[Key Information](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) [Risk Factors](index=5&type=section&id=D.%20RISK%20FACTORS) The company faces significant risks from telehealth industry regulations, international operational challenges in Israel, and various financial and market volatilities - The company operates in the **highly regulated healthcare industry** and the relatively new and volatile telehealth market, facing risks from evolving regulations, competition, and the need for continuous product innovation[27](index=27&type=chunk)[36](index=36&type=chunk)[39](index=39&type=chunk) - Operations in Israel expose the company to risks from **political and military instability**, such as the Israel-Hamas-Hezbollah war, which could disrupt business and affect personnel[47](index=47&type=chunk)[49](index=49&type=chunk)[55](index=55&type=chunk) - Operational risks include challenges of managing a global business, dependence on key suppliers, potential **data security breaches**, and exposure to foreign currency fluctuations[62](index=62&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - Financial and market risks include **stock price volatility**, potential dilution from future equity issuances, and reduced disclosure requirements as a foreign private issuer[81](index=81&type=chunk)[84](index=84&type=chunk)[91](index=91&type=chunk) - Holders of American Depositary Shares (ADSs) have **different and more limited rights** than direct shareholders, including limitations on voting and legal recourse[94](index=94&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk) [Information on the Company](index=18&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) [History and Development of the Company](index=18&type=section&id=A.%20HISTORY%20AND%20DEVELOPMENT%20OF%20THE%20COMPANY) Founded in 1986, the company has grown through international expansion, key acquisitions like Mediton Group, and listings on the SIX Swiss Exchange and Nasdaq - SHL was founded in 1986, listed on the SIX Swiss Exchange in 2000, and its ADSs traded on Nasdaq from **April 2023 until a voluntary delisting in April 2025**[109](index=109&type=chunk) - In 2021, SHL acquired **70% of Mediton Group for NIS 84 million**, with a subsequent disputed agreement to acquire the remaining 30%[115](index=115&type=chunk)[131](index=131&type=chunk) Capital Expenditures | (in thousands USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Development Costs | 2,714 | 4,203 | 5,243 | | Property and Equipment | 950 | 1,289 | 1,661* | | **Total** | **3,664** | **5,492** | **6,904** | [Business Overview](index=20&type=section&id=B.%20BUSINESS%20OVERVIEW) SHL provides personal telemedicine solutions focused on cardiac monitoring, operating primarily in Israel, Germany, and the United States with its SmartHeart® platform - SHL's core business is telemedicine services with a focus on cardiac care, featuring its key product, the **SmartHeart® 12-lead ECG platform**[120](index=120&type=chunk)[122](index=122&type=chunk)[139](index=139&type=chunk) - The company's growth strategy focuses on leveraging synergies with Mediton in Israel, expanding services in Germany, and driving **U.S. adoption of the SmartHeart® platform**[148](index=148&type=chunk)[149](index=149&type=chunk) - Clinical trials for the SmartHeart® device have shown positive results, including **significant reductions in hospital readmissions** for post-heart attack patients[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - The company faces **intense competition** in all markets, where key competitive factors include ease of use, price, brand recognition, and service quality[39](index=39&type=chunk)[174](index=174&type=chunk)[179](index=179&type=chunk) [Geographic Operations](index=21&type=section&id=SHL's%20Geographic%20Operations) The company's operations are segmented into Israel ($43M revenue), Europe ($13M revenue), and the U.S. ($1M revenue), each with a distinct business focus Revenue by Segment (2024) | Segment | Revenue (approx.) | | :--- | :--- | | Israel | $43 million | | Europe (Germany) | $13 million | | Rest of the World (U.S.) | $1 million | - In Israel, SHL provides 24/7 telemedicine services to private subscribers and offers diagnostics and preventative healthcare to institutional clients through its **Mediton subsidiary**[128](index=128&type=chunk)[132](index=132&type=chunk)[138](index=138&type=chunk) - In Germany, SHL has multi-year contracts with major health insurance funds to provide **remote patient monitoring** and telehealth services[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) - In the U.S., the focus is on the patented, **FDA-cleared SmartHeart® platform**, with efforts to gain OTC clearance and grow a direct-to-consumer program[139](index=139&type=chunk)[140](index=140&type=chunk)[148](index=148&type=chunk) [Regulations](index=24&type=section&id=Regulations) SHL operates under complex and evolving