SHL Telemedicine : Half Year Report 2020

Half Year Report 2020

SHL Telemedicine Ltd.

1 January - 30 June

Letter to Shareholders

Dear Shareholders

The first half of 2020 was marked by the disruptive acceleration in the adaption of telemedicine, with the outbreak of the global COVID-19 pandemic serving as a catalyst. Our Company, as a leading provider and developer with vast experience in the field of telemedicine, is well positioned to leverage its assets and knowhow and benefit from this change.

Although the pandemic, being a rolling event, impacts our financial results with decline in revenues and increased costs, the Company is building a valuable pipeline of customers and

2potential deals which is expected to materialize into significant business in the mid-term.

During the period, we experienced decreased operational efficiency and increased costs due to measures that were implemented to allow the Company to continue to operate safely and seamlessly and providing protected working environment to our employees.

Revenues during the period were USD 19.5 m compared to USD 19.9 m in constant currency1 in the first half of 2019. EBITDA for the period was USD 2 . 8 m, compared to an EBITDA of USD 6.0 m in constant currency in the first half of 2019 (which included a performance-basedincome of USD 2 . 0 m generated from cost savings delivered under a Chronic Disease Telehealth contract in Germany relating to the years 2015 and 2017). Net income for the period was USD 0.1 m compared to

1 Constant Currency - to enable meaningful comparison between 1HY2020 and 1HY2019 results, 1HY2019 results are also presented at 1HY2020 constant currency exchange rates. Management believes that this presentation enables a more meaningful comparison between the periods due to the significant fluctuations in NIS/USD/EUR exchange rates during the period.

a net income of USD 3.9 m in constant currency in the first half of 2019 (which included the performance-basedincome of USD 2 . 0 m). The Company generated an operational free cash flow of USD 1.4 m during the period.

In Germany, revenues for the period were USD 8.1 m, down by 11% compared to the first half of 2019 in constant currency, as a result of longer decision making cycles of institutional customers, delays in launch of new programs and slower recruitment of patients to Chronic Disease Telehealth Programs, along with a decline in service utilization by one of the institutional payors with whom the engagement will end this year.

In Israel, revenues were USD 11.0 m, slightly up by 3% compared to the first half of 2019 in constant currency, and the Israeli operation continued to contribute profitability to the Group.

Telemedicine is at a tipping point and has come of age. Our employees, management team and Board of Directors are excited about the opportunities ahead.

On behalf of the Board of Directors and the management team, we thank all employees for their hard work and our business partners and shareholders for the trust they have placed in SHL.

Sincerely,

Board

Letter to Shareholders

SHL Telemedicine Ltd.

1 January - 30 June

Half-Year Report 2020	3

Financial Statements

INDEX

5	|	Review of Interim Condensed Consolidated Financial Statements
6	|	Consolidated Balance Sheets
8	|	Consolidated Statements of Comprehensive Income
9	|	Consolidated Statements of Changes in Equity
10	|	Consolidated Statements of Cash Flows
12	|	Notes to Interim Condensed Consolidated Financial Statements

4

Financial Statements