Results for Q2 in line with expectations

SHL Telemedicine’s results for Q2 in line with expectations. SHL expects to announce significant transaction regarding its US business in coming days.

Tel Aviv / Zurich, October 1, 2007. SHL Telemedicine Ltd. (SWX: SHLTN), a leading provider and developer of advanced personal telemedicine solutions, with revenues of USD 20.3 million for the second quarter of 2007 compared to USD 21.0 million in Q2 of 2006. Revenues for the half year total USD 40.3 million against revenues of USD 41.5 million in H1 2006. Revenues from Germany continued to
display good growth together with those of Israel while in the US, revenues declined mainly due to the divestment of the CVI (Cardio Vascular Imaging) centers over the past year.

Gross margins remained steady with gross profit amounting to USD 9.7 million and USD 19.2 million in Q2 and H1 of 2007 respectively, compared to USD 10.1 million and USD 20.0 million in Q2 and H1 of 2006.

EBITDA and EBIT for the quarter amounted to USD 2.0 million and USD 0.2 million respectively, compared to USD 3.1 million and USD 1.3 million in Q2 of 2006. EBITDA and EBIT for the half year amounted to USD 4.2 million and USD 0.6 million, compared to USD 6.2 million and USD 2.6 million in the first half of 2006.

This decrease in operating results was mainly due to increased provisions and restructuring costs relating to its overall US operations.
After the recording of a further charge of USD 1.0 million relating to the discontinued operations from the US imaging centers, SHL’s net income for the first half of 2007 amounted to USD 0.6 million compared with a net loss of USD 3.9 million in the first half of 2006. Net loss for the first half of 2007 attributable to SHL shareholders
amounted to USD 3.8 million compared with a net loss of USD 4.7 million in the first half of 2006.

Cash flow
Cash generated in Q2 from SHL’s operating activities amounted to USD 0.9 million compared to USD 0.6 million in Q2 of 2006 bringing cash generated from operating activities in the first half of 2007 to USD 0.3 million compared to USD 0.2 million in H1 of 2006.

After balance sheet date, SHL arranged a credit facility in the US with one of the US’s leading banks in the amount of USD 12.5 million.
2/5 Expected transaction in US SHL is in the final stages of negotiations regarding a significant and major transaction with regard to its US operations and expects to make an announcement regarding this in the coming days .

New state of the art wireless platform for arrhythmia monitoring
SHL has just received FDA clearance of its new proprietary cardiac looping recorder and transmitter, first in a new family of wireless cellular based devices developed by SHL for diagnostic arrhythmia services and the first wireless cellular looping monitor available in the world. This new device which will soon be available on the US market
increases the ease of use for patients carrying out diagnostic arrhythmia testing thus improving patient compliance and resulting in higher diagnostic yields of information for
the clinician.

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