healthcare regulations across its key markets, including FDA standards in the U.S., AMR registration in Israel, and SHI system rules in Germany - In the U.S., medical devices are subject to **FDA approval**, and manufacturing must adhere to Good Manufacturing Practices (GMP)[150](index=150&type=chunk)[167](index=167&type=chunk) - In Israel, medical devices must be registered in the **"AMR register,"** and operations are subject to Ministry of Health and Consumer Protection Laws[152](index=152&type=chunk) - In Germany, recent legislative changes are encouraging telemedicine use within the statutory health insurance system through **digital health applications (DiGAs)**[135](index=135&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk) [Organizational Structure](index=29&type=section&id=C.%20ORGANIZATIONAL%20STRUCTURE) SHL Telemedicine Ltd. is the parent company of a global group with key operating subsidiaries in Israel, Germany, and the United States - SHL Telemedicine Ltd. is the parent company with a network of subsidiaries[182](index=182&type=chunk) - Key operating subsidiaries include **Mediton Medical Centers Chain Ltd. (70% owned)** in Israel, SHL Telemedizin GmbH in Germany, and SHL Telemedicine USA, Inc. in the US[183](index=183&type=chunk)[184](index=184&type=chunk) [Property, Plants and Equipment](index=30&type=section&id=D.%20PROPERTY%2C%20PLANTS%20AND%20EQUIPMENT) The company's principal facilities, including its head offices and telemedicine centers in Germany and Israel, are all rented - SHL **rents all its principal office** and telemedicine center facilities in Germany and Israel[185](index=185&type=chunk) [Operating and Financial Review and Prospects](index=31&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) [Operating Results](index=31&type=section&id=A.%20OPERATING%20RESULTS) In 2024, revenue remained stable at $56.8 million, but net loss widened significantly to $27.8 million due to major goodwill and development cost impairments Key Financial Results | (in thousands USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenue | $56,779 | $57,075 | $58,998 | | Gross profit | $25,793 | $25,261 | $27,189 | | Operating (loss) | $(26,793) | $(9,006) | $(5,166) | | Net profit (loss) | $(27,753) | $(6,855) | $215 | - Revenues remained flat year-over-year, with a **$1.4 million increase in Israel offset by a $1.4 million decrease in Germany**[204](index=204&type=chunk) - A significant increase in 'Other expenses' to $19.7 million was the main driver of the increased operating loss, including a **$13.5 million goodwill impairment** for the German unit[212](index=212&type=chunk) - Net financial income decreased drastically to a $21 thousand expense in 2024 from a $3.0 million income in 2023, which had benefited from **investor option modifications**[214](index=214&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=B.%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity weakened, with cash decreasing to $18.0 million in 2024, and management believes existing capital is sufficient for the next twelve months - Cash and cash equivalents combined with short-term bank deposits totaled approximately **$18.0 million at year-end 2024**, down from $26.0 million at year-end 2023[226](index=226&type=chunk) Cash Flow Summary | (In millions USD) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) operating activities | (0.4) | (1.5) | | Net cash provided by (used in) investing activities | 6.0 | (9.3) | | Net cash provided by (used in) financing activities | (4.9) | 13.7 | - Cash used in financing activities in 2024 was $4.8 million, contrasting with $13.7 million provided in 2023, which included **$20.0 million from the exercise of investor options**[235](index=235&type=chunk)[236](index=236&type=chunk) - The company has a long-term loan of **NIS 59 million ($18 million)** obtained in 2021 and was in compliance with its financial covenants as of December 31, 2024[243](index=243&type=chunk)[244](index=244&type=chunk) [Research and Development, Patents and Licenses](index=40&type=section&id=C.%20RESEARCH%20AND%20DEVELOPMENT%2C%20PATENTS%20AND%20LICENSES%2C%20ETC.) SHL focuses heavily on R&D for advanced telemedicine, protecting its intellectual property with key patents for its monitoring systems and trademarks for its SmartHeart® brand - Gross research and development costs were **$5.3 million in 2024**, down from $6.7 million in 2023[250](index=250&type=chunk) - The company holds key patents for its "Electrocardiographic Monitoring System" with **expiration dates extending to 2032**[252](index=252&type=chunk) - The **SmartHeart® trademark** is registered and protected in multiple jurisdictions, including the USA, Europe, China, and Japan[253](index=253&type=chunk) [Critical Accounting Estimates](index=42&type=section&id=E.