Kinetic Concepts Reports Fourth Quarter and Full Year Financial Results for 2006.SAN ANTONIO San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. -- Kinetic kinetic /ki·net·ic/ (ki-net´ik) pertaining to or producing motion. ki·net·ic adj. Of, relating to, or produced by motion. kinetic pertaining to or producing motion. Concepts, Inc. (NYSE NYSE See: New York Stock Exchange : KCI KCI Kansas City International (airport) KCI Kennel Club of India KCI Key Club International KCI Korea Concrete Institute KCI Kitchener Collegiate Institute KCI Kids Central, Inc. KCI The Kitchen Collection, Inc. KCI Kodak Canada Inc. ): Fourth Quarter Highlights * V.A.C.([R])revenue increased 18% to $293.2 million from $248.6 million in the prior-year period * Total revenue increased 15% to $371.5 million from $322.0 million in the prior-year period * Share-based compensation expense under FAS 123R reduced net earnings by $4.0 million, or $0.06 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share * Net earnings were $51.3 million, an increase of 11% from $46.4 million in the prior-year period * Net earnings per diluted share were $0.73, an increase of 14% from $0.64 in the prior-year period Full-Year Highlights * V.A.C. revenue increased 18% to $1.07 billion from $907.5 million in the prior year * Total revenue increased 13% to $1.37 billion from $1.21 billion in the prior year * Share-based compensation expense under FAS 123R reduced net earnings by $12.0 million, or $0.17 per diluted share * Net earnings were $195.5 million, an increase of 60% from $122.2 million in the prior year * Net earnings per diluted share were $2.69, an increase of 61% from $1.67 in the prior year Kinetic Concepts, Inc. (NYSE: KCI) today reported fourth quarter 2006 total revenue of $371.5 million, an increase of 15% from the fourth quarter of 2005. Total revenue for the full year of 2006 was $1.37 billion, a 13% increase from the prior year. Foreign currency exchange movements favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted total revenue for the fourth quarter and full year of 2006 by 2% and 1%, respectively, compared to the corresponding periods of the prior year. Net earnings for the fourth quarter of 2006 were $51.3 million, an 11% increase from $46.4 million for the same period last year. Net earnings per diluted share for the fourth quarter of 2006 increased 14% to $0.73 per diluted share compared to $0.64 per diluted share for the same period in the prior year. For the full year of 2006, net earnings were $195.5 million, up 60% from $122.2 million for the prior year. Net earnings per diluted share for the full year of 2006 were $2.69, an increase of 61% from last year. During the third quarter of 2005, the Company reached an agreement to settle a 13-year old litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. case. The settlement payment resulted in a charge of $72.0 million, or $47.4 million and $0.65 per diluted share, net of taxes. "I am pleased with our fourth quarter performance. The Company achieved a significant milestone of over one billion dollars in V.A.C. revenue during 2006," said Catherine Burzik, President and Chief Executive Officer of KCI. "During my first few months here, we have begun to lay the foundation for what we expect will be a year of continued revenue growth, improved global processes and fiscal discipline." Revenue Recap - Fourth Quarter of 2006 Domestic revenue was $268.3 million for the fourth quarter of 2006, an increase of $28.5 million, or 12%, from the prior-year period due primarily to increased rental and sales volumes for V.A.C. wound healing wound healing Physiology The repair of a wound Steps Inflammation, repair and closure, remodeling, final healing; repair of incisions may be either simple–'clean' wounds with little loss of tissue heal by 'primary intention', or 'dirty' wounds heal by devices and related disposables. Domestic V.A.C. revenue of $219.5 million for the fourth quarter was 13% higher than the same period one year ago due to an increase in V.A.C. rental units-in-use, partly offset by lower realized pricing and shorter average treatment periods. Growth in average rental units-in-use was reported across all care settings. Lower realized V.A.C. pricing resulted primarily from lower canister reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates under Medicare Part B and payer mix payer mix Medical practice The type–eg, Medicaid, Medicare, indeminity insurance, managed care–of monies received by a medical practice. Cf Patient mix, Service mix. changes, while the average treatment period per unit-in-use declined year-to-year resulting in slightly lower dressing and canister usage per unit out. Domestic surfaces revenue was $48.8 million for the fourth quarter of 2006, an 8% increase from the same period in the prior year due primarily to growth of both rental and sales volumes in the acute care setting. International revenue of $103.2 million for the fourth quarter of 2006 increased 25% compared to the prior-year period due primarily to higher V.A.C. revenue. Fourth quarter international V.A.C. revenue of $73.7 million increased 36% compared to the year-ago period due primarily to continued market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" . International surfaces revenue of $29.5 million for the fourth quarter increased 5% compared to the prior-year period. Foreign currency exchange movements favorably impacted total international revenue by 9% in the fourth quarter. Revenue Recap - Full Year of 2006 Domestic revenue for 2006 was $993.8 million, up $107.6 million, or 12%, from 2005 due substantially to increased rental and sales volumes for V.A.C. wound healing devices and related disposables. International revenue for 2006 of $377.9 million, increased $55.5 million, or 17%, compared to the prior year due to higher V.A.C. unit volumes, partly offset by lower surfaces revenue due directly to a significant sale of $5.1 million in the first quarter of 2005. Foreign currency exchange movements favorably impacted total worldwide revenue by 1% for the year. Worldwide V.A.C. revenue was $1.07 billion for 2006, an increase of 18% from the prior year due to increased market penetration resulting in higher rental and sales volumes. Foreign currency exchange movements favorably impacted worldwide V.A.C. revenue by 1% for the year. Worldwide surfaces revenue was $302.5 million, an increase of less than 1% from the prior year. Foreign currency exchange movements favorably impacted worldwide surfaces revenue by 1% for the year. Negatively impacting worldwide surfaces revenue growth was a $5.1 million sale in 2005, which reduced growth over the prior year by 2%. Gross Profit Margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. Gross