FOR MORE INFORMATION, CONTACT:
|
| |
Investors
| News Media
|
Nathan Speicher
| Mike Barger
|
Office: (210) 255-6027
| Office: (210) 255-6824
|
| nathan.speicher@kci1.com | mike.barger@kci1.com |
CENTAUR GUERNSEY L.P. INC. REPORTS
FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS FOR 2013
- Fourth quarter 2013 Centaur Guernsey L.P. Inc. (“Centaur” or the "Company") revenue of $469.8 million, up 6.8% from the prior-year period as reported and 7.3% from the prior-year period on a constant currency basis
- Fourth quarter 2013 loss from continuing operations of $51.7 million compared to $56.2 million for the prior-year period
- Fourth quarter 2013 total Adjusted EBITDA from continuing operations1 of $191.9 million compared to $193.0 million for the prior-year period
- KCI closed on the previously-announced acquisition of SystagenixTM
Highlights of the fourth quarter and year ended December 31, 2013
Centaur revenue for the fourth quarter of 2013 was $469.8 million, up from the prior-year comparable period by 7.3% on a constant currency basis. Our loss from continuing operations for the fourth quarter of 2013 was $51.7 million compared to $56.2 million in the prior-year period. Adjusted EBITDA from continuing operations were $191.9 million for the fourth quarter of 2013, compared to $193.0 million in the prior-year period.
Centaur revenue for the year ended December 31, 2013 was $1,758.9 million, up from the prior year by 1.2% on a constant currency basis. Our loss from continuing operations for the year ended December 31, 2013 was $555.4 million compared to $233.6 million in the prior-year period. Adjusted EBITDA from continuing operations were $717.1 million for the year ended December 31, 2013, compared to $735.8 million in the prior-year period.
On October 28, 2013, KCI closed on the previously-announced acquisition of Systagenix. Systagenix has a broad portfolio of innovative advanced wound care products with a focus on moist wound healing dressings - including PROMOGRAN PRISMA®, the collagen dressing market leader, TIELLE® (foam) and ADAPTIC® (non adherent contact layers). Systagenix distributes over 20 million advanced wound care dressings each month to more than 70 countries.
The successful completion of the Systagenix acquisition marks an important milestone in the advancement of our long-term strategy to be the global leader in transformational healing solutions. Over the coming quarters, we will continue integrating the Systagenix business into our broader wound care portfolio of products and therapies. As a result, we have renamed our business segments. Revenues related to KCI and Systagenix products are included within the Advanced Wound Therapeutics segment and revenue related to LifeCell is now reported under the Regenerative Medicine segment. We believe these segments reflect the nature of our businesses and are consistent with the manner in which we manage the Company.
“We are pleased with both the performance of our Regenerative Medicine business and the progress we continue to make in our Advanced Wound Therapeutics business,” said Joe Woody, President and Chief Executive Officer.
Our consolidated financial statements include Systagenix results for the period subsequent to the close date of the acquisition.
Financial Position
Total cash at December 31, 2013 was $206.9 million. During 2013, Centaur generated cash of $136.8 million from operations, used cash of $563.8 million in investing activities and generated cash of $250.6 million in financing activities. Investing and financing activities included the acquisition of Systagenix. On January 22, 2014 we entered into an amendment of our senior secured credit agreement which reduced the nominal interest rate of our senior secured credit facility by 50 basis points.
As of December 31, 2013, total long-term debt outstanding was $4.89 billion and our Net Leverage Ratio2 was 6.0x. On October 28, 2013, upon the closing of the Systagenix acquisition, KCI paid a purchase price of $485.0 million, subject to adjustment, using cash on hand and proceeds from $350 million of incremental borrowings under our existing senior secured credit facility.
Discontinued Operations
On November 8, 2012, we completed the transaction whereby our Therapeutic Support Systems ("TSS") business was acquired by Getinge AB. As a result of the sale, the results of the operations of our TSS business are presented as discontinued operations in the condensed consolidated statements of operations for all periods presented. Discontinued operations amounts related to TSS exclude the impact of corporate overhead support expenses, incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the agreement.
Company Structure
Centaur is a non-operating holding company whose business is comprised of the operations of its wholly-owned subsidiaries KCI and LifeCell. Centaur is controlled by investment funds advised by Apax Partners and controlled affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board and certain other co-investors. Unless otherwise noted in this report, the terms “we,” “our” or “Company,” refer to Centaur and its subsidiaries, collectively.
