Intercure(INCR) - 2024 Q4 - Annual Report

Headline Summary & Outlook InterCure's FY2024 results, Q1 2025 outlook, and strategic developments, including international expansion and facility recovery FY2024 Results and Q1 2025 Update Overview This section provides a high-level overview of InterCure's financial performance for FY2024, reporting NIS 239 million in revenue and NIS 24 million in Adjusted EBITDA, alongside a strong Q1 2025 outlook with expected sequential growth of over 25%. The results were impacted by the October 7th terrorist attack and the ongoing war, for which the company is receiving compensation FY2024 Financial Performance | Metric | Value (NIS Million) | | :----- | :------------------ | | Revenue | 239 | | Adjusted EBITDA | 24 | | Adjusted EBITDA Margin | ~10% | | Cash on Hand (end 2024) | 80 | | Compensation Received (until Dec 31, 2024) | 62 | | Compensation Received (to date) | 82 | | Funding Secured | 66 | | Additional Funding from Authorities | 20 | - Q1 2025 Outlook: Expected sequential growth of over 25% to over NIS 70 million[5] - Expects continued double-digit growth throughout 2025[5] - Positive Adjusted EBITDA expected for Q1 2025[5] - Impact of October 7th Attack: 2024 results were affected by damages to the southern facility caused by the terrorist attack on October 7, 2023, and the continued war in Gaza[5] - InterCure is entitled to full compensation from the Israeli authorities for all direct and indirect damages caused to the southern facility[5] Key Highlights and Strategic Developments InterCure maintained profitability for 18-19 consecutive quarters despite war impacts, expanded its strategic partnership with Cookies™ to Germany, and is actively restoring its Nir Oz facility, enabling new product launches and international expansion - Profitability: The second half of 2024 ended with positive Adjusted EBITDA and represents InterCure's eighteenth and nineteenth consecutive quarters of profitability[5] - International Expansion: InterCure announced expansion of its strategic partnership with Cookies™ to Germany and expects to launch first Cookies products in Germany during the upcoming months[5] - Facility Recovery & Product Launches: Restoring the southern facility continues at full force, enabling the Company to return to profitable growth, including exercising the Cookies agreement and expanding international operations in Germany, the UK, and beyond[5] - First launches since October 2023 of over 20 SKUs including the first Nir Oz products while experiencing solid global demand for CANNDOC products[5] - To meet up with the global demand InterCure promoting a significant development and expanding of the Nir Oz Facility in collaboration with "Tkumah" administration and other authorities in Israel[5] FY2024 Financial Performance and Milestones InterCure's FY2024 financial results, CEO remarks, operational milestones, and historical data, highlighting war impacts CEO's Remarks CEO Alexander Rabinovich highlighted InterCure's resilience in 2024 despite challenges from the October 7th attack and ongoing war, emphasizing continued revenue generation with positive Adjusted EBITDA and a focus on growth. He expressed confidence in double-digit growth, international expansion, and leadership in the pharmaceutical cannabis industry for 2025, while also hoping for peace and supporting regional recovery - Resilience & Growth Focus: Despite unprecedented challenges in 2024, including the impact of the October 7th attack on the Nir Oz facility and ongoing war in Gaza, InterCure remained resilient, generating revenues with positive Adjusted EBITDA, and focused on growth[8] - Nir Oz Recovery: Following the successful completion of NIS 66 million funding, the company is accelerating the recovery of its Nir Oz facility and has already resumed product launches from the site[8] - 2025 Outlook: As the company enters 2025, it is seeing strong demand across global markets and is confident in its ability to continue delivering double-digit growth, expand international operations, and lead the Pharmaceutical cannabis industry forward[8] - Commitment to Recovery: The company is committed to playing a meaningful role in the region's recovery and rebuilding efforts in the aftermath of tragic events[9] Detailed Financial and Operational Milestones InterCure reported annual revenue of NIS 239 million and Adjusted EBITDA of NIS 24 million for FY2024, maintaining profitability for 18-19 consecutive quarters. The company secured NIS 66 million in funding for its Nir Oz facility recovery, expanded its European footprint with Cookies™ agreements, and grew its medical cannabis pharmacy chain to 25 active locations FY2024 Financials | Metric | Value (NIS Million) | | :----- | :------------------ | | Annual Revenue | 239 | | Adjusted EBITDA | 24 | | Adjusted EBITDA Margin | ~10% | - Profitability: H2/2024 represents the eighteenth and nineteenth consecutive quarters of profitability[10] - War Compensation: InterCure received NIS 62 million until December 31, 2024 (to date, NIS 82 million) as partial advanced payments from the Israeli authorities and expects to receive additional substantial payments to cover war-related damages[10] - Cash Position: The Company ended 2024 with cash on hand of NIS 80 million[10] - European Expansion: Expands its European footprint with new strategic agreements with Cookies™, enhancing branded product offerings and expecting to launch Cookies Corners licensed pharmacies in Germany and UK, alongside differentiated online platforms[10] - Domestic Expansion: Continued expansion of the Company's dedicated medical cannabis pharmacy chain to a total of 25 active locations as of today[10] - Funding