InterCure Announces First Half of 2024 Results: Revenue of NIS 126 million and Adjusted EBITDA of NIS 21 million

Written by Customer Service on . Posted in Earnings Releases And Operating Results.

  • Revenues during the first half of 2024 reached NIS 126 million, alongside an Adjusted EBITDA1of NIS 21 million (Approximately 17% of revenues).
  • Both quarters (Q1 and Q2 of 2024) ended with positive EBITDAs and profit from operations and represents InterCure’s 16th and 17th consecutive quarter of profitability2.
  • Revenues for the first half of 2024 were affected by damages caused by the terrorist attack on October 7, 2023, and the war in Gaza.
  • InterCure is entitled to full compensation from the Israeli authorities for all direct and indirect damages caused to its Southern Facility located at Kibbutz Nir Oz. To date, InterCure has already received tens of millions of NIS as partial advance payments from the Israeli authorities.
  • Announced Expansion of its strategic partnership with Cookies™ to Germany and expects to launch first Cookies products in Germany in the fourth quarter of 2024.
  • Restoring the Southern Facility continues in accordance with receiving advance payments from the Israeli authorities.
  • Expects double digit growth throughout the second half of 2024 (compared to first half of 2024) due to expected launches in German and UK markets.

NEW YORK and HERZLIYA, Israel, Aug. 29, 2024 (GLOBE NEWSWIRE) — InterCure Ltd. (NASDAQ: INCR) (TASE: INCR) (“InterCure” or the “Company“) is pleased to announce its financial and operating results for the six months ended June 30, 2024. All amounts are expressed in New Israeli Shekels (NIS), unless otherwise noted.

First Half 2024 Financial Highlights and Milestones

  • Revenue was NIS 126 million, and the adjusted EBITDA for the six months ending June 30, 2024 was NIS 21 million, approximately 17% of revenues. Compared to the second half of 2023 (which was only partly affected by the terrorist attack on October 7, 2023 and the war in Gaza) with NIS 147 million of revenue and NIS 31 million of adjusted EBITDA.
  • The October 7th terror attack effected the Company’s revenues in first half of 2024 due to damages to its southern facility located at Kibbutz Nir Oz (the “Southern Facility”).
  • The Company’s operating profit was NIS 11 million.
  • Both quarters (Q1 and Q2 of 2024) represents the 16th and 17th consecutive quarters of profitability for InterCure, with both quarters showing positive Adjusted EBITDA and profit from operations.
  • Continued expansion of the Company’s dedicated medical cannabis pharmacy chain to a total of 24 active locations as of today. As of October 2023, the Company holds 100% of Cannolam LTD including the full rights to Cookies™ international agreements, alongside Israel’s largest chain of dedicated medical cannabis pharmacies, Givol™.
  • Since October 7, 2023, war situation was declared by the Israeli government. As of this date, there is limited access to the Company’s Southern Facility.
  • According to Israeli Law, due to the location of the Company’s Southern Facility, the Company is entitled to full compensation for all the direct and indirect damages caused to the Southern Facility by the terrorist attack and the war in Gaza.
  • Restoring the Southern Facility continues with accordance of receiving advance payments from the Israeli authorities.
  • To date, the Company has received tens of millions of NIS as advance payments from the Israeli authorities in relation to such compensation and expects to receive additional substantial advance payments to support the Southern Facility restoration.
  • The Company’s cash on hand was NIS 21 million while the Company has unused credit line of over NIS 22 million and it is expecting to receive additional substantial advance payments from the Israeli authorities as part the compensation it is entitled to due to damages caused to the Southern Facility.
  • Expands its European footprint with new strategic agreements with Cookies™. Enhancing branded product offerings with the most-recognized global cannabis brand and expects to launch Cookies Corners licensed pharmacies in Germany and UK, alongside differentiated online platforms with the official cookies retail experience.
  • Continued execution of the Company’s global expansion plan. Plans to launch more than 30 new GMP SKUs during the second half of 2024 executing collaborations with Cookies, Binske, Organigram and others.
  • Expects double digit growth throughout the second half of 2024 compared to first half of 2024.

Alexander Rabinovitch, CEO of InterCure noted: “Yesterday, we announced the expansion of our strategic partnership with Cookies to the German market, the largest market in Europe, which is experiencing accelerated growth and becoming a key target market for Intercure. Intercure grew double-digit in the first half and presented profitable quarters, the 16th and 17th in a row. This consistent performance highlights our business model’s strength and commitment to leading the pharmaceutical cannabis market even in this challenging time. In the first half, we heavily invested in the restoration of the company’s main facility located at Kibbutz Nir Oz. The facility was damaged by the terrorist attack and is expected to gradually return to full capacity in the coming quarters, in accordance with receiving compensation from the authorities for the direct and indirect damages which the company is entitle to.”

