TORONTO and GLIL YAM, Israel - IM Cannabis Corp. (CSE: NASDAQ:IMCC) (NASDAQ: IMCC), a medical cannabis company with operations in Israel and Germany, revealed that its German subsidiary, Adjupharm GmbH, has seen a 50% increase in revenue for the third quarter of 2024 compared to the second quarter. This growth follows the partial legalization of cannabis in Germany in April 2024, which has led to a significant rise in demand for cannabis products in pharmacies.
The increase in revenue, amounting to approximately CAD$ 3.5M in Q2, is attributed to the company's strategic initiatives and the robust demand for its products in the German market. IMC's CEO, Oren Shuster, expressed satisfaction with the Q3 performance, attributing the growth to the company's efforts to strengthen its supply chain in response to the market's increased demand.
IMCannabis operates in Israel and Germany, two of the largest medical cannabis markets, focusing on sustainable and profitable growth. The company has established a transnational ecosystem with a data-driven approach and a globally sourced product supply chain, adhering to strict regulatory standards.
In Israel, IMC's commercial activities are conducted through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients. The company also manages retail pharmacies, online platforms, and distribution centers to ensure quality control across the value chain. In Germany, Adjupharm GmbH is responsible for distributing cannabis to pharmacies for medical patients.
The company's forward-looking statements indicate management's expectations for future developments, including compliance with listing requirements and the potential launch of new brands in the German market. However, these statements involve inherent risks and uncertainties, and actual results could differ materially due to various factors such as regulatory changes, market competition, and supply chain constraints.
This performance update is based on a press release statement and reflects the company's preliminary sales results in Germany for Q3 2024. Investors are advised that forward-looking statements should not be relied upon as predictions of future events and that the company's financial outlook is subject to change.
In other recent news, IM Cannabis Corp. has witnessed significant developments. The company announced the appointment of Shmulik Arbel, a finance veteran and former Deputy CEO of Leumi, to its board of directors. Arbel's extensive experience in strategic planning, finance, and corporate governance is expected to benefit the company's strategic initiatives.
In terms of financial performance, IM Cannabis reported a 12% year-over-year increase in revenue, reaching C$14.8 million, significantly bolstered by a 129% surge in sales in Germany. However, the company's overall margins were affected by the need to offload inventory in Israel, resulting in lower profitability. The Roth/MKM analyst reaffirmed the Buy rating and the $6.00 price target, acknowledging that IM Cannabis's potential is somewhat constrained by limited access to supply in the near term.
The company also reported a 200% increase in sales in Q2 compared to Q1 2024, following the legalization of cannabis in Germany. Despite an 11.7% increase in revenue compared to the same quarter in the previous year, the company reported a decrease in gross profit due to inventory clearance and slow-moving stock. The company also noted a reduction in adjusted EBITDA loss, net loss, and diluted loss per share compared to Q2 2023. These are recent developments that have shaped the company's current standing in the market.
InvestingPro Insights
While IM Cannabis Corp. (IMCC) has reported a significant revenue increase in its German operations, it's crucial to examine the company's overall financial health. According to InvestingPro data, IMCC's revenue for the last twelve months as of Q2 2024 stood at $36.46 million USD, with a revenue growth of 11.68% in Q2 2024. However, the company faces some challenges, as highlighted by InvestingPro Tips.
One InvestingPro Tip indicates that IMCC is "Not profitable over the last twelve months." This is reflected in the company's operating income, which stands at -$9.64 million USD for the same period. Another InvestingPro Tip notes that the "Stock has taken a big hit over the last six months," with data showing a -49.85% price total return over that period.
These insights provide a more comprehensive view of IMCC's financial situation, balancing the positive news from Germany with broader company performance. For investors seeking a deeper understanding, InvestingPro offers 7 additional tips for IMCC, providing a more nuanced analysis of the company's prospects in the evolving cannabis market.
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