InterCure Stock: Under-the-Radar Pot Company Reports Stellar Q4 & Full-Year Results

Undervalued InterCure Ltd Poised for Massive Growth

For the most part, cannabis stock investors have their eyes on the U.S. market, waiting for marijuana to finally be decriminalized at the federal level.

But there’s more to the marijuana market than North America. Countries on other continents have been following the lead of Canada and Mexico in legalizing the drug. The well-established pot companies in various countries are poised to make big gains when recreational cannabis is finally legalized at the federal level in the U.S.

One of the most compelling marijuana plays, without question, is InterCure Ltd (NASDAQ:INCR), the most profitable and fastest-growing cannabis company outside North America. Canndoc, a wholly owned subsidiary of InterCure, is Israel’s largest licensed cannabis producer.

Israel is considered one of the global leaders in medical marijuana research and innovation. In July 2020, Israel surpassed Germany as the world’s biggest importer of medical cannabis flower. (Source: “Israel Passes Germany as World’s Largest Importer of Medical Cannabis Flower,” MJBizDaily, December 17, 2021.)

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The boost was thanks in large part to a 2019 reform in Israel that made it easier for doctors to prescribe marijuana to people suffering from conditions such as chronic pain, cancer, post-traumatic stress disorder (PTSD), Parkinson’s disease, Tourette Syndrome, and epilepsy. (Source: “Is Cannabis Legal in Israel?The Cannigma, September 13, 2021.)

While recreational cannabis is technically illegal in Israel, the country has implemented decriminalization policies for small-scale possession. Some Israeli lawmakers support decriminalizing recreational marijuana and expunging the criminal records of those who have been convicted of minor possession charges.

According to some sources, as much as 27% of the adult population in Israel uses cannabis.

As Israel’s largest cannabis company, InterCure Ltd is well positioned to capitalize on both the medical and recreational cannabis markets in the country.

InterCure Ltd reported stellar fourth-quarter financial results, which showed that the company captured 30% of Israel’s market share for medical cannabis. Subsequent to the end of the fourth quarter, the company added three new medical cannabis pharmacies, bringing its total to 23.

Despite the company’s strong foothold and record results, INCR stock hasn’t been performing as well as one might expect. As of this writing, the stock is down by seven percent over the last six months and down by 3.5% year-to-date.

InterCure Ltd’s outlook is bright, though. Analysts’ average 12-month price target for InterCure stock is $8.66, and their high estimate is $10.31. That points to potential gains in the range of 39% to 65%.

Chart courtesy of StockCharts.com

About INCR Stock

InterCure Ltd, doing business as Canndoc, produces dried cannabis inflorescences and cannabis extracts mixed with oil. The company also invests in the biomedical sector.

Over the last few months, InterCure Ltd has announced a number of partnerships and an acquisition.

In February, the company announced that it had signed a definitive agreement to acquire Cann Pharmaceutical Ltd., an Israeli-based, multinational medical cannabis company, also known as Better. (Source: “InterCure Signs Definitive Agreement to Acquire Multi-National Medical Cannabis Producer ‘Better‘,” InterCure Ltd, February 16, 2022.)

Through the $35.0-million acquisition, InterCure will gain Better’s unique marijuana strains, cultivation site, intellectual property, and commercial operations in Israel and elsewhere.

In early March, InterCure announced a new partnership with Altman Health, a nutritional supplement company whose products are available in more than 1,700 points of sale, including all major pharmacies in Israel. (Source: “InterCure Announces Partnership With Altman Health,” InterCure Ltd, March 1, 2022.)

The partnership will focus on the new Israeli cannabidiol (CBD) market, following the Israeli minister of health’s announcement that CBD will be removed from the country’s Dangerous Drugs Act.

InterCure Ltd’s partnership with Altman Health will register, manufacture, market, and distribute CBD products—including Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) products—in Israel.

Later in March, InterCure announced a strategic, international multiyear cultivation, marketing, and distribution agreement with Clever Leaves. (Source: “InterCure and Clever Leaves Announce International Strategic Partnership,” InterCure Ltd, March 22, 2022.)

Under this agreement, InterCure will have access to Clever Leaves’ high-tetrahydrocannabinol (THC) medical cannabis flower. Meanwhile, Clever Leaves will cultivate InterCure Ltd’s strains and launch InterCure’s branded products in the EU, the U.K., and South America.

Record-Breaking Q4 & Full-Year 2021 Results

On April 6, InterCure Ltd announced its financial results for the fourth quarter and year ended December 31, 2021.

The company’s fourth-quarter revenue went up by 194% year-over-year and 29% sequentially to $32.6 million. (Source: “InterCure Reports Record Breaking Q4 and 2021 Results – Exceeded Preliminary Results,” InterCure Ltd, April 6, 2022.)

InterCure’s fourth-quarter revenue exceeded its preliminary results, marking the company’s sixth consecutive quarter of positive operating cash flow and its eighth consecutive quarter of double-digit revenue growth. That represents an estimated annualized run rate of more than CA$130.0 million.

For the quarter, InterCure Ltd reported record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CA$9.0 million, a 140% year-over-year increase and a 50% sequential increase. The company reported a fourth-quarter net loss of CA$1.0 million.

InterCure Ltd delivered more than one ton of medical cannabis per month in the fourth quarter of 2021.

Also during the quarter, the company announced that it had expanded its international operations into Europe through a partnership with the cannabis company Cookies Creative Productions & Consulting, Inc. Under the multiyear agreement, InterCure Ltd will open “Cookies” branded stores and medical cannabis pharmacies in Austria and the U.K.

InterCure’s CEO, Alexander Rabinovitch, commented, “Our fourth quarter results came in stronger than we initially expected as we successfully continue to expand InterCure’s branded product portfolio, scale up our unique global supply chain and expand our pharmaceutical grade medical cannabis dispensing operation.”

For fiscal 2021, InterCure Ltd’s total revenue increased by 230% to a record CA$89.0 million. Its full-year adjusted EBITDA went up by 250% year-over-year to a record CA$23.0 million. The company reported full-year net income of CA$3.0 million and ended 2021 with CA$89.0 million in cash.

During the year, InterCure Ltd increased its market share for Canndoc’s branded products and added 19 locations to its medical cannabis pharmacy chain.

Analyst Take

InterCure Ltd might be the biggest cannabis company in Israel and the fastest-growing, most profitable cannabis company outside of North America, but it has mostly stayed under the radar of Wall Street analysts. That won’t last for long.

InterCure Ltd has announced a number of partnerships and a strategic acquisition, expanding its national and international footprint. Moreover, recreational cannabis is expected to be legalized at the federal level in the U.S. in the near term.

The company reported record fourth-quarter and full-year financial results, and it expects that momentum to continue in 2022. Its solid balance sheet is expected to help support future profit growth.

This all means InterCure stock could be worth considering.