Kinetic Concepts Reports Fourth Quarter and Full Year Financial Result

    Business Editors/Health/Medical Writers

    SAN ANTONIO--(BUSINESS WIRE)--Jan. 24, 2005--Kinetic Concepts Inc. (NYSE:KCI) today reported fourth quarter 2004 net revenue of $273.7 million, an increase of 27% from the fourth quarter of 2003, and full-year 2004 net revenue of $992.6 million, an increase of 30% over the prior year. Foreign currency exchange movements favorably impacted net revenue for the fourth quarter and the full year 2004 by 3% compared to the corresponding periods of the prior year.
    Net earnings for the fourth quarter of 2004 were $34.2 million compared to net earnings of $68.0 million for the same period one year ago. For the year, net earnings were $96.5 million. Net earnings available to shareholders for the year were $30.9 million, after recognition of $65.6 million of preferred stock dividends in connection with the Company's first quarter initial public offering ("IPO"). Earnings per diluted share for the fourth quarter of 2004 were $0.47, compared to net earnings per diluted share of $1.03 for the same period in the prior year. For the year, the Company reported net earnings per diluted share, after preferred dividends, of $0.45, compared to net earnings per diluted share of $0.93 for 2003.
    "We are pleased with our revenue growth in 2004 as broader acceptance by physicians and payers helped to bring the benefits of V.A.C. therapy to more patients in need," said Dennert O. Ware, President and Chief Executive Officer of KCI. "In addition, during the fourth quarter we commissioned a study to update the V.A.C. market potential in the U.S.," Ware continued. "We are pleased to report that the study confirmed our belief that the potential market for V.A.C. in the U.S. is about 40% larger than we initially estimated. While this should not impact short-term growth, we believe that the overall market potential is higher than we had previously thought."

    Non-GAAP Financial Information(1)

    On February 27, 2004, KCI completed an IPO and on June 16, 2004, KCI completed a follow-on secondary stock offering. These transactions had the effect of reducing net earnings for 2004 by $21.8 million. During 2003, KCI completed a leveraged recapitalization, which resulted in recapitalization expenses totaling $86.4 million on a pretax basis and $54.0 million, or $0.84 per diluted share, net of income taxes. In the fourth quarter of 2003, the Company recorded a pre-tax gain of $75.0 million, or $46.9 million net of income taxes, from an anti-trust litigation settlement. Excluding expenses associated with the stock offerings and debt prepayments, net earnings for 2004 were $118.3 million, up 54% from $76.8 million for the same comparable period a year ago. Earnings per diluted share, excluding expenses and dividends associated with the stock offerings and debt prepayments, were $1.67 for 2004, compared to $1.04 on a comparable basis for the same period in 2003, a 61% improvement. Earnings per diluted share of $0.47 for the fourth quarter of 2004, increased 47% compared to $0.32 for the fourth quarter of 2003, excluding the anti-trust litigation settlement gain and recapitalization in 2003.

    Revenue Recap -- Fourth Quarter 2004

    Domestic revenue for the fourth quarter of 2004 was $201.7 million, an increase of 24% from the prior-year period due to increased rental and sales volumes for V.A.C. wound healing devices and related disposables. International revenue of $72.0 million increased 36% compared to the prior-year period. Foreign currency exchange movements favorably impacted international revenue by 13%, during the fourth quarter.
    Worldwide V.A.C. revenue was $198.7 million for the fourth quarter of 2004, an increase of 39% from the prior-year period. Foreign currency exchange movements favorably impacted worldwide V.A.C. revenue by 3%, compared to the fourth quarter of the prior year. The growth in V.A.C. revenue stems from volume increases driven by our continued focus on marketing and selling efforts, which are raising customer awareness.
    Worldwide surfaces revenue was $75.0 million for the fourth quarter of 2004, an increase of 2% from the prior-year period. Favorable currency exchange rate movements accounted for all of the fourth quarter 2004 surface revenue increase.