Alexander Rabinovitch continued: “Intercure is set for a significant growth in the coming quarters and years in all territories, and to that end, we have executed strategic actions to strengthen the company’s high quality cultivation and supply chain in Canada and Europe. Entering the German market with great impact by the company’s leading product lines, including Cookies, the globally most recognized cannabis brand , is a significant step in our commitment to provide high-quality, pharma-grade cannabis to patient communities and creating value to our shareholders.”

InterCure is thankful to its managers and employees for their commitment and to its strategic partners in Israel and worldwide who stand with us during this time of war.

Key Half Year Financial Highlights – Cannabis Sector

  H1-24 H2-23 H1-23 H2-22 H1-22 H2-21 H1-21
Revenues 125,733   146,939   208,614   206,178   182,506   141,396   78,281  
Gross Profit(1) 40,442   40,394   67,945   81,558   77,399   61,295   34,694  
GP Margin 32%   27%   33%   40%   42%   43%   44%  
Adjusted EBITDA(2) 20,829   31,201   29,669   40,714   43,411   35,132   21,765  
Adjusted EBITDA(2)Margin 17%   21%   14%   20%   24%   25%   28%  
 

Notes

  (1)   Gross profit before effect of fair value.
  (2)   EBITDA adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses (or income). This is a non-IFRS financial measure and does not have a standardized meaning prescribed by IFRS, please see “Non-IFRS Measures” below.
       

About InterCure (dba Canndoc)
InterCure (dba Canndoc) (NASDAQ: INCR) (TASE: INCR) is the leading, profitable, and fastest growing cannabis company outside of North America. Canndoc, a wholly owned subsidiary of InterCure, is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products. InterCure leverages its market leading distribution network, best in class international partnerships and a high-margin vertically integrated “seed-to-sale” model to lead the fastest growing cannabis global market outside of North America.

For more information, visit: https://www.intercure.co

Non-IFRS Measures
This press release makes reference to certain non-IFRS financial measures. Adjusted EBITDA, as defined by InterCure, means earnings before interest, income taxes, depreciation, and amortization, adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses (or income). This measure is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. InterCure’s method of calculating this measure may differ from methods used by other entities and accordingly, this measure may not be comparable to similarly titled measured used by other entities or in other jurisdictions. InterCure uses this measure because it believes it provides useful information to both management and investors with respect to the operating and financial performance of the company. A reconciliation of Adjusted EBITDA to an IFRS measure (revenue), which is incorporated by reference to this press release, is available in InterCure’s MD&A included in our Annual Report on Form 20-F under the heading “Results of Operations”, available under the Company’s profile on EDGAR at www.sec.gov.

Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements may include, but are not limited to, the Company’s success of its global expansion plans, its expansion strategy to major markets worldwide, statements relating to the security events in Israel, as well as statements, other than historical facts, that address activities, events or developments that InterCure intends, expects, projects, believes or anticipates will or may occur in the future. These statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,” “should,” “intends,” “plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many factors could cause InterCure’s actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: the Company’s success of its global expansion plans, its continued growth, the expected operations, financial results business strategy, competitive strengths, goals and expansion and growth plans, expansion strategy to major markets worldwide, the impact of the COVID-19 pandemic, the impact of the war in Israel and the war in Ukraine and the conditions of the markets generally. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond InterCure’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: changes in general economic, business and political conditions, changes in applicable laws, the U.S. regulatory landscapes and enforcement related to cannabis, changes in public opinion and perception of the cannabis industry, and reliance on the expertise and judgment of our senior management. More detailed information about the risks and uncertainties affecting us is contained under the heading “Risk Factors” included in the Company’s most recent Annual Report on Form 20-F and in other filings that we have made and may make with the Securities and Exchange Commission in the future.

Contacts

InterCure Ltd.
Amos Cohen, Chief Financial Officer
amos@intercure.co

1 Adjusted EBITDA means EBITDA for the cannabis sector adjusted for changes in the fair value of inventory, share-based payment expense, impairment losses (and gains) on financial assets, non-controlling interest and other expenses. This is a non-IFRS financial measure and does not have a standardized meaning prescribed by IFRS, please see “Non-IFRS Measures” below.

