Card Guard reports about the financial results Q3 2008, the best in the last years

These strong results were driven by LifeStar Ambulatory Cardiac Telemetry (ACT) services provided by Card Guard’s monitoring services in the U.S. The ACT service generated over USD 10.33 million in revenue this 3rd quarter, which contributed to the overall growth of 83.3% from Q3 2007 revenues. Card Guard also generated first time sales of the PMP4 wireless healthcare system with fetal monitoring capabilities in Europe.

Launch of LifeStar ACT III Platinum On September 30, 2008, LifeWatch launched its next-generation LifeStar ACT III Platinum (ACT III) monitor in the U.S. This high-performance Ambulatory Cardiac Telemetry system, cleared by the FDA in June 2008, provides more sensitive and specific arrhythmia detection through its 3-channel ECG functionality and ST deviation analysis that can measure ischemic changes. The ACT III monitor automatically detects and sends heart rhythm abnormalities to a 24/7/365 LifeWatch monitoring call centre. As stated in previous reports and media releases, all three LifeWatch call centres are staffed by certified cardiac technicians, who interpret the data and initiate physician notification based on pre-determined criteria. The ACT III monitor offers broader functionality compared to its predecessor, the ACT I.

With six hours of memory in the sensor and a flash memory of up to 21 days of data on the ACT Cell phone monitor, no valuable data is lost if a patient is disconnected from the cellular phone. The sophisticated algorithm and advanced wireless and web-based technologies of ACT III enhances data collection, analysis, transmission and reporting, and can be utilized in standard and alternative patient monitoring programs, such as Specialized Atrial Fibrillation (AF) Patient Care and Congestive Heart Failure (CHF) programs.

New national CPT codes to cover the ACT Services across the whole USA Card Guard AG will profit from new national reimbursement rates that cover the LifeStar ACT Ambulatory Telemetry services in the U.S.A. The rates were established by the Centers for Medicare and Medicaid Services ("CMS"), which is the largest healthcare payor in the U.S. and is funded by the federal government. The new reimbursement rates apply to standardized billing codes known as CPT (Current Procedural Terminology) codes, which were published by the American Medical Association ("AMA") on October 10, 2008, and will become effective on January 1, 2009. LifeWatch is reimbursed by CMS for the technical component of its monitoring services.

The current reimbursement rate for the technical component of LifeStar™ ACT is USD 1,123, as established by Highmark Medicare Services. Highmark is the administrator for CMS payments in Pennsylvania, where the LifeStar ACT Monitoring Centre is located. While the CPT codes are recognized nationally, Highmark retains responsibility for administrating the 2009 reimbursement rate for the technical component of the CPT code. The establishment of new national CPT codes will simplify the claim process for LifeStar ACT services as it will eliminate the necessity of billing for these services with a variety of other codes. The new CMS codes and rates for the LifeStar ACT service will broaden its appeal to all healthcare providers as we anticipate widespread adoption by other payors in the U.S.

Monitoring Services The outstanding third quarter of 2008 was led by Card Guard’s Monitoring Services, with revenues of USD 20.37 million, up 83.3% compared to revenues in the third quarter of 2007. This exceptional growth is directly attributable to the ongoing successful adoption of the ACT device and monitoring services by hospitals, cardiology practices, and electrophysiologists. The ACT service is now being utilized by 24 cardiac institutions that have enrolled their AF catheter and surgical ablation patients in the LifeWatch AF Patient Care Program. Launched in May of 2008, this first-to-market AF Patient Care Program provides objective periop arrhythmia analysis that can dramatically improve a physician’s ability to assess the clinical outcomes from these complex procedures, through real-time ECG data and improved medical compliance.

Sales of Systems Sales of Systems in the third quarter of 2008 reached USD 2.75 million, up from revenues of USD 1.78 million recorded in the corresponding quarter of 2007. This growth is attributed to the sales of the PMP4 wireless healthcare system and monitoring devices that will be utilized by a healthcare provider in Europe for monitoring pregnant women at risk. Card Guard expects to receive additional orders from this customer in Q4 of 2008 and throughout 2009. Sales in Asia and other regions remained relatively unchanged during the 3rd quarter.

U.S. remain Card Guard’s most important market Consolidated revenues reflect the highest growth potential from the U.S. market. For the 3rd quarter of 2008, the consolidated revenues are comprised as follows:

USA – USD 21.71 million compared to USD 12.39 million for 3rd quarter of 2007

Europe – USD 1.02 million compared to USD 0.07 million for 3rd quarter of 2007 Asia – USD 0.29 million compared to USD 0.35 million for 3rd quarter of 2007 Other markets – USD 0.1 million compared to USD 0.08 million for 3rd quarter of 2007

Improved Gross Profit, EBIT and EBITDA In the 3rd quarter of 2008, Card Guard’s gross profit increased to USD 13.08 million, reflecting an impressive gross margin of 56.6%. This compares to a gross profit of USD 5.53 million and a gross margin of 42.9% that was recorded in the 3rd quarter of 2007.

The higher gross margin is attributed to the growth in ACT services and to the sales of the PMP4 in Europe.

A positive and impressive EBITDA of USD 4.78 million yielding a double digit margin of 20.7% was recorded in the 3rd quarter of 2008, versus an EBITDA of USD 0.46 million reported in the corresponding quarter of 2007. EBIT for the 3rd quarter of 2008 also improved significantly to reach USD 3.77 million, compared to an LBIT of USD 0.49 million for the 3rd quarter of 2007. These impressive results continue the positive trends from the previous four consecutive quarters that are directly attributed to the significant increase in ACT revenue streams and the strict cost controls throughout the organization.

Operating Expenses In the 3rd quarter of 2008, Research and Development costs amounted to USD 1.18 million, compared to USD 0.98 million recorded in the 3rd quarter of 2007. Selling and marketing expenses in the 3rd quarter of 2008 were USD 4.35 million, compared to 3rd quarter of 2007 sales and marketing expenses of USD 2.86 million. This growth is due to the increase in the U.S. national sales force to support the increased sales activities for ACT services.

General and Administration expenses for this quarter were USD 3.78 million, compared to USD 2.26 million recorded during the corresponding quarter of 2007, but almost the same as for the Q2 2008 General and Administration costs. The total operating expenses as a percentage of revenue in Q3 2008 were lower than those reported in Q3 2007.

Net Result Improvements The positive net result for the 3rd quarter of 2008 amounted to USD 1.61 million, following a net loss of USD 1.07 million reported in the 3rd quarter of 2007. Earnings per share for the 3rd quarter of 2008 were USD 0.12 (fully diluted) compared with a loss per share of USD 0.09 for the 3rd quarter of 2007.

Stronger Cash flows and increasing liquidity Net cash improved during the 3rd quarter of 2008. Net cash provided by operating activities amounted to USD 3.28 million. Card Guard improved its balance of cash, cash equivalents, marketable securities and structures which amounted to USD 20.77 million as of September 30, 2008 (out of which our cash and cash equivalents were USD 18.1 million) compared to USD 14.07 million reported for September 30, 2007 and USD 17.84 million as of June 30, 2008.

As stated in previous quarterly reports, LifeStar ACT is the “growth engine” of Card Guard. Based on the sustained growth of patient enrollments and a higher reimbursement rate for the ACT service, we are confident that the positive trends of the first three quarters of 2008 will continue into the next quarters.