10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

Commission file number 001-09913

ACELITY 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

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

                                                                                                                                                                         Yes   ____         No    X   

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

                                                                                                                                                                         Yes   ____         No     X   

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   ____           No    X   

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  X   

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 March 9, 2015, there were 341,410,891.610 Class A-1 and 717,038.800 Class A-2 partnership units outstanding, all of which were held by affiliates.   

Documents Incorporated by Reference: None

TABLE OF CONTENTS

ACELITY L.P. INC.

			Page No.
PART I.	Item 1.	Business	4
	Item 1A.	Risk Factors	17
	Item 1B.	Unresolved Staff Comments	30
	Item 2.	Properties	31
	Item 3.	Legal Proceedings	32
	Item 4.	Mine Safety Disclosures	33
PART II.	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
	Item 6.	Selected Financial Data	34
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risks	54
	Item 8.	Financial Statements and Supplementary Data	56
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	110
	Item 9A.	Controls and Procedures	110
	Item 9B.	Other Information	111
PART III.	Item 10.	Directors, Executive Officers and Corporate Governance	112
	Item 11.	Executive Compensation	116
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	141
	Item 13.	Certain Relationships and Related Transactions and Director Independence	142
	Item 14.	Principal Accounting Fees and Services	145
PART IV.	Item 15.	Exhibits and Financial Statement Schedules	146
SIGNATURES			151

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K. Except as required under federal securities laws and the rules and regulations of the SEC, we do not have any intention to update any forward-looking statements to reflect events or circumstances arising after the date of this Annual Report on Form 10-K, 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K 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.

MARKET AND INDUSTRY DATA AND FORECASTS

This Annual Report on Form 10-K includes industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources we believe to be reliable. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management’s good faith estimates and assumptions about our markets and our internal research. We have not independently verified such third-party information nor have we ascertained the underlying economic assumptions relied upon in those sources. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in this Annual Report on Form 10-K.

DEFINED TERMS

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

• the terms the “Company,” “we,” “our,” and “us” refer to Acelity L.P. Inc., formerly know as Centaur Guernsey L.P. Inc., (“Acelity”) 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 Acelity.

• the term “Sponsors” means collectively investment funds advised by Apax Partners (“Apax”) and controlled affiliates of Canada Pension Plan Investment Board (“CPPIB”) and the Public Sector Pension Investment Board (“PSP Investments”) and certain other co-investors who control Acelity.

▪ 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.

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PART I

ITEM 1.BUSINESS

Company Overview and Corporate Organization

Acelity is a non-operating holding company whose business is comprised of the operations of wholly-owned subsidiaries that commercialize our advanced wound therapeutics and regenerative medicine products. Acelity is controlled by our Sponsors. We operate our advanced wound therapeutics and regenerative medicine businesses through subsidiaries of KCI, LifeCell and Systagenix. Our global headquarters is based in San Antonio, Texas.

We are a leading global medical technology company devoted to the development and commercialization of innovative products and therapies designed to improve clinical outcomes while helping to reduce the overall cost of patient care. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all healthcare settings, including acute care hospitals, long-term care facilities and patients’ homes. 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. Our primary businesses serve the advanced wound therapeutics and regenerative medicine markets.

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.Other revenue consists of contract manufacturing operations performed at our manufacturing facility in Gargrave, England. 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.

For the year ended December 31, 2014, we generated revenue of $1.866 billion. Our AWT and Regenerative Medicine businesses generated approximately 76.1% and 22.9% of our total 2014 revenue, respectively. Other revenue was approximately 1.0% of our total 2014 revenue. Revenue from our Americas and EMEA/APAC operations accounted for 75.6% and 24.4% of our total 2014 revenue, respectively.

As of December 31, 2014, we had approximately 5,740 employees worldwide, the majority of whom are located in North America. Other major concentrations of employees are located in Europe and at our manufacturing, research and development and engineering operations based in the U.K., Ireland and Belgium.

Competitive Strengths

We believe we have the following competitive strengths:

Leading Brands in Attractive Markets

We have built leading brands in the large and growing advanced wound therapeutics and regenerative medicine markets. Our product portfolio includes several top global brands such as V.A.C.®, AlloDerm®, Strattice® and Promogran®. Other well-regarded brands that are gaining adoption and market share include advanced devices such as VeraFlo™, Prevena® and ABThera®, as well as our Adaptic® wound dressing.

Complete Solutions Across the Continuum of Care

We have a portfolio of highly complementary products that can be used together or in sequence to address patient needs at different stages of healing from the operating room, to the hospital ward and in the home. This allows us to co-market and cross-sell our products across business lines, treatment protocols and care settings. Our advanced devices such as ABThera and Prevena are often used to help manage recovery and reduce complications from breast reconstruction and hernia repair surgical procedures using our Regenerative Medicine products. In addition, our advanced wound dressings such as Adaptic and Promogran are often used before, during and after V.A.C. Therapy for the management of complex wounds.

Global Reach and Broad Customer Relationships

Our global sales operations are geographically diverse with direct sales in over 25 countries and indirect operations in an additional 50 countries. Our global sales organizations have deep clinical experience and have fostered strong relationships

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with prescribers, patients, caregivers and payers over the past three decades by providing a high degree of clinical support, education and consultation. We have extensive relationships and long term agreements with large group purchasing organizations and managed care payers that give us increased access to patients and healthcare facilities that utilize our products. We have a unique sales and service infrastructure that allows us to meet the needs of health care facilities, caregivers, patients and payers to better manage patient outcomes across all care settings.

Improving Clinical Outcomes Through Innovation

We have a history of over 35-years of innovation and commercialization of best-in-class products and therapies that deliver superior clinical outcomes for patients. We continue to be global pioneers in negative pressure devices, advanced wound dressings and regenerative medicine, creating and growing new markets based on our ability to identify and address unmet clinical needs with products that advance the practice of medicine. We make substantial investments in developing clinical and economic data that demonstrate the superior clinical efficacy and outstanding value proposition of our products and therapies.

High Degree of Customer Satisfaction

Our focus on meeting customer needs has delivered high levels of customer satisfaction over a long period of time. We are dedicated to solving clinical problems for patients and caregivers, while at the same time reducing total health care costs for our customers and payers. We leverage a comprehensive set of skills and systems through our Advantage Center operation in the United States to manage customer service and reimbursement activities which provide our customers and payers with superior service. We have an extensive field service network and provide 24-hour technical and clinical support for our customers with an infrastructure designed to allow us to meet the most emergent medical needs of our customers and patients.

Our Business Strategy

We intend to execute on our vision of sustaining leadership positions in each of our businesses by focusing on the following strategic priorities:

Growing Volumes in Core Markets

We seek to build on leadership positions in our core markets of negative pressure wound therapy, advanced wound dressings, breast reconstruction and hernia repair. Demographic trends and increased incidence of chronic disease states are increasing demand in our core markets. We will utilize our best-in-class clinical and economic outcomes to meet expanding demand and grow volumes through increased adoption and penetration of our products, while leveraging our sales force channels across business lines to cross-promote our complementary portfolio of products. We offer flexible business and pricing models with the aim of increasing customer retention and market share gains.

Driving Adoption of Expansion Products

We have launched several impactful new technologies in recent years, such as V.A.C. VeraFlo®, Prevena, ABThera, Revolve™ and CelluTome®, and we plan new products and line extensions across our product portfolio. We drive adoption of these expansion products by focusing on product differentiation and superior clinical efficacy. We continue to invest in new clinical data to drive therapy adoption and gain access to expanded medical procedures. Our clinical profile coupled with our economic value proposition provide a catalyst for increased adoption of our newer products and therapies.

Investing in Geographic Expansion

We are making substantial investments in geographic expansion to establish our products and therapies as leaders in high-growth markets to drive our continued success. In our AWT business, we continue to focus and invest in high-growth geographic segments such as Japan, Brazil, China, India, Turkey, South Africa and the Middle East. In Regenerative Medicine we are investing in the development of the breast reconstruction and hernia repair markets in Europe while evaluating new geographies. We seek to create and expand sustainable operations in these high-growth geographic segments while we expand availability of our product offerings and develop value brands and business models tailored to local market needs.

Portfolio Innovation

Our highly skilled innovation teams place a great deal of emphasis on identifying the unmet needs of patients and care-givers, and we invest in projects that will deliver impactful clinical and economic benefits. We have a successful track record

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spanning over 35 years in commercializing novel technologies that change the clinical practice of medicine by addressing the critical unmet needs of clinicians, restoring the well-being of their patients and helping to reduce the overall cost of patient care.

Growing Through Acquisitions

We augment our organic innovation and development with acquisitions of new technologies and product platforms that are a good strategic fit for our business. We intend to build on our leadership positions through the evaluation of and investment in adjacent or enabling technologies and synergistic growth opportunities. We plan to leverage the strength of our core businesses and sales channels to commercialize newly acquired technologies and product lines to meet the needs of patients and caregivers worldwide.

Operational Excellence

In an effort to implement our long-term strategy, our management team is focused on operational excellence, with a goal of improved operations and management systems which transform us into a more agile, progressive and global enterprise. We maintain a low cost global manufacturing footprint which helps drive profitability and strong cash flows. We continue to identify and implement efficiencies in our systems and operations through standardization and automation that translate into reduced costs and more effective decision making.

Advanced Wound Therapeutics Business

Our AWT business is focused on the development and commercialization of advanced devices and advanced wound dressings and accounted for approximately $1.420 billion or 76.1% of our global revenue in 2014. 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.

Advanced Devices

We are a global market leader in the commercialization of NPWT products across all care settings and the majority of our advanced wound therapeutics revenue is generated with NPWT products. Our NPWT product portfolio is built upon our proprietary V.A.C. technology, which promotes wound healing by delivering controlled and regulated negative pressure (a vacuum) to the wound bed through an open-cell foam dressing. Since its introduction, our V.A.C. technology has changed the way wounds are treated and managed. With more published clinical evidence than any competing offering, V.A.C. has been selected by prescribers as the treatment of choice for approximately 9 million patients worldwide. Key brands within our NPWT product portfolio include the V.A.C.Ulta® with VeraFlo™, InfoV.A.C®, ActiV.A.C.®, and V.A.C.Via®.

Over the last 20 years, we have worked with the medical community to develop a significant body of clinical evidence demonstrating the superior efficacy of our NPWT products and we believe our products provide a significant technological advantage to patients and caregivers which helps reduce complications at a lower overall cost of care. Since we first introduced V.A.C. in 1996, over 980 clinical studies proving and supporting the clinical efficacy of our V.A.C. wound healing and tissue repair systems have been published in peer reviewed medical journals such as The Lancet, the International Wound Journal, the World Journal of Surgery, the Plastic and Reconstructive Surgery journal, the Annals of Surgery, the Journal of Wound Care and the Annals of Plastic Surgery. A study published in the Plastic and Reconstructive Surgery journal showed reduction in operating room visits and a decrease in hospital length of stay when using VeraFlo with Prontosan compared to V.A.C.in wounds that required hospital admission and surgical debridement. Encouraging results have also been noted in a published study using VeraFlo with saline instillation in the International Wound Journal. In the outpatient setting, compelling economic outcomes data on over 8,200 NPWT patient claims provided by Optum LifeSciences showed that both 12 month wound related costs and 12 month all-cause costs for patients treated with our NPWT products cost 27% less to treat compared to patients treated by competitors’ NPWT products. In addition, independent consensus conferences have issued guidelines for the use of NPWT for diabetic foot wounds, pressure ulcers, complex chest wounds, hospital-treated wounds and open abdominal wounds.

Our NPSM business is a rapidly growing franchise with products designed for use in the surgical setting. Our NPSM products employ negative pressure for use in the surgical setting for the management of complex open abdominal procedures and for the management of clean, closed incisions. Our key brands in NPSM are ABThera for the open abdomen and Prevena for incision management. Clinical studies have shown significant advantages to patients with our NPSM products. For example, clinical data on Prevena published in the Journal of Vascular Surgery in January 2013 demonstrated a significant decrease in the

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incidence of groin surgical site complications, and recent clinical data on ABThera published in the online edition of the Annals of Surgery observed a greater than 50% reduction in 90-day mortality in patients who received ABThera versus the traditional Barker’s vacuum- packing technique (“BVPT”) for treatment of the open abdomen. This randomized controlled trial of ABThera supports the findings of a 2013 prospective observational study published in the World Journal of Surgery that stated that a prospective cohort study observed a 50% reduction in 30-day all cause mortality and an increased 30-day primary fascial closure rate in patients who received ABThera versus BVPT for treatment of the open abdomen.

In 2013, we launched our CelluTome technology, a product designed for epidermal skin grafting with limited donor-site morbidity in the office or outpatient setting with minimal discomfort. This technology enables a consistent and reproducible harvest of autologous grafts of uniform thickness that are immediately applied to the wound bed. The CelluTome device utilizes gentle warmth and negative pressure to create epidermal microdomes which are then harvested and secured to a dressing. This allows for a user-friendly method for applying the grafts directly to the recipient site. This technology is designed to minimize pain and donor site trauma, with no need for anesthesia.

Advanced Wound Dressings

Our AWT business markets a comprehensive portfolio of advanced wound dressings which are focused on addressing chronic and acute wounds. Our dressings are also highly complementary to our wound care devices and therapies. Our advanced wound dressings are often used before, during and after the use of our NPWT therapies at various stages of healing. Our dressings are designed to maintain a moist wound healing environment and to protect the wound site from infection while managing exudate, pain and odor. Our dressings utilize a variety of materials and technologies such as collagen, foam, hydropolymer, silicon, hydrocolloids, hydrogels, alginates and non-adherent layers. We also incorporate antimicrobial materials into specialized dressings, such as silver and iodine.

Our Promogran brand is a market leading collagen dressing which helps promote wound healing by providing the benefits of collagen on the wound and maintaining a moist wound healing environment. In published scientific studies, Promogran has been proven to help restore the balance of the wound microenvironment, promoting granulation tissue and helping the wound close. Our Promogran line of products are often used for the treatment of diabetic foot ulcers, venous leg ulcers, and pressure ulcers, as well as traumatic and surgical wounds, all of which can be complex and difficult to manage. The clinical benefits of Promogran are further enhanced in our Promogran Prisma® line of dressings with the use of ionic silver, which helps protect against infection. In clinical practice Promogran Prisma has been demonstrated to protect against infection and promote healing in diabetic foot ulcers. Our Tielle foam dressings, Adaptic contact layer dressings, and Silvercel® antimicrobial dressings are also leading brands designed to provide patient comfort and maintain an optimal moist wound healing environment. Adaptic Touch® is often used in conjunction with NPWT to enhance patients' comfort and safety in certain applications.

Customers

In U.S. acute care and long-term care facilities, we contract with healthcare facilities individually or through proprietary or voluntary group purchasing organizations (“GPOs”) that represent large numbers of hospitals and long-term care facilities. We bill these facilities directly for the rental and sale of our products. In the U.S. home care setting, we provide our AWT products and therapies to patients in the home and bill third-party payers, such as Medicare and private insurance, directly. For 2014, 2013 and 2012, U.S. Medicare placements accounted for 8%, 11% and 13%, of AWT revenue, respectively. In the U.S., we primarily distribute our advanced wound dressings through independent distributors. None of our individual customers or third party payers, other than U.S. Medicare, accounted for 10% or more of total AWT revenues for 2014, 2013 or 2012. Outside of the U.S., most of our AWT revenue is generated in the post-acute and acute care settings on a direct billing basis, or through sales to distributors in countries where we have indirect operations. Sales and rentals of AWT products accounted for approximately 76.1% of our total revenue in 2014. Geographically, the Americas and EMEA/APAC represented 70.9% and 29.1%, respectively, of total 2014 AWT revenue.

Sales and Marketing

Our AWT products are utilized in acute care hospitals and facilities, long-term care facilities and in the home. Because physicians and nurses are critical to the adoption and use of our advanced devices and dressings, a major element of our marketing focus is to educate and train these medical practitioners in the application of our products. We equip clinicians with the specific knowledge necessary to drive optimal clinical outcomes, restore patient well being and reduce the cost of patient care. Our AWT sales organizations include clinical consultants, all of whom are healthcare professionals. Their principal responsibilities are to make product rounds, consult on complex cases, train home health agencies and educate facility staff on the use of our therapies.

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Competition

Key competitors to our AWT business include Convatec, Molnlycke, Spiracur, Genadyne, Hartmann, Coloplast and Smith & Nephew. In addition, there are several smaller regional companies that have introduced medical devices designed to compete with our products.

Seasonality

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.

Regenerative Medicine Business

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, which complement our tissue matrix business. Regenerative Medicine accounted for approximately $428.1 million or 22.9% of our global revenue in 2014. The majority of our Regenerative Medicine revenue is generated in the United States and we continue efforts to penetrate new geographies. Our Regenerative Medicine business is primarily conducted by our LifeCell operating subsidiaries.

Our tissue matrices enjoy leadership positions in post-mastectomy breast reconstruction and complex abdominal wall repair. With recent advances in both technology and surgical technique, more women are choosing breast reconstruction procedures post-mastectomy and AlloDerm is a best-in-class choice for tissue reinforcement for these procedures. AlloDerm has been used successfully in more than one million procedures to date, and its clinical performance in breast reconstruction post-mastectomy has been reported in over 100 peer-reviewed articles, which is more than all competitive products combined.

Strattice is used primarily by surgeons to reinforce complex abdominal wall repairs; particularly the challenging ventral hernia repairs often encountered in the growing number of patients with multiple comorbidities and prior hernia repair surgeries. Recent clinical studies have shown that the use of Strattice in these difficult cases reduces the incidence of postoperative complications, including mesh explantation, infection, and small bowel obstruction. Additionally, an analysis from a U.S. national database of public and private claims reported that the use of biological matrices, such as Strattice, resulted in up to a five-fold decrease in complication rates and a two-fold decrease in total costs over an 18-month time period for the average complex abdominal wall reconstruction patient.

Our proprietary biomaterial processing for both AlloDerm and Strattice removes cells from dermal tissue, which minimizes patient rejection and enables our tissue matrices to ultimately transition into host tissue for a strong, natural repair. This unique processing allows our tissue matrices to support tissue regeneration without scar formation and allows for rapid revascularization, white cell migration, and cell repopulation, all of which may lead to increased resistance to infection at the surgical site. This is a key differentiator for our products when compared to synthetic implants and other competitive offerings. Our tissue matrix products also offer ease of use and minimize risk of some complications, including adhesions to the implant.

In November 2014, we acquired global intellectual property and regulatory rights to the Revolve system, for which we previously held exclusive distribution rights in North America and Australia. Revolve is a single-use, high volume autologous fat processing system engineered to yield rapid and reliable results. With our newly acquired rights, which allow us to manufacture and sell Revolve globally, combined with the commercialization of the adipose tissue injector device recently acquired from TauTona, we expect to further increase our presence and penetration into the autologous fat grafting market, and achieve sales and marketing synergies with existing and future Revolve customers, through the commercialization of the adipose tissue injector device recently acquired from TauTona.

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Customers

Our tissue matrices and autologous fat grafting products are used primarily by plastic and general surgeons. Hospitals and ambulatory surgical centers (“ASCs”) are the primary purchasers of our products, and we contract with healthcare facilities individually or through proprietary hospital groups, integrated delivery networks and GPOs that represent large numbers of hospitals and long-term care facilities. None of our customers or third party payers accounted for 10% or more of total Regenerative Medicine revenues for 2014, 2013 or 2012. Geographically, the Americas and EMEA/APAC represented approximately 94.5% and 5.5%, respectively, of total 2014 Regenerative Medicine revenue.

Sales and Marketing

We currently market our Regenerative Medicine products in the United States primarily for abdominal wall repair, breast reconstruction post-mastectomy, general reconstruction and cosmetic applications through our direct sales and marketing organization. Since 2009, we have commercialized Strattice in 17 countries in our EMEA geographic region, where we have initially contracted directly with hospitals for the use of Strattice in complex abdominal wall repair and breast reconstruction. Our sales representatives in the U.S. and EMEA primarily interact with plastic surgeons and general surgeons to educate them regarding the use and potential benefits of our tissue-related products. We are considered the benchmark in the industry for delivering professional medical education, including hands-on bioskill labs, national and international conferences, trade shows, and medical symposia featuring some of the most well-regarded and influential surgeons in their respective fields. We also participate in numerous national fellowship programs with world-renowned institutions.

In addition to our direct sales and marketing efforts, we partner with several companies for the sales and marketing of our acellular tissue matrices in dental, orthopedic, and urogynecoligical procedures. These partners include BioHorizons Implant Systems, Inc., Wright Medical, Boston Scientific, and Tornier for the distribution and marketing of our tissue matrix products in the United States and certain international markets. These partnered relationships accounted for approximately $12.2 million or 0.7% of our total 2014 revenue. LifeCell also manufactures GRAFTJACKET for wounds, which is distributed by our AWT business.

Competition

Our Regenerative Medicine products compete with various commercially available products made from synthetic materials or biologic materials of human or animal tissue origin. Our tissue matrix products compete with products marketed by such companies as Covidien, C.R. Bard Inc., Johnson & Johnson, Allergan, Atrium, W.L. Gore & Associates, Cook Inc., TEI Biosciences Inc., and Baxter International Inc.

International

Our AWT and Regenerative Medicine global sales operations are geographically diverse with direct sales in over 25 countries and indirect operations in an additional 50 countries. The principal markets, products and methods of distribution in our businesses’ international operations vary with market size and stage of development. Our principal international markets are currently in Canada, western Europe, Japan and the Middle East, and we are currently expanding sales and marketing resources in order to capitalize on opportunities in other markets, such as emerging markets in the Asia Pacific region and Latin America. Generally, we maintain a geographically based sales organization that we believe provides greater flexibility in international markets. For the years ended December 31, 2014, 2013 and 2012, approximately 24.4%, 19.7% and 19.1%, respectively, of total revenue was derived from EMEA/APAC markets.

Our international operations are subject to certain financial and other risks, and international operations in general present complex tax and cash management challenges. Relationships with customers and effective terms of sale frequently vary by country. Trade receivable balances in most countries outside the United States generally are outstanding for longer periods than in the United States, particularly in Europe. Political and economic instability are also important business concerns due to the potential for rapidly changing business conditions and currency exposure. Foreign currency exchange rate fluctuations can affect income and cash flows of international operations. The company attempts to hedge some of these currency exposures to help reduce the effects of foreign exchange fluctuations on the business. For more information, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk”, Note 6 of the notes to consolidated financial statements and Item 1A. “Risk Factors” included in this Form 10-K.

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Acquisitions and Divestitures

In November 2014, LifeCell entered into a license and technology transfer agreement with the GID Group. Under the agreement, we received an exclusive, world-wide, sublicensable, and royalty-free license to the Revolve technology. Revolve is a single-patient-use, high volume autologous fat processing system designed for surgeons interested in providing their patients with natural, volume enhancement solutions.

In October 2014, LifeCell entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”) to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. The U.S. agreement for the core fields of plastic, general, and gastrointestinal surgeries was set to expire in November 2015. The termination agreement provided for a one-time payment of $4.5 million to LifeCell on November 30, 2014 and the repurchase of existing inventory. LifeCell has agreed to provide limited transition services to Novadaq. These historical results of operations of the disposal group are reported as discontinued operations in the consolidated statements of operations.

In January 2014, we acquired intellectual property for an advanced Adipose Tissue Injector ("ATI") for improved fat grating procedures from the TauTona Group, a medical device incubator based in Menlo Park, California. The ATI is a battery-powered, single-use tool that was built to deliver fat at a controlled rate, which reduces the complexity of performing injections and allows the surgeon to focus on placement. By managing the pressure and flow rates during injection, the ATI minimizes damage to the injected fat and efficiently delivers the tissue to the injection site. With the ATI, we are expanding our offering for reconstructive and cosmetic procedures utilizing fat grafting technology.

In the fourth quarter of 2013, we closed the acquisition of Systagenix, an established provider of advanced wound therapeutics products. The adjusted purchase price paid, net of cash and cash equivalents, was $478.7 million. 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 Systagenix portfolio of innovative wound care products comprises the majority of our advanced wound dressings business, discussed above. Systagenix, formerly part of Johnson & Johnson, generated annual revenue of approximately $205.5 million in 2013. Financial results of Systagenix are included within our consolidated financial statements for the period subsequent to the acquisition date. Combining Systagenix's advanced wound dressings with our KCI wound care business and innovation pipeline will enable us to create additional value for customers by providing more complete solutions for patients and clinicians.

In the fourth quarter of 2012, we acquired CelluTome, a technology designed for epidermal skin grafting with limited donor-site morbidity in the office or outpatient setting with minimal discomfort. This technology enables a consistent and reproducible harvest of autologous grafts of uniform thickness that are immediately applied to the wound bed. The technology’s value in skin grafting procedures makes it a strategic fit into our advanced wound therapeutics business.

In the fourth quarter of 2012, we also completed the divestiture of our legacy KCI TSS business to Getinge AB. The TSS business was comprised of specialized therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. At the closing of the divestiture, Getinge paid approximately $247 million for the assets of the TSS business. At the time of the divestiture, we entered into a transition services agreement with Getinge pursuant to which we provided certain financial and information technology services through 2014. The historical results of operations of the disposal group, excluding the allocation of general corporate overhead, are reported as discontinued operations in the consolidated statements of operations.

Suppliers, Operations and Manufacturing

We distribute our AWT products with direct service infrastructure in the U.S. as well as through third party logistics providers in the U.S. and other markets where we have direct operations. We primarily rely on independent distributors in many of our international markets who generally control the importation and marketing of our product within their territories. In the U.S., we primarily distribute our advanced wound dressings through independent distributors.

The manufacture of our AWT devices and disposables is conducted at our manufacturing facilities in Athlone, Ireland, Peer, Belgium, and the manufacturing facilities of third-party contract manufacturers in Mexico. The manufacture of our AWT dressings is primarily conducted at our manufacturing facility in Gargrave, England. We plan to leverage our existing infrastructure and manufacturing capabilities to expand internal production for our AWT devices, disposables and dressings in the future. Our manufacturing processes for our AWT devices involve producing final assemblies in accordance with a master production plan. Assembly of our devices is accomplished using metal parts, plastics, electronics and other materials and component parts that are primarily purchased from outside suppliers. Our manufacturing processes and quality systems are intended to comply with

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appropriate FDA and International Organization for Standardization (“ISO”) requirements. Component parts and materials are obtained from industrial distributors, original equipment manufacturers and contract manufacturers. The majority of parts and materials are readily available in the open market (steel, aluminum, plastics, fabrics, polymers, etc.) for which price volatility is relatively low. Some raw materials used in the manufacture of both our devices and disposables are procured from a single source and sole source suppliers As part of our normal business process, and in particular since the acquisition of Systagenix, we continue to develop and qualify second source suppliers where practical.

Our Regenerative Medicine manufacturing operations are located at a single location in Branchburg, New Jersey, with primary warehousing and distribution being conducted at a separate location in the immediate vicinity of the manufacturing plant. Warehousing and distribution of products supporting our EMEA Regenerative Medicine business are conducted from a distribution center in the Netherlands. We maintain inventory of our tissue matrix products for direct sales, and we periodically ship product to our distributors, which they maintain in inventory until final sale. Our autologous fat grafting products are manufactured by a third-party supplier in the U.S.

Our Regenerative Medicine business is dependent on the availability of sufficient quantities of raw materials, including donated human cadaveric tissue, porcine tissue and other materials required for tissue processing. Our xenograft tissue matrix products are made from porcine skin tissue. We have two qualified porcine tissue suppliers. Our primary porcine tissue source is supplied by three separate breeding herd farms that are isolated for biosecurity. Our allograft tissue matrix products are made from donated human dermal tissue. We obtain all of our donated human cadaveric tissue from multiple tissue banks and organ procurement organizations in the United States. These tissue banks and organ procurement organizations are subject to federal and state regulations. We require supplying tissue banks and organ procurement organizations to comply with the guidelines of, and be registered by, the FDA. The National Organ Transplant Act (“NOTA”) does not apply to xenograft tissue products; however, our materials and porcine tissue suppliers are subject to extensive regulatory requirements applicable to their operations, including oversight and regulation by the U.S. Department of Agriculture. Most of our critical raw materials have secondary sources of supply. Where they do not, materials and solutions inventories are adjusted to ensure business continuity in case of a supplier disruption, and we are currently in the process of identifying and validating secondary sources.

Intellectual Property

To protect our proprietary rights in our products, new developments, improvements and inventions, we rely on a combination of patents, copyrights, trademarks, trade secrets and other intellectual property rights, and contractual restrictions on disclosure, copying and transfer of title, including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants and other third parties. We seek patent protection in the United States and abroad. Many of our products and services are offered under proprietary trademarks and service marks. We have patent rights relating to our existing and prospective products in the form of owned and licensed patents. Most of the patents in our patent portfolio have a term of 20 years from their date of priority. We hold more than 2,260 patents and have over 1,760 patent applications pending in the United States and in certain other countries that relate to aspects of the technology used in many of our products. We do not consider our business to be materially dependent upon any individual patent. For additional information see “Item 1A. Risk Factors” and Note 12 of the notes to the consolidated financial statements for the year ended December 31, 2014.

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Research, Development and Clinical Sciences

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, and new applications of negative pressure technology and advanced wound dressings. 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. We continue to focus our efforts in developing new cost-effective products and technologies that result in superior clinical outcomes. One of our primary focuses for innovation is to gain greater insights into areas of high clinical need, where we can bring new product solutions with novel technologies to help clinicians address these problems. In addition, we strive to improve the value proposition of our products by increasing their clinical and economic benefits and by improving their ease of use. Expenditures for research and development, including clinical trials, in each of the periods below, were as follows (dollars in thousands):

	Year ended December 31,
	2014		2013		2012
Research and development expenses	$	69,321	$	75,577	$	71,712

Working Capital Management

We maintain inventory parts, supplies and finished goods to support customer needs in our service centers, manufacturing facilities and distribution warehouses. Our payment terms with health care facilities and third-party payers, including Medicare and private insurance are consistent with industry standards. A portion of our receivables relate to unbilled revenues arising in the normal course of business. A portion of our revenues remain unbilled for a period of time due to monthly billing cycles requested by our customers or due to our internal paperwork processing and compliance procedures regarding billing third-party payers.

Government Regulation and Other Considerations

Our products are subject to regulation by numerous domestic and foreign government agencies, including the United States Food and Drug Administration (‘‘FDA’’), and various laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our products. We are also governed by federal, state, local and international laws of general applicability, such as those regulating employee health and safety and the protection of the environment. Overall, the scope and extent of domestic and foreign laws and regulations applicable to our business is increasing.

United States Regulation of Medical Devices

All of our medical devices sold in the United States are subject to the Federal Food, Drug, and Cosmetic Act as implemented and enforced by the FDA. The FDA and, in some cases, other government agencies administer requirements covering the design, development, testing, safety, effectiveness, manufacturing, labeling, promotion, advertising, distribution and post-market surveillance of our products. Unless an exemption applies, each medical device that we market must first receive either premarket notification clearance (by filing a 510(k) submission) or premarket approval (by filing a premarket approval application (“PMA”)) from the FDA. In addition, certain modifications made to marketed devices also may require 510(k) clearance or approval of a PMA supplement. The process of obtaining FDA clearance or approval of a medical device can be lengthy and costly. The FDA’s 510(k) clearance process usually takes from three to 12 months, but it can take longer. The process of obtaining PMA approval is much more costly, lengthy, and uncertain, and is generally preceded by the conduct of a well-controlled clinical study. The PMA review and approval process generally takes from one to three years, but it can take longer.

In addition to regulations governing 510(k) and PMA submissions, we are subject to regulations governing the conduct of clinical investigations; device listing and establishment registration; the manufacture and control of our devices, as set forth in the Quality System Regulation (“QSR”); labeling; and promotion; reporting of adverse events and device malfunctions; post-approval restrictions or conditions, including post-approval study commitments; post-market surveillance requirements; and reporting requirements for product recalls, or corrections or removals in the field. Our manufacturing facilities, as well as those of certain of our suppliers, are subject to periodic and for-cause inspections by the FDA and other governmental authorities to verify compliance with the QSR and other regulatory requirements.

United States Regulation of Human Tissue Products

All of our human tissue products are subject to FDA regulatory requirements for human cells, tissues and cellular and tissue-based products (“HCT/Ps”). Certain HCT/Ps are regulated solely under Section 361 of the Public Health Service Act and

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are referred to as “Section 361 HCT/Ps,” while other HCT/Ps are subject to the FDA’s regulatory requirements for medical devices and/or biologics. A product that is regulated as a Section 361 HCT/P generally may be commercially distributed without prior FDA clearance or approval. However, all HCT/Ps, including Section 361 HCT/Ps, must comply with the FDA’s regulations for donor screening and Good Tissue Practices (“GTPs”), as described further below. We believe that allograft products, AlloDerm, Cymetra®, GRAFTJACKET and Repliform®, satisfy the FDA requirements for regulation solely as Section 361 HCT/Ps and, therefore, are not subject to FDA’s requirements for medical devices and biologics and do not require FDA clearance or approval prior to commercial distribution.

The FDA has established regulations for HCT/Ps (including Section 361 HCT/Ps) that require tissue donors to be screened and tested for relevant communicable diseases and require manufacturers of HCT/Ps to follow GTPs in their recovery, processing, storage, labeling, packaging and distribution of HCT/Ps to prevent the introduction, transmission or spread of communicable diseases. The FDA regulations for HCT/Ps also require us to report adverse reactions and deviations from donor screening and other applicable requirements. Product listing and establishment registration requirements also apply to our HCT/Ps. The facilities we use to process our HCT/Ps are subject to periodic and for-cause inspections by the FDA and other governmental authorities to verify compliance with GTPs and these other regulatory requirements.

In addition to the FDA regulations applicable to our products, procurement of certain human organs and tissue is subject to other federal requirements, such as NOTA. A few but increasing number of states, including Florida, California, Oklahoma, Illinois, New York and Maryland, impose their own regulatory requirements on establishments involved in the processing, handling, storage and distribution of human tissue. LifeCell is also accredited by the American Association of Tissue Banks (“AATB”) and voluntarily complies with its guidelines. 

Other Regulatory Requirements

We are also subject to additional laws and regulations that govern our business operations, products and technologies, including:

• federal, state and foreign anti-kickback laws and regulations, which generally prohibit payments to physicians or other purchasers of medical products as an inducement to purchase or prescribe a product;

• the Stark law, which prohibits physicians from referring Medicare or Medicaid patients to a provider that bills these programs for the provision of certain designated health services if the physician (or a member of the physician’s immediate family) has a financial relationship with that provider;

• federal and state laws and regulations that protect the confidentiality of certain patient health information, including patient records, and restrict the use and disclosure of such information, in particular, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act;

• the Physician Payments Sunshine Act, which requires public disclosure of the financial relationships of United States physicians and teaching hospitals with applicable manufacturers, including medical device and biologics companies;

• the False Claims Act, which prohibits the submission of false or otherwise improper claims for payment to a federally funded health care program, and health care fraud statutes that prohibit false statements and improper claims to any third-party payer; and

• the United States Foreign Corrupt Practices Act, which can be used to prosecute companies in the United States for certain improper arrangements with foreign government officials or other parties outside the United States.

Failure to comply with these laws and regulations could result in criminal liability, significant fines or penalties, negative publicity and substantial costs and expenses associated with investigation and enforcement activities. To assist in our compliance efforts, we adhere to many codes of ethics and conduct regarding our sales and marketing activities in the United States and other countries in which we operate. In addition, we have in place a dedicated Chief Compliance Officer and compliance team to implement, monitor and improve our internal business compliance programs and policies.

International Regulation

Internationally, the regulation of medical devices is complex. These laws range from comprehensive device approval requirements for some or all of our products to requests for product data or certifications. Inspection of and controls over manufacturing, as well as monitoring of device-related adverse events, also are components of most of these regulatory systems. Most of our business is subject to varying degrees of governmental regulation in the countries in which we operate, and the general trend is toward increasingly stringent regulation. For example, the European Commission (“EC”) has harmonized national regulations for the control of medical devices through European Medical Device Directives with which manufacturers must comply.

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Under these regulations, manufacturing plants must have received quality system certification from a “Notified Body” in order to sell products within the member states of the European Union. Medical devices deemed to be in the high risk classification, such as Strattice, further undergo a distinct design review by the Notified Body. Certification allows manufacturers to affix a “CE” mark to the products. Products covered by the EC regulations that do not bear the CE mark may not be sold or distributed within the European Union. Although the more variable national requirements under which medical devices were formerly regulated have been substantially replaced by the European Union Medical Devices Directive, individual nations can still impose unique requirements that may require supplemental submissions.

To be sold in Japan, most medical devices must undergo thorough safety examinations and demonstrate medical efficacy before they are granted approval through a pre-market approval application, or “shonin.” The Japanese government, through the Ministry of Health, Labour, and Welfare (“MHLW”), regulates medical devices under the Pharmaceutical Affairs Law (“PAL”). Oversight for medical devices is conducted through the Pharmaceutical and Medical Devices Agency (“PMDA”), a government organization responsible for scientific review of market authorization applications, and inspection and auditing of manufacturers to ensure compliance with clinical, laboratory, and manufacturing practice requirements. Penalties for a company’s noncompliance with PAL could be severe, including revocation or suspension of a company’s business license and criminal sanctions. We are subject to inspection for compliance by the MHLW and the PMDA.

The regulation of our human tissue products outside the United States varies by country and is complex and constantly evolving. A limited amount of our human tissue products is currently distributed in several countries internationally. Certain countries where we do not currently sell our human tissue products regulate human tissue products as pharmaceutical products, which would require us to make extensive filings and obtain regulatory approvals before selling our product in such countries. Certain countries classify our products as human tissue for transplantation but may restrict their import or sale. Certain foreign countries have laws similar to NOTA. These laws may restrict the amount that we can charge for our products and may restrict our ability to export or distribute our products to licensed not-for-profit organizations in those countries. Other countries have no applicable regulations regarding the import or sale of human tissue products similar to our products, creating uncertainty as to what standards we may be required to meet.

In many of the other foreign countries in which we market our products, we may be subject to requirements affecting, among other things:

• product standards and specifications;

• packaging;

• labeling;

• quality systems;

• imports;

• tariffs;

• duties; and

• taxes.

Many of the requirements applicable to our devices and products in these countries are similar to those of the FDA. In some regions, the level of government regulation of medical devices is increasing, which can lengthen time to market and increase registration and approval costs. In many countries, the national health or social security organizations require the Company’s products to be qualified before they can be marketed and considered eligible for reimbursement.

Health Care Initiatives and Reimbursement

Government and private sector initiatives to control the increasing cost of health care, including price regulation and competitive pricing, coverage and payment policies, comparative and cost-effectiveness analyses, technology assessments and managed-care arrangements, are continuing in many geographies where we do business, including the United States, Europe and Japan. As a result of these changes, the marketplace has placed increased emphasis on the delivery of more cost-effective medical therapies. For example, government programs, private health care insurance and managed-care plans have attempted to control costs by limiting the amount of reimbursement they will pay for procedures or treatments, and some third-party payers require their pre-approval before medical devices or therapies are utilized by patients. These various initiatives have created increased price sensitivity over medical products generally and may impact demand for our products. A substantial portion of advanced wound therapeutic and regenerative medicine product placements are subject to reimbursement coverage criteria from various public and private third-party payers, including government-funded programs, and other publicly funded health plans in foreign jurisdictions. As a result, the demand and payment for our products are dependent, in part, on the reimbursement policies of these payers. Payment by government entities for our products in the United States is subject to regulation by the Centers for Medicare

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and Medicaid Services (“CMS”) and comparable state agencies responsible for reimbursement and regulation of health care items and services. Reimbursement fee schedules regulate the amount the United States government will reimburse hospitals, providers and suppliers for the care of persons covered by Medicare. This includes in some instances determining whether specific technologies, and their correlating procedures, are covered, and if so, what the payment rate may be. Changes in current reimbursement levels could have an adverse effect on market demand and our pricing flexibility.

In the U.S. home care market, our NPWT products are subject to Medicare Part B reimbursement and many U.S. commercial insurers have adopted coverage criteria similar to Medicare standards. For the year ended December 31, 2014, U.S. Medicare placements of our NPWT products represented approximately 6.5% of our total revenue. We maintain CMS deemed accreditation in the U.S. through the Accreditation Commission for Health Care (“ACHC”). Our U.S. Service Centers are subject to numerous unannounced federal and state reimbursement and licensing agency inspections, in addition to the tri-annual ACHC reaccreditation survey visits. From time to time, CMS periodically initiates payment schedule changes and bidding programs that affect our home care NPWT business. Our revenue from U.S. Medicare placements of NPWT products is now subject to Medicare’s durable medical equipment competitive bidding program. On January 30, 2013, as part of this competitive bidding program, CMS announced new reimbursement rates for Medicare patients in the home, which became effective July 1, 2013. This program resulted in an average reimbursement decline of 41% for NPWT across the 91 major metropolitan areas. These 91 areas represent approximately 45% of our U.S. Medicare Part B business. Reimbursement for the NPWT business has also been impacted by the competitive bidding program in an additional 9 areas as of January 1, 2014, with a similar reimbursement decline of 42%. These 9 areas represent an additional 10% of our U.S. Medicare Part B business. The areas impacted by competitive bidding will be re-bid at the expiration of the current 3-year Medicare contracts, with new rates going into effect July 1, 2016 for the initial 91 MSAs, and January 1, 2017 for the subsequent 9 MSAs.  Additionally, all non-bid areas, representing 45% of our U.S. Medicare Part B business, will be subject to reimbursement decreases equivalent to regional averages of the competitive bidding rates beginning January 1, 2016.   The new rates will be phased in beginning January 1, 2016 and fully in effect by July 1, 2016. 

Additionally, sequestration cuts of 2% were implemented to all Medicare Part A and B fee-for-service payments, including items under Medicare competitive bidding contracts that began on April 1, 2013. CMS applies the 2% reduction to all claims after determining patient coinsurance and any other applicable deductible and Medicare secondary payment adjustments. The sequestration cut is in place until 2024 unless Congress acts.

We also are subject to routine pre-payment and post-payment audits of durable medical equipment (“DME”) claims submitted to Medicare Part B. These audits typically involve a complex medical review, by Medicare or its designated contractors and representatives, of documentation supporting 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 obtain the written medical record in advance of therapy as long as the underlying medical records reported to us support the coverage criteria and medical necessity 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 clinical providers, medical facilities and prescribers. Obtaining these medical records in connection with a claims audit may be challenging and, in any event, all of these records are subject to further examination, interpretation 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, we could be subject to denial or overpayment demands for claims submitted for Medicare reimbursement. In the rare event that an audit results in major discrepancies of claims records which lacked proof of medical necessity, Medicare may be entitled to take additional corrective measures, including: extrapolation of the results of the audit across a wider population of claims, submitting recoupment demands for claims other than those examined in the audit, or placing the organization on a full prepayment review. These audits have increased over the last two years from being negligible to approximately 10% of our claims.  While eventually receiving payment on a high percent of the claims subject to these audits, payment timeliness may range from a few months up to a year resulting in increasing Medicare accounts receivable balances.

Health care cost containment efforts have also prompted domestic hospitals and other customers of medical device manufacturers to consolidate into larger purchasing groups to enhance purchasing power, and this trend is expected to continue. The medical device industry has also experienced some consolidation, partly in order to offer a broader range of products to large purchasers. As a result, transactions with customers are larger, more complex and tend to involve more long-term contracts than in the past. These larger customers, due to their enhanced purchasing power, may attempt to increase the pressure on product pricing.

Foreign governments also impose regulations in connection with their health care reimbursement programs and the delivery of health care items and services. We are continuing our efforts to obtain expanded reimbursement for our products and related disposables in foreign jurisdictions. These efforts have resulted in varying levels of reimbursement for our products from

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private and public payers in multiple jurisdictions, primarily in the acute care setting. Generally, our NPWT products are covered and reimbursed in the inpatient hospital setting and to some extent, depending on the country, in post-acute or community-based care settings (Austria, Switzerland and some regions in Italy). However, in certain countries, such as Germany, the U.K., France and Spain, post-acute care coverage and reimbursement are largely provided on a case-by-case basis and multiple efforts are underway with certain countries to secure consistent coverage and reimbursement policies in community-based outpatient care settings. In targeted countries, we are utilizing accepted “coverage with evidence” mechanisms in close cooperation with local clinicians and clinical centers, government health ministry officials and, in some cases, private payers to obtain the necessary evidence to support adequate coverage and reimbursement. Overall, the prospects of achieving broader global coverage and reimbursement for our products in both acute and post-acute settings are dependent upon the controls applied by governments and private payers with regard to rising healthcare costs. We believe that our plans to achieve positive coverage and reimbursement decisions for our products outside the United States are supported by the growing requirements to provide supporting clinical and economic evidence.

Health Care Reform

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act were enacted into law in the United States, which included a number of provisions aimed at improving the quality and decreasing the costs of healthcare. Under the legislation, it is expected that expanded healthcare coverage will be made available to an additional 30 million Americans. The increased costs to the U.S. government are expected to be funded through a combination of payment reductions for providers over time and several new taxes. The legislation imposed, among other things, an excise tax of 2.3% of any entity that manufactures or imports medical devices offered for sale in the United States beginning in 2013. We are subject to this excise tax on our sales of certain medical devices we manufacture, produce or import. In fiscal years 2014 and 2013, we paid approximately $14.1 million and $13.5 million, respectively, related to the medical device tax. The legislation also provides for the establishment of an Independent Payment Advisory Board that could recommend changes in Medicare payment under certain circumstances beginning in 2014. In addition, the legislation authorizes certain voluntary demonstration projects around development of bundling payments for acute, inpatient hospital services, physician services, and post acute services for episodes of hospital care and also increases fraud and abuse penalties and expands the scope and reach of the Federal False Claims Act and government enforcement tools, which may adversely impact healthcare companies. The new law or any future legislation could reduce medical procedure volumes, lower reimbursement for our products, and impact the demand for our products or the prices at which we sell our products.

Availability of Securities and Exchange Commission Filings

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act, as amended, are available free of charge on our website at www.acelity.com, as soon as reasonably practicable after we file or furnish such information to the SEC. Information contained on our website is not incorporated by reference to this report.

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ITEM 1A.RISK FACTORS

Risks Related to Our Business

We face significant and increasing competition, which could adversely affect our operating results.

We face significant and increasing competition in each of our businesses, which are characterized by rapid technological change and significant price competition. Market share can shift as a result of technological innovation and other business factors. Our customers consider many factors when selecting a product, including product reliability, clinical outcomes, product availability, price and services provided by the manufacturer. Our ability to compete will depend in large part on our ability to develop and acquire new products and technologies as well as to anticipate technology advances. Product introductions or enhancements by competitors which have advanced technology, better features or lower pricing may make our products obsolete or less competitive. As a result, we will be required to devote continued efforts and financial resources to bring our products under development to market, expand our geographic reach, enhance our existing products and develop new products for the advanced wound therapeutics and regenerative medicine markets. In addition, we have seen increasing price competition as more competitors have entered the market and customers are being challenged by declining reimbursement rates. Consolidation trends in the healthcare industry may also introduce new competitors or provide existing competitors with an enhanced ability to compete against our products. We expect competition to increase over time as competitors introduce additional competing products in the advanced wound therapeutics and regenerative medicine markets and continue expanding into geographic markets where we currently operate. Our failure to compete effectively could result in loss of market share to our competitors and have a material adverse effect on our sales and profitability. Our competitive position can also be adversely affected by product problems, physician advisories and safety alerts, reflecting the importance of product quality in the medical device industry.

We are subject to stringent domestic and foreign medical device and human tissue regulation and any adverse regulatory action may materially adversely affect our financial condition and business operations.

The development, manufacture, sale, and distribution of our products are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies monitors and enforces compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our medical devices and tissue matrices.

We cannot be certain that we will receive required approval or clearance from the FDA and foreign regulatory agencies for new products or modifications to existing products on a timely basis, or at all. The process of obtaining marketing approval or clearance from the FDA and comparable foreign bodies for new products, or for enhancements or modifications to existing products, could:

• take a significant amount of time;

• require the expenditure of substantial resources;

• involve rigorous pre-clinical and clinical testing, as well as increased post-market surveillance;

• involve modifications, repairs or replacements of our products; and

• result in limitations on the indicated uses of our products.

The failure to receive approval or clearance for significant new products or modifications to existing products or any substantial delay in obtaining any required approval or clearance could have a material adverse effect on our financial condition and results of operations.

The FDA also could disagree with our conclusion that certain Regenerative Medicine products are Section 361 HCT/Ps not subject to FDA premarket clearance or approval requirements. If the FDA were to determine that any of these products required premarket clearance or approval as devices or biologics, this could disrupt our existing marketing of these products and have a material adverse effect on our financial condition and results of operations. Noncompliance with federal or state requirements relating to procurement of certain human organs and tissue also could disrupt our operations and have a material adverse effect on our financial condition and results of operations.

We also are subject to FDA regulations governing the manufacture and control of our products, product labeling and advertising, reporting of adverse events, and reporting of recalls. Compliance with these and other applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. If the FDA were to find that we have failed to comply with any of these requirements, it could institute a wide variety of enforcement actions,

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ranging from a public warning letter to more severe sanctions, such as product recalls or seizures, monetary penalties, consent decrees, injunctive actions to halt the manufacture or distribution of products, or other civil or criminal penalties. Civil or criminal penalties could be assessed against our officers, employees, or us. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products. In addition, any negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on our financial condition and results of operations.

In addition, device manufacturers are permitted to promote products solely for the uses and indications set forth in the approved product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses are false and that fraudulent claims are made to the government. The failure to comply with “off-label” promotion restrictions can result in significant financial penalties and in a corporate integrity agreement with the federal government that imposes significant administrative obligations and costs, and potential exclusion from federal health care programs.

Foreign governmental regulations have become increasingly stringent and more common, and we may become subject to even more rigorous regulation by foreign governmental authorities in the future. Penalties for a company’s noncompliance with foreign governmental regulation could be severe, including revocation or suspension of a company’s business license and criminal sanctions. Any domestic or foreign governmental medical device law or regulation imposed in the future may have a material adverse effect on our financial condition and business operations.

If we are unable to develop new generations of products and enhancements to existing products, our competitive position may be harmed.

Our success is dependent upon the successful development, introduction and commercialization of new generations of products and enhancements to existing products. Innovation in developing new product lines and in developing enhancements to our existing products is required for us to grow and compete effectively. The success and completion of development of any new products remains subject to all the risks associated with the commercialization of new products based on innovative technologies, including unanticipated technical or manufacturing problems, extended lead times in obtaining required regulatory and reimbursement approval of new products, the possibility of significantly higher development costs than anticipated, our ability to anticipate and satisfy customer needs in a timely manner with relevant technology, and gaining customer acceptance. Innovation through enhancements and new products requires significant capital commitments and investments on our part, which we may be unable to recover. Our failure to introduce new and innovative products in a timely manner could have an adverse effect on our business, results of operations, financial condition and cash flows.

Our current and future products are subject to regulation by the FDA and other national, federal and state governmental authorities. We may be required to undertake time-consuming and costly development and clinical activities and seek regulatory clearance or approval for expanded clinical applications for current products and new products. Clearance and/or approval might not be granted for a new or modified product or expanded uses of existing products on a timely basis, if at all.

Any substantial increase in applicable regulatory or administrative requirements that are imposed on us could potentially delay our development and commercialization of new medical device products. Also, our determination that our allograft products are eligible for regulation as human cellular and tissue-based product is limited to their current intended uses. In the future, we may wish to market our allograft products for new intended uses, which may require premarket clearance or approval under FDA medical device or biologic regulations, and which could be time consuming and costly. Our failure to maintain clearances or approvals for existing products or to obtain clearance or approval for new or modified products could adversely affect our results of operations and financial condition.

Even if we are able to develop, manufacture and obtain regulatory approvals and clearances for our new products, the success of those products depends on market acceptance, which could be affected by several factors, including (i) the availability of alternative products from our competitors; (ii) the price and reliability of our products relative to that of our competitors; (iii) the reimbursement provided for our products; (iv) the timing of our market entry; and (v) our ability to market and distribute our products effectively.

The adoption of healthcare reform in the U.S. may adversely affect our business and financial results.

As part of the enactment of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, we are now subject to an excise tax of 2.3% on our sales of certain medical devices we manufacture, produce or import. In fiscal years 2014 and 2013, we paid approximately $14.1 million and $13.5 million, respectively, related to the

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medical device tax. In addition, the legislation authorizes certain voluntary demonstration projects around development of bundling payments for acute, inpatient hospital services, physician services, and post acute services for episodes of hospital care and also increases fraud and abuse penalties and expands the scope and reach of the Federal Civil False Claims Act and government enforcement tools, which may adversely impact healthcare companies. The new law or any future legislation could reduce medical procedure volumes, lower reimbursement for our products, and impact the demand for our products or the prices at which we sell our products.

We cannot predict with any certainty what other impact this legislation may have on our business. Legislative or administrative reforms to the U.S. or international reimbursement systems that significantly reduce reimbursement for procedures using our products and therapies or deny coverage for such procedures, or adverse decisions relating to our products by administrators of such systems in coverage or reimbursement issues, could result in reduced demand for our products and increased downward pricing pressure, which could adversely affect our business. While this legislation is intended to expand health insurance coverage to uninsured persons in the United States, the impact of any overall increase in access to healthcare on sales of our products remains uncertain. It is also possible that this legislation will result in lower reimbursements for our products. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payers. Insurers may also refuse to provide any coverage of uses of approved products for medical indications other than those for which the FDA has granted market approvals, all of which may have a material adverse effect on our business, financial condition and results of operations.

Cost-containment efforts of our customers, purchasing groups, third-party payers and governmental organizations could adversely affect our sales and profitability.

Many existing and potential customers for our products within the United States are members of GPOs and integrated delivery networks (“IDNs”), including accountable care organizations, and our business is partly dependent on major contracts with these organizations. Our products can be contracted under national tenders or with larger hospital GPOs. The healthcare industry has been consolidating, and as a result, transactions with customers are larger and more complex. GPOs and IDNs negotiate pricing arrangements with healthcare product manufacturers and distributors and offer the negotiated prices to affiliated hospitals and other members. GPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. The majority of our AWT hospital sales and rentals in the United States are made pursuant to contracts with GPOs and IDNs. At any given time, we are typically at various stages of responding to bids and negotiating and renewing GPO and IDN agreements; including, agreements that would otherwise expire. Bids are generally solicited from multiple manufacturers or service providers with the intention of obtaining lower pricing. Due to the highly competitive nature of the bidding process and the GPO and IDN contracting processes in the United States, we may not be able to obtain or maintain contract positions with major GPOs and IDNs across our product portfolio. Failure to be included in certain of these agreements could have a material adverse effect on our business, including sales and rental revenues.

While having a contract with a major purchaser, such as a GPO, IDN or public-based purchasing organization for a given product category can facilitate sales, such contract positions can offer no assurance that sales volumes of those products will be maintained. For example, GPOs and IDNs are increasingly awarding contracts to multiple suppliers for the same product category. Even when we are the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN generally are free to purchase from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause upon 60 to 90 days’ notice. Accordingly, although we have multiple contracts with many major purchasing organizations, the members of such groups may choose to not purchase from us, and the contracts themselves are subject to termination on short notice.

Outside the United States, we have experienced pricing pressure from centralized governmental healthcare authorities due to efforts by such authorities to lower healthcare costs. Implementation of healthcare reforms and competitive bidding contract tenders may limit the price or the level at which reimbursement is provided for our products and adversely affect both our pricing flexibility and the demand for our products. Healthcare providers may respond to such cost-containment pressures by substituting lower cost products or other therapies for our products. We frequently are required to engage in competitive bidding for the sale of our products to governmental purchasing agents and hospital groups. Our failure to offer acceptable prices to these customers could adversely affect our sales and profitability in these markets. Distributors of our products also have begun to negotiate terms of sale more aggressively to increase their profitability. Failure to negotiate distribution arrangements having advantageous pricing and other terms of sale could cause us to lose market share and would adversely affect our business, results of operations, financial condition and cash flows.

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Changes in U.S. and international reimbursement regulations, policies and rules, or their interpretation, could reduce reimbursement and collections or adversely affect the demand for our products and negatively impact our global expansion efforts.

The demand for our products is highly dependent on the regulations, policies and rules of third-party payers in the United States and internationally, including the U.S. Medicare and Medicaid programs, as well as private insurance and managed care organizations that reimburse us for the sale and rental of our products. If coverage or payment regulations, policies or rules of existing third-party payers are revised in any material way in light of increased efforts to control healthcare spending or otherwise, the amount we may be reimbursed or the demand for our products may decrease, or the costs of furnishing or renting our products could increase.

Due to the increased scrutiny and publicity of government efforts to contain rising healthcare costs, we may be subject to future assessments or studies by U.S. and foreign healthcare, safety and reimbursement agencies, which could lead to changes in reimbursement policies that adversely affect our business. Any unfavorable results from assessments or studies could result in reduced reimbursement or prevent us from obtaining reimbursement from third-party payers and could reduce the demand or acceptance of our products and therapies. If we are unable to obtain expanded reimbursement for our products in foreign jurisdictions, our international expansion plans could be delayed and our plans for growth could be negatively impacted.

In the United States, the reimbursement of our products by Medicare is subject to review by government contractors that administer payments under federal healthcare programs. For the year ended December 31, 2014, U.S. Medicare placements of our NPWT products represented approximately 6.5% of our total revenue. Changes to Medicare policies, including the launch and expansion of the competitive bidding program, can have a significant impact on our business. These changes can also include revisions in the interpretation or application of Medicare contractor coverage policies or adverse administrative coverage determinations. Such changes can lead to denials of our claims for payment and/or requests to recoup alleged overpayments made to us for our products. Such determinations and changes can often be challenged only through an administrative appeals process. In the event that our interpretations of coverage policies in effect at any given time are inconsistent with administrative coverage determinations, we could be subject to recoupment or refund of all or a portion of any disputed amounts as well as penalties, which could exceed our related revenue realization reserves, and could negatively impact our revenue from Medicare placements in the United States. We are participating in Medicare’s durable medical equipment competitive bidding program, which resulted in substantial reimbursement declines in 100 major metropolitan areas. Any expansion of the competitive bidding program or further price reductions could have an adverse impact on our financial results. For more information on the competitive bidding program, see “Item 1: Business.”

We are also subject to claims audits by government regulators, contractors and private payers. Our documentation, billing and other practices are subject to scrutiny by regulators, including claims audits. To ensure compliance with U.S. reimbursement regulations, the Medicare regional contractors and other government contractors periodically conduct audits of billing practices and request medical records and other documents to support claims submitted by us for payment of services rendered to our customers, which in some cases involve a review of claims that can be several years old. Such audits may also be initiated as a result of recommendations made by government agencies. Our agreements with private payers also commonly provide that payers may conduct claims audits to ensure that our billing practices comply with their policies. These audits can result in delays in obtaining reimbursement, denials of claims, or demands for significant refunds or recoupments of amounts previously paid to us. For more information on claims audits, see Note 12 of the notes to the consolidated financial statements for the year ended December 31, 2014.

If we are unsuccessful in protecting and maintaining our intellectual property, our competitive position could be harmed.

We rely on a combination of patents, trademarks, copyrights, trade secrets and nondisclosure agreements to protect our proprietary intellectual property. Patents and our other proprietary rights are essential to our business, and our ability to compete effectively with other companies is dependent upon the proprietary nature of our technologies. We seek to protect these, in part, through confidentiality agreements with employees, consultants, and other third parties. We pursue a policy of generally obtaining patent protection in both the United States and key foreign countries for patentable subject matter in our proprietary devices and also attempt to review third-party patents and patent applications to the extent publicly available to develop an effective patent strategy, avoid infringement of third-party patents, identify licensing opportunities and monitor the patent claims of others. We currently own numerous United States and foreign patents and have numerous patent applications pending. We are also a party to various license agreements pursuant to which patent rights have been obtained or granted in consideration for cash, cross-licensing rights or royalty payments.

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Our efforts to protect our intellectual property and proprietary rights may not be sufficient. We cannot be sure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors, that these patents will remain valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications, or that competitors will not otherwise gain access to our confidential information or trade secrets. In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by us. Competitors also may harm our sales by designing products that mirror the capabilities of our products or technology without infringing our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue and could have a material adverse effect on our financial condition and results of operations.

Pending and future patent litigation could be costly and disruptive and may have an adverse effect on our financial condition and results operations.

We operate in an industry characterized by extensive patent litigation. Defending intellectual property litigation is expensive and complex and outcomes are difficult to predict. We are currently party to several intellectual property litigation disputes described in more detail in “Item 3. Legal Proceedings” and Note 12 of the notes to the consolidated financial statements for the year ended December 31, 2014. Any pending or future patent litigation may result in significant damage awards, including treble damages under certain circumstances, and injunctions that could prevent the manufacture and sale of affected products or force us to make significant royalty payments in order to continue selling the affected products. At any given time, we are involved as either a plaintiff or a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time. As a healthcare supplier, we can expect to face additional claims of patent infringement in the future. A successful claim of patent or other intellectual property infringement against us could adversely affect our results of operations and financial condition.

We may not successfully identify and complete acquisitions on favorable terms or achieve anticipated synergies relating to any acquisitions, and such acquisitions could result in unforeseen operating difficulties and expenditures, require significant management resources and require significant charges or write-downs.

We regularly review potential acquisitions of complementary businesses, technologies, services and products. We may be unable to find suitable acquisition candidates to expand our business. Even if we identify appropriate acquisition candidates, we may be unable to complete the acquisitions on favorable terms, if at all. Future acquisitions may increase our debt or reduce our cash available for operations or other uses. In addition, the process of integrating an acquired business, technology, service or product into our existing operations requires significant efforts, including the coordination of information technologies, research and development, sales and marketing, operations, manufacturing and finance. These efforts could result in unforeseen difficulties and expenditures. Integration of an acquired company often requires significant expenditures as well as significant management resources that cannot then be dedicated to other projects. In addition, we may face additional risks related to unknown or contingent liabilities related to business practices of the acquired companies, environmental remediation expense, products liability, patent infringement claims or other unknown liabilities.

Moreover, we may not realize the anticipated financial or other benefits of an acquisition, including our ability to achieve cost savings or revenue synergies. Our failure to manage successfully and coordinate the growth of the combined company could also have an adverse impact on our business. In addition, we cannot be certain that the businesses we acquire will become profitable or remain so. We also could experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets and asset impairment charges, and other issues that could arise in connection with, or as a result of, the acquisition of an acquired company or business. For example, in 2013 we recognized impairment charges of $443.4 million related to impairment of LifeCell goodwill and intangible assets, which KCI acquired in 2008. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our existing business, our results of operations and financial condition could be adversely affected. See Note 2 of the notes to the consolidated financial statements for the year ended December 31, 2014 for a discussion of our recent acquisitions.

We may not realize the expected benefits from our restructuring initiatives and continuous improvement efforts, and they may result in unintended adverse impacts to our business.

Over the last three years, we have undertaken several restructuring and realignment initiatives to reduce our overall cost base and improve efficiency. We have recently announced a business realignment plan to combine our business units into one centrally managed operating company as well as to unify certain support functions. The actions initiated under our business

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realignment plans include outsourcing of certain service and support functions, workforce reductions, and other efforts to streamline our business. While these changes are part of a comprehensive plan to, among other things, accelerate our growth, reduce costs and leverage economies of scale, we may not realize the expected benefits of our restructuring initiatives and continuous improvement efforts. In addition, these actions and potential future restructuring actions could yield unintended consequences, such as distraction of management and employees, business disruption, reduced employee morale and productivity and unexpected additional employee attrition, including the inability to attract or retain key personnel. These consequences could negatively affect our business, financial condition and results of operations. If we do not successfully manage our current restructuring activities, or any other restructuring activities that we may take in the future, any expected efficiencies and benefits might be delayed or not realized, and our operations and business could be disrupted. In addition, the costs associated with implementing restructuring activities might exceed expectations, which could result in additional future charges.

Divestitures of some of our businesses or product lines may adversely affect our business, results of operations and financial condition.

In regularly evaluating the performance of our businesses, we may decide to sell a business or product line. Even if we identify a divestiture opportunity, we may be unable to complete the divestiture on favorable terms, if at all. Any divestitures may result in significant charge-offs or write-downs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our business, results of operations and financial condition. The process of divesting ourselves of a business or product line could result in unforeseen expenditures and risks, including dissynergies in shared functions, as well as complexities in separating operations, services, products and personnel. Divestitures often require the diversion of management's attention from other business concerns and the disruption of our business, and could result in potential loss of key employees. We may not be able to successfully manage these or other significant risks related to divesting a business or product line. See Note 2 of the notes to the consolidated financial statements for the year ended December 31, 2014 for a discussion of the recent divestiture of the SPY® Elite System business and the 2012 divestiture of the TSS business.

Our failure to comply with program integrity laws may subject us to penalties and adversely affect our financial condition and results of operations.

Participation in federal healthcare programs requires us to comply with laws regarding the way in which we conduct business, as well as the way in which we submit claims. These laws include the False Claims Act, which attaches per-claim liability and treble damages to the filing of false or improper claims for federal payment. Since 2009, we have been party to litigation arising out of qui tam allegations of violations of the False Claims Act. For more information regarding this litigation, see “Item 3. Legal Proceedings.” There are also laws that attach criminal liability to unlawful inducements for the referral of business reimbursable under federally funded healthcare programs, known as the anti-kickback laws, and those that attach repayment and monetary damages to instances where healthcare service providers seek reimbursement for providing certain services to a patient who was referred by a physician that has certain types of direct or indirect financial relationships with the service provider, known as the Stark law. Additionally, we are subject to the Sunshine Act, which requires that we annually disclose to CMS all transfers of value (subject to limited exclusions) to certain physicians and teaching hospitals, as such terms are defined in statute and regulation. Failure to accurately disclose these transfers could subject us to certain monetary penalties.

The laws applicable to us are subject to evolving interpretations. If a governmental authority were to conclude that we are not in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and civil penalties, including, for example, exclusion from participation as a supplier of product to beneficiaries covered by Medicare and Medicaid. Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, our exclusion from such programs as a result of a violation of these laws could have a material adverse effect on our financial condition and results of operations.

To avoid such penalties, we operate consistent with the AdvaMed Code of Ethics on Interactions with Health Care Professionals which provides guidance on marketing and other practices in our relationships with healthcare professionals and/or product purchasers. We also adhere to many similar codes in countries outside the United States. In addition, we have in place and are continuously improving our internal business integrity and compliance program and policies.

Failure of any of our clinical studies or third-party assessments to demonstrate desired outcomes in proposed endpoints may reduce physician usage or result in pricing pressures that could have a negative impact on business performance.

We regularly conduct clinical studies designed to test a variety of endpoints associated with product performance and use across a number of applications. If, as a result of poor design, implementation or otherwise, a clinical study conducted by us or others fails to demonstrate statistically significant results supporting performance or use benefits or comparative or cost effectiveness

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of our products, physicians may elect not to use our products as a treatment for conditions that may benefit from them. Furthermore, in the event of an adverse clinical study outcome, our products may not achieve “standard-of-care” designations, where they exist, for the conditions in question, which could deter the adoption of our products. Also, if serious device-related adverse events are reported during the conduct of a study it could affect continuation of the study, product approval and product adoption. If we are unable to develop a body of statistically significant evidence from our clinical study program, whether due to adverse results or the inability to complete properly designed studies, domestic and international public and private payers could refuse to cover our products, limit the manner in which they cover our products, or reduce the price they are willing to pay or reimburse for our products. In the case of a pre-approval study or a study required by a regulatory body as a condition of clearance or approval, a regulatory body can revoke, modify or deny clearance or approval of the study and/or the product in question.

Because we depend upon a limited group of suppliers and, in some cases, exclusive suppliers for products essential to our business, we may incur significant product development costs and experience material delivery delays if we lose any significant supplier, which could materially impact the rental and sales of our products.

We obtain some of our finished products and components from a limited group of suppliers, and we purchase certain supplies from single sources for reasons of quality assurance, cost-effectiveness, availability, or constraints resulting from regulatory requirements. While we work closely with suppliers to assure continuity of supply and maintain high quality and reliability, these efforts may not be successful. Manufacturing disruptions experienced by our suppliers may jeopardize our supply of finished products and components. Due to the stringent regulations and requirements of the FDA and other similar non-U.S. regulatory agencies regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for certain components or materials. A change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology. A reduction or interruption in manufacturing, or an inability to secure alternative sources of raw materials or components, could have a material effect on our business, results of operations, financial condition and cash flows. Due to our substantial indebtedness, one or more of our suppliers may refuse to extend us credit with respect to our purchasing or leasing equipment, supplies, products or components, or may only agree to extend us credit on significantly less favorable terms or subject to more onerous conditions. This could significantly disrupt our ability to purchase or lease required equipment, supplies, products and components in a cost-effective and timely manner and could have a material adverse effect on our business. Any casualty, natural disaster or other significant disruption of any of our sole-source suppliers’ operations, or any unexpected loss of any existing exclusive supply contract could have a material adverse effect on our business.

Increased prices for, or unavailability of, raw materials or sub-assembliesused in our products could adversely affect our profitability or revenues.

Our profitability is affected by the prices of the raw materials and sub-assemblies used in the manufacture of our products. These prices may fluctuate based on a number of factors beyond our control, including changes in supply and demand, general economic conditions, labor costs, fuel related delivery costs, competition, import duties, tariffs, currency exchange rates, and government regulation. Due to the highly competitive nature of the healthcare industry and the cost containment efforts of our customers and third-party payers, we may be unable to pass along cost increases for key components or raw materials through higher prices to our customers. If the cost of key components or raw materials increases, and we are unable fully to recover these increased costs through price increases or offset these increases through other cost reductions, we could experience lower margins and profitability. Significant increases in the prices of raw materials or sub-assemblies that cannot be recovered through productivity gains, price increases or other methods could adversely affect our results of operations. Moreover, pursuant to the conflict minerals requirements promulgated by the SEC as a part of Dodd-Frank, we are required to report on the source of any conflict minerals used in our products as well as the process we use to determine the source of such materials. We will incur expenses as we work with our suppliers to evaluate the source of any conflict minerals in our products, and compliance with these requirements could adversely affect the sourcing, supply, and pricing of our raw materials.

If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a substantial amount of time and our sales and profitability will decline.

Our facilities and the manufacturing equipment we use to produce our products would be costly to replace and could require substantial lead-time to repair or replace. The manufacture of all of our tissue regenerative medicine products is conducted exclusively at our sole manufacturing facility in Branchburg, New Jersey, and our adipose autologous grafting products are manufactured at a third-party supplier in the U.S. The manufacture of our NPWT disposable supplies is conducted at our manufacturing facilities in Athlone, Ireland and Peer, Belgium, and the manufacturing facilities of third-party contract manufacturers in Mexico. The manufacture of our advanced wound dressings is conducted at our manufacturing facility in Gargrave, England. Regulatory approvals of our products are limited to one or more specifically approved manufacturing facilities. If we

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fail to produce enough of a product at a facility, or if our manufacturing process at that facility is subject to a temporary or permanent facility shut-down caused by casualty (property damage caused by fire or other perils), regulatory action, or other unexpected interruptions, we may be unable to deliver that product to our customers or to identify and validate alternative sources for the affected product on a timely basis, which would impair our results of operations. Disruption of our third-party manufacturers’ facilities could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, failure to follow specific protocols and procedures, destruction of, or damage to, any facility (as a result of natural disaster, use and storage of hazardous materials or other events), quality control issues, bankruptcy of the manufacturer or other reasons. Any of these disruptions in the production of our key manufacturers could have a negative impact on our sales or profitability. We take precautions to safeguard the facilities, including security, health and safety protocols, appropriate inventory coverage, business continuity plans and off-site backup and storage of electronic data. Additionally, we maintain property insurance that includes coverage for business interruption. However, a natural disaster such as a fire or flood could affect our ability to maintain ongoing operations and cause us to incur additional expenses. Insurance coverage may not be adequate to fully cover losses in any particular case. Accordingly, damage to a facility or other property due to fire, flood or other natural disaster or casualty event could materially and adversely affect our revenues and results of operations.

Disruption to our distribution operations could adversely affect our business.

We utilize third-party logistics providers to distribute our products in all of our geographic markets. Especially because our distribution operations are largely dependent upon third parties, any prolonged disruption in the operations of our existing distribution providers, whether due to technical, labor or other difficulties, equipment malfunction, contamination, failure to follow specific protocols and procedures, destruction of or damage to any facility (as a result of natural disaster, use and storage of hazardous materials or other events) or other reasons, could have a material adverse effect on our business, prospects, financial condition or results of operations. We rely on independent distributors in many of our international markets who generally control the importation and marketing of our product within their territories. We generally grant exclusive rights to these distributors and rely on them to understand local market conditions, to diligently sell our products and to comply with local laws and regulations. The operation of local laws and our agreements with distributors can make it difficult for us to change quickly from a distributor who we feel is underperforming. If we do terminate an independent distributor, we may lose our product registrations and customers who have been dealing with that distributor. Because we do not have local staff in many of the areas covered by independent distributors, it may be difficult for us to detect failures in our distributors’ performance or compliance. Actions by independent distributors that are beyond our control could result in flat or declining sales in that territory, harm to the reputation of our company or its products, or legal liability.

Quality problems with our products and services could harm our reputation for producing high-quality products and erode our competitive advantage, sales, and market share.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure. Our future operating results will depend on our ability to sustain an effective quality control system and effectively train and manage our employee base with respect to our quality system. Our quality system plays an essential role in determining and meeting customer requirements, preventing defects and improving our products and services. While we have a network of quality systems throughout our business lines and facilities, quality and safety issues may occur with respect to any of our products. A quality or safety issue may result in a public warning letter from the FDA, product recalls or seizures, monetary sanctions, injunctions to halt manufacturing and distribution of products, civil or criminal sanctions, refusal of a government to grant clearances or approvals or delays in granting such clearances or approvals, import detentions of products made outside the United States, restrictions on operations or withdrawal or suspension of existing approvals. Negative publicity regarding a quality issue could damage our reputation, cause us to lose customers, or decrease demand for our products. Any of the foregoing events could disrupt our business and have an adverse effect on our results of operations and financial condition.

Our international business operations are subject to risks, including risks arising from currency exchange rate fluctuations, which could adversely affect our operating results.

Our operations outside the United States are subject to certain legal, regulatory, social, political, and economic risks inherent in international business operations. Sales outside of the United States represented approximately $537.0 million, or 29%, of our total revenue for the year ended December 31, 2014 and $411.4 million, or 24%, of our total revenue for the year ended December 31, 2013, and we expect that non-U.S. sales will contribute significantly to future growth. The risks associated with our operations outside the United States include:

• local product preferences and product requirements;

• less stringent protection of intellectual property in some countries outside the United States;

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• more stringent data privacy and protection measures in some countries outside the United States;

• trade protection measures and import and export licensing requirements;

• changes in foreign regulatory requirements and tax laws;

• alleged or actual violations of the Foreign Corrupt Practices Act of 1977, and similar local commercial anti-bribery and anti-corruption laws in the foreign jurisdictions in which we do business;

• changes in foreign medical reimbursement programs and policies, and other healthcare reforms;

• government-mandated austerity programs limiting spending;

• changes in government-funded tenders and payer pathways;

• difficulty in establishing, staffing and managing non-U.S. operations;

• complex tax and cash management issues;

• potential tax costs associated with repatriating cash from our non-U.S. subsidiaries;

• political and economic instability and inflation, recession or interest rate fluctuations; and

• longer-term receivables than are typical in the United States, and greater difficulty of collecting receivables in certain foreign jurisdictions.

We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the United States dollar strengthens in relation to the currencies of other countries such as the Euro, where we sell our products, our United States dollar reported revenue and income will decrease. Additionally, we incur significant costs in foreign currencies and a fluctuation in those currencies’ value can negatively impact manufacturing and selling costs. Changes in the relative values of currencies occur regularly and, in some instances, could have an adverse effect on our results of operations and financial condition. While we enter into foreign currency exchange contracts designed to reduce the short-term impact of foreign currency fluctuations, we cannot eliminate the risk, which may adversely affect our expected results.

Most of our customer relationships outside of the United States are with governmental entities and we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws in non-U.S. jurisdictions.

The FCPA and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or other third-parties, including distributors. Violations of anti-bribery laws, or allegations of such violations, could disrupt our business and result in a material effect on our results of operations, financial condition and cash flows.

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We rely on the performance of our information technology systems, the failure of which could have an adverse effect on our business and performance.

Our business requires the continued operation of sophisticated information technology systems and network infrastructure. These systems are vulnerable to interruption by fire, power loss, system malfunction, computer viruses, cyber-attacks and other events, which may be beyond our control. Systems interruptions could reduce our ability to accept customer orders, manufacture our products, or provide service for our customers, and could have an adverse effect on our operations and financial performance. The level of protection and disaster-recovery capability varies from site to site, and there can be no guarantee that any such plans, to the extent they are in place, will be totally effective. In addition, security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information belonging to us, our employees, partners, customers, or our suppliers, which may result in significant costs and potential government sanctions. In particular, if we are unable to adequately safeguard individually identifiable health information, we may be subject to additional liability under domestic and international laws respecting the privacy and security of health information.

We also are pursuing initiatives to modernize our information technology systems and processes. Many of our business lines use disparate systems and processes, including those required to support critical functions related to our operations, sales, and financial reporting. We continue implementing new systems to better streamline and integrate critical functions, which we expect to result in improved efficiency and, over time, reduced costs. While we believe these initiatives provide significant opportunity for us, they do expose us to inherent risks. We may suffer data loss or delays or other disruptions to our business, which could have an adverse effect on our results of operations and financial condition. If we fail to successfully implement new information technology systems and processes, we may fail to realize cost savings anticipated to be derived from these initiatives.

We may not be able to maintain our competitive advantages if we are not able to attract and retain key personnel.

Our success depends to a significant extent on our ability to attract and retain key members of our executive, technical, sales, marketing and engineering staff. While we have taken steps to retain such key personnel, there can be no assurance that we will be able to retain the services of individuals whose knowledge and skills are important to our businesses. Our success also depends on our ability to prospectively attract, expand, integrate, train and retain qualified management, technical, sales, marketing and engineering personnel. Because the competition for qualified personnel is intense, costs related to compensation and retention could increase significantly in the future. Additionally, integration of acquired companies and businesses, such as Systagenix, can be disruptive and may lead to the departure of key employees. If we were to lose a sufficient number of our key employees and were unable to replace them in a reasonable period of time, these losses could seriously damage our business.

Adverse changes in general domestic and global economic conditions and instability and disruption of credit markets could adversely affect our operating results, financial condition or liquidity.

