EANS-Adhoc: LifeWatch to announce results for the third quarter 2011 (with document)

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3-month report/LifeWatch AG Q3 2011 results

09.11.2011

• Cumulative provision of USD 18.50 million to settle OIG
investigation • Strict compliance program is set in place •
Most cost-cutting initiatives completed

International conference call/audio web cast about LifeWatch AG
results in the third quarter 2011

• Wednesday, November 9, 2011 at 03:00 p.m. CET
• Dial-in number: +41 (0)91 610 56 00 (Europe)/+44 (0)203 059 58 62(UK)/+1
(1) 866 291 41 66 (USA - Toll-free)
• Audio web cast: https://services.choruscall.eu/links/lifewatch111109.html

Neuhausen am Rheinfall/Switzerland - LifeWatch AG (SIX Swiss
Exchange: LIFE), the leading provider of wireless telemedicine, today
announces the results for the third quarter 2011. LifeWatch´s
financial results for the third quarter 2011 were largely impacted by
the distraction in its sales force and with some accounts related to
the OIG investigation. While no final agreement has been reached to
date the Company has booked a provision in a cumulative amount of USD
18.50 million to settle this issue. Furthermore the Company has taken
strict measures to ensure total compliance to U.S. government
healthcare compliance and regulation in its entire organization.

You will find a PDF-version of this press release and of the Letter
to Shareholders for the results of the third quarter 2011 at the end
of this message.

Third Quarter 2011 Financial Highlights:

+ Revenues of USD 18.78 million;

+ LBIT and LBITDA of USD 19.84 and USD 18.37 million respectively,
compared to a LBIT of USD 8.55 million and LBITDA of USD 7.02
million, respectively in Q2 2011;

+ Net loss of USD 20.40 million, compared to a net loss of USD 10.07
million in Q2 2011;

+ Cash, cash equivalents, marketable securities and structures of USD
7.20 million on September 30, 2011, compared to USD 11.53 million in
the previous quarter;

+ Completion of most cost-cutting initiatives;

Management analysis:

LifeWatch AG reports on a very difficult third quarter of 2011.
Revenues in Q3 2011 reached USD 18.78 million, a decrease of
approximately 7% over Q2 2011 revenues. This decrease is mainly
attributed to the distraction to our sales force and some accounts
related to the previously announced OIG investigation, lower
enrollments due to seasonal factors, and higher deductibles many
patients are required to pay for healthcare related services.

As previously announced, our U.S. subsidiary, LifeWatch Services,
Inc., is under a civil investigation by the Office of the Inspector
General of the U.S. Department of Health and Human Services ("OIG")
that audits the use of Medicare and TriCare payments in the U.S.
healthcare market, and by the United States Department of Justice
("DOJ"). The investigation concerns Medicare and TriCare payments
made to LifeWatch. LifeWatch has cooperated fully with the OIG and
the DOJ throughout the investigation, and is currently negotiating a
settlement to be paid over five years. While no final agreement has
been reached to date and the terms are yet to be finalized, as of
September 30, 2011, LifeWatch has booked a provision in a cumulative
amount of USD 18.50 million to settle this issue. As soon as the
Company has completed the settlement with OIG and DOJ, we will
disclose further details.

In order to enhance its compliance program and pro-actively align
itself with the latest government healthcare compliance and
regulatory guidelines, LifeWatch engaged an outside firm, Strategic
Management Services, LLC ("SMS"), which has extensive experience in
health care compliance and regulatory oversight. SMS developed a
comprehensive Ethics and Compliance Program for LifeWatch. The
compliance program is overseen by a Corporate Compliance Officer.
Pursuant to the compliance program, every LifeWatch employee is
trained and tested annually on compliance policies and procedures.
Further training is mandatory for any employee involved in billing,
coding, or providing care to patients. A quarterly audit is conducted
to ensure that our employees understand and comply with applicable
laws and policies, and conform to the highest standards of ethics and
integrity. LifeWatch requires strict adherence to this program to
ensure that appropriate care is provided to federal health care
program beneficiaries and that the claims submitted for such care are
complete and accurate.

During Q3 2011, LifeWatch received approximately USD 3.7 million from
the withheld Medicare reimbursement payment of USD 11.8 million. The
remaining payment of approximately USD 8.0 million was received in
October 2011. The Company also completed the majority of its cost
cutting initiatives in Q3 2011, which contributed to a reduction in
costs of services and operational expenses. These measures already
have a positive impact on this quarter and will continue to improve
going forward.

