Slide 1: Interim Management Discussion & Analysis, Quarter Ended June 30, 2022
Ws INTERCURE INTERCURE LTD. Interim Management Discussion & Analysis (Unaudited) For the quarter ended on June 30, 2022
Slide 2: MD&A basis of presentation
This Management's Discussion and Analysis ("MD&A") is dated August 2022 and provides an analysis of the financial operating results for the quarter ended June 30, 2022. In this MD&A, references to the “Company,” “Intercure,” and “we,” “us, and “our” are intencled to refer to the business and operati
Slide 3: Forward-looking information
‘This MOBA may contain forwarc-tooking information within the meaning of applicable securties legislation, Which reflects Intercure’s current expectations regarding future events, inclucing statements regorcing developments in the Company's operations in future periods, adequacy of financial resourc
Slide 4: Non-IFRS financial measures
In this MD&A, we use certain non-IFRS financial measures to measure, compare and explain the operating results and financial performance of Intercure. These measures are commonly used by companies operating in the cannabis industry as useful metrics for measuring performance. However, they do not ha
Slide 5: Second Quarter 2022 Financial Highlights
+ Record revenue of approximately $37 million (NIS 95 million), more than double the revenues of the second quarter of 2021 and representing sequential growth of over 9%, + Tenth consecutive quarter of high growth representing an annualized run rate revenues of $150 million (NIS 381 million). + Adju
Slide 6: Second Quarter 2022 and Recent Financial & Operating Highlights
~~ y SS Second Quarter 2022 and Recent Financial & Operating Highlights k a py: TN NT + Successful opening of the first flagship Cookies retail location in Austria, located in the center of Vienna, = + Continued expansion of the Company's medical cannabis dedicated pharmacy chain with the grand open
Slide 7: First Half 2022 Financial Highlights
CC =———_—_=— First Half 2022 Financial Highlights E + Record revenue of approximately $72 milion (NS 182 millon), more than 130% than the revenues of the first half of 2021 + Gross profit increased over 120% year-over-year to over $30 million (NIS 77 milion). + Adjusted EBITDA for H1 2022 increased
Slide 8: Management commentary on tenth consecutive quarter of growth
We are proud to deliver our tenth consecutive quarter of profitable growth, solidifying our operational excellency and leading position. We remain focused ‘on developing and launching the highest quality pharmaceutical grade medical cannabis products as our target markets are evolving at a rapid pac
Slide 9: Annualized Quarterly Revenue Run Rate (millions)
(1 ma Annualized Quarterly Revenue Run Rate (millions) | x J - Q2-22 520 4-20 © QI-21 2-21 08-21 Q4-21 Q1-22
Slide 10: Annualized EBITDA (millions)
r a f s | Annuallize EBITDA (millions)” O20 03-20 © 4-20-21 2-21 3-21 Q421 Q1-22 02-22 “Cannabis sector
Slide 11: Quarterly Revenue (millions)
92-20 Q3-20 (million: ho Q4-20 Qt-2t 2-21 03-21 4-21 Q1-22 195} $37 2-22
Slide 12: Half Revenue (millions)
( Half revent (million: ) 2-21 11-22 _— 12-20 H1-21
Slide 13: Half Adjusted EBITDA (millions)
| Half Adjusted EBITDA (millions) * $0 ew H2-20 — 2-21 H1-22 “cannabis Sector
Slide 14: Annual Revenue (millions)
Annual Revenue (millions) 381
Slide 15: Adjusted EBITDA (millions)
Adjusted EBITDA (millions)* wes 21 ul
Slide 16: Cash (millions)
Slide 17: Cookies flagship store
Slide 18: Expanding our leading medical cannabis dispensing pharmacies chain
Expanding our leading medical cannatis dispensing pharmacies chain -~——___— e [ Fully operational | ~ _~ Q3-20 4-20 QT-21
Slide 19: Expanding our leading medical cannabis dispensing pharmacies chain
{ Expanding our leading medical cannabis dispensin: harmacies chain
Slide 20: The Southern Facility
The Southern Facil
Slide 21: New Releases
New Releases (EDELLIN, THE SOAP
Slide 22: Cultivated at the Southern Facility
a L Cultivated at the Southern Facility 5 now | J
Slide 23: Cultivated at the Southern Facility
i % | Cultivated at the Souther Facility Ke y | avneo |
Slide 24: Cultivated at the Southern Facility
rc { Cultivated at the Southern Facility ) [ com |
Slide 25: Cultivated at the Southern Facility
a = { Cultivated at the Southern Facility 5. [cw | /
Slide 26: Cultivated at the Southern Facility
Slide 27: Company Overview
Company Overview “This Management's Discussion and Analysis (°MD8&A") is dated August 2022 and provides an analysis ofthe financial operating results forthe quarter ended June 30, 2022. In this MDA, references to the “Company,” “Intercur,” and “we.” “us,” and “our” are intended to refer to the busin
Slide 28: Non-IFRS financial measures definitions
In this MD&A, we use certain non-IPRS financial measures to measure, compare and explain the ‘operating resulls and Financial performance of Intercure. These measures are commonly used by companies operating in the cannabis industry as useful metres for measuring performance. However, they do not ha
Slide 29: Subsidiaries and pharmacy operations
‘+ Maayan Haim Pharmacy 2015 Lid.'s operations are focused on managing and operating & ‘medical cannabis pharmacy inthe ety of Bait Dagan, ‘© Ahuza Phammacy D.Y.'s operations are focused on managing and operating a pharmacy in the city of Refanana. The Ahuza pharmacy is yet to be approved for sellin
