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EMPI'S FOURTH QUARTER REVENUES JUMP OVER 80% AS FIRM BENEFITS FROM BROADER PRODUCT MIX AND ACQUISITION OF MEDTRONIC UNIT; KINETIC CONCEPTS SALES UP

This article was originally published in The Gray Sheet

Executive Summary

Empi's expanding product mix and volume growth from an acquisition pushed revenues up over 80% in the 1992 fourth quarter ended Dec. 31 compared to the same period last year. During the quarter, Empi's sales jumped 81.7% to $11.8 mil. from $6.5 mil. in the comparable period in 1991. Earnings rose 85.8% to $1.5 mil. from $783,985 in the last quarter of 1991. The firm said in a Feb. 18 press release that fourth quarter revenue gains resulted from "continued core business expansion"; sales of the Innova female incontinence product, the Dupel drug delivery device and the Ultraflex line of dynamic splints; and revenues from Nortech, which was acquired from Medtronic in mid- November ("The Gray Sheet" Nov. 30, 1992, p. 13). The firm added that it was pleased with the integration of the Nortech division and noted that "this transaction is an excellent fit for Empi, both for the added core business it brings and the expanded sales force for Empi's new product lines." Sales for the year ended Dec. 31, 1992 rose 52.9% to $33.4 mil. from $21.8 mil. in 1991. The firm noted that during the year, "sales of new products reached 21% of total sales, exceeding the company's goal." Net income for the year also advanced sharply, up 98.4% to $4 mil. from $2 mil. the previous year. Kinetic Concepts' gains in its growth businesses offset a 9% downturn in its domestic acute care specialty bed business, resulting in a 7.9% revenue gain for the fourth quarter. Revenues were $72.1 mil. for the fourth quarter ended Dec. 31, 1992 compared to $66.8 mil. for that period the year before. Earnings for the quarter were up 11.9% to $7.7 mil. For the year ending Dec. 31, 1992, sales were up 12% to $278.5 mil. from $248.7 mil. Earnings rose by 14.8% to $28.5 mil. from $24.8 mil. KCI notes that earnings have been slowed in part because of a 25% reduction in Medicare reimbursement for its HomeKair bed. The firm says that the Health Care Financing Administration "is currently undertaking a comprehensive review of all reimbursement coverage criteria and pricing codes for pressure relieving devices in the home and we believe there is a distinct possibility that a favorable reclassification may occur." KCI plans to add approximately 150 people to its sales force, a 50% expansion. This will "capitalize on the opportunities in each of its business segments," which include several recent moves toward expansion. KCI recently has purchased Medical Retro Design, which remanufactures used hospital beds to include more up-to-date features. KCI also has signed a letter of intent to purchase Mediscus, a provider of acute care specialty patient surfaces that is currently in bankruptcy proceedings. Invacare's fourth quarter income rose 25.9% to $6.1 mil., while sales increased 23.9% to $87.8 mil. compared to the results from the same quarter in the prior year. For the full year ended Dec. 31, the firm's sales reached $305.2 mil., up 16% from 1991 sales of $263.2 mil. Net was up 25.6% to $17.7 mil. from $14.1 mil. in 1991. The firm also notes that "the purchasing patterns of our domestic dealers have returned to normal, following the temporary inventory adjustments which occurred earlier in the year resulting from 1991 Medicare reimbursement changes." The improved performance allowed Invacare during the year to acquire Poirier S.A., a French wheelchair manufacturer, and to acquire two operating facilities with only "a modest increase in leverage." Marquest Medical reported a net loss of $5.3 mil. on sales of $4.6 mil. for the third quarter ended Dec. 31, 1992. Revenues increased 434.5% from $858,000 for the same period in 1991. The firm's results were affected during the third quarter last year by an FDA-imposed suspension of operations between October 1991 and January 1992 because of good manufacturing practices violations ("The Gray Sheet" Oct. 14, 1991, p. 5). Sales of $16.4 mil. for the nine months ended Dec. 31, 1992 were down 33.8% from the previous year's figure of $24.8 mil. for the same period. The company posted losses of $15.7 mil. for the nine months.
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