvement in cash utilization. The recently-announced private placement with BAT, subsequent to the period, is anticipated to provide $10 million in new equity capital, further strengthening the Company's liquidity and working capital position. With a leaner cost structure, clinical-grade manufacturing capabilities, and strong brand equity, Charlotte's Web is well-positioned to capitalize on emerging botanical wellness opportunities as regulatory clarity advances. Management expects the combination of operating expense control and manufacturing efficiencies to continue to drive improvements in cash flow performance. "The new BAT Transaction will be transformational for our balance sheet, eliminating material liabilities and adding $10 million in additional capital. As we progress with this strengthened financial foundation to support the anticipated Medicare pilot launch, Charlotte's Web will be well-positioned to convert strategic catalysts into sustainable long-term performance," said Erika Lind, Chief Financial Officer. "With a significantly de-levered capital structure, our focus will shift entirely to operational execution and unlocking the value of our strategic positioning in botanical wellness." Consolidated Financial Statements and Management's Discussion and Analysis The Company's consolidated financial statements and accompanying notes for the twelve months ended December 31, 2025, and 2024, and related management's discussion and analysis of financial condition and results of operations ("MD&A"), are reported in the Company's 10-K filing on the Securities and Exchange Commission website at www.sec.gov and on SEDAR+ at www.sedarplus.ca and will be available on the Investor Relations section of the Company's website at https://investors.charlottesweb.com. Analyst Conference Call A conference call to review the results is scheduled for today at 11:00 A.M. Eastern Time. There are three ways to join the call: Register your phone number at https://emportal.ink/4bD2NsY to receive an automated call back Dial 1-646-357-8785 or 1-800-836-8184 approximately 10 minutes before the conference call Listen to the live webcast online A recording of the call will be available through April 7, 2026. To listen to a replay of the earnings call please dial 1-646-517-4150 or 1-888-660-6345 and provide conference replay ID 17777#. A webcast of the call will also be accessible through the investor relations section of the Company's website for an extended period of time. Subscribe to Charlotte's Web investor news. About Charlotte's Web Holdings, Inc. Charlotte's Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is a botanical wellness innovation company and a market leader in hemp extract wellness that includes Charlotte's Web whole-plant full-spectrum CBD extracts as well as broad-spectrum CBD and cannabinoid isolates. The Company's hemp extracts have naturally occurring botanical compounds including cannabidiol ("CBD"), CBN, CBC, CBG, THC, terpenes, flavonoids, and other beneficial compounds. Charlotte's Web product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery, immunity), CBN gummies, hemp-derived THC microdose gummies, functional mushroom gummies, CBD capsules, CBD topical creams, and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte's Web maintains stringent control over product quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte's Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and are available online through the Company's website at www.charlottesweb.com. Shares of Charlotte's Web trade on the Toronto Stock Exchange (TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in the United States on the OTC under the symbol "CWBHF". Additional Information and Where to Find It In connection with the proposed transaction, Charlotte's Web will file with the SEC a preliminary proxy statement and a definitive proxy statement, each on Schedule 14A and may file other documents with the SEC regarding the proposed Transaction. This release is not a substitute for the proxy statement or any other document that Charlotte's Web may file with the SEC. INVESTORS IN, AND SECURITY HOLDERS OF, CHARLOTTE'S WEB ARE URGED TO READ, WHEN AVAILABLE, THE PRELIMINARY PROXY STATEMENT, THE DEFINITIVE PROXY STATEMENT AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CHARLOTTE'S WEB AND THE PROPOSED TRANSACTION AND RELATED MATTERS. When available, the definitive proxy statement and other relevant materials for the proposed transaction will be mailed or otherwise made available to stockholders of Charlotte's Web as of April 6, 2026. Investors and security holders may obtain free copies of the proxy statement (when available) and other documents filed with the SEC by Charlotte's Web through the web site maintained by the SEC at www.sec.gov or by contacting Charlotte's Web at 700 Tech Court, Louisville, CO 80027 or by telephone at (720) 484-8930. Participants in the Solicitation Charlotte's Web and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction under the rules of the SEC. Information regarding the persons who may be deemed participants in the solicitation of proxies in connection with the proposed transaction will be set forth in the proxy statement when it is filed with the SEC. You can find more information about Charlotte's Web's directors and executive officers in its Annual Report for the year ended December 31, 2025 on Form 10-K filed with the SEC on March 31, 2026 and Charlotte's Web's Definitive Annual Meeting Proxy Statement filed with the SEC on April 29, 2025. You may obtain a free copy of these documents as indicated above. No Offer or Solicitation This press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Forward-Looking Information Certain information provided herein constitutes forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements are typically identified by words such as "may", "will", "should", "could", "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements are not guarantees of future performance, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions, expected future development, and other factors that it believes are appropriate and reasonable. Specifically, this press release contains forward-looking statements relating to, but not limited to: completion of the Transaction with BAT, including obtaining the necessary TSX and shareholder approval of the Transaction; benefits to the Company of completing the Transaction with BAT; use of proceeds of the Transaction; the Company's