Kinetic Concepts planning to continue using cash flow to repay debt

By Jennifer Lanning Drey

Portland, Ore., Jan. 26 - Kinetic Concepts Inc. expects to continue using its cash flow to drive down leverage this year, after making $200 million of scheduled and voluntary senior credit facility repayments in 2009, Martin Landon, chief financial officer of Kinetic Concepts, said Tuesday during the company's fourth-quarter and year-end conference call.

Of that amount, $50 million of repayments were made in the fourth quarter, he said.

As a result, Kinetic Concepts ended 2009 with an economic debt to trailing 12-month EBITDA ratio of 2.3 times. The figure has since improved due to another $50 million prepayment made in mid-January, he said.

Total long-term debt outstanding at Dec. 31 was $1.306 billion on a GAAP basis, or $1.44 billion on a debt-instrument basis.

"Our financial position remains liquid and stable, with total worldwide cash of over $260 million and a substantially unencumbered revolving credit line," Landon said.

The company believes continued business-mix improvements and operating efficiencies will allow it to fund organic growth investments in 2010 while slightly expanding full-year margins, he said.

Kinetic Concepts reported total revenue of $526.8 million for the fourth quarter, a 7% increase as compared to the same period of 2008. The company said foreign currency exchange movements favorably impacted total revenue during the period by 3%.

Fourth-quarter net earnings increased by 34% over the prior-year period.

"This performance is evidence of the progress we are making on our strategic pillars of geographic expansion, innovation, diversification and organizational readiness," Catherine Burzik, chief executive officer of Kinetic Concepts, said Tuesday.

Kinetic Concepts is a San Antonio medical technology company specializing in advanced wound care and therapeutic support systems.

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