    Revenue Recap -- Year Ended 2004

    Domestic revenue for 2004 was $744.3 million, a 28% increase from 2003 due directly to increased rental and sales volumes for V.A.C. wound healing devices and related disposables. International revenue of $248.3 million increased 35% compared to 2003. Foreign currency exchange movements favorably impacted international revenue by 12% during 2004.
    Worldwide V.A.C. revenue was $699.0 million for 2004, an increase of 45% from the prior year due primarily to increased rental and sales volumes. Foreign currency exchange movements favorably impacted 2004 worldwide V.A.C. revenue by 3%.
    Worldwide surfaces revenue was $293.6 million for 2004, an increase of 4% from the prior year due to growth in international markets. For the year, foreign currency exchange movements accounted for approximately 3% of the worldwide surfaces revenue increase. Higher bariatric surfaces revenue for 2004, which was partially offset by lower wound care surfaces sales, accounted for the remainder of the surfaces revenue increase.

    Income Tax Rate

    The effective income tax rates for the fourth quarter and full-year 2004 were 34.6% and 35.5% respectively, compared to 37.5% for each of the same periods in 2003. The income tax rate reduction is primarily attributable to a higher portion of taxable income being generated in lower tax jurisdictions.

    Outlook

    The following guidance is based on current information and expectations as of January 24, 2005.

    As previously announced, KCI presently projects full year 2005 revenue of $1.20 - $1.25 billion based on continued demand for its V.A.C. negative pressure wound therapy devices and related supplies. Earnings per diluted share for 2005 are currently projected to be $2.10 - $2.20 per share, based upon a weighted average diluted share count estimate of 73.0 - 73.5 million shares. It is the Company's practice to provide guidance on a full-year basis, however, it is important to note that we typically experience a seasonal fluctuation in sequential growth from the fourth quarter of each year to the first quarter of the following year. Also, the Company essentially completed its planned sales force expansion, including territory realignments, by the end of the fourth quarter of 2004. With the influence of these factors, the Company expects that the first quarter 2005 revenue will approximate, or be slightly higher than, fourth quarter 2004.

2004 2004 (in millions, except EPS) Actual (Non GAAP)(1) --------- --------------- Revenue $ 993 $ 993 Net Earnings $ 96 $ 118 Diluted EPS $0.45 $1.67 Diluted Shares 67.9 70.9

2005 % (in millions, except EPS) Forecast Increase ----------------------- ----------- Revenue $1,200 - $1,250 21% - 26% Net Earnings $ 154 - $ 162 31% - 37% Diluted EPS $ 2.10 - $ 2.20 26% - 32% Diluted Shares 73.0 - 73.5 3% - 4%

    Earnings Release Conference Call

    As previously announced, the Company has scheduled an earnings release conference call for 5:00 p.m. eastern standard time today, Monday, January 24, 2005. The dial-in numbers for this conference call are as follows:

Domestic Dial-in Number: 800-706-7748 International Dial-in Number: +617-614-3473 Participant Code: 50516246

    This call is being webcast by CCBN and can be accessed at the Kinetic Concepts Inc. web site at http://www.kci1.com/investor/index.asp, and clicking on Web cast -- Q4 2004 Kinetic Concepts Earnings Call. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com and institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). An archive of the webcast will be available at http://www.kci1.com/investor/index.asp until January 23, 2006.
    KCI's business outlook as of today is expected to be available on KCI's Investor Relations web site. It is currently expected that a business outlook update will not be announced until the release of KCI's next quarterly earnings announcement, notwithstanding subsequent developments. However, although KCI undertakes no duty to update its business outlook, KCI may update the full business outlook or any portion thereof at any time.

(1) Throughout this press release, we have presented income statement items on a non-GAAP basis to exclude the impact of income and expenses and the acceleration of the in-kind preferred stock dividends incurred as a result of the 2004 stock offerings and debt prepayments, the 2003 anti-trust litigation settlement gain and the 2003 leveraged recapitalization. These non-GAAP financial measures do not replace the presentation of our GAAP financial results. We have provided this supplemental non-GAAP information because it may provide meaningful information regarding our results on a basis that better facilitates comparisons between the periods presented. 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 income statement for the periods presented to the non-GAAP financial information provided is included herein. See the attached Reconciliations of Condensed Consolidated Statement of Earnings.