beliefs regarding product eligibility under CMS programs and the Company's opportunities in connection therewith; the potential scope and impact of federal healthcare frameworks for hemp-derived products; potential impacts as a result of the HEMP Act; advancement of the Hemp Act; the Company's competitive positioning, and its ability to participate in federal healthcare programs; sales volume and gross margin expectations; anticipated timing for, and business impact of, in-house manufacturing of topical ‎and gummy products; future expectations for SG&A expenses; regulatory developments and the impact of developments on both consumer action and the Company's opportunities and operations; activities relating to, and sponsorship of, legislation to advance regulatory framework; the impact of insourcing on operating margins, capital expenditures and R&D; anticipated future financial results the impact of certain activities on the Company's business and financial condition and anticipated trajectory; the timing and outcomes from DeFloria's clinical trials, including strategic value for the Company's shareholders and potential commercial opportunities for Charlotte's Web; and the ability of AJA001 to address irritability associated with ASD. The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: receipt of TSX and shareholder approval for the Transaction; successful completion of the Transaction; expectations around cost reduction, run rate, revenue growth and expectations around cash flow improvement in 2026; regulatory regime changes; anticipated product development and sales; the success of sales and marketing activities; product development and production expectations; outcomes from R&D activities; the Company's ability to deal with adverse growing conditions in a timely and cost-effective manner; the availability of qualified and cost-effective human resources; compliance with contractual and regulatory obligations and requirements; availability of adequate liquidity and capital to support operations and business plans; continued product placement on various product channels; anticipated development of new products; anticipated consumer trends and corresponding product innovation; ; the Company's ability to increase online traffic and demographic exposure through new products and marketing and omni-channel expansion; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: supply and distribution chains; the market for the Company's products; revenue fluctuations; regulatory changes; loss of customers and retail partners; retention and availability of talent; organizational changes, marketing plans and operational platform upgrades, and the impact of these initiatives on retail expansion, operational efficiencies, cash flow,‎ revenue and e-commerce monetization; expectations relating to IT upgrades, marketing optimization and operational integrations; the impact of the Company's product innovations on product development, expansion activities and the corresponding ‎results thereof; competing products; share price volatility; loss of proprietary information; product acceptance; internet and system infrastructure functionality; information technology security; available capital to fund operations and business plans; crop risk; economic and political considerations; failure to receive TSX and shareholder approval of the Transaction; and including but not limited to those risks and uncertainties discussed under the heading "Risk Factors" in the Company's most recently filed Annual Report on Form 10-K, and other risk factors contained in other filings with the Securities and Exchange Commission available on www.sec.gov and filings with Canadian securities regulatory authorities available www.sedarplus.ca. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty, as these are interdependent, and the Company's future course of action depends on management's assessment of all information available at the relevant time. Any forward-looking statement in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. Except as required by applicable law, the Company assumes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements. (1) Non-GAAP Measures –EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is not a recognized performance measure under U.S. GAAP. The term EBITDA consists of net income (loss) and excludes interest, taxes, depreciation, and amortization. Adjusted EBITDA also excludes other non-cash items such as changes in fair value of financial instruments (Mark-to-Market), Share-based compensation, and impairment of assets. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. The non-GAAP financial measures do not have a standardized meaning prescribed under U.S. GAAP and therefore may not be comparable to similar measures presented by other issuers. The primary purpose of using non-GAAP financial measures is to provide supplemental information we believe may be useful to investors and to enable them to evaluate our results the same way we do. We also present non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis and comparing our results with those of other companies by excluding items we do not believe are indicative of our core operating performance. Specifically, we use these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware, however, that not all companies define these non-GAAP measures consistently. View original content to download multimedia:https://www.prnewswire.com/news-releases/charlottes-web-reports-2025-fourth-quarter-and-full-year-financial-results-302729592.html

