When the smoke dissipates: The cannabis factories roll losses

Public medical cannabis factories continue to show losses and lead stocks to a low.

The three companies examined have erased (in aggregate) more than half a billion shekels, since the record value of the cannabis wave that swept the Tel Aviv Stock Exchange about 3 years ago

Roast Greenberg

03/04/2022

Sunday, 03 April 2022, 09:16 Updated: 09:48

• Share on Facebook

• Share on WhatsApp

• Share on Twitter

• Share on Email

• Share on general

• Comments

  Comments

The gears of medical cannabis factories creak in producing profits.

The three public companies whose main activity is:

.

Panaxia led the amount of factory losses examined by Walla!

Money (see table) for 2021, which amounted to NIS 20.1 million operating loss, and NIS 21.3 million net loss.

This is despite the fact that its revenues increased by 37.6% and stood at about NIS 83.6 million for the reporting period.

Examination of the reports shows that the cost of generating income for that period was about NIS 83 million, and yielded the company a minimal gross profit of only about NIS 535,000.

Thus, while the increase in its income increased by about 37.6%, the rate of increase in the costs of generating income bypassed it and stood at 47%.

Panaxia also stated in the report that it has written off about NIS 4.7 million of inventory in 2021, as a result of the cessation of various activities, which led to a gross profit margin of about 0.7% compared to about 7% in 2020.

These include its distribution and logistics activities. It sold it during the second quarter of 2021, from which it also recorded a capital gain of NIS 14.7 million, thus reducing its operating loss,

since without that capital gain, the operating loss that the company would present was deeper and similar to the one it presented in 2020. Although the company also reduced, among other things following the sale, by NIS 9 million its management and general expenses, which stood at NIS 16.9 million for 2021.

Panaxia is traded on the Tel Aviv Stock Exchange at a value of NIS 102.8 million after its share fell by 84.36% since The peak value to it at the end of October 2019, when it was traded at about NIS 441.5 million, and since then has erased from its value about NIS 338.7 million.

However, its three founders;

together received a NIS 1.8 million management fee (NIS 600,000 each) for 2021, for a 50% job (each).

Good to know (promoted)

7 questions to help you choose the perfect mattress for you

Served on behalf of Dr. Comfort

The green is painted red.

A year of losses to medical cannabis companies (Photo: Walla !, no)

Despite the large write-off in the value of Panaxia, the highest write-off rate is in

Kanashur Therapeutics, which until the end of 2021 was led by Maj. Gen. (Res.) Ido Nehushtan, the former commander of the Air Force who served as its chairman.

NIS 1 million, failed to take off in the sky of the local capital market and after the publication of its reports last weekend completed a decrease of about 87% since the peak value reached last February about NIS 163.1 million, which expresses an erasure of about NIS 128.3 million from its peak peak days

. Kanashur showed a higher rate of increase in its revenues for 2021 compared to 2020, which stood at about

872.9

%, while the rate of cost of producing those revenues increased by about 128.2%.

Will be able to cover the cost of production - about NIS 40.9 million. The company recorded an operating loss of about NIS 15.7 million, and a net loss of about NIS 16.5 million.

The loss did not interfere with the compensation of

, which was about NIS 1.2 million for 2021, of which NIS 838,000 salary, NIS 306,000 payment in shares, and NIS 68,000 for car maintenance, meals and more.

Dr. Dedi Segal, CEO of Panaxia.

NIS 21.3 million net loss in 2021 (Photo: Yachz)

Investors lose, the CEO wins

The highest remuneration for an office holder among the three companies examined was that of

(22.07%) at Unibo Pharmaceutical Industries.

Bitton's total remuneration was NIS 2.66 million, of which NIS 1.19 million was salary. NIS 1.17 million, payment in shares, and

a

grant of NIS 292,000.

Net income amounted to NIS 4.3 million, compared with a minimum profit of NIS 17,000 in the previous fiscal year.

Although the company's revenues increased by 25.3% and stood at NIS 42.2 million in 2021, the rate of cost of producing revenues increased by 37.7% and stood at NIS 28.6 million.

Despite this, Unibo is the only company that ended 2021 with a gross profit of millions of shekels.

An increase of NIS 2.5 million in administrative and general expenses, NIS 1.5 million in R&D expenses, and NIS 7.3 million in marketing expenses, led to an operating loss. The operating loss was about 1,700%.

Univo explained that "the increase in profits from fair value adjustments of biological assets in the year of the report is due to the first recognition of a biological asset following the first commercial growth in Amit Farms," ​​which is a medical cannabis cultivation and control farm

. And Marketing noted that this is due, among other things, to the first consolidation of the pharmacy it acquired in Holon, and to a "significant increase," she wrote, in its workforce, which also affected the increase in administrative and general expenses.

A summary of the examination of the reports of the production squad in the local cannabis industry raises a question mark as to its ability to be profitable, despite some regulatory easing.

Perhaps this is due to the size of the local market, where 9 factories are currently approved to operate, competing with each other for customers and pushing prices down.

Founder, controlling shareholder and CEO of Unibo, Golan Bitton. Total compensation of NIS 2.66 million (Photo: Gal Zeevi)

• Of money

• Our money

Tags

• Cannabis

• Medical Cannabis

• financial reports