UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE MONTH OF AUGUST 2023
COMMISSION
FILE NUMBER 001-40614
INTERCURE
LTD.
(Translation
of registrant’s name into English)
85
Medinat ha-Yehudim Street
Herzliya,
4676670, Israel
Tel:
+972 77 460 5012
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form
20-F ☒ Form 40-F ☐
On
August 31, 2023, Intercure Ltd. (the “Company”) issued a press release announcing its financial results for the six months
ended June 30, 2023. Attached hereto are the following exhibits:
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
Intercure Ltd. |
|
|
|
|
By: |
/s/
Amos Cohen |
|
Name: |
Amos
Cohen |
|
Title: |
Chief
Executive Officer |
Date:
August 31, 2023
Exhibit 99.1
InterCure
Announces Record Revenues First Half of 2023 with over 14% growth YOY
Achieved
record revenues of NIS 209 million ($75 million)1 for the first half of 2023
Annualized
revenue run rate of NIS 417 million ($149 million)
Adjusted
EBITDA2 of NIS 30 million ($11 million)
Generated
NIS 35 million ($13 million) cash from operations in the second quarter
Strong
balance sheet with over NIS 116 million ($42 million) cash
and
financial assets3 of NIS 71 million ($25 million)
NEW
YORK, and HERZLIYA, Israel – Aug 31, 2023 – InterCure Ltd. (NASDAQ: INCR) (TASE: INCR) (dba Canndoc)(“InterCure”
or the “Company”) is pleased to announce its financial and operating results for the six months ended June 30, 2023. All
amounts are expressed in New Israeli Shekels (NIS) or Canadian dollars ($), unless otherwise noted.
Second
Quarter and First Half 2023 Key Financial Highlights
| ● | Record
revenue of NIS 209 million ($75 million) for first half of 2023 and NIS 102 ($36 million)
for the second quarter of 2023, representing YOY growth of over 14% and 8% respectively. |
| ● | Seventh
consecutive half year growth representing an Annualized revenue run rate of NIS 417 million
($149 million). |
| ● | Gross
profit of NIS 68 million ($24 million), 33% of revenue, for first half of 2023 and NIS 33
million ($12 million), 32% of revenue for the second quarter. |
| ● | EBITDA2
of NIS 30 million ($11 million) for first half of 2023, representing 14% of revenue
and NIS 14 million ($5 million) for the second quarter. |
| ● | Generated
positive NIS 35 million ($13 million) cash from operations in the second quarter and a negative
NIS 17 million ($6 million) for the first half. |
| ● | Cash
and restricted cash at period end of over NIS 116 million ($42 million) and financial assets3
of NIS 71 million ($25 million). As the interest rate environment is changing,
we are constantly revising our financing structure. During the first half of 2023 we voluntarily
repaid loans of NIS 86 million ($31 million). |
Second
Quarter and First Half 2023 Key Operating Highlights
| ● | Sustained
market share growth during first half of 2023 due to solid demand for Canndoc’s branded
products with more than 20 new SKU’s successful launches during the period marking
Intercure’s leading position in all categories. |
| ● | The
cultivation operation successfully added 18 new highly demanded strains into its growth cycles.
Including new high THC Humbolt cultivars. These are expected to launch during the third and
fourth quarters. |
1
All amounts are expressed in New Israeli Shekels (NIS) or Canadian Dollar ($).
2
Means EBITDA for the cannabis sector 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).
3
Financial assets are mainly debts and loans included in other receivables.
| ● | Signing
collaboration agreement (in the form of a license agreement) with legendary boxer, entrepreneur,
and cannabis advocate Mike Tyson’s premium cannabis brand. Under the terms of
the agreement, InterCure will be granted the right on exclusive basis to cultivate, manufacture,
sell, market and distribute all approved products and brands of TYSON 2.0 In Israel, Germany,
France Australia and the United Kingdom. InterCure will also have the right to use the name,
the marks and the TYSON 2.0 intellectual property in the said territories. |
| ● | Announced
a voluntary delisting of our ordinary shares from the Toronto Stock Exchange, due to the
fact that maintaining the listing did not offer substantial benefits to InterCure and its
shareholders. InterCure’s shares continue to be trade on Nasdaq and the Tel Aviv
Stock Exchange. |
| ● | on August 7, 2023 the minister of health announced a new reform of
the Israeli medical cannabis regulations. The new regulations are set to revolutionize the process of prescribing medical cannabis to
patients by allowing physicians to prescribe medical cannabis as the first line of treatment (for the first time). In addition, the new
regulations will eliminate bottlenecks that have been burdened the industry during the last years. This includes easing cultivation, manufacturing
and exportation procedures and regulations. Additionally matching the GMP standards between Israel and Europe and transition to self-regulation
similar to the Israeli pharmaceutical industry. The new reform also set a process for the introduction of new formats like vapes, edibles,
extracts and other non-flower formats. Furthermore, the reform set a date of February 2024 to reschedule CBD out of the narcotic law which
will allow CBD based products to be sold over the counter. |
| ● | The
new reform is expected to put into effect within the next coming months and it is expected
to increase the number of patients and the demand for medical cannabis products after a long
period of stagnation in the Israeli market. As we updated in the previous quarter, financially
struggling companies and companies exiting the market continue to liquidize low-to-medium
quality inventories at lower prices. This had an impact primarily on our ultra-medical and
legacy products. |
| ● | On
June 15, 2023, Tel Aviv-Jaffa District Court dismissed the lawsuit against Intercure and the parties agreed on a binding arbitration
process in which the amount owed to Intercure and the parties will be determined and paid as part of a full separation process.