We are subject to risks arising from adverse changes in general domestic and global economic conditions, including recession or economic slowdown and disruption of credit markets. During 2008, the global economy was impacted by the effects of the global financial crisis. This global financial crisis, including the European sovereign debt crisis, caused extreme disruption in the financial markets, including diminished liquidity and credit availability. Subsequently, economic conditions have improved and the financial markets can today be characterized as healthy with general availability of credit. However, there can be no assurance that there will not be deterioration in the global economy in the future. We believe an economic downturn could generally decrease hospital census and the demand for elective surgeries. Also, any future financial crisis, could make it more difficult and more expensive for hospitals and health systems to obtain credit, which may contribute to pressures on their operating margins. In addition, any economic deterioration would likely result in higher unemployment and reduce the number of individuals covered by private insurance, which may result in an increase in the cost of uncompensated care for hospitals. Higher unemployment may also result in a shift in reimbursement patterns as unemployed individuals switch from private plans to public plans such as U.S. Medicaid or Medicare. If economic conditions deteriorate and unemployment increases, any significant shift in coverage for the unemployed may have an unfavorable impact on our reimbursement mix and may result in a decrease in our overall average unit prices.

Any disruption in the credit markets could impede our access to capital, which could be further adversely affected if we are unable to maintain our current credit ratings. Should we have limited access to additional financing sources, we may need to defer capital expenditures or seek other sources of liquidity, which may not be available to us on acceptable terms if at all. Similarly, if our suppliers face challenges in obtaining credit or other financial difficulties, they may be unable to provide the materials required to manufacture our products. All of these factors related to global economic conditions, which are beyond our control, could negatively impact our business, results of operations, financial condition and liquidity.

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We are exposed to product liability claims that may materially and adversely affect our revenues and results of operations.

Our businesses expose us to product liability risks inherent in the testing, manufacturing, marketing and use of medical products. We are, and may be in the future, subject to product liability claims and lawsuits, including potential class actions or mass tort claims, alleging that our products have resulted or could result in an unsafe condition or injury. Any product liability claim brought against us, with or without merit, could be costly to defend and could result in settlement payments and adjustments not covered by or in excess of insurance. In addition, we may not be able to obtain insurance on terms acceptable to us or at all because insurance varies in cost and can be difficult to obtain. The legal expenses associated with defending against product liability claims, the obligation to pay a product liability claim in excess of available insurance coverage, or the ability to maintain adequate insurance coverage could increase operating expenses and could materially and adversely affect our results of operations and financial position.

We are involved in a number of legal proceedings relating to product liability claims. For example, LifeCell is currently named as a defendant in approximately 335 lawsuits filed by individuals alleging personal injury and seeking monetary damages for failed hernia repair procedures using LifeCell’s AlloDerm products. We are also named defendants in 180 cases related to Repliform, a human tissue product sold by Boston Scientific, one of our distributors. Legal proceedings are inherently unpredictable, and the outcome can result in excessive verdicts and/or injunctive relief that may affect how we operate our business, or we may enter into settlements of claims for monetary damages that exceed our insurance coverage, if any. In addition, we cannot predict the results of future legislative activity or future court decisions, any of which could lead to an increase in regulatory investigations or our exposure to litigation. Any such proceedings or investigations, regardless of the merits, may result in substantial costs, the diversion of management’s attention from other business concerns and additional restrictions on our sales or the use of our products, and potentially harm our reputation, which could disrupt our business and have an adverse effect on our results of operations and financial condition.

Our operations are subject to environmental, health and safety laws and regulations that could require us to incur material costs.

Our manufacturing operations worldwide and those of our third-party suppliers are subject to many requirements under environmental, health and safety laws concerning, among other things, the generation, handling, transportation and disposal of hazardous substances or wastes, the cleanup of hazardous substance releases, and emissions or discharges into the air or water. Violations of these laws can result in significant civil and criminal penalties and incarceration. Most environmental agencies also have the power to shut down an operation if it is operating in violation of environmental law. Some European countries impose environmental taxes or require manufacturers to take back used products at the end of their useful life, and others restrict the materials that manufacturers may use in their products and require redesign and labeling of products. We have management programs and processes in place that are intended to minimize the potential for violations of these laws. New laws and regulations, violations of these laws or regulations, stricter enforcement of existing requirements, or the discovery of previously unknown contamination could require us to incur costs, become the basis for new or increased liabilities, and cause disruptions to our operations that could be material. Any significant disruption in our third party suppliers’ operations as a result of violations of these laws or regulations could also have an adverse effect on our operations and financial condition.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition and results of operations.

We are subject to income taxes as well as non-income based taxes, in both the U.S. and various jurisdictions outside the U.S. We are subject to ongoing tax audits in the U.S. and other jurisdictions. Tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our consolidated earnings and financial condition. Additionally, changes in tax laws or tax rulings could materially impact our effective tax rate. For example, recent legislation imposed on medical device manufacturers a 2.3% excise tax on U.S. sales of medical devices beginning in January 2013. Proposals for fundamental U.S. corporate tax reform, if enacted, could have a material impact on our future results of operations.

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Risks Related to Our Capital Structure

The interests of our Equity Sponsors may differ from the interests of holders of our 10.5% Second Lien Senior Secured Notes due 2018,12.5% Senior Unsecured Notes due 2019 and Convertible Senior Notes due 2015 (collectively, the “Notes”).

As a result of the 2011 going-private transaction, our Sponsors and their affiliates beneficially own most of the outstanding equity of our company. The interests of the Sponsors may differ from our interest and from those of holders of our Notes in material respects. For example, the Sponsors may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their overall equity portfolios, even though such transactions might involve risks to holders of our Notes. The Sponsors are in the business of making investments in companies and may from time to time in the future acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers of our customers. The companies in which one or more of the Sponsors invest may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Additionally, the Sponsors may determine that the disposition of some or all of their interests in our company would be beneficial to the Sponsors at a time when such disposition could be detrimental to the holders of our Notes. If we encounter financial difficulties, or we are unable to pay our debts as they mature, the interests of our equity holders might conflict with those of the holders of our Notes. In that situation, for example, the holders of our Notes might want us to raise additional equity from our equity holders or other investors to reduce our leverage and pay our debts, while our equity holders might not want to increase their investment in us or have their ownership diluted and instead choose to take other actions, such as selling our assets. The Sponsors have no obligation to provide us with financing and are able to sell their equity ownership in our parent company at any time. Moreover, the Sponsors’ ownership of our company may have the effect of discouraging offers to acquire control of our company.

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the Notes.

We have a significant amount of indebtedness. At December 31, 2014, we and our subsidiaries had approximately $4.898 billion (excluding original issue discount) of aggregate principal amount of indebtedness outstanding, of which $4.286 billion was secured indebtedness, $612.1 million was unsecured indebtedness, and an additional $161.0 million of unused commitments available to be borrowed under our Revolving Credit Facility. Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. Our substantial indebtedness could have other important consequences to our debt holders and significant effects on our business. For example, it could:

• make it more difficult for us to satisfy our obligations with respect to the Notes and our other debt;

• increase our vulnerability to adverse changes in general economic, industry and competitive conditions;

• require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• require us to repatriate cash for debt service from our foreign subsidiaries resulting in dividend tax costs or require us to adopt other disadvantageous tax structures to accommodate debt service payments;

• restrict us from capitalizing on business opportunities;

• make it more difficult to satisfy our financial obligations, including payments on the Notes;

• place us at a competitive disadvantage compared to our competitors that have less debt; and

• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes.

In addition, the credit agreement governing our credit facilities and the indentures governing the Notes contain, and the agreements governing future indebtedness may contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness.

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Despite our current level of indebtedness, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We may be able to incur significant additional indebtedness in the future. Although the indentures governing the Notes and the credit agreement governing our credit facilities limit our ability and the ability of our present and future subsidiaries to incur additional indebtedness, the terms of the credit facilities and the indentures permit us to incur significant additional indebtedness. Moreover, all amounts outstanding at any time under our credit facilities are effectively senior to the notes to the extent of the value of the collateral. In addition, the credit agreement governing our credit facilities and the Indentures do not prohibit us from incurring obligations that do not constitute indebtedness as defined therein. To the extent that we incur additional indebtedness or such other obligations, the risk associated with our substantial indebtedness described above, including our possible inability to service our debt, will increase. In addition, because our credit facilities bear interest at variable rates of interest, we are exposed to risk from fluctuations in interest rates. We may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, or may create additional risks.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

Our ability to make payments on and to refinance our indebtedness and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the credit agreement governing our credit facilities and the indentures governing the Notes, may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations in respect of the credit facilities or the Notes.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our financial condition and results of operations.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot guarantee that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments. As a result, any default by us on our indebtedness could have a material adverse effect on our business and could impact our ability to make payments under the Notes.

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The credit agreement governing our credit facilities and the indentures governing the Notes will restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The credit agreement governing our credit facilities and the indentures governing the Notes will impose significant operating and financial restrictions and limit our ability and our other restricted subsidiaries’ ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make loans and investments;

• sell or otherwise dispose of assets;

• sell stock of our subsidiaries;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends; and

• consolidate, merge or sell all or substantially all of our assets.

As a result of these covenants and restrictions, we are and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, we will be required to maintain specified financial ratios and satisfy other financial condition tests. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot guarantee that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as others contained in our future debt instruments from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be adversely affected.

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.PROPERTIES

Our principal office is owned by us and is located in San Antonio, Texas. In addition, we lease office space in San Antonio, Texas, Bridgewater, New Jersey, and Gatwick, England, which are used for sales and marketing, customer service, research and development facilities, information technology, and for general corporate purposes. We also lease our service centers in countries where we have direct operations. We conduct our Regenerative Medicine manufacturing operations, including tissue processing, warehousing and distribution at two leased facilities in Branchburg, New Jersey, which includes office, laboratory, manufacturing and warehouse space. We maintain AWT engineering operations in the United States and maintain AWT manufacturing and engineering operations in the United Kingdom, Ireland and Belgium. We believe that all buildings, machinery and equipment are in good condition, suitable for their purposes and are maintained on a basis consistent with sound operations and that our current facilities will be adequate to meet our needs for 2015.

The following is a summary of our primary facilities:

			Owned
Location	Description	Segment	or Leased
San Antonio, TX	Corporate Headquarters	Corporate	Owned
Bridgewater, NJ	LifeCell Offices	Regenerative Medicine	Leased
Gatwick, England	Systagenix Offices	AWT	Leased
Branchburg, NJ	Manufacturing Plant	Regenerative Medicine	Leased
San Antonio, TX	R&D and Medical Facility	AWT	Leased
San Antonio, TX	Billings, Collections and Customer Service	AWT	Leased
San Antonio, TX	Information Technology and Training	Shared Services	Leased
San Antonio, TX	Technical Service Center	AWT	Leased
Budapest, Hungary	Financial and Other Shared Services	Shared Services	Leased
Dorset, England	R&D and Administrative Offices	AWT	Leased
Athlone, Ireland	Manufacturing Plant	AWT	Leased
Peer, Belgium	Manufacturing Plant	AWT	Leased
Gargrave, England	Manufacturing Plant	AWT	Owned

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ITEM 3.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.

In August 2013, Vital Needs International, L.P. ("Vital Needs") filed a Demand for Arbitration with the American Arbitration Association seeking to recover in excess of $100 million in damages and legal fees 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. The arbitration hearing took place in January 2015, and we are currently awaiting a decision from the panel, which is expected during the second quarter of 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 arbitration.

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”). On November 18, 2014, a jury found that the ‘200 Patent was not invalid and was infringed and further awarded LifeNet a lump sum damages amount of $34.7 million. As a result of this decision, we recorded a liability of $34.7 millionin the fourth quarter of 2014. We disagree with the result at this stage in the litigation and believe that LifeCell’s defenses to the claims are meritorious. LifeCell will continue to vigorously assert its defenses during the post-trial and appeal stages of this litigation and intends to defend any further claims by LifeNet. If LifeCell’s post-verdict motions are denied, LifeCell plans to appeal to the U.S. Federal Circuit Court of Appeals in Washington D.C. on multiple grounds.

On June 30, 2014, KCI entered into a settlement agreement with Wake Forest  University Health Sciences to fully and finally resolve the historical patent and royalty disputes between them relating to negative pressure wound therapy. As of December 31, 2014, the accompanying consolidated balance sheet included $82.7 million under the caption “accrued expenses and other” and $104.3 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.

Products Liability Litigation

LifeCell Corporation is a defendant in approximately 335lawsuits 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 each selected two bellwether cases from which one case to be tried will be selected. Further discovery is proceeding on each of the four bellwether cases. Trial of the first bellwether case is currently scheduled for January 2016. 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. 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 further fact discovery is proceeding in these cases, 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.

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LifeCell Corporation has been named as a defendant in approximately 180 lawsuits in state and federal courts 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 175LifeCell cases filed in a consolidated docket in Middlesex County, Massachusetts. The cases are in the initial phase and no discovery has occurred. Three cases are pending in a multi-district federal case in West Virginia that is proceeding very slowly. The remaining cases are in Massachusetts, Delaware, Minnesota, and New York. None of these cases are proceeding at this time. We intend to defend these suits vigorously, and 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 before a 3 member panel. On January 16, 2015, the Ninth Circuit entered an order scheduling oral argument en banc before the U.S. Court of Appeals for the Ninth Circuit which is currently scheduled for March 17, 2015. 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.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Acelity’s partnership units are not currently traded on a public market. No dividends were declared in 2014, 2013 or 2012. The terms of our Notes and our senior credit agreement currently restrict our ability to declare and pay cash dividends. See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.

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ITEM 6.SELECTED FINANCIAL DATA

The following tables summarize our consolidated financial data for the periods presented. You should read the following financial information together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes to those consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. The selected consolidated balance sheet data for fiscal years 2013 and 2014 and the selected consolidated statement of operations data for the fiscal years 2012, 2013 and 2014 are derived from our audited consolidated financial statements included elsewhere in this report. The selected consolidated statement of operations data for fiscal year 2010, the period from January 1, 2011 through November 3, 2011, and the period from November 4, 2011 through December 31, 2011 and the selected consolidated balance sheet data for fiscal years 2010, 2011 and 2012 are derived from our audited consolidated financial statements not included in this report. Reclassifications have been made to our results from prior years to conform to our current presentation (in thousands).

	Fiscal Year Ended December 31,			Period from January 1 through November 3,			Period from November 4 through December 31,			Fiscal Year Ended December 31,
	2010			2011			2011(1)			2012			2013			2014
	Predecessor			Predecessor			Successor			Successor			Successor			Successor
Consolidated statement of operations data:
Revenue:
Rental	$	911,655		$	745,457		$	142,506		$	815,560		$	743,818		$	719,864
Sales	831,055			753,708			160,395			913,943			989,083			1,146,475
Total revenue	1,742,710			1,499,165			302,901			1,729,503			1,732,901			1,866,339
Rental expenses	468,745			349,754			84,747			438,752			353,504			332,762
Cost of sales	229,308			189,379			43,025			244,372			251,842			323,363
Gross profit	1,044,657			960,032			175,129			1,046,379			1,127,555			1,210,214
Selling, general and administrative expenses	529,337			559,507			216,458			589,858			684,601			713,554
Research and development expenses	85,567			69,575			14,117			71,712			75,577			69,321
Acquired intangible asset amortization	37,426			29,519			16,459			220,984			188,571			194,433
Wake Forest settlement	—			—			—			—			—			198,578
Impairment of goodwill and intangible assets	—			—			—			—			443,400			—
Operating earnings (loss)	392,327			301,431			(71,905		)	163,825			(264,594		)	34,328
Interest income and Other	851			972			148			829			1602			3,667
Interest expense(2)	(87,053		)	(61,931		)	(105,052		)	(466,622		)	(419,877		)	(412,733		)
Loss on extinguishment of debt	—			—			—			(31,481		)	(2,364		)	—
Foreign currency gain (loss)	(4,769		)	131			21,783			(13,001		)	(22,226		)	17,844
Derivative instruments gain (loss)	269			(2,909		)	(9,473		)	(31,433		)	1,576			(5,183		)
Earnings (loss) from continuing operations before income taxes (benefit)	301,625			237,694			(164,499		)	(377,883		)	(705,883		)	(362,077		)
Income taxes (benefit)	90,099			76,096			(46,127		)	(147,823		)	(150,792		)	(127,031		)
Earnings (loss) from continuing operations	211,526			161,598			(118,372		)	(230,060		)	(555,091		)	(235,046		)
Earnings (loss) from discontinued operations, net of tax	44,558			29,340			3,503			88,643			(3,567		)	4,573
Net earnings (loss)	$	256,084		$	190,938		$	(114,869	)	$	(141,417	)	$	(558,658	)	$	(230,473	)

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	Fiscal Year Ended December 31,
	2010		2011(1)		2012		2013		2014
	Predecessor		Successor		Successor		Successor		Successor
Consolidated balance sheet data:
Cash and cash equivalents	$	316,603	$	215,426	$	383,150	$	206,949	$	183,541
Working capital	512,388		479,913		512,185		461,707		286,839
Total assets	3,075,999		7,921,379		7,574,764		7,272,645		7,000,713
Total debt(3)	1,105,062		4,663,402		4,579,592		4,893,316		4,841,975
Total shareholders’ equity	1,483,079		1,593,444		1,457,396		898,075		660,713

(1) Amounts include the impact of the Merger in November 2011.

(2) Amount for the period from November 4, 2011 through December 31, 2011 includes $32.3 million of fees associated with the Merger-related bridge financing.

(3) Total debt equals current and long-term debt and capital lease obligations.

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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in this Annual Report on Form 10-K. 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 I, Item 1A.).

OVERVIEW

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 and accounted for approximately $1.420 billion or 76.1% of our global revenue in 2014. 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, which complement our tissue matrix business. Regenerative medicine accounted for approximately $428.1 million or 22.9% of our global revenue in 2014.

Other revenue consists of contract manufacturing operations performed at our manufacturing facility in Gargrave, England and accounted for approximately $18.0 million or 1.0% of our global revenue in 2014.

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.

Acquisitions and Divestitures

In October 2014, LifeCell entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”) to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. The U.S. agreement for the core fields of plastic, general, and gastrointestinal surgeries was set to expire in November 2015. The termination agreement provided for a one-time payment of $4.5 million to LifeCell on November 30, 2014 and the repurchase of existing inventory. LifeCell has agreed to provide limited transition services to Novadaq. These historical results of operations of the disposal group are reported as discontinued operations in the consolidated statements of operations.

In the fourth quarter of 2013, we closed the acquisition of Systagenix, an established provider of advanced wound therapeutics products. The adjusted purchase price paid, net of cash and cash equivalents, was $478.7 million. The purchase price was funded using $350.0 million of incremental borrowings under our existing senior secured credit facility along with cash on

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hand. The Systagenix portfolio of innovative wound care products comprises the majority of our advanced wound dressings business, discussed above. Systagenix, formerly part of Johnson & Johnson, generated annual revenue of approximately $205.5 million in 2013. Financial results of Systagenix are included within our consolidated financial statements for the period subsequent to the acquisition date. Combining Systagenix's advanced wound dressings with our KCI wound care business and innovation pipeline will enable us to create additional value for customers by providing more complete solutions for patients and clinicians.

In the fourth quarter of 2012, we also completed the divestiture of our legacy KCI TSS business to Getinge AB. The TSS business was comprised of specialized therapeutic support systems, including hospital beds, mattress replacement systems, overlays and patient mobility devices. At the closing of the divestiture, Getinge paid approximately $247 million for the assets of the TSS business. At the time of the divestiture, we entered into a transition services agreement with Getinge pursuant to which we provided certain financial and information technology services through 2014. The historical results of operations of the disposal group, excluding the allocation of general corporate overhead, are reported as discontinued operations in the consolidated statements of operations.

Healthcare and Reimbursement Reform

Significant reforms to the U.S. healthcare system were adopted in the form of the Patient Protection and Affordable Care Act of 2010 (the “PPACA”). The PPACA requires, among other things, medical device companies to pay a 2.3% excise tax on most U.S. medical device sales beginning in 2013. During 2014 and 2013, the company paid excise taxes totaling $14.1 million and $13.5 million, respectively.

In the U.S. home care market, our NPWT products are subject to Medicare Part B reimbursement and many U.S. insurers have adopted coverage criteria similar to Medicare standards. For the years ended December 31, 2014 and 2013, U.S. Medicare placements of our NPWT products represented approximately 6.5% and 8.2%, respectively, of our total revenue. Our revenue from U.S. Medicare placements of NPWT products is now subject to Medicare’s durable medical equipment competitive bidding program. On January 30, 2013, as part of this competitive bidding program, CMS announced new reimbursement rates for Medicare patients in the home, which became effective July 1, 2013. This program resulted in an average reimbursement decline of 41% for NPWT across the 91 major metropolitan areas. These 91 areas represent approximately 45% of our U.S. Medicare Part B business. Reimbursement for the NPWT business has also been impacted by the competitive bidding program in an additional 9 areas as of January 1, 2014, with a similar reimbursement decline of 42%. These 9 areas represent an additional 10% of our U.S. Medicare Part B business. The areas impacted by competitive bidding will be re-bid at the expiration of the current 3-year Medicare contracts, with new rates going into effect July 1, 2016 for the initial 91 MSAs, and January 1, 2017 for the subsequent 9 MSAs.  Additionally, all non-bid areas, representing 45% of our U.S. Medicare Part B business, will be subject to reimbursement decreases equivalent to regional averages of the competitive bidding rates beginning January 1, 2016.   The new rates will be phased in beginning January 1, 2016 and fully in effect by July 1, 2016. 

Additionally, sequestration cuts of 2% were implemented to all Medicare Part A and B fee-for-service payments, including items under Medicare competitive bidding contracts that began on April 1, 2013. CMS applies the 2% reduction to all claims after determining patient coinsurance and any other applicable deductible and Medicare secondary payment adjustments. The sequestration cut is in place until 2024 unless Congress acts.

RECENT DEVELOPMENTS

On March 10, 2015, we entered into Amendment No. 6 to our Senior Secured Credit Facility (“Amendment No. 6”). In connection with Amendment No. 6, certain applicable rates were modified so that (i) Dollar Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.50% or an adjusted base rate plus 2.50%, (ii) Euro Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.75% or an adjusted base rate plus 2.75%, and (iii) Term E-2 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%. 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%. Repayments of Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans within 12 months of the effective date of Amendment No. 6 in connection with a repricing transaction will be subject to a 1.0% prepayment premium. As a result of Amendment No. 6, the financial covenants were amended to remove the interest coverage ratio in its entirety and to set the total leverage ratio for any test period to be no greater than 8.25:1.00. In addition, certain other covenants were amended, including with respect to the incurrence of incremental facilities and asset sales. We paid fees of $6.3 million as a result of this amendment. See “Liquidity and Capital Resources” and Note 5 of the notes to the consolidated financial statements for the year ended December 31, 2014.

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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.Other revenue consists of contract manufacturing operations performed at our manufacturing facility in Gargrave, England. 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.

The Year ended December 31, 2014 compared to the Year ended December 31, 2013

Revenue by Operating Segment

The following table sets forth, for the periods indicated, business unit revenue (in thousands):

	Year ended December 31,
	2014		2013
Advanced Wound Therapeutics revenue:
Rental	$	719,864	$	743,818
Sales	700,414		543,569
Total – Advanced Wound Therapeutics	1,420,278		1,287,387
Regenerative Medicine revenue:
Sales	428,089		442,174
Other revenue:
Sales	17,972		3,340
Total consolidated revenue:
Rental	719,864		743,818
Sales	1,146,475		989,083
Total consolidated revenue	$	1,866,339	$	1,732,901

The increase in total revenue for 2014 as compared to the prior year 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 year.

The increase in worldwide AWT revenue from the comparable prior year 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 lower average pricing due to increased competition, healthcare reform and declining reimbursement, partially offset by higher volumes. Foreign currency exchange rate movements did not have a significant impact on worldwide AWT revenue compared to the prior year.

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The decline in worldwide Regenerative Medicine revenue from the prior year was due primarily to decreased volumes of abdominal wall repair procedures using biologics as some customers are choosing lower cost alternatives. Foreign currency exchange rate movements did not have a significant impact on worldwide Regenerative Medicine revenue.

For additional discussion on segment and operation information, see Note 14 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Revenue by Geography

The following table sets forth, for the periods indicated, rental and sales revenue by geography (in thousands):

	Year ended December 31,
	2014		2013
Americas revenue:
Rental	$	622,491	$	627,121
Sales	789,157		763,794
Total – Americas	1,411,648		1,390,915
EMEA/APAC revenue:
Rental	97,373		116,697
Sales	357,318		225,289
Total – EMEA/APAC	454,691		341,986
Total consolidated revenue:
Rental	719,864		743,818
Sales	1,146,475		989,083
Total consolidated revenue	$	1,866,339	$	1,732,901

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:

	Year ended December 31,
	2014		2013
Advanced Wound Therapeutics revenue	76.1	%	74.3	%
Regenerative Medicine revenue	22.9		25.5
Other revenue	1.0		0.2
Total consolidated revenue	100.0	%	100.0	%
Americas revenue	75.6	%	80.3	%
EMEA/APAC revenue	24.4		19.7
Total consolidated revenue	100.0	%	100.0	%
Rental revenue	38.6	%	42.9	%
Sales revenue	61.4		57.1
Total consolidated revenue	100.0	%	100.0	%

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Rental Expenses

The following table presents rental expenses for the periods indicated (in thousands):

	Year ended December 31,
	2014		2013
Rental expenses	$	332,762	$	353,504

Rental 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 2014 decreased from the prior year due primarily to a decrease in depreciation related to the fixed asset step up associated with purchase accounting adjustments related to the Merger, partially offset by an increase in operational expenses related to increases in the number of sales force representatives.

Cost of Sales

The following table presents cost of sales (in thousands):

	Year ended December 31,
	2014		2013
Cost of sales	$	323,363	$	251,842

Cost of sales includes manufacturing costs, product costs, royalties and the step up in value associated with purchase accounting adjustments associated with our “for sale” products.  The increase in cost of sales in 2014 compared to the prior year was due primarily to increased sales volumes from Systagenix, which was acquired in the fourth quarter of 2013.

Gross Profit Margin

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

	Year ended December 31,
	2014		2013
Gross profit margin	64.8	%	65.1	%

The gross profit margin decrease during 2014 as compared to the prior year 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 associated with purchase accounting adjustments related to the Merger.

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Selling, General and Administrative Expenses

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

	Year ended December 31,
	2014			2013
Selling, general and administrative expenses	$	713,554		$	684,601
As a percent of total revenue	38.2		%	39.5		%

SG&A 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 increase in SG&A expenses during 2014 compared to the prior year is due primarily to increased costs from Systagenix, which was acquired in the fourth quarter of 2013, along with a $34.7 million accrued expense recorded in the fourth quarter of 2014 related to our LifeNet litigation. The increase was partially offset by a fixed asset impairment charge of $30.6 million and write-offs of $16.9 million of other intangible assets due primarily to the discontinuation of certain projects in 2013.

Research and Development Expenses

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

	Year ended December 31,
	2014			2013
Research and development expenses	$	69,321		$	75,577
As a percent of total revenue	3.7		%	4.4		%

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 Merger, we recorded $2.891 billion of identifiable intangible assets during the fourth quarter of 2011. In 2013, we recorded an additional $253.6 million of identifiable intangibles in connection with our acquisition of Systagenix. We recognized $194.4 million and $188.6 million of amortization expense related to these acquired intangible assets during the years ended December 31, 2014 and 2013, respectively.

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 $280.0 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 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.

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Impairment of Goodwill and Intangible Assets

No impairments of Goodwill or Intangible Assets were recorded in 2014. During the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit.

Interest Expense

Interest expense decreased to $412.7 million in 2014 compared to $419.9 million in the prior year due to lower interest rates.

Foreign Currency Gain (Loss)

Foreign currency transaction gains were $17.8 million during 2014 compared to losses of $22.2 million in the prior year. The revaluation of the Term E-1 EURO loan to U.S. dollars represented $39.8 million of foreign currency transaction gains during 2014 compared to losses of $14.5 million in the prior year.

Derivative Instruments Gain (Loss)

During 2014, we recorded a derivative instruments loss of $5.2 million compared to a gain of $1.6 million in the prior year due primarily to fluctuations in the value of our interest rate derivative instruments.

Earnings (loss) from Discontinued Operations

During 2014, we recorded earnings from discontinued operations, net of tax, of $4.6 million related to the disposition of our SPY assets. During 2013, we recorded a loss from discontinued operations, net of tax, of $3.3 million related to the disposition of TSS assets and a loss from discontinued operations, net of tax, of $0.3 million related to the disposition of our SPY assets. See Note 2 of the notes to consolidated financial statements for the year ended December 31, 2014 for additional information on discontinued operations.

The Year ended December 31, 2013 compared to the Year ended December 31, 2012

Revenue by Operating Segment

The following table sets forth, for the periods indicated, business unit revenue (in thousands):

	Year ended December 31,
	2013		2012
Advanced Wound Therapeutics revenue:
Rental	743,818		815,560
Sales	543,569		496,698
Total – Advanced Wound Therapeutics	1,287,387		1,312,258
Regenerative Medicine revenue:
Sales	442,174		417,245
Other revenue:
Sales	3,340		—
Total consolidated revenue:
Rental	743,818		815,560
Sales	989,083		913,943
Total consolidated revenue	$	1,732,901	$	1,729,503

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The increase in total revenue for 2013 as compared to the prior year was due to higher Regenerative Medicine 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 year.

The decline in worldwide AWT revenue from the prior year was attributable primarily to lower rental revenue in established markets, partially offset by revenues from the Systagenix acquisition in the fourth quarter and increased revenue from expansion products and certain markets outside the U.S. 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 compared to the prior year.

The growth in worldwide Regenerative Medicine revenue over the prior year was due primarily to increased volumes of abdominal wall repair procedures due to demographic shifts and increased volumes of breast reconstruction procedures utilizing our products. Foreign currency exchange rate movements did not have a significant impact on worldwide Regenerative Medicine revenue.

For additional discussion on segment and operation information, see Note 14 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Revenue by Geography

The following table sets forth, for the periods indicated, rental and sales revenue by geography (in thousands):

	Year ended December 31,
	2013		2012
Americas revenue:
Rental	627,121		676,227
Sales	763,794		723,180
Total – Americas	1,390,915		1,399,407
EMEA/APAC revenue:
Rental	116,697		139,333
Sales	225,289		190,763
Total – EMEA/APAC	341,986		330,096
Total consolidated revenue:
Rental	743,818		815,560
Sales	989,083		913,943
Total consolidated revenue	$	1,732,901	$	1,729,503

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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:

	Year ended December 31,
	2013		2012
Advanced Wound Therapeutics revenue	74.3	%	75.9	%
Regenerative Medicine revenue	25.5		24.1
Other revenue	0.2		—
Total consolidated revenue	100.0	%	100.0	%
Americas revenue	80.3	%	80.9	%
EMEA/APAC revenue	19.7		19.1
Total consolidated revenue	100.0	%	100.0	%
Rental revenue	42.9	%	47.2	%
Sales revenue	57.1		52.8
Total consolidated revenue	100.0	%	100.0	%

Rental Expenses

The following table presents rental expenses for the periods indicated (in thousands):

	Year ended December 31,
	2013		2012
Rental expenses	$	353,504	$	438,752

Rental 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 2013 decreased from the prior year due primarily to a decrease in depreciation related to the fixed asset step up associated with purchase accounting related to the Merger and a reduction in operational expenses due to cost control measures.

Cost of Sales

The following table presents cost of sales (in thousands):

	Year ended December 31,
	2013		2012
Cost of sales	$	251,842	$	244,372

Cost of sales includes manufacturing costs, product costs, royalties and the step up in value associated with purchase accounting adjustments associated with our “for sale” products.  The increase in cost of sales in 2013 compared to the prior year was due primarily to increased sales volumes, partially offset by a $22.3 million net decrease in cost of sales related to the sale of inventory subject to a step up in value associated with purchase accounting adjustments.

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Gross Profit Margin

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

	Year ended December 31,
	2013		2012
Gross profit margin	65.1	%	60.5	%

The gross profit margin increase during 2013 compared to the prior year was due primarily to a decrease in depreciation related to the fixed asset step up, lower cost of sales related to the inventory step up associated with purchase accounting and a reduction in operational expenses due to cost control measures.

Selling, General and Administrative Expenses

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

	Year ended December 31,
	2013			2012
Selling, general and administrative expenses	$	684,601		$	589,858
As a percent of total revenue	39.5		%	34.1		%

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 increase in SG&A expenses during 2013 compared to the prior year is due primarily to a fixed asset impairment charge of $30.6 million and an increase in restructuring-related expenses. Additionally, during 2013, write-offs of $16.9 million of other intangible assets were recorded due primarily to the discontinuation of certain projects. During 2012, SG&A expenses included impairment charges of $22.1 million associated with certain production equipment at our AWT manufacturing plant and inventory associated with our V.A.C.Via product.

Research and Development Expenses

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

	Year ended December 31,
	2013			2012
Research and development expenses	$	75,577		$	71,712
As a percent of total revenue	4.4		%	4.1		%

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 Merger, we recorded $2.891 billion of identifiable intangible assets during the fourth quarter of 2011. In 2013, we recorded an additional $253.6 million of identifiable intangibles in connection with our acquisition of Systagenix. We recognized $188.6 million and $221.0 million of amortization expense related to these acquired intangible assets during the years ended December 31, 2013 and 2012, respectively.

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Impairment of Goodwill and Intangible Assets

During the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit.

Interest Expense

Interest expense decreased to $419.9 million in 2013 compared to $466.6 million in the prior year due to lower average debt balances at lower interest rates.

Foreign Currency Gain (Loss)

Foreign currency transaction losses were $22.2 million during 2013 compared to $13.0 million in the prior year. The revaluation of the Term E-1 EURO loan to U.S. dollars represented $14.5 million and $6.3 million of the foreign currency transaction losses recorded during 2013 and 2012, respectively.

Derivative Instruments Gain (Loss)

During 2013, we recorded a derivative instruments gain of $1.6 million compared to a loss of $31.4 million in the prior year due primarily to fluctuations in the value of our interest rate derivative instruments.

Earnings (loss) from Discontinued Operations

During 2013, we recorded a loss from discontinued operations, net of tax, of $3.3 million related to the disposition of TSS assets and a loss from discontinued operations, net of tax, of $0.3 million related to the disposition of our SPY assets. During 2012, we recorded earnings from discontinued operations, net of tax, of $92.2 million related to the disposition of TSS assets and a loss from discontinued operations, net of tax, of $3.6 million related to the disposition of our SPY assets. See Note 2 of the notes to consolidated financial statements for the year ended December 31, 2014 for additional information on discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

We expect to fund our operations through a combination of internally generated cash from operations and from occasional borrowings under our Revolving Credit Facility. Our primary uses of cash are working capital requirements, capital expenditures and debt service requirements. We anticipate that cash generated from operations together with amounts available under our Revolving Credit Facility will be sufficient to meet our future working capital requirements, capital expenditures and debt service obligations as they become due. However, our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance which will be affected by general economic, financial and other factors beyond our control. See “Risk Factors—Risks Relating to our Capital Structure—To service our indebtedness, we will require a significant amount of cash.” Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations. For further information on the terms of our Revolving Credit Facility, see Note 5 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Historical — 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. Our capital expenditures consist primarily of manufactured rental assets, manufacturing equipment, computer hardware and software, expenditures related to leasehold improvements and expenditures related to our global corporate headquarters building.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases, in 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.

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Sources of Capital

Based upon the current level of operations, we believe our existing cash 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 years ended December 31, 2014, 2013 and 2012 and therefore have not been separately disclosed in the 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 2014, our primary source of capital was cash from operations. During 2013, our primary source of capital was cash from operations and cash from financing activities related to our acquisition of Systagenix. The following table summarizes the net cash provided and used by operating activities, investing activities and financing activities (in thousands):

	Year Ended December 31,
	2014			2013			2012
Net cash provided by operating activities	$	91,795		$	136,779		$	162,693
Net cash provided (used) by investing activities	(78,272		)	(563,822		)	144,535
Net cash provided (used) by financing activities	(28,735		)	250,602			(140,200		)
Effect of exchange rates changes on cash and cash equivalents	(8,196		)	240			696
Net increase (decrease) in cash and cash equivalents	$	(23,408	)	$	(176,201	)	$	167,724

As of December 31, 2014 and 2013, our principal sources of liquidity consisted of $183.5 million and $206.9 million, respectively, of cash and cash equivalents and availability under our Revolving Credit Facility. The availability under the Revolving Credit Facility was $161.0 million and $178.8 million at December 31, 2014 and 2013, respectively, and was reduced by $39.0 million and $21.2 million, respectively, for letters of credit issued by banks which are party to the Senior Secured Credit Facility. In addition, we had $11.4 million and $12.6 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility as of December 31, 2014 and 2013, respectively.

Capital Expenditures

During the years ended December 31, 2014 , 2013 and 2012, we made capital expenditures of $66.6 million, $80.9 million and $91.6 million, respectively. Capital expenditures during the years ended December 31, 2014 and 2013 related primarily to expanding the rental fleet and information technology projects and purchases. Capital expenditures during the year ended December 31, 2012 related primarily to expanding the rental fleet, the construction of our global headquarters building, and information technology projects and purchases.

Senior Secured 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.

On March 10, 2015, we entered into Amendment No. 6 to our Senior Secured Credit Facility (“Amendment No. 6”). In connection with Amendment No. 6, certain applicable rates were modified so that (i) Dollar Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.50% or an adjusted base rate plus 2.50%, (ii) Euro Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.75% or an adjusted base rate plus 2.75%, and (iii) Term E-2 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%. 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%. Repayments of Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans within 12 months of the effective date of Amendment No. 6 in connection with a repricing transaction will be subject to a 1.0% prepayment premium. As a result of Amendment No. 6, the financial covenants were amended to remove the interest coverage ratio in its entirety and to set the total leverage ratio for any

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test period to be no greater than 8.25:1.00. In addition, certain other covenants were amended, including with respect to the incurrence of incremental facilities and asset sales. We paid fees of $6.3 million as a result of this amendment.

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 December 31, 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	—	%		$	—	$	161,042	(2)
Senior Dollar Term E-1 Credit Facility	May 2018	4.41	%	(3)	1,903,000		—
Senior Euro Term E-1 Credit Facility	May 2018	5.08	%	(3)	286,370		—
Senior Term E-2 Credit Facility	November 2016	4.03	%	(3)	312,396		—
Total					$	2,501,766	$	161,042

(1) Amount outstanding includes the unamortized original issue discount.

(2) At December 31, 2014, the amount available under the revolving portion of our Senior Secured Credit Facility reflected a reduction of $39.0 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility. In addition, we have $11.4 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 December 31, 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.

10.5% Second Lien Senior Secured Notes

In November 2011, we issued $1.750 billion aggregate principal amount of second lien senior secured notes due 2018 (the “10.5% Second Lien Notes”). 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.

12.5% Senior Unsecured Notes

In November 2011, we issued $750.0 million aggregate principal amount of senior unsecured notes due 2019 (the “12.5% Unsecured Notes”); $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 had 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 December 31, 2014, $101,000 aggregate principal amount of the notes remained outstanding.

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Covenants

As of December 31, 2014 and 2013, the Senior Secured Credit Facility required we have a total leverage ratio not to exceed 7.4:1 and 8.1:1, respectively, and an interest coverage ratio of at least 1.3:1 and 1.2:1, respectively. As of December 31, 2014 and 2013, our actual total leverage ratio was 6.2:1 and 6.0:1, respectively, and our interest coverage ratio was 1.8:1 and 1.9:1, respectively. As of December 31, 2014 and 2013, we were in compliance with all covenants under the Senior Secured Credit Facility. As of December 31, 2014 and 2013, 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. The Company expects to continue to be in compliance with these covenants in 2015. As a result of Amendment No. 6, the financial covenants were amended to remove the interest coverage ratio covenant in its entirety and to set the total leverage ratio for any test period to be no greater than 8.25:1.00.

For further information on our long-term debt, see Note 5 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Interest Rate Protection

At December 31, 2014 and 2013, we had three interest rate swap agreements to convert $1.463 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 6 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Contractual Obligations

We are committed to making cash payments in the future on long-term debt, capital leases, operating leases, licensing agreements and purchase commitments. We have not guaranteed the debt of any other party. The following table summarizes our contractual cash obligations as of December 31, 2014 for each of the periods indicated (in thousands):

	2015		2016-2017		2018-2019		Thereafter		Total(1)
Long-term debt obligations(2)	$	25,721	$	357,018	$	4,515,700	$	—	$	4,898,439
Interest on long-term debt obligations(2)	362,322		707,243		326,234		—		1,395,799
Capital lease obligations	526		394		—		—		920
Operating lease obligations	22,387		26,692		15,645		28,587		93,311
Milestone obligations(3)	19,200		10,000		22,500		47,500		99,200
Licensing agreements	1,250		2,500		—		—		3,750
Purchase obligations	50,609		—		—		—		50,609
Settlement agreement obligations(4)	85,000		115,000		—		—		200,000
Related party management fees(5)	5,149		10,298		10,298		19,738		45,483
Total	$	572,164	$	1,229,145	$	4,890,377	$	95,825	$	6,787,511

(1) This excludes our liability of $33.3 million for unrecognized tax benefits. We cannot make a reasonably reliable estimate of the amount and period of related future payments for such liability.

(2) Amounts and timing may be different from our estimated interest payments due to potential voluntary prepayments, borrowings and interest and foreign currency rate fluctuations.

(3) Represents future anticipated milestone payments associated with acquisitions.

(4) Represents our liability to fully resolve the pending patent disputes with Wake Forest.

(5) Represents fees for strategic and consulting services paid to entities affiliated with the Sponsors. For further discussion of related party management fees, see Note 13 of the notes to the consolidated financial statements for the year ended December 31, 2014.

In addition to the contractual obligations set forth above, we have a $34.7 million accrual related to the LifeNet Health lawsuit against LifeCell Corporation. On November 18, 2014, a jury found that LifeNet’s U.S. Patent No. 6,569,200 was not invalid and was infringed and further awarded LifeNet a lump sum damages amount of $34.7 million. We disagree with the result

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at this stage in the litigation and believe that LifeCell’s defenses to the claims are meritorious. LifeCell will continue to vigorously assert its defenses during the post-trial and appeal stages of this litigation and intends to defend any further claims by LifeNet.

Critical Accounting Estimates

Critical accounting estimates as those that are, in management’s opinion, very important to the portrayal of our financial condition and results of operations and require our management’s most difficult, subjective or complex judgments. In preparing our financial statements in accordance with U.S. generally accepted accounting principles, we must often make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements and during the reporting period. Some of those judgments can be subjective and complex. Consequently, actual results could differ from our estimates. The accounting policies that are most subject to important estimates or assumptions are described below. Also, see Note 1 of the notes to the consolidated financial statements for the year ended December 31, 2014.

Revenue Recognition and Accounts Receivable Realization

We recognize revenue in accordance with the Revenue Recognition topic of the Codification when each of the following four criteria are met:

1) a contract or sales arrangement exists;

2) products have been shipped and title has transferred or services have been rendered;

3) the price of the products or services is fixed or determinable; and

4) collectibility is reasonably assured.

We recognize rental revenue based on the number of days a product is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.  Sales revenue is recognized when products are shipped and title has transferred.  In addition, we establish realization reserves against revenue to provide for adjustments including capitation agreements, estimated credit memos, volume discounts, pricing adjustments, utilization adjustments, product returns, cancellations, estimated uncollectible amounts and payer adjustments based on historical experience. In addition, revenue is recognized net of administrative fees paid to group purchasing organizations (“GPOs”).

The Americas trade accounts receivable consist of amounts due directly from acute and extended care organizations, third-party payers (“TPP”), both governmental and non-governmental, third-party distributors and patient pay accounts.  Included within the TPP accounts receivable balances are amounts that have been or will be billed to patients once the primary payer portion of the claim has been settled by the TPP.  EMEA/APAC trade accounts receivable consist of amounts due primarily from acute care organizations and third-party distributors.

The TPP reimbursement process in the United States requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, could increase total accounts receivable.  Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in our home care business may, in some cases, extend beyond one year prior to full settlement of the claim.

We utilize a combination of factors in evaluating the collectibility of our accounts receivable. For unbilled receivables, we establish reserves to allow for expected denied or uncollectible items.  In addition, items that remain unbilled for more than a specified period of time, or beyond an established billing window, are reserved against revenue.  For billed receivables, we generally establish reserves using a combination of factors including historic adjustment rates for credit memos and canceled transactions, historical collection experience, and the length of time receivables have been outstanding.  The reserve rates vary by payer group.  In addition, we record specific reserves for bad debt when we become aware of a customer’s inability or refusal to satisfy its debt obligations, such as in the event of a bankruptcy filing. If circumstances change, such as higher than expected claims denials, post-payment claim recoupments, a material change in the interpretation of reimbursement criteria by a major customer or payer, or payment defaults or an unexpected material adverse change in a major customer’s or payer’s ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount.  A hypothetical 1% change in the collectibility of our billed receivables at December 31, 2014 would impact pre-tax earnings (loss) by an estimated $2.1 million.

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Inventory

Advanced Wound Therapeutics inventories

Inventories are recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On October 28, 2013, inventories purchased as part of our acquisition of Systagenix were recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Costs include material, labor and manufacturing overhead costs. Inventory expected to be converted into equipment for short-term rental is reclassified to property, plant and equipment. We review our inventory balances quarterly for excess sale products or obsolete inventory levels. Inventory quantities of sale-only products in excess of anticipated demand are considered excess and are reserved at 100%. For rental products, we review both product usage and product life cycle to classify inventory as active, discontinued or obsolete. Obsolescence reserve balances are established on an increasing basis from 0% for active, high-demand products to 100% for obsolete products. The reserve is reviewed and, if necessary, adjustments are made on a monthly basis. We rely on historical information and production planning forecasts to support our reserve and utilize management’s business judgment for “high risk” items, such as products that have a fixed shelf life. Once the value of inventory is reduced, we do not adjust the reserve balance until the inventory is sold or otherwise disposed.

Regenerative Medicine inventories

Inventories are recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Inventories on hand include the cost of materials, freight, direct labor and manufacturing overhead. We record a provision for excess and obsolete inventory based primarily on inventory quantities on hand, the historical product sales and estimated forecast of future product demand and production requirements. In addition, we record a provision for tissue that will not meet tissue standards based on historic rejection rates.

Long-Lived Assets

Prior to the completion of the Merger on November 4, 2011, property, plant and equipment was stated at cost. On November 4, 2011, property, plant and equipment was recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. On October 28, 2013, property, plant and equipment purchased as part of our acquisition of Systagenix was recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. Betterments, which extend the useful life of the equipment, are capitalized. Depreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives (20 to 30 years for buildings and between three and seven years for most of our other property and equipment) of the assets. If an event were to occur that indicates the carrying value of long-lived assets might not be recoverable, we would review property, plant and equipment for impairment using an undiscounted cash flow analysis and if an impairment had occurred on an undiscounted basis, we would compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly.

Goodwill and Other Intangible Assets

Business combinations are accounted for under the acquisition method. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values as of the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

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Goodwill is tested for impairment by reporting unit annually as of October 31, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition.

Impairment is tested by comparing the carrying value of the reporting unit to the reporting unit’s fair value. The carrying value of each reporting unit is determined by taking the reported net assets of the consolidated entity, identifying reporting unit specific assets (including goodwill) and liabilities and allocating shared operational and administrative assets and liabilities to the appropriate reporting unit, which is the same as the segment to which they are assigned. The fair value of each reporting unit is determined using current industry market multiples as well as discounted cash flow models using certain assumptions about expected future operating performance and appropriate discount rates determined by our management. To ensure the reasonableness of the estimated fair value of our reporting units, we perform a reconciliation of the estimated fair value of our consolidated entity to the total estimated fair value of all our reporting units. The assumptions used in estimating fair values and performing the goodwill impairment test are inherently uncertain and require management judgment. When it is determined that the carrying value of goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, the measurement of any impairment is determined and the carrying value is reduced as appropriate.

Identifiable intangible assets include developed technology, in-process research and development, customer relationships, tradenames and patents. We amortize our identifiable definite lived intangible assets over 2 to 20 years, depending on the estimated economic or contractual life of the individual asset. For indefinite-lived identifiable intangible assets, impairment is tested by comparing the carrying value of the asset to the fair value. When it is determined that the carrying value of identifiable intangible assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, the measurement of any impairment is determined and the carrying value is reduced as appropriate.

There were no impairments of goodwill or identifiable intangible assets during 2014 or 2012. The results of the third quarter 2013 interim impairment test indicated that the estimated fair value of the Regenerative Medicine reporting unit was less than its carrying value; consequently, during the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived identifiable intangible assets related to our Regenerative Medicine reporting unit.

Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to our business model or changes in operating performance. Significant differences between these estimates and actual cash flows could materially affect our future financial results. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units. In the event of an approximate 27% and 10% drop in the fair value of our KCI reporting unit and the fair value of our KCI indefinite-lived identifiable intangible assets, respectively, the fair value of the KCI reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2014. In the event of an approximate 21% drop in the fair value of our Systagenix reporting unit, the fair value of the Systagenix reporting unit would still exceed its book value as of October 31, 2014. Additionally, in the event of an approximate 11% drop in the fair value of our Regenerative Medicine reporting unit, the fair value of the Regenerative Medicine reporting unit would still exceed its book value as of October 31, 2014. Certain Regenerative Medicine indefinite-lived identifiable intangible assets approximated their fair value as of October 31, 2014.

Income Taxes

Deferred income taxes are accounted for in accordance with the “Income Taxes” Topic of the FASB Accounting Standards Codification which requires the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the tax bases of assets and liabilities, as measured by current enacted tax rates. When appropriate, we evaluate the need for a valuation allowance to reduce our deferred tax assets.

We also account for uncertain tax positions in accordance with the “Income Taxes” Topic of the FASB Accounting Standards Codification. Accordingly, a liability is recorded for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We have established a valuation allowance to reduce deferred tax assets associated with foreign net operating losses, certain state net operating losses and certain foreign deferred tax assets to an amount whose realization is more likely than not. We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary differences and expected repatriation of foreign earnings. Accordingly, we believe that no additional valuation allowances are necessary.

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Legal Proceedings and Other Loss Contingencies

We are subject to various legal proceedings, many involving routine litigation incidental to our business. The outcome of any legal proceeding is not within our complete control, is often difficult to predict and is resolved over very long periods of time. Estimating probable losses associated with any legal proceedings or other loss contingencies is very complex and requires the analysis of many factors including assumptions about potential actions by third parties. Loss contingencies are disclosed when there is at least a reasonable possibility that a loss has been incurred and are recorded as liabilities in the consolidated financial statements when it is both (1) probable or known that a liability has been incurred and (2) the amount of the loss is reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. If a loss contingency is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements.

Recently Issued Accounting Standards

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

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ITEM 7A.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. We have established policies, procedures and internal processes governing our management of market risk and the use of financial instruments to manage our exposure to such risk.

Interest Rate Risk

We have variable interest rate debt and other financial instruments which are subject to interest rate risk that could have a negative impact on our business if not managed properly. We have a risk management policy which is designed to reduce the potential negative earnings effect arising from the impact of fluctuating interest rates. We manage our interest rate risk on our borrowings through interest rate swap agreements which effectively convert a portion of our variable rate borrowings to a fixed rate basis, thus reducing the impact of changes in interest rates on future interest expenses. We do not use financial instruments for speculative or trading purposes.

The table below provides information as of December 31, 2014 about our long-term debt and interest rate derivatives, both of which are sensitive to changes in interest rates. For long-term debt, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate derivatives, the table presents notional amounts and weighted average interest rates by expected (contractual) maturity dates. Weighted average interest rates of our interest rate derivatives are based on the nominal amounts which are used to calculate the contractual payments to be exchanged under the contract (dollars in thousands):

	Expected Maturity Date as of December 31, 2014
	2015			2016			2017			2018			2019			Thereafter			Total			Fair Value(1)
Long-term debt
Fixed rate	$	101		$	—		$	—		$	1,750,000		$	612,000		$	—		$	2,362,101		$	2,583,754
Weighted average interest rate	3.250		%	—		%	—		%	10.500		%	12.500		%	—		%	11.018		%
Variable rate	$	25,620		$	334,584		$	22,434		$	2,153,700		$	—		$	—		$	2,536,338		$	2,501,222
Weighted average interest rate(2)	3.967		%	3.967		%	3.967		%	3.967		%	3.967		%	—		%	3.967		%
Interest rate swaps(3)
Variable to fixed-notional amount	$	83,300		$	1,379,700		$	—		$	—		$	—		$	—		$	1,463,000		$	(22,003	)
Average pay rate	2.252		%	2.252		%	—		%	—		%	—		%	—		%	2.252		%
Average receive rate(4)	1.250		%	1.250		%	—		%	—		%	—		%	—		%	1.250		%

_____________________

(1) The fair value of our fixed rate debt is based on a limited number of trades and does not necessarily represent the purchase price of the entire portfolio.

(2) The weighted average interest rate for all periods presented represents the nominal weighted average interest rate as of December 31, 2014. These rates reset quarterly.

(3) Interest rate swaps relate to the variable rate debt under long-term debt. The aggregate fair value of our interest rate swap agreements of $22.0 million was negative. At December 31, 2014, $13.9 million was recorded as a current liability and $8.1 million was recorded as a long-term liability.

(4) The average receive rate for future periods are based on the current period rates. These rates reset quarterly.

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Foreign Currency and Market Risk

We have direct operations in the United States, Canada, Western Europe, Australia, Japan, Singapore, India, Turkey, Brazil and South Africa, and we conduct additional business through distributors primarily in Latin America, the Middle East, Eastern Europe and Asia. Our foreign operations are generally measured in their applicable local currencies. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. Exposure to these fluctuations is managed primarily through the use of natural hedges, whereby funding obligations and assets are both managed in the applicable local currency.

We face transactional currency exposures related to when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. These nonfunctional currency exposures relate primarily to existing intercompany receivables and payables arising from intercompany purchases of manufactured products. We enter into foreign currency exchange contracts to mitigate the impact of currency fluctuations on transactions and anticipated cash flows denominated in nonfunctional currencies, thereby limiting risk that would otherwise result from changes in exchange rates. The periods of the foreign currency exchange contracts correspond to the periods of the exposed transactions and anticipated cash flows but generally do not extend beyond 12 months. We also face exposure to foreign currency fluctuations related to the Euro denominated portion of our Senior Secured Credit Facility.

At December 31, 2014, we had no outstanding foreign currency exchange contracts. Based on our overall transactional currency rate exposure, movements in the currency rates will not materially affect our financial condition.

International operations reported operating profit of $81.4 million for the year ended December 31, 2014. We estimate that a 10% fluctuation in the value of the U.S. dollar relative to these foreign currencies as of and for the year ended December 31, 2014, would change our net earnings (loss) for the year ended December 31, 2014 by approximately $9.1 million. Our analysis does not consider the implications that such fluctuations could have on the overall economic activity that could exist in such an environment in the United States or the foreign countries or on the results of operations of our foreign entities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors of Chiron Holdings GP, Inc.

We have audited the accompanying consolidated balance sheets of Acelity L.P. Inc. and subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive loss, equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Acelity L.P. Inc. and subsidiaries at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth within.

/s/ ERNST & YOUNG LLP

ERNST & YOUNG LLP

San Antonio, Texas

March 10, 2015

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ACELITY L.P. INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

	December 31, 2014			December 31, 2013
Assets:
Current assets:
Cash and cash equivalents	$	183,541		$	206,949
Accounts receivable, net	370,483			407,578
Inventories, net	178,222			181,567
Deferred income taxes	63,025			23,621
Prepaid expenses and other	27,563			53,161
Total current assets	822,834			872,876
Net property, plant and equipment	288,048			333,725
Debt issuance costs, net	77,896			102,054
Deferred income taxes	31,692			31,459
Goodwill	3,378,298			3,378,661
Identifiable intangible assets, net	2,397,251			2,549,201
Other non-current assets	4,694			4,669
	$	7,000,713		$	7,272,645
Liabilities and Equity:
Current liabilities:
Accounts payable	$	51,827		$	50,316
Accrued expenses and other	343,484			328,975
Current installments of long-term debt	25,721			26,311
Income taxes payable	1,305			3,368
Deferred income taxes	113,658			2,199
Total current liabilities	535,995			411,169
Long-term debt, net of current installments and discount	4,815,290			4,865,503
Non-current tax liabilities	33,300			53,682
Deferred income taxes	792,157			1,003,784
Other non-current liabilities	163,258			40,432
Total liabilities	6,340,000			6,374,570
Equity:
General partner’s capital	—			—
Limited partners’ capital	670,787			900,218
Accumulated other comprehensive income (loss), net	(10,074		)	(2,143		)
Total equity	660,713			898,075
	$	7,000,713		$	7,272,645

See accompanying notes to consolidated financial statements.

57

ACELITY L.P. INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands)

	Year ended December 31,
	2014			2013			2012
Revenue:
Rental	$	719,864		$	743,818		$	815,560
Sales	1,146,475			989,083			913,943
Total revenue	1,866,339			1,732,901			1,729,503
Rental expenses	332,762			353,504			438,752
Cost of sales	323,363			251,842			244,372
Gross profit	1,210,214			1,127,555			1,046,379
Selling, general and administrative expenses	713,554			684,601			589,858
Research and development expenses	69,321			75,577			71,712
Acquired intangible asset amortization	194,433			188,571			220,984
Wake Forest settlement	198,578			—			—
Impairment of goodwill and intangible assets	—			443,400			—
Operating earnings (loss)	34,328			(264,594		)	163,825
Interest income and other	3,667			1,602			829
Interest expense	(412,733		)	(419,877		)	(466,622		)
Loss on extinguishment of debt	—			(2,364		)	(31,481		)
Foreign currency gain (loss)	17,844			(22,226		)	(13,001		)
Derivative instruments gain (loss)	(5,183		)	1,576			(31,433		)
Loss from continuing operations before income tax benefit	(362,077		)	(705,883		)	(377,883		)
Income tax benefit	(127,031		)	(150,792		)	(147,823		)
Loss from continuing operations	(235,046		)	(555,091		)	(230,060		)
Earnings (loss) from discontinued operations, net of tax	4,573			(3,567		)	88,643
Net loss	$	(230,473	)	$	(558,658	)	$	(141,417	)

See accompanying notes to consolidated financial statements.

58

ACELITY L.P. INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(in thousands)

	Year ended December 31,
	2014			2013			2012
Net loss	$	(230,473	)	$	(558,658	)	$	(141,417	)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(5,690		)	(3,867		)	5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013	—			2,241			—
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	(2,241		)	—			—
Total comprehensive loss	$	(238,404	)	$	(560,284	)	$	(136,093	)

See accompanying notes to consolidated financial statements.

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ACELITY L.P. INC. AND SUBSIDIARIES

Consolidated Statements of Equity

(in thousands)

	General Partner’s Capital		Limited Partners’ Capital			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balances at December 31, 2011	$	—	$	1,599,285		$	(5,841	)	$	1,593,444
Net loss	—		(141,417		)	—			(141,417		)
Capital contributions from limited partners	—		239			—			239
Distribution to limited partners	—		(2,199		)	—			(2,199		)
Equity-based compensation expense	—		2,005			—			2,005
Foreign currency translation adjustment, net of tax expense of $369	—		—			5,324			5,324
Balances at December 31, 2012	$	—	$	1,457,913		$	(517	)	$	1,457,396
Net loss	—		(558,658		)	—			(558,658		)
Distribution to limited partners	—		(1,572		)	—			(1,572		)
Equity-based compensation expense	—		2,711			—			2,711
Settlement of profits interest units	—		(176		)	—			(176		)
Foreign currency translation adjustment, net of tax benefit of $233	—		—			(3,867		)	(3,867		)
Unrealized investment gain, net of tax expense of $1,403	—		—			2,241			2,241
Balances at December 31, 2013	$	—	$	900,218		$	(2,143	)	$	898,075
Net loss	—		(230,473		)	—			(230,473		)
Equity-based compensation expense	—		3,619			—			3,619
Settlement of profits interest units	—		(2,577		)	—			(2,577		)
Foreign currency translation adjustment, net of tax expense of $753	—		—			(5,690		)	(5,690		)
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403	—		—			(2,241		)	(2,241		)
Balances at December 31, 2014	$	—	$	670,787		$	(10,074	)	$	660,713

See accompanying notes to consolidated financial statements

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ACELITY L.P. INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands)
	Year ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net loss	$	(230,473	)	$	(558,658	)	$	(141,417	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt issuance costs and discount	38,966			35,838			29,155
Depreciation and other amortization	303,905			335,959			436,370
Loss (gain) on disposition of assets	(900		)	4,423			(152,701		)
Amortization of fair value step-up in inventory	6,680			3,162			25,021
Fixed asset and inventory impairment	—			30,580			22,116
Impairment of goodwill and intangible assets	—			443,400			—
Write-off of other intangible assets	—			16,885			—
Provision for bad debt	14,032			7,308			8,984
Loss on extinguishment of debt	—			2,364			31,481
Gain on sale of investment	(3,211		)	—			—
Equity-based compensation expense	4,033			2,925			2,069
Deferred income tax benefit	(159,170		)	(187,089		)	(126,389		)
Unrealized loss (gain) on derivative instruments	(10,670		)	(4,645		)	30,002
Unrealized loss (gain) on revaluation of cross currency debt	(39,756		)	14,450			6,272
Change in assets and liabilities:
Decrease (increase) in accounts receivable, net	26,596			(10,924		)	37,574
Increase in inventories, net	(3,096		)	(17,171		)	(18,797		)
Decrease (increase) in prepaid expenses and other	19,308			(9,338		)	2,468
Increase (decrease) in accounts payable	1,608			1,137			(8,815		)
Increase (decrease) in accrued expenses and other	125,677			20,449			(24,537		)
Increase (decrease) in tax liabilities, net	(1,734		)	5,724			3,837
Net cash provided by operating activities	91,795			136,779			162,693
Cash flows from investing activities:
Additions to property, plant and equipment	(66,584		)	(80,911		)	(91,567		)
Decrease (increase) in inventory to be converted into equipment for short-term rental	(3,563		)	1,286			5,269
Dispositions of property, plant and equipment	3,652			1,298			2,630
Proceeds from disposition of assets	5,212			—			244,317
Proceeds from sale of investment	4,211			—			—
Business acquired in purchase transaction, net of cash acquired	(9,613		)	(478,748		)	(15,097		)
Increase in identifiable intangible assets and other non-current assets	(11,587		)	(6,747		)	(1,017		)
Net cash provided (used) by investing activities	(78,272		)	(563,822		)	144,535

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ACELITY L.P. INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands)
	Year ended December 31,
	2014			2013			2012
Cash flows from financing activities:
Capital contributions from limited partners	—			—			239
Distribution to limited partners	—			(1,572		)	(2,199		)
Settlement of profits interest units	(2,332		)	(176		)	—
Repayments of long-term debt and capital lease obligations	(26,403		)	(69,396		)	(118,767		)
Debt issuance costs	—			(20,477		)	(18,410		)
2013 and 2012 acquisition financing:
Proceeds from senior credit facility	—			349,563			—
Payment of debt issuance costs	—			(7,340		)	(1,063		)
Net cash provided (used) by financing activities	(28,735		)	250,602			(140,200		)
Effect of exchange rate changes on cash and cash equivalents	(8,196		)	240			696
Net increase (decrease) in cash and cash equivalents	(23,408		)	(176,201		)	167,724
Cash and cash equivalents, beginning of period	206,949			383,150			215,426
Cash and cash equivalents, end of period	$	183,541		$	206,949		$	383,150

See accompanying notes to consolidated financial statements

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Notes to Consolidated Financial Statements

NOTE 1.Summary of Significant Accounting Policies

(a)Basis of Presentation and Principles of Consolidation

On November 4, 2011, Kinetic Concepts, Inc. (“KCI”) completed its merger (the “Merger”) with Chiron Merger Sub, Inc. (“Merger Sub”), a direct subsidiary of Chiron Holdings, Inc. (“Holdings”) and an indirect subsidiary of Acelity L.P. Inc. (“Acelity”), pursuant to the terms of the Agreement and Plan of Merger, dated as of July 12, 2011 (the “Merger Agreement”), by and among Holdings, Merger Sub and KCI. As a result of the Merger, KCI is a 100% owned subsidiary of Acelity. In connection with this transaction, LifeCell Corporation (“LifeCell”), formerly a 100% owned subsidiary of KCI, was promoted to be a sister corporation of KCI, such that each of KCI and LifeCell are now 100% owned subsidiaries of Acelity. Acelity is a non-operating holding company indirectly controlled by investment funds advised by Apax Partners (“Apax”) and controlled affiliates of Canada Pension Plan Investment Board (“CPPIB”) and the Public Sector Pension Investment Board (“PSP Investments” and with Apax and CPPIB, collectively, the “Sponsors”) and certain other co-investors. The consolidated financial statements presented herein include the accounts of Acelity L.P. Inc., together with its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise noted in this report, the terms “we,” “us,” “our,” or the “Company” refers to Acelity L.P. Inc. and subsidiaries. The accompanying audited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”). Certain prior period amounts have been reclassified to conform to the 2014 presentation.

Net earnings (loss) per share information is not presented as such information is not meaningful. Chiron Guernsey Holdings L.P. Inc. owns over 99% of the limited partnership interests of Acelity, while Acelity’s Managing Limited Partner owns less than 1% of the limited partnership interests.  Chiron Guernsey GP Co. Limited owns all of the general partnership interests in Acelity and has no economic interest in Acelity. We do not have any publicly traded common stock or potential common stock.

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.

On October 29, 2014, LifeCell entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”) to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. 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.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. 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.

(b)Nature of Operations and Customer Concentration

We are a leading global medical technology company devoted to the development and commercialization of innovative products and therapies designed to improve clinical outcomes while helping to reduce the overall cost of patient care. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all healthcare settings, including acute care hospitals, long-term care facilities and patients’ homes. 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. Our primary businesses serve the advanced wound therapeutics and regenerative medicine markets. Our advanced devices business is primarily engaged in commercializing several technology platforms, including negative pressure wound therapy (“NPWT”), negative pressure surgical management (“NPSM”) and epidermal harvesting. Our advanced wound dressings are used for the management of chronic and acute wounds. 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. In addition to our acellular tissue matrices, our regenerative medicine business markets autologous fat grafting solutions, such as Revolve, which is complementary to our tissue matrix business.

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We have direct operations in over 25 countries and indirect operations in an additional 50 countries. We have two reportable operating segments which correspond to our two businesses: Advanced Wound Therapeutics 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. As defined by the Codification, we have three reporting units: KCI, Regenerative Medicine and Systagenix. We have operations in 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.

Operations for our Americas geographic region accounted for approximately 75.6%, 80.3%, and 80.9% of our total revenue for the years ended December 31, 2014, 2013 and 2012, respectively. In the U.S. acute and extended care settings, which accounted for approximately 58.5%, 60.8%, and 59.2% of our Americas revenue for the years ended December 31, 2014, 2013 and 2012, respectively, we bill our customers directly for the rental and sale of our products. Also in the U.S. acute and extended care settings, we contract with both proprietary hospital groups and voluntary group purchasing organizations (“GPOs”). Proprietary hospital groups own all of the hospitals which they represent and, as a result, can ensure compliance with an executed national agreement. Voluntary GPOs negotiate contracts on behalf of member hospital organizations, but cannot ensure that their members will comply with the terms of an executed national agreement. During the years ended December 31, 2014, 2013 and 2012, we recorded approximately $106.7 million, $94.1 million, and $96.3 million, respectively, in Advanced Wound Therapeutics revenues under contracts with Novation, LLC, our largest single GPO relationship.

In the U.S. home care setting, where our revenue comes predominantly from our NPWT products, we provide products and services to patients in the home and bill third-party payers directly, such as Medicare and private insurance. During the years ended December 31, 2014, 2013 and 2012, we recorded revenue related to Medicare claims of approximately $120.6 million, $142.5 million, and $167.1 million, respectively.

In the EMEA/APAC region, most of our Advanced Wound Therapeutics revenue is generated in the acute care setting on a direct billing basis.

(c)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(d)Revenue Recognition

We recognize revenue in accordance with the “Revenue Recognition” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification when each of the following four criteria are met:

1) a contract or sales arrangement exists;

2) products have been shipped, title has transferred or services have been rendered;

3) the price of the products or services is fixed or determinable; and

4) collectibility is reasonably assured.

We recognize rental revenue based on the number of days a product is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.  Sales revenue is recognized when products are shipped and title has transferred.  In addition, we establish realization reserves against revenue to provide for adjustments including capitation agreements, estimated credit memos, volume discounts, pricing adjustments, utilization adjustments, product returns, cancellations, estimated uncollectible amounts and payer adjustments based on historical experience. In addition, revenue is recognized net of administrative fees paid to GPOs and state sales tax paid on post-acute rentals and sales.

(e)Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. 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.

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(f)Accounts Receivable

The Americas trade accounts receivable consist of amounts due directly from acute and extended care organizations, third-party payers (“TPP”), both governmental and non-governmental, third-party distributors and patient pay accounts.  Included within the TPP accounts receivable balances are amounts that have been or will be billed to patients once the primary payer portion of the claim has been settled by the TPP.  EMEA/APAC trade accounts receivable consist of amounts due primarily from acute care organizations and third-party distributors.

Significant concentrations of accounts receivable include:

	2014		2013
Acute and extended care organizations	51	%	53	%
Managed care, insurance and other	28	%	28	%
Medicare/Medicaid	10	%	9	%
Other	11	%	10	%

The TPP reimbursement process in the United States requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, could increase total accounts receivable.  Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in our home care business may, in some cases, extend beyond one year prior to full settlement of the claim.

We utilize a combination of factors in evaluating the collectibility of our accounts receivable. For unbilled receivables, we establish reserves to allow for expected denied or uncollectible items.  In addition, items that remain unbilled for more than a specified period of time, or beyond an established billing window, are reserved against revenue.  For billed receivables, we generally establish reserves using a combination of factors including historic adjustment rates for credit memos and canceled transactions, historical collection experience, and the length of time receivables have been outstanding.  The reserve rates vary by payer group.  In addition, we record specific reserves for bad debt when we become aware of a customer’s inability or refusal to satisfy its debt obligations, such as in the event of a bankruptcy filing.

(g)Inventories

Advanced Wound Therapeutics inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On October 28, 2013, inventories purchased as part of our acquisition of Systagenix were recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Costs include material, labor and manufacturing overhead costs. Inventory expected to be converted into equipment for short-term rental is reclassified to property, plant and equipment. We review our inventory balances monthly for excess sale products or obsolete inventory levels. Inventory quantities of sale-only products in excess of anticipated demand are considered excess and are reserved at 100%. For rental products, we review both product usage and product life cycle to classify inventory as active, discontinued or obsolete. Obsolescence reserve balances are established on an increasing basis from 0% for active, high-demand products to 100% for obsolete products. The reserve is reviewed and, if necessary, adjustments are made on a monthly basis. We rely on historical information and production planning forecasts to support our reserve and utilize management’s business judgment for “high risk” items, such as products that have a fixed shelf life. Once the value of inventory is reduced, we do not adjust the reserve balance until the inventory is sold or otherwise disposed.

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Regenerative Medicine inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Inventories on hand include the cost of materials, freight, direct labor and manufacturing overhead. We record a provision for excess and obsolete inventory based primarily on inventory quantities on hand, the historical product sales and estimated forecast of future product demand and production requirements. In addition, we record a provision for tissue that will not meet tissue standards based on historic rejection rates.

(h)Vendor Rebates

We may receive consideration from vendors in the normal course of business in the form of rebates of purchase price paid. Our policy for accounting for these funds is in accordance with the “Revenue Recognition” Topic of the FASB Accounting Standards Codification. Funds are recognized as a reduction of cost of sales and inventory if the funds are a reduction of the price for the vendor’s products.

(i)Long-Lived Assets

Prior to the completion of the Merger on November 4, 2011, property, plant and equipment was stated at cost. On November 4, 2011, property, plant and equipment was recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. On October 28, 2013, property, plant and equipment purchased as part of our acquisition of Systagenix was recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. Betterments, which extend the useful life of the equipment, are capitalized. Debt issuance costs, which represent fees and other direct costs incurred in connection with our borrowings are capitalized and amortized using the effective interest method over the contractual term of the borrowing. Other assets consisted principally of other investments at December 31, 2014 and 2013.

When an event occurs that indicates the carrying value of long-lived assets might not be recoverable, we review property, plant and equipment for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. During 2013, we recorded a $30.6 million fixed asset impairment charge. There were no impairments of fixed assets in 2014.

Depreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives (20 to 30 years for buildings and between 3 and 7 years for most of our other property and equipment) of the assets. Amortization for leasehold improvements is taken over the shorter of the estimated useful life of the asset or over the remaining lease term. Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $108.0 million, $145.7 million, and $178.4 million, respectively. During 2012, we recorded a $22.1 million impairment charge associated with certain production equipment at our manufacturing plant and inventory associated with our V.A.C.Via product.

(j)Goodwill and Other Intangible Assets

Business combinations are accounted for under the acquisition method. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values as of the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

Goodwill is tested for impairment by reporting unit annually as of October 31, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition.

66

Impairment of goodwill is tested by comparing the carrying value of the reporting unit to the reporting unit’s fair value. The carrying value of each reporting unit is determined by taking the reported net assets of the consolidated entity, identifying reporting unit specific assets (including goodwill) and liabilities and allocating shared operational and administrative assets and liabilities to the appropriate reporting unit. The fair value of each reporting unit is determined using current industry multiples as well as discounted cash flow models using certain performance assumptions and appropriate discount rates determined by our management. To ensure the reasonableness of the estimated fair value of our reporting units, we perform a reconciliation of the estimated fair value of our consolidated entity to the total estimated fair value of all our reporting units. When it is determined that the carrying value of goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, the measurement of any impairment is determined and the carrying value is reduced as appropriate.

Identifiable intangible assets include developed technology, in-process research and development, customer relationships, tradenames and patents. For intangible assets that are subject to amortization, we amortize the assets over the estimated economic or contractual life of the individual asset. When an event occurs that indicates the carrying value of definite-lived intangible assets might not be recoverable, we review the assets for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. Indefinite-lived intangibles are tested for impairment annually as of October 31, or more frequently when events or changes in circumstances indicate that the assets might be impaired. If the carrying amount of the indefinite-lived intangible assets exceeds their fair value, an impairment is recognized in an amount equal to that excess.

The Company performed an interim impairment test on goodwill of its Regenerative Medicine reporting unit during the third quarter of 2013. In our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, we disclosed that in the event of an approximate 6% and 4% drop in the fair value of our Regenerative Medicine reporting unit and the fair value of our Regenerative Medicine indefinite-lived identifiable intangible assets, respectively, the fair value of the Regenerative Medicine reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2012. The Company continued to monitor the close proximity of the reporting unit’s carrying value compared to its fair value and, in the third quarter, determined it was required to complete the interim impairment test, as defined under GAAP. The results of the third quarter 2013 interim impairment test indicated that the estimated fair value of the Regenerative Medicine reporting unit was less than its carrying value; consequently, during the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. There were no impairments of goodwill or identifiable intangible assets during 2014 or 2012.

During 2013, write-offs of $16.9 million of other intangible assets were recorded due primarily to the discontinuation of certain projects.

Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to our business model or changes in operating performance. Significant differences between these estimates and actual cash flows could materially affect our future financial results. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units. In the event of an approximate 27% and 10% drop in the fair value of our KCI reporting unit and the fair value of our KCI indefinite-lived identifiable intangible assets, respectively, the fair value of the KCI reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2014. In the event of an approximate 21% drop in the fair value of our Systagenix reporting unit, the fair value of the Systagenix reporting unit would still exceed its book value as of October 31, 2014. Additionally, in the event of an approximate 11% drop in the fair value of our Regenerative Medicine reporting unit, the fair value of the Regenerative Medicine reporting unit would still exceed its book value as of October 31, 2014. Certain Regenerative Medicine indefinite-lived identifiable intangible assets approximated their fair value as of October 31, 2014.

(k)Income Taxes

Deferred income taxes are accounted for using the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the tax bases of assets and liabilities, as measured by current enacted tax rates.  When appropriate, we evaluate the need for a valuation allowance to reduce our deferred tax assets.

A liability is recorded for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.  We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We have established a valuation allowance to reduce deferred tax assets associated with foreign net operating losses, certain state net operating losses, and certain foreign deferred tax assets to an amount whose realization is more likely than not.

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We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary differences and expected repatriation of foreign earnings. Accordingly, we believe that no additional valuation allowances are necessary.

(l)Royalties

We pay royalties for the right to market certain of our medical devices. Royalties are generally based on applicable revenue or the number of units sold and are recognized in the period that the related revenue is earned. Royalties related to rental revenue are included in rental expense. Royalties on sales revenue are included in cost of sales.

(m)Self-Insurance

We self-insure certain employee benefit and casualty insurance risks. Our group medical plan for U.S. employees is a qualified self-insured plan subject to specific stop loss insurance coverage. Our short-term disability plan for U.S. based employees is self-insured. The Texas Employee Injury Benefit Plan is self-insured subject to a $750,000 per occurrence retention. Our casualty insurance program has a $750,000 deductible for workers’ compensation, auto liability, and general liability. Our products liability program has a $1,000,000 self-insured retention. Our group life and accidental death and dismemberment plan and our long-term disability plan are all fully insured. We fully accrue our retained loss liabilities, including claims incurred but not reported. Based on historical trends, we believe our accruals for retained losses are adequate to cover future losses.

(n)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.

Periodically, 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; 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 consolidated balance sheet.

All derivative instruments are recorded on the balance sheet 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.

(o)Foreign Currency Translation and Transaction Gains and Losses

The functional currency for the majority of our foreign operations is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from the foreign currency translations are included in accumulated other comprehensive income. Transaction gains and losses, such as those resulting from the settlement of nonfunctional currency receivables or payables, including intercompany balances, are included in foreign currency gain (loss) in our consolidated statements of operations. Additionally, payable and receivable balances and long-term debt denominated in nonfunctional currencies are marked-to-market at month-end, and the gain or loss is recognized in our consolidated statements of operations.

(p)Concentration of Credit Risk

We have a concentration of credit risk with financial institutions related to our derivative instruments. As of December 31, 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 $487.7 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.

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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.

(q)Equity-based Compensation

We account for equity-based payments to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires that equity-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values.

As required by ASC 718, we recognize equity-based compensation expense for equity-based payment awards that are expected to vest based on estimated fair values on the date of grant. For awards classified as liability awards, the fair value of these awards is reviewed on a regular basis and the expense associated with these awards is adjusted accordingly as the fair value changes. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rates. To the extent our actual forfeitures are different than our estimates, we record a true-up for the differences in the period that the awards vest, and such true-ups could materially affect our operating results. We also consider whether there have been any significant changes in facts and circumstances that would affect our expected forfeiture rate.

We are also required to determine the fair value of equity-based awards at the grant date. We estimate the fair values of employee incentive equity awards using a Black-Scholes-Merton valuation model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Profits Interest Units and Appreciation Rights. These determinations require judgment, including estimating expected volatility. If actual results differ significantly from these estimates, equity-based compensation expense and our results of operations could be impacted.

(r)Research and Development

The focus of our research and development program has been to invest in clinical studies and the development of new advanced wound healing systems, products and dressings. This includes the development of new and synergistic technologies across the continuum of wound care including tissue regeneration, preservation and repair, new applications of negative pressure technology, and the leveraging of our core understanding of biological tissues in order to develop biosurgery products in our Regenerative Medicine business. The types of costs classified as research and development expense include salaries of technical staff, consultant costs, facilities and utilities costs related to offices occupied by technical staff, depreciation on equipment and facilities used by technical staff, supplies and materials for research and development and outside services such as prototype development and testing and third-party research and development costs. Expenditures for research and development, including expenses related to clinical studies, are expensed as incurred.

