Kinetic Concepts Reports Financial Results For Third Quarter and First Nine Months of 2008

SAN ANTONIO--(BUSINESS WIRE)--Kinetic Concepts, Inc. (NYSE: KCI):

Third Quarter Highlights

• Total revenue increased 22% to $503.3 million, including $61.2 million of LifeCell revenue
• Net earnings decreased 4% to $56.6 million
• Net earnings per diluted share decreased 5% to $0.78
• Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses, increased 17% to $69.2 million
• Non-GAAP net earnings per diluted share, excluding certain non-cash acquisition-related expenses, increased 17% to $0.96

First Nine Months Highlights

• Total revenue increased 18% to $1.385 billion, including $88.8 million of LifeCell revenue
• Net earnings decreased 29% to $121.8 million
• Net earnings per diluted share decreased 29% to $1.69
• Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses, increased 19% to $202.5 million
• Non-GAAP net earnings per diluted share, excluding certain non-cash acquisition-related expenses, increased 18% to $2.81

Kinetic Concepts, Inc. (NYSE: KCI) today reported third quarter 2008 total revenue of $503.3 million, an increase of 22% from the third quarter of 2007. Total revenue for the first nine months of 2008 was $1.385 billion, an 18% increase from the prior-year period. Foreign currency exchange movements favorably impacted total revenue for the third quarter and first nine months of 2008 by approximately 2% and 3%, respectively, compared to the corresponding periods of the prior year.

Net earnings for the third quarter of 2008 were $56.6 million, compared to $59.0 million for the same period one year ago. Net earnings per diluted share for the third quarter of 2008 decreased 5% to $0.78, compared to $0.82 for the same period in the prior year. The decrease in reported net earnings and net earnings per diluted share is due to after-tax transaction-related costs and expenses of $12.7 million, or $0.18 per diluted share, associated with our acquisition of LifeCell Corporation in the second quarter of 2008.

“Our third quarter results demonstrated that our business fundamentals remain solid,” said Catherine Burzik, President and Chief Executive Officer of KCI. “We continued to grow global V.A.C.^® revenue despite increased competition. Our LifeCell^® acquisition is meeting our expectations and we continue to drive operating efficiencies that fund the investments which will help deliver sustainable top-line growth and increased shareholder value.”

For the first nine months of 2008, net earnings were $121.8 million, down 29%, compared to $170.7 million from last year. Net earnings per diluted share for the first nine months of 2008 were $1.69, a decrease of 29% from the same period one year ago. Non-GAAP net earnings, excluding certain non-cash acquisition-related expenses increased 19% from the prior year to $202.5 million.

Revenue Recap – Third Quarter and First Nine Months of 2008

North American revenue was $386.3 million for the third quarter and $1.038 billion for the first nine months of 2008, representing increases of 24% and 15%, respectively, from the prior year due to revenue associated with the LifeCell acquisition and increased rental and sales volumes for V.A.C. wound healing devices and related disposables. North American V.A.C. revenue of $270.0 million for the third quarter and $781.9 million for the first nine months of 2008 increased approximately 6% and 7%, respectively, compared to the same periods of the prior year due primarily to higher rental and sales unit volume. The rate of North American V.A.C. revenue growth has declined from the prior-year periods due to a number of factors including increased competitive activity, institutional budget constraints and shorter average treatment periods. Order demand in the period exceeded unit volume growth as average treatment periods have declined due to improved treatment protocols, faster healing times and wound mix primarily in the acute care setting. LifeCell revenue was $61.2 million for the quarter and $88.8 million for the year-to-date period post-acquisition. LifeCell regenerative tissue revenue for the third quarter of 2008 represented an increase of approximately 29% over the same period one year ago due primarily to growth in its core challenging hernia repair and breast reconstruction applications. North American revenue from therapeutic support systems was $55.1 million for the third quarter and $167.7 million for the first nine months of 2008, representing decreases of 3% and 1%, respectively, from the prior-year periods due primarily to the loss of a large GPO contract announced earlier this year.

EMEA/APAC revenue of $117.0 million for the third quarter and $347.0 million for the first nine months of 2008 increased 19% and 25%, respectively, compared to the prior year due primarily to increased V.A.C. revenue. EMEA/APAC V.A.C. revenue of $90.3 million for the third quarter and $264.6 million for the first nine months of 2008 increased 24% and 29%, respectively, compared to the same periods of the prior year due primarily to higher rental and sales unit volume. EMEA/APAC therapeutic support systems revenue for the third quarter of 2008 of $26.7 million was up approximately 6% compared to the prior year period, while therapeutic support systems revenue of $82.4 million for the first nine months of 2008 increased 14% period-to-period. Foreign currency exchange movements favorably impacted total EMEA/APAC revenue by 8% and 12% for the third quarter and first nine months of 2008, respectively, compared to the corresponding periods of the prior year.