%20CRITICAL%20ACCOUNTING%20ESTIMATES) The company's financial statements rely on significant management judgments, particularly for goodwill impairment testing and the recognition of deferred tax assets - **Impairment of goodwill** is a critical estimate, requiring management to project future cash flows and determine a suitable discount rate[257](index=257&type=chunk) - Recognition of **deferred tax assets** for carry-forward losses involves significant judgment regarding the likelihood of future taxable profits[258](index=258&type=chunk) [Directors, Senior Management and Employees](index=43&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) [Directors and Senior Management](index=43&type=section&id=A.%20DIRECTORS%20AND%20SENIOR%20MANAGEMENT) The company's leadership includes Chairman Dr. Itamar Offer and CEO David Arnon, heading a six-member board and an experienced executive team - Dr. Itamar Offer has served as **Chairman of the Board** since September 2024[262](index=262&type=chunk) - David Arnon was appointed **Chief Executive Officer** in August 2024[269](index=269&type=chunk) - Lior Haalman was appointed **Chief Financial Officer** in March 2025[270](index=270&type=chunk) [Compensation](index=45&type=section&id=B.%20COMPENSATION) Aggregate 2024 compensation for directors and executives was $1.2 million, governed by a shareholder-approved policy and supplemented by a share option plan - Aggregate compensation for directors and executive officers for 2024 was approximately **$1.2 million**, excluding share-based compensation[273](index=273&type=chunk) - As of May 1, 2025, executive officers and directors held outstanding options to purchase up to **867,124 ordinary shares**[274](index=274&type=chunk) - The company adopted a new **Compensation Policy**, approved by shareholders on May 9, 2024, in accordance with Israeli law[287](index=287&type=chunk) - The Share Option Plan allows for the grant of options to executives, directors, and key employees, with **exercise prices based on the 30-day average share price**[295](index=295&type=chunk) [Board Practices](index=49&type=section&id=C.%20BOARD%20PRACTICES) The six-member Board of Directors includes two external directors as required by Israeli law and maintains independent audit and compensation committees - The Board consists of six directors, including **two external directors**, complying with Israeli law; three directors are considered independent under SEC standards[302](index=302&type=chunk)[308](index=308&type=chunk) - The company has an Audit Committee and a Compensation Committee, both comprised of **three independent directors**[314](index=314&type=chunk)[320](index=320&type=chunk) - Mr. Yehoshua (Shuky) Abramovich serves as the Audit Committee's **financial expert**[314](index=314&type=chunk)[457](index=457&type=chunk) - The company has an **internal auditor**, Mr. Michael Gilinsky, appointed in May 2021 as required by Israeli law[330](index=330&type=chunk) [Employees](index=54&type=section&id=D.%20EMPLOYEES) SHL's full-time employee count decreased to 526 in 2024, with the majority located in Israel and working in operations Employees by Division and Location (as of Dec 31, 2024) | Division | Israel | Germany | U.S.A. | Total | | :--- | :--- | :--- | :--- | :--- | | Operation | 284 | 88 | - | 372 | | Research & Development | 16 | 16 | - | 32 | | Sales & Marketing | 39 | 8 | 3 | 50 | | General & Administrative | 52 | 19 | 1 | 72 | | **Total Employees** | **391** | **123** | **4** | **518** | - The total number of full-time employees was **526 as of December 31, 2024**, down from 583 at the end of 2023[332](index=332&type=chunk) [Share Ownership](index=55&type=section&id=E.%20SHARE%20OWNERSHIP) Significant beneficial ownership is held by directors through affiliated investment groups, while the CEO and CFO hold substantial option packages - Director Ido Nouberger beneficially owns **8.6% of ordinary shares** through his affiliation with Value Base Ltd[335](index=335&type=chunk)[339](index=339&type=chunk) - Director Nir Rotenberg beneficially owns **4.9% of ordinary shares** through his affiliation with Danbar Finance Ltd[335](index=335&type=chunk)[339](index=339&type=chunk) - CEO David Arnon holds options for **400,000 shares (2.4% of class)** and CFO Lior Haalman holds options for **320,000 shares (1.9% of class)**[335](index=335&type=chunk) [Major Shareholders and Related Party Transactions](index=56&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) [Major Shareholders](index=56&type=section&id=A.%20MAJOR%20SHAREHOLDERS) As of May 2025, the largest shareholder group held 36.4% of shares, though their voting rights are suspended, with several other funds holding significant stakes Major Shareholders as of May 1, 2025 | Identity of Person or Group | Amount Owned | Percent of Class | | :--- | :--- | :--- | | Mrs. Mengke Cai and Kun Shen (1) | 5,969,413 | 36.4% | | More Provident Funds | 2,111,576 | 12.9% | | Value Base Group | 1,406,236 | 8.6% | | Yariv Alroy | 801,456 | 4.9% | | Danbar Finance Ltd. | 791,405 | 4.8% | | Sphera Funds Management | 632,456 | 3.9% | - The voting rights of the largest shareholder group (Mengke Cai and Kun Shen) are **suspended by the Swiss Takeover Board**[342](index=342&type=chunk) [Related Party Transactions](index=57&type=section&id=B.