Non-GAAP Financial Information
Within this document, we have presented 1) Adjusted EBITDA from continuing operations, as defined in our senior secured credit agreement and 2) supplemental revenue data to exclude the impact of foreign currency fluctuations on a non-GAAP basis.
These non-GAAP financial measures do not replace the presentation of our GAAP results. We have provided this supplemental non-GAAP information because it may provide meaningful information regarding our results on a basis that better facilitates an understanding of our results of operations which may not be otherwise apparent under 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 certain GAAP selected financial information for the periods presented to the non-GAAP selected financial information provided is included herein.
1Adjusted EBITDA from continuing operations excludes the operations of our previously-divested TSS business and the impact of merger-related expenses, foreign currency gains or losses, business optimization expenses and other expenses specified in the reconciliation within this release.
2 The Net Leverage Ratio represents Net Debt divided by Consolidated EBITDA for the last twelve months. Net Debt consists of total indebtedness including capital leases and other financing obligations, less cash and cash equivalents up to the greater of$300.0 million or 40% of Consolidated EBITDA for the last twelve months. Consolidated EBITDA, as defined in our senior secured credit agreement, represents Adjusted EBITDA from continuing operations plus "run rate" cost savings and a pro forma adjustment related to EBITDA of Systagenix for the first 10 months of 2013, which is not included in our consolidated financial statements.
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Year ended December 31, |
| | 2013 | | 2012 | | % Change | | 2013 | | 2012 | | % Change |
| Revenue: | | | | | | | | | | | |
| Rental | $ | 180,803 |
| | $ | 199,851 |
| | (9.5 | )% | | $ | 750,252 |
| | $ | 822,201 |
| | (8.8 | )% |
| Sales | 288,984 |
| | 240,081 |
| | 20.4 |
| | 1,008,659 |
| | 924,252 |
| | 9.1 |
|
| Total revenue | 469,787 |
| | 439,932 |
| | 6.8 |
| | 1,758,911 |
| | 1,746,453 |
| | 0.7 |
|
| | | | | | | | | | | | |
| Rental expenses | 85,116 |
| | 95,059 |
| | (10.5 | ) | | 358,595 |
| | 443,446 |
| | (19.1 | ) |
| Cost of sales | 79,862 |
| | 58,884 |
| | 35.6 |
| | 261,569 |
| | 249,338 |
| | 4.9 |
|
| Gross profit | 304,809 |
| | 285,989 |
| | 6.6 |
| | 1,138,747 |
| | 1,053,669 |
| | 8.1 |
|
| | | | | | | | | | | | |
| Selling, general and administrative expenses | 177,697 |
| | 157,000 |
| | 13.2 |
| | 696,175 |
| | 602,781 |
| | 15.5 |
|
| Research and development expenses | 19,484 |
| | 18,173 |
| | 7.2 |
| | 75,624 |
| | 71,859 |
| | 5.2 |
|
| Acquired intangible asset amortization | 49,448 |
| | 48,724 |
| | 1.5 |
| | 188,571 |
| | 220,984 |
| | (14.7 | ) |
| Impairment of goodwill and intangible assets | — |
| | — |
| | — |
| | 443,400 |
| | — |
| | — |
|
| Operating earnings (loss) | 58,180 |
| | 62,092 |
| | (6.3 | ) | | (265,023 | ) | | 158,045 |
| | — |
|
| | | | | | | | | | | | |
| Interest income and other | 323 |
| | 199 |
| | 62.3 |
| | 1,602 |
| | 829 |
| | 93.2 |
|
| Interest expense | (104,733 | ) | | (113,515 | ) | | (7.7 | ) | | (419,877 | ) | | (466,622 | ) | | (10.0 | ) |
| Loss on extinguishment of debt | — |
| | (31,481 | ) | | — |
| | (2,364 | ) | | (31,481 | ) | | (92.5 | ) |
| Foreign currency loss | (10,291 | ) | | (13,429 | ) | | (23.4 | ) | | (22,226 | ) | | (13,001 | ) | | 71.0 |
|
| Derivative instruments gain (loss) | (1,624 | ) | | (2,960 | ) | | (45.1 | ) | | 1,576 |
| | (31,433 | ) | | — |
|
