Kinetic Concepts Reports Financial Results for Third Quarter and First Nine Months of 2009
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SAN ANTONIO--(BUSINESS WIRE)-- Kinetic Concepts, Inc. (NYSE: KCI):
Third Quarter Highlights
- Worldwide V.A.C. Therapy revenue of $360.6 million, up 2% on a constant currency basis
- North American V.A.C. Therapy revenue of $270.8 million, up 1% from the prior-year period on a constant currency basis
- Regenerative Medicine revenue of $71.8 million, up 17% from the prior-year period
- Therapeutic Support Systems revenue of $72.1 million, down 10% on a constant currency basis
- Diluted earnings per share of $0.91 on a reported basis, $1.08 on a non-GAAP basis adjusted for non-cash acquisition- related items
Kinetic Concepts, Inc. (NYSE: KCI) today reported third quarter 2009 total revenue of $504.4 million, compared to $503.3 million reported for the third quarter of 2008. Total revenue for the first nine months of 2009 was $1.466 billion, up 6% from the prior-year period. Foreign currency exchange movements negatively impacted total revenue for the third quarter and first nine months of 2009 by approximately 1% and 3%, respectively, compared to the corresponding periods of the prior year.
Net earnings for the third quarter of 2009 were $64.6 million, or $0.91 per diluted share, compared to $53.9 million, or $0.75 per diluted share, for the third quarter of 2008, representing increases of 20% and 21%, respectively, from the prior-year periods.
"In the third quarter, we delivered revenue and earnings growth despite the impact of ongoing competitive and economic pressures," said Catherine M. Burzik, President and Chief Executive Officer of KCI. "We also made progress in the quarter on several key strategic initiatives. We received regulatory approval for V.A.C.(R) Therapy in Japan, launched our open abdominal therapy system, ABTheraTM, and expanded our manufacturing capabilities in Ireland as we prepare for the launch of exciting new products in 2010."
Revenue Recap - Third Quarter and First Nine Months of 2009 Show Stability
Worldwide revenue from V.A.C. Therapy products was $360.6 million for the third quarter of 2009 and $1.039 billion for the first nine months of 2009, compared to $360.3 million and $1.046 billion, respectively, for the corresponding periods of 2008. Higher unit rental and sales volumes in the period were offset by unfavorable foreign currency exchange rate movements and lower realized pricing. Foreign currency exchange movements unfavorably impacted worldwide V.A.C. Therapy revenue by approximately 1% and 3%, respectively, compared to the third quarter and first nine months of the prior year. On a constant currency basis, the growth in V.A.C. Therapy revenue stemmed from increased market penetration of V.A.C. Therapy, resulting in higher rental and sales unit volumes. North American V.A.C. Therapy revenue of $270.8 million for the third quarter and $791.8 million for the first nine months of 2009 represented increases of approximately 1% compared to the same periods of the prior year due to continued market penetration. Average U.S. rental unit volume during the third quarter and first nine months of 2009 increased approximately 4% and 5%, respectively, over the corresponding periods of 2008, partly offset by a lower average realized price due to unfavorable payer mix, reduced treatment periods and lower Medicare pricing. EMEA/APAC V.A.C. Therapy revenue decreased 1% to $89.7 million for the third quarter and decreased 7% to $247.5 million for the first nine months of 2009 from $90.3 million and $264.6 million, respectively, for the third quarter and first nine months of the prior year. Foreign currency exchange movements unfavorably impacted EMEA/APAC V.A.C. Therapy revenue for the third quarter and first nine months of 2009 by 5% and 12%, respectively, compared to the prior-year periods.
Total revenue from our Regenerative Medicine, or LifeCell, division was $71.8 million and $209.0 million for the third quarter and first nine months of 2009, respectively. Third quarter Regenerative Medicine revenue increased 17% as compared to the same period one year ago. Sales of Strattice, our porcine-based regenerative tissue matrix, generated $23.9 million of total sales in the quarter, or 33% of total Regenerative Medicine revenue for the period.
