SHL Telemedicine : Half Year Report 2022

Half Year Report 2022

SHL Telemedicine Ltd.

1 January - 30 June, 2022

Letter to Shareholders

Dear Shareholders

The first half of 2022 was marked by good momentum as we continue laying the infrastructure for a significant step up of our activity, mainly in the USA and Germany.

We are witnessing global changes in employability, shortage in the workforce and in the economy, with rising rates of inflation and interest. These challenges also apply to the healthcare industry and represent a catalyst for the growing need and demand to telemedicine technology and services, that can be used and operated remotely also by

2staff with lesser skills and experience or by the patients themselves. Overcoming operational and other challenges and lowering costs for all healthcare stakeholders.

During the period, the Company strengthened its leadership, nominating Mr. Ehud Barak (former Prime Minister of Israel) as Co-Chairman and leading partner of the Company for global growth. Overall, the company grew its Revenues in the first half year of 2022, with Revenues for the period of USD 30.9 million, an increase of about 53% compared to USD 20.2 in the first half of 2021 in constant currency1, mostly from consolidation of Mediton results for the period. Adjusted

EBITDA2 for	the	period	was	USD 3.5 million,
an increase	of	about	30%	compared to

1 Constant currency - to enable meaningful comparison between 1HY2022 and 1HY2021 results, 1HY2021 results are also presented at 1HY2022 exchange rates. The 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.

2 EBITDA: operating profit excluding stock base compensation expenses and extraordinary expenses.

USD 2.7 million in the first half of 2021 in constant currency1, mainly related to consolidation of Mediton results for the period.

Operating cash flow for the period contribued USD 2.0 million while we invested in the US operation ramp up, in inventories and in R&D, compared to negative operating cash flow of USD 0.7 million in the first half of 2021. Net profit for the period was USD 0.1 million3, compared to a net loss of USD 10.2 million3 in the first half of 2021 in constant currency1.

Germany

Revenues were USD 7.1 million, a decrease of about 14% compared to the first half 2021 in constant currency1. The Company is successfully dealing with the entry of large international competitors into the market, and our short term strategy to maintain our leading position, including by increasing R&D expenses, led to a loss in the German operation during the period, but we are already seeing the fruits from this strategy.

The Company won a pan-European tender by BARMER, that was issued in May 2022, for a large seven-year contract for Doctors' Virtual Visit and Telehealth services. The Company will continue and provide Doctors' Virtual Visits and Telehealth

3 Mainly due to extraordinary non-cash financial income of USD 1.7 million, and financial expenses of USD 8.6 million in the first half of 2021 mainly related to changes in the fair value of the options issued to investors in the capital increases in the first half of 2021.

Letter to Shareholders

services to all BARMER insureds Germany-wide, with a clear path of growth of this activity that was delayed in 2022 due to the tender process.

Earlier in the period, the Company entered into agreement with the German Society of Cardiologists in Private Practice - BNK (Bundesverband Niedergelassener Kardiologen e.V.), according to which all Cardiologists' members of BNK will have access to SHL's monitoring platform and services for their chronic heart failure patients.

The Company expects additional new collaborations and contracts in the fields of Doctors' Virtual Visits and TeleHealth services, potentially still during 2022.

Israel

Revenues were USD 23.0 million, up about 97% compared to USD 11.7 million in the first half 2021 in constant currency1, mostly from consolidation of Mediton results.

The strong foundations of SHL's activities in Israel, the B2C private-pay subscription activity and the B2B activity with government institutions, health funds and business entities, are growing in a consistent and moderate manner. We expect the growth will increase with the launch of new technologies, such as the AI technology, and the cross selling between these activities.

USA

In the US the Company started to see a ramping up of customers' pipeline and revenues, with revenues for the period almost doubling the full year 2021.

The company appointed Mr. Jason Bottiglieri, a highly experienced healthcare executive, as General Manager of SHL Telemedicine USA, and continues to bolster its US Advisory Board as the growth of its SmartHeart solution accelerates.

During the period the Company expanded and increased activity in existing as well as new channels. Entering into additional agreements for use of the SmartHeart® Platform in the skilled nursing and post-acute facilities field, expanding the use of SmartHeart® to clinical trials with CVS Health - Clinical Trial Services, and launching the marketing

and distribution of SmartHeart® with Henry Schein 3 to its US healthcare customers. All of which expand

and increase the use cases for the SmartHeart® Platform. In parallel, the company continues to drive the implementation of SmartHeart® with existing strategic partners, developing additional use cases and increase use of SmartHeart®, that will lead to generating of recurring revenues.

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,

Ehud Barak	Yariv Alroy	Erez Nachtomy
Co-Chairman	Co-Chairman	CEO
of the Board	of the Board

Letter to Shareholders

INDEX

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

4

Financial Statements

The Shareholders and Board of Directors

SHL Telemedicine Ltd.

Auditors' review report to the shareholders and board of directers of SHL Telemedicine Ltd.

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of SHL Telemedicine Ltd. ("the Company") and its subsidiaries as of June 30, 2022, which comprise the interim consolidated balance sheet as of June 30, 2022, and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the six month period then ended and explanatory notes. Management is responsible for the preparation and presentation of this interim financial information in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34"). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible

for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our

attention that causes us to believe that the
accompanying interim condensed consolidated	5

financial statements are not prepared, in all material respects, in accordance with IAS 34.

Tel-Aviv, Israel

September 21, 2022

KOST FORER GABBAY & KASIERER

A Member of Ernst & Young Global

Financial Statements