10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

Commission file number 333-184233-14

CENTAUR GUERNSEY L.P. INC.

(Exact name of registrant as specified in its charter)

Guernsey	98-1022387
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12930 West Interstate 10 San Antonio, Texas	78249
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (210) 524-9000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                                                                          Yes   X        No   

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                          Yes   X        No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			Accelerated filer
Non-accelerated filer	X	(Do not check if a smaller reporting company)	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

    Yes   ____         No      X   

As of July 28, 2014, there were 341,410,891.610 Class A-1 and 728,041.800 Class A-2 partnership units outstanding.   

TABLE OF CONTENTS

CENTAUR GUERNSEY L.P. INC.

			Page No.
PART I.	FINANCIAL INFORMATION		4
	Item 1.	Financial Statements	4
		Condensed Consolidated Balance Sheets	4
		Condensed Consolidated Statements of Operations	5
		Condensed Consolidated Statements of Comprehensive Loss	6
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4.	Controls and Procedures	37
PART II.	OTHER INFORMATION		37
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	37
	Item 6.	Exhibits	38
	SIGNATURES		39

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” The forward-looking statements are based on our current expectations and projections about future events. Discussions containing forward-looking statements may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and elsewhere in this report. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “predicts,” “projects,” “potential,” “continue,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” or the negative of those terms and other variations of them or by comparable terminology.

These forward-looking statements are only predictions, not historical facts, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. The factors that could contribute to such differences include those discussed under the caption “Risk Factors.” You should consider each of the risk factors and uncertainties under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, among other things, in evaluating our prospects and future financial performance. The occurrence of the events described in the risk factors could harm our business, results of operations and financial condition. These forward-looking statements are made as of the date of this report. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention to update any forward-looking statements to reflect events or circumstances arising after the date of this report, whether as a result of new information, future events or otherwise.

TRADEMARKS, SERVICE MARKS AND COPYRIGHTS

3M® Tegaderm® is a licensed trademark of 3M Company; GRAFTJACKET® is a licensed trademark of Wright Medical Technology Inc; Novadaq®, SPY®, and SPY ELITE® are licensed trademarks of Novadaq Technologies, Inc.; and Prontosan® Wound Irrigation Solution is a licensed trademark of B. Braun Medical, Inc. Unless otherwise indicated, all other trademarks appearing in this report are proprietary to KCI Licensing, Inc., LifeCell Corporation or Systagenix Wound Management IP Co B.V., their affiliates and/or licensors. The absence of a trademark or service mark or logo from this report does not constitute a waiver of trademark or other intellectual property rights of KCI Licensing, Inc., Systagenix Wound Management IP Co B.V., or LifeCell Corporation, their affiliates and/or licensors.

DEFINED TERMS

The following terms are used in this Quarterly Report on Form 10-Q unless otherwise noted or indicated by the context.

• the terms the “Company,” “we,” “our,” and “us” refer to Centaur Guernsey L.P. Inc. (“Centaur”) and its consolidated subsidiaries.

• the term “Merger” refers to the transaction completed on November 4, 2011 pursuant to which Kinetic Concepts, Inc. was merged with Chiron Merger Sub, Inc. (“Merger Sub”), a direct subsidiary of Chiron Holdings, Inc. (“Holdings”) and an indirect subsidiary of Centaur Guernsey L.P. Inc.

▪ the term “KCI” means Kinetic Concepts, Inc. and its subsidiaries.

▪ the term “LifeCell” means LifeCell Corporation and its subsidiaries.

▪ the term “Systagenix” means Systagenix Wound Management B.V., its subsidiaries, and its U.S.-based affiliate, Systagenix Wound Management (US), Inc.

3

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2014			December 31, 2013
	(unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	213,667		$	206,949
Accounts receivable, net	371,061			407,578
Inventories, net	185,491			181,567
Deferred income taxes	32,551			23,621
Prepaid expenses and other	43,248			53,161
Total current assets	846,018			872,876
Net property, plant and equipment	306,642			333,725
Debt issuance costs, net	89,960			102,054
Deferred income taxes	35,734			31,459
Goodwill	3,378,931			3,378,661
Identifiable intangible assets, net	2,472,073			2,549,201
Other non-current assets	5,219			4,669
	$	7,134,577		$	7,272,645
Liabilities and Equity:
Current liabilities:
Accounts payable	54,846			50,316
Accrued expenses and other	428,491			328,975
Current installments of long-term debt	26,100			26,311
Income taxes payable	4,099			3,368
Deferred income taxes	17,219			2,199
Total current liabilities	530,755			411,169
Long-term debt, net of current installments and discount	4,856,928			4,865,503
Non-current tax liabilities	53,989			53,682
Deferred income taxes	860,070			1,003,784
Other non-current liabilities	133,360			40,432
Total liabilities	6,435,102			6,374,570
Equity:
General partner’s capital	—			—
Limited partners’ capital	701,433			900,218
Accumulated other comprehensive loss, net	(1,958		)	(2,143		)
Total equity	699,475			898,075
	$	7,134,577		$	7,272,645

See accompanying notes to condensed consolidated financial statements.

4

CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenue:
Rental	$	175,235		$	190,245		$	341,793		$	378,408
Sales	289,936			242,434			570,917			470,155
Total revenue	465,171			432,679			912,710			848,563
Rental expenses	87,038			90,382			172,830			187,733
Cost of sales	82,307			59,325			165,609			115,556
Gross profit	295,826			282,972			574,271			545,274
Selling, general and administrative expenses	170,585			204,983			346,946			366,425
Research and development expenses	18,233			20,397			35,723			38,179
Acquired intangible asset amortization	48,754			46,461			99,443			94,007
Wake Forest settlement	198,578			—			198,578			—
Operating earnings (loss)	(140,324		)	11,131			(106,419		)	46,663
Interest income and other	127			904			222			1,062
Interest expense	(101,805		)	(105,658		)	(204,000		)	(213,746		)
Loss on extinguishment of debt	—			(2,164		)	—			(2,164		)
Foreign currency gain (loss)	3,852			(7,772		)	4,088			(3,197		)
Derivative instruments gain (loss)	(4,297		)	10,556			(4,300		)	10,040
Loss from continuing operations before income tax benefit	(242,447		)	(93,003		)	(310,409		)	(161,342		)
Income tax benefit	(89,730		)	(31,056		)	(111,309		)	(56,024		)
Loss from continuing operations	(152,717		)	(61,947		)	(199,100		)	(105,318		)
Loss from discontinued operations, net of tax	—			(628		)	—			(2,044		)
Net loss	$	(152,717	)	$	(62,575	)	$	(199,100	)	$	(107,362	)

See accompanying notes to condensed consolidated financial statements.

5

CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Net loss	$	(152,717	)	$	(62,575	)	$	(199,100	)	$	(107,362	)
Unrealized investment gain, net of tax benefit (expense) of $629 and $1 in 2014 and ($385) and ($1,075) in 2013	(1,005		)	614			(2		)	1,716
Foreign currency translation adjustment, net of tax benefit (expense) of ($440) and ($502) in 2014 and $171 and $559 in 2013	(103		)	(2,359		)	187			(4,135		)
Total comprehensive loss	$	(153,825	)	$	(64,320	)	$	(198,915	)	$	(109,781	)

See accompanying notes to condensed consolidated financial statements.

6

CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Six months ended June 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(199,100	)	$	(107,362	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt issuance costs and discount	19,409			17,205
Depreciation and other amortization	160,528			171,194
Loss on disposition of assets	—			3,315
Amortization of fair value step-up in inventory	6,680			—
Fixed asset and inventory impairment	—			30,259
Write-off of other intangible assets	—			13,400
Wake Forest settlement	198,578			—
Provision for bad debt	8,239			3,521
Loss on extinguishment of debt	—			2,164
Equity-based compensation expense	2,103			1,196
Deferred income tax benefit	(141,532		)	(71,357		)
Unrealized gain on derivative instruments	(3,785		)	(11,697		)
Unrealized gain on revaluation of cross currency debt	(3,104		)	(4,318		)
Change in assets and liabilities:
Decrease in accounts receivable, net	27,186			5,912
Increase in inventories, net	(10,881		)	(10,997		)
Decrease (increase) in prepaid expenses and other	9,765			(15,315		)
Increase in accounts payable	4,412			2,939
Increase (decrease) in accrued expenses and other	(17,827		)	8,359
Increase in tax liabilities, net	707			1,975
Net cash provided by operating activities	61,378			40,393
Cash flows from investing activities:
Additions to property, plant and equipment	(28,382		)	(39,981		)
Increase in inventory to be converted into equipment for short-term rental	(4,121		)	(8,523		)
Dispositions of property, plant and equipment	532			432
Businesses acquired in purchase transaction, net of cash acquired	(4,613		)	—
Increase in identifiable intangible assets and other non-current assets	(4,230		)	(2,558		)
Net cash used by investing activities	(40,814		)	(50,630		)
Cash flows from financing activities:
Settlement of profits interest units	(1,416		)	—
Distribution to limited partners	—			(1,572		)
Repayments of long-term debt and capital lease obligations	(13,271		)	(52,926		)
Payment of debt issuance costs	—			(21,122		)
Net cash used by financing activities	(14,687		)	(75,620		)
Effect of exchange rate changes on cash and cash equivalents	841			(1,676		)
Net increase (decrease) in cash and cash equivalents	6,718			(87,533		)
Cash and cash equivalents, beginning of period	206,949			383,150
Cash and cash equivalents, end of period	$	213,667		$	295,617

See accompanying notes to condensed consolidated financial statements

7

Notes to Condensed Consolidated Financial Statements

NOTE 1.Summary of Significant Accounting Policies

(a)Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, financial position and cash flows in conformity with GAAP. Operating results from interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of our results for the interim periods presented. Certain prior period amounts have been reclassified to conform to the 2014 presentation.

On November 8, 2012, KCI closed on the divestiture of its Therapeutic Support Systems ("TSS") business to Getinge AB. Under the terms of the sale agreement, we agreed to provide transition services to Getinge AB after the close of the transaction. Additionally, the results of the operations subject to the agreement, excluding the allocation of general corporate overhead, are presented as discontinued operations in the consolidated statements of operations for all periods presented. Discontinued operations amounts related to TSS also exclude incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the transition services agreement.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. We have two primary geographic regions for which we provide supplemental information: the Americas, which is comprised principally of the United States and includes Canada, Puerto Rico and Latin America; and EMEA/APAC, which is comprised of Europe, the Middle East, Africa and the Asia Pacific region.

The condensed consolidated financial statements appearing in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

(b)Derivative Financial Instruments and Fair Value Measurements

We use derivative financial instruments to manage the economic impact of fluctuations in interest rates. We do not use financial instruments for speculative or trading purposes. Periodically, we enter into interest rate protection agreements to modify the interest characteristics of our outstanding debt. Our interest rate derivatives have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period.

We also use derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates on our intercompany balances and corresponding cash flows and to manage our transactional currency exposures when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. We enter into foreign currency exchange contracts to manage these economic risks. These contracts are not designated as hedges; and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period. Although we use master netting agreements with our derivative counterparties, we do not offset derivative asset and liability positions in the condensed consolidated balance sheets.

All derivative instruments are recorded on the balance sheets at fair value. The fair values of our interest rate derivatives and foreign currency exchange contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets, which represent level 2 inputs as defined by the Codification.

8

(c)Concentration of Credit Risk

We have a concentration of credit risk with financial institutions related to our derivative instruments. As of June 30, 2014, Morgan Stanley, UBS and HSBC were the counterparties on our interest rate protection agreements consisting of interest rate swap agreements in notional amounts totaling $507.1 million each. We use master netting agreements with our derivative counterparties to reduce our risk and use multiple counterparties to reduce our concentration of credit risk.

We maintain cash and cash equivalents with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits bear minimal credit risk as they are maintained at financial institutions of reputable credit and generally may be redeemed upon demand.

(d)   Recently Adopted Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that entities should present the unrecognized tax benefit as a reduction of the deferred tax asset for a net operating loss (“NOL”) or similar tax loss or tax credit carryforward rather than as a liability when the uncertain tax position would reduce the NOL or other carryforward under the tax law. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company adopted this ASU effective January 1, 2014. The adoption of this update did not have a material impact on our results of operations, financial position or disclosures.

(e)   Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity". ASU No. 2014-08 changes the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organization's operations and financial results should be presented as discontinued operations. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. The Company is evaluating this update, however we do not anticipate that it will have a material effect on our results of operations, financial position or disclosures.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU supersedes the revenue recognition requirements in Topic 605, "Revenue Recognition", and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, "Revenue Recognition-Construction-Type and Production-Type Contracts". In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, "Property, Plant, and Equipment", and intangible assets within the scope of Topic 350, "Intangibles-Goodwill and Other") are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is evaluating this update to determine if it will have a material effect on our results of operations, financial position or disclosures.

(f)   Other Significant Accounting Policies

For further information on our significant accounting policies, see Note 1 of the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

9

NOTE 2.Business Acquisition

On July 30, 2013, KCI announced that it had signed a definitive share purchase agreement to acquire Systagenix, an established provider of advanced wound care products. The transaction closed on October 28, 2013. The adjusted purchase price paid, net of cash and cash equivalents, was $478.7 million. The acquisition was accounted for as a business combination using the acquisition method and the purchase price was funded using $350.0 million of incremental borrowings under our existing senior secured credit facility along with cash on hand. The preliminary allocation of the purchase price to the Systagenix tangible and identifiable intangible assets was based on their estimated fair values as of the acquisition date. The excess of the purchase price over the identifiable intangible and net tangible assets was allocated to goodwill, which is not deductible for tax purposes. The purchase price allocation is preliminary, pending the final determination of the fair value of certain assumed assets and liabilities. As these issues are identified, modified or resolved, resulting increases or decreases to the preliminary value of assets and liabilities are offset by a change to goodwill. Adjustments to these estimates will be included in the final allocation of the purchase price.

The following table represents the preliminary allocation of the purchase price (in thousands):

	December 31, 2013			Adjustment			June 30, 2014
Goodwill	$	171,086		$	270		$	171,356
Identifiable intangible assets
Customer relationships	103,301						103,301
Developed technology	91,700						91,700
Tradenames	56,800						56,800
In-process research and development	1,766						1,766
Tangible assets acquired and liabilities assumed:
Accounts receivable	50,807						50,807
Inventories	27,450						27,450
Other current assets	1,902						1,902
Property, plant and equipment	44,016						44,016
Other non-current assets	139						139
Current liabilities	(34,752		)	(270		)	(35,022		)
Other non-current liabilities	(79		)				(79		)
Net deferred tax liability	(35,388		)				(35,388		)
Total purchase price	$	478,748		$	—		$	478,748

Purchase accounting rules require that as certain pre-acquisition issues are identified, modified or resolved, resulting increases or decreases to the preliminary value of assets and liabilities are offset by a change in goodwill. Modifications to goodwill reflected in the “Adjustments” column above were primarily the result of assumed liabilities.

The following table reflects the unaudited pro forma condensed consolidated results of operations, as though the acquisition had occurred on January 1, 2012 (in thousands):

	Three months ended June 30,			Six months ended June 30,
	2013			2013
Pro forma revenue	$	484,771		$	951,765
Pro forma net loss	$	(61,656	)	$	(114,794	)

The unaudited pro forma condensed consolidated results of operations presented above are for illustrative purposes only and are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the period presented, nor are they indicative of future operating results. 

10

In January 2014, LifeCell entered into an asset purchase agreement with TauTona Injector, LLC to purchase certain assets, including patents, know-how, and inventory. Under the terms of the asset purchase agreement, LifeCell made an initial cash payment of $3.0 million at the closing of the transaction. The asset purchase agreement also calls for additional payments by LifeCell of up to $31.5 million upon the achievement of certain milestones. During the first six months of 2014, LifeCell paid $1.5 million under the asset purchase agreement related to milestone achievement. As of June 30, 2014, the accompanying condensed consolidated balance sheet included $6.8 million under the caption "accrued expenses and other" and $8.6 million under the caption "other non-current liabilities" related to future anticipated milestone payments.

NOTE 3.Supplemental Balance Sheet Data

(a)Accounts Receivable, net

Accounts receivable consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	399,904		$	418,804
Unbilled receivables	31,518			50,841
Less:  Allowance for revenue adjustments	(59,138		)	(67,631		)
Gross trade accounts receivable	372,284			402,014
Less:  Allowance for bad debt	(13,166		)	(8,483		)
Net trade accounts receivable	359,118			393,531
Other receivables	11,943			14,047
	$	371,061		$	407,578

(b)   Inventories, net

Inventories consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	126,494		$	110,937
Goods and tissue in-process	12,387			12,994
Raw materials, supplies, parts and unprocessed tissue	69,454			71,876
	208,335			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(8,073		)	(3,952		)
Reserve for excess and obsolete inventory	(14,771		)	(10,288		)
	$	185,491		$	181,567

11

NOTE 4.     Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility (1) – due 2018	$	1,936,975		$	1,946,708
Senior Euro Term E-1 Credit Facility (1) – due 2018	332,937			337,820
Senior Term E-2 Credit Facility (1) – due 2016	316,944			318,537
10.5% Second Lien Senior Secured Notes due 2018	1,750,000			1,750,000
12.5% Senior Unsecured Notes due 2019	612,000			612,000
3.25% Convertible Senior Notes due 2015	101			101
Notional amount of debt	4,948,957			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(27,621		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(9,469		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(3,727		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(22,268		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,844		)	(3,025		)
Net discount on debt	(65,929		)	(73,352		)
Total debt, net of discount	4,883,028			4,891,814
Less:  Current installments	(26,100		)	(26,311		)
	$	4,856,928		$	4,865,503

_____________________________

(1) On January 22, 2014, we entered into Amendment No. 5 to our senior secured credit facility. As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the governing credit agreement and loan documents, except as revised by Amendment No. 5.

Senior Secured Credit Facility

Our senior secured credit facility (the “Senior Secured Credit Facility”) includes a $200 million revolving credit facility (the “Revolving Credit Facility”). Amounts available under the Revolving Credit Facility are available for borrowing and reborrowing until maturity. At June 30, 2014 and December 31, 2013, no revolving credit loans were outstanding and we had outstanding letters of credit issued by banks which are party to the Senior Secured Credit Facility of $21.3 million and $21.2 million, respectively. In addition, we had $12.1 million and $12.6 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility as of June 30, 2014 and December 31, 2013, respectively. The capacity of the Revolving Credit Facility is reduced for the $21.3 million and $21.2 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility as of June 30, 2014 and December 31, 2013, respectively. The resulting availability under the Revolving Credit Facility was $178.7 million and $178.8 million at June 30, 2014 and December 31, 2013, respectively. Commitment fees accrue at a rate of 0.50% on the amounts available under the Revolving Credit Facility.

On January 22, 2014, we entered into Amendment No. 5 to our Senior Secured Credit Facility ("Amendment No. 5"). As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the governing credit agreement and loan documents, except as revised by Amendment No. 5. In connection with Amendment No. 5, Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans were refinanced with Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, respectively.

Interest. Amounts outstanding under the Dollar Term E-1 Loans, the Term E-2 Loans and the Revolving Credit Facility (other than swing-line loans and unreimbursed drawings on letters of credit) bear interest, at our option, at a rate equal to either the base rate or the eurocurrency rate, in each case plus an applicable margin. Amounts outstanding under the Euro Term E-1 Loans bear interest at the eurocurrency rate, and swing-line loans and unreimbursed drawings on letters of credit bear interest at the base rate. As a result of Amendment No. 5, the new applicable margins are (i) for eurocurrency rate loans that are Dollar Term

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E-1 Loans, 3.00%, (ii) for base rate loans that are Dollar Term E-1 Loans, 2.00%, (iii) for eurocurrency rate loans that are Euro Term E-1 Loans, 3.25%, (iv) for base rate loans that are Euro Term E-1 Loans, 2.25%, (v) for eurocurrency rate loans that are Term E-2 Loans, 2.50%, and (vi) for base rate loans that are Term E-2 Loans, 1.50%. The Term E loans will have a eurocurrency rate floor of 1.00% and a base rate floor of 2.00%.

10.5% Second Lien Senior Secured Notes and 12.5% Senior Unsecured Notes

As required upon the closing of our 10.5% Second Lien Senior Secured Notes due 2018 (“10.5% Second Lien Notes”) and the 12.5% Senior Unsecured Notes due 2019 (“12.5% Unsecured Notes”), we entered into registration rights agreements with respect to these notes. Pursuant to the terms of the registration rights agreements, we filed a registration statement (the “Registration Statement”) with respect to a registered exchange offer to exchange such notes for new notes with terms substantially identical in all material respects with the notes (except for the provisions relating to the transfer restrictions and payment of additional interest). On February 13, 2013, our Registration Statement was declared effective by the Securities and Exchange Commission (“SEC”), and our exchange offer was completed on March 15, 2013.

Because our Registration Statement was not declared effective by the SEC under the Securities Act and the exchange offer was not consummated within 365 days following the issuance of the notes (“Exchange Date”), and because we did not file a shelf registration statement covering resales of the notes within 30 days after the Exchange Date (each a “Notes Registration Default”), additional interest accrued on the aggregate principal amount of the notes from and including the date on which any such Notes Registration Default occurred to but excluding the date on which the Notes Registration Defaults were cured through the completion of the exchange offer. Under the terms of the registration rights agreements entered into with respect to these notes, additional interest was accrued at a rate of 0.25% and 0.50% from November 4, 2012 to February 4, 2013 and February 5, 2013 to March 15, 2013, respectively.

Covenants

As of June 30, 2014, we were in compliance with all covenants under our Senior Secured Credit Facility, 10.5% Second Lien Notes, 12.5% Unsecured Notes, and 3.25% Convertible Senior Notes due 2015 (“the Convertible Notes”).

For further information on our long-term debt, see Note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

NOTE 5.     Derivative Financial Instruments and Fair Value Measurements

We are exposed to credit loss in the event of nonperformance by counterparties to the extent of the fair values of the outstanding interest rate swap agreements, interest rate cap agreements and foreign currency exchange contracts, but we do not anticipate nonperformance by any of the counterparties. All derivative instruments are recorded on the balance sheets at fair value. We do not use financial instruments for speculative or trading purposes.

Interest Rate Protection

At June 30, 2014 and December 31, 2013, we had three interest rate swap agreements to convert a portion of our outstanding variable rate debt to a fixed rate basis. These agreements that became effective in December 2013, have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period. The interest rate swap agreements have quarterly interest payments, receive rates based on the higher of three-month USD LIBOR or 1.25% and pay rates based on fixed rates, due on the last day of March, June, September and December. The aggregate notional amount decreases quarterly by amounts ranging from $1.7 million to $56.4 million until maturity.

The following table summarizes our interest rate swap agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$507,100	2.256%
12/31/13-12/31/16	$507,100	2.249%
12/31/13-12/31/16	$507,100	2.250%

The interest rate cap agreements expired on December 31, 2013.

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Foreign Currency Exchange Rate Mitigation

At June 30, 2014, we had no outstanding foreign currency exchange contracts. At December 31, 2013, we had foreign currency exchange contracts to sell or purchase $14.3 million of various currencies.

Fair Value Measurements

The Codification definesfair value as the exit price that would be received to sell an asset or paid to transfer a liability. The Fair Value Measurements and Disclosure topic of the Codification establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term obligations, excluding our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt, including the 10.5% Second Lien Secured Notes, the 12.5% Unsecured Notes and the Convertible Notes approximates fair value. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.6 billion and $2.7 billion, respectively, at June 30, 2014. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.6 billion and $2.7 billion, respectively, at December 31, 2013. The fair value of our long-term debt was estimated based upon open-market trades at or near year end which represent Level 2 inputs.

All of our derivatives, as of the reporting date, use inputs considered as Level 2. The interest rate swap agreements are valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreements by using market information available as of the reporting date, including prevailing interest rates and related forward interest rate curves. The foreign currency exchange contracts are valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreements by using market information available as of the reporting date, including prevailing foreign currency exchange rates and related foreign currency exchange rate curves.

The following table sets forth the location and aggregate fair value amounts of all derivative instruments with credit-related contingent features (in thousands):

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
		June 30, 2014		December 31, 2013			June 30, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	14,713	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	14,175		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	28,888	$	32,820

The following table summarizes the amount of gain (loss) on derivatives not designated as hedging instruments (dollars in thousands):

	Three months ended June 30,					Six months ended June 30,
	2014			2013		2014			2013
Interest rate swap agreements	$	(4,287	)	$	9,953	$	(4,362	)	$	9,252
Interest rate cap agreements	—			1		—			(5		)
Foreign currency exchange contracts	(10		)	602		62			793
	$	(4,297	)	$	10,556	$	(4,300	)	$	10,040

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Certain of our derivative instruments contain provisions that require compliance with the restrictive covenants of our Senior Secured Credit Facility. For further information regarding the restrictive covenants of credit facilities, see Note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

If we default under our credit facilities, the lenders could require immediate repayment of the entire principal. If those lenders require immediate repayment, we may not be able to repay them which could result in the foreclosure of substantially all of our assets. In these circumstances, the counterparties to the derivative instruments could request immediate payment or full collateralization on derivative instruments in net liability positions. Certain of our derivative counterparties are also parties to our Senior Secured Credit Facility.

No collateral has been posted by us in the normal course of business. If the credit-related contingent features underlying these agreements were triggered on June 30, 2014, we could be required to settle or post the full amount as collateral to the respective agreement counterparties.

We did not have any measurements of financial assets or financial liabilities at fair value on a nonrecurring basis at June 30, 2014 or December 31, 2013.

NOTE 6. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in thousands):

	Accumulated Foreign Currency Translation Adjustment			Investment Gain			Accumulated Other Comprehensive Income (Loss)
Balances at December 31, 2013	$	(4,384	)	$	2,241		$	(2,143	)
Unrealized investment gain, net of tax benefit of $1	—			(2		)	(2		)
Foreign currency translation adjustment, net of tax expense of $502	187			—			187
Balances at June 30, 2014	$	(4,197	)	$	2,239		$	(1,958	)

During the six months ended June 30, 2014, there were no reclassification adjustments out of accumulated other comprehensive loss to net loss.