Worldwide V.A.C. revenue was $360.3 million for the third quarter of 2008 and $1.046 billion for the first nine months of 2008, representing increases of 10% and 12%, respectively, due primarily to increased rental and sales volumes for V.A.C. wound healing devices and related supplies, resulting from increased market penetration. Foreign currency exchange movements favorably impacted worldwide V.A.C. revenue by 2% and 3%, respectively, compared to the third quarter and first nine months of the prior year.

Worldwide therapeutic support systems revenue was $81.8 million for the third quarter of 2008 and $250.1 million for the first nine months of 2008, representing flat revenue levels for the comparative quarterly periods and an increase of approximately 4% for the first nine months of 2008. Foreign currency exchange movements favorably impacted worldwide therapeutic support systems revenue by 3% and 4%, respectively, for the third quarter and first nine months of 2008 compared to the same periods one year ago.

Profit Margins

Gross profit for the third quarter and first nine months of 2008 was $251.6 million and $687.5 million, respectively, representing increases of 23% and 22% from the same periods of the prior year. Gross profit margin improved approximately 30 basis points in the 2008 third quarter, compared to the year-ago period, due primarily to higher gross margins associated with the LifeCell acquisition and increased productivity of service operations.

Operating earnings for the third quarter and first nine months of 2008 were $112.9 million and $255.0 million, respectively, representing an increase of 14% for the third quarter and a decrease of 6% for the first nine months of 2008 compared to the same periods one year ago. Excluding the impact of certain non-cash acquisition-related expenses on the Company’s financial results, non-GAAP operating earnings for the third quarter and first nine months of 2008 increased approximately 32% and 26%, respectively, from the corresponding periods of one year ago. The non-GAAP operating earnings improvement for the third quarter, excluding certain non-cash acquisition-related expenses, was due primarily to higher gross profit combined with operating efficiencies, process improvements and lower general and administrative expenses. Research and development expenses for the third quarter and first nine months of 2008 increased 99% and 65%, respectively, compared to the same periods one year ago as the Company continued to expand its product development pipeline.

Interest Expense

Interest expense for the third quarter and first nine months was $25.6 million and $41.4 million, respectively, compared to $10.2 million and $18.4 million for the corresponding periods of the prior year due to the addition of $1.7 billion in acquisition financing completed during the second quarter of 2008. The acquisition financing was comprised of a senior secured term loan of $1.0 billion, due 2013, and $690.0 million of 3.25% convertible senior notes due 2015. Proceeds from these facilities were used to repay $68.0 million of outstanding debt under the previous credit facility, purchase all of the outstanding shares of LifeCell and pay related fees and expenses associated with the transaction. The senior secured term loan has a stated variable interest rate of 3-month LIBOR plus an applicable margin, however, we have entered into agreements that effectively fix the variable interest rate component on approximately $490 million of the term loan at an average of 3.3% plus the applicable margin.

Income Tax Rate

The effective income tax rates for the third quarter and the first nine months of 2008 were 33.3% and 43.6%, respectively, compared to 34.2% and 33.7% for the corresponding periods in 2007. The lower income tax rate for the third quarter resulted primarily from a higher percentage of total income being generated in lower tax foreign jurisdictions. The effective income tax rate for the first nine months of 2008 increased significantly from the year-ago period due primarily to the non-deductibility of the $61.6 million write-off of in-process research and development associated with the LifeCell acquisition.

Reconciliation to Adjusted Diluted Earnings per Share

Diluted net earnings per share, on a non-GAAP basis, adjusted for certain non-cash acquisition-related expenses, were as follows:

		Three months ended			Nine months ended
		September 30, 2008			September 30, 2008
Diluted EPS – GAAP basis		$	0.78		$	1.69
In-process research and development			-			0.85
Amortization of acquired intangibles			0.09			0.13
Expense from LifeCell inventory step-up			0.06			0.09
Debt issuance cost amortization			0.03			0.05
Adjusted diluted EPS – Non-GAAP basis		$	0.96		$	2.81

Balance Sheet

At September 30, 2008, total cash was $245.2 million and total long-term debt outstanding was $1.74 billion. Subsequent to September 30, 2008, the Company made a voluntary revolving credit facility repayment of $75.0 million from cash on hand. The Company’s leverage ratio at the end of September 2008 was approximately 2.9 times trailing-twelve-months EBITDA.