(s)Shipping and Handling

We include shipping and handling costs in rental expense and cost of sales, as appropriate. Shipping and handling costs on sales products recovered from customers of $5.1 million, $4.7 million and $4.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, are included in sales revenue for these periods.

(t)Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a government authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes and value added taxes, are accounted for on a net (excluded from revenues and costs) basis.

(u)Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses were $10.9 million, $7.6 million and $8.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

(v)Seasonality

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,

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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.

(w)   Legal Proceedings and Other Loss Contingencies

We are subject to various legal proceedings, many involving routine litigation incidental to our business. The outcome of any legal proceeding is not within our complete control, is often difficult to predict and is resolved over very long periods of time. Estimating probable losses associated with any legal proceedings or other loss contingencies is very complex and requires the analysis of many factors including assumptions about potential actions by third parties. Loss contingencies are disclosed when there is at least a reasonable possibility that a loss has been incurred and are recorded as liabilities in the consolidated financial statements when it is both (1) probable or known that a liability has been incurred and (2) the amount of the loss is reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. If a loss contingency is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements.

(x)Concentrations in Available Sources of Materials

For both of our businesses, we obtain some of our finished products and components from a limited group of suppliers, and we purchase certain supplies from single sources for reasons of quality assurance, cost-effectiveness, availability, or constraints resulting from regulatory requirements.

Our manufacturing processes for Advanced Wound Therapeutics products involve producing final assemblies in accordance with a master production plan. Assembly of our products is accomplished using metal parts, plastics, electronics and other materials and component parts that are primarily purchased from outside suppliers. Component parts and materials are obtained from industrial distributors, original equipment manufacturers and contract manufacturers. The majority of parts and materials are readily available in the open market (steel, aluminum, plastics, fabrics, polymers, etc.) for which price volatility is reasonably low. Our manufacturing processes and quality systems are intended to comply with appropriate FDA and International Organization for Standardization (“ISO”) requirements.

Our Ireland plant manufactures certain disposable supplies, on a high-volume automation line, which have historically been supplied by third-party contract manufacturers in Mexico. We plan to continue leveraging our existing infrastructure and manufacturing capabilities to expand internal production in the future.

Many raw materials and contract manufacturing for our advanced wound dressings are sole source or conducted on a purchase order basis. Since the Systagenix acquisition, we have undertaken an effort to qualify a second source supplier for key materials.

Our Regenerative Medicine business is dependent on the availability of sufficient quantities of raw materials, including donated human cadaveric tissue, porcine tissue and other materials required for tissue processing.  We currently receive human tissue from multiple U.S. tissue banks and organ procurement organizations.  

Our Regenerative Medicine xenograft tissue matrix products are made from porcine skin tissue. We have two qualified porcine tissue suppliers. Our primary porcine tissue source is supplied by three separate breeding herd farms that are isolated for biosecurity. We also have qualified second sources for many of our specialized solutions that are essential to the processing of our xenograft tissue matrix products.

While we work closely with suppliers to assure continuity of supply and maintain high quality and reliability, manufacturing disruptions experienced by our suppliers could jeopardize our supply of finished products and components. Additionally, a change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology. Any casualty, natural disaster or other significant disruption of any of our sole-source suppliers’ operations, or any unexpected loss of any existing exclusive supply contract could have a material adverse effect on our business.

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(y)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.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carry forward, similar tax loss, or a tax credit carry forward exists at the reporting date. This new guidance became effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company has applied the requirements of ASU 2013-11 prospectively in preparing the December 31, 2014 consolidated balance sheet, which resulted in a decrease to non-current deferred tax assets of $14.9 million and a decrease to non-current reserves for uncertain tax positions of $14.9 million. Had the Company applied the requirements of ASU 2013-11 retrospectively to the December 31, 2013 consolidated balance sheet, there would not have been a material impact.

(z)Recently Issued Accounting Standards

In April 2014, the FASB issued 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.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements — Going Concern (Subtopic 205-40).” The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating this update, however we do not anticipate that the adoption of this guidance will have a material impact on our results of operations, financial position or disclosures.

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NOTE 2.    Acquisitions and Divestitures

Acquisitions

Systagenix

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 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 using the income approach. 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 following table represents the allocation of the purchase price (in thousands):

	December 31, 2013			Adjustment			December 31, 2014
Goodwill	$	171,086		$	1,737		$	172,823
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		)	(1,737		)	(36,489		)
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 net deferred tax liability relates primarily to the tax impact of future amortization associated with the intangible assets acquired, which is not deductible for tax purposes.

The following table reflects the unaudited pro forma condensed consolidated results of operations, as though the acquisition had occurred as of the beginning of the period presented (in thousands):

	Year Ended December 31,
	2013			2012
Pro forma revenue	$	1,931,683		$	1,943,296
Pro forma net loss	$	(552,153	)	$	(168,001	)

Pro forma condensed consolidated results of operations for the year ended December 31, 2013 were adjusted to exclude nonrecurring charges of $16.2 million related to transaction costs recognized as selling, general and administrative expenses. Pro forma condensed consolidated results of operations for the year ended December 31, 2012 were adjusted to include these nonrecurring charges.  Additionally, the pro forma condensed consolidated results of operations for the year ended December 31,

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2012 were adjusted to include $9.8 million of additional nonrecurring cost of sales associated with the preliminary purchase accounting adjustments related to the step up in value of inventory.

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 periods presented, nor are they indicative of future operating results. 

TauTona Injector, LLC

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. For the year ended December 31, 2014, LifeCell paid $1.5 million under the asset purchase agreement related to milestone achievement. As of December 31, 2014, the accompanying consolidated balance sheet included $7.1 million under the caption “accrued expenses and other” and $9.0 million under the caption “other non-current liabilities” related to future anticipated milestone payments.

GID Group

In November 2014, LifeCell entered into an asset purchase agreement with GID Group to purchase certain assets, including patents and know-how. Under the terms of the asset purchase agreement, LifeCell made an initial cash payment of $5.0 million at the closing of the transaction. The asset purchase agreement also calls for additional payments by LifeCell of up to $10.0 million upon the achievement of certain milestones. As of December 31, 2014, the accompanying consolidated balance sheet included $4.5 million under the caption “accrued expenses and other” and $3.7 million under the caption “other non-current liabilities” related to future anticipated milestone payments.

Divestitures

Therapeutic Support Systems

On November 8, 2012, KCI closed on the divestiture of its TSS business to Getinge AB. The final adjusted purchase price paid by Getinge to KCI was $241.5 million. Under the terms of the Agreement, we agreed to provide transition services to Getinge after the close of the transaction. The historical results of operations of the disposal group, 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 and the service fee payable by Getinge under the transition services agreement.

The Company utilized the net proceeds from the sale to fund the acquisition of Systagenix and internal investments, which satisfied our reinvestment requirement associated with our senior secured credit facility.

The operating results of the TSS product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2013			2012
Revenue	$	—		$	188,121
Earnings (loss) before income taxes	$	(5,371	)	$	149,916
Income tax expense (benefit)	$	(2,068	)	$	57,718
Earnings (loss) from discontinued operations	$	(3,303	)	$	92,198

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SPY® Elite System

On October 29, 2014, LifeCell Corporation entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”)

to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. LifeCell received a one-time payment of $4.5 million and sold existing inventory back to Novadaq. Under the terms of the agreement, LifeCell has agreed to provide limited transition services to Novadaq through December 31, 2014. In connection with the transfer, the parties have also resolved all legal disputes between them.

The operating results of the SPY® Elite System product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2014		2013			2012
Revenue	$	22,204	$	26,010		$	16,950
Earnings (loss) before income taxes	$	7,436	$	(429	)	$	(5,780	)
Income tax expense (benefit)	$	2,863	$	(165	)	$	(2,225	)
Earnings (loss) from discontinued operations	$	4,573	$	(264	)	$	(3,555	)

NOTE 3.Supplemental Balance Sheet Data

(a)Accounts Receivable, net

Accounts receivable consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	396,329		$	418,804
Unbilled receivables	39,293			50,841
Less:  Allowance for revenue adjustments	(61,460		)	(67,631		)
Gross trade accounts receivable	374,162			402,014
Less:  Allowance for bad debt	(13,087		)	(8,483		)
Net trade accounts receivable	361,075			393,531
Other receivables	9,408			14,047
	$	370,483		$	407,578

(b)       Inventories, net

Inventories consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	127,253		$	110,937
Goods and tissue in-process	6,887			12,994
Raw materials, supplies, parts and unprocessed tissue	67,567			71,876
	201,707			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(7,515		)	(3,952		)
Reserve for excess and obsolete inventory	(15,970		)	(10,288		)
	$	178,222		$	181,567

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(c)Net property, plant and equipment

Net property, plant and equipment consists of the following (in thousands):

	December 31, 2014			December 31, 2013
Land	$	13,121		$	13,438
Buildings	46,561			46,092
Equipment for short-term rental	313,025			297,896
Machinery, equipment and furniture	320,498			294,916
Leasehold improvements	77,810			76,224
Inventory to be converted to equipment	7,515			3,952
	778,530			732,518
Less: accumulated depreciation	(490,482		)	(398,793		)
	$	288,048		$	333,725

(d)Accrued expenses and other

Accrued expenses and other consist of the following (in thousands):

	December 31, 2014		December 31, 2013
Payroll, benefits, commissions, bonuses and related taxes	$	65,740	$	89,190
Wake Forest royalty settlement and other royalties	85,275		66,446
Interest	43,607		43,253
Sales and other taxes	24,469		21,827
Insurance	8,729		9,425
Derivative liability	13,936		914
Other accrued expenses	101,728		97,920
	$	343,484	$	328,975

NOTE 4.Accounting for Goodwill and Other Non-current Assets

As defined by the Codification, we have three reporting units: KCI, Regenerative Medicine and Systagenix. We have two reportable operating segments which correspond to our two global 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.

(a)Goodwill

Based on the purchase price allocation, the components of goodwill by reporting unit are listed below (in thousands):

	KCI		Regenerative Medicine			Systagenix		Total
Balance at December 31, 2012	$	2,483,240	$	996,535		$	—	$	3,479,775
Goodwill acquired, net of purchase price adjustments	—		—			171,086		171,086
Impairment of goodwill	—		(272,200		)	—		(272,200		)
Balance at December 31, 2013	2,483,240		724,335			171,086		3,378,661
Adjustment to prior year acquisition	—		—			1,737		1,737
Reduction for sale of business	—		(2,100		)	—		(2,100		)
Balance at December 31, 2014	$	2,483,240	$	722,235		$	172,823	$	3,378,298

There were no impairments of goodwill or identifiable intangible assets during 2014. As of December 31, 2013, cumulative impairments of goodwill totaled $272.2 million.

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(b)       Identifiable intangible assets

Identifiable intangible assets include the following (in thousands):

	December 31, 2014					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships and non-compete agreements	$	947,638	$	(400,806	)	$	947,706	$	(291,812	)
Developed technology	761,464		(206,355		)	759,898		(128,728		)
Tradenames and patents	129,726		(16,582		)	85,693		(7,322		)
Total definite-lived intangible assets	1,838,828		(623,743		)	1,793,297		(427,862		)
Indefinite-lived intangible assets:
Tradenames	1,178,800		—			1,178,800		—
In-process research and development	3,366		—			4,966		—
Total indefinite-lived intangible assets	1,182,166		—			1,183,766		—
	$	3,020,994	$	(623,743	)	$	2,977,063	$	(427,862	)

Amortization expense, related to definite‑lived intangibles, was approximately $195.9 million, $190.3 million and $221.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The following table presents the estimated amortization expense, in total, to be incurred over the next five years for all definite-lived intangible assets as of December 31, 2014 (in thousands):

Year ending December 31,	Estimated Amortization Expense
2015	$178,498
2016	$162,717
2017	$149,423
2018	$136,083
2019	$125,348

(c)Debt issuance costs

As of December 31, 2014 and 2013, unamortized debt issuance costs related to our current senior secured credit facility and our fixed rate long-term debt, including the 10.5% Second Lien Notes and the 12.5% Unsecured Notes were collectively $77.9 million and $102.1 million, respectively. Amortization of debt issuance costs recorded for the years ended December 31, 2014, 2013 and 2012 were $24.1 million, $21.8 million and $18.2 million, respectively. Additionally, in the year ended December 31, 2012, we recorded approximately $16.2 million of debt issuance costs write offs in connection with the repurchase of senior unsecured notes. There were no write-offs of debt issuance costs during the year ended December 31, 2014 and 2013. The remaining costs for the senior secured credit facility and fixed rate long-term debt are amortized on a straight-line basis or using the effective interest method, as appropriate, over the respective term of debt to which they specifically relate.

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NOTE 5.     Long-Term Debt

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

	December 31, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility(1) – due 2018	$	1,927,241		$	1,946,708
Senior Euro Term E-1 Credit Facility(1) – due 2018	293,746			337,820
Senior Term E-2 Credit Facility(1) – due 2016	315,351			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	4,898,439			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(24,241		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(7,376		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(2,955		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(20,205		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,651		)	(3,025		)
Net discount on debt	(57,428		)	(73,352		)
Total debt, net of discount	4,841,011			4,891,814
Less:  Current installments	(25,721		)	(26,311		)
	$	4,815,290		$	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 credit agreement and loan documents, except as revised by the amendment.

Senior Secured Credit Facility

Our senior secured credit facility (the “Senior Secured Credit Facility”) includes a $200.0 million revolving credit facility (the “Revolving Credit Facility”). Amounts available under the Revolving Credit Facility are available for borrowing and reborrowing until maturity. At December 31, 2014 and 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 $39.0 million and $21.2 million, respectively. In addition, we had $11.4 million and $12.6 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility as of December 31, 2014 and 2013, respectively. The capacity of the Revolving Credit Facility is reduced for the $39.0 million and $21.2 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility as of December 31, 2014 and 2013, respectively. The resulting availability under the Revolving Credit Facility was $161.0 million and $178.8 million at December 31, 2014 and 2013, respectively. Commitment fees accrue at a rate of 0.50% on the amounts available under the Revolving Credit Facility.

Interest. 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. 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 fees of $1.8 million as a result of this amendment.

On March 10, 2015, we entered into Amendment No. 6 to our Senior Secured Credit Facility (“Amendment No. 6”). In connection with Amendment No. 6, certain applicable rates were modified so that (i) Dollar Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.50% or an adjusted base rate plus 2.50%, (ii) Euro Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.75% or an adjusted base rate plus 2.75%, and (iii) Term

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E-2 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%. 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 may elect interest periods of one, two, three, or six months for the Eurocurrency borrowings. Interest on base rate borrowings is payable quarterly in arrears. Interest on Eurocurrency borrowings is payable at the end of each applicable interest period or every three months in the case of interest periods in excess of three months. Interest on all past due amounts will accrue at 2.00% over the applicable rate.

Collateral. The Senior Secured Credit Facility is secured by a first priority lien and security interest in (a) substantially all equity interests of each of our 100% owned U.S. and first-tier material foreign subsidiaries (limited in the case of certain subsidiaries to 65% of the voting equity interests of such subsidiary) and (b) subject to certain exceptions, substantially all of our (in this instance referring only to us and our subsidiaries that are or will be co-borrowers or guarantors under the Senior Secured Credit Facility) present and future real property (with a value in excess of $20 million individually) and present and future tangible and intangible assets. The liens securing the Senior Secured Credit Facility are subject to permitted liens.

Guarantors. Our obligations under the Senior Secured Credit Facility are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-borrowers under the senior secured credit facility, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The Revolving Credit Facility and the Term E-2 Facility mature on November 4, 2016, and the Dollar Term E-1 Facility and the Euro Term E-1 Facility mature on May 4, 2018. The principal amount of each of the Dollar Term E-1 Facility, the Euro Term E-1 Facility and the Term E-2 Facility amortizes in quarterly installments equal to 1.0% of the original principal amount of each such facility per annum until the respective final maturity date.

Voluntary Prepayments. We may prepay, in full or in part, borrowings under the Revolving Credit Facility without premium or penalty, subject to minimum prepayment amount and increment limitations.  We may prepay, in full or in part, borrowings under the Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility without premium or penalty, subject to minimum prepayment amount and increment limitations, except that repayments of Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans within 12 months of the effective date of Amendment No. 6 in connection with a repricing transaction will be subject to a 1.0% prepayment premium.

Mandatory Prepayments. Subject to certain exceptions, we must make periodic prepayments of the Dollar Term E-1 Facility, the Euro Term E-1 Facility and the Term E-2 Facility equal to: (i) 100% of the net cash proceeds of certain dispositions of property, (ii) 100% of the net cash proceeds of the issuance or incurrence of certain indebtedness, and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified total leverage ratios) of annual excess cash flow.

Representations. The Senior Secured Credit Facility contains representations generally customary for similar facilities and transactions.

Covenants. The Senior Secured Credit Facility contains affirmative and negative covenants customary for similar facilities and transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness (including guarantee obligations);

• incur liens;

• engage in certain fundamental changes, including changes in the nature of our business;

• sell assets;

• pay dividends and make other payments in respect of capital stock;

• make acquisitions, investments, loans and advances;

• pay and modify the terms of certain indebtedness;

• engage in certain transactions with affiliates; and

• enter into negative pledge clauses and clauses restricting subsidiary distributions.

The Senior Secured Credit Facility contains financial covenants requiring us to meet certain leverage and interest coverage ratios, subject to certain equity cure rights. Beginning March 31, 2012, it is an event of default if we permit any of the following:

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• as of the last day of any fiscal quarter, our leverage ratio of debt to EBITDA, as defined in the senior secured credit agreement, to be greater than a maximum leverage ratio, initially set at 8.50 to 1.00 and stepped down periodically; and

• as of the last day of any fiscal quarter, our ratio of EBITDA to interest expense, as defined in the senior secured credit agreement, to be less than a minimum interest coverage ratio, initially set at 1.10 to 1.00 and stepped up periodically.

As of December 31, 2014, we were in compliance with the covenants under the Senior Secured Credit Facility.

As a result of Amendment No. 6, the financial covenants were amended to remove the interest coverage ratio in its entirety and to set the total leverage ratio for any test period to be no greater than 8.25:1.00.

Events of Default. The Senior Secured Credit Facility contains events of default including, but not limited to, failure to pay principal or interest, breaches of representations and warranties, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, impairments of loan documentation or security, changes of control, and defaults with respect to certain ERISA obligations.

10.5% Second Lien Senior Secured Notes

In November 2011, we issued $1.750 billion aggregate principal amount of second lien notes due 2018.

Interest. Interest on the 10.5 % Second Lien Notes accrues at the rate of 10.5% per annum and is payable semi-annually in cash on each May 1 and November 1 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. 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. Interest on the 10.5 % Second Lien Notes accrues from and includes the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months.

Collateral. The second lien senior secured notes are secured by a second priority lien and security interest in (a) substantially all equity interests of each of our 100% owned U.S. and first-tier material foreign subsidiaries (limited in the case of certain subsidiaries to 65% of the voting equity interests of such subsidiary) and (b) subject to certain exceptions, substantially all of our (in this instance referring only to us and our subsidiaries that are or will be co-issuers or guarantors of the second lien notes) present and future real property (with a value in excess of $20 million individually) and present and future tangible and intangible assets. The liens securing the second lien notes are subject to permitted liens.

Guarantors. Our obligations under the second lien senior secured notes are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the second lien notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The second lien senior secured notes will mature on November 1, 2018.

Covenants. The indenture governing the second lien senior secured notes contains affirmative and negative covenants customary for similar transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make loans and investments;

• sell or otherwise dispose of assets;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends; and

• consolidate, merge or sell all or substantially all of our assets.

As of December 31, 2014, we were in compliance with all covenants under the second lien senior secured notes indenture.

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Optional Redemption. At any time prior to November 1, 2014, we may redeem up to 35% of the aggregate principal amount of the second lien senior secured notes with the net cash proceeds of certain equity offerings, at a redemption price equal to 110.500% of the aggregate principal amount of the second lien senior secured notes being redeemed plus accrued and unpaid interest.

At any time prior to November 1, 2015, we may redeem all or part of the second lien senior secured notes at a redemption price equal to 100% of the aggregate principal amount of the second lien senior secured notes to be redeemed, plus a make-whole premium and accrued and unpaid interest.

At any time on or after November 1, 2015, we may redeem the second lien senior secured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	105.250%
2016	102.625%
2017 and thereafter	100.000%

Change of Control. If we experience certain kinds of changes of control, we will be required to offer to purchase the second lien senior secured notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

Events of Default. The indenture governing the second lien senior secured notes contains events of default including, but not limited to, failure to pay principal or interest, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, and impairments of loan documentation or security.

12.5% Senior Unsecured Notes

In November 2011, we issued $750 million aggregate principal amount of senior unsecured notes due 2019; $612.0 million of which are still outstanding.

Interest. Interest on the senior unsecured notes accrues at the rate of 12.5% per annum and is payable semi-annually in cash on each May 1 and November 1 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. 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. Interest on the senior unsecured notes accrues from and includes the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months.

Collateral. The senior unsecured notes are senior unsecured obligations.

Guarantors. Our obligations under the senior unsecured notes are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the senior unsecured notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The senior unsecured notes will mature on November 1, 2019.

Covenants. The indenture governing the senior unsecured notes contains affirmative and negative covenants customary for similar transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make loans and investments;

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• sell or otherwise dispose of assets;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends; and

• consolidate, merge or sell all or substantially all of our assets.

As of December 31, 2014, we were in compliance with all covenants under the senior unsecured notes indenture.

Optional Redemption. At any time prior to November 1, 2014, we may redeem up to 35% of the aggregate principal amount of the senior unsecured notes with the net cash proceeds of certain equity offerings, at a redemption price equal to 112.500% of the aggregate principal amount of the senior unsecured notes being redeemed plus accrued and unpaid interest.

At any time prior to November 1, 2015, we may redeem all or part of the senior unsecured notes at a redemption price equal to 100% of the aggregate principal amount of the senior unsecured notes to be redeemed, plus a make-whole premium and accrued and unpaid interest.

At any time on or after November 1, 2015, we may redeem the senior unsecured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	106.250%
2016	103.125%
2017 and thereafter	100.000%

Change of Control. If we experience certain kinds of changes of control, we will be required to offer to purchase the senior unsecured notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

Events of Default. The indenture governing the senior unsecured notes contains events of default including, but not limited to, failure to pay principal or interest, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, and impairments of loan documentation or security.

3.25% 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 “Indenture”).

In connection with the Merger, the holders of the Convertible Notes had the right to require us to repurchase some or all of their Convertible Notes as provided in the Indenture. The repurchase date for any Convertible Notes tendered to us was November 30, 2011. The repurchase price was the principal amount of the Convertible Notes plus accrued interest. The holders of the Convertible Notes that did not elect to require us to repurchase their Convertible Notes maintained the right to convert their Convertible Notes into cash on or before November 29, 2011. As of December 31, 2014, $101,000 aggregate principal amount of the notes remained outstanding.

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Interest and Future Maturities

Interest paid during the years ended December 31, 2014, 2013 and 2012 was $367.0 million, $385.7 million, and $432.2 million, respectively.

Future maturities of long-term debt at December 31, 2014 were (in thousands):

Year	Amount
2015	$	25,721
2016	$	334,584
2017	$	22,434
2018	$	3,903,700
2019	$	612,000
Thereafter	$	—

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NOTE 6.     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 sheet at fair value. We do not use financial instruments for speculative or trading purposes.

Derivatives Not Designated as Hedges

At December 31, 2014 and 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 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 chart summarizes these agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$487,667	2.256%
12/31/13-12/31/16	$487,667	2.249%
12/31/13-12/31/16	$487,667	2.250%

During the years ended December 31, 2013 and 2012, we had interest rate cap agreements with initial notional amounts of $1.600 billion at a cost of $2.2 million that effectively limited the interest rate to 2% on a portion of the borrowings under our Senior Secured Credit Facility. The interest rate cap agreements expired on December 31, 2013.

We also use derivative instruments to manage our transactional currency exposures when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. These nonfunctional currency exposures relate primarily to existing and forecasted intercompany receivables and payables arising from intercompany purchases of manufactured products. We enter into foreign currency exchange contracts to mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, thereby limiting risk that would otherwise result from changes in exchange rates. These contracts are not designated as hedges; 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 consolidated balance sheet. The periods of the foreign currency exchange contracts generally do not exceed one year and correspond to the periods of the exposed transactions and related settlements. At December 31, 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 sheet 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 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 $2.501 billion and $2.584 billion, respectively, at December 31, 2014. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.615 billion and $2.694 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.

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All of our derivatives, as of the reporting date, use inputs considered as Level 2. The interest rate swap agreements and interest rate cap agreements are valued using a discounted cash flow model that takes into account the present value of the expected 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
		December 31, 2014		December 31, 2013			December 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	13,936	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	8,067		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	22,003	$	32,820

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

	Year ended December 31,
	2014			2013			2012
Interest rate swap agreements	$	(5,245	)	$	2,618		$	(25,486	)
Interest rate cap agreements	—			(9		)	(1,583		)
Foreign currency exchange contracts	62			(1,033		)	(4,364		)
	$	(5,183	)	$	1,576		$	(31,433	)

Certain of our derivative instruments contain provisions that require compliance with the restrictive covenants of our Senior Secured Credit Facility. See Note 5 for further discussion of the restrictive covenants of our Senior Secured Credit Facility.

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 December 31, 2014, we could be required to settle or post the full amount as collateral to its counterparties.

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

NOTE 7.Leasing Obligations

We are obligated for equipment under various capital leases, which expire at various dates during the next three years. At December 31, 2014 and 2013, the gross amount of equipment under capital leases totaled $2.6 million and $2.7 million and related accumulated depreciation was approximately $1.7 million and $1.2 million, respectively.

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We lease computer and telecommunications equipment, service and sales vehicles, office space, various storage spaces and manufacturing facilities under non-cancelable operating leases, which expire at various dates over the next 20 years. Total rental expense for operating leases was $29.7 million, $27.8 million and $43.0 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Future minimum lease payments under capital and non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2014 are as follows (in thousands):

	Capital Leases			Operating Leases
2015	$	526		$	22,387
2016	394			14,947
2017	—			11,745
2018	—			8,918
2019	—			6,727
Thereafter	—			28,587
Total minimum lease payments	$	920		$	93,311
Less amount representing interest	(66		)
Present value of net minimum capital lease payments	854
Less current portion	(488		)
Obligations under capital leases, excluding current installments	$	366

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NOTE 8.Income Taxes (Benefit)

The following table summarizes earnings (loss) before income taxes (benefit) of U.S. and non-U.S. operations (in thousands):

	Year ended December 31,
	2014			2013			2012
U.S.	$	(515,976	)	$	(845,261	)	$	(492,869	)
Non-U.S.	161,335			133,578			259,122
	(354,641		)	(711,683		)	(233,747		)
Earnings (loss) from discontinued operations before income taxes	7,436			(5,800		)	144,136
Earnings (loss) from continuing operations before income taxes	$	(362,077	)	$	(705,883	)	$	(377,883	)

The following table summarizes the composition of income tax expense (benefit) (in thousands):

	Year ended December 31,
	2014			2013			2012
Current:
U.S. Federal	$	18,149		$	16,777		$	17,693
U.S. State	2,220			8,162			3,148
Non-U.S.	14,633			9,125			13,218
Total current expense	35,002			34,064			34,059
Deferred:
U.S. Federal	(138,046		)	(158,735		)	(104,476		)
U.S. State	(19,998		)	(26,383		)	(19,900		)
Non-U.S.	(1,126		)	(1,971		)	(2,013		)
Total deferred tax expense (benefit)	(159,170		)	(187,089		)	(126,389		)
	(124,168		)	(153,025		)	(92,330		)
Income tax expense (benefit) related to discontinued operations	2,863			(2,233		)	55,493
Income tax expense (benefit) related to continuing operations	$	(127,031	)	$	(150,792	)	$	(147,823	)

The reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate is as follows:

	Year ended December 31,
	2014(1)		2013(1)		2012(1)
Computed “expected” tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.4		1.7		3.8
Non-deductible items	(0.1	)	(0.9	)	(0.5	)
Effect of international operations	(4.4	)	(1.5	)	0.1
Section 199 production deduction	0.8		0.2		0.5
Research and development credit	0.1		0.3		—
Goodwill impairment	—		(13.4	)	—
Other, net	0.2		0.1		0.6
	35.0		21.5		39.5
Change in rate related to discontinued operations	0.1		(0.1	)	(0.4	)
Effective tax rate related to continuing operations	35.1	%	21.4	%	39.1	%

⁽¹⁾  The years ended December 31, 2014, 2013 and 2012 include a loss before income tax benefit. The consolidated effective income tax rates represent adjustments to the computed “expected” income tax benefit rate for the period. Therefore, negative percentages represent reductions to the income tax benefit rate.

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The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Deferred Tax Assets:
Non-U.S. tax credit	$	76,320		$	67,765
U.S. research and development tax credit	978			—
Net operating loss	100,772			67,229
Accounts receivable	(1,468		)	9,377
Non-U.S. net operating loss carry forwards	36,904			23,259
Accrued liabilities	87,412			12,156
Deferred non-U.S. tax asset	43,864			48,223
Accrued interest	14,686			20,296
Disallowed interest carry forward	106,860			52,407
Unrealized foreign exchange currency loss, net	—			371
Inventory	9,717			2,124
Other	891			618
Total gross deferred tax assets	476,936			303,825
Less: valuation allowances	(82,299		)	(55,944		)
Net deferred tax assets	394,637			247,881
Deferred Tax Liabilities:
Intangible assets, amortizable	(384,485		)	(447,286		)
Intangible assets, indefinite-lived	(454,779		)	(455,417		)
Loan fees	(30,751		)	(31,343		)
U.S. tax on non-U.S. earnings	(256,039		)	(190,665		)
Deferred U.S. state tax liability	3,556			(831		)
Unrealized foreign exchange currency gain, net	(19,883		)	—
Depreciation	(56,865		)	(70,870		)
Other	(6,489		)	(2,372		)
Total gross deferred tax liabilities	(1,205,735		)	(1,198,784		)
Net deferred tax liability	(811,098		)	(950,903		)
Less: current deferred tax asset	(63,025		)	(23,621		)
Less: non-current deferred tax asset	(31,692		)	(31,459		)
Less: current deferred tax liability	113,658			2,199
Non-current deferred tax liability	$	(792,157	)	$	(1,003,784	)

The change in the balance sheet deferred tax accounts reflect deferred income tax benefit, the deferred tax impact of other comprehensive income items and purchase accounting adjustments.

At December 31, 2014,$219.2 millionof U.S. federal net operating losses,$545.9 million of U.S. state net operating losses and $154.9 million of non-U.S. net operating losses were available for carry forward. In addition, non-U.S. unrealized tax credits of $78.6 million were recorded relating to the anticipated tax credits that will be available when non-U.S. earnings will be repatriated to the U.S. These non-U.S. unrealized tax credits are netted against the deferred tax liability for U.S. tax on non-U.S. earnings. Additionally, for U.S. federal income tax purposes, non-U.S. tax credit carry forwards of $76.3 million are available to be utilized once sufficient non-U.S. source income is recognized. The losses generally expire within a period of three to 20 years, with some non-U.S. losses available indefinitely. The non-U.S. tax credit expiration period is 10 years which will begin when the credits become realized. At December 31, 2014, we had valuation allowances of $36.7 million associated with U.S. state net operating losses and $45.6 million associated with non-U.S. loss carry forwards. The net valuation allowance increased by $26.3 million in 2014 due primarily to uncertainty regarding the ability to utilize U.S. state net operating losses and non-U.S. operating losses. We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary

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differences and expected repatriation of non-U.S. earnings to the U.S. Accordingly, we believe that no additional valuation allowances are necessary.

We provide tax reserves for U.S. federal, U.S. state, U.S. local and non-U.S. uncertain tax positions. The development of these tax positions requires subjective, critical estimates and judgments about tax matters, potential outcomes and timing. Although the outcome of open tax examinations is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities resulting from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in assumptions in future periods, are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes.

At December 31, 2014 and 2013, we had $33.3 million and $53.7 million, respectively, of unrecognized tax benefits that were classified as long-term liabilities, of which $26.2 million and $30.5 million, respectively, would favorably impact our effective tax rate, if recognized. The reconciliation of the allowance for uncertain tax positions is as follows (in thousands):

	December 31, 2014			December 31, 2013
Balance at beginning of year	$	41,694		$	33,634
Gross additions for tax positions of prior years	10,683			6,644
Gross reductions for tax positions of prior years	(18,331		)	(1,488		)
Gross additions on positions related to the current year	6,494			5,056
Reductions resulting from a lapse of the applicable statute of limitation	(724		)	(2,152		)
Balance at end of year	39,816			41,694
Accrued interest and penalties	8,341			11,988
ASU 2013-11 reclassification	(14,857		)	—
Gross unrecognized income tax benefit	$	33,300		$	53,682

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. We recognized a decrease of net interest and penalties in the consolidated statement of operations of approximately $3.6 million in 2014 comprised of an increase of $0.9 million associated with ongoing accruals and a decrease of $4.5 million associated with releases. In 2013, we recognized an increase of net interest and penalties in the consolidated statement of operations of approximately $1.2 million, comprised of an increase of $1.8 million associated with ongoing accruals and a decrease of $0.6 million associated with releases. Additionally, $8.3 million and $12.0 million of interest and penalties were recorded in the consolidated balance sheets as of December 31, 2014 and 2013, respectively.

We operate in multiple tax jurisdictions, both inside and outside the United States and are routinely under audit by U.S. federal, U.S. state and non-U.S. tax authorities. These reviews can involve complex matters that may require an extended period of time for resolution. Our U.S. federal income tax returns have been examined and settled through tax year ending November 3, 2011. We have ongoing audits in various U.S. state and U.S. local jurisdictions, as well as audits in various non-U.S. jurisdictions. In general, the tax years 2009 through 2013 remain open in the major taxing jurisdictions, with some U.S. state and non-U.S. jurisdictions remaining open longer as a result of net operating losses and longer statute of limitation periods.

It is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by $0.5 million. This decrease would result from the expiration of the statute of limitations and the completion of tax examinations in multiple jurisdictions.

Income taxes paid, net of income tax refunds, were $24.9 million, $36.3 million, and $28.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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NOTE 9. Equity

Under the terms of Acelity’s Third Amended and Restated Limited Partnership Agreement dated September 1, 2014, the limited partners contributed 100% of the capital to the partnership. No partner is required to make any additional capital contributions to the partnership. Net income (loss) and distributions are allocated to the general and limited partners in proportion to their respective capital contributions.

NOTE 10.Incentive Compensation Plans

Equity-based compensation expense was recognized in the consolidated statements of operations as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Rental expenses	$	106	$	52	$	2
Cost of sales	105		113		88
Selling, general and administrative expenses	3,822		2,760		1,979
Total equity-based compensation expense, net of tax	$	4,033	$	2,925	$	2,069

There was no income tax impact associated with equity-based compensation during the years ended December 31, 2014, 2013 and 2012.

Investment Plan

We have an Investment Plan intended to qualify as a deferred compensation plan under Section 401(k) of the Internal Revenue Code of 1986. The Investment Plan is available to all employees in the United States and we match employee contributions up to a specified limit. During the years ended December 31, 2014, 2013 and 2012 matching contributions charged to expense were approximately $13.3 million, $12.2 million, and $14.7 million, respectively.

Equity Based Plans

Profits Interest

On November 11, 2011, the Board of Directors of Chiron Holdings GP, Inc. (“Holdings GP”), in its capacity as general partner of Chiron Guernsey Holdings L.P. Inc. (the “Limited Partnership”), approved the Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (the “Executive Plan”). The maximum aggregate number of interest units (“Profits Interest Units”) available for awards under the Executive Plan is 23,641,333, subject to adjustment as provided for in the plan. The vesting terms and expiration of each award shall be fixed by the general partner. The distribution threshold for awards granted under this plan is established by the general partner.

For incentive equity awards granted during the years ended December 31, 2014, 2013 and 2012, a portion of the awards granted vests incrementally over a period of four years. The remaining portion of awards granted during the years ended December 31, 2014, 2013 and 2012 vest at graduated levels upon the attainment of certain performance conditions established by the general partner. The performance conditions are based on achieving certain levels of multiple of invested capital and subject to the satisfaction of market conditions based upon the occurrence of a major liquidity event in the future. Subject to certain limitations, the weighted average distribution threshold (i.e., the amount of distributions that need to be made by the Limited Partnership with respect to each limited partnership unit individually prior to such Profits Interest Unit participating in the distributions of the Limited Partnership) for awards granted during the years ended December 31, 2014, 2013 and 2012 is $8.11, $7.40 and $5.00, respectively.

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The weighted-average estimated fair value of time-based Profits Interest Units granted during the years ended December 31, 2014, 2013 and 2012, was $1.62, $2.30 and $1.33 per unit, respectively, using the Black-Scholes-Merton option pricing model. The weighted-average estimated fair value of performance-based Profits Interest Units granted during the years ended December 31, 2014, 2013 and 2012, was $1.42, $1.98 and $1.15 per unit, respectively, using the Black-Scholes-Merton option pricing model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Profits Interest Units. The estimated fair values for these periods included the following weighted average assumptions for both the time-based and performance-based Profits Interest Units (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Post-Merger assumptions were determined as follows. The expected stock volatility is based on the Company’s historical volatility over the previous five year period, which is the expected holding period. This historical volatility was increased to incorporate the implied volatility associated with the Company’s increase in leverage from historical levels. The expected dividend yield is zero. The risk-free interest rate for the period was based on the U.S. Treasury yield curve in effect at the time of grant. The expected life is based on the estimated holding period until a major liquidity event.

A summary of our Profits Interest Unit (“PIU”) activity, and related information is set forth in the table below (in thousands, except weighted average grant date fair value):

	Time-based		Performance-based		Total		Weighted Average Grant Date Fair Value
PIU outstanding – December 31, 2013	8,562		7,922		16,484		$	1.50
Granted	2,054		2,054		4,108		$	1.52
Repurchased	(947	)	—		(947	)	$	1.45
Forfeited/Expired	(1,698	)	(3,123	)	(4,821	)	$	1.75
PIU outstanding – December 31, 2014	7,971		6,853		14,824		$	1.42
PIU exercisable as of December 31, 2014	4,583		—		4,583		$	1.49

As of December 31, 2014, there was $4.1 million and $7.9 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested time-based and performance-based Profits Interest Units, respectively, granted under our plan subsequent to the Merger.  The unrecognized compensation cost for the time-based awards is expected to be recognized over a weighted average period of 2.4 years. The unrecognized compensation cost of the performance-based awards is expected to be recognized as it becomes probable the market condition will be satisfied. There is no contractual term for the PIU agreements, however, with certain consent of the Limited Partnership and plan participants, the general partner may amend, alter, suspend, discontinue, or terminate the Executive Plan or any portion thereof at any time.

Appreciation Rights

On December 14, 2011, the Board of Directors of Holdings GP, in its capacity as general partner of the Limited Partnership, approved the Chiron Guernsey Holdings L.P. Inc. Appreciation Rights Plan (as amended from time to time, the “Appreciation Rights Plan”). The maximum aggregate number of Class A-2 interests (“Appreciation Rights”) in respect of which awards can be issued under the Appreciation Rights Plan is 4,172,000, subject to adjustment as provided for in the plan. The base price of units granted under this plan is established by the administrator (the compensation committee of the board of the general partner, or any committee or subcommittee thereof to which the compensation committee of the board delegates authority to administer the Appreciation Rights Plan) as of the date of grant, which may not be less than the fair market value of a Class A-2 interest as of the date of grant. The vesting terms and expiration of each award shall be fixed by the administrator.

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For incentive equity awards granted during the years ended December 31, 2014, 2013 and 2012, a portion of the awards granted vest in full upon the earlier of a change in control of the Limited Partnership or the fourth anniversary of the date of grant. The remaining portion of awards granted in 2012 vest at graduated rates upon the attainment of certain performance metrics established by the administrator and subject to the satisfaction of certain market conditions based upon the occurrence of a major liquidity event in the future. Upon exercise or redemption of vested awards, employees generally receive a cash payment equal to the product of the excess, if any, of the fair market value of a Class A-2 interest at the time of exercise or redemption over the base price times the number of Class A-2 interests under the award.

The weighted-average estimated grant-date fair value of time-based Appreciation Rights granted during the years ended December 31, 2014, 2013 and 2012, was $1.66, $1.37 and $0.81 per unit, respectively, using the Black-Scholes-Merton option pricing model. The weighted-average estimated grant-date fair value of performance-based Appreciation Rights granted during the years ended December 31, 2014, 2013 and 2012, was $1.46, $1.35 and $0.81 per unit, respectively, using the Black-Scholes-Merton option pricing model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Appreciation Rights. The estimated fair values for the years ended December 31, 2014, 2013 and 2012 included the following weighted average assumptions for both the time-based and performance-based Appreciation Rights (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Post-Merger assumptions were determined as follows. The expected stock volatility is based on the Company’s historical volatility over the previous five year period, which is the expected holding period. This historical volatility was increased to incorporate the implied volatility associated with the Company’s increase in leverage from historical levels. The expected dividend yield is zero. The risk-free interest rate for the period was based on the U.S. Treasury yield curve in effect at the time of grant. The expected life is based on the estimated holding period until a major liquidity event.

A summary of our Appreciation Rights activity, and related information, for the year ended December 31, 2014 is set forth in the table below (in thousands, except exercise price and contractual term):

	Time-based		Performance-based		Total		Weighted Average Base Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Appreciation Rights outstanding – December 31, 2013	787		787		1,574		$	6.50	8.96
Granted	682		682		1,364		$	7.95
Exercised	—		—		—		$	—
Forfeited/Expired	(345	)	(345	)	(690	)	$	6.69
Appreciation Rights outstanding – December 31, 2014	1,124		1,124		2,248		$	7.32	8.56	$	—
Appreciation rights exercisable - December 31, 2014	—		—		—		$	—	N/A	$	—

As of December 31, 2014, there was $1.4 million and $1.8 million of total unrecognized compensation costs, net of estimated forfeitures, related to each of the non-vested time-based and performance-based Appreciation Rights granted, respectively, under our plan subsequent to the Merger.  The unrecognized compensation cost for the time-based awards is expected to be recognized over a weighted average period of 2.7 years. The unrecognized compensation cost of the performance-based awards is expected to be recognized as it becomes probable the market condition will be satisfied.

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NOTE 11.Other Comprehensive Income (loss)

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

	Accumulated Foreign Currency Translation Adjustment			Unrealized Investment Gains (Losses)			Accumulated Other Comprehensive Income (Loss)
Balances at January 1, 2012	$	(5,841	)	$	—		$	(5,841	)
Foreign currency translation adjustment, net of tax expense of $369	5,324			—			5,324
Balances at December 31, 2012	(517		)	—			(517		)
Foreign currency translation adjustment, net of tax benefit of $233	(3,867		)	—			(3,867		)
Unrealized investment gain, net of tax expense of $1,403 in 2013	—			2,241			2,241
Balances at December 31, 2013	(4,384		)	2,241			(2,143		)
Foreign currency translation adjustment, net of tax expense of $753	(5,690		)	—			(5,690		)
Unrealized investment loss, net of tax benefit	—			—			—
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	—			(2,241		)	(2,241		)
Balances at December 31, 2014	$	(10,074	)	$	—		$	(10,074	)

During 2013 and 2012, there were no reclassification adjustments out of accumulated other comprehensive income (loss) to net earnings (loss).

NOTE 12.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.

In August 2013, Vital Needs International, L.P. ("Vital Needs") filed a Demand for Arbitration with the American Arbitration Association seeking to recover in excess of $100 million in damages and legal fees 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. The arbitration hearing took place in January 2015, and we are currently awaiting a decision from the panel, which is expected during the second quarter of 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 arbitration.

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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”). On November 18, 2014, a jury found that the ‘200 Patent was not invalid and was infringed and further awarded LifeNet a lump sum damages amount of $34.7 millionAs a result of this decision, we recorded a liability of $34.7 millionin the fourth quarter of 2014. We disagree with the result at this stage in the litigation and believe that LifeCell’s defenses to the claims are meritorious. LifeCell will continue to vigorously assert its defenses during the post-trial and appeal stages of this litigation and intends to defend any further claims by LifeNet. If LifeCell’s post-verdict motions are denied, LifeCell plans to appeal to the U.S. Federal Circuit Court of Appeals in Washington D.C. on multiple grounds.

On June 30, 2014, KCI entered into a settlement agreement with Wake Forest  University Health Sciences to fully and finally resolve the historical patent and royalty disputes between them relating to negative pressure wound therapy. As of December 31, 2014, the accompanying consolidated balance sheet included $82.7 million under the caption “accrued expenses and other” and $104.3 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.

Products Liability Litigation

LifeCell Corporation is a defendant in approximately 335lawsuits 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 each selected two bellwether cases from which one case to be tried will be selected. Further discovery is proceeding on each of the four bellwether cases. Trial of the first bellwether case is currently scheduled for January 2016. 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. 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 further fact discovery is proceeding in these cases, 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.

LifeCell Corporation has been named as a defendant in approximately 180 lawsuits in state and federal courts 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 175LifeCell cases filed in a consolidated docket in Middlesex County, Massachusetts. The cases are in the initial phase and no discovery has occurred. Three cases are pending in a multi-district federal case in West Virginia that is proceeding very slowly. The remaining cases are in Massachusetts, Delaware, Minnesota, and New York. None of these cases are proceeding at this time. We intend to defend these suits vigorously, and 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 before a 3 member panel. On January 16, 2015, the Ninth Circuit entered an order scheduling oral

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argument en banc before the U.S. Court of Appeals for the Ninth Circuit which is currently scheduled for March 17, 2015. 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 durable medical equipment (“DME”) claims submitted to Medicare Part B. These audits typically involve a complex medical review, by Medicare or its designated contractors and representatives, of documentation supporting 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 obtain the written medical record in advance of therapy as long as the underlying medical records reported to us support the coverage criteria and medical necessity 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 clinical providers, medical facilities and prescribers. Obtaining these medical records in connection with a claims audit may be challenging and, in any event, all of these records are subject to further examination, interpretation 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, we could be subject to denial or overpayment demands for claims submitted for Medicare reimbursement. In the rare event that an audit results in major discrepancies of claims records which lacked proof of medical necessity, Medicare may be entitled to take additional corrective measures, including: extrapolation of the results of the audit across a wider population of claims, submitting recoupment demands for claims other than those examined in the audit, or placing the organization on a full prepayment review. These audits have increased over the last two years from being negligible to approximately 10% of our claims.  While eventually receiving payment on a high percent of the claims subject to these audits, payment timeliness may range from a few months up to a year resulting in increasing Medicare accounts receivable balances.

As of December 31, 2014, our commitments for the purchase of new product inventory were $50.6 million. We expect the total inventory commitments at December 31, 2014 to occur in 2015.

NOTE 13.Related Party Transactions

Services Agreements and Merger Related Fees

On November 4, 2011, in connection with the Merger, entities affiliated with the Sponsors (the “Managers”) entered into services agreements and material event services agreements with KCI and LifeCell or, in certain cases, their affiliates (the “Services Agreements”), pursuant to which the Managers will provide strategic and consulting services, including financing and strategic business planning and analysis services, to KCI, LifeCell and/or their subsidiaries, parent entities and controlled affiliates. Pursuant to the Services Agreements, the Managers are entitled to receive an annual consulting fee, as well as certain fees for specified material events, including sales of KCI or LifeCell and refinancings. The Managers will also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with the provision of services pursuant to the Services Agreements. The Services Agreements will continue indefinitely unless terminated by the consent of all the parties thereto. However, the Services Agreements will terminate automatically upon an initial public offering of KCI, LifeCell or one of their subsidiaries, parent entities or controlled affiliates, unless KCI or LifeCell or, in certain cases, an affiliate of KCI or LifeCell, as applicable, elects by prior written notice to continue the Services Agreements. The Services Agreements may also terminate upon certain change of control events involving KCI or LifeCell. On November 4, 2011, the Managers also entered into an indemnification agreement with the Company and its parent entities (the “Indemnification Agreement”). The Indemnification Agreement contains customary exculpation and indemnification provisions in favor of the Managers and certain of their affiliates. During the years ended December 31, 2014, 2013 and 2012, we paid management fees of $5.1 million, $8.7 million and $5.1 million, respectively, to the Managers. We expect

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to pay approximately $5.1 million in management fees to the Managers during each of the years ended December 2015 through the term of the agreements.

Management Investment

Subsequent to the Merger, Messrs. Ball, Bibb, Busenlehner and Woody have each entered into subscription agreements with Guernsey Holdings and GP, pursuant to which each individual agreed to subscribe for and acquire from Guernsey Holdings Class A-2 Units of Guernsey Holdings (each, a “Subscription”). In connection with the Subscription, each individual became a party to the limited partnership agreement of Guernsey Holdings as a limited partner of Guernsey Holdings.

Indemnification Agreement

On November 4, 2011, the Managers also entered into an indemnification agreement with the Company and its parent entities (the “Indemnification Agreement”). The Indemnification Agreement contains customary exculpation and indemnification provisions in favor of the Managers and certain of their affiliates.

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NOTE 14.Segment and Geographic 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 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 and the service fee payable by Getinge under the transition services agreement.

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

	Year ended December 31,
	2014			2013			2012
Revenue:
Advanced Wound Therapeutics	$	1,420,278		$	1,287,387		$	1,312,258
Regenerative Medicine	428,089			442,174			417,245
Other operations (1)	17,972			3,340			—
Total revenue	$	1,866,339		$	1,732,901		$	1,729,503
Operating earnings (loss):
Advanced Wound Therapeutics (2)	$	455,666		$	443,850		$	398,066
Regenerative Medicine	132,904			125,112			109,931
Other operations (1)	2,443			637			—
Non-allocated costs:
General headquarter expense (3)	(9,516		)	(55,044		)	(19,928		)
Equity-based compensation	(4,033		)	(2,925		)	(2,069		)
Business optimization and transaction-related expenses (4)	(150,125		)	(144,253		)	(101,191		)
Acquired intangible asset amortization (5)	(194,433		)	(188,571		)	(220,984		)
Wake Forest settlement	(198,578		)	—			—
Impairment of goodwill and intangible assets (6)	—			(443,400		)	—
Total non-allocated costs	(556,685		)	(834,193		)	(344,172		)
Total operating earnings (loss)	$	34,328		$	(264,594	)	$	163,825

(1) Represents contract manufacturing operations conducted at our manufacturing facility in Gargrave, England for the period subsequent to our acquisition of Systagenix as discussed in Note 2.

(2) 2013 includes write-offs of $16.7 million of other intangible assets due primarily to the discontinuation of certain AWT projects. 2012 includes $22.1 million of impairment charges associated with certain production equipment at our Athlone manufacturing plant and inventory associated with our V.A.C.Via product.

(3) 2013 includes a $30.6 million fixed asset impairment charge.

(4) Represents restructuring-related expenses associated with our business optimization initiatives as well as management fees and costs associated with acquisition, disposition and financing activities.

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

(6) During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

96

	Year ended December 31,
	2014		2013		2012
Depreciation and other amortization:
Advanced Wound Therapeutics	$	231,296	$	261,348	$	324,945
Regenerative Medicine	70,882		68,514		70,730
Other	1,727		6,097		40,695
	$	303,905	$	335,959	$	436,370

Significant non-cash expense other than depreciation and amortization expense includes the Merger and acquisition-related periodic recognition of cost of sales associated with the application of purchase accounting adjustments to step up the value of inventory. For the years ended December 31, 2014 and 2013, we recognized $6.7 million and $3.2 million, respectively, in related cost of sales for Advanced Wound Therapeutics related to our acquisition of Systagenix. For the year ended December 31, 2012, we recognized $5.7 million and $19.7 million, respectively, in Merger-related cost of sales for Advanced Wound Therapeutics and Regenerative Medicine.

Advanced Wound Therapeutics and Regenerative Medicine assets are primarily accounts receivable, inventories, goodwill, intangible assets and net property, plant and equipment generally identifiable by product. Other assets include assets related to our divestiture and assets not specifically identifiable to a product, such as cash, deferred income taxes, prepaid expenses, net debt issuance costs and other non-current assets. Information on segment assets are as follows (in thousands):

	December 31,
	2014		2013		2012
Total assets:
Advanced Wound Therapeutics	$	5,070,845	$	5,274,625	$	4,966,687
Regenerative Medicine	1,539,057		1,574,315		2,039,137
Other	390,811		423,705		568,940
	$	7,000,713	$	7,272,645	$	7,574,764

Advanced Wound Therapeutics and Regenerative Medicine gross capital expenditures primarily relate to manufactured rental assets, manufacturing equipment, and computer hardware and software identifiable by product. Other capital expenditures include those related to our TSS business which was sold in November 2012 and those not specifically identifiable to a product, such as the purchase of land and the construction of our global headquarters building, leasehold improvements, and computer hardware and software. The following table contains information on gross capital expenditures (in thousands):

	Year ended December 31,
	2014		2013		2012
Gross capital expenditures:
Advanced Wound Therapeutics	$	21,517	$	36,910	$	15,731
Regenerative Medicine	7,057		17,862		26,240
Other	38,010		26,139		49,596
	$	66,584	$	80,911	$	91,567

97

Revenues are attributed to countries based on the location of our entity providing the products or services. Information on the geographical location of select financial information is as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Geographic location of revenue:
Domestic	$	—	$	—	$	—
United States	1,329,306		1,321,517		1,335,043
Other foreign	537,033		411,384		394,460
Total revenue	$	1,866,339	$	1,732,901	$	1,729,503

	December 31,
	2014		2013		2012
Geographic location of long-lived assets (1):
Domestic	$	—	$	—	$	—
United States	198,754		224,789		287,700
Other foreign	89,294		108,936		100,782
Total long-lived assets	$	288,048	$	333,725	$	388,482

_____________________________

(1)Long-lived assets exclude intangible assets.

98

NOTE 15.Quarterly Financial Data (unaudited)

The unaudited consolidated results of operations by quarter are summarized below (in thousands):

	Year Ended December 31, 2014
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	442,635		$	459,178		$	481,793		$	482,733
Gross profit	$	276,596		$	293,207		$	314,413		$	325,998
Operating earnings (loss)	$	32,805		$	(142,123	)	$	88,347		$	55,299
Loss from continuing operations	$	(47,060	)	$	(153,823	)	$	(3,235	)	$	(30,928	)
Earnings from discontinued operations	$	677		$	1,106		$	1,398		$	1,392
Net loss	$	(46,383	)	$	(152,717	)	$	(1,837	)	$	(29,536	)

	Year Ended December 31, 2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	411,366		$	426,193		$	432,960		$	462,382
Gross profit	$	260,540		$	280,060		$	285,082		$	301,873
Operating earnings (loss)	$	36,536		$	11,456		$	(370,355	)	$	57,769
Loss from continuing operations	$	(42,753	)	$	(61,747	)	$	(398,607	)	$	(51,984	)
Earnings (loss) from discontinued operations	$	(2,034	)	$	(828	)	$	46		$	(751	)
Net loss	$	(44,787	)	$	(62,575	)	$	(398,561	)	$	(52,735	)

99

NOTE 16.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 the10.5% 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 the10.5% Second Lien Notes or 12.5% Unsecured Notes, or

(4) upon the achievement of investment grade status by the10.5% 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 December 31, 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.

100

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2014

(in thousands)

	Acelity 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	$	41,027		$	1,499	$	140,617	$	—		$	183,541
Accounts receivable, net	—		179,872			67,355		123,256		—			370,483
Inventories, net	—		73,904			110,355		93,765		(99,802		)	178,222
Deferred income taxes	—		52,868			10,157		—		—			63,025
Prepaid expenses and other	—		11,106			6,851		247,606		(238,000		)	27,563
Intercompany receivables	166		1,854,033			2,432,299		48,267		(4,334,765		)	—
Total current assets	564		2,212,810			2,628,516		653,511		(4,672,567		)	822,834
Net property, plant and equipment	—		315,691			69,801		164,838		(262,282		)	288,048
Debt issuance costs, net	—		77,896			—		—		—			77,896
Deferred income taxes	—		—			—		31,692		—			31,692
Goodwill	—		2,483,240			732,138		162,920		—			3,378,298
Identifiable intangible assets, net	—		299,575			1,788,661		309,015		—			2,397,251
Other non-current assets	—		1,161			186		94,247		(90,900		)	4,694
Intercompany loan receivables	—		760,000			429,856		—		(1,189,856		)	—
Intercompany investments	667,530		360,292			223,581		—		(1,251,403		)	—
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713
Liabilities and Equity:
Current liabilities:
Accounts payable	$	245	$	16,298		$	14,463	$	20,821	$	—		$	51,827
Accrued expenses and other	—		218,793			244,829		74,380		(194,518		)	343,484
Intercompany payables	6,441		1,181,383			2,634,149		512,792		(4,334,765		)	—
Current installments of long-term debt	—		25,721			—		—		—			25,721
Income taxes payable	—		—			—		1,305		—			1,305
Deferred income taxes	—		—			113,658		—		—			113,658
Total current liabilities	6,686		1,442,195			3,007,099		609,298		(4,529,283		)	535,995
Long-term debt, net of current installments and discount	—		4,815,290			—		—		—			4,815,290
Non-current tax liabilities	—		9,404			6,203		17,693		—			33,300
Deferred income taxes	—		106,440			637,777		47,940		—			792,157
Other non-current liabilities	695		113,368			48,172		1,023		—			163,258
Intercompany loan payables	—		420,294			760,000		9,562		(1,189,856		)	—
Total liabilities	7,381		6,906,991			4,459,251		685,516		(5,719,139		)	6,340,000
Total equity	660,713		(396,326		)	1,413,488		730,707		(1,747,869		)	660,713
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713

101

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Acelity 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

102

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2014
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	606,031		$	—		$	113,833		$	—		$	719,864
Sales	—			292,573			919,988			862,689			(928,775		)	1,146,475
Total revenue	—			898,604			919,988			976,522			(928,775		)	1,866,339
Rental expenses	106			292,336			11,156			202,613			(173,449		)	332,762
Cost of sales	105			314,129			571,768			370,643			(933,282		)	323,363
Gross profit (loss)	(211		)	292,139			337,064			403,266			177,956			1,210,214
Selling, general and administrative expenses	3,822			295,324			211,865			203,110			(567		)	713,554
Research and development expenses	—			24,044			26,803			18,474			—			69,321
Acquired intangible asset amortization	—			61,995			79,136			53,302			—			194,433
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(4,033		)	(287,802		)	19,260			128,380			178,523			34,328
Non-operating intercompany transactions	—			18,775			146,218			(249,577		)	84,584			—
Interest income and other	—			73,919			19,148			319			(89,719		)	3,667
Interest expense	—			(431,670		)	(68,861		)	(1,921		)	89,719			(412,733		)
Foreign currency gain (loss)	—			44,515			(924		)	(25,747		)	—			17,844
Derivative instruments loss	—			(5,183		)	—			—			—			(5,183		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(4,033		)	(587,446		)	114,841			(148,546		)	263,107			(362,077		)
Income tax expense (benefit)	—			(165,662		)	36,119			2,512			—			(127,031		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(4,033		)	(421,784		)	78,722			(151,058		)	263,107			(235,046		)
Equity in earnings (loss) of subsidiaries	(226,440		)	(72,592		)	(151,058		)	—			450,090			—
Earnings (loss) from continuing operations	(230,473		)	(494,376		)	(72,336		)	(151,058		)	713,197			(235,046		)
Earnings (loss) from discontinued operations, net of tax	—			—			4,573			—			—			4,573
Net earnings (loss)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Total comprehensive income (loss)	$	(238,404	)	$	(502,307	)	$	(75,694	)	$	(158,989	)	$	736,990		$	(238,404	)

103

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2013
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	608,256		$	—		$	135,562		$	—		$	743,818
Sales	—			295,530			855,607			679,340			(841,394		)	989,083
Total revenue	—			903,786			855,607			814,902			(841,394		)	1,732,901
Rental expenses	52			253,082			10,986			221,473			(132,089		)	353,504
Cost of sales	113			296,788			523,367			261,199			(829,625		)	251,842
Gross profit (loss)	(165		)	353,916			321,254			332,230			120,320			1,127,555
Selling, general and administrative expenses	2,759			346,731			173,772			161,678			(339		)	684,601
Research and development expenses	—			29,555			31,679			14,343			—			75,577
Acquired intangible asset amortization	—			80,042			73,794			34,735			—			188,571
Impairment of goodwill and intangible assets	—			—			443,400			—			—			443,400
Operating earnings (loss)	(2,924		)	(102,412		)	(401,391		)	121,474			120,659			(264,594		)
Non-operating intercompany transactions	—			58,867			123,951			(153,998		)	(28,820		)	—
Interest income and other	—			72,601			12,251			179			(83,429		)	1,602
Interest expense	—			(431,882		)	(70,623		)	(801		)	83,429			(419,877		)
Loss on extinguishment of debt	—			(2,364		)	—			—			—			(2,364		)
Foreign currency loss	—			(16,723		)	(179		)	(5,316		)	(8		)	(22,226		)
Derivative instruments gain	—			1,576			—			—			—			1,576
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,924		)	(420,337		)	(335,991		)	(38,462		)	91,831			(705,883		)
Income tax expense (benefit)	—			(166,067		)	8,120			7,155			—			(150,792		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,924		)	(254,270		)	(344,111		)	(45,617		)	91,831			(555,091		)
Equity in earnings (loss) of subsidiaries	(555,734		)	56,284			(46,074		)	—			545,524			—
Earnings (loss) from continuing operations	(558,658		)	(197,986		)	(390,185		)	(45,617		)	637,355			(555,091		)
Earnings from discontinued operations, net of tax	—			(3,091		)	(309		)	(457		)	290			(3,567		)
Net earnings (loss)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Total comprehensive income (loss)	$	(560,284	)	$	(202,703	)	$	(392,120	)	$	(47,700	)	$	642,523		$	(560,284	)

104

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2012
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	654,372		$	—		$	161,188		$	—		$	815,560
Sales	—			292,303			411,032			547,346			(336,738		)	913,943
Total revenue	—			946,675			411,032			708,534			(336,738		)	1,729,503
Rental expenses	2			288,143			1,195			259,308			(109,896		)	438,752
Cost of sales	88			240,146			136,556			236,766			(369,184		)	244,372
Gross profit (loss)	(90		)	418,386			273,281			212,460			142,342			1,046,379
Selling, general and administrative expenses	1,991			327,223			120,789			140,549			(694		)	589,858
Research and development expenses	—			26,310			36,213			9,189			—			71,712
Acquired intangible asset amortization	—			102,954			77,752			40,278			—			220,984
Operating earnings (loss)	(2,081		)	(38,101		)	38,527			22,444			143,036			163,825
Non-operating intercompany transactions	—			100,690			329,531			(474,480		)	44,259			—
Interest income and other	—			73,114			12,251			177			(84,713		)	829
Interest expense	—			(478,756		)	(72,458		)	(121		)	84,713			(466,622		)
Loss on debt extinguishment	—			(31,481		)	—			—			—			(31,481		)
Foreign currency gain (loss)	—			(7,822		)	294			(5,473		)	—			(13,001		)
Derivative instruments loss	—			(31,433		)	—			—			—			(31,433		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,081		)	(413,789		)	308,145			(457,453		)	187,295			(377,883		)
Income tax expense (benefit)	—			(140,681		)	50,759			(57,901		)	—			(147,823		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,081		)	(273,108		)	257,386			(399,552		)	187,295			(230,060		)
Equity in earnings (loss) of subsidiaries	(139,336		)	(60,960		)	(375,553		)	—			575,849			—
Earnings (loss) from continuing operations	(141,417		)	(334,068		)	(118,167		)	(399,552		)	763,144			(230,060		)
Earnings from discontinued operations, net of tax	—			4,546			37,855			23,999			22,243			88,643
Net earnings (loss)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Total comprehensive income (loss)	$	(136,093	)	$	(324,198	)	$	(74,988	)	$	(370,229	)	$	769,415		$	(136,093	)

105

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2014
	Acelity 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)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Adjustments to reconcile net earnings (loss) to net cash provided	6,364			306,092			104,787			131,736			(226,711		)	322,268
Net cash provided (used) by operating activities	(224,109		)	(188,284		)	37,024			(19,322		)	486,486			91,795
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(156,810		)	(5,024		)	(49,922		)	145,261			(66,495		)
Proceeds from disposition of assets held for sale	—			—			5,212			—			—			5,212
Proceeds from sale of investment	—			4,211			—			—			—			4,211
Business acquired in purchase transaction, net of cash acquired	—			—			(9,500		)	(113		)	—			(9,613		)
Increase in identifiable intangible assets and other non-current assets	—			(376		)	(7,418		)	(3,793		)	—			(11,587		)
Net cash provided (used) by investing activities	—			(152,975		)	(16,730		)	(53,828		)	145,261			(78,272		)
Cash flows from financing activities:
Settlement of profits interest units	(2,332		)	—			—			—			—			(2,332		)
Repayments of long-term debt and capital lease obligations	—			(26,345		)	—			(58		)	—			(26,403		)
Proceeds (payments) on intercompany loans	—			251,576			(45,168		)	(206,408		)	—			—
Proceeds (payments) on intercompany investments	226,441			69,284			26,255			309,767			(631,747		)	—
Net cash provided (used) by financing activities	224,109			294,515			(18,913		)	103,301			(631,747		)	(28,735		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(8,196		)	—			(8,196		)
Net increase (decrease) in cash and cash equivalents	—			(46,744		)	1,381			21,955			—			(23,408		)
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	41,027		$	1,499		$	140,617		$	—		$	183,541

106

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2013
	Acelity 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)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,673			244,257			263,245			292,384			(109,122		)	695,437
Net cash provided (used) by operating activities	(553,985		)	43,180			(127,249		)	246,310			528,523			136,779
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(196,988		)	(17,274		)	(111,118		)	247,053			(78,327		)
Business acquired in purchase transaction, net of cash acquired	—			—			(64,938		)	(413,810		)	—			(478,748		)
Increase in identifiable intangible assets and other non-current assets	—			(453		)	(6,419		)	125			—			(6,747		)
Net cash provided (used) by investing activities	—			(197,441		)	(88,631		)	(524,803		)	247,053			(563,822		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Settlement of profits interest units	(176		)	—			—			—			—			(176		)
Repayments of long-term debt and capital lease obligations	—			(67,133		)	(2,257		)	(6		)	—			(69,396		)
Debt issuance costs	—			(20,477		)	—			—			—			(20,477		)
Proceeds (payments) on intercompany loans	—			(157,416		)	(58,554		)	215,970			—			—
2013 acquisition financing
Proceeds from senior credit facility	—			349,563			—			—			—			349,563
Payment of debt issuance costs	—			(7,340		)	—			—			—			(7,340		)
Proceeds (payments) on intercompany investments	555,733			(131,953		)	276,809			74,987			(775,576		)	—
Net cash provided (used) by financing activities	553,985			(34,756		)	215,998			290,951			(775,576		)	250,602
Effect of exchange rate changes on cash and cash equivalents	—			—			—			240			—			240
Net increase (decrease) in cash and cash equivalents	—			(189,017		)	118			12,698			—			(176,201		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	87,771		$	118		$	118,662		$	—		$	206,949

107

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2012
	Acelity 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)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,268			449,431			(141,711		)	141,795			(149,673		)	304,110
Net cash provided (used) by operating activities	(137,149		)	119,909			(222,023		)	(233,758		)	635,714			162,693
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(96,931		)	(25,244		)	(70,550		)	109,057			(83,668		)
Proceeds from disposition of assets held for sale	—			74,576			72,335			97,406			—			244,317
Business acquired in purchase transaction, net of cash acquired	—			(15,097		)	—			—			—			(15,097		)
Increase in identifiable intangible assets and other non-current assets	—			5,881			(7,795		)	897			—			(1,017		)
Net cash provided (used) by investing activities	—			(31,571		)	39,296			27,753			109,057			144,535
Cash flows from financing activities:
Capital contributions from limited partners	239			—			—			—			—			239
Distribution to limited partners	(2,199		)	—			—			—			—			(2,199		)
Repayments of long-term debt and capital lease obligations	—			(118,777		)	—			10			—			(118,767		)
Debt issuance costs	—			(18,410		)	—			—			—			(18,410		)
Proceeds (payments) on intercompany loans	—			15,783			(90,803		)	75,020			—			—
2012 refinancing of senior credit facility
Payment of debt issuance costs	—			(1,063		)	—			—			—			(1,063		)
Proceeds (payments) on intercompany investments	139,096			168,265			273,530			163,880			(744,771		)	—
Net cash provided (used) by financing activities	137,136			45,798			182,727			238,910			(744,771		)	(140,200		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			696			—			696
Net increase in cash and cash equivalents	(13		)	134,136			—			33,601			—			167,724
Cash and cash equivalents, beginning of period	411			142,652			—			72,363			—			215,426
Cash and cash equivalents, end of period	$	398		$	276,788		$	—		$	105,964		$	—		$	383,150

108

Schedule II

ACELITY L.P. INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three Years ended December 31, 2014
(in thousands)
Description	Balances at January 1, 2012		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2012
Accounts receivable realization reserves	$	21,151	$	5,318	$	124,616	(1)	$	74,547	$	76,538
Inventory reserve	$	1,974	$	22,287	$	—		$	14,361	$	9,900
Deferred tax asset valuation allowance	$	18,247	$	1,025	$	—		$	—	$	19,272
Description	Balances at January 1, 2013		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2013
Accounts receivable realization reserves	$	76,538	$	3,968	$	70,472	(1)	$	74,864	$	76,114
Inventory reserve	$	9,900	$	11,662	$	—		$	11,274	$	10,288
Deferred tax asset valuation allowance	$	19,272	$	29,064	$	7,608		$	—	$	55,944
Description	Balances at January 1, 2014		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2014
Accounts receivable realization reserves	$	76,114	$	10,801	$	67,122	(1)	$	79,490	$	74,547
Inventory reserve	$	10,288	$	25,484	$	—		$	19,802	$	15,970
Deferred tax asset valuation allowance	$	55,944	$	26,355	$	—		$	—	$	82,299

(1) Additions to the accounts receivable realization reserves charged to other accounts reflect the net increase in revenue reserves to allow for expected credit memos, canceled transactions and uncollectible items where collectibility is not reasonably assured in accordance with the provisions of the “Revenue Recognition” Topic of the FASB Accounting Standards Codification.

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

ITEM 9A.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Our management, with the participation of our principal 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 principal 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 principal 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 fourth fiscal quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

110

Report of Management on Internal Control Over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting as is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). 

The Company’s internal control system was designed to provide reasonable assurance to the Company’s management, Board of Directors, and equity holders regarding the preparation and fair presentation of the Company’s published financial statements in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

There are inherent limitations to the effectiveness of any system of internal control over financial reporting. Accordingly, even an effective system of internal control over financial reporting can only provide reasonable assurance with respect to financial statement preparation and presentation in accordance with accounting principles generally accepted in the United States of America. Our internal controls over financial reporting are subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013 framework).

Based on the results of this assessment, management has concluded that, as of December 31, 2014, the Company’s internal control over financial reporting was effective.

Date: March 10, 2015

/s/ Joseph F. Woody

Joseph F. Woody

President and Chief Executive Officer

/s/ Thomas W. Casey

Thomas W. Casey

Executive Vice President and Chief Financial Officer

ITEM 9B.OTHER INFORMATION

None.

111

PART III

ITEM 10:DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information Concerning our Directors

Our governing board of directors are the directors of Chiron Holdings GP, Inc. (“GP”), the general partner of Chiron Guernsey Holdings L.P. Inc., which is the parent of Acelity L.P. Inc. The composition of the board of GP was determined by funds advised by the Sponsors. The following is information about the directors of the GP.

Name	Age	Position
William J. Gumina	44	Director; Chairman of the Board
James G. Carlson	62	Director
Steven Dyson	41	Director
Timothy Guertin	65	Director
Erik Levy	40	Director
John F. Megrue Jr.	56	Director
Jim A. Pittman	51	Director
Joseph F. Woody	49	Director; President and Chief Executive Officer

Biographical information concerning the directors of GP is set forth below.

William “Buddy” J. Gumina joined as a Director on November 4, 2011, and currently serves as Chairman of the Board. He joined Apax Partners in 1998 and serves as a Partner and Global Co-head of Apax’s Healthcare team. Prior to joining Apax, Mr. Gumina worked in investment banking from 1992 to 1994, while employed by Kidder, Peabody, and in private equity from 1996 to 1998, while employed by Donaldson, Lufkin & Jenrette Merchant Banking Partners. Throughout his tenure as a finance professional, he has worked on deals involving large healthcare organizations such as TriZetto, Qualitest Pharmaceuticals, Spectrum Laboratories, Encompass Home Health, Voyager HospiceCare, One Call Care Management and MagnaCare Holdings. Currently, Mr. Gumina serves as a Director and Chairman of the Compensation Committee of One Call Care Management and GENEX Services, and as a Director of Rue 21. He holds a Bachelor's degree in Political Science from Yale University and a Master of Business Administration degree from Harvard Graduate School of Business Administration. We believe Mr. Gumina's qualifications to serve on our Board of Directors include his extensive business and financial experience related to the healthcare industry. Mr. Gumina also possesses company board experience.

James G. Carlson joined as a Director on June 1, 2013. Mr. Carlson served as Chief Executive Officer of Amerigroup from 2007 through 2012, becoming Chairman of the company’s Board of Directors in 2008. Previously, he served as Amerigroup’s President and Chief Operating Officer, a position he held since 2003. Earlier in his career, Mr. Carlson was an Executive Vice President of UnitedHealth Group. Mr. Carlson is also the founder of HealthSpring, a physician group practice management company, and cofounder of Workscape, a software company that later was acquired by ADP. He began his career with the Prudential Insurance Company of America. Mr. Carlson is currently a member of the Board of Directors for Omnicare, Inc. We believe Mr. Carlson’s qualifications to serve on our Board of Directors include his extensive leadership, business and financial experience related to the healthcare industry. Mr. Carlson also possesses company board experience.

Steven Dyson joined as a Director on November 4, 2011. Mr. Dyson began his employment at Apax Partners in 2000. Currently, he is a Partner and Co-Head of the Healthcare team in London. Mr. Dyson has worked on many significant deals with companies such as Unilabs, Capio, General Healthcare Group and Zeneus Pharma and most recently OneCall Care Management. Prior to joining Apax, Mr. Dyson worked at McKinsey & Co. He currently serves as a Director and a member of the Compensation Committee of Unilabs, a Director and the Chairman of the Audit and Compliance Committees of OneCall Care Management, and as a Director of several subsidiary holding companies of General Healthcare Group. Mr. Dyson earned a Master’s degree in Biochemistry from Oxford University and a Doctor of Philosophy degree in Biology from Cambridge University. We believe Mr. Dyson’s qualifications to serve on our board of directors include his extensive business and financial experience related to the healthcare industry. Mr. Dyson also possesses company board experience.

112

Timothy E. Guertin joined as a Director effective as of October 16, 2012.  Mr. Guertin has over 35 years of experience in the healthcare industry.  Prior to joining the board of directors, Mr. Guertin served multiple leadership roles at Varian Medical Systems, Inc. He served as President from 2005 to September, 2012 and Chief Executive Officer from 2006 to September 2012. Mr. Guertin additionally worked at Varian Medical Systems, Inc. in the capacity of Chief Operating Officer from 2005 to 2006, Corporate Executive Vice President from 2002 to 2005, President of the Oncology Systems business unit of the company from 1990 to 2005, and Corporate Vice President from 1992 to 2002. Mr. Guertin is currently a member of the Board of Directors for Varian Medical Systems, Inc., and Teradyne, Inc. Mr. Guertin is also a board member for the Radiation Oncology Institute. We believe Mr. Guertin’s qualifications to serve on our Board of Directors include his extensive leadership, business, and financial experience related to the healthcare industry.  Mr. Guertin also possesses company board experience.

Erik Levy joined as a Director on November 4, 2011. Mr. Levy is a Senior Principal with CPPIB and a founding member of CPPIB's private equity program. Over the years he has led or participated in several investments including Cequel Communications, KCI, IMS Health, Skype Technologies, and Bank of America Merchant Services. Mr. Levy serves as a Director of Cequel and previously served as a Director of Skype from 2009 to 2011.  Mr. Levy also serves on CPPIB’s Private Debt Investment Committee. Prior to joining CPPIB, Mr. Levy worked at Bain & Company and Mercer. Mr. Levy holds a Master of Business Administration degree from the Rotman School of Management at the University of Toronto and a Bachelor of Science degree in Actuarial Mathematics from Concordia University. We believe Mr. Levy's qualifications to serve on our Board of Directors include his extensive business and financial experience, along with his investing experience in the healthcare industry. Mr. Levy also possesses company board experience.

John F. Megrue Jr. joined as a Director on November 4, 2011. Mr. Megrue joined Apax Partners in 2005 and currently serves as Chairman of Apax Partners U.S. Mr. Megrue is a member of the Global Executive Committee, Investment and Approval Committees, and the Global Co-Head of Retail & Consumer Group. He originally joined Apax in 1988 and rejoined in 2005 from Saunders, Karp & Megrue. Mr. Megrue graduated with a BS in Mechanical Engineering from Cornell University and an MBA from the Wharton School of the University of Pennsylvania. Mr. Megrue is an active Board member of the following Apax portfolio companies: Rue21 and Cole Haan. Mr. Megrue is currently chairing the Business Leadership Council for the Global Plan Towards the Elimination of New HIV Infections Among Children by 2015. Mr. Megrue also serves as a Director on the Board of Grameen America. We believe Mr. Megrue brings to the Board of Directors extensive leadership, operations, financial, business, and strategic planning experience. Mr. Megrue also possesses company board experience.

Jim A. Pittman joined as a Director on November 4, 2011. Mr. Pittman joined PSP Investments as Vice President of Private Equity in February of 2005 and has co-led the strategy and investment of an over $9.5 billion international Private Equity portfolio, including over $4 billion of direct deals and co-investments. From 2002 to 2005, he was Executive Vice-President and CFO of Provincial Aerospace, an internationally diversified aerospace and aviation operations company focused on aircraft modifications and operations. Mr. Pittman received his Chartered Accountant designation in 1990 while articling with Deloitte & Touche, and he currently sits on the Board of Directors for Telesat Canada, Haymarket Financial, and Noranco Inc. and is a former Board member of Noodles and Company and The Institutional Limited Partners Association. We believe Mr. Pittman brings to the Board of Directors extensive leadership, operations, financial, accounting, business, and strategic planning experience. Mr. Pittman also possesses company board experience.

