IM Cannabis Reports Third Quarter Financial Results

PR Newswire

TORONTO and GLIL YAM, Israel, Nov. 14, 2024

IMC pairs a +12% increase in revenue with a -16% decrease in the total operating expenses, building a solid foundation to deliver in 2025.

TORONTO and GLIL YAM, Israel, Nov. 14, 2024 /PRNewswire/ -- IM Cannabis Corp. (the "Company" or "IMC") (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the third quarter ended September 30, 2024. All amounts are reported in Canadian dollars and compared to the quarter ended September 30, 2023, unless otherwise stated.

Q3 2024 Financial Highlights

   -- +12% increase in Revenue to $13.9M vs. $12.4M in Q3, 2023. Adjusting for 
      the revocation of the Oranim deal, increases the revenue to +51% or $4.7M 
      vs Q3, 2023 
 
   -- -41% decrease in Selling & Marketing expenses to $1.5M vs. $2.6M in Q3, 
      2023 
 
   -- -16% decrease in Total Operating expenses to $4.1M vs. $4.9M in Q3, 2023 
 
   -- -$0.5M EBITDA loss, a decrease of -68% vs. $1.6M in Q3, 2023 
 
   -- -$0.2M adjusted EBITDA loss (Non-IFRS), a decrease of -82% vs. $1.3M in 
      Q3, 2023 
 
   -- +25% improvement in Operational expense ratio to 30% vs. 40% in Q3, 2023 

Management Commentary

"While the 66% growth we delivered in Germany, to reach $5.8M this quarter is a highlight, we spent the quarter focused on building a solid foundation for 2025," said Oren Shuster, Chief Executive Officer of IMC. "Our goal was to build a strong, consistent supply chain, along with a laser focus on how to improve the efficiency and accuracy of how we use our resources. I believe that the foundation we built this quarter will be the basis we will use to deliver in 2025."

"The discipline necessary to drive efficient resource management is an ongoing focus of ours and can clearly be seen in this quarter's results, " commented Uri Birenberg, Chief Financial Officer of IMC. "Our Q3, 2024 revenues increased from $12.4 million in Q3, 2023, to $13.9 million this quarter, while our operating expenses decreased from $4.9 million in Q3, 2023 to $4.1 million in Q3, 2024. As a result, our operating expense ratio was 30% in Q3, 2024 in comparison with 40% in Q3, 2023, making us 25% more efficient."

Q3 2024 Conference Call

The Company will host a Zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.

If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.

Q3 2024 Financial Results

   -- Revenues for the third quarter of 2024 were $13.9 million compared to 
      $12.4 million in Q3 2023, an increase of $1.5 million or 12%. The 
      increase is mainly attributed to accelerated growth in Germany revenue of 
      $4.3 million net and decreased net Revenue in Israel of $2.8 million, 
      which consists of Oranim revenue in Q3 2023. Adjusting for Oranim Revenue 
      of $3.2 million in Q3 2023, result with revenue increase of $4.7M or 51%. 
 
   -- Total Dried Flower sold in Q3 2024 was approximately 2,202 kg with an 
      average selling price of $6.20 per gram, compared to approximately 
      2,558kg in Q3 2023, with an average selling price of $4.35 per gram, 
      which is a price increase of 42%. 
 
   -- Cost of revenues for Q3 2024 were $10.7 million compared to $9.6 million 
      in Q3 2023, an increase of $1.1 million or 11%, mainly due to an increase 
      in costs of approximately $1.2 million including an accrual for slow 
      inventory of $0.6 million, that is offset by decrease in other costs net 
      of approximately $0.1 million. 
 
   -- Gross profit for the third quarter of 2024 was $3.1 million, compared to 
      $2.6 million in Q3 2023, an increase of 19%. 
 
   -- G&A Expenses in Q3 2024 were $2.4 million, compared to $2.1 million in Q3 
      2023, an increase of $0.3 million or 10%. 
 
   -- Selling and Marketing Expenses in Q3 2024 were $1.5 million, compared to 
      $2.6 million in Q3 2023, a decrease of $1.1 million or 41% mainly due to 
      the revocation of Oranim agreement of $0.7 million and decrease in 
      salaries and professional services of $0.5 million. 
 
   -- Total operating expenses in Q3 2024 were $4.1 million compared to $4.9 
      million in Q3 2023, a decrease of $0.8 million or 16%. 
 
   -- Net Loss in Q3 2024 was $1.1 million, compared to $2.1 million in Q3 2023 
      a decrease loss of $1.0 million or 48%. 
 
   -- Basic and diluted Loss per Share in Q3 2024 was $0.41, compared to a loss 
      of $0.96 per Share in Q3 2023. 
 
   -- Non-IFRS Adjusted EBITDA loss in Q3 2024 was $0.2 million, compared to 
      loss of $1.3 million in Q3 2023 or 82% decrease. 
 
   -- Cash and Cash Equivalents as of September 30, 2024, were $2 million 
      compared to $1.8 million on December 31, 2023. 
 
   -- Total assets as of September 30, 2024, were $44.6 million, compared to 
      $48.8 million on December 31, 2023, a decrease of $4.2 million or 8.6%. 

The decrease is mainly attributed to the Oranim agreement cancelation of $9.5 million of which mainly attributed to; goodwill $3.5 million, intangible asset $1.4 million, inventory $0.8 million, trade receivables $1.3 million and property plant and equipment $0.8 million and reduction of cash and cash equivalents of $0.3 million.

In addition to the Oranim revocation agreement effect, there is a total asset increase of $5.3 million mainly due to an increase of $8.1 million in trade receivables and an increase of Cash and cash equivalents of $0.5 million, offset by $4.8 million reduction in Inventory and reduction of $0.9 million in intangible assets.

   -- Total Liabilities as of September 30, 2024, were $40.4 million, compared 
      to $35.1 million on December 31, 2023, an increase of $5.3 million or 
      15%. 

The increase is mainly attributed to an increase of $8.9 million in trade payables and an increase of $1.6 million in other accounts payable offset by a decrease mainly attributed to the Oranim agreement cancelation of $6.8 million of which mainly attributed to a decrease in PUT option liability in the amount of $2.0 million, a decrease in purchase consideration payable in the amount of $2.2 million and a decrease of $1.6 million in trade payables.

The Company's financial statements as of September 30, 2024, includes a note regarding the Company's ability to continue as a going concern. The Company's Q3 2024 financial results do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the "Liquidity and Capital Resources" and "Risk Factors" sections in the Company's management's discussion and analysis for the quarter ended September 30, 2024.

Non-IFRS Measures

This press release makes reference to "Gross Margin" and "Adjusted EBITDA", which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company's IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company's management's discussion and analysis for the period ended September 30, 2024, available under the Company's SEDAR+ profile at www.sedarplus.ca on EDGAR at www.sec.gov/edgar.

We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.

About IM Cannabis Corp.

IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.

The IMC ecosystem operates in Israel through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients.

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