Thank you FDA, layoffs if this does not last as all bets are on this

KCI's parent reports wider loss on higher revenue
By Patrick Danner
July 29, 2014 | Updated: July 29, 2014 9:02pm
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By Patrick Danner
July 29, 2014 | Updated: July 29, 2014 9:02pm

SAN ANTONIO — San Antonio-based Kinetic Concepts Inc.'s 2013 acquisition of a U.K. wound-care company continued to propel revenue growth for their parent company.
KCI's parent, Centaur Guernsey LP Inc., on Tuesday reported revenue of $465.2 million in the second quarter ended June 30, up about $32.5 million or 7.5 percent from the same period a year ago.
Most of that growth was attributed to the $485 million acquisition of Systagenix in October. Without Systagenix, however, Centaur Guernsey's revenue would have fallen 5.5 percent, or more than $25 million. Lower average pricing on products hurt revenue in the quarter.
KCI officials expect to begin seeing a positive effect on revenue later this quarter as a result of London-based competitor Smith & Nephew's move to temporarily cease commercial distribution of its Renasys Negative Pressure Wound Therapy product in the United States.
Smith & Nephew made the move last month after the U.S. Food and Drug Administration directed it to obtain new regulatory clearances because of design changes made to Renasys systems. The applications for clearance have been filed and are awaiting action, Smith & Nephew said at the time.
“We're not going to speak to or speculate on the details of (Smith & Nephew's) situation or how long this product might be off the market,” KCI President and CEO Joseph Woody said in a conference call with analysts.
“What's more important is that we are providing KCI's world-class negative pressure wound therapy products to patients in the United States as quickly as possible so their treatment goes uninterrupted,” Woody said. The products are used to treat surgical and chronic wounds.
The FDA told Smith & Nephew that its Renasys devices were “adulterated and misbranded because of multiple violations,” Bloomberg BNA reported this month. A Smith & Nephew spokeswoman didn't respond to a request for comment.
Moody's Investors Services expects KCI to benefit from Smith & Nephew's troubles.
“We expect KCI to gain market share — at least until Smith & Nephew is able to relaunch its product in the U.S. — which will benefit near-term revenue” and earnings before taxes, interest and other items, Moody's wrote last month.
Woody acknowledged that the second quarter was challenging for KCI, Systagenix and sister company LifeCell Corp., which specializes in skin and tissue regeneration. The companies are being combined into one under the KCI banner, and this is expected to produce as much as $25 million in costs this year.
Centaur Guernsey posted a $152.7 million loss in the second quarter, up 144 percent from a $62.6 million loss in the same period last year. In the most recent quarter, the company took a $199 million charge to settle a patent dispute with Wake Forest University Health Sciences. The settlement was for $280 million, which will be paid in annual installments through 2017. The first payment, $80 million, is due this month.
KCI's second-quarter performance also was hurt by competitive bidding instituted by the Centers for Medicare & Medicaid Services (CMS).
“We expect improvement in the overall revenue growth due both to the lapsing of the pricing impact from CMS and volume growth as customers and payers return to KCI,” Chief Financial Officer Robert Hureau said.
Centaur Guernsey is controlled by investment funds advised by Apax Partners and affiliates of Canadian pension investment management funds. They acquired KCI for $6.3 billion in a leveraged buyout in 2011.

 

Guess this proves the old saying that it is better to be lucky than good is correct.

 

Easy financial move, taking a loss for 8 quarters in a row, make that 9 after this report. Tell investors that waht we really need is other parts to make the company profitable...i.e. Systagenix, Life Cell (did we not already figure there are no synergies). Revenue starts going up imediately due to aquisitions, margins still fall. It buys the c-suite more time until they figure this model does not work and start laying off people first, divesting units second. I will bet anyone they try to take the company public within the next 9 months. Its the only way our investors have a chance to make their money back. Good PR to inflate the IPO price, sell high and then watch the carnage pile up that is known as KCI.