EANS-Adhoc: LifeWatch to announce results for the third quarter 2011 (with document)
2 Documents
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3-month report/LifeWatch AG Q3 2011 results
09.11.2011
Cumulative provision of USD 18.50 million to settle OIG investigation
Strict compliance program is set in place
Most cost-cutting initiatives completed
International conference call/audio web cast about LifeWatch AG results in the
third quarter 2011
Wednesday, November 9, 2011 at 03:00 p.m. CET
Dial-in number: +41 (0)91 610 56 00 (Europe)/+44 (0)203 059 58 62(UK)/+1
(1) 866 291 41 66 (USA - Toll-free)
Audio web cast: https://services.choruscall.eu/links/lifewatch111109.html
Neuhausen am Rheinfall/Switzerland - LifeWatch AG (SIX Swiss Exchange: LIFE),
the leading provider of wireless telemedicine, today announces the results for
the third quarter 2011. LifeWatch´s financial results for the third quarter 2011
were largely impacted by the distraction in its sales force and with some
accounts related to the OIG investigation. While no final agreement has been
reached to date the Company has booked a provision in a cumulative amount of USD
18.50 million to settle this issue. Furthermore the Company has taken strict
measures to ensure total compliance to U.S. government healthcare compliance and
regulation in its entire organization.
You will find a PDF-version of this press release and of the Letter to
Shareholders for the results of the third quarter 2011 at the end of this
message.
Third Quarter 2011 Financial Highlights:
+ Revenues of USD 18.78 million;
+ LBIT and LBITDA of USD 19.84 and USD 18.37 million respectively, compared to a
LBIT of USD 8.55 million and LBITDA of USD 7.02 million, respectively in Q2
2011;
+ Net loss of USD 20.40 million, compared to a net loss of USD 10.07 million in
Q2 2011;
+ Cash, cash equivalents, marketable securities and structures of USD 7.20
million on September 30, 2011, compared to USD 11.53 million in the previous
quarter;
+ Completion of most cost-cutting initiatives;
Management analysis:
LifeWatch AG reports on a very difficult third quarter of 2011. Revenues in Q3
2011 reached USD 18.78 million, a decrease of approximately 7% over Q2 2011
revenues. This decrease is mainly attributed to the distraction to our sales
force and some accounts related to the previously announced OIG investigation,
lower enrollments due to seasonal factors, and higher deductibles many patients
are required to pay for healthcare related services.
As previously announced, our U.S. subsidiary, LifeWatch Services, Inc., is under
a civil investigation by the Office of the Inspector General of the U.S.
Department of Health and Human Services ("OIG") that audits the use of Medicare
and TriCare payments in the U.S. healthcare market, and by the United States
Department of Justice ("DOJ"). The investigation concerns Medicare and TriCare
payments made to LifeWatch. LifeWatch has cooperated fully with the OIG and the
DOJ throughout the investigation, and is currently negotiating a settlement to
be paid over five years. While no final agreement has been reached to date and
the terms are yet to be finalized, as of September 30, 2011, LifeWatch has
booked a provision in a cumulative amount of USD 18.50 million to settle this
issue. As soon as the Company has completed the settlement with OIG and DOJ, we
will disclose further details.
In order to enhance its compliance program and pro-actively align itself with
the latest government healthcare compliance and regulatory guidelines, LifeWatch
engaged an outside firm, Strategic Management Services, LLC ("SMS"), which has
extensive experience in health care compliance and regulatory oversight. SMS
developed a comprehensive Ethics and Compliance Program for LifeWatch. The
compliance program is overseen by a Corporate Compliance Officer. Pursuant to
the compliance program, every LifeWatch employee is trained and tested annually
on compliance policies and procedures. Further training is mandatory for any
employee involved in billing, coding, or providing care to patients. A quarterly
audit is conducted to ensure that our employees understand and comply with
applicable laws and policies, and conform to the highest standards of ethics and
integrity. LifeWatch requires strict adherence to this program to ensure that
appropriate care is provided to federal health care program beneficiaries and
that the claims submitted for such care are complete and accurate.
