Revenues of USD 20.0 million for Q1

with EBITDA of USD 2.2 million.
Operations in Germany continued to progress with additional health insurers and an integrated telemedicine network in Cologne adopting PHTS’s Telemedicine solutions.

Tel Aviv / Zurich, May 30, 2007. SHL’s revenues for the first quarter of 2007 amounted to USD 20.0 million compared to USD 20.5 million in Q1 of 2006 with revenues from the telemedicine segment increasing to USD 15.6 million from USD 15.4 million in Q1 of 2006.
The decrease in revenues from the non telemedicine segment is due to the divestment of centers in SHL’s US medical services division.
Gross margin in the telemedicine segment improved to 52 % from 51 % in Q1 2006 although the overall gross margin remained steady at 48%. Gross profit from the telemedicine segment increased to USD 8.2 million from USD 7.9 million in Q1 of 2006 with total gross profit amounting to USD 9.6 million compared with USD 9.9 million in
Q1 of 2006

EBIT from the telemedicine segment amounted to USD 1.0 million compared to USD 1.1 million in Q1 of 2006 with total EBIT amounting to USD 0.4 million against USD 1.4 million in the comparable period.

EBITDA for the quarter from the telemedicine
segment reached USD 2.7 million compared to USD 2.8 million in Q1 of 2006 with total EBITDA reaching USD 2.2 million compared to USD 3.1 million in Q1 2006. The decrease in the non telemedicine segment result is due to the divestment of centers in SHL’s US medical services division.

SHL’s net income from continuing operations amounted to USD 3.9 million compared to USD 0.2 million in Q1 2006. This figure includes the recording of a gross capital gain in the amount of USD 4.8 million resulting from the sale of a cardio vascular center in Texas. SHL’s net gain from the sale for its 20% holding amounted to USD 0.3 million.
A further charge relating to the discontinued operations from the US imaging centers of USD 0.6 million reduced SHL’s net income to USD 3.3 million compared to a net loss of USD 1.5 million in the first quarter of 2006. Net loss attributable to SHL shareholders’ amounted to USD 1.0 million compared to USD 1.8 million in Q1 2006.

The Telemedicine operations
During the quarter the telemedicine operations in the US, Germany and Israel progressed well and are on track with their full year plan. In particular, PHTS, SHL’s German operations, showed its strong growth potential, with more companies and organizations joining the list of German health insurers providing the PHTS Telemedicine service solution to their chronically ill heart patients. New contracts signed recently included BKK Essanelle, which insures the employees of well known organizations such as Henkel, Schering, MAN and Rhine Metal and BKK Merck, the public health insurance company of Merck. Additionally, PHTS has been appointed the exclusive provider of telemedicine services to a new integrated telemedicine net
service being established in Cologne.

Cash Flow
Cash used in operating activities during the first quarter due to the seasonal delay this quarter in reimbursements in the US market amounted to USD 0.6 million compared to USD 0.5 million in
Q1 2000.
As at March 31, 2007 SHL held USD 14.4 million in cash, cash equivalents, marketable securities and deposits.

Looking ahead
SHL expects continued improvement in its operations with EBITDA for 2007 expected to be in the previously announced range of USD 12-14 million.

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