Outlook

The following guidance is based on current information and expectations as of October 22, 2008 (in millions, except per share data):

							% Change
	FY 2007			FY 2008			from 2007
Total revenue	$	1,610		$	1,885 – $1,905		17	% – 18%
Diluted EPS -- GAAP basis	$	3.31		$	2.47 – $2.57		(25	%) – (22%)
Weighted average shares outstanding		71.7			72.0 – 72.5		0	% – 1%
Adjusted Diluted EPS -- Non-GAAP basis	$	3.31		$	3.75 – $3.85		13	% – 16%

The revenue guidance for 2008 reflects the impact of increased competition in the area of negative pressure wound therapy, unfavorable foreign currency exchange rate fluctuations in the second half of the 2008 calendar year and shorter lengths of treatment for V.A.C. Therapy.

KCI 2008 Analyst Day Event

KCI plans to host an Analyst Day event on Thursday, October 30, 2008 at the Grand Hyatt in San Antonio. The event will include presentations by key opinion leaders in the field of advanced wound care, as well as presentations by KCI leaders. To learn more about the event, go to KCI’s Investor Relations web site at http://www.kci1.com/investor/index.asp and click on the Analyst Day link.

Non-GAAP Financial Information

Within this document, we have included our results for the third quarter and nine months ended September 30, 2008 along with our outlook on a non-GAAP basis to exclude the impact of the specified non-cash expenses set forth above associated with our acquisition of LifeCell in the second quarter of 2008. These non-GAAP financial measures do not replace the presentation of our GAAP outlook. We have provided this supplemental non-GAAP information because it may provide meaningful information regarding our outlook on a basis that better facilitates an understanding of our expected results of operations which may not be otherwise apparent under purchase accounting for the LifeCell acquisition in accordance with GAAP. Management uses this non-GAAP financial information, along with GAAP information, for reviewing the operating results of its business segments and for analyzing potential future business trends. In addition, we believe some investors may use this information in a similar fashion. A reconciliation of our GAAP selected financial information for the periods presented to the non-GAAP selected financial information provided is included herein.

Earnings Release Conference Call

As previously announced, we have scheduled an earnings release conference call for 8:30 a.m. Eastern Daylight Time today, Wednesday, October 22, 2008. The dial-in numbers for this conference call are as follows:

Domestic Dial-in Number:	888-313-5249
International Dial-in Number:	+706-679-5386

This call is also being webcast and can be accessed at the Kinetic Concepts, Inc. web site at http://www.kci1.com/investor/index.asp, and clicking on Webcast – Q3 2008 Kinetic Concepts, Inc. Earnings Conference Call. An archive of the web cast will be available until October 21, 2009 at http://www.kci1.com/investor/index.asp.

KCI's business outlook as of today is expected to be available on KCI's Investor Relations web site. KCI does not currently expect to update this business outlook until the release of KCI's next quarterly earnings announcement, notwithstanding subsequent developments.

About KCI

Kinetic Concepts, Inc. (NYSE: KCI) is a leading global medical technology company devoted to the discovery, development, manufacture and marketing of innovative, high-technology therapies and products for the wound care, tissue regeneration and therapeutic support system markets. Headquartered in San Antonio, Texas, KCI’s success spans more than three decades and can be traced to a history deeply rooted in innovation and a passion for significantly improving the healing – and the lives – of patients around the world.

KCI’s three primary businesses include:

Advanced Wound Care – Includes KCI’s proprietary Vacuum Assisted Closure^®, or V.A.C.^® Therapy System, which has been clinically demonstrated to promote wound healing through unique mechanisms of action while reducing the overall cost of treating patients with complex wounds.

Regenerative Medicine– Represented by KCI’s LifeCell business and includes tissue-based products for use in reconstructive, orthopedic and urogynecologic surgical procedures to repair soft tissue defects.

Therapeutic Support Systems – Includes specialty hospital beds, mattress replacement systems and overlays designed to address pulmonary complications associated with immobility, to reduce skin breakdown and assist caregivers in the safe and dignified handling of patients of size.