%20RELATED%20PARTY%20TRANSACTIONS) The company has an employment agreement with its CEO that includes a significant option grant and leases office space from an affiliate of a former shareholder - CEO David Arnon's employment agreement includes a **NIS 90,000 monthly salary**, an annual bonus potential, and a grant of 400,000 options[348](index=348&type=chunk)[349](index=349&type=chunk) - The company leases office space for its Mediton subsidiary from an affiliate of a former shareholder of Mediton, with a monthly rent of approximately **$43,000**[353](index=353&type=chunk) [Financial Information](index=58&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) [Consolidated Statements and Other Financial Information](index=58&type=section&id=A.%20CONSOLIDATED%20STATEMENTS%20AND%20OTHER%20FINANCIAL%20INFORMATION) The company is not involved in any material legal proceedings and has not paid dividends since 2019, lacking a formal dividend policy - The company is not currently party to any legal disputes expected to have a **significant effect on its financial condition**[356](index=356&type=chunk) - The company does not have a dividend policy and **did not pay a dividend** in any year from 2020 to 2024[357](index=357&type=chunk)[358](index=358&type=chunk) [Additional Information](index=59&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) [Taxation](index=60&type=section&id=E.%20TAXATION) The company is subject to a 23% Israeli corporate tax rate and believes it was not a Passive Foreign Investment Company (PFIC) for U.S. holders in 2024 - The corporate tax rate for Israeli resident companies is **23%**[367](index=367&type=chunk) - Dividends paid to non-Israeli residents are generally subject to a **25% withholding tax**, which may be reduced by an applicable tax treaty[373](index=373&type=chunk)[374](index=374&type=chunk) - The company does not believe it was a **Passive Foreign Investment Company (PFIC)** for the 2024 taxable year, but its status is subject to annual determination[401](index=401&type=chunk) - If classified as a PFIC, U.S. Holders would face **adverse tax consequences**, including higher tax rates on certain distributions and gains[402](index=402&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) [Market Risk Disclosures](index=68&type=section&id=Market%20Risk%20Disclosures) The company is exposed to financial market risks including credit, foreign currency (NIS, USD, Euro), interest rate, and liquidity risk - **Credit risk** is concentrated in cash deposits with major banks and trade receivables from customers in Germany and Israel[420](index=420&type=chunk)[421](index=421&type=chunk) - The company is exposed to **foreign currency risk** from holding cash and making purchases in U.S. dollars and Euros, while its functional currency is the NIS[423](index=423&type=chunk)[425](index=425&type=chunk) - **Interest rate risk** is primarily related to a long-term loan with a floating interest rate (prime + 1.05%)[433](index=433&type=chunk) - **Liquidity risk** is managed via a recurring planning tool that considers financial asset maturities and projected operational cash flows[437](index=437&type=chunk) [Controls and Procedures](index=73&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) [Disclosure Controls and Internal Control](index=73&type=section&id=Disclosure%20Controls%20and%20Internal%20Control) Management concluded that disclosure controls were ineffective as of year-end 2024 due to material weaknesses in IT General Controls, with a remediation plan in progress - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2024[449](index=449&type=chunk) - **Material weaknesses** were identified in Information Technology General Controls (ITGCs), specifically in user access, segregation of duties, and program change-management[450](index=450&type=chunk)[451](index=451&type=chunk) - A remediation plan is underway, which includes implementing a **new ERP system** (expected by end of 2025) and improving IT policies[453](index=453&type=chunk)[455](index=455&type=chunk) [Cybersecurity](index=76&type=section&id=ITEM%2016K.