Achieved record revenues of $40 million for the first quarter
Annualized revenue run rate of $159 million
Adjusted EBITDA(1) of $6 Million
Strong balance sheet with over $45 million cash and Net current assets of over $72 million
NEW YORK, TORONTO, and HERZLIYA, Israel, May 15, 2023 (GLOBE NEWSWIRE) — InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) (TASE: INCR) (dba Canndoc)(“InterCure” or the “Company”) is pleased to announce its financial and operating results for the first quarter ended March 31, 2023.
All amounts are expressed in New Israeli Shekels (NIS) or Canadian dollars ($), unless otherwise noted.
First Quarter 2023 Key Financial & Operating Highlights
- Quarterly revenue of $40 million (NIS 106 million), representing 22% growth YoY and up 1% sequentially compared to the prior quarter.
- Annualized Revenue Run Rate of $159 million (NIS 425 million).
- Increased our leadership market share due to solid demand for Canndoc’s branded products.
- Revenue growth expected to continue through out 2023.
- Gross profit of $13 million (NIS 35 million), gross margin of 33% compared to 41% (YoY) as a result of market conditions. During the quarter, financially struggling companies and companies exiting the market continue to liquidise low-to-medium quality inventories at lower prices. This had an impact primarily on our ultra-medical and legacy products, while the prices for our top selling high quality products remained stable. In addition, none of our 7 in-process pharmacies received license to dispense medical cannabis mainly due to police personal shortage, we expect all 7 pharmacies which are still in-process will be licensed by year end.
- Adjusted EBITDA for the first quarter was $6 million (NIS 16 million).
- Cash and restricted cash (consolidated) at quarter end of $45 million (NIS 120 million) and Net current assets of over $72 million. As interest rate environment is changing, we are constantly revising our financing structure. During the first quarter of 2023 we voluntarily repayed loans of $24 million (NIS 64 million). In addition to the cash position we have unutilized credit lines and financial assets of over $41 million (NIS 110 million).
- Expansion of our trade houses operations positioning Pharmazone as the biggest medical cannabis dedicated trade house in Israel.
- Announced the termination of the Better acquisition agreement, which has led us subsequently to file a lawsuit to recover the funds loaned in connection with the merger agreement.
- Successfully completed export of our GMP products to Intercure’s EU hub, preparing for commercial launches of our products in UK and Germany.
Subsequent Quarter 2023 Highlights
- Signed an initial collaboration agreement with legendary boxer, entrepreneur and cannabis advocate Mike Tyson’s premium cannabis brand. The partnership will grant an exclusive distribution license to cultivate, manufacture, sell, market, and distribute all approved products and brands of TYSON 2.0 in Israel, Australia, United Kingdom, Germany and other EU countries such as Switzerland. InterCure will also have the right to use the name, the marks and the TYSON 2.0 intellectual property in these territories.
“I am proud of our team delivering another consecutive quarter of record revenues with strong operating performance demonstrating our leadership position,” said InterCure CEO Alexander Rabinovich, adding, “We continued to execute on our international expansion plans building our footprint organically and exploring strategic acquisitions in key markets, to meet the solid demand for our high-quality branded products. We expect 2023 to be another millstone year for Intercure, solidifying our leadership position in the pharmaceutical cannabis market.”
(1) Means 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);
Key Q1 2023 Financial Highlights – Cannabis Sector
(In thousands NIS)
| Q1 2023 | Q1 2022 | |
| Revenues | 106,175 | 87,229 |
| Gross Profit (1) | 35,123 | 35,857 |
| Adjusted EBITDA (2) | 15,806 | 21,298 |
| Q1-23 | Q4-22 | Q3-22 | Q2-22 | Q1-22 | Q4-21 | Q3-21 | |
| Revenues | 106,175 | 105,606 | 100,572 | 95,277 | 87,229 | 79,701 | 61,695 |
| Gross Profit (1) | 35,123 | 37,484 | 44,074 | 41,542 | 35,857 | 36,613 | 24,682 |
| GP Margin | 33% | 35% | 44% | 44% | 41% | 46% | 40% |
| Adjusted EBITDA(2) | 15,806 | 18,527 | 22,187 | 22,113 | 21,298 | 21,091 | 14,041 |
| Adjusted EBITDA(2) Margin | 15% | 18% | 22% | 23% | 24% | 26% | 23% |
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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.
| For the 3-months ended on March 31 | ||
| 2023 | 2022 | |
| Revenues | 106,175 | 87,229 |
| Gross profit before effect of fair value | 35,123 | 35,857 |
| Gross profit after effect of fair value | 34,327 | 39,384 |
| Research and development expenses | (157) | (162) |
| General and administrative expenses | (11,210) | (8,308) |
| Share based payments | (1,409) | (851) |
| Marketing and selling expenses | (13,570) | (9,830) |
| Impairment gains and (losses) on financial assets through profit or loss | 4 | (50) |
| Other income (expenses), net | (2,038) | (195) |
| Consolidated operating profit | 5,947 | 19,988 |
| Comprehensive income | 92 | 14,699 |
| Interest / Financing expenses (income) net | 4,173 | 581 |
| Tax expenses | 1,682 | 4,708 |
| Depreciation and amortization | 2,925 | 2,354 |
| EBITDA | 8,872 | 22,342 |
| Share-based payment expenses | 1,409 | 851 |
| Other expenses (income), net | 2,038 | 195 |
| Impairment losses and (gains) on financial assets through profit and loss | (4) | 50 |
| Fair value adjustment to inventory | 796 | (3,527) |
| Adjusted EBITDA | 13,111 | 19,911 |
| Basic earnings (loss) per share | 0.005 | 0.38 |
| Diluted earnings per share | 0.005 | 0.36 |
Consolidated Financial Statements and Management’s Discussion and Analysis
The publication of InterCure’s audited financial statements and accompanying notes for the quarter ended March 31, 2023 and related management’s discussion and analysis of financial condition and results of operations and analysis of financial condition and results of operations (“MD&A”) are available under the Company’s profile on SEDAR.