Worldwide Therapeutic Support Systems ("TSS") revenue was $72.1 million for the third quarter and $217.5 million for the first nine months of 2009, compared to $81.8 million and $250.1 million, respectively for the same periods one year ago, due primarily to lower rental and sales volumes in the United States resulting from the economic downturn and capital constraints on acute care facilities combined with unfavorable foreign currency exchange movements. North American revenue from TSS was $46.5 million for the third quarter of 2009, a 16% decrease from the prior-year period, due primarily to lower hospital census and customer capital constraints. North American TSS revenue for the first nine months of 2009 was $141.8 million, down 15% from the prior year revenue of $167.7 million. EMEA/APAC TSS revenue of $25.5 million and $75.6 million for the third quarter and first nine months of 2009, decreased 4% and 8%, respectively, compared to the corresponding periods of 2008. On a constant currency basis, EMEA/APAC TSS revenue increased 1% for the third quarter and 2% for the first nine months of 2009, compared to the same periods in the prior year.
Total North American revenue was $388.6 million for the third quarter and $1.142 billion for the first nine months of 2009, an increase of 1% and 10%, respectively, from the prior-year periods due primarily to the acquisition of LifeCell in May 2008. Total EMEA/APAC revenue was $115.8 million for the third quarter of 2009 and $324.0 million for the first nine months of 2009, representing decreases of 1% and 7%, respectively, compared to the prior-year periods due primarily to unfavorable foreign currency exchange rate movements. Foreign currency exchange rate movements unfavorably impacted EMEA/APAC revenue by 5% in the third quarter and by 11% in the first nine months of 2009 compared to the prior-year periods.
Profit Margins Improve on Mix and Productivity Initiatives
Gross profit for the third quarter and first nine months of 2009 was $274.9 million and $782.8 million, respectively, representing increases of 8% and 13% from the corresponding periods of the prior year. Gross profit margin was approximately 55% for the third quarter of 2009, an increase of approximately 400 basis points from the same period one year ago. The gross profit margin increase was due primarily to increased field service operations productivity and higher gross margins associated with the Regenerative Medicine business unit.
Third quarter selling, general and administrative ("SG&A") expenses increased approximately $16.4 million, or 15%, over the third quarter of 2008. SG&A increases included higher legal expenses associated with pending litigation matters, higher share-based compensation expense, increased costs associated with the Company's upcoming market entry in Japan, higher marketing expenses related to new product launches and global business transformation initiatives.
Research and development expenses for the third quarter of 2009 increased 13% from the prior-year period to $24.7 million, due in part to increased activity related to the development of our next generation of advanced wound care products. Total research and development expenses represented approximately 5% of revenue for the current period. In July, the Company launched its next innovation for the care of the open abdomen, ABThera, which has received strong clinical reviews in its initial applications.
Other Income/Expense Reflects Continued Deleveraging Progress
Third quarter 2009 interest expense decreased to $25.7 million, from $29.9 million in the same period of the prior year, due to scheduled and voluntary debt payments made over the last twelve months. Long-term debt outstanding as of September 30, 2009 consisted of a senior secured term loan of $800.0 million due 2013 and $690.0 million of 3.25% senior convertible notes due 2015.
During the first quarter of 2009, the Company adopted required accounting standards related to the accounting for certain convertible debt instruments. The standards specify that issuers of such instruments should account separately for the liability and equity components in a manner that reflects the entity's estimated non-convertible borrowing rate at the date of issuance. As a result of the Company's adoption of these standards, we recorded $3.1 million, or $0.05 per diluted share, of additional after-tax non-cash interest expense during the third quarter of 2009. The required retroactive application of these standards also resulted in additional after-tax, non-cash interest expense for the third quarter of the prior year of $2.8 million, or $0.03 per diluted share.
