SHL TeleMedicine

(SWX:SHLTN) today reported achieving net profit of $3.34 million for the first quarter of 2001, compared with $500,000 in the fourth quarter of 2000.

The company attributes the rise largely to increased revenues from financing, due to favorable change in the exchange rate of the shekel against the dollar. The company therefore does not regard the profit as typical of the coming quarters.

Revenues climbed to $5.53 million for the first quarter of 2001, 18% more than in the first quarter last year, and 6% more than in the fourth quarter of 2000.

SHL co-president Erez Alroy says that the company's goal was to expand its international activity. In the first quarter activity outside Israel contributed 21% of sales, compared with just 7% in the whole of 2000.

Erez Alroy noted that the company has appointed Ronen Elad as chief of its business in Israel. This will free Erez Alroy and Yoram Alroy, SHL's chairman, to devote themselves to operations outside Israel.

The Alroy brothers own the controlling interest in SHL, together with Philips Medical Systems.

Alroy said that SHL has not rejecting the option of expanding outside Israel through acquisitions.

During the first quarter, SHL announced U.S. Food & Drug Administration approval for its CardioBeeper 12/12.

The product can transfer a full electrocardiogram within 12 seconds to a medical services receiver.

The approval of the CardioBeeper 12/12 completes the FDA approval of SHL's remote patient-monitoring system.

Based on the FDA approval, Alroy believes that the company will start selling products in the American market by year-end.

UBS Warburg has rated SHL a Strong Buy and set a price target of SF 62, 90% above its market price. UBS expects 45% to 50% sales growth in 2001.

The investment house underwrote SHL's IPO on the Swiss exchange.

Alroy accepts with UBS' forecasts. He believes that the company's international operations will help make these forecasts come true.

SHL reported operating profit for the first quarter of $1 million, compared with $1.26 million in the first quarter of 2000.

Alroy attributes the drop to eroded goodwill after the company changed its holdings structure and assumed full ownership over its subsidiaries.

In addition, Alroy says that the recruitment of new workers mainly for the company's international operations boosted wage costs.

But compared with its operating profit in the fourth quarter of 2000, SHL posted a 60% increase.

Joint venture with Philips

At the end of January this year, SHL announced the establishment of a joint venture with Philips Medical Systems, called Philips HeartCare Telemedicine Services Europe.

The venture will incorporate SHL's telemedicine systems and Philips' medical products. SHL hopes Philips will open the door to Europe's markets.

Philips owns 80.1% of the venture. SHL has an option to increase its 19.9% stake to 35%.

Alroy estimates that the joint investment will come to tens of millions of shekels. But SHL will profit from its status as exclusive supplier to the venture.

"The revenues from the venture are still insignificant to date. But the fact that we planned to launch it in two small countries and a big one, and in fact launched it in two big ones and a small one (Germany, Italy and Switzerland) is indicative of its potential," Alroy concluded.