    About KCI

    Kinetic Concepts Inc. is a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces. We design, manufacture, market and service a wide range of proprietary products that can significantly improve clinical outcomes while reducing the overall cost of patient care by accelerating the healing process or preventing complications. Our advanced wound care systems incorporate our proprietary Vacuum Assisted Closure(R), or V.A.C.(R) , technology, which has been clinically demonstrated to promote wound healing and reduce the cost of treating patients with difficult-to-treat wounds. Our therapeutic surfaces, including specialty hospital beds, mattress replacement systems and overlays, are designed to address complications associated with immobility and obesity, such as pressure sores and pneumonia. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all health care settings including acute care hospitals, extended care facilities and patients' homes both in the United States and abroad.

    Forward-Looking Statements

    This press release contains forward-looking statements including, among other things, management's estimates of future performance, revenue and earnings growth objectives and potential market. The forward-looking statements contained herein are based on our current expectations and are subject to a number of risks and uncertainties which could cause us to fail to achieve our current financial projections and other expectations, such as a change in the demand for the V.A.C. resulting from increased competition, a change in payer reimbursement policies, our ability to protect our intellectual property rights and general economic conditions. All information set forth in this release and its attachments is as of January 24, 2005. 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, 2003, including, among other sections, under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which is on file with the SEC and available at the SEC's web site at www.sec.gov. Additional information will also be set forth in those sections in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, which will be filed with the SEC in the first quarter of 2005.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (in thousands, except per share data) (unaudited)

Three months ended Dec. 31, Year ended Dec. 31, --------------------------- ---------------------------- % % 2004 2003 Change 2004 2003 Change -------- -------- --------- --------- --------- -------- Revenue: Rental $196,659 $161,346 21.9 % $726,783 $582,801 24.7 % Sales 76,996 54,568 41.1 265,853 181,035 46.9 -------- -------- --------- --------- Total revenue 273,655 215,914 26.7 % 992,636 763,836 30.0 %

Rental expenses 127,244 96,267 32.2 457,294 356,075 28.4 Cost of goods sold 18,636 17,708 5.2 70,780 64,118 10.4 -------- -------- --------- --------- Gross profit 127,775 101,939 25.3 % 464,562 343,643 35.2 %

Selling, general and administrative expenses 62,934 52,137 20.7 223,452 170,614 31.0 Research and development expenses 9,461 7,425 27.4 31,312 23,044 35.9 Initial public offering expenses - - - 19,836 - - Secondary offering expenses - - - 2,219 - - Recapitalization expenses - 130 - - 70,085 - Litigation settlement - (75,000) - - (75,000) - -------- -------- --------- --------- Operating earnings 55,380 117,247 (52.8)% 187,743 154,900 21.2 %

Interest income 390 132 195.5 1,133 1,065 6.4 Interest expense (7,175) (10,536) 31.9 (44,635) (52,098) 14.3 Foreign currency gain 3,652 1,883 93.9 5,353 7,566 (29.2) -------- -------- --------- --------- Earnings before income taxes 52,247 108,726 (51.9)% 149,594 111,433 34.2 % Income taxes 18,061 40,772 (55.7) 53,106 41,787 27.1 -------- -------- --------- --------- Net earnings $34,186 $67,954 (49.7)% $96,488 $69,646 38.5 % Series A convertible preferred stock dividends - (6,069) - (65,604) (9,496) - -------- -------- --------- --------- Net earnings available to common share- holders $34,186 $61,885 (44.8)% $30,884 $60,150 (48.7)% ======== ======== ========= ========= Net earnings per share available to common share- holders: Basic $0.50 $1.50 (66.7)% $0.49 $1.03 (52.4)% ======== ======== ========= ========= Diluted(1) $0.47 $1.03 (54.4)% $0.45 $0.93 (51.6)% ======== ======== ========= ========= Weighted average shares outstanding: Basic 68,104 41,203 62,599 58,599 ======== ======== ========= ========= Diluted(1) 72,560 65,842 67,918 64,493 ======== ======== ========= =========