Income Tax Rate
The effective income tax rate for the third quarter and first nine months of 2009 was 29.7% and 31.1%, respectively, compared to 33.0% and 43.8% for the prior-year periods. The high effective income tax rate for the first nine months of 2008 resulted from the impact of non-deductible costs associated with our LifeCell acquisition. The decrease in the effective income tax rate for the third quarter and first nine months of 2009 was due primarily to the favorable resolution of certain tax contingencies during the quarter.
Reconciliation to Adjusted Diluted Earnings per Share
Diluted earnings per share, on a non-GAAP basis, adjusted for certain non-cash acquisition-related expenses and restructuring charges, were as follows:
Three months ended Nine months ended
September 30, 2009 September 30, 2009
Diluted EPS - GAAP basis $ 0.91 $ 2.31
Acquisition-related adjustments:
Amortization of acquired intangibles 0.09 0.27
Debt issuance cost amortization 0.03 0.10
Interest expense - adoption of
required accounting standards for 0.05 0.12
convertible debt
Restructuring charges -- 0.09
Adjusted diluted EPS - non-GAAP $ 1.08 $ 2.89
basis
Financial Position Again Demonstrates Liquidity and Strength
Total cash at quarter-end was $270.1 million, an increase of $22.3 million from year-end 2008. During the third quarter of 2009, the Company made scheduled and voluntary senior credit facility repayments totaling $50.0 million from cash-on-hand. Operating cash flow less net capital expenditures for the first nine months of 2009 was $208.4 million, an increase of $32.5 million, or 18%, from the same period one year ago, due to higher earnings and lower capital expenditures. Total long-term debt outstanding at September 30, 2009 was $1.351 billion on a GAAP-basis, including the discount associated with our adoption of required accounting standards, and $1.490 billion on an economic, or debt-instrument, basis. The long-term debt balances in our condensed consolidated balance sheets reflect the discount associated with applying the estimated non-convertible borrowing rate upon the issuance of the convertible notes. The total discount will accrete over the term of the notes. As of September 30, 2009 and December 31, 2008, these convertible notes had balances of $551.1 million and $536.4 million, respectively, within our condensed consolidated balance sheets.
Outlook
The Company reaffirms the following guidance, based on current information and expectations as of October 21, 2009 (in millions, except per share data):
% Change
FY 2008 FY 2009 from 2008
Total revenue $1,878 $1,950 - $2,000 4% - 6%
Diluted EPS - GAAP basis $2.32 $3.19 - $3.34 38% - 44%
Acquisition-related adjustments:
In process research and development 0.86 -
Amortization of acquired intangibles 0.21 0.35
Debt issuance cost amortization 0.08 0.15
Expense from LifeCell inventory 0.13 -
step-up
Interest expense - adoption of
required accounting standards for 0.10 0.17
convertible debt
Restructuring charges 0.08 0.09
Adjusted Diluted EPS - non-GAAP basis $3.78 $3.95 - $4.10 4% - 8%
Diluted weighted average shares 71.8 70.5 - 71.5 (2%) - 0%
outstanding
The revenue guidance reflects our expectation of continued capital constraints in the hospital setting, resulting in a double-digit decline in TSS revenue, combined with slower international V.A.C. Therapy revenue growth due to additional competitive and economic factors.
Non-GAAP Financial Information
Within this document, we have included our results for the third quarter and nine months ended September 30, 2009 along with our outlook on a non-GAAP basis to exclude the impact of the specified non-cash expenses set forth above associated with our acquisition of LifeCell in the second quarter of 2008 and the impact of restructuring charges incurred during the first quarter of 2009 and the fourth quarter of 2008. In addition, we have presented supplemental revenue data on a non-GAAP basis to exclude the impact of foreign currency fluctuations between 2008 and 2009. These non-GAAP financial measures do not replace the presentation of our GAAP results and outlook. We have provided this supplemental non-GAAP information because it may provide meaningful information regarding our results and outlook on a basis that better facilitates an understanding of our expected results of operations which may not be otherwise apparent under GAAP. Management uses this non-GAAP financial information, along with GAAP information, for reviewing the operating results of its business segments and for analyzing potential future business trends. In addition, we believe some investors may use this information in a similar fashion. A reconciliation of our GAAP selected financial information for the periods presented to the non-GAAP selected financial information provided is included herein.