Joseph F. Woody joined as a Director on April 24, 2012 and currently serves as President and Chief Executive Officer for the Company. Woody has more than 20 years experience in the healthcare sector. Prior to joining Acelity in November 2011, Woody served as global president of Vascular Therapies for Covidien. At Covidien, he was responsible for the $2.6B acquisition and integration of ev3. Previously, Woody served as global president, Smith & Nephew Advanced Wound Management, and held other leadership positions at Alliance Imaging, Inc., Acuson and GE Medical Systems. Mr. Woody is currently a member of the board of directors of the Advanced Wound Medical Technology Association (AdvaMed) and is chair of the Wound Healing and Tissue Regeneration Sector. We believe Mr. Woody's qualifications to serve on our board of directors include his extensive experience in the negative pressure wound therapy and advanced wound management market, along with his significant acquisitions and integration experience in the healthcare industry. As the President and Chief Executive Officer of the Company, Mr. Woody delivers significant experience to our board of directors in terms of leadership, industry, operations, risk management, financial and strategic planning, as well as in-depth knowledge of our Advanced Wound Therapeutics and Regenerative Medicine businesses. Mr. Woody also possesses company board experience.

113

Information Concerning our Executive Officers

The following is information about our executive officers:

Name	Age	Position
Joseph F. Woody	49	Director, President and Chief Executive Officer
Thomas W. Casey	52	Executive Vice President, Chief Financial Officer
John T. Bibb	42	Executive Vice President, General Counsel and Secretary
Gaurav Agarwal	41	Group President, Businesses and Innovation
Peter W. Huntley	54	President of Emerging Markets
Laura Piccinini	45	President of Developed Markets
David E. Ball	56	Senior Vice President, Operations, Quality and Regulatory
William “Butch” F. Hulse IV	41	Chief Compliance Officer; Senior Vice President, Enterprise Risk Management
Gregory Kayata	53	Senior Vice President, Human Resources

Biographical information of our executive officers is set forth below:

Joseph F. Woody, the President and Chief Executive Officer of the Company, also serves as a Director of GP. Mr. Woody’s biographical information is set forth above under the caption “Information Concerning our Directors.”

Thomas W. Casey, joined Acelity in November 2014 and serves as the Company’s Executive Vice President, Chief Financial Officer. Mr. Casey has over 30 years of financial accounting, reporting, planning and analysis experience, which include nearly two decades of roles in senior leadership. Prior to joining Acelity in 2014, Mr. Casey served as Executive Vice President and Chief Financial Officer at Clear Channel from 2009 to 2013. Previously, Mr. Casey held various leadership positions with Washington Mutual and GE Financial Assurance. He began his career at Coopers & Lybrand.

John T. Bibb joined Acelity in 2003 and currently serves as Executive Vice President, General Counsel and Secretary. Mr. Bibb previously served as Associate General Counsel, Corporate, Securities, Mergers and Acquisitions and was promoted to his current role of General Counsel in April 2011. Prior to joining Acelity, Mr. Bibb practiced law at the law firms of Baker Botts, L.L.P. and Cox Smith Matthews Incorporated.

Gaurav Agarwal joined Acelity in December 2014 and serves as the Company’s Group President, Businesses and Innovation. In this role, Mr. Agarwal leads the strategic direction for Acelity’s Advanced Wound Therapeutics and Regenerative Medicine businesses, oversees Acelity’s innovation pipeline, product portfolio strategy and execution, and leads the Company’s North American commercial operations. Mr. Agarwal has nearly 20 years of global business management experience in the healthcare industry. Prior to joining Acelity, he served as President, Orthopaedic Reconstruction for the Advanced Surgical Devices Division at Smith & Nephew from 2012 to 2014 and prior to that served in the roles of Chief Operating Officer and Senior Vice President of Advanced Surgical Devices Division at Smith & Nephew since 2010. Previously, Mr. Agarwal held various leadership positions with GE Healthcare.

Peter W. Huntley¸ joined Acelity in October 2013 and currently serves as President of Emerging Markets. Prior to that he served as our Senior Vice President, Systagenix. Mr. Huntley has more than 15 years of experience in the healthcare industry and was most recently Chief Executive Officer of Corin Group plc. Previously, Mr. Huntley was a member of the executive committee at Smith & Nephew for 10 years, where he was most recently Group Director, Indirect Markets.

Laura Piccinini, currently our President of Developed Markets, has more than 20 years of experience in the medical device industry. Prior to joining Acelity in February 2014 as Vice President, Core Markets, she served as Vice President, GM Medical Care Solutions Europe at Covidien since 2012. Prior to that, she served as President, Stryker, EMEA at Stryker from 2009 to 2012. Previously, Ms. Piccinini held various regional management roles with Tyco Healthcare International.

David E. Ball, our Senior Vice President, Operations, Quality and Regulatory, joined Acelity in May 2011. Prior to joining Acelity, Mr. Ball spent 30 years holding various leadership positions at GE, Hill-Rom and Harris Corporation. Most recently Mr. Ball served as Vice President and Global General Manager, Premium Business Segment, Surgical Imaging at GE Healthcare. During his tenure at GE, he led global R&D, quality, sustaining engineering and marketing teams focused on best-in-class surgical products as well as full FDA compliance.

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William “Butch” F. Hulse IV, is our Chief Compliance Officer and Senior Vice President Enterprise Risk Management. In this role Mr. Hulse is responsible for the Company's global compliance program and risk management programs. Mr. Hulse joined Acelity in 2008 as Associate General Counsel with global responsibility for Acelity's litigation and dispute resolution functions, taking on additional responsibilities over time. Prior to joining Acelity, Mr. Hulse was a shareholder with the law firm Cox Smith Matthews Incorporated where his practice was devoted to complex commercial litigation.

Gregory Kayata, our Senior Vice President, Human Resources, has worked in human resources for nearly 30 years. Prior to joining Acelity in October 2014, Mr. Kayata spent eight years at Covidien plc, most recently as Vice President, Total Rewards. Previously, he spent 17 years at Invensys, now Schneider Electronics, in various human resources roles with increasing leadership responsibility.

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Corporate Governance

Audit Committee

Our board of directors has a standing audit committee with a charter approved by the Board of Directors. The Audit Committee reviews our internal accounting procedures and considers and reports to the Board of Directors with respect to other auditing and accounting matters, including the selection of our independent auditors, the scope of annual audits, fees to be paid to our independent auditors and the performance of our independent auditors.

The functions of the Audit Committee include the following: serving as an independent and objective party to monitor the Company’s financial reporting process and internal control system; reviewing the audit activities and performance of the Company’s independent accountants and internal auditors; and assisting the Board of Directors in its oversight of the Company’s compliance with legal and regulatory requirements and the integrity of the Company’s financial statements.

The current members of the Audit Committee are Steven Dyson, Erik Levy, and Jim Pittman. We do not have an “audit committee financial expert,” as that term is defined by SEC rules, however we feel each committee member’s background and financial sophistication is sufficient to fulfill the duties of the Audit Committee. In addition, the Audit Committee has the ability, on its own, to retain independent accountants or other consultants whenever it deems appropriate.

Code of Ethics

Our Code of Ethics for Chief Executive and Senior Financial Officers can be found at www.acelity.com on the Investor Relations page. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of the Codes of Ethics for Chief Executive and Senior Financial Officers by posting such information on our website, at the address and location specified above.

ITEM 11:EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis describes the material features of the compensation policies and decisions for the executive officers identified in the Summary Compensation Table (the “named executive officers” or “NEOs”). This discussion is intended to help you understand the detailed information provided in the tables below.

Background

On November 4, 2011, KCI completed a transaction pursuant to which KCI was merged with an indirect subsidiary of Acelity (the “Merger”). In connection with the Merger, LifeCell, formerly a wholly-owned subsidiary of KCI, was promoted to be a sister corporation of KCI, such that each of KCI and LifeCell are now wholly-owned subsidiaries of Acelity. Acelity is a non-operating holding limited partnership controlled indirectly by the Sponsors and certain other co-investors. Unless otherwise noted, the terms “we,” “us,” “our,” or the “Company,” refers to Acelity and its subsidiaries.

Named Executive Officers

We will report compensation for the following executive officers for fiscal year 2014:

• Joseph F. Woody, President and Chief Executive Officer

• Thomas W. Casey, Executive Vice President and Chief Financial Officer

• John T. Bibb, Executive Vice President and General Counsel

• Laura Piccinini, President, Developed Markets

• David E. Ball, Senior Vice President, Operations, Quality and Regulatory

• Brian T. Busenlehner, Vice President and former Interim Chief Financial Officer

• Robert P. Hureau, former Executive Vice President and Chief Financial Officer

• Michael E. Mathews, former Senior Vice President, International, KCI

• Philip M. Croxford, former Senior Vice President, LifeCell

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Mr. Casey was hired as the Executive Vice President and Chief Financial Officer on November 11, 2014. Mr. Hureau resigned and left the Company on September 23, 2014. Mr. Mathews and Mr. Croxford separated from the Company on May 31, 2014 and September 24, 2014, respectively. On September 24, 2014, Ms. Piccinini was promoted to President, Developed Markets. Compensation for Mr. Busenlehner is disclosed because he was the interim Chief Financial Officer after Mr. Hureau left the Company.

Compensation Philosophy and Objectives

Our executive compensation program is designed to be competitive and efficient and to attract, retain and motivate highly qualified executive talent, while appropriately aligning executive incentives with Company and shareholder objectives. To accomplish this, compensation paid to executive officers is designed to align compensation rewards with our financial performance, the individual performance of the executive officer, and the competitive industry compensation norms. Our executive compensation programs are designed to encourage appropriate and acceptable levels of risk-taking by management in furtherance of the Company’s short-term and long-term strategic plans to increase shareholder value.

To meet these objectives, our compensation program balances short-term and long-term goals and mixes fixed and performance-based compensation related to the overall financial performance of the Company. The compensation program is intended to reinforce the importance of performance and accountability at various operational levels, and a significant portion of total compensation is provided in the form of cash compensation incentives that reward performance as measured against established financial goals. Each element of our compensation program is reviewed individually and considered collectively with the other elements of our compensation program to ensure that it is consistent with the goals and objectives of both that particular element of compensation and our overall compensation program.

Compensation Oversight and Process

Executive compensation and related issues are administered by the compensation committee of Chiron Holdings GP, Inc., the general partner of Chiron Guernsey Holdings L.P. Inc., the parent of Acelity (the “compensation committee”).

The compensation committee operates under a written charter adopted by our Board of Directors (the “Board”) and has responsibility for discharging the responsibilities of the Board relating to the review of the compensation of our executive officers and making recommendations to the non-executive directors for approval. The compensation committee oversees our executive compensation practices and is responsible for review and oversight of our compensation plans and policies, the annual review of all executive officer compensation, administration of our equity plans, and the approval of equity grants to executive officers. The compensation committee meets at least quarterly in person and periodically approves and adopts, or makes recommendations to the Board for, matters relating to compensation, including the approval of equity grants to employees. The compensation committee engages the services of independent outside advisors.

The Chief Executive Officer, the Senior Vice President of Human Resources, and the General Counsel attend regular compensation committee meetings but do not participate in discussions relating to the determination of their own compensation. The Chief Executive Officer makes salary, bonus and equity grant recommendations with respect to the named executive officers to the compensation committee. The Human Resources, Finance and Legal departments provide support to the compensation committee. However, each meeting concludes with an executive session during which only the compensation committee members are present.

The day-to-day design and administration of compensation plans and policies applicable to our employees in general are handled by the Human Resources, Finance, and Legal departments of the Company. The compensation committee remains responsible for overall administration and maintenance of our compensation plans and policies.

Throughout 2014, Towers Watson, an independent consultant on executive compensation (the “compensation consultant”), provided the compensation committee with assistance in analyzing the Company’s compensation strategy, including generating data discussed under the sections entitled “Peer Group” and “Competitive Market Surveys” below. The compensation consultant was directed by the compensation committee to identify trends in executive compensation, assist the compensation committee with the determination of pay programs, assess competitive pay levels and mix (e.g., proportion of base salary to incentive pay, proportion of annual incentives to long-term incentives, and benefits), and advise the compensation committee on establishing appropriate compensation levels for our named executive officers. Towers Watson was retained and directed by the compensation committee and did not provide additional services to the Company or management during 2014.

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Compensation Committee Interlocks and Insider Participation

The following directors of Chiron Holdings GP, Inc. served as members of our compensation committee during fiscal year 2014: William J. Gumina (Chairman), Timothy E. Guertin, Erik Levy and Jim Pittman. During fiscal year 2014, no members of the compensation committee were officers or employees of the Company or any of its subsidiaries. During fiscal year 2014, none of our executive officers served on the Board or compensation committee of another entity, one or more of whose executive officers served as a member of our Board or compensation committee.

Risk Oversight

The role of the Board and its committees in the risk oversight process includes receiving regular reports from members of senior management on areas of material risk to the Company, including operational, financial, legal, regulatory, strategic and reputational risks. The Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives these reports from the appropriate “risk owner” within the organization to enable the Board to understand our risk identification, risk management, and risk mitigation strategies.

The audit committee has responsibility for oversight of our internal audit function and receives regular updates from management on risk management initiatives undertaken by the Company. The audit committee provides the Board with regular updates on our enterprise risk management programs and any significant changes in identified risks and changes in risk management programs. The compliance committee assists the audit committee in its periodic review of our compliance with laws and regulations and the results of internal compliance programs. The compensation committee, with input from the audit and compliance committees, conducts periodic reviews of our incentive compensation arrangements and practices to assess the extent to which such arrangements and practices encourage excessive risk-taking behavior by executive officers and employees. The review takes into account the degree to which our incentive plans match our business strategy and shareholder interests, upside limits or controls on maximum payouts, the balance of performance measures in plans, and the Board’s ability to make changes in the plan as necessary. Based on the compensation committee’s reviews and input, we believe the design of the Company’s compensation plans and programs for our employees will not create risks that would have a material adverse effect on the Company and do not have a reasonable probability of motivating excessive risk-taking that could have a material adverse effect on the Company. The compensation committee is authorized to alter or recommend to the Board alterations to incentive compensation arrangements as necessary to manage appropriate risk-taking behavior.

The charters for the audit committee, the compliance committee, and the compensation committee provide that each of the committees may meet with management, consultants and advisors as each committee deems appropriate. The committees also receive and review reports from management with respect to the applicable risk exposures of the Company. When a committee receives a report from management, the committee chair routinely reports to the full Board on identified risk exposures. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships that are addressed by each committee.

Peer Group

The compensation committee compares our compensation elements against a peer group of medical device and other companies with size and growth characteristics similar to the Company based upon data and recommendations from the compensation consultant. The compensation committee annually evaluates the peer group and will make changes to the peer group from time to time, as it deems appropriate. For 2014, there are no changes to the peer group from 2013. The companies comprising our 2014 peer group are:

CareFusion Corporation	Hospira, Inc.
C.R. Bard, Inc.	IDEXX Laboratories, Inc.
Dentsply International, Inc.	ResMed Inc.
Edwards Lifesciences Corporation	Teleflex Incorporated
Haemonetics Corp.	Varian Medical Systems, Inc.
Hanger Inc.	Hill-Rom Holdings Inc.
Hologic Inc.	Zimmer Holdings, Inc.

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Competitive Market Surveys

Typically, the compensation committee obtains compensation market analyses on an annual basis from the compensation consultant in order to understand the competitive positioning of our executive pay practices and to assist with the committee's determinations on the appropriate level and mix of executive compensation. The market analyses include a review of proxy disclosure information from our competitive peer group and three survey sources that reflect the life sciences, medical products, and general industry segments, updated to estimate compensation levels as of March 1, 2014 by 3.0% per year. All compensation survey information is derived from our compensation consultant. All 2013 survey data was sized to best approximate our revenue of $1.7 billion, giving us results that are appropriate for our revenue size among our peer and industry group.

Elements of Compensation

We seek to reward executive officers for measurable results in meeting and exceeding objectives and to reinforce a sense of ownership, entrepreneurial spirit and long-term shareholder value. Consistent with this philosophy, we use multiple components of executive compensation, with an emphasis on variable compensation and long-term incentives. The Company’s performance-based compensation elements are guided by the compensation committee’s long term objectives of maintaining market competitiveness and retention value, while recognizing current performance. The Company’s target pay philosophy positions total compensation for its executive officers between the 50th and 75th percentiles of market. The main elements of our compensation for executive officers are base salary, annual incentive bonus, long-term incentives, and benefits, as discussed in more detail in the following paragraphs. Actual compensation may fall outside that range based on a variety of factors, including individual performance, additional responsibilities and length of tenure in a particular position. Our long-term incentive grants are typically larger than annual ongoing grants when compared to the market because the Company’s practice is to grant long-term incentive awards only upon a new hire or promotion and not on an annual basis. The Company believes that all named executive officers are appropriately compensated based on their roles in the organization and against benchmark market data. The main elements of our compensation for executives are base salary, annual incentive bonus, long-term incentives, and benefits, as discussed in more detail in the following paragraphs.

Executive Base Salaries

Executive base salary levels are set to be competitive, with reference to the market analyses obtained by the compensation committee. Base salary for each executive officer is generally targeted to approximate the 50th percentile of market for comparable positions based on the benchmark data, taking into account the competitive environment and the experience and accomplishments of a particular executive officer. There may be situations where specialized knowledge, skills or accomplishments are recognized in which this goal can be exceeded. The base salary levels of our named executive officers also reflect a combination of other factors including the named executive officer’s position and responsibilities, experience, specific competencies, comparable salaries of our other executive officers, our overall annual budget for merit increases and the named executive officer’s individual contributions to our performance. Base salary is an element of compensation used to determine the annual incentive bonus (as a percentage of salary) for the named executive officers. The weight given to each of these factors varies by the individual named executive officer, as the compensation committee deems appropriate. Formal performance reviews of the Chief Executive Officer are completed by the Board, and the Chief Executive Officer completes reviews for all other executive officers. Performance reviews are conducted annually to assess these factors, along with the market data obtained by the compensation committee. Based on the performance reviews, the compensation committee approves and adopts, or makes recommendations to the Board for adjustments to executive base salaries, which are typically made effective on April 1 of each year. Assessment of each executive officer’s individual performance includes consideration of the executive officer’s contributions to Company financial performance and Management by Objectives, as well as judgment, creativity, effectiveness in leading and developing subordinates, execution capability, contributions to improvements in the quality of our products, services and operations, and consistency of behavior with our guiding principles.

Joseph F. Woody was hired as President of KCI's former Active Healing Solutions business unit in November 2011 and was promoted to the position of President and Chief Executive Officer of KCI in January 2012. He assumed the role of interim Chief Executive Officer for LifeCell in April 2013 and was promoted to the role of President and Chief Executive Officer for the combined organization of KCI, LifeCell and Systagenix in September 2013. Mr. Woody's base salary in 2012 was $625,000. Effective January 1, 2013, the compensation committee authorized an annual base salary increase from $625,000 to $825,000 for Mr. Woody, which placed him between the 25th and 50th percentile, based on market analyses provided by the compensation consultant. Effective March 24, 2014, the compensation committee authorized a base salary increase from $825,000 to $862,000 for Mr. Woody, which placed him at approximately the 50th percentile of the market based on the market data provided by the compensation consultant.

In 2014, the annual base salaries for Mr. Casey, Mr. Bibb, Ms. Piccinini, Mr. Ball, Mr. Hureau, Mr. Mathews and Mr. Croxford each approximated the 50th percentile of the market data provided by the compensation consultant. Effective March 24, 2014, the compensation committee authorized an annual base salary increase of 3.5% for Mr. Bibb, Mr. Croxford, and Mr. Hureau

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based on strong performance in 2013. Mr. Mathews did not receive an annual base salary increase in 2014. Ms. Piccinini received a 3.6% annual base salary increase in connection with her promotion to President, Developed Markets in September 2014. Mr. Ball received an 11% annual base salary increase due to his expanded role as the Senior Vice President of Operations, Quality and Regulatory from his previous role of Senior Vice President, Quality and Operations. In his role as the Vice President and interim Chief Financial Officer, Mr. Busenlehner’s annual base salary is below the 25th percentile of the market data, but this was expected in light of the short-term, temporary assignment. All of these comparisons were within an expected range of the targeted percentile of the market, and were established in light of individual roles, responsibility levels and relative experience in each role.

Annual Incentive Bonus for Executive Officers

Our annual incentive bonus program is designed to focus the attention of each executive officer on goals and activities that are critical to our success. The compensation committee sets the corporate financial performance targets and personal objectives for the Chief Executive Officer and for other executive officers based on recommendations from the Chief Executive Officer and Human Resources. These performance targets and objectives are designed to encourage strong annual financial results and to increase long-term shareholder value. The Annual Incentive Bonus Guidelines (the “AIB”) are pre-established by the compensation committee each year and communicated to the Company’s executive officers. However, pursuant to the terms of the AIB, the compensation committee retains the discretion to award some, all, or none of the bonuses described in the guidelines, depending on certain factors.

Target bonuses (as a percentage of base pay) for each named executive officer, when established, were generally targeted to approximate the 50th to 75th percentile of market for comparable positions based on the benchmark data provided by the compensation consultant. This targeting is designed to create a “pay-at-risk” annual compensation profile. Based on this market analysis, in 2014 target bonus for Mr. Woody, Mr. Bibb, Mr. Ball, Mr. Hureau, and Mr. Mathews for 2014 were in the 25th, 75th, 50th, 50th, and 50th percentile, respectively. Target bonus for Mr. Croxford was between the 50th and 75th percentile compared to market data. Ms. Piccinini was eligible to receive a pro rated bonus to reflect her 2014 target bonus of 50%, which was in effect until she assumed the President, Developed Markets role in September 2014, at which point her target bonus was increased to 70% for the balance of 2014, putting her target bonus in the 50th percentile compared to market data for that position. Mr. Busenlehner was eligible to receive a pro rated bonus to reflect his target bonus of 35%, which was increased to 80% for the period of time during which he served as interim Chief Financial Officer. Mr. Casey was not eligible to receive a 2014 bonus due to his November 2014 start date with the Company. The amount of the bonus actually paid was not determined with reference to the market data but rather with regard to the realization of the Company objectives and personal objectives described below.

The 2014 AIB was designed to reward participants for their contributions to the Company’s achievement of established financial goals through assignment to a set of specific financial metrics based on the primary business unit their role supported. These sets of financial metrics consisted of certain financial performance targets for revenue, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and cash flows. AIB for our named executive officers was based on either a consolidated set of metrics defined as the consolidated revenue, EBITDA and cash flows of the three business units (the “Consolidated Corporate Metric”) or, in the case of Ms. Piccinini, a set of metrics based upon KCI revenue and EBITDA (“KCI Metric”) plus a metric calculated based on the Consolidated Corporate Metric. Metric scores are based on actual achievement as measured against the established financial performance targets (“Financial Metric Attainment”). The compensation committee retains discretion under the AIB to adjust actual results by removing the impact of foreign currency exchange rate fluctuations and unusual items in the calculation of the metric scores. The 2014 AIB does not provide for bonuses if we fail to attain established minimums of performance versus target for certain performance targets as established under the guidelines and approved by the compensation committee. Those thresholds are between 90% and 97% of target depending on the particular performance metric. In addition, the financial metrics underlying the calculated earned payout are each subject to an overall cap of 200%.

A summary of the performance measures constituting the target financial metrics under the 2014 AIB is as follows (dollars in thousands):

	Consolidated Corporate Metric
Performance Measure	Target		Weighting
Consolidated revenue	$	1,975,000	45	%
Consolidated EBITDA	$	794,000	40	%
Consolidated cash flow	$	154,000	15	%

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	KCI Metric
Performance Measure	Target		Weighting
KCI revenue	$	1,286,000	35	%
KCI EBITDA	$	565,000	30	%
Consolidated Corporate Metric			35	%

A further assessment of each named executive officer’s individual performance (taking into account performance against personal objectives and other factors) is made and used as a multiple ranging from 0% to 150% (the “Individual Multiple”) and is applied to calculate the final bonus payout for each named executive officer. The Individual Multiple is a direct multiple of the calculated earned payout described above. The compensation committee establishes personal objectives for each executive based on recommendations by the Chief Executive Officer and the most senior Human Resources executive with a view towards primarily objective, metrically driven goals. However, some personal objectives by nature have a subjective component. As such, in selected instances, the compensation committee may exercise its discretion with respect to whether such subjective goals have been achieved and may adjust bonus calculations which may yield higher or lower bonus amounts than would result from a purely formulaic approach. In certain instances, the compensation committee may also determine to award no bonus, such as in the case of termination of employment of a named executive officer. In establishing corporate and individual objectives under the incentive bonus program, the compensation committee sets goals at levels it believes are significant but achievable with rigorous personal commitment. A named executive officer’s actual bonus is the product of his or her target bonus, the applicable Financial Metric Attainment and the Individual Multiple.

No executive officer will be entitled to any payments under the 2014 AIB until such executive officer’s award is approved by our compensation committee.

The table below summarizes the decisions of the Compensation Committee with regard to the annual performance bonuses for each named executive officer eligible to receive an annual incentive bonus for fiscal year 2014 pursuant to the 2014 AIB Mr. Casey, Mr. Hureau, Mr. Mathews, and Mr. Croxford were ineligible to receive a bonus pursuant to the 2014 AIB.

Name	Base Salary Rate ($)	Target Bonus (%)	Target Bonus ($)	Financial Metric Attainment (%)	Individual Multiple (%)	Actual Bonus (%)		Actual Bonus ($)
Joseph F. Woody	862,000	110%	948,200	22.9%	100%	25.2	%	217,138
John T. Bibb	389,108	80%	311,287	22.9%	102%	18.7	%	72,710
David E. Ball	400,155	60%	240,093	22.9%	108%	14.8	%	59,380
Laura Piccinini(1)	350,794	64%	223,285	23.8%	105%	15.9	%	55,799
Brian T. Busenlehner(2)	268,540	52%	140,009	22.9%	100%	11.9	%	32,062

(1) Ms. Piccinini’s annual base salary is pro rated based on her February 2014 start date with the Company, and her promotion to President, Developed Markets in September 2014. Her bonus plan Financial Metric Attainment is a pro rated blend of the Consolidated Corporate Metric and KCI Metric and target bonus percentages from above. Her base salary is reflected in U.S. dollars using a conversion rate of 1.33 U.S. dollars per Euro.

(2) Mr. Busenlehner’s 2014 annual target bonus is pro rated to reflect his target bonus of 35%, which was increased to 80% for the period of time during which he served as interim Chief Financial Officer.

In calculating the Individual Multiple for each named executive officer under the 2014 AIB, the compensation committee considered the overall contribution of each named executive officer to the financial metrics together with each named executive officer’s accomplishment of his or her key personal objectives established for the 2014 fiscal year.

Mr. Woody’s individual performance was determined by the compensation committee in accordance with its annual CEO evaluation procedure, which included his own self-evaluation and an evaluation by each non-employee director of his overall performance and his contribution to the Company’s performance under the Consolidated Corporate Metric described above. As a result of this evaluation, the compensation committee assigned Mr. Woody the Individual Multiple of 100% set forth in the above table. The compensation committee based Mr. Woody’s Individual Multiple on his performance and accomplishments in 2014, including successfully leading the development and launch of the Company’s new branding initiative and execution on strategic objectives.

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Mr. Bibb’s individual performance was determined based on his contribution to the Company’s Consolidated Corporate Metric described above, together with his accomplishment of personal objectives for 2014, including:

•supporting evaluation of, and negotiation of for, strategic transactions;

•supporting corporate development activities; and

•delivering favorable outcomes on key litigation activities.

The compensation committee determined that Mr. Bibb met or exceeded each of his objectives in assigning him the Individual Multiple set forth in the table above.

Ms. Piccinini’s individual performance was determined based on her contribution to the Company’s Consolidated Corporate Metric described above, together with her accomplishment of personal objectives for 2014, including:

•achieving specified financial targets for the Company’s business in Developed Markets; and

•achieving specified targets for new products in Developed Markets.

The compensation committee determined that Ms. Piccinini met or exceeded each of her objectives in assigning her the Individual Multiple set forth in the table above.

Mr. Ball’s individual performance was determined based on his contribution to the Company’s Consolidated Corporate Metric described above, together with his accomplishment of personal objectives for 2014, including:

•ensuring quality internal control environment with respect to manufacturing operations;

•supporting corporate development activities; and

•managing regulatory functions to achieve the Company’s performance targets.

The compensation committee determined that Mr. Ball met or exceeded each of his objectives in assigning him the Individual Multiple set forth in the table above.

Mr. Busenlehner’s individual performance was determined based on his contribution to the Company’s Consolidated Corporate Metric described above, together with his accomplishment of personal objectives for 2014, including:

•ensuring quality internal control environment with respect to financial operations ;

•supporting corporate development activities; and

•managing financial operations to achieve the Company’s financial performance targets.

The compensation committee determined that Mr. Busenlehner met or exceeded each of his objectives in assigning him the Individual Multiple set forth in the table above.

Executive Long-Term Incentives

Long-Term Incentives Summary Tables

Our long-term incentive (“LTI”) equity grant practices result in a significant portion of each named executive’s compensation being contingent on positive Company and individual performance. The following table illustrates the extent to which, over the last three fiscal years of the Company, named executive officer compensation has been comprised of such performance-based compensation.

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In 2012, 2013 and 2014, our long-term incentive awards to named executive officers were structured as described in the table below. Please refer to the “2014 Summary Compensation Table” for detailed information regarding individual awards to the named executive officers in the applicable years.

Award Year	LTI Award Element	Percentage of LTI Award Value(1)	Percentage of Shares Subject to Award(2)	Vesting Schedule(3)
2012	Time-based Profits Interest Units	54%	50%	25% vest on the first anniversary of grant; the remainder vest over the next 36 months on a quarterly basis
	Performance-based Profits Interest Units	46%	50%	Vesting, if any, determined based on achievement of certain performance targets based on the Sponsors’ multiple of invested capital upon the occurrence of certain defined exit events
2013	Time-based Profits Interest Units	54%	50%	25% vest on the first anniversary of grant; the remainder vest over the next 36 months on a quarterly basis
	Performance-based Profits Interest Units	46%	50%	Vesting, if any, determined based on achievement of certain performance targets based on the Sponsors’ multiple of invested capital upon the occurrence of certain defined exit events
2014	Time-based Profits Interest Units	53%	50%	25% vest on the first anniversary of grant; the remainder vest over the next 36 months on a quarterly basis
	Performance-based Profits Interest Units	47%	50%	Vesting, if any, determined based on achievement of certain performance targets based on the Sponsors’ multiple of invested capital upon the occurrence of certain defined exit events

(1) As measured using the same factors and assumptions used in Footnote 4 to the “2014 Summary Compensation Table” below.

(2) Calculated assuming vesting at target attainment.

(3) Assumes no liquidity event or change in control occurs. In March 2013, Mr. Croxford received an award of profits interest units with the following time-based vesting schedule: 25% vest on the first anniversary of December 10, 2012, his employment start date; the remainder vest over the next 36 months on a quarterly basis.

Long-Term Incentive Program Design

On November 11, 2011, the Board of Directors of Chiron Holdings GP, Inc. (“GP”), in its capacity as general partner of Chiron Guernsey Holdings L.P. Inc., approved the Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (the “Equity Incentive Plan”). Named executive officers were eligible to participate in the Equity Incentive Plan, pursuant to which recipients of profits interest units are eligible to share in the value realized by the Company’s private owners upon the occurrence of a future liquidation event. The vesting of a portion of the profits interest awards depends on the achievement of certain performance conditions based on achieving certain levels of multiple of invested capital and are subject to the satisfaction of market conditions based upon the occurrence of a major liquidity event in the future. The compensation committee exercises judgment in determining the levels of profits interest unit awards, considering the competitiveness of the awards, relative job responsibilities, a named executive officer’s target cash and total compensation levels and an assessment of each named executive officer’s performance and potential, as well as retention considerations.

Long-Term Incentive Awards Description

Since 2011, long term incentive compensation grants have been comprised of profits interest units, with 50% of the profits interest awards vesting one-fourth on the first anniversary of the date of grant and equally on each quarterly anniversary thereafter, and the remaining 50% vesting at graduated levels upon the attainment of certain performance conditions established by GP. The performance conditions are based on achieving certain levels of multiple of invested capital (“MOIC”) and subject to the satisfaction of market conditions based upon the occurrence of a major liquidity event in the future. The performance awards vest one-third if 1.5 MOIC is reached, two-thirds if 2.0 MOIC is reached and 100% if 2.5 MOIC is reached. Each profits interest unit will be entitled to share in distributions to the extent that the aggregate distributions received in respect of an equity unit exceeds the value of such equity unit as of the date the applicable interest unit grant. The GP has the sole discretion to determine the timing of distributions and the aggregate amount available for distributions. Distributions to be made in respect of any unvested profits interest awards shall be deferred until the date, if any, on which such awards become vested, at which point the distributions will be made. Pursuant to the award agreements for profits interest unit awards issued under the Equity Incentive Plan and subject to continued employment through the date of the change in control (or if a change in control occurs within 105 days of a termination without “Cause” or a

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resignation for “Good Reason” (each, as defined in the Equity Incentive Plan)), all time vesting profits interest units not previously forfeited will vest upon the consummation of a change of control, and all performance vesting units vest as and when the applicable performance vesting conditions are satisfied.

In February 2014, the compensation committee awarded 1,138,952 profits interest units to Mr. Woody in connection with his promotion to President and Chief Executive Officer of the combined organization of LifeCell, Systagenix, and KCI in September 2013, which was rebranded as Acelity in September 2014. Ms. Piccinini received 250,000 profits interest units in February 2014 as a new hire long-term incentive grant and was awarded an additional 250,000 units in February 2015, in connection with her promotion to the President, Developed Markets role. In February 2014, the compensation committee awarded 200,000 profits interest units to Mr. Ball in connection with his expanded role as Senior Vice President, Operations, Quality, and Regulatory. Mr. Bibb, Mr. Busenlehner, Mr. Hureau, Mr. Mathews, and Mr. Croxford did not receive long term incentive compensation in 2014. Mr. Casey received 2,000,000 profits interest units in February 2015 as a new hire long-term incentive grant.

Other Benefits and Perquisites

We provide the named executive officers with health and welfare benefits that are available to all our employees. International plans may vary, but employees and executive officers generally participate in health and welfare programs designed to attract and retain employees in a competitive marketplace while providing protection against any hardships otherwise arising from an illness, disability or death. We do not currently maintain pension arrangements, supplemental executive retirement plans or other non-qualified deferred compensation arrangements for the benefit of our named executive officers, and strive to ensure that any other perquisites are limited in nature and value.

Along these lines, we also make available to our executive officers a limited amount of benefits and perquisites that the compensation committee believes are reasonable and consistent with the overall executive compensation program. These executive benefits and perquisites are intended to serve as part of a competitive total compensation program and to enhance the executive officer’s ability to efficiently perform his or her responsibilities and minimize distractions. The compensation committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers. The named executive officers are provided with reimbursement for tax planning services. This amount is only available as a reimbursement, not as a guaranteed amount, and was limited in 2014 to an expenditure of $10,000 for our Chief Executive Officer and up to $5,000 for the other named executive officers. We also provide named executive officers with an annual executive physical exam, and this benefit was limited in 2014 to an expenditure of $2,500 for each of our named executive officers. The attributed costs of these personal benefits are included in the “All Other Compensation” column of the 2014 Summary Compensation Table below.

In 2014, the Company also provided relocation benefits to Mr. Woody, Mr. Hureau, and Mr. Croxford in an aggregate of $278,467, $27,474, and $19,920, respectively, in accordance with the Company’s executive relocation policies. Mr. Casey received a sign-on bonus of $100,000 in 2014. In connection with her offer letter, Ms. Piccinini received a sign-on bonus of $66,500. In March 2014, Ms. Piccinini was eligible for a payment of a special bonus of $66,500 and she is also eligible to receive a lump sum retention bonus of $75,000 and a corporate success bonus of $25,000 due to her region meeting the revenue forecast for the period of April 1, 2014 through December 31, 2014, subject to her continued employment with Acelity through March 18, 2015. The retention bonus was designed to incentivize her retention and continued performance and dedication following the announcement of the departure of Mr. Mathews, Senior Vice President, International. Ms. Piccinini received a housing allowance of $109,341 in 2014, pursuant to employment agreement. Ms. Piccinini and her family have had use of a company-provided car, and the Company paid $16,231 in leasing fees during 2014 on her behalf. Ms. Piccinini also received a pension contribution of $12,079 for 2014. Ms. Piccinini’s compensation, other benefits and perquisites are reflected in U.S. dollars using a conversion rate of 1.33 U.S. dollars to Euros. We paid health insurance premiums of $13,560 each for Mr. Ball and Mr. Busenlehner, $13,530 for Mr. Mathews, $12,804 for Mr. Bibb, and $11,111 for Mr. Hureau. Mr. Mathews received $547,151 in connection with his overseas assignment in 2014, and he received $160,880 for relocation expense reimbursement.

Termination Payments

We entered into severance arrangements with our named executive officers (by entering into employment and/or retention agreements) based on market practice as identified by the compensation consultant, which recognizes that senior executives are often unwilling to join and/or remain at a company without the assurance that they will be provided with a customary severance package if they are terminated by the Company other than for cause. The severance arrangements are designed with a view to ensuring our executive officers’ employment and preventing the distraction and loss of key employees which might otherwise occur in connection with rumored or actual fundamental corporate changes, and to promote retention despite the uncertainties of a contemplated or pending transaction. The compensation committee determined which particular events would trigger payment based on current market practice. These agreements have been structured with the terms and payout levels described below based on benchmark data

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provided by the compensation consultant. Please refer to the “Potential Payments Upon Termination or Change in Control,” below, for more information regarding potential payments upon termination.

Effective September 23, 2014, Mr. Hureau resigned from his position as Executive Vice President and Chief Financial Officer. Mr. Hureau remains subject to the Non-Disclosure and Non-Competition Agreement that he executed as a new hire employee, which contains a two-year post-termination non-competition covenant, a two-year post termination non-solicitation covenant, and a perpetual confidentiality provision. No separation payments were made to Mr. Hureau, and he is not otherwise entitled to severance or post-termination compensation from the Company under any arrangements.

Effective May 31, 2014, Mr. Mathews ceased to be the Senior Vice President, KCI International, and, in connection therewith, entered into a separation and release agreement that contained a general release of claims in favor of KCI, its affiliates and its subsidiaries. Mr. Mathews’ separation agreement also contains a two-year post-termination non-competition covenant, a two-year post termination non-solicitation covenant, and a perpetual confidentiality provision. In partial consideration for Mr. Mathews’ obligations under the separation agreement, Mr. Mathews received certain accrued benefits and a lump sum cash termination payment in the amount of $662,666. In addition, he is eligible to receive reimbursement for COBRA premiums for a period of 12 months immediately following the date of the termination of his employment with the Company.

Effective September 24, 2014, Mr. Croxford ceased to be the Senior Vice President, LifeCell and in connection therewith, entered into a separation and release agreement that contained a general release of claims in favor of LifeCell, its affiliates and its subsidiaries. Mr. Croxford’s separation agreement also contains a two-year post-termination non-competition covenant, a two-year post-termination non-solicitation covenant, and a perpetual confidentiality provision. In partial consideration for Mr. Croxford’s obligations under the separation agreement, Mr. Croxford received certain accrued benefits and a lump sum cash termination payment in the amount of $747,788. In addition, he is eligible to receive reimbursement for COBRA premiums for a period of 12 months immediately following the date of the termination of his employment with the Company.

Effect of Change in Control on Executive Compensation

Pursuant to the award agreements for profits interest unit awards issued under the Equity Incentive Plan (as defined in the section captioned “Executive Long-Term Incentives--Long-Term Incentive Awards Description”) and subject to continued employment through the date of the change in control (or if a change in control occurs within 105 days of a termination without “Cause” or a resignation for “Good Reason” (each, as defined in the Equity Incentive Plan)), all time vesting profits interest units not previously forfeited will vest upon the consummation of a change of control, and all performance vesting units vest as and when the applicable performance vesting conditions are satisfied.

None of the Company’s named executive officers are entitled to any tax gross-ups for any excise tax under Code Sections 280G and 4999.

Please refer to “Potential Payments Upon Termination or Change in Control,” below, for more information regarding the effects of a change in control on executive compensation.

Management Stock Ownership Guidelines

Because the Company was no longer public following the Merger in 2011, the Board abandoned the Management Stock Ownership Guidelines.

Tax, Accounting, and Regulatory Considerations

We consider the effect of tax, accounting and other regulatory requirements in designing and implementing compensation programs so that our programs meet regulatory requirements and efficiently deliver compensation. While these factors may impact plan designs, ultimately, decisions reflect the pay strategy of the Company and the program intent.

Code Section 162(m) Policy

Code Section 162(m) limits us to a deduction for federal income tax purposes of no more than $1 million of compensation paid to certain executive officers in a taxable year. Compensation above $1 million may be deducted if it is “performance-based compensation” within the meaning of the Internal Revenue Code. Code Section 162(m) no longer applies subsequent to the Merger.

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Insider Trading Policy and Policy Against Hedging

Our insider trading policy prohibits directors, employees and certain of their family members from purchasing or selling any type of security, whether issued by us or another company, while such person is aware of material non-public information relating to the issuer of the security or from providing such material non-public information to any person who may trade while aware of such information. This policy also prohibits directors and employees from engaging in short sales with respect to our securities, or entering into puts, calls or other “derivative” transactions with respect to our securities. Our insider trading policy also prohibits hedging transactions involving Company securities, holding Company securities in margin accounts, or pledging Company securities as collateral for a loan. We also have procedures that require transactions involving the Company’s securities to be pre-cleared by our General Counsel and Chief Financial Officer.

Policy on Recovery of Compensation

In February 2010, the Board of Directors of KCI formally adopted a Compensation Adjustment Policy. The goal of the policy is to ensure the fair and accurate payment of bonus and incentive compensation to executive officers based on the Company’s actual financial performance if subsequent information is revealed which leads to a restatement of financial results. Under the policy, in the event of a restatement of the Company’s financial results due to material noncompliance with any then-applicable financial reporting requirement under either GAAP or the federal securities laws, the Board may require our executive officers to repay any portion of bonus or incentive compensation payments which are in excess of the amounts that would have been paid based on the restated financial results. In addition, the Board has the discretion to cause the Company to make incremental payouts to executive officers and other employees if any restatement of the Company’s financial results indicates that the Company should have made higher bonus or incentive compensation payments than those actually made.

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The material in the following report is not “soliciting material,” is not deemed “filed” with the SEC, and is not incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filing.

Compensation Committee Report

Our compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this Annual Report on Form 10-K with our management. Based upon this review and discussion, the compensation committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this Annual Report on Form 10-K.

This report is respectfully submitted by the compensation committee of the Board

William J. Gumina, Chairman

Timothy E. Guertin

Erik Levy

Jim Pittman

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2014 Summary Compensation Table

The following table sets forth the total compensation earned for services rendered during fiscal year 2014 for: (1) the individuals serving as our principal executive officers and principal financial officers during fiscal year 2014; and (2) the three other most highly compensated executive officers during fiscal year 2014, as well as two additional individuals who would have been among the three other most highly compensated executive officers but for the fact that the individuals were not serving as executive officers of the Company at the end of our last completed fiscal year (together, our “named executive officers”). In accordance with SEC rules, 2012 compensation is not presented for Messrs. Hureau and Croxford because they were not named executive officers in that year. 2012 and 2013 compensation is not presented for Messrs. Busenlehner, Casey, Bibb, Ball and Ms. Piccinini for that same reason. The 2014 Summary Compensation Table, Grants of Plan-Based Awards in 2014, and Outstanding Equity Awards at 2014 Fiscal Year-End table should be viewed together for a more complete representation of both the annual and long-term incentive compensation elements of our program.

Name and Principal Position(1)	Year	Salary(2)  ($)	Bonus(3)  ($)	Stock Awards(4) ($)	Option Awards(4)  ($)	Non-Equity Incentive Plan Compensation(5)  ($)	All Other Compen- sation(6)  ($)	Total ($)
Joseph F. Woody President and Chief Executive Officer	2014	857,062	—	—	1,731,207	217,138	289,847	3,095,254
	2013	825,000	—	—	1,125,131	772,497	79,282	2,801,910
	2012	625,000	—	—	34,932	748,440	210,783	1,619,155
Thomas W. Casey, Executive Vice President and Chief Financial Officer	2014	87,692	100,000	—	—	—	—	187,692
John T. Bibb, Executive Vice President and General Counsel	2014	387,670	—	—	—	72,710	22,504	482,884
David E. Ball, Senior Vice President, Operations, Quality and Regulatory	2014	392,848	500	—	304,000	59,380	23,505	780,233
Laura Piccinini, President Developed Markets(7)	2014	349,227	133,000	—	380,000	55,799	150,845	1,068,871
Brian T. Busenlehner, Vice President and former Interim CFO	2014	267,829	—	—	—	32,062	90,765	390,656
Robert P. Hureau, former Executive Vice President and Chief Financial Officer	2014	374,269	—	—	—	—	48,054	422,323
	2013	337,179	300,000	—	3,375,394	268,948	68,237	4,349,758
Michael E. Mathews, former SVP International, KCI	2014	171,453	—	—	—	—	1,392,687	1,564,140
	2013	412,169	—	—	—	175,102	1,153,291	1,740,562
	2012	200,000	165,900	—	775,000	111,739	415,459	1,668,098
Philip M. Croxford, former SVP, LifeCell	2014	326,167	—	—	—	—	779,877	1,106,044
	2013	405,949	125,000	—	1,651,235	283,275	36,231	2,501,690

(1) The material terms of each named executive officer’s employment agreement or arrangement is described below, under the heading “Executive Officer Employment Agreements.” We do not currently maintain pension arrangements, supplemental executive retirement plans or other non-qualified deferred compensation arrangements for the benefit of the named executive officers and thus the applicable column was intentionally omitted from the table above.

(2) The column “Salary” indicates the amount of base salary earned by the named executive officer during the fiscal year, inclusive of amounts deferred under the Company’s tax-qualified retirement plan. Since salary increases have historically occurred annually in April, the salaries presented in this column reflect three months at one annual salary rate and nine months at a different annual salary rate, except in the cases of promotions or job changes where the salaries are prorated.

(3) Mr. Casey received a sign-on bonus, Mr. Ball received a spot award and Ms. Piccinini received a sign-on bonus of $66,500 and a special bonus of $66,500.

(4) The columns “Stock Awards” and “Option Awards” indicate the aggregate grant date fair value of awards in the year they were granted, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). For a discussion of valuation assumptions, please see Note 10 of the notes to the consolidated financial statements for the year ended December 31, 2014. Please also refer to the “Grants of Plan-Based Awards in 2014” table below for additional information regarding equity awards granted in 2014.

(5) In the column “Non-Equity Incentive Plan Compensation,” we disclose the dollar value of all earnings for services performed during the fiscal year pursuant to awards under non-equity incentive plans, including our Annual Incentive Bonus Guidelines, or AIB, as further described in the section captioned “Annual Incentive Bonus for Executive Officers.” Whether an award is included with respect to any particular fiscal year depends on whether the relevant performance measure was satisfied during the fiscal year. For example, our AIB awards are annual awards and the payments under those awards are made based upon the

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achievement of financial results and personal objectives measured as of December 31 of each fiscal year; accordingly, the amount we report for AIB corresponds to the fiscal year for which the award was earned even though such payment was made after the end of such fiscal year. We expect the bonuses for the 2014 fiscal year will be paid in the first quarter of 2015. The annual incentive bonus payment calculations are based on the base salaries in effect as of April 1, 2014, except in the cases of promotions or job changes that occur during the year where the bonuses are prorated.

(6) In the column “All Other Compensation,” we disclose for 2014:

• An aggregate of $278,467 in relocation benefits provided to Mr. Woody of which $116,817 was a relocation reimbursement gross-up;

• An aggregate of $27,474 in relocation benefits provided to Mr. Hureau;

• An aggregate of $19,920 in relocation benefits provided to Mr. Croxford, $747,788 in connection with his termination of employment and $3,341 for COBRA reimbursement;

• An aggregate of $125,572 in housing and automobile allowances paid to Ms. Piccinini;

• Mr. Mathews in 2014 received $547,151 in connection with his overseas assignment, $160,880 for relocation and $662,666 in connection with his termination of employment.

• An amount of $67,500 for Mr. Busenlehner for his interim assignment as Chief Financial Officer.

• Our contributions to the Company’s retirement plans, $8,000 each for Mr.Woody, Mr. Hureau, Mr. Croxford, Mr. Mathews, Mr. Bibb, Mr. Ball, and Mr. Busenlehner. Ms. Piccinini received $12,079 in retirement contributions for 2014.

• We paid life insurance premiums of $1,104 each for Mr. Woody, Mr. Bibb, and Mr. Ball, $828 each for Mr. Croxford and Mr. Hureau, $460 for Mr. Mathews, and $864 for Mr. Busenlehner. We paid $7,005 for Ms. Piccinini’s life insurance premiums.

• We paid health insurance premiums of $13,560 each for Mr. Ball and Mr. Busenlehner, $13,530 for Mr. Mathews, $12,804 for Mr. Bibb, and $11,111 for Mr. Hureau. Ms. Piccinini received $6,189 in health insurance premiums. We paid dental insurance premiums of $776 each for Mr. Ball and Mr. Busenlehner, $602 for Mr. Hureau, and $596 for Mr. Bibb. We paid vision premiums of $65 each for Mr. Ball and Mr. Busenlehner, and $39 for Mr. Hureau. The personal benefits paid to these named executives exceeded the aggregate value of $10,000.

(7) Ms. Piccinini’s compensation is reflected in U.S. dollars using a conversion rate of 1.33 U.S. dollars to Euros.

In accordance with SEC regulations, we report use of corporate resources by our executive officers as a perquisite or other personal benefit unless it is “integrally and directly related” to the performance of the executive’s duties. SEC rules require us to report this and other perquisites at our aggregate incremental cost. The amounts shown include the value of perquisites and other personal benefits to a named executive only if the aggregate value exceeded $10,000. Where we do report perquisites and other personal benefits for a named executive, we quantify each perquisite or personal benefit only if it exceeds the greater of $25,000 or 10% of the total amount of perquisites.

Executive Officer Employment Agreements and Transition Arrangements

Upon hiring each of the named executive officers, the Company and the named executive officer executed an offer letter or employment agreement, as applicable, outlining the terms of employment for such officer. Each of these letters or agreements sets forth standard terms summarizing salary, bonus and benefits. These offer letters and employment agreements are described below.

Joseph F. Woody. In November 2011, Mr. Woody executed an employment agreement with KCI providing for his employment as the Global President of Active Healing Solutions business unit of KCI. Under his employment agreement, Mr. Woody’s annual base salary in 2012 was $625,000, subject to annual review and increase by KCI. For 2011, Mr. Woody received a one-time signing bonus of $804,000 and $58,219 as a pro-rated portion of his annual performance-based bonus, which is a target of 100% of his annual base salary. His annual base salary changed from $625,000 to $825,000 effective January 1, 2013 based on competitive position and strong performance. In October 2014, Mr. Woody executed an amended and restated employment agreement. Pursuant to the terms of his amended agreement, his employment term is extended to November 11, 2018, his annual base salary is $862,000, and his target bonus percentage is 110%. Mr. Woody is also eligible for severance benefits, subject to his execution of a release of claims and compliance with certain restrictive covenants, pursuant to the terms of his amended and restated employment agreement, in the event his employment is terminated upon the occurrence of certain events as discussed in “Potential Payments Upon Termination or Change in Control” below.

Thomas W. Casey. In November 2014, Mr. Casey executed a written offer letter with KCI USA, Inc. providing for his employment as Executive Vice President, Chief Financial Officer of Acelity. Pursuant to his offer letter, Mr. Casey’s annual base salary in 2014 was $600,000. Due to his start date with the Company, he was not eligible to receive an annual performance-based bonus pursuant to KCI’s AIB for 2014. Mr. Casey’s target bonus for 2015 is 80% of his annual base salary. For 2014, Mr. Casey also received a one-time signing bonus of $100,000, which was payable thirty days from his employment date, and perquisites consisting of up to $5,000 per year for tax planning assistance and $2,000 per year for a physical exam. Mr. Casey’s offer letter also provided for the issuance of 2,000,000 profits interest units pursuant to the Equity Incentive Plan upon approval by the compensation committee, which approval was granted in February 2015.The offer letter also contemplates the execution of a retention agreement with Mr. Casey as further described in “Potential Payments Upon Termination or Change in Control” below.

John T. Bibb.  KCI entered into an employment offer letter dated April 7, 2011 with John Bibb to serve as Senior Vice President and General Counsel of KCI. The offer letter provides for at-will employment with no fixed term of employment, an annual base salary of $340,000, a discretionary incentive bonus opportunity with a target bonus value equal to 60% of Mr. Bibb's annual

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base salary, and perquisites consisting of up to $5,000 per year for tax planning assistance and $2,000 per year for a physical exam. As of March 24, 2014, Mr. Bibb’s annual base salary is $389,108, and his target bonus percentage is 80%. Mr. Bibb is also eligible for severance benefits and may be subject to certain restrictive covenants in the event his employment is terminated upon the occurrence of certain events, pursuant to a separate retention agreement he has entered into with the Company, as discussed in “Potential Payments Upon Termination or Change in Control” below.

Laura Piccinini. In August 2013, Ms. Piccinini executed a written employment agreement with KCI Medical S.r.l. providing for her employment as Vice President, Core Markets commencing in February 2014. Ms. Piccinini’s base salary in February 2014 was €280,000, and she was also eligible to receive an annual performance-based bonus pursuant to KCI’s AIB. Ms. Piccinini’s target bonus for 2014 was 35% of her annual base salary. Ms. Piccinini also received a signing bonus of €50,000, which was payable thirty days from her employment date. In March 2014, Ms. Piccinini was promoted to Vice President, Europe, Australia and New Zealand. In connection with her March 2014 promotion, Ms. Piccinini’s annual base salary was increased to €290,000 and her target bonus was increased to 50% of her annual base salary. In March 2014, Ms. Piccinini also executed a stay bonus agreement with Kinetic Concepts, Inc. providing for the payment of a retention bonus of $75,000 in the event she remained employed with KCI through March 18, 2015, and a further success bonus of $25,000 if KCI met a regional, financial performance target for 2014. In October 2014, Ms. Piccinini executed an amendment letter to her employment agreement in connection with her promotion to President of Developed Markets. Pursuant to her October 2014 amendment letter, effective as of September 24, 2014, Ms. Piccinini’s target bonus was increased to 70% of her annual base salary. Ms. Piccinini is entitled to receive notice, or payment in lieu thereof, and a severance payment pursuant to applicable Italian labor law, in the event her employment is terminated upon the occurrence of certain events as discussed in “Potential Payments Upon Termination or Change in Control” below.

David E. Ball. In 2011, Mr. Ball executed a written offer letter with KCI USA, Inc. providing for his employment as COO- Active Healing Solutions, a former business unit of KCI. Pursuant to his offer letter, Mr. Ball’s annual base salary was $315,000, and he was also eligible to receive an annual performance-based bonus pursuant to the Company's AIB with a target bonus of 40% of his annual base salary. As of March 24, 2014, Mr. Ball’s base salary was $400,155, and his target bonus for 2014 was 60% of his annual base salary. Mr. Ball is also eligible for severance benefits and may be subject to certain restrictive covenants in the event his employment is terminated upon the occurrence of certain events, pursuant to a separate retention agreement he has entered into with the Company, as discussed in “Potential Payments Upon Termination or Change in Control” below.

Brian T. Busenlehner. In 2005, Mr. Busenlehner executed a written offer letter with KCI USA, Inc. providing for his employment in the Company’s Internal Audit department. Since 2007, he has served as the Company’s Vice President, Corporate Controller. As of March 24, 2014, Mr. Busenlehner’s base salary was $268,540, and he was also eligible to receive an annual performance-based bonus pursuant to the Company's AIB. Mr. Busenlehner’s target bonus for 2014 was 35% of his annual base salary, which was increased to 80% for the time period during which he served as the Company’ s interim Chief Financial Officer. Mr. Busenlehner is also eligible for severance benefits and may be subject to certain restrictive covenants in the event his employment is terminated upon the occurrence of certain events, pursuant to a separate retention agreement he has entered into with the Company, as discussed in “Potential Payments Upon Termination or Change in Control” below.

Robert P. Hureau. In March 2013, Mr. Hureau executed a written offer letter with KCI providing for his employment as Executive Vice President, Chief Financial Officer. Pursuant to his offer letter, Mr. Hureau’s annual base salary was $500,000, and he was also eligible to receive an annual performance-based bonus pursuant to KCI’s AIB. Mr. Hureau’s target bonus for 2014 was 80% of his annual base salary, which would have been be pro-rated based on his service with KCI in 2014. For 2013, Mr. Hureau also received a one-time signing bonus of $300,000. Mr. Hureau was also eligible for severance benefits in the event his employment was terminated upon the occurrence of certain events as discussed in “Potential Payments Upon Termination or Change in Control” below. Mr. Hureau resigned from the Company in September 2014 and became subject to certain restrictive covenants pursuant to the terms of his Non-Disclosure and Non-Competition Agreement.

Michael E. Mathews. In July 2012, Mr. Mathews joined KCI as Senior Vice President, International, and in August 2012, Mr. Mathews executed a global assignment agreement with KCI providing for his relocation overseas. His salary changed from $400,000 to $412,000 effective April 1, 2013, reflecting a merit increase. Mr. Mathews was also eligible to receive an annual performance-based bonus pursuant to KCI’s AIB. Mr. Mathews’s target bonus for 2013 was 70% of his annual base salary. Pursuant to his agreement, Mr. Mathews also received a monthly housing allowance up to £10,000 per month during his assignment in the United Kingdom, an annual allowance of $32,000, which represents the goods and services differential between the United Kingdom and the United States, work permits and schooling costs for dependents, a monthly car allowance of £1,100, and a tax true-up amount so that Mr. Mathews was only required to pay taxes on his compensation that he would have paid had he been located in the United States. In connection with his relocation, Mr. Mathews was entitled to relocation benefits for moving his household effects and family to and from the UK for the assignment in accordance with the Company’s moving and relocation policy as in effect from time to time. Mr. Mathews was also eligible for severance benefits and became subject to certain restrictive covenants upon the termination of his employment in May 2014 as discussed in “Potential Payments Upon Termination or Change in Control” below.

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Philip M. Croxford. In November 2012, Mr. Croxford executed a written offer letter with LifeCell providing for his employment as Senior Vice President, Commercial. Mr. Croxford’s base salary in December 2012 was $395,000, and he was also eligible to receive an annual performance-based bonus pursuant to LifeCell’s AIB. Mr. Croxford’s target bonus for 2013 was 60% of his annual base salary. In October 2013, Mr. Croxford executed a written offer letter with KCI in connection with his promotion to Senior Vice President, LifeCell. Pursuant to his October 2013 offer letter, Mr. Croxford’s base salary for 2013, effective as of September 30, 2013, was $425,000, and his target bonus was increased to 70% of his annual base salary. For 2013, pursuant to his November 2012 offer letter, Mr. Croxford also received a contingent signing bonus of $130,000 of which $80,000 was payable thirty days from his employment date and $50,000 was payable after his one year anniversary date, provided that he was performing satisfactorily. In May 2013 Mr. Croxford executed a stay bonus agreement with LifeCell providing for the payment of a retention bonus of $37,500 in the event he remained employed with LifeCell through December 31, 2013, and for a further success bonus of $37,500 if LifeCell met a financial performance target for 2013. Mr. Croxford was also eligible for severance benefits and became subject to certain restrictive covenants upon the termination of his employment in September 2014 as discussed in “Potential Payments Upon Termination or Change in Control” below.

Grants of Plan-Based Awards in 2014

The following table provides information concerning awards in 2014.

		Estimated Future Payouts Under Non Equity Incentive Plan Awards(1)			Estimated Future Payouts Under Equity Incentive Plan Stock Unit Awards			Option Awards: Number of Securities Underlying Options(3) (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards(4)  ($)
Name	Grant Date	Threshold(2)  ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)
Joseph F. Woody(5)		—	948,200	1,896,400	—	—	—	—	—	—
	2/25/2014	—	—	—	—	—	—	1,138,952	—	1,731,207
Thomas W. Casey(6)		—	—	—	—	—	—	—	—	—
John T. Bibb(7)		—	311,287	622,574	—	—	—	—	—	—
David E. Ball(8)		—	240,093	480,186	—	—	—	—	—	—
	2/25/2014	—	—	—	—	—	—	200,000	—	304,000
Laura Piccinini(9)		—	223,285	446,570	—	—	—	—	—	—
	2/25/2014	—	—	—	—	—	—	250,000	—	380,000
Brian T. Busenlehner(10)		—	140,009	280,018	—	—	—	—	—	—
Robert P. Hureau(11)		—	—	—	—	—	—	—	—	—
Michael E. Mathews(12)		—	—	—	—	—	—	—	—	—
Philip Croxford(13)		—	—	—	—	—	—	—	—	—

(1) These columns report the range of potential amounts pursuant to awards under non-equity incentive plans, including our AIB. 2014 AIB Bonus amounts are reported in the 2014 Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” We expect the bonuses for the 2014 fiscal year will be paid in the first quarter of 2015.

(2) The 2014 AIB does not provide for a threshold payout; therefore, this column is left blank intentionally.

(3) Awards made in 2014 were profits interest units granted pursuant to the Equity Incentive Plan with a distribution threshold of $8.11 per unit.

(4) This column reports the FASB ASC Topic 718 value of profits interest units granted during 2014.

(5) Mr. Woody is eligible to receive a 2014 bonus based on a target bonus of 110% of his 2014 salary.

(6) Mr. Casey is not eligible receive a 2014 bonus based on his hire date of November 10, 2014.

(7) Mr. Bibb is eligible to receive a 2014 bonus based on a target bonus of 80% of his 2014 annual base salary.

(8) Mr. Ball is eligible to receive a 2014 bonus based on a target bonus of 60% of his 2014 annual base salary.

(9) Ms. Piccinini is eligible to receive a pro rated bonus based on her hire date in February 2014, which reflected her target bonus of 50%, which was increased to 70% when she assumed the role of President, Developed Markets in September 2014. Ms. Piccinini’s compensation is reflected in U.S. dollars using a conversion rate of 1.33 U.S. dollars per Euro.

(10) Mr. Busenlehner is eligible to receive a pro rated bonus to reflect a target bonus of 80% which was in effect while he served in the interim CFO role. Mr. Busenlehner’s target bonus for the remainder of 2014 was 35%.

(11) Mr. Hureau is not eligible to receive a 2014 bonus due to his September 2014 resignation.

(12) Mr. Mathews is not eligible to receive a 2014 bonus due to his May 2014 separation from the Company.

(13) Mr. Croxford is not eligible to receive a 2014 bonus due to his September 2014 separation from the Company.

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Material Terms of Plans that Govern Share-Based Awards

On November 11, 2011, the Board of Directors of Chiron Holdings GP, Inc. in its capacity as general partner of Chiron Guernsey Holdings L.P. Inc., approved the Equity Incentive Plan, as further described in the section captioned “Executive Long-Term Incentives--Long-Term Incentive Program Design.” At the time of plan adoption, the maximum aggregate number of profits interest units available for awards under the Equity Incentive Plan was 23,352,535, subject to adjustment as provided for in the plan. In July 2012, the limited partnership agreement of Chiron Guernsey Holdings L.P. Inc. was amended to allow for a maximum of 23,641,333 profits interest units available for awards under the Equity Incentive Plan. The vesting terms and expiration of each award shall be fixed by the compensation committee. The distribution threshold for awards granted under this plan is established by the compensation committee, which shall not be less than an amount equal to the fair market value of a limited partnership unit as of such date. “Fair Market Value” means the fair market value per limited partnership unit as determined by the compensation committee in good faith based upon the amount such limited partnership unit would have received as a distribution in the event of a liquidation of the limited partnership as of the date of determination, provided that, for the avoidance of doubt, no valuation discount (including for lack of marketability or minority interest) shall be taken into account when such determination is made.

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Outstanding Equity Awards at 2014 Fiscal Year-End

The following table provides information concerning unexercised profits interest units and equity incentive plan awards for each named executive officer outstanding as of the end of 2014. Each outstanding award is represented by a separate row, which indicates the number of securities underlying the award.

For profits interest unit awards, the table below discloses the distribution threshold and the expiration date.

The value of the profits interests unit awards granted in 2014 are $1.62 per unit for the time-based portion and $1.42 per unit for the performance-based portion. The value of the profits interests unit awards for 2013 are $2.30 per unit for the time-based portion and $1.98 per unit for the performance-based portion. The value of the profits interests unit awards for 2011 and 2012 are $1.33 per unit for the time-based portion and $1.15 per unit for the performance-based portion. The valuation is based on FASB ASC Topic 718. The potential future value of the profits interests awards are directly related to the multiple on invested capital (“MOIC”) received in a change in control transaction.

	Option Awards(1)					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable(2)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(3)	Option Exercise Price ($)	Option Expiration Date(4)	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Joseph F. Woody(5)	929,701	214,547	1,144,248	5.00	—	—	—	—	—
	11,444	2,641	14,085	5.00	—	—	—	—	—
	115,010	147,871	262,881	7.49	—	—	—	—	—
	—	569,476	569,476	8.11	—	—	—	—	—
Thomas W. Casey	—	—	—	—	—	—	—	—	—
John T. Bibb	535,080	123,480	658,560	5.00	—	—	—	—	—
	6,587	1,520	8,107	5.00	—	—	—	—	—
David E. Ball	187,278	43,218	230,496	5.00	—	—	—	—	—
	2,305	532	2,837	5.00	—	—	—	—	—
	—	100,000	100,000	8.11	—	—	—	—	—
Laura Piccinini	—	125,000	125,000	8.11	—	—	—	—	—
Brian T. Busenlehner	80,262	18,522	98,784	5.00	—	—	—	—	—
	14,323	6,511	20,834	5.00	—	—	—	—	—
	988	228	1,216	5.00	—	—	—	—	—
Robert P. Hureau(6)	246,451	—	—	7.49	—	—	—	—	—
Michael E. Mathews(6)	16,380	—	—	5.00	—	—	—	—	—
	547	—	—	5.00	—	—	—	—	—
Philip M. Croxford(6)	192,901	—	—	7.28	—	—	—	—	—

(1) Amounts listed are profits interest units with the distribution threshold indicated in the “option exercise price” column.

(2) Vesting for awards are 50% time-based and 50% performance-based. Generally, the time-based portion vests 25% one year after the date of grant the remaining 75% vests quarterly in equal amounts over the next 36 months so that vesting is 100% complete in 4 years. In March 2013 Mr. Croxford received an award of profits interest units with the following time-based vesting schedule: 25% vest on the first anniversary of December 10, 2012, his employment start date; the remainder vest over the next 36 months on a quarterly basis.

(3) Vesting for awards are 50% time-based and 50% performance-based. The performance portion vests one third if “MOIC” reaches 1.5x, two thirds if MOIC reaches 2.0x and 100% if MOIC reaches 2.5x where x is the original invested capital in the Merger. The performance-based portion also requires an event where the current owners receive payment such as in a change in control, public offering, or leveraged recapitalization.

(4) Profits interest units have no expiration date.

(5) Mr. Woody received 208,045 profits interest units with a distribution threshold of $5.00 that were fully vested and nonforfeitable on the date of grant.

(6) Messrs. Hureau, Mathews and Croxford forfeited all unvested profits interest units upon their separation from the Company.

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Option Exercises and Stock Vested in 2014

The following table provides information concerning exercises of stock options and awards issued pursuant to the Equity Incentive Plan which vested during 2014 on an aggregate basis. The table reports the number of securities for which the options were exercised and for which stock awards vested, and the aggregate dollar value realized upon exercise of options and vesting of stock awards.

	Option Awards			Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
Michael E. Mathews(1)	—	$	482,071	—	—

(1) In 2014, the Company exercised its call right with respect to 160,156 of Mr. Mathews’ vested profits interest units at $3.01 per unit.

Pension Benefits and Nonqualified Deferred Compensation

We do not currently maintain pension arrangements, supplemental executive retirement plans or other non-qualified deferred compensation arrangements for the benefit of our named executive officers.

Potential Payments Upon Termination or Change in Control

The information below describes and estimates certain compensation that would become payable under existing plans and arrangements if the named executive officer’s employment had terminated on December 31, 2014 (other than for Messrs. Hureau, Mathews, and Croxford, whose actual compensation payable in connection with their separation, if any, is described below), given the named executive officer’s compensation and service levels as of such date. These benefits are in addition to benefits available generally to salaried employees, such as distributions under the Company’s bonus plans, disability benefits and accrued salary and vacation benefits.

Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different from those estimated below. Factors that could affect these amounts include the timing during the year of any such event and the valuation of the Company at that time. There can be no assurance that a termination or change in control would produce the same or similar results as those described below if any assumption used to prepare this information is not correct in fact.

Woody Employment Agreement. Under the terms of Mr. Woody’s employment agreement dated October 31, 2014, Mr. Woody will be entitled to the following severance pay and benefits if he is terminated by KCI without “Cause,” or if he terminates his employment for “Good Reason,” subject to compliance with certain restrictive covenant obligations and to execution of a release of claims in favor of KCI, its affiliates and its subsidiaries a lump sum cash payment equal to the sum of his then-current annual base salary and annual target bonus multiplied by 1.5 (or the sum of the foregoing multiplied by 2 if such termination occurs within 24 months of a change in control); and 18 months of subsidized COBRA coverage. In the event Mr. Woody is terminated as a result of his death or disability, he will be entitled to a pro rata bonus for the year of termination (determined based on actual results).

Mr. Woody’s employment agreement contains (i) perpetual confidentiality restrictions that protect proprietary information, developments and other intellectual property and confidential and proprietary materials of KCI, its affiliates and its subsidiaries, which was received from third parties for certain limited purposes, (ii) a non-competition covenant that prohibits Mr. Woody from competing against the KCI, its affiliates, or its subsidiaries during the term of employment and for two years after termination of employment, and (iii) a non-solicitation covenant that prohibits Mr. Woody from actively soliciting customers, suppliers, employees, agents or consultants of KCI, its affiliates or its subsidiaries during the term of employment and for two years after termination of employment.

Under Mr. Woody’s employment agreement, “Cause” generally means his (i) substantial and continuing failure to render services to KCI or any subsidiary or affiliate in accordance with his obligations and position with KCI or any subsidiary or affiliate, subject to his having received adequate notice of such failure and his inability to cure such failure within 30 days after such notice; (ii) gross negligence, or breach of fiduciary duty; (iii) conviction of, or no contest plea to, an act of theft, fraud or embezzlement, or a felony; or (iv) material breach of the terms of any agreement between him and either KCI or any subsidiary or affiliate or a material

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breach of any KCI policy, subject to his having received; adequate notice of such failure and his inability to cure such failure within 30 days after such notice.

Under Mr. Woody’s employment agreement, “Good Reason” generally means (i) the material reduction of his title, duties, authority, responsibilities and/or reporting relationship, all from that which existed at the commencement of his employment, which is not cured within 30 days after his providing written notice to KCI; (ii) the reduction of his base salary (which is not cured within 30 days after his providing written notice) or target bonus percentage to below 110%; (iii) his relocation to a business location in excess of 50 miles from KCI’s headquarters in San Antonio (which is not cured within 30 days after his providing written notice); (iv) KCI’s the failure to obtain a satisfactory agreement from any successor of KCI to assume and agree to perform KCI’s obligations under his employment Agreement and deliver a copy thereof to Mr. Woody, unless such assumption occurs by operation of law; or (v) KCI’s material breach of any of its obligations under the employment agreement where KCI has failed to cure such breach within 30 days written notice from Mr. Woody.    

Casey Offer Letter. Under the terms of Mr. Casey’s November 2014 offer letter, in the event of an involuntary termination of Mr. Casey’s employment by KCI without “Cause,” he is entitled to receive a severance payment equal to his annual base salary plus his annual target bonus, and reimbursement of COBRA premiums for up to 12 months, contingent on his execution of a separation agreement providing for non-compete, non-solicitation, non-disclosure provisions. Under Mr. Casey’s offer letter, “Cause” generally means conduct involving one or more of the following: (i) his substantial and continuing failure to render services to KCI or any subsidiary or affiliate in accordance with the executive's obligations and position with KCI, or any subsidiary or affiliate, other than due to disability; provided that KCI or any subsidiary or affiliate provides the executive with adequate notice of such failure and, if such failure is capable of cure, the failure to cure such failure within 30 days of the notice; (ii) dishonesty causing financial or reputation harm to KCI, gross negligence, or breach of fiduciary duty; (iii) indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; or (iv) a material breach of the terms of an agreement between the executive and KCI or between Mr. Casey and any subsidiary or affiliate of KCI or a material breach of any KCI policy.

Bibb Executive Retention Agreement. KCI has entered into an executive retention agreement with Mr. Bibb. The executive retention agreement generally provides for at-will employment. In the event that Mr. Bibb is terminated by reason of death or physical or mental incapacity, by KCI for “Cause,” or by Mr. Bibb without “Good Reason,” the executive generally will be entitled to earned but unpaid salary and accrued and unused vacation, but generally will not otherwise be entitled to receive any additional severance benefits. The executive retention agreement provides that upon termination of employment by KCI without “Cause” or by the executive for “Good Reason,” subject to Mr. Bibb's execution of a release in favor of KCI, its affiliates, and its subsidiaries, he will be entitled to receive (i) earned and unpaid salary and payment of accrued and unused vacation time, (ii) a lump sum cash termination payment equal to one times the sum of executive's annual base salary and annual target bonus, and (iii) reimbursement of COBRA premiums for up to 12 months following the date of such termination. Alternatively, if Mr. Bibb is terminated without Cause or resigns for Good Reason within 24 months following a change in control, Mr. Bibb is eligible for a severance payment amount of two times the sum of his annual base salary and annual target bonus, and reimbursement of COBRA premiums for up to 18 months.

Under Mr. Bibb’s executive retention agreement, “Good Reason” generally means the occurrence of any of the following: (i) the material reduction of his duties and/or responsibilities, which is not cured within 30 days after Mr. Bibb provides written notice to KCI; provided, however, it shall not be considered Good Reason if, upon or following a change in control, his duties and responsibilities remain the same as those prior to the change in control but Mr. Bibb’s title and/or reporting relationship is changed; (ii) the material reduction of Mr. Bibb’s base compensation (which is not cured within 30 days after Mr. Bibb provides written notice), other than across-the-board decreases in base salary applicable to all executive officers of the Company; or (iii) the relocation of Mr. Bibb to a business location in excess of 50 miles from KCI’s headquarters in San Antonio (which is not cured within 30 days after Mr. Bibb provides written notice).

Under the Bibb Executive Retention Agreement, “Cause” generally means conduct involving one or more of the following: (i) the substantial and continuing failure of Mr. Bibb to render services to KCI or any subsidiary or affiliate of KCI in accordance with his obligations and position with KCI or any subsidiary or affiliate of KCI, other than due to disability; provided that KCI or any subsidiary or affiliate of KCI provides Mr. Bibb with adequate notice of such failure and, if such failure is capable of cure, failure to cure such failure within 30 days of the notice; (ii) failure to use reasonable business judgment in executing or following any specific and lawful directive or instruction from his immediate supervisor, KCI’s chief executive officer, or the Board; (iii) dishonesty causing financial or reputation harm to KCI or any subsidiary or affiliate of KCI, gross negligence, or breach of fiduciary duty; (iv) indictment of, conviction of, or no contest plea to, any felony, or an act of theft, fraud or embezzlement; or (v) a material breach of the terms of an agreement between Mr. Bibb and KCI or between Mr. Bibb and any subsidiary or affiliate of KCI or a material breach of any policy of KCI or any subsidiary or affiliate of KCI.

Piccinini Employment Agreement and Applicable Law. Pursuant Ms. Piccinini’s employment agreement with KCI Medical S.r.l. and to applicable Italian labor law, upon a termination of Ms. Piccinini’s employment, she is entitled to notice, or payment in

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lieu thereof, of between six months and twelve months, as follows: for up to four years of service, six months’ notice; for between four years and eight years of service, eight months’ notice; for between eight and twelve years of service, ten months’ notice; and for twelve or more months of service, twelve months’ notice. Ms. Piccinini would also be eligible to receive a severance payment equal to approximately one month of compensation per year of service with the Company upon termination of her employment for any reason, including upon a termination for cause or upon Ms. Piccinini’s resignation. Ms. Piccinini would also be eligible to receive a gross annual amount equal to 30% of her annual salary, paid in quarterly equal installments from the date of termination of her employment contract in consideration for Ms. Piccinini’s compliance with a 6-month post-termination non-competition covenant. Ms. Piccinini’s employment agreement also provides for a 12-month post-termination non-solicitation covenant.

Piccinini Stay Bonus Agreement. Under the terms of Ms. Piccinini’s March 2014 stay bonus agreement, in the event of a termination without “Cause,” she is entitled to receive the retention bonus of $75,000, and the success bonus of $25,000 if KCI meets the financial metric. In the event Ms. Piccinini is terminated for “Cause,” she will not be entitled to receive any payment under the agreement.

Under Ms. Piccinini’s stay bonus agreement, “Cause” generally means conduct involving one or more of the following: (i) the substantial and continuing failure of the executive to render services to KCI in accordance with her obligations and position with KCI; provided that KCI provides Ms. Piccinini with adequate notice of such failure and, if such failure is capable of cure, failure to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii) indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach of the terms of an agreement between Ms. Piccinini and KCI or a material breach of any KCI policy.

Ball Key Employee Retention Agreement. KCI has entered into a key employee retention agreement with Mr. Ball. The key employee retention agreement provides for at-will employment. In the event that Mr. Ball is terminated by reason of death or physical or mental incapacity, by KCI for “Cause,” or by the executive officer without “Good Reason,” the executive officer generally will be entitled to earned but unpaid salary and accrued and unused vacation, but generally will not otherwise be entitled to receive any additional severance benefits. The key employee retention agreement provides that upon termination of employment by KCI without “Cause” or by the executive officer for “Good Reason,” subject to the named executive officer’s execution of a release in favor of KCI, its affiliates, and its subsidiaries, the executive officer will be entitled to receive (i) earned and unpaid salary and payment of accrued and unused vacation time, (ii) a lump sum cash termination payment equal to one times the named executive officer’s annual base salary and annual target bonus, and (iii) reimbursement of COBRA premiums for up to 12 months following the date of such termination.

Under the Ball retention agreements described above, “Good Reason” generally means the occurrence of any of the following: (i) the material reduction of the named executive officer’s duties and/or responsibilities, which is not cured within 30 days after the executive provides written notice to KCI; provided, however, it shall not be considered Good Reason if, upon or following a change in control, his duties and responsibilities remain the same as those prior to the change in control but his title and/or reporting relationship is changed; (ii) the material reduction of the executive officer’s base salary (which is not cured within 30 days after the executive officer provides written notice), other than across-the-board decreases in base salary applicable to all executive officers of KCI; or (iii) the relocation of the named executive officer to a business location in excess of 50 miles from KCI’s headquarters in San Antonio (which is not cured within 30 days after the executive officer provides written notice).

Under Mr. Ball’s retention agreement described above, “Cause” generally means conduct involving one or more of the following: (i) his substantial and continuing failure to render services to KCI or any subsidiary or affiliate in accordance with his obligations and position with KCI, or any subsidiary or affiliate, other than due to disability; provided that KCI or any subsidiary or affiliate provides Mr. Ball with adequate notice of such failure and, if such failure is capable of cure, failure to cure such failure within 30 days of the notice; (ii) dishonesty causing financial or reputation harm to KCI, gross negligence, or breach of fiduciary duty; (iii) indictment of, conviction of, or no contest plea to, any felony, or an act of theft, fraud or embezzlement; or (iv) a material breach of the terms of an agreement between Mr. Ball and KCI or between Mr. Ball and any subsidiary or affiliate of KCI or a material breach of any KCI policy.