Anticipated CMMI Medicare Pilot Program Participation, Regulatory Momentum, and Cost Structure Improvements Position Company for Growth and Pathway to Profitability LOUISVILLE, Colo., March 31, 2026 /CNW/ - (TSX: CWEB) (OTC: CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), a botanical wellness innovation company and the market leader in cannabidiol (CBD) hemp extract wellness products, today announced results for the quarter and year ended December 31, 2025. All amounts are expressed in U.S. dollars, unless otherwise stated. SUBSEQUENT MATERIAL EVENTS BAT Transaction Prior to this earnings release, Charlotte's Web announced a transaction (the "Transaction") with BT DE Investments Inc. ("BAT"), a subsidiary of British American Tobacco p.l.c. (LSE: BATS and NYSE: BTI), comprised of two components: (i) the amendment and conversion of BAT's outstanding C$75.3 million (approximately US$54 million at current exchange rates for estimation purposes) convertible debenture, in addition to all accrued interest (C$14.2 million, or approximately US$10 million); and (ii) a concurrent additional equity investment by BAT of US$10 million (approximately C$13.9 million) by way of a private placement. Following completion of the Transaction, BAT will hold approximately 40% of the Company's then-issued and outstanding common shares on a non-diluted basis. The debenture conversion eliminates Charlotte's Web's largest outstanding balance sheet liability and significantly strengthens shareholders' equity, while removing approximately $3 million in annual interest costs. The net proceeds of the cash will be used to support the Company's participation in the anticipated Centers for Medicare & Medicaid Innovations (CMMI) Medicare pilot program and other permitted purposes if the CMMI program does not proceed. The Transaction is subject to TSX approval and the approval of Charlotte's Web shareholders at the Annual General and Special Meeting scheduled to be held on or about May 28, 2026. CMMI Medicare Pilot Program and CMS Beneficiary Engagement Incentive (BEI) On December 18, 2025, the Washington Administration announced a Center for Medicare and Medicaid Innovation ("CMMI") Medicare pilot program, the first federal initiative designed to enable federally authorized CBD access for senior patients through Medicare. Charlotte's Web is participating as a CBD launch partner for the pilot, beginning with senior oncology patients, with a broader expansion to additional Medicare beneficiary segments expected in 2027. Subsequently, on March 20, 2026, the Centers for Medicare & Medicaid Services ("CMS") issued related guidance establishing the Beneficiary Engagement Incentive ("BEI"), the specific mechanism through which the CMMI pilot will operate. The guidance confirmed that hemp-derived CBD products, including non-intoxicating full-spectrum products containing up to 3 mg per serving of tetrahydrocannabinols, are eligible under the program. Charlotte's Web believes that its core portfolio of full-spectrum CBD wellness products qualifies under this federally authorized incentive program, with participating healthcare organizations permitted to fund up to $500 per beneficiary annually toward eligible CBD wellness products beginning in April 2026. Under the BEI, participating healthcare organizations, primarily accountable care organizations ("ACOs") and oncology model providers, may elect to purchase eligible hemp-derived CBD products from compliant suppliers using their own funds and furnish them to aligned Medicare beneficiaries for symptom management. Costs are covered by the participating organization from its own program economics. CBD wellness products may help reduce reliance on higher-cost treatments, and participating organizations have a financial incentive to help their patients achieve better outcomes at lower cost. Participants in the ACO REACH Model and the Enhancing Oncology Model ("EOM") may begin offering the BEI effective April 1, 2026, with the Long-term Enhanced ACO Design (LEAD) Model following on January 1, 2027. Regulatory Developments and Federal Policy Momentum Federal policy developments during and after the fourth quarter of 2025 represented some of the most meaningful progress for hemp-derived CBD since the 2018 Farm Bill, signaling a potential turning point for the industry. HEMP Act Driving a federal legislative framework is the Hemp Enforcement, Modernization, and Protection Act (the "HEMP Act"), introduced by Congressman Morgan Griffith, Chairman of the House Energy and Commerce Subcommittee on Health. This congressional committee is responsible for FDA oversight. The HEMP Act presents a science-driven federal framework that preserves access to responsibly produced full-spectrum CBD products. The HEMP Act is expected to proceed through regular committee order. Some industry stakeholders also believe the legislation could advance through Congress' September Continuing Resolution. Policy momentum has been further driven by congressional and executive actions. In November 2025, Congress passed the Agriculture, Rural Development, FDA, and Related Agencies Appropriations Act as part of a government funding agreement that included restrictions on the total THC content of hemp-derived products, with an implementation window set for late 2026. Subsequently, a December 18, 2025, Executive Order directed senior White House leadership to work with Congress to update the statutory definition of hemp-derived cannabinoid products, ensuring continued access to full-spectrum CBD while preserving Congressional intent to restrict products that may pose health risks. Simultaneously, the Administration announced a Center for Medicare and Medicaid Innovation ("CMMI") Medicare care innovation pilot program, underscoring a broader federal interest in research and evidence development to support hemp-derived wellness products. "2025 was a defining year for Charlotte's Web," said Bill Morachnick, Chief Executive Officer. "Our participation as a launch partner for the CMMI Medicare pilot marks a landmark breakthrough, bringing physician-authorized CBD access into the healthcare system for seniors, with Charlotte's Web at the forefront. We see this as an early model for potential healthcare integration across additional segments of Medicare's approximately 67 million beneficiaries. Alongside the Presidential Executive Order and growing bipartisan momentum for a rational federal framework, we believe our industry is at a pivotal inflection point. We've built this Company for moments exactly like this." DeFloria: Advancing Cannabinoid Pharmaceutical Development DeFloria, Inc., a collaboration between Charlotte's Web, Ajna BioSciences, and British American Tobacco, achieved significant clinical and regulatory milestones in 2025, advancing AJA001 Oral Solution as the most advanced cannabinoid drug program utilizing the FDA's Botanical Drug Pathway. In 2025, the FDA completed its review of Phase 1 data and cleared DeFloria to proceed with Phase 2 clinical trials for AJA001, a treatment for irritability associated with autism spectrum disorder (ASD). The Phase 1 trial demonstrated that AJA001 was well-tolerated across a wide dosage range with favorable pharmacokinetic profiles, establishing the foundation for Phase 2 evaluation of safety, tolerability, and effectiveness in adolescents and adults with ASD. According to the CDC, ASD affects approximately 1 in 