LIFE aTyr Pharma Inc

Revenue growth of 9.1% to USD 52.5 million - above-market growth in core monitoring services resulting in market share gains - substantial increase in profitability as efficiency measures bear fruit - EBITDA margin of 13.8% achieved - net profit of USD 1.9 million vs. net loss of USD 4.7 million in H1 2014 - full-year guidance reiterated

LifeWatch AG (SIX Swiss Exchange: LIFE), a leading developer and provider of medical solutions and remote diagnostic monitoring services in the digital health market, is pleased to report on good progress during the first half of 2015. In total, revenues during the first six months amounted to USD 52.5 million, an increase of 9.1% compared to the prior year period. Monitoring services (99.7% of revenues) grew by 12.1%, clearly outperforming the market average and thus resulting in market share gains. During the first half year, our US-based subsidiary LifeWatch Services Inc. signed 40 new or amended contracts, underpinning our brand and sales force successes. Device sales declined to USD 0.2 million due to delivery delays into the second half of 2015. The gross profit margin amounted to 52.8% versus 52.1% a year earlier. We expect the gross margin to continue to expand mid-term as on-going cost and efficiency measures, product mix improvements and new project launches take effect.

Substantial improvement in operating profitability

Our operating profitability improved substantially thanks to the positive impact of the restructuring and productivity measures that we implemented over the past year. As such, EBITDA during the first half year reached USD 7.2 million (H1 2014 LBITDA of USD -1.5 million), equivalent to an EBITDA margin of 13.8%, and EBIT amounted to USD 3.8 million (EBIT margin of 7.3%), marking the highest levels since the first half of 2009. Significant progress was achieved in Sales & Marketing thanks to sales force optimization and territory realignment, resulting in an 800 bps reduction 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 as other opportunities currently under review, involve significant costs in the short-term, we believe they are necessary to enhance our future growth and thereby remain a leader in this rapidly growing digital health market.

Outlook

LifeWatch stands by its full-year 2015 guidance. The company is continuing its efforts to update and grow its core business while at the same time launching new products and entering new markets. Dr. Stephan Rietiker commented: "Our market growth and efficiency programs are progressing well and I am particularly excited about the prospects for our new products and of our new markets. We firmly believe that we are setting the stage for continued above average growth and increased profitability in the years to come."

Key figures (unaudited, USD millions):

 

H1 2015

 

H1 2014

Revenues 52.51 48.12 Gross profit 27.75 25.09 As % of revenues 52.8% 52.1% EBITDA / (LBITDA) 7.23 (1.52) As % of revenues 13.8% NA EBIT / (LBIT) 3.81 (4.13) As % of revenues 7.3% NA Net income (loss) 1.94 (4.72) As % of revenues 3.7% NA Earnings (loss) per share 0.14 (0.36) Total fixed assets, net 16.22 13.02 Total assets 71.94 68.54 Total equity 39.04 34.82 As % of total assets 54.3% 51% Net cash flow 0.02 (3.92) Employees 612 561  

Detailed reporting

The report on the first half 2015 can be found on our website using the following link: http://irlifewatch.com/websites/lifewatch_ir/English/4020/interim-reports. html

The presentation on the first half 2015 is available under this link: http://irlifewatch.com/websites/lifewatch_ir/English/5010/financial-presentations.html

Today's conference call

A conference call on LifeWatch's half-year results will be held today at 14.00 CET.

Dial-in numbers for the conference call:CH: +41 22 580 59 70GER: +49 69 2222 29 043UK: +44 203 00 92 452US: +1 855 402 77 66Participant Pin Code: 60170589#

The live audio webcast and presentation slides will be available under following link: http://lifewatch200815-live.audio-webcast.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 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.

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

View source version on businesswire.com: http://www.businesswire.com/news/home/20150819006321/en/

LifeWatch AG c/o Dynamics GroupPhilippe Blangey / Doris RudischhauserPhone: +41 43 268 32 35 / +41 79 410 81 88investor-relations@lifewatch.com