EQS-Adhoc

LifeWatch AG: LifeWatch AG reports above-market revenue growth of 9.1% and substantial improvement in profitability during first half 2015 - Seite 2

to 18% of revenues (H1 2014: 26%). Likewise, the reorganization of the R&D
activities during the second half of 2014 as well as the capitalization of
some development costs led to a 300 bps reduction in R&D to 3.8% of
revenues. Without capitalization, R&D expenses would represent 5.7% of
revenues (H1 2014: 8%). Thanks to these substantial cost savings, together
with slightly lower General & Administration costs, the absence of
restructuring charges and despite a higher tax charge, LifeWatch was able
to achieve a positive net income of USD 1.94 million during the first half
of 2015, compared to a net loss of USD 4.72 million during the prior
period. As a result of this good operating performance, the company
generated a cash flow from operations of USD 4.2 million during the first
six months of 2015, against a cash drain of USD 2.8 million during H1 2014.
The equity ratio stood at 54.3% as of June 30, 2015 (53.4% as of December
31, 2014).

On-going development and market activities
As previously announced, development activities are continuing on both our
cardiac and vital signs monitoring patches. The pilot trials for the vital
signs monitoring system are on-going with two new clinics being added in
September, one in the United States and one in Switzerland. The FDA's
enforcement of its new guidances on medical devices "Design Considerations
for Devices Indicated for Home Use" and "Mobile Medical Applications" has
resulted in unexpected minor delays in obtaining the requisite FDA
clearances for LifeWatch's cutting-edge technologies. Clearance for the
vital signs monitoring system is however still expected later this year,
allowing for a limited market release during the fourth quarter. The
cardiac monitoring patch is currently being tested in a hospital
environment. Here again, the new FDA guidance is somewhat delaying
regulatory clearance, although we still anticipate a full market launch
later this year.

Positive news was received in July regarding an 8% increase in the
reimbursement rate from Medicare for our Telemetry offering (ACT) as of
2016. This should lead to improved revenues and profits of around USD 3.5
million in 2016. This change will further enhance our expected revenue
growth for 2016 and beyond.

Furthermore, we are on track to launch our cardiac monitoring business in
the Turkish market in the first half of 2016 and are currently in the
process of establishing the necessary organization and infrastructure to
meet this goal. This is a first step in the global expansion of our remote
cardiac monitoring services. Although these development activities, as well