According to the company’s position, Cannolam owes Intercure tens of NIS millions (which are not included in the financial assets
mentioned) and Intercure’s claim has been submitted to an arbitrator who is expected to rule within the next month. The separation
process has a negative effect on the performance of Cannolam that could not be evaluated at this time, Intercure intends to exhaust
its full rights against the minority shareholders of Cannolam. Previously, on April 24, 2023, a lawsuit was filed against Intercure
in Tel Aviv-Jaffa District Court in Israel by minority shareholders of our subsidiary, Cannolam. The lawsuit relates to
disagreements concerning the ongoing management of Cannolam. Intercure has conducted a preliminary review of the claims made by the
minority shareholders and find that they lack a valid legal basis. |
| ● | Commercial
launches of our GMP products in UK and Germany expected during the fourth quarter of 2023
and the first quarter of 2024 as registration process are undergoing. |
“First
half of 2023 is another solid performance for Inercure, with year-over-year revenue growing 14% to $ million and adjusted EBITDA
margin of 14%. I am proud of our team ability to execute despite some challenging market conditions when big players are exiting the
space.” said InterCure CEO Alexander Rabinovitch. In the second quarter we generated $31 million in operating cash flow
and ended the quarter with $42 million of cash and $25 of financial assets on our balance sheet. We continue to optimize our
operations for continued growth supported by our leading position. We are encouraged from the new regulations in Israel and Germany
as pharmaceutical cannabis becoming a world standard across Europe and many other territories. We are also keeping an open eye on
the U.S. Department of Health and Human Services scientific and medical evaluation, supporting cannabis to be classified as a
Schedule III drug by the DEA and the opportunities it may generate to Intercure.”
Half
Year Revenues 2020 to 2023
Key
Quarterly Financial Highlights – Cannabis Sector
| |
H1-23 | | |
H2-22 | | |
H1-22 | | |
H2-21 | | |
H1-21 | |
Revenues | |
| 208,614 | | |
| 206,178 | | |
| 182,506 | | |
| 141,396 | | |
| 78,281 | |
Gross Profit (1) | |
| 67,945 | | |
| 81,558 | | |
| 77,399 | | |
| 61,295 | | |
| 34,694 | |
GP Margin | |
| 33 | % | |
| 40 | % | |
| 42 | % | |
| 43 | % | |
| 44 | % |
Adjusted EBITDA(2) | |
| 29,669 | | |
| 40,714 | | |
| 43,411 | | |
| 35,132 | | |
| 21,765 | |
Adjusted EBITDA(2) Margin | |
| 14 | % | |
| 20 | % | |
| 24 | % | |
| 25 | % | |
| 28 | % |
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. |
About
InterCure (dba Canndoc)
InterCure
(dba Canndoc) (NASDAQ: INCR) (TASE: INCR) is the leading, profitable, and fastest growing cannabis company outside of North America.
Canndoc, a wholly owned subsidiary of InterCure, is Israel’s largest licensed medical cannabis producer and one of the first
to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products. InterCure leverages its
international 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.
For
more information, visit: http://www.intercure.co.
Non-IFRS
Measures
This
press release makes reference to certain non-IFRS financial measures. Adjusted EBITDA, as defined by InterCure, means 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). 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. InterCure’s method of calculating this measure may differ from methods used by other entities and
accordingly, this measure may not be comparable to similarly titled measured used by other entities or in other jurisdictions. 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. A reconciliation of Adjusted EBITDA to an IFRS measure (revenue), which is incorporated by reference
to this press release, is available in InterCure’s MD&A included in our Annual Report on Form 20-F under the heading “Results
of Operation”, available under the Company’s profile on SEDAR at www.sedar.com.
