Third Quarter 2009 Results. Analysts and Media Conference November 5, 2009 Zurich

Transcription

1 Third Quarter 2009 Results Analysts and Media Conference November 5, 2009 Zurich

2 This presentation contains forward looking statements which involve risks and uncertainties. The actual performance, results and timing of the business of LifeWatch AG, could differ materially from the performance, results and timing in this presentation. This presentation does not constitute an offer to sell or a solicitation to an offer to purchase any securities of LifeWatch AG, any such decision must not be made on the basis of the information provided in this presentation. This presentation must not be distributed in or into the United States of America. 2

3 LifeWatch Presentation Team Dr. Yacov Geva Chairman & CEO LifeWatch AG Kobi Ben Efraim Chief Financial Officer LifeWatch AG Brent Atwood Chief Operating Officer LifeWatch 3

4 Agenda o Business Highlights Q Dr. Yacov Geva o Financials Review Q Kobi Ben Efraim o Reimbursement Environment Brent Atwood o NiteWatch Launch Update Brent Atwood o Summary Dr. Yacov Geva 4

5 Business Highlights Q Dr. Yacov Geva, Chairman & CEO, LifeWatch AG

6 6 LifeWatch Overview Headquartered in Switzerland, listed on SIX Exchange Main subsidiary LifeWatch headquartered in Rosemont, IL Profitable wireless healthcare monitoring company The leading 24/7/365 cardiac event monitoring company in U.S. Employs 692 Delivers Next-Generation health monitoring platform Wireless Ambulatory Cardiac Telemetry LifeStar ACT Comprehensive platform for multiple markets ehealth, Home Health, Disease Management and Wellness Increasing market acceptance Covers >297 million lives at a higher reimbursement rates for ACT Over 1.5 million patients monitored by LifeWatch Strong financial performance USD 34.1m Q revenues reflecting 47% growth over Q % EBITDA margin

7 Quarterly Revenue in USD Million 35 LifeWatch Continued Success LifeWatch Quarterly Revenue REVENUE EBIT Margin % % % 15% 10% 5% EBIT Margin 10 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 0% 7

8 Fiscal Highlights Q versus Q in USD Million REVENUES 34.1 EBITDA % growth year-over-year % growth year-over-year Q3/08 Q3/09 Q3/08 Q3/ EBIT % growth year-over-year Cash from Operations % growth year-over-year Q3/08 Q3/09 Q3/08 Q3/09 8

9 Enrollments Exceed 75,000 enrollments in LifeStar ACT Growth 25,000 20,000 20,164 18,697 15,000 10,000 5, ,427 11,154 8,545 7,106 5, ,252 1,495 2,722 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 6,132 enrollments in ,931 enrollments in ,288 enrollments in first 3 quarters of 2009

10 Expanding ACT Family of Products Act I Launched: Q Features: Auto-detect, auto-send Act III Launched: Q Features: 3-channel Act Ex Launched: Q Features: Holter capabilities o Patient care programs: o AF Patient Care Program: Launched Q2 2008: Customized program for post-surgical monitoring of patients undergoing AF catheter and surgical ablation procedures. o Patient Stroke Care Program: Launched Q3 2009: Monitoring patients who have experienced a Transient Ischemic Attack / Stroke of unknown origin (cryptogenic). 10

11 Diverse LifeStar ACT Revenue LifeStar ACT Enrollments Q LifeWatch Continues to Diversify the ACT Platform 11

12 LifeWatch Clients / Sales Force Expansion o o Customer base: Over 7,000 U.S. customers including 3,900 private cardiology groups (serving 23,000 cardiologists) 4 new Federal accounts in Q3 2009, bringing the total to 39 Federal accounts Sales Reps Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 12

13 Multiple Growth Opportunities o Demographic changes drive demand o Aging population o Obesity o Product innovation o Expansion into additional disease states leveraging our monitoring platform o Continued outsourcing of cardiac monitoring o Consolidation of Independent Diagnostic Testing Facilities 13

14 Demographic Changes Driving Demand for Cardiac Monitoring Graying of America: Percent of U.S. Population Over 65 Obesity: Prevalence of Overweight and Obese in U.S. Source: Population Division, U.S. Census Bureau; August 14, 2008 Source: Centers of Disease Control; National Health and Nutrition Examination Survey (NHANES); 2002 As people get older the risk of cardiac arrhythmias increase Obesity is a major risk factor for heart attack, according to the American Heart Association. Aging and obesity trends are driving demand for cardiac monitoring 14