%20CYBERSECURITY) [Cybersecurity Governance and Risk Management](index=76&type=section&id=Cybersecurity%20Governance%20and%20Risk%20Management) Cybersecurity is overseen by an external CISO and a Board Cyber Committee, with a strategy based on Israeli and international standards and no reported incidents in 2023-2024 - The company has an external Chief Information Security Officer and follows the **Israel Cyber Defense Doctrine 2.0** and standards like ISO 27001 and HIPAA[465](index=465&type=chunk)[466](index=466&type=chunk) - A Board-level **Cyber Committee**, established in 2020, oversees the company's information technology security measures[469](index=469&type=chunk) - The company conducts regular risk assessments and penetration tests, with **no cyber incidents or data breaches** occurring in 2024 and 2023[467](index=467&type=chunk)[468](index=468&type=chunk) [Financial Statements](index=77&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) [Notes to Consolidated Financial Statements](index=88&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key financial events including a significant goodwill impairment in Germany, a dispute over the Mediton acquisition, and the status of tax loss carryforwards [Note 11: Goodwill and Intangible Assets](index=109&type=section&id=NOTE%2011%3A-%20GOODWILL%20AND%20INTANGIBLE%20ASSETS%2C%20NET) In 2024, the company recorded a $13.45 million goodwill impairment for its German unit and a $2.77 million impairment for capitalized development costs - Recognized a goodwill impairment loss of **$13,450 thousand** in 2024 for the German cash-generating unit, citing lower-than-expected business performance[603](index=603&type=chunk)[608](index=608&type=chunk) - Recognized an impairment loss of **$2,765 thousand** for intangible assets, mainly capitalized development costs for unprofitable service applications[603](index=603&type=chunk)[610](index=610&type=chunk) Goodwill Allocation by CGU (in thousands USD) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Israel - Telemedicine | 3,109 | 3,126 | | Israel – Mediton | 16,022 | 16,111 | | Germany | - | 13,728 | | **Total** | **19,131** | **32,965** | [Note 19: Taxes on Income](index=124&type=section&id=NOTE%2019%3A-%20TAXES%20ON%20INCOME) The company has significant carryforward tax losses of $119.7 million, but a large portion of the related deferred tax assets have not been recognized on the balance sheet - As of Dec 31, 2024, the company has carryforward tax losses of approximately **$66.6 million in Israel, $33.4 million in Europe, and $19.7 million in the U.S.**[225](index=225&type=chunk)[658](index=658&type=chunk) - Deferred tax assets amounting to **$26,188 thousand** related to these losses were not recognized because their realization is not considered probable[659](index=659&type=chunk) [Note 20: Liability for Acquisition of Non-Controlling Interests](index=127&type=section&id=NOTE%2020%3A-%20LIABILITY%20FOR%20ACQUISITION%20OF%20NON-CONTROLLING%20INTERSTS) A liability of NIS 31.1 million has been recorded for the acquisition of the remaining 30% of Mediton, though the transaction is stalled due to a dispute over offset claims - The non-controlling interests (NCI) of Mediton exercised their **put option in September 2024** to sell their 30% stake to the company[663](index=663&type=chunk) - An arbitrator's binding decision set the exercise price at **NIS 31.1 million ($8,540 thousand)**, which is now recorded as a current liability[663](index=663&type=chunk) - The closing of the acquisition has not been completed due to a dispute, with SHL seeking to **offset the payment** against alleged misrepresentations by the sellers[663](index=663&type=chunk)[700](index=700&type=chunk) [Note 26: Segment Information](index=136&type=section&id=NOTE%2026%3A-%20SEGMENT%20INFORMATION) In 2024, the Israel segment was profitable ($8.3M), while the Europe (-$4.1M) and ROW (-$4.2M) segments recorded losses, contributing to the overall operating loss Segment Revenues by Customer Type (2024, in thousands USD) | Segment | Individuals & communities | Institutions & payers | Others | Total | | :--- | :--- | :--- | :--- | :--- | | Europe | - | 12,673 | - | 12,673 | | Israel | 20,325 | 23,126 | - | 43,451 | | ROW | - | - | 655 | 655 | | **Total** | **20,325** | **35,799** | **655** | **56,779** | Segment Profit (Loss) (in thousands USD) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Europe | (4,139) | (5,347) | (3,044) | | Israel | 8,346 | 8,424 | 8,641 | | ROW | (4,158) | (3,622) | (2,972) |

Acquisitions and Investments - The company acquired a 70% interest in the Mediton Group on August 31, 2021, enhancing its market position in telemedicine [25]. - In 2021, SHL acquired 70% of Mediton Group for approximately $26 million to enhance its service offerings in Israel [86]. - Future acquisitions or investments may involve substantial cash expenditures and could lead to dilution of equity, additional debt, and contingent liabilities [40]. - The company plans to enhance growth by selectively acquiring businesses that offer complementary technologies and services, such as the recent acquisition of Mediton [95]. Market Conditions and Competition - The telehealth market is rapidly changing, and the company's success depends on client willingness to adopt its solutions [32]. - Competition in the telemedicine sector has intensified, leading to pricing pressures that could negatively impact sales and profitability [33]. - The company