During Q3 2011, LifeWatch received approximately USD 3.7 million from the
withheld Medicare reimbursement payment of USD 11.8 million. The remaining
payment of approximately USD 8.0 million was received in October 2011. The
Company also completed the majority of its cost cutting initiatives in Q3 2011,
which contributed to a reduction in costs of services and operational expenses.
These measures already have a positive impact on this quarter and will continue
to improve going forward.
Revenues:
Revenues decreased 7% to reach USD 18.78 million in Q3 2011 from USD 20.15
million in Q2 2011. As discussed previously, the decrease in revenues was mainly
due to the distraction of our sales force and some accounts during the OIG
investigation, lower enrollments associated with the summer season (fewer
patients visiting physicians), and the cancellation or transfer of ACT or
NiteWatch services by patients with no coverage or higher healthcare plan
deductibles.
Gross Profit, LBIT and LBITDA:
Cost of services decreased by USD 1.36 million this quarter, and contributed to
an improved gross margin of 46.9%, compared to a gross margin of 43.8% in Q2
2011. This improvement, despite lower revenues, is mainly attributable to a
reduction in the costs associated with monitoring services, no further overlap
of payroll expenses in our San Francisco call center and the termination of the
Medical Policy Appeals Program (MPAP). LBIT was USD 19.84 million, compared to
LBIT of USD 8.55 million in Q2 2011. Excluding the restructuring and others,
LBIT was significantly less compared to the previous quarter. Operational
expenses were mainly reduced through headcount reductions, a decrease in legal
costs and other efficiencies. The cost savings and restructuring initiatives
will be completed in Q4 2011, and are expected to have a positive impact in Q4
2011 and going forward. LBITDA was USD 18.37 this quarter, compared to LBITDA of
USD 7.02 in Q2 2011.
Net Loss:
Net loss this quarter was USD 20.40 million, compared to a net loss of USD 10.1
million in Q2 2011. Fully-diluted loss per share was USD 1.64 this quarter,
compared to a full-diluted loss per share of 0.81 in Q2 2011.
Center of Monitoring Excellence:
LifeWatch Services, Inc. has monitored millions of Americans since it was
founded in 1992. In 2010 alone, more than 275,000 patients were enrolled on our
advanced cardiac monitoring or Home Sleep Test services. Each month we receive
numerous cards and emails from patients thanking us for the excellent service
and care provided to them during a stressful time of their life. Other patients
rate our service offering through our patient satisfaction surveys, which we
conduct monthly. In fact, we average over 95% in "Good to Excellent" scores for
all aspects of our service. We have much to be proud of, and salute our
employees who deliver best in care services.
.
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About LifeWatch AG:
LifeWatch AG, headquartered in Neuhausen am Rheinfall, Switzerland and listed on
SIX Swiss Exchange (LIFE), is the leading healthcare technology and solutions
company, specializing in advanced telemedicine systems and wireless remote
patient monitoring services. LifeWatch provides services to 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 wireless remote telemedicine
provider. LifeWatch services include Home Sleep Testing for Obstructive Sleep
Apnea patients under the brand name NiteWatch. For additional information,
please visit www.lifewatch.com.
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 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 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.
Attachments with Announcement:
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Further inquiry note:
Kobi Ben Efraim, Chief Financial Officer, LifeWatch AG:
Tel +41 52 632 00 50 | Fax +41 52 632 00 51 | E-mail kobibe@lifewatch.com
Sensus Investor & Public Relations, Zürich:
Tel +41 43 366 55 11 | Fax +41 43 366 55 12 | E-mail lifewatch@sensus.ch
end of announcement euro adhoc
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Attachments with Announcement:
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http://resources.euroadhoc.com/us/ToCwLq5B
http://resources.euroadhoc.com/us/o1izYpb6
issuer: LifeWatch AG
Rundbuckstrasse 6
CH-8212 Neuhausen am Rheinfall
phone: +41 52 632 00 50
FAX: +41 52 632 00 51
mail: users@lifewatch.com
WWW: www.lifewatch.com
sector: Healthcare Providers
ISIN: CH0012815459
indexes: SPI, SPIEX
stockmarkets: Open Market / XETRA: Frankfurt, free trade: Berlin, Main Standard:
SIX Swiss Exchange
language: English