NOTE 7.Commitments and Contingencies

LEGAL PROCEEDINGS

Intellectual Property Litigation

As the owner and exclusive licensee of patents, from time to time, we are a party to proceedings challenging these patents, including challenges in U.S. federal courts, foreign courts, foreign patent offices and the U.S. Patent and Trademark Office. Additionally, from time to time, we are a party to litigation we initiate against others we contend infringe these patents, which often results in counterclaims regarding the validity of such patents. At other times, we are party to litigation initiated by others who contend we infringe their patents. It is not possible to reliably predict the outcome of the proceedings described below. However, if we are unable to effectively enforce our intellectual property rights, third parties may become more aggressive in the marketing of competitive products around the world.

On June 30, 2014 , KCI entered into a settlement and release agreement (the “Settlement Agreement”) with Wake Forest University Health Sciences to fully and finally resolve the pending patent disputes between them relating to negative pressure wound therapy ("NPWT"). The Settlement Agreement resolves all disputes between the parties as detailed in our previous disclosures. The Settlement Agreement includes a stipulated dismissal with prejudice of the lawsuits between KCI and Wake Forest, including the lawsuit that was previously scheduled to begin trial on July 28, 2014 in the U.S. District Court for the Western District of Texas, San Antonio Division. To fully resolve the litigation, KCI agreed to pay Wake Forest retrospective U.S. patent royalties in the amount of $280.0 million, according to the following schedule: $80.0 million paid in July 2014, $85.0 million to be paid in

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June 2015, $85.0 million to be paid in June 2016, and $30.0 million to be paid in June 2017. As of June 30, 2014, the accompanying condensed consolidated balance sheet included $160.4 million under the caption "accrued expenses and other" and $101.4 million under the caption "other non-current liabilities" representing the net present value of payments under the Settlement Agreement discounted using our incremental borrowing rate as the discount rate. As a result, we recorded patent settlement charges of $198.6 million in the second quarter of 2014 representing the net present value of payments under the Settlement Agreement, net of the $63.2 million previously existing accrual.

In August 2013, Vital Needs International, L.P. ("Vital Needs") filed a Demand for Arbitration with the American Arbitration Association seeking to recover $100 million in damages against KCI entities based on a number of claims related to certain intellectual property rights sold by Vital Needs to KCI pursuant to a 2006 acquisition agreement. Vital Needs alleges, among other things, breach of the contract for failure to pay royalties on sales of KCI products. We do not believe any royalties are owed to Vital Needs for sales of KCI products, and we believe our defenses to Vital Needs' claims are meritorious. We intend to vigorously defend the arbitration, which is in its initial phase. The arbitration is currently set for January 2015. It is not possible to predict the outcome of this arbitration, nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

In September 2013, LifeNet Health ("LifeNet") filed suit against LifeCell Corporation in the United States District Court for the Eastern District of Virginia, Norfolk Division. LifeNet alleges that two LifeCell products, Strattice and AlloDerm Ready to Use, infringe LifeNet’s U.S. Patent No. 6,569,200 ("the ‘200 Patent"). LifeNet alleges that LifeCell has been aware of the ‘200 Patent and its infringement since 2009 and acted willfully in continuing to infringe the ‘200 Patent thereafter. LifeNet seeks monetary damages including treble damages for willful infringement, together with costs and prejudgment and post judgment interest as well as a finding that the case is exceptional and an award of costs and reasonable attorneys fees. We believe that our defenses to the LifeNet claims are meritorious and that the patents that are the subject of the litigation are invalid, or are not infringed by LifeCell’s products. It is not possible to predict the outcome of this litigation nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

Products Liability Litigation

LifeCell Corporation is a defendant in approximately 330 lawsuits filed by individuals alleging personal injury and seeking monetary damages for failed hernia repair procedures using LifeCell’s AlloDerm products. These cases have been consolidated for case management purposes in Middlesex County, New Jersey. The trial court has issued a pre-trial order incorporating the bellwether practice of trying the claims of some plaintiffs to determine the likelihood of settlement or to avoid relitigating common issues in every case. Following limited discovery, the parties have recently selected four bellwether cases from which one case to be tried will be selected. Full discovery will now proceed on each of the bellwether cases. Trial of the one bellwether case that is ultimately selected is scheduled for September 2015. Although it is not possible to reliably predict the outcome of the litigation, we believe that our defenses to these claims are meritorious and we will defend against these suits vigorously. These consolidated cases are being treated as a single occurrence and therefore do not require the exhaustion of a separate self-insured retention to trigger coverage. Based on our existing insurance coverage and our defenses to these cases, we do not expect them to have a material impact on our results of operations or our financial position. As these cases are in their early stages with much discovery still to be conducted, the plaintiffs have yet to set forth their alleged damages. As such, it is impossible to predict or estimate potential losses if our defenses to these cases are unsuccessful.

Since 2012, LifeCell Corporation has been named as a defendant in approximately 130 lawsuits in state and federal courts in Massachusetts, Delaware, Minnesota, New York and Texas (federal court cases have been transferred to West Virginia multidistrict litigation docket) alleging personal injury and seeking monetary damages for failed gynecological procedures using a human tissue product processed by LifeCell and sold by one of LifeCell’s distributors, Boston Scientific, under the name Repliform. There are approximately 110 LifeCell cases filed in a consolidated docket in Middlesex County Massachusetts. Although many were initially filed in a multidistrict action involving numerous synthetic mesh manufacturers and synthetic products, the court has transferred cases involving only Repliform to a separate docket. The cases are in the initial phase and no discovery has occurred. We intend to defend these suits vigorously. Based on our existing insurance coverage and our defenses to these cases, we do not expect them to have a material impact on our results of operations or our financial position. As these cases are in their early stages it is not possible to predict or estimate potential losses if our defenses to these cases are unsuccessful.

Other Litigation

In 2009, KCI received a subpoena from the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) seeking records regarding our billing practices under the local coverage policies of the four regional Durable Medical Equipment Medicare Administrative Contractors (“DME MACs”). KCI cooperated with the OIG's inquiry and provided substantial documentation to the OIG and the U.S. Attorneys' office in response to its request. The government's inquiry stemmed from the

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filing under seal of two 2008 qui tam actions against KCI by two former employees in the U.S. District Court, Central District of California, Western Division. These cases are captioned United States of America, ex rel. Steven J. Hartpence v. Kinetic Concepts, Inc. et al, and United States of America, ex rel. Geraldine Godecke v. Kinetic Concepts, Inc., et al. The complaints contend that KCI violated the Federal False Claims Act by billing in a manner that was not consistent with the Local Coverage Determinations issued by the DME MACs and seek recovery of monetary damages. Following the completion of the government's review and its decision declining to intervene in such suits, the live pleadings were ordered unsealed in 2011. After reviewing the allegations, KCI filed motions seeking the dismissal of the suits on multiple grounds.  In 2012, the Court granted KCI's motions dismissing all of the claims under the False Claims Act. The cases are on appeal in the U.S. Court of Appeals for the Ninth Circuit and oral argument was in July 2014. We believe that our defenses to the claims in the Hartpence and Goedecke cases are meritorious and that we have no liability under the False Claims Act for their allegations. However, it is not possible to predict the outcome of this litigation nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

We are a party to several additional lawsuits arising in the ordinary course of our business. Additionally, the manufacturing and marketing of medical products necessarily entails an inherent risk of product liability claims. We maintain multiple layers of product liability insurance coverage and we believe these policies and the amounts of coverage are appropriate and adequate.

OTHER COMMITMENTS AND CONTINGENCIES

As a healthcare supplier, we are subject to extensive government regulation, including laws and regulations directed at ascertaining the appropriateness of reimbursement, preventing fraud and abuse and otherwise regulating reimbursement under various government programs. The marketing, billing, documenting and other practices are all subject to government oversight and review. To ensure compliance with Medicare and other regulations, regional carriers often conduct audits and request patient records and other documents to support claims submitted by us for payment of services rendered to customers.

We also are subject to routine pre-payment and post-payment audits of medical claims submitted to Medicare. These audits typically involve a review, by Medicare or its designated contractors and representatives, of documentation supporting the medical necessity of the therapy provided by us. While Medicare requires us to obtain a comprehensive physician order prior to providing products and services, we are not required to, and do not as a matter of practice require, or subsequently obtain, the underlying medical records supporting the information included in such claim. Following a Medicare request for supporting documentation, we are obligated to procure and submit the underlying medical records retained by various medical facilities and physicians. Obtaining these medical records in connection with a claims audit may be difficult or impossible and, in any event, all of these records are subject to further examination and dispute by an auditing authority. Under standard Medicare procedures, we are entitled to demonstrate the sufficiency of documentation and the establishment of medical necessity, and we have the right to appeal any adverse determinations. If a determination is made that our records or the patients' medical records are insufficient to meet medical necessity or Medicare reimbursement requirements for the claims subject to a pre-payment or post-payment audit, we could be subject to denial, recoupment or refund demands for claims submitted for Medicare reimbursement. In the event that an audit results in discrepancies in the records provided, Medicare may be entitled to extrapolate the results of the audit to make recoupment demands based on a wider population of claims than those examined in the audit.

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NOTE 8.Segment Information

The Company is engaged in the rental and sale of advanced wound therapeutics and regenerative medicine products in over 75 countries worldwide through direct sales and indirect operations. We have two reportable operating segments which correspond to our two businesses: Advanced Wound Therapeutics ("AWT") and Regenerative Medicine. Our AWT business is conducted by KCI and its subsidiaries, including Systagenix, while our Regenerative Medicine business is conducted by LifeCell and its subsidiaries. In most countries where we operate, certain aspects of our two businesses are supported by the same administrative staff, systems and infrastructure and, as such, we have allocated these costs between the businesses based on allocation methods including headcount, revenue and other methods as deemed appropriate. We measure segment profit (loss) as operating earnings (loss), which is defined as income (loss) before interest and other income, interest expense, foreign currency gains and losses, derivative instruments gains and losses and income taxes. All intercompany transactions are eliminated in computing revenue and operating earnings (loss).

On November 8, 2012, Getinge AB purchased certain assets and assumed certain liabilities comprising KCI's TSS business. The historical results of operations of the TSS business, excluding the allocation of general corporate overhead, are reported as discontinued operations in the consolidated statements of operations. Discontinued operations amounts related to TSS also exclude incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the transition services agreement.

Information on segments and a reconciliation of consolidated totals are as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenue:
Advanced Wound Therapeutics	$	351,655		$	317,765		$	687,634		$	623,647
Regenerative Medicine	113,516			114,914			225,076			224,916
Total revenue	$	465,171		$	432,679		$	912,710		$	848,563
Operating earnings (loss):
Advanced Wound Therapeutics	$	106,507		$	110,897		$	191,257		$	200,318
Regenerative Medicine	33,764			31,197			64,772			61,066
Non-allocated costs:
General headquarter expense (1)	(2,398		)	(40,003		)	(5,207		)	(53,112		)
Equity-based compensation	(1,162		)	(663		)	(2,103		)	(1,196		)
Merger and restructuring-related expenses (2)	(29,703		)	(43,836		)	(57,117		)	(66,406		)
Acquired intangible asset amortization (3)	(48,754		)	(46,461		)	(99,443		)	(94,007		)
Wake Forest settlement	(198,578		)	—			(198,578		)	—
Total non-allocated costs	(280,595		)	(130,963		)	(362,448		)	(214,721		)
Total operating earnings	$	(140,324	)	$	11,131		$	(106,419	)	$	46,663

_____________________

(1) The second quarter and six months ended June 30, 2013 includes $4.0 million and $13.4 million, respectively, of write-offs of in-process research and development costs due to discontinuation of related projects and a $30.3 million fixed asset impairment charge.

(2) Represents expenses related to the Merger including management fees and restructuring-related expenses.

(3) 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

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NOTE 9.Guarantor Condensed Consolidating Financial Statements

Our 10.5% Second Lien Notes and 12.5% Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries. The non-guarantor subsidiaries do not have any payment obligations under the 10.5% Second Lien Notes or 12.5% Unsecured Notes. Subject to the terms of the10.5% Second Lien Notes and 12.5% Unsecured Notes indentures, the guarantee of a subsidiary guarantor will terminate upon:

(1) a sale or other disposition (including by way of consolidation or merger) of the capital stock of such guarantor or the sale or disposition of all or substantially all the assets of such subsidiary guarantor (other than to the Company or a restricted subsidiary) otherwise permitted by the 10.5% Second Lien Notes or 12.5% Unsecured Notes indentures,

(2) the designation in accordance with the 10.5% Second Lien Notes or 12.5% Unsecured Notes indenture of the guarantor as an unrestricted subsidiary or the occurrence of any event after which the guarantor is no longer a restricted subsidiary,

(3) defeasance or discharge of the 10.5% Second Lien Notes or 12.5% Unsecured Notes, or

(4) upon the achievement of investment grade status by the 10.5% Second Lien Notes or 12.5% Unsecured Notes; provided that such guarantee shall be reinstated upon the reversion date.

In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary will pay the holders of its debt and other liabilities, including its trade creditors, before it will be able to distribute any of its assets to us. In the future, any non-U.S. subsidiaries, immaterial subsidiaries and subsidiaries that we designate as unrestricted subsidiaries under the 10.5% Second Lien Notes and 12.5% Unsecured Notes indentures will not guarantee the 10.5% Second Lien Notes or 12.5% Unsecured Notes. As of June 30, 2014, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of the guarantee arrangements, we are presenting the following condensed consolidated balance sheets, statements of operations and comprehensive income (loss), and statements of cash flows of the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries.

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Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

June 30, 2014

(in thousands)

(unaudited)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	126,932		$	—	$	86,337	$	—		$	213,667
Accounts receivable, net	—		162,526			63,091		145,444		—			371,061
Inventories, net	—		90,347			109,130		100,722		(114,708		)	185,491
Deferred income taxes	—		3,850			28,701		—		—			32,551
Prepaid expenses and other	—		23,774			5,376		278,730		(264,632		)	43,248
Intercompany receivables	166		1,811,567			2,337,871		80,410		(4,230,014		)	—
Total current assets	564		2,218,996			2,544,169		691,643		(4,609,354		)	846,018
Net property, plant and equipment	—		291,799			76,384		199,214		(260,755		)	306,642
Debt issuance costs, net	—		89,960			—		—		—			89,960
Deferred income taxes	—		—			—		35,734		—			35,734
Goodwill	—		2,483,240			732,771		162,920		—			3,378,931
Identifiable intangible assets, net	—		329,408			1,811,914		330,751		—			2,472,073
Other non-current assets	—		1,209			186		94,724		(90,900		)	5,219
Intercompany loan receivables	—		789,037			421,051		—		(1,210,088		)	—
Intercompany investments	705,089		348,120			371,682		—		(1,424,891		)	—
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	17,339		$	12,147	$	25,360	$	—		$	54,846
Accrued expenses and other	—		297,686			246,871		80,664		(196,730		)	428,491
Intercompany payables	5,526		980,902			2,628,650		614,936		(4,230,014		)	—
Current installments of long-term debt	—		26,100			—		—		—			26,100
Income taxes payable	—		—			1,527		2,572		—			4,099
Deferred income taxes	—		—			—		17,219		—			17,219
Total current liabilities	5,526		1,322,027			2,889,195		740,751		(4,426,744		)	530,755
Long-term debt, net of current installments and discount	—		4,856,928			—		—		—			4,856,928
Non-current tax liabilities	—		29,422			4,373		20,194		—			53,989
Deferred income taxes	—		42,161			760,615		57,294		—			860,070
Other non-current liabilities	652		122,509			9,023		1,176		—			133,360
Intercompany loan payables	—		414,369			770,000		25,720		(1,210,089		)	—
Total liabilities	6,178		6,787,416			4,433,206		845,135		(5,636,833		)	6,435,102
Total equity	699,475		(235,647		)	1,524,951		669,851		(1,959,155		)	699,475
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577

20

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	87,771	$	118	$	118,662	$	—		$	206,949
Accounts receivable, net	—		184,723		71,457		151,398		—			407,578
Inventories, net	—		54,809		101,779		101,751		(76,772		)	181,567
Deferred income taxes	—		14,991		6,610		2,020		—			23,621
Prepaid expenses and other	—		35,832		5,434		321,427		(309,532		)	53,161
Intercompany receivables	166		1,687,528		2,326,181		21,241		(4,035,116		)	—
Total current assets	564		2,065,654		2,511,579		716,499		(4,421,420		)	872,876
Net property, plant and equipment	—		311,122		80,963		223,987		(282,347		)	333,725
Debt issuance costs, net	—		102,054		—		—		—			102,054
Deferred income taxes	—		—		—		31,459		—			31,459
Goodwill	—		2,483,240		732,771		162,650		—			3,378,661
Identifiable intangible assets, net	—		361,640		1,829,452		358,109		—			2,549,201
Other non-current assets	—		715		192		94,662		(90,900		)	4,669
Intercompany loan receivables	—		990,972		404,688		—		(1,395,660		)	—
Intercompany investments	901,902		432,884		372,093		—		(1,706,879		)	—
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	15,266	$	14,929	$	20,121	$	—		$	50,316
Accrued expenses and other	—		185,790		246,977		77,843		(181,635		)	328,975
Intercompany payables	4,110		852,892		2,559,407		618,707		(4,035,116		)	—
Current installments of long-term debt	—		26,311		—		—		—			26,311
Income taxes payable	—		—		3,368		—		—			3,368
Deferred income taxes	—		—		—		2,199		—			2,199
Total current liabilities	4,110		1,080,259		2,824,681		718,870		(4,216,751		)	411,169
Long-term debt, net of current installments and discount	—		4,865,503		—		—		—			4,865,503
Non-current tax liabilities	—		28,850		4,284		20,548		—			53,682
Deferred income taxes	—		231,713		718,930		53,141		—			1,003,784
Other non-current liabilities	281		38,667		334		1,150		—			40,432
Intercompany loan payables	—		399,690		780,000		215,970		(1,395,660		)	—
Total liabilities	4,391		6,644,682		4,328,229		1,009,679		(5,612,411		)	6,374,570
Total equity	898,075		103,599		1,603,509		577,687		(2,284,795		)	898,075
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645

21

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	144,440		$	1,606		$	29,189		$	—		$	175,235
Sales	—			69,469			250,425			217,734			(247,692		)	289,936
Total revenue	—			213,909			252,031			246,923			(247,692		)	465,171
Rental expenses	37			70,687			4,329			53,929			(41,944		)	87,038
Cost of sales	39			76,573			162,673			90,636			(247,614		)	82,307
Gross profit (loss)	(76		)	66,649			85,029			102,358			41,866			295,826
Selling, general and administrative expenses	1,085			73,021			42,549			54,000			(70		)	170,585
Research and development expenses	—			6,241			6,535			5,457			—			18,233
Acquired intangible asset amortization	—			15,737			19,718			13,299			—			48,754
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(1,161		)	(226,928		)	16,227			29,602			41,936			(140,324		)
Non-operating intercompany transactions	—			5,958			(20,244		)	(22,982		)	37,268			—
Interest income and other	—			17,301			3,063			47			(20,284		)	127
Interest expense	—			(104,834		)	(17,221		)	(34		)	20,284			(101,805		)
Foreign currency gain (loss)	—			3,839			349			(336		)	—			3,852
Derivative instruments loss	—			(4,297		)	—			—			—			(4,297		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,161		)	(308,961		)	(17,826		)	6,297			79,204			(242,447		)
Income tax expense (benefit)	—			(110,451		)	24,228			(3,507		)	—			(89,730		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,161		)	(198,510		)	(42,054		)	9,804			79,204			(152,717		)
Equity in earnings (loss) of subsidiaries	(151,556		)	(34,014		)	9,804			—			175,766			—
Earnings (loss) from continuing operations	(152,717		)	(232,524		)	(32,250		)	9,804			254,970			(152,717		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(152,717	)	$	(232,524	)	$	(32,250	)	$	9,804		$	254,970		$	(152,717	)
Total comprehensive income (loss)	$	(153,825	)	$	(233,632	)	$	(33,358	)	$	8,696		$	258,294		$	(153,825	)

22

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	155,244		$	1,013		$	33,988		$	—		$	190,245
Sales	—			74,428			196,572			160,448			(189,014		)	242,434
Total revenue	—			229,672			197,585			194,436			(189,014		)	432,679
Rental expenses	13			61,149			3,328			56,413			(30,521		)	90,382
Cost of sales	29			47,596			144,151			59,251			(191,702		)	59,325
Gross profit (loss)	(42		)	120,927			50,106			78,772			33,209			282,972
Selling, general and administrative expenses	621			120,228			47,902			36,291			(59		)	204,983
Research and development expenses	—			8,454			8,265			3,678			—			20,397
Acquired intangible asset amortization	—			20,414			18,088			7,959			—			46,461
Operating earnings (loss)	(663		)	(28,169		)	(24,149		)	30,844			33,268			11,131
Non-operating intercompany transactions	—			8,300			(101		)	(28,829		)	20,630			—
Interest income and other	—			18,510			3,063			40			(20,709		)	904
Interest expense	—			(108,622		)	(17,661		)	(84		)	20,709			(105,658		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency loss	—			(5,943		)	(135		)	(1,694		)	—			(7,772		)
Derivative instruments gain	—			10,556			—			—			—			10,556
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(663		)	(107,532		)	(38,983		)	277			53,898			(93,003		)
Income tax expense (benefit)	—			(18,526		)	(8,917		)	(3,613		)	—			(31,056		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(663		)	(89,006		)	(30,066		)	3,890			53,898			(61,947		)
Equity in earnings (loss) of subsidiaries	(61,912		)	(25,033		)	4,540			—			82,405			—
Earnings (loss) from continuing operations	(62,575		)	(114,039		)	(25,526		)	3,890			136,303			(61,947		)
Earnings (loss) from discontinued operations, net of tax	—			(1,527		)	—			650			249			(628		)
Net earnings (loss)	$	(62,575	)	$	(115,566	)	$	(25,526	)	$	4,540		$	136,552		$	(62,575	)
Total comprehensive income (loss)	$	(64,320	)	$	(117,311	)	$	(27,271	)	$	2,795		$	141,787		$	(64,320	)

23

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	280,204		$	3,187		$	58,402		$	—		$	341,793
Sales	—			135,338			455,780			426,200			(446,401		)	570,917
Total revenue	—			415,542			458,967			484,602			(446,401		)	912,710
Rental expenses	80			139,478			7,620			108,040			(82,388		)	172,830
Cost of sales	45			141,914			279,649			183,470			(439,469		)	165,609
Gross profit (loss)	(125		)	134,150			171,698			193,092			75,456			574,271
Selling, general and administrative expenses	1,978			152,303			89,951			102,887			(173		)	346,946
Research and development expenses	—			11,863			13,279			10,581			—			35,723
Acquired intangible asset amortization	—			32,162			39,890			27,391			—			99,443
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(2,103		)	(260,756		)	28,578			52,233			75,629			(106,419		)
Non-operating intercompany transactions	—			(668		)	(28,526		)	(30,989		)	60,183			—
Interest income and other	—			34,501			12,891			77			(47,247		)	222
Interest expense	—			(216,850		)	(34,358		)	(39		)	47,247			(204,000		)
Foreign currency gain	—			3,379			303			406			—			4,088
Derivative instruments loss	—			(4,300		)	—			—			—			(4,300		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,103		)	(444,694		)	(21,112		)	21,688			135,812			(310,409		)
Income tax expense (benefit)	—			(190,439		)	56,485			22,645			—			(111,309		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,103		)	(254,255		)	(77,597		)	(957		)	135,812			(199,100		)
Equity in earnings (loss) of subsidiaries	(196,997		)	(84,764		)	(957		)	—			282,718			—
Earnings (loss) from continuing operations	(199,100		)	(339,019		)	(78,554		)	(957		)	418,530			(199,100		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Total comprehensive income (loss)	$	(198,915	)	$	(338,834	)	$	(78,369	)	$	(772	)	$	417,975		$	(198,915	)

24

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	305,712		$	3,253		$	69,443		$	—		$	378,408
Sales	—			143,637			416,255			322,348			(412,085		)	470,155
Total revenue	—			449,349			419,508			391,791			(412,085		)	848,563
Rental expenses	13			123,498			8,170			113,335			(57,283		)	187,733
Cost of sales	54			97,731			253,909			119,908			(356,046		)	115,556
Gross profit (loss)	(67		)	228,120			157,429			158,548			1,244			545,274
Selling, general and administrative expenses	1,129			202,656			92,565			70,254			(179		)	366,425
Research and development expenses	—			15,356			16,521			6,302			—			38,179
Acquired intangible asset amortization	—			41,651			36,367			15,989			—			94,007
Operating earnings (loss)	(1,196		)	(31,543		)	11,976			66,003			1,423			46,663
Non-operating intercompany transactions	—			60,252			58,754			(52,353		)	(66,653		)	—
Interest income and other	—			36,194			6,126			69			(41,327		)	1,062
Interest expense	—			(219,761		)	(35,218		)	(94		)	41,327			(213,746		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency gain (loss)	—			5,480			(213		)	(8,464		)	—			(3,197		)
Derivative instruments gain (loss)	—			10,040			—			—			—			10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,196		)	(141,502		)	41,425			5,161			(65,230		)	(161,342		)
Income tax expense (benefit)	—			(46,097		)	(4,183		)	(5,744		)	—			(56,024		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,196		)	(95,405		)	45,608			10,905			(65,230		)	(105,318		)
Equity in earnings (loss) of subsidiaries	(106,166		)	55,260			10,814			—			40,092			—
Earnings (loss) from continuing operations	(107,362		)	(40,145		)	56,422			10,905			(25,138		)	(105,318		)
Earnings (loss) from discontinued operations, net of tax	—			(2,394		)	(2		)	(91		)	443			(2,044		)
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Total comprehensive income (loss)	$	(109,781	)	$	(44,958	)	$	54,001		$	8,395		$	(17,438	)	$	(109,781	)

25

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	3,518			145,948			116,189			95,906			(101,083		)	260,478
Net cash provided (used) by operating activities	(195,582		)	(193,071		)	37,635			94,949			317,447			61,378
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(55,257		)	(3,587		)	(30,561		)	57,434			(31,971		)
Businesses acquired in purchase transaction, net of cash acquired	—			—			(4,500		)	(113		)	—			(4,613		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(424		)	(3,711		)	(95		)	—			(4,230		)
Net cash provided (used) by investing activities	—			(55,681		)	(11,798		)	(30,769		)	57,434			(40,814		)
Cash flows from financing activities:
Settlement of profits interest units	(1,416		)	—			—			—			—			(1,416		)
Repayments of long-term debt and capital lease obligations	—			(13,240		)	—			(31		)	—			(13,271		)
Proceeds (payments) on intercompany loans	—			216,613			(26,363		)	(190,250		)	—			—
Proceeds (payments) on intercompany investments	196,998			84,540			408			92,935			(374,881		)	—
Net cash provided (used) by financing activities	195,582			287,913			(25,955		)	(97,346		)	(374,881		)	(14,687		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			841			—			841
Net increase (decrease) in cash and cash equivalents	—			39,161			(118		)	(32,325		)	—			6,718
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	126,932		$	—		$	86,337		$	—		$	213,667

26

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities	2,767			145,087			(12,136		)	(49,950		)	61,987			147,755
Net cash provided (used) by operating activities	(104,595		)	102,548			44,284			(39,136		)	37,292			40,393
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(90,855		)	(8,962		)	(67,434		)	119,179			(48,072		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(49		)	(2,375		)	(134		)	—			(2,558		)
Net cash provided (used) by investing activities	—			(90,904		)	(11,337		)	(67,568		)	119,179			(50,630		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Repayments of long-term debt and capital lease obligations	—			(52,959		)	—			33			—			(52,926		)
Payment of debt issuance costs	—			(21,122		)	—			—			—			(21,122		)
Proceeds (payments) on intercompany loans	—			14,786			(16,371		)	1,585			—			—
Proceeds (payments) on intercompany investments	106,167			(56,265		)	(16,576		)	123,145			(156,471		)	—
Net cash provided (used) by financing activities	104,595			(115,560		)	(32,947		)	124,763			(156,471		)	(75,620		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(1,676		)	—			(1,676		)
Net increase (decrease) in cash and cash equivalents	—			(103,916		)	—			16,383			—			(87,533		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	172,872		$	—		$	122,347		$	—		$	295,617

27

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and accompanying notes included in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in our “Risk Factors.” (Part II, Item 1A.), including those previously disseminated in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

GENERAL

We are a leading global medical technology company devoted to the development and commercialization of innovative products and therapies designed to improve outcomes while helping to reduce the overall cost of patient care. Our primary businesses serve the advanced wound therapeutics and regenerative medicine markets and we are engaged in the rental and sale of our products throughout the United States and in over 75 countries worldwide through direct sales and indirect operations. We are owned 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.