(1) Due to their antidilutive effect, 2,990 and 7,522 dilutive potential common shares from the preferred stock conversion have been excluded from the diluted weighted average shares calculation for the years ended Dec. 31, 2004 and 2003, respectively.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES Reconciliation of Condensed Consolidated Statements of Earnings(1) For the Three Months ended Dec. 31, (in thousands, except per share data) (unaudited)

2003 -------------------------------- Excluding Anti-trust Anti-trust Settlement Settlement and and Recapital- Recapital- 2004 ization ization % GAAP GAAP (non-GAAP) (non-GAAP) Change(2) -------- --------- ---------- ------------ ----------- Revenue: Rental $196,659 $161,346 $- $161,346 21.9 % Sales 76,996 54,568 - 54,568 41.1 -------- --------- ---------- ----------- Total revenue 273,655 215,914 - 215,914 26.7 %

Rental expenses 127,244 96,267 - 96,267 32.2 Cost of goods sold 18,636 17,708 - 17,708 5.2 -------- --------- ---------- ----------- Gross profit 127,775 101,939 - 101,939 25.3 %

Selling, general and administrative expenses 62,934 52,137 - 52,137 20.7 Research and development expenses 9,461 7,425 - 7,425 27.4 Recapitalization expenses - 130 (130) - - Litigation settlement - (75,000) 75,000 - - -------- --------- ---------- ----------- Operating earnings 55,380 117,247 (74,870) 42,377 30.7 %

Interest income 390 132 - 132 195.5 Interest expense (7,175) (10,536) - (10,536) 31.9 Foreign currency gain 3,652 1,883 - 1,883 93.9 -------- --------- ---------- ----------- Earnings before income taxes 52,247 108,726 (74,870) 33,856 54.3 % Income taxes 18,061 40,772 (28,076) 12,696 42.3 -------- --------- ---------- ----------- Net earnings $34,186 $67,954 $(46,794) $21,160 61.6 %

Series A convertible preferred stock dividends - (6,069) - (6,069) - -------- --------- ---------- -----------

Net earnings available to common share- holders $34,186 $61,885 $(46,794) $15,091 126.5 % ======== ========= ========== ===========

Net earnings per share available to common share- holders: Basic $0.50 $1.50 $0.37 35.1 % ======== ========= =========== Diluted $0.47 $1.03 $0.32 46.9 % ======== ========= =========== Weighted average shares outstanding: Basic 68,104 41,203 41,203 ======== ========= =========== Diluted 72,560 65,842 65,842 ======== ========= ===========

(1) These non-GAAP financial measures do not replace the presentation of our GAAP financial results. See footnote 1 on page 3 of this press release for further discussion of our non-GAAP financial information.

(2) The percentage change reflects the percentage variance between the 2004 GAAP results and the 2003 (non-GAAP) results, excluding anti-trust settlement and recapitalization.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES Reconciliation of Condensed Consolidated Statements of Earnings(1) For the Year ended Dec. 31, (in thousands, except per share data) (unaudited)

2004 ---------------------------------------------- Excluding Costs and Costs and Expenses Expenses Related to Related to Offerings Offerings and Debt and Debt Prepayments Prepayments GAAP (non-GAAP) (non-GAAP) --------- ----------- ----------- Revenue: Rental $ 726,783 $ -- $ 726,783 Sales 265,853 -- 265,853 ------- ------- ------- Total revenue 992,636 -- 992,636

Rental expenses 457,294 -- 457,294 Cost of goods sold 70,780 -- 70,780 ------- ------- ------- Gross profit 464,562 -- 464,562