Earnings Release Conference Call
As previously announced, we have scheduled an earnings release conference call for 8:30 a.m. Eastern Daylight Time today, Wednesday, October 21, 2009. The dial-in numbers for this conference call are as follows:
Domestic Dial-in Number: 866-336-4900 International Dial-in Number: +702-696-5179 Conference ID Number: 34042303
This call is being webcast and can be accessed at the Kinetic Concepts, Inc. Web site at http://www.kci1.com/investor/index.asp, by clicking on Webcast - Q3 2009 Kinetic Concepts, Inc. Earnings Conference Call. An archive of the web cast will be available until October 20, 2010 at http://www.kci1.com/investor/index.asp.
KCI's business outlook as of today is expected to be available on KCI's Investor Relations web site. KCI does not currently expect to update this business outlook until the release of KCI's next quarterly earnings announcement, notwithstanding subsequent developments. Although KCI undertakes no duty to update its business outlook, KCI may update the full business outlook or any portion thereof at any time.
About KCI
Kinetic Concepts, Inc. (NYSE: KCI), is a leading global medical technology company devoted to the discovery, development, manufacture and marketing of innovative, high-technology therapies and products for the wound care, tissue regeneration and therapeutic support system markets. Headquartered in San Antonio, Texas, KCI's success spans more than three decades and can be traced to a history deeply rooted in innovation and a passion for significantly improving the healing and the lives of patients around the world.
The Company employs approximately 6,600 people and markets its products in more than 20 countries. For more information about KCI and how its products are changing the practice of medicine, visit www.KCI1.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, management's outlook, estimates of future performance, revenue, earnings per share, growth objectives and weighted average shares outstanding. The forward-looking statements contained herein are based on our current expectations and are subject to a number of risks and uncertainties that could cause us to fail to achieve our current financial projections and other expectations, such as changes in the demand for V.A.C. Therapy resulting from increased competition, the seasonal slowing of V.A.C. Therapy unit growth in the fourth and first quarter of each year, changes in payer reimbursement policies and our ability to protect our intellectual property rights. All information set forth in this release and its attachments is as of October 21, 2009. We undertake no duty to update this information. More information about potential factors that could cause our results to differ or adversely affect our business and financial results is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and in our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2009 and June 30, 2009, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These reports are on file with the SEC and available at the SEC's website at www.sec.gov. Additional information may also be set forth in those sections in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009, which will be filed with the SEC in early November 2009.
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
Three months ended September 30, Nine months ended September 30,
% %
2009 2008 Change 2009 2008 Change
Revenue:
Rental $ 298,577 $ 305,205 (2.2 )% $ 872,955 $ 906,393 (3.7 )%
Sales 205,820 198,094 3.9 592,872 479,046 23.8
Total revenue 504,397 503,299 0.2 1,465,827 1,385,439 5.8
Rental 169,555 182,392 (7.0 ) 505,264 538,669 (6.2 )
expenses
Cost of sales 59,940 66,542 (9.9 ) 177,745 152,220 16.8
Gross profit 274,902 254,365 8.1 782,818 694,550 12.7
Selling,
general and 125,838 109,420 15.0 365,045 309,814 17.8