Slide 30: Business overview and Better acquisition agreement
wwe achieve the highest standard of product quality for our patients and for commercial research collaborations. We believe this will enable us to enler into fulure partnerships and agreements ith ‘pharmaceutical companies. (On February 16, 2022, we announced a definitive agreement with Cann Pharmac
Slide 31: Cash flow, cash balance and flagship Cookies openings
‘+ Reported positive eash flow from operations forthe nine consecutive quarter. ‘+ Strong balance sheet with NIS 245 million (CADS 96 million) eash on June 30,2022 (On the 2th of June 2022, we announced the grand opening of its flagship Cookies pharmacy in Beer Sheva, the largest city in Israels sou
Slide 32: Partnerships: Cookies
We have entered the following partnerships, all of which provides us with exclusive relationships t strbute the noted products within certain geographical ares: Cookies ‘Cookies is one ofthe mast well-respected and top-selling cannabis brands in California and throughout the world. The company and i
Slide 33: Organigram partnership
WORGANIGRAM Organigram, Ine, (NASDAQ: OG) (TSX: OG) Organigram’ cannabis, is a leading licensed producer of In June 2020, we entered into a contractual eationship with Organigram forthe purpose of collaborating {o develop, import and export medical cannabis products in the state of Israel and across
Slide 34: Charlotte's Web partnership
CHARLOTTE’S WEB CCharlote’s Web Ine. (TSX: CWEB) (TCO? the largest worldwide CBD brands, 'WBHEF) (“Charlotte's Web") is the owner of one af In December 2020, we entered into a collaboration with Charlote's Web, under which we will be the sole partner of Charlotte's Web in Israel, and through which t
Slide 35: Altman Health and Fotmer partnerships
Aftervards,InterCure will begin the process of registering Charlote's Web's produets withthe Minister of Health In March 2022, we announced a strategic partnership with Altman Health, the market leader with an ‘unmatched shelf space of OTC and nutritional supplements at over 1,700 points of sal, inc
Slide 36: Canndoc genetics and Denmark EU-GMP agreement
(Canndoc —new genetics - CANNDOC Cali™ cultivated in Canndoe's advanced southern fest Denmark In May 2020, we entered into an EU-GMP distribution agreement with a Danish partner for the production of up to 11.7 tonnes of eannabis per year for a period of 3 yeas. As pat of this agreement, ‘we will ma
Slide 37: Distribution agreements: SLE and Novolog
prescriptions on-site or have our products delivered dirctly to their residence, Under the old regulations, the IMCA instituted a fixed price forthe monthly supply of cannabis products, regardless of the dosage fr form of use. Under the current regulations, the price of cannabis produes i not fixed
Slide 38: International: Germany and Austria
Internasional Germany In June 2019, we entered into a non-exclusive distribution agreement with a licensed distributor in Germany, for the purpose of distributing our pharmaccutial-grade products within Germany’ (the “German Distribution Agreement’). ‘The German Distribution Agreement contains custo
Slide 39: Adjusted EBITDA reconciliation
For the 3-month period ended on For the 6-month period Tune 30 ‘ended on June 30 a0 3021 30m 2021 Consolidated 17926 8.879 37914 ‘operating profit (loss) ‘Comprehensive Camprehes same son8 sours 9am ee eee oan 403 2706) ® recone sm ase voass Dewecitin and ays ast 469 EBITD moan ___ was nso Stareined
Slide 40: Revenues and gross profit discussion
Revenues — Revenue forthe second quarter of 2022 was approximately two times greater compared 80 the corresponding period last year and increased by 111% compared to the previous quarter. The growth \vas primarily derived from high demand for the companys quality product lines, market growth, inerea
Slide 41: Cash Flow
Cash Flow Intercute’s approach to liquidity isto always have sufficient liquidity to meet its ibilities as they come ue. This is achieved by continuously monitoring cashflows and reviewing actual operating expenditures and revenue against budget. For three months For three months Cash Flow ‘ended on
Slide 42: Summary of Quarterly Results
‘Summary of Quarterly Results “The following table below sets out cerain fully consolidated financial data for the Company oof ot sgt a.m monk 2020— aD Revenue osam $7029 7A 64S 45209 SRST HH ANT (us) S152 95K57 6619 246829267 ISNT BBO 0785 Enis 2070919911 1944611999 OSE ass BIS RT 035438 @0), OH ak
Slide 43: Critical Accounting Estimates and Outstanding Share Data
Short term Joan from related party (ote 138) rm. 1.782 TOTAL 222806 9741 $3,932 «5,559 292,128 Critical Accounting Estimates ‘The Company's evtical accounting estimates are summarized in note 3 of the Annual Financial Statements and have not changed! during the following interim period. ‘Outstanding
Slide 44: Off Balance Sheet Transactions, Risks and Uncertainties
(Off Balance Sheet Transactions “The Company has no off-balance shoot arrangements Financial Instruments and Other Instruments ‘We do not have any financial instruments other than normal course accounts receivable and payables associated with our business activities, Risk and Uncertainties ‘Weare su