Secured: Secured Funding of NIS 66 million to support the recovery of Nir Oz Facility, which may increase to NIS 107 million to support the expansion of the facility in collaboration with the "Tkumah" administration[10] - The funding includes investments from key shareholders[10] - Future Growth & Product Pipeline: After the October 7, 2023 terrorist attack effects on revenues and operations in 2024, the Company expects to resume sequential quarterly growth during 2025[10] - As the restoration of the Nir Oz facility continues, CANNDOC will resume launching during 2025 with a pipeline of over 80 GMP SKUs, including Cookies, Binske and new brands[10] Historical Financial Data This section presents a historical overview of InterCure's revenues, net income, and Adjusted EBITDA from 2021 to 2024, highlighting the impact of the October 7th terrorist attack and the war in Gaza on 2024 and 2023 results Historical Financial Performance (2021-2024) | Metric | 2024 (NIS '000) | 2023 (NIS '000) | 2022 (NIS '000) | 2021 (NIS '000) | | :---------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues | 238,845 | 355,553 | 388,684 | 219,677 | | Net Income | (72,793) | (63,533) | 43,749 | 7,294 | | Adjusted EBITDA | 24,193 | 60,870 | 84,125 | 56,897 | - Note on 2023-2024 Results: Results for 2024 and 2023 were affected by damages to the southern facility caused by the terrorist attack on October 7, 2023, and the continued war in Gaza[11] Company Profile and Financial Definitions InterCure's market position, business model, non-IFRS measures definition, and Adjusted EBITDA reconciliation About InterCure (dba Canndoc) InterCure, operating as Canndoc, is a leading, profitable, and fast-growing cannabis company outside North America. It is Israel's largest licensed cannabis producer, offering GMP-certified, pharmaceutical-grade medical cannabis products through a vertically integrated "seed-to-sale" model and extensive distribution network - Market Position: InterCure (dba Canndoc) is the leading, profitable, and fastest growing cannabis company outside of North America[12] - Subsidiary: 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[12] - Business Model: 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[12] Non-IFRS Measures Definition This section defines Adjusted EBITDA as a non-IFRS financial measure used by InterCure. It represents earnings before interest, income taxes, depreciation, and amortization, further adjusted for changes in fair value of inventory, share-based payment expense, impairment losses, non-controlling interest, and other expenses/income. The company uses this measure to provide useful information on operating and financial performance, acknowledging it may not be comparable to similar measures from other companies - Adjusted EBITDA Definition: 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)[13] - Purpose: 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[13] - Comparability: 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[13] Adjusted EBITDA Reconciliation This section provides a detailed reconciliation of Adjusted EBITDA to net income for the years 2021 through 2024, breaking down adjustments such as financing costs, tax expenses, depreciation, share-based payments, and fair value adjustments Adjusted EBITDA Reconciliation (2021-2024) | Metric | 2024 (NIS '000) | 2023 (NIS '000) | 2022 (NIS '000) | 2021 (NIS '000) | | :------------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues | 238,845 | 355,553 | 388,684 | 219,677 | | Net Income | (72,793) | (63,533) | 43,749 | 7,294 | | Financing cost (net) | 20,116 | 19,719 | 6,786 | 9,451 | | Tax expenses | (14,530) | 2,248 | 93 | 11,441 | | Depreciation and amortization | 15,371 | 13,166 | 11,699 | 7,393 | | Share-based payments | 2,281 | 2,592 | 8,907 | 6,451 | | Other expenses (exclude other income from the Tax authorities) | 62,497 | 75,289 | 2,128 | 2,971 | | Changes in the fair value of financial assets | (340) | 666 | 174 | 1,868 | | Fair value adjustment to inventory | 5,360 | 3,244 | 3,874 | 4,858 | | Adjusted EBITDA (Consolidated) | 17,962 | 53,392 | 77,411 | 51,727 | | Non cannabis sector expenses | 6,231 | 7,479 | 6,715 | 5,170 | | Adjusted EBITDA (Cannabis Sector) | 24,193 | 60,871 | 84,126 | 56,897 | Important Disclosures Cautionary forward-looking statements, inherent risks, and contact information for InterCure Ltd Forward-Looking Statements This section contains cautionary statements regarding forward-looking information, which are based on management's assumptions and subject to risks and uncertainties. These risks include global expansion success, continued growth, market conditions, the impact of the COVID-19 pandemic, the war in Israel and Ukraine, changes in laws, public perception of the cannabis industry, and reliance on senior management expertise. Actual results may differ materially from projections - Nature of Statements: This press release contains forward-looking statements, often characterized by terminology such as "believes," "hopes," "may," "anticipates," "should," "intends," "plans," "will," "expects," "estimates," "projects," "positioned," "strategy" and similar expressions[15] - Risks and Uncertainties: Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially, including the Company's success of its global expansion plans, its continued growth, the impact of the COVID-19 pandemic, the impact of the war in Israel and the war in Ukraine, 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 senior management[15] Contacts Provides contact information for InterCure Ltd., specifically for Amos Cohen, Chief Financial Officer - Contact Person: Amos Cohen, Chief Financial Officer[16] - Email: amos@intercure.co[16]