Busenlehner Key Employee Retention Agreement. KCI has entered into a key employee retention agreement with Mr. Busenlehner. The key employee retention agreement provides for at-will employment. In the event that the executive officer is terminated by reason of death or physical or mental incapacity, by KCI for “Cause,” or by the executive officer without “Good Reason,” the executive officer generally will be entitled to earned but unpaid salary and accrued and unused vacation, but generally will not otherwise be entitled to receive any additional severance benefits. The key employee retention agreement provides that upon termination of employment by KCI without “Cause” or by the employee for “Good Reason,” subject to the named executive officer’s execution of a release in favor of KCI, its affiliates, and its subsidiaries, the executive officer will be entitled to receive (i) earned and unpaid salary and payment of accrued and unused vacation time, (ii) a lump sum cash termination payment equal to one times the named executive officer’s annual base salary, and (iii) reimbursement of COBRA premiums for up to 12 months following the

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date of such termination. Alternatively, if Mr. Busenlehner is terminated without Cause or resigns for Good Reason within 24 months following a change in control, Mr. Busenlehner is eligible for a severance payment amount of one time the sum of his annual base salary and annual target bonus, and reimbursement of COBRA premiums for up to 12 months.

Under Mr. Busenlehner’s retention agreement described above, “Good Reason” generally means the occurrence of any of the following: (i) the material reduction of the named executive officer’s duties and/or responsibilities, which is not cured within 30 days after the executive provides written notice to KCI; provided, however, it shall not be considered Good Reason if, upon or following a change in control, his duties and responsibilities remain the same as those prior to the change in control but his title and/or reporting relationship is changed; (ii) the material reduction of the executive’s base salary, other than across-the-board decreases in base salary applicable to all executive officers of KCI; or (iii) the relocation of the named executive officer to a business location in excess of 50 miles from KCI’s headquarters in San Antonio.

Under Mr. Busenlehner’s retention agreement described above, “Cause” generally means conduct involving one or more of the following: (i) his substantial and continuing failure to render services to KCI or any subsidiary or affiliate in accordance with his obligations and position with KCI, subsidiary or affiliate; provided that KCI or any subsidiary or affiliate provides Mr. Busenlehner with adequate notice of such failure and, if such failure is capable of cure, failure to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii) indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach of the terms of an agreement between Mr. Busenlehner and KCI or between Mr. Busenlehner and any subsidiary or affiliate of KCI or a material breach of any KCI policy.

Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan. Executive officers of the Company are eligible to receive equity awards under the Equity Incentive Plan (as defined in the section captioned “Executive Long-Term Incentives--Long-Term Incentive Awards Description”), which was adopted subsequent to the Merger. The plan generally provides for the grant of profits interest awards at the discretion of the compensation committee who serves as the administrator of the plan at the direction of the GP. All named executive officers have been granted awards under the plan, which generally have the terms described below and entitle each executive to share in a portion of the capital appreciation of Chiron Guernsey Holdings L.P. Inc. after return to the Sponsors of their invested capital.

Fifty percent of the awards are subject to time-based vesting conditions and generally vest over a four-year period with 25% of the time-based tranche becoming vested on the first anniversary of the grant date and the remainder of the time-based award becoming vested in quarterly installments over the following three-year period. The other fifty percent of the awards are subject to performance-based vesting conditions and generally vest on a liquidity event (generally including a change in control, an initial public offering or a leveraged recapitalization of the Company) as to one-third of the performance-based tranche if the Sponsors receive a cumulative return of 1.5 times their invested capital in the Company, as to an additional one-third of the performance-based tranche if the Sponsors receive a cumulative return of 2.0 times their invested capital in the Company, and as to an additional one-third of the performance-based tranche if the Sponsors receive a cumulative return of 2.5 times their invested capital in the Company.

In the event of an executive officer’s termination of employment without “Cause” or for “Good Reason,” the portion of the time-based tranche that would have vested on the next scheduled vesting date will become vested on the date of such termination, and the remaining unvested portion of the time-based award may become fully vested if a change in control occurs within 105 days following the date of such termination, disregarding the prior termination of employment for such purposes. In addition, in the event of an executive’s termination of employment without “Cause” or for “Good Reason,” the performance-based tranche will remain eligible to become vested if a liquidity event occurs within six months following such termination and the applicable cumulative return thresholds are satisfied.

In the event of certain divestitures of individual business segments of the Company and certain corresponding terminations of employment, (i) the time-based tranche may become fully vested if the named executive officer remains employed through such divestiture and uses best efforts to effect such divestiture, and (ii) the performance-based tranche may remain eligible to become vested upon a liquidity event if the named executive officer remains employed through such divestiture and uses best efforts to effect such divestiture.

For all named executive officers, in the event of a reorganization and corresponding termination of employment, the performance-based tranche may remain eligible to become vested upon a liquidity event occurring within two years following such termination if the business unit for which the employee performs services achieves certain pre-established business plan goals as of the date of the reorganization.

The profits interest awards are subject to customary repurchase rights, restrictions on transfer and other security holder rights, and the executives have the right to require the profits interests to be repurchased at fair market value by Chiron Guernsey Holdings L.P. Inc. upon a termination due to death or physical or mental incapacity.

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Under the Equity Incentive Plan, “Cause” means conduct involving one or more of the following: (i) the substantial and continuing failure of the participant to render services to the Company in accordance with the participant’s obligations and position with the Company, provided that the Company provides the participant with adequate notice of such failure and, if such failure is capable of cure, the participant fails to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence or breach of fiduciary duty; (iii) the participant’s indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach of the terms of any agreement between the participant, on the one hand, and the Company on the other hand or a material breach of any material Company policy.

Under the Equity Incentive Plan, “Good Reason” means one or more of the following: (i) the material reduction of participant’s duties and/or responsibilities, which is not cured within 30 days after the participant provides written notice to the Company; provided however, it shall not be considered Good Reason if, upon or following a change in control, the participant’s duties and responsibilities remain the same as those prior to a change in control but the participant’s title and/or reporting relationship is changed; (ii) the material reduction of participant’s base salary (which is not cured within 30 days after the participant provides written notice), other than across-the-board decreases in base salary applicable to all executive officers of the Company; or (iii) the relocation of the participant to a business location in excess of 50 miles from the participant’s place of employment on the date of grant (which is not cured within 30 days after the participant provides written notice). To be considered a resignation from employment on an account of Good Reason, the participant must provide written notice to the Company (stating that participant believes one or more of the Good Reason conditions described above exists) within 30 days following the initial existence of such condition, and must resign within 30 days following the Company’s failure to cure such condition.

Hureau Resignation. Effective September 23, 2014, Mr. Hureau resigned from his position as Executive Vice President and Chief Financial Officer. Mr. Hureau remains subject to the Non-Disclosure and Non-Competition Agreement that he executed as a new hire employee, which contains a two-year post-termination non-competition covenant, a two-year post termination non-solicitation covenant, and a perpetual confidentiality provision. No separation payments were made to Mr. Hureau, and he is not otherwise entitled to severance or post-termination compensation from the Company under any arrangements.

Mathews Separation Agreement.Effective May 31, 2014, Mr. Mathews ceased to be the Senior Vice President, KCI International, and, in connection therewith, entered into a separation and release agreement that contained a general release of claims in favor of KCI, its affiliates and its subsidiaries. Mr. Mathews’ separation agreement also contains a two-year post-termination non-competition covenant, a two-year post termination non-solicitation covenant, and a perpetual confidentiality provision. In partial consideration for Mr. Mathews’ obligations under the separation agreement, Mr. Mathews received certain accrued benefits and a lump sum cash termination payment in the amount of $662,666. In addition, he is eligible to receive reimbursement for COBRA premiums for a period of 12 months immediately following the date of the termination of his employment with the Company.

Croxford Separation Agreement.Effective September 24, 2014, Mr. Croxford ceased to be the Senior Vice President, LifeCell and in connection therewith, entered into a separation and release agreement that contained a general release of claims in favor of LifeCell, its affiliates and its subsidiaries. Mr. Croxford’s separation agreement also contains a two-year post-termination non-competition covenant, a two-year post-termination non-solicitation covenant, and a perpetual confidentiality provision. In partial consideration for Mr. Croxford’s obligations under the separation agreement, Mr. Croxford received certain accrued benefits and a lump sum cash termination payment in the amount of $747,788. In addition, he is eligible to receive reimbursement for COBRA premiums for a period of 12 months immediately following the date of the termination of his employment with the Company.

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Executive Benefits and Payments Upon Termination Table

The following table shows the potential payments to our named executive officers under existing agreements, plans or other arrangements for various scenarios involving a change in control or termination of employment, in each case assuming the termination date was December 31, 2014 (other than for Mr. Mathews and Mr. Croxford, whose actual compensation payable in connection with their separations are described below).

Name	Good Reason Termination (1)($)	Involuntary Not for Cause Termination (1)($)	Change in Control(2)($)	Termination Following a Change in Control($)	Termination Due toDeath or Disability($)
Joseph F. Woody
Severance	2,715,300	2,715,300	—	3,620,400	—
COBRA premium reimbursements (3)	31,618	31,618	—	31,618	—
Total	2,746,918	2,746,918	—	3,652,018	—
Thomas W. Casey
Severance	—	1,080,000	—	1,080,000	—
COBRA premium reimbursements (3)	—	21,078	—	21,078	—
Total	—	1,101,078	—	1,101,078	—
John T. Bibb
Severance	700,394	700,394	—	1,400,789	—
COBRA premium reimbursements (3)	21,078	21,078	—	31,618	—
Total	721,472	721,472	—	1,432,407	—
David E. Ball
Severance	640,248	640,248	—	640,248	—
COBRA premium reimbursements (3)	21,078	21,078	—	21,078	—
Total	661,326	661,326	—	661,326	—
Laura Piccinini(4)
Severance	57,855	409,196	—	409,196	53,200
COBRA premium reimbursements (3)	—	—	—	—	—
Total	57,855	409,196	—	409,196	53,200
Brian T. Busenlehner
Severance	268,540	268,540	—	362,529	—
COBRA premium reimbursements (3)	21,078	21,078	—	21,078	—
Total	289,618	289,618	—	383,607	—
Michael E. Mathews
Severance	—	662,666	—	—	—
COBRA premium reimbursements (3)	—	21,078	—	—	—
Total	—	683,744	—	—	—
Philip M. Croxford
Severance	—	747,788	—	—	—
COBRA premium reimbursements (3)	—	21,078	—	—	—
Total	—	768,866	—	—	—

(1) This column assumes that no liquidity event or change in control would occur within 105 days after termination.

(2) This column assumes that long-term incentives were assumed by a successor corporation.

(3) This amount is based on the estimated annual cost of health care premiums to KCI, and represents the maximum potential reimbursement amount. Mr. Mathews and Mr. Croxford are eligible to receive COBRA premium reimbursements as per their separation agreements. Ms. Piccinini is not eligible to receive COBRA premium reimbursements.

(4) Amounts for Ms. Piccinini assume the Company elected to provide Ms. Piccinini with a payment in lieu of notice as provided under Italian labor law. Amounts for Ms. Piccinini are reflected in U.S. dollars using a conversion rate of 1.33 U.S. dollars to Euros.

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2014 Director Compensation Table

The following table provides information concerning the compensation of the non-employee, independent members of the Board of Directors for 2014. None of our other non-employee directors hold any profits interest units or received direct compensation for their service as a director in 2014.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
James G. Carlson	$	150,000	—	—	—	$	150,000
Timothy E. Guertin	$	150,000	—	—	—	$	150,000

Narrative Disclosure Regarding Director Compensation

As non-employee members of our Board, Mr. Carlson and Mr. Guertin each received an annual cash retainer equal to $120,000 for service on our Board in 2014, which is generally payable quarterly in advance. The 2014 fees paid in cash reflected in the table above include a payment for the first quarter of 2015. None of our other non-employee directors received cash-based or equity-based compensation for their service on our Board in 2014. We do not provide additional cash retainers or other cash-based or equity-based compensation to our non-employee directors for service on the Board, including service on any of the committees of our Board.

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ITEM 12:SECURITY OWNERSHIP

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The following table sets forth certain information regarding the ownership of limited partnership interests of Chiron Guernsey Holdings L.P. Inc., the parent of Acelity L.P. Inc., as of March 9, 2015 for: (1) each director; (2) each of our executive officers, including those named in the 2014 Summary Compensation Table; (3) all of our executive officers and directors as a group; and (4) all those known by us to be beneficial owners of more than five percent of our limited partnership interests.

	Limited Partnership Interests Beneficially Owned (1)
Name	# of Units	% of A-1 Class
Chiron A S.à r.l.. c/o Apax Partners, L.P. 601 Lexington Avenue, 53rd Floor New York, New York 10022	54,028,151	15.82	%
Chiron B1 S.à r.l. c/o Apax Partners, L.P. 601 Lexington Avenue, 53rd Floor New York, New York 10022	92,960,329	27.23	%
Eagle AIV, L.P. c/o Apax Partners, L.P. 601 Lexington Avenue, 53rd Floor New York, New York 10022	23,158,035	6.78	%
CPP Investment Board Private Holdings Inc. Canada Pension Plan Investment Board One Queen Street East, Suite 2600 P.O. Box 101 Toronto, Ontario M5C 2W5	84,221,670	24.67	%
Port-aux-Choix Private Investments II Inc. Public Sector Pension Investment Board 1250 Rene-Levesque Blvd. West Suite 900 Montreal, Quebec H3B 4W8	73,086,029	21.41	%

	Limited Partnership Interests Beneficially Owned (1)
Directors and Executive Officers (2)	# of Units	% of A-2 Class
Joseph F.Woody	50,000	6.97	%
John T. Bibb	148,957	20.77	%
David E. Ball	8,547	1.19	%
Brian T. Busenlehner	22,127	3.09	%
Total Officers and Directors	229,631	32.02	%

(1) Class A-1 interests represent 99.8% of the limited partnership interests. Class A-2 interests possess no voting rights and a lower distribution priority than Class A-1 interests.

(2) Messrs. Gumina, Carlson, Dyson, Guertin, Levy, Megrue, Pittman, Casey, Agarwal, Hulse, Huntley, and Kayata, and Ms. Piccinini own no limited partnership interests at December 31, 2014. Unless otherwise indicated the address of each individual listed in this table is c/o Acelity, 12930 IH 10 West, San Antonio, Texas 78249.

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ITEM 13:CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE

Review, Approval and Ratification of Transactions with Related Persons

Our Codes of Conduct detail numerous obligations for all Company directors, executive officers and employees relating to (a) responsibilities to the organization, (b) fair dealing, (c) conflicts of interest, (d) bribery and corruption laws, (e) responsibilities to other employees, (f) interacting with the government, (g) international business, and (h) healthcare laws, and provides guidance on the disclosure or reporting of activities that create or appear to create an actual or potential conflict of interest.

The Code of Ethics for Chief Executive and Senior Financial Officers requires designated officers to comply with the laws that govern the conduct of the Company’s business and to report suspected violations. It requires these officers to promote compliance with the Company’s policy to make full and accurate disclosure in the documents filed with the SEC and also requires disclosure of a conflict of interest to the Executive Committee of the Board of Directors.

In addition, the stockholders’ agreement of Chiron Holdings GP, Inc. provides that certain related party transactions must be approved by a majority of the votes of the Board of Directors, including all of the votes of the directors designated by the non-interested Sponsor.

It is not possible to describe the many types of transactions covered by these policies meaningfully. The policies are intended to cover significant transactions such as contracts, investments, purchase orders or acquisitions or divestitures between the Company and its officers and directors or their affiliates.

Services Agreements

In connection with the Merger, we entered into the service agreements as described below. The aggregate ongoing annual fees under such services agreements do not exceed approximately $6 million per annum in the aggregate. In 2013, the Company paid the Sponsors an aggregate of $3.5 million in connection with the Systagenix acquisition financing.

KCI and LifeCell each entered into material event services agreements with each of the Sponsors, their affiliates or their designees (each, a “Material Event Services Agreement”) pursuant to which KCI and LifeCell retain each of the Sponsors, their affiliates or their designees to provide consulting services to KCI or LifeCell (as applicable) relating to the structuring and documentation of the acquisition of such company, financial and business due diligence with respect to the acquisition of such company, financing required for the acquisition of such company, future financings and refinancing, exit events, and acquisitions and divestitures. The Material Event Services Agreements provide that each of the Sponsors, their affiliates or their designees will only serve as a consultant and not be involved in the management or operations of KCI or LifeCell (as applicable). Each Material Event Services Agreement remains in effect until a change of control or similar transaction or until the parties mutually agree to terminate it, in which case the Material Event Services Agreement will terminate at the next anniversary of the date of the Material Event Services Agreement. Each Material Event Services Agreement will also terminate upon the consummation of an initial public offering unless prior to such consummation KCI or LifeCell (as applicable) elects to continue such agreement. Each Material Event Services Agreement provides for an upfront closing fee payable to each of the Sponsors, their affiliates or their designees at the closing of the Merger. In connection with such agreements, each of KCI and LifeCell provide customary exculpation and indemnification provisions in favor of each of the Sponsors, their affiliates or their designees in connection with the services they provide to each of KCI and LifeCell.

In connection with the Merger, KCI entered into a service agreement with Chiron Topco, Inc. (“US Holdco”), a Delaware corporation (the “US Holdco Service Agreement”) pursuant to which KCI retained US Holdco to provide strategic services to KCI relating to financing and strategic business planning, add-on investments and analysis. The US Holdco Service Agreement provides that US Holdco will only serve as a consultant and not be involved in the management or operations of KCI. The US Holdco Service Agreement will remain in effect until a change of control or similar transaction or until the parties mutually agree to terminate it, in which case the US Holdco Service Agreement will terminate at the next anniversary of the date of the US Holdco Service Agreement. The US Holdco Service Agreement will also terminate upon the consummation of an initial public offering unless prior to such consummation KCI elects to continue such agreement. The US Holdco Service Agreement provides for an ongoing annual advisory service fee payable to US Holdco in four equal quarterly installments. Upon the termination of the US Holdco Service Agreement, a payment for foregone services fees may become payable to US Holdco. KCI agrees to indemnify US Holdco and its partners, shareholders, members, controlling persons, affiliates, directors, officers, fiduciaries, managers, employees and agents for certain losses arising under the US Holdco Service Agreement, losses relating to the Merger Agreement (as applicable), losses arising from advice or services provided by US Holdco to KCI and losses arising from indemnities and hold harmless obligations entered into by US Holdco in connection with the Merger Agreement.

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In connection with the Merger, US Holdco entered into service agreements with each of the Sponsors, their affiliates or their designees (each, a “Sponsor Service Agreement”) pursuant to which US Holdco retained each of the Sponsors, their affiliates or their designees to provide consulting services to US Holdco relating to financing and strategic business planning and in order to assist US Holdco in fulfilling its obligations under the US Holdco Service Agreement with KCI. The Sponsor Service Agreements provide that each of the Sponsors, their affiliates or their designees will only serve as a consultant and not be involved in the management or operations of US Holdco. Each Sponsor Service Agreements remains in effect until a change of control or similar transaction or until the parties mutually agree to terminate it, in which case the Sponsor Service Agreement will terminate at the next anniversary of the date of the Sponsor Service Agreement. Each Sponsor Service Agreement will also terminate upon the consummation of an initial public offering unless prior to such consummation US Holdco elects to continue such agreement. Each Sponsor Service Agreement provides for an ongoing annual advisory service fee payable to each of the Sponsors, their affiliates or their designees in four equal quarterly installments. Upon the termination of a Sponsor Service Agreement, a payment for foregone services fees may become payable to the appropriate Sponsor. US Holdco agrees to indemnify each of the Sponsors and their partners, shareholders, members, controlling persons, affiliates, designees, directors, officers, fiduciaries, managers, employees and agents for certain losses arising under the Sponsor Service Agreement, losses relating to the Merger Agreement (as applicable), losses arising from advice or services provided by each of the Sponsors, their affiliates or their designees to US Holdco and losses arising from indemnities and hold harmless obligations entered into by each of the Sponsors, their affiliates or their designees in connection with the Merger Agreement.

In connection with the Merger, LifeCell entered into a service agreement with the general partner of Chiron Guernsey Holdings L.P. Inc. (“Guernsey Holdings”), Chiron Holdings GP, Inc. (“GP”), a Delaware corporation (the “GP Service Agreement”), pursuant to which LifeCell retained GP to provide strategic services to LifeCell relating to financing and strategic business planning, add-on investments and analysis. The GP Service Agreement provides that GP will only serve as a consultant and not be involved in the management or operations of LifeCell. The GP Service Agreement will remain in effect until a change of control or similar transaction or until the parties mutually agree to terminate it, in which case the GP Service Agreement will terminate at the next anniversary of the date of the GP Service Agreement. The GP Service Agreement will also terminate upon the consummation of an initial public offering unless prior to such consummation LifeCell elects to continue such agreement. The GP Service Agreement provides for an ongoing annual advisory service fee payable to GP in four equal quarterly installments. Upon the termination of the GP Service Agreement, a payment for foregone services fees may become payable to GP. LifeCell will agree to indemnify GP and its partners, shareholders, members, controlling persons, affiliates, directors, officers, fiduciaries, managers, employees and agents for certain losses arising under the GP Service Agreement, losses relating to the Merger Agreement (as applicable), losses arising from advice or services provided by GP to LifeCell and losses arising from indemnities and hold harmless obligations entered into by GP in connection with the Merger Agreement.

In connection with the Merger, GP entered into service agreements with each of the Sponsors, their affiliates or their designees (each, a “GP Sponsor Service Agreement”) pursuant to which GP retained each of the Sponsors, their affiliates or their designees to provide consulting services to GP relating to financing and strategic business planning and in order to assist GP in fulfilling its obligations under the GP Service Agreement with LifeCell. The GP Sponsor Service Agreements provide that each of the Sponsors, their affiliates or their designees will only serve as a consultant and not be involved in the management or operations of GP. Each GP Sponsor Service Agreement will remain in effect until a change of control or similar transaction or until the parties mutually agree to terminate it, in which case the GP Sponsor Service Agreement will terminate at the next anniversary of the date of the GP Sponsor Service Agreement. Each GP Sponsor Service Agreement will also terminate upon the consummation of an initial public offering unless prior to such consummation GP elects to continue such agreement. The GP Sponsor Service Agreements provide for an ongoing annual advisory service fee payable to each of the Sponsors, their affiliates or their designees in four equal quarterly installments. Upon the termination of a GP Sponsor Service Agreement, a payment for foregone services fees may become payable to the appropriate Sponsor. GP will agree to indemnify each of the Sponsors and their partners, shareholders, members, controlling persons, affiliates, designees, directors, officers, fiduciaries, managers, employees and agents for certain losses arising under the GP Sponsor Service Agreement, losses relating to the Merger Agreement (as applicable), losses arising from advice or services provided by each of the Sponsors, their affiliates or their designees to GP and losses arising from indemnities and hold harmless obligations entered into by each of the Sponsors, their affiliates or their designees in connection with the Merger Agreement.

Management Investment

Subsequent to the Merger, Messrs. Ball, Bibb, Busenlehner and Woody have each entered into subscription agreements with Guernsey Holdings and GP, pursuant to which each individual agreed to subscribe for and acquire from Guernsey Holdings Class A-2 Units of Guernsey Holdings (each, a “Subscription”). In connection with the Subscription, each individual became a party to the limited partnership agreement of Guernsey Holdings as a limited partner of Guernsey Holdings.

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Carlson and Guertin Service Agreements

     Mr. Carlson and Mr. Guertin have each entered into Service Agreements with GP in connection with their respective appointments to the board of directors of GP as a non-executive director. Pursuant to the Service Agreements, we agreed to pay each of Mr. Carlson and Mr. Guertin an annual director fee of $120,000, payable in regular quarterly installments.

Indemnification Agreements

On November 4, 2011, the Managers also entered into an indemnification agreement with the Company and its parent entities (the “Indemnification Agreement”). The Indemnification Agreement contains customary exculpation and indemnification provisions in favor of the Managers and certain of their affiliates.

In January 2013, the Centaur Guernsey G.P. Inc., Chiron Guernsey GP Co. Limited, KCI, KCI USA, Inc. and LifeCell entered into an indemnification agreement with each of the directors of Chiron Holdings GP, Chiron Guernsey GP Co. Limited, KCI, KCI USA, Inc. and LifeCell. The indemnification agreements contain customary exculpation and indemnification provisions in favor of the directors and certain of their affiliates.

Agreements with Officers

In addition, we have certain agreement with our officers which are described in the section entitled “Executive Compensation.”

Director Independence

We are not a listed issuer whose securities are listed on a national securities exchange or on an inter-dealer quotation system which has requirements that a majority of the Board of Directors be independent.

However, if we were a listed issuer whose debt securities were traded on the New York Stock Exchange (NYSE) and subject to such requirements, we would be entitled to rely on the debt listings exception contained in the NYSE Listing Manual, Rule 303A.00 for the exception from the requirements of Rule 303A, generally, including the requirement to have a Board of Directors made up of a majority of independent directors.

Furthermore, because we are not a listed issuer, we are also not subject to the requirements of Rule 10A-3 of the Exchange Act with respect to the independence of the members of our Audit Committee. Nevertheless, pursuant to an evaluation of director independence, as determined by the rules of the New York Stock Exchange, Mr. Carlson and Mr. Guertin meet the test for director independence.

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ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed by Ernst & Young LLP, our independent auditors, for professional services rendered for the audit of our annual consolidated financial statements, the reviews of the consolidated financial reports included in our quarterly reports and statutory audits, in each case, for each of the years ended December 31, 2014 and 2013 amounted to approximately $1.9 million and $1.7 million, respectively.

Audit Related Fees

No audit related fees were billed for the year ended December 31, 2014 or 2013.

Tax Fees

The aggregate fees billed by Ernst & Young LLP for professional services rendered for tax compliance, tax advice and tax planning for the years ended December 31, 2014 and December 31, 2013 amounted to approximately $0.4 million and $0.5 million, respectively. Such services consisted of tax planning, transaction support and compliance.

All Other Fees

No other fees were billed by Ernst & Young LLP for services other than those described above under “Audit Fees,” “Audit Related Fees” and “Tax Fees” for each of the years ended December 31, 2014 and 2013.

Audit and Compliance Committee Pre-Approval Policies and Procedures

The Audit Committee policies and procedures for pre-approving all audit and non-audit services provided by our independent auditors require that all engagements for services by Ernst & Young LLP or other independent auditors be subject to prior approval by the Audit Committee. For audit services, the auditor must provide the Audit Committee with an audit plan, no later than May 31 of each year, which outlines the scope of the audit services proposed to be performed during the fiscal year, along with a fee estimate. If approved by the Audit Committee, the audit plan is formally accepted by the Audit Committee at a regularly scheduled meeting. For non-audit services, our management must submit to the Audit Committee for approval, no later than May 31 of each year, the list of non-audit services that it recommends the auditor be engaged to provide that year, along with a fee estimate for the services. The Audit Committee will review, and at its sole discretion, approve, a list of services along with fees for such services. The Audit Committee is to be informed routinely by management and the auditor as to the non-audit services actually provided by the auditor pursuant to the pre-approval process.

Additionally, the Audit Committee has delegated to its Chairman the authority to amend or modify the list of approved, permissible, non audit services and fees for which estimated fees do not exceed $50,000. The Chairman will report any such action taken to the Audit Committee at its next meeting.

All services provided by Ernst & Young LLP and the related fees set forth above were unanimously approved by the Audit Committee in accordance with the pre-approval procedures described above, and were deemed not incompatible with maintaining Ernst & Young LLP’s independence.

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PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)   The following documents are filed as part of this Annual Report:
	1.   Financial Statements
		The following consolidated financial statements are filed as a part of this report:
			Report of Independent Registered Public Accounting Firm
			Consolidated Balance Sheets as of December 31, 2014 and 2013
			Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012
			Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014, 2013 and 2012
			Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2014, 2013 and 2012
			Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
			Notes to Consolidated Financial Statements
	2.   Financial Statement Schedules
		The following consolidated financial statement schedule for the years ended December 31, 2014, 2013 and 2012
			Schedule II-Valuation and Qualifying Accounts for the years ended December 31, 2014, 2013 and 2012
				All other schedules have been omitted as the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.
(b)   Exhibits
	The following exhibits are incorporated herein by reference or are filed as part of this Annual Report:

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EXHIBITS

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of April 7, 2008, between Kinetic Concepts, Inc., Leopard Acquisition Sub, Inc., and LifeCell Corporation (filed as Exhibit 2.1 to Kinetic Concepts, Inc. Form 8-K filed on April 7, 2008).
2.2	Agreement and Plan of Merger, dated as of July 12, 2011, among Chiron Holdings, Inc., Chiron Merger Sub, Inc. and Kinetic Concepts, Inc. (filed as Exhibit 2.1 to Kinetic Concepts, Inc. Form 8-K filed on July 14, 2011).
2.3	Asset Purchase Agreement by and between Kinetic Concepts, Inc. and Getinge AB, dated as of August 14, 2012 (filed as Exhibit 10.6 to our Registration Statement on Form S-4 filed on October 1, 2012).
2.4	Share Purchase Agreement dated as of July 26, 2013, by and between Systagenix Wound Care Management Cooperatie B.A., Systagenix Holding Corp., and Kinetic Concepts, Inc. (filed as Exhibit 2.1 to our Form 8-K filed on July 30, 2013).
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 Acelity L.P. Inc. (filed as Exhibit 3.2 to our Form 10-Q for the quarterly period ended September 30, 2014.
3.3	Third Amended and Restated Limited Partnership Agreement of Acelity L.P. Inc. (filed as Exhibit 3.3 to our Form 10-Q for the quarterly period ended September 30, 2014).
4.1	Specimen Common Stock Certificate (filed as Exhibit 4.3 to Amendment No. 1 to Kinetic Concepts, Inc. Registration Statement on Form S-1, filed on February 2, 2004, as thereafter amended).
4.2	Form of 3.25% Convertible Senior Note due 2015, dated as of April 21, 2008, (included in Exhibit 4.1 to Kinetic Concepts, Inc. Form 8-K filed on April 22, 2008).
4.3	Indenture, dated as of April 21, 2008 between Kinetic Concepts, Inc., KCI USA, Inc. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Kinetic Concepts, Inc. Form 8-K filed on April 22, 2008).
4.4	Form of 10.5% Second Lien Senior Secured Notes due 2018, dated November 4, 2011 (included in Exhibit 10.2 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
4.5	Indenture, dated as of November 4, 2011, between Chiron Merger Sub, Inc., Kinetic Concepts, Inc., KCI USA, Inc., the Guarantors party thereto and Wilmington Trust, National Association, as Trustee and Collateral Agent (filed as Exhibit 10.2 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
4.6	Form of 12.5% Senior Notes due 2019, dated as of November 4, 2011 (included in Exhibit 10.3 to Kinetic Concepts, Inc. Form 8-k filed on November 10, 2011).
4.7	Indenture, dated as of November 4, 2011, between Chiron Merger Sub, Inc., Kinetic Concepts, Inc., KCI USA, Inc., the Guarantors party thereto and Wilmington Trust, National Association, as Trustee (filed as Exhibit 10.3 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
*10.1	Form of Director Indemnification Agreement among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and each of the non-executive directors of Chiron Holdings GP, Inc (filed as Exhibit 10.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.2	Amended and Restated Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (filed as Exhibit 10.8 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.3	Form of Chiron Guernsey Holdings L.P. Inc. Equity Incentive Plan Standard Profits Interest Unit Award Agreement (filed as Exhibit 10.5 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.4	Form of Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Executive Profits Interest Unit Award Agreement (filed as Exhibit 10.8 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.5	Form of Chiron Guernsey Holdings L.P. Inc. Profits Interest Unit Award and Amendment Agreement (filed as Exhibit 10.9 to our Registration Statement on Form S-4 filed on October 1, 2012).

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*10.6	Non-Employee Director Services Agreement dated April 8, 2013 by and among Chiron Guernsey Holdings LP Inc. and Tim Guertin (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.7	Chiron Guernsey Holdings LP, Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings LP, Inc. and Timothy Guertin dated April 8, 2013 (filed as Exhibit 10.2 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.8	Non-Employee Director Services Agreement dated May 27, 2013 by and among Chiron Guernsey Holdings L.P. Inc. and James G. Carlson (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended June 30, 2013).
*10.9	Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings L.P. Inc. and James G. Carlson dated May 27, 2013 (filed as Exhibit 10.2 on our Form 10-Q for the quarterly period ended June 30, 2013).
*10.10	Indemnification Agreement, dated as of January 16, 2013, among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and Joseph F. Woody (filed as Exhibit 10.4 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.11	Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings L.P. Inc. and with Joe Woody, dated November 28, 2011 (filed as Exhibit 10.10 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.12	Amended and Restated Employment Agreement by and between Kinetic Concepts, Inc. and Joe Woody, dated October 31, 2014 (filed as Exhibit 10.1 to our Form 8-K filed on November 6, 2014).
*†10.13	Offer Letter by and between KCI USA, Inc. and Thomas Casey, dated November 4, 2014.
*10.14	Promotion Letter by and between Kinetic Concepts, Inc. and John Bibb, dated April 7, 2011 (filed as Exhibit 10.14 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.15	Executive Retention Agreement by and between Kinetic Concepts, Inc. and John Bibb, dated April 7, 2011 (filed as Exhibit 10.15 to our Registration Statement on Form S-4 filed on October 1, 2012).
*†10.16	First Amendment to Executive Retention Agreement by and between Kinetic Concepts, Inc. and John Bibb, dated July 16, 2014.
*10.17	Indemnification Agreement, dated as of January 18, 2013, among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and John T. Bibb (filed as Exhibit 10.2 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*†10.18	Key Employee Retention Agreement by and between David Ball and Kinetic Concepts, Inc., dated January 1, 2013.
*†10.19	Open Ended Employment Agreement by and between Laura Piccinini and KCI Medical S.r.l., dated August 2013.
*†10.20	Letter to Laura Piccinini regarding the amendment to the terms and conditions of employment with KCI Medical S.r.l., dated October 28, 2014.
*†10.21	Stay Bonus Agreement by and between KCI Medical S.r.l. and Laura Piccinini, dated March 18, 2014.
*†10.22	Key Employee Retention Agreement by and between Brian Busenlehner and Kinetic Concepts, Inc., dated September 1, 2007.
*10.23	Offer Letter by and between LifeCell Corporation and Philip Croxford, dated November 14, 2012.
*10.24	Promotion Letter by and between Kinetic Concepts, Inc. and Philip Croxford, dated October 23, 2013.
*10.25	Stay Bonus Agreement by and between LifeCell Corporation and Philip Croxford, dated May 9, 2013.
*†10.26	Separation and Release Agreement by and between LifeCell Corporation and Philip Croxford, dated November 3, 2014.
*10.27	Offer Letter by and between KCI USA, Inc. and Robert Hureau, dated March 28, 2013 (filed as Exhibit 10.3 to our Form 10-Q for the quarterly period ending March 31, 2013).
*10.28	Key Employee Retention Agreement by and between Kinetic Concepts, Inc. and Robert Hureau, dated May 5, 2013 (field as Exhibit 10.4 to our form 10-Q for the quarterly period ending March 31, 2013).
*10.29	Letter of Understanding - Global Assignment Agreement by and between KCI USA, Inc. and Michael Mathews, dated August 3, 2012 (filed as Exhibit 10.25 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).

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*10.30	Executive Equity Incentive Plan Profits Interest Unit Award Agreement by and between Chiron Guernsey Holdings L.P. Inc. and Michael Mathews, dated July 2, 2012 (filed as Exhibit 10.26 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.31	Separation and Release Agreement by and between KCI USA, Inc. and Michael Mathews, dated April 29, 2014 (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended March 31, 2014).
10.32	Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014 (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended June 30, 2014).
10.33	Registration Rights Agreement by and among Chiron Merger Sub, Inc. to be merged with and into Kinetic Concepts, Inc., the Guarantors party thereto and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC dated as of November 4, 2011 (filed as Exhibit 10.19 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.34	Registration Rights Agreement by and among Chiron Merger Sub, Inc. to be merged with and into Kinetic Concepts, Inc., the Guarantors party thereto and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC dated as of November 4, 2011 (filed as Exhibit 10.20 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.35	Indemnification Agreement, dated as of November 4, 2011, among Chiron Guernsey Holdings L.P. Inc., Chiron Holdings GP, Inc., Chiron Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Chiron Topco, Inc., Chiron Holdings, Inc., Kinetic Concepts, Inc.,and Apax Partners, L.P.,PPIB Equity Investments Inc. and Datura Private Investments Inc. (filed as Exhibit 10.21 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.36	Credit Agreement, dated as of November 4, 2011, among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and others party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
10.37	Amendment No. 1 to Credit Agreement, dated as of November 7, 2012, among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and others party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.22 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.38	Amendment No. 2 to the Credit Agreement, dated as of June 14, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our Form 8-K filed on June 14, 2013).
10.39	Amendment No. 3 to the Credit Agreement, dated as of October 28, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our form 8-K filed on October 28, 2013).
10.40	Amendment No. 4 to the Credit Agreement, dated as of November 15, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.27 to our Form 10-K for the year ended December 31, 2013).
10.41	Amendment No. 5 to the Credit Agreement, dated as of January 22, 2014, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our form 8-K filed January 22, 2014).
†10.42	Amendment No. 6 to the Credit Agreement, dated as of March 10, 2015, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders.
†21.1	Subsidiaries of the Registrant.
†31.1	Certification of Principal Executive Officers Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†32.1	Certification of Chief Executive Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
	†      Exhibit filed herewith.

149

*    Compensatory arrangements for director(s) and/or executive officer(s).

150

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 March 10, 2015.

ACELITY L.P. INC.
By:	/s/ William J. Gumina
	William J. Gumina
	Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ William J. Gumina	Chairman of the Board of Directors	March 10, 2015
WILLIAM J. GUMINA
/s/ Joseph F. Woody	Director, President and Chief Executive Officer	March 10, 2015
JOSEPH F. WOODY	(Principal Executive Officer)
/s/ Thomas W. Casey	Executive Vice President and Chief Financial Officer	March 10, 2015
THOMAS W. CASEY	(Principal Financial Officer)
/s/ Brian T. Busenlehner	Vice President, Corporate Controller	March 10, 2015
BRIAN T. BUSENLEHNER	(Principal Accounting Officer)
/s/ James G. Carlson	Director	March 10, 2015
JAMES G. CARLSON
/s/ Steven Dyson	Director	March 10, 2015
STEVEN DYSON
/s/ Timothy Guertin	Director	March 10, 2015
TIMOTHY GUERTIN
/s/ Erik Levy	Director	March 10, 2015
ERIK LEVY
/s/ John F. Megrue, Jr.	Director	March 10, 2015
JOHN F. MEGRUE, JR.
/s/ Jim A. Pittman	Director	March 10, 2015
JIM A. PITTMAN

151

EXHIBITS

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of April 7, 2008, between Kinetic Concepts, Inc., Leopard Acquisition Sub, Inc., and LifeCell Corporation (filed as Exhibit 2.1 to Kinetic Concepts, Inc. Form 8-K filed on April 7, 2008).
2.2	Agreement and Plan of Merger, dated as of July 12, 2011, among Chiron Holdings, Inc., Chiron Merger Sub, Inc. and Kinetic Concepts, Inc. (filed as Exhibit 2.1 to Kinetic Concepts, Inc. Form 8-K filed on July 14, 2011).
2.3	Asset Purchase Agreement by and between Kinetic Concepts, Inc. and Getinge AB, dated as of August 14, 2012 (filed as Exhibit 10.6 to our Registration Statement on Form S-4 filed on October 1, 2012).
2.4	Share Purchase Agreement dated as of July 26, 2013, by and between Systagenix Wound Care Management Cooperatie B.A., Systagenix Holding Corp., and Kinetic Concepts, Inc. (filed as Exhibit 2.1 to our Form 8-K filed on July 30, 2013).
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 Acelity L.P. Inc. (filed as Exhibit 3.2 to our Form 10-Q for the quarterly period ended September 30, 2014.
3.3	Third Amended and Restated Limited Partnership Agreement of Acelity L.P. Inc. (filed as Exhibit 3.3 to our Form 10-Q for the quarterly period ended September 30, 2014).
4.1	Specimen Common Stock Certificate (filed as Exhibit 4.3 to Amendment No. 1 to Kinetic Concepts, Inc. Registration Statement on Form S-1, filed on February 2, 2004, as thereafter amended).
4.2	Form of 3.25% Convertible Senior Note due 2015, dated as of April 21, 2008, (included in Exhibit 4.1 to Kinetic Concepts, Inc. Form 8-K filed on April 22, 2008).
4.3	Indenture, dated as of April 21, 2008 between Kinetic Concepts, Inc., KCI USA, Inc. and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Kinetic Concepts, Inc. Form 8-K filed on April 22, 2008).
4.4	Form of 10.5% Second Lien Senior Secured Notes due 2018, dated November 4, 2011 (included in Exhibit 10.2 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
4.5	Indenture, dated as of November 4, 2011, between Chiron Merger Sub, Inc., Kinetic Concepts, Inc., KCI USA, Inc., the Guarantors party thereto and Wilmington Trust, National Association, as Trustee and Collateral Agent (filed as Exhibit 10.2 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
4.6	Form of 12.5% Senior Notes due 2019, dated as of November 4, 2011 (included in Exhibit 10.3 to Kinetic Concepts, Inc. Form 8-k filed on November 10, 2011).
4.7	Indenture, dated as of November 4, 2011, between Chiron Merger Sub, Inc., Kinetic Concepts, Inc., KCI USA, Inc., the Guarantors party thereto and Wilmington Trust, National Association, as Trustee (filed as Exhibit 10.3 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
*10.1	Form of Director Indemnification Agreement among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and each of the non-executive directors of Chiron Holdings GP, Inc (filed as Exhibit 10.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.2	Amended and Restated Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (filed as Exhibit 10.8 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.3	Form of Chiron Guernsey Holdings L.P. Inc. Equity Incentive Plan Standard Profits Interest Unit Award Agreement (filed as Exhibit 10.5 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.4	Form of Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Executive Profits Interest Unit Award Agreement (filed as Exhibit 10.8 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.5	Form of Chiron Guernsey Holdings L.P. Inc. Profits Interest Unit Award and Amendment Agreement (filed as Exhibit 10.9 to our Registration Statement on Form S-4 filed on October 1, 2012).

152

*10.6	Non-Employee Director Services Agreement dated April 8, 2013 by and among Chiron Guernsey Holdings LP Inc. and Tim Guertin (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.7	Chiron Guernsey Holdings LP, Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings LP, Inc. and Timothy Guertin dated April 8, 2013 (filed as Exhibit 10.2 to our Form 10-Q for the quarterly period ended March 31, 2013).
*10.8	Non-Employee Director Services Agreement dated May 27, 2013 by and among Chiron Guernsey Holdings L.P. Inc. and James G. Carlson (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended June 30, 2013).
*10.9	Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings L.P. Inc. and James G. Carlson dated May 27, 2013 (filed as Exhibit 10.2 on our Form 10-Q for the quarterly period ended June 30, 2013).
*10.10	Indemnification Agreement, dated as of January 16, 2013, among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and Joseph F. Woody (filed as Exhibit 10.4 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.11	Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan Profits Interest Unit Award Agreement between Chiron Guernsey Holdings L.P. Inc. and with Joe Woody, dated November 28, 2011 (filed as Exhibit 10.10 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.12	Amended and Restated Employment Agreement by and between Kinetic Concepts, Inc. and Joe Woody, dated October 31, 2014 (filed as Exhibit 10.1 to our Form 8-K filed on November 6, 2014).
*†10.13	Offer Letter by and between KCI USA, Inc. and Thomas Casey, dated November 4, 2014.
*10.14	Promotion Letter by and between Kinetic Concepts, Inc. and John Bibb, dated April 7, 2011 (filed as Exhibit 10.14 to our Registration Statement on Form S-4 filed on October 1, 2012).
*10.15	Executive Retention Agreement by and between Kinetic Concepts, Inc. and John Bibb, dated April 7, 2011 (filed as Exhibit 10.15 to our Registration Statement on Form S-4 filed on October 1, 2012).
*†10.16	First Amendment to Executive Retention Agreement by and between Kinetic Concepts, Inc. and John Bibb, dated July 16, 2014.
*10.17	Indemnification Agreement, dated as of January 18, 2013, among Centaur Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Kinetic Concepts, Inc., KCI USA, Inc., LifeCell Corporation, and John T. Bibb (filed as Exhibit 10.2 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*†10.18	Key Employee Retention Agreement by and between David Ball and Kinetic Concepts, Inc., dated January 1, 2013.
*†10.19	Open Ended Employment Agreement by and between Laura Piccinini and KCI Medical S.r.l., dated August 2013.
*†10.20	Letter to Laura Piccinini regarding the amendment to the terms and conditions of employment with KCI Medical S.r.l., dated October 28, 2014.
*†10.21	Stay Bonus Agreement by and between KCI Medical S.r.l. and Laura Piccinini, dated March 18, 2014.
*†10.22	Key Employee Retention Agreement by and between Brian Busenlehner and Kinetic Concepts, Inc., dated September 1, 2007.
*10.23	Offer Letter by and between LifeCell Corporation and Philip Croxford, dated November 14, 2012.
*10.24	Promotion Letter by and between Kinetic Concepts, Inc. and Philip Croxford, dated October 23, 2013.
*10.25	Stay Bonus Agreement by and between LifeCell Corporation and Philip Croxford, dated May 9, 2013.
*†10.26	Separation and Release Agreement by and between LifeCell Corporation and Philip Croxford, dated November 3, 2014.
*10.27	Offer Letter by and between KCI USA, Inc. and Robert Hureau, dated March 28, 2013 (filed as Exhibit 10.3 to our Form 10-Q for the quarterly period ending March 31, 2013).
*10.28	Key Employee Retention Agreement by and between Kinetic Concepts, Inc. and Robert Hureau, dated May 5, 2013 (field as Exhibit 10.4 to our form 10-Q for the quarterly period ending March 31, 2013).
*10.29	Letter of Understanding - Global Assignment Agreement by and between KCI USA, Inc. and Michael Mathews, dated August 3, 2012 (filed as Exhibit 10.25 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).

153

*10.30	Executive Equity Incentive Plan Profits Interest Unit Award Agreement by and between Chiron Guernsey Holdings L.P. Inc. and Michael Mathews, dated July 2, 2012 (filed as Exhibit 10.26 to Amendment No. 3 to our Registration Statement on Form S-1, filed on January 23, 2013).
*10.31	Separation and Release Agreement by and between KCI USA, Inc. and Michael Mathews, dated April 29, 2014 (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended March 31, 2014).
10.32	Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014 (filed as Exhibit 10.1 to our Form 10-Q for the quarterly period ended June 30, 2014).
10.33	Registration Rights Agreement by and among Chiron Merger Sub, Inc. to be merged with and into Kinetic Concepts, Inc., the Guarantors party thereto and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC dated as of November 4, 2011 (filed as Exhibit 10.19 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.34	Registration Rights Agreement by and among Chiron Merger Sub, Inc. to be merged with and into Kinetic Concepts, Inc., the Guarantors party thereto and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC dated as of November 4, 2011 (filed as Exhibit 10.20 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.35	Indemnification Agreement, dated as of November 4, 2011, among Chiron Guernsey Holdings L.P. Inc., Chiron Holdings GP, Inc., Chiron Guernsey L.P. Inc., Chiron Guernsey GP Co. Limited, Chiron Topco, Inc., Chiron Holdings, Inc., Kinetic Concepts, Inc.,and Apax Partners, L.P.,PPIB Equity Investments Inc. and Datura Private Investments Inc. (filed as Exhibit 10.21 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.36	Credit Agreement, dated as of November 4, 2011, among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and others party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to Kinetic Concepts, Inc. Form 8-K filed on November 10, 2011).
10.37	Amendment No. 1 to Credit Agreement, dated as of November 7, 2012, among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and others party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.22 to Amendment No. 1 of our Registration Statement on Form S-4 filed on November 5, 2012).
10.38	Amendment No. 2 to the Credit Agreement, dated as of June 14, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our Form 8-K filed on June 14, 2013).
10.39	Amendment No. 3 to the Credit Agreement, dated as of October 28, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our form 8-K filed on October 28, 2013).
10.40	Amendment No. 4 to the Credit Agreement, dated as of November 15, 2013, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.27 to our Form 10-K for the year ended December 31, 2013).
10.41	Amendment No. 5 to the Credit Agreement, dated as of January 22, 2014, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders (filed as Exhibit 10.1 to our form 8-K filed January 22, 2014).
†10.42	Amendment No. 6 to the Credit Agreement, dated as of March 10, 2015, by and among Kinetic Concepts, Inc. and KCI USA, Inc., the lenders and other party thereto, and Bank of America, N.A. as Administrative Agent for the lenders.
†21.1	Subsidiaries of the Registrant.
†31.1	Certification of Principal Executive Officers Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†32.1	Certification of Chief Executive Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
†32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated March 10, 2015.
	†      Exhibit filed herewith.

154

*    Compensatory arrangements for director(s) and/or executive officer(s).

155

EX-10.13

November 4, 2014

Thomas Casey

512 Terrell Road

San Antonio, TX 78209

Dear Thomas:

It is my pleasure, on behalf of KCI USA, Inc. ("KCI" or the "Company"), to present you with the following offer of employment for the position of Executive Vice President, Chief Financial Officer based out of our San Antonio, Texas office. You will be reporting to Joe Woody, President and Chief Executive Officer and your start date is currently November 11, 2014. Please note that this offer is contingent upon successful completion of our screening process, which includes, but may not be limited to, background and reference checks, drug screening and verification of your eligibility to work in the United States.

Below is an outline of the compensation package designed for you, as well as a summary of selected benefits.

Annual Compensation

Base Salary: You will be paid a bi weekly base salary of $23,076.93 every other Friday, which equates to $600,000 annually. Your employment status will be classified as a regular, full-time exempt employee.

Signing Bonus

As additional consideration for joining the Company, you will receive a one-time bonus of $100,000 minus required withholdings. This bonus is payable 30 days following your start date with the Company. Should you voluntarily resign your position within one- year of your start date, you will be required to reimburse the Company the amount of your Signing Bonus.

Annual Incentive Bonus Plan: As an Executive Vice President, Chief Financial Officer, you are eligible to participate in the Annual Incentive Bonus (AIB) program. This AIB Plan is intended to be an incentive to eligible employees and is designed to pay a bonus when specific Company and individual performance results are achieved, as agreed upon by the senior management team, resulting in potential payouts above or below target. This is a calendar year plan and participation and payouts in the AIB Plan will be prorated based on your start date. Please note, only employees hired prior to October 1st of a fiscal year will be eligible to participate in the AIB Plan on a prorated basis. Therefore, those hired on or after October 1st will only be eligible for the upcoming fiscal year plan. Your participation in the AIB plan will otherwise be subject to all of the terms and conditions of the AIB Plan and can change without notice. Your annual target is 80% of annual salary.

Executive Equity Incentive Plan:

Your position is eligible for participation in the Executive Equity Incentive Plan maintained by KCI’s parent, Chiron Guernsey Holdings L.P. Inc. You will be recommended for a long term incentive award in the form of 2,000,000 Profits Interest Units (“PIUs”), subject to vesting conditions described therein. These PIUs are issued by Chiron Guernsey Holdings L.P. Inc., the private equity partnership that owns KCI. As discussed with you, the PIUs represent a participation in the appreciation of the value of the

partnership over time. The PIUs, when issued, will have a base distribution threshold based on the value per Class A unit of the partnership on the date of grant (similar to an option exercise price). As such, the PIUs will have no value on the date of grant but will, over time, increase in potential value if the partnership increases in value. 50% of the Profits Interest Units will be time vesting units, with 25% of the time vesting units to cliff vest on the first anniversary of grant and the remaining 75% to vest ratably on a quarterly basis over 36 months; and 50% of the Profits Interest Units will vest based on achievement of certain investment milestones for the parent company. More information on the PIU award will be provided to you separately upon approval of your grant by the compensation committee.

Vacation

Time away, for your grade, is a self-managed program offering Team Members significant flexibility in managing personal time off. With this approach, vacation days are not allotted, tracked or banked and as such, scheduling time off need only be coordinated with your direct supervisor. The program is subject to state laws which may have different requirements. Your Human Resources representative can provide more details.

Retention Agreement

Your position will also be eligible for a retention agreement which generally provides that in the event your employment is terminated by KCI other than for “Cause” (as that term is defined in the retention agreement), you will receive a severance payment equal to one years’ base salary and one years’ bonus, plus up to 12 months reimbursement for COBRA premium payments. Such severance payment would be conditioned upon entry into a separation agreement providing for non-compete, non-solicitation, non-disclosure and other standard provisions.

Additional Benefits

You are eligible to participate in most benefits plans as of your date of hire. For employees of both KCI and LifeCell, this includes KCI's sponsored health plans, flexible spending accounts and supplemental life insurance plans. In addition, KCI provides short and long-term disability coverage, basic life insurance coverage and an Employee Assistance Program at no cost to you.

After completing 30 days of full time employment and meeting all eligibility requirements, you will automatically be enrolled in the pre-tax 401(k) Plan at 3% of your base pay. This plan provides a $1 for $1 match, up to the first 6%, with an annual limit of $8,000.

You are also eligible for $5,000 annual reimbursement for Financial Planning and Tax services.

You will also have the opportunity to take advantage of additional programs, details of which will be provided to you via your Human Resource Department.

Agreements

By virtue of your new role, it will be necessary for you to sign several agreements as a condition of your employment, including but not limited to the following:

Arbitration Policy Statement, Non-Compete Agreement, Confidentiality Agreement, Invention Assignment Agreement, and completion of a Form I-9 establishing your eligibility to work in the United States under the federal Immigration Reform and Control Act. The agreements listed above will be provided for your review and signature. These agreements must be completed and submitted prior to beginning employment.

Thomas, these are exciting times at KCI and we are looking forward to your contributions as we grow.

However, we recognize you retain the option, as does KCI, of ending your employment with KCI at any time, with or without notice and with or without cause. As such, your employment with KCI is considered at-will and neither this letter, nor any other oral or written representations may be considered a contract for employment with KCI for any specific period of time.

This letter serves to establish the entirety of your employment relationship with KCI and its subsidiaries, and supersedes any previous understanding that may have been implied or expressed, either verbally or in writing, by any representative of the Company. This offer is valid for five business days from the date of receipt.

Upon electronic acceptance of this offer, KCI will prepare a New Hire e-mail with a link to KCI's Onboarding New Hire Portal that will allow you to complete many of your New Hire tasks including your Benefits Enrollment paperwork, Federal W-4 form, Direct Deposit Authorization and most of the KCI Agreements.

Should you have any questions or require clarification on any aspect of this offer, please do not hesitate to contact me at 210-255-6104.

I hope you are as excited at the prospect of joining KCI as we are at having you as part of the team!

Sincerely,

/s/ Greg Kayata

Gregory Kayata

Senior Vice President, Human Resources

Cc: Joe Woody

EX-10.16

FIRST AMENDMENT TO

EXECUTIVE RETENTION AGREEMENT

In connection with that Executive Retention Agreement (“Agreement”) by and between Kinetic Concepts, Inc. (the “Company”) and John T. Bibb (“Executive”), dated effective as of  April 7, 2011, the Company and Executive have agreed that the following changes to the Agreement (in bold) have been made effective as of July 16, 2014:

3.    Definition of Terms.

(b)[Intentionally omitted.]

4.    Severance Benefits Upon a Qualifying Termination.

(b)Qualifying Termination not in Connection with a Change in Control. If the Executive experiences a Qualifying Termination that is not in connection with a Change of Control as described in Section 4(a) above, then the Executive shall be entitled to receive the following severance benefits, which shall be in addition to any salary earned and vacation accrued up to and including the Separation Date: (i) a severance payment in the amount of the Executive's annual base salary plus annualtarget bonus (disregarding any reduction in base compensation constituting Good Reason, if the Executive's Qualifying Termination is for such Good Reason), payable as a lump sum payment within five business days of the date of the Qualifying Termination, subject to Section 6(a) below; and (ii) if the Executive timely elects COBRA health insurance continuation coverage at the same, or a lower, level of coverage as the Executive had elected prior to his or her Qualifying Termination, the Company shall reimburse the Executive for the full COBRA premium payment made by the Executive, until the earliest of: (A) 12 months following the Separation Date, (B) the date the Executive fails to make timely payment of COBRA premiums and/or terminates his or her election of COBRA coverage, and (C) the date the Executive becomes eligible for comparable health insurance coverage (as an employee or otherwise), that does not contain any exclusion or limitation with respect to any preexisting condition of the Executive or a covered family member. The Executive acknowledges that the Company's reimbursement to the Executive of the full COBRA premium payment made by the Executive will be taxable income to the Executive.

Except as expressly set forth in this amendment, the Agreement shall remain in full force and effect without amendment or modification thereof.

[Remainder of page intentionally left blank; signature page follows.]

IN WITNESS WHEREOF, each of the parties hereto have executed this amendment, in the case of the Company by its duly authorized officer.

KINETIC CONCEPTS, INC.
By:	/s/ Joseph F. Woody
	Joseph F. Woody,
	President and Chief Executive Officer
EXECUTIVE
/s/ John T. Bibb
John T. Bibb

EX-10.18

KEY EMPLOYEE RETENTION AGREEMENT

This Key Employee Retention Agreement (the "Agreement") is effective as of January 1, 2013 (the "Effective Date"), by and between David Ball (the "Employee"), and Kinetic Concepts, Inc. (the "Company") (together the "Parties").

RECITALS

WHEREAS, the Employee is presently employed by the Company or one of its subsidiaries as Senior Vice President, Operations and has significant strategic and management responsibilities necessary to the continued successful operation of the Company's business;

WHEREAS, the Board of Directors of the Company’s parent (the "Board") has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee; and

WHEREAS, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee's termination of employment under the circumstances described herein that provide the Employee with the financial incentive and encouragement necessary to remain with the Company on a long-term basis.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:

1.Term of Agreement. The Company and the Employee agree that this Agreement will be in effect from the Effective Date until the termination of the Employee's employment with the Company.

2.At-Will Employment. While this Agreement is in effect, the Employee's employment with the Company shall continue to be at-will and, as such, may be terminated by the Employee or the Company at any time, for any reason and with or without advance notice, subject to the Company's severance obligations set forth herein.

3.Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a)Accrued Obligations. “Accrued Obligations” means the (i) any base salary earned, but not yet paid, prior to the effective date of termination of employment, (ii) any annual bonus that was determined, but not yet paid, prior to the effective date of such termination, (iii) reimbursement for any unreimbursed business expenses properly incurred by the Employee in accordance with Employer policy prior to the date of Employee’s termination; provided that claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to the Employer within 90 days following the date of Employee’s termination of employment, and (iv) any amounts or benefits that are vested amounts or vested benefits or that the Employee is otherwise entitled to receive under any plan, program, policy or practice (with the exception of those, if any, relating to severance) on the date of termination, in accordance with such plan, program, policy, or practice.

(b)Affiliate. "Affiliate" means, with respect to any entity, any other corporation, organization, association, partnership, sole proprietorship or other type of entity, whether incorporated or unincorporated, directly or indirectly controlling or controlled by or under direct or indirect common control with such entity.

(c)Cause. "Cause" means conduct involving one or more of the following: (i) the substantial and continuing failure of the Employee to render services to the Company in accordance with the Employee's obligations and position with the Company, other than due to Disability; provided that the Company provides the Employee with adequate notice of such failure and, if such failure is capable of cure, the Employee fails to cure such failure within 30 days of the notice; (ii) dishonesty causing financial or reputation harm to the Company, gross negligence, or breach of fiduciary duty; (iii) the Employee's indictment of, conviction of, or no contest plea to, any felony, or an act of theft, fraud or embezzlement; or (iv) a material breach of the terms of an agreement between the Employee and the Company or a material breach of any Company policy. The Employee's employment with the Company shall be deemed to have terminated for Cause if, within 12 months after the Employee's employment has terminated, facts and circumstances are discovered that would have justified a termination for Cause; in which case, the Employee may be required to repay to the Company any severance benefits to which he or she would not have been entitled upon a termination for Cause.

(d)Change in Control. “Change in Control” has the meaning set forth in the Amended and Restated Limited Partnership Agreement of Chiron Guernsey Holdings L.P. Inc.

(e)Company. "Company" means Kinetic Concepts, Inc. and any Subsidiary or Affiliate of the Company.

(f)Disability. "Disability" means a condition entitling the Participant to receive benefits under a long-term disability plan of the Company, or, in the absence of such a plan, the complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which the Employee was employed or served when such disability commenced.

(g)Good Reason. "Good Reason" means, in order to be a Qualifying Termination, one or more of the following, without the Employee's written consent: (i) the material reduction of the Employee's duties and/or responsibilities, which is not cured within 30 days after the Employee provides written notice to the Company; provided, however, it shall not be considered Good Reason if, upon or following a Change in Control, the Employee's duties and responsibilities remain the same as those prior to the Change in Control but the Employee's title and/or reporting relationship is changed; (ii) the material reduction of the Employee's base compensation (which is not cured within 30 days after the Employee provides written notice), other than across-the-board decreases in base compensation applicable to similarly situated, “Key Employees” of the Company; or (iii) the relocation of the Employee to a business location in excess of fifty (50) miles from the location of the Employee's employment with the Company on the Effective Date (which is not cured within 30 days after the Employee provides written notice). To be considered a resignation from employment on account of Good Reason, the Employee must: (i) provide written notice to the Company (stating that Employee believes one or more of the Good Reason conditions described above exists) within 30 days from the date the Employee becomes aware of the initial existence of such condition, upon the notice of which the Company shall be provided a period of 30 days during which it may remedy the condition, and (ii) resign within 30 days of the Company's failure to cure such condition.

(h)Qualifying Termination. A "Qualifying Termination" means the Employee's (i) termination of employment by the Company without Cause (other than on account of Disability); or (ii) the Employee's resignation from employment with the Company for Good Reason.

(i)Subsidiary. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations (other than the last corporation) in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

4.Severance Benefits Upon a Qualifying Termination. If the Employee experiences a Qualifying Termination, then the Employee shall be entitled to receive the following severance benefits, which shall be in addition to the Accrued Obligations: (i) a severance payment in the amount of the Employee's annual base salary plus annual target bonus, payable as a lump sum payment within five business days of the date of the Qualifying Termination, subject to Section 6(a) below; and (ii) if the Employee timely elects COBRA health insurance continuation coverage at the same, or a lower, level of coverage as the Employee had elected prior to his or her Qualifying Termination, the Company shall reimburse the Employee for the full COBRA premium payment made by the Employee, until the earliest of: (A) 12 months following the Separation Date, (B) the date the Employee fails to make timely payment of COBRA premiums and/or terminates his or her election of COBRA coverage, and (C) the date the Employee becomes eligible for comparable health insurance coverage (as an employee or otherwise), that does not contain any exclusion or limitation with respect to any preexisting condition of the Employee or a covered family member. The Employee acknowledges that the Company's reimbursement to the Employee of the full COBRA premium payment made by the Employee will be taxable income to the Employee.

5.Termination of Employee's Employment Other than a Qualifying Termination

(a)Termination on Account of Employee's Disability or Death. If the Company terminates the Employee's employment as a result of the Employee's Disability or due to the death of the Employee, then the Employee shall not be entitled to receive any severance benefits and shall only be entitled to receive the Accrued Obligations; provided, however, that this provision shall not have any effect upon any rights the Employee or the Employee's estate may have under the terms of any Company short- or long-term disability policy or life insurance policy.

(b)Termination for Cause or Resignation without Good Reason. If the Employee is terminated for Cause or resigns from employment without Good Reason, then the Employee shall not be entitled to receive any severance benefits and shall only be entitled to receive the Accrued Obligations.

6.Conditions to Severance Benefits.

(a)No severance benefits shall be provided under Section 4 above unless and until the Employee, in consideration of such benefits has executed, returned, and not revoked, during any revocation period required by applicable law, a Separation and Release Agreement in substantially the form attached hereto as Exhibit A (the "Release"), which Release the Company shall deliver to the Employee within five business days of the date of the Qualifying Termination.

(b)The Employee acknowledges and agrees that he or she is not entitled to any severance, change in control or any other payments or benefits provided under the terms of the Company’s Severance Pay Plan, as amended, or any offer letter, agreement or memoranda, or similar agreement, plan or arrangement, whether written or oral, relating or referring to employment, severance, or any benefits or payment the Employee may receive upon termination of employment for any reason, other than the Company's stock incentive plans or qualified or non-qualified retirement benefit plans that provide for specific benefits.

(c)All payment of severance benefits under this Agreement are intended to be exempt from, but in the alternative shall comply with, Code Section 409A.

(d)All cash and cash equivalent bonus and incentive compensation paid to the Employee is subject to the Company's Compensation Adjustment Policy, which is hereby incorporated by

reference. This Section 6(d) shall survive the termination of the Employee's employment with the Company.

7.Successors.

(a)Company's Successors. Any successor (or parent thereof) to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or substantially all of the Company's business and/or assets shall be legally bound by this Agreement and shall assume and agree to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor (or parent thereof) to the Company's business and/or assets.

(b)Employee's Successors. All rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees, as described in Section 5(a). The Employee shall have no right to assign any of his or her obligations or duties under this Agreement to any other person or entity.

8.Notice.

(a)General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address that the Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to 12930 IH 10 West, San Antonio, Texas 78249, and all notices shall be directed to the attention the General Counsel.

(b)Notice of Termination. Any termination by the Company for Cause or by the Employee for Good Reason shall be communicated by a written notice of termination to the other Party hereto. Such notice shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated.

9.Arbitration. All disputes relating to or arising out of this Agreement or otherwise in connection with the Employee's employment with, or termination from, the Company, shall be settled by binding arbitration, in San Antonio, Texas, in accordance with the Company's standard arbitration policy and procedures.

10.Code Section 409A.  This Agreement is intended to comply with Code Section 409A and the interpretative guidance thereunder, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions, and will be administered, construed, and interpreted in accordance with such intent. If any provision of this Agreement needs to be revised to satisfy the requirements of Code Section 409A, then such provision shall be modified or restricted to the extent and in the manner necessary to be in compliance with such requirements of the Code and any such modification will attempt to maintain the same economic results as were intended under this Agreement. Each payment under this Agreement is intended to be treated as one of a series of separate payment for purposes of Code Section 409A and Treas. Reg. §1.409A-2(b)(2)(iii) (or any similar or successor provisions).

(a)    For purposes of this Agreement, the Employee's employment with the Company shall be deemed to be terminated when the Employee has a "Separation from Service" within the meaning of Code Section 409A, and references to termination of employment shall be deemed to refer to a Separation from Service. For purposes of this Section 10, and in accordance with Treas. Reg. §1.409A-1(h)(1)(ii) (or any similar or successor provisions), the Employee's Separation from Service shall be deemed to occur, without limitation, if the Company and the Employee reasonably anticipate that the level of bona fide services the Employee will perform after a certain date (the Employee's "Separation Date"), whether as an employee or as an independent contractor, will permanently decrease to less than fifty percent (50%) of the average level of bona fide services provided in the immediately preceding thirty-six (36) months.

(b)    Notwithstanding anything in this Agreement to the contrary, to the extent that payments under this Agreement are subject to Code Section 409A, are on account of a Separation from Service, and the Employee the Employee is considered a "specified employee" (as defined in Code Section 409A and Treas. Reg. §1.409A-1(c)(i) or any similar or successor provision) who otherwise would be entitled to a payment during the six-month period beginning on the Employee's Separation Date that is not otherwise excluded under Code Section 409A under the exception for short-term deferrals, separation pay arrangements, reimbursements, in-kind distributions, or any otherwise applicable exception, the payment will not be made to the Employee until the earlier of the six-month anniversary of the Employee's Separation Date or the Employee's death and will be accumulated and paid on the first day of the seventh month following the Separation Date. 

(c)    The Company does not guarantee that any payments made in connection with the Agreement will satisfy all applicable provisions of Code Section 409A.

11.Miscellaneous Provisions.

(a)Waiver, Amendment or Substitution. No provision of this Agreement shall be amended, modified, waived, substituted, or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either Party of any breach of, or of compliance with, any condition or provision of this Agreement by the other Party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(b)Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas. Subject to the requirements in Section 9 above, the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Agreement will be exclusively in the courts in the State of Texas, Bexar County, including the Federal Courts located therein (should Federal jurisdiction exist).

(c)Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(d)Survival. The provisions of the Company's Non-Disclosure and Non-Compete Agreement, Sections 6, 7, 9, and 11 of this Agreement, and any other provisions of this Agreement that are intended to apply, operate or have effect after the expiration or termination of the term of this Agreement, or at a time when the term of this Agreement may have expired or terminated, shall survive the expiration or termination of the term of this Agreement for any reason.

(e)Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes and other authorized deductions.

(f)Deemed Resignation. Upon the Employee's termination of employment for any reason, the Employee shall be deemed to have resigned as of the date of the Employee's termination of employment from all offices, directorships and fiduciary positions with the Company and the Company's employee benefit plans unless the Employee is affirmatively re-appointed or re-elected to such position as of the date of the Employee's termination of employment.

(g)No Representations. Each Party acknowledges that it is not relying and has not relied on any promise, representation or statement made by or on behalf of the other Party that is not set forth in this Agreement.

(h)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(i)Prior Agreements Replaced and Superseded. Employee acknowledges and expressly agrees that this Agreement shall replace and supersede all prior arrangements, offer letters, agreements or memoranda, other similar agreements, plans, arrangements, or understandings, whether written or oral, regarding or referring to employment, severance, or any benefits or payment the Employee may receive upon termination of employment for any reason, other than any equity plans of Chiron Guernsey Holdings L.P. Inc. or its subsidiaries, any qualified or non-qualified retirement benefit plans that provide for specific benefits, and any agreements listed in Exhibit B.

IN WITNESS WHEROF, each of the Parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE	KINETIC CONCEPTS, INC.
/s/ David Ball	By:	/s/ David A. Lillback
Name		David A. Lillback
		Senior Vice President, Human Resources
Address:

EXHIBIT A TO KEY EMPLOYEE RETENTION AGREEMENT

SEPARATION AND RELEASE AGREEMENT

Address: ________________________________________________________________

Dear __________________:

This Separation and Release Agreement (this "Release Agreement") confirms the terms of the separation of your employment from Kinetic Concepts, Inc. and any of its affiliates and subsidiaries (the "Company").

Termination of Employment

1.You and the Company have reached a mutual agreement that your employment with the Company will terminate effective as of ________ (the "Separation Date"). As of the Separation Date, you will no longer be an employee or officer of the Company, and you hereby resign from any and all employment and managerial positions, boards and officer, director or trustee positions, if any, with the Company as of the Separation Date. You also hereby agree to execute any other documents reasonably necessary to effectuate such resignations. Provided that the Company requests you to perform services from the date of this Release Agreement through the Separation Date, you shall, in the Company 's sole discretion, (a) assist with the transitioning of your duties to a successor and (b) be available at reasonable times to respond to any questions that the Company may have regarding its business. In the sole direction of the Company, you will perform these services on Company premises or by telephone.

2.Regardless of whether you sign this Release Agreement, you will be paid your Accrued Obligations, as defined in the Key Employee Retention Agreement. As of the Separation Date, you will cease to participate in all Company benefit plans (except as provided by COBRA).

Separation Payment and Benefits

3.Subject to your compliance with the terms and conditions of this Release Agreement, and provided that you do not revoke your consent to this Release Agreement as permitted by paragraph 14 of this Release Agreement, the Company shall, in accordance with the terms of Section 4 of the Key Employee Retention Agreement effective as of _________ (the "Key Employee Retention Agreement"): (a) pay, or cause to be paid, to you a separation payment of $_________ (______Dollars), less all amounts required to be withheld by law, including, but not limited to, any applicable federal, state or local taxes within five (5) business days of the Effective Date (as defined in paragraph 14 of this Release Agreement); and (b) if you timely elect COBRA health insurance continuation coverage, reimburse you for COBRA premiums for up to _______ (___) months following the date of termination.

Releases

4.You, for yourself and successors, assigns, executors and administrators, now and forever hereby release and discharge the Company, together with its respective past and present parents, subsidiaries, and affiliates, together with each of their officers, directors, stockholders, partners, employees, agents, representatives and attorneys, and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns (collectively, the "Releasees") from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected (collectively, "Claims") which you or your executors, administrators, successors or assigns ever had, now have or may hereafter claim to have by

reason of any matter, cause or thing whatsoever: (a) arising from the beginning of time up to the date you sign this Release Agreement including, but not limited to, any Claims (i) relating in any way to your employment relationship with the Company or any of the Releasees or (ii) arising under any federal, local or state statute or regulation, including, without limitation, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Sarbanes-Oxley Act of 2002, the Family Medical Leave Act of 1993, the Texas Commission on Human Rights Act, the Texas Workers' Compensation Act and/or any other applicable local or state law, each as amended; (b) relating to the termination of your employment relationship with the Company or any of the Releasees; (c) relating to wrongful employment termination; or (d) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company and any of the Releasees and you, including, (A) the Offer Letter dated __________ (the "Offer Letter"); and (B) the Key Employee Retention Agreement. Notwithstanding the foregoing, nothing contained in this paragraph 4 shall in any way release or discharge any Claims you may have (1) for payments or benefits forth in this Release Agreement, (2) for indemnification under the charter, by-laws, certificate of formation, operating agreement or other governing documents of the Company, insurance policies of or pertaining to the Company, or applicable law, (3) your rights to any vested pension or retirement benefits (including, without limitation, 401(k), or (4) that cannot be waived under applicable law.

5.You acknowledge and agree that, except as otherwise expressly provided in this Release Agreement: (a) the Company has fully satisfied any and all obligations whatsoever owed to you arising out of your employment with the Company, and that no further payments or benefits are owed to you by the Company or any of the Releasees, including, but not limited to, any payments or benefits under the Offer Letter or the Key Employee Retention Agreement; and (b) you have knowingly relinquished, waived and forever released any and all rights to any personal recovery in any action or proceeding that may be commenced on your behalf arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys' fees.

6. You agree to indemnify the Company and hold it harmless for any claims brought by any taxing authority against any of the Releasees seeking payment of taxes, penalties and/or interest related to the assessment, determination and/or reporting of taxes under federal, state and/or local law, including, without limitation, payment of attorneys' fees for counsel selected by the Company for its defense of such matters and costs.

Equity Awards

7.You understand and acknowledge that any outstanding equity awards will be governed by the terms of the award agreements respecting such awards, and that this Release Agreement does not alter or amend the terms thereof. The Company agrees that for purposes of such awards your separation of employment shall be treated as one other than for cause.

Covenants/Confidentiality

8.You acknowledge and agree that during your employment with the Company you have developed and had access to confidential trade secret information. Accordingly, notwithstanding any provision of this Release Agreement to the contrary, you hereby reaffirm, and agree to comply with the Non-Disclosure and Non-Compete Agreement, a form of which is attached hereto as Annex A (the

"Covenants Agreement"). You further agree that the Covenants Agreement shall remain in full force and effect as if restated herein.

9.You agree not to take any action or to make any statement, written or oral, that disparages or criticizes the business or management of the Company or any of its respective directors, officers, agents, or employees. Except as required or permitted by paragraphs 11 or 12 below, you further agree not to take any action that is intended to, or that does in fact, damage the business or reputation of the Company or its affiliates, or the personal or business reputations of any of their respective directors, officers, agents, or employees, or that interferes with, impairs or disrupts the normal operations of the Company or its affiliates.

10.You agree that you will not disclose this Release Agreement or its terms to any person, except (a) to your immediate family, provided that prior to such disclosure, you inform your immediate family that they are also bound by confidentiality and you shall be responsible for any such disclosure by your immediate family; (b) as may be required for obtaining legal or tax advice, or future employment provided that prior to such disclosure you will inform your legal or tax advisor or potential employer that they are bound by confidentiality and you shall be responsible for any such disclosure by your legal or tax advisor or potential employer; (c) for the filing of income tax returns; (d) as may be required by law, provided that you shall promptly notify the Company prior to making any disclosure required by law so that the Company may seek a protective order or other appropriate remedy; or (e) in any proceeding to enforce this Release Agreement.

11.You agree that you will, for up to one year following your termination of employment with the Company, at the Company's request, cooperate fully, at such times that do not unreasonably interfere with your personal or business activities, with the Company in any regulatory or legal matter that involves the Company, or its then-current or former officers, directors, employees or agents, about which you may have knowledge or information. Your cooperation may include, but not be limited to, the following: (a) appearing for an interview; (b) answering all questions fully and truthfully; (c) appearing for depositions and/or at trial related to any claim, action or litigation in which the Company becomes a party; and (d) meeting with representatives of the Company to assist in preparation for such depositions and/or trials.

12.Nothing in this Release Agreement shall prevent you from providing truthful and accurate information to any government agency, internal regulating body or as otherwise may be required by law.

Return of Company Property

13.On or before the date you execute this Release Agreement, you will return all property in your possession, custody or control which belongs to the Company, including without limitation, keys, credit cards, computers, phone cards and other physical property of the Company, and any of the Company's documents, reports, files, memorandum, records, software and other media, whether kept in paper or electronic format, and neither you nor anyone acting on your behalf shall maintain copies, duplicates, reproductions or excerpts of any such property.

Voluntary Waiver

14.You understand and agree that the Company is under no obligation to provide the payments and benefits provided in this Release Agreement absent your consent to the terms of this Release Agreement, and that you are under no obligation to consent to this Release Agreement. You acknowledge and agree that (a) the Company has advised you of your right to consult with an attorney prior to executing this Release Agreement, (b) you have carefully read and fully understand all of the provisions of this Release Agreement, and (c) you are entering into this Release Agreement knowingly, freely and

voluntarily in exchange for good and valuable consideration. You shall have twenty-one (21) calendar days from the date of this Release Agreement to consider this Release Agreement, although you may sign it sooner; provided, however, that if the termination of your employment is part of an exit incentive or employment termination program, you shall have forty-five (45) days from the date of this Release Agreement to consider this Release Agreement and the Older Workers Benefit Protection Act chart that is attached as Annex C to this Release Agreement. Once you have signed this Release Agreement, you shall have seven (7) additional calendar days from the date of execution to revoke your consent to this Release Agreement. Any such revocation shall be made in writing so as to be received by the Senior Vice President, Human Resources, prior to the eighth (8th) calendar day following your execution of this Release Agreement. If no such revocation occurs, this Release Agreement shall become effective on the eighth (8th) calendar day following your execution of this Release Agreement (the "Effective Date"). In the event that you revoke your consent or you do not sign this Release Agreement within the applicable review period, this Release Agreement shall be null and void, and the Company shall not be obligated to provide you with any of the payments or benefits set forth in this Release Agreement.

Governing Law; Dispute Resolution

15.This Release Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without reference to its choice of law rules.