31 children in the United States, and existing treatments are limited and often poorly tolerated. AJA001 employs Charlotte's Web's proprietary full-spectrum CBD hemp extract derived from its patented cultivars, representing a multi-compound botanical approach rather than traditional single-molecule synthetic drugs. DeFloria's progress carries substantial strategic value for Charlotte's Web shareholders: Validation of Botanical Science: Clinical advancement of Charlotte's Web's proprietary genetics through FDA-regulated pathways validates the therapeutic potential of the Company's hemp formulations and strengthens the scientific foundation underlying its consumer products. Manufacturing Rights: Charlotte's Web holds exclusive commercial manufacturing rights for AJA001 upon potential FDA approval, representing a significant long-term revenue opportunity in the multi-billion-dollar ASD treatment market. Equity Ownership: Charlotte's Web owns approximately one-third of DeFloria, providing direct participation in value creation from pharmaceutical development milestones and potential commercialization. Phase 2 Clinical Program Update DeFloria has been actively preparing for entry into its Phase 2 clinical program, with key elements including clinical site selection, protocol optimization, and manufacturing readiness now substantially advanced. Building on the favorable safety and pharmacokinetic data from Phase 1, which established the dosing parameters for Phase 2 evaluation, the Company expects to initiate its Phase 2 trial in mid-2026, subject to the completion of customary development activities and the alignment of required resources. Phase 2 represents a pivotal milestone for AJA001, designed to evaluate safety, tolerability, and early signals of therapeutic effectiveness in adolescents and adults with ASD. Drawing on Charlotte's Web's extensive real-world experience within the ASD community and the consistency of outcomes observed with similar cannabinoid profiles, the Company is optimistic about AJA001's potential to address irritability associated with ASD—an area with significant unmet need and limited well-tolerated treatment options. "Our partnership with Ajna and BAT through DeFloria demonstrates our leadership in advancing hemp-derived compounds from consumer wellness into FDA-regulated pharmaceutical development, and it reflects the same commitment to science-backed innovation that drives our core business," said Mr. Morachnick. 2025 Business Review Charlotte's Web executed a transformational year in 2025, advancing strategic initiatives across product innovation, operational efficiency, and healthcare channel development. The Company extended its leadership beyond traditional CBD with the launch of Brightside™ precision low-dose hemp THC gummies, expanded minor cannabinoid and functional mushroom offerings, and established its fastest-growing category in comprehensive sleep support. On the manufacturing side, Charlotte's Web completed full internalization of Brightside™ gummy production, with approximately 75% of total gummy production expected to transition to in-house manufacturing in 2026. The Company's manufacturing operations received zero findings on its most recent NSF 455-2 Dietary Supplement cGMP audit, reflecting the highest level of compliance readiness across its production facilities. This progress, combined with the establishment of a Scientific Advisory Board to support the Company's expanding medical practitioner channel, positions Charlotte's Web at the intersection of consumer wellness and healthcare integration, where emerging federal policy developments are creating significant new opportunities. Financial Review The following table sets forth selected financial information for the periods indicated: Consolidated net revenue for Q4 2025 was $13.3 million, up 4.7% year-over-year from $12.7 million in Q4 2024. The increase primarily reflects direct-to-consumer momentum for the Company's 2025 diversified botanical wellness innovations, including the new Brightside™ low-dose hemp THC gummy offerings, expanded sleep and functional mushroom portfolios, and new minor cannabinoid formulations featuring CBG and CBN. Gross profit was $5.0 million, or 37.5% of revenue in Q4 2025, compared to $5.1 million, or 40.2% of revenue in Q4 2024. Reported gross margin reflected an inventory charge of $1.3 million related to the disposal of legacy gummy product that did not meet the Company's quality standards, impacting margin by approximately 10 percentage points. Adjusting for this non-recurring item, the underlying gross margin performance demonstrated meaningful improvement gains from recent B2B channel optimizations and manufacturing internalization. In-house manufacturing benefitted gross margin in the quarter, validating the Company's strategy. Management expects gross margin to normalize toward the Company's historical 50% range as production efficiencies continue to scale. Direct-to-consumer promotional efficiency is also improving, with targeted cohort-based campaigns replacing broad discounting and driving stronger revenue conversion without margin dilution. Total selling, general, and administrative ("SG&A") expenses were $10.6 million for the quarter, unchanged year‑over‑year and higher sequentially. The fourth quarter included several discrete, non‑recurring items that impacted quarterly comparability, including a $0.6 million state sales tax audit accrual, incremental marketing costs related to the termination of an agency agreement, and the absence of a one‑time rent accrual correction recorded in the third quarter. Excluding these items, the Company's underlying operating expense base remained consistent with the structurally lower cost profile achieved during 2025. SG&A declined year‑over‑year across the first three quarters of the year, reflecting the successful execution of cost reduction initiatives designed to better align expenses with revenue. Charlotte's Web believes it has largely completed its operating cost reset and expects quarterly SG&A to remain in a normalized range of approximately $10 million to $11 million. Total net loss for Q4 2025 was $11.5 million, or $(0.07) per share, versus a net loss of $3.4 million, or $(0.02) per share, in Q4 2024. Adjusted EBITDA(1) loss for the quarter was $(4.4) million, compared with Adjusted EBITDA(1) of $0.3 million in Q4 2024. Net cash used in operating activities declined to $1.9 million in the fourth quarter, compared to $5.5 