SHL with strong organic growth in Q1 08

Financial Highlights for the First Quarter of 2008:
Revenues increased by 73% to USD 10.4 million from USD 6.0 million in Q1 07. Whilst all businesses contributed to the increased revenues, strongest growth was achieved by PHTS, SHL’s German operations with subscriber growth of over 80 %.This culminated in revenues from Germany of USD 3.4 million, more than double those of the comparable quarter of 2007 and already approaching the revenues of the first half of 2007.
Gross margins improved significantly from 55.0% to 64.4% and with the increased revenues Gross profit for the quarter amounted to USD 6.7 million compared to a gross profit of USD 3.3 million in Q1 07.

EBITDA for the quarter reached USD 1.8 million bringing the EBITDA margin to 17.4% compared to an LBITDA of USD 0.2 million in Q1 2007.

EBIT for the period amounted to USD 0.7 million compared to an LBIT of USD 1.0 million in Q1 07 reflecting an improvement of USD 1.7 million.

SHL’s net profit for the quarter amounted to USD 1.4 million compared to a net loss of USD 1.8 million in Q1 2007, prior to the effect of an exceptional exchange loss caused by the significant devaluation of the USD against the NIS during this period. After the taking into account of this exceptional exchange loss of some USD 4.1 million, net of taxes, which was mainly related to the placing of proceeds of around USD 100 million from the sale of Raytel, SHL reported an actual loss for the quarter of USD 2.7 million.

Cash flow from operations was negatively affected by the one-time exchange rate losses of some USD 4.7 million and remaining payments related to the Raytel sale of some USD 3.3 million bringing cash used in operations to USD 8.8 million. During the quarter the Company repaid USD 10.7 million of its loans and the Company’s cash, cash equivalents and marketable securities at 31st March 2008 amounted to USD 74.3 million.

Commenting on the results for the quarter Erez Alroy, Co-CEO of SHL Telemedicine stated: “We are pleased to report the robust organic top line growth predicted after the divestment of Raytel. We continue to see strong interest from German health insurance companies in our telemedicine platform – a result of the need for cost efficiency in the health care business. The added value of our services, both from a clinical and economic point of view, remains a compelling proposition and has recently been demonstrated in a new application for diabetic patients.”

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