15 ASIC Core Technology o Embedded software and hardware in one microchip for: o Cardiology o Diabetes o Hypertension o Wellness applications o Congestive heart failure (CHF) o Chronic obstructive pulmonary disease (COPD) o Indispensable technology for implementing highly functional, compact integrated circuits used in today s electronic products o Faster time to market through shorter design and development cycles Strong Technology Platform Leveraged Into New Markets 15

16 Comprehensive Wireless Health Care Platform for Multiple Markets o Increasing Disease Prevalence by population o Cardiovascular Disease o Diabetes o COPD/Asthma o Obesity o Sleep Apnea o Chronic diseases o Aging population o Nursing shortage o Exploding healthcare costs 16

17 U.S. Cardiac Arrhythmia Monitoring Market = USD 2 billion U.S. Cardiac Monitoring Market Wireless Monitoring Penetration Independant diagnostic testing facilities (IDTFs) gain share as hospitals and physician offices continue to outsource Higher diagnostic yield will drive adoption of wireless systems Source: Frost and Sullivan; Cardiac Monitoring Outlook,

18 U.S. Cardiac Arrhythmia Monitoring Market = USD 2 billion U.S. Cardiac Monitoring Market Highly Fragmented Market Dominated by a Few Providers IDTFs 33% Physicians 45% Hospitals 22% Market leaders will benefit from consolidation Source: Frost and Sullivan; Cardiac Monitoring Outlook,

19 Group Financial Review Q Kobi Ben Efraim, Chief Financial Officer, LifeWatch AG

20 Strong Revenue Growth o Q of USD 34.1 million increased 47% over Q o Monitoring Services contributed 95.4% of total revenues Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 20

21 Primarily Driven by LifeStar ACT in USD Million Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 LifeStar ACT Cardiac Event and Other Holter Pacemaker Technologies ACT revenue of USD 25.6 million increased 148% in Q compared to Q

22 Efficiency Initiatives o LifeWatch implemented cost efficiencies in an effort to offset a portion of the Highmark/Medicare reimbursement reductions o Improved software algorithms lower the average number of transmissions per patient o Reduced labor cost o Renegotiated communication cost and limited phone activation time o Despite the flat sequential revenues, LifeWatch still delivered improved profitability 22

23 Improving Profitability o Gross profit: USD 22.2 million in Q increased 60% YOY from USD 13.9 million in Q o Gross margin: 65.2% in Q compared to 60.1% in Q o EBITDA: USD 10.4 million in Q increased 118% from USD 4.8 million in Q o EBITDA margin: 30.6% in Q compared to 20.7% in Q Gross Profit EBITDA Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 23

24 EBIT and Net Income Performance o EBIT: USD 8.8 million in Q increased 133% from USD 3.8 million in Q o EBIT margin: 25.8% in Q compared to 16.3% in Q o Net income: USD 7.3 million in Q increased 354% from USD 1.6 million in Q o Net income margin: 21.5% in Q compared to 7.0% in Q EBIT Net Income * Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 *USD 5.3 million does not include the one time tax benefit of USD 5.7 million 24

25 Improving Cash Flow From Operations o Cash flow provided by operations of USD 9.2 million, versus USD 3.3 million in Q o Days sales outstanding in Q of 45 days compared to 50 days in Q Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 25

26 Stable Financial Position o Q cash, cash equivalents, marketable securities and structures in an amount of USD 38.0 million Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 26

27 Reimbursement Environment Brent Atwood, Chief Operating Officer, LifeWatch Corp.

28 LifeWatch Reimbursement Profile o Highmark Medicare Services implemented a reimbursement rate of USD 754 per patient on September 1, 2009 o Commercial payor reimbursement rate has remained stable for the third quarter

29 Medicare Reimbursement Environment o o o o January 1, 2009, Category 1 code took effect for wireless cardiac monitoring o At the time CMS did not price the code nationally and allowed regional Medicare administrators to set rates o Highmark of Pennsylvania set the reimbursement rate at USD 1,123 July 1, 2009, CMS declined to establish a national reimbursement rate July 10, 2009, Highmark communicated an intent to reduce the reimbursement rate from USD 1,123 to USD 754 beginning September 1, 2009 September 1, 2009, Highmark implemented the reimbursement rate of USD 754 o LifeWatch is in continued discussion with Highmark in an effort to demonstrate the value of wireless cardiac monitoring and quantify our cost structure 29