administrative
expenses
Research and
development 24,669 21,884 12.7 68,071 53,279 27.8
expenses
Acquired
intangible 10,160 10,189 (0.3 ) 30,476 14,843 105.3
asset
amortization
In-process
research and - - - - 61,571 -
development
Operating 114,235 112,872 1.2 319,226 255,043 25.17
earnings
Interest
income and 158 835 (81.1 ) 646 4,997 (87.1 )
other
Interest (25,728 ) (29,943 ) (14.1 ) (80,449 ) (49,062 ) 64.0
expense
Foreign
currency gain 3,183 (3,253 ) - (3,896 ) (2,740 ) 42.2
(loss)
Earnings
before income 91,848 80,511 14.1 235,527 208,238 13.1
taxes
Income taxes 27,279 26,600 2.6 73,156 91,185 (19.8 )
Net earnings $ 64,569 $ 53,911 19.8 % $ 162,371 $ 117,053 38.7 %
Net earnings
per share:
Basic $ 0.92 $ 0.75 22.7 % $ 2.32 $ 1.63 42.3 %
Diluted $ 0.91 $ 0.75 21.3 % $ 2.31 $ 1.62 42.6 %
Weighted
average shares
outstanding:
Basic 70,150 71,831 70,035 71,756
Diluted 70,666 72,130 70,425 72,110
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2009 2008
Assets:
Current assets:
Cash and cash equivalents $ 270,054 $ 247,767
Accounts receivable, net 410,738 406,007
Inventories, net 111,615 109,097
Deferred income taxes 23,921 19,972
Prepaid expenses and other 36,684 34,793
Total current assets 853,012 817,636
Net property, plant and equipment 290,272 303,799
Debt issuance costs, less accumulated amortization 38,800 50,295
of $19,391 at 2009 and $7,896 at 2008
Deferred income taxes 10,924 8,635
Goodwill 1,328,881 1,337,810
Identifiable intangible assets, net 458,586 472,547
Other non-current assets 13,140 12,730
$ 2,993,615 $ 3,003,452
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable $ 72,349 $ 53,765
Accrued expenses and other 214,687 258,666
Current installments of long-term debt 114,286 100,000
Income taxes payable 616 -
Total current liabilities 401,938 412,431
Long-term debt, net of current installments and 1,236,802 1,415,443
discount
Non-current tax liabilities 30,268 26,205
Deferred income taxes 224,319 239,621
Other non-current liabilities 5,390 6,382
1,898,717 2,100,082
Shareholders' equity:
Common stock; authorized 225,000 at 2009 and 2008,
issued and outstanding 71,088 at 2009 and 70,524 at 71 71
2008
Preferred stock; authorized 50,000 at 2009 and - -
2008; issued and outstanding 0 at 2009 and 2008
Additional paid-in capital 793,093 765,645
Retained earnings 291,019 128,648
Accumulated other comprehensive income, net 10,715 9,006
Shareholders' equity 1,094,898 903,370
$ 2,993,615 $ 3,003,452
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine months ended September 30,
2009 2008
Cash flows from operating activities:
Net earnings $ 162,371 $ 117,053
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, amortization and other 114,672 86,649
Provision for bad debt 7,602 5,986
Amortization of deferred gain on sale of (803 ) (803 )
headquarters facility
Amortization of convertible debt discount 14,645 8,081
Write-off of deferred debt issuance costs 2,348 860
Share-based compensation expense 22,977 19,678
Excess tax benefit from share-based payment (515 ) (258 )
arrangements
Write-off of in-process research and - 61,571
development
Change in assets and liabilities, net of
business acquired:
Increase in accounts receivable, net (14,419 ) (19,879 )
Increase in inventories, net (2,725 ) (8,297 )
Increase in prepaid expenses and other (1,505 ) (9,712 )
Increase (decrease) in deferred income taxes, (5,212 ) 68,105
net
Increase (decrease) in accounts payable 18,484 (8,230 )
Decrease in accrued expenses and other (46,415 ) (49,603 )
Increase in tax liabilities, net 978 554
Net cash provided by operating activities 272,483 271,755
Cash flows from investing activities:
Additions to property, plant and equipment (66,019 ) (83,748 )
Decrease (increase) in inventory to be 1,969 (12,100 )
converted into equipment for short-term rental
Dispositions of property, plant and equipment 4,298 4,638
