InterCure Ltd. — FY2023 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2023; annual report filed April 30, 2024. This is an annual filing, not a standalone fourth-quarter report. Financial statements are audited under IFRS and presented in NIS; amounts below are NIS millions unless stated otherwise.
Business context
InterCure operates in medical cannabis, primarily through cultivation, production, distribution and pharmacy businesses in Israel. Its international partnerships and planned expansion remain dependent on regulatory permits; the filing says its products had not yet been distributed through its international distribution partnerships as of the report date.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | 355.6 | 388.7 |
| Gross profit before biological fair-value effects | 108.3 (30% margin) | 159.0 (41% margin) |
| Reported gross profit | 105.1 | 155.1 |
| Operating profit (loss), after impairment | (41.6) | 50.6 |
| Net comprehensive profit (loss) | (63.5) | 43.7 |
| EBITDA | (28.4) | 62.3 |
| Adjusted EBITDA | 53.4 | 77.4 |
| Cash from operating activities | (53.6) | 51.3 |
FY2023 basic and diluted loss per share was NIS 1.36, versus earnings per share of NIS 0.99 in FY2022. Net financing expense rose to NIS 19.7 million from NIS 6.8 million. The company reported NIS 67.7 million of goodwill and property, plant and equipment impairments, including NIS 63.1 million of goodwill impairment.
At year-end, cash and cash equivalents were NIS 101.1 million and restricted cash was NIS 9.7 million. Current assets were NIS 418.8 million against current liabilities of NIS 225.9 million, a reported working-capital surplus of NIS 192.9 million. Balance-sheet bank loans and current maturities totaled NIS 170.4 million; lease liabilities were NIS 25.3 million including current maturities. Total liabilities were NIS 329.6 million and total equity NIS 457.1 million. Cash and cash equivalents plus restricted cash were approximately NIS 111 million, down from NIS 246 million in 2022.
The filing also cites positive EBITDA in Q3 and Q4 of NIS 13 million and NIS 16 million, respectively, but does not clearly specify the precise quarterly EBITDA definition in that statement. Adjusted EBITDA is a non-IFRS measure and includes specified adjustments; it should not be treated as equivalent to operating cash flow or IFRS profit.
Material changes and unusual items
- Revenue fell 9% year over year. Management attributed the decline and lower gross margin largely to the October 7, 2023 attack and ensuing war, which damaged and restricted access to the Southern Facility, disrupted supply and affected production and sales. Lower-priced inventory liquidations in the market also pressured margins.
- Operating cash flow swung from positive NIS 51.3 million to negative NIS 53.6 million. Financing activities used NIS 82.9 million, primarily reflecting debt repayments and interest paid; bank-loan repayments were NIS 119.9 million and new bank borrowing was NIS 62.7 million.
- The company recorded NIS 30.1 million of government reimbursement income related to war damage. It reported receiving NIS 31.1 million in compensation by December 31, 2023 and NIS 57.3 million by April 30, 2024. At year-end it estimated a further NIS 56 million in compensation receivable; the timing and final amount remain subject to verification and collection.
- Other receivables included loans and claims tied to uncompleted transactions. The company recorded a NIS 12.2 million impairment provision on certain receivables and loans, while reporting NIS 40.5 million of such receivables after provision.
- InterCure became the 100% owner of Cannolam following an arbitration decision and transfer of minority shareholders’ shares. In January 2024, it agreed to acquire Leon Pharm in a share transaction, subject to closing conditions and regulatory approvals.
Outlook, risks and contingencies
No quantified financial guidance is provided. Management’s stated strategy is to grow its regulated-market business, develop distribution and pharmacy operations, and expand production as demand and permits allow. The Southern Facility’s access and restoration, the duration and effects of the war, and the realization of government compensation are significant uncertainties.
Other key risks include cannabis licensing and export/import approvals, evolving regulation and competition, agricultural and product-quality risks, international partnership execution, liquidity and financing needs, foreign-exchange and interest-rate exposure, and the ability to sustain margins. The company’s clinical studies have faced substantial delays; management is evaluating whether to continue parts of the program.
Material legal matters include a proposed Israeli class action alleging unlawful cannabis advertising, with claimed damages of NIS 420 million plus requested rewards and punitive damages; the company says the case is at an early stage and has not recorded a provision. A counterclaim by Cann Pharmaceutical seeks, among other relief, completion of a terminated transaction or USD 35 million in damages. Other disputes and claims are described in the filing, including a debt recovery claim against Cann Pharmaceutical; outcomes are uncertain.
The auditor issued an unqualified opinion on the IFRS financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023; the auditor did not provide an ICFR attestation, consistent with the company’s emerging-growth-company exemption.
Most important facts for investors to verify
- Progress, access and operating capacity at the Southern Facility, and the amount and timing of remaining war-related compensation.
- Cash conversion, working-capital needs, debt maturities and interest costs after the sharp reversal in operating cash flow.
- The basis and reconciliation of Adjusted EBITDA, including the substantial gap between FY2023 adjusted EBITDA and IFRS EBITDA.
- Whether receivables from counterparties and uncompleted transactions are collectible, and the status of major litigation and counterclaims.
- Whether international distribution plans, German market entry and the Leon Pharm acquisition proceed, and on what economics and regulatory terms.
- The filing indicates the financial statements reflect correction of an error; verify the nature, period and financial impact of that correction in the full filing and notes.