million in Q3 2025 and $1.8 million in Q4 2024. Quarterly cash usage reflects the timing of cash outlays relative to accrual‑based expense recognition, and the fourth quarter improvement demonstrates continued progress in converting earnings improvements into cash flow. Fiscal Year 2025 Financial Review On a year-over-year basis, consolidated net revenue for the twelve months ended December 31, 2025, was $49.9 million, compared to $49.7 million for the twelve-month period in 2024. This represented a year-over-year increase of 0.5%, marking the first annual revenue increase since 2021 and following four consecutive quarters of sequential growth established in 2024. Growth was driven by the expansion of the Company's product portfolio into adjacent wellness categories and by improvements in digital marketing efficiency through targeted, cohort-based consumer engagement strategies. Gross profit for the year ended December 31, 2025, was $21.7 million, or 43.5%, compared to $21.3 million, or 42.8%, for the year ended December 31, 2024. Reported gross margin was impacted by discrete items for both years. 2025 included zero-margin DeFloria extract reimbursement supporting Phase 2 clinical trials during the year, gummy insourcing startup costs, the B2B channel restructuring in the third quarter, and a charge related to substandard product disposal in the fourth quarter. In-house gummy manufacturing provided a net gross margin benefit in the fourth quarter and is modelled to further support margin improvement as production scales. Total SG&A expense for 2025 was $42.0 million, compared to $53.3 million in the prior year. The $11.3 million, or 21.2%, decrease reflects the successful execution of the Company's comprehensive cost optimization strategy, which has reduced SG&A by approximately $33.6 million, or 44.5%, over the past two years. The year-over-year decrease was primarily driven by lower personnel costs resulting from workforce optimization initiatives implemented in the second half of 2024, the elimination of significant amortization and media expenses, and continued reductions from contract renegotiations, software optimizations, and improved operating efficiencies. An operating loss of $20.3 million in 2025 represented a 36.6% improvement from $32.0 million in 2024. Net loss for 2025 was $29.7 million, or $(0.19) per share, basic and diluted, compared to a net loss of $29.8 million, or $(0.19) per share, basic and diluted, in 2024. The net loss in 2025 included a $6.4 million net non-cash change in the fair value of the Company's debt derivative and its investment in DeFloria. Excluding depreciation, amortization, and interest, the Adjusted EBITDA(1) loss for 2025 was $12.9 million, as compared to an Adjusted EBITDA(1) loss of $12.6 million for 2024, which included a higher inventory provision than 2025. Financial Position Cash as of December 31, 2025, was $8.0 million, compared to $21.7 million in the prior year. With a declining operating expense base, anticipated gross margin improvements from in-house production, and steady consumer demand across new categories, management expects continued improvement in cash utilization. The recently-announced private placement with BAT, subsequent to the period, is anticipated to provide $10 million in new equity capital, further strengthening the Company's liquidity and working capital position. With a leaner cost structure, clinical-grade manufacturing capabilities, and strong brand equity, Charlotte's Web is well-positioned to capitalize on emerging botanical wellness opportunities as regulatory clarity advances. Management expects the combination of operating expense control and manufacturing efficiencies to continue to drive improvements in cash flow performance. "The new BAT Transaction will be transformational for our balance sheet, eliminating material liabilities and adding $10 million in additional capital. As we progress with this strengthened financial foundation to support the anticipated Medicare pilot launch, Charlotte's Web will be well-positioned to convert strategic catalysts into sustainable long-term performance," said Erika Lind, Chief Financial Officer. "With a significantly de-levered capital structure, our focus will shift entirely to operational execution and unlocking the value of our strategic positioning in botanical wellness." Consolidated Financial Statements and Management's Discussion and Analysis The Company's consolidated financial statements and accompanying notes for the twelve months ended December 31, 2025, and 2024, and related management's discussion and analysis of financial condition and results of operations ("MD&A"), are reported in the Company's 10-K filing on the Securities and Exchange Commission website at www.sec.gov and on SEDAR+ at www.sedarplus.ca and will be available on the Investor Relations section of the Company's website at https://investors.charlottesweb.com. Analyst Conference Call A conference call to review the results is scheduled for today at 11:00 A.M. Eastern Time. There are three ways to join the call: Register your phone number at https://emportal.ink/4bD2NsY to receive an automated call back Dial 1-646-357-8785 or 1-800-836-8184 approximately 10 minutes before the conference call Listen to the live webcast online A recording of the call will be available through April 7, 2026. To listen to a replay of the earnings call please dial 1-646-517-4150 or 1-888-660-6345 and provide conference replay ID 17777#. A webcast of the call will also be accessible through the investor relations section of the Company's website for an extended period of time. Subscribe to Charlotte's Web investor news. About Charlotte's Web Holdings, Inc. Charlotte's Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is a botanical wellness innovation company and a market leader in hemp extract wellness that includes Charlotte's Web whole-plant full-spectrum CBD extracts as well as broad-spectrum CBD and cannabinoid isolates. The Company's hemp extracts have naturally occurring botanical compounds including cannabidiol ("CBD"), CBN, CBC, CBG, THC, terpenes, flavonoids, and other beneficial compounds. Charlotte's Web product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery, immunity), CBN gummies, hemp-derived THC microdose gummies, functional mushroom gummies, CBD capsules, CBD topical creams, and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte's Web maintains stringent control over product quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte's Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and are available online through the Company's website at www.charlottesweb.com. Shares of Charlotte's Web trade on the Toronto Stock Exchange (TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in the United States on the OTC under the symbol "CWBHF". Additional Information and Where to Find It In connection with the proposed transaction, Charlotte's Web will file with the SEC a preliminary proxy statement and a definitive proxy statement, each on Schedule 14A and may file other documents with the SEC regarding the proposed Transaction. This release is not a substitute for the proxy statement or any other document that Charlotte's Web may file with the SEC. INVESTORS IN, AND SECURITY HOLDERS OF, CHARLOTTE'S WEB ARE URGED TO READ, WHEN AVAILABLE, THE PRELIMINARY PROXY STATEMENT, THE DEFINITIVE PROXY STATEMENT AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CHARLOTTE'S WEB AND THE PROPOSED TRANSACTION AND RELATED MATTERS. When available, the definitive proxy statement and other relevant materials for the proposed transaction will be mailed or otherwise made available to stockholders of Charlotte's Web as of April 6, 2026. Investors and security holders may obtain free copies of the proxy statement (when available) and other documents filed with the SEC by Charlotte's Web through the web site maintained by the SEC at www.sec.gov or by contacting Charlotte's Web at 700 Tech Court, Louisville, CO 80027 or by telephone at (720) 484-8930. Participants in the Solicitation Charlotte's Web and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction under the rules of the SEC. Information regarding the persons who may be deemed participants in the solicitation of proxies in connection with the proposed transaction will be set forth in the proxy statement when it is filed with the SEC. You can find more information about Charlotte's Web's directors and executive officers in its Annual Report for the year ended December 31, 2025 on Form 10-K filed with the SEC on March 31, 2026 and Charlotte's Web's Definitive Annual Meeting Proxy Statement filed with the SEC on April 29, 2025. You may obtain a free copy of these documents as indicated above. No Offer or Solicitation This press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Forward-Looking Information Certain information provided herein constitutes forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements are typically identified by words such as "may", "will", "should", "could", "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements are not guarantees of future performance, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions, expected future development, and other factors that it believes are appropriate and reasonable. Specifically, this press release contains forward-looking statements relating to, but not limited to: completion of the Transaction with BAT, including obtaining the necessary TSX and shareholder approval of the Transaction; benefits to the Company of completing the Transaction with BAT; use of proceeds of the Transaction; the Company's beliefs regarding product eligibility under CMS programs and the Company's opportunities in connection therewith; the potential scope and impact of federal healthcare frameworks for hemp-derived products; potential impacts as a result of the HEMP Act; advancement of the Hemp Act; the Company's competitive positioning, and its ability to participate in federal healthcare programs; sales volume and gross margin expectations; anticipated timing for, and business impact of, in-house manufacturing of topical ‎and gummy products; future expectations for SG&A expenses; regulatory developments and the impact of developments on both consumer action and the Company's opportunities and operations; activities relating to, and sponsorship of, legislation to advance regulatory framework; the impact of insourcing on operating margins, capital expenditures and R&D; anticipated future financial results the impact of certain activities on the Company's business and financial condition and anticipated trajectory; the timing and outcomes from DeFloria's clinical trials, including strategic value for the Company's shareholders and potential commercial opportunities for Charlotte's Web; and the ability of AJA001 to address irritability associated with ASD. The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: receipt of TSX and shareholder approval for the Transaction; successful completion of the Transaction; expectations around cost reduction, run rate, revenue growth and expectations around cash flow improvement in 2026; regulatory regime changes; anticipated product development and sales; the success of sales and marketing activities; product development and production expectations; outcomes from R&D activities; the Company's ability to deal with adverse growing conditions in a timely and cost-effective manner; the availability of qualified and cost-effective human resources; compliance with contractual and regulatory obligations and requirements; availability of adequate liquidity and capital to support operations and business plans; continued product placement on various product channels; anticipated development of new products; anticipated consumer trends and corresponding product innovation; ; the Company's ability to increase online traffic and demographic exposure through new products and marketing and omni-channel expansion; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: supply and distribution chains; the market for the Company's products; revenue fluctuations; regulatory changes; loss of customers and retail partners; retention and availability of talent; organizational changes, marketing plans and operational platform upgrades, and the impact of these initiatives on retail expansion, operational efficiencies, cash flow,‎ revenue and e-commerce monetization; expectations relating to IT upgrades, marketing optimization and operational integrations; the impact of the Company's product innovations on product development, expansion activities and the corresponding ‎results thereof; competing products; share price volatility; loss of proprietary information; product acceptance; internet and system infrastructure functionality; information technology security; available capital to fund operations and business plans; crop risk; economic and political considerations; failure to receive TSX and shareholder approval of the Transaction; and including but not limited to those risks and uncertainties discussed under the heading "Risk Factors" in the Company's most recently filed Annual Report on Form 10-K, and other risk factors contained in other filings with the Securities and Exchange Commission available on www.sec.gov and filings with Canadian securities regulatory authorities available www.sedarplus.ca. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty, as these are interdependent, and the Company's future course of action depends on management's assessment of all information available at the relevant time. Any forward-looking statement in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. Except as required by applicable law, the Company assumes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements. (1) Non-GAAP Measures –EBITDA and Adjusted EBITDA Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is not a recognized performance measure under U.S. GAAP. The term EBITDA consists of net income (loss) and excludes interest, taxes, depreciation, and amortization. Adjusted EBITDA also excludes other non-cash items such as changes in fair value of financial instruments (Mark-to-Market), Share-based compensation, and impairment of assets. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. The non-GAAP financial measures do not have a standardized meaning prescribed under U.S. GAAP and therefore may not be comparable to similar measures presented by other issuers. The primary purpose of using non-GAAP financial measures is to provide supplemental information we believe may be useful to investors and to enable them to evaluate our results the same way we do. We also present non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis and comparing our results with those of other companies by excluding items we do not believe are indicative of our core operating performance. Specifically, we use these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware, however, that not all companies define these non-GAAP measures consistently. View original content to download multimedia:https://www.prnewswire.com/news-releases/charlottes-web-reports-2025-fourth-quarter-and-full-year-financial-results-302729592.html View original content to download multimedia: http://www.newswire.ca/en/releases/archive/March2026/31/c4768.html

TORONTO, March 31, 2026--(BUSINESS WIRE)--Organigram Global Inc. (NASDAQ: OGI) (TSX: OGI), (the "Company" or "Organigram"), is pleased to announce that the shareholders of Organigram have overwhelmingly approved the resolution required to consummate the previously announced acquisition by the Company (the "Transaction") of Sanity Group GmbH ("Sanity Group") and the related private placement financing (the "Private Placement") with BT DE Investments Inc., a wholly-owned subsidiary of British American Tobacco ("BAT") at the Company’s annual general and special meeting of shareholders (the "Shareholders") held on March 30, 2026 (the "Meeting"). Shareholders approved an ordinary resolution (the "Transaction Resolution") authorizing (i) the indirect acquisition by the Company of all the issued and outstanding shares of Sanity Group not already owned by the Company, and (ii) the issuance by the Company of up to 96,287,602 common shares to the shareholders of Sanity Group and BAT in connection with the Transaction and the Private Placement, by an affirmative vote of 93% of the votes represented at the Meeting, excluding the votes attached to the Company’s common shares beneficially owned, or over which control or direction was exercised by BAT, its associates and affiliates and their respective directors and officers who held Organigram common shares as of the record date for the Meeting in accordance with the rules of the TSX Company Manual and Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. The full text of the Transaction Resolution is set forth as "Appendix B" in the Company’s management information circular dated February 23, 2026 (the "Circular") provided in connection with the Meeting. Transaction Highlights Financially accretive acquisition that is expected to bring scale and positively impact both revenue and profitability. Sanity generated positive EBITDA in 2025. Cements Organigram’s position as a leader in the growing global cannabis market. Organigram is currently #1 in the Canadian adult use recreational market, and on closing will become a top company in the rapidly growing German medical cannabis market, the second largest federally legal cannabis market in the world after Canada. Provides Organigram with a vertically integrated European ‘hub’ and footprint. Will add local leadership, a strong network of strategic partners throughout the value chain across Europe as well as commercial, operational, medical and regulatory expertise. Sanity Group operates Europe’s first two legal cannabis specialty stores as part of scientific pilot projects in Switzerland. Pilot project experience also enhances credibility for future pilot projects, including in Germany. Provides Organigram the opportunity to bring its industry leading brands and IP to new markets globally. The combination of both teams, with the support of the Product Development Collaboration (PDC) generated intellectual property, is expected to deliver a suite of next generation cannabis innovations, backed by science, to European medical markets. In addition to the shareholder approval obtained, the Transaction remains subject to the satisfaction of certain customary closing conditions for transactions of this nature, including the completion of the Private Placement and the ATB Financial senior secured credit facilities. The Company previously obtained foreign direct investment (FDI) clearance for the Transaction. Closing of the Transaction is expected to occur in April 2026. In addition to the approval of the Transaction Resolution, the Shareholders approved all other matters presented for approval at the Meeting, as described in further detail below. Election of Directors Each of the ten nominees listed in the Circular were elected as directors of the Company. The Company received proxies and virtual votes at the Meeting as set out below: The biographies of the Company’s directors are set out in the Circular, which is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Committee Composition Following the Meeting, the Board has reviewed and approved the composition of its Committees which remain unchanged. The Investment Committee