IM Cannabis Corp (IMCC) Provides Update on German Operations and Financial Outlook
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IM Cannabis Corp. ("IMC" or the "Company") (CSE: IMCC) (NASDAQ: IMCC), a multi-country operator ("MCO") in the medical and adult-use recreational cannabis sector with operations in Israel, Germany and Canada, announces the completion of a new, state-of-the-art logistics centre in Germany (the "Logistics Centre") that will allow Adjupharm GmbH ("Adjupharm"), the Company's fully licensed EU-GMP subsidiary, to internally manage all aspects of its supply chain including, uniquely, the repackaging of bulk cannabis. The Company expects that the Logistics Centre will strongly augment Adjupharm's capabilities as a focal point for IMC's European strategy.
Since being acquired by IMC, Adjupharm has upgraded its production and storage capacities to meet the increase in medical cannabis volumes expected as the Company and Adjupharm enter new supply agreements. With the completion of the Logistics Centre, IMC has now doubled its footprint in Germany to approximately 80,000 square feet, upgraded its production facilities with state-of-the-art technology and increased its storage capacity to seven tons of cannabis. With the Logistics Centre in operation, new sources of supply now secured extending its portfolio to include premium products, some of them exclusive, and a wide network of distribution partners, the Company expects to fortify and grow its presence in the German market.
Preliminary Q2 Results and Q3 Outlook
IMC expects its net revenue in the second quarter of 2021 to be in the range of $11 million to $12 million, an approximate 30% sequential increase from the first quarter. As compared to the previously announced financial outlook provided on April 23, 2021, revenue was impacted by delays in contracted shipments to Germany that accounted for nearly the entire variance between actual and estimated revenue in the quarter. These delays were due to lack of product availability from Adjupharm's primary European supply partner. Corrective steps have now been taken during the quarter to diversify supply to Germany, including signing of additional agreements to import cannabis from Canadian licensed producers.
IMC expects significant revenue growth in the third quarter of 2021 based on the following considerations:
- Increased medical cannabis sales by Focus Medical in Israel through the fulfilment of existing supply agreements to Israeli pharmacies
- The inclusion of a full quarter of revenue from the recently completed acquisition of Panaxia-to-the-Home's ("Panaxia") distribution and in-house pharmacy activities, compared to 31 days in the second quarter.
- The consolidation of nearly a full quarter of revenue from IMC's acquisition of MYM Nutraceuticals Inc. ("MYM"), which closed on July 9, 2021.
- Continued growth at Trichome JWC Acquisition Corp. ("Trichome"), as its recently launched WAGNERS recreational adult-use brand continues to gain market traction
- Resumed growth in Germany, with shipments renewed at the start of the third quarter as well as additional agreements signed to ensure continuous flow of EU-GMP supply.
"While we experienced some operational challenges in the second quarter in Germany, we have taken measures to promptly address these. We are confident in our strategy, our assets and our team and believe that our results for the second half of 2021 will demonstrate this," commented Oren Shuster, CEO of IMC. "As we move through the rest of the year, we will benefit from the Panaxia and MYM acquisitions, a return to growth in Germany with new supply now secured, increased cannabis sales in Israel through the fulfillment of Focus Medical's existing supply agreements and continued growth at Trichome as new brands gain traction."
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