30 Commercial Reimbursement Environment o LifeWatch has contracts with 469 independent commercial payors covering 297 million lives o Q added 5 managed care contracts covering 1 million lives o Majority of commercial contracts automatically renew at the same rate ever year 30

31 LifeWatch Reimbursement Strategy o IDTF Coalition o Federal and State legislative efforts o Partnership with U.S. wireless carriers o (Verizon / AT&T) o Landmark clinical assessment of about 1,000 ACT patients o Active dialogue with Highmark and CMS 31

32 Realizing the Value of Wireless Medicine The current health care crisis has some experts saying that telemedicine's time has finally come. CNET July 2009 We are already experiencing the promise and potential of the next generation of telemedicine systems that focus on improving the productivity of clinical staff, and quality, access, and convenience for all health consumers. Rep. Butterfield (D-N.C.) May 2009 Intel prescribes telemedicine to treat health costs. San Francisco Business Times

33 NiteWatch Launch Update Brent Atwood, Chief Operating Officer, LifeWatch Corp.

34 The Dawn of a New Day Home Sleep Apnea Testing o In July, LifeWatch announced its intent to launch a home sleep test (HST) for the diagnosis of obstructive sleep apnea (OSA) o OSA is a widely undiagnosed medical condition that is highly correlated with other chronic diseases o LifeWatch will leverage its medical monitoring expertise into a competitive advantage in the OSA market o LifeWatch is the first Cardiac IDTF to enter the sleep apnea market o HST is a first step in diversifying LifeWatch s service offering 34

35 Sleep Apnea Diagnosis is a Large Market Opportunity o 38 million patients affected with OSA o 18 million afflicted with moderate to severe OSA 15 million undiagnosed (85%) o 3 billion (USD) Market Internationally (2008) o U.S. Market approximately USD 1.5B o Estimated 2 million tests in 2006 (1 million U.S. tests) o Equipment, Diagnostic Testing, Therapy Products/Services o 20-30% annual growth over next 5 years o Diagnostic location: 80% sleep lab / 20% home testing June CANACCORD ADAMS 35

36 NiteWatch: Corporate Website Launched November

37 Step 1 Physicians enroll patients on NiteWatch NiteWatch Service Model Step 2 LifeWatch validates insurance for NiteWatch coverage Step 3 LifeWatch establishes patient hook-up for NiteWatch service Step 6 LifeWatch bills patients insurance company ASP of USD NiteWatch Continuum of Care Step 5 Report sent to prescribing physician after interpretation by LifeWatch contracted physician Step 4 Ave. 2-3 nights of data is recorded and sent back to LifeWatch 37

38 NiteWatch Payor Coverage Update o WPS/Medicare approval pending as a Sleep Apnea IDTF o Filed application with Medicare: October 1, 2009 o Completed on-site review: mid-october o Signed 166 managed care contracts, covering 90 million lives for the NiteWatch service o We are negotiating with about 200 of remaining carriers o Anticipated ASP: USD

39 NiteWatch Market Entry Milestones Beta Test Update o About 10 client organizations participating in our beta program o patients enrolled in LifeWatch service o Coordinating a nationwide network of physicians to interpret sleep data in the State that it was recorded. o Necessary for Medicare certification o On track for January 2010 for national physician coverage NiteWatch Milestones o NiteWatch monitoring service rollout: o o o Q beta testing Q expanded launch Q general availability o Managed care objective: o 60%-70% commercial coverage by January

40 LifeWatch Summary Dr. Yacov Geva, Chairman & CEO, LifeWatch AG

41 Investment Highlights o Large and growing outpatient cardiac monitoring market o Expanding penetration of wireless technology o Leading provider in a highly fragmented market o Multiple growth opportunities o Blue-chip customer base o Entering an attractive sleep apnea market 41

42 o Operational objectives Corporate Outlook o Focus resources on wireless monitoring penetration and market share growth o Exceed 75,000 ACT enrollments in 2009 o Continuous development of next generation ACT platform o Expansion into new service offering - Sleep Apnea o Financial objectives for 2009 Revenue Growth USD million (>50% ) EBITDA Margin >20% EBIT Margin >16% 42