16.No waiver by either party of any breach by the other party of any condition or provision of this Release Agreement to be performed by such other party shall be deemed a waiver of any other provision or condition at the time or at any prior or subsequent time. This Release Agreement and the provisions contained in it shall not be construed or interpreted for or against either party because that party drafted or caused that party's legal representative to draft any of its provisions.

17.Any claim or controversy arising out of or relating to this Release Agreement, your employment with or separation from the Company, or arising out of any other transaction or occurrence with the Releasees, shall be submitted to final and binding arbitration in Bexar County, Texas according to the procedures set out in the Company's Arbitration Policy, a copy of which is attached hereto as Annex B. With an adequate opportunity to consult with legal counsel, you have knowingly and voluntarily waived any right to trial by jury of any dispute with any of the Releasees, notwithstanding contrary provisions of any federal, state or local law, regulation or ordinance. Notwithstanding the foregoing provisions, if you breach any of your restrictive covenants, the Company shall have the right to seek immediate injunctive relief in the form of a temporary restraining order or preliminary injunction, enjoining you from such further breach of those provisions of this Release Agreement, pending a final ruling by the arbitrator.

No Admission of Wrongdoing

18.Nothing contained in this Release Agreement shall be deemed to constitute an admission or evidence of any wrongdoing or liability by you or by the Company or any of the other Releasees.

Enforceability

19.In the event that any one or more of the provisions of this Release Agreement, including the Exhibits A, B and C (if applicable) hereto, are held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder hereof will not in any way be affected or impaired thereby and any such provision or provisions will be enforced to the fullest extent permitted by law. Moreover, if any one or more of the provisions contained in this Release Agreement, including the Exhibits A, B and C (if applicable) hereto, shall be held to be excessively broad as to duration, activity or subject, such provisions

shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

Successors and Assigns

20.This Release Agreement shall inure to the benefit of and be binding upon the Company and any successor organization which shall succeed to the Company by merger or consolidation or operation of law, or by acquisition of assets of the Company. This Release Agreement is personal to you and may not be assigned by you. In the event of your death prior to the Company's having made or paid to you any or all of the payments and benefits referenced in this Release Agreement, the Company shall instead make or pay to your estate, as and when otherwise due hereunder, all such then remaining payments and benefits.

Entire Agreement

21.The terms described in this Release Agreement, including in Exhibits A, B and C (if applicable) hereto, set forth the entire agreement and understanding of the parties and supersede all prior agreements, arrangements and understandings, written or oral, between the parties, including, but not limited to, the Offer Letter and the Key Employee Retention Agreement, provided, however, that as specifically provided in paragraph 8 above, the Covenants Agreement remains in full force and effect. You acknowledge and agree that you are not relying on any representations or promises by the Company, other than those set forth herein, with regard to the subject matter, basis or effect of this Release Agreement or otherwise. This Release Agreement may not be altered or modified other than in a writing signed by you and an authorized representative of the Company.

*        *        *

Please indicate your agreement to the foregoing terms by signing and dating the Release Agreement in the space provided below. If you decide to revoke your consent to the Release Agreement, it must be in writing and be received by me at the above address before the close of business on the seventh day after execution of this Release Agreement.

	Very truly yours,
	Kinetic Concepts, Inc.
	By:
		Name
		Title
Agreed to and Accepted By:
Name
Date:

EX-10.19

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

Assago, 2013

TRA

la KCI MEDICAL S.r.l. (qui di seguito denominata “La Società”), con sede legale in Assago, Via Meucci n. 1, C.F. 10804870151

E

la Sig.ra Laura Piccinini, nata a il e residente in C.F. , viene stipulato il seguente

CONTRATTO DI LAVORO SUBORDINATO a TEMPO INDETERMINATO

1) DECORRENZA E DURATA

Il contratto di lavoro avrà inizio il giorno 3 febbraio 2013 e proseguirà a tempo indeterminato.

2) CONTRATTO COLLETTIVO NAZIONALE dei LAVORATORI

Il presente contratto di lavoro subordinato sarà soggetto alle norme di cui al C.C.N.L. per i dirigenti di aziende del terziario,distribuzione e servizi (il “CCNL”).

3) INQUADRAMENTO E FUNZIONI

Le è assegnata la qualifica di “Dirigente”, secondo la classificazione del personale prevista dal CCNL e mansioni di Vice President, Core Markets, di gestione delle operazioni Core Commercial a livello internazionale come necessario, unitamente ad altre funzioni indicate dal Senior Vice President, International di KCI.

4) TRATTAMENTO RETRIBUTIVO

La sua retribuzione annua lorda è pari ad euro 280.000 (duecento ottantamila/00), che sarà corrisposto in 14 mensilità.

Sulla base di quanto stabilito dal CCNL, la retribuzione annua lorda include il superminimo assorbibile e deve intendersi comprensiva anche di ogni futuro incremento retributivo stabilito dal contratto collettivo.

Dall’importo lordo di cui sopra, suddiviso in 14 mensilità annue, verranno dedotte ritenute

Assago, 2013

BETWEEN

KCI MEDICAL S.r.l. (hereinafter the “Company”), with registered office in Assago, Via Meucci no. 1, taxpayer’s code number 10804870151

AND

Mrs Laura Piccinini, born in on and residing in , taxpayer’s code number , the following

OPEN ENDED EMPLOYMENT AGREEMENT

is entered into

1) START DATE AND TERM

This employment agreement shall start on 3 February 2013 and shall continue on an open-ended basis.

2) NATIONAL COLLECTIVE BARGAINING AGREEMENT

This employment agreement shall be governed by the provisions of the national collective bargaining agreement (C.C.N.L.) applied to executives of commercial companies.

3) CLASSIFICATION AND DUTIES

You will be classified as executive (Dirigente) pursuant to the staff classification provided by the C.C.N.L. and you will have duties as Vice President, Core Markets, handling Core Commercial Operations throughout the world as required, along with such other duties as required by KCI’s Senior Vice President, International.

4) SALARY

Your gross salary shall be equal to EUR 280,000 per year (two hundred eighty thousand /00), payable in 14 instalments

According to the CCNL , the gross salary per year shall include the superminimum absorbable (superminimo assorbibile) and shall be meant as inclusive also of any future salary increase established by the collective bargaining agreement.

From the aforementioned amount, divided into 14 monthly instalments per year, social security and tax

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

previdenziali e fiscali di legge.

Quale ulteriore compenso per il Suo ingresso nella nostra Società, Le verrà corrisposto un bonus speciale pari a un importo lordo di euro 50.000 dedotte le ritenute di legge. Tale bonus (Signing Bonus) Le verrà corrisposto dopo 30 giorni dalla data di assunzione. In caso di Sue dimissioni volontarie entro un anno dalla data di inizio, Le sarà richiesto di rimborsare alla Società l’importo del Signing Bonus.

Quale ulteriore compenso, finché ricoprirà questa posizione, riceverà una indennità mensile per spese alloggio pari a euro 7.500.

Le comunichiamo altresì che Lei ha diritto a partecipare al programma internazionale di incentivazione denominato A.I.B. (Annual Incentive Bonus), che consiste in un piano di incentivazione correlato al raggiungimento di obiettivi sia individuali che aziendali. Sulla base di questo piano incentivante Le potrà essere assegnato, qualora ne ricorrano le condizioni, un bonus pari al 35% della sua retribuzione annua lorda (i.e. la menzionata percentuale si applicherà sulla sola retribuzione annua lorda di cui alla clausola 4, primo paragrafo, che precede, con esclusione dalla base di calcolo di eventuali benefit, bonus, etc., aggiuntivi a tale retribuzione di riferimento). L’importo del suddetto premio sarà calcolato tenendo anche in considerazione l’incidenza dello stesso sulle mensilità aggiuntive (tredicesima e quattordicesima) e sugli altri istituti legali e contrattuali indiretti (ferie, festività, permessi e altre assenze in genere). Pertanto la somma corrisposta a tale titolo non dovrà essere presa come base per ulteriori ricalcoli retributivi. In considerazione del fatto che il Suo rapporto di lavoro avrà inizio in data 3 febbraio 2014, Lei non avrà alcun diritto a ricevere alcun importo a titolo di A.I.B. con riferimento all’anno 2013, neppure pro rata, mentre l’eventuale bonus maturato con riferimento agli obiettivi assegnatiLe per il 2014 sarà calcolato pro rata temporis, per il periodo corrente dal 3 febbraio 2014 al 31 dicembre 2014.

La Sua posizione Le consentirà di partecipare anche all’Executive Equity Incentive Plan gestito da Chiron Guernsey Holdings L.P. Inc, la controllante di KCI. Lei sarà proposta per partecipare al piano di incentivi a lungo termine rappresentato da 125.000 Profits Interest Units (“PIU”) e soggetto alle relative condizioni di assegnazione. Le PIU sono emesse da Chiron Guernsey Holdings L.P. Inc., la società di private equity che detiene KCI. Come visto assieme

withholdings shall be deducted as provided by law.

As additional consideration for joining the Company, you will receive a one-time bonus of EUR 50,000 minus required withholdings. This bonus (Signing Bonus) is payable 30 days following your start date with the Company. Should you voluntarily resign your position within one-year of your start date, you will be required to reimburse the Company the amount of your Signing Bonus.

As an additional consideration, while you are in this role, you will receive a monthly housing allowance of EUR 7,500.

Furthermore, we inform you that you will be included in the international incentive programme called A.I.B. (Annual Incentive Bonus), which consists of an incentive plan linked to the achievement of personal and company goals. On the basis of the incentive plan, we may grant you a bonus equal to 35% of your yearly gross salary (i.e. the mentioned percentage will apply exclusively on the yearly gross salary indicated under previous clause 4, first paragraph, thus excluding any additional benefit, bonus, etc. from the salary of reference). When calculating said bonus we will take into consideration its incidence on any additional monthly pay (thirteenth and fourteenth month salary) and on other indirect legal and contractual provision (vacations, public holidays, leaves and other absences in general). Therefore the amount thus granted shall not be taken into consideration for any further pay recalculation. In consideration of your hiring date occurring on 3 February 2014, you will not be eligible to receive any A.I.B. relating to year 2013, not even on a pro rata basis, whereas the bonus accrued in relation to the goals assigned for year 2014 will be calculated pro rata temporis, taking into account the period between 3 February 2014 and 31 December 2014.

Your position is eligible for participation in the Executive Equity Incentive Plan maintained by KCI’s parent, Chiron Guernsey Holdings L.P. Inc. You will be recommended for a long term incentive award in the form of 125,000 Profits Interest Units (“PIUs”), subject to vesting conditions described therein. These PIUs are issued by Chiron Guernsey Holdings L.P. Inc., the private equity partnership that owns KCI. As discussed with you, the PIUs represent a participation in the appreciation of the value of the partnership over time. The PIUs, when issued, will have a base distribution threshold based on the value per Class A

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

a Lei, le PIU rappresentano una partecipazione all’aumento di valore di Chiron Guernsey Holdings L.P. Inc. nel corso del tempo. Quando emesse, le PIU avranno un limite di distribuzione di base fondato sul valore di ciascuna unità di Classe A di Chiron Guernsey Holdings L.P. Inc. alla data di assegnazione (simile al prezzo di esercizio di un’opzione). Pertanto, le PIU non avranno valore al momento dell’assegnazione, ma nel tempo il loro valore potrà potenzialmente aumentare all’aumentare di valore di Chiron Guernsey Holdings L.P. Inc.. 50% delle Profits Interest Units saranno assegnate con criterio temporale, ossia in percentuale del 25% verranno assegnate al primo anniversario dell’assegnazione ed il restante 75% proporzionalmente su base trimestrale nel corso di 36 mesi; e 50% delle Profits Interest Units verranno assegnate al raggiungimento di certi obiettivi di investimento della controllante. Le saranno fornite ulteriori informazioni sulle PIU separatamente quando il comitato per i compensi approverà l’assegnazione a Suo favore.

Le Parti convengono che qualunque valore e/ o guadagno dovesse derivarLe dal PIU è escluso dalla base di calcolo per qualunque istituto retributivo diretto ed indiretto, ivi compreso il trattamento di fine rapporto e l’indennità sostitutiva del preavviso.

5) SEDE DI LAVORO

La Sua sede di lavoro sarà presso la sede della società sita in Assago,Via Meucci 1.

Lei si impegna comunque ad accettare qualsiasi cambiamento e/o integrazione di territorio che si rendesse necessaria per comprovate ragioni tecnico-organizzative e secondo le norme vigenti dal CCNL.

In considerazione delle sue funzioni e mansioni, Le potrà essere richiesto di viaggiare in trasferta in Italia e all’estero e le parti concordano che tale caratteristica è da considerarsi quale requisito essenziale del ruolo che lei ricoprirà all’interno della società. Pertanto il trattamento retributivo indicato al punto 4 che precede è da intendersi omnicomprensivo anche del pagamento per tale obbligazione e, quindi, nulla potrà esserle corrisposto a titolo di indennità di trasferta.

6) RIMBORSO SPESE E AUTO AZIENDALE

Mensilmente la Società le rimborserà le spese direttamente connesse allo svolgimento del rapporto di lavoro, purché tali spese siano state preventivamente approvate dalla Società e previa presentazione dei relativi giustificativi ai sensi e nel rispetto delle disposizioni fiscali vigenti e delle policy aziendali in materia.

unit of the partnership on the date of grant (similar to an option exercise price). As such, the PIUs will have no value on the date of grant but will, over time, increase in potential value if the partnership increases in value. 50% of the Profits Interest Units will be time vesting units, with 25% of the time vesting units to cliff vest on the first anniversary of grant and the remaining 75% to vest rateably on a quarterly basis over 36 months; and 50% of the Profits Interest Units will vest based on achievement of certain investment milestones for the parent company. More information on the PIU award will be provided to you separately upon approval of your grant by the compensation committee.

The Parties expressly agreed that any value/earn arisen for you by the PIU is excluded from the calculation of any direct or indirect remuneration elements, and from the severance payment and indemnity in lieu of notice.

5) PLACE OF WORK

Your place of work shall be at the Company’s headquarters in Assago, Via Meucci 1.

You undertake, however, to accept any change and/or territorial expansion which should be necessary for proved technical-organizational reasons and in compliance with the current provisions of the C.C.N.L..

Considering your duties and tasks, you may be requested to go on business trip in Italy and abroad and the Parties agree that this is an essential requirement of the position you are going to have in the Company. Therefore the remuneration mentioned under point 4) above is to be understood as covering also such requirement and nothing shall be paid to you by way of travel allowance.

6) EXPENSE REIMBURSEMENT AND COMPANY CAR

The Company shall monthly reimburse expenses directly related to your employment, provided they have been previously approved by the Company and are submitted with relevant receipts pursuant to, and in compliance with, tax regulations in force and applicable corporate policies.

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

Per l’esercizio delle funzioni correlate al suo ruolo, Le verrà data in dotazione un’autovettura aziendale, che potrà utilizzare anche ad uso privato, secondo le vigenti procedure interne. Al riguardo il relativo controvalore fissato dalla legge verrà imputato mensilmente in sede di elaborazione del suo cedolino paga, allo scopo di conteggiare i contributi previdenziali e l’Irpef da lei dovuti.

Saranno a suo carico le ammende derivanti da contravvenzioni alle norme del codice di circolazione.

7) FERIE E PERMESSI RETRIBUITI

Lei avrà diritto ad un periodo di ferie annuali retribuite alle condizioni e nei limiti di cui al CCNL.

8) ORARIO DI LAVORO

Per quanto concerne le disposizioni in ordine all’orario di lavoro, si rinvia alle norme di cui al già richiamato CCNL.

9) TERMINI DI PREAVVISO

Nel caso di risoluzione del rapporto di lavoro le Parti avranno l’obbligo di osservare i termini di preavviso previsti dal CCNL.

10) OBBLIGO DI FEDELTA’ E RISERVATEZZA

Lei dà atto che il rapporto con la Società ha caratteristiche di fiducia e riservatezza. Si impegna, pertanto, a svolgere l'attività con regolarità, diligenza e correttezza professionale, in osservanza della politica della Società, che con la presente dà atto di conoscere, nonché nel rispetto delle responsabilità connesse alla propria posizione e alle proprie funzioni.

Lei si impegna a non rivelare a terzi, né in costanza del rapporto di lavoro né successivamente alla cessazione dello stesso, alcuna informazione riservata della Società, con particolare riguardo alle informazioni di natura finanziaria, tecnica o commerciale. Parimenti, Lei non utilizzerà le informazioni per scopi diversi dai legittimi fini sociali e altresì dà atto che tutti gli scritti e gli altri documenti il cui contenuto possa in qualsiasi modo riguardare l’attività sociale sono di proprietà esclusiva della Società e che gli stessi non possono essere portati all'esterno salva previa autorizzazione scritta della Società. Alla risoluzione del rapporto di lavoro per qualsivoglia motivo, compreso il pensionamento, Lei dovrà prontamente consegnare alla Società (senza trattenere alcuna copia) tutti i fascicoli, i documenti e gli altri scritti che riguardino gli interessi o l’attività aziendale della Società o di altra società del gruppo.

In order to perform the duties related to your position, you will be granted a company car which you are entitled to use also for private use according to the internal policies in force. In that respect, the relevant value as established by law shall be monthly appropriated upon processing your payroll for the purpose of calculating the social security contributions and Irpef incumbent on you.

You shall bear fines resulting from violation of road traffic regulations.

7) VACATIONS AND PAID LEAVES

You will be entitled to a yearly period of paid vacation under the terms, and within the limits, provided by C.C.N.L.

8) WORKING TIME

As to working time regulations, we refer to the provisions of the already mentioned C.C.N.L.

9) NOTICE PERIOD

Should the employment be terminated the parties shall be obliged to comply with the notice terms provided by the C.C.N.L.

10) LOYALTY AND CONFIDENTIALITY

You acknowledge that the relationship with the Company relies on loyalty and confidentiality. Therefore, you undertake to regularly perform your activity with care and professional fairness, in compliance with the corporate policy, which you acknowledge to know, whilst observing the responsibilities related to your position and duties.

You undertake not to disclose to third parties, either while in the employ of the Company or after its termination, any confidential information of the Company, specifically as to financial, technical or commercial information. Likewise you shall not use the information for purposes other than lawful corporate purposes. Furthermore you acknowledge that all the papers and the other documents, whose content may in any manner concern the corporate activity, exclusively belong to the Company and they cannot be carried outside its premises without written authorization of the Company. Upon terminating the employment for any reason whatsoever, including retirement, you shall promptly deliver to the Company (without withholding any copy thereof) all the files, documents and other papers which concern the interests or the corporate activity of the Company or other company of the group.

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

11) DIVIETO DI STORNO DI DIPENDENTI E PATTO DI NON CONCORRENZA

(i) Per tutta la durata del rapporto di lavoro e per 12 mesi dalla cessazione dello stesso, Lei non potrà, direttamente o indirettamente, contattare alcun amministratore, dipendente o collaboratore della Società con il fine di proporre loro la risoluzione del rapporto di lavoro esistente per instaurare un rapporto di lavoro di natura subordinata o autonoma con qualsiasi soggetto diverso che svolga attività anche non in concorrenza con quella svolta dalla Società.

In ogni caso, Lei non potrà assumere o far sì che venga assunto da terzi alcun amministratore, dipendente o collaboratore della Società per tutta la durata del rapporto di lavoro e per 12 mesi dalla cessazione dello stesso.

(ii) Lei si obbliga, ai sensi dell'art. 2125 cod. civ., per il periodo di 6 mesi a decorrere dal giorno della cessazione del rapporto di lavoro, per qualunque causa avvenuta, a non svolgere direttamente o indirettamente alcuna attività in favore di società, anche cooperative, enti, organizzazioni o persone fisiche, che possano trovarsi in concorrenza con l'attività svolta dalla Società.

L'obbligo di astensione comporta che nessuna attività a favore dei soggetti di cui sopra possa essere svolta sia direttamente, che per interposta persona od ente, sia in proprio, in forma autonoma o subordinata, anche occasionale o gratuita, ovvero in qualità di associato in partecipazione o socio con prestazioni accessorie, sia quale amministratore o institore, indipendentemente dalle mansioni oggetto della futura prestazione lavorativa.

Ai fini del presente patto, per “attività in concorrenza”, a titolo esemplificativo, si intende qualsivoglia attività inerente ai seguenti settori (a) terapia per la pressione negativa delle piaghe e (b) cure avanzate delle piaghe, incluse a titolo esemplificativo e non esaustivo le attività svolte dalle società elencate all’Allegato A al presente contratto e società a queste collegate, nonché ai settori di attività nei quali Lei abbia operato nei 12 mesi precedenti la cessazione del rapporto di lavoro.

11) NON SOLICITATION AND NON COMPETITION COVENANT

(i) You shall not, during your employment contract and for a period of 12 months from the termination of your employment induce or attempt to induce or entice away or engage (directly or indirectly) any director, officer or employee in the Company to leave employment with the Company in order to canvass them to enter into an employment, subordinated or not, with another Company performing any kind of activity, even if non in competition with the Company.

In any case, you shall not hire or cause to be hired any director, officer or employee in the Company during your employment and for a period of 12 months from the termination of your employment.

(ii) You undertake, in accordance with Article 2125 of the Italian Civil Code, that you will not, for a period of 6 months after the termination of the employment contract for whatever reason, be involved in any activity (directly or indirectly) for the benefit of any company, organisation or individual which is in competition or likely to be in competition with the activities carried out by the Company.

The obligation set out above means that you will not carry out any activity for the above-mentioned entities, either personally or behind a sham person or body, as a self-employed person or as a subordinate employee, even occasionally or for free, as a partner, director, employee, seconder, consultant or agent, independently from your duties in future employment.

For the purposes of this clause, by way of example “activity in competition” includes any activity related to the sectors of (a) negative pressure wound therapy and (b) advanced wound care and including but not limited to, the activities carried out by entities, and their affiliates, set forth on Exhibit A to this contract and those sectors within which worked in the 12 months before the termination of your employment contract.

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

(iii) L'obbligo di non concorrenza avrà validità nel seguente territorio: Italia.

(iv) Quale corrispettivo dell'obbligo di non concorrenza di cui al presente contratto, la Società si obbliga a corrisponderLe un compenso lordo annuo pari al 30% dell’ultima retribuzione annuale determinata ai sensi dell’art. 2120 cod. civ., parametrato all’effettiva durata del patto di non concorrenza pari a 6 mesi, e con l’esclusione di eventuali bonus, retribuzioni variabili, fringe benefits, etc. Tale compenso sarà corrisposto, nel caso di adempimento regolare a tutte le obbligazioni di cui al presente accordo, in rate trimestrali uguali posticipate a decorrere dalla data di cessazione del rapporto di lavoro e solo durante il periodo di vigenza del patto.

(v) Allo scopo di consentire alla Società il controllo sull'esatto adempimento dell'obbligo di non concorrenza, Lei si obbliga bimestralmente a comunicare alla Società con lettera raccomandata il nome della società, dell'ente od organizzazione o semplicemente datore di lavoro, per il quale svolgerà la propria opera o collaborazione, ovvero l'attività che svolgerà nel periodo di esecuzione del patto ed ogni modificazione e variazione dei soggetti e dell'attività non oltre il momento d'inizio o di mutamento di essi.

(vi) In caso di inadempimento anche parziale alle obbligazioni di cui alle precedenti clausole 11 (i) e 11 (ii) Lei sarà tenuta a restituire alla Società l'intera somma percepita a titolo di corrispettivo del presente patto di non concorrenza ai sensi della clausola 12 (iv), e sarà altresì tenuta al pagamento in favore della Società, a titolo di penale, di una somma pari all’ammontare dell'ultima retribuzione annuale determinata ai sensi dell'art. 2121 cod. civ., salvo ogni ulteriore risarcimento del danno.

(vii) In caso di inadempimento o di ritardo all'obbligo di informazione di cui alla clausola 11 (v), Lei corrisponderà alla Società, a titolo di penale, un importo di Euro 50,00 (Euro cinquanta/00) per ogni giorno di ritardo.

12) CLAUSOLA DI GARANZIA

Lei conferma che il Suo precedente rapporto di lavoro si è interrotto precedentemente all'inizio dell'impiego presso la Società e dichiara di essere libera da qualsivoglia vincolo impostogli in occasione di precedenti rapporti di lavoro che Le impedisca di svolgere le mansioni affidateLe con il presente contratto di lavoro.

(iii) The obligation provided in this clause will be valid within the following territory: Italy…

(iv) In consideration of this undertaking, the Company will pay you a gross annual amount equal to the 30% of the last gross annual salary calculated pursuant the section 2120 of the Italian Civil Code, calculated on the basis of the effective duration of the undertaking equal to 6 months, and excluding any possible bonus payment, variable remuneration, fringe benefits, etc.. This sum will be paid you by the Company in quarterly equal instalments from the date of termination of the employment contract, in respect of any obligation of the present contract and only during the enforceability period of the clause.

(v) In order to allow the Company to check the compliance with the non-competition covenant, you undertake to notify every two months, by registered letter to the Company, the name of the company, of the body or of the organisation, or simply the employer for which you will carry out your work, collaboration or activity during the period of effectiveness of the present non-competition covenant and any modification or variation of those activities or entities from the moment of variation.

(vi) In the case of failure, in whole or in part, to comply with the covenants in the sub clauses no. 11 (i) and 11 (ii) hereinabove, you will be obliged to pay back the money received from the Company as provided in clause no. 11 (iv), and to pay, as a penalty, a sum equal to last annual salary determined in accordance with article 2121 of the Italian Civil Code, with the right of the Company to obtain compensation for any other damages.

(vii) In the case of failure or delay in performance of the obligation in the sub clause no. 11 (v), you will be obliged to pay a penalty of Euro 50.00 (Euro Fifty) for any day of delay.

12) GUARANTEE

You confirm that your previous employment terminated prior to your employ in the Company and you declare that you are free of any obligation imposed by previous employments and which prevents you from carrying out the tasks assigned hereby.

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

13) VARIE

Il presente contratto costituisce atto ricognitivo dei termini dell'intero accordo intervenuto tra le Parti all'atto della costituzione del rapporto di lavoro. Nessuna modifica o aggiunta al presente contratto sarà valida ed efficace se non sia in forma scritta e sottoscritta dalle Parti.

Lei garantisce altresì che adempirà ai suoi obblighi con la massima diligenza e si impegna a non accettare incarichi da terzi ovvero a svolgere attività lavorativa per conto proprio, pur se non in concorrenza con la Società, con o senza profitto.

Con la presente Lei riconosce che la Società ha assolto l’obbligo di informazione delle condizioni del rapporto di lavoro previsto dal D.Lgs. n. 152/1997.

14) DATI PERSONALI

Con la sottoscrizione del presente contratto di lavoro ed ai sensi del Decreto Legislativo 30 giugno 2003, n. 196 (di seguito, il "Decreto"), la Società, nella sua qualità di Responsabile del Trattamento, tratterà i suoi dati personali per gli scopi di seguito indicati:

(a) per l'instaurazione, la gestione e l'estinzione del rapporto di lavoro instaurato tra le Parti;

(b) per l'applicazione della normativa nazionale e comunitaria (UE), così come per l'applicazione di ordini emanati dalle competenti Autorità.

I suoi dati personali verranno trattati, per gli scopi summenzionati, da personale, in forza presso il Dipartimento delle Risorse Umane o presso altri Dipartimenti della Società, autorizzato ad agire in qualità di "persona incaricata del Trattamento" o in caso di necessità, da soggetti esterni alla Società, all'uopo debitamente nominati per iscritto. Tali dati potranno essere trattati dalla Società con l'ausilio di mezzi manuali, elettronici e/o automatizzati ed in modo idoneo a garantire la sicurezza dei suddetti dati e ad evitare accessi non autorizzati.

La Società potrà inoltre trattare, per le finalità sopra enunciate, i dati definiti dal Decreto come "dati sensibili" inclusi, a titolo esemplificativo ma non esaustivo, i dati relativi alle condizioni di salute, all'iscrizione a partiti politici o sindacati ed al credo religioso.

I dati potranno essere comunicati a professionisti, società, associazioni e consulenti legali, finanziari e/o amministrativi della Società per l'adempimento dei compiti sopraindicati.

I suddetti dati, inclusi i dati sensibili, potranno essere

13) MISCELLANEA

This agreement acknowledges and incorporates the entire terms of the understandings reached by Parties upon establishing the employment relationship. No change nor addition hereto shall be valid and effective unless in writing and signed by the Parties.

You assure that you will fulfil your obligations with utmost care and undertake not to accept any assignment from third parties or carry out work activity on your own, even if not in competition with the Company, with or without profit.

You acknowledge hereby that the Company has complied with the obligation to provide information about the terms of the employment pursuant to Legislative Decree No. 152/1997.

14) PERSONAL DATA

By signing this employment agreement and pursuant to Legislative Decree 30 June 2003, No. 196 (hereinafter the "Decree"), the Company in its capacity as Data Processor, shall process your personal data for the following purposes:

(a) to establish, manage and terminate the relationship between the Parties;

(b) to apply national and EU rules, as well as to apply orders issued by the relevant Authorities.

Your personal data will be processed for the above mentioned purposes by staff of the Human Resources Department or other department authorized to act as "person in charge of Processing" or, if necessary, by external individuals appointed in writing for the purpose. The Company may process your data by manual, electronic and/or automated means in such a way as to assure their security and avoid any unlawful access.

Furthermore, for the purposes above, the Company may process data defined as “sensitive” by the Decree, including, but not limited to, data relating to health conditions, political party or trade union membership, or religious belief.

Your data may be given to professionals, companies, associations, legal financial and/or administrative consultants of the Company for the performance of the above mentioned tasks.

Said data, including sensitive data, may be sent abroad exclusively for the performance of the above

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

trasferiti all'estero esclusivamente per l'adempimento degli scopi summenzionati.

Lei potrà esercitare i diritti previsti dall'articolo 7 del Decreto, incluso il diritto di accedere, richiedere la cancellazione e l'aggiornamento dei propri dati personali, così come il diritto di opporsi, in tutto od in parte, per motivi legittimi, al trattamenti di tali dati.

Con la sottoscrizione del presente contratto di lavoro ed ai sensi degli articoli 23 e 26 del Decreto, Lei acconsente al trattamento dei Suoi dati personali e sensibili ed ai sensi dell'articolo 43 del Decreto, al loro trasferimento all'estero per gli scopi e le modalità predette. La Società la informa che, ai sensi del Decreto Legislativo n. 196 del 30 Giugno 2003, i dati personali contenuti nel presente accordo ovvero comunque comunicati o acquisiti nel corso della sua esecuzione e le loro variazioni saranno trattati dalla Società stessa, anche per mezzo di mezzi meccanici o elettronici, allo scopo di adempiere alle obbligazioni contenute nell’accordo, per controllare e valutare la relazione tra le parti, per informare eventuali possibili acquirenti della Società o dell’azienda e per adempiere agli obblighi previsti da leggi, regolamenti e/o ordini di pubbliche autorità. La fornitura di tali dati è facoltativa, ma un rifiuto di fornirli potrebbe determinare difficoltà nell’adempimento dell’accordo.

Tali dati potranno essere comunicati a professionisti e consulenti della Società o di altre società del gruppo per il perseguimento dei fini sopra indicati. Titolare del trattamento è la Società.

Il presente contratto è sottoscritto in lingua italiana e inglese. In caso di controversia e/o interpretazione, la versione italiana prevarrà su quella inglese.

KCI MEDICAL S.R.L.

/s/ Holly Mactaggart

Holly Mactaggart

VP, International Human Resources

/s/ Michael Mathews

Michael Mathews

Senior VP, International

mentioned tasks.

You may exercise the rights provided under article 7 of the Decree including the right to access your personal data, to have them eliminated and updated, as well as the right to object, in full or in part, to their treatment, for lawful reasons.

By signing this employment agreement and pursuant to articles 23 and 26 of the Decree you agree to the processing of your personal and sensitive data and pursuant to article 43 of the Decree you agree to their transferring abroad for said purposes and in said manner. The Company informs you that pursuant to Legislative Decree No. 196 of 30 June 003, the personal data contained in this agreement or in whatever manner given or obtained during its term and the relevant changes shall be processed by the Company also by mechanical or electronic means so as to fulfil the obligations contained herein, to control and assess the relationship between the parties, to inform potential purchasers of the Company or of the business and to fulfil the obligations provided by laws, regulations and/or orders of public authorities. Supplying those data is voluntary, but refusing to supply them may create difficulties in the performance of the agreement.

Those data may be given to professionals and consultants of the Company or of other companies of the group to pursue the above mentioned purposes. Data Controller is the Company.

This agreement is signed in Italian and English version. In case of conflict and/or interpretation, the Italian version will prevail.

KCI MEDICAL S.R.L.

/s/ Holly Mactaggart

Holly Mactaggart

VP, International Human Resources

/s/ Michael Mathews

Michael Mathews

Senior VP, International

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

Accetto con la presente i termini e le condizioni di cui sopra, confermo i miei dati personali come di seguito indicati e presto il mio consenso ai sensi del Decreto Legislativo 30 Giugno 2003 n. 196, al trattamento, comunicazione e trasferimento all’estero di tali dati personali e di qualsiasi loro variazione, secondo quanto indicato nella informativa ricevuta:

Nome: Laura Piccinini

Luogo e data di nascita:

Residenza:

Codice Fiscale:

/s/ Laura Piccinini

Laura Piccinini

Per accettazione ed accordo, ai sensi dell'art. 1341 c.c., 2° comma, di tutte le condizioni di cui al suesteso contratto con espressa approvazione di quanto previsto alla clausola 11 (divieto di storno di dipendenti e patto di non concorrenza) .

Assago, [] 2013

/s/ Laura Piccinini

Laura Piccinini

I hereby accept the aforementioned terms and conditions, I confirm my personal details as reported below and I agree to the treatment, communication and transfer abroad of my personal data and any relevant change pursuant to Legislative Decree 30 June 2003 No. 196, as per the information received:

Name: Laura Piccinini

Place and date of birth:

Residence:

Taxpayer’s code number:

/s/ Laura Piccinini

Laura Piccinini

By way of acceptance and agreement, according to Article 1341, second paragraph, Italian Civil Code of all conditions of the above contract with specific approval of clause 11 (non solicitation and non competition covenant).

Assago, [] 2013

/s/ Laura Piccinini

Laura Piccinini

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

Tel. + 39 02 4571741 Fax + 39 02 457174210 www.kci-medical.it

Allegato A

Exhibit A

Nell’elenco che segue devono intendersi ricomprese tutte le società collegate a quelle espressamente indicate (“Affiliates”). Ai fini del presente Allegato A, per “Affiliates” si intendono le società, di capitali e di persone, o qualsiasi altro soggetto nel quale la società menzionata detenga partecipazioni, dirette o indirette attraverso società affiliate, o che detenga partecipazioni nella società menzionata, direttamente o indirettamente per il tramite di società affiliate.

All entities listed herein include any and all affiliates. For purposes of this Exhibit A, “Affiliates” means any corporation, partnership or other entity in which the named entity owns any equity interest, either directly or indirectly through subsidiaries, or which owns an interest in the named entity, either directly or indirectly through subsidiaries.

ITI Medical, Inc and Affiliates

Smith and Nephew and Affiliates

Synergy Healthcare Plc and Affiliates

GeroMed Pflege-und Medizintechnik GmbH and Affiliates

Solvay Phatma ceuticals S.A.S. and Affiliates

3M Medical Diagnostics and Affiliates

B. Braun Melsungen AG and Affiliates

Coloplast A/S and Affiliates

Convatec Inc and Affiliates

Hartmann-Rico a.s. and Affiliates

Mölnlycke Health Care AB and Affiliates

Talley Medical Ltd. and Affiliates

Caditec Medical + Technic GmbH and Affiliates

Lohmann & Rauscher International GmbH & Co KG and Affiliates

Medela Medizin Technik GmbH & Co and Affiliates

Bständig and Affiliates

Atmos and Affiliates

Velo and Affiliates

Ligasano and Affiliates

Sunmed and Affiliates

Wound Care Company and Affiliates

Genadyne and Affiliates

Spiracur and Affiliates

Combi Care and Affiliates

Devon Medical and Affiliates

For You Medical and Affiliates

KCI Medical s.r.l. Via A. Meucci, 1 20090 Assago, MI Italy KKCI Medical s.r.l. con socio unico (((soggetta a direzione e coordinamento di KCI UK Holding Ltd.) CCapitale Sociale 4.900.000 Euro (i.v.) – P.IVA/C.F. 10804870151 RRegistro Imprese MI n.°330579 – REA/CCIAA MI 1406540

EX-10.20

Ms Laura Piccinini

c/o KCI Medical S.r.l.

Via Meucci 1, 20090 - Assago (MI)

28 October 2014

Subject: Amendment to the terms and conditions of your employment with KCI Medical S.r.l. (the “Company”)

Dear Laura,

Further to our understanding following the global announcement by Joe Woody of 24 September 2014, we are happy to confirm the following amendment to your terms and conditions of employment with the Company effective from 24 September 2014.

Classification and Duties: you will be classified as executive (Dirigente) pursuant to the staff classification provided by the C.C.N.L. and you will have duties as President of Developed Markets, with responsibilities for the AWT business and RM business in the Developed Markets of Europe, Australia and New Zealand, reporting to Joe Woody, President and CEO of KCI International Inc.

Salary:On the basis of the A.I.B. (Annual Incentive Bonus), incentive linked to the achievement of personal and company goals, the target bonus will be increased from 50% to 70% of your yearly gross salary. In consideration of this change during 2014, this increase will be calculated pro rata temporis, taking into account the period between 24 September 2014 and 31 December 2014.

All other terms and conditions of your employment agreement with the Company, as set out in your employment agreement with the Company (which for the avoidance of doubt was signed in 2013 but effective from your commencement date of 3 February 2014), together with any subsequent amendments, will remain unchanged. For the avoidance of doubt your yearly gross salary, as set out in the letter to you dated 18 March 2014, will remain at 290,000 EUROS.

We look forward to working with you in your new role. Please confirm your agreement to this amendment to your terms and conditions of employment with the Company by signing and returning a copy of this letter.

Sincerely,

David A. Lillback,

Senior Vice President, Human Resources

On behalf of Kinetic Concepts, Inc.

/s/ David Lillback

Adriano Cito

Vice President Finance EMEA & General Manager Global SSC

In his capacity as director of KCI Medical S.r.l.

/s/ Adriano Cito

By way of acknowledgement and receipt

Laura Piccinini

/s/ Laura Piccinini

Date 29 October 2014

EX-10.21

CONFIDENTIAL

March 18, 2014

Laura Piccinini

Dear Laura:

Kinetic Concepts, Inc., the parent company of KCI Medical S.r.l. ("KCI") is pleased to provide you with this KCI Stay Bonus Agreement (the "Agreement"), which is designed to incentivize your retention, and continued high performance and dedication following the recent announcement of organizational changes. This Agreement provides for the payment of a retention or stay incentive, under certain conditions, as discussed more fully below.

Bonus Opportunity

Subject to the other provisions of this Agreement, you shall be eligible to receive a lump sum stay bonus of $75,000 (the "Stay Bonus"), less any applicable withholding taxes, in the event you remain employed with KCI through March 18, 2015.

Corporate Success Bonus

In addition, if you are eligible to receive a Stay Bonus, and if regional revenue meets the revenue forecast for the period of April 1, 2014 through December 31, 2014, you shall also become eligible to receive a success bonus equal to $25,000 (the "Success Bonus"). Payment of the Stay Bonus and Success Bonus, if any, will be made in a lump sum, less any applicable withholding taxes, on the payment date for the first payroll period after March 18, 2015 (the "Bonus Payment Date").

Rights on Termination of Employment

If your employment with KCI is terminated by KCI without Cause prior to the Bonus Payment Date, you shall be paid the Stay Bonus and, if earned, the Success Bonus, on the Bonus Payment Date. Any payment made pursuant to this Agreement will be in addition to rather than in lieu of any payment you are entitled to receive under another severance, retention or any similar plan or agreement of or with KCI.

If your employment with KCI is terminated for Cause prior to the Bonus Payment Date, you shall forfeit the right to receive any payment pursuant to this Agreement.

General Provisions

The terms, conditions and existence of this Agreement are confidential, and you agree to treat such terms and conditions on a confidential basis. We also would like to remind you of your obligations to maintain the confidentiality of KCI's confidential information pursuant to KCI's Code of Conduct and the confidentiality agreement you signed with KCI.

You will be required to sign a general release of any claims against KCI and parties related to KCI in a form provided by KCI in order to receive any payment pursuant to this Agreement. This Agreement does not alter or in any way modify your employment relationship with KCI or create any rights to continued employment.

This Agreement is the complete agreement of the parties concerning the subject matter hereof and supersedes any other agreements, representations or understandings between you and KCI relating to the subject matter hereof.

KCI may assign this Agreement, including all rights and obligations hereunder, at any time to any of its affiliates or to any purchaser in a transaction involving the sale of all or substantially all of KCI's assets.

Definition

For purposes of the Agreement:

"Cause" means conduct involving one or more of the following: (i) your substantial and continuing failure to render services to KCI in accordance with your obligations and position with KCI; provided that KCI provides you with adequate notice of such failure and, if such failure is capable of cure, you fail to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii) your indictment of, conviction of, or no contest plea to an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach by you of the terms of an agreement between you and KCI or any material breach by you of any material KCI policy.

Please contact me should you have any questions.

		Sincerely,
		/s/ David A. Lillback
		David A. Lillback,
		Senior Vice President, Human Resources
		Kinetic Concepts, Inc.
UNDERSTOOD AND AGREED:
/s/ Laura Piccinini	March 20, 2014
Name	Date

EX-10.22

KEY EMPLOYEE RETENTION AGREEMENT

This Key Employee Retention Agreement (the "Agreement") is effective as of September 1, 2007 (the "Effective Date"), by and between Brian Busenlehner (the "Employee"), and Kinetic Concepts, Inc. ("KCI" or the "Company") (together the "Parties").

RECITALS

WHEREAS, the Employee is presently employed by the Company as Vice President, Corporate Controller and has significant strategic and management responsibilities necessary to the continued successful operation of the Company's business;

WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee;

WHEREAS, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment under the circumstances described herein that provide the Employee with the financial incentive and encouragement necessary to remain with the Company on a long-term basis.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:

1.Term of Agreement. The Company and the Employee agree that this Agreement will be in effect from the Effective Date until the termination of the Employee's employment with the Company as set forth in Section 2 herein.

2.    At-Will Employment. While this Agreement is in effect, the Employee's employment with the Company shall continue to be at-will and, as such, may be terminated by the Employee or the Company at any time, for any reason and with or without advance notice, subject to the Company's severance obligations set forth herein.

3.    Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a)    Change in Control. A Change in Control means the first to occur of any one of the following events: (i) consummation of any sale, lease, exchange, or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company (together with the assets of the Company's direct and indirect subsidiaries) to any Person or group of related Persons, as that term is used in Section 13(d) of the Exchange Act (a "Group"), together with any affiliates thereof; or (ii) any Person or Group becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Shares representing more than 50% of the aggregate voting power of the issued and outstanding stock entitled to vote in the election of directors of the Company; or (iii) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

(b)    Qualifying Termination. A "Qualifying Termination" shall mean the Employee's (i) termination of employment by the Company without "Cause;" or (ii) the Employee's resignation from employment for "Good Reason."

(c)    Cause. "Cause" shall mean conduct involving one or more of the following: (i) the substantial and continuing failure of the Employee to render services to the Company or any subsidiary or affiliate in accordance with the Employee’s obligations and position with the Company, subsidiary or affiliate; provided that the Company or any subsidiary or affiliate provides the Employee with adequate notice of such failure and, if such failure is capable of cure, the Employee fails to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii) the Employee's indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach of the terms of an agreement between the Employee and the Company or any subsidiary or affiliate on the other hand or a material breach of any Company policy.

(d)    Good Reason. "Good Reason" shall mean one or more of the following: (i) the material reduction of Employee’s duties and/or responsibilities, which is not cured within 30 days after the Employee provides written notice to the Company; provided, however, it shall not be considered Good Reason if, upon or following a Change in Control, the Employee's duties and responsibilities remain the same as those prior to the Change in Control but the Employee's title and/or reporting relationship is changed; (ii) the material reduction of Employee's base salary, other than across-the-board decreases in base salary applicable to all executive officers of the Company; or (iii) the relocation of the Employee to a business location in excess of fifty (50) miles from the Company’s headquarters in San Antonio.

(e)    Disability. For purposes of this Agreement, "Disability" shall mean that the Employee is unable, with or without reasonable accommodation, to perform one or more essential functions of his or her position as an employee of the Company as the result of his or her incapacity due to physical or mental impairment for more than 90 days (not necessarily consecutive) in any 180-day period.

4.    Severance Benefits Upon a Qualifying Termination.

(a)    Qualifying Termination in Connection with a Change in Control. If the Employee experiences a Qualifying Termination upon or within 24 months following a Change of Control, then the Employee shall be entitled to receive the following severance benefits, which shall be in addition to any salary earned and vacation accrued up to and including the date of termination, as determined by the Company: (i) a severance payment in the amount of the Employee's annual base salary plus annual target bonus, payable as a lump sum payment within five business days of the date the Employee executes and returns the attached waiver and release agreement; and (ii) if the Employee timely elects COBRA health insurance continuation coverage, reimbursement of COBRA premiums for up to 12 months following the date of termination.

(b)    Qualifying Termination not in Connection with a Change in Control. If the Employee experiences a Qualifying Termination that is not in connection with a Change of Control as described in Section 4(a) herein, then the Employee shall be entitled to receive the following severance benefits, which shall be in addition to any salary earned and vacation accrued up to and including the date of termination, as determined by the Company: (i) a severance payment in the amount of the Employee's annual base salary, payable as a lump sum payment within five business days of the date the Employee executes and returns the attached waiver and release agreement; and (ii) if the Employee timely elects COBRA health insurance continuation coverage, reimbursement of COBRA premiums for up to 12 months following the date of termination.

5.    Termination of Employee's Employment Other than a Qualifying Termination

(a)    Termination on Account of Employee's Disability or Death. If the Company terminates the Employee’s employment as a result of the Employee’s Disability or due to the death of the Employee, then the Employee shall not be entitled to receive any severance benefits and shall only be entitled to receive any salary earned and vacation accrued up to and including the date of termination; provided, however, that this provision shall not have any effect upon any rights the Employee or his estate may have under the terms of any Company short or long-term disability policy or life insurance policy.

(b)    Termination for Cause or Resignation without Good Reason. If the Employee is terminated for Cause or resigns from employment without Good Reason, then the Employee shall not be entitled to receive any severance benefits and shall only be entitled to receive any salary earned and vacation accrued up to and including the date of termination.

6.    Conditions to Severance Benefits.

(a)    No severance benefits shall be made under Sections 4(a) and (b) unless and until the Employee shall, in consideration of such benefits, execute a full waiver and release of all claims in the form attached hereto or as otherwise provided by the Company.

(b)    The Employee acknowledges and agrees that he or she is not entitled to any severance or change in control benefits provided under the terms of the 1997 KCI Severance Pay Plan or any similar agreement, plan or arrangement, other than the Company's stock option plans.

(c)    All payment of severance benefits under this Agreement shall comply with section 409A of the Internal Revenue Code.

7.    Successors.

(a)    Company’s Successors. Any successor (or parent thereof) to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor (or parent thereof) to the Company’s business and/or assets.

(b)    Employee’s Successors. All rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. Employee shall have no right to assign any of his obligations or duties under this Amended Agreement to any other person or entity.

8.    Notice.

(a)    General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its General Counsel.

(b)    Notice of Termination. Any termination by the Company for Cause or by the Employee for Good Reason shall be communicated by a written notice of termination to the other party hereto. Such notice shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated.

9.    Arbitration. All disputes relating to or arising out of this Agreement or otherwise in connection with the Employee's employment with, or termination from, the Company, shall be settled by binding arbitration in accordance with the Company's standard arbitration policy and procedures.

10.    Miscellaneous Provisions.

(a)    Waiver. No provision of this Agreement shall be amended, modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(b)    Choice of Law. The validity, interpretation, construction and performance of this Amended Agreement shall be governed by the laws of the State of Texas.

(c)    Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(d)    Employment Taxes. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes and other authorized deductions.

(e)    No Representations. Each party acknowledges that it is not relying and has not relied on any promise, representation or statement made by or on behalf of the other party that is not set forth in this Amended Agreement.

(f)    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(g)    Prior Agreements. Except as specifically set forth on Exhibit A hereto, this Agreement shall supersede all prior arrangements, whether written or oral, and understandings regarding the subject matter of this Agreement.

[Signatures to Follow on Next Page]

IN WITNESS WHEREOF, each of the Parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

COMPANY	KINETIC CONCEPTS, INC.
	By: /s/ Jim Cravens
	Title: Senior Vice President, Human Resources
EMPLOYEE	Brian Busenlehner
	/s/ Brian Busenlehner

EX-10.26

SEPARATION AND RELEASE AGREEMENT

Philip Croxford

11128 Harbour Estates Circle

Fort Myers, Florida 33908

Dear Phil:

This Separation and Release Agreement (this "Release Agreement") confirms the terms of the separation of your employment from LifeCell Corporation and any of its affiliates and subsidiaries (the "Company").

Termination of Employment

1.You and the Company have reached a mutual agreement that your employment with the Company ended effective September 24, 2014 (the "Separation Date"). As of the Separation Date, you were no longer an employee or officer of the Company, and you hereby resign from any and all employment and managerial positions, boards and officer, director or trustee positions, if any, with the Company as of the Separation Date. You also hereby agree to execute any other documents reasonably necessary to effectuate such resignations. Provided the Company requests you to perform services from the date of this Release Agreement through the Separation Date, you shall, in the Company’s sole discretion, (a) assist with the transitioning of your duties to a successor and (b) be available at reasonable times to respond to any questions that the Company may have regarding its business. In the sole discretion of the Company, with reasonable advance notice, you will perform these services on Company premises or by telephone.

2.As of the Separation Date, you ceased to participate in all of the Company’s benefit plans (except as provided by COBRA).

3.You are hereby advised and encouraged by the Company to consult with your own independent counsel before signing this Release Agreement.

Separation Payment

4.Subject to your compliance with the terms and conditions of this Release Agreement, and provided that you do not revoke your consent to this Release Agreement as permitted by Paragraph 22 of this Release Agreement, the Company shall, in accordance with the agreed upon separation terms pay, or cause to be paid, to you, in full satisfaction of all rights and obligations of the Company:

(a)    a one-time separation payment of Four Hundred Thirty-Nine Thousand Eight Hundred Seventy-Five Dollars and No Cents ($439,875.00), less all amounts required to be withheld by law, including, but not limited to, any applicable federal, state or local taxes (the “Severance Payment”) to be paid within five (5) business days of the Effective Date (as defined in Paragraph 22 of this Release Agreement);

(b)    a one-time payment of Three Hundred Seven Thousand Nine Hundred Twelve Dollars and Fifty Cents ($307,912.50), less all amounts required to be withheld by law, including, but not limited to, any applicable federal, state or local taxes, representing your 2014 target AIB (“Target AIB”) to be paid within five (5) business days of the Effective Date (as defined in Paragraph 22 of this Release Agreement); and

(c)    if you timely elect health insurance continuation coverage at the same, or a lower, level of coverage as you elected prior to the Separation Date, you will be reimbursed for COBRA premiums

at the employee only rate until the earliest of: (i) twelve (12) months following the Separation Date; (ii) the date you fail to make timely payment of COBRA premiums and/or terminate your election of COBRA coverage; and (iii) the date you become eligible for comparable health insurance coverage (as an employee or otherwise), that does not contain any exclusion or limitation with respect to any preexisting condition (the “COBRA Payments”). You acknowledge that the Company’s reimbursement of the COBRA premium made by you will be taxable income to you.

The payment(s) set forth in Paragraphs 4(a)-(c) above are expressly contingent upon your execution, delivery and non-revocation of this Release Agreement, as provided in Paragraph 22. You acknowledge that you are not otherwise entitled to receive the payment(s) set forth in Paragraphs 4(a)-(c) above, which exceed anything of value to which you are otherwise entitled from the Company, and agree that you will not seek anything further from any of the Releasees.

Releases; Representations; Covenant Not to Sue

5.You, for yourself and successors, assigns, executors and administrators, now and forever hereby release and discharge the Company, together with its respective past and present parents, subsidiaries, and affiliates, together with each of their officers, directors, stockholders, partners, employees, agents, representatives, attorneys (in each case, individually and in their official capacities) and employee benefit plans (and such plans’ fiduciaries, agents, administrators and insurers, individually and in their official capacities), and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns (collectively, the "Releasees") from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected (collectively, "Employee Claims") which you or your executors, administrators, successors or assigns ever had, now have or may hereafter claim to have by reason of any matter, cause or thing whatsoever: (a) arising from the beginning of time up to the date you sign this Release Agreement including, but not limited to, any Employee Claims (i) relating in any way to your employment relationship with the Company or any of the Releasees or (ii) arising under any federal, local or state statute or regulation, including, without limitation, state wage and hour laws (to the extent waivable), federal and state whistleblower laws, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Lilly Ledbetter Fair Pay Act of 2009, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act (excluding COBRA), the Vietnam Era Veterans Readjustment Assistance Act, the Fair Credit Reporting Act, the Age Discrimination in Employment Act ("ADEA"), the Occupational Safety and Health Act, the Sarbanes-Oxley Act of 2002, the False Claims Act, the Texas Commission on Human Rights Act, the New Jersey Law Against Discrimination, the New Jersey Family Leave Act, the New Jersey State Wage and Hour Law (to the extent waivable), as each may be amended from time to time, any claim or cause of action you may have under any federal or state immigration statute, including without limitation the Immigration & Nationality Act ("INA"), the Immigration Reform & Control Act ("IRCA") and related regulations, and/or any other applicable local, state or federal law, each as amended; (b) relating to the termination of your employment relationship with the Company or any of the Releasees; (c) relating to wrongful employment termination; or (d) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company, or any of the Releasees, and you, including, the Offer Letter dated November 14, 2012 and revised November 18, 2012 (the "Offer Letter"), attached as Exhibit A to this Release Agreement, and the Promotion Letter dated October 23, 2013 (the "Promotion Letter"), attached as Exhibit B. This releases all Employee Claims including those of which you are not aware and those not mentioned in this Release Agreement. You specifically release any and all Employee Claims arising out of your employment with the Company and/or any of its affiliates or termination therefrom, including, without limitation, any and all claims to monetary recovery to which you might be

entitled in connection with any potential class action claims that may be filed on behalf of any purported class to which you are a member as a result of your employment with the Company and/or any of its affiliates.

6.You expressly acknowledge and agree that, by entering into this Release Agreement, you are releasing and waiving any and all rights or Employee Claims, including claims under the ADEA, which have arisen on or before the date your execution and delivery of this Release Agreement to the Company.

7.The Company, for itself and its successors, assigns, executors and administrators, now and forever hereby releases and discharges you, from any and all known rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity (collectively, "Company Claims") which the Company ever had, now has or may hereafter claim to have by reason of any matter, cause or thing whatsoever: (a) arising from the beginning of time up to the date you sign this Release Agreement including, but not limited to, any currently known Company Claims (i) relating in any way to your employment relationship with the Company or any of the Releasees or (ii) arising under any federal, local or state statute or regulation; (b) relating to the termination of your employment relationship with the Company or any of the Releasees; or (c) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company, or any of the Releasees, and you, including, the Offer Letter and Promotion Letter. The Company does not release Company Claims arising from any intentional conduct on your part outside the course and scope of your employment, which have accrued or which may ever accrue to the Company or any of the Releasees resulting from or relating to any act or omission occurring on or before the date of signing this Agreement, arising out of or pertaining to your employment relationship with the Company, concerning the terms and conditions of your employment, or concerning your conduct occurring in the course and scope of your employment with the Company.

8.Notwithstanding the foregoing, nothing contained in this Release Agreement shall in any way release or discharge any Employee Claims you may have (1) for payments or benefits set forth in the Release Agreement; (2) for indemnification under the charter, by-laws, certificate of formation, operating agreement or other governing documents of the Company, insurance policies of or pertaining to the Company, or applicable law; (3) for any vested pension or retirement benefits (including, without limitation, 401(k)); or (4) for any other Employee Claims that cannot be waived under applicable law.

9.You acknowledge and agree that, except as otherwise expressly provided in this Release Agreement: (a) the Company has fully satisfied any and all obligations whatsoever owed to you arising out of your employment with the Company, and that no further payments or benefits are owed to you by the Company or any of the Releasees, including, but not limited to, any payments or benefits under the Offer Letter or the Promotion Letter; and (b) you have knowingly relinquished, waived and forever released any and all rights to any personal recovery in any action or proceeding that may be commenced on your behalf arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys' fees.

10.You agree to indemnify the Company and hold it harmless for any claims brought by any taxing authority against any of the Releasees seeking payment of taxes, penalties and/or interest related to your reporting of taxes under federal, state and/or local law, including, without limitation, payment of attorneys' fees for counsel selected by the Company for its defense of such matters and costs. For avoidance of doubt, this indemnification obligation does not extend to the Company’s withholding requirements related to the payments set forth in Paragraph 4.

11.You hereby represent and warrant that (a) you have not filed, caused or permitted to be filed any pending proceeding (nor have you lodged a complaint with any governmental or quasi-governmental

authority) against any of the Releasees, nor have you agreed to do any of the foregoing, (b) you have not assigned, transferred, sold, encumbered, pledged, hypothecated, mortgaged, distributed, or otherwise disposed of or conveyed to any third party any right or Claim against any of the Releasees that has been released in this Release Agreement, and (c) you have not directly or indirectly assisted any third party in filing, causing or assisting to be filed, any Claim against any of the Releasees. Except as set forth in Paragraph 12, 17 and 18 below, you covenant and agree that you shall not encourage or solicit or voluntarily assist or participate in any way in the filing, reporting or prosecution by you or any third party of a proceeding or Claim against any of the Releasees, including, but not limited to any potential class action claims that may be filed on behalf of any purported class to which you are a member as a result of your employment with the Company and/or any of its affiliates.

12.You and the Company acknowledge and agree that this Release Agreement shall not affect the rights and responsibilities of the Equal Employment Opportunity Commission (the "EEOC") or similar federal or state agency to enforce the ADEA or other applicable laws, and further acknowledge and agree that this Release Agreement shall not be used to justify interfering with your protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC or similar federal or state agency. Accordingly, nothing in this Release Agreement shall preclude you from filing a charge with, or participating in any manner in an investigation, hearing or proceeding conducted by, the EEOC or similar federal or state agency, but you hereby waive any and all rights to recover under, or by virtue of, any such investigation, hearing or proceeding. Further notwithstanding anything set forth in this Release Agreement to the contrary, nothing in this Release Agreement shall affect or be used to interfere with your protected right to test in any court, under the Older Workers’ Benefit Protection Act, or like statute or regulation, the validity of the waiver of rights under the ADEA set forth in this Release Agreement.

Equity Awards

13.Subject to your continued compliance with the Covenants Agreement (as defined below and limited in Paragraph 14 herein) and the Assignment Agreement (defined below), Chiron Guernsey Holdings L.P. Inc., a Guernsey limited partners (the "Partnership") agrees that it will exercise its call right with respect to the Vested Profit Interest Units ("PIU") pursuant to Section VI.F. of the Amended and Restated Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (the "PIU Plan"), subject to the terms and conditions provided therein; provided, however, that the Partnership will make a payment to you in consideration for the cancellation of all of such Vested PIUs no later than April 30, 2015. The purchase price for each Vested PIU will be equal to the Fair Market Value (as defined in the PIU Plan) as of the date that such payment is made to you in consideration for the cancellation of all of such Vested PIUs.

Covenants/Confidentiality

14.You acknowledge and agree that during your employment with the Company you have developed and had access to confidential trade secret information. Accordingly, notwithstanding any provision of this Release Agreement to the contrary, you hereby reaffirm, and agree to comply with the Non-Disclosure and Non-Competition Agreement, signed by you as of December 5, 2012, a copy of which is attached hereto as Exhibit C (the "Covenants Agreement") and the Invention Assignment Agreement, signed by you as of December 5, 2012, a copy of which is attached hereto as Exhibit D (the "Assignment Agreement"); provided, however, that the Covenants Agreement is hereby, as applicable, limited as follows:

(a)    Subject to Paragraph 14(b) below, the restrictions in Section 3 of the Covenants Agreement (Non-Competition) shall not prevent you from performing services for a diversified company (or division thereof) that competes with the Company so long as (i) the division or department to which

you are providing services does not compete with the Company, (ii) you do not have direct responsibility (commercial or technical) for the products of such diversified company (or division thereof) that are competitive with the products of the Company, and (iii) no more than thirty-five percent (35%) of such entity’s gross revenue is derived from such competitive business.

(b)    In the event that you do secure new employment in a diversified company as permitted by Paragraph 14(a), you shall not be permitted to use or disclose any Company Confidential Information or know how, in accordance with the Covenants Agreement, as part of your responsibilities in this role.

You affirm that you are not currently seeking and will not seek employment in breach of your Covenants Agreement (as limited by this Paragraph 14). You reaffirm that your experience and capabilities are such that the restrictions contained in the Covenants Agreement (as limited by this Paragraph 14) are reasonable, do not impose a greater restraint than necessary to protect the Company’s goodwill or other business interests and will not prevent you from obtaining employment or otherwise earning a reasonable living. You further agree that the Covenants Agreement (as limited by this Paragraph 14) and Assignment Agreement shall remain in full force and effect as if restated herein.

15.You agree not to take any action or to make any statement, written or oral, that disparages or criticizes the business or management of the Company or any of its respective directors, officers, agents, or employees. Except as required or permitted by Paragraphs 12, 17 and 18, you further agree not to take any action that is intended to, or that does in fact, damage the business or reputation of the Company or its affiliates, or the personal or business reputations of any of their respective directors, officers, agents, or employees, or that interferes with, impairs or disrupts the normal operations of the Company or its affiliates. The Company agrees to instruct the Acelity Senior Leadership Team not to take any action or to make any statement, written or oral, that disparages or criticizes you.

16.You agree that you will not disclose this Release Agreement or its terms to any person, except (a) to your immediate family, provided that prior to such disclosure, you inform your immediate family that they are also bound by confidentiality and you shall be responsible for any such disclosure by your immediate family; (b) as may be required for obtaining legal or tax advice, or future employment provided that prior to such disclosure you will inform your legal or tax advisor that they are bound by confidentiality and you shall be responsible for any such disclosure by your legal or tax advisor or potential employer; (c) for the filing of income tax returns; (d) as may be required by law, provided that you shall promptly notify the Company prior to making any disclosure required by law so that the Company may seek a protective order or other appropriate remedy; or (e) in any proceeding to enforce this Release Agreement.

17.You agree that following your termination of employment with Company, you will, at the Company’s request, cooperate fully, at such times that do not unreasonably interfere with your personal or business activities, with the Company in any regulatory or legal matter that involves the Company, or its then-current or former officers, directors, employees or agents, about which you may have knowledge or information. The Company shall pay for your actual, documented expenses, if any, incurred for any such cooperation. Your cooperation may include, but not be limited to, the following: (a) appearing for an interview; (b) answering all questions fully and truthfully; (c) appearing for depositions and/or at trial related to any claim, action or litigation in which the Company becomes a party; and (d) meeting with representatives of the Company to assist in preparation for such depositions and/or trials.

18.Nothing in this Release Agreement shall prevent you from providing truthful and accurate information to any government agency, internal regulating body or as otherwise may be required by law.

Return of Company Property

19.On or before the date you execute this Release Agreement, you will exercise reasonable efforts to return all property in your possession, custody or control which belongs to the Company, including without limitation, keys, credit cards, computers, phone cards and other physical property of the Company, and any of the Company’s documents, reports, files, memorandum, records, software and other media, whether kept in paper or electronic format, and neither you nor anyone acting on your behalf shall maintain copies, duplicates, reproductions or excerpts of any such property.

Voluntary Waiver

20.You understand and agree that the Company is under no obligation to provide the payments and benefits provided in Paragraph 4 of this Release Agreement absent your consent to the terms of this Release Agreement, and that you are under no obligation to consent to this Release Agreement.

21.You acknowledge and agree that (a) the Company has advised you of your right to consult with an attorney prior to executing this Release Agreement, (b) you have carefully read and fully understand all of the provisions of this Release Agreement, and (c) you are entering into this Release Agreement knowingly, freely and voluntarily in exchange for good and valuable consideration.

22.You shall have twenty-one (21) calendar days from the date you are provided this Release Agreement, as amended, to consider this Release Agreement. Once you have signed this Release Agreement, you shall have seven (7) additional calendar days from the date of execution to revoke your consent to this Release Agreement. Any such revocation shall be made in writing so as to be received by David Lillback, Senior Vice President, Human Resources, prior to the eighth (8th) calendar day following your execution of this Release Agreement. If no such revocation occurs, this Release Agreement shall become effective on the eighth (8th) calendar day following your execution of this Release Agreement (the "Effective Date"). In the event that you revoke your consent or you do not sign this Release Agreement within the applicable review period, this Release Agreement shall be null and void, and the Company shall not be obligated to provide you with any of the payments or benefits set forth in Paragraph 4 of this Release Agreement.

Governing Law; Dispute Resolution

23.This Release Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without reference to its choice of law rules.

24.No waiver by either party of any breach by the other party of any condition or provision of this Release Agreement to be performed by such other party shall be deemed a waiver of any other provision or condition at the time or at any prior or subsequent time. This Release Agreement and the provisions contained in it shall not be construed or interpreted for or against either party because that party drafted or caused that party's legal representative to draft any of its provisions.

25.Any claim or controversy arising out of or relating to this Release Agreement, your employment with or separation from the Company, or arising out of any other transaction or occurrence with the Releasees, shall be submitted to final and binding arbitration in Bexar County, Texas according to the procedures set out in the Company’s Arbitration Agreement and Agreement Concerning Policy on Arbitration, signed by you as of December 5, 2012, a copy of which is attached hereto as Exhibit E. With an adequate opportunity to consult with legal counsel, you have knowingly and voluntarily waived any right to trial by jury of any dispute with any of the Releasees, notwithstanding contrary provisions of any federal, state or local law, regulation or ordinance. Notwithstanding the foregoing provisions, if you breach any of your restrictive covenants, the Company shall have the right to seek immediate injunctive relief in the form of a

temporary restraining order or preliminary injunction, enjoining you from such further breach of those provisions of this Release Agreement, pending a final ruling by the arbitrator.

No Admission of Wrongdoing

26.Nothing contained in this Release Agreement shall be deemed to constitute an admission or evidence of any wrongdoing or liability by you or by the Company or any of the other Releasees.

Enforceability

27.In the event that any one or more of the provisions of this Release Agreement, including the Exhibits hereto, are held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder hereof will not in any way be affected or impaired thereby and any such provision or provisions will be enforced to the fullest extent permitted by law. Moreover, if any one or more of the provisions contained in this Release Agreement, including the Exhibits hereto, shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

Successors and Assigns

28.This Release Agreement shall inure to the benefit of and be binding upon the Company and any successor organization which shall succeed to the Company by merger or consolidation or operation of law, or by acquisition of assets of the Company. This Release Agreement is personal to you and may not be assigned by you. In the event of your death prior to the Company’s having made or paid to you any or all of the payments and benefits referenced in this Release Agreement, the Company shall instead make or pay to your estate, as and when otherwise due hereunder, all such then remaining payments and benefits.

Entire Agreement

29.The terms described in this Release Agreement, including in the Exhibits (if applicable) hereto, set forth the entire agreement and understanding of the parties and supersede all prior agreements, arrangements and understandings, written or oral, between the parties, including, but not limited to, the Offer Letter and the Promotion Letter, provided, however, that as specifically provided in Paragraphs 13, 14 and 25 above, the PIU Plan, the Covenants Agreement (as limited by Paragraph 14 of this Agreement), the Assignment Agreement and the Arbitration Agreement remain in full force and effect. You acknowledge and agree that you are not relying on any representations or promises by the Company, other than those set forth herein, with regard to the subject matter, basis or effect of this Release Agreement or otherwise. This Release Agreement may not be altered or modified other than in a writing signed by you and an authorized representative of the Company.

*        *        *

Please indicate your agreement to the foregoing terms by signing and dating the Release Agreement in the space provided below. If you decide to revoke your consent to the Release Agreement, it must be in writing and received by the Company as provided in Paragraph 22.

Very truly yours,

LifeCell Corporation

By:     /s/ David Lillback

David Lillback

Sr. Vice President, Human Resources

Agreed to and Accepted By:

/s/ Philip Croxford

Philip Croxford

Date: November 3, 2014

EX-10.42

AMENDMENT NO. 6 TO CREDIT AGREEMENT

AMENDMENT NO. 6, dated as of March 10, 2015 (this “Amendment”), by and among the Co-Borrowers, the Guarantors, the Parent GP, the Required Lenders and the Administrative Agent, to the Credit Agreement, dated as of November 4, 2011, as amended by Amendment No. 1 to Credit Agreement, dated November 7, 2012, Amendment No. 2 to Credit Agreement, dated June 14, 2013, Amendment No. 3 to Credit Agreement, dated October 28, 2013, Amendment No. 4 to Credit Agreement, dated November 15, 2013, and Amendment No. 5 to Credit Agreement, dated January 22, 2014, among CHIRON MERGER SUB, INC., a Texas corporation, KINETIC CONCEPTS, INC., a Texas corporation (the “Lead Borrower”), KCI USA, INC., a Delaware corporation (“KCI USA” and, together with the Lead Borrower, the “Co-Borrowers”), CHIRON HOLDINGS, INC., a Delaware corporation, CHIRON TOPCO, INC., a Delaware corporation, ACELITY L.P. INC., a Guernsey limited partnership, solely with respect to Sections 5.01 through 5.04, 7.13 and 8.01 of the Credit Agreement, CHIRON GUERNSEY GP CO. LIMITED, a Guernsey limited company, BANK OF AMERICA, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender, and each lender from time to time party thereto (the “Credit Agreement”). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement unless otherwise defined herein.

WITNESSETH:

WHEREAS, the Lead Borrower has requested an amendment to the Credit Agreement and the Guaranty Agreement pursuant to which certain provisions of the Credit Agreement and the Guaranty Agreement will be amended as set forth herein;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

Amendments

Section 1.1.     Amendments. Subject to the occurrence of the Amendment No. 6 Effective Date:

(a)Section 1.01 of the Credit Agreement is hereby amended by inserting in appropriate alphabetical order the following new definitions:

“Amendment No. 6” means Amendment No. 6 to this Agreement dated as of March 10, 2015.

“Amendment No. 6 Effective Date” means March 10, 2015, the date of effectiveness of Amendment No. 6.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and solely to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest pursuant to the Collateral Documents to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” (determined after giving effect to any applicable keep well, support or other agreement for the benefit of such Guarantor and any and all Guarantees of such Guarantor’s Swap Obligations by other Loan Parties) as defined in the

Commodity Exchange Act at the time the Guarantee of such Guarantor or the grant of such security interest would otherwise have become effective with respect to such related Swap Obligation but for such Guarantor’s failure to constitute an “eligible contract participant” at such time. If a Swap Obligation arises under a Master Agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such Guarantee or security interest is or becomes excluded in accordance with the first sentence of this definition.

“Financial Covenant” means the covenant set forth in Section 7.10.

“Permitted Alternative Incremental Facilities Debt” has the meaning specified in Section 7.03(t).

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

(b)Clause (b) of the definition of “Applicable Rate” is hereby amended and restated in its entirety as follows:

“(i) for Eurocurrency Rate Loans that are Dollar Term E-1 Loans, 3.50%, (ii) for Base Rate Loans that are Dollar Term E-1 Loans, 2.50%, (iii) for Eurocurrency Rate Loans that are Euro Term E-1 Loans, 3.75%, (iv) for Base Rate Loans that are Euro Term E-1 Loans, 2.75%, (v) for Eurocurrency Rate Loans that are Term E-2 Loans, 3.00%, and (vi) for Base Rate Loans that are Term E-2 Loans, 2.00%.”

(c)The definition of “Excluded Taxes” in the Credit Agreement is hereby amended by amending and restating clause (d) thereof in its entirety and replacing it with the following:

“(d) any withholding Tax imposed pursuant to FATCA.”

(d)The definition of “FATCA” in the Credit Agreement is hereby amended and restated in its entirety as follows:

““FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto), any current or future Treasury regulations thereunder or other official administrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code as of the date of this Agreement (or any amended or successor version described above) and any intergovernmental agreements implementing the foregoing.”

(e)The definition of “Financial Covenants” in the Credit Agreement is hereby deleted in its entirety.

(f)The definition of “Repricing Transaction” in the Credit Agreement is hereby amended by amending and restating subclause (a)(ii) in the first sentence thereof in its entirety and replacing it with the following:

“(ii) Indebtedness in the form of loans incurred under Section 7.03(x)”

(g)Section 2.05(a)(ii) of the Credit Agreement is hereby amended by inserting the following immediately after clause (7) thereof:

“(8) on or prior to the twelve month anniversary of the Amendment No. 6 Effective Date, the Co-Borrowers (i) make any prepayment of Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans in connection with any Repricing Transaction or (ii) effect any amendment of this Agreement resulting in a Repricing Transaction with respect to Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans, the Co-Borrowers shall pay to the Administrative Agent, for the ratable account of

each of the applicable Dollar Term E-1 Lenders, Euro Term E-1 Lenders or Term E-2 Lenders, (x) in the case of clause (i), a prepayment premium of 1.0% of the amount of the applicable Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans being prepaid and (y) in the case of clause (ii), an amount equal to 1.0% of the aggregate amount of the applicable Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans outstanding immediately prior to such amendment.”

(h)Section 2.14(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(a)    At any time and from time to time, subject to the terms and conditions set forth herein, the Borrowers may, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders), request to add one or more additional tranches of term loans (the “Incremental Term Loans”) or one or more increases in the Revolving Credit Commitments (the “Incremental Revolving Commitments”; together with the Incremental Term Loans, the “Incremental Facilities”), provided that at the time of each such request and upon the effectiveness of each Incremental Facility Amendment no Default or Event of Default has occurred and is continuing or shall result therefrom. Notwithstanding anything to contrary herein, the aggregate principal amount of all Incremental Facilities (other than Refinancing Term Loans and Refinancing Revolving Commitments), together with the aggregate principal amount of all Permitted First Lien Secured Debt and Permitted Alternative Incremental Facilities Debt, shall not exceed the sum of (x) $350,000,000 plus (y) the amount of any voluntary prepayments of the Term Loans and voluntary permanent reductions of the Revolving Credit Commitments effected after the Closing Date (it being understood that any prepayment of Term Loans with the proceeds of substantially concurrent borrowings of new Loans hereunder or any reduction of Revolving Credit Commitments in connection with a substantially concurrent issuance of new revolving commitments hereunder shall not increase the calculation of the amount under this clause (y)); provided that (i) the Borrowers may incur unlimited additional Incremental Facilities, Permitted First Lien Secured Debt and Permitted Alternative Incremental Facilities Debt so long as, after giving Pro Forma Effect thereto (assuming that any such Incremental Revolving Commitments are drawn in full) and after giving effect to any Permitted Acquisition consummated in connection therewith and all other appropriate Pro Forma Adjustments, the First Lien Senior Secured Leverage Ratio shall not exceed 3.25:1.00 (other than to the extent such Incremental Facilities, Permitted First Lien Secured Debt or Permitted Alternative Incremental Facilities Debt is incurred pursuant to this proviso concurrently with the incurrence of Incremental Facilities, Permitted First Lien Secured Debt or Permitted Alternative Incremental Facilities Debt in reliance on clause (x) above, in which case the First Lien Senior Secured Leverage Ratio shall be permitted to exceed 3.25:1.00 to the extent of such Incremental Facilities, Permitted First Lien Secured Debt or Permitted Alternative Incremental Facilities Debt is incurred in reliance on such clause (x)) and (ii) for the avoidance of doubt, Incremental Facilities, Permitted First Lien Secured Debt or Permitted Alternative Incremental Facilities Debt may be incurred pursuant to clause (i) of this proviso prior to utilization of the amount set forth in clause (x) above. Each Incremental Facility shall be in an integral multiple of $1,000,000 and be in an aggregate principal amount that is not less than $15,000,000 in case of Incremental Term Loans or $15,000,000 in case of Incremental Revolving Commitments, provided that such amount may be less than the applicable minimum amount if such amount represents all the remaining availability hereunder as set forth above. Each Incremental Facility shall have the same guarantees as, and be secured by the same Collateral securing, all of the other Obligations hereunder.”

(i)Section 3.01(f) of the Credit Agreement is hereby amended by (w) changing the comma at the end of subclause (ii)(E) to a semicolon and (x) adding the following clause (iii) at the end thereof:

“(iii)    If a payment made to any Lender under any Loan Documents would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as

applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and, if necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.”

(j)Section 7.01(ee) of the Credit Agreement is hereby amended by (i) deleting the following parenthetical at the end of clause (x) thereof:

“(and the terms set forth in the proviso in Section 2.14(b) shall have been complied with as if such Indebtedness was considered an Incremental Term Loan)”

and (ii) deleting the following parenthetical at the end of clause (y) thereof:

“(unless such term loans are non-amortizing and the terms and conditions of which (excluding pricing and optional and mandatory prepayment or redemption terms) reflect market terms on the date of issuance)”

(k)Section 7.01 of the Credit Agreement is hereby amended by deleting the “and” at the end of clause (ff) thereof, deleting the period at the end of clause (gg) thereof and replacing it with “; and” and inserting the following immediately after clause (gg) thereof:

“(hh)    Liens securing Indebtedness permitted pursuant to Section 7.03(t); provided that such Liens may be either a first priority Lien on the Collateral that is pari passu with the Lien securing the Obligations or a Lien ranking junior to the Lien on the Collateral securing the Obligations (but may not be secured by any assets that are not Collateral) and, in any such case, the beneficiaries thereof (or an agent on their behalf) shall have, as applicable, (i) become party to the Notes Intercreditor Agreement pursuant to the terms thereof or (ii) entered into an intercreditor agreement with the Administrative Agent that is reasonably satisfactory to the Administrative Agent.”

(l)Section 7.03(t) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(t)    (i) Indebtedness (in the form of senior secured, senior unsecured, senior subordinated, or subordinated notes or loans) incurred by the Borrowers to the extent that the Borrowers shall have been permitted to incur such Indebtedness pursuant to, and such Indebtedness shall be deemed to be incurred in reliance on, Section 2.14 (assuming for such purposes that such Indebtedness was an Incremental Term Loan that is secured by a first priority lien on the Collateral); provided that (A) such Indebtedness shall not mature earlier than the Maturity Date applicable to the Term E-1 Loans, (B) as of the date of the incurrence of such Indebtedness, the Weighted Average Life to Maturity of such Indebtedness shall not be shorter than that of the then-remaining Term E-1 Loans, (C) no Restricted Subsidiary is a borrower or guarantor with respect to such Indebtedness unless such Restricted Subsidiary is a Subsidiary Guarantor which shall have previously or substantially concurrently Guaranteed the Obligations, (D) the other terms and conditions of such Indebtedness (excluding pricing and optional prepayment or redemption terms) reflect market terms on the date of issuance; provided that if such Indebtedness contains any financial maintenance covenants, such covenants shall not be tighter than (or in addition to) those contained in this Agreement, (E) if such Indebtedness is in the form of a credit facility that could have been incurred as an Incremental Term Loan and incurred or guaranteed on a secured basis, then such Indebtedness shall be subject to the terms set forth in the proviso in Section 2.14(b) as if such Indebtedness was considered an Incremental Term Loan and (F)

the Lead Borrower has delivered to the Administrative Agent a certificate of a Responsible Officer, together with all relevant financial information reasonably requested by the Administrative Agent, including reasonably detailed calculations demonstrating compliance with clauses (A), (B), (C), (D) and (E) (such Indebtedness incurred pursuant to this clause (t) being referred to as “Permitted Alternative Incremental Facilities Debt”) and (ii) any Permitted Refinancing thereof;”

(m)Section 7.05(m)(iii) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(iii)    from and after the Amendment No. 6 Effective Date, all such Dispositions made under this Section 7.05(m) do not exceed in the aggregate 15.0% of Total Assets for the Test Period then most recently ended;”

(n)Section 7.10 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Financial Covenant. Permit the Total Leverage Ratio for any Test Period to be greater than 8.25:1.00.”