2 Adjusted EBITDA.

InterCure LTD
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As of June 30, 2024 (Unaudited)
 
Condensed Consolidated Interim Statements of Financial Position
  As of June 30
  NIS in thousands
    2024       2023  
  (Unaudited)   (Unaudited)
ASSETS      
       
CURRENT ASSETS:      
Cash and cash equivalents   19,899       102,653  
Restricted cash   948       13,788  
Trade receivables, net   61,672       42,623  
Other receivables   158,045       91,747  
Inventory   126,466       156,443  
Biological assets   3,388       7,058  
Financial assets measured at fair value through profit or loss   399       192  
Total current assets   370,817       414,504  
       
NON-CURRENT ASSETS:      
Other receivables   439       –  
Property, plant and equipment and right-of-use asset   98,611       96,970  
Goodwill   223,609       284,181  
Deferred tax assets   27,042       23,625  
Financial assets measured at fair value through profit or loss   1,922       2,565  
Investment in associate and loan   18,447       20,000  
Total non-current assets   370,070       427,341  
       
TOTAL ASSETS   740,887       841,845  
       
LIABILITIES AND EQUITY      
       
CURRENT LIABILITIES:      
Short term loan and current maturities   81,755       56,521  
Trade payables   83,071       104,605  
Other payables   39,965       39,524  
Contingent consideration   4,082       6,145  
Short term loan from non-controlling interest   –       957  
Total current liabilities   208,873       207,752  
       
LONG-TERM LIABILITIES:      
Long term loans   51,317       84,067  
Liabilities in respect of employee benefits   841       1,079  
Lease liability   17,741       21,295  
Total long-term liabilities   69,899       106,441  
       
EQUITY:      
Share capital, premium and other reserves   649,013       634,383  
Capital reserve for transactions with controlling shareholder   2,388       2,388  
Capital reserve for transactions with non-controlling interests   13,561       –  
Receipts on account of shares   –       8,541  
Accumulated losses   (204,518 )     (136,552 )
Equity attributable to owners of the Company   460,444       508,760  
       
Non-controlling interests   1,671       18,892  
TOTAL EQUITY   462,115       527,652  
       
TOTAL LIABILITIES AND EQUITY   740,887       841,845  

Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income
 
  For the 6-months ended on
June 30		   Year ended December 31
  NIS in thousands
    2024       2023       2023  
  (Unaudited)   (Unaudited)   (Audited)
           
           
           
Revenue   125,733       208,614       355,553  
Cost of revenue before fair value adjustments   85,291       140,669       247,214  
           
Gross income before impact of changes in fair value   40,442       67,945       108,339  
           
Unrealized changes to fair value adjustments of biological assets   1,218       4,339       261  
Loss from fair value changes realized in the current year   1,029       5,316       3,505  
           
Gross Profit   40,631       66,968       105,095  
           
Research and development expenses   219       256       388  
General and administrative expenses   18,374       21,856       42,610  
Sales and marketing expenses   27,454       27,800       53,269  
Other expenses, net   (16,414 )     2,919       47,138  
Changes in the fair value of financial assets through profit or loss, net.   (201 )     12       665  
Share based payments   686       2,358       2,592  
           
Operating Profit   10,513       11,767       (41,567 )
           
           
Financing income   1,031       2,252       5,883  
Financing expenses   10,070       11,842       25,601  
           
Financing expenses (income), net   9,039       9,590       19,718  
           
Profit before tax on income   1,474       2,177       (61,285 )
           
Tax (expense) benefit   (1,480 )     1,640       (2,248 )
Total comprehensive Profit (loss)   (6 )     3,817       (63,533 )
           
Profit (loss) attributable to:          
Owners of the Company   1,433       5,097       (61,959 )
Non-controlling interests   (1,439 )     (1,280 )     (1,574 )
Total   (6 )     3,817       (63,533 )
           
Interest / Financing expense (income) net   9,039       9,590       19,718  
Tax expenses (benefit)   1,480       (1,640 )     2,248  
Depreciation and amortization   6,337       6,442       13,166  
EBITDA   16,850       18,209       (28,401 )
Share-based payment expenses   686       2,358       2,592  
Other expenses (income), net (without other income from the Tax authorities)   416       2,919       75,292  
Impairment losses and (gains) on financial assets through profit and loss   (201 )     12       665  
Fair value adjustment to inventory   (189 )     977       3,244  
Adjusted EBITDA   17,562       24,475       53,392  
           
Earnings per share          
Basic earnings (loss)   0.03       0.11       (1.36 )
Diluted earnings (loss)   0.03       0.11       (1.36 )
                       

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