Business acquired in purchase transaction, net (173 ) (1,745,522 )
of cash acquired
Increase in identifiable intangible assets and (18,206 ) (3,753 )
other non-current assets
Net cash used by investing activities (78,131 ) (1,840,485 )
Cash flows from financing activities:
Proceeds from revolving credit facility 20,000 75,000
Repayments of long-term debt, revolving credit (198,990 ) (25,193 )
facility and capital lease obligations
Excess tax benefit from share-based payment 515 258
arrangements
Proceeds from exercise of stock options 784 2,431
Purchase of immature shares for minimum tax (242 ) (886 )
withholdings
Proceeds from the purchase of stock in ESPP and 3,336 2,346
other
Acquisition financing:
Proceeds from senior credit facility - 1,000,000
Proceeds from convertible senior notes - 690,000
Repayment of long-term debt - (68,000 )
Proceeds from convertible debt warrants - 102,458
Purchase of convertible debt hedge - (151,110 )
Payment of debt issuance costs - (60,704 )
Net cash provided (used) by financing (174,597 ) 1,566,600
activities
Effect of exchange rate changes on cash and 2,532 (18,627 )
cash equivalents
Net increase (decrease) in cash and cash 22,287 (20,757 )
equivalents
Cash and cash equivalents, beginning of period 247,767 265,993
Cash and cash equivalents, end of period $ 270,054 $ 245,236
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP
Supplemental Revenue Data
(in thousands)
(unaudited)
Three months ended September 30,
2009 GAAP Constant
Constant 2008 % Currency %
GAAP FX Impact Currency GAAP Change Change(1)
Total Revenue:
V.A.C.
North America $ 270,848 $ 649 $ 271,497 $ 269,965 0.3 % 0.6 %
EMEA/APAC 89,732 4,625 94,357 90,324 (0.7 ) 4.5
Total V.A.C. 360,580 5,274 365,854 360,289 0.1 1.5
Regenerative
Medicine
North America 71,248 (50 ) 71,198 61,233 16.4 16.3
EMEA/APAC 519 (54 ) 465 - - -
Total
Regenerative 71,767 (104 ) 71,663 61,233 17.2 17.0
Medicine
Therapeutic
Support
Systems
North America 46,542 431 46,973 55,082 (15.5 ) (14.7 )
EMEA/APAC 25,508 1,346 26,854 26,695 (4.4 ) 0.6
Total
Therapeutic 72,050 1,777 73,827 81,777 (11.9 ) (9.7 )
Support
Systems
Total North
America 388,638 1,030 389,668 386,280 0.6 0.9
revenue
Total
EMEA/APAC 115,759 5,917 121,676 117,019 (1.1 ) 4.0
revenue
Total Revenue $ 504,397 $ 6,947 $ 511,344 $ 503,299 0.2 % 1.6 %
V.A.C.:
North America
revenue
Rental $ 193,337 $ 316 $ 193,653 $ 192,799 0.3 % 0.4 %
Sales 77,511 333 77,844 77,166 0.4 0.9
Total North
America 270,848 649 271,497 269,965 0.3 0.6
revenue
EMEA/APAC
revenue
Rental 43,214 2,542 45,756 44,588 (3.1 ) 2.6
Sales 46,518 2,083 48,601 45,736 1.7 6.3
Total
EMEA/APAC 89,732 4,625 94,357 90,324 (0.7 ) 4.5
revenue
Total rental 236,551 2,858 239,409 237,387 (0.4 ) 0.9
revenue
Total sales 124,029 2,416 126,445 122,902 0.9 2.9
revenue
Total - V.A.C. $ 360,580 $ 5,274 $ 365,854 $ 360,289 0.1 % 1.5 %
Revenue
Regenerative
Medicine
Revenue:
North America $ 71,248 $ (50 ) $ 71,198 $ 61,233 16.4 % 16.3 %
sales revenue
EMEA/APAC 519 (54 ) 465 - - -
sales revenue
Total -
Regenerative $ 71,767 $ (104 ) $ 71,663 $ 61,233 17.2 % 17.0 %
Medicine
Revenue
Therapeutic
Support
Systems
Revenue:
North America
revenue
Rental $ 41,325 $ 361 $ 41,686 $ 46,461 (11.1 )% (10.3 )%
Sales 5,217 70 5,287 8,621 (39.5 ) (38.7 )
Total North
America 46,542 431 46,973 55,082 (15.5 ) (14.7 )
revenue
EMEA/APAC
revenue
Rental 20,701 957 21,658 21,357 (3.1 ) 1.4
Sales 4,807 389 5,196 5,338 (9.9 ) (2.7 )
Total
EMEA/APAC 25,508 1,346 26,854 26,695 (4.4 ) 0.6
revenue
Total rental 62,026 1,318 63,344 67,818 (8.5 ) (6.6 )
revenue
Total sales 10,024 459 10,483 13,959 (28.2 ) (24.9 )
revenue
Total -
Therapeutic
Support $ 72,050 $ 1,777 $ 73,827 $ 81,777 (11.9 )% (9.7 )%
Systems
Revenue
(1) Represents percentage change between 2009 Non-GAAP, Constant Currency,
revenue and 2008 GAAP revenue.