| Loss from continuing operations before income tax benefit | (58,145 | ) | | (99,094 | ) | | (41.3 | ) | | (706,312 | ) | | (383,663 | ) | | 84.1 |
|
| Income tax benefit | (6,414 | ) | | (42,923 | ) | | (85.1 | ) | | (150,957 | ) | | (150,048 | ) | | 0.6 |
|
| Loss from continuing operations | (51,731 | ) | | (56,171 | ) | | (7.9 | ) | | (555,355 | ) | | (233,615 | ) | | 137.7 |
|
| Gain (loss) from discontinued operations, net of tax | (1,004 | ) | | 95,878 |
| | — |
| | (3,303 | ) | | 92,198 |
| | — |
|
| Net earnings (loss) | $ | (52,735 | ) | | $ | 39,707 |
| | — | % | | $ | (558,658 | ) | | $ | (141,417 | ) | | — | % |
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
|
| | | | | | | |
| | December 31,
2013 | | December 31,
2012 |
| Assets: | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 206,949 |
| | $ | 383,150 |
|
| Accounts receivable, net | 407,578 |
| | 355,718 |
|
| Inventories, net | 181,567 |
| | 139,850 |
|
| Deferred income taxes | 23,621 |
| | — |
|
| Prepaid expenses and other | 53,161 |
| | 39,511 |
|
| Total current assets | 872,876 |
| | 918,229 |
|
| | | | |
| Net property, plant and equipment | 333,725 |
| | 388,482 |
|
| Debt issuance costs, net | 102,054 |
| | 96,476 |
|
| Deferred income taxes | 31,459 |
| | 20,003 |
|
| Goodwill | 3,378,661 |
| | 3,479,775 |
|
| Identifiable intangible assets, net | 2,549,201 |
| | 2,666,201 |
|
| Other non-current assets | 4,669 |
| | 5,598 |
|
| | | | |
| | $ | 7,272,645 |
| | $ | 7,574,764 |
|
| | | | |
| Liabilities and Equity: | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 50,316 |
| | $ | 40,970 |
|
| Accrued expenses and other | 328,975 |
| | 284,163 |
|
| Current installments of long-term debt | 26,311 |
| | 23,383 |
|
| Income taxes payable | 3,368 |
| | — |
|
| Deferred income taxes | 2,199 |
| | 57,528 |
|
| Total current liabilities | 411,169 |
| | 406,044 |
|
| | | | |
| Long-term debt, net of current installments and discount | 4,865,503 |
| | 4,554,112 |
|
| Non-current tax liabilities | 53,682 |
| | 44,465 |
|
| Deferred income taxes | 1,003,784 |
| | 1,069,480 |
|
| Other non-current liabilities | 40,432 |
| | 43,267 |
|
| Total liabilities | 6,374,570 |
| | 6,117,368 |
|
| Equity: | | | |
| General partner's capital | — |
| | — |
|
| Limited partners’ capital | 900,218 |
| | 1,457,913 |
|
| Accumulated other comprehensive loss, net | (2,143 | ) | | (517 | ) |
| Total equity | 898,075 |
| | 1,457,396 |
|
| | | | |
| | $ | 7,272,645 |
| | $ | 7,574,764 |
|
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands)
|
| | | | | | | |
| | Year ended December 31, |
| | 2013 | | 2012 |
| Cash flows from operating activities: | | | |
| Net loss | $ | (558,658 | ) | | $ | (141,417 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | |
| Amortization of debt issuance costs and discount | 35,838 |
| | 29,155 |
|
| Depreciation and other amortization | 335,959 |
| | 436,370 |
|
| Loss (gain) on disposition of assets | 4,423 |
| | (152,701 | ) |
| Amortization of fair value step-up in inventory | 3,162 |
| | 25,021 |
|
| Fixed asset and inventory impairment | 30,580 |
| | 22,116 |
|
| Impairment of goodwill and intangible assets | 443,400 |
| | — |
|
| Write-off of other intangible assets | 16,885 |
| | — |
|
| Provision for bad debt | 7,308 |
| | 8,984 |
|
| Loss on extinguishment of debt | 2,364 |
| | 31,481 |
|
| Equity-based compensation expense | 2,925 |
| | 2,069 |
|
| Deferred income tax benefit | (187,089 | ) | | (126,389 | ) |
| Unrealized loss (gain) on derivative instruments | (4,645 | ) | | 30,002 |
|
| Unrealized loss on revaluation of cross currency debt | 14,450 |
| | 6,272 |
|
| Change in assets and liabilities: | | | |
| Decrease (increase) in accounts receivable, net | (10,924 | ) | | 37,574 |