The Company employs approximately 7,000 people and markets its products in more than 20 countries. For more information about KCI, and how its products are changing the practice of medicine, visit www.kci1.com.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, management's outlook, estimates of future performance, revenue, earnings per share, growth objectives and weighted average shares outstanding. These forward-looking statements contained herein are based on our current expectations and are subject to a number of risks and uncertainties that could cause us to fail to achieve our current financial projections and other expectations, such as changes in the demand for the V.A.C. resulting from increased competition, in payer reimbursement policies or in our ability to protect our intellectual property. All information set forth in this release and its attachments is as of October 22, 2008. We undertake no duty to update this information. More information about potential factors that could cause our results to differ or adversely affect our business and financial results is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2008 and June 30, 2008, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These reports are on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008, which will be filed with the SEC in early November 2008.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
	Three months ended September 30,						Nine months ended September 30,
					%						%
	2008		2007		Change		2008		2007		Change
Revenue:
Rental	$ 305,205		$ 295,371		3.3 %		$ 906,393		$ 844,400		7.3 %
Sales	198,094		115,509		71.5		479,046		331,948		44.3
Total revenue	503,299		410,880		22.5		1,385,439		1,176,348		17.8
Rental expenses	185,136		170,742		8.4		545,729		506,047		7.8
Cost of sales	66,542		35,917		85.3		152,220		104,764		45.3
Gross profit	251,621		204,221		23.2		687,490		565,537		21.6
Selling, general and administrative expenses	106,676		94,349		13.1		302,754		261,183		15.9
Research and development expenses	21,884		10,996		99.0		53,279		32,200		65.5
Acquired intangible asset amortization	10,189		-		-		14,843		-		-
In-process research and development	-		-		-		61,571		-		-
Operating earnings	112,872		98,876		14.2		255,043		272,154		(6.3)
Interest income and other	835		689		21.2		4,997		3,569		40.0
Interest expense	(25,648)		(10,176)		152.0		(41,350)		(18,398)		124.8
Foreign currency gain (loss)	(3,253)		328		-		(2,740)		(124)		-
Earnings before income taxes	84,806		89,717		(5.5)		215,950		257,201		(16.0)
Income taxes	28,254		30,692		(7.9)		94,154		86,548		8.8
Net earnings	$ 56,552		$ 59,025		(4.2)%		$ 121,796		$ 170,653		(28.6)%
Net earnings per share:
Basic	$ 0.79		$ 0.83		(4.8)%		$ 1.70		$ 2.41		(29.5)%
Diluted	$ 0.78		$ 0.82		(4.9)%		$ 1.69		$ 2.39		(29.3)%
Weighted average shares outstanding:
Basic	71,831		71,214				71,756		70,791
Diluted	72,130		71,929				72,110		71,490

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
	September 30,			December 31,
		2008			2007
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	245,236		$	265,993
Accounts receivable, net		408,339			356,965
Inventories, net		126,435			50,341
Deferred income taxes		18,849			41,504
Prepaid expenses and other		46,958			31,176
Total current assets		845,817			745,979
Net property, plant and equipment		282,850			228,471
Debt issuance costs, less accumulated amortization of $6,387 at 2008 and $218 at 2007
		56,991			2,456
Deferred income taxes		7,500			8,743
Goodwill		1,337,388			48,897
Identifiable intangible assets, less accumulated amortization of $26,142 at 2008 and $10,678 at 2007
		481,711			7,196
Other non-current assets		16,475			15,843
	$	3,028,732		$	1,057,585
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable	$	58,996		$	50,804
Accrued expenses and other		194,333			212,874
Current installments of long-term debt		100,000			-
Total current liabilities		353,329			263,678
Long-term debt, net of current installments		1,640,000			68,000
Non-current tax liabilities		35,327			31,313
Deferred income taxes		169,997			9,921
Other non-current liabilities		6,778			7,653
Total liabilities		2,205,431			380,565
Shareholders' equity:
Common stock; authorized 225,000 at 2008 and 2007, issued and outstanding 72,535 at 2008 and 72,153 at 2007
		73			72
Preferred stock; authorized 50,000 at 2008 and 2007; issued and outstanding 0 at 2008 and 2007
		-			-
Additional paid-in capital		677,757			644,347
Retained earnings (deficit)		114,615			(7,181	)
Accumulated other comprehensive income		30,856			39,782
Shareholders' equity		823,301			677,020
	$	3,028,732		$	1,057,585