profit for the fourth quarter and full year of 2006 was $177.1 million and $644.0 million, respectively, representing increases of 13% and 14%, respectively, from the same periods of the prior year. Gross profit margin for the fourth quarter of 2006 was 47.7% compared to 48.7% for the same period one year ago. For the full year of 2006, gross profit margin was 47.0%, up from 46.8% for the same period of the prior year. Fourth quarter 2006 gross profit margin was negatively impacted by lower homecare reimbursement for V.A.C. canisters in addition to higher selling costs, which were due to continued additions to our clinical sales force combined with share-based compensation costs. Share-Based Compensation During the fourth quarter and full year of 2006, the Company recorded share-based compensation expense totaling $5.7 million and $17.1 million, respectively, before income taxes, or $0.06 and $0.17, respectively, per diluted share, under the provisions of Statement of Financial Accounting Standards No. 123R. Prior to 2006, the Company accounted for share-based compensation under Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, Opinion No. 25. Income Tax Rate The effective income tax rate for the fourth quarter of 2006 was 34.7% compared to 34.0% in the prior-year period. The effective income tax rate for the full year of 2006 was 33.1% compared to 34.0% in 2005. The effective income tax rate for 2006 reflects the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. resolution of certain tax contingencies during the first half of the year. Other Matters During the fourth quarter of 2006, the Company recorded CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. transition costs of approximately $2.7 million. The Company also made a voluntary prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of approximately $20 million on its senior debt outstanding during the fourth quarter of 2006. In connection with the prepayment, the Company wrote-off approximately $250,000 of capitalized debt issuance costs. Outlook The following guidance is based on current information and expectations as of January 30, 2007: KCI currently projects full-year 2007 total revenue to be $1.51 - $1.56 billion, representing revenue growth of 10-14%, based primarily on continued demand for its V.A.C. negative pressure wound therapy Negative Pressure Wound Therapy (NPWT) is the use of sub-atmospheric pressure to promote or assist wound healing, or to remove fluids from a wound site. History Negative Pressure Wound Therapy in its present form was developed by Dr. Louis Argenta and Dr. devices and related supplies. The Company currently projects net earnings per diluted share for 2007 of $3.05 - $3.15 per diluted share, based upon a weighted average diluted share estimate of 70.5 - 71.5 million shares, representing diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth of 13 - 17%. The Company's practice is to provide guidance on a full-year basis. However, the Company has historically experienced a seasonal fluctuation in sequential revenue between the fourth quarter and first quarter of each year. As a result of this historical experience, the Company currently expects that revenue in the first quarter of 2007 will approximate revenue in the fourth quarter of 2006. Earnings Release Conference Call As previously announced, we have scheduled an earnings release conference call for 8:30 a.m. eastern standard time today, Tuesday, January 30, 2007. The dial-in numbers for this conference call are as follows: Domestic Dial-in Number: 866-362-4832 International Dial-in Number: +617-597-5364 Participant Code: 32248120 This call is being webcast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network and can be accessed at the Kinetic Concepts, Inc. web site at http://www.kci1.com/investor/index.asp, and clicking on Web cast - Q4 2006 Kinetic Concepts, Inc. Earnings Conference Call. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). An archive of the webcast will be available at http://www.kci1.com/investor/index.asp until January 29, 2008. KCI's business outlook as of today is expected to be available on KCI's Investor Relations Investor relations The process by which the corporation communicates with its investors. web site. It is currently expected that a business outlook update will not be announced 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. is a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces. We design, manufacture, market and service a wide range of proprietary products that can improve clinical outcomes and can help reduce the overall cost of patient care. Our advanced wound care systems incorporate our proprietary Vacuum Assisted Closure[R], or V.A.C., technology, which has been demonstrated clinically to help promote wound healing and can help reduce the cost of treating patients with serious wounds. Our therapeutic surfaces, including specialty hospital beds, mattress replacement systems and overlays, are designed to address pulmonary complications associated with immobility immobility standing still and disinclined to move, as in an animal suddenly blinded; responds to other stimuli unless immobility is part of a dummy syndrome when all stimuli are ignored. , to prevent skin breakdown and assist caregivers in the safe and dignified dig·ni·fied adj. Having or expressing dignity. dig  ni·fied ly adv. handling of
obese o·beseadj. Extremely fat; very overweight. obese characterized by obesity. obese adjective Characterized by obesity, see there; excessively fat patients. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all health care settings, including acute care hospitals, extended care facilities and patients' homes both in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and abroad. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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. These forward-looking statements 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 the V.A.C. resulting from increased competition, payer reimbursement policies or our ability to protect our intellectual property rights. All information set forth in this release and its attachments is as of January 30, 2007. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2005 and in our Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. for the quarterly periods ended September 30, 2006, June 30, 2006 and March 31, 2006, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial 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 will also be set forth in those sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, which will be filed with the SEC on or before March 1, 2007. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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