Selling, general and administrative 223,452 -- 223,452 expenses Research and development expenses 31,312 -- 31,312 Initial public offering 19,836 (19,836) -- expenses Secondary offering 2,219 (2,219) -- expenses Recapitalization expenses -- -- -- Litigation settlement -- -- -- ------- ------- ------- Operating earnings 187,743 22,055 209,798 Interest income 1,133 -- 1,133 Interest expense (44,635) 11,689 (32,946) Foreign currency gain 5,353 -- 5,353 ------- ------- ------- Earnings before income taxes 149,594 33,744 183,338 Income taxes 53,106 11,979 65,085 ------- ------- ------- Net earnings $ 96,488 $ 21,765 $ 118,253 Series A convertible preferred stock dividends (65,604) 65,604 -- ------- ------- ------- Net earnings available to common $ 30,884 $ 87,369 $ 118,253 shareholders ======= ======= ======= Net earnings per share available to common shareholders: Basic $ 0.49 $ 1.89 ======= ======= Diluted(3) $ 0.45 $ 1.67 ======= ======= Weighted average shares outstanding: Basic 62,599 62,599 ======= ======= Diluted(3) 67,918 70,908 ======= =======

2003 ----------------------------------- Excluding Anti-trust Anti-trust Settlement Settlement and and Recapital- Recapital- ization ization % GAAP (non-GAAP) (non-GAAP) Change(2) --------- ----------- ----------- ---------- Revenue: Rental $ 582,801 $ -- $ 582,801 24.7 % Sales 181,035 -- 181,035 46.9 ------- ------- ------- Total revenue 763,836 -- 763,836 30.0 %

Rental expenses 356,075 -- 356,075 28.4 Cost of goods sold 64,118 -- 64,118 10.4 ------- ------- ------- Gross profit 343,643 -- 343,643 35.2 %

Selling, general and administrative expenses 170,614 -- 170,614 31.0 Research and development expenses 23,044 -- 23,044 35.9 Initial public offering expenses -- -- -- -- Secondary offering expenses -- -- -- -- Recapitalization expenses 70,085 (70,085) -- -- Litigation settlement (75,000) 75,000 -- -- ------- ------- ------- Operating earnings 154,900 (4,915) 149,985 39.9 % Interest income 1,065 -- 1,065 6.4 Interest expense (52,098) 16,302 (35,796) 8.0 Foreign currency gain 7,566 -- 7,566 (29.2) ------- ------- ------- Earnings before income taxes 111,433 11,387 122,820 49.3 % Income taxes 41,787 4,270 46,057 41.3 ------- ------- ------- Net earnings $ 69,646 $ 7,117 $ 76,763 54.0 % Series A convertible preferred stock dividends (9,496) -- (9,496) -- ------- ------- ------- Net earnings available to common $ 60,150 $ 7,117 $ 67,267 75.8 % shareholders ======= ======= ======= Net earnings per share available to common shareholders: Basic $ 1.03 $ 1.15 64.3 % ======= ======= Diluted(3) $ 0.93 $ 1.04 60.6 % ======= ======= Weighted average shares outstanding: Basic 58,599 58,599 ======= ======= Diluted(3) 64,493 64,493 ======= ======= (1) These non-GAAP financial measures do not replace the presentation of our GAAP financial results. See footnote 1 on page 3 of this press release for further discussion of our non-GAAP financial information.

(2) The percentage change reflects the percentage variance between the 2004 (non-GAAP) results, excluding costs and expenses related to offerings and debt prepayments, and the 2003 (non-GAAP) results, excluding anti-trust settlement and recapitalization.

(3) For the year ended December 31, 2004, 2,990 dilutive potential common shares from the preferred stock conversion have been excluded from the diluted weighted average shares calculation for the GAAP results, due to their antidilutive effect. In addition, due to their antidilutive effect, 7,522 dilutive potential common shares from the preferred stock conversion have been excluded from the diluted weighted average shares calculation, for the GAAP results and for the Excluding Anti-trust Settlement and Recapitalization results for the year ended December 31, 2003.

KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands)

Dec. 31, ----------------------- 2004 2003 ------------- --------- Assets: Current assets: Cash and cash equivalents $124,366 $156,064 Accounts receivable, net 252,822 199,938 Inventories, net 35,590 32,253 Deferred income taxes 24,836 22,749 Prepaid expenses and other current assets 13,296 11,811 -------- -------- Total current assets 450,910 422,815 -------- --------

Net property, plant and equipment 183,075 145,208 Loan and preferred stock issuance costs, less accumulated amortization of $8,317 in 2004 and $906 in 2003 11,937 19,779 Deferred income taxes 7,913 2,227 Goodwill 49,369 48,797 Other assets, less accumulated amortization of $8,748 in 2004 and $8,190 in 2003 29,261 28,497 -------- -------- $732,465 $667,323 ======== ======== Liabilities and Shareholders' Equity (Deficit): Current liabilities: Accounts payable $43,246 $34,386 Accrued expenses and other 150,116 115,054 Current installments of long-term debt 2,803 4,800 Current installments of capital lease obligations 201 1,576 Income taxes payable 20,821 39,403 -------- -------- Total current liabilities 217,187 195,219 -------- --------

Long-term debt, net of current installments 442,943 678,100 Capital lease obligations, net of current installments 239 1,351 Deferred income taxes 13,170 28,793 Deferred gain, sale of headquarters facility 8,112 9,183 Other noncurrent liabilities 13 212 -------- -------- 681,664 912,858

Series A convertible preferred stock issued and outstanding 0 at 2004 and 264 at 2003 - 261,719

Shareholders' equity (deficit): Common stock; authorized 225,000 at 2004 and 150,000 at 2003; issued and outstanding 68,694 at 2004 and 41,270 at 2003 69 41 Preferred stock; authorized 50,000 in 2004 and 0 in 2003; issued and outstanding 0 in 2004 and 2003 - - Additional paid-in capital 517,354 1,157 Deferred compensation (1,906) 185 Retained deficit (488,071) (518,955) Accumulated other comprehensive income 23,355 10,318 -------- -------- Shareholders' equity (deficit) 50,801 (507,254) -------- -------- $732,465 $667,323 ======== ========

KINETIC CONCEPTS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)

Year ended Dec. 31, ------------------- 2004 2003 -------- -------- Cash flows from operating activities: Net earnings $96,488 $69,646 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 60,901 46,893 Provision for uncollectible accounts receivable 12,346 6,702 Amortization of deferred gain on sale of headquarters facility (1,070) (841) Write-off of deferred loan issuance costs 5,504 5,233 Non-cash amortization of stock award to directors 442 185 Tax benefit related to exercise of stock options 69,257 - Non-cash accrual of recapitalization expenses - 7,131 Change in assets and liabilities: Increase in accounts receivable, net (63,649) (53,597) Decrease in other accounts receivable - 175,000 Decrease (increase) in inventories (2,874) 5,723 Decrease (increase) in current deferred income taxes, net (2,087) (78,636) Decrease (increase) in prepaid expenses and other current assets 170 (2,046) Increase in accounts payable 9,090 23,251 Increase in accrued expenses 44,664 44,289 Increase (decrease) in income taxes payable (18,582) 24,788 Increase (decrease) in deferred income taxes, net (22,728) 6,485 -------- -------- Net cash provided by operating activities 187,872 280,206 -------- -------- Cash flows from investing activities: Additions to property, plant and equipment (93,230) (76,276) Decrease (increase) in inventory to be converted into equipment for short-term rental (100) 2,100 Dispositions of property, plant and equipment 1,982 3,575 Business acquisitions, net of cash acquired (1,247) (2,224) Increase in other assets (2,573) (328) -------- -------- Net cash used by investing activities (95,168) (73,153) -------- -------- Cash flows from financing activities: Repayment of notes payable, long term, capital lease and other obligations (237,536) (114,649) Proceeds from exercise of stock options 15,352 1,725 Proceeds from purchase of stock in ESPP 1,815 - Initial public offering of common stock: Proceeds from issuance of common stock 105,000 - Stock issuance costs (10,604) - Recapitalization: Payoff of long-term debt and bonds - (408,226) Proceeds from issuance of new debt and bonds - 685,000 Proceeds from issuance of Series A convertible preferred stock, net - 258,017 Purchase of common stock - (509,597) Debt and preferred stock issuance costs - (20,729) -------- -------- Net cash used by financing activities (125,973) (108,459) -------- -------- Effect of exchange rate changes on cash and cash equivalents 1,571 2,985 -------- -------- Net increase (decrease) in cash and cash equivalents (31,698) 101,579 Cash and cash equivalents, beginning of period 156,064 54,485 -------- -------- Cash and cash equivalents, end of period $124,366 $156,064 ======== ======== Non-cash activity: Non-cash consideration for exercise of stock options $6,480 $334

