EANS-Adhoc: LifeWatch reports on results for the First Quarter 2010

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3-month report/LifeWatch AG Q1 2010

11.05.2010

• Ongoing positive cash flow
• ACT patient enrollments up 37% to 21,099 patients
• The first 300 patient enrollments for the NiteWatch service
• Additions of managers with proven track record to LifeWatch team

Neuhausen am Rheinfall / Switzerland - LifeWatch AG (SIX Swiss
Exchange: LIFE), the leading wireless remote cardiac and medical
patient monitoring service provider in the U.S., today announces
results for the First Quarter 2010.

The following link will take you to the complete press release and to
the Letter to Shareholders Q1 2010:

http://production.investis.com/lifewatch/

First Quarter 2010 highlights are as follows:

• Positive operating cash flow of USD 6.24 million, compared to USD 4.52
generated from operations in Q1 2009

• Increase from December 2009 of USD 4.44 million in cash, cash equivalents
and marketable securities to reach USD 43.55 million

• Revenues of USD 22.39 million, compared to USD 28.04 in Q1 2009

• LBIT of USD 3.99 million, compared to EBIT of USD 5.60 million in Q1 2009

• LBITDA of USD 2.35 million compared to EBITDA of USD 6.93 million in Q1
2009

• Net loss of USD 1.09 million, compared to a net profit of USD 11.02
million in Q1 2009

• A one-time inventory mark-down of approximately USD 1.5 million

• ACT enrollments up 37% to 21,099 patients

• NiteWatch Home Sleep Test services enrolls first 300 patients on
service

During Q1 2010, LifeWatch once again experienced significant growth
of its ACT service with enrollments increasing 37% compared to Q1
2009. Moreover, the Company generated strong cash flows from
operating activities of USD 6.24 million, 38% more than the USD 4.52
million generated in Q1 2009. However, despite these positive
operational developments, our first quarter results were
significantly affected by certain insurers´ decision not to reimburse
the Company´s ACT services after the gradual switch to a new
dedicated billing code. This reimbursement denial issue was not
expected and was a main driver behind our disappointing Q1 results.
We generated revenues of approximately USD 22 million for Q1 2010, a
20% decline from Q1 2009. This reduction in revenues, along with a
one-off write down of inventories amounting to some USD 1.5
million,results in a negative EBIT (LBIT) of approximately (USD 4)
million in Q1 2010.

LifeWatch is currently working through the formal appeals process
with the insurers in question to ensure overall patient coverage for
ACT services as quickly as possible. Given the general acceptance of
the importance and value of the service, we are hopeful for a
favorable resolution in the near future.

U.S. Monitoring Services Market Remains Promising

In the first quarter of 2010, LifeWatch´s consolidated revenues for
all its markets are reported below:

• In the U.S., USD 22.08 million revenues were achieved compared with USD
27.45 million in Q1 2009. This decline is principally attributable to the
non-payment of reimbursement claims for ACT services by a small number of
payors responsible for a significant number of patients, partly to the
general reduction in reimbursement levels predicted in 2009 and to the
decline in sales of systems. Enrollments were higher quarter over
quarter.

• International revenues, which were only device related, fell to USD 0.31
million compared with USD 0.59 million in Q1 2009.

Focus on Monitoring Services Drives Growth

ACT wireless cardiac monitoring services enrolled 21,099 patients in
Q1 2010, an increase of 5,672 enrollments compared with Q1 2009.
Revenues from sales of systems fell to USD 0.64 million in Q1 2010,
compared with USD 1.79 million in the corresponding period of 2009.
This development was expected, as the move from a focus on device
sales to a focus on monitoring services continued.

Strategic Update: Growth Strategy

Over the years, LifeWatch has developed a service management platform
that positions the Company to capitalize on the substantial
opportunity in remote healthcare monitoring. LifeWatch´s
infrastructure, technology, clinical capabilities and insurance
company relationships enable the efficient expansion into multiple,
new monitoring services. Cardiac monitoring and sleep testing are
only the first two services to utilize the Company´s platform;
additional services will be launched in the future. LifeWatch has
developed a growth plan to take advantage of the opportunity in
remote healthcare monitoring. The Company´s target growth areas
include:

• Current Services - with the aim of expanding and growing the cardiac
monitoring and sleep test businesses
• New Services - with the aim of identifying and expanding into new areas of
healthcare remote monitoring
• New Geographies - with the aim of identifying and expanding into
attractive international markets

The Company aims to generate USD 500 million of revenues by 2015, at a 20 - 25%

EBIT margin, and forecasts significant contributions from all its
target growth areas.

