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DGAP-Adhoc: LifeWatch achieves volume growth of 13.1% in the first half of 2014

August 19, 2014

LifeWatch AG / Key word(s): Half Year Results 20.08.2014 07:05 Release of an ad hoc announcement pursuant to Art. 53 KR --------------------------------------------------------------------------- Press Release LifeWatch achieves volume growth of 13.1% in the first half of 2014 LifeWatch continued to expand as sales reached USD 48.12 million in H1 2014, an increase of 10.2% versus H1 2013. Higher expenses resulted in a net loss of USD 4.72 million in H1 2014. Based on the on-going operational improvements and a more focused sales approach a turnover in excess of USD 100 million and a positive operating result for FY 2014 is targeted. In total, revenues surged by 10.2% to USD 48.12 million in the first six months of 2014, compared to USD 43.68 million in the first half of 2013. 99% of revenues were generated by our US-based subsidiary. The volume increase was higher than the revenue increase as a result of an 8% price decrease by Medicare. Gross profit margin amounted to 52.1% versus 59.3% a year earlier. The margin drop is attributable to one-off costs of USD 1.84 million. Adjusted for these one-time effects, a gross margin of 56.0% would have resulted. Furthermore, the initiated optimization process together with increased Sales and Marketing and General and Administration costs had an impact on profitability and resulted in an operating loss of USD 4.13 million compared to an EBIT of USD 2.71 million in H1 2013. As a result of the corrective action taken we expect this reduction in profits to be temporary. On-going operational improvements We expect that the various streamlining activities initiated thus far will bear fruit as of the second half of this year and especially next year. The objectives being addressed include the broadening of the product and service offering, the expansion of the current technology globally, the assessment of developing a mHealth accessory device as well as the move towards becoming a fully-integrated biomedical informatics provider. The following measures and strategies have already been implemented: a) restructuring and redefinition of the Israeli R&D operation, b) realignment of US sales territories and regions to improve efficiency as well as refocusing of the sales commission plan, c) implementation of a global Governance, Risk and Compliance program, d) structural changes including realigning the business along global lines and e) establishment of a senior management leadership and training program. In addition we are in the process of updating and standardizing our financial reporting systems. Vital Signs Patch on track for launch in 2015 LifeWatch signed 19 new or amended agreements for NiteWatch Home Sleep Test services and Ambulatory Cardiac Telemetry (ACT) services during the first half of 2014. We further expect to launch the Vital Signs Patch (VSP) in the first half of 2015, following marketing clearance from the FDA. This potentially game changing technology is an easy to use sensor worn on a patient's upper chest. Once activated, the system provides automation and alerts of key vital signs via continuous wireless monitoring. Outlook LifeWatch expects to exceed its goal of USD 100 million in revenues in 2014, with an improvement in EBIT and EBITDA. We are confident of growing revenues by strengthening our market share in existing markets as well as globalizing our service offerings. Dr Stephan Rietiker commented: "I strongly believe in our company's people, technology and service offering and I am working, together with my team, to bring the company to the next level. I also firmly believe that this year of transition will set the stage for the future and I am excited about the prospects for the company." Key figures (unaudited, USD millions): H1 2014 H1 2014 H1 2013 adjusted Revenues 48.12 48.12 43.68 Gross Profit 26.93 25.09 25.92 As % of revenues 56.0% 52.1% 59.3% EBITDA / (LBITDA) 1.45 (1.52) 4.32 As % of revenues 3.0% NA 9.9% EBIT / (LBIT) (1.16) (4.13) 2.71 As % of revenues NA NA 6.2% Net income (loss) (1.75) (4.72) 8.88 Earnings per share (basic) (0.36) 0.68 Total fixed assets, net 13.02 7.76 Total Assets 68.54 69.28 Total equity 34.82 44.12 As % of assets 51% 64% Net Cash Flow (3.92) 4.97 Employees 561 535 Adjustments to H1 2014 figures USD millions LifeWatch V Healthphone inventory write-off 1.19 One-off costs for improved phone contract 0.40 Memory cards purchase 0.25 Adjustment to Gross Profit 1.84 Disputed billings 0.38 Israel restructuring 0.25 Legal reserve 0.50 Total adjustment * 2.97 * to EBITDA (LBITDA), EBIT (LBIT) and Net Income (Loss) Detailed reporting The report on the first half 2014 can be found on our website using the following link: http://irlifewatch.com/websites/lifewatch_ir/English/4020/quarterly-report s.html Today's conference call A conference call on our half-year results will be held today at 14.00 CET. Dial-in will be as follows: CH: +41 44 580 65 22 GER: +49 69 2017 44 210 US: +1 877 423 0830 Participant Pin Code: 558424# For further questions: LifeWatch AG c/o Dynamics Group, Philippe Blangey / Doris Rudischhauser Phone: +41 43 268 32 35 E-mail: investor-relations@lifewatch.com About LifeWatch AG: LifeWatch AG, headquartered in Neuhausen am Rheinfall and listed on SIX Swiss Exchange (LIFE), Switzerland, is a leading healthcare technology and solution company, specializing in advanced telehealth systems and wireless remote Patient monitoring services. LifeWatch's services provide physicians with critical information to determine appropriate treatment and thereby improve Patient outcomes. LifeWatch AG has operative subsidiaries in the United States, in Switzerland and in Israel, and is the parent company of LifeWatch Services Inc., and LifeWatch Technologies, Ltd.LifeWatch Services, Inc. is a leading U.S.-based provider of cardiac monitoring services and home sleep testing of Obstructive Sleep Apnea (OSA). LifeWatch Technologies Ltd., based in Israel, is a leading developer and manufacturer of telemedicine products. For additional information, please visit www.lifewatch.com. Sign up for customized e-mail alerts and documentation requests at http://www.irlifewatch.com/alert-service.aspx 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, the 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 FROM 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. 20.08.2014 News transmitted by EQS Schweiz AG. The issuer is responsible for the contents of the release. EQS publishes regulatory releases, media releases on the capital market and press releases. The EquityStory Group distributes authentic and real-time financial news for over 1'300 listed companies. The Swiss news archive can be found at www.equitystory.ch/news --------------------------------------------------------------------------- Language: English Company: LifeWatch AG Rundbuckstrasse 6 8212 Neuhausen am Rheinfall Switzerland Phone: +41 52 632 00 50 Fax: +41 52 632 00 51 E-mail: Internet: www.lifewatch.com ISIN: CH0012815459 Valor: 811189 Listed: Freiverkehr in Berlin, Stuttgart; Frankfurt in Open Market ; SIX End of Announcement EQS Group News-Service ---------------------------------------------------------------------------


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