EANS-Adhoc: LifeWatch AG to report on promising Fourth Quarter 2011 and Full Fiscal Year 2011 Financial Results (with document)

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Analysts' Comments/LifeWatch AG

29.02.2012

+ Revenues increased by 18% to USD 22.24 million in the fourth
quarter

2011;
+ EBIT of USD 0.09 m and EBITDA of USD 1.08 million in the fourth quarter
2011;
+ Positive operating cash flow of USD 7.07 million in the fourth quarter
2011;
+ Completed cost reductions of over USD 15 million annually;
+ Another 25 million covered lives and 111 contracts in FFY 2011

Analyst and media conference, international live conference call and
audio web cast on LifeWatch Q4 2011 and FFY 2011 financial results:

+ Wednesday, February 29, 2012 at 10.00 a.m. CET at Zunfthaus zur Saffran,
Zurich/Switzerland;
+ 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/lifewatch120229.html;

Neuhausen am Rheinfall/Switzerland - LifeWatch AG (SIX Swiss
Exchange: LIFE), the leading provider of wireless telemedicine, today
announces the results for the fourth quarter 2011 and full fiscal
year 2011. LifeWatch marked up the end of a difficult year with a
return to growth and positive EBIT and EBITDA in the fourth quarter
2011. The Company continues to make improvements in all areas of its
business and is rolling out its promising strategy for an enforced
product and geographical diversification.

Fourth Quarter 2011 Financial Highlights:

• Revenues of USD 22.24 million, an increase of approximately 18% from Q3
2011

• EBIT of USD 0.09 million, compared with LBIT of 19.84 in Q3 2011

• EBITDA of USD 1.08 million, versus an LBITDA of USD 18.37 million in Q3
2011

• Net loss of USD 0.55 million versus net loss of USD 20.4 million in Q3
2011

• Positive operating cash flow of USD 7.07 million, versus negative
operating cash flow in Q3 2011

• Cash, cash equivalents, marketable securities and structures of USD 13.93
million, compared with USD 7.20 million recorded in Q3 2011

Full Fiscal Year 2011 Financial Highlights:

• Revenues of USD 82.24 million, compared with USD 87.09 million in
FFY 2010

• Successfully completed cost reductions of over USD 15 million annually

• LBIT and LBITDA of USD 28.22 million and USD 22.92 million respectively,
compared with LBIT of USD 4.85 million and EBITDA of USD 0.39 million,
respectively, in FFY 2010

• Excluding restructuring and other costs, LBIT and EBITDA in FFY 2011 were
USD 4.55 million and USD 0.76 million, respectively

• Net loss of USD 31.97 million, compared with net income of USD 0.83
million in FFY 2010

• Negative operating cash flow of USD 8.45 million

• Cash, cash equivalents, marketable securities and structures of USD 13.93

million on December 31, 2011

Business Update:

The civil OIG investigation had a big impact on our FFY 2011 results.
As published in our Q3 2011 letter to shareholders, LifeWatch
cooperated fully with the OIG and the DOJ throughout the
investigation. We are finalizing the settlement to be paid over five
years, and in Q3 2011, the Company booked a provision in a cumulative
amount of USD 18.50 million which is related to this issue. LifeWatch
will disclose further details once the settlement is completed with
the OIG and DOJ.

Technology Update:

LifeWatch has entered into a joint development agreement with the
U.S. American medical technology developer Ansar Group on a
break-through testing technology which will be deployed on a wide
range of LifeWatch wireless cardiac monitors in the coming months.
For the first time in the wireless cardiac monitoring industry, the
treating physician will be able to measure individual parasympathetic
and sympathetic responses of their patient. This information will be
significant in providing additional clinical data for patients with
Atrial Fibrillation, Syncope (fainting), Congestive Heart Failure,
Cardiac Autonomic Neuropathy (associated with increased risk of
mortality and morbidity), and Hypertension. These conditions together
affect an estimated 99 million Americans. An additional subset of
patients who could benefit from this test includes millions of
Americans who are currently prescribed Beta blockers.