|
| Increase in inventories, net | (17,171 | ) | | (18,797 | ) |
| Decrease (increase) in prepaid expenses and other | (9,338 | ) | | 2,468 |
|
| Increase (decrease) in accounts payable | 1,137 |
| | (8,815 | ) |
| Increase (decrease) in accrued expenses and other | 20,449 |
| | (24,537 | ) |
| Increase in tax liabilities, net | 5,724 |
| | 3,837 |
|
| Net cash provided by operating activities | 136,779 |
| | 162,693 |
|
| | | | |
| Cash flows from investing activities: | | | |
| Additions to property, plant and equipment | (80,911 | ) | | (91,567 | ) |
| Increase in inventory to be converted into equipment for short-term rental | 1,286 |
| | 5,269 |
|
| Dispositions of property, plant and equipment | 1,298 |
| | 2,630 |
|
| Proceeds from disposition of assets held for sale | — |
| | 244,317 |
|
| Business acquired in purchase transaction, net of cash acquired | (478,748 | ) | | (15,097 | ) |
| Increase in identifiable intangible assets and other non-current assets | (6,747 | ) | | (1,017 | ) |
| Net cash provided (used) by investing activities | (563,822 | ) | | 144,535 |
|
| | | | |
| Cash flows from financing activities: | | | |
| Capital contributions from limited partners | — |
| | 239 |
|
| Distribution to limited partners | (1,572 | ) | | (2,199 | ) |
| Settlement of profits interest units | (176 | ) | | — |
|
| Repayments of long-term debt and capital lease obligations | (69,396 | ) | | (118,767 | ) |
| Payment of debt issuance costs | (20,477 | ) | | (19,473 | ) |
| Acquisition financing for Systagenix: | | | |
| Proceeds from borrowings on Incremental Term Loan D-1 | 349,563 |
| | — |
|
| Payment of debt issuance costs | (7,340 | ) | | — |
|
| Net cash provided (used) by financing activities | 250,602 |
| | (140,200 | ) |
| Effect of exchange rate changes on cash and cash equivalents | 240 |
| | 696 |
|
| Net increase (decrease) in cash and cash equivalents | (176,201 | ) | | 167,724 |
|
| Cash and cash equivalents, beginning of period | 383,150 |
| | 215,426 |
|
| Cash and cash equivalents, end of period | $ | 206,949 |
| | $ | 383,150 |
|
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP
Supplemental Revenue Data
(dollars in thousands)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | |
| | Three months ended December 31, | | GAAP % Change | | Constant Currency % Change (1) |
| | 2013 | | 2012 GAAP | | |
| | GAAP | | FX Impact | | Constant Currency | | | |
| Advanced Wound Therapeutics revenue: | | | | | | | | | | | |
| Rental | $ | 179,135 |
| | $ | 1,362 |
| | $ | 180,497 |
| | $ | 197,717 |
| | (9.4 | )% | | (8.7 | )% |
| Sales | 167,066 |
| | 918 |
| | 167,984 |
| | 128,384 |
| | 30.1 |
| | 30.8 |
|
| Total | 346,201 |
| | 2,280 |
| | 348,481 |
| | 326,101 |
| | 6.2 |
| | 6.9 |
|
| | | | | | | | | | | | |
| Regenerative Medicine revenue: | | | | | | | | | | | |
| Rental | 1,668 |
| | — |
| | 1,668 |
| | 2,134 |
| | (21.8 | ) | | (21.8 | ) |
| Sales | 121,918 |
| | (125 | ) | | 121,793 |
| | 111,697 |
| | 9.2 |
| | 9.0 |
|
| Total | 123,586 |
| | (125 | ) | | 123,461 |
| | 113,831 |
| | 8.6 |
| | 8.5 |
|
| | | | | | | | | | | | |
| Total Revenue: | | | | | | | | | | | |
| Rental | 180,803 |
| | 1,362 |
| | 182,165 |
| | 199,851 |
| | (9.5 | ) | | (8.8 | ) |
| Sales | 288,984 |
| | 793 |
| | 289,777 |
| | 240,081 |
| | 20.4 |
| | 20.7 |
|
| Total | $ | 469,787 |
| | $ | 2,155 |
| | $ | 471,942 |
| | $ | 439,932 |
| | 6.8 | % | | 7.3 | % |
|
| | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, | | GAAP % Change | | Constant Currency % Change (1) |
| | 2013 | | 2012 GAAP | | |
| | GAAP | | FX Impact | | Constant Currency | | | |
| Advanced Wound Therapeutics revenue: | | | | | | | | | | | |