anticipates continued pricing pressures due to competition from both small and large players in the telemedicine market [149][152]. - The competitive landscape includes significant players like GE Healthcare and Medtronic, with expectations of market consolidation as companies seek synergies [151][152]. Financial Performance - Revenue for the year ended December 31, 2023, was $57.075 million, a decrease from $58.998 million in 2022, representing a decline of approximately 3.3% [162]. - Gross profit for 2023 was $25.261 million, down from $27.189 million in 2022, indicating a gross margin of 44% compared to 46% in the previous year [162][163]. - Operating loss for 2023 was $(9.006) million, compared to $(5.166) million in 2022, indicating a worsening operational performance [162]. - Net loss for 2023 was $(6.855) million, a significant decline from a net profit of $0.215 million in 2022 [162]. - Total revenues decreased by approximately $1.9 million in 2023 compared to 2022, with a notable decline of $3.0 million in Israel attributed to a negative exchange rate impact of $4.0 million [194]. Regulatory and Legal Risks - The company operates under complex regulations that could result in legal challenges and penalties if not complied with [30]. - The rights and responsibilities of shareholders are governed by Israeli law, which may impose additional obligations not typically found in U.S. corporate governance [37]. - The ability to pay dividends is subject to Israeli law, which may be affected by currency fluctuations [21]. Operational Challenges - The company faces significant risks due to military instability in Israel, which could adversely affect operations and financial results [18]. - Political and economic conditions in Israel may lead to adverse effects on business operations and financial condition [35]. - The company may face operational disruptions due to military reserve duty requirements for employees in Israel [56]. - The company may face disruptions in operations and increased labor costs due to potential labor disputes as it expands significantly in the coming years [39]. Research and Development - The company has made substantial investments in research and development to address new market needs and enhance customer engagement [33]. - Research and development expenses increased to $5.260 million in 2023, up from $3.788 million in 2022, reflecting a rise to 9% of total revenue [162][163]. - The company is focused on developing advanced telemedicine technologies for cardiac diseases, particularly congestive heart failure [132]. Currency and Financial Risks - The company is exposed to transactional and translational currency exchange risks due to revenues and expenses in NIS, euros, and U.S. dollars, without engaging in foreign currency hedging [45]. - The company’s accumulated deficit increased from $73,074,000 in 2022 to $80,130,000 in 2023, a rise of approximately 10% [144]. - The company has carry forward tax losses totaling approximately $109.8 million as of December 31, 2023, which includes $62 million in Israel, $32.5 million in Europe, and $15.3 million in the U.S. [170]. Technology and Product Development - SHL's SmartHeart® platform is the only 12 lead ECG that allows a layperson to perform a full, hospital-quality ECG without professional assistance, and it is FDA-cleared [81]. - The SmartHeart® platform, introduced in the U.S. market in 2020, is a cloud-based technology enabling hospital-quality ECGs to be performed anywhere, with FDA clearance currently required for use [93]. - SHL's telemonitoring programs for chronic patients have shown a 76% reduction in hospital readmissions and a 41% decrease in emergency department visits compared to standard care [93]. - The company has established collaborations with major healthcare providers, including the Mayo Clinic, to evaluate the effectiveness of its SmartHeart® platform [125]. Shareholder and Governance Issues - ADS holders do not have the same rights as shareholders, including limitations on attending meetings and exercising voting rights [69]. - The company is a foreign private issuer, exempt from certain public disclosure requirements, which may afford less protection to ADS holders [67]. - As an emerging growth company, the company relies on exemptions from various reporting requirements, which may affect the attractiveness of its ADSs [68]. Future Outlook - The company has provided guidance for the next quarter, expecting revenue to be between $320 million and $350 million, which would reflect a growth of 10% to 15% [211]. - The company plans to expand healthcare services in Israel and Germany and increase distribution of the SmartHeart® platform, focusing on strategic partnerships with U.S. healthcare providers [189]. - The company is continuously examining potential acquisition targets, including competitors and telemedicine center operators, to expand its market presence [95].