(o)Section 10.10 of the Credit Agreement is hereby amended and restated by inserting the following paragraph after the first paragraph in such Section:

“The words “execution,” “execute,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other Committed Loan Notices, Swingline Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.”

(p)Article IV of the Guaranty Agreement is hereby amended by inserting the following as a new Section 4.15:

“Excluded Swap Obligations Limitation. Notwithstanding anything in this Guaranty to the contrary, no Guarantor shall be required to make any payment pursuant to this Guaranty to any party, and the right of set-off provided in Section 4.08 shall not apply with respect to any Guarantor, in each case, with respect to Excluded Swap Obligations, if any, of such Guarantor.”

(q)The definition of “Obligations” in the Credit Agreement is hereby amended and restated in its entirety as follows:

““Obligations” means all (x) advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party or other Subsidiary arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any other Subsidiary of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, (y) obligations of any Loan Party or any other Subsidiary arising under any Secured Hedge Agreement, and (z) Cash

Management Obligations; provided that the “Obligations” shall exclude any Excluded Swap Obligations. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents (and of any of their Subsidiaries to the extent they have obligations under the Loan Documents) include (a) the obligation (including guarantee obligations) to pay principal, interest, Letter of Credit commissions, reimbursement obligations, charges, expenses, fees, Attorney Costs, indemnities and other amounts payable by any Loan Party or any other Subsidiary under any Loan Document and (b) the obligation of any Loan Party or any other Subsidiary to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party or such Subsidiary.”

(r)Section 8.04 of the Credit Agreement is hereby amended by inserting the following paragraph after the last paragraph in such Section:

“Notwithstanding the foregoing, (a) amounts received from any Borrower or any Guarantor that is not a “Eligible Contract Participant” (as defined in the Commodity Exchange Act) shall not be applied to the obligations that are Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Obligations other than Excluded Swap Obligations as a result of this clause (a), to the extent permitted by applicable law, the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to clause Fourth above from amounts received from “Eligible Contract Participants” to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to obligations described in clause Fourth above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other obligations pursuant to clause Fourth above) and (b) Cash Management Obligations shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank. Each Cash Management Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX hereof for itself and its Affiliates as if a “Lender” party hereto.”

(s)Section 1.02 of the Guaranty Agreement is hereby amended by inserting in appropriate alphabetical order the following new definition:

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation is incurred or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

(t)Section 2.01 of the Guaranty Agreement is hereby amended and restated in its entirety as follows:

“Guaranty and Keepwell.

(a)     Each Guarantor absolutely, irrevocably and unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each of the Guarantors further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Each of the Guarantors waives presentment to, demand of payment from and protest to any Co-Borrower or any other Guaranty Party of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

(b)     Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Guaranty in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 2.01(b) for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 2.01(b), or otherwise under this Guaranty, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 2.01(b) shall remain in full force and effect until the termination of this Guaranty in accordance with Section 4.13. Each Qualified ECP Guarantor intends that this Section 2.01(b) constitute, and this Section 2.01(b) shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.”

ARTICLE II

Conditions to Effectiveness

This Amendment shall become effective on the date (the “Amendment No. 6 Effective Date”) on which:

(a)The Administrative Agent (or its counsel) shall have received from (i) the Administrative Agent, (ii) the Required Lenders and (iii) each Loan Party and the Parent GP, (x) a counterpart of this Amendment signed on behalf of such party or (y) written evidence satisfactory to the Administrative Agent (which may include a telecopy or other electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b)The Administrative Agent shall have received, on behalf of itself, the Collateral Agent, the Lenders and each L/C Issuer on the Amendment No. 6 Effective Date, a written opinion of (i)  Kirkland & Ellis LLP, New York counsel to the Loan Parties and (ii) Cox Smith Matthews Incorporated, Texas counsel to the Loan Parties, in each case (A) dated as of the Amendment No. 6 Effective Date, (B) addressed to each L/C Issuer on the Amendment No. 6 Effective Date, the Administrative Agent, the Collateral Agent and the Lenders and (C) in form and substance reasonably satisfactory to the Administrative Agent

(c)The Administrative Agent shall have received a copy of the certificate or articles of incorporation, certificate of limited partnership, certificate of formation or other equivalent organizational documents, including all amendments thereto, of each Loan Party and the Parent GP, (A) in the case of a corporation, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, and a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Loan Party or the Parent GP as of a recent date from such Secretary of State (or other similar official) or (B) in the case of a partnership or limited liability company, certified by the Secretary or Assistant Secretary of each such Loan Party or the Parent GP, or in the alternative (other than in the case of the Co-Borrowers), a certificate stating that such certificate or articles of incorporation or organization have not been amended since the Amendment No. 5 Effective Date.

(d)The Administrative Agent shall have received in the case of each Loan Party and the Parent GP a certificate of the Secretary or Assistant Secretary or similar officer of each Loan Party and the Parent GP dated the Amendment No. 6 Effective Date and certifying (i) that attached thereto is a true and complete copy of the bylaws (or partnership agreement, limited liability company agreement or other equivalent governing documents) of such Loan Party or the Parent GP as in effect on the Amendment No. 6 Effective Date and at all times since a date prior to the date of the resolutions described in clause (ii) below or in the alternative (other than in the case of the Co-Borrowers), certifying that such bylaws (or partnership agreement, limited liability company agreement or other equivalent governing documents) have not been amended since the

Amendment No. 5 Effective Date, (ii) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party or the Parent GP (or its managing general partner, managing member or equivalent) authorizing the execution, delivery and performance of this Amendment or any other document delivered in connection herewith to which such person is a party and, in the case of the Co-Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Amendment No. 6 Effective Date, (iii) that the certificate or articles of incorporation, certificate of limited partnership, articles of incorporation, certificate of formation or other equivalent organizational documents of such Loan Party or the Parent GP has not been amended since the date of the last amendment thereto disclosed pursuant to clause (i) above, (iv) as to the incumbency and specimen signature of each officer executing this Amendment or any other document delivered in connection herewith on behalf of such Loan Party or the Parent GP, and (v) as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party or the Parent GP.

(e)The Administrative Agent shall have received in the case of each Loan Party and the Parent GP a certificate of a director or an officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to clause (b) above.

(f)The Co-Borrowers shall have paid to the Administrative Agent for the account of each Lender that has executed and delivered a signature page to this Amendment No. 6 to the Administrative Agent at or prior to 5:00 p.m., New York City time on March 5, 2015 (the “Consent Deadline”) a fee equal to 0.25% of the sum of (x) the Term Loans, if any, of such Lender at the Consent Deadline and (y) the Revolving Credit Commitments, if any, of such Lender at the Consent Deadline. All other fees and expenses due to the Administrative Agent and the Lenders required to be paid on the Amendment No. 6 Effective Date shall have been paid. All reasonable costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of counsel for the Administrative Agent) of the Administrative Agent in connection with this Amendment and the transactions contemplated hereby shall have been paid, to the extent invoiced.

(g)The representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of the date hereof, as applicable, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date) provided that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.

(h)At the time of and immediately after giving effect to this Amendment, no Default or Event of Default shall exist or would result from the Amendment and related Credit Extension or from the application of the proceeds therefrom.

(i)The Administrative Agent shall have received a certificate, dated the Amendment No. 6 Effective Date and signed by a Responsible Officer of the Lead Borrower, confirming compliance with the conditions set forth in paragraphs (g) and (h) of this Article II.

The Administrative Agent shall notify the Lead Borrower and the Lenders of the Amendment No. 6 Effective Date. Notwithstanding the foregoing, the amendments effected hereby shall not become effective, and will automatically terminate, if each of the conditions set forth or referred to in this Article II has not been satisfied at or prior to 5:00 p.m., New York City time, on March 10, 2015.

ARTICLE III

Representations and Warranties.

After giving effect to the amendments contained herein, on the Amendment No. 6 Effective Date the Co-Borrowers hereby confirm that: (a) this Amendment has been duly authorized, executed and delivered by each Loan Party and the Parent GP and constitutes the legal, valid and binding obligations of each Loan Party and the Parent GP enforceable against it in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity; (b) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects on and as of the Amendment No. 6 Effective Date with the same effect as though made on and as of the Amendment No. 6 Effective Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties were true and correct in all material respects as of such earlier date); provided that any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates; and (c) no Default or Event of Default has occurred and is continuing under the Credit Agreement.

ARTICLE IV

Miscellaneous

Section 4. 1.Continuing Effect; No Other Amendments or Waivers. This Amendment shall not constitute an amendment or waiver of or consent to any provision of the Credit Agreement and the other Loan Documents except as expressly stated herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Loan Parties or the Parent GP that would require an amendment, waiver or consent of the Administrative Agent or the Lenders except as expressly stated herein. Except as expressly waived hereby, the provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect in accordance with their terms. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

Section 4. 2.Counterparts. This Amendment may be executed in any number of separate counterparts by the parties hereto (including by telecopy or via electronic mail), each of which counterparts when so executed shall be an original, but all the counterparts shall together constitute one and the same instrument.

Section 4. 3.GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 4. 4.Reaffirmation. Each Loan Party, and with respect to clause (i) below the Parent GP, hereby expressly acknowledges the terms of this Amendment and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated hereby and (ii) its guarantee of the Obligations under each Guaranty, as applicable, and its grant of Liens on the Collateral to secure the Obligations pursuant to the Collateral Documents.

Section 4. 5.From and after the Amendment No. 6 Effective Date, the Borrowers and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Term Loans as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

Section 4. 6.On and after the Amendment No. 6 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement,” “thereunder,” “thereof”

or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written.

KINETIC CONCEPTS, INC.,
	as the Lead Borrower
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Executive Vice President, Chief Financial Officer and Treasurer

KCI USA, INC.,
	as Co-Borrower
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Executive Vice President, Chief Financial Officer and Treasurer

CHIRON HOLDINGS, INC.,
	as Holdings
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Vice President and Treasurer

CHIRON TOPCO, INC.,
	as Topco
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Vice President and Treasurer

[Signature Page to Amendment No. 6]

KCI HOLDING COMPANY, INC.
KCI HOMECARE, INC.
KCI INTERNATIONAL, INC.
KCI LICENSING, INC.
KCI IMPORTS, INC.,
	as a Guarantor
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Vice President and Treasurer

KCI ANIMAL HEALTH, LLC
KCI REAL HOLDINGS, L.L.C.
KCI USA REAL HOLDINGS, L.L.C.
TECHNIMOTION, LLC
KCI PROPERTIES LIMITED
KCI REAL PROPERTY LIMITED,
	as a Guarantor
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Vice President and Treasurer

LIFECELL CORPORATION,
	as a Guarantor
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Executive Vice President, Chief Financial Officer and Treasurer

[Signature Page to Amendment No. 6]

ACELITY LP, INC., as Parent
By:	CHIRON GUERNSEY GP CO. LIMITED,
	Its: General Partner
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Director

CHIRON GUERNSEY GP CO. LIMITED,
	as the Parent GP
By:	/s/ Thomas W. Casey
	Name: Thomas W. Casey
	Title: Director

[Signature Page to Amendment No. 6]

BANK OF AMERICA, N.A.,
	as Administrative Agent and Collateral Agent
By:	/s/ Anthony W. Kell
	Name: Anthony W. Kell
	Title: Vice President

[Signature Page to Amendment No. 6]

EX-21.1

Exhibit 21.1

Acelity L.P. Inc.

List of Subsidiaries

Name	Jurisdiction
KCI Medical Australia PTY Ltd	Australia
KCI Austria GmbH	Austria
KCI Medical Belgium BVBA	Belgium
KCI Polymedics	Belgium
KCI Brasil Importadora E Distribuidora De Produtos Para Saúde Ltda	Brazil
Systagenix Brasil Importação e Comércio de Produtos Médico-Hospitalares Ltda.	Brazil
KCI Medical Canada Inc.	Ontario, Canada
LifeCell Canada Inc.	Canada
KCI APAC Holding Ltd	Cayman Islands
KCI Medical Holdings Unlimited	Cayman Islands
KCI MS Unlimited	Cayman Islands
KCI Wound Holdings	Cayman Islands
Soleil WC Acquisition Corp. II	Cayman Islands
KCI Medical (China) Co. Ltd.	China
KCI Costa Rica S.A.	Costa Rica
Chiron Holdings, Inc.	Delaware
Chiron Topco, Inc.	Delaware
KCI Animal Health, LLC	Delaware
KCI Brazil Holdings LLC	Delaware
KCI Holding Company, Inc.	Delaware
KCI HomeCare, Inc.	Delaware
KCI Imports, Inc.	Delaware
KCI International, Inc.	Delaware
KCI Licensing, Inc.	Delaware
KCI Real Holdings, L.L.C.	Delaware
KCI USA Real Holdings, L.L.C.	Delaware
KCI USA, Inc.	Delaware
Kinetic Concepts, Inc.	Delaware
LifeCell Corporation	Delaware
MoMelan Technologies, Inc.	Delaware
Technimotion, LLC	Delaware
KCI Medical ApS	Denmark
Laboratoire KCI Médical	France
KCI Medical Holding GmbH	Germany
KCI Medizinprodukte GmbH	Germany
Systagenix Wound Management (Germany) GmbH	Germany
KCI Hong Kong Holding Limited	Hong Kong
KCI Hungary Kft.	Hungary
KCI Medical India Private Limited	India

Name	Jurisdiction
KCI Medical Limited	Ireland
KCI Manufacturing	Ireland
KCI Medical Resources	Ireland
LifeCell Medical Resources Limited	Ireland
KCI Medical S.r.l.	Italy
KCI KK	Japan
Medical Holdings Limited	Malta
KCI Europe Holding B.V.	The Netherlands
KCI Medical B.V.	The Netherlands
KCI Wound Management Coöperatief U.A.	The Netherlands
Systagenix Wound Management B.V.	The Netherlands
Systagenix Wound Management IP Co B.V.	The Netherlands
Systagenix Wound Management Mezz B.V.	The Netherlands
KCI New Zealand Unlimited	New Zealand
KCI Medical AS	Norway
KCI Panamá, S.A.	Panama
KCI Medical Puerto Rico, Inc.	Puerto Rico
KCI Medical Asia Pte. Ltd.	Singapore
Systagenix Wound Management (South Africa) (Proprietary) Limited	South Africa
KCI Clinic Spain, S.L.	Spain
Systagenix Wound Management (Spain), S.L.U.	Spain
KCI Medical AB	Sweden
KCI Medical GmbH	Switzerland
KCI Properties Limited	Texas
KCI Real Property Limited	Texas
The Kinetic Concepts Foundation	Texas
KCI Tibbi Cihaz Ticaret Ithalat Ihracat Limited Sirket	Turkey
KCI Medical Middle East & Africa FZE	U.A.E. (Dubai)
Systagenix Wound Management FZE	U.A.E. (Dubai)
KCI Medical United Kingdom Limited	United Kingdom
KCI Medical Limited	United Kingdom
KCI UK Holdings Limited	United Kingdom
KCI Medical Products (UK) Limited	United Kingdom
LifeCell EMEA Limited	United Kingdom
Systagenix Wound Management (Acquisition) Limited	United Kingdom
Systagenix Wound Management International, Limited	United Kingdom
Systagenix Wound Management, Limited	United Kingdom
Systagenix Wound Management Manufacturing, Limited	United Kingdom

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

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

I, Joseph F. Woody, certify that:

I have reviewed this Annual Report on Form 10-K of Acelity L.P. Inc.;

1. 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;

2. 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;

3. 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 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

4. 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.

/s/ JOSEPH F. WOODY

Joseph F. Woody

Chief Executive Officer

March 10, 2015

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

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

I, Thomas W. Casey, certify that:

1. I have reviewed this Annual Report on Form 10-K of Acelity 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 have:

5.

(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

6. 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.

/s/ THOMAS W. CASEY

Thomas W. Casey

Chief Financial Officer

March 10, 2015

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICERS PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph F. Woody, certify that:

1. the accompanying Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, 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 Acelity L.P. Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Acelity L.P. Inc. and will be retained by Acelity L.P. Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaim any obligation to update the foregoing certification except as required by law.

/s/ JOSEPH F. WOODY

Joseph F. Woody

Chief Executive Officer

March 10, 2015

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas W. Casey, certify that:

1. the accompanying Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, 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 Acelity L.P. Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Acelity L.P. Inc. and will be retained by Acelity L.P. Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

/s/ THOMAS W. CASEY

Thomas W. Casey

Chief Financial Officer

March 10, 2015

XML

Guarantor Condensed Consolidating Financial Statements (Tables)

12 Months Ended

Dec. 31, 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

December 31, 2014

(in thousands)

	Acelity 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	$	41,027		$	1,499	$	140,617	$	—		$	183,541
Accounts receivable, net	—		179,872			67,355		123,256		—			370,483
Inventories, net	—		73,904			110,355		93,765		(99,802		)	178,222
Deferred income taxes	—		52,868			10,157		—		—			63,025
Prepaid expenses and other	—		11,106			6,851		247,606		(238,000		)	27,563
Intercompany receivables	166		1,854,033			2,432,299		48,267		(4,334,765		)	—
Total current assets	564		2,212,810			2,628,516		653,511		(4,672,567		)	822,834
Net property, plant and equipment	—		315,691			69,801		164,838		(262,282		)	288,048
Debt issuance costs, net	—		77,896			—		—		—			77,896
Deferred income taxes	—		—			—		31,692		—			31,692
Goodwill	—		2,483,240			732,138		162,920		—			3,378,298
Identifiable intangible assets, net	—		299,575			1,788,661		309,015		—			2,397,251
Other non-current assets	—		1,161			186		94,247		(90,900		)	4,694
Intercompany loan receivables	—		760,000			429,856		—		(1,189,856		)	—
Intercompany investments	667,530		360,292			223,581		—		(1,251,403		)	—
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713
Liabilities and Equity:
Current liabilities:
Accounts payable	$	245	$	16,298		$	14,463	$	20,821	$	—		$	51,827
Accrued expenses and other	—		218,793			244,829		74,380		(194,518		)	343,484
Intercompany payables	6,441		1,181,383			2,634,149		512,792		(4,334,765		)	—
Current installments of long-term debt	—		25,721			—		—		—			25,721
Income taxes payable	—		—			—		1,305		—			1,305
Deferred income taxes	—		—			113,658		—		—			113,658
Total current liabilities	6,686		1,442,195			3,007,099		609,298		(4,529,283		)	535,995
Long-term debt, net of current installments and discount	—		4,815,290			—		—		—			4,815,290
Non-current tax liabilities	—		9,404			6,203		17,693		—			33,300
Deferred income taxes	—		106,440			637,777		47,940		—			792,157
Other non-current liabilities	695		113,368			48,172		1,023		—			163,258
Intercompany loan payables	—		420,294			760,000		9,562		(1,189,856		)	—
Total liabilities	7,381		6,906,991			4,459,251		685,516		(5,719,139		)	6,340,000
Total equity	660,713		(396,326		)	1,413,488		730,707		(1,747,869		)	660,713
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Acelity 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)

	For the year ended December 31, 2014
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	606,031		$	—		$	113,833		$	—		$	719,864
Sales	—			292,573			919,988			862,689			(928,775		)	1,146,475
Total revenue	—			898,604			919,988			976,522			(928,775		)	1,866,339
Rental expenses	106			292,336			11,156			202,613			(173,449		)	332,762
Cost of sales	105			314,129			571,768			370,643			(933,282		)	323,363
Gross profit (loss)	(211		)	292,139			337,064			403,266			177,956			1,210,214
Selling, general and administrative expenses	3,822			295,324			211,865			203,110			(567		)	713,554
Research and development expenses	—			24,044			26,803			18,474			—			69,321
Acquired intangible asset amortization	—			61,995			79,136			53,302			—			194,433
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(4,033		)	(287,802		)	19,260			128,380			178,523			34,328
Non-operating intercompany transactions	—			18,775			146,218			(249,577		)	84,584			—
Interest income and other	—			73,919			19,148			319			(89,719		)	3,667
Interest expense	—			(431,670		)	(68,861		)	(1,921		)	89,719			(412,733		)
Foreign currency gain (loss)	—			44,515			(924		)	(25,747		)	—			17,844
Derivative instruments loss	—			(5,183		)	—			—			—			(5,183		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(4,033		)	(587,446		)	114,841			(148,546		)	263,107			(362,077		)
Income tax expense (benefit)	—			(165,662		)	36,119			2,512			—			(127,031		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(4,033		)	(421,784		)	78,722			(151,058		)	263,107			(235,046		)
Equity in earnings (loss) of subsidiaries	(226,440		)	(72,592		)	(151,058		)	—			450,090			—
Earnings (loss) from continuing operations	(230,473		)	(494,376		)	(72,336		)	(151,058		)	713,197			(235,046		)
Earnings (loss) from discontinued operations, net of tax	—			—			4,573			—			—			4,573
Net earnings (loss)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Total comprehensive income (loss)	$	(238,404	)	$	(502,307	)	$	(75,694	)	$	(158,989	)	$	736,990		$	(238,404	)

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2013
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	608,256		$	—		$	135,562		$	—		$	743,818
Sales	—			295,530			855,607			679,340			(841,394		)	989,083
Total revenue	—			903,786			855,607			814,902			(841,394		)	1,732,901
Rental expenses	52			253,082			10,986			221,473			(132,089		)	353,504
Cost of sales	113			296,788			523,367			261,199			(829,625		)	251,842
Gross profit (loss)	(165		)	353,916			321,254			332,230			120,320			1,127,555
Selling, general and administrative expenses	2,759			346,731			173,772			161,678			(339		)	684,601
Research and development expenses	—			29,555			31,679			14,343			—			75,577
Acquired intangible asset amortization	—			80,042			73,794			34,735			—			188,571
Impairment of goodwill and intangible assets	—			—			443,400			—			—			443,400
Operating earnings (loss)	(2,924		)	(102,412		)	(401,391		)	121,474			120,659			(264,594		)
Non-operating intercompany transactions	—			58,867			123,951			(153,998		)	(28,820		)	—
Interest income and other	—			72,601			12,251			179			(83,429		)	1,602
Interest expense	—			(431,882		)	(70,623		)	(801		)	83,429			(419,877		)
Loss on extinguishment of debt	—			(2,364		)	—			—			—			(2,364		)
Foreign currency loss	—			(16,723		)	(179		)	(5,316		)	(8		)	(22,226		)
Derivative instruments gain	—			1,576			—			—			—			1,576
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,924		)	(420,337		)	(335,991		)	(38,462		)	91,831			(705,883		)
Income tax expense (benefit)	—			(166,067		)	8,120			7,155			—			(150,792		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,924		)	(254,270		)	(344,111		)	(45,617		)	91,831			(555,091		)
Equity in earnings (loss) of subsidiaries	(555,734		)	56,284			(46,074		)	—			545,524			—
Earnings (loss) from continuing operations	(558,658		)	(197,986		)	(390,185		)	(45,617		)	637,355			(555,091		)
Earnings from discontinued operations, net of tax	—			(3,091		)	(309		)	(457		)	290			(3,567		)
Net earnings (loss)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Total comprehensive income (loss)	$	(560,284	)	$	(202,703	)	$	(392,120	)	$	(47,700	)	$	642,523		$	(560,284	)

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2012
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	654,372		$	—		$	161,188		$	—		$	815,560
Sales	—			292,303			411,032			547,346			(336,738		)	913,943
Total revenue	—			946,675			411,032			708,534			(336,738		)	1,729,503
Rental expenses	2			288,143			1,195			259,308			(109,896		)	438,752
Cost of sales	88			240,146			136,556			236,766			(369,184		)	244,372
Gross profit (loss)	(90		)	418,386			273,281			212,460			142,342			1,046,379
Selling, general and administrative expenses	1,991			327,223			120,789			140,549			(694		)	589,858
Research and development expenses	—			26,310			36,213			9,189			—			71,712
Acquired intangible asset amortization	—			102,954			77,752			40,278			—			220,984
Operating earnings (loss)	(2,081		)	(38,101		)	38,527			22,444			143,036			163,825
Non-operating intercompany transactions	—			100,690			329,531			(474,480		)	44,259			—
Interest income and other	—			73,114			12,251			177			(84,713		)	829
Interest expense	—			(478,756		)	(72,458		)	(121		)	84,713			(466,622		)
Loss on debt extinguishment	—			(31,481		)	—			—			—			(31,481		)
Foreign currency gain (loss)	—			(7,822		)	294			(5,473		)	—			(13,001		)
Derivative instruments loss	—			(31,433		)	—			—			—			(31,433		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,081		)	(413,789		)	308,145			(457,453		)	187,295			(377,883		)
Income tax expense (benefit)	—			(140,681		)	50,759			(57,901		)	—			(147,823		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,081		)	(273,108		)	257,386			(399,552		)	187,295			(230,060		)
Equity in earnings (loss) of subsidiaries	(139,336		)	(60,960		)	(375,553		)	—			575,849			—
Earnings (loss) from continuing operations	(141,417		)	(334,068		)	(118,167		)	(399,552		)	763,144			(230,060		)
Earnings from discontinued operations, net of tax	—			4,546			37,855			23,999			22,243			88,643
Net earnings (loss)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Total comprehensive income (loss)	$	(136,093	)	$	(324,198	)	$	(74,988	)	$	(370,229	)	$	769,415		$	(136,093	)

Guarantor and Non-Guarantor Statement of Cash Flows

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2014
	Acelity 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)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Adjustments to reconcile net earnings (loss) to net cash provided	6,364			306,092			104,787			131,736			(226,711		)	322,268
Net cash provided (used) by operating activities	(224,109		)	(188,284		)	37,024			(19,322		)	486,486			91,795
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(156,810		)	(5,024		)	(49,922		)	145,261			(66,495		)
Proceeds from disposition of assets held for sale	—			—			5,212			—			—			5,212
Proceeds from sale of investment	—			4,211			—			—			—			4,211
Business acquired in purchase transaction, net of cash acquired	—			—			(9,500		)	(113		)	—			(9,613		)
Increase in identifiable intangible assets and other non-current assets	—			(376		)	(7,418		)	(3,793		)	—			(11,587		)
Net cash provided (used) by investing activities	—			(152,975		)	(16,730		)	(53,828		)	145,261			(78,272		)
Cash flows from financing activities:
Settlement of profits interest units	(2,332		)	—			—			—			—			(2,332		)
Repayments of long-term debt and capital lease obligations	—			(26,345		)	—			(58		)	—			(26,403		)
Proceeds (payments) on intercompany loans	—			251,576			(45,168		)	(206,408		)	—			—
Proceeds (payments) on intercompany investments	226,441			69,284			26,255			309,767			(631,747		)	—
Net cash provided (used) by financing activities	224,109			294,515			(18,913		)	103,301			(631,747		)	(28,735		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(8,196		)	—			(8,196		)
Net increase (decrease) in cash and cash equivalents	—			(46,744		)	1,381			21,955			—			(23,408		)
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	41,027		$	1,499		$	140,617		$	—		$	183,541

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2013
	Acelity 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)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,673			244,257			263,245			292,384			(109,122		)	695,437
Net cash provided (used) by operating activities	(553,985		)	43,180			(127,249		)	246,310			528,523			136,779
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(196,988		)	(17,274		)	(111,118		)	247,053			(78,327		)
Business acquired in purchase transaction, net of cash acquired	—			—			(64,938		)	(413,810		)	—			(478,748		)
Increase in identifiable intangible assets and other non-current assets	—			(453		)	(6,419		)	125			—			(6,747		)
Net cash provided (used) by investing activities	—			(197,441		)	(88,631		)	(524,803		)	247,053			(563,822		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Settlement of profits interest units	(176		)	—			—			—			—			(176		)
Repayments of long-term debt and capital lease obligations	—			(67,133		)	(2,257		)	(6		)	—			(69,396		)
Debt issuance costs	—			(20,477		)	—			—			—			(20,477		)
Proceeds (payments) on intercompany loans	—			(157,416		)	(58,554		)	215,970			—			—
2013 acquisition financing
Proceeds from senior credit facility	—			349,563			—			—			—			349,563
Payment of debt issuance costs	—			(7,340		)	—			—			—			(7,340		)
Proceeds (payments) on intercompany investments	555,733			(131,953		)	276,809			74,987			(775,576		)	—
Net cash provided (used) by financing activities	553,985			(34,756		)	215,998			290,951			(775,576		)	250,602
Effect of exchange rate changes on cash and cash equivalents	—			—			—			240			—			240
Net increase (decrease) in cash and cash equivalents	—			(189,017		)	118			12,698			—			(176,201		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	87,771		$	118		$	118,662		$	—		$	206,949

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2012
	Acelity 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)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,268			449,431			(141,711		)	141,795			(149,673		)	304,110
Net cash provided (used) by operating activities	(137,149		)	119,909			(222,023		)	(233,758		)	635,714			162,693
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(96,931		)	(25,244		)	(70,550		)	109,057			(83,668		)
Proceeds from disposition of assets held for sale	—			74,576			72,335			97,406			—			244,317
Business acquired in purchase transaction, net of cash acquired	—			(15,097		)	—			—			—			(15,097		)
Increase in identifiable intangible assets and other non-current assets	—			5,881			(7,795		)	897			—			(1,017		)
Net cash provided (used) by investing activities	—			(31,571		)	39,296			27,753			109,057			144,535
Cash flows from financing activities:
Capital contributions from limited partners	239			—			—			—			—			239
Distribution to limited partners	(2,199		)	—			—			—			—			(2,199		)
Repayments of long-term debt and capital lease obligations	—			(118,777		)	—			10			—			(118,767		)
Debt issuance costs	—			(18,410		)	—			—			—			(18,410		)
Proceeds (payments) on intercompany loans	—			15,783			(90,803		)	75,020			—			—
2012 refinancing of senior credit facility
Payment of debt issuance costs	—			(1,063		)	—			—			—			(1,063		)
Proceeds (payments) on intercompany investments	139,096			168,265			273,530			163,880			(744,771		)	—
Net cash provided (used) by financing activities	137,136			45,798			182,727			238,910			(744,771		)	(140,200		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			696			—			696
Net increase in cash and cash equivalents	(13		)	134,136			—			33,601			—			167,724
Cash and cash equivalents, beginning of period	411			142,652			—			72,363			—			215,426
Cash and cash equivalents, end of period	$	398		$	276,788		$	—		$	105,964		$	—		$	383,150

XML

Derivative Financial Instruments and Fair Value Measurements - Derivative Financial Instruments (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Interest Rate Protection [Abstract]
Colalteral posted	$ 0
Not Designated as Hedging Instrument [Member] | Interest Rate Cap [Member]
Interest Rate Protection [Abstract]
Derivative, Notional Amount		1,600,000,000	1,600,000,000
Cost of derivative		2,200,000	2,200,000
Derivative, Cap Interest Rate		2.00%	2.00%
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]
Interest Rate Protection [Abstract]
Derivative, Notional Amount	487,667,000
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]
Interest Rate Protection [Abstract]
Derivative, Notional Amount	487,667,000
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]
Interest Rate Protection [Abstract]
Derivative, Notional Amount	487,667,000
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]
Interest Rate Protection [Abstract]
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Notional Amount	$ 0	$ 14,300,000

XML

Supplemental Balance Sheet Data - Accrued Expenses and Other (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accrued Expenses and Other [Line Items]
Payroll, benefits, commissions, bonuses and related taxes	$ 65,740	$ 89,190
Wake Forest royalty settlement and other royalties	85,275	66,446
Interest	43,607	43,253
Sales and other taxes	24,469	21,827
Insurance	8,729	9,425
Derivative liability	13,936	914
Other accrued expenses	101,728	97,920
Accrued expenses and other	$ 343,484	$ 328,975

XML

Segment and Geographic Information (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014 Countries segment	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014 Countries segment		Dec. 31, 2013		Dec. 31, 2012
Segment Reporting Information [Line Items]
Number of countries in which entity rents or sales products	75								75
Number of Reportable Operating Segments	2								2
Number of Global Business Units	2								2
Total revenue	$ 482,733,000	$ 481,793,000	$ 459,178,000	$ 442,635,000	$ 462,382,000	$ 432,960,000	$ 426,193,000	$ 411,366,000	$ 1,866,339,000		$ 1,732,901,000		$ 1,729,503,000
Operating earnings (loss)	55,299,000	88,347,000	(142,123,000)	32,805,000	57,769,000	(370,355,000)	11,456,000	36,536,000	34,328,000		(264,594,000)		163,825,000
Non-allocated costs:
General headquarter expense									(9,516,000)	[1]	(55,044,000)	[1]	(19,928,000)	[1]
Equity-based compensation									(4,033,000)		(2,925,000)		(2,069,000)
Business optimization and transaction-related expenses									(150,125,000)	[2]	(144,253,000)	[2]	(101,191,000)	[2]
Acquired intangible asset amortization									(194,433,000)	[3]	(188,571,000)	[3]	(220,984,000)	[3]
Wake Forest settlement									(198,578,000)		0		0
Impairment of goodwill and intangible assets									0		(443,400,000)	[4]	0
Total non-allocated costs									(556,685,000)		(834,193,000)		(344,172,000)
Write off of in process research and development costs									0		16,885,000		0
Fixed asset and inventory impairment									0		30,580,000		22,116,000
Goodwill, Impairment Loss											272,200,000
Advanced Wound Therapeutics [Member]
Segment Reporting Information [Line Items]
Total revenue									1,420,278,000		1,287,387,000		1,312,258,000
Operating earnings (loss)									455,666,000	[5]	443,850,000	[5]	398,066,000	[5]
Non-allocated costs:
Write off of in process research and development costs											16,700,000
Regenerative Medicine [Member]
Segment Reporting Information [Line Items]
Total revenue									428,089,000		442,174,000		417,245,000
Operating earnings (loss)									132,904,000		125,112,000		109,931,000
Non-allocated costs:
Goodwill, Impairment Loss											272,200,000
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)											171,200,000
Other [Member]
Segment Reporting Information [Line Items]
Total revenue									17,972,000	[6]	3,340,000	[6]	0	[6]
Operating earnings (loss)									2,443,000	[6]	637,000	[6]	0
Domestic [Member]
Segment Reporting Information [Line Items]
Total revenue									0		0		0
United States [Member]
Segment Reporting Information [Line Items]
Total revenue									1,329,306,000		1,321,517,000		1,335,043,000
Other Foreign Country [Member]
Segment Reporting Information [Line Items]
Total revenue									$ 537,033,000		$ 411,384,000		$ 394,460,000

[1] 2013 includes a $30.6 million fixed asset impairment charge.

[2] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOmExMDg3M2UyNjgwYzQ0NDE5ZWUxMzYyYTk3YWYxMmVlfFRleHRTZWxlY3Rpb246RDFGQzlDQTAzMkNENDc2NjlDMkZCQzY4QUI3MjczMkUM}

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

[4] During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

[5] 2013 includes write-offs of $16.7 million of other intangible assets due primarily to the discontinuation of certain AWT projects. 2012 includes $22.1 million of impairment charges associated with certain production equipment at our Athlone manufacturing plant and inventory associated with our V.A.C.Via product.

[6] Represents contract manufacturing operations conducted at our manufacturing facility in Gargrave, England for the period subsequent to our acquisition of Systagenix as discussed in Note 2.

XML

Derivative Financial Instruments and Fair Value Measurements - Fair Value and Balance Sheet Locations (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2008
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 0	$ 146,000
Derivative liability, fair value	22,003,000	32,820,000
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	8,067,000	31,906,000
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Accrued expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	13,936,000	345,000
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	146,000
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	569,000
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member]
Derivatives, Fair Value [Line Items]
Interest rate on senior long-term debt	10.50%
Convertible Senior Notes [Member] | 3.25% Convertible Senior Notes due 2015 [Member]
Derivatives, Fair Value [Line Items]
Interest rate on senior long-term debt			3.25%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member]
Derivatives, Fair Value [Line Items]
Interest rate on senior long-term debt	12.50%
Senior Secured Credit Facility [Member]
Derivatives, Fair Value [Line Items]
Long-term Debt, Fair Value	2,501,000,000	2,615,000,000
Fixed Rate Long-Term Debt [Member]
Derivatives, Fair Value [Line Items]
Long-term Debt, Fair Value	$ 2,584,000,000	$ 2,694,000,000

XML

Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Cash Flow (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net loss	$ (230,473)	$ (558,658)	$ (141,417)
Adjustments to reconcile net earnings (loss) to net cash provided	322,268	695,437	304,110
Net cash provided (used) by operating activities	91,795	136,779	162,693
Cash flows from investing activities:
Net additions to property, plant and equipment	(66,495)	(78,327)	(83,668)
Proceeds from disposition of assets	5,212	0	244,317
Proceeds from sale of investment	4,211	0	0
Business acquired in purchase transaction, net of cash acquired	(9,613)	(478,748)	(15,097)
Increase in identifiable intangible assets and other non-current assets	(11,587)	(6,747)	(1,017)
Net cash provided (used) by investing activities	(78,272)	(563,822)	144,535
Cash flows from financing activities:
Capital contributions from limited partners			239
Distribution to limited partners	0	(1,572)	(2,199)
Settlement of profits interest units	(2,332)	(176)	0
Repayments of long-term debt and capital lease obligations	(26,403)	(69,396)	(118,767)
Debt issuance costs	0	(20,477)	(18,410)
Proceeds (payments) on intercompany loans	0	0	0
KCI acquisition financing:
Proceeds from senior credit facility	0	349,563	0
Payment of debt issuance costs	0	(7,340)	(1,063)
Proceeds (payments) on intercompany investments	0	0	0
Net cash provided (used) by financing activities	(28,735)	250,602	(140,200)
Effect of exchange rate changes on cash and cash equivalents	(8,196)	240	696
Net increase (decrease) in cash and cash equivalents	(23,408)	(176,201)	167,724
Cash and cash equivalents, beginning of period	206,949	383,150	215,426
Cash and cash equivalents, end of period	183,541	206,949	383,150
Parent Company [Member]
Cash flows from operating activities:
Net loss	(230,473)	(558,658)	(141,417)
Adjustments to reconcile net earnings (loss) to net cash provided	6,364	4,673	4,268
Net cash provided (used) by operating activities	(224,109)	(553,985)	(137,149)
Cash flows from investing activities:
Net additions to property, plant and equipment	0	0	0
Proceeds from disposition of assets	0		0
Proceeds from sale of investment	0
Business acquired in purchase transaction, net of cash acquired	0	0	0
Increase in identifiable intangible assets and other non-current assets	0	0	0
Net cash provided (used) by investing activities	0	0	0
Cash flows from financing activities:
Capital contributions from limited partners			239
Distribution to limited partners		(1,572)	(2,199)
Settlement of profits interest units	(2,332)	(176)
Repayments of long-term debt and capital lease obligations	0	0	0
Debt issuance costs		0	0
Proceeds (payments) on intercompany loans	0	0	0
KCI acquisition financing:
Proceeds from senior credit facility		0
Payment of debt issuance costs		0	0
Proceeds (payments) on intercompany investments	226,441	555,733	139,096
Net cash provided (used) by financing activities	224,109	553,985	137,136
Effect of exchange rate changes on cash and cash equivalents	0	0	0
Net increase (decrease) in cash and cash equivalents	0	0	(13)
Cash and cash equivalents, beginning of period	398	398	411
Cash and cash equivalents, end of period	398	398	398
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Cash flows from operating activities:
Net loss	(494,376)	(201,077)	(329,522)
Adjustments to reconcile net earnings (loss) to net cash provided	306,092	244,257	449,431
Net cash provided (used) by operating activities	(188,284)	43,180	119,909
Cash flows from investing activities:
Net additions to property, plant and equipment	(156,810)	(196,988)	(96,931)
Proceeds from disposition of assets	0		74,576
Proceeds from sale of investment	4,211
Business acquired in purchase transaction, net of cash acquired	0	0	(15,097)
Increase in identifiable intangible assets and other non-current assets	(376)	(453)	5,881
Net cash provided (used) by investing activities	(152,975)	(197,441)	(31,571)
Cash flows from financing activities:
Capital contributions from limited partners			0
Distribution to limited partners		0	0
Settlement of profits interest units	0	0
Repayments of long-term debt and capital lease obligations	(26,345)	(67,133)	(118,777)
Debt issuance costs		(20,477)	(18,410)
Proceeds (payments) on intercompany loans	251,576	(157,416)	15,783
KCI acquisition financing:
Proceeds from senior credit facility		349,563
Payment of debt issuance costs		(7,340)	(1,063)
Proceeds (payments) on intercompany investments	69,284	(131,953)	168,265
Net cash provided (used) by financing activities	294,515	(34,756)	45,798
Effect of exchange rate changes on cash and cash equivalents	0	0	0
Net increase (decrease) in cash and cash equivalents	(46,744)	(189,017)	134,136
Cash and cash equivalents, beginning of period	87,771	276,788	142,652
Cash and cash equivalents, end of period	41,027	87,771	276,788
Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net loss	(67,763)	(390,494)	(80,312)
Adjustments to reconcile net earnings (loss) to net cash provided	104,787	263,245	(141,711)
Net cash provided (used) by operating activities	37,024	(127,249)	(222,023)
Cash flows from investing activities:
Net additions to property, plant and equipment	(5,024)	(17,274)	(25,244)
Proceeds from disposition of assets	5,212		72,335
Proceeds from sale of investment	0
Business acquired in purchase transaction, net of cash acquired	(9,500)	(64,938)	0
Increase in identifiable intangible assets and other non-current assets	(7,418)	(6,419)	(7,795)
Net cash provided (used) by investing activities	(16,730)	(88,631)	39,296
Cash flows from financing activities:
Capital contributions from limited partners			0
Distribution to limited partners		0	0
Settlement of profits interest units	0	0
Repayments of long-term debt and capital lease obligations	0	(2,257)	0
Debt issuance costs		0	0
Proceeds (payments) on intercompany loans	(45,168)	(58,554)	(90,803)
KCI acquisition financing:
Proceeds from senior credit facility		0
Payment of debt issuance costs		0	0
Proceeds (payments) on intercompany investments	26,255	276,809	273,530
Net cash provided (used) by financing activities	(18,913)	215,998	182,727
Effect of exchange rate changes on cash and cash equivalents	0	0	0
Net increase (decrease) in cash and cash equivalents	1,381	118	0
Cash and cash equivalents, beginning of period	118	0	0
Cash and cash equivalents, end of period	1,499	118	0
Non-Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net loss	(151,058)	(46,074)	(375,553)
Adjustments to reconcile net earnings (loss) to net cash provided	131,736	292,384	141,795
Net cash provided (used) by operating activities	(19,322)	246,310	(233,758)
Cash flows from investing activities:
Net additions to property, plant and equipment	(49,922)	(111,118)	(70,550)
Proceeds from disposition of assets	0		97,406
Proceeds from sale of investment	0
Business acquired in purchase transaction, net of cash acquired	(113)	(413,810)	0
Increase in identifiable intangible assets and other non-current assets	(3,793)	125	897
Net cash provided (used) by investing activities	(53,828)	(524,803)	27,753
Cash flows from financing activities:
Capital contributions from limited partners			0
Distribution to limited partners		0	0
Settlement of profits interest units	0	0
Repayments of long-term debt and capital lease obligations	(58)	(6)	10
Debt issuance costs		0	0
Proceeds (payments) on intercompany loans	(206,408)	215,970	75,020
KCI acquisition financing:
Proceeds from senior credit facility		0
Payment of debt issuance costs		0	0
Proceeds (payments) on intercompany investments	309,767	74,987	163,880
Net cash provided (used) by financing activities	103,301	290,951	238,910
Effect of exchange rate changes on cash and cash equivalents	(8,196)	240	696
Net increase (decrease) in cash and cash equivalents	21,955	12,698	33,601
Cash and cash equivalents, beginning of period	118,662	105,964	72,363
Cash and cash equivalents, end of period	140,617	118,662	105,964
Eliminations [Member]
Cash flows from operating activities:
Net loss	713,197	637,645	785,387
Adjustments to reconcile net earnings (loss) to net cash provided	(226,711)	(109,122)	(149,673)
Net cash provided (used) by operating activities	486,486	528,523	635,714
Cash flows from investing activities:
Net additions to property, plant and equipment	145,261	247,053	109,057
Proceeds from disposition of assets	0		0
Proceeds from sale of investment	0
Business acquired in purchase transaction, net of cash acquired	0	0	0
Increase in identifiable intangible assets and other non-current assets	0	0	0
Net cash provided (used) by investing activities	145,261	247,053	109,057
Cash flows from financing activities:
Capital contributions from limited partners			0
Distribution to limited partners		0	0
Settlement of profits interest units	0	0
Repayments of long-term debt and capital lease obligations	0	0	0
Debt issuance costs		0	0
Proceeds (payments) on intercompany loans	0	0	0
KCI acquisition financing:
Proceeds from senior credit facility		0
Payment of debt issuance costs		0	0
Proceeds (payments) on intercompany investments	(631,747)	(775,576)	(744,771)
Net cash provided (used) by financing activities	(631,747)	(775,576)	(744,771)
Effect of exchange rate changes on cash and cash equivalents	0	0	0
Net increase (decrease) in cash and cash equivalents	0	0	0
Cash and cash equivalents, beginning of period	0	0	0
Cash and cash equivalents, end of period	$ 0	$ 0	$ 0

XML

Supplemental Balance Sheet Data - Inventories, Net (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Inventory [Line Items]
Finished goods and tissue available for distribution	$ 127,253	$ 110,937
Goods and tissue in-process	6,887	12,994
Raw materials, supplies, parts and unprocessed tissue	67,567	71,876
Inventories, gross	201,707	195,807
Less: Amounts expected to be converted into equipment for short-term rental	(7,515)	(3,952)
Reserve for excess and obsolete inventory	(15,970)	(10,288)
Inventories, net	$ 178,222	$ 181,567

XML

Leasing Obligations (Tables)

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Future Minimum Lease Payments Under Capital and Operating Leases

Future minimum lease payments under capital and non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2014 are as follows (in thousands):

	Capital Leases			Operating Leases
2015	$	526		$	22,387
2016	394			14,947
2017	—			11,745
2018	—			8,918
2019	—			6,727
Thereafter	—			28,587
Total minimum lease payments	$	920		$	93,311
Less amount representing interest	(66		)
Present value of net minimum capital lease payments	854
Less current portion	(488		)
Obligations under capital leases, excluding current installments	$	366

XML

Schedule II (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Accounts receivable realization reserves
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning balance	$ 76,114		$ 76,538		$ 21,151
Additions Charged to Costs and Expenses	10,801		3,968		5,318
Additions Charged to Other Accounts	67,122	[1]	70,472	[1]	124,616	[1]
Deductions	79,490		74,864		74,547
Ending balance	74,547		76,114		76,538
Inventory reserve
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning balance	10,288		9,900		1,974
Additions Charged to Costs and Expenses	25,484		11,662		22,287
Additions Charged to Other Accounts	0		0		0
Deductions	19,802		11,274		14,361
Ending balance	15,970		10,288		9,900
Deferred tax asset valuation allowance
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning balance	55,944		19,272		18,247
Additions Charged to Costs and Expenses	26,355		29,064		1,025
Additions Charged to Other Accounts	0		7,608		0
Deductions	0		0		0
Ending balance	$ 82,299		$ 55,944		$ 19,272

[1] Additions to the accounts receivable realization reserves charged to other accounts reflect the net increase in revenue reserves to allow for expected credit memos, canceled transactions and uncollectible items where collectibility is not reasonably assured in accordance with the provisions of the “Revenue Recognition” Topic of the FASB Accounting Standards Codification.

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Segment and Geographic Information Schedule of gross capital expenditures (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Gross capital expenditures	$ 66,584	$ 80,911	$ 91,567
Advanced Wound Therapeutics [Member]
Segment Reporting Information [Line Items]
Gross capital expenditures	21,517	36,910	15,731
Regenerative Medicine [Member]
Segment Reporting Information [Line Items]
Gross capital expenditures	7,057	17,862	26,240
Other [Member]
Segment Reporting Information [Line Items]
Gross capital expenditures	$ 38,010	$ 26,139	$ 49,596

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Leasing Obligations - Narrative (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Leases, Operating [Abstract]
Rental expense for operating leases	$ 29.7	$ 27.8	$ 43.0
Equipment [Member]
Leases, Capital [Abstract]
Capital leases, expiration period	3 years
Gross amount of equipment under capital leases	2.6	2.7
Accumulated depreciation of equipment under capital leases	$ 1.7	$ 1.2
Leases, Operating [Abstract]
Operating Leases, Expiration Period	20 years

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Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 183,541	$ 206,949	$ 383,150	$ 215,426
Accounts receivable, net	370,483	407,578
Inventories, net	178,222	181,567
Deferred income taxes	63,025	23,621
Prepaid expenses and other	27,563	53,161
Intercompany receivables	0	0
Total current assets	822,834	872,876
Net property, plant and equipment	288,048	333,725
Debt issuance costs, net	77,896	102,054
Deferred income taxes	31,692	31,459
Goodwill	3,378,298	3,378,661	3,479,775
Identifiable intangible assets, net	2,397,251	2,549,201
Other non-current assets	4,694	4,669
Intercompany loan receivables	0	0
Intercompany investments	0	0
Total assets	7,000,713	7,272,645	7,574,764
Current liabilities:
Accounts payable	51,827	50,316
Accrued expenses and other	343,484	328,975
Intercompany payables	0	0
Current installments of long-term debt	25,721	26,311
Income taxes payable	1,305	3,368
Deferred income taxes	113,658	2,199
Total current liabilities	535,995	411,169
Long-term debt, net of current installments and discount	4,815,290	4,865,503
Non-current tax liabilities	33,300	53,682
Deferred income taxes	792,157	1,003,784
Other non-current liabilities	163,258	40,432
Intercompany loan payables	0	0
Total liabilities	6,340,000	6,374,570
Equity:
Total equity	660,713	898,075	1,457,396	1,593,444
Total liabilities and shareholders' equity	7,000,713	7,272,645
Parent Company [Member]
Current assets:
Cash and cash equivalents	398	398	398	411
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	667,530	901,902
Total assets	668,094	902,466
Current liabilities:
Accounts payable	245	0
Accrued expenses and other	0	0
Intercompany payables	6,441	4,110
Current installments of long-term debt	0	0
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	6,686	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	695	281
Intercompany loan payables	0	0
Total liabilities	7,381	4,391
Equity:
Total equity	660,713	898,075
Total liabilities and shareholders' equity	668,094	902,466
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Current assets:
Cash and cash equivalents	41,027	87,771	276,788	142,652
Accounts receivable, net	179,872	184,723
Inventories, net	73,904	54,809
Deferred income taxes	52,868	14,991
Prepaid expenses and other	11,106	35,832
Intercompany receivables	1,854,033	1,687,528
Total current assets	2,212,810	2,065,654
Net property, plant and equipment	315,691	311,122
Debt issuance costs, net	77,896	102,054
Deferred income taxes	0	0
Goodwill	2,483,240	2,483,240
Identifiable intangible assets, net	299,575	361,640
Other non-current assets	1,161	715
Intercompany loan receivables	760,000	990,972
Intercompany investments	360,292	432,884
Total assets	6,510,665	6,748,281
Current liabilities:
Accounts payable	16,298	15,266
Accrued expenses and other	218,793	185,790
Intercompany payables	1,181,383	852,892
Current installments of long-term debt	25,721	26,311
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	1,442,195	1,080,259
Long-term debt, net of current installments and discount	4,815,290	4,865,503
Non-current tax liabilities	9,404	28,850
Deferred income taxes	106,440	231,713
Other non-current liabilities	113,368	38,667
Intercompany loan payables	420,294	399,690
Total liabilities	6,906,991	6,644,682
Equity:
Total equity	(396,326)	103,599
Total liabilities and shareholders' equity	6,510,665	6,748,281
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	1,499	118	0	0
Accounts receivable, net	67,355	71,457
Inventories, net	110,355	101,779
Deferred income taxes	10,157	6,610
Prepaid expenses and other	6,851	5,434
Intercompany receivables	2,432,299	2,326,181
Total current assets	2,628,516	2,511,579
Net property, plant and equipment	69,801	80,963
Debt issuance costs, net	0	0
Deferred income taxes	0	0
Goodwill	732,138	732,771
Identifiable intangible assets, net	1,788,661	1,829,452
Other non-current assets	186	192
Intercompany loan receivables	429,856	404,688
Intercompany investments	223,581	372,093
Total assets	5,872,739	5,931,738
Current liabilities:
Accounts payable	14,463	14,929
Accrued expenses and other	244,829	246,977
Intercompany payables	2,634,149	2,559,407
Current installments of long-term debt	0	0
Income taxes payable	0	3,368
Deferred income taxes	113,658	0
Total current liabilities	3,007,099	2,824,681
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	6,203	4,284
Deferred income taxes	637,777	718,930
Other non-current liabilities	48,172	334
Intercompany loan payables	760,000	780,000
Total liabilities	4,459,251	4,328,229
Equity:
Total equity	1,413,488	1,603,509
Total liabilities and shareholders' equity	5,872,739	5,931,738
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	140,617	118,662	105,964	72,363
Accounts receivable, net	123,256	151,398
Inventories, net	93,765	101,751
Deferred income taxes	0	2,020
Prepaid expenses and other	247,606	321,427
Intercompany receivables	48,267	21,241
Total current assets	653,511	716,499
Net property, plant and equipment	164,838	223,987
Debt issuance costs, net	0	0
Deferred income taxes	31,692	31,459
Goodwill	162,920	162,650
Identifiable intangible assets, net	309,015	358,109
Other non-current assets	94,247	94,662
Intercompany loan receivables	0	0
Intercompany investments	0	0
Total assets	1,416,223	1,587,366
Current liabilities:
Accounts payable	20,821	20,121
Accrued expenses and other	74,380	77,843
Intercompany payables	512,792	618,707
Current installments of long-term debt	0	0
Income taxes payable	1,305	0
Deferred income taxes	0	2,199
Total current liabilities	609,298	718,870
Long-term debt, net of current installments and discount	0	0
Non-current tax liabilities	17,693	20,548
Deferred income taxes	47,940	53,141
Other non-current liabilities	1,023	1,150
Intercompany loan payables	9,562	215,970
Total liabilities	685,516	1,009,679
Equity:
Total equity	730,707	577,687
Total liabilities and shareholders' equity	1,416,223	1,587,366
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Inventories, net	(99,802)	(76,772)
Deferred income taxes	0	0
Prepaid expenses and other	(238,000)	(309,532)
Intercompany receivables	(4,334,765)	(4,035,116)
Total current assets	(4,672,567)	(4,421,420)
Net property, plant and equipment	(262,282)	(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	(1,189,856)	(1,395,660)
Intercompany investments	(1,251,403)	(1,706,879)
Total assets	(7,467,008)	(7,897,206)
Current liabilities:
Accounts payable	0	0
Accrued expenses and other	(194,518)	(181,635)
Intercompany payables	(4,334,765)	(4,035,116)
Current installments of long-term debt	0	0
Income taxes payable	0	0
Deferred income taxes	0	0
Total current liabilities	(4,529,283)	(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	(1,189,856)	(1,395,660)
Total liabilities	(5,719,139)	(5,612,411)
Equity:
Total equity	(1,747,869)	(2,284,795)
Total liabilities and shareholders' equity	$ (7,467,008)	$ (7,897,206)

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Guarantor Condensed Consolidating Financial Statements - Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Condensed Income Statements, Captions [Line Items]
Rental									$ 719,864	$ 743,818		$ 815,560
Sales									1,146,475	989,083		913,943
Total revenue	482,733	481,793	459,178	442,635	462,382	432,960	426,193	411,366	1,866,339	1,732,901		1,729,503
Rental expenses									332,762	353,504		438,752
Cost of sales									323,363	251,842		244,372
Gross profit (loss)	325,998	314,413	293,207	276,596	301,873	285,082	280,060	260,540	1,210,214	1,127,555		1,046,379
Selling, general and administrative expenses									713,554	684,601		589,858
Research and development expenses									69,321	75,577		71,712
Acquired intangible asset amortization									194,433	188,571		220,984
Wake Forest settlement									198,578	0		0
Impairment of goodwill and intangible assets									0	443,400	[1]	0
Operating earnings (loss)	55,299	88,347	(142,123)	32,805	57,769	(370,355)	11,456	36,536	34,328	(264,594)		163,825
Non-operating intercompany transactions									0	0		0
Interest income and other									3,667	1,602		829
Interest expense									(412,733)	(419,877)		(466,622)
Loss on extinguishment of debt									0	(2,364)		(31,481)
Foreign currency gain (loss)									17,844	(22,226)		(13,001)
Derivative instruments gain (loss)									(5,183)	1,576		(31,433)
Earnings (loss) from continuing operations before income taxes (benefit)									(362,077)	(705,883)		(377,883)
Income tax expense (benefit)									(127,031)	(150,792)		(147,823)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									(235,046)	(555,091)		(230,060)
Equity in earnings (loss) of subsidiaries									0	0		0
Earnings (loss) from continuing operations	(30,928)	(3,235)	(153,823)	(47,060)	(51,984)	(398,607)	(61,747)	(42,753)	(235,046)	(555,091)		(230,060)
Earnings (loss) from discontinued operations, net of tax	1,392	1,398	1,106	677	(751)	46	(828)	(2,034)	4,573	(3,567)		88,643
Net earnings (loss)	(29,536)	(1,837)	(152,717)	(46,383)	(52,735)	(398,561)	(62,575)	(44,787)	(230,473)	(558,658)		(141,417)
Total comprehensive income (loss)									(238,404)	(560,284)		(136,093)
Parent Company [Member]
Condensed Income Statements, Captions [Line Items]
Rental									0	0		0
Sales									0	0		0
Total revenue									0	0		0
Rental expenses									106	52		2
Cost of sales									105	113		88
Gross profit (loss)									(211)	(165)		(90)
Selling, general and administrative expenses									3,822	2,759		1,991
Research and development expenses									0	0		0
Acquired intangible asset amortization									0	0		0
Wake Forest settlement									0
Impairment of goodwill and intangible assets										0
Operating earnings (loss)									(4,033)	(2,924)		(2,081)
Non-operating intercompany transactions									0	0		0
Interest income and other									0	0		0
Interest expense									0	0		0
Loss on extinguishment of debt										0		0
Foreign currency gain (loss)									0	0		0
Derivative instruments gain (loss)									0	0		0
Earnings (loss) from continuing operations before income taxes (benefit)									(4,033)	(2,924)		(2,081)
Income tax expense (benefit)									0	0		0
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									(4,033)	(2,924)		(2,081)
Equity in earnings (loss) of subsidiaries									(226,440)	(555,734)		(139,336)
Earnings (loss) from continuing operations									(230,473)	(558,658)		(141,417)
Earnings (loss) from discontinued operations, net of tax									0	0		0
Net earnings (loss)									(230,473)	(558,658)		(141,417)
Total comprehensive income (loss)									(238,404)	(560,284)		(136,093)
Kinetic Concepts, Inc. and KCI USA, Inc. Borrower [Member]
Condensed Income Statements, Captions [Line Items]
Rental									606,031	608,256		654,372
Sales									292,573	295,530		292,303
Total revenue									898,604	903,786		946,675
Rental expenses									292,336	253,082		288,143
Cost of sales									314,129	296,788		240,146
Gross profit (loss)									292,139	353,916		418,386
Selling, general and administrative expenses									295,324	346,731		327,223
Research and development expenses									24,044	29,555		26,310
Acquired intangible asset amortization									61,995	80,042		102,954
Wake Forest settlement									198,578
Impairment of goodwill and intangible assets										0
Operating earnings (loss)									(287,802)	(102,412)		(38,101)
Non-operating intercompany transactions									18,775	58,867		100,690
Interest income and other									73,919	72,601		73,114
Interest expense									(431,670)	(431,882)		(478,756)
Loss on extinguishment of debt										(2,364)		(31,481)
Foreign currency gain (loss)									44,515	(16,723)		(7,822)
Derivative instruments gain (loss)									(5,183)	1,576		(31,433)
Earnings (loss) from continuing operations before income taxes (benefit)									(587,446)	(420,337)		(413,789)
Income tax expense (benefit)									(165,662)	(166,067)		(140,681)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									(421,784)	(254,270)		(273,108)
Equity in earnings (loss) of subsidiaries									(72,592)	56,284		(60,960)
Earnings (loss) from continuing operations									(494,376)	(197,986)		(334,068)
Earnings (loss) from discontinued operations, net of tax									0	(3,091)		4,546
Net earnings (loss)									(494,376)	(201,077)		(329,522)
Total comprehensive income (loss)									(502,307)	(202,703)		(324,198)
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Rental									0	0		0
Sales									919,988	855,607		411,032
Total revenue									919,988	855,607		411,032
Rental expenses									11,156	10,986		1,195
Cost of sales									571,768	523,367		136,556
Gross profit (loss)									337,064	321,254		273,281
Selling, general and administrative expenses									211,865	173,772		120,789
Research and development expenses									26,803	31,679		36,213
Acquired intangible asset amortization									79,136	73,794		77,752
Wake Forest settlement									0
Impairment of goodwill and intangible assets										443,400
Operating earnings (loss)									19,260	(401,391)		38,527
Non-operating intercompany transactions									146,218	123,951		329,531
Interest income and other									19,148	12,251		12,251
Interest expense									(68,861)	(70,623)		(72,458)
Loss on extinguishment of debt										0		0
Foreign currency gain (loss)									(924)	(179)		294
Derivative instruments gain (loss)									0	0		0
Earnings (loss) from continuing operations before income taxes (benefit)									114,841	(335,991)		308,145
Income tax expense (benefit)									36,119	8,120		50,759
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									78,722	(344,111)		257,386
Equity in earnings (loss) of subsidiaries									(151,058)	(46,074)		(375,553)
Earnings (loss) from continuing operations									(72,336)	(390,185)		(118,167)
Earnings (loss) from discontinued operations, net of tax									4,573	(309)		37,855
Net earnings (loss)									(67,763)	(390,494)		(80,312)
Total comprehensive income (loss)									(75,694)	(392,120)		(74,988)
Non-Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Rental									113,833	135,562		161,188
Sales									862,689	679,340		547,346
Total revenue									976,522	814,902		708,534
Rental expenses									202,613	221,473		259,308
Cost of sales									370,643	261,199		236,766
Gross profit (loss)									403,266	332,230		212,460
Selling, general and administrative expenses									203,110	161,678		140,549
Research and development expenses									18,474	14,343		9,189
Acquired intangible asset amortization									53,302	34,735		40,278
Wake Forest settlement									0
Impairment of goodwill and intangible assets										0
Operating earnings (loss)									128,380	121,474		22,444
Non-operating intercompany transactions									(249,577)	(153,998)		(474,480)
Interest income and other									319	179		177
Interest expense									(1,921)	(801)		(121)
Loss on extinguishment of debt										0		0
Foreign currency gain (loss)									(25,747)	(5,316)		(5,473)
Derivative instruments gain (loss)									0	0		0
Earnings (loss) from continuing operations before income taxes (benefit)									(148,546)	(38,462)		(457,453)
Income tax expense (benefit)									2,512	7,155		(57,901)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									(151,058)	(45,617)		(399,552)
Equity in earnings (loss) of subsidiaries									0	0		0
Earnings (loss) from continuing operations									(151,058)	(45,617)		(399,552)
Earnings (loss) from discontinued operations, net of tax									0	(457)		23,999
Net earnings (loss)									(151,058)	(46,074)		(375,553)
Total comprehensive income (loss)									(158,989)	(47,700)		(370,229)
Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Rental									0	0		0
Sales									(928,775)	(841,394)		(336,738)
Total revenue									(928,775)	(841,394)		(336,738)
Rental expenses									(173,449)	(132,089)		(109,896)
Cost of sales									(933,282)	(829,625)		(369,184)
Gross profit (loss)									177,956	120,320		142,342
Selling, general and administrative expenses									(567)	(339)		(694)
Research and development expenses									0	0		0
Acquired intangible asset amortization									0	0		0
Wake Forest settlement									0
Impairment of goodwill and intangible assets										0
Operating earnings (loss)									178,523	120,659		143,036
Non-operating intercompany transactions									84,584	(28,820)		44,259
Interest income and other									(89,719)	(83,429)		(84,713)
Interest expense									89,719	83,429		84,713
Loss on extinguishment of debt										0		0
Foreign currency gain (loss)									0	(8)		0
Derivative instruments gain (loss)									0	0		0
Earnings (loss) from continuing operations before income taxes (benefit)									263,107	91,831		187,295
Income tax expense (benefit)									0	0		0
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries									263,107	91,831		187,295
Equity in earnings (loss) of subsidiaries									450,090	545,524		575,849
Earnings (loss) from continuing operations									713,197	637,355		763,144
Earnings (loss) from discontinued operations, net of tax									0	290		22,243
Net earnings (loss)									713,197	637,645		785,387
Total comprehensive income (loss)									$ 736,990	$ 642,523		$ 769,415

[1] During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

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Segment and Geographic Information Schedule of depreciation and other amortization (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Depreciation and other amortization	$ 303,905,000	$ 335,959,000	$ 436,370,000
Advanced Wound Therapeutics [Member]
Segment Reporting Information [Line Items]
Depreciation and other amortization	231,296,000	261,348,000	324,945,000
Cost of sales associated with the preliminary purchase accounting adjustments related to the step up in value of inventory	6,700,000	3,200,000	5,700,000
Regenerative Medicine [Member]
Segment Reporting Information [Line Items]
Depreciation and other amortization	70,882,000	68,514,000	70,730,000
Cost of sales associated with the preliminary purchase accounting adjustments related to the step up in value of inventory			19,700,000
Other [Member]
Segment Reporting Information [Line Items]
Depreciation and other amortization	$ 1,727,000	$ 6,097,000	$ 40,695,000

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Schedule II

12 Months Ended

Dec. 31, 2014

Valuation and Qualifying Accounts [Abstract]

Schedule II: Valuation and Qualifying Accounts

ACELITY L.P. INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three Years ended December 31, 2014
(in thousands)
Description	Balances at January 1, 2012		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2012
Accounts receivable realization reserves	$	21,151	$	5,318	$	124,616	(1)	$	74,547	$	76,538
Inventory reserve	$	1,974	$	22,287	$	—		$	14,361	$	9,900
Deferred tax asset valuation allowance	$	18,247	$	1,025	$	—		$	—	$	19,272
Description	Balances at January 1, 2013		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2013
Accounts receivable realization reserves	$	76,538	$	3,968	$	70,472	(1)	$	74,864	$	76,114
Inventory reserve	$	9,900	$	11,662	$	—		$	11,274	$	10,288
Deferred tax asset valuation allowance	$	19,272	$	29,064	$	7,608		$	—	$	55,944
Description	Balances at January 1, 2014		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts			Deductions		Balances at December 31, 2014
Accounts receivable realization reserves	$	76,114	$	10,801	$	67,122	(1)	$	79,490	$	74,547
Inventory reserve	$	10,288	$	25,484	$	—		$	19,802	$	15,970
Deferred tax asset valuation allowance	$	55,944	$	26,355	$	—		$	—	$	82,299

(1) Additions to the accounts receivable realization reserves charged to other accounts reflect the net increase in revenue reserves to allow for expected credit memos, canceled transactions and uncollectible items where collectibility is not reasonably assured in accordance with the provisions of the “Revenue Recognition” Topic of the FASB Accounting Standards Codification.

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Accounting for Goodwill and Other Non-current Assets Schedule of Definite-lived and Indefinite-lived Intangible Assets (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Definite-Lived Intangible Assets, Gross [Abstract]
Gross Carrying Amount	$ 1,838,828,000	$ 1,793,297,000
Accumulated Amortization	(623,743,000)	(427,862,000)
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Carrying Amount	1,182,166,000	1,183,766,000
Total Gross Carrying Amount	3,020,994,000	2,977,063,000
Amortization expense for definite-lived assets	195,900,000	190,300,000	221,300,000
Tradenames [Members]
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Carrying Amount	1,178,800,000	1,178,800,000
In-process Research and Development [Member]
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
Gross Carrying Amount	3,366,000	4,966,000
Customer Relationships and Non-compete Agreements [Member]
Definite-Lived Intangible Assets, Gross [Abstract]
Gross Carrying Amount	947,638,000	947,706,000
Accumulated Amortization	(400,806,000)	(291,812,000)
Developed Technology [Member]
Definite-Lived Intangible Assets, Gross [Abstract]
Gross Carrying Amount	761,464,000	759,898,000
Accumulated Amortization	(206,355,000)	(128,728,000)
Tradenames and Patents [Member]
Definite-Lived Intangible Assets, Gross [Abstract]
Gross Carrying Amount	129,726,000	85,693,000
Accumulated Amortization	$ (16,582,000)	$ (7,322,000)

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Acquisitions and Divestitures Acquisitions (Details) (USD $)	12 Months Ended			3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Oct. 28, 2013
Business Acquisition [Line Items]
Business acquired in purchase transaction, net of cash acquired	$ 9,613,000	$ 478,748,000	$ 15,097,000
Goodwill	3,378,298,000	3,378,661,000	3,479,775,000	3,378,661,000
Goodwill, Purchase Accounting Adjustments	1,737,000
Accrued expense and other	343,484,000	328,975,000		328,975,000
Other non-current liabilities	163,258,000	40,432,000		40,432,000
Systagenix [Member]
Business Acquisition [Line Items]
Business acquired in purchase transaction, net of cash acquired	478,748,000	478,748,000		478,700,000
Business Acquisition Incremental Borrowing					350,000,000
Goodwill	172,823,000	171,086,000		171,086,000
Goodwill, Purchase Accounting Adjustments	1,737,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Accounts Receivable	50,807,000	50,807,000		50,807,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	27,450,000	27,450,000		27,450,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	1,902,000	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		44,016,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets	139,000	139,000		139,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable	(36,489,000)	(34,752,000)		(34,752,000)
Assumed Liability Purchase Accounting Adjustment	(1,737,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other	(79,000)	(79,000)		(79,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liability, Net	(35,388,000)	(35,388,000)		(35,388,000)
Systagenix [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	103,301,000	103,301,000		103,301,000
Systagenix [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	91,700,000	91,700,000		91,700,000
Systagenix [Member] | Tradenames [Members]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	56,800,000	56,800,000		56,800,000
Systagenix [Member] | In-process Research and Development [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	1,766,000	1,766,000		1,766,000
Attenuate [Member]
Business Acquisition [Line Items]
Business acquired in purchase transaction, net of cash acquired	3,000,000
Milestone Achievement Payment	1,500,000
Accrued expense and other	7,100,000
Other non-current liabilities	9,000,000
Revolve [Member]
Business Acquisition [Line Items]
Business acquired in purchase transaction, net of cash acquired	5,000,000
Accrued expense and other	4,500,000
Other non-current liabilities	3,700,000
Maximum [Member] | Attenuate [Member]
Business Acquisition [Line Items]
Additional Future Milestone Payments	31,500,000
Maximum [Member] | Revolve [Member]
Business Acquisition [Line Items]
Additional Future Milestone Payments	$ 10,000,000

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Quarterly Financial Data (Unaudited) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Financial Data [Line Items]
Revenue	$ 482,733	$ 481,793	$ 459,178	$ 442,635	$ 462,382	$ 432,960	$ 426,193	$ 411,366	$ 1,866,339	$ 1,732,901	$ 1,729,503
Gross profit (loss)	325,998	314,413	293,207	276,596	301,873	285,082	280,060	260,540	1,210,214	1,127,555	1,046,379
Operating earnings (loss)	55,299	88,347	(142,123)	32,805	57,769	(370,355)	11,456	36,536	34,328	(264,594)	163,825
Earnings (loss) from continuing operations	(30,928)	(3,235)	(153,823)	(47,060)	(51,984)	(398,607)	(61,747)	(42,753)	(235,046)	(555,091)	(230,060)
Earnings (loss) from discontinued operations, net of tax	1,392	1,398	1,106	677	(751)	46	(828)	(2,034)	4,573	(3,567)	88,643
Net loss	$ (29,536)	$ (1,837)	$ (152,717)	$ (46,383)	$ (52,735)	$ (398,561)	$ (62,575)	$ (44,787)	$ (230,473)	$ (558,658)	$ (141,417)

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Segment and Geographic Information (Tables)

12 Months Ended

Dec. 31, 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):

	Year ended December 31,
	2014			2013			2012
Revenue:
Advanced Wound Therapeutics	$	1,420,278		$	1,287,387		$	1,312,258
Regenerative Medicine	428,089			442,174			417,245
Other operations (1)	17,972			3,340			—
Total revenue	$	1,866,339		$	1,732,901		$	1,729,503
Operating earnings (loss):
Advanced Wound Therapeutics (2)	$	455,666		$	443,850		$	398,066
Regenerative Medicine	132,904			125,112			109,931
Other operations (1)	2,443			637			—
Non-allocated costs:
General headquarter expense (3)	(9,516		)	(55,044		)	(19,928		)
Equity-based compensation	(4,033		)	(2,925		)	(2,069		)
Business optimization and transaction-related expenses (4)	(150,125		)	(144,253		)	(101,191		)
Acquired intangible asset amortization (5)	(194,433		)	(188,571		)	(220,984		)
Wake Forest settlement	(198,578		)	—			—
Impairment of goodwill and intangible assets (6)	—			(443,400		)	—
Total non-allocated costs	(556,685		)	(834,193		)	(344,172		)
Total operating earnings (loss)	$	34,328		$	(264,594	)	$	163,825

(1) Represents contract manufacturing operations conducted at our manufacturing facility in Gargrave, England for the period subsequent to our acquisition of Systagenix as discussed in Note 2.

(2) 2013 includes write-offs of $16.7 million of other intangible assets due primarily to the discontinuation of certain AWT projects. 2012 includes $22.1 million of impairment charges associated with certain production equipment at our Athlone manufacturing plant and inventory associated with our V.A.C.Via product.

(3) 2013 includes a $30.6 million fixed asset impairment charge.

(4) Represents restructuring-related expenses associated with our business optimization initiatives as well as management fees and costs associated with acquisition, disposition and financing activities.

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

(6) During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

Schedule of Depreciation and Other Amortization Schedule of Depreciation and Other Amortization by Segment

	Year ended December 31,
	2014		2013		2012
Depreciation and other amortization:
Advanced Wound Therapeutics	$	231,296	$	261,348	$	324,945
Regenerative Medicine	70,882		68,514		70,730
Other	1,727		6,097		40,695
	$	303,905	$	335,959	$	436,370

Information on Segment Assets

Information on segment assets are as follows (in thousands):

	December 31,
	2014		2013		2012
Total assets:
Advanced Wound Therapeutics	$	5,070,845	$	5,274,625	$	4,966,687
Regenerative Medicine	1,539,057		1,574,315		2,039,137
Other	390,811		423,705		568,940
	$	7,000,713	$	7,272,645	$	7,574,764

Gross Capital Expenditures

The following table contains information on gross capital expenditures (in thousands):

	Year ended December 31,
	2014		2013		2012
Gross capital expenditures:
Advanced Wound Therapeutics	$	21,517	$	36,910	$	15,731
Regenerative Medicine	7,057		17,862		26,240
Other	38,010		26,139		49,596
	$	66,584	$	80,911	$	91,567

Schedule of Information on the Geographical Location of Select Financial Information

Information on the geographical location of select financial information is as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Geographic location of revenue:
Domestic	$	—	$	—	$	—
United States	1,329,306		1,321,517		1,335,043
Other foreign	537,033		411,384		394,460
Total revenue	$	1,866,339	$	1,732,901	$	1,729,503

	December 31,
	2014		2013		2012
Geographic location of long-lived assets (1):
Domestic	$	—	$	—	$	—
United States	198,754		224,789		287,700
Other foreign	89,294		108,936		100,782
Total long-lived assets	$	288,048	$	333,725	$	388,482

_____________________________

(1)Long-lived assets exclude intangible assets.

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Accounting for Goodwill and Other Non-current Assets Debt Issuance Costs (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Debt issuance costs, net	$ 77,896,000	$ 102,054,000
Amortization of financing costs	24,100,000	21,800,000	18,200,000
Write-off of deferred debt issuance costs	$ 0	$ 0	$ 16,200,000
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member]
Debt Instrument [Line Items]
Debt instrument, stated interest rate	10.50%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member]
Debt Instrument [Line Items]
Debt instrument, stated interest rate	12.50%

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Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Comprehenisve Income Loss, Net of Tax [Roll Forward]
Balances, Beginning	$ (2,143)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(5,690)	(3,867)	5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013	0	2,241	0
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	(2,241)	0	0
Reclassification adjustment out of accumulated other comprehensive income (loss)		0	0
Balances, Ending	(10,074)	(2,143)
Accumulated Foreign Currency Translation Adjustment [Member]
Other Comprehenisve Income Loss, Net of Tax [Roll Forward]
Balances, Beginning	(4,384)	(517)	(5,841)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(5,690)	(3,867)	5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013	0
Balances, Ending	(10,074)	(4,384)	(517)
Accumulated Other Comprehensive Income (Loss) [Member]
Other Comprehenisve Income Loss, Net of Tax [Roll Forward]
Balances, Beginning	(2,143)	(517)	(5,841)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(5,690)	(3,867)	5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013	0	2,241
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	(2,241)
Balances, Ending	(10,074)	(2,143)	(517)
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Other Comprehenisve Income Loss, Net of Tax [Roll Forward]
Balances, Beginning	2,241	0		0
Unrealized investment gain, net of tax expense of $1,403 in 2013		2,241
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	(2,241)
Balances, Ending	$ 0	$ 2,241		$ 0

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Income Taxes (Benefit) - Schedule of Effective Inome Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Income Taxes [Line Items]
Computed expected tax rate	35.00%	[1]	35.00%	[1]	35.00%	[1]
State income taxes, net of federal benefit	3.40%	[1]	1.70%	[1]	3.80%	[1]
Non-deductible items	(0.10%)	[1]	(0.90%)	[1]	(0.50%)	[1]
Effect of international operations	(4.40%)	[1]	(1.50%)	[1]	0.10%	[1]
Section 199 production deduction	0.80%	[1]	0.20%	[1]	0.50%	[1]
Research and development credit	0.10%	[1]	0.30%	[1]	0.00%	[1]
Goodwill Impairment	0.00%	[1]	(13.40%)	[1]	0.00%	[1]
Other, net	0.20%	[1]	0.10%	[1]	0.60%	[1]
Effective income tax rate, before discontinued operations	35.00%	[1]	21.50%	[1]	39.50%	[1]
Change in rate related to discontinued operations	0.10%		(0.10%)		(0.40%)
Effective tax rate related to continuing operations	35.10%	[1]	21.40%	[1]	39.10%	[1]

[1] The years ended December 31, 2014, 2013 and 2012 include a loss before income tax benefit. The consolidated effective income tax rates represent adjustments to the computed “expected” income tax benefit rate for the period. Therefore, negative percentages represent reductions to the income tax benefit rate.