Revenues:

Revenues decreased 7% to reach USD 18.78 million in Q3 2011 from USD
20.15 million in Q2 2011. As discussed previously, the decrease in
revenues was mainly due to the distraction of our sales force and
some accounts during the OIG investigation, lower enrollments
associated with the summer season (fewer patients visiting
physicians), and the cancellation or transfer of ACT or NiteWatch
services by patients with no coverage or higher healthcare plan
deductibles.

Gross Profit, LBIT and LBITDA:

Cost of services decreased by USD 1.36 million this quarter, and
contributed to an improved gross margin of 46.9%, compared to a gross
margin of 43.8% in Q2 2011. This improvement, despite lower revenues,
is mainly attributable to a reduction in the costs associated with
monitoring services, no further overlap of payroll expenses in our
San Francisco call center and the termination of the Medical Policy
Appeals Program (MPAP). LBIT was USD 19.84 million, compared to LBIT
of USD 8.55 million in Q2 2011. Excluding the restructuring and
others, LBIT was significantly less compared to the previous quarter.
Operational expenses were mainly reduced through headcount
reductions, a decrease in legal costs and other efficiencies. The
cost savings and restructuring initiatives will be completed in Q4
2011, and are expected to have a positive impact in Q4 2011 and going
forward. LBITDA was USD 18.37 this quarter, compared to LBITDA of USD
7.02 in Q2 2011.

Net Loss:

Net loss this quarter was USD 20.40 million, compared to a net loss
of USD 10.1 million in Q2 2011. Fully-diluted loss per share was USD
1.64 this quarter, compared to a full-diluted loss per share of 0.81
in Q2 2011.

Center of Monitoring Excellence:

LifeWatch Services, Inc. has monitored millions of Americans since it
was founded in 1992. In 2010 alone, more than 275,000 patients were
enrolled on our advanced cardiac monitoring or Home Sleep Test
services. Each month we receive numerous cards and emails from
patients thanking us for the excellent service and care provided to
them during a stressful time of their life. Other patients rate our
service offering through our patient satisfaction surveys, which we
conduct monthly. In fact, we average over 95% in "Good to Excellent"
scores for all aspects of our service. We have much to be proud of,
and salute our employees who deliver best in care services. .

Sign-up for customized E-mail alerts and documentation requests is
available at http://production.investis.com/lifewatch/alert-service/

About LifeWatch AG:

LifeWatch AG, headquartered in Neuhausen am Rheinfall, Switzerland
and listed on SIX Swiss Exchange (LIFE), is the leading healthcare
technology and solutions company, specializing in advanced
telemedicine systems and wireless remote patient monitoring services.
LifeWatch provides services to high-risk and chronically ill
patients, health conscious consumers and wellness programs. 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 wireless
remote telemedicine provider. LifeWatch services include Home Sleep
Testing for Obstructive Sleep Apnea patients under the brand name
NiteWatch. For additional information, please visit
www.lifewatch.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
AG 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.

Attachments with Announcement:
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http://resources.euroadhoc.com/us/ToCwLq5B
http://resources.euroadhoc.com/us/o1izYpb6

Further inquiry note:
Kobi Ben Efraim, Chief Financial Officer, LifeWatch AG:
Tel +41 52 632 00 50 | Fax +41 52 632 00 51 | E-mail kobibe@lifewatch.com

Sensus Investor & Public Relations, Zürich:
Tel +41 43 366 55 11 | Fax +41 43 366 55 12 | E-mail lifewatch@sensus.ch

end of announcement euro adhoc
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Attachments with Announcement:
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http://resources.euroadhoc.com/us/ToCwLq5B
http://resources.euroadhoc.com/us/o1izYpb6

issuer: LifeWatch AG
Rundbuckstrasse 6
CH-8212 Neuhausen am Rheinfall
phone: +41 52 632 00 50
FAX: +41 52 632 00 51
mail: users@lifewatch.com
WWW: www.lifewatch.com
sector: Healthcare Providers
ISIN: CH0012815459
indexes: SPI, SPIEX
stockmarkets: Open Market / XETRA: Frankfurt, free trade: Berlin, Main Standard:
SIX Swiss Exchange
language: English