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP
Supplemental Revenue Data
(in thousands)
(unaudited)
Nine months ended September 30,
2009 GAAP Constant
Constant 2008 % Currency
%
GAAP FX Impact Currency GAAP Change Change
(1)
Total
Revenue:
V.A.C.
North $ 791.837 $ 4,261 $ 796,098 $ 781,884 1.3 % 1.8 %
America
EMEA/APAC 247,490 30,620 278,110 264,613 (6.5 ) 5.1
Total V.A.C. 1,039,327 34,881 1,074,208 1,046,497 (0.7 ) 2.6
Regenerative
Medicine
North 208,132 (50 ) 208,082 88,836 134.3 134.2
America
EMEA/APAC 913 (64 ) 849 - - -
Total
Regenerative 209,045 (114 ) 208,931 88,836 135.3 135.2
Medicine
Therapeutic
Support
Systems
North 141,817 2,941 144,758 167,705 (15.4 ) (13.7 )
America
EMEA/APAC 75,638 8,643 84,281 82,401 (8.2 ) 2.3
Total
Therapeutic 217,455 11,584 229,039 250,106 (13.1 ) (8.4 )
Support
Systems
Total North
America 1,141,786 7,152 1,148,938 1,038,425 10.0 10.6
revenue
Total
EMEA/APAC 324,041 39,199 363,240 347,014 (6.6 ) 4.7
revenue
Total $ 1,465,827 $ 46,351 $ 1,512,178 $ 1,385,439 5.8 % 9.1 %
Revenue
V.A.C.:
North
America
revenue
Rental $ 566,274 $ 2,248 $ 568,522 $ 562,982 0.6 % 1.0 %
Sales 225,563 2,013 227,576 218,902 3.0 4.0
Total North
America 791,837 4,261 796,098 781,884 1.3 1.8
revenue
EMEA/APAC
revenue
Rental 120,472 15,773 136,245 130,966 (8.0 ) 4.0
Sales 127,018 14,847 141,865 133,647 (5.0 ) 6.1
Total
EMEA/APAC 247,490 30,620 278,110 264,613 (6.5 ) 5.1
revenue
Total rental 686,746 18,021 704,767 693,948 (1.0 ) 1.6
revenue
Total sales 352,581 16,860 369,441 352,549 - 4.8
revenue
Total -
V.A.C. $ 1,039,327 $ 34,881 $ 1,074,208 $ 1,046,497 (0.7 )% 2.6 %
Revenue
Regenerative
Medicine
Revenue:
North
America $ 208,132 $ (50 ) $ 208,082 $ 88,836 134.3 % 134.2 %
sales
revenue
EMEA/APAC
sales 913 (64 ) 849 - - -
revenue
Total -
Regenerative $ 209,045 $ (114 ) $ 208,931 $ 88,836 135.3 % 135.2 %
Medicine
Revenue
Therapeutic
Support
Systems
Revenue:
North
America
revenue
Rental $ 125,828 $ 2,383 $ 128,211 $ 144,784 (13.1 )% (11.4 )%
Sales 15,989 558 16,547 22,921 (30.2 ) (27.8 )
Total North
America 141,817 2,941 144,758 167,705 (15.4 ) (13.7 )
revenue
EMEA/APAC
revenue
Rental 60,381 7,049 67,430 67,661 (10.8 ) (0.3 )
Sales 15,257 1,594 16,851 14,740 3.5 14.3
Total
EMEA/APAC 75,638 8,643 84,281 82,401 (8.2 ) 2.3
revenue
Total rental 186,209 9,432 195,641 212,445 (12.3 ) (7.9 )
revenue
Total sales 31,246 2,152 33,398 37,661 (17.0 ) (11.3 )
revenue
Total -
Therapeutic
Support $ 217,455 $ 11,584 $ 229,039 $ 250,106 (13.1 )% (8.4 )%
Systems
Revenue
(1) Represents percentage change between 2009 Non-GAAP, Constant Currency, revenue
and 2008 GAAP revenue.
KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Selected Financial Information - GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
Three months ended September 30,
Interest
Expense -
Debt Adoption
of
Amortization Issuance Required Restructuring
2009 of Acquired Cost Accounting and Other Adjusted Adjusted %
GAAP Intangibles Amortization Standards Charges 2009 2008 Change
Operating $ 114,235 $ 10,160 $ - $ - $ - $ 124,395 $ 130,060 (4.4 )%
earnings
Net $ 64,569 $ 6,248 $ 2,293 $ 3,060 $ - $ 76,170 $ 69,229 10.0 %
earnings
Diluted
earnings $ 0.91 $ 0.09 $ 0.03 $ 0.05 $ - $ 1.08 $ 0.96 12.5 %
per share
Nine months ended September 30,
Interest
Expense -
Debt Adoption
of
Amortization Issuance Required Restructuring
2009 of Acquired Cost Accounting and Other Adjusted Adjusted %
GAAP Intangibles Amortization Standards Charges 2009 2008 Change
Operating $ 319,226 $ 30,476 $ - $ - $ 9,356 $ 359,058 $ 341,619 5.1 %
earnings
Net $ 162,371 $ 18,742 $ 7,069 $ 9,007 $ 6,301 $ 203,490 $ 202,539 0.5 %
earnings
Diluted
earnings $ 2.31 $ 0.27 $ 0.10 $ 0.12 $ 0.09 $ 2.89 $ 2.81 2.8 %
per share
Three months ended September 30,
Interest
Expense -
Debt Adoption In-Process
of
Amortization Issuance Required Restructuring Research
2008 of Acquired Cost Accounting and Other Inventory and Adjusted
GAAP Intangibles Amortization Standards Charges Write-up Development 2008
Operating $ 112,872 $ 10,189 $ - $ - $ - $ 6,999 $ - $ 130,060
earnings
Net $ 53,911 $ 6,266 $ 1,914 $ 2,834 $ - $ 4,304 $ - $ 69,229
earnings
Diluted
earnings $ 0.75 $ 0.09 $ 0.03 $ 0.03 $ - $ 0.06 $ - $ 0.96
per share
Nine months ended September 30,
Interest
Expense -
Debt Adoption In-Process
of
Amortization Issuance Required Restructuring Research
2008 of Acquired Cost Accounting and Other Inventory and Adjusted
GAAP Intangibles Amortization Standards Charges Write-up Development 2008
Operating $ 255,043 $ 14,843 $ - $ - $ - $ 10,162 $ 61,571 $ 341,619
earnings
Net $ 117,053 $ 9,128 $ 3,567 $ 4,970 $ - $ 6,250 $ 61,571 $ 202,539
earnings
Diluted
earnings $ 1.62 $ 0.13 $ 0.05 $ 0.07 $ - $ 0.09 $ 0.85 $ 2.81
per share
Source: Kinetic Concepts, Inc.
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