IM Cannabis reports increase in German revenue, but decrease in Israeli

IM Cannabis Corp. (Nasdaq: IMCC) (CSE: IMCC) announced its financial results today for the third quarter ending Sept. 30. IM Cannabis reported revenue increased 12% to C$13.9 million compared to C$12.4 million in the 2023 third quarter.

The company attributed the increase to accelerated revenue growth in Germany, which reached C$4.3 million, and decreased net revenue in Israel of C$2.8 million. IM Cannabis told investors that the war in Israel continues to negatively affect its operations.

IM Cannabis trimmed its net loss in the quarter to C$1.1 million versus C$2.1 million in 2023, an improvement of C$1 million or 48%. The basic and diluted loss per share was C$0.41, compared to a loss of C$0.96 per share in 2023. The company ended the quarter with C$1.9 million in cash.

However, IM Cannabis remains a going concern. The company’s working capital (current assets less current liabilities) amounted to a negative C$11 million, and the company’s accumulated loss deficit is now C$259 million.

“While the 66% growth we delivered in Germany to reach C$5.8M this quarter is a highlight, we spent the quarter focused on building a solid foundation for 2025,” CEO Oren Shuster said. “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.”

According to CFO Uri Birenberg, the company has been focused on “efficient resource management,” the results of which are reflected in the quarter’s results.

“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,” Birenberg said.

The cost of revenue grew in the quarter to C$10.7 million compared to C$9.6 million in 2023, an increase of C$1.1 million or 11%, mainly due to an increase in costs of approximately C$1.2 million including an accrual for slow inventory of $600,000, which was offset by a decrease in other costs net of approximately $100,000.

Looking ahead

IM Cannabis told investors that it plans to continue building on the increasing demand and positive momentum in Israel and Germany, supported by strategic alliances with Canadian suppliers and a highly skilled sourcing team.

It intends to develop and execute a long-term growth plan in Germany, based on the strong sourcing infrastructure in Israel which is powered by advanced product knowledge and regulatory expertise establishing, in the company’s view, a competitive advantage following the April 1 legalization in Germany.

The company also plans to increase inventory levels to meet rising demand in Germany and secure new suppliers and additional supply chains from Israel and other countries to ensure product availability in Germany.