Our advanced wound therapeutics ("AWT") business is focused on the development and commercialization of AWT devices and dressings. Our AWT business is primarily engaged in commercializing several technology platforms, including negative pressure wound therapy (“NPWT”), advanced dressings, negative pressure surgical management (“NPSM”) and epidermal harvesting. Our AWT dressings are used for the management of chronic and acute wounds. Our AWT business is primarily conducted by KCI and its operating subsidiaries, including Systagenix. Key brands in our AWT business include the V.A.C. NPWT line of products, Prevena, ABThera, CelluTome, Promogran, Tielle, and Adaptic.

Our Regenerative Medicine business is primarily focused on the development and commercialization of regenerative and reconstructive acellular tissue matrices for use in general and reconstructive surgical procedures to repair soft tissue defects. Key brands within our product portfolio include our human tissue based AlloDerm and porcine tissue based Strattice in various configurations designed to meet the needs of patients and caregivers. In addition to our acellular tissue matrices, our Regenerative Medicine business markets autologous fat grafting solutions, such as Revolve, and distributes SPY Elite, a real-time operating room-based tissue perfusion imaging system, both of which are complementary to our tissue matrix business.

Our customers include acute care hospitals, ambulatory surgical centers, and long-term care facilities, with whom we contract directly or through group purchasing organizations (“GPOs”). We bill these facilities directly for the rental and sale of our products. In the U.S. home care setting, we provide products and therapies to patients in the home and bill third-party payers, such as Medicare and private insurance, directly. Outside of the U.S., most of our revenue is generated in the acute care setting. Our sales and marketing organizations are focused on the training and education of care-givers on the proper application of our products and therapies, particularly with general, plastic and orthopedic surgeons, as well as wound ostomy care nurses. We also drive adoption of our products with the support of extensive clinical efficacy data, as well as the economic value proposition of our products to reduce the overall cost of care.

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RESULTS OF OPERATIONS

We have two reportable operating segments which correspond to our two businesses: Advanced Wound Therapeutics ("AWT") and Regenerative Medicine. Our AWT business is conducted by KCI and its subsidiaries, including Systagenix, while our Regenerative Medicine business is conducted by LifeCell and its subsidiaries. We have two primary geographic regions: the Americas, which is comprised principally of the United States and includes Canada, Puerto Rico and Latin America; and EMEA/APAC, which is comprised of Europe, the Middle East, Africa and the Asia Pacific region.

Historically, we have experienced a seasonal slowing of unit demand for our NPWT devices and related dressings beginning in the fourth quarter and continuing into the first quarter, which we believe has been caused by year-end clinical treatment patterns, such as the postponement of elective surgeries and increased discharges of individuals from the acute care setting around the winter holidays. We typically experience a slowing of demand for our AWT dressings in the fourth quarter. Although we do not know if our historical experience will prove to be indicative of future periods, similar slow-downs may occur in subsequent periods.

Revenue for each of our geographic regions in which we operate is disclosed for each of our businesses. Certain prior period amounts have been reclassified to conform to the 2014 presentation.

Revenue by Operating Segment

The following table sets forth, for the periods indicated, business unit revenue as well as the percentage change in each line item, comparing the second quarter and first six months of 2014 to the second quarter and first six months of 2013 (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014		2013		% Change		2014		2013		% Change
Advanced Wound Therapeutics revenue:
Rental	$	173,629	$	189,232	(8.2	)%	$	338,606	$	375,155	(9.7	)%
Sales	178,026		128,533		38.5		349,028		248,492		40.5
Total – Advanced Wound Therapeutics	351,655		317,765		10.7		687,634		623,647		10.3
Regenerative Medicine revenue:
Rental	1,606		1,013		58.5		3,187		3,253		(2.0	)
Sales	111,910		113,901		(1.7	)	221,889		221,663		0.1
Total – Regenerative Medicine	113,516		114,914		(1.2	)	225,076		224,916		0.1
Total consolidated revenue:
Rental	175,235		190,245		(7.9	)	341,793		378,408		(9.7	)
Sales	289,936		242,434		19.6		570,917		470,155		21.4
Total consolidated revenue	$	465,171	$	432,679	7.5	%	$	912,710	$	848,563	7.6	%

The increase in total revenue compared to the prior-year periods was due to higher AWT sales revenue, partially offset by lower AWT rental revenue. Foreign currency exchange rate movements did not have a significant impact on worldwide revenue compared to the prior years.

The increase in worldwide AWT revenue from the comparable prior-year periods was attributable primarily to revenues from Systagenix, which was acquired in the fourth quarter of 2013, and increased revenue from expansion products and certain markets outside the U.S., partially offset by lower rental revenue in established markets. The lower rental revenue in established markets resulted from a combination of lower volumes and lower average pricing. We anticipate our average global pricing will decline moderately in the future due to increased competition, healthcare reform and declining reimbursement. Foreign currency exchange rate movements did not have a significant impact on worldwide AWT revenue during the second quarter and first six months of 2014 compared to the prior year periods.

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Revenue by Geography

The following table sets forth, for the periods indicated, rental and sales revenue by geography as well as the percentage change in each line item, comparing the second quarter and first six months of 2014 to the second quarter and first six months of 2013 (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014		2013		% Change		2014		2013		% Change
Americas revenue:
Rental	$	150,404	$	160,735	(6.4	)%	$	292,008	$	318,614	(8.4	)%
Sales	196,263		191,738		2.4		389,666		373,527		4.3
Total – Americas	346,667		352,473		(1.6	)	681,674		692,141		(1.5	)
EMEA/APAC revenue:
Rental	24,831		29,510		(15.9	)	49,785		59,794		(16.7	)
Sales	93,673		50,696		84.8		181,251		96,628		87.6
Total – EMEA/APAC	118,504		80,206		47.7		231,036		156,422		47.7
Total consolidated revenue:
Rental	175,235		190,245		(7.9	)	341,793		378,408		(9.7	)
Sales	289,936		242,434		19.6		570,917		470,155		21.4
Total consolidated revenue	$	465,171	$	432,679	7.5	%	$	912,710	$	848,563	7.6	%

Revenue Relationship

The following table sets forth, for the periods indicated, the percentage relationship of each item to total revenue in the period, as well as the changes in each line item:

	Three months ended June 30,							Six months ended June 30,
	2014		2013		Change			2014		2013		Change
Advanced Wound Therapeutics revenue	75.6	%	73.4	%	220		bps	75.3	%	73.5	%	180		bps
Regenerative Medicine revenue	24.4		26.6		(220	)	bps	24.7		26.5		(180	)	bps
Total consolidated revenue	100.0	%	100.0	%				100.0	%	100.0	%
Americas revenue	74.5	%	81.5	%	(700	)	bps	74.7	%	81.6	%	(690	)	bps
EMEA/APAC revenue	25.5		18.5		700		bps	25.3		18.4		690		bps
Total consolidated revenue	100.0	%	100.0	%				100.0	%	100.0	%
Rental revenue	37.7	%	44.0	%	(630	)	bps	37.4	%	44.6	%	(720	)	bps
Sales revenue	62.3		56.0		630		bps	62.6		55.4		720		bps
Total consolidated revenue	100.0	%	100.0	%				100.0	%	100.0	%

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Rental Expenses

The following table presents rental expenses for the periods indicated as well as the percentage change in each line item, comparing the second quarter and first six months of 2014 to the second quarter and first six months of 2013 (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014		2013		% Change		2014		2013		% Change
Rental expenses	$	87,038	$	90,382	(3.7	)%	$	172,830	$	187,733	(7.9	)%

Rental, or field, expenses are comprised of both fixed and variable costs including facilities, field service, sales force compensation and royalties associated with our rental products. Rental expenses during the second quarter and first six months of 2014 decreased from the prior-year periods due primarily to a decrease in depreciation related to the fixed asset step up associated with purchase accounting, partially offset by an increase in operational expenses related to the sales force.

Cost of Sales

The following table presents cost of sales as well as the percentage change in each line item, comparing the second quarter and first six months of 2014 to the second quarter and first six months of 2013 (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014		2013		% Change		2014		2013		% Change
Cost of sales	$	82,307	$	59,325	38.7	%	$	165,609	$	115,556	43.3	%

Cost of sales includes manufacturing costs, product costs and royalties associated with our “for sale” products. The increase in cost of sales from the prior-year periods was due primarily to increased sales volumes from Systagenix, which was acquired in the fourth quarter of 2013. The increase is also due to $6.7 million of additional cost of sales recorded in the first quarter of 2014 associated with the Systagenix acquisition purchase accounting adjustments related to the step up in value of inventory.

Gross Profit Margin

The following table presents the gross profit margin (calculated as gross profit divided by total revenue for the periods indicated):

	Three months ended June 30,							Six months ended June 30,
	2014		2013		Change			2014		2013		Change
Gross profit margin	63.6	%	65.4	%	(180	)	bps	62.9	%	64.3	%	(140	)	bps

The gross profit margin decrease during the second quarter of 2014 compared to the prior-year period was due primarily to a decline in average global pricing due to increased competition, healthcare reform, declining reimbursement and higher operational expenses related to the sales force. This decrease was partially offset by a decrease in depreciation expense related to the fixed asset step up. The gross profit margin decrease during the first six months of 2014 compared to the prior-year period was due primarily to a decline in average global pricing due to increased competition, healthcare reform, declining reimbursement, higher operational expenses related to the sales force and higher cost of sales related to the inventory step up associated with purchase accounting. This decrease was partially offset by a decrease in depreciation expense related to the fixed asset step up.

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Selling, General and Administrative Expenses

The following table presents selling, general and administrative expenses and the percentage relationship to total revenue (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014		2013		% Change		2014		2013		% Change
Selling, general and administrative expenses	$	170,585	$	204,983	(16.8	)%	$	346,946	$	366,425	(5.3	)%

Selling, general and administrative (“SG&A”) expenses generally include administrative labor, incentive and sales compensation costs, insurance costs, professional fees, depreciation, bad debt expense and information systems costs, but exclude rental sales force compensation costs. The decrease in SG&A expenses from the prior-year periods is due primarily to the $30.3 million fixed asset impairment charge and the write-off of $4.0 million and $13.4 million of in-process research and development costs due to the discontinuation of certain projects recorded during the second quarter and first six months of 2013, respectively.

Research and Development Expenses

The following table presents research and development expenses and the percentage relationship to total revenue (dollars in thousands):

	Three months ended June 30,									Six months ended June 30,
	2014			2013			Change			2014			2013			Change
Research and development expenses	$	18,233		$	20,397		(10.6)%			$	35,723		$	38,179		(6.4)%
As a percent of total revenue	3.9		%	4.7		%	(80	)	bps	3.9		%	4.5		%	(60	)	bps

Research and development expenses relate to our investments in clinical studies and the development of new and enhanced products and therapies. Our research and development efforts include the development of new and synergistic technologies across the continuum of wound care, including tissue regeneration, preservation and repair, as well as new applications of negative pressure technology. Our research and development program is also leveraging our core understanding of biological tissues in order to develop biosurgery products in our Regenerative Medicine business.

Acquired Intangible Asset Amortization

In connection with the 2011 merger and the 2013 Systagenix acquisition, we recorded $2.89 billion and $253.6 million, respectively, of identifiable intangible assets during the fourth quarters of 2011 and 2013, respectively. During the second quarters of 2014 and 2013, we recorded $48.8 million and $46.5 million, respectively, of amortization expense associated with these acquired intangible assets. During the first six months of 2014 and 2013, we recorded $99.4 million and $94.0 million, respectively, of amortization expense associated with these acquired intangible assets.

Wake Forest Settlement

On June 30, 2014 , KCI entered into a settlement and release agreement (the “Settlement Agreement”) with Wake Forest to fully and finally resolve the pending patent disputes between them regarding Wake Forest’s NPWT patents formerly licensed to KCI. To fully resolve all the pending disputes between KCI and Wake Forest, KCI agreed to pay Wake Forest retrospective U.S. patent royalties in the amount of $280 million, according to the following schedule: $80 million to be paid in July 2014, $85 million to be paid in June 2015, $85 million to be paid in June 2016, and $30 million to be paid in June 2017. As a result, we recorded patent settlement charges of $198.6 million in the second quarter of 2014 representing the net present value of payments under the Settlement Agreement, net of the $63.2 million previously existing accrual.

Interest Expense

Interest expense decreased to $101.8 million and $204.0 million in the second quarter and first six months of 2014, respectively, compared to $105.7 million and $213.7 million in the comparable prior-year periods due to lower interest rates.

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Foreign Currency Gain (Loss)

Foreign currency transaction gains were $3.9 million and $4.1 million during the second quarter and first six months of 2014, respectively compared to losses of $7.8 million and $3.2 million in the prior-year periods. The revaluation of the Term E-1 EURO loan to U.S. dollars represented a foreign currency transaction gain of $3.3 million and $3.1 million during the second quarter and first six months of 2014, respectively. The revaluation of the Term E-1 EURO loan to U.S. dollars represented a foreign currency transaction loss $5.5 million recorded during the second quarter of 2013 and a $4.3 million foreign currency transaction gain recorded during the first six months of 2013.

Loss from Discontinued Operations

No gains or losses from discontinued operations were recorded in the second quarter and first six months of 2014. During the second quarter and first six months of 2013, we recorded a loss from discontinued operations, net of tax, of $0.6 million and $2.0 million.

LIQUIDITY AND CAPITAL RESOURCES

General

We require capital principally for working capital requirements, capital expenditures and debt service requirements. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities. Working capital is required principally to finance accounts receivable and inventory. Our working capital requirements vary from period-to-period depending on manufacturing volumes, the timing of shipments and the payment cycles of our customers and payers.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases, open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Sources of Capital

Based upon the current level of operations, we believe our existing capital resources, as well as cash flows from operating activities and availability under our Revolving Credit Facility will be adequate to meet our anticipated cash requirements for at least the next twelve months. Cash flows related to discontinued operations were not material for the first six months of 2013 and therefore have not been separately disclosed in the condensed consolidated statements of cash flows. We do not anticipate the absence of cash flows from discontinued operations to significantly affect our liquidity and capital resources. During the first six months of 2014 and 2013, our primary source of capital was cash from operations. The following table summarizes the net cash provided and used by operating activities, investing activities and financing activities (in thousands):

	Six months ended June 30,
	2014			2013
Net cash provided by operating activities	$	61,378		$	40,393
Net cash used by investing activities	(40,814		)	(50,630		)
Net cash used by financing activities	(14,687		)	(75,620		)
Effect of exchange rates changes on cash and cash equivalents	841			(1,676		)
Net increase (decrease) in cash and cash equivalents	$	6,718		$	(87,533	)

As of June 30, 2014 and December 31, 2013, our principal sources of liquidity consisted of $213.7 million and $206.9 million, respectively, of cash and cash equivalents. We also had availability of $178.7 million and $178.8 million under our Revolving Credit Facility as of June 30, 2014 and December 31, 2013, respectively.

Capital Expenditures

During the first six months of 2014 and 2013, we made capital expenditures of $28.4 million and $40.0 million, respectively. Capital expenditures during the first six months of 2014 and 2013 related primarily to expanding the rental fleet and information technology projects and purchases.

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Senior Secured Credit Facility

The following table sets forth the amounts owed under the Senior Secured Credit Facility, the effective interest rates on such outstanding amounts, and the amount available for additional borrowing thereunder, as of June 30, 2014 (dollars in thousands):

Senior Secured Credit Facility	Maturity Date	Effective Interest Rate			Amount Outstanding (1)		Amount Available for Additional Borrowing
Senior Revolving Credit Facility	November 2016	—	%		$	—	$	178,706	(2)
Senior Dollar Term E-1 Credit Facility	May 2018	4.41	%	(3)	1,909,354		—
Senior Euro Term E-1 Credit Facility	May 2018	5.08	%	(3)	323,468		—
Senior Term E-2 Credit Facility	November 2016	4.03	%	(3)	313,217		—
Total					$	2,546,039	$	178,706

_____________________

(1) Amount outstanding includes the original issue discount.

(2) At June 30, 2014, the amount available under the Revolving Credit Facility reflected a reduction of $21.3 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility. In addition, we have $12.1 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility.

(3) The effective interest rate includes the effect of the original issue discount. Excluding the original issue discount, our nominal interest rate as of June 30, 2014 was 4.00% on the Senior Dollar Term E-1 Credit Facility, 4.25% on the Senior Euro Term E-1 Credit Facility and 3.50% on the Senior Term E-2 Credit Facility.

On January 22, 2014, we entered into Amendment No. 5 to our Senior Secured Credit Facility ("Amendment No. 5"). As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the Credit Agreement and Loan Documents, except as revised by the amendment. In connection with Amendment No. 5, Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans were refinanced with Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, respectively. Dollar Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.00% or an adjusted base rate plus 2.00%. Euro Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.25% or an adjusted base rate plus 2.25%.  Term E-2 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 2.50% or an adjusted base rate plus 1.50%.  The Eurocurrency rate shall be subject to a floor of 1.00%, and the adjusted base rate shall be subject to a floor of 2.00%. We paid and expensed fees of $1.8 million as a result of this amendment.

10.5% Second Lien Senior Secured Notes

In November 2011, we issued $1.75 billion aggregate principal amount of 10.5% Second Lien Notes due 2018. Interest on the 10.5% Second Lien Notes accrues at the rate of 10.50% per annum and is payable semi-annually in cash on each May 1 and November 1, beginning on May 1, 2012, to the persons who are registered holders at the close of business on April 15 and October 15 immediately preceding the applicable interest payment date. The 10.5% Second Lien Notes were issued at a discount resulting in an effective interest rate of 10.87%. Under the terms of the registration rights agreements entered into with respect to these notes, additional interest was accrued at a rate of 0.25% and 0.50% from November 4, 2012 to February 4, 2013 and February 5, 2013 to March 15, 2013, respectively, due to delays in the effectiveness of our registration statement.

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12.5% Senior Unsecured Notes

In November 2011, we issued $750.0 million aggregate principal amount of senior 12.5% Unsecured Notes due 2019; $612.0 million of which are still outstanding. Interest on the 12.5% Unsecured Notes accrues at the rate of 12.50% per annum and is payable semi-annually in cash on each May 1 and November 1, beginning on May 1, 2012, to the persons who are registered holders at the close of business on April 15 and October 15 immediately preceding the applicable interest payment date. The 12.5% Unsecured Notes were issued at a discount resulting in an effective interest rate of 12.62%. Under the terms of the registration rights agreements entered into with respect to these notes, additional interest was accrued at a rate of 0.25% and 0.50% from November 4, 2012 to February 4, 2013 and February 5, 2013 to March 15, 2013, respectively, due to delays in the effectiveness of our registration statement.

Convertible Senior Notes

In 2008, we issued $690.0 million aggregate principal amount of 3.25% convertible senior notes due 2015 (the "Convertible Notes").  The Convertible Notes are governed by the terms of an indenture dated as of April 21, 2008 (the “Convertible Notes Indenture”). As a result of the Merger, the holders of the Convertible Notes have the right to require us to repurchase some or all of their Convertible Notes as provided in the Convertible Notes Indenture. The repurchase price is the principal amount of the Convertible Notes plus accrued interest. As of June 30, 2014, $101,000 aggregate principal amount of the notes remained outstanding.

Covenants

As of June 30, 2014, we were in compliance with all covenants under our Senior Secured Credit Facility, 10.5% Second Lien Notes, 12.5% Unsecured Notes, and the Convertible Notes.

For further information on our long-term debt, see Note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Interest Rate Protection

At June 30, 2014 and December 31, 2013, we had three interest rate swap agreements to convert $1.5 billion of our outstanding variable rate debt to a fixed rate basis. These agreements became effective on December 31, 2013. The aggregate notional amount of the interest rate swaps decreases quarterly by amounts ranging from $1.7 million to $56.4 million until maturity. Our interest rate protection agreements have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period.

Previously held interest rate cap agreements expired on December 31, 2013.

For further information on our interest rate protection agreements, see Note 5 of the notes to the condensed consolidated financial statements.

Contractual Obligations

On June 30, 2014 , KCI entered into a settlement and release agreement (the “Settlement Agreement”) with Wake Forest to fully and finally resolve the pending patent disputes between them regarding Wake Forest’s NPWT patents formerly licensed to KCI. The Settlement Agreement resolves all disputes between KCI and Wake Forest, and their respective affiliates, related to Wake Forest’s NPWT patents that were the subject of a 1993 license agreement between KCI and Wake Forest, and detailed in our previous disclosures. To fully resolve all the pending disputes between KCI and Wake Forest, KCI agreed to pay Wake Forest retrospective U.S. patent royalties in the amount of $280 million, according to the following schedule (in thousands):

	2014		2015-2016		2017-2018		Thereafter		Total
Settlement Agreement obligations	$	80,000	$	170,000	$	30,000	$	—	$	280,000

Other than the Settlement Agreement, there have been no material changes, outside of the ordinary course of business, in our outstanding contractual obligations since December 31, 2013.

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OTHER MATTERS

Critical Accounting Estimates

For a description of our critical accounting estimates, please see our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 under the heading Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates."

Recently Issued Accounting Standards

See note 1(e) of the notes to condensed consolidated financial statements included in this report for a discussion of recently issued accounting standards.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including fluctuations in interest rates and variability in currency exchange rates. There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. For a description of our policies, procedures and internal processes governing our management of market risk and the use of financial instruments to manage our exposure to such risk, please see our Annual Report for the fiscal year ended December 31, 2013 under the heading “Quantitative and Qualitative Disclosures About Market Risk.”

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Our management, with the participation of the Chief Executive Officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and principal financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting (as such term is defined by paragraph (d) of Rule 13a-15) under the Exchange Act, during the second fiscal quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Incorporated in this Item 1, by reference, are the legal proceedings described in note 7 of the notes to condensed consolidated financial statements included in this report under the heading "Commitments and Contingencies: Legal Proceedings."

ITEM 1A.RISK FACTORS

There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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ITEM 6.EXHIBITS

A list of all exhibits filed or included as part of this quarterly report on Form 10-Q is as follows:
Exhibit Number	Description
3.1	Declaration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012).
3.2	Certificate of Registration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.4 to our Registration Statement on Form S-4 filed on October 1, 2012).
3.3	Amended and Restated Limited Partnership Agreement of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012).
†10.1	Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014.
†31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
†31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
†32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
	†      Exhibit filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Antonio, State of Texas on July 30, 2014.

	CENTAUR GUERNSEY L.P. INC.
	(REGISTRANT)
Date: July 30, 2014	By:	/s/ Joseph F. Woody
		Joseph F. Woody
		Principal Executive Officer
		(Duly Authorized Officer)
Date: July 30, 2014	By:	/s/ Robert P. Hureau
		Robert P. Hureau
		Principal Financial Officer
		(Duly Authorized Officer)

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EXHIBITS

Exhibit Number	Description
3.1	Declaration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012).
3.2	Certificate of Registration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.4 to our Registration Statement on Form S-4 filed on October 1, 2012).
3.3	Amended and Restated Limited Partnership Agreement of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012).
†10.1	Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014.
†31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
†31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
†32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014.
	†      Exhibit filed herewith.