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Nine months ended September 30,
		2008				2007
Cash flows from operating activities:
Net earnings	$	121,796			$	170,653
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and other		87,019				67,785
Provision for bad debt		5,986				5,519
Amortization of deferred gain on sale of headquarters facility		(803	)			(803	)
Write-off of deferred debt issuance costs		860				3,922
Share-based compensation expense		19,678				17,908
Excess tax benefit from share-based payment arrangements		(258	)			(12,582	)
Write-off of in-process research and development		61,571				-
Change in assets and liabilities, net of business acquired:
Increase in accounts receivable, net		(19,879	)			(30,781	)
Increase in inventories, net		(8,297	)			(7,284	)
Increase in prepaid expenses and other		(9,712	)			(7,987	)
Increase (decrease) in deferred income taxes, net		71,073				(17,135	)
Decrease in accounts payable		(8,230	)			(2,934	)
Decrease in accrued expenses and other		(49,603	)			(9,779	)
Increase in tax liabilities, net		554				27,963
Net cash provided by operating activities		271,755				204,465
Cash flows from investing activities:
Additions to property, plant and equipment		(83,748	)			(53,947	)
Increase in inventory to be converted into equipment for short-term rental
		(12,100	)			(13,500	)
Dispositions of property, plant and equipment		4,638				1,239
Business acquired in purchase transaction, net of cash acquired		(1,745,522	)			-
Purchase of investments		-				(36,425	)
Maturities of investments		-				36,425
Increase in intangible assets and other non-current assets		(3,753	)			(1,288	)
Net cash used by investing activities		(1,840,485	)			(67,496	)
Cash flows from financing activities:
Proceeds from revolving credit facility		75,000				188,000
Repayments of long-term debt, capital lease and other obligations		(25,193	)			(307,584	)
Payment of debt issuance costs		-				(2,268	)
Excess tax benefit from share-based payment arrangements		258				12,582
Proceeds from exercise of stock options		2,431				21,634
Purchase of immature shares for minimum tax withholdings		(886	)			(2,321	)
Proceeds from purchase of stock in ESPP and other		2,346				2,142
Acquisition financing:
Proceeds from senior credit facility		1,000,000				-
Proceeds from convertible senior notes		690,000				-
Repayment of long-term debt		(68,000	)			-
Proceeds from convertible debt warrant		102,458				-
Purchase of convertible debt hedge		(151,110	)			-
Payment of debt issuance costs		(60,704	)			-
Net cash provided (used) by financing activities		1,566,600				(87,815	)
Effect of exchange rate changes on cash and cash equivalents		(18,627	)			7,874
Net increase (decrease) in cash and cash equivalents		(20,757	)			57,028
Cash and cash equivalents, beginning of period		265,993				107,146
Cash and cash equivalents, end of period	$	245,236			$	164,174