Financial Reporting and Compliance - SHL Telemedicine's financial statements are prepared in accordance with IFRS and reported in U.S. dollars[13] - The company faces risks related to compliance with complex healthcare regulations, which could adversely affect its operations and financial condition[23] - The company may face challenges in complying with tax laws across multiple jurisdictions, which could impact its financial condition if tax policies are challenged[70] - The company is exempt from certain public disclosure requirements as a foreign private issuer, which may afford less protection to ADS and ordinary share holders[85] - The company is classified as an "emerging growth company," which may make its securities less attractive to investors due to reduced disclosure requirements[89] - The deposit agreement for ADS holders may be amended or terminated without their consent, potentially affecting their rights[92] Market and Competitive Landscape - The telehealth market is rapidly evolving, with significant competition leading to pricing pressures and potential impacts on sales and profitability[34] - The company faces significant competition in the telemedicine market, with competitors including GE Healthcare, Medtronic, and Philips Medical Systems, which have greater resources and established brands[166] - The competitive landscape includes pressures from both large companies and smaller startups, leading to potential pricing declines in certain product segments[163] - Recent legislative changes in Germany have accelerated the adoption of telemedicine services, with expectations for a significant market shift towards remote medical services[152] Business Operations and Strategy - The company acquired a 70% interest in the Mediton Group on August 31, 2021, enhancing its market presence[16] - SHL Telemedicine is focused on continuous product development and enhancements to meet customer needs and market demands[32] - The company aims to improve users' quality of life and reduce emergency interventions through its telemedicine solutions[104] - SHL has strategically acquired local companies in Germany, enhancing its position in the telehealth market and remote patient monitoring services[105] - SHL is actively seeking to enhance growth through selective acquisitions and cross-selling opportunities, including potential targets in telemedicine[141] Financial Performance - SHL's revenue for the year ended December 31, 2022, was $58,998,000, representing a 19% increase from $49,582,000 in 2021[193] - Gross profit for 2022 was $27,189,000, up from $24,593,000 in 2021, indicating a growth of 10.6%[193] - Operating expenses increased to $32,355,000 in 2022 from $25,090,000 in 2021, reflecting a rise of 28.9%[193] - The net profit for 2022 was $215,000, a significant recovery from a net loss of $13,924,000 in 2021[193] - SHL's operating loss for 2022 was $5,166,000, compared to a loss of $497,000 in 2021, indicating ongoing challenges in profitability despite revenue growth[193] Risks and Challenges - The ongoing COVID-19 pandemic presents operational challenges, including increased logistics costs and labor market competition[37] - Retaining key personnel is critical for SHL's growth strategy, with intense competition for skilled employees in the healthcare sector[40] - Military instability and political conditions in Israel may adversely affect the company's business and operations[44] - Labor disputes could disrupt operations or lead to higher labor costs, significantly impacting financial performance[58] - The company is exposed to operational risks due to differing legal and regulatory requirements in international markets[56] - The company is dependent on third-party suppliers and manufacturers, which may lead to logistical problems and affect product quality[61] - The company is exposed to data security and privacy risks, with potential impacts from cyberattacks and system breaches[65] - Fluctuations in exchange rates may affect the company's financial results, as revenues and expenses are paid in multiple currencies[66] Product Development and Innovation - SHL's patented SmartHeart® platform was introduced in the US in 2020, leading to commercial agreements with major healthcare providers like Mayo Clinic and CVS[106] - The SmartHeart® platform is a key product, being the only full ECG 12 lead ECG that can be performed by a layperson, and is FDA-cleared and patented[177] - The introduction of remote monitoring reimbursement by G-BA in early 2022 has established telemonitoring for congestive heart failure patients as the standard of care[137] - SHL's SmartHeart® platform is marketed to healthcare providers and payers in the US, with collaborations including the Mayo Clinic and CVS Health[162] Shareholder Information - As of May 5, 2023, certain principal shareholders hold approximately 36.4% of the issued shares of SHL, which may influence shareholder decisions if restrictions are lifted[73] - The market prices of the company's ADSs on Nasdaq and ordinary shares on the SIX may be highly volatile, influenced by economic conditions and geopolitical factors[75] - The company has not declared dividends since 2019, with no assurance of future dividends impacting shareholder returns[82] - The trading prices of the company's ADSs and ordinary shares may decline due to substantial future sales or perceived sales of equity securities[77]