40

EX-10.1

Exhibit 10.1

SETTLEMENT AND RELEASE AGREEMENT

THIS SETTLEMENT AND RELEASE AGREEMENT(the “Settlement Agreement”) is made as of June 30, 2014 (“Effective Date”) between Kinetic Concepts, Inc., a corporation organized under the laws of Texas and having a place of business at 12930 Interstate 10 West, San Antonio, Texas, 78249, and its Affiliates, including its subsidiaries, their successors and assigns, including but not limited to KCI Licensing, Inc., KCI USA, Inc., KCI Medical Resources, Medical Holdings, and KCI Manufacturing (collectively “KCI”) and Wake Forest University Health Sciences, a non-profit corporation organized and existing under the laws of the State of North Carolina and located at Medical Center Boulevard, Winston-Salem, North Carolina 27157, and its Affiliates, including its subsidiaries, their successors and assigns (collectively “WFUHS”).

WHEREAS, KCI and WFUHS (collectively “the Parties”) are currently involved in litigation in the United States and Germany and desire to fully and finally resolve all disputes with respect to the Litigations (defined below), the Patents (defined below), the Products (defined below), and the License Agreement (defined below);

WHEREAS, the Parties entered into a Confidential Binding Term Sheet Between Wake Forest University Health Sciences and Kinetic Concepts, Inc., on June 19, 2014 to fully and finally resolve all disputes with respect to the Litigations, the Patents, the Products, and the License Agreement (the “Binding Term Sheet”), wherein the Parties agreed to enter into a Definitive Agreement;

WHEREAS, the Parties desire that this Settlement Agreement shall be the Definitive Agreement between the Parties set forth in the Binding Term Sheet; and

WHEREAS, the Parties acknowledge that full, valid, and binding consideration exists for the execution of this Settlement Agreement and that such consideration consists of the mutual promises contained herein, and the performance by each of the Parties of their respective mutual and independent covenants and representations as set forth herein.

NOW THEREFORE, in consideration of the terms, conditions and mutual obligations set forth herein and understanding the meaning and legal effect of entering into this Agreement, the Parties hereto stipulate, agree, warrant, and represent as follows:

1. Definitions. As used herein, the following terms have the following meanings:

a. “Affiliate,” in relation to any Party, shall mean any corporation, partnership, proprietorship, person or other entity controlled by, controlling, or under common control with such Party, and shall include any corporation, or partnership, proprietorship, person or other entity directly or indirectly owning, owned by or under common ownership with such Party to the extent of fifty percent (50%) or more the equity or voting shares, including shares owned beneficially by such Party.

b. “Applicable Law” means with respect to any Person, any federal, state or local law (statutory, common, or otherwise), constitution, treaty, convention, ordinance, code, rule,

1

regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

c. “Governmental Authority” means any transnational, domestic or foreign federal, state, or local, governmental authority, department, court, agency or official, including any political subdivision thereof.

d. “License Agreement” means the license agreement entered into between the Parties on October 6, 1993, and all sublicenses, modifications and/or amendments thereto, terminated on or about March 18, 2011.

e. “Litigations” means the lawsuits entitled: Kinetic Concepts, Inc.et al. v. Wake Forest University Health Sciences, Civil Action No. 11-CV-00163-XR pending in the United States District Court for the Western District of Texas, San Antonio Division); Wake Forest University Health Sciences vs. Kinetic Concepts,et al., Civil Action No. 11-CV-00713-XR pending in the United States District Court for the Western District of Texas, San Antonio Division, consolidated with 11-CV-00163-XR; the German nullity proceeding between the Parties, in the German Federal Patent Court regarding EP0620720 (DE 692 24 847), case no. 4 Ni 28/13(EP); and any and all lawsuits filed by either of the Parties against the other Party related to the License Agreement, the Products, or the Patents prior to the Effective Date of this Settlement Agreement.

f. “Patents” means U.S. patents 5,645,081, 5,636,643, 7,198,046, 7,216,651 and foreign equivalents, including but not limited to European Patent 0620720, including their continuations, continuations-in-part, divisionals, reexaminations, reissues, and any other patent sharing common priority with the aforementioned patents.

g. “Products” means all Negative Pressure Wound Therapy and Negative Pressure Technology Platform products and features of such products that were the subject of the License Agreement, or that are the subject of any Litigations, including but not limited to pump sales, pump rentals, canisters, dressing kits, tubing, and any related components for V.A.C. Classic, miniV.A.C., V.A.C.ATS, InfoV.A.C., ActiV.A.C., V.A.C. Simplicity, V.A.C. Instill, V.A.C.Ulta, V.A.C.Via, V.A.C.VeraFlo, AbThera, and Prevena systems, and existing on or before June 19, 2014, including evolutions made to such products in the nature of an insubstantial change in dimension, proportion, components, material, orientation, functionality or materials for component parts, or the general location of existing features or functionalities of such products; provided that such change does not alter the basic operation of such product as provided in such products’ specifications (e.g. applying a negative pressure to the surface of the body in continuous, intermittent, or variable pressure modes).

2

2. Other Definitional and Interpretative Provisions.The words “hereof,” “herein,” and “hereunder”
and words of like import used in this Settlement Agreement shall refer to this Settlement Agreement as a whole and not to any particular provision of this Settlement Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Sections are to Sections of this Settlement Agreement unless otherwise specified. Any singular term in this Settlement Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes,” or “including” are used in this Settlement Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written,” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any person or entity include the successors and permitted assigns of that person or entity. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law.

3. Releases of Claims and Liabilities. WFUHS, on behalf of itself and its Affiliates, subsidiaries, licensees to the Patents, named inventors to the Patents, and successors in interest to the Patents and License Agreement, hereby irrevocably releases, acquits, and forever discharges KCI and its Affiliates, subsidiaries, distributors, suppliers, customers, officers, directors, legal representatives, and successors in interest from any and all claims with respect to the Patents, Products, and/or License Agreement, and from any and all claims brought in the Litigations, including any claims, that could have been brought for activities solely occurring before June 19, 2014. KCI, on behalf of itself and its Affiliates and subsidiaries, hereby irrevocably releases, acquits and forever discharges WFUHS and its Affiliates, subsidiaries, officers, directors, legal representatives, and successors, named inventors to the Patents, and successors in interest from any and all claims with respect to the Patents and/or License Agreement, and from any and all claims brought in the Litigations, including any claims that could have been brought for activities solely occurring before June 19, 2014.

4. Stipulations of Dismissal of the Litigations. For each of the Litigations, each Party shall, and shall cause its counsel in the applicable jurisdictions within 15 (fifteen) days of the Effective Date of this Settlement Agreement to, withdraw its complaints and demands for judicial relief and cause each of its complaints and demands in the Litigations to be dismissed with prejudice. Each Party shall bear all of its own costs, including attorneys fees, associated with the Litigations.

5. Covenant Not to Sue. WFUHS, on behalf of itself and its Affiliates, subsidiaries, and successors in interest to the Patents and License Agreement, further covenants and agrees not to sue or otherwise assert any claim, demand, cause of action, or request for damages or other relief against KCI and its Affiliates, subsidiaries, distributors, suppliers, customers, officers, directors, legal representatives, and successors in interest with respect to the Products or any current uses of the

3

Products occurring prior to June 19, 2014; provided, however, that the Parties agree that the Covenant Not to Sue will not extend to future uses of the Products which future uses are primarily intended to regenerate bone, or to treat and improve the function of heart, brain, and central nervous tissue (but not including uses of Products to cover or protect any such tissues or otherwise heal wounds) (“Future Uses”). WFUHS represents that it has no current knowledge of any such Future Uses.

6. Consideration.In addition to the other consideration set forth in this Settlement Agreement, KCI or its designee will pay to WFUHS or its designee $280,000,000 U.S.(Two Hundred Eighty Million Dollars in United States currency) (“the Settlement Payments”) as full and final payment of all amounts owing under this Settlement Agreement and to resolve the disputes referenced herein, to be paid as follows:

$80,000,000 (eighty million dollars) within 5 (five) business days of the Effective Date of this Settlement Agreement;

$85,000,000 (eighty five million dollars) upon the first anniversary of the Effective Date of this Settlement Agreement;

$85,000,000 (eighty five million dollars) upon the second anniversary of the Effective Date of this Settlement Agreement; and

$30,000,000 (thirty million dollars) upon the third anniversary of the Effective Date of this Settlement Agreement.

The Parties agree there shall be no penalty for pre-payment and no interest shall accrue on the consideration owed by KCI if paid timely. Payment shall be made by wire transfer in U.S. dollars to the following account:

Acct Name: Wake Forest University Health Sciences

Bank: Wells Fargo Bank, N.A.

Acct # 2079900145793   

ABA # 121000248

Swift Code: WFBIUS6S

7. Tax Reporting.The Parties hereby acknowledge, understand and agree that the Settlement Payments due hereunder to WFUHS by, or on behalf of KCI, are payments of retrospective U.S. patent royalties. Accordingly, KCI shall, for Federal and State income tax purposes, report all installments of the Settlement Payments due hereunder in a manner consistent with its prior tax reporting of the royalty payments made to WFUHS pursuant to the License Agreement, the characterization of which was as ordinary and necessary deductions pursuant to Section 162 of the Internal Revenue Code of 1986, as amended. Similarly, WFUHS shall, for Federal and State Income Tax purposes, report all its receipt of each installment of the Settlement Payments in a manner consistent thereof.

4

8. No Admissions. Nothing in this Settlement Agreement or the Binding Term Sheet shall be deemed an admission by either Party.

9. Authority. Each Party warrants and represents to the other Party that (a) such warranting and representing Party is a corporation duly organized, validly existing and in good standing under the Applicable Laws of the state of its incorporation and has the requisite power and authority to enter into this Settlement Agreement and to take actions, or refrain or forebear from taking actions, and grant the releases and covenants not to sue as described herein so as to fully perform its obligations under, and implement the provisions and intent of, this Settlement Agreement, (b) the execution, delivery and performance of this Settlement Agreement has been duly authorized by all corporate actions necessary on the part of such Party, and (c) the individual executing this Settlement Agreement on behalf of such Party has the authority to do so.

10. Amendments / Non-Waiver. Any provision of this Settlement Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party, or in the case of waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

11. Governing Law. This Settlement Agreement shall be governed by and construed and enforced with the Applicable Law of the State of Delaware, without regard to the conflict of law principles of such state, except that any claims relating to Section 6 of this Agreement (Consideration) shall be brought in a jurisdiction and venue of WFUHS’s choosing, and any claims relating to Section 5 (Covenant Not to Sue) shall be brought in a jurisdiction and venue of KCI’s choosing.

12. Remedies. The Parties acknowledge and agree that monetary damages would be an inadequate remedy for violations of this Settlement Agreement and that either Party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance, or injunctive relief, or such other relief as such court may deem just and proper, in order to enforce this Settlement Agreement or prevent any violation of the terms hereof, and to the extent permitted by Applicable Law, each Party waives the posting of a bond and any objection to the imposition of such relief.

13. Integration. This Settlement Agreement contains the entire agreement of the Parties with respect to the subject matter of this Settlement Agreement, and supersedes all prior negotiations, agreements, and understandings with respect thereto, including but not limited to the Binding Term Sheet.

14. Successors and Assigns. To the extent not otherwise granted in this Settlement Agreement, all provisions of this Settlement Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

5

15. Severability. If any term, provision, covenant or restriction of this Settlement Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Settlement Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.

16. Notices. All notices, requests, and other communications to any Party shall be in writing and shall be given,

if to KCI, to:

12930 Interstate 10 West

San Antonio, Texas 78249

Attention: General Counsel

Facsimile No.: (210) 255-6990

if to WFUHS, to:

Medical Center Boulevard

Winston-Salem, North Carolina 27157

Attention: General Counsel

Facsimile No.: (336) 713-4168

17. Counterparts. This Settlement Agreement may be signed in multiple counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

6

Agreed and Accepted by:

KINETIC CONCEPTS, INC.	WAKE FOREST UNIVERSITY HEALTH SCIENCES
By: /s/ John T. Bibb	By: /s/ John D. McConnell
Print Name: John T. Bibb	Print Name: John D. McConnell
Title: Executive Vice President, General Counsel, and Secretary	Title: Chief Executive Officer
Date: June 30, 2014	Date: June 30, 2014

7

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

(PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Joseph F. Woody, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Centaur Guernsey L.P. Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

   (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

   (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

   (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

   (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:       July 30, 2014

 /s/ Joseph F. Woody

Joseph F. Woody

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

(PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

I, Robert P. Hureau, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Centaur Guernsey L.P. Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

   (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

   (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

   (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

   (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

   (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:   July 30, 2014

 /s/ Robert P. Hureau

Robert P. Hureau

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002

     In connection with the Quarterly Report of Centaur Guernsey L.P. Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Joseph F. Woody, as Chief Executive Officer of the Company and Robert P. Hureau, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, to the best of their knowledge, respectively, that (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 30, 2014

 /s/ Joseph F. Woody

Joseph F. Woody

Chief Executive Officer

 /s/ Robert P. Hureau

Robert P. Hureau

Chief Financial Officer

XML

Commitments and Contingencies (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Loss Contingencies [Line Items]
Accrued expenses and other	$ 428,491,000		$ 428,491,000		$ 328,975,000
Other non-current liabilities	133,360,000		133,360,000		40,432,000
Wake Forest settlement	198,578,000	0	198,578,000	0
Demand for Arbitration, Requested Damages			100,000,000
Wake Forest Settlement [Member]
Loss Contingencies [Line Items]
Contractual Obligation	280,000,000		280,000,000
Contractual Obligation, Future Minimum Payments Due, Remainder of Fiscal Year	80,000,000		80,000,000
Contractual Obligation, Due in Next Twelve Months	85,000,000		85,000,000
Contractual Obligation, Due in Second Year	85,000,000		85,000,000
Contractual Obligation, Due in Third Year	30,000,000		30,000,000
Accrued expenses and other	160,378,000		160,378,000		63,176,000
Other non-current liabilities	101,376,000		101,376,000
Wake Forest settlement			$ 198,578,000
Alloderm [Member] | LifeCell Corporation [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	330		330
Repliform [Member] | LifeCell Corporation [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	130		130
Cases Filed in Consolidated Docket [Member] | Repliform [Member] | LifeCell Corporation [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	110		110

XML

Business Acquisition (Details) (USD $)	6 Months Ended			3 Months Ended				6 Months Ended									3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Attenuate [Member]	Jun. 30, 2014 Systagenix [Member]	Dec. 31, 2013 Systagenix [Member]	Jun. 30, 2013 Systagenix [Member]	Jun. 30, 2013 Systagenix [Member]	Jun. 30, 2014 Systagenix [Member] Customer Relationships [Member]	Dec. 31, 2013 Systagenix [Member] Customer Relationships [Member]	Jun. 30, 2014 Systagenix [Member] Developed Technology Rights [Member]	Dec. 31, 2013 Systagenix [Member] Developed Technology Rights [Member]	Jun. 30, 2014 Systagenix [Member] Trade Names [Member]	Dec. 31, 2013 Systagenix [Member] Trade Names [Member]	Jun. 30, 2014 Systagenix [Member] In Process Research and Development [Member]	Dec. 31, 2013 Systagenix [Member] In Process Research and Development [Member]	Dec. 31, 2013 Systagenix [Member] Senior Dollar Term D-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Maximum [Member] Attenuate [Member]
Business Acquisition [Line Items]
Business Acquisition, Cost of Acquired Entity, Purchase Price	$ 4,613,000	$ 0		$ 3,000,000	$ 478,748,000	$ 478,748,000
Business Acquisition, Incremental Borrowing																	350,000,000
Goodwill	3,378,931,000		3,378,661,000		171,356,000	171,086,000
Goodwill, Purchase Accounting Adjustments					270,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles									103,301,000	103,301,000	91,700,000	91,700,000	56,800,000	56,800,000	1,766,000	1,766,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables					50,807,000	50,807,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory					27,450,000	27,450,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other					1,902,000	1,902,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment					44,016,000	44,016,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets					139,000	139,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable					(35,022,000)	(34,752,000)
Assumed Liability Purchase Accounting Adjustment					(270,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other					(79,000)	(79,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liability, Net					(35,388,000)	(35,388,000)
Business Acquisition, Pro Forma Revenue							484,771,000	951,765,000
Business Acquisition, Pro Forma Net Income (Loss)							(61,656,000)	(114,794,000)
Additional Future Milestone Payments																		31,500,000
Milestone Achievement Payment				1,500,000
Accrued expenses and other	428,491,000		328,975,000	6,800,000
Other non-current liabilities	$ 133,360,000		$ 40,432,000	$ 8,600,000

XML

Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Cash Flow (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net earnings (loss)	$ (199,100)	$ (107,362)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	260,478	147,755
Net cash provided (used) by operating activities	61,378	40,393
Cash flows from investing activities
Net additions to property, plant and equipment	(31,971)	(48,072)
Businesses acquired in purchase transaction, net of cash acquired	(4,613)	0
Decrease (increase) in identifiable intangible assets and other non-current assets	(4,230)	(2,558)
Net cash provided (used) by investing activities	(40,814)	(50,630)
Cash flows from financing activities:
Distribution to limited partners	0	(1,572)
Settlement of profits interest units	(1,416)	0
Repayments of long-term debt and capital lease obligations	(13,271)	(52,926)
Payment of debt issuance costs	0	(21,122)
Proceeds (payments) on intercompany loans	0	0
Proceeds (payments) on intercompany investments	0	0
Net cash provided (used) by financing activities	(14,687)	(75,620)
Effect of exchange rate changes on cash and cash equivalents	841	(1,676)
Net increase (decrease) in cash and cash equivalents	6,718	(87,533)
Cash and cash equivalents, beginning of period	206,949	383,150
Cash and cash equivalents, end of period	213,667	295,617
Parent Company [Member]
Cash flows from operating activities:
Net earnings (loss)	(199,100)	(107,362)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	3,518	2,767
Net cash provided (used) by operating activities	(195,582)	(104,595)
Cash flows from investing activities
Net additions to property, plant and equipment	0	0
Businesses acquired in purchase transaction, net of cash acquired	0
Decrease (increase) in identifiable intangible assets and other non-current assets	0	0
Net cash provided (used) by investing activities	0	0
Cash flows from financing activities:
Distribution to limited partners	0	(1,572)
Settlement of profits interest units	(1,416)
Repayments of long-term debt and capital lease obligations	0	0
Payment of debt issuance costs	0	0
Proceeds (payments) on intercompany loans	0	0
Proceeds (payments) on intercompany investments	196,998	106,167
Net cash provided (used) by financing activities	195,582	104,595
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	398	398
Cash and cash equivalents, end of period	398	398
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Cash flows from operating activities:
Net earnings (loss)	(339,019)	(42,539)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	145,948	145,087
Net cash provided (used) by operating activities	(193,071)	102,548
Cash flows from investing activities
Net additions to property, plant and equipment	(55,257)	(90,855)
Businesses acquired in purchase transaction, net of cash acquired	0
Decrease (increase) in identifiable intangible assets and other non-current assets	(424)	(49)
Net cash provided (used) by investing activities	(55,681)	(90,904)
Cash flows from financing activities:
Distribution to limited partners	0	0
Settlement of profits interest units	0
Repayments of long-term debt and capital lease obligations	(13,240)	(52,959)
Payment of debt issuance costs	0	(21,122)
Proceeds (payments) on intercompany loans	216,613	14,786
Proceeds (payments) on intercompany investments	84,540	(56,265)
Net cash provided (used) by financing activities	287,913	(115,560)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	39,161	(103,916)
Cash and cash equivalents, beginning of period	87,771	276,788
Cash and cash equivalents, end of period	126,932	172,872
Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net earnings (loss)	(78,554)	56,420
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	116,189	(12,136)
Net cash provided (used) by operating activities	37,635	44,284
Cash flows from investing activities
Net additions to property, plant and equipment	(3,587)	(8,962)
Businesses acquired in purchase transaction, net of cash acquired	(4,500)
Decrease (increase) in identifiable intangible assets and other non-current assets	(3,711)	(2,375)
Net cash provided (used) by investing activities	(11,798)	(11,337)
Cash flows from financing activities:
Distribution to limited partners	0	0
Settlement of profits interest units	0
Repayments of long-term debt and capital lease obligations	0	0
Payment of debt issuance costs	0	0
Proceeds (payments) on intercompany loans	(26,363)	(16,371)
Proceeds (payments) on intercompany investments	408	(16,576)
Net cash provided (used) by financing activities	(25,955)	(32,947)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	(118)	0
Cash and cash equivalents, beginning of period	118	0
Cash and cash equivalents, end of period	0	0
Non-Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net earnings (loss)	(957)	10,814
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	95,906	(49,950)
Net cash provided (used) by operating activities	94,949	(39,136)
Cash flows from investing activities
Net additions to property, plant and equipment	(30,561)	(67,434)
Businesses acquired in purchase transaction, net of cash acquired	(113)
Decrease (increase) in identifiable intangible assets and other non-current assets	(95)	(134)
Net cash provided (used) by investing activities	(30,769)	(67,568)
Cash flows from financing activities:
Distribution to limited partners	0	0
Settlement of profits interest units	0
Repayments of long-term debt and capital lease obligations	(31)	33
Payment of debt issuance costs	0	0
Proceeds (payments) on intercompany loans	(190,250)	1,585
Proceeds (payments) on intercompany investments	92,935	123,145
Net cash provided (used) by financing activities	(97,346)	124,763
Effect of exchange rate changes on cash and cash equivalents	841	(1,676)
Net increase (decrease) in cash and cash equivalents	(32,325)	16,383
Cash and cash equivalents, beginning of period	118,662	105,964
Cash and cash equivalents, end of period	86,337	122,347
Eliminations [Member]
Cash flows from operating activities:
Net earnings (loss)	418,530	(24,695)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	(101,083)	61,987
Net cash provided (used) by operating activities	317,447	37,292
Cash flows from investing activities
Net additions to property, plant and equipment	57,434	119,179
Businesses acquired in purchase transaction, net of cash acquired	0
Decrease (increase) in identifiable intangible assets and other non-current assets	0	0
Net cash provided (used) by investing activities	57,434	119,179
Cash flows from financing activities:
Distribution to limited partners	0	0
Settlement of profits interest units	0
Repayments of long-term debt and capital lease obligations	0	0
Payment of debt issuance costs	0	0
Proceeds (payments) on intercompany loans	0	0
Proceeds (payments) on intercompany investments	(374,881)	(156,471)
Net cash provided (used) by financing activities	(374,881)	(156,471)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	$ 0	$ 0

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Supplemental Balance Sheet Data

6 Months Ended

Jun. 30, 2014

Balance Sheet Related Disclosures [Abstract]

Supplemental Balance Sheet Data

Supplemental Balance Sheet Data

(a)Accounts Receivable, net

Accounts receivable consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	399,904		$	418,804
Unbilled receivables	31,518			50,841
Less:  Allowance for revenue adjustments	(59,138		)	(67,631		)
Gross trade accounts receivable	372,284			402,014
Less:  Allowance for bad debt	(13,166		)	(8,483		)
Net trade accounts receivable	359,118			393,531
Other receivables	11,943			14,047
	$	371,061		$	407,578

(b)   Inventories, net

Inventories consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	126,494		$	110,937
Goods and tissue in-process	12,387			12,994
Raw materials, supplies, parts and unprocessed tissue	69,454			71,876
	208,335			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(8,073		)	(3,952		)
Reserve for excess and obsolete inventory	(14,771		)	(10,288		)
	$	185,491		$	181,567

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Derivative Financial Instruments and Fair Value Measurements - Derivative Financial Instruments (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Interest Rate Protection [Abstract]
Collateral posted	$ 0
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Interest Rate Protection [Abstract]
Number of interest rate agreements held	3	3
Derivative, quarterly interest payments, receive rates, maximum	1.25%
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Interest Rate Swap - 2.256%, effective December 31, 2013 [Member]
Derivative [Line Items]
Derivative, Notional Amount	507,100,000
Interest Rate Protection [Abstract]
Fixed Interest Rate	2.256%
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Interest Rate Swap - 2.249%, effective December 31, 2013 [Member]
Derivative [Line Items]
Derivative, Notional Amount	507,100,000
Interest Rate Protection [Abstract]
Fixed Interest Rate	2.249%
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Interest Rate Swap - 2.250%, effective December 31, 2013 [Member]
Derivative [Line Items]
Derivative, Notional Amount	507,100,000
Interest Rate Protection [Abstract]
Fixed Interest Rate	2.25%
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Minimum [Member]
Interest Rate Protection [Abstract]
Notional amount decreases by quarter	1,700,000
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Maximum [Member]
Interest Rate Protection [Abstract]
Notional amount decreases by quarter	56,400,000
Not Designated as Hedging Instrument [Member] | Foreign Currency Exchange Contracts [Member]
Derivative [Line Items]
Derivative, Notional Amount	0	14,300,000
Senior Secured Credit Facility [Member]
Derivative [Line Items]
Long-term Debt, Fair Value	2,600,000,000	2,600,000,000
Fixed Rate Long-Term Debt [Member]
Derivative [Line Items]
Long-term Debt, Fair Value	$ 2,700,000,000	$ 2,700,000,000

