InterCure: Cannabis Play That’s Ready To POP.
Summary
- Steady growth Revenue for Q1 $10.32 mil USD and Q2 $14.13 mil USD.
- Steps away from decriminalization of cannabis in Israel.
- International Import/Export Partnerships with access to Europe and Canada.
- Just listed on NASDAQ.
About:
InterCure is rapidly growing leader and the most profitable Israeli cannabis company. Canndoc, a wholly owned subsidiary of InterCure, is Israel's largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products. InterCure leverages its market leading distribution network, best in class international partnerships and a high-margin vertically integrated "seed-to-sale" model to be the most profitable cannabis company globally outside of North America.
Some Financial Highlights:
Another great quarter for this “not very known” cannabis stock. Lets take a look:
- Revenue as of “June 30th 2021” is $24,5 mil USD for the past 6 months. If we are doubling it for next 6 months, that will bring revenue to $49 mil USD for a year. With 42.7 mil shares outstanding. That will be $1.15/Share.
- As of “Dec 31 2020” Revenue was $20,31 mil USD for a year on 2020. InterCure already made more in 6 months and will probably double that in the next 6 months.
- Positive cash flow from operations for the fourth consecutive quarter.
- Cash on the balance sheet, as of “June 30,21” $62.16 mil USD. With 42.7 mil shares outstanding, that is $1.46 cash/share. Due to SPAC.
- Revenue Q2-21 (14,13 mil USD) an increase of 27% from Q1-21 (10,32 mil USD).
- Current Ratio of 3.09 June 30th 2021 and a Quick Ratio of 2.8
- EV/Sales Dec 2020 15.27. EV/Sales for 2021 6.33 (after doubling 6 months revenue)
- Continued to grow market share due to solid demand for Canndoc's branded products, expansion of its medical cannabis dispensing operation and continued improvement across all facets of the business, including same store sales (SSS) increase.
- Added three additional medical cannabis licensed pharmacies during the quarter, bringing the total retail locations to eight. Expansion of the Company's medical cannabis dispensing operation is expected to continue and accelerate in the third quarter and throughout the remainder of 2021.
- Solid international demand for InterCure's GMP branded products expected to boost global expansion as Ministry of Economy announced easing regulation for medical cannabis exportation.
- Legalization of adult use cannabis and CBD products in Israel progresses as a new government sworn into office in June 2021.
Strategic Partnerships:
“In late June 2021, the InterCure was one of the first and only Israeli licensed producers to meet the new standards set by the IMCA (Act 109) and successfully resumed importation of medical cannabis from its exclusive strategic partner Tilray. Importation is expected to continue and accelerate throughout the third quarter and the rest of 2021.
Source: Intercure.ca Second quarter Financial Results.
InterCure is making great progress to fulfil domestic demand, while expending into Europe, by making strategic partnerships:
Tilray – In Dec 2019 strategic collaboration was established to provide InterCure with access to existing and potential markets in Tilray’s operating territories. Tilray Portugal will import GMP-quality medical cannabis products from InterCure. The Tilray Agreements provide InterCure with a seven-and-a-half year exclusivity period over all of the final Tilray-branded products sold in Israel.
Organigram – June 2020 collaboration to import and export medical cannabis products in the state of Israel and across Europe. Agreement states that InterCure will produce and market medical cannabis products imported from Organigram in pharmacies throughout Israel and Europe.
Aphria – August 2020 Agreement of importing 3000 kg into Israel, with an option to import up to 6000 kg for two additional periods of two years each.
Charlotte’s Web – Dec 2020 agreement, which made InterCure the sole partner in Israel, marketing under a joint brand in Israel. Agreement is for 5 years.
Fortmer – Dec 2020 Agreement with Uruguay cultivator. Fortmer Agreement provides us with a seven-and-a-half year exclusivity period over all of the final Fortmer branded products sold in Israel.
When will cannabis be decriminalized in Israel?
“As of April 1, 2019, Israel decriminalized the use of cannabis for citizens over the age of 18 when used in private. Possession of a home-grown marijuana plant and buds are no longer a punishable offence.” – But that does not mean it is fully decriminalized."
Source: Forbes Israel Decriminalizes Cannabis
"Decriminalization bill failed on July 28th, 2021 in Knesset due to opposition. Vote failed 52-55. When the Haskel’s bill will be passed, it will allow “Israeli adults to possess up to 50 grams of marijuana and to grow up to 15 plants for personal use.”
Source: The Times of Israel
When cannabis will be fully decriminalized? We still don’t know, but the movement will not slow down. Vote failed 52-55 such close gap signals for inevitable bill pass.
Israeli demand for cannabis is growing:
Aug 2019, 50k Active licenses and Aug 2020, 75k active licenses a 33% increase. Demand for Flower went from ~1400 kg in Aug 2019 to 2000 kg in Aug 2020 a 30% increase. That is consistent with license increase.
Let’s talk about Ehud Barak a Chairman of the Board.
It is always nice to see familiar CEO or a member of the board. It is even better if that member of the board is an ex-Prime Minister.
Ehud Barak has served on InterCure’s board of directors as Chairman since March 2019. Mr. Barak also currently serves on the board of three other Israeli companies: Carbyne Ltd., Guardicore Ltd. and Cypertoka Ltd. Mr. Barak served as the tenth Prime Minister of Israel from 1999 to 2001. Before being elected Prime Minister, Mr. Barak completed an illustrious 36-year career in the Isreali Defence Forces (the “IDF”), as the most decorated soldier in its history. Mr. Barak served in top positions in the IDF, including Head of Planning, Head of Military Intelligence, Commander of the Central Command and Deputy Chief of General Staff.
Source: InterCure Board of Directors
NASDAW listing:
As I am writing this article InterCure trades on Israeli stock exchange under INCR and Toronto Exchange under IRCLF or INCR.U. It was listed on NASDAQ Sept 01 under INCR and had a 15% pop. Being just listed on NASDAQ and “fairly unknown” gives us a unique opportunity.
Conclusion:
There are quite a few catalysts that will happen to drive this stock up. At great value, this should be a winner.
- Decriminalization of cannabis in Israel.
- Growing revenue.
- Expansion to European markets.
- Signed agreement with local pharmacies for distribution
- Listing on NASDAQ.
Analyst's Disclosure: I/we have a beneficial long position in the shares of INCR either through stock ownership, options, or other derivatives.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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