Forward-Looking
Statements
This
press release may contain forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating
to InterCure’s objectives plans and strategies, as well as statements, other than historical facts, that address activities, events
or developments that InterCure intends, expects, projects, believes or anticipates will or may occur in the future. These statements
are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,”
“should,” “intends,” “plans,” “will,” “expects,” “estimates,”
“projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and assessments
made in light of management’s experience and perception of historical trends, current conditions, expected future developments
and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to
risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many
factors could cause InterCure’s actual activities or results to differ materially from the activities and results anticipated in
forward-looking statements, including, but not limited to, the following: the Company’s future revenue growth and profitability,
the success of its global expansion plans, its continued growth, the expected operations, financial results business strategy, competitive
strengths, goals and expansion and growth plans, expansion strategy to major markets worldwide, the impact of the COVID-19 pandemic and
the war in Ukraine, macro economic factors (including inflation) and uncertainty created as a result of the socio-political situation
in Israel. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many
of which are beyond InterCure’s control, which could cause actual results and events to differ materially from those that are disclosed
in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: changes in general economic,
business and political conditions, changes in applicable laws, the U.S. regulatory landscapes and enforcement related to cannabis, changes
in public opinion and perception of the cannabis industry, reliance on the expertise and judgment of senior management, as well as the
factors discussed under the heading “Risk Factors” in InterCure’s Annual Information Form for the year ended December
31, 2022, which is available on SEDAR at www.sedar.com, and under the heading “Risk Factors” and “Cautionary Note Regarding
Forward-Looking Statements” in the registration statement on Form 20-F, filed with the Securities Exchange Commission on May 1,
2023. InterCure undertakes no obligation to update such forward-looking information, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Contact:
Amos
Cohen, Chief Financial Officer (Amos@intercure.co)
CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As
of June 30, 2023 (Unaudited)
Condensed
Consolidated Interim Statements of Financial Position
| |
For the 6-months ended on June 30 | |
| |
NIS in thousands | |
| |
2023 | | |
2022 | |
| |
(Unaudited) | | |
(Audited) | |
ASSETS | |
| | |
| |
| |
| | |
| |
CURRENT ASSETS: | |
| | | |
| | |
Cash and cash equivalents | |
| 102,653 | | |
| 232,589 | |
Restricted cash | |
| 13,788 | | |
| 13,907 | |
Trade receivables, net | |
| 42,623 | | |
| 36,919 | |
Other receivables | |
| 91,747 | | |
| 97,375 | |
Inventory | |
| 136,443 | | |
| 120,133 | |
Biological assets | |
| 7,058 | | |
| 6,365 | |
Financial assets measured at fair value through profit or loss | |
| 192 | | |
| 205 | |
Total current assets | |
| 394,504 | | |
| 507,493 | |
| |
| | | |
| | |
NON-CURRENT ASSETS: | |
| | | |
| | |
Property, plant and equipment and right-of-use asset | |
| 96,970 | | |
| 103,133 | |
Goodwill | |
| 284,181 | | |
| 284,181 | |
Deferred tax assets | |
| 23,625 | | |
| 20,635 | |
Financial assets measured at fair value through profit or loss | |
| 2,565 | | |
| 2,565 | |
Investment in associate and loan | |
| 40,000 | | |
| 40,000 | |
Total non-current assets | |
| 447,341 | | |
| 450,514 | |
| |
| | | |
| | |
TOTAL ASSETS | |
| 841,845 | | |
| 958,007 | |
| |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Short term loan and current maturities | |
| 56,521 | | |
| 126,935 | |
Trade payables | |
| 104,605 | | |
| 126,067 | |
Other payables | |
| 39,524 | | |
| 48,397 | |
Contingent consideration | |
| 6,145 | | |
| 10,230 | |
Short term loan from non-controlling interest | |