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Long-Term Debt (Details) (USD $)	1 Months Ended	3 Months Ended			6 Months Ended																	3 Months Ended
	Mar. 15, 2013	Feb. 04, 2013	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Revolving Credit Facility [Member] Senior Revolving Credit Facility - due 2016 [Member]	Dec. 31, 2013 Revolving Credit Facility [Member] Senior Revolving Credit Facility - due 2016 [Member]	Nov. 30, 2011 Revolving Credit Facility [Member] Senior Revolving Credit Facility - due 2016 [Member]	Jun. 30, 2014 Term Credit Facilities [Member] Senior Dollar Term E-1 Credit Facility Due 2018 [Member]	Dec. 31, 2013 Term Credit Facilities [Member] Senior Dollar Term D-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Term Credit Facilities [Member] Senior Euro Term E-1 Credit Facility Due 2018 [Member]	Dec. 31, 2013 Term Credit Facilities [Member] Senior Euro Term D-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Term Credit Facilities [Member] Senior Term E-2 Credit Facility Due 2016 [Member] [Member]	Dec. 31, 2013 Term Credit Facilities [Member] Senior Term D-2 Credit Facility Due 2016 [Member]	Jun. 30, 2014 Convertible Senior Notes [Member] 3.25% Convertible Senior Notes due 2015 [Member]	Dec. 31, 2013 Convertible Senior Notes [Member] 3.25% Convertible Senior Notes due 2015 [Member]	Jun. 30, 2014 Senior Secured Notes [Member] 10.5% Second Lien Senior Secured Notes due 2018 [Member]	Dec. 31, 2013 Senior Secured Notes [Member] 10.5% Second Lien Senior Secured Notes due 2018 [Member]	Jun. 30, 2014 Senior Unsecured Notes [Member] 12.5% Senior Unsecured Notes due 2019 [Member]	Dec. 31, 2013 Senior Unsecured Notes [Member] 12.5% Senior Unsecured Notes due 2019 [Member]	Jun. 30, 2014 Banks Which Are Not Party To Senior Secured Credit Facility [Member] Senior Revolving Credit Facility - due 2016 [Member]	Dec. 31, 2013 Banks Which Are Not Party To Senior Secured Credit Facility [Member] Senior Revolving Credit Facility - due 2016 [Member]	Jun. 30, 2014 Eurocurrency Rate [Member] Senior Dollar Term E-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Eurocurrency Rate [Member] Senior Euro Term E-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Eurocurrency Rate [Member] Senior Term E-2 Credit Facility Due 2016 [Member] [Member]	Jun. 30, 2014 Eurocurrency Rate [Member] Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] Minimum [Member]	Jun. 30, 2014 Base Rate [Member] Senior Dollar Term E-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Base Rate [Member] Senior Euro Term E-1 Credit Facility Due 2018 [Member]	Jun. 30, 2014 Base Rate [Member] Senior Term E-2 Credit Facility Due 2016 [Member] [Member]	Jun. 30, 2014 Base Rate [Member] Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] Minimum [Member]
Debt Instrument [Line Items]
Long-term debt, gross			$ 4,948,957,000	$ 4,965,166,000				$ 1,936,975,000	$ 1,946,708,000	$ 332,937,000	$ 337,820,000	$ 316,944,000	$ 318,537,000	$ 101,000	$ 101,000	$ 1,750,000,000	$ 1,750,000,000	$ 612,000,000	$ 612,000,000
Less: Discount, net of accretion			(65,929,000)	(73,352,000)				(27,621,000)	(30,926,000)	(9,469,000)	(10,693,000)	(3,727,000)	(4,486,000)			(22,268,000)	(24,222,000)	(2,844,000)	(3,025,000)
Long-term Debt			4,883,028,000	4,891,814,000
Less: Current installments			(26,100,000)	(26,311,000)
Long-term debt, net of current installments and discount			4,856,928,000	4,865,503,000
Senior Secured Credit Facilities [Abstract]
Credit facility, maximum borrowing capacity							200,000,000
Line of Credit Facility, Amount Outstanding					0	0
Letters of credit, amount outstanding					21,300,000	21,200,000														12,100,000	12,600,000
Credit facility, remaining borrowing capacity					$ 178,700,000	$ 178,800,000
Credit facility, unused capacity, commitment fee percentage					0.50%
Debt Instrument, Basis Spread on Variable Rate																						3.00%	3.25%	2.50%	1.00%	2.00%	2.25%	1.50%	2.00%
10.5% Second Lien Senior Secured Notes and 12.5% Senior Unsecured Notes [Abstract]
Interest rate on senior long-term debt														3.25%		10.50%		12.50%
Debt Instument, Registration Rights Agreement, Additional Interest Accrual Rate	0.50%	0.25%

XML

Derivative Financial Instruments and Fair Value Measurements - Fair Value and Balance Sheet Locations (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 0	$ 146
Derivative liability, fair value	28,888	32,820
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Other non-current assets [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	0	0
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Prepaid expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	0	0
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Other non-current liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	14,175	31,906
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Accrued expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	14,713	345
Not Designated as Hedging Instrument [Member] | Foreign Currency Exchange Contracts [Member] | Prepaid expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	0	146
Not Designated as Hedging Instrument [Member] | Foreign Currency Exchange Contracts [Member] | Accrued expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	$ 0	$ 569

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Derivative Financial Instruments and Fair Value Measurements - Gain (Loss) on Derivatives (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments gain (loss)	$ (4,297)	$ 10,556	$ (4,300)	$ 10,040
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments gain (loss)	(4,297)	10,556	(4,300)	10,040
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments gain (loss)	(4,287)	9,953	(4,362)	9,252
Not Designated as Hedging Instrument [Member] | Interest Rate Cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments gain (loss)	0	1	0	(5)
Not Designated as Hedging Instrument [Member] | Foreign Currency Exchange Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative instruments gain (loss)	$ (10)	$ 602	$ 62	$ 793

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Business Acquisition Business Acquisition

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Business Acquisition

On July 30, 2013, KCI announced that it had signed a definitive share purchase agreement to acquire Systagenix, an established provider of advanced wound care products. The transaction closed on October 28, 2013. The adjusted purchase price paid, net of cash and cash equivalents, was $478.7 million. The acquisition was accounted for as a business combination using the acquisition method and the purchase price was funded using $350.0 million of incremental borrowings under our existing senior secured credit facility along with cash on hand. The preliminary allocation of the purchase price to the Systagenix tangible and identifiable intangible assets was based on their estimated fair values as of the acquisition date. The excess of the purchase price over the identifiable intangible and net tangible assets was allocated to goodwill, which is not deductible for tax purposes. The purchase price allocation is preliminary, pending the final determination of the fair value of certain assumed assets and liabilities. As these issues are identified, modified or resolved, resulting increases or decreases to the preliminary value of assets and liabilities are offset by a change to goodwill. Adjustments to these estimates will be included in the final allocation of the purchase price.

The following table represents the preliminary allocation of the purchase price (in thousands):

	December 31, 2013			Adjustment			June 30, 2014
Goodwill	$	171,086		$	270		$	171,356
Identifiable intangible assets
Customer relationships	103,301						103,301
Developed technology	91,700						91,700
Tradenames	56,800						56,800
In-process research and development	1,766						1,766
Tangible assets acquired and liabilities assumed:
Accounts receivable	50,807						50,807
Inventories	27,450						27,450
Other current assets	1,902						1,902
Property, plant and equipment	44,016						44,016
Other non-current assets	139						139
Current liabilities	(34,752		)	(270		)	(35,022		)
Other non-current liabilities	(79		)				(79		)
Net deferred tax liability	(35,388		)				(35,388		)
Total purchase price	$	478,748		$	—		$	478,748

Purchase accounting rules require that as certain pre-acquisition issues are identified, modified or resolved, resulting increases or decreases to the preliminary value of assets and liabilities are offset by a change in goodwill. Modifications to goodwill reflected in the “Adjustments” column above were primarily the result of assumed liabilities.

The following table reflects the unaudited pro forma condensed consolidated results of operations, as though the acquisition had occurred on January 1, 2012 (in thousands):

	Three months ended June 30,			Six months ended June 30,
	2013			2013
Pro forma revenue	$	484,771		$	951,765
Pro forma net loss	$	(61,656	)	$	(114,794	)

The unaudited pro forma condensed consolidated results of operations presented above are for illustrative purposes only and are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the period presented, nor are they indicative of future operating results. 

In January 2014, LifeCell entered into an asset purchase agreement with TauTona Injector, LLC to purchase certain assets, including patents, know-how, and inventory. Under the terms of the asset purchase agreement, LifeCell made an initial cash payment of $3.0 million at the closing of the transaction. The asset purchase agreement also calls for additional payments by LifeCell of up to $31.5 million upon the achievement of certain milestones. During the first six months of 2014, LifeCell paid $1.5 million under the asset purchase agreement related to milestone achievement. As of June 30, 2014, the accompanying condensed consolidated balance sheet included $6.8 million under the caption "accrued expenses and other" and $8.6 million under the caption "other non-current liabilities" related to future anticipated milestone payments.

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Accumulated other comprehensive income (loss), net	$ (1,958)		$ (1,958)		$ (2,143)
Unrealized investment gain, net of tax benefit of $1	(1,005)	614	(2)	1,716
Foreign currency translation adjustment, net of tax expense of $502	(103)	(2,359)	187	(4,135)
Accumulated Translation Adjustment [Member]
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, before Tax			0
Accumulated other comprehensive income (loss), net	(4,197)		(4,197)		(4,384)
Unrealized investment gain, net of tax benefit of $1			0
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated other comprehensive income (loss), net	2,239		2,239		2,241
Foreign currency translation adjustment, net of tax expense of $502			0
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated other comprehensive income (loss), net	(1,958)		(1,958)		(2,143)
Unrealized investment gain, net of tax benefit of $1			(2)
Foreign currency translation adjustment, net of tax expense of $502			$ 187

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 213,667	$ 206,949
Accounts receivable, net	371,061	407,578
Inventories, net	185,491	181,567
Deferred income taxes	32,551	23,621
Prepaid expenses and other	43,248	53,161
Total current assets	846,018	872,876
Net property, plant and equipment	306,642	333,725
Debt issuance costs, net	89,960	102,054
Deferred income taxes	35,734	31,459
Goodwill	3,378,931	3,378,661
Identifiable intangible assets, net	2,472,073	2,549,201
Other non-current assets	5,219	4,669
Total assets	7,134,577	7,272,645
Current liabilities:
Accounts payable	54,846	50,316
Accrued expenses and other	428,491	328,975
Current installments of long-term debt	26,100	26,311
Income taxes payable	4,099	3,368
Deferred income taxes	17,219	2,199
Total current liabilities	530,755	411,169
Long-term debt, net of current installments and discount	4,856,928	4,865,503
Non-current tax liabilities	53,989	53,682
Deferred income taxes	860,070	1,003,784
Other non-current liabilities	133,360	40,432
Total liabilities	6,435,102	6,374,570
Equity:
General partner’s capital	0	0
Limited partners’ capital	701,433	900,218
Accumulated other comprehensive loss, net	(1,958)	(2,143)
Total equity	699,475	898,075
Total liabilities and shareholders' equity	$ 7,134,577	$ 7,272,645

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net loss	$ (199,100)	$ (107,362)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt issuance costs and discount	19,409	17,205
Depreciation and other amortization	160,528	171,194
Loss on disposition of assets	0	3,315
Amortization of fair value step-up in inventory	6,680	0
Fixed asset and inventory impairment	0	30,259
Write-off of other intangible assets	0	13,400
Wake Forest settlement	198,578	0
Provision for bad debt	8,239	3,521
Loss on extinguishment of debt	0	2,164
Equity-based compensation expense	2,103	1,196
Deferred income tax benefit	(141,532)	(71,357)
Unrealized gain on derivative instruments	(3,785)	(11,697)
Unrealized gain on revaluation of cross currency debt	(3,104)	(4,318)
Change in assets and liabilities:
Decrease in accounts receivable, net	27,186	5,912
Increase in inventories, net	(10,881)	(10,997)
Decrease (increase) in prepaid expenses and other	9,765	(15,315)
Increase in accounts payable	4,412	2,939
Increase (decrease) in accrued expenses and other	(17,827)	8,359
Increase in tax liabilities, net	707	1,975
Net cash provided (used) by operating activities	61,378	40,393
Cash flows from investing activities
Additions to property, plant and equipment	(28,382)	(39,981)
Increase in inventory to be converted into equipment for short-term rental	(4,121)	(8,523)
Dispositions of property, plant and equipment	532	432
Businesses acquired in purchase transaction, net of cash acquired	(4,613)	0
Increase in identifiable intangible assets and other non-current assets	(4,230)	(2,558)
Net cash provided (used) by investing activities	(40,814)	(50,630)
Cash flows from financing activities:
Settlement of profits interest units	(1,416)	0
Distribution to limited partners	0	(1,572)
Repayments of long-term debt and capital lease obligations	(13,271)	(52,926)
Payment of debt issuance costs	0	(21,122)
Net cash provided (used) by financing activities	(14,687)	(75,620)
Effect of exchange rate changes on cash and cash equivalents	841	(1,676)
Net increase (decrease) in cash and cash equivalents	6,718	(87,533)
Cash and cash equivalents, beginning of period	206,949	383,150
Cash and cash equivalents, end of period	$ 213,667	$ 295,617

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Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 213,667	$ 206,949	$ 295,617	$ 383,150
Accounts receivable, net	371,061	407,578
Inventories, net	185,491	181,567
Deferred income taxes	32,551	23,621
Prepaid expenses and other	43,248	53,161
Intercompany receivables	0	0
Total current assets	846,018	872,876
Net property, plant and equipment	306,642	333,725
Debt issuance costs, net	89,960	102,054
Deferred income taxes	35,734	31,459
Goodwill	3,378,931	3,378,661
Identifiable intangible assets, net	2,472,073	2,549,201
Other non-current assets	5,219	4,669
Intercompany loan receivables	0	0
Intercompany investments	0	0
Total assets	7,134,577	7,272,645
Current liabilities:
Accounts payable	54,846	50,316
Accrued expenses and other	428,491	328,975
Intercompany payables	0	0
Current installments of long-term debt	26,100	26,311
Income taxes payable	4,099	3,368
Deferred income taxes	17,219	2,199
Total current liabilities	530,755	411,169
Long-term debt, net of current installments and discount	4,856,928	4,865,503
Non-current tax liabilities	53,989	53,682
Deferred income taxes	860,070	1,003,784
Other non-current liabilities	133,360	40,432
Intercompany loan payables	0	0
Total liabilities	6,435,102	6,374,570
Equity:
Total equity	699,475	898,075
Total liabilities and shareholders' equity	7,134,577	7,272,645
Parent Company [Member]
Current assets:
Cash and cash equivalents	398	398	398	398
Accounts receivable, net	0	0
Inventories, net	0	0
Deferred income taxes	0	0
Prepaid expenses and other	0	0
Intercompany receivables	166	166
Total current assets	564	564
Net property, plant and equipment	0	0
Debt issuance costs, net	0	0
Deferred income taxes	0	0
Goodwill	0	0
Identifiable intangible assets, net	0	0
Other non-current assets	0	0
Intercompany loan receivables	0	0
Intercompany investments	705,089	901,902
Total assets	705,653	902,466
Current liabilities:
Accounts payable	0	0
Accrued expenses and other	0	0
Intercompany payables	5,526	4,110
Current installments of long-term debt	0	0
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	5,526	4,110
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	0	0
Deferred income taxes	0	0
Other non-current liabilities	652	281
Intercompany loan payables	0	0
Total liabilities	6,178	4,391
Equity:
Total equity	699,475	898,075
Total liabilities and shareholders' equity	705,653	902,466
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Current assets:
Cash and cash equivalents	126,932	87,771	172,872	276,788
Accounts receivable, net	162,526	184,723
Inventories, net	90,347	54,809
Deferred income taxes	3,850	14,991
Prepaid expenses and other	23,774	35,832
Intercompany receivables	1,811,567	1,687,528
Total current assets	2,218,996	2,065,654
Net property, plant and equipment	291,799	311,122
Debt issuance costs, net	89,960	102,054
Deferred income taxes	0	0
Goodwill	2,483,240	2,483,240
Identifiable intangible assets, net	329,408	361,640
Other non-current assets	1,209	715
Intercompany loan receivables	789,037	990,972
Intercompany investments	348,120	432,884
Total assets	6,551,769	6,748,281
Current liabilities:
Accounts payable	17,339	15,266
Accrued expenses and other	297,686	185,790
Intercompany payables	980,902	852,892
Current installments of long-term debt	26,100	26,311
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	1,322,027	1,080,259
Long-term debt, net of current installments and discount	4,856,928	4,865,503
Non-current tax liabilities	29,422	28,850
Deferred income taxes	42,161	231,713
Other non-current liabilities	122,509	38,667
Intercompany loan payables	414,369	399,690
Total liabilities	6,787,416	6,644,682
Equity:
Total equity	(235,647)	103,599
Total liabilities and shareholders' equity	6,551,769	6,748,281
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	0	118	0	0
Accounts receivable, net	63,091	71,457
Inventories, net	109,130	101,779
Deferred income taxes	28,701	6,610
Prepaid expenses and other	5,376	5,434
Intercompany receivables	2,337,871	2,326,181
Total current assets	2,544,169	2,511,579
Net property, plant and equipment	76,384	80,963
Debt issuance costs, net	0	0
Deferred income taxes	0	0
Goodwill	732,771	732,771
Identifiable intangible assets, net	1,811,914	1,829,452
Other non-current assets	186	192
Intercompany loan receivables	421,051	404,688
Intercompany investments	371,682	372,093
Total assets	5,958,157	5,931,738
Current liabilities:
Accounts payable	12,147	14,929
Accrued expenses and other	246,871	246,977
Intercompany payables	2,628,650	2,559,407
Current installments of long-term debt	0	0
Income taxes payable	1,527	3,368
Deferred income taxes	0	0
Total current liabilities	2,889,195	2,824,681
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	4,373	4,284
Deferred income taxes	760,615	718,930
Other non-current liabilities	9,023	334
Intercompany loan payables	770,000	780,000
Total liabilities	4,433,206	4,328,229
Equity:
Total equity	1,524,951	1,603,509
Total liabilities and shareholders' equity	5,958,157	5,931,738
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	86,337	118,662	122,347	105,964
Accounts receivable, net	145,444	151,398
Inventories, net	100,722	101,751
Deferred income taxes	0	2,020
Prepaid expenses and other	278,730	321,427
Intercompany receivables	80,410	21,241
Total current assets	691,643	716,499
Net property, plant and equipment	199,214	223,987
Debt issuance costs, net	0	0
Deferred income taxes	35,734	31,459
Goodwill	162,920	162,650
Identifiable intangible assets, net	330,751	358,109
Other non-current assets	94,724	94,662
Intercompany loan receivables	0	0
Intercompany investments	0	0
Total assets	1,514,986	1,587,366
Current liabilities:
Accounts payable	25,360	20,121
Accrued expenses and other	80,664	77,843
Intercompany payables	614,936	618,707
Current installments of long-term debt	0	0
Income taxes payable	2,572	0
Deferred income taxes	17,219	2,199
Total current liabilities	740,751	718,870
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	20,194	20,548
Deferred income taxes	57,294	53,141
Other non-current liabilities	1,176	1,150
Intercompany loan payables	25,720	215,970
Total liabilities	845,135	1,009,679
Equity:
Total equity	669,851	577,687
Total liabilities and shareholders' equity	1,514,986	1,587,366
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Inventories, net	(114,708)	(76,772)
Deferred income taxes	0	0
Prepaid expenses and other	(264,632)	(309,532)
Intercompany receivables	(4,230,014)	(4,035,116)
Total current assets	(4,609,354)	(4,421,420)
Net property, plant and equipment	(260,755)	(282,347)
Debt issuance costs, net	0	0
Deferred income taxes	0	0
Goodwill	0	0
Identifiable intangible assets, net	0	0
Other non-current assets	(90,900)	(90,900)
Intercompany loan receivables	(1,210,088)	(1,395,660)
Intercompany investments	(1,424,891)	(1,706,879)
Total assets	(7,595,988)	(7,897,206)
Current liabilities:
Accounts payable	0	0
Accrued expenses and other	(196,730)	(181,635)
Intercompany payables	(4,230,014)	(4,035,116)
Current installments of long-term debt	0	0
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	(4,426,744)	(4,216,751)
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	0	0
Deferred income taxes	0	0
Other non-current liabilities	0	0
Intercompany loan payables	(1,210,089)	(1,395,660)
Total liabilities	(5,636,833)	(5,612,411)
Equity:
Total equity	(1,959,155)	(2,284,795)
Total liabilities and shareholders' equity	$ (7,595,988)	$ (7,897,206)

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Reconciliation of Revenue and Operating Earnings (Loss) from Segments to Consolidated

Information on segments and a reconciliation of consolidated totals are as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenue:
Advanced Wound Therapeutics	$	351,655		$	317,765		$	687,634		$	623,647
Regenerative Medicine	113,516			114,914			225,076			224,916
Total revenue	$	465,171		$	432,679		$	912,710		$	848,563
Operating earnings (loss):
Advanced Wound Therapeutics	$	106,507		$	110,897		$	191,257		$	200,318
Regenerative Medicine	33,764			31,197			64,772			61,066
Non-allocated costs:
General headquarter expense (1)	(2,398		)	(40,003		)	(5,207		)	(53,112		)
Equity-based compensation	(1,162		)	(663		)	(2,103		)	(1,196		)
Merger and restructuring-related expenses (2)	(29,703		)	(43,836		)	(57,117		)	(66,406		)
Acquired intangible asset amortization (3)	(48,754		)	(46,461		)	(99,443		)	(94,007		)
Wake Forest settlement	(198,578		)	—			(198,578		)	—
Total non-allocated costs	(280,595		)	(130,963		)	(362,448		)	(214,721		)
Total operating earnings	$	(140,324	)	$	11,131		$	(106,419	)	$	46,663

_____________________

(1) The second quarter and six months ended June 30, 2013 includes $4.0 million and $13.4 million, respectively, of write-offs of in-process research and development costs due to discontinuation of related projects and a $30.3 million fixed asset impairment charge.

(2) Represents expenses related to the Merger including management fees and restructuring-related expenses.

