Kinetic Concepts Medical Device Company Intelligence Report

Additional Information

Founded in 1976, Texas, US-based Kinetic Concepts Inc (KCI) is a global medical technology company with primary business units serving the advanced wound care, regenerative medicine and therapeutic support systems markets. The company operates three business units:

Active Healing Solutions (AHS) - based at the company’s headquarters in San Antonio, Texas, the AHS business is focused on the development and commercialisation of advanced wound care therapies based on its negative pressure technology platform (NPTP), which employs negative pressure in a variety of applications to promote wound healing. NPTP comprises three primary product categories: negative pressure wound therapy (NPWT), negative pressure surgical management (NPSM) and negative pressure regenerative medicine (NPRM). NPWT, through the company’s V.A.C. Therapy portfolio, currently represents the primary source of revenue for the AHS business. In addition, it continues to develop new products and therapies in NPSM and plans to launch NPRM products to broaden and diversify its NPTP revenue streams in the future. During 2010 and 2011, KCI’s latest NPWT product, the V.A.C.Via Therapy system, was launched in the US and in select European markets, respectively. In addition, during 2010, the company launched the Prevena Incision Management System globally. Prevena is an NPSM product designed specifically for the management of surgically-closed incisions. In the acute care setting, KCI bills its customers directly for the rental and sale of its products. In the homecare setting, the company provides products and services to patients in the home and generally invoices third-party payers directly.

LifeCell - located in Branchburg, New Jersey, US, the LifeCell business is focused on the development and commercialisation of regenerative and reconstructive acellular tissue matrices for use in reconstructive, orthopaedic and urogynaecologic surgical procedures to repair soft tissue defects, as well as for reconstructive and cosmetic procedures. Existing products include human-based AlloDerm regenerative tissue matrix and porcine-based Strattice reconstructive tissue matrix in various configurations designed to meet the needs of patients and caregivers. The majority of LifeCell’s revenue is generated from the clinical applications of challenging hernia repair and post-mastectomy breast reconstruction, which is generated primarily in the US in the acute care setting on a direct billing basis. KCI continues efforts to penetrate markets with its other LifeCell products while developing and commercialising additional tissue matrix products and applications to expand into new markets and geographies. During 2011, the company launched its latest acellular dermal matrix, AlloDerm Regenerative Tissue Matrix Ready-to-Use.

Therapeutic Support Systems (TSS) - also based in San Antonio, the TSS business is focused on commercialising specialised therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. The business rents and sells products in three primary surface categories: critical care, wound care and bariatric care. Its critical care products, typically used in the ICU, are designed to address pulmonary complications associated with immobility; its wound care surfaces are used to reduce or treat skin breakdown; and its bariatric care surfaces assist caregivers in the safe and dignified handling of obese and morbidly obese patients, while addressing complications related to immobility. The TSS business moved into the patient mobility sector in January 2011 with the acquisition of TechniMotion Medical.

The addition of LifeCell to KCI's portfolio in May 2008 provided the company with additional long-term growth opportunities, since changes in the NWPT market – the core of KCI’s business – mean that rivals are emerging with lower-priced, but equally effective, products to challenge KCI’s dominance of the field. Larger and more diversified companies are looking to buy those smaller companies with activities in NPWT – the purchase of BlueSky Medical by Smith & Nephew in 2007 is a good example – and, where it is able, KCI is defending itself by seeking legal opinion as to whether its rivals are infringing its NPWT patent rights. Indeed, KCI and Wake Forest University – which granted KCI an exclusive global licence to certain patents that are integral to the technology incorporated in V.A.C Therapy products – are in dispute after a Federal District Court entered an order in a Smith & Nephew case invalidating Wake Forest patent claims.

Overall, KCI rents and sells its products in more than 20 countries. The company has approximately 7,100 employees worldwide, operates R&D facilities in the US and the UK, and maintains manufacturing and engineering operations in the US, the UK, Ireland and Belgium. In 2010, KCI generated net income of US$256.1 million on revenue of US$2.0 billion. The AHS business accounted for 70% of revenue, the LifeCell business for 17% and the TSS business for the remaining 13%. In the first nine months of 2011, KCI’s earnings were up 32% on a 4% increase in revenues.

In November 2011, KCI was acquired by a consortium comprised of funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and Canada's Public Sector Pension Investment Board, in a transaction valued at US$4.98 billion (or US$6.1 billion including KCI’s outstanding debt).

This company report provides

Overview
Key contact information
Introduction to the company and its current activities
Summary of its financial performance
Who are the company’s major competitors?
Key recent events in an “at a glance” format

Financial Review
Current year and annual financial data, including revenue breakdowns by product area and geographic region (if available)
Table providing in-depth five-year financial analysis
Employee data, including breakdown by company division and geographic location

Strategic Focus
Investigates the company’s aims and its areas of focus

Products
Core product areas, key brands, product approvals and launches Research and Development
How much has been invested in R&D?
Where is the research based?
What alliances and agreements does the company have and with whom?

Manufacturing and Distribution
Identifying the company’s manufacturing locations
Sales and marketing facilities

Agreements
With whom has the company reached agreements and what do they involve? Key contracts awarded

Mergers, Acquisitions, Minority Investments and Divestments

Litigation

Key Corporate Events