| Rental | 743,818 |
| | 4,723 |
| | $ | 748,541 |
| | 815,560 |
| | (8.8 | )% | | (8.2 | )% |
| Sales | 546,909 |
| | 3,470 |
| | 550,379 |
| | 496,698 |
| | 10.1 |
| | 10.8 |
|
| Total | 1,290,727 |
| | 8,193 |
| | 1,298,920 |
| | 1,312,258 |
| | (1.6 | ) | | (1.0 | ) |
| | | | | | | | | | | | |
| Regenerative Medicine revenue: | | | | | | | | | | | |
| Rental | 6,434 |
| | — |
| | 6,434 |
| | 6,641 |
| | (3.1 | ) | | (3.1 | ) |
| Sales | 461,750 |
| | (278 | ) | | 461,472 |
| | 427,554 |
| | 8.0 |
| | 7.9 |
|
| Total | 468,184 |
| | (278 | ) | | 467,906 |
| | 434,195 |
| | 7.8 |
| | 7.8 |
|
| | | | | | | | | | | | |
| Total Revenue: | | | | | | | | | | | |
| Rental | 750,252 |
| | 4,723 |
| | 754,975 |
| | 822,201 |
| | (8.8 | ) | | (8.2 | ) |
| Sales | 1,008,659 |
| | 3,192 |
| | 1,011,851 |
| | 924,252 |
| | 9.1 |
| | 9.5 |
|
| Total | $ | 1,758,911 |
| | $ | 7,915 |
| | $ | 1,766,826 |
| | $ | 1,746,453 |
| | 0.7 | % | | 1.2 | % |
(1) Represents percentage change between 2013 non-GAAP Constant Currency revenue and 2012 GAAP revenue.
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP
Selected Financial Information
(dollars in thousands)
(unaudited)
|
| | | | | | | | | | | | | | | |
| | Three months ended December 31, | | Year ended December 31, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | |
| Net earnings (loss) | $ | (52,735 | ) | | $ | 39,707 |
| | $ | (558,658 | ) | | $ | (141,417 | ) |
| Loss (gain) on disposition of assets | 1,234 |
| | (152,701 | ) | | 4,423 |
| | (152,701 | ) |
| Interest expense, net of interest income | 104,689 |
| | 113,332 |
| | 419,337 |
| | 465,988 |
|
| Income tax expense (benefit) | (7,044 | ) | | 17,099 |
| | (153,025 | ) | | (92,330 | ) |
| Foreign currency loss | 10,291 |
| | 13,429 |
| | 22,226 |
| | 13,001 |
|
| Depreciation and other amortization | 83,933 |
| | 89,475 |
| | 335,959 |
| | 436,370 |
|
| Derivative instruments (gain) loss | 1,624 |
| | 2,960 |
| | (1,576 | ) | | 31,433 |
|
| Management fees and expenses | 4,787 |
| | 1,478 |
| | 8,910 |
| | 6,589 |
|
| Equity-based compensation expense | 879 |
| | 883 |
| | 2,925 |
| | 2,069 |
|
Acquisition, disposition and financing expenses (1) | 13,518 |
| | 53,675 |
| | 36,364 |
| | 69,659 |
|
Business optimization expenses(2) | 22,832 |
| | 13,769 |
| | 91,525 |
| | 56,425 |
|
Other permitted expenses (3) | 7,745 |
| | 2,198 |
| | 508,227 |
| | 56,353 |
|
| Adjusted EBITDA | 191,753 |
| | 195,304 |
| | 716,637 |
| | 751,439 |
|
Adjusted EBITDA from discontinued operations (4) | 148 |
| | (2,263 | ) | | 498 |
| | (15,681 | ) |
| Adjusted EBITDA from continuing operations | $ | 191,901 |
| | $ | 193,041 |
| | $ | 717,135 |
| | $ | 735,758 |
|
| | | | | | | | |
| Adjusted EBITDA from continuing operations as a percentage of revenue | 40.8 | % | | 43.9 | % | | 40.8 | % | | 42.1 | % |
(1) Represents loss (gain) on extinguishment of debt, and labor, travel, training, consulting and other costs associated with acquisition and disposition activities, including the disposition of our TSS business and acquisition of Systagenix.
(2) Represents labor, travel, training, consulting and other costs associated exclusively with our business optimization initiatives.
(3) Represents charges for the impairment of goodwill, intangible assets and fixed assets; the write-off of in-process research and development and other intangible assets; amortization of the fair value step-up in inventory and other permitted expenses.
(4) Adjusted EBITDA from discontinued operations includes the (gain) loss from discontinued operations, excluding any related gain or loss on
disposition of assets, adjusted as defined in our senior secured credit agreement.
