Kinetic Concepts Inc. Q3 2009 Earnings Call Transcript

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2009-10-21 11:07:08.0

Tags: Deutsche Bank AG, Call Transcript, Injunction, Earnings, Kinetic Concepts Inc., Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Seth Waugh - Deutsche Bank.

Seth Waugh - Deutsche Bank

Just first, I wanted to touch on the international V.A.C. growth. It was solid, a little bit higher than we expected. So I just wanted to see if any of the $90 million, if you can attribute any of that to be injunctions that we saw overseas?

Cathy Burzik

You’re asking about the injunctions?

Seth Waugh - Deutsche Bank

I was saying, Cathy, you had the injunctions in Germany and Australia, and if any of the bump up in our U.S. V.A.C growth was just due to those injunctions or do you think it was more just solid unit growth?

Cathy Burzik

It’s not due to the injunctions at all. I think that it’s really due to the execution in the area, and as I talked a little bit in the script, particularly in Germany, where we have very open competition at this point. We’re very pleased with the performance that we see there.

Seth Waugh - Deutsche Bank

Actually, on the ABThera product, I saw that ACS, there was definitely a big buzz about it. How do you expect this product is going to impact your mix and margin over the near term and is it priced at a premium or is it in line with your current structure?

Cathy Burzik

It’s a great question and we’re really pleased with ABThera. I know that many members of the KCI team were there, both AAST and ACS and there looks to be really strong demand and really good positive early feedback on this. The product is priced at a premium and just to remind you that, there are some of those applications of open abdominal compartment syndrome, where V.A.C is used today, but we know because of the limitations for example, these wounds, they have an awful lot of exudate.

So V.A.C today really is not optimal and therefore we’ve designed this ABThera system. So we believe that really this ABThera system will cannibalize what’s called the barker system, which is really the standard of care for treating those patients today. So we see this primarily as a market expansion.

Seth Waugh - Deutsche Bank

Okay, market expansion and market and margin expansion?

Cathy Burzik

Yes.

Seth Waugh - Deutsche Bank

One or two more and then I’ll jump back in. For Strattice, you were saying that you think supply and demand are kind of catching up with each other. Are there any supply issues on Strattice and then on the AlloDerm side, since last quarter, have you increased your cadaver supply?

 

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