Additions to LifeWatch team

LifeWatch has further strengthened its team with several new hires
with extensive experience in business development, marketing, IT,
finance, operations, and mergers and acquisitions. The LifeWatch team
is tasked with implementing and executing the Company´s corporate and
growth strategy that will capitalize on the substantial opportunities
in remote medical monitoring while constantly seeking efficiencies to
increase operating leverage, reduce costs and improve profitability.

2010 Outlook

LifeWatch expects that the reimbursement environment will remain
challenging in the near term and has thus revised its outlook for the
full year 2010 with a USD 100-105 million revenue target and a USD
1-3 million EBIT target. The Company believes that its ACT service
will continue to grow substantially throughout the year and that
NiteWatch will accelerate its expansion in the marketplace. As a part
of its long-term growth strategy, LifeWatch will prudently invest in
new services and new geographies. Through the efforts of both the
familiar and new members of the LifeWatch team, the Company is poised
to return to profitability in the near term while laying the
foundation for expansion into other lucrative markets in the future.

About LifeWatch AG:

LifeWatch AG, headquartered in Neuhausen am Rheinfall and listed on
SIX Swiss Exchange (LIFE), Switzerland, is the leading healthcare
technology and solution company, specializing in advanced telehealth
systems and wireless remote patient monitoring services. LifeWatch
services cater to individuals, ranging from high-risk and chronically
ill patients, to consumers of health and wellness products. LifeWatch
has subsidiaries in the United States, the Netherlands, Japan, the
United Kingdom, Switzerland and Israel. LifeWatch AG is the parent
company of LifeWatch Services Inc., a leading US-based cardiac
monitoring service provider, and manufacturer of telecardiology
products. LifeWatch is also introducing a new program for Home
SleepTesting of Obstructive Sleep Apnea (OSA) patients under the
brand name NiteWatch. For additional information, please visit
www.lifewatch.com and www.nitewatchservices.com

This press release includes forward-looking statements. All
statements other than statements of historical facts contained in
this press release, including statements regarding future results of
operations and financial position, business strategy and plans and
objectives for future operations, are forward- looking statements.
The words "believe," "may," "will," "estimate," "continue,"
"anticipate," "intend," "expect" and similar expressions are intended
to identify forward-looking statements. LifeWatch AG has based these
forward- looking statements largely on current expectations and
projections about future events and financial trends that it believes
may affect the financial condition, results of operations, business
strategy, short term and long term business operations and
objectives, and financial needs. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions. In light
of these risks, uncertainties and assumptions, the forward-looking
events and circumstances described may not occur and actual results
could differ materially and adversely from those anticipated or
implied in the forward- looking statements. All forward-looking
statements are based only on data available to LifeWatch AG at the
time of the issue of this press release. LifeWatch AG does not
undertake any obligation to update any forward-looking statements
contained in this press release as a result of new information,
future events or otherwise.

THIS PRESS RELEASE IS NOT BEING ISSUED IN THE UNITED STATES OF
AMERICA AND SHOULD NOT BE DISTRIBUTED TO UNITED STATES PERSONS OR
PUBLICATIONS WITH A GENERAL CIRCULATION IN THE UNITED STATES. THIS
PRESS RELEASE DOES NOT CONSTITUTE AN OFFER OF SECURITIES OF LIFEWATCH
AG OR ANY OF ITS SUBSIDIARIES FOR SALE IN THE UNITED STATES OR AN
INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF LIFEWATCH
OR ITS SUBSIDIARIES IN THE UNITED STATES. IN ADDITION, THE SECURITIES
OF LIFEWATCH AG AND ITS SUBSIDIARIES HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
DELIVERED WITHIN THE UNITED STATES OR TO U.S. PERSONS ABSENT
REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE UNITED STATES SECURITIES LAWS. ANY PUBLIC
OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE
BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM LIFEWATCH AG OR
ITS SUBSIDIARIES, AS APPLICABLE, AND WILL CONTAIN DETAILED
INFORMATION ABOUT THE ISSUER AND ITS MANAGEMENT AS WELL AS FINANCIAL
STATEMENTS OF THE ISSUER.

end of announcement euro adhoc
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ots Originaltext: LifeWatch AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Woo Kim, Senior Vice President of Strategy and Business Development, LifeWatch

Tel +1 847 813 4299 | Fax +1 847 813 24 48 | Email wkim@lifewatch.com

Sensus Investor and Public Relations GmbH, Zürich:

Tel +41 43 366 55 11 | Fax +41 43 366 55 12 | Email lifewatch@sensus.ch

Branche: Healthcare Providers
ISIN: CH0012815459
WKN: 1281545
Index: SPI, SPIEX
Börsen: Frankfurt / Open Market / XETRA
SIX Swiss Exchange / Hauptsegment
Berlin / free trade