Medical technology company Kinetic Concepts, Inc. (KCI) Wednesday reported an increase in net profit for the third quarter, reflecting higher revenues from regenerative medicine segment and improved margins. The company also reaffirmed its earnings and revenues guidance for fiscal 2009.
For the quarter, the San Antonio, Texas-based company's net earnings was $64.57 million or $0.91 per share, up from $53.91 million or $0.75 per share in the prior-year quarter. On an adjusted basis, net profit increased to $76.17 million or $1.08 per share from $69.23 million or $0.96 per share a year ago.
Adjusted results exclude amortization of acquired intangibles, debt issuance cost amortization, and interest expense with regard to adoption of required accounting standards.
On average, seven analysts polled by Thomson Reuters expected Kinetic to earn $1.05 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the period rose slightly to $504.40 million from $503.30 million in the third quarter of fiscal 2008. Analysts expected the company to generate revenues of $504.01 million during the quarter.
On a segmental basis, revenues from VAC segment were up to $360.58 million from $360.29 million, regenerative medicine segment generated revenues of $71.77 million, up 17.2% from $61.23 million, while revenues from therapeutic support systems declined to $72.05 million from $81.78 million last year.
Geography-wise, revenues from North America were $388.64 million compared to $386.28 million, whereas revenues from EMEA/APAC countries slipped to $115.76 million from $117.02 million in the same quarter last year.
The company's rental revenues for the quarter were $298.58 million versus $305.21 million, while revenues from sales rose to $205.82 million from $198.09 million a year ago.
Kinetic noted that foreign currency exchange movements had a negative impact on the quarter's total revenues by about 1%, compared to the corresponding period prior year.
For the three-month period, the company's interest income and other incomes plunged to $158 thousand from $835 thousand, and interest expense was $25.73 million compared with $29.94 million last year. During the period, Kinetic had a foreign currency gain of $3.18 million as against a loss of $3.25 million in the 2008-year period.
The company's gross margin for the quarter was nearly 55%, an increase of about 400 basis points from the 2008-year period. Kinetic attributed the rise in margin to increased field service operations productivity and higher gross margins in relation to Regenerative Medicine business unit.
For the quarter, research and development expenses incurred by the company rose to $24.67 million from $21.88 million in the year-ago period, reflecting increased activity in connection with development of Kinetic's next generation of advanced wound care products.
Effective income tax rate for the period was 29.7% versus 33.0% in the previous year, reflecting favorable resolution of certain tax contingencies during the quarter.
For the nine-month period, the company's net income surged to $162.37 million or $2.31 per share from $117.05 million or $1.62 per share in the comparable period prior year. Adjusted net earnings for the period was $203.49 million or $2.89 per share as against $202.54 million or $2.81 per share last year. Year-to-date revenues increased to $1.47 billion from $1.39 billion in the prior year.
In addition to this, president and chief executive officer Catherine Burzik said, "We received regulatory approval for V.A.C.® 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."
For the second quarter of fiscal 2009, the company had posted a net profit of $58.1 million or $0.82 per share compared to a net loss of $4.81 million or $0.07 per share in the year-ago quarter. Total revenues for the second quarter were reported as $491.35 million versus $462.12 million in same quarter last year.
Looking ahead, for fiscal year 2009, Kinetic reaffirmed its earnings guidance in the range of $3.19 to $3.34 per share on revenues ranging between $1.95 billion and $2.00 billion. The company also backed its adjusted fiscal 2009 earnings view of between $3.95 and $4.10 per share. For full year 2009, analysts expect Kinetic to earn $3.95 per share on revenues of $1.98 billion.
KCI closed Monday's regular trading at $37.74 per share on the New York Stock Exchange.
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