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Supplemental Revenue Data
(in thousands)
(unaudited)
		Three months ended September 30,
									Variance
			2008			2007 (1	)			$			%
Total Revenue:
V.A.C.
Rental		$	237,387		$	226,114			$	11,273			5.0		%
Sales			122,902			102,781				20,121			19.6
Total V.A.C.			360,289			328,895				31,394			9.5
Therapeutic Support Systems
Rental			67,818			69,257				(1,439	)		(2.1	)
Sales			13,959			12,728				1,231			9.7
Total Therapeutic Support Systems			81,777			81,985				(208	)		(0.3	)
LifeCell sales			61,233			-				61,233			-
Total rental revenue			305,205			295,371				9,834			3.3
Total sales revenue			198,094			115,509				82,585			71.5
Total Revenue		$	503,299		$	410,880			$	92,419			22.5		%
North America Revenue:
V.A.C.
Rental		$	192,799		$	189,035			$	3,764			2.0		%
Sales			77,166			66,795				10,371			15.5
Total V.A.C.			269,965			255,830				14,135			5.5
Therapeutic Support Systems
Rental			46,461			49,225				(2,764	)		(5.6	)
Sales			8,621			7,497				1,124			15.0
Total Therapeutic Support Systems			55,082			56,722				(1,640	)		(2.9	)
LifeCell sales			61,233			-				61,233			-
Total North America rental			239,260			238,260				1,000			0.4
Total North America sales			147,020			74,292				72,728			97.9
Total – North America Revenue		$	386,280		$	312,552			$	73,728			23.6		%
EMEA/APAC Revenue:
V.A.C.
Rental		$	44,588		$	37,079			$	7,509			20.3		%
Sales			45,736			35,986				9,750			27.1
Total V.A.C.			90,324			73,065				17,259			23.6
Therapeutic Support Systems
Rental			21,357			20,032				1,325			6.6
Sales			5,338			5,231				107			2.0
Total Therapeutic Support Systems			26,695			25,263				1,432			5.7
Total EMEA/APAC rental			65,945			57,111				8,834			15.5
Total EMEA/APAC sales			51,074			41,217				9,857			23.9
Total – EMEA/APAC Revenue		$	117,019		$	98,328			$	18,691			19.0		%
(1) Prior year amounts have been reclassified to conform to our current year presentation.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Supplemental Revenue Data
(in thousands)
(unaudited)
	Nine months ended September 30,
								Variance
		2008			2007 (1	)			$			%
Total Revenue:
V.A.C.
Rental	$	693,948		$	641,713			$	52,235			8.1		%
Sales		352,549			293,052				59,497			20.3
Total V.A.C.		1,046,497			934,765				111,732			12.0
Therapeutic Support Systems
Rental		212,445			202,687				9,758			4.8
Sales		37,661			38,896				(1,235	)		(3.2	)
Total Therapeutic Support Systems		250,106			241,583				8,523			3.5
LifeCell sales		88,836			-				88,836			-
Total rental revenue		906,393			844,400				61,993			7.3
Total sales revenue		479,046			331,948				147,098			44.3
Total Revenue	$	1,385,439		$	1,176,348			$	209,091			17.8		%
North America Revenue:
V.A.C.
Rental	$	562,982		$	539,110			$	23,872			4.4		%
Sales		218,902			190,932				27,970			14.6
Total V.A.C.		781,884			730,042				51,842			7.1
Therapeutic Support Systems
Rental		144,784			145,366				(582	)		(0.4	)
Sales		22,921			24,053				(1,132	)		(4.7	)
Total Therapeutic Support Systems		167,705			169,419				(1,714	)		(1.0	)
LifeCell sales		88,836			-				88,836			-
Total North America rental		707,766			684,476				23,290			3.4
Total North America sales		330,659			214,985				115,674			53.8
Total – North America Revenue	$	1,038,425		$	899,461			$	138,964			15.4		%
EMEA/APAC Revenue:
V.A.C.
Rental	$	130,966		$	102,603			$	28,363			27.6		%
Sales		133,647			102,120				31,527			30.9
Total V.A.C.		264,613			204,723				59,890			29.3
Therapeutic Support Systems
Rental		67,661			57,321				10,340			18.0
Sales		14,740			14,843				(103	)		(0.7	)
Total Therapeutic Support Systems		82,401			72,164				10,237			14.2
Total EMEA/APAC rental		198,627			159,924				38,703			24.2
Total EMEA/APAC sales		148,387			116,963				31,424			26.9
Total – EMEA/APAC Revenue	$	347,014		$	276,887			$	70,127			25.3		%
(1) Prior year amounts have been reclassified to conform to our current year presentation.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES
Selected Financial Information - GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
	Three months ended September 30,
										Expense
				In-process						From				Debt
				Research			Amortization			LifeCell				Issuance
		2008		and			of Acquired			Inventory				Cost				Adjusted				2007		%
	GAAP			Development			Intangibles			Step-up				Amortization					2008		GAAP			Change
Operating earnings	$	112,872		$	-		$	10,189		$	6,999			$	-			$	130,060		$	98,876		31.5	%
Net earnings	$	56,552		$	-		$	6,266		$	4,304			$	2,107			$	69,229		$	59,025		17.3	%
Diluted earnings per share	$	0.78		$	-		$	0.09		$	0.06			$	0.03			$	0.96		$	0.82		17.1	%
	Nine months ended September 30,
										Expense
				In-Process						From				Debt
				Research			Amortization			LifeCell				Issuance
		2008		and			of Acquired			Inventory				Cost				Adjusted				2007		%
	GAAP			Development			Intangibles			Step-Up				Amortization					2008		GAAP			Change
Operating earnings	$	255,043		$	61,571		$	14,843		$	10,162			$	-			$	341,619		$	272,154		25.5	%
Net earnings	$	121,796		$	61,571		$	9,128		$	6,250			$	3,794			$	202,539		$	170,653		18.7	%
Diluted earnings per share	$	1.69		$	0.85		$	0.13		$	0.09			$	0.05			$	2.81		$	2.39		17.6	%