(3) 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

XML

Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Condensed Income Statements, Captions [Line Items]
Rental	$ 175,235		$ 190,245		$ 341,793		$ 378,408
Sales	289,936		242,434		570,917		470,155
Total revenue	465,171		432,679		912,710		848,563
Rental expenses	87,038		90,382		172,830		187,733
Cost of sales	82,307		59,325		165,609		115,556
Gross profit (loss)	295,826		282,972		574,271		545,274
Selling, general and administrative expenses	170,585		204,983		346,946		366,425
Research and development expenses	18,233		20,397		35,723		38,179
Acquired intangible asset amortization	48,754	[1]	46,461	[1]	99,443	[1]	94,007	[1]
Wake Forest settlement	198,578		0		198,578		0
Operating earnings (loss)	(140,324)		11,131		(106,419)		46,663
Non-operating intercompany transactions	0		0		0		0
Interest income and other	127		904		222		1,062
Interest Expense	(101,805)		(105,658)		(204,000)		(213,746)
Loss on extinguishment of debt	0		(2,164)		0		(2,164)
Foreign currency gain (loss)	3,852		(7,772)		4,088		(3,197)
Derivative instruments gain (loss)	(4,297)		10,556		(4,300)		10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(242,447)		(93,003)		(310,409)		(161,342)
Income tax expense (benefit)	(89,730)		(31,056)		(111,309)		(56,024)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(152,717)		(61,947)		(199,100)		(105,318)
Equity in earnings (loss) of subsidiaries	0		0		0		0
Earnings (loss) from continuing operations	(152,717)		(61,947)		(199,100)		(105,318)
Earnings (loss) from discontinued operations, net of tax	0		(628)		0		(2,044)
Net earnings (loss)	(152,717)		(62,575)		(199,100)		(107,362)
Total comprehensive income (loss)	(153,825)		(64,320)		(198,915)		(109,781)
Parent Company [Member]
Condensed Income Statements, Captions [Line Items]
Rental	0		0		0		0
Sales	0		0		0		0
Total revenue	0		0		0		0
Rental expenses	37		13		80		13
Cost of sales	39		29		45		54
Gross profit (loss)	(76)		(42)		(125)		(67)
Selling, general and administrative expenses	1,085		621		1,978		1,129
Research and development expenses	0		0		0		0
Acquired intangible asset amortization	0		0		0		0
Wake Forest settlement	0				0
Operating earnings (loss)	(1,161)		(663)		(2,103)		(1,196)
Non-operating intercompany transactions	0		0		0		0
Interest income and other	0		0		0		0
Interest Expense	0		0		0		0
Loss on extinguishment of debt			0				0
Foreign currency gain (loss)	0		0		0		0
Derivative instruments gain (loss)	0		0		0		0
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,161)		(663)		(2,103)		(1,196)
Income tax expense (benefit)	0		0		0		0
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,161)		(663)		(2,103)		(1,196)
Equity in earnings (loss) of subsidiaries	(151,556)		(61,912)		(196,997)		(106,166)
Earnings (loss) from continuing operations	(152,717)		(62,575)		(199,100)		(107,362)
Earnings (loss) from discontinued operations, net of tax	0		0		0		0
Net earnings (loss)	(152,717)		(62,575)		(199,100)		(107,362)
Total comprehensive income (loss)	(153,825)		(64,320)		(198,915)		(109,781)
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Condensed Income Statements, Captions [Line Items]
Rental	144,440		155,244		280,204		305,712
Sales	69,469		74,428		135,338		143,637
Total revenue	213,909		229,672		415,542		449,349
Rental expenses	70,687		61,149		139,478		123,498
Cost of sales	76,573		47,596		141,914		97,731
Gross profit (loss)	66,649		120,927		134,150		228,120
Selling, general and administrative expenses	73,021		120,228		152,303		202,656
Research and development expenses	6,241		8,454		11,863		15,356
Acquired intangible asset amortization	15,737		20,414		32,162		41,651
Wake Forest settlement	198,578				198,578
Operating earnings (loss)	(226,928)		(28,169)		(260,756)		(31,543)
Non-operating intercompany transactions	5,958		8,300		(668)		60,252
Interest income and other	17,301		18,510		34,501		36,194
Interest Expense	(104,834)		(108,622)		(216,850)		(219,761)
Loss on extinguishment of debt			(2,164)				(2,164)
Foreign currency gain (loss)	3,839		(5,943)		3,379		5,480
Derivative instruments gain (loss)	(4,297)		10,556		(4,300)		10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(308,961)		(107,532)		(444,694)		(141,502)
Income tax expense (benefit)	(110,451)		(18,526)		(190,439)		(46,097)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(198,510)		(89,006)		(254,255)		(95,405)
Equity in earnings (loss) of subsidiaries	(34,014)		(25,033)		(84,764)		55,260
Earnings (loss) from continuing operations	(232,524)		(114,039)		(339,019)		(40,145)
Earnings (loss) from discontinued operations, net of tax	0		(1,527)		0		(2,394)
Net earnings (loss)	(232,524)		(115,566)		(339,019)		(42,539)
Total comprehensive income (loss)	(233,632)		(117,311)		(338,834)		(44,958)
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Rental	1,606		1,013		3,187		3,253
Sales	250,425		196,572		455,780		416,255
Total revenue	252,031		197,585		458,967		419,508
Rental expenses	4,329		3,328		7,620		8,170
Cost of sales	162,673		144,151		279,649		253,909
Gross profit (loss)	85,029		50,106		171,698		157,429
Selling, general and administrative expenses	42,549		47,902		89,951		92,565
Research and development expenses	6,535		8,265		13,279		16,521
Acquired intangible asset amortization	19,718		18,088		39,890		36,367
Wake Forest settlement	0				0
Operating earnings (loss)	16,227		(24,149)		28,578		11,976
Non-operating intercompany transactions	(20,244)		(101)		(28,526)		58,754
Interest income and other	3,063		3,063		12,891		6,126
Interest Expense	(17,221)		(17,661)		(34,358)		(35,218)
Loss on extinguishment of debt			0				0
Foreign currency gain (loss)	349		(135)		303		(213)
Derivative instruments gain (loss)	0		0		0		0
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(17,826)		(38,983)		(21,112)		41,425
Income tax expense (benefit)	24,228		(8,917)		56,485		(4,183)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(42,054)		(30,066)		(77,597)		45,608
Equity in earnings (loss) of subsidiaries	9,804		4,540		(957)		10,814
Earnings (loss) from continuing operations	(32,250)		(25,526)		(78,554)		56,422
Earnings (loss) from discontinued operations, net of tax	0		0		0		(2)
Net earnings (loss)	(32,250)		(25,526)		(78,554)		56,420
Total comprehensive income (loss)	(33,358)		(27,271)		(78,369)		54,001
Non-Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Rental	29,189		33,988		58,402		69,443
Sales	217,734		160,448		426,200		322,348
Total revenue	246,923		194,436		484,602		391,791
Rental expenses	53,929		56,413		108,040		113,335
Cost of sales	90,636		59,251		183,470		119,908
Gross profit (loss)	102,358		78,772		193,092		158,548
Selling, general and administrative expenses	54,000		36,291		102,887		70,254
Research and development expenses	5,457		3,678		10,581		6,302
Acquired intangible asset amortization	13,299		7,959		27,391		15,989
Wake Forest settlement	0				0
Operating earnings (loss)	29,602		30,844		52,233		66,003
Non-operating intercompany transactions	(22,982)		(28,829)		(30,989)		(52,353)
Interest income and other	47		40		77		69
Interest Expense	(34)		(84)		(39)		(94)
Loss on extinguishment of debt			0				0
Foreign currency gain (loss)	(336)		(1,694)		406		(8,464)
Derivative instruments gain (loss)	0		0		0		0
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	6,297		277		21,688		5,161
Income tax expense (benefit)	(3,507)		(3,613)		22,645		(5,744)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	9,804		3,890		(957)		10,905
Equity in earnings (loss) of subsidiaries	0		0		0		0
Earnings (loss) from continuing operations	9,804		3,890		(957)		10,905
Earnings (loss) from discontinued operations, net of tax	0		650		0		(91)
Net earnings (loss)	9,804		4,540		(957)		10,814
Total comprehensive income (loss)	8,696		2,795		(772)		8,395
Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Rental	0		0		0		0
Sales	(247,692)		(189,014)		(446,401)		(412,085)
Total revenue	(247,692)		(189,014)		(446,401)		(412,085)
Rental expenses	(41,944)		(30,521)		(82,388)		(57,283)
Cost of sales	(247,614)		(191,702)		(439,469)		(356,046)
Gross profit (loss)	41,866		33,209		75,456		1,244
Selling, general and administrative expenses	(70)		(59)		(173)		(179)
Research and development expenses	0		0		0		0
Acquired intangible asset amortization	0		0		0		0
Wake Forest settlement	0				0
Operating earnings (loss)	41,936		33,268		75,629		1,423
Non-operating intercompany transactions	37,268		20,630		60,183		(66,653)
Interest income and other	(20,284)		(20,709)		(47,247)		(41,327)
Interest Expense	20,284		20,709		47,247		41,327
Loss on extinguishment of debt			0				0
Foreign currency gain (loss)	0		0		0		0
Derivative instruments gain (loss)	0		0		0		0
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	79,204		53,898		135,812		(65,230)
Income tax expense (benefit)	0		0		0		0
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	79,204		53,898		135,812		(65,230)
Equity in earnings (loss) of subsidiaries	175,766		82,405		282,718		40,092
Earnings (loss) from continuing operations	254,970		136,303		418,530		(25,138)
Earnings (loss) from discontinued operations, net of tax	0		249		0		443
Net earnings (loss)	254,970		136,552		418,530		(24,695)
Total comprehensive income (loss)	$ 258,294		$ 141,787		$ 417,975		$ (17,438)

[1] 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

XML

Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014 segment
Basis of Presentation and Principles of Consolidation [Abstract]
Number of Reportable Operating Segments	2
Number of primary geographic regions	2
Interest Rate Swap [Member] | Concentration of Credit Risk [Member]
Basis of Presentation and Principles of Consolidation [Abstract]
Derivative, Notional Amount	$ 507,100

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(a)Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, financial position and cash flows in conformity with GAAP. Operating results from interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of our results for the interim periods presented. Certain prior period amounts have been reclassified to conform to the 2014 presentation.

On November 8, 2012, KCI closed on the divestiture of its Therapeutic Support Systems ("TSS") business to Getinge AB. Under the terms of the sale agreement, we agreed to provide transition services to Getinge AB after the close of the transaction. Additionally, the results of the operations subject to the agreement, excluding the allocation of general corporate overhead, are presented as discontinued operations in the consolidated statements of operations for all periods presented. Discontinued operations amounts related to TSS also exclude incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the transition services agreement.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. We have two primary geographic regions for which we provide supplemental information: the Americas, which is comprised principally of the United States and includes Canada, Puerto Rico and Latin America; and EMEA/APAC, which is comprised of Europe, the Middle East, Africa and the Asia Pacific region.

The condensed consolidated financial statements appearing in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

(b)Derivative Financial Instruments and Fair Value Measurements

We use derivative financial instruments to manage the economic impact of fluctuations in interest rates. We do not use financial instruments for speculative or trading purposes. Periodically, we enter into interest rate protection agreements to modify the interest characteristics of our outstanding debt. Our interest rate derivatives have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period.

We also use derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates on our intercompany balances and corresponding cash flows and to manage our transactional currency exposures when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. We enter into foreign currency exchange contracts to manage these economic risks. These contracts are not designated as hedges; and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period. Although we use master netting agreements with our derivative counterparties, we do not offset derivative asset and liability positions in the condensed consolidated balance sheets.

All derivative instruments are recorded on the balance sheets at fair value. The fair values of our interest rate derivatives and foreign currency exchange contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets, which represent level 2 inputs as defined by the Codification.

(c)Concentration of Credit Risk

We have a concentration of credit risk with financial institutions related to our derivative instruments. As of June 30, 2014, Morgan Stanley, UBS and HSBC were the counterparties on our interest rate protection agreements consisting of interest rate swap agreements in notional amounts totaling $507.1 million each. We use master netting agreements with our derivative counterparties to reduce our risk and use multiple counterparties to reduce our concentration of credit risk.

We maintain cash and cash equivalents with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits bear minimal credit risk as they are maintained at financial institutions of reputable credit and generally may be redeemed upon demand.

(d)   Recently Adopted Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that entities should present the unrecognized tax benefit as a reduction of the deferred tax asset for a net operating loss (“NOL”) or similar tax loss or tax credit carryforward rather than as a liability when the uncertain tax position would reduce the NOL or other carryforward under the tax law. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company adopted this ASU effective January 1, 2014. The adoption of this update did not have a material impact on our results of operations, financial position or disclosures.

(e)   Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity". ASU No. 2014-08 changes the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organization's operations and financial results should be presented as discontinued operations. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. The Company is evaluating this update, however we do not anticipate that it will have a material effect on our results of operations, financial position or disclosures.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU supersedes the revenue recognition requirements in Topic 605, "Revenue Recognition", and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, "Revenue Recognition-Construction-Type and Production-Type Contracts". In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, "Property, Plant, and Equipment", and intangible assets within the scope of Topic 350, "Intangibles-Goodwill and Other") are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is evaluating this update to determine if it will have a material effect on our results of operations, financial position or disclosures.

(f)   Other Significant Accounting Policies

For further information on our significant accounting policies, see Note 1 of the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Revenue:
Rental	$ 175,235		$ 190,245		$ 341,793		$ 378,408
Sales	289,936		242,434		570,917		470,155
Total revenue	465,171		432,679		912,710		848,563
Rental expenses	87,038		90,382		172,830		187,733
Cost of sales	82,307		59,325		165,609		115,556
Gross profit (loss)	295,826		282,972		574,271		545,274
Selling, general and administrative expenses	170,585		204,983		346,946		366,425
Research and development expenses	18,233		20,397		35,723		38,179
Acquired intangible asset amortization	48,754	[1]	46,461	[1]	99,443	[1]	94,007	[1]
Wake Forest settlement	198,578		0		198,578		0
Operating earnings (loss)	(140,324)		11,131		(106,419)		46,663
Interest income and other	127		904		222		1,062
Interest Expense	(101,805)		(105,658)		(204,000)		(213,746)
Loss on extinguishment of debt	0		(2,164)		0		(2,164)
Foreign currency gain (loss)	3,852		(7,772)		4,088		(3,197)
Derivative instruments gain (loss)	(4,297)		10,556		(4,300)		10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(242,447)		(93,003)		(310,409)		(161,342)
Income tax benefit	(89,730)		(31,056)		(111,309)		(56,024)
Earnings (loss) from continuing operations	(152,717)		(61,947)		(199,100)		(105,318)
Loss from discontinued operations, net of tax	0		(628)		0		(2,044)
Net earnings (loss)	$ (152,717)		$ (62,575)		$ (199,100)		$ (107,362)

[1] 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

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Business Acquisition (Tables)

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table represents the preliminary allocation of the purchase price (in thousands):

	December 31, 2013			Adjustment			June 30, 2014
Goodwill	$	171,086		$	270		$	171,356
Identifiable intangible assets
Customer relationships	103,301						103,301
Developed technology	91,700						91,700
Tradenames	56,800						56,800
In-process research and development	1,766						1,766
Tangible assets acquired and liabilities assumed:
Accounts receivable	50,807						50,807
Inventories	27,450						27,450
Other current assets	1,902						1,902
Property, plant and equipment	44,016						44,016
Other non-current assets	139						139
Current liabilities	(34,752		)	(270		)	(35,022		)
Other non-current liabilities	(79		)				(79		)
Net deferred tax liability	(35,388		)				(35,388		)
Total purchase price	$	478,748		$	—		$	478,748

Business Acquisition, Pro Forma Information [Table Text Block]

The following table reflects the unaudited pro forma condensed consolidated results of operations, as though the acquisition had occurred on January 1, 2012 (in thousands):

	Three months ended June 30,			Six months ended June 30,
	2013			2013
Pro forma revenue	$	484,771		$	951,765
Pro forma net loss	$	(61,656	)	$	(114,794	)

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 28, 2014 Class A-1 Partnership Units [Member]	Jul. 28, 2014 Class A-2 Partnership Units [Member]
Document Information [Line Items]
Entity Registrant Name	CENTAUR GUERNSEY L.P. INC.
Entity Central Index Key	0001557939
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		341,410,891.610	728,041.800
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014

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Supplemental Balance Sheet Data (Tables)

6 Months Ended

Jun. 30, 2014

Balance Sheet Related Disclosures [Abstract]

Schedule of Accounts Receivable, Net

Accounts receivable consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	399,904		$	418,804
Unbilled receivables	31,518			50,841
Less:  Allowance for revenue adjustments	(59,138		)	(67,631		)
Gross trade accounts receivable	372,284			402,014
Less:  Allowance for bad debt	(13,166		)	(8,483		)
Net trade accounts receivable	359,118			393,531
Other receivables	11,943			14,047
	$	371,061		$	407,578

Schedule of Inventories, Net

Inventories consist of the following (in thousands):

	June 30, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	126,494		$	110,937
Goods and tissue in-process	12,387			12,994
Raw materials, supplies, parts and unprocessed tissue	69,454			71,876
	208,335			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(8,073		)	(3,952		)
Reserve for excess and obsolete inventory	(14,771		)	(10,288		)
	$	185,491		$	181,567

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net loss	$ (152,717)	$ (62,575)	$ (199,100)	$ (107,362)
Unrealized investment gain, net of tax benefit (expense) of $629 and $1 in 2014 and ($385) and ($1,075) in 2013	(1,005)	614	(2)	1,716
Foreign currency translation adjustment, net of tax benefit (expense) of ($440) and ($502) in 2014 and $171 and $559 in 2013	(103)	(2,359)	187	(4,135)
Total comprehensive income (loss)	$ (153,825)	$ (64,320)	$ (198,915)	$ (109,781)

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2014

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income (Loss) Note

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in thousands):

	Accumulated Foreign Currency Translation Adjustment			Investment Gain			Accumulated Other Comprehensive Income (Loss)
Balances at December 31, 2013	$	(4,384	)	$	2,241		$	(2,143	)
Unrealized investment gain, net of tax benefit of $1	—			(2		)	(2		)
Foreign currency translation adjustment, net of tax expense of $502	187			—			187
Balances at June 30, 2014	$	(4,197	)	$	2,239		$	(1,958	)

During the six months ended June 30, 2014, there were no reclassification adjustments out of accumulated other comprehensive loss to net loss.

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Derivative Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Derivative Financial Instruments and Fair Value Measurements Disclosure [Abstract]

Derivative Financial Instruments and Fair Value Measurements

 Derivative Financial Instruments and Fair Value Measurements

We are exposed to credit loss in the event of nonperformance by counterparties to the extent of the fair values of the outstanding interest rate swap agreements, interest rate cap agreements and foreign currency exchange contracts, but we do not anticipate nonperformance by any of the counterparties. All derivative instruments are recorded on the balance sheets at fair value. We do not use financial instruments for speculative or trading purposes.

Interest Rate Protection

At June 30, 2014 and December 31, 2013, we had three interest rate swap agreements to convert a portion of our outstanding variable rate debt to a fixed rate basis. These agreements that became effective in December 2013, have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period. The interest rate swap agreements have quarterly interest payments, receive rates based on the higher of three-month USD LIBOR or 1.25% and pay rates based on fixed rates, due on the last day of March, June, September and December. The aggregate notional amount decreases quarterly by amounts ranging from $1.7 million to $56.4 million until maturity.

The following table summarizes our interest rate swap agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$507,100	2.256%
12/31/13-12/31/16	$507,100	2.249%
12/31/13-12/31/16	$507,100	2.250%

The interest rate cap agreements expired on December 31, 2013.

Foreign Currency Exchange Rate Mitigation

At June 30, 2014, we had no outstanding foreign currency exchange contracts. At December 31, 2013, we had foreign currency exchange contracts to sell or purchase $14.3 million of various currencies.

Fair Value Measurements

The Codification definesfair value as the exit price that would be received to sell an asset or paid to transfer a liability. The Fair Value Measurements and Disclosure topic of the Codification establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term obligations, excluding our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt, including the 10.5% Second Lien Secured Notes, the 12.5% Unsecured Notes and the Convertible Notes approximates fair value. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.6 billion and $2.7 billion, respectively, at June 30, 2014. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.6 billion and $2.7 billion, respectively, at December 31, 2013. The fair value of our long-term debt was estimated based upon open-market trades at or near year end which represent Level 2 inputs.

All of our derivatives, as of the reporting date, use inputs considered as Level 2. The interest rate swap agreements are valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreements by using market information available as of the reporting date, including prevailing interest rates and related forward interest rate curves. The foreign currency exchange contracts are valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreements by using market information available as of the reporting date, including prevailing foreign currency exchange rates and related foreign currency exchange rate curves.

The following table sets forth the location and aggregate fair value amounts of all derivative instruments with credit-related contingent features (in thousands):

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
		June 30, 2014		December 31, 2013			June 30, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	14,713	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	14,175		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	28,888	$	32,820

The following table summarizes the amount of gain (loss) on derivatives not designated as hedging instruments (dollars in thousands):

	Three months ended June 30,					Six months ended June 30,
	2014			2013		2014			2013
Interest rate swap agreements	$	(4,287	)	$	9,953	$	(4,362	)	$	9,252
Interest rate cap agreements	—			1		—			(5		)
Foreign currency exchange contracts	(10		)	602		62			793
	$	(4,297	)	$	10,556	$	(4,300	)	$	10,040

Certain of our derivative instruments contain provisions that require compliance with the restrictive covenants of our Senior Secured Credit Facility. For further information regarding the restrictive covenants of credit facilities, see Note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

If we default under our credit facilities, the lenders could require immediate repayment of the entire principal. If those lenders require immediate repayment, we may not be able to repay them which could result in the foreclosure of substantially all of our assets. In these circumstances, the counterparties to the derivative instruments could request immediate payment or full collateralization on derivative instruments in net liability positions. Certain of our derivative counterparties are also parties to our Senior Secured Credit Facility.

No collateral has been posted by us in the normal course of business. If the credit-related contingent features underlying these agreements were triggered on June 30, 2014, we could be required to settle or post the full amount as collateral to the respective agreement counterparties.

We did not have any measurements of financial assets or financial liabilities at fair value on a nonrecurring basis at June 30, 2014 or December 31, 2013.

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Guarantor Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Jun. 30, 2014

Guarantor Condensed Consolidating Financial Statements [Abstract]

Guarantor and Non-Guarantor Balance Sheet

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

June 30, 2014

(in thousands)

(unaudited)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	126,932		$	—	$	86,337	$	—		$	213,667
Accounts receivable, net	—		162,526			63,091		145,444		—			371,061
Inventories, net	—		90,347			109,130		100,722		(114,708		)	185,491
Deferred income taxes	—		3,850			28,701		—		—			32,551
Prepaid expenses and other	—		23,774			5,376		278,730		(264,632		)	43,248
Intercompany receivables	166		1,811,567			2,337,871		80,410		(4,230,014		)	—
Total current assets	564		2,218,996			2,544,169		691,643		(4,609,354		)	846,018
Net property, plant and equipment	—		291,799			76,384		199,214		(260,755		)	306,642
Debt issuance costs, net	—		89,960			—		—		—			89,960
Deferred income taxes	—		—			—		35,734		—			35,734
Goodwill	—		2,483,240			732,771		162,920		—			3,378,931
Identifiable intangible assets, net	—		329,408			1,811,914		330,751		—			2,472,073
Other non-current assets	—		1,209			186		94,724		(90,900		)	5,219
Intercompany loan receivables	—		789,037			421,051		—		(1,210,088		)	—
Intercompany investments	705,089		348,120			371,682		—		(1,424,891		)	—
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	17,339		$	12,147	$	25,360	$	—		$	54,846
Accrued expenses and other	—		297,686			246,871		80,664		(196,730		)	428,491
Intercompany payables	5,526		980,902			2,628,650		614,936		(4,230,014		)	—
Current installments of long-term debt	—		26,100			—		—		—			26,100
Income taxes payable	—		—			1,527		2,572		—			4,099
Deferred income taxes	—		—			—		17,219		—			17,219
Total current liabilities	5,526		1,322,027			2,889,195		740,751		(4,426,744		)	530,755
Long-term debt, net of current installments and discount	—		4,856,928			—		—		—			4,856,928
Non-current tax liabilities	—		29,422			4,373		20,194		—			53,989
Deferred income taxes	—		42,161			760,615		57,294		—			860,070
Other non-current liabilities	652		122,509			9,023		1,176		—			133,360
Intercompany loan payables	—		414,369			770,000		25,720		(1,210,089		)	—
Total liabilities	6,178		6,787,416			4,433,206		845,135		(5,636,833		)	6,435,102
Total equity	699,475		(235,647		)	1,524,951		669,851		(1,959,155		)	699,475
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	87,771	$	118	$	118,662	$	—		$	206,949
Accounts receivable, net	—		184,723		71,457		151,398		—			407,578
Inventories, net	—		54,809		101,779		101,751		(76,772		)	181,567
Deferred income taxes	—		14,991		6,610		2,020		—			23,621
Prepaid expenses and other	—		35,832		5,434		321,427		(309,532		)	53,161
Intercompany receivables	166		1,687,528		2,326,181		21,241		(4,035,116		)	—
Total current assets	564		2,065,654		2,511,579		716,499		(4,421,420		)	872,876
Net property, plant and equipment	—		311,122		80,963		223,987		(282,347		)	333,725
Debt issuance costs, net	—		102,054		—		—		—			102,054
Deferred income taxes	—		—		—		31,459		—			31,459
Goodwill	—		2,483,240		732,771		162,650		—			3,378,661
Identifiable intangible assets, net	—		361,640		1,829,452		358,109		—			2,549,201
Other non-current assets	—		715		192		94,662		(90,900		)	4,669
Intercompany loan receivables	—		990,972		404,688		—		(1,395,660		)	—
Intercompany investments	901,902		432,884		372,093		—		(1,706,879		)	—
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	15,266	$	14,929	$	20,121	$	—		$	50,316
Accrued expenses and other	—		185,790		246,977		77,843		(181,635		)	328,975
Intercompany payables	4,110		852,892		2,559,407		618,707		(4,035,116		)	—
Current installments of long-term debt	—		26,311		—		—		—			26,311
Income taxes payable	—		—		3,368		—		—			3,368
Deferred income taxes	—		—		—		2,199		—			2,199
Total current liabilities	4,110		1,080,259		2,824,681		718,870		(4,216,751		)	411,169
Long-term debt, net of current installments and discount	—		4,865,503		—		—		—			4,865,503
Non-current tax liabilities	—		28,850		4,284		20,548		—			53,682
Deferred income taxes	—		231,713		718,930		53,141		—			1,003,784
Other non-current liabilities	281		38,667		334		1,150		—			40,432
Intercompany loan payables	—		399,690		780,000		215,970		(1,395,660		)	—
Total liabilities	4,391		6,644,682		4,328,229		1,009,679		(5,612,411		)	6,374,570
Total equity	898,075		103,599		1,603,509		577,687		(2,284,795		)	898,075
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	144,440		$	1,606		$	29,189		$	—		$	175,235
Sales	—			69,469			250,425			217,734			(247,692		)	289,936
Total revenue	—			213,909			252,031			246,923			(247,692		)	465,171
Rental expenses	37			70,687			4,329			53,929			(41,944		)	87,038
Cost of sales	39			76,573			162,673			90,636			(247,614		)	82,307
Gross profit (loss)	(76		)	66,649			85,029			102,358			41,866			295,826
Selling, general and administrative expenses	1,085			73,021			42,549			54,000			(70		)	170,585
Research and development expenses	—			6,241			6,535			5,457			—			18,233
Acquired intangible asset amortization	—			15,737			19,718			13,299			—			48,754
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(1,161		)	(226,928		)	16,227			29,602			41,936			(140,324		)
Non-operating intercompany transactions	—			5,958			(20,244		)	(22,982		)	37,268			—
Interest income and other	—			17,301			3,063			47			(20,284		)	127
Interest expense	—			(104,834		)	(17,221		)	(34		)	20,284			(101,805		)
Foreign currency gain (loss)	—			3,839			349			(336		)	—			3,852
Derivative instruments loss	—			(4,297		)	—			—			—			(4,297		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,161		)	(308,961		)	(17,826		)	6,297			79,204			(242,447		)
Income tax expense (benefit)	—			(110,451		)	24,228			(3,507		)	—			(89,730		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,161		)	(198,510		)	(42,054		)	9,804			79,204			(152,717		)
Equity in earnings (loss) of subsidiaries	(151,556		)	(34,014		)	9,804			—			175,766			—
Earnings (loss) from continuing operations	(152,717		)	(232,524		)	(32,250		)	9,804			254,970			(152,717		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(152,717	)	$	(232,524	)	$	(32,250	)	$	9,804		$	254,970		$	(152,717	)
Total comprehensive income (loss)	$	(153,825	)	$	(233,632	)	$	(33,358	)	$	8,696		$	258,294		$	(153,825	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	155,244		$	1,013		$	33,988		$	—		$	190,245
Sales	—			74,428			196,572			160,448			(189,014		)	242,434
Total revenue	—			229,672			197,585			194,436			(189,014		)	432,679
Rental expenses	13			61,149			3,328			56,413			(30,521		)	90,382
Cost of sales	29			47,596			144,151			59,251			(191,702		)	59,325
Gross profit (loss)	(42		)	120,927			50,106			78,772			33,209			282,972
Selling, general and administrative expenses	621			120,228			47,902			36,291			(59		)	204,983
Research and development expenses	—			8,454			8,265			3,678			—			20,397
Acquired intangible asset amortization	—			20,414			18,088			7,959			—			46,461
Operating earnings (loss)	(663		)	(28,169		)	(24,149		)	30,844			33,268			11,131
Non-operating intercompany transactions	—			8,300			(101		)	(28,829		)	20,630			—
Interest income and other	—			18,510			3,063			40			(20,709		)	904
Interest expense	—			(108,622		)	(17,661		)	(84		)	20,709			(105,658		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency loss	—			(5,943		)	(135		)	(1,694		)	—			(7,772		)
Derivative instruments gain	—			10,556			—			—			—			10,556
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(663		)	(107,532		)	(38,983		)	277			53,898			(93,003		)
Income tax expense (benefit)	—			(18,526		)	(8,917		)	(3,613		)	—			(31,056		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(663		)	(89,006		)	(30,066		)	3,890			53,898			(61,947		)
Equity in earnings (loss) of subsidiaries	(61,912		)	(25,033		)	4,540			—			82,405			—
Earnings (loss) from continuing operations	(62,575		)	(114,039		)	(25,526		)	3,890			136,303			(61,947		)
Earnings (loss) from discontinued operations, net of tax	—			(1,527		)	—			650			249			(628		)
Net earnings (loss)	$	(62,575	)	$	(115,566	)	$	(25,526	)	$	4,540		$	136,552		$	(62,575	)
Total comprehensive income (loss)	$	(64,320	)	$	(117,311	)	$	(27,271	)	$	2,795		$	141,787		$	(64,320	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	280,204		$	3,187		$	58,402		$	—		$	341,793
Sales	—			135,338			455,780			426,200			(446,401		)	570,917
Total revenue	—			415,542			458,967			484,602			(446,401		)	912,710
Rental expenses	80			139,478			7,620			108,040			(82,388		)	172,830
Cost of sales	45			141,914			279,649			183,470			(439,469		)	165,609
Gross profit (loss)	(125		)	134,150			171,698			193,092			75,456			574,271
Selling, general and administrative expenses	1,978			152,303			89,951			102,887			(173		)	346,946
Research and development expenses	—			11,863			13,279			10,581			—			35,723
Acquired intangible asset amortization	—			32,162			39,890			27,391			—			99,443
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(2,103		)	(260,756		)	28,578			52,233			75,629			(106,419		)
Non-operating intercompany transactions	—			(668		)	(28,526		)	(30,989		)	60,183			—
Interest income and other	—			34,501			12,891			77			(47,247		)	222
Interest expense	—			(216,850		)	(34,358		)	(39		)	47,247			(204,000		)
Foreign currency gain	—			3,379			303			406			—			4,088
Derivative instruments loss	—			(4,300		)	—			—			—			(4,300		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,103		)	(444,694		)	(21,112		)	21,688			135,812			(310,409		)
Income tax expense (benefit)	—			(190,439		)	56,485			22,645			—			(111,309		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,103		)	(254,255		)	(77,597		)	(957		)	135,812			(199,100		)
Equity in earnings (loss) of subsidiaries	(196,997		)	(84,764		)	(957		)	—			282,718			—
Earnings (loss) from continuing operations	(199,100		)	(339,019		)	(78,554		)	(957		)	418,530			(199,100		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Total comprehensive income (loss)	$	(198,915	)	$	(338,834	)	$	(78,369	)	$	(772	)	$	417,975		$	(198,915	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	305,712		$	3,253		$	69,443		$	—		$	378,408
Sales	—			143,637			416,255			322,348			(412,085		)	470,155
Total revenue	—			449,349			419,508			391,791			(412,085		)	848,563
Rental expenses	13			123,498			8,170			113,335			(57,283		)	187,733
Cost of sales	54			97,731			253,909			119,908			(356,046		)	115,556
Gross profit (loss)	(67		)	228,120			157,429			158,548			1,244			545,274
Selling, general and administrative expenses	1,129			202,656			92,565			70,254			(179		)	366,425
Research and development expenses	—			15,356			16,521			6,302			—			38,179
Acquired intangible asset amortization	—			41,651			36,367			15,989			—			94,007
Operating earnings (loss)	(1,196		)	(31,543		)	11,976			66,003			1,423			46,663
Non-operating intercompany transactions	—			60,252			58,754			(52,353		)	(66,653		)	—
Interest income and other	—			36,194			6,126			69			(41,327		)	1,062
Interest expense	—			(219,761		)	(35,218		)	(94		)	41,327			(213,746		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency gain (loss)	—			5,480			(213		)	(8,464		)	—			(3,197		)
Derivative instruments gain (loss)	—			10,040			—			—			—			10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,196		)	(141,502		)	41,425			5,161			(65,230		)	(161,342		)
Income tax expense (benefit)	—			(46,097		)	(4,183		)	(5,744		)	—			(56,024		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,196		)	(95,405		)	45,608			10,905			(65,230		)	(105,318		)
Equity in earnings (loss) of subsidiaries	(106,166		)	55,260			10,814			—			40,092			—
Earnings (loss) from continuing operations	(107,362		)	(40,145		)	56,422			10,905			(25,138		)	(105,318		)
Earnings (loss) from discontinued operations, net of tax	—			(2,394		)	(2		)	(91		)	443			(2,044		)
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Total comprehensive income (loss)	$	(109,781	)	$	(44,958	)	$	54,001		$	8,395		$	(17,438	)	$	(109,781	)

