Kinetic Concepts reports solid first quarter, plans to increase R&D spending

By Lisa Kerner

Charlotte, N.C., April 24 - Kinetic Concepts, Inc.'s fiscal year is off to a strong start, according to remarks made by president and chief executive officer Catherine Burzik during an earnings conference call on Tuesday.

The company reported first-quarter 2007 total revenue of $368.8 million, up 16% from $319.2 million in the first quarter of 2006. Net earnings for the quarter rose 10% from the prior-year period to $53.6 million, and Kinetic posted net earnings per diluted share of $0.75 for the first quarter, up 14% from $0.66 for the same period in 2006.

Gross profit for the first quarter of 2007 was $171.2 million, an increase of 14% from the prior-year period.

"We made solid progress on a number of initiatives we have set out for 2007, including deeper V.A.C. penetration in established markets, profitable revenue growth in therapeutic surfaces and increased investment in our research and development," Burzik stated in a company news release.

"We look forward to further progress toward our strategic initiatives as the year unfolds."

Burzik also said during the call that Kinetic is taking an aggressive approach to its portfolio management and increasing research and development spending with a focus on innovation.

"Our goal is to execute our plan with precision and to do so in a way that creates overall shareholder value," Burzik said.

Kinetic long-term debt outstanding at March 31 was $207.3 million. The company made a voluntary prepayment on its senior debt of about $25.0 million. In addition, Kinetic said it remains undrawn on its credit facility and its net debt is below $100 million.

The company reaffirmed its 2007 projections for total revenue of $1.51 billion to $1.56 billion and net earnings per diluted share $3.05 to $3.15.

Kinetic, based in San Antonio, Texas, is a medical technology company specializing in wound-care products.

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