InterCure Ltd.

InterCure reported full-year 2022 revenue of $150 million, or NIS389 million, up 77% from $85 million in 2021. Fourth-quarter revenue was $41 million, or NIS106 million, versus $31 million, or NIS80 million in Q4 2021, and up 6% sequentially from Q3 2022. Full-year gross margin was 41% versus 44% in 2021; management also said gross margin in the first quarter was 35%. Adjusted EBITDA was $32 million, or NIS84 million, up from $22 million in 2021, and operating cash flow was $20 million with year-end cash of $95 million. Looking ahead, management gave no formal guidance, but said 2023 capex should be at least 50% lower than 2022, pharmacy locations should grow to about 35, and commercial exports to Germany, the UK and other territories should ramp in coming quarters.

CEO Alexander Rabinovitch framed 2022 as a strong year of profitable growth, saying InterCure solidified its position as the largest, fastest-growing and profitable cannabis company outside North America. He emphasized the company’s vertically integrated model, expansion in cultivation and pharmacy locations, and progress in international supply chains and branded product launches. His tone was optimistic but cautious on timing, repeatedly saying the Israeli reform and market cleanup should help, but that he could not pinpoint the exact quarter of inflection.

CFO Amos Cohen highlighted record full-year revenue of $150 million and adjusted EBITDA of $32 million, with revenue growth outpacing patient growth. He said gross margin for 2022 was 41% versus 44% in 2021, and noted pricing pressure from distressed competitors selling low- to mid-quality inventory below cost, which affected ultra-medical and legacy products. He also pointed to $18 million of 2022 capex, $20 million of operating cash flow, and $95 million in cash at year-end, while saying 2023 capex should be at least 50% lower than 2022 and roughly 70% of capex is funded with long-term Israeli bank loans.

Analysts focused on Israeli market pricing, asking how much current discounting is temporary and how it affects margins. Management said the market mix is still roughly 70% high-quality and 30% discounted product, and they expect the cleanup from distressed sellers to occur by the middle of the second half of 2023. Questions also centered on the prescription reform and whether the company could handle a potential 70% market demand increase; management said it has already scaled cultivation and supply partnerships and believes it is prepared, though timing remains uncertain. On Europe, management said Germany and the UK are still early-stage opportunities, but they expect better margins there than in Israel because pricing is higher.