EQS-Adhoc

LifeWatch AG: Q1 2016 Results and Strategy Update

EQS Group-Ad-hoc: LifeWatch AG / Key word(s): Quarter Results
LifeWatch AG: Q1 2016 Results and Strategy Update

06.07.2016 / 07:00
Release of an ad hoc announcement pursuant to Art. 53 KR.


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LifeWatch Announces Q1 2016 Results and Strategy Update


Zug/Switzerland, July 6, 2016 - LifeWatch AG (SIX Swiss Exchange: LIFE), a
leading developer and provider of medical solutions and remote diagnostic
monitoring services to the digital health market, today reported financial
results for the first three months of 2016 and provided an update on the
Company's revised strategy.

In the first quarter of 2016, revenues amounted to USD 28.4 million,
representing an increase of 12.3% compared to the first quarter of 2015.
The increase in revenues is attributable to above market revenue growth in
the Company's cardiac monitoring business in the United States.

The gross profit margin for the period improved to 56.2% or USD 15.95
million, representing an improvement from the 53.3% margin recorded for the
prior year's period.

The operating loss for the first quarter amounted to USD -13.2 million as
compared to a profit (EBIT) for the prior year period of USD 2.1 million.
Operating results were negatively impacted by settlement and legal costs
associated with the two legal cases, Highmark and Qui Tam, announced on
June 1, 2016 as well as other non-recurring expenditures. The operating
loss in the first quarter of 2016 was primarily attributable to the Qui Tam
settlement of USD 12.98 million.

Other operating costs were also moderately higher in the first quarter of
2016. Research and development costs were USD 1.15 million, or 4.0% of
revenue, as a result of certain external costs in connection with the MCT
1-lead patch. Sales and marketing costs increased to USD 5.86 million, or
20.6% of revenue, as compared to the prior year period of USD 4.40 million,
driven primarily by higher sales commissions for performance above plan.

General and administrative costs increased to USD 9.0 million, or 31.7% of
revenue, compared to USD 5.96 million in Q1 2015. Higher G&A costs were
attributable to several factors including higher labor, legal and outside
service costs. There was also an increase in the provision for bad debt
based on the implementation of a more robust methodology. Investments in
additional quality assurance and quality control personnel and the
utilization of external quality/regulatory consultants along with increases
in legal costs associated with the aforementioned legal cases represented