consists of Dexter John (Chair), Stephen Smith, Marni Wieshofer, Simon Ashton and Craig Harris. The Governance, Nominating and Sustainability Committee consists of Geoff Machum (Chair), Sherry Porter, Dexter John and Craig Harris. The Audit Committee consists of Stephen Smith (Chair), Dexter John, Marni Wieshofer and Simon Ashton and the Compensation Committee consists of Sherry Porter (Chair), Geoff Machum and Karina Gehring. Appointment of Auditor PricewaterhouseCoopers LLP was appointed as the auditor of the Company until the next annual meeting of the shareholders of the Company or until its successor is duly appointed, and the directors of the Company were authorized to fix the remuneration of such auditor by the affirmative vote of 97% of the votes represented at the Meeting. Approval of Unallocated Awards under Long-Term Omnibus Equity Incentive Plan Shareholders approved the ordinary resolution (the "Unallocated Awards Resolution") authorizing all unallocated options, restricted share units, performance share units and deferred share units under the Company’s Long-Term Omnibus Equity Incentive Plan dated as of January 25, 2020 by the affirmative vote of 94% of the votes represented at the Meeting. The full text of the Unallocated Awards Resolution is set forth as "Appendix A" in the Circular. Further Information For further information regarding the Transaction, please refer to the Circular filed under the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. About Organigram Global Inc. Organigram Global Inc. is a NASDAQ Global Select Market and TSX listed company whose wholly owned subsidiary, Organigram Inc., is a licensed cultivator of cannabis and manufacturer of cannabis-derived goods in Canada. Through its acquisition of Collective Project Limited, Organigram Global participates in the U.S. and Canadian cannabinoid beverage markets. Organigram is focused on producing high-quality cannabis for adult consumers, as well as developing international business partnerships to extend the Company's global footprint. Organigram has also developed and acquired a portfolio of cannabis brands, including Edison, Big Bag O’ Buds, SHRED, SHRED’ems, Monjour, Tremblant Cannabis, Collective Project, Trailblazer, BOXHOT and DEBUNK. Organigram operates facilities in Moncton, New Brunswick and Lac Supérieur, Quebec, with a dedicated edibles manufacturing facility in Winnipeg, Manitoba. The Company also operates two additional cannabis processing facilities in Southwestern Ontario; one in Aylmer and the other in London. The facility in Aylmer houses best-in-class CO2 and Hydrocarbon extraction capabilities, and is optimized for formulation refinement, post-processing of minor cannabinoids, and pre-roll production. The facility in London will be optimized for labelling, packaging, and national fulfillment. The Company is regulated by Health Canada under the Cannabis Act and the Cannabis Regulations (Canada). Forward-Looking Information This news release contains forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "estimates", "intends", "anticipates", "believes" or variations of such words and phrases or state that certain actions, events, or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking-statements. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, events, performance or achievements of Organigram to differ materially from current expectations or future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking statements reflect current beliefs of management of the Company with respect to future events and are based on information currently available to management including the reasonable assumptions, estimates, analysis and opinions of management of the Company considering their experience, perception of trends, current conditions and expected developments as well as other factors that management believes to be relevant as at the date such statements are made. Forward-looking statements involve significant known and unknown risks and uncertainties. Many factors could cause actual results, performance or achievement to be materially different from any future forward-looking statements. There is a risk that some or all the expected benefits of the Transaction may fail to materialize or may not occur within the time periods anticipated by the Company. The challenge of coordinating previously independent businesses makes evaluating the business and future financial prospects of the Company following the business combination difficult. Material risks and uncertainties that could cause actual results to differ from forward-looking statements include the inherent uncertainty associated with the financial and other projections a well as market changes arising from Canadian and European governmental actions or market conditions; satisfaction or waiver of all conditions to closing of the Transaction; completion of the Transaction and Private Placement on the terms contemplated in their governing agreements, as applicable; the prompt and effective integration of Sanity into the Company not being possible; the ability to achieve the anticipated synergies and value-creation contemplated by the business combination not being possible or being delayed; the response of business partners and retention as a result of the business combination being negative; the impact of competitive responses to the business combination negatively impacting the Company; the ability to achieve the expected manufacturing and production output including flower supply not being possible; and the diversion of management time on business combination-related issues. Readers are cautioned that the foregoing list of factors is not exhaustive. Other risks and uncertainties not presently known to the Company or that the Company presently believe are not material could also cause actual results or events to differ materially from those expressed in the forward-looking statements contained herein. For a more detailed discussion of risks and other factors, see the factors and risks disclosed in the Circular, the Company’s most recent annual information form, management’s discussion and analysis and other Company documents filed from time to time on SEDAR+ (see www.sedarplus.ca) and filed or furnished to the Securities and Exchange Commission on EDGAR (see www.sec.gov). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260330159875/en/ Contacts For Organigram Investor Relations enquiries: Max Schwartz, Director of Investor Relations [email protected]