LifeWatch AG

EANS-Adhoc: LifeWatch AG reports strong results for second quarter 2009 as seventh consecutive quarter of year-over-year revenue growth Entering the market for Home Sleep Testing

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3-month report/LifeWatch Q2 2009 Results

28.07.2009

Neuhausen am Rheinfall / Switzerland - LifeWatch AG (SIX Swiss Exchange: LIFE), the leading provider of wireless cardiac monitoring services in the U.S., today announces strong results for the second quarter of 2009. Starting in the fourth quarter, LifeWatch will enter the market for Home Sleep Testing with a new monitoring service offer package called NiteWatch.

The following link will take you to the complete press release:

http://www.newsaktuell.ch/pdf/lifewatch_q2_2009_english_final.pdf

The following link will take you to the Letter to Shareholders Q2 2009:

http://www.newsaktuell.ch/pdf/lts__q2_09_final_28072009.pdf

Q2 2009 Highlights are as follows:

@@start.t2@@. Consolidated revenues reached USD 33.92 million, reflecting growth of
         66.8% compared with Q2 2008

      . Gross profit margin of 59.6% representing USD 20.2 million in gross profit

      . EBITDA of USD 8.85 million with a 26.1% margin, compared with a 21.7%
         margin in Q2 2008

      . EBIT of USD 7.21 million with a margin of 21.3%, versus a 16.1% margin in
         Q2 2008

      . Positive operational cash flow of USD 8.18 million, more than double the
         USD 3.12 million generated in Q2 2008

      . 6 new managed care contracts at LifeWatch Services were signed in Q2 2009,
         totalling 464 contracts, and covering over 296 million lives

      . LifeStar ACT wireless monitoring service achieved more than 18,500
         enrollments in Q2 2009@@end@@

LifeWatch AG reported very strong results for the seventh consecutive quarter, with consolidated revenues of USD 33.92 million in Q2 2009. This reflects revenue growth of 66.8% compared with Q2 2008 revenues of USD 20.34 million. LifeWatch also realized continued operational efficiencies, with higher EBIT and EBITDA margins, and net income growth. Net income of USD 5.01 million in the second quarter 2009 increased substantially year-over-year from USD 1.03 million in Q2 2008. Earnings per share for this quarter were USD 0.379 (fully diluted), a significant increase from USD 0.083 (filly diluted) earnings per share reported in Q2 2008. In Q2 2009, LifeWatch generated USD 8.18 million in cash flow from operations, compared with USD 3.12 million recorded in Q2 2008. The balance of cash, cash equivalents, marketable securities and structures in Q2 2009 reached USD 30.20 million, of which cash and cash equivalents were USD 28.92 million. This compares with USD 17.84 million in cash, cash equivalents, marketable securities and structures reported in Q2 2008.

Monitoring Services

LifeWatch's Monitoring Services achieved revenues of USD 31.81 million in Q2 2009, compared with USD 18.78 million in Q2 2008, reflecting a 69% increase. ACT continues to be the primary driver of our impressive results, and supports our decision to focus on growing the wireless monitoring service business. Adoption of wireless cardiac monitoring solutions will continue to be driven by further outsourcing from hospitals and clinics to Independent Diagnositic Test Facilities (IDTFs) such as LifeWatch.

As reported on July 13, 2009, LifeWatch Services Inc. received a letter from Highmark Medicare Services (the carrier for CMS/Medicare services in Pennsylvania) announcing a reduction in reimbursement rates from USD 1,123 to USD 754 for the U.S. nationwide CPT Code 93229 beginning September 1, 2009. LifeWatch strongly believes that the planned reduction affecting all providers covered under CPT Code 93229 is unjustified, as a result of the cost related to providing 24-hour cardiac monitoring. LifeWatch in conjunction with the coalition of IDTFs is challenging the decision. Highmark's proposed rates is applicable to Medicare patients and impacts roughly a third of LifeWatch's LifeStar ACT enrollees. The remainder of our wireless cardiac arrhythmia monitoring enrollees are covered by 464 independent commercial contracts.

The LifeWatch Federal business division signed two new contracts with the Department of Defence (DoD) and three with the Department of Veterans Affairs (VA) for facilities to start utilizing LifeWatch monitoring services in Q2 2009. To help support this growth, a new Federal Client Executive was hired in the quarter.

In June of 2009, LifeWatch consolidated its monitoring centres to two fully redundant locations in order to better support our ACT telemetry platform. This allows LifeWatch to better align the clinical continuity and service operations that support the continued expansion of ACT, while becoming more efficient and cost effective.

Sales of Systems

Sales of Systems in Q2 2009 of USD 2.12 million compared with USD 1.55 million in Q2 2008. This growth was attributed mainly to sales of cardiac event recorders in the U.S. market.

New Market Entry - Home Sleep Testing Market

The Company's successful ACT wireless monitoring services in the U.S. has positioned LifeWatch as the brand leader in wireless telemedicine services, and to this end, LifeWatch intends to leverage its expertise in remote medical monitoring into complementary markets. As a first step, LifeWatch has announced a strategy to enter the sleep apnea market with an Obstructive Sleep Apnea (OSA) home sleep testing solution in the U.S. Untreated OSA patients have double the healthcare costs of those not afflicted, yet even with the high prevalence of OSA in the U.S., less than 1 in 7 OSA patients have been diagnosed. The Sleep Testing Market is estimated at USD 3 billion; and is forecast at more than 3 million diagnostic tests in 2009. In January 2009, Medicare issued a coverage decision memorandum specific to HST for OSA diagnosis after an extensive review of 93 clinical studies conducted to validate the utilization of home sleep testing (HST), Given favorable reimbursement environment for HST, LifeWatch decided to enter into the HST market with its "NiteWatch" monitoring service platform, which will be launched in Q4 2009 to specific customers, with an expanded roll-out planned in 2010.

Reiterate 2009 Outlook

LifeWatch reiterates its 2009 guidance of at least 50% revenue growth with ongoing strong profitability. We expect the EBITDA margin to exceed 20%, with an EBIT margin above 16% for Fiscal Year 2009.

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 cardiac monitoring services. LifeWatch services treat 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 cardiac monitoring service provider, and manufacturer of telecardiology products. www.lifewatch.com

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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.

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ots Originaltext: LifeWatch AG
Im Internet recherchierbar: http://www.presseportal.ch

Further inquiry note:
Kobi Ben Efraim, Chief Financial Officer, LifeWatch AG
Tel +41 52 632 00 50 | Fax +41 52 632 00 51 | Email kobibe@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



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