KCI gets out of bed business

Tuesday, September 25, 2012

SAN ANTONIO – Getinge AB, a player in the European support surfaces market, is positioning itself to become a major player on this side of the Atlantic with its acquisition of Kinetic Concept, Inc.’s (KCI) support surfaces business.

The Sweden-based Getinge in August agreed to buy Therapeutic Support Systems (TSS) from KCI for $275 million. 

“TSS is very strong in North America, with 60% of its revenues coming from the U.S. market,” Johan Malmquist, CEO of Getinge Group, said during a conference call. “I think the complementary nature of our two product portfolios will allow us to penetrate both markets in North America and Western Europe significantly better than we’ve done in the past.”

KCI was acquired in November 2011 by London-based private equity firm Apax Partners for $6.1 billion. In January, it announced a new management structure and plans to sell TSS, which provides hospital beds, mattress replacement systems and other support surfaces. TSS had revenues of $247 million in 2011.

Although KCI got its start in the support surfaces market, it has increasingly turned its focus to other markets, in particular negative pressure wound therapy, with its popular V.A.C. Therapy System.

“Customers found themselves not receiving the quality of service or the responsiveness they have been used to receiving historically,” Malmquist said. 

Getinge—through its ArjoHuntleigh brand—was a direct competitor to KCI but a fairly distant one, said analyst Jonathan Sadock.  

“This (deal) brings them solidly into the top three,” said Sadock, managing partner with Philadelphia-based Paragon Ventures.

Getinge will integrate TSS into the ArjoHuntleigh brand.