Business Context and Reporting Period
Company: Intercure Ltd. (INCR)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Overview: Intercure is an Israeli public corporation engaged in the production, manufacturing, and distribution of pharmaceutical-grade cannabis and cannabis-based products for medical use. The company operates two main production facilities in Israel (Northern and Southern) and a chain of private pharmacies. The reporting period was significantly impacted by the ongoing war in Israel, specifically the October 7, 2023 attacks which devastated the Southern Facility in Nir Oz. As of year-end, the company is in the process of restoring the Southern Facility and has received advance compensation payments from Israeli authorities.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (NIS '000s) | 2024 (NIS '000s) |
|---|---|---|
| Revenue | 270,200 | 238,845 |
| Gross Profit | 33,181 | 30,233 |
| Net Loss | (36,784) | (72,793) |
| Adjusted EBITDA | 41,616 | Not explicitly stated (Positive) |
| Operating Cash Flow | 16,841 | (66,926) |
| Cash & Equivalents (End of Period) | 46,466 | 78,318 |
| Total Debt (Current + Non-Current) | 148,262 | 183,414 |
Note: All figures are in thousands of New Israeli Shekels (NIS). Adjusted EBITDA for 2025 was reported as NIS 41.6 million (Consolidated) and NIS 46.6 million (Cannabis Sector).
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by 13% to NIS 270.2 million, driven by the resumption of production and sales from the Southern Facility and the first significant revenue contributions from the German market.
- Net Loss Reduction: The consolidated net loss improved significantly, decreasing from NIS 72.8 million in 2024 to NIS 36.8 million in 2025. This improvement was aided by government compensation income and efficiency improvements.
- Cash Flow Turnaround: Operating cash flow turned positive at NIS 16.8 million, compared to a negative NIS 66.9 million in 2024, attributed to higher revenues and a decrease in net working capital.
- Debt Reduction: Total bank loans decreased due to repayments, though the company secured a new NIS 30 million non-secured loan in late 2024/early 2025 to support recovery.
- Impairment: No goodwill impairment was recognized in 2025, as the recoverable amount of the cash-generating unit exceeded its carrying amount.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management is focused on the rehabilitation and expansion of the Southern Facility, aiming to triple its capacity. The company is executing a global expansion strategy, with a specific focus on the German market following the enactment of the Cannabis Act. A private placement in March 2025 raised approximately NIS 35.5 million to support these recovery and expansion efforts.
Key Risks & Contingencies:
- Geopolitical Instability: Ongoing hostilities in the Middle East, including conflicts with Hamas, Hezbollah, and Iran, pose significant risks to operations, supply chains, and personnel availability (reserve duty). The Southern Facility remains in a recovery phase.
- Regulatory Approvals: The company's ability to export and import products depends on obtaining and maintaining permits from the Israeli Medical Cannabis Agency (IMCA) and foreign regulators. Delays in regulatory approvals for CBD products in Israel and export permits could hinder growth.
- Nasdaq Compliance: The company received a notice from Nasdaq in February 2026 regarding non-compliance with the minimum bid price requirement ($1.00). It has 180 days to regain compliance or face delisting.
- Legal Proceedings: The company is involved in several lawsuits, including a significant dispute with Cann Pharmaceutical Ltd. (counterclaim of over NIS 100 million, though procedurally struck out) and restructuring proceedings involving a major partner, Bazelet Group (claim of approx. NIS 27-29 million).
- Anti-Dumping Duties: A 175% anti-dumping duty on Canadian medical cannabis imports was proposed and accepted by the Minister of Economy in 2025, though the Minister of Finance objected. This could impact import costs and competitive dynamics.
Investor Verification Checklist
- War Compensation Status: Verify the timeline and certainty of receiving the remaining compensation from Israeli authorities for the Southern Facility damages (NIS 243 million claimed for inventory/assets).
- Nasdaq Delisting Risk: Monitor the company's progress in meeting the $1.00 minimum bid price requirement by August 24, 2026.
- Southern Facility Recovery: Assess the physical progress of the Southern Facility restoration and the timeline for full operational capacity.
- German Market Entry: Confirm the status of regulatory approvals and commercial launch in Germany, a key growth driver.
- Bazelet Restructuring: Track the outcome of the Bazelet Group restructuring proceedings and the recoverability of the NIS 27+ million claim.
- Anti-Dumping Duty Finality: Determine the final status of the 175% anti-dumping duty on Canadian imports and its impact on supply chain costs.