| 957 | | |
| 1,090 | |
Total current liabilities | |
| 207,752 | | |
| 312,719 | |
| |
| | | |
| | |
LONG-TERM LIABILITIES: | |
| | | |
| | |
Long term loans | |
| 84,067 | | |
| 99,684 | |
Liabilities in respect of employee benefits | |
| 1,079 | | |
| 1,025 | |
Lease liability | |
| 21,295 | | |
| 23,102 | |
Total long-term liabilities | |
| 106,441 | | |
| 123,811 | |
| |
| | | |
| | |
EQUITY: | |
| | | |
| | |
Share capital, premium and other reserves | |
| 634,383 | | |
| 632,025 | |
Capital reserve for transactions with controlling shareholder | |
| 2,388 | | |
| 2,388 | |
Receipts on account of shares | |
| 8,541 | | |
| 8,541 | |
Accumulated losses | |
| (136,552 | ) | |
| (141,649 | ) |
Equity attributable to owners of the Company | |
| 508,760 | | |
| 501,305 | |
| |
| | | |
| | |
Non-controlling interests | |
| 18,892 | | |
| 20,172 | |
TOTAL EQUITY | |
| 527,652 | | |
| 521,477 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND EQUITY | |
| 841,845 | | |
| 958,007 | |
Condensed
Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income
| |
For the 6-months ended on June 30 | | |
Year ended
December 31 | |
| |
NIS in thousands | |
| |
2023 | | |
2022 | | |
2022 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Audited) | |
| |
| | | |
| | | |
| | |
Revenue | |
| 208,614 | | |
| 182,506 | | |
| 388,684 | |
Cost of revenue before fair value adjustments | |
| 140,669 | | |
| 105,107 | | |
| 229,727 | |
| |
| | | |
| | | |
| | |
Gross income before impact of changes in fair value | |
| 67,945 | | |
| 77,399 | | |
| 158,957 | |
| |
| | | |
| | | |
| | |
Unrealized changes to fair value adjustments of biological assets | |
| 4,339 | | |
| 7,881 | | |
| 13,054 | |
Loss from fair value changes realized in the current year | |
| 5,316 | | |
| 2,270 | | |
| 16,928 | |
| |
| | | |
| | | |
| | |
Gross Profit | |
| 66,968 | | |
| 83,010 | | |
| 155,083 | |
| |
| | | |
| | | |
| | |
Research and development expenses | |
| 256 | | |
| 338 | | |
| 632 | |
General and administrative expenses | |
| 21,856 | | |
| 16,958 | | |
| 36,082 | |
Sales and marketing expenses | |
| 27,800 | | |
| 24,112 | | |
| 56,533 | |
Other expenses, net | |
| 2,919 | | |
| 1,124 | | |
| 2,128 | |
Changes in the fair value of financial assets through profit or loss, net. | |
| 12 | | |
| 123 | | |
| 174 | |
Share based payments | |
| 2,358 | | |
| 2,441 | | |
| 8,907 | |
| |
| | | |
| | | |
| | |
Operating Profit | |
| 11,767 | | |
| 37,914 | | |
| 50,627 | |
| |
| | | |
| | | |
| | |
Financing income | |
| 2,252 | | |
| 8,805 | | |
| 8,170 | |
Financing expenses | |
| 11,842 | | |
| 6,099 | | |
| 14,955 | |
| |
| | | |
| | | |
| | |
Financing expenses (income), net | |
| 9,590 | | |
| (2,706 | ) | |
| 6,785 | |
| |
| | | |
| | | |
| | |
Profit before tax on income | |
| 2,177 | | |
| 40,620 | | |
| 43,842 | |
| |
| | | |
| | | |
| | |
Tax (expense) benefit | |
| 1,640 | | |
| (10,445 | ) | |
| (93 | ) |
Total comprehensive Profit (loss) | |
| 3,817 | | |
| 30,175 | | |
| 43,749 | |
| |
| | | |
| | | |
| | |
Profit (loss) attributable to: | |
| | | |
| | | |
| | |
Owners of the Company | |
| 5,097 | | |
| 29,012 | | |
| 44,819 | |
Non-controlling interests | |
| (1,280 | ) | |
| 1,163 | | |
| (1,070 | ) |
Total | |
| 3,817 | | |
| 30,175 | | |
| 43,749 | |
| |
| | | |
| | | |
| | |
Interest / Financing expense (income) net | |
| 9,590 | | |
| (2,706 | ) | |
| 6,785 | |
Tax expenses (benefit) | |
| (1,640 | ) | |
| 10,445 | | |
| 93 | |
Depreciation and amortization | |
| 6,442 | | |
| 4,629 | | |
| 2,354 | |
EBITDA | |
| 18,209 | | |
| 42,543 | | |
| 52,981 | |
Share-based payment expenses | |
| 2,358 | | |
| 2,441 | | |
| (2,004 | ) |
Other expenses (income(, net | |
| 2,919 | | |
| 1124 | | |
| 2128 | |
Impairment losses and (gains) on financial assets through profit and loss | |
| 12 | | |
| 123 | | |
| 174 | |
Fair value adjustment to inventory | |
| 977 | | |
| (5611 | ) | |
| (3527 | ) |
Adjusted EBITDA | |
| 24,475 | | |
| 40,620 | | |
| 49,752 | |
| |
| | | |
| | | |
| | |
Earnings per share | |
| | | |
| | | |
| | |
Basic earnings | |
| 0.11 | | |
| 0.64 | | |
| 0.99 | |
Diluted earnings | |
| 0.11 | | |
| 0.64 | | |
| 0.99 | |
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