Intercure(US:INCR)2023-04-04 22:56Financial Data and Key Metrics Changes - In 2022, the company achieved record revenues of approximately $150 million, representing a 77% increase compared to $85 million in 2021 [40][42] - Adjusted EBITDA for 2022 was $32 million, or 22% of revenue, compared to $22 million in 2021 [45][40] - Gross margin for 2022 was 41%, down from 44% in 2021, with a gross profit exceeding $60 million [18][40] Business Line Data and Key Metrics Changes - Patient count grew by only 18% in 2022, while the company’s revenue grew by 77%, indicating strong market share growth [5][40] - The company expanded its pharmacy chain to 28 locations, with 20 actively dispensing medical cannabis [42][39] - The company reported a record fourth quarter revenue of $41 million, a 30% increase from the fourth quarter of 2021 [43][40] Market Data and Key Metrics Changes - The Israeli Ministry of Health expects the cannabis market to grow to 85 tons in 2023, up from 49 tons in 2022, marking an expected growth of over 70% [13][37] - The company noted that the market is currently about 70% high-quality products and 30% discounted products, with a trend of struggling companies exiting the market [24][49] Company Strategy and Development Direction - The company aims to expand its international supply chain and has developed two new locations outside Israel, including a Cookies branded shop in Vienna and a pharmacy in London [7][6] - The focus remains on execution, expansion, and building a vertically integrated model centered on high-quality branded products [42][16] - The company plans to launch branded products in Germany and the UK, where prices are significantly higher than in Israel, potentially improving gross profit margins [26][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upcoming prescription reform in Israel, which is expected to eliminate the bottleneck of physician prescribing licenses and significantly increase market access [61][59] - The company is prepared for the anticipated market growth and has scaled up operations and supply agreements with international partners [33][46] - Management acknowledged the current financial weakness in the industry but expects market consolidation and recovery as struggling companies exit [18][31] Other Important Information - The company ended 2022 with $95 million in cash and a solid balance sheet, demonstrating strong cash flow generation [46][40] - Capital expenditures in 2022 totaled $18 million, with expectations for 2023 to be at least 50% lower as the focus shifts to global expansion [20][21] Q&A Session Summary Question: Can you provide insights on the dynamics in the Israeli market? - Management indicated that the market is approximately 70% high-quality and 30% discounted products, with struggling companies affecting prices [24][49] Question: What are the expectations for international progress? - Management noted that while progress has been slow, they are taking careful steps and see Germany as a key target market [28][26] Question: How will the prescription reform impact market access? - The reform will allow any physician under the public health system to prescribe medical cannabis, expected to significantly increase market size [61][59] Question: What is the outlook for gross margins? - Management expects potential recovery in gross margins as the market cleans up and high-quality products are introduced in new territories [50][51] Question: How does the company plan to handle potential market growth? - The company has scaled up operations and signed agreements with third parties to prepare for increased demand [33][46]