Guarantor and Non-Guarantor Statement of Cash Flows

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	3,518			145,948			116,189			95,906			(101,083		)	260,478
Net cash provided (used) by operating activities	(195,582		)	(193,071		)	37,635			94,949			317,447			61,378
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(55,257		)	(3,587		)	(30,561		)	57,434			(31,971		)
Businesses acquired in purchase transaction, net of cash acquired	—			—			(4,500		)	(113		)	—			(4,613		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(424		)	(3,711		)	(95		)	—			(4,230		)
Net cash provided (used) by investing activities	—			(55,681		)	(11,798		)	(30,769		)	57,434			(40,814		)
Cash flows from financing activities:
Settlement of profits interest units	(1,416		)	—			—			—			—			(1,416		)
Repayments of long-term debt and capital lease obligations	—			(13,240		)	—			(31		)	—			(13,271		)
Proceeds (payments) on intercompany loans	—			216,613			(26,363		)	(190,250		)	—			—
Proceeds (payments) on intercompany investments	196,998			84,540			408			92,935			(374,881		)	—
Net cash provided (used) by financing activities	195,582			287,913			(25,955		)	(97,346		)	(374,881		)	(14,687		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			841			—			841
Net increase (decrease) in cash and cash equivalents	—			39,161			(118		)	(32,325		)	—			6,718
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	126,932		$	—		$	86,337		$	—		$	213,667

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities	2,767			145,087			(12,136		)	(49,950		)	61,987			147,755
Net cash provided (used) by operating activities	(104,595		)	102,548			44,284			(39,136		)	37,292			40,393
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(90,855		)	(8,962		)	(67,434		)	119,179			(48,072		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(49		)	(2,375		)	(134		)	—			(2,558		)
Net cash provided (used) by investing activities	—			(90,904		)	(11,337		)	(67,568		)	119,179			(50,630		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Repayments of long-term debt and capital lease obligations	—			(52,959		)	—			33			—			(52,926		)
Payment of debt issuance costs	—			(21,122		)	—			—			—			(21,122		)
Proceeds (payments) on intercompany loans	—			14,786			(16,371		)	1,585			—			—
Proceeds (payments) on intercompany investments	106,167			(56,265		)	(16,576		)	123,145			(156,471		)	—
Net cash provided (used) by financing activities	104,595			(115,560		)	(32,947		)	124,763			(156,471		)	(75,620		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(1,676		)	—			(1,676		)
Net increase (decrease) in cash and cash equivalents	—			(103,916		)	—			16,383			—			(87,533		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	172,872		$	—		$	122,347		$	—		$	295,617

XML

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility (1) – due 2018	$	1,936,975		$	1,946,708
Senior Euro Term E-1 Credit Facility (1) – due 2018	332,937			337,820
Senior Term E-2 Credit Facility (1) – due 2016	316,944			318,537
10.5% Second Lien Senior Secured Notes due 2018	1,750,000			1,750,000
12.5% Senior Unsecured Notes due 2019	612,000			612,000
3.25% Convertible Senior Notes due 2015	101			101
Notional amount of debt	4,948,957			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(27,621		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(9,469		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(3,727		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(22,268		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,844		)	(3,025		)
Net discount on debt	(65,929		)	(73,352		)
Total debt, net of discount	4,883,028			4,891,814
Less:  Current installments	(26,100		)	(26,311		)
	$	4,856,928		$	4,865,503

_____________________________

(1) On January 22, 2014, we entered into Amendment No. 5 to our senior secured credit facility. As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the governing credit agreement and loan documents, except as revised by Amendment No. 5.

XML

Guarantor Condensed Consolidating Financial Statements

6 Months Ended

Jun. 30, 2014

Guarantor Condensed Consolidating Financial Statements [Abstract]

Guarantor Condensed Consolidating Financial Statements

Guarantor Condensed Consolidating Financial Statements

Our 10.5% Second Lien Notes and 12.5% Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries. The non-guarantor subsidiaries do not have any payment obligations under the 10.5% Second Lien Notes or 12.5% Unsecured Notes. Subject to the terms of the10.5% Second Lien Notes and 12.5% Unsecured Notes indentures, the guarantee of a subsidiary guarantor will terminate upon:

(1) a sale or other disposition (including by way of consolidation or merger) of the capital stock of such guarantor or the sale or disposition of all or substantially all the assets of such subsidiary guarantor (other than to the Company or a restricted subsidiary) otherwise permitted by the 10.5% Second Lien Notes or 12.5% Unsecured Notes indentures,

(2) the designation in accordance with the 10.5% Second Lien Notes or 12.5% Unsecured Notes indenture of the guarantor as an unrestricted subsidiary or the occurrence of any event after which the guarantor is no longer a restricted subsidiary,

(3) defeasance or discharge of the 10.5% Second Lien Notes or 12.5% Unsecured Notes, or

(4) upon the achievement of investment grade status by the 10.5% Second Lien Notes or 12.5% Unsecured Notes; provided that such guarantee shall be reinstated upon the reversion date.

In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary will pay the holders of its debt and other liabilities, including its trade creditors, before it will be able to distribute any of its assets to us. In the future, any non-U.S. subsidiaries, immaterial subsidiaries and subsidiaries that we designate as unrestricted subsidiaries under the 10.5% Second Lien Notes and 12.5% Unsecured Notes indentures will not guarantee the 10.5% Second Lien Notes or 12.5% Unsecured Notes. As of June 30, 2014, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of the guarantee arrangements, we are presenting the following condensed consolidated balance sheets, statements of operations and comprehensive income (loss), and statements of cash flows of the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries.

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

June 30, 2014

(in thousands)

(unaudited)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	126,932		$	—	$	86,337	$	—		$	213,667
Accounts receivable, net	—		162,526			63,091		145,444		—			371,061
Inventories, net	—		90,347			109,130		100,722		(114,708		)	185,491
Deferred income taxes	—		3,850			28,701		—		—			32,551
Prepaid expenses and other	—		23,774			5,376		278,730		(264,632		)	43,248
Intercompany receivables	166		1,811,567			2,337,871		80,410		(4,230,014		)	—
Total current assets	564		2,218,996			2,544,169		691,643		(4,609,354		)	846,018
Net property, plant and equipment	—		291,799			76,384		199,214		(260,755		)	306,642
Debt issuance costs, net	—		89,960			—		—		—			89,960
Deferred income taxes	—		—			—		35,734		—			35,734
Goodwill	—		2,483,240			732,771		162,920		—			3,378,931
Identifiable intangible assets, net	—		329,408			1,811,914		330,751		—			2,472,073
Other non-current assets	—		1,209			186		94,724		(90,900		)	5,219
Intercompany loan receivables	—		789,037			421,051		—		(1,210,088		)	—
Intercompany investments	705,089		348,120			371,682		—		(1,424,891		)	—
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	17,339		$	12,147	$	25,360	$	—		$	54,846
Accrued expenses and other	—		297,686			246,871		80,664		(196,730		)	428,491
Intercompany payables	5,526		980,902			2,628,650		614,936		(4,230,014		)	—
Current installments of long-term debt	—		26,100			—		—		—			26,100
Income taxes payable	—		—			1,527		2,572		—			4,099
Deferred income taxes	—		—			—		17,219		—			17,219
Total current liabilities	5,526		1,322,027			2,889,195		740,751		(4,426,744		)	530,755
Long-term debt, net of current installments and discount	—		4,856,928			—		—		—			4,856,928
Non-current tax liabilities	—		29,422			4,373		20,194		—			53,989
Deferred income taxes	—		42,161			760,615		57,294		—			860,070
Other non-current liabilities	652		122,509			9,023		1,176		—			133,360
Intercompany loan payables	—		414,369			770,000		25,720		(1,210,089		)	—
Total liabilities	6,178		6,787,416			4,433,206		845,135		(5,636,833		)	6,435,102
Total equity	699,475		(235,647		)	1,524,951		669,851		(1,959,155		)	699,475
	$	705,653	$	6,551,769		$	5,958,157	$	1,514,986	$	(7,595,988	)	$	7,134,577

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Centaur Guernsey L.P. Inc. Parent Company		Kinetic Concepts, Inc. and KCI USA, Inc. Borrower		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets:
Current assets:
Cash and cash equivalents	$	398	$	87,771	$	118	$	118,662	$	—		$	206,949
Accounts receivable, net	—		184,723		71,457		151,398		—			407,578
Inventories, net	—		54,809		101,779		101,751		(76,772		)	181,567
Deferred income taxes	—		14,991		6,610		2,020		—			23,621
Prepaid expenses and other	—		35,832		5,434		321,427		(309,532		)	53,161
Intercompany receivables	166		1,687,528		2,326,181		21,241		(4,035,116		)	—
Total current assets	564		2,065,654		2,511,579		716,499		(4,421,420		)	872,876
Net property, plant and equipment	—		311,122		80,963		223,987		(282,347		)	333,725
Debt issuance costs, net	—		102,054		—		—		—			102,054
Deferred income taxes	—		—		—		31,459		—			31,459
Goodwill	—		2,483,240		732,771		162,650		—			3,378,661
Identifiable intangible assets, net	—		361,640		1,829,452		358,109		—			2,549,201
Other non-current assets	—		715		192		94,662		(90,900		)	4,669
Intercompany loan receivables	—		990,972		404,688		—		(1,395,660		)	—
Intercompany investments	901,902		432,884		372,093		—		(1,706,879		)	—
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645
Liabilities and Equity:
Current liabilities:
Accounts payable	$	—	$	15,266	$	14,929	$	20,121	$	—		$	50,316
Accrued expenses and other	—		185,790		246,977		77,843		(181,635		)	328,975
Intercompany payables	4,110		852,892		2,559,407		618,707		(4,035,116		)	—
Current installments of long-term debt	—		26,311		—		—		—			26,311
Income taxes payable	—		—		3,368		—		—			3,368
Deferred income taxes	—		—		—		2,199		—			2,199
Total current liabilities	4,110		1,080,259		2,824,681		718,870		(4,216,751		)	411,169
Long-term debt, net of current installments and discount	—		4,865,503		—		—		—			4,865,503
Non-current tax liabilities	—		28,850		4,284		20,548		—			53,682
Deferred income taxes	—		231,713		718,930		53,141		—			1,003,784
Other non-current liabilities	281		38,667		334		1,150		—			40,432
Intercompany loan payables	—		399,690		780,000		215,970		(1,395,660		)	—
Total liabilities	4,391		6,644,682		4,328,229		1,009,679		(5,612,411		)	6,374,570
Total equity	898,075		103,599		1,603,509		577,687		(2,284,795		)	898,075
	$	902,466	$	6,748,281	$	5,931,738	$	1,587,366	$	(7,897,206	)	$	7,272,645

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	144,440		$	1,606		$	29,189		$	—		$	175,235
Sales	—			69,469			250,425			217,734			(247,692		)	289,936
Total revenue	—			213,909			252,031			246,923			(247,692		)	465,171
Rental expenses	37			70,687			4,329			53,929			(41,944		)	87,038
Cost of sales	39			76,573			162,673			90,636			(247,614		)	82,307
Gross profit (loss)	(76		)	66,649			85,029			102,358			41,866			295,826
Selling, general and administrative expenses	1,085			73,021			42,549			54,000			(70		)	170,585
Research and development expenses	—			6,241			6,535			5,457			—			18,233
Acquired intangible asset amortization	—			15,737			19,718			13,299			—			48,754
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(1,161		)	(226,928		)	16,227			29,602			41,936			(140,324		)
Non-operating intercompany transactions	—			5,958			(20,244		)	(22,982		)	37,268			—
Interest income and other	—			17,301			3,063			47			(20,284		)	127
Interest expense	—			(104,834		)	(17,221		)	(34		)	20,284			(101,805		)
Foreign currency gain (loss)	—			3,839			349			(336		)	—			3,852
Derivative instruments loss	—			(4,297		)	—			—			—			(4,297		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,161		)	(308,961		)	(17,826		)	6,297			79,204			(242,447		)
Income tax expense (benefit)	—			(110,451		)	24,228			(3,507		)	—			(89,730		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,161		)	(198,510		)	(42,054		)	9,804			79,204			(152,717		)
Equity in earnings (loss) of subsidiaries	(151,556		)	(34,014		)	9,804			—			175,766			—
Earnings (loss) from continuing operations	(152,717		)	(232,524		)	(32,250		)	9,804			254,970			(152,717		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(152,717	)	$	(232,524	)	$	(32,250	)	$	9,804		$	254,970		$	(152,717	)
Total comprehensive income (loss)	$	(153,825	)	$	(233,632	)	$	(33,358	)	$	8,696		$	258,294		$	(153,825	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the three months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	155,244		$	1,013		$	33,988		$	—		$	190,245
Sales	—			74,428			196,572			160,448			(189,014		)	242,434
Total revenue	—			229,672			197,585			194,436			(189,014		)	432,679
Rental expenses	13			61,149			3,328			56,413			(30,521		)	90,382
Cost of sales	29			47,596			144,151			59,251			(191,702		)	59,325
Gross profit (loss)	(42		)	120,927			50,106			78,772			33,209			282,972
Selling, general and administrative expenses	621			120,228			47,902			36,291			(59		)	204,983
Research and development expenses	—			8,454			8,265			3,678			—			20,397
Acquired intangible asset amortization	—			20,414			18,088			7,959			—			46,461
Operating earnings (loss)	(663		)	(28,169		)	(24,149		)	30,844			33,268			11,131
Non-operating intercompany transactions	—			8,300			(101		)	(28,829		)	20,630			—
Interest income and other	—			18,510			3,063			40			(20,709		)	904
Interest expense	—			(108,622		)	(17,661		)	(84		)	20,709			(105,658		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency loss	—			(5,943		)	(135		)	(1,694		)	—			(7,772		)
Derivative instruments gain	—			10,556			—			—			—			10,556
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(663		)	(107,532		)	(38,983		)	277			53,898			(93,003		)
Income tax expense (benefit)	—			(18,526		)	(8,917		)	(3,613		)	—			(31,056		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(663		)	(89,006		)	(30,066		)	3,890			53,898			(61,947		)
Equity in earnings (loss) of subsidiaries	(61,912		)	(25,033		)	4,540			—			82,405			—
Earnings (loss) from continuing operations	(62,575		)	(114,039		)	(25,526		)	3,890			136,303			(61,947		)
Earnings (loss) from discontinued operations, net of tax	—			(1,527		)	—			650			249			(628		)
Net earnings (loss)	$	(62,575	)	$	(115,566	)	$	(25,526	)	$	4,540		$	136,552		$	(62,575	)
Total comprehensive income (loss)	$	(64,320	)	$	(117,311	)	$	(27,271	)	$	2,795		$	141,787		$	(64,320	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	280,204		$	3,187		$	58,402		$	—		$	341,793
Sales	—			135,338			455,780			426,200			(446,401		)	570,917
Total revenue	—			415,542			458,967			484,602			(446,401		)	912,710
Rental expenses	80			139,478			7,620			108,040			(82,388		)	172,830
Cost of sales	45			141,914			279,649			183,470			(439,469		)	165,609
Gross profit (loss)	(125		)	134,150			171,698			193,092			75,456			574,271
Selling, general and administrative expenses	1,978			152,303			89,951			102,887			(173		)	346,946
Research and development expenses	—			11,863			13,279			10,581			—			35,723
Acquired intangible asset amortization	—			32,162			39,890			27,391			—			99,443
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(2,103		)	(260,756		)	28,578			52,233			75,629			(106,419		)
Non-operating intercompany transactions	—			(668		)	(28,526		)	(30,989		)	60,183			—
Interest income and other	—			34,501			12,891			77			(47,247		)	222
Interest expense	—			(216,850		)	(34,358		)	(39		)	47,247			(204,000		)
Foreign currency gain	—			3,379			303			406			—			4,088
Derivative instruments loss	—			(4,300		)	—			—			—			(4,300		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,103		)	(444,694		)	(21,112		)	21,688			135,812			(310,409		)
Income tax expense (benefit)	—			(190,439		)	56,485			22,645			—			(111,309		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,103		)	(254,255		)	(77,597		)	(957		)	135,812			(199,100		)
Equity in earnings (loss) of subsidiaries	(196,997		)	(84,764		)	(957		)	—			282,718			—
Earnings (loss) from continuing operations	(199,100		)	(339,019		)	(78,554		)	(957		)	418,530			(199,100		)
Earnings (loss) from discontinued operations, net of tax	—			—			—			—			—			—
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Total comprehensive income (loss)	$	(198,915	)	$	(338,834	)	$	(78,369	)	$	(772	)	$	417,975		$	(198,915	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Operations and Comprehensive Income (Loss)

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	305,712		$	3,253		$	69,443		$	—		$	378,408
Sales	—			143,637			416,255			322,348			(412,085		)	470,155
Total revenue	—			449,349			419,508			391,791			(412,085		)	848,563
Rental expenses	13			123,498			8,170			113,335			(57,283		)	187,733
Cost of sales	54			97,731			253,909			119,908			(356,046		)	115,556
Gross profit (loss)	(67		)	228,120			157,429			158,548			1,244			545,274
Selling, general and administrative expenses	1,129			202,656			92,565			70,254			(179		)	366,425
Research and development expenses	—			15,356			16,521			6,302			—			38,179
Acquired intangible asset amortization	—			41,651			36,367			15,989			—			94,007
Operating earnings (loss)	(1,196		)	(31,543		)	11,976			66,003			1,423			46,663
Non-operating intercompany transactions	—			60,252			58,754			(52,353		)	(66,653		)	—
Interest income and other	—			36,194			6,126			69			(41,327		)	1,062
Interest expense	—			(219,761		)	(35,218		)	(94		)	41,327			(213,746		)
Loss on extinguishment of debt	—			(2,164		)	—			—			—			(2,164		)
Foreign currency gain (loss)	—			5,480			(213		)	(8,464		)	—			(3,197		)
Derivative instruments gain (loss)	—			10,040			—			—			—			10,040
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(1,196		)	(141,502		)	41,425			5,161			(65,230		)	(161,342		)
Income tax expense (benefit)	—			(46,097		)	(4,183		)	(5,744		)	—			(56,024		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(1,196		)	(95,405		)	45,608			10,905			(65,230		)	(105,318		)
Equity in earnings (loss) of subsidiaries	(106,166		)	55,260			10,814			—			40,092			—
Earnings (loss) from continuing operations	(107,362		)	(40,145		)	56,422			10,905			(25,138		)	(105,318		)
Earnings (loss) from discontinued operations, net of tax	—			(2,394		)	(2		)	(91		)	443			(2,044		)
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Total comprehensive income (loss)	$	(109,781	)	$	(44,958	)	$	54,001		$	8,395		$	(17,438	)	$	(109,781	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2014
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(199,100	)	$	(339,019	)	$	(78,554	)	$	(957	)	$	418,530		$	(199,100	)
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities	3,518			145,948			116,189			95,906			(101,083		)	260,478
Net cash provided (used) by operating activities	(195,582		)	(193,071		)	37,635			94,949			317,447			61,378
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(55,257		)	(3,587		)	(30,561		)	57,434			(31,971		)
Businesses acquired in purchase transaction, net of cash acquired	—			—			(4,500		)	(113		)	—			(4,613		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(424		)	(3,711		)	(95		)	—			(4,230		)
Net cash provided (used) by investing activities	—			(55,681		)	(11,798		)	(30,769		)	57,434			(40,814		)
Cash flows from financing activities:
Settlement of profits interest units	(1,416		)	—			—			—			—			(1,416		)
Repayments of long-term debt and capital lease obligations	—			(13,240		)	—			(31		)	—			(13,271		)
Proceeds (payments) on intercompany loans	—			216,613			(26,363		)	(190,250		)	—			—
Proceeds (payments) on intercompany investments	196,998			84,540			408			92,935			(374,881		)	—
Net cash provided (used) by financing activities	195,582			287,913			(25,955		)	(97,346		)	(374,881		)	(14,687		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			841			—			841
Net increase (decrease) in cash and cash equivalents	—			39,161			(118		)	(32,325		)	—			6,718
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	126,932		$	—		$	86,337		$	—		$	213,667

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

(unaudited)

	For the six months ended June 30, 2013
	Centaur Guernsey L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net earnings (loss)	$	(107,362	)	$	(42,539	)	$	56,420		$	10,814		$	(24,695	)	$	(107,362	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities	2,767			145,087			(12,136		)	(49,950		)	61,987			147,755
Net cash provided (used) by operating activities	(104,595		)	102,548			44,284			(39,136		)	37,292			40,393
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(90,855		)	(8,962		)	(67,434		)	119,179			(48,072		)
Decrease (increase) in identifiable intangible assets and other non-current assets	—			(49		)	(2,375		)	(134		)	—			(2,558		)
Net cash provided (used) by investing activities	—			(90,904		)	(11,337		)	(67,568		)	119,179			(50,630		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Repayments of long-term debt and capital lease obligations	—			(52,959		)	—			33			—			(52,926		)
Payment of debt issuance costs	—			(21,122		)	—			—			—			(21,122		)
Proceeds (payments) on intercompany loans	—			14,786			(16,371		)	1,585			—			—
Proceeds (payments) on intercompany investments	106,167			(56,265		)	(16,576		)	123,145			(156,471		)	—
Net cash provided (used) by financing activities	104,595			(115,560		)	(32,947		)	124,763			(156,471		)	(75,620		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(1,676		)	—			(1,676		)
Net increase (decrease) in cash and cash equivalents	—			(103,916		)	—			16,383			—			(87,533		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	172,872		$	—		$	122,347		$	—		$	295,617

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

LEGAL PROCEEDINGS

Intellectual Property Litigation

As the owner and exclusive licensee of patents, from time to time, we are a party to proceedings challenging these patents, including challenges in U.S. federal courts, foreign courts, foreign patent offices and the U.S. Patent and Trademark Office. Additionally, from time to time, we are a party to litigation we initiate against others we contend infringe these patents, which often results in counterclaims regarding the validity of such patents. At other times, we are party to litigation initiated by others who contend we infringe their patents. It is not possible to reliably predict the outcome of the proceedings described below. However, if we are unable to effectively enforce our intellectual property rights, third parties may become more aggressive in the marketing of competitive products around the world.