Managed Care:

For fiscal 2011, LifeWatch signed 111 agreements, of which 51 were
for NiteWatch Home Sleep Test services, and 60 for Ambulatory Cardiac
Telemetry (ACT) services. Since 2010, LifeWatch has negotiated 367
contracts for these two services alone. Among the biggest private
insurance companies that LifeWatch contracted recently for its
services were the East Coast Carrier Magnacare in New York (850,000
covered lives) and the West Coast based carriers Blue Shield of
California (3.5 million covered lives) and Heritage Provider Network
(550,000 covered lives) from Southern California.

Home Sleep Testing:

In January of 2012, Kaiser Health News (a nonprofit news organization
providing in-depth coverage of health care policy and politics),
cited the rising costs of diagnosing Obstructive Sleep Apnea (OSA) in
the U.S. due to the overuse of sleep labs. Currently about 80% of the
sleep tests are performed at sleep labs, with 20% performed in the
home. As insurance companies are becoming more aware of the cost
benefits of diagnosing OSA with Home Sleep Tests, we believe the U.S.
market will experience a paradigm shift from Sleep Labs to the less
expensive non-attended home sleep testing. The national rates for OSA
are also rising, as a result of the increase of obesity in the
general population, which is expected to drive growth.

Joint Venture and Expansion into New Geographies:

In November 2011, LifeWatch and Tracker AG entered into a joint
venture to develop and distribute innovative products and solutions
in the field of telemedicine and monitoring services in Switzerland
and neighboring European healthcare markets. Their first jointly
developed product, the LifeTracker Mobile, is an innovative mobile
phone targeted to health and wellness conscious consumers over 55
years of age. LifeTracker products use M2M technology (machine to
machine) that enables an automated information exchange between
different devices such as mobile phones and blood pressure monitors.
Further product specific options are on track to be launched in the
first half of 2012.

Revenues:

Revenues for Q4 of 2011 reached USD 22.24 million, an improvement of
approximately 18% from Q3 of 2011. Revenues for FFY 2011 reached USD
82.24 million, a decrease of about 6% from FFY 2010 of USD 87.08
million. The decrease in FFY revenues is mainly due to the reduction
in reimbursement rates, a decrease in ACT enrollments due to tighter
reimbursement requirements, and the impact of the civil investigation
led by the Office of the Inspector General (OIG) on our sales force.

Gross Profit:

Gross profit during this reporting quarter improved to USD 13.48
million with a margin of 60.6%, compared with a gross profit of USD
8.81 million (46.9% margin) in Q3 2011. Gross margins improved due to
the increased revenues in Q4 2011, cost savings associated with the
termination of the Medical Policy Appeal Program (MPAP), and a
reduction in headcount. Gross profit in FFY 2011 reached USD 43.44
million with a margin of 52.8% compared to gross profit of USD 43.71
million with a margin of 50.2% in FFY 2010. The cost cutting measures
introduced in Q2 of 2011 had a positive impact on FFY gross profit
margin.

Net Income/Loss:

Net loss for the fourth quarter was USD 0.55 million compared to a
net loss of USD 20.40 million recorded in Q3 2011. Fully-diluted loss
per share was USD 0.04 in the fourth quarter of 2011 compared with
fully-diluted loss per share of USD 1.64 reported for the Q3 of 2011.
Net loss for FFY 2011 was USD 31.97 million compared to a net income
of USD 0.83 million recorded in FFY 2010. Fully-diluted loss per
share was USD 2.56 in FFY 2011 compared with fully- diluted earnings
per share of USD 0.06 reported for FFY 2010.

Outlook 2012:

We remain cautiously optimistic for FFY 2012. The healthcare cuts
proposed in the U.S. have been postponed until 2015; however we still
face competition from new entry level companies in our cardiac
monitoring services business. And our long-term growth strategy of
product and geographical diversification look promising.

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 Sleep
Testing of Obstructive Sleep Apnea (OSA) patients under the brand
name NiteWatch. For additional information, please visit
www.lifewatch.com.

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

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.

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Further inquiry note:
Sensus Investor and Public Relations, Zürich:
Tel +41 43 366 55 11 | Fax +41 43 366 55 12 | Email lifewatch@sensus.ch

end of announcement euro adhoc
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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: free trade: Berlin, Open Market / XETRA: Frankfurt, Main Standard:
SIX Swiss Exchange
language: English