Kinetic Concepts, Inc. (KCI) exudes positive energy for wound-healing purposes. The company's active healing solutions (AHS) business makes vacuum-assisted wound care systems (including the V.A.C. Via system), which use KCI's negative pressure technology to speed patient recovery from complex wounds. The unit also makes negative pressure systems to aid in the healing of surgical incisions. Its LifeCell business develops tissue regeneration products used in reconstructive surgical procedures. The firm is selling its therapeutic support systems (TSS) business, which makes hospital beds, specialized mattresses, and patient mobility assistance devices. KCI is owned by a consortium of private-investors.
Change in Company Type
KCI was acquired for nearly $5 billion by a group of private-equity firms in 2011. The group included Apax Partners and two Canadian pension firms. The deal, which also included another $1.3 billion in assumed debt, made KCI a private entity and allowed KCI and its owners to take advantage of new opportunities and make further investments in the medical products industry.
KCI makes most of its sales in the US, where it markets and distributes its products through its own sales force. Internationally, KCI distributes its products directly and through local distributors in some 20 countries.
The company's 2011 going-private transaction followed several years of revenue growth for KCI, though sales and net income growth slowed a bit in 2010 (revenues increased 1% to $2 billion and net income grew 12% to $256 million, compared to 6% and 32% growth rates in 2009). Most of the company's revenue growth was attributed to the rapidly growing LifeCell tissue matrix business, as well as to strong sales within its larger AHS segment. Sales from the TSS division, however, were lagging due to economy-related capital spending constraints in the hospital industry.
KCI is focused on growing its AHS product line (its biggest revenue earner). Through the division, KCI has worked to develop and commercialize new products and therapies based on its negative pressure technology platform (NPTP), including the 2010 and 2011 introductions of the V.A.C. Via Therapy System in the US and Europe and the Prevena Incision Management System globally.
Along with internal efforts, KCI enters into sales and marketing agreements with other medical equipment makers to gain access to new products and a broader customer base. It has one such agreement with Novadaq Technologies for the North American distribution of Novadaq's SPY Elite System, which helps with surgical visualization in tissue procedures. KCI also has a licensing agreement (entered into in 2011) with Wright Medical Technologies for Wright's Graftjacket product line for ulcer repair procedures.
The company is working to expand its presence outside of North America. To that end it is building up its distribution networks and launching products in new markets. For instance, in 2012 KCI opened a new V.A.C. training center for doctors in Brazil to help expand its presence in South America, where it primarily sells its products through third-party distributors.
To increase its focus on the AHS and LifeCell divisions, in 2012 KCI agreed to sell the TSS operations to Swedish wound management firm Getinge for some $275 million, marking KCI's exit from the hospital bed manufacturing business upon which it was founded. TSS also makes mobility devices and other equipment for patients who are immobilized and have pulmonary, bariatric, or chronic wound conditions.
KCI's customers include acute care hospitals, long-term care facilities, home health agencies, and wound care clinics in the US and abroad. Some of its largest customers include hospital group purchasing organizations (GPOs) such as Novation. The company maintains an in-house team of specialists who help individual and home health customers negotiate paperwork related to Medicare and private insurance.
KCI was founded by chairman emeritus James Leininger in 1976 in San Antonio. Leininger owned some 11% of the company's stock prior to its acquisition by the Apax Partners-led private equity consortium in 2011. – less