On June 30, 2014 , KCI entered into a settlement and release agreement (the “Settlement Agreement”) with Wake Forest University Health Sciences to fully and finally resolve the pending patent disputes between them relating to negative pressure wound therapy ("NPWT"). The Settlement Agreement resolves all disputes between the parties as detailed in our previous disclosures. The Settlement Agreement includes a stipulated dismissal with prejudice of the lawsuits between KCI and Wake Forest, including the lawsuit that was previously scheduled to begin trial on July 28, 2014 in the U.S. District Court for the Western District of Texas, San Antonio Division. To fully resolve the litigation, KCI agreed to pay Wake Forest retrospective U.S. patent royalties in the amount of $280.0 million, according to the following schedule: $80.0 million paid in July 2014, $85.0 million to be paid in June 2015, $85.0 million to be paid in June 2016, and $30.0 million to be paid in June 2017. As of June 30, 2014, the accompanying condensed consolidated balance sheet included $160.4 million under the caption "accrued expenses and other" and $101.4 million under the caption "other non-current liabilities" representing the net present value of payments under the Settlement Agreement discounted using our incremental borrowing rate as the discount rate. As a result, we recorded patent settlement charges of $198.6 million in the second quarter of 2014 representing the net present value of payments under the Settlement Agreement, net of the $63.2 million previously existing accrual.

In August 2013, Vital Needs International, L.P. ("Vital Needs") filed a Demand for Arbitration with the American Arbitration Association seeking to recover $100 million in damages against KCI entities based on a number of claims related to certain intellectual property rights sold by Vital Needs to KCI pursuant to a 2006 acquisition agreement. Vital Needs alleges, among other things, breach of the contract for failure to pay royalties on sales of KCI products. We do not believe any royalties are owed to Vital Needs for sales of KCI products, and we believe our defenses to Vital Needs' claims are meritorious. We intend to vigorously defend the arbitration, which is in its initial phase. The arbitration is currently set for January 2015. It is not possible to predict the outcome of this arbitration, nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

In September 2013, LifeNet Health ("LifeNet") filed suit against LifeCell Corporation in the United States District Court for the Eastern District of Virginia, Norfolk Division. LifeNet alleges that two LifeCell products, Strattice and AlloDerm Ready to Use, infringe LifeNet’s U.S. Patent No. 6,569,200 ("the ‘200 Patent"). LifeNet alleges that LifeCell has been aware of the ‘200 Patent and its infringement since 2009 and acted willfully in continuing to infringe the ‘200 Patent thereafter. LifeNet seeks monetary damages including treble damages for willful infringement, together with costs and prejudgment and post judgment interest as well as a finding that the case is exceptional and an award of costs and reasonable attorneys fees. We believe that our defenses to the LifeNet claims are meritorious and that the patents that are the subject of the litigation are invalid, or are not infringed by LifeCell’s products. It is not possible to predict the outcome of this litigation nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

Products Liability Litigation

LifeCell Corporation is a defendant in approximately 330 lawsuits filed by individuals alleging personal injury and seeking monetary damages for failed hernia repair procedures using LifeCell’s AlloDerm products. These cases have been consolidated for case management purposes in Middlesex County, New Jersey. The trial court has issued a pre-trial order incorporating the bellwether practice of trying the claims of some plaintiffs to determine the likelihood of settlement or to avoid relitigating common issues in every case. Following limited discovery, the parties have recently selected four bellwether cases from which one case to be tried will be selected. Full discovery will now proceed on each of the bellwether cases. Trial of the one bellwether case that is ultimately selected is scheduled for September 2015. Although it is not possible to reliably predict the outcome of the litigation, we believe that our defenses to these claims are meritorious and we will defend against these suits vigorously. These consolidated cases are being treated as a single occurrence and therefore do not require the exhaustion of a separate self-insured retention to trigger coverage. Based on our existing insurance coverage and our defenses to these cases, we do not expect them to have a material impact on our results of operations or our financial position. As these cases are in their early stages with much discovery still to be conducted, the plaintiffs have yet to set forth their alleged damages. As such, it is impossible to predict or estimate potential losses if our defenses to these cases are unsuccessful.

Since 2012, LifeCell Corporation has been named as a defendant in approximately 130 lawsuits in state and federal courts in Massachusetts, Delaware, Minnesota, New York and Texas (federal court cases have been transferred to West Virginia multidistrict litigation docket) alleging personal injury and seeking monetary damages for failed gynecological procedures using a human tissue product processed by LifeCell and sold by one of LifeCell’s distributors, Boston Scientific, under the name Repliform. There are approximately 110 LifeCell cases filed in a consolidated docket in Middlesex County Massachusetts. Although many were initially filed in a multidistrict action involving numerous synthetic mesh manufacturers and synthetic products, the court has transferred cases involving only Repliform to a separate docket. The cases are in the initial phase and no discovery has occurred. We intend to defend these suits vigorously. Based on our existing insurance coverage and our defenses to these cases, we do not expect them to have a material impact on our results of operations or our financial position. As these cases are in their early stages it is not possible to predict or estimate potential losses if our defenses to these cases are unsuccessful.

Other Litigation

In 2009, KCI received a subpoena from the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) seeking records regarding our billing practices under the local coverage policies of the four regional Durable Medical Equipment Medicare Administrative Contractors (“DME MACs”). KCI cooperated with the OIG's inquiry and provided substantial documentation to the OIG and the U.S. Attorneys' office in response to its request. The government's inquiry stemmed from the filing under seal of two 2008 qui tam actions against KCI by two former employees in the U.S. District Court, Central District of California, Western Division. These cases are captioned United States of America, ex rel. Steven J. Hartpence v. Kinetic Concepts, Inc. et al, and United States of America, ex rel. Geraldine Godecke v. Kinetic Concepts, Inc., et al. The complaints contend that KCI violated the Federal False Claims Act by billing in a manner that was not consistent with the Local Coverage Determinations issued by the DME MACs and seek recovery of monetary damages. Following the completion of the government's review and its decision declining to intervene in such suits, the live pleadings were ordered unsealed in 2011. After reviewing the allegations, KCI filed motions seeking the dismissal of the suits on multiple grounds.  In 2012, the Court granted KCI's motions dismissing all of the claims under the False Claims Act. The cases are on appeal in the U.S. Court of Appeals for the Ninth Circuit and oral argument was in July 2014. We believe that our defenses to the claims in the Hartpence and Goedecke cases are meritorious and that we have no liability under the False Claims Act for their allegations. However, it is not possible to predict the outcome of this litigation nor is it possible to estimate any damages that may be awarded if we are unsuccessful in the litigation.

We are a party to several additional lawsuits arising in the ordinary course of our business. Additionally, the manufacturing and marketing of medical products necessarily entails an inherent risk of product liability claims. We maintain multiple layers of product liability insurance coverage and we believe these policies and the amounts of coverage are appropriate and adequate.

OTHER COMMITMENTS AND CONTINGENCIES

As a healthcare supplier, we are subject to extensive government regulation, including laws and regulations directed at ascertaining the appropriateness of reimbursement, preventing fraud and abuse and otherwise regulating reimbursement under various government programs. The marketing, billing, documenting and other practices are all subject to government oversight and review. To ensure compliance with Medicare and other regulations, regional carriers often conduct audits and request patient records and other documents to support claims submitted by us for payment of services rendered to customers.

We also are subject to routine pre-payment and post-payment audits of medical claims submitted to Medicare. These audits typically involve a review, by Medicare or its designated contractors and representatives, of documentation supporting the medical necessity of the therapy provided by us. While Medicare requires us to obtain a comprehensive physician order prior to providing products and services, we are not required to, and do not as a matter of practice require, or subsequently obtain, the underlying medical records supporting the information included in such claim. Following a Medicare request for supporting documentation, we are obligated to procure and submit the underlying medical records retained by various medical facilities and physicians. Obtaining these medical records in connection with a claims audit may be difficult or impossible and, in any event, all of these records are subject to further examination and dispute by an auditing authority. Under standard Medicare procedures, we are entitled to demonstrate the sufficiency of documentation and the establishment of medical necessity, and we have the right to appeal any adverse determinations. If a determination is made that our records or the patients' medical records are insufficient to meet medical necessity or Medicare reimbursement requirements for the claims subject to a pre-payment or post-payment audit, we could be subject to denial, recoupment or refund demands for claims submitted for Medicare reimbursement. In the event that an audit results in discrepancies in the records provided, Medicare may be entitled to extrapolate the results of the audit to make recoupment demands based on a wider population of claims than those examined in the audit.

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Segment Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure

Segment Information

The Company is engaged in the rental and sale of advanced wound therapeutics and regenerative medicine products in over 75 countries worldwide through direct sales and indirect operations. We have two reportable operating segments which correspond to our two businesses: Advanced Wound Therapeutics ("AWT") and Regenerative Medicine. Our AWT business is conducted by KCI and its subsidiaries, including Systagenix, while our Regenerative Medicine business is conducted by LifeCell and its subsidiaries. In most countries where we operate, certain aspects of our two businesses are supported by the same administrative staff, systems and infrastructure and, as such, we have allocated these costs between the businesses based on allocation methods including headcount, revenue and other methods as deemed appropriate. We measure segment profit (loss) as operating earnings (loss), which is defined as income (loss) before interest and other income, interest expense, foreign currency gains and losses, derivative instruments gains and losses and income taxes. All intercompany transactions are eliminated in computing revenue and operating earnings (loss).

On November 8, 2012, Getinge AB purchased certain assets and assumed certain liabilities comprising KCI's TSS business. The historical results of operations of the TSS business, excluding the allocation of general corporate overhead, are reported as discontinued operations in the consolidated statements of operations. Discontinued operations amounts related to TSS also exclude incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the transition services agreement.

Information on segments and a reconciliation of consolidated totals are as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenue:
Advanced Wound Therapeutics	$	351,655		$	317,765		$	687,634		$	623,647
Regenerative Medicine	113,516			114,914			225,076			224,916
Total revenue	$	465,171		$	432,679		$	912,710		$	848,563
Operating earnings (loss):
Advanced Wound Therapeutics	$	106,507		$	110,897		$	191,257		$	200,318
Regenerative Medicine	33,764			31,197			64,772			61,066
Non-allocated costs:
General headquarter expense (1)	(2,398		)	(40,003		)	(5,207		)	(53,112		)
Equity-based compensation	(1,162		)	(663		)	(2,103		)	(1,196		)
Merger and restructuring-related expenses (2)	(29,703		)	(43,836		)	(57,117		)	(66,406		)
Acquired intangible asset amortization (3)	(48,754		)	(46,461		)	(99,443		)	(94,007		)
Wake Forest settlement	(198,578		)	—			(198,578		)	—
Total non-allocated costs	(280,595		)	(130,963		)	(362,448		)	(214,721		)
Total operating earnings	$	(140,324	)	$	11,131		$	(106,419	)	$	46,663

_____________________

(1) The second quarter and six months ended June 30, 2013 includes $4.0 million and $13.4 million, respectively, of write-offs of in-process research and development costs due to discontinuation of related projects and a $30.3 million fixed asset impairment charge.

(2) Represents expenses related to the Merger including management fees and restructuring-related expenses.

(3) 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, financial position and cash flows in conformity with GAAP. Operating results from interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of our results for the interim periods presented. Certain prior period amounts have been reclassified to conform to the 2014 presentation.

On November 8, 2012, KCI closed on the divestiture of its Therapeutic Support Systems ("TSS") business to Getinge AB. Under the terms of the sale agreement, we agreed to provide transition services to Getinge AB after the close of the transaction. Additionally, the results of the operations subject to the agreement, excluding the allocation of general corporate overhead, are presented as discontinued operations in the consolidated statements of operations for all periods presented. Discontinued operations amounts related to TSS also exclude incremental expenses related to our transition services agreement with Getinge AB and the service fee payable by Getinge AB under the transition services agreement.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. We have two primary geographic regions for which we provide supplemental information: the Americas, which is comprised principally of the United States and includes Canada, Puerto Rico and Latin America; and EMEA/APAC, which is comprised of Europe, the Middle East, Africa and the Asia Pacific region.

The condensed consolidated financial statements appearing in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Derivative Financial Instruments and Fair Value Measurements

Derivative Financial Instruments and Fair Value Measurements

We use derivative financial instruments to manage the economic impact of fluctuations in interest rates. We do not use financial instruments for speculative or trading purposes. Periodically, we enter into interest rate protection agreements to modify the interest characteristics of our outstanding debt. Our interest rate derivatives have not been designated as hedging instruments, and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period.

We also use derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates on our intercompany balances and corresponding cash flows and to manage our transactional currency exposures when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. We enter into foreign currency exchange contracts to manage these economic risks. These contracts are not designated as hedges; and as such, we recognize the fair value of these instruments as an asset or liability with income or expense recognized in the current period. Although we use master netting agreements with our derivative counterparties, we do not offset derivative asset and liability positions in the condensed consolidated balance sheets.

All derivative instruments are recorded on the balance sheets at fair value. The fair values of our interest rate derivatives and foreign currency exchange contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets, which represent level 2 inputs as defined by the Codification.

Concentration of Credit Risk

Concentration of Credit Risk

We have a concentration of credit risk with financial institutions related to our derivative instruments. As of June 30, 2014, Morgan Stanley, UBS and HSBC were the counterparties on our interest rate protection agreements consisting of interest rate swap agreements in notional amounts totaling $507.1 million each. We use master netting agreements with our derivative counterparties to reduce our risk and use multiple counterparties to reduce our concentration of credit risk.

We maintain cash and cash equivalents with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. These deposits bear minimal credit risk as they are maintained at financial institutions of reputable credit and generally may be redeemed upon demand.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11 “Income Taxes – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forwards Exists” which provides that entities should present the unrecognized tax benefit as a reduction of the deferred tax asset for a net operating loss (“NOL”) or similar tax loss or tax credit carryforward rather than as a liability when the uncertain tax position would reduce the NOL or other carryforward under the tax law. The ASU is effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company adopted this ASU effective January 1, 2014. The adoption of this update did not have a material impact on our results of operations, financial position or disclosures.

Recently Issued Accounting Standards

(e)   Recently Issued Accounting Standards

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity". ASU No. 2014-08 changes the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organization's operations and financial results should be presented as discontinued operations. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. The Company is evaluating this update, however we do not anticipate that it will have a material effect on our results of operations, financial position or disclosures.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU supersedes the revenue recognition requirements in Topic 605, "Revenue Recognition", and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, "Revenue Recognition-Construction-Type and Production-Type Contracts". In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, "Property, Plant, and Equipment", and intangible assets within the scope of Topic 350, "Intangibles-Goodwill and Other") are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU. For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is evaluating this update to determine if it will have a material effect on our results of operations, financial position or disclosures.

Other Significant Accounting Policies

Other Significant Accounting Policies

For further information on our significant accounting policies, see Note 1 of the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014 segment		Jun. 30, 2013
Segment Reporting Information [Line Items]
Number of Reportable Operating Segments					2
Number of global business units					2
Total revenue	$ 465,171		$ 432,679		$ 912,710		$ 848,563
Operating earnings (loss)	(140,324)		11,131		(106,419)		46,663
Non-allocated costs:
General headquarter expense	(2,398)	[1]	(40,003)	[1]	(5,207)	[1]	(53,112)	[1]
Equity-based compensation	(1,162)		(663)		(2,103)		(1,196)
Merger and restructuring-related expenses	(29,703)	[2]	(43,836)	[2]	(57,117)	[2]	(66,406)	[2]
Acquired intangible asset amortization	(48,754)	[3]	(46,461)	[3]	(99,443)	[3]	(94,007)	[3]
Wake Forest settlement	(198,578)		0		(198,578)		0
Total non-allocated costs	(280,595)		(130,963)		(362,448)		(214,721)
Write-off of other intangible assets			4,000		0		13,400
Asset Impairment Charges			30,259		0		30,259
Advanced Wound Therapeutics [Member]
Segment Reporting Information [Line Items]
Total revenue	351,655		317,765		687,634		623,647
Operating earnings (loss)	106,507		110,897		191,257		200,318
Regenerative Medicine [Member]
Segment Reporting Information [Line Items]
Total revenue	113,516		114,914		225,076		224,916
Operating earnings (loss)	$ 33,764		$ 31,197		$ 64,772		$ 61,066
Minimum [Member]
Segment Reporting Information [Line Items]
Minimum number of countries in which the entity has operations	75				75

[1] The second quarter and six months ended June 30, 2013 includes $4.0 million and $13.4 million, respectively, of write-offs of in-process research and development costs due to discontinuation of related projects and a $30.3 million fixed asset impairment charge.

[2] Represents expenses related to the Merger including management fees and restructuring-related expenses.

[3] 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011.

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows (in thousands):

	Accumulated Foreign Currency Translation Adjustment			Investment Gain			Accumulated Other Comprehensive Income (Loss)
Balances at December 31, 2013	$	(4,384	)	$	2,241		$	(2,143	)
Unrealized investment gain, net of tax benefit of $1	—			(2		)	(2		)
Foreign currency translation adjustment, net of tax expense of $502	187			—			187
Balances at June 30, 2014	$	(4,197	)	$	2,239		$	(1,958	)

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Supplemental Balance Sheet Data - Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Billed trade accounts receivable	$ 399,904	$ 418,804
Unbilled receivables	31,518	50,841
Less: Allowance for revenue adjustments	(59,138)	(67,631)
Gross trade accounts receivable	372,284	402,014
Less: Allowance for bad debt	(13,166)	(8,483)
Net trade accounts receivable	359,118	393,531
Other receivables	11,943	14,047
Accounts receivable, net	$ 371,061	$ 407,578

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Unrealized investment gain, net of tax benefit (expense) of $629 and $1 in 2014 and ($385) and ($1,075) in 2013	$ 629	$ (385)	$ 1	$ (1,075)
Foreign currency translation adjustment, net of tax benefit (expense) of ($440) and ($502) in 2014 and $171 and $559 in 2013	$ (440)	$ 171	$ (502)	$ 559

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Long-Term Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility (1) – due 2018	$	1,936,975		$	1,946,708
Senior Euro Term E-1 Credit Facility (1) – due 2018	332,937			337,820
Senior Term E-2 Credit Facility (1) – due 2016	316,944			318,537
10.5% Second Lien Senior Secured Notes due 2018	1,750,000			1,750,000
12.5% Senior Unsecured Notes due 2019	612,000			612,000
3.25% Convertible Senior Notes due 2015	101			101
Notional amount of debt	4,948,957			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(27,621		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(9,469		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(3,727		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(22,268		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,844		)	(3,025		)
Net discount on debt	(65,929		)	(73,352		)
Total debt, net of discount	4,883,028			4,891,814
Less:  Current installments	(26,100		)	(26,311		)
	$	4,856,928		$	4,865,503

_____________________________

(1) On January 22, 2014, we entered into Amendment No. 5 to our senior secured credit facility. As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the governing credit agreement and loan documents, except as revised by Amendment No. 5.

Senior Secured Credit Facility

Our senior secured credit facility (the “Senior Secured Credit Facility”) includes a $200 million revolving credit facility (the “Revolving Credit Facility”). Amounts available under the Revolving Credit Facility are available for borrowing and reborrowing until maturity. At June 30, 2014 and December 31, 2013, no revolving credit loans were outstanding and we had outstanding letters of credit issued by banks which are party to the Senior Secured Credit Facility of $21.3 million and $21.2 million, respectively. In addition, we had $12.1 million and $12.6 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility as of June 30, 2014 and December 31, 2013, respectively. The capacity of the Revolving Credit Facility is reduced for the $21.3 million and $21.2 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility as of June 30, 2014 and December 31, 2013, respectively. The resulting availability under the Revolving Credit Facility was $178.7 million and $178.8 million at June 30, 2014 and December 31, 2013, respectively. Commitment fees accrue at a rate of 0.50% on the amounts available under the Revolving Credit Facility.

On January 22, 2014, we entered into Amendment No. 5 to our Senior Secured Credit Facility ("Amendment No. 5"). As a result of the amendment we created new classes of Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, having the same rights and obligations as the Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans as set forth in the governing credit agreement and loan documents, except as revised by Amendment No. 5. In connection with Amendment No. 5, Dollar Term D-1 Loans, Euro Term D-1 Loans and Term D-2 Loans were refinanced with Dollar Term E-1 Loans, Euro Term E-1 Loans and Term E-2 Loans, respectively.

Interest. Amounts outstanding under the Dollar Term E-1 Loans, the Term E-2 Loans and the Revolving Credit Facility (other than swing-line loans and unreimbursed drawings on letters of credit) bear interest, at our option, at a rate equal to either the base rate or the eurocurrency rate, in each case plus an applicable margin. Amounts outstanding under the Euro Term E-1 Loans bear interest at the eurocurrency rate, and swing-line loans and unreimbursed drawings on letters of credit bear interest at the base rate. As a result of Amendment No. 5, the new applicable margins are (i) for eurocurrency rate loans that are Dollar Term E-1 Loans, 3.00%, (ii) for base rate loans that are Dollar Term E-1 Loans, 2.00%, (iii) for eurocurrency rate loans that are Euro Term E-1 Loans, 3.25%, (iv) for base rate loans that are Euro Term E-1 Loans, 2.25%, (v) for eurocurrency rate loans that are Term E-2 Loans, 2.50%, and (vi) for base rate loans that are Term E-2 Loans, 1.50%. The Term E loans will have a eurocurrency rate floor of 1.00% and a base rate floor of 2.00%.

10.5% Second Lien Senior Secured Notes and 12.5% Senior Unsecured Notes

As required upon the closing of our 10.5% Second Lien Senior Secured Notes due 2018 (“10.5% Second Lien Notes”) and the 12.5% Senior Unsecured Notes due 2019 (“12.5% Unsecured Notes”), we entered into registration rights agreements with respect to these notes. Pursuant to the terms of the registration rights agreements, we filed a registration statement (the “Registration Statement”) with respect to a registered exchange offer to exchange such notes for new notes with terms substantially identical in all material respects with the notes (except for the provisions relating to the transfer restrictions and payment of additional interest). On February 13, 2013, our Registration Statement was declared effective by the Securities and Exchange Commission (“SEC”), and our exchange offer was completed on March 15, 2013.

Because our Registration Statement was not declared effective by the SEC under the Securities Act and the exchange offer was not consummated within 365 days following the issuance of the notes (“Exchange Date”), and because we did not file a shelf registration statement covering resales of the notes within 30 days after the Exchange Date (each a “Notes Registration Default”), additional interest accrued on the aggregate principal amount of the notes from and including the date on which any such Notes Registration Default occurred to but excluding the date on which the Notes Registration Defaults were cured through the completion of the exchange offer. Under the terms of the registration rights agreements entered into with respect to these notes, additional interest was accrued at a rate of 0.25% and 0.50% from November 4, 2012 to February 4, 2013 and February 5, 2013 to March 15, 2013, respectively.

Covenants

As of June 30, 2014, we were in compliance with all covenants under our Senior Secured Credit Facility, 10.5% Second Lien Notes, 12.5% Unsecured Notes, and 3.25% Convertible Senior Notes due 2015 (“the Convertible Notes”).

For further information on our long-term debt, see Note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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Supplemental Balance Sheet Data - Inventories, Net (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Inventory [Line Items]
Finished goods and tissue available for distribution	$ 126,494	$ 110,937
Goods and tissue in-process	12,387	12,994
Raw materials, supplies, parts and unprocessed tissue	69,454	71,876
Inventories, gross	208,335	195,807
Less: Amounts expected to be converted into equipment for short-term rental	(8,073)	(3,952)
Reserve for excess and obsolete inventory	(14,771)	(10,288)
Inventories, net	$ 185,491	$ 181,567

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Derivative Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Derivative [Line Items]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table sets forth the location and aggregate fair value amounts of all derivative instruments with credit-related contingent features (in thousands):

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
		June 30, 2014		December 31, 2013			June 30, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	14,713	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	14,175		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	28,888	$	32,820

Not Designated as Hedging Instrument [Member]

Derivative [Line Items]

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following table summarizes the amount of gain (loss) on derivatives not designated as hedging instruments (dollars in thousands):

	Three months ended June 30,					Six months ended June 30,
	2014			2013		2014			2013
Interest rate swap agreements	$	(4,287	)	$	9,953	$	(4,362	)	$	9,252
Interest rate cap agreements	—			1		—			(5		)
Foreign currency exchange contracts	(10		)	602		62			793
	$	(4,297	)	$	10,556	$	(4,300	)	$	10,040

Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]

Derivative [Line Items]

Schedule of Notional Amounts of Outstanding Derivative Positions

The following table summarizes our interest rate swap agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$507,100	2.256%
12/31/13-12/31/16	$507,100	2.249%
12/31/13-12/31/16	$507,100	2.250%