Card Guard reports record net profit of $4.75m and $28.7m revenue for Q2

Telemedicine systems and services provider Card Guard Scientific Survival (SWX:CARDG) today posted record net earnings of $4.75 million for the second quarter of this year.

Profit in the second quarter of 2000 came to $2.4 million, and $2.1 million in the first quarter of 2001.

Its second-quarter revenue of $28.7 million is 36% above that achieved in the first quarter and almost twice its Q2 2000 revenue, which came to $11 million.

Card Guard stands out among the Israeli companies trading in Switzerland, whose valuations are said to be detached from their financial results. This is true of Oridion Systems (SWX:ORIDN), as well as of SHL TeleMedicine (SWX:SHLTN), which has yet to report significant earnings.

Card Guard's second quarter results show that it managed to sustain its rapid growth while retaining impressive profit margins.

The company posted positive earnings, before interest, taxes, depreciation and amortization of $6.9 million for the second quarter of this year. It recorded positive Ebitda of $4.5 million for the first quarter of this year.

The company attributes its revenue growth to partly to development of its monitoring services business.

It also credits alliances with multinationals such as U.S.-based Medtronic (NYSE:MDT), the Italian company Snia, which trades on the Italian stock exchange, and Tomen Corporation from Japan.

Its growth is also due to successful entry into medical imaging systems based on its contract to establish the National Indonesian Telemedicine Center. The project is backed by government institutions.

Geographically, for the first time in Card Guard's history, sales to the Far East including Japan exceeded sales in the United States.

Far East sales came to $14.6 million, compared with $2.5 million in the parallel quarter of 2000 and almost nothing in the first quarter of this year.

U.S. sales came to $13.8 million in the second quarter, a tad higher than in the second quarter of 2000.

European sales collapsed in the second quarter to $208,000, compared with $8.7 million in the first quarter.

Going Swiss
Despite the paucity of sales in Europe, Card Guard is determined arp drop will apparently not stop from Card Guard transforming itself from an Israeli corporation into a Swiss one. The company board, headed by CEO Jacob Geva, believes that "Swissification" would be beneficial for the company, at several levels.

"A newly founded Swiss company in Schaffhausen will become the new holding entity of Card Guard" to effect the move, the company stated.

"The step will broaden Card Guard's international shareholders base, as it will allow more institutional investors to invest in the company. Furthermore, as Card Guard will be closer to the Swiss med-tech and European healthcare market, the move will support our initiative in the promising European telemedicine market," Geva explained.

The move needs to be approved by the Israeli courts, and by Card Guard's shareholders at a special assembly scheduled for the end of September.

In parallel, Card Guard plans to move its listing from the SWX New Market to the SWX Main Board. The company went public in November 1999. Four months ago, Card Guard's Israeli shareholders sold their holdings in the company for some $116 million. The sellers included Shrem Fudim Kelner, which sold its 5% stake in return for $25 million, Polaris Venture Capital chief Rami Kalish, who owned a 0.5% stake for which he got $2.5 million.

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