LifeWatch AG

EQS-Adhoc: LifeWatch AG: First half-year 2016 financial results


EQS Group-Ad-hoc: LifeWatch AG / Key word(s): Half Year Results
LifeWatch AG: First half-year 2016 financial results

18.08.2016 / 07:00
Release of an ad hoc announcement pursuant to Art. 53 KR.


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LifeWatch reports first half-year 2016 financial results


Revenue growth of 8.6% to USD 57.0 million - negative EBIT and EBITDA
principally caused by one-time charges

Zug/Switzerland - LifeWatch AG (SIX Swiss Exchange: LIFE), a leading developer
and provider of medical solutions and remote diagnostic monitoring services in
the digital health market, reports continued revenue growth during the first
half of 2016.

Overall revenues during the first six months amounted to USD 57 million, an
increase of 8.6%, whereas monitoring service revenue in the US grew by 10%
compared to the prior year. Revenue grew less strongly in Q2 compared to Q1,
which had shown revenue growth of 12.3%.

Significant one-time costs negatively impact profitability

The gross profit margin in the first half of 2016 was 49.1% as compared to 52.8%
a year earlier. The reduction in margin is attributable to the write-off of
capitalized software development costs and inventory for the Vital Signs Patch
(VSP) project as well as other obsolete inventory. Without these one-time
write-offs, the gross margin would have been 55.5%.

Research and development expenses increased to 4.7% of revenues in H1 2016 (H1
2015: 3.8%) mainly due to lower capitalization of software development costs.
However, without capitalization, R&D expenses would represent 5.8% of revenues
(H1 2015: 5.7%). Sales and marketing expenses increased to 19.5% of revenue in
H1 2016 (H1 2015: 18.0%). The increase is attributed to higher sales commission
payments associated primarily with the increased revenue. General and
Administrative (G&A) expenses in H1 2016 were 31.7% of revenue (H1 2015: 23.8%).
G&A was negatively impacted by two one-time items (see table below), which
contributed to the increase of USD 5.5 million in this category.

Other increases in G&A include costs related to a bonus scheme for all
employees, higher labor costs, recruitment fees for several new senior staff
members, new website design, FDA consultant costs, upgrade of global
interconnectivity and the implementation of a new disaster recovery system.

The provision to pay the Qui Tam settlement, once the anticipated approvals by
the government are received, and the reduction in the Highmark settlement,
together with a recovery from the Pharmalife case are included under other
charges and represent one-time legal settlement costs in the half-year.

Principally as a result of these one-time items, LifeWatch incurred a loss from
operations (EBIT) of negative USD 7.63 million (H1 2015: USD 3.81 million) and a
loss before interest, tax and depreciation (EBITDA) of negative USD 3.0 million
(H1 2015: USD 7.2 million). Following the deduction of financial costs, tax and
the share of the losses from establishing operations in Turkey, LifeWatch had a
net loss of USD 9.8 million (H1 2015; net income of USD 1.9 million).

The table below shows adjusted EBIT and adjusted EBITDA:

One-off items(in USD million):                         

Vital Signs Patch development / inventory             -3.612

Qui Tam settlement                                    -12.975

Reduction in Highmark settlement                      8.973

Pharmalife recovery net of employee settlement 0.248

Professional fees related to legal settlements -0.964

Automation of bad debt provision calculation          -1.247

Total                                                 -9.577

Adjusted EBIT                                         1.952

Adjusted EBIT margin                                  3.4%

Adjusted EBITDA                                       6.620

Adjusted EBITDA margin                                11.6%
 
Outlook

LifeWatch is revising its full year guidance from that announced in its July 6,
2016 press release. Whilst LifeWatch maintains that the Company will have a
positive EBITDA margin, in the single digit range and negative EBIT and net
income, the Company now expects that, as a result of the slowing of sales growth
in the second quarter, revenue growth is likely to be in the single digit range.

Although the first half of 2016 has been disappointing, management is of the
opinion that with the settlement of the two older legal cases, the Company has
finally resolved the major remaining historical issues and can now fully focus
on growing the business going forward.

With the launch of the new Mobile Cardiac Telemetry (MCT) 1-lead patch, the
upcoming completion of several internal development projects and the planned
entry into the Turkish market, the company has laid the foundation for future
growth, the benefits of which should materialize in the second half of 2016 and
beyond.

Key figures (unaudited, USD millions):

                          H1 2016 H1 2015

Revenues                  57.02   52.51

Gross profit              28.01   27.75

As % of revenues          49.1%   52.8%

EBITDA / (LBITDA)         (2.96)  7.23

As % of revenues          NA      13.8%

EBIT / (LBIT)             (7.63)  3.81

As % of revenues          NA      7.3%

Net income (loss)         (9.80)  1.94

As % of revenues          NA      3.7%

Earnings (loss) per share (0.73)  0.14

Total fixed assets, net   16.58   16.22

Total assets              76.32   71.94

Total equity              15.90   39.04

As % of total assets      20.8%   54.3%

Net cash flow             (3.90)  0.02

Employees                 631     612
 
Detailed reporting
The report on the first half 2016 can be found on our website using the
following link:

http://irlifewatch.com/download/companies/lifewatch/Quarterly%20Reports/LifeWatc
h_HY2016.pdf

The presentation on the first half 2016 is available under this link:

http://irlifewatch.com/download/Companies/lifewatch/Presentations/presentation_L
ifeWatch_HY2016_en.pdf

Today's conference call
A conference call on LifeWatch's half-year 2016 results will be held today at
15.00 CET.

Dial-in numbers for the conference call:

CH: +41 22 580 59 70
GER: +49 69 2222 29 043
UK: +44 203 00 92 452
US: +1 855 402 77 66
Participant Pin Code: 60170589#

The presentation slides (without audio) will be available under following link:
www.audio-webcast.com
Password: lifewatch0816

The live audio webcast will be available under following link:
http://lifewatch180816-live.audio-webcast.com


For further questions: 
LifeWatch AG, Andrew Moore, CFO
c/o Dynamics Group, Doris Rudischhauser 
Phone +41 43 268 27 40 / Mobile +41 79 410 81 88 
E-Mail: investor-relations@lifewatch.com 


About LifeWatch AG

LifeWatch AG, headquartered in Zug and listed on SIX Swiss Exchange (LIFE),
Switzerland, is a leading healthcare technology and solution company,
specializing in advanced digital health systems and wireless remote diagnostic
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. LifeWatch Technologies Ltd.,
based in Israel, is a leading developer and manufacturer of telemedicine
products. For additional information, please visitwww.lifewatch.com.

Sign up for customized e-mail alerts and documentation requests at
http://www.irlifewatch.com/websites/lifewatch_ir/English/9510/alert-service.html

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 MUST
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.

End of ad hoc announcement
Additional features:


Document:http://n.eqs.com/c/fncls.ssp?u=IUOXLVSPEB
Document title: LifeWatch reports first half-year 2016 financial results

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18.08.2016 News transmitted by Tensid EQS AG. www.eqs.com

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Language: English

Company:  LifeWatch AG

          Baarerstrasse 139

          6300 Zug

          Switzerland

Phone:    +41 41 728 67 78

Internet: www.lifewatch.com

ISIN:     CH0012815459

Valor:    811189

Listed:   Regulated Unofficial Market in Berlin, Stuttgart; Open Market in
Frankfurt ; SIX


End of News EQS Group News Service
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