Financial Performance - The company reported revenues of USD 59.0 million for 2022, a 27% increase compared to USD 46.4 million in 2021 in constant currency[10]. - Adjusted EBITDA for the period was USD 4.1 million, a decrease of 35% from USD 6.4 million in 2021 in constant currency, primarily due to investments in the US and Germany[10]. - The company achieved a net profit of USD 0.2 million, compared to a net loss of USD 13.3 million in 2021 in constant currency[14]. - In Germany, revenues decreased by 16% to USD 13.4 million compared to 2021 in constant currency, attributed to increased R&D expenses and competition[15]. - In the US, revenues remained stable at USD 0.5 million, with significant investments leading to a negative contribution of approximately USD 3.0 million during the period[20][21]. - Revenues in Israel increased by 51% to USD 45.1 million compared to USD 30.0 million in 2021 in constant currency, largely due to the consolidation of Mediton results[23]. - The company has a cash position of USD 18.7 million at the end of the reported period, indicating a strong balance sheet[10]. Contracts and Market Expansion - The company secured a seven-year contract with BARMER, one of Germany's largest health insurers, for Doctors' Virtual Visit and Telehealth services, expanding access to over 12.5 million insured individuals[16][19]. - The company plans to commence direct-to-consumer sales in the US pending FDA OTC clearance, supported by an inventory of USD 5.6 million of SmartHeart® devices[22]. - The company commenced trading on Nasdaq® on April 3, 2023, which is expected to enhance visibility in the US market[27]. Corporate Structure and Governance - SHL operates in one business segment - telemedicine services, providing centralized remote diagnostic and monitoring services to end-users[53]. - The company has subsidiaries in Israel, Germany, and the U.S., with SHL Germany providing telemedicine services mainly through German health insurers[53]. - The financial statements committee was eliminated, and its tasks were transferred to the Audit Committee effective January 15, 2023[48]. - The company is subject to the corporate governance principles laid down in the Israeli Companies Law and the regulations of the SIX Swiss Exchange[51]. - The Board of Directors consists of eight members, including two Independent Directors, in compliance with Israeli regulations[104]. - The company has a diverse board with members holding various significant positions in the financial and healthcare sectors[119][121][123][124]. Share Capital and Ownership - As of December 31, 2022, SHL's market capitalization was CHF 217.3 million, with 14,683,644 shares issued out of an authorized capital of 250,000 NIS[57]. - As of December 31, 2022, the company had 100% ownership in several subsidiaries, including SHL Telemedicine International Ltd. and SHL Telemedicine USA, Inc.[59]. - As of December 31, 2022, Mrs. Mengke Cai and Kun Shen hold 5,969,413 ordinary shares, representing 40.65% of the voting rights[64]. - More Provident Funds and Pension Ltd increased its holdings to 1,812,525 shares, accounting for 11.06% of the voting rights[67]. - The total share position of the Company as of December 31, 2022, includes 2,735,305 shares (18.63%) related to shares and granted incentive plan options[67]. - The authorized share capital is NIS 250,000, divided into 25,000,000 ordinary shares with a par value of NIS 0.01 each[71]. - As of December 31, 2022, the issued and outstanding share capital was NIS 146,822.72, consisting of 14,682,272 ordinary shares[72]. Compensation and Incentives - The Company is not aware of any cross-shareholdings exceeding 5% of the share capital and voting rights by any significant shareholders[70]. - Under the 2021 Share Incentive Plan, a maximum of 4,077,346 options are reserved for issuance, with 1,969,119 options available for grant as of the date hereof[75]. - The weighted average exercise price of options outstanding at the end of 2022 was CHF 11.85, with a fair value of CHF 3,215,749[80]. - The Company held 1,372 of its own Ordinary Shares as of December 31, 2022, which do not confer voting rights[92]. - The Company has no Convertible Bonds issued, and all options are detailed in the authorized capital section[102]. - The Compensation Policy aims to align officer compensation with SHL's long-term goals and risk management policies[185]. - The aggregate fair value of share-based compensation for officers is capped at 1.5 times the annual base salary for each officer, and 2.5 times for the CEO, over a three-year period[189]. - The annual cash bonus for executive officers can be up to 12 times the CEO's base salary and up to 6 times for other VPs[196]. - A minimum performance threshold of 80% of target KPIs is required for any annual bonus payment[195]. Board Activities and Committees - The Board of Directors approved the elimination of the FS Committee on January 15, 2023, transferring its functions to the Audit Committee[155]. - The Audit Committee held two meetings during the year, each lasting approximately 1 hour, with attendance from the CEO, CFO, and external auditors[148]. - The Compensation Committee conducted five meetings in the year, with an average duration of approximately 1 hour, attended by the CEO and CFO[151]. - The Investment Committee was established on February 21, 2019, to determine the investment policy for cash proceeds not required for ongoing operations[157]. - The M&A Committee was appointed on June 16, 2019, to facilitate prospective M&A transactions[158]. - The Cyber Committee was established on February 10, 2020, to recommend actions for the security of the Company's information technology systems[160]. - The Executive Committee was appointed on May 17, 2020, to assist the CEO in operating the Company's ongoing business[162]. - The Internal Auditor, Mr. Michael Gilinsky, was appointed in March 2021 and participated in one Audit Committee meeting during the year[163]. Risk Management and Compliance - SHL's risk management includes ongoing identification and mitigation of financial and non-financial risks, including credit and liquidity risks[166]. - The company has an Internal Auditor who examines processes and controls related to financial operations and compliance[165]. - The Audit Committee is required to examine flaws in business management and propose remedial measures to the Board[147].

Company Registration and Trading - SHL Telemedicine Ltd. announced that its registration statement on Form 20-F was declared effective by the U.S. Securities Exchange Commission[5] - The company's American Depositary Shares are expected to commence trading on the NASDAQ Capital Market under the ticker symbol "SHLT" on April 3, 2023[5] Forward-Looking Statements - The press release includes forward-looking statements with cautionary notes regarding factors that could cause actual results to differ from projections[5]