Kinetic Concepts, Inc. (KCI) reported second-quarter results on July 21 that surprised on estimates by 2.08%.

Earnings per share were 98 cents compared to analysts’ estimates of 96 cents.

Revenue grew 6% to $491.3 million compared to the second quarter of 2008. Foreign currency translation negatively effected revenue by 4% in the quarter.

The company saw strength in the Worldwide V.A.C Therapy segment as revenue rose 3% to $349.4 million year over year.

Regenerative Medicine, or LifeCell, which accounts for 15% of total revenue, climbed 22% to $71.1 million on a pro forma basis. The company completed its acquisition of LifeCell in May 2008.

Sales of Strattice, its porcine-based regenerative tissue matrix which launched in Mar 2008, generated 31% of the total LifeCell sales in the quarter, up from 10% of the total in the year ago period.

Reaffirmed 2009 Guidance

The company reaffirmed prior 2009 earnings per share guidance in the range of $3.95 to $4.10.

Covering analysts responded by raising full-year consensus estimates by 15 cents to $3.97 per share to be in line with the company’s forecast.

Third-quarter estimates fell, however, to 88 cents from $1.02 per share. in the last week even though 4 out of 8 covering analysts raised and 2 lowered during that period.

Value Fundamentals

Kinetic Concepts, which manufactures health care products for advanced wound care, negative pressure wound therapy and therapeutic support systems, was a Zacks #1 Rank (strong buy) stock when I last reviewed it on Jul 1. It is now a Zacks #2 Rank (buy) stock.

It is still cheap, trading at just 7.4x forward earnings.

Zacks Investment Research
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