KINETIC CONCEPTS, INC. AND SUBSIDIARIES SUPPLEMENTAL REVENUE DATA (in thousands) (unaudited)

Three months ended Dec. 31, ------------------------------------ Variance --------------- 2004 2003 $ % ---------- --------- -------- ------ USA V.A.C. Rental $114,326 $88,861 $25,465 28.7% Sales 41,912 28,342 13,570 47.9 -------- -------- ------ Total V.A.C. 156,238 117,203 39,035 33.3

Therapeutic surfaces/other Rental 37,782 37,928 (146) (0.4) Sales 7,650 7,851 (201) (2.6) -------- -------- ------ Total therapeutic surfaces/other 45,432 45,779 (347) (0.8)

Total USA rental 152,108 126,789 25,319 20.0 Total USA sales 49,562 36,193 13,369 36.9 -------- -------- ------ Subtotal - USA $201,670 $162,982 $38,688 23.7% -------- -------- ------ International V.A.C. Rental $21,159 $12,584 $8,575 68.1% Sales 21,304 12,734 8,570 67.3 -------- -------- ------ Total V.A.C. 42,463 25,318 17,145 67.7

Therapeutic surfaces/other Rental 23,392 21,973 1,419 6.5 Sales 6,130 5,641 489 8.7 -------- -------- ------ Total therapeutic surfaces/other 29,522 27,614 1,908 6.9

Total International rental 44,551 34,557 9,994 28.9 Total International sales 27,434 18,375 9,059 49.3 -------- -------- ------ Subtotal - International $71,985 $52,932 $19,053 36.0% -------- -------- ------ Total revenue $273,655 $215,914 $57,741 26.7% ======== ======== ======

KINETIC CONCEPTS, INC. AND SUBSIDIARIES SUPPLEMENTAL REVENUE DATA (in thousands) (unaudited)

Year ended Dec. 31, ------------------------------------- Variance ---------------- 2004 2003 $ % --------- --------- --------- ------ USA V.A.C. Rental $417,008 $311,662 $105,346 33.8% Sales 145,627 88,192 57,435 65.1 -------- -------- -------- Total V.A.C. 562,635 399,854 162,781 40.7

Therapeutic surfaces/other Rental 152,219 149,460 2,759 1.8 Sales 29,450 30,568 (1,118) (3.7) -------- -------- -------- Total therapeutic surfaces/other 181,669 180,028 1,641 0.9

Total USA rental 569,227 461,122 108,105 23.4 Total USA sales 175,077 118,760 56,317 47.4 -------- -------- -------- Subtotal - USA $744,304 $579,882 $164,422 28.4% -------- -------- -------- International V.A.C. Rental $68,503 $41,331 $27,172 65.7 % Sales 67,875 40,615 27,260 67.1 -------- -------- -------- Total V.A.C. 136,378 81,946 54,432 66.4

Therapeutic surfaces/other Rental 89,053 80,348 8,705 10.8 Sales 22,901 21,660 1,241 5.7 -------- -------- -------- Total therapeutic surfaces/other 111,954 102,008 9,946 9.8

Total International rental 157,556 121,679 35,877 29.5 Total International sales 90,776 62,275 28,501 45.8 -------- -------- -------- Subtotal - International $248,332 $183,954 $64,378 35.0% -------- -------- -------- Total revenue $992,636 $763,836 $228,800 30.0% ======== ======== ========

--30--CSD/sa*

CONTACT: Kinetic Concepts Inc., San Antonio Investors: Martin J. Landon, 210-255-6494 or Media: Sloane & Company Elliot Sloane, 212-446-1860

KEYWORD: TEXAS INDUSTRY KEYWORD: MEDICAL DEVICES MEDICAL MANUFACTURING EARNINGS CONFERENCE CALLS SOURCE: Kinetic Concepts Inc.

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