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Supplemental Balance Sheet Data - Net Property, Plant, and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 778,530	$ 732,518
Less accumulated depreciation	(490,482)	(398,793)
Net property, plant and equipment	288,048	333,725
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	13,121	13,438
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	46,561	46,092
Equipment for Short-Term Rental [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	313,025	297,896
Machinery, Equipment and Furniture [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	320,498	294,916
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	77,810	76,224
Inventory To Be Converted To Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 7,515	$ 3,952

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(a)Basis of Presentation and Principles of Consolidation

On November 4, 2011, Kinetic Concepts, Inc. (“KCI”) completed its merger (the “Merger”) with Chiron Merger Sub, Inc. (“Merger Sub”), a direct subsidiary of Chiron Holdings, Inc. (“Holdings”) and an indirect subsidiary of Acelity L.P. Inc. (“Acelity”), pursuant to the terms of the Agreement and Plan of Merger, dated as of July 12, 2011 (the “Merger Agreement”), by and among Holdings, Merger Sub and KCI. As a result of the Merger, KCI is a 100% owned subsidiary of Acelity. In connection with this transaction, LifeCell Corporation (“LifeCell”), formerly a 100% owned subsidiary of KCI, was promoted to be a sister corporation of KCI, such that each of KCI and LifeCell are now 100% owned subsidiaries of Acelity. Acelity is a non-operating holding company indirectly controlled by investment funds advised by Apax Partners (“Apax”) and controlled affiliates of Canada Pension Plan Investment Board (“CPPIB”) and the Public Sector Pension Investment Board (“PSP Investments” and with Apax and CPPIB, collectively, the “Sponsors”) and certain other co-investors. The consolidated financial statements presented herein include the accounts of Acelity L.P. Inc., together with its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise noted in this report, the terms “we,” “us,” “our,” or the “Company” refers to Acelity L.P. Inc. and subsidiaries. The accompanying audited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”). Certain prior period amounts have been reclassified to conform to the 2014 presentation.

Net earnings (loss) per share information is not presented as such information is not meaningful. Chiron Guernsey Holdings L.P. Inc. owns over 99% of the limited partnership interests of Acelity, while Acelity’s Managing Limited Partner owns less than 1% of the limited partnership interests.  Chiron Guernsey GP Co. Limited owns all of the general partnership interests in Acelity and has no economic interest in Acelity. We do not have any publicly traded common stock or potential common stock.

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.

On October 29, 2014, LifeCell entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”) to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. 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.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. 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.

(b)Nature of Operations and Customer Concentration

We are a leading global medical technology company devoted to the development and commercialization of innovative products and therapies designed to improve clinical outcomes while helping to reduce the overall cost of patient care. We have an infrastructure designed to meet the specific needs of medical professionals and patients across all healthcare settings, including acute care hospitals, long-term care facilities and patients’ homes. 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. Our primary businesses serve the advanced wound therapeutics and regenerative medicine markets. Our advanced devices business is primarily engaged in commercializing several technology platforms, including negative pressure wound therapy (“NPWT”), negative pressure surgical management (“NPSM”) and epidermal harvesting. Our advanced wound dressings are used for the management of chronic and acute wounds. 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. In addition to our acellular tissue matrices, our regenerative medicine business markets autologous fat grafting solutions, such as Revolve, which is complementary to our tissue matrix business.

We have direct operations in over 25 countries and indirect operations in an additional 50 countries. We have two reportable operating segments which correspond to our two businesses: Advanced Wound Therapeutics 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. As defined by the Codification, we have three reporting units: KCI, Regenerative Medicine and Systagenix. We have operations in 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.

Operations for our Americas geographic region accounted for approximately 75.6%, 80.3%, and 80.9% of our total revenue for the years ended December 31, 2014, 2013 and 2012, respectively. In the U.S. acute and extended care settings, which accounted for approximately 58.5%, 60.8%, and 59.2% of our Americas revenue for the years ended December 31, 2014, 2013 and 2012, respectively, we bill our customers directly for the rental and sale of our products. Also in the U.S. acute and extended care settings, we contract with both proprietary hospital groups and voluntary group purchasing organizations (“GPOs”). Proprietary hospital groups own all of the hospitals which they represent and, as a result, can ensure compliance with an executed national agreement. Voluntary GPOs negotiate contracts on behalf of member hospital organizations, but cannot ensure that their members will comply with the terms of an executed national agreement. During the years ended December 31, 2014, 2013 and 2012, we recorded approximately $106.7 million, $94.1 million, and $96.3 million, respectively, in Advanced Wound Therapeutics revenues under contracts with Novation, LLC, our largest single GPO relationship.

In the U.S. home care setting, where our revenue comes predominantly from our NPWT products, we provide products and services to patients in the home and bill third-party payers directly, such as Medicare and private insurance. During the years ended December 31, 2014, 2013 and 2012, we recorded revenue related to Medicare claims of approximately $120.6 million, $142.5 million, and $167.1 million, respectively.

In the EMEA/APAC region, most of our Advanced Wound Therapeutics revenue is generated in the acute care setting on a direct billing basis.

(c)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(d)Revenue Recognition

We recognize revenue in accordance with the “Revenue Recognition” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification when each of the following four criteria are met:

1) a contract or sales arrangement exists;

2) products have been shipped, title has transferred or services have been rendered;

3) the price of the products or services is fixed or determinable; and

4) collectibility is reasonably assured.

We recognize rental revenue based on the number of days a product is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.  Sales revenue is recognized when products are shipped and title has transferred.  In addition, we establish realization reserves against revenue to provide for adjustments including capitation agreements, estimated credit memos, volume discounts, pricing adjustments, utilization adjustments, product returns, cancellations, estimated uncollectible amounts and payer adjustments based on historical experience. In addition, revenue is recognized net of administrative fees paid to GPOs and state sales tax paid on post-acute rentals and sales.

(e)Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. 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.

(f)Accounts Receivable

The Americas trade accounts receivable consist of amounts due directly from acute and extended care organizations, third-party payers (“TPP”), both governmental and non-governmental, third-party distributors and patient pay accounts.  Included within the TPP accounts receivable balances are amounts that have been or will be billed to patients once the primary payer portion of the claim has been settled by the TPP.  EMEA/APAC trade accounts receivable consist of amounts due primarily from acute care organizations and third-party distributors.

Significant concentrations of accounts receivable include:

	2014		2013
Acute and extended care organizations	51	%	53	%
Managed care, insurance and other	28	%	28	%
Medicare/Medicaid	10	%	9	%
Other	11	%	10	%

The TPP reimbursement process in the United States requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, could increase total accounts receivable.  Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in our home care business may, in some cases, extend beyond one year prior to full settlement of the claim.

We utilize a combination of factors in evaluating the collectibility of our accounts receivable. For unbilled receivables, we establish reserves to allow for expected denied or uncollectible items.  In addition, items that remain unbilled for more than a specified period of time, or beyond an established billing window, are reserved against revenue.  For billed receivables, we generally establish reserves using a combination of factors including historic adjustment rates for credit memos and canceled transactions, historical collection experience, and the length of time receivables have been outstanding.  The reserve rates vary by payer group.  In addition, we record specific reserves for bad debt when we become aware of a customer’s inability or refusal to satisfy its debt obligations, such as in the event of a bankruptcy filing.

(g)Inventories

Advanced Wound Therapeutics inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On October 28, 2013, inventories purchased as part of our acquisition of Systagenix were recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Costs include material, labor and manufacturing overhead costs. Inventory expected to be converted into equipment for short-term rental is reclassified to property, plant and equipment. We review our inventory balances monthly for excess sale products or obsolete inventory levels. Inventory quantities of sale-only products in excess of anticipated demand are considered excess and are reserved at 100%. For rental products, we review both product usage and product life cycle to classify inventory as active, discontinued or obsolete. Obsolescence reserve balances are established on an increasing basis from 0% for active, high-demand products to 100% for obsolete products. The reserve is reviewed and, if necessary, adjustments are made on a monthly basis. We rely on historical information and production planning forecasts to support our reserve and utilize management’s business judgment for “high risk” items, such as products that have a fixed shelf life. Once the value of inventory is reduced, we do not adjust the reserve balance until the inventory is sold or otherwise disposed.

Regenerative Medicine inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Inventories on hand include the cost of materials, freight, direct labor and manufacturing overhead. We record a provision for excess and obsolete inventory based primarily on inventory quantities on hand, the historical product sales and estimated forecast of future product demand and production requirements. In addition, we record a provision for tissue that will not meet tissue standards based on historic rejection rates.

(h)Vendor Rebates

We may receive consideration from vendors in the normal course of business in the form of rebates of purchase price paid. Our policy for accounting for these funds is in accordance with the “Revenue Recognition” Topic of the FASB Accounting Standards Codification. Funds are recognized as a reduction of cost of sales and inventory if the funds are a reduction of the price for the vendor’s products.

(i)Long-Lived Assets

Prior to the completion of the Merger on November 4, 2011, property, plant and equipment was stated at cost. On November 4, 2011, property, plant and equipment was recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. On October 28, 2013, property, plant and equipment purchased as part of our acquisition of Systagenix was recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. Betterments, which extend the useful life of the equipment, are capitalized. Debt issuance costs, which represent fees and other direct costs incurred in connection with our borrowings are capitalized and amortized using the effective interest method over the contractual term of the borrowing. Other assets consisted principally of other investments at December 31, 2014 and 2013.

When an event occurs that indicates the carrying value of long-lived assets might not be recoverable, we review property, plant and equipment for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. During 2013, we recorded a $30.6 million fixed asset impairment charge. There were no impairments of fixed assets in 2014.

Depreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives (20 to 30 years for buildings and between 3 and 7 years for most of our other property and equipment) of the assets. Amortization for leasehold improvements is taken over the shorter of the estimated useful life of the asset or over the remaining lease term. Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $108.0 million, $145.7 million, and $178.4 million, respectively. During 2012, we recorded a $22.1 million impairment charge associated with certain production equipment at our manufacturing plant and inventory associated with our V.A.C.Via product.

(j)Goodwill and Other Intangible Assets

Business combinations are accounted for under the acquisition method. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values as of the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

Goodwill is tested for impairment by reporting unit annually as of October 31, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition.

Impairment of goodwill is tested by comparing the carrying value of the reporting unit to the reporting unit’s fair value. The carrying value of each reporting unit is determined by taking the reported net assets of the consolidated entity, identifying reporting unit specific assets (including goodwill) and liabilities and allocating shared operational and administrative assets and liabilities to the appropriate reporting unit. The fair value of each reporting unit is determined using current industry multiples as well as discounted cash flow models using certain performance assumptions and appropriate discount rates determined by our management. To ensure the reasonableness of the estimated fair value of our reporting units, we perform a reconciliation of the estimated fair value of our consolidated entity to the total estimated fair value of all our reporting units. When it is determined that the carrying value of goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, the measurement of any impairment is determined and the carrying value is reduced as appropriate.

Identifiable intangible assets include developed technology, in-process research and development, customer relationships, tradenames and patents. For intangible assets that are subject to amortization, we amortize the assets over the estimated economic or contractual life of the individual asset. When an event occurs that indicates the carrying value of definite-lived intangible assets might not be recoverable, we review the assets for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. Indefinite-lived intangibles are tested for impairment annually as of October 31, or more frequently when events or changes in circumstances indicate that the assets might be impaired. If the carrying amount of the indefinite-lived intangible assets exceeds their fair value, an impairment is recognized in an amount equal to that excess.

The Company performed an interim impairment test on goodwill of its Regenerative Medicine reporting unit during the third quarter of 2013. In our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, we disclosed that in the event of an approximate 6% and 4% drop in the fair value of our Regenerative Medicine reporting unit and the fair value of our Regenerative Medicine indefinite-lived identifiable intangible assets, respectively, the fair value of the Regenerative Medicine reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2012. The Company continued to monitor the close proximity of the reporting unit’s carrying value compared to its fair value and, in the third quarter, determined it was required to complete the interim impairment test, as defined under GAAP. The results of the third quarter 2013 interim impairment test indicated that the estimated fair value of the Regenerative Medicine reporting unit was less than its carrying value; consequently, during the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. There were no impairments of goodwill or identifiable intangible assets during 2014 or 2012.

During 2013, write-offs of $16.9 million of other intangible assets were recorded due primarily to the discontinuation of certain projects.

Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to our business model or changes in operating performance. Significant differences between these estimates and actual cash flows could materially affect our future financial results. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units. In the event of an approximate 27% and 10% drop in the fair value of our KCI reporting unit and the fair value of our KCI indefinite-lived identifiable intangible assets, respectively, the fair value of the KCI reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2014. In the event of an approximate 21% drop in the fair value of our Systagenix reporting unit, the fair value of the Systagenix reporting unit would still exceed its book value as of October 31, 2014. Additionally, in the event of an approximate 11% drop in the fair value of our Regenerative Medicine reporting unit, the fair value of the Regenerative Medicine reporting unit would still exceed its book value as of October 31, 2014. Certain Regenerative Medicine indefinite-lived identifiable intangible assets approximated their fair value as of October 31, 2014.

(k)Income Taxes

Deferred income taxes are accounted for using the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the tax bases of assets and liabilities, as measured by current enacted tax rates.  When appropriate, we evaluate the need for a valuation allowance to reduce our deferred tax assets.

A liability is recorded for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.  We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We have established a valuation allowance to reduce deferred tax assets associated with foreign net operating losses, certain state net operating losses, and certain foreign deferred tax assets to an amount whose realization is more likely than not. We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary differences and expected repatriation of foreign earnings. Accordingly, we believe that no additional valuation allowances are necessary.

(l)Royalties

We pay royalties for the right to market certain of our medical devices. Royalties are generally based on applicable revenue or the number of units sold and are recognized in the period that the related revenue is earned. Royalties related to rental revenue are included in rental expense. Royalties on sales revenue are included in cost of sales.

(m)Self-Insurance

We self-insure certain employee benefit and casualty insurance risks. Our group medical plan for U.S. employees is a qualified self-insured plan subject to specific stop loss insurance coverage. Our short-term disability plan for U.S. based employees is self-insured. The Texas Employee Injury Benefit Plan is self-insured subject to a $750,000 per occurrence retention. Our casualty insurance program has a $750,000 deductible for workers’ compensation, auto liability, and general liability. Our products liability program has a $1,000,000 self-insured retention. Our group life and accidental death and dismemberment plan and our long-term disability plan are all fully insured. We fully accrue our retained loss liabilities, including claims incurred but not reported. Based on historical trends, we believe our accruals for retained losses are adequate to cover future losses.

(n)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.

Periodically, 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; 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 consolidated balance sheet.

All derivative instruments are recorded on the balance sheet 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.

(o)Foreign Currency Translation and Transaction Gains and Losses

The functional currency for the majority of our foreign operations is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from the foreign currency translations are included in accumulated other comprehensive income. Transaction gains and losses, such as those resulting from the settlement of nonfunctional currency receivables or payables, including intercompany balances, are included in foreign currency gain (loss) in our consolidated statements of operations. Additionally, payable and receivable balances and long-term debt denominated in nonfunctional currencies are marked-to-market at month-end, and the gain or loss is recognized in our consolidated statements of operations.

(p)Concentration of Credit Risk

We have a concentration of credit risk with financial institutions related to our derivative instruments. As of December 31, 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 $487.7 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.

(q)Equity-based Compensation

We account for equity-based payments to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires that equity-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values.

As required by ASC 718, we recognize equity-based compensation expense for equity-based payment awards that are expected to vest based on estimated fair values on the date of grant. For awards classified as liability awards, the fair value of these awards is reviewed on a regular basis and the expense associated with these awards is adjusted accordingly as the fair value changes. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rates. To the extent our actual forfeitures are different than our estimates, we record a true-up for the differences in the period that the awards vest, and such true-ups could materially affect our operating results. We also consider whether there have been any significant changes in facts and circumstances that would affect our expected forfeiture rate.

We are also required to determine the fair value of equity-based awards at the grant date. We estimate the fair values of employee incentive equity awards using a Black-Scholes-Merton valuation model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Profits Interest Units and Appreciation Rights. These determinations require judgment, including estimating expected volatility. If actual results differ significantly from these estimates, equity-based compensation expense and our results of operations could be impacted.

(r)Research and Development

The focus of our research and development program has been to invest in clinical studies and the development of new advanced wound healing systems, products and dressings. This includes the development of new and synergistic technologies across the continuum of wound care including tissue regeneration, preservation and repair, new applications of negative pressure technology, and the leveraging of our core understanding of biological tissues in order to develop biosurgery products in our Regenerative Medicine business. The types of costs classified as research and development expense include salaries of technical staff, consultant costs, facilities and utilities costs related to offices occupied by technical staff, depreciation on equipment and facilities used by technical staff, supplies and materials for research and development and outside services such as prototype development and testing and third-party research and development costs. Expenditures for research and development, including expenses related to clinical studies, are expensed as incurred.

(s)Shipping and Handling

We include shipping and handling costs in rental expense and cost of sales, as appropriate. Shipping and handling costs on sales products recovered from customers of $5.1 million, $4.7 million and $4.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, are included in sales revenue for these periods.

(t)Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a government authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes and value added taxes, are accounted for on a net (excluded from revenues and costs) basis.

(u)Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses were $10.9 million, $7.6 million and $8.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

(v)Seasonality

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.

(w)   Legal Proceedings and Other Loss Contingencies

We are subject to various legal proceedings, many involving routine litigation incidental to our business. The outcome of any legal proceeding is not within our complete control, is often difficult to predict and is resolved over very long periods of time. Estimating probable losses associated with any legal proceedings or other loss contingencies is very complex and requires the analysis of many factors including assumptions about potential actions by third parties. Loss contingencies are disclosed when there is at least a reasonable possibility that a loss has been incurred and are recorded as liabilities in the consolidated financial statements when it is both (1) probable or known that a liability has been incurred and (2) the amount of the loss is reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. If a loss contingency is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements.

(x)Concentrations in Available Sources of Materials

For both of our businesses, we obtain some of our finished products and components from a limited group of suppliers, and we purchase certain supplies from single sources for reasons of quality assurance, cost-effectiveness, availability, or constraints resulting from regulatory requirements.

Our manufacturing processes for Advanced Wound Therapeutics products involve producing final assemblies in accordance with a master production plan. Assembly of our products is accomplished using metal parts, plastics, electronics and other materials and component parts that are primarily purchased from outside suppliers. Component parts and materials are obtained from industrial distributors, original equipment manufacturers and contract manufacturers. The majority of parts and materials are readily available in the open market (steel, aluminum, plastics, fabrics, polymers, etc.) for which price volatility is reasonably low. Our manufacturing processes and quality systems are intended to comply with appropriate FDA and International Organization for Standardization (“ISO”) requirements.

Our Ireland plant manufactures certain disposable supplies, on a high-volume automation line, which have historically been supplied by third-party contract manufacturers in Mexico. We plan to continue leveraging our existing infrastructure and manufacturing capabilities to expand internal production in the future.

Many raw materials and contract manufacturing for our advanced wound dressings are sole source or conducted on a purchase order basis. Since the Systagenix acquisition, we have undertaken an effort to qualify a second source supplier for key materials.

Our Regenerative Medicine business is dependent on the availability of sufficient quantities of raw materials, including donated human cadaveric tissue, porcine tissue and other materials required for tissue processing.  We currently receive human tissue from multiple U.S. tissue banks and organ procurement organizations.  

Our Regenerative Medicine xenograft tissue matrix products are made from porcine skin tissue. We have two qualified porcine tissue suppliers. Our primary porcine tissue source is supplied by three separate breeding herd farms that are isolated for biosecurity. We also have qualified second sources for many of our specialized solutions that are essential to the processing of our xenograft tissue matrix products.

While we work closely with suppliers to assure continuity of supply and maintain high quality and reliability, manufacturing disruptions experienced by our suppliers could jeopardize our supply of finished products and components. Additionally, a change in suppliers could require significant effort or investment in circumstances where the items supplied are integral to product performance or incorporate unique technology. Any casualty, natural disaster or other significant disruption of any of our sole-source suppliers’ operations, or any unexpected loss of any existing exclusive supply contract could have a material adverse effect on our business.

(y)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.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carry forward, similar tax loss, or a tax credit carry forward exists at the reporting date. This new guidance became effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company has applied the requirements of ASU 2013-11 prospectively in preparing the December 31, 2014 consolidated balance sheet, which resulted in a decrease to non-current deferred tax assets of $14.9 million and a decrease to non-current reserves for uncertain tax positions of $14.9 million. Had the Company applied the requirements of ASU 2013-11 retrospectively to the December 31, 2013 consolidated balance sheet, there would not have been a material impact.

(z)Recently Issued Accounting Standards

In April 2014, the FASB issued 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.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements — Going Concern (Subtopic 205-40).” The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating this update, however we do not anticipate that the adoption of this guidance will have a material impact on our results of operations, financial position or disclosures.

XML

Income Taxes (Benefit) - Schedule of Deferred Tax Assets and Liabilities (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Deferred Tax Assets [Abstract]
Non-U.S. tax credit	$ 76,320,000	$ 67,765,000
U.S. research and development tax credit	978,000	0
Net operating loss	100,772,000	67,229,000
Accounts receivable	(1,468,000)	9,377,000
Non-U.S. net operating loss carry forwards	36,904,000	23,259,000
Accrued liabilities	87,412,000	12,156,000
Deferred non-U.S. tax asset	43,864,000	48,223,000
Accrued interest	14,686,000	20,296,000
Disallowed Interest carry forward	106,860,000	52,407,000
Unrealized foreign exchange currency loss, net	0	371,000
Inventory	9,717,000	2,124,000
Other	891,000	618,000
Total gross deferred tax assets	476,936,000	303,825,000
Less: valuation allowances	(82,299,000)	(55,944,000)
Net deferred tax assets	394,637,000	247,881,000
Deferred Tax Liabilities [Abstract]
Intangible assets, amortizable	(384,485,000)	(447,286,000)
Intangible assets, indefinite-lived	(454,779,000)	(455,417,000)
Loan Fees	(30,751,000)	(31,343,000)
U.S tax on non-U.S. earnings	(256,039,000)	(190,665,000)
Deferred U.S.state tax liability	3,556,000	(831,000)
Unrealized foreign exchange currency gain, net	(19,883,000)	0
Depreciation	(56,865,000)	(70,870,000)
Other	(6,489,000)	(2,372,000)
Total gross deferred tax liabilities	(1,205,735,000)	(1,198,784,000)
Net deferred tax liability	(811,098,000)	(950,903,000)
Less: current deferred tax asset	(63,025,000)	(23,621,000)
Less: non-current deferred tax asset	(31,692,000)	(31,459,000)
Less: current deferred tax liability	113,658,000	2,199,000
Non-current deferred tax liability	(792,157,000)	(1,003,784,000)
Deferred Tax Assets, Unrealized Tax Credit Carryforwards, Foreign	78,600,000
Internal Revenue Service (IRS) [Member]
Deferred Tax Liabilities [Abstract]
Operating loss carryforwards	219,200,000
State [Member]
Deferred Tax Liabilities [Abstract]
Operating loss carryforwards	545,900,000
Operating loss carryforwards, valuation allowance	36,700,000
Net increase in valuation allowance	26,300,000
Foreign [Member]
Deferred Tax Liabilities [Abstract]
Operating loss carryforwards	154,900,000
Operating loss carryforwards, expiration period	10 years
Operating loss carryforwards, valuation allowance	$ 45,600,000
Minimum [Member]
Deferred Tax Liabilities [Abstract]
Operating loss carryforwards, expiration period	3 years
Maximum [Member]
Deferred Tax Liabilities [Abstract]
Operating loss carryforwards, expiration period	20 years

XML

Acquisitions and Divestitures Business Acquisition, Pro Forma (Details) (Systagenix [Member], USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Systagenix [Member]
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue	$ 1,931,683,000	$ 1,943,296,000
Business Acquisition, Pro Forma Net Income (Loss)	(552,153,000)	(168,001,000)
Business Combination, Acquisition Related Costs	16,200,000
Amortization Of Fair Value Step Up In Inventory		$ 9,800,000

XML

Supplemental Balance Sheet Data (Tables)

12 Months Ended

Dec. 31, 2014

Balance Sheet Related Disclosures [Abstract]

Schedule of Accounts Receivable, Net

Accounts receivable consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	396,329		$	418,804
Unbilled receivables	39,293			50,841
Less:  Allowance for revenue adjustments	(61,460		)	(67,631		)
Gross trade accounts receivable	374,162			402,014
Less:  Allowance for bad debt	(13,087		)	(8,483		)
Net trade accounts receivable	361,075			393,531
Other receivables	9,408			14,047
	$	370,483		$	407,578

Schedule of Inventories, Net

Inventories consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	127,253		$	110,937
Goods and tissue in-process	6,887			12,994
Raw materials, supplies, parts and unprocessed tissue	67,567			71,876
	201,707			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(7,515		)	(3,952		)
Reserve for excess and obsolete inventory	(15,970		)	(10,288		)
	$	178,222		$	181,567

Schedule of Net Property, Plant and Equipment

Net property, plant and equipment consists of the following (in thousands):

	December 31, 2014			December 31, 2013
Land	$	13,121		$	13,438
Buildings	46,561			46,092
Equipment for short-term rental	313,025			297,896
Machinery, equipment and furniture	320,498			294,916
Leasehold improvements	77,810			76,224
Inventory to be converted to equipment	7,515			3,952
	778,530			732,518
Less: accumulated depreciation	(490,482		)	(398,793		)
	$	288,048		$	333,725

Schedule of Accrued Expenses and Other

Accrued expenses and other consist of the following (in thousands):

	December 31, 2014		December 31, 2013
Payroll, benefits, commissions, bonuses and related taxes	$	65,740	$	89,190
Wake Forest royalty settlement and other royalties	85,275		66,446
Interest	43,607		43,253
Sales and other taxes	24,469		21,827
Insurance	8,729		9,425
Derivative liability	13,936		914
Other accrued expenses	101,728		97,920
	$	343,484	$	328,975

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Acquisitions and Divestitures Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

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

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

	December 31, 2013			Adjustment			December 31, 2014
Goodwill	$	171,086		$	1,737		$	172,823
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		)	(1,737		)	(36,489		)
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 as of the beginning of the period presented (in thousands):

	Year Ended December 31,
	2013			2012
Pro forma revenue	$	1,931,683		$	1,943,296
Pro forma net loss	$	(552,153	)	$	(168,001	)

Discontinued Operations and Disposal Groups [Abstract]

Operating results of product portfolios included in discontinued operations - TSS

The operating results of the TSS product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2013			2012
Revenue	$	—		$	188,121
Earnings (loss) before income taxes	$	(5,371	)	$	149,916
Income tax expense (benefit)	$	(2,068	)	$	57,718
Earnings (loss) from discontinued operations	$	(3,303	)	$	92,198

Operating results of product portfolios included in discontinued operations - SPY

The operating results of the SPY® Elite System product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2014		2013			2012
Revenue	$	22,204	$	26,010		$	16,950
Earnings (loss) before income taxes	$	7,436	$	(429	)	$	(5,780	)
Income tax expense (benefit)	$	2,863	$	(165	)	$	(2,225	)
Earnings (loss) from discontinued operations	$	4,573	$	(264	)	$	(3,555	)

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Derivative Financial Instruments and Fair Value Measurements - Gain (Loss) on Derivatives (Details) (Not Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative not designated as hedging instruments	$ (5,183)	$ 1,576	$ (31,433)
Interest Rate Swap [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative not designated as hedging instruments	(5,245)	2,618	(25,486)
Interest Rate Cap [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative not designated as hedging instruments	0	(9)	(1,583)
Foreign Currency Exchange Contracts [Member] | Foreign Currency Gain (Loss) [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative not designated as hedging instruments	$ 62	$ (1,033)	$ (4,364)

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Acquisitions and Divestitures Divestitures (Details) (USD $)	3 Months Ended								12 Months Ended			0 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Nov. 08, 2012
Operating results of product portfolios included in discontinued operations
Earnings (loss) before income taxes									$ 7,436,000	$ (5,800,000)	$ 144,136,000
Income tax expense (benefit)									(2,863,000)	2,233,000	(55,493,000)
Earnings (loss) from discontinued operations, net of tax	1,392,000	1,398,000	1,106,000	677,000	(751,000)	46,000	(828,000)	(2,034,000)	4,573,000	(3,567,000)	88,643,000
Therapeutic Support Systems [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Divestiture of Businesses												241,500,000
Operating results of product portfolios included in discontinued operations
Revenue										0	188,121,000
Earnings (loss) before income taxes										(5,371,000)	149,916,000
Income tax expense (benefit)										(2,068,000)	57,718,000
Earnings (loss) from discontinued operations, net of tax										(3,303,000)	92,198,000
SPY Elite System [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from Divestiture of Businesses	4,500,000
Operating results of product portfolios included in discontinued operations
Revenue									22,204,000	26,010,000	16,950,000
Earnings (loss) before income taxes									7,436,000	(429,000)	(5,780,000)
Income tax expense (benefit)									2,863,000	(165,000)	(2,225,000)
Earnings (loss) from discontinued operations, net of tax									$ 4,573,000	$ (264,000)	$ (3,555,000)

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Accounting for Goodwill and Other Non-current Assets (Tables)

12 Months Ended

Dec. 31, 2014

Accounting for Goodwill and Other Non-current Assets [Abstract]

Schedule of Goodwill

Based on the purchase price allocation, the components of goodwill by reporting unit are listed below (in thousands):

	KCI		Regenerative Medicine			Systagenix		Total
Balance at December 31, 2012	$	2,483,240	$	996,535		$	—	$	3,479,775
Goodwill acquired, net of purchase price adjustments	—		—			171,086		171,086
Impairment of goodwill	—		(272,200		)	—		(272,200		)
Balance at December 31, 2013	2,483,240		724,335			171,086		3,378,661
Adjustment to prior year acquisition	—		—			1,737		1,737
Reduction for sale of business	—		(2,100		)	—		(2,100		)
Balance at December 31, 2014	$	2,483,240	$	722,235		$	172,823	$	3,378,298

Schedule of Definite-lived and Indefinite-lived Intangible Assets

Identifiable intangible assets include the following (in thousands):

	December 31, 2014					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships and non-compete agreements	$	947,638	$	(400,806	)	$	947,706	$	(291,812	)
Developed technology	761,464		(206,355		)	759,898		(128,728		)
Tradenames and patents	129,726		(16,582		)	85,693		(7,322		)
Total definite-lived intangible assets	1,838,828		(623,743		)	1,793,297		(427,862		)
Indefinite-lived intangible assets:
Tradenames	1,178,800		—			1,178,800		—
In-process research and development	3,366		—			4,966		—
Total indefinite-lived intangible assets	1,182,166		—			1,183,766		—
	$	3,020,994	$	(623,743	)	$	2,977,063	$	(427,862	)

Schedule of Estimated Amortization Expense

The following table presents the estimated amortization expense, in total, to be incurred over the next five years for all definite-lived intangible assets as of December 31, 2014 (in thousands):

Year ending December 31,	Estimated Amortization Expense
2015	$178,498
2016	$162,717
2017	$149,423
2018	$136,083
2019	$125,348

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

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

	December 31, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility(1) – due 2018	$	1,927,241		$	1,946,708
Senior Euro Term E-1 Credit Facility(1) – due 2018	293,746			337,820
Senior Term E-2 Credit Facility(1) – due 2016	315,351			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	4,898,439			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(24,241		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(7,376		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(2,955		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(20,205		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,651		)	(3,025		)
Net discount on debt	(57,428		)	(73,352		)
Total debt, net of discount	4,841,011			4,891,814
Less:  Current installments	(25,721		)	(26,311		)
	$	4,815,290		$	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 credit agreement and loan documents, except as revised by the amendment.

Schedule of Redemption Prices for Second Lien Notes

At any time on or after November 1, 2015, we may redeem the second lien senior secured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	105.250%
2016	102.625%
2017 and thereafter	100.000%

Schedule of Redemption Prices for Senior Unsecured Notes

At any time on or after November 1, 2015, we may redeem the senior unsecured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	106.250%
2016	103.125%
2017 and thereafter	100.000%

Schedule of Maturities of Long-term Debt

Future maturities of long-term debt at December 31, 2014 were (in thousands):

Year	Amount
2015	$	25,721
2016	$	334,584
2017	$	22,434
2018	$	3,903,700
2019	$	612,000
Thereafter	$	—

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Consolidated Statements of Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Foreign currency translation adjustment, taxes	$ (753)	$ 233	$ (369)
Unrealized investment gain, taxes	0	(1,403)	0
Reclassification of realized investment gain included in net loss, taxes	1,403	0	0
Accumulated Other Comprehensive Income (Loss) [Member]
Foreign currency translation adjustment, taxes	(753)	233	(369)
Unrealized investment gain, taxes	0	(1,403)	0
Reclassification of realized investment gain included in net loss, taxes	$ 1,403	$ 0	$ 0

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Derivative Financial Instruments and Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 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
		December 31, 2014		December 31, 2013			December 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	13,936	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	8,067		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	22,003	$	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 derivative not designated as hedging instruments (in thousands):

	Year ended December 31,
	2014			2013			2012
Interest rate swap agreements	$	(5,245	)	$	2,618		$	(25,486	)
Interest rate cap agreements	—			(9		)	(1,583		)
Foreign currency exchange contracts	62			(1,033		)	(4,364		)
	$	(5,183	)	$	1,576		$	(31,433	)

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

Derivative [Line Items]

Schedule of Notional Amounts of Outstanding Derivative Positions

The following chart summarizes these agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$487,667	2.256%
12/31/13-12/31/16	$487,667	2.249%
12/31/13-12/31/16	$487,667	2.250%

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Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014 farm supplier Countries segment	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014 farm supplier Countries segment	Dec. 31, 2013	Dec. 31, 2012
Basis of Presentation and Principles of Consolidation [Abstract]
Number of Reportable Operating Segments	2								2
Number of primary geographic regions	2								2
Nature of Operations and Customer Concentration [Abstract]
Number of countries in which entity rents or sales products	75								75
Number of Reporting Units	3								3
Total revenue	$ 482,733,000	$ 481,793,000	$ 459,178,000	$ 442,635,000	$ 462,382,000	$ 432,960,000	$ 426,193,000	$ 411,366,000	$ 1,866,339,000	$ 1,732,901,000	$ 1,729,503,000
Inventories [Abstract]
Sale-only products in excess of anticipated demand, reserve percentage	100.00%								100.00%
Long-Lived Assets [Abstract]
Depreciation expense									108,000,000	145,700,000	178,400,000
Asset impairment charges									0	30,580,000	22,116,000
Goodwill and Other Intangible Assets [Abstract]
Goodwill, Impairment Loss										272,200,000
Write off of in process research and development costs									0	16,885,000	0
Self-Insurance [Abstract]
Casualty insurance deductible	750,000								750,000
Shipping and Handling [Abstract]
Shipping and handling									5,100,000	4,700,000	4,800,000
Advertising Expenses [Abstract]
Advertising expense									10,900,000	7,600,000	8,800,000
Concentrations In Available Sources Of Materials [Abstract]
Number of qualified porcine tissue suppliers	2								2
Number of separate breeding herd farms supplying porcine tissue	3								3
Recently Adopted Accounting Standards [Abstract]
Decrease in non-current deferred tax assets	14,900,000								14,900,000
ASU 2013-11 reclass	14,900,000								14,900,000
Product Liability [Member]
Self-Insurance [Abstract]
Self Insurance, Retention Amount	1,000,000								1,000,000
Employee Injury Benefit Plan [Member]
Self-Insurance [Abstract]
Self Insurance, Retention Amount	750,000								750,000
Minimum [Member]
Nature of Operations and Customer Concentration [Abstract]
Number of Countries in which Entity Operates	25								25
Number of Countries in which company has sales through indirect operations	50								50
Inventories [Abstract]
Obsolescence reserve balance percentage	0.00%								0.00%
Minimum [Member] | Buildings [Member]
Long-Lived Assets [Abstract]
Useful life									20 years
Minimum [Member] | Property, Plant and Equipment, Other Types [Member]
Long-Lived Assets [Abstract]
Useful life									3 years
Maximum [Member]
Inventories [Abstract]
Obsolescence reserve balance percentage	100.00%								100.00%
Maximum [Member] | Buildings [Member]
Long-Lived Assets [Abstract]
Useful life									30 years
Maximum [Member] | Property, Plant and Equipment, Other Types [Member]
Long-Lived Assets [Abstract]
Useful life									7 years
United States [Member]
Nature of Operations and Customer Concentration [Abstract]
Total revenue									1,329,306,000	1,321,517,000	1,335,043,000
Sales [Member] | Americas [Member] | Geographic Concentration Risk [Member]
Nature of Operations and Customer Concentration [Abstract]
Concentration risk, percentage									75.60%	80.30%	80.90%
Chiron Guernsey Holdings LP [Member] | Minimum [Member]
Basis of Presentation and Principles of Consolidation [Abstract]
Ownership percentage									99.00%	99.00%	99.00%
Acelity Managing Limited Partner [Member] | Maximum [Member]
Basis of Presentation and Principles of Consolidation [Abstract]
Ownership percentage									1.00%	1.00%	1.00%
Chiron Guernsey GP Co. Limited [Member]
Basis of Presentation and Principles of Consolidation [Abstract]
Percentage of general partnership owned									100.00%	100.00%	100.00%
Acute and Extended Care Organizations [Member] | Sales [Member] | United States [Member] | Geographic Concentration Risk [Member]
Nature of Operations and Customer Concentration [Abstract]
Concentration risk, percentage									58.50%	60.80%	59.20%
Medicare [Member] | United States [Member]
Nature of Operations and Customer Concentration [Abstract]
Total revenue									120,600,000	142,500,000	167,100,000
Novation, LLC [Member] | United States [Member]
Nature of Operations and Customer Concentration [Abstract]
Total revenue									106,700,000	94,100,000	96,300,000
Interest Rate Swap [Member] | Concentration of Credit Risk [Member]
Concentration of Credit Risk [Abstract]
Derivative, Notional Amount	487,700,000								487,700,000
Regenerative Medicine [Member]
Nature of Operations and Customer Concentration [Abstract]
Total revenue									428,089,000	442,174,000	417,245,000
Goodwill and Other Intangible Assets [Abstract]
Change in fair value of reporting unit									11.00%		6.00%
Change in fair value of identifiable intangible assets											4.00%
Goodwill, Impairment Loss										272,200,000
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)										171,200,000
Advanced Wound Therapeutics [Member]
Nature of Operations and Customer Concentration [Abstract]
Total revenue									1,420,278,000	1,287,387,000	1,312,258,000
Goodwill and Other Intangible Assets [Abstract]
Change in fair value of reporting unit									27.00%
Change in fair value of identifiable intangible assets									10.00%
Write off of in process research and development costs										16,700,000
Systagenix [Member]
Goodwill and Other Intangible Assets [Abstract]
Change in fair value of reporting unit									21.00%
Goodwill, Impairment Loss										$ 0

XML

Long-Term Debt (Details) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended			11 Months Ended	0 Months Ended
	Mar. 15, 2013	Feb. 04, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014	Mar. 10, 2015	Nov. 30, 2011	Dec. 31, 2008
Debt Instrument [Line Items]
Long-term debt, gross			$ 4,898,439,000	$ 4,965,166,000		4,898,439,000
Less: Discount, net of accretion			(57,428,000)	(73,352,000)		(57,428,000)
Long-term Debt			4,841,011,000	4,891,814,000		4,841,011,000
Less: Current installments			(25,721,000)	(26,311,000)		(25,721,000)
Long-term debt, net of current installments and discount			4,815,290,000	4,865,503,000		4,815,290,000
Interest [Abstract]
Interest rate added on past due amounts			2.00%			2.00%
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Additional interest accrual rate	0.50%	0.25%
Interest and Future Maturities [Abstract]
Interest paid, net of cash received from interest rate derivatives			367,000,000	385,700,000	432,200,000
Maturities of Long-term Debt [Abstract]
2015			25,721,000			25,721,000
2016			334,584,000			334,584,000
2017			22,434,000			22,434,000
2018			3,903,700,000			3,903,700,000
2019			612,000,000			612,000,000
Thereafter			0			0
Dollar Term E-1 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						3.00%
Dollar Term E-1 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						2.00%
Euro Term E-1 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						3.25%
Euro Term E-1 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						2.25%
Dollar Term E-2 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						2.50%
Dollar Term E-2 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						1.50%
Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member]
Maturity [Abstract]
Quarterly installments as percentage of original principal amount			1.00%
Mandatory Repayments [Abstract]
Mandatory repayments due to disposition of certain property, percentage of proceeds			100.00%
Mandatory repayments due to issuance or incurrence of debt, percentage of proceeds			100.00%
Mandatory repayments, percentage of excess annual cash flow			50.00%
Mandatory repayments, percentage of excess annual cash flow, first stepdown			25.00%
Mandatory repayments, percentage of excess annual cash flow, second stepdown			0.00%
Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] | Eurocurrency Rate [Member] | Minimum [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						1.00%
Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] | Base Rate [Member] | Minimum [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate						2.00%
Revolving Credit Facility [Member] | Senior Revolving Credit Facility - due 2016 [Member]
Senior Secured Credit Facilities [Abstract]
Credit facility, maximum borrowing capacity								200,000,000
Line of Credit Facility, Amount Outstanding				0
Letters of credit, amount outstanding			39,000,000	21,200,000		39,000,000
Credit facility, remaining borrowing capacity			161,000,000	178,800,000		161,000,000
Credit facility, unused capacity, commitment fee percentage			0.50%
Senior Secured Credit Facility [Member]
Interest [Abstract]
Payments of Financing Costs			1,800,000
Collateral [Abstract]
Maximum percentage of voting stock (in hundredths)			65.00%			65.00%
Present and future real property pledged as collateral			20,000,000			20,000,000
Term Credit Facilities [Member] | Dollar Term D-1 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross				1,946,708,000
Less: Discount, net of accretion				(30,926,000)
Term Credit Facilities [Member] | Euro Term D-1 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross				337,820,000
Less: Discount, net of accretion				(10,693,000)
Term Credit Facilities [Member] | Dollar Term D-2 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross				318,537,000
Less: Discount, net of accretion				(4,486,000)
Term Credit Facilities [Member] | Dollar Term E-1 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross			1,927,241,000			1,927,241,000
Less: Discount, net of accretion			(24,241,000)			(24,241,000)
Term Credit Facilities [Member] | Euro Term E-1 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross			293,746,000			293,746,000
Less: Discount, net of accretion			(7,376,000)			(7,376,000)
Term Credit Facilities [Member] | Dollar Term E-2 Facility [Member]
Debt Instrument [Line Items]
Long-term debt, gross			315,351,000			315,351,000
Less: Discount, net of accretion			(2,955,000)			(2,955,000)
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member]
Debt Instrument [Line Items]
Long-term debt, gross			1,750,000,000	1,750,000,000		1,750,000,000
Less: Discount, net of accretion			(20,205,000)	(24,222,000)		(20,205,000)
Collateral [Abstract]
Maximum percentage of voting stock (in hundredths)			65.00%			65.00%
Present and future real property pledged as collateral			20,000,000			20,000,000
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, face amount								1,750,000,000.00
Interest rate on senior long-term debt			10.50%			10.50%
Redemption price of notes as percentage of principal plus accrued interest in event of change of control			101.00%			101.00%
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member] | Prior to November 1, 2014 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Aggregate principal amount of notes redeemable prior to November 1, 2014			35.00%			35.00%
Debt instrument, redemption price, percentage			110.50%
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member] | Prior to November 1, 2015 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			100.00%
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member] | On or after November 1, 2015 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			105.25%
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member] | On or after November 1, 2016 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			102.625%
Senior Secured Notes [Member] | 10.5% Second Lien Senior Secured Notes due 2018 [Member] | On or after November 1, 2017 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			100.00%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member]
Debt Instrument [Line Items]
Long-term debt, gross			612,000,000	612,000,000		612,000,000
Less: Discount, net of accretion			(2,651,000)	(3,025,000)		(2,651,000)
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, face amount								750,000,000
Interest rate on senior long-term debt			12.50%			12.50%
Redemption price of notes as percentage of principal plus accrued interest in event of change of control			101.00%			101.00%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member] | Prior to November 1, 2014 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Aggregate principal amount of notes redeemable prior to November 1, 2014			35.00%			35.00%
Debt instrument, redemption price, percentage			112.50%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member] | Prior to November 1, 2015 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			100.00%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member] | On or after November 1, 2015 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			106.25%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member] | On or after November 1, 2016 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			103.125%
Senior Unsecured Notes [Member] | 12.5% Senior Unsecured Notes due 2019 [Member] | On or after November 1, 2017 [Member]
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, redemption price, percentage			100.00%
Convertible Senior Notes [Member] | 3.25% Convertible Senior Notes due 2015 [Member]
Debt Instrument [Line Items]
Long-term debt, gross			101,000	101,000		101,000
10.5% Second Lien Senior Secured Notes, 12.5% Senior Unsecured Notes and 3.25% Convertible Senior Notes [Abstract]
Debt instrument, face amount									690,000,000
Interest rate on senior long-term debt									3.25%
Beginning March 31, 2012 [Member] | Senior Secured Credit Facility [Member]
Covenants [Abstract]
Leverage ratio of debt to EBITDA			8.50			8.50
Ratio of EBITDA to interest expense			1.10			1.10
Banks Which Are Not Party To Senior Secured Credit Facility [Member] | Senior Secured Credit Facility [Member] | Senior Revolving Credit Facility - due 2016 [Member]
Senior Secured Credit Facilities [Abstract]
Letters of credit, amount outstanding			11,400,000	12,600,000		11,400,000
Internal Revenue Service (IRS) [Member]
Debt Instrument [Line Items]
Operating loss carryforwards			$ 219,200,000			219,200,000
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-1 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							3.50%
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-1 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							2.50%
Debt Instrument Basis Spread on Variable Rate [Member] | Euro Term E-1 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							3.75%
Debt Instrument Basis Spread on Variable Rate [Member] | Euro Term E-1 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							2.75%
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-2 Facility [Member] | Eurocurrency Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							3.00%
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-2 Facility [Member] | Base Rate [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							2.00%
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] | Eurocurrency Rate [Member] | Minimum [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							1.00%
Debt Instrument Basis Spread on Variable Rate [Member] | Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility [Member] | Base Rate [Member] | Minimum [Member]
Interest [Abstract]
Credit facility, basis spread on variable rate							2.00%

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Segment and Geographic Information Information on segment assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 7,000,713	$ 7,272,645	$ 7,574,764
Advanced Wound Therapeutics [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	5,070,845	5,274,625	4,966,687
Regenerative Medicine [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	1,539,057	1,574,315	2,039,137
Other [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 390,811	$ 423,705	$ 568,940

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 183,541	$ 206,949
Accounts receivable, net	370,483	407,578
Inventories, net	178,222	181,567
Deferred income taxes	63,025	23,621
Prepaid expenses and other	27,563	53,161
Total current assets	822,834	872,876
Net property, plant and equipment	288,048	333,725
Debt issuance costs, net	77,896	102,054
Deferred income taxes	31,692	31,459
Goodwill	3,378,298	3,378,661
Identifiable intangible assets, net	2,397,251	2,549,201
Other non-current assets	4,694	4,669
Total assets	7,000,713	7,272,645
Current liabilities:
Accounts payable	51,827	50,316
Accrued expenses and other	343,484	328,975
Current installments of long-term debt	25,721	26,311
Income taxes payable	1,305	3,368
Deferred income taxes	113,658	2,199
Total current liabilities	535,995	411,169
Long-term debt, net of current installments and discount	4,815,290	4,865,503
Non-current tax liabilities	33,300	53,682
Deferred income taxes	792,157	1,003,784
Other non-current liabilities	163,258	40,432
Total liabilities	6,340,000	6,374,570
Equity:
General partner’s capital	0	0
Limited partners’ capital	670,787	900,218
Accumulated other comprehensive income (loss), net	(10,074)	(2,143)
Total equity	660,713	898,075
Total liabilities and shareholders' equity	$ 7,000,713	$ 7,272,645

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Supplemental Balance Sheet Data - Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Billed trade accounts receivable	$ 396,329	$ 418,804
Unbilled receivables	39,293	50,841
Less: Allowance for revenue adjustments	(61,460)	(67,631)
Gross trade accounts receivable	374,162	402,014
Less: Allowance for bad debt	(13,087)	(8,483)
Net trade accounts receivable	361,075	393,531
Other receivables	9,408	14,047
Accounts receivable, net	$ 370,483	$ 407,578

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Cash flows from operating activities:
Net loss	$ (230,473)	$ (558,658)		$ (141,417)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt issuance costs and discount	38,966	35,838		29,155
Depreciation and other amortization	303,905	335,959		436,370
Loss (gain) on disposition of assets	(900)	4,423		(152,701)
Amortization of fair value step-up in inventory	6,680	3,162		25,021
Fixed asset and inventory impairment	0	30,580		22,116
Impairment of goodwill and intangible assets	0	443,400	[1]	0
Write-off of other intangible assets	0	16,885		0
Provision for bad debt	14,032	7,308		8,984
Loss on extinguishment of debt	0	2,364		31,481
Gain on sale of investment	(3,211)	0		0
Equity-based compensation expense	4,033	2,925		2,069
Deferred income tax benefit	(159,170)	(187,089)		(126,389)
Unrealized loss (gain) on derivative instruments	(10,670)	(4,645)		30,002
Unrealized loss (gain) on revaluation of cross currency debt	(39,756)	14,450		6,272
Change in assets and liabilities:
Decrease (increase) in accounts receivable, net	26,596	(10,924)		37,574
Increase in inventories, net	(3,096)	(17,171)		(18,797)
Decrease (increase) in prepaid expenses and other	19,308	(9,338)		2,468
Increase (decrease) in accounts payable	1,608	1,137		(8,815)
Increase (decrease) in accrued expenses and other	125,677	20,449		(24,537)
Increase (decrease) in tax liabilities, net	(1,734)	5,724		3,837
Net cash provided by operating activities	91,795	136,779		162,693
Cash flows from investing activities:
Additions to property, plant and equipment	(66,584)	(80,911)		(91,567)
Decrease (increase) in inventory to be converted into equipment for short-term rental	(3,563)	1,286		5,269
Dispositions of property, plant and equipment	3,652	1,298		2,630
Proceeds from disposition of assets	5,212	0		244,317
Proceeds from sale of investment	4,211	0		0
Business acquired in purchase transaction, net of cash acquired	(9,613)	(478,748)		(15,097)
Increase in identifiable intangible assets and other non-current assets	(11,587)	(6,747)		(1,017)
Net cash provided (used) by investing activities	(78,272)	(563,822)		144,535
Cash flows from financing activities:
Capital contributions from limited partners	0	0		239
Distribution to limited partners	0	(1,572)		(2,199)
Settlement of profits interest units	(2,332)	(176)		0
Repayments of long-term debt and capital lease obligations	(26,403)	(69,396)		(118,767)
Debt issuance costs	0	(20,477)		(18,410)
2013 and 2012 acquisition financing:
Proceeds from senior credit facility	0	349,563		0
Payment of debt issuance costs	0	(7,340)		(1,063)
Net cash provided (used) by financing activities	(28,735)	250,602		(140,200)
Effect of exchange rate changes on cash and cash equivalents	(8,196)	240		696
Net increase (decrease) in cash and cash equivalents	(23,408)	(176,201)		167,724
Cash and cash equivalents, beginning of period	206,949	383,150		215,426
Cash and cash equivalents, end of period	$ 183,541	$ 206,949		$ 383,150

[1] During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

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Income Taxes (Benefit) - Schedule of Income before Income Tax, Domestic and Foreign (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Line Items]
U.S.	$ (515,976)	$ (845,261)	$ (492,869)
Non-U.S.	161,335	133,578	259,122
Earnings (loss) before income taxes, total	(354,641)	(711,683)	(233,747)
Earnings (loss) from discontinued operations before income taxes	7,436	(5,800)	144,136
Earnings (loss) from continuing operations before income taxes (benefit)	$ (362,077)	$ (705,883)	$ (377,883)

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Incentive Compensation Plans Incentive Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Equity-Based Compensation Expense

Equity-based compensation expense was recognized in the consolidated statements of operations as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Rental expenses	$	106	$	52	$	2
Cost of sales	105		113		88
Selling, general and administrative expenses	3,822		2,760		1,979
Total equity-based compensation expense, net of tax	$	4,033	$	2,925	$	2,069

Weighted Average Assumptions, Profits Interest Units

The estimated fair values for these periods included the following weighted average assumptions for both the time-based and performance-based Profits Interest Units (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Profits Interest Unit Activity

A summary of our Profits Interest Unit (“PIU”) activity, and related information is set forth in the table below (in thousands, except weighted average grant date fair value):

	Time-based		Performance-based		Total		Weighted Average Grant Date Fair Value
PIU outstanding – December 31, 2013	8,562		7,922		16,484		$	1.50
Granted	2,054		2,054		4,108		$	1.52
Repurchased	(947	)	—		(947	)	$	1.45
Forfeited/Expired	(1,698	)	(3,123	)	(4,821	)	$	1.75
PIU outstanding – December 31, 2014	7,971		6,853		14,824		$	1.42
PIU exercisable as of December 31, 2014	4,583		—		4,583		$	1.49

Weighted Average Assumptions, Appreciation Rights

The estimated fair values for the years ended December 31, 2014, 2013 and 2012 included the following weighted average assumptions for both the time-based and performance-based Appreciation Rights (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Appreciation Rights Activity

A summary of our Appreciation Rights activity, and related information, for the year ended December 31, 2014 is set forth in the table below (in thousands, except exercise price and contractual term):

	Time-based		Performance-based		Total		Weighted Average Base Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Appreciation Rights outstanding – December 31, 2013	787		787		1,574		$	6.50	8.96
Granted	682		682		1,364		$	7.95
Exercised	—		—		—		$	—
Forfeited/Expired	(345	)	(345	)	(690	)	$	6.69
Appreciation Rights outstanding – December 31, 2014	1,124		1,124		2,248		$	7.32	8.56	$	—
Appreciation rights exercisable - December 31, 2014	—		—		—		$	—	N/A	$	—

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Incentive Compensation Plans - Equity-Based Compensation Expense and 401(k) Recognized Costs (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Pre-tax equity-based compensation expense	$ 4,033,000	$ 2,925,000	$ 2,069,000
Total equity-based compensation expense, net of tax	4,033,000	2,925,000	2,069,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	0	0	0
401(k) recognized costs	13,300,000	12,200,000	14,700,000
Rental Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Pre-tax equity-based compensation expense	106,000	52,000	2,000
Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Pre-tax equity-based compensation expense	105,000	113,000	88,000
Selling, General and Adminstrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Pre-tax equity-based compensation expense	$ 3,822,000	$ 2,760,000	$ 1,979,000

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Segment and Geographic Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic 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 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 and the service fee payable by Getinge under the transition services agreement.

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

	Year ended December 31,
	2014			2013			2012
Revenue:
Advanced Wound Therapeutics	$	1,420,278		$	1,287,387		$	1,312,258
Regenerative Medicine	428,089			442,174			417,245
Other operations (1)	17,972			3,340			—
Total revenue	$	1,866,339		$	1,732,901		$	1,729,503
Operating earnings (loss):
Advanced Wound Therapeutics (2)	$	455,666		$	443,850		$	398,066
Regenerative Medicine	132,904			125,112			109,931
Other operations (1)	2,443			637			—
Non-allocated costs:
General headquarter expense (3)	(9,516		)	(55,044		)	(19,928		)
Equity-based compensation	(4,033		)	(2,925		)	(2,069		)
Business optimization and transaction-related expenses (4)	(150,125		)	(144,253		)	(101,191		)
Acquired intangible asset amortization (5)	(194,433		)	(188,571		)	(220,984		)
Wake Forest settlement	(198,578		)	—			—
Impairment of goodwill and intangible assets (6)	—			(443,400		)	—
Total non-allocated costs	(556,685		)	(834,193		)	(344,172		)
Total operating earnings (loss)	$	34,328		$	(264,594	)	$	163,825

(1) Represents contract manufacturing operations conducted at our manufacturing facility in Gargrave, England for the period subsequent to our acquisition of Systagenix as discussed in Note 2.

(2) 2013 includes write-offs of $16.7 million of other intangible assets due primarily to the discontinuation of certain AWT projects. 2012 includes $22.1 million of impairment charges associated with certain production equipment at our Athlone manufacturing plant and inventory associated with our V.A.C.Via product.

(3) 2013 includes a $30.6 million fixed asset impairment charge.

(4) Represents restructuring-related expenses associated with our business optimization initiatives as well as management fees and costs associated with acquisition, disposition and financing activities.

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

(6) During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

	Year ended December 31,
	2014		2013		2012
Depreciation and other amortization:
Advanced Wound Therapeutics	$	231,296	$	261,348	$	324,945
Regenerative Medicine	70,882		68,514		70,730
Other	1,727		6,097		40,695
	$	303,905	$	335,959	$	436,370

Significant non-cash expense other than depreciation and amortization expense includes the Merger and acquisition-related periodic recognition of cost of sales associated with the application of purchase accounting adjustments to step up the value of inventory. For the years ended December 31, 2014 and 2013, we recognized $6.7 million and $3.2 million, respectively, in related cost of sales for Advanced Wound Therapeutics related to our acquisition of Systagenix. For the year ended December 31, 2012, we recognized $5.7 million and $19.7 million, respectively, in Merger-related cost of sales for Advanced Wound Therapeutics and Regenerative Medicine.

Advanced Wound Therapeutics and Regenerative Medicine assets are primarily accounts receivable, inventories, goodwill, intangible assets and net property, plant and equipment generally identifiable by product. Other assets include assets related to our divestiture and assets not specifically identifiable to a product, such as cash, deferred income taxes, prepaid expenses, net debt issuance costs and other non-current assets. Information on segment assets are as follows (in thousands):

	December 31,
	2014		2013		2012
Total assets:
Advanced Wound Therapeutics	$	5,070,845	$	5,274,625	$	4,966,687
Regenerative Medicine	1,539,057		1,574,315		2,039,137
Other	390,811		423,705		568,940
	$	7,000,713	$	7,272,645	$	7,574,764

Advanced Wound Therapeutics and Regenerative Medicine gross capital expenditures primarily relate to manufactured rental assets, manufacturing equipment, and computer hardware and software identifiable by product. Other capital expenditures include those related to our TSS business which was sold in November 2012 and those not specifically identifiable to a product, such as the purchase of land and the construction of our global headquarters building, leasehold improvements, and computer hardware and software. The following table contains information on gross capital expenditures (in thousands):

	Year ended December 31,
	2014		2013		2012
Gross capital expenditures:
Advanced Wound Therapeutics	$	21,517	$	36,910	$	15,731
Regenerative Medicine	7,057		17,862		26,240
Other	38,010		26,139		49,596
	$	66,584	$	80,911	$	91,567

Revenues are attributed to countries based on the location of our entity providing the products or services. Information on the geographical location of select financial information is as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Geographic location of revenue:
Domestic	$	—	$	—	$	—
United States	1,329,306		1,321,517		1,335,043
Other foreign	537,033		411,384		394,460
Total revenue	$	1,866,339	$	1,732,901	$	1,729,503

	December 31,
	2014		2013		2012
Geographic location of long-lived assets (1):
Domestic	$	—	$	—	$	—
United States	198,754		224,789		287,700
Other foreign	89,294		108,936		100,782
Total long-lived assets	$	288,048	$	333,725	$	388,482

_____________________________

(1)Long-lived assets exclude intangible assets.

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Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2014

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

Other Comprehensive Income (loss)

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

	Accumulated Foreign Currency Translation Adjustment			Unrealized Investment Gains (Losses)			Accumulated Other Comprehensive Income (Loss)
Balances at January 1, 2012	$	(5,841	)	$	—		$	(5,841	)
Foreign currency translation adjustment, net of tax expense of $369	5,324			—			5,324
Balances at December 31, 2012	(517		)	—			(517		)
Foreign currency translation adjustment, net of tax benefit of $233	(3,867		)	—			(3,867		)
Unrealized investment gain, net of tax expense of $1,403 in 2013	—			2,241			2,241
Balances at December 31, 2013	(4,384		)	2,241			(2,143		)
Foreign currency translation adjustment, net of tax expense of $753	(5,690		)	—			(5,690		)
Unrealized investment loss, net of tax benefit	—			—			—
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	—			(2,241		)	(2,241		)
Balances at December 31, 2014	$	(10,074	)	$	—		$	(10,074	)

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Guarantor Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 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 the10.5% 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 the10.5% Second Lien Notes or 12.5% Unsecured Notes, or

(4) upon the achievement of investment grade status by the10.5% 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 December 31, 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

December 31, 2014

(in thousands)

	Acelity 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	$	41,027		$	1,499	$	140,617	$	—		$	183,541
Accounts receivable, net	—		179,872			67,355		123,256		—			370,483
Inventories, net	—		73,904			110,355		93,765		(99,802		)	178,222
Deferred income taxes	—		52,868			10,157		—		—			63,025
Prepaid expenses and other	—		11,106			6,851		247,606		(238,000		)	27,563
Intercompany receivables	166		1,854,033			2,432,299		48,267		(4,334,765		)	—
Total current assets	564		2,212,810			2,628,516		653,511		(4,672,567		)	822,834
Net property, plant and equipment	—		315,691			69,801		164,838		(262,282		)	288,048
Debt issuance costs, net	—		77,896			—		—		—			77,896
Deferred income taxes	—		—			—		31,692		—			31,692
Goodwill	—		2,483,240			732,138		162,920		—			3,378,298
Identifiable intangible assets, net	—		299,575			1,788,661		309,015		—			2,397,251
Other non-current assets	—		1,161			186		94,247		(90,900		)	4,694
Intercompany loan receivables	—		760,000			429,856		—		(1,189,856		)	—
Intercompany investments	667,530		360,292			223,581		—		(1,251,403		)	—
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713
Liabilities and Equity:
Current liabilities:
Accounts payable	$	245	$	16,298		$	14,463	$	20,821	$	—		$	51,827
Accrued expenses and other	—		218,793			244,829		74,380		(194,518		)	343,484
Intercompany payables	6,441		1,181,383			2,634,149		512,792		(4,334,765		)	—
Current installments of long-term debt	—		25,721			—		—		—			25,721
Income taxes payable	—		—			—		1,305		—			1,305
Deferred income taxes	—		—			113,658		—		—			113,658
Total current liabilities	6,686		1,442,195			3,007,099		609,298		(4,529,283		)	535,995
Long-term debt, net of current installments and discount	—		4,815,290			—		—		—			4,815,290
Non-current tax liabilities	—		9,404			6,203		17,693		—			33,300
Deferred income taxes	—		106,440			637,777		47,940		—			792,157
Other non-current liabilities	695		113,368			48,172		1,023		—			163,258
Intercompany loan payables	—		420,294			760,000		9,562		(1,189,856		)	—
Total liabilities	7,381		6,906,991			4,459,251		685,516		(5,719,139		)	6,340,000
Total equity	660,713		(396,326		)	1,413,488		730,707		(1,747,869		)	660,713
	$	668,094	$	6,510,665		$	5,872,739	$	1,416,223	$	(7,467,008	)	$	7,000,713

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Balance Sheet

December 31, 2013

(in thousands)

	Acelity 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)

	For the year ended December 31, 2014
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	606,031		$	—		$	113,833		$	—		$	719,864
Sales	—			292,573			919,988			862,689			(928,775		)	1,146,475
Total revenue	—			898,604			919,988			976,522			(928,775		)	1,866,339
Rental expenses	106			292,336			11,156			202,613			(173,449		)	332,762
Cost of sales	105			314,129			571,768			370,643			(933,282		)	323,363
Gross profit (loss)	(211		)	292,139			337,064			403,266			177,956			1,210,214
Selling, general and administrative expenses	3,822			295,324			211,865			203,110			(567		)	713,554
Research and development expenses	—			24,044			26,803			18,474			—			69,321
Acquired intangible asset amortization	—			61,995			79,136			53,302			—			194,433
Wake Forest settlement	—			198,578			—			—			—			198,578
Operating earnings (loss)	(4,033		)	(287,802		)	19,260			128,380			178,523			34,328
Non-operating intercompany transactions	—			18,775			146,218			(249,577		)	84,584			—
Interest income and other	—			73,919			19,148			319			(89,719		)	3,667
Interest expense	—			(431,670		)	(68,861		)	(1,921		)	89,719			(412,733		)
Foreign currency gain (loss)	—			44,515			(924		)	(25,747		)	—			17,844
Derivative instruments loss	—			(5,183		)	—			—			—			(5,183		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(4,033		)	(587,446		)	114,841			(148,546		)	263,107			(362,077		)
Income tax expense (benefit)	—			(165,662		)	36,119			2,512			—			(127,031		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(4,033		)	(421,784		)	78,722			(151,058		)	263,107			(235,046		)
Equity in earnings (loss) of subsidiaries	(226,440		)	(72,592		)	(151,058		)	—			450,090			—
Earnings (loss) from continuing operations	(230,473		)	(494,376		)	(72,336		)	(151,058		)	713,197			(235,046		)
Earnings (loss) from discontinued operations, net of tax	—			—			4,573			—			—			4,573
Net earnings (loss)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Total comprehensive income (loss)	$	(238,404	)	$	(502,307	)	$	(75,694	)	$	(158,989	)	$	736,990		$	(238,404	)

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2013
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	608,256		$	—		$	135,562		$	—		$	743,818
Sales	—			295,530			855,607			679,340			(841,394		)	989,083
Total revenue	—			903,786			855,607			814,902			(841,394		)	1,732,901
Rental expenses	52			253,082			10,986			221,473			(132,089		)	353,504
Cost of sales	113			296,788			523,367			261,199			(829,625		)	251,842
Gross profit (loss)	(165		)	353,916			321,254			332,230			120,320			1,127,555
Selling, general and administrative expenses	2,759			346,731			173,772			161,678			(339		)	684,601
Research and development expenses	—			29,555			31,679			14,343			—			75,577
Acquired intangible asset amortization	—			80,042			73,794			34,735			—			188,571
Impairment of goodwill and intangible assets	—			—			443,400			—			—			443,400
Operating earnings (loss)	(2,924		)	(102,412		)	(401,391		)	121,474			120,659			(264,594		)
Non-operating intercompany transactions	—			58,867			123,951			(153,998		)	(28,820		)	—
Interest income and other	—			72,601			12,251			179			(83,429		)	1,602
Interest expense	—			(431,882		)	(70,623		)	(801		)	83,429			(419,877		)
Loss on extinguishment of debt	—			(2,364		)	—			—			—			(2,364		)
Foreign currency loss	—			(16,723		)	(179		)	(5,316		)	(8		)	(22,226		)
Derivative instruments gain	—			1,576			—			—			—			1,576
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,924		)	(420,337		)	(335,991		)	(38,462		)	91,831			(705,883		)
Income tax expense (benefit)	—			(166,067		)	8,120			7,155			—			(150,792		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,924		)	(254,270		)	(344,111		)	(45,617		)	91,831			(555,091		)
Equity in earnings (loss) of subsidiaries	(555,734		)	56,284			(46,074		)	—			545,524			—
Earnings (loss) from continuing operations	(558,658		)	(197,986		)	(390,185		)	(45,617		)	637,355			(555,091		)
Earnings from discontinued operations, net of tax	—			(3,091		)	(309		)	(457		)	290			(3,567		)
Net earnings (loss)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Total comprehensive income (loss)	$	(560,284	)	$	(202,703	)	$	(392,120	)	$	(47,700	)	$	642,523		$	(560,284	)

Condensed Consolidating Parent Company, Co-Issuers,

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

(in thousands)

	For the year ended December 31, 2012
	Acelity L.P. Inc. Parent Company			Kinetic Concepts, Inc. and KCI USA, Inc. Borrower			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue:
Rental	$	—		$	654,372		$	—		$	161,188		$	—		$	815,560
Sales	—			292,303			411,032			547,346			(336,738		)	913,943
Total revenue	—			946,675			411,032			708,534			(336,738		)	1,729,503
Rental expenses	2			288,143			1,195			259,308			(109,896		)	438,752
Cost of sales	88			240,146			136,556			236,766			(369,184		)	244,372
Gross profit (loss)	(90		)	418,386			273,281			212,460			142,342			1,046,379
Selling, general and administrative expenses	1,991			327,223			120,789			140,549			(694		)	589,858
Research and development expenses	—			26,310			36,213			9,189			—			71,712
Acquired intangible asset amortization	—			102,954			77,752			40,278			—			220,984
Operating earnings (loss)	(2,081		)	(38,101		)	38,527			22,444			143,036			163,825
Non-operating intercompany transactions	—			100,690			329,531			(474,480		)	44,259			—
Interest income and other	—			73,114			12,251			177			(84,713		)	829
Interest expense	—			(478,756		)	(72,458		)	(121		)	84,713			(466,622		)
Loss on debt extinguishment	—			(31,481		)	—			—			—			(31,481		)
Foreign currency gain (loss)	—			(7,822		)	294			(5,473		)	—			(13,001		)
Derivative instruments loss	—			(31,433		)	—			—			—			(31,433		)
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries	(2,081		)	(413,789		)	308,145			(457,453		)	187,295			(377,883		)
Income tax expense (benefit)	—			(140,681		)	50,759			(57,901		)	—			(147,823		)
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries	(2,081		)	(273,108		)	257,386			(399,552		)	187,295			(230,060		)
Equity in earnings (loss) of subsidiaries	(139,336		)	(60,960		)	(375,553		)	—			575,849			—
Earnings (loss) from continuing operations	(141,417		)	(334,068		)	(118,167		)	(399,552		)	763,144			(230,060		)
Earnings from discontinued operations, net of tax	—			4,546			37,855			23,999			22,243			88,643
Net earnings (loss)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Total comprehensive income (loss)	$	(136,093	)	$	(324,198	)	$	(74,988	)	$	(370,229	)	$	769,415		$	(136,093	)

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2014
	Acelity 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)	$	(230,473	)	$	(494,376	)	$	(67,763	)	$	(151,058	)	$	713,197		$	(230,473	)
Adjustments to reconcile net earnings (loss) to net cash provided	6,364			306,092			104,787			131,736			(226,711		)	322,268
Net cash provided (used) by operating activities	(224,109		)	(188,284		)	37,024			(19,322		)	486,486			91,795
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(156,810		)	(5,024		)	(49,922		)	145,261			(66,495		)
Proceeds from disposition of assets held for sale	—			—			5,212			—			—			5,212
Proceeds from sale of investment	—			4,211			—			—			—			4,211
Business acquired in purchase transaction, net of cash acquired	—			—			(9,500		)	(113		)	—			(9,613		)
Increase in identifiable intangible assets and other non-current assets	—			(376		)	(7,418		)	(3,793		)	—			(11,587		)
Net cash provided (used) by investing activities	—			(152,975		)	(16,730		)	(53,828		)	145,261			(78,272		)
Cash flows from financing activities:
Settlement of profits interest units	(2,332		)	—			—			—			—			(2,332		)
Repayments of long-term debt and capital lease obligations	—			(26,345		)	—			(58		)	—			(26,403		)
Proceeds (payments) on intercompany loans	—			251,576			(45,168		)	(206,408		)	—			—
Proceeds (payments) on intercompany investments	226,441			69,284			26,255			309,767			(631,747		)	—
Net cash provided (used) by financing activities	224,109			294,515			(18,913		)	103,301			(631,747		)	(28,735		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			(8,196		)	—			(8,196		)
Net increase (decrease) in cash and cash equivalents	—			(46,744		)	1,381			21,955			—			(23,408		)
Cash and cash equivalents, beginning of period	398			87,771			118			118,662			—			206,949
Cash and cash equivalents, end of period	$	398		$	41,027		$	1,499		$	140,617		$	—		$	183,541

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2013
	Acelity 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)	$	(558,658	)	$	(201,077	)	$	(390,494	)	$	(46,074	)	$	637,645		$	(558,658	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,673			244,257			263,245			292,384			(109,122		)	695,437
Net cash provided (used) by operating activities	(553,985		)	43,180			(127,249		)	246,310			528,523			136,779
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(196,988		)	(17,274		)	(111,118		)	247,053			(78,327		)
Business acquired in purchase transaction, net of cash acquired	—			—			(64,938		)	(413,810		)	—			(478,748		)
Increase in identifiable intangible assets and other non-current assets	—			(453		)	(6,419		)	125			—			(6,747		)
Net cash provided (used) by investing activities	—			(197,441		)	(88,631		)	(524,803		)	247,053			(563,822		)
Cash flows from financing activities:
Distribution to limited partners	(1,572		)	—			—			—			—			(1,572		)
Settlement of profits interest units	(176		)	—			—			—			—			(176		)
Repayments of long-term debt and capital lease obligations	—			(67,133		)	(2,257		)	(6		)	—			(69,396		)
Debt issuance costs	—			(20,477		)	—			—			—			(20,477		)
Proceeds (payments) on intercompany loans	—			(157,416		)	(58,554		)	215,970			—			—
2013 acquisition financing
Proceeds from senior credit facility	—			349,563			—			—			—			349,563
Payment of debt issuance costs	—			(7,340		)	—			—			—			(7,340		)
Proceeds (payments) on intercompany investments	555,733			(131,953		)	276,809			74,987			(775,576		)	—
Net cash provided (used) by financing activities	553,985			(34,756		)	215,998			290,951			(775,576		)	250,602
Effect of exchange rate changes on cash and cash equivalents	—			—			—			240			—			240
Net increase (decrease) in cash and cash equivalents	—			(189,017		)	118			12,698			—			(176,201		)
Cash and cash equivalents, beginning of period	398			276,788			—			105,964			—			383,150
Cash and cash equivalents, end of period	$	398		$	87,771		$	118		$	118,662		$	—		$	206,949

Condensed Consolidating Parent Company, Co-Issuers,

Guarantor and Non-Guarantor Statement of Cash Flows

(in thousands)

	For the year ended December 31, 2012
	Acelity 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)	$	(141,417	)	$	(329,522	)	$	(80,312	)	$	(375,553	)	$	785,387		$	(141,417	)
Adjustments to reconcile net earnings (loss) to net cash provided	4,268			449,431			(141,711		)	141,795			(149,673		)	304,110
Net cash provided (used) by operating activities	(137,149		)	119,909			(222,023		)	(233,758		)	635,714			162,693
Cash flows from investing activities:
Net additions to property, plant and equipment	—			(96,931		)	(25,244		)	(70,550		)	109,057			(83,668		)
Proceeds from disposition of assets held for sale	—			74,576			72,335			97,406			—			244,317
Business acquired in purchase transaction, net of cash acquired	—			(15,097		)	—			—			—			(15,097		)
Increase in identifiable intangible assets and other non-current assets	—			5,881			(7,795		)	897			—			(1,017		)
Net cash provided (used) by investing activities	—			(31,571		)	39,296			27,753			109,057			144,535
Cash flows from financing activities:
Capital contributions from limited partners	239			—			—			—			—			239
Distribution to limited partners	(2,199		)	—			—			—			—			(2,199		)
Repayments of long-term debt and capital lease obligations	—			(118,777		)	—			10			—			(118,767		)
Debt issuance costs	—			(18,410		)	—			—			—			(18,410		)
Proceeds (payments) on intercompany loans	—			15,783			(90,803		)	75,020			—			—
2012 refinancing of senior credit facility
Payment of debt issuance costs	—			(1,063		)	—			—			—			(1,063		)
Proceeds (payments) on intercompany investments	139,096			168,265			273,530			163,880			(744,771		)	—
Net cash provided (used) by financing activities	137,136			45,798			182,727			238,910			(744,771		)	(140,200		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—			696			—			696
Net increase in cash and cash equivalents	(13		)	134,136			—			33,601			—			167,724
Cash and cash equivalents, beginning of period	411			142,652			—			72,363			—			215,426
Cash and cash equivalents, end of period	$	398		$	276,788		$	—		$	105,964		$	—		$	383,150

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Aug. 01, 2013
Loss Contingencies [Line Items]
Demand for Arbitration Requested Damages				$ 100,000,000
Other non-current liabilities	163,258,000	40,432,000
Accrued expenses and other	343,484,000	328,975,000
Wake Forest settlement	198,578,000	0	0
Unrecorded Unconditional Purchase Obligation	50,600,000
LifeNet [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Expense	34,700,000
Other non-current liabilities	34,700,000
Wake Forest Settlement [Member]
Loss Contingencies [Line Items]
Other non-current liabilities	104,300,000
Accrued expenses and other	$ 82,700,000	$ 63,200,000
Alloderm [Member] | LifeCell [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	335
Repliform [Member] | LifeCell [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	180
Cases Filed in Consolidated Docket [Member] | Repliform [Member] | LifeCell [Member] | Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Number of pending lawsuits	175

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Consolidated Statements of Equity (USD $) In Thousands, unless otherwise specified	Total	General Partner's Capital [Member]	Limited Partners' Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Equity, beginning balance at Dec. 31, 2011	$ 1,593,444	$ 0	$ 1,599,285	$ (5,841)
Increase (Decrease) in Partners' Capital [Roll Forward]
Net loss	(141,417)		(141,417)
Capital contributions from limited partners	239		239
Distribution to limited partners	(2,199)		(2,199)
Equity-based compensation expense	2,005		2,005
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	5,324			5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013	0
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	0
Equity, ending balance at Dec. 31, 2012	1,457,396	0	1,457,913	(517)
Increase (Decrease) in Partners' Capital [Roll Forward]
Net loss	(558,658)		(558,658)
Capital contributions from limited partners	0
Distribution to limited partners	(1,572)		(1,572)
Equity-based compensation expense	2,711		2,711
Settlement of profits interest units	(176)		(176)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(3,867)			(3,867)
Unrealized investment gain, net of tax expense of $1,403 in 2013	2,241			2,241
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	0
Equity, ending balance at Dec. 31, 2013	898,075	0	900,218	(2,143)
Increase (Decrease) in Partners' Capital [Roll Forward]
Net loss	(230,473)		(230,473)
Capital contributions from limited partners	0
Equity-based compensation expense	3,619		3,619
Settlement of profits interest units	(2,577)		(2,577)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012	(5,690)			(5,690)
Unrealized investment gain, net of tax expense of $1,403 in 2013	0
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	(2,241)			(2,241)
Equity, ending balance at Dec. 31, 2014	$ 660,713	$ 0	$ 670,787	$ (10,074)

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Consolidated Statements of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Revenue:
Rental									$ 719,864	$ 743,818		$ 815,560
Sales									1,146,475	989,083		913,943
Total revenue	482,733	481,793	459,178	442,635	462,382	432,960	426,193	411,366	1,866,339	1,732,901		1,729,503
Rental expenses									332,762	353,504		438,752
Cost of sales									323,363	251,842		244,372
Gross profit (loss)	325,998	314,413	293,207	276,596	301,873	285,082	280,060	260,540	1,210,214	1,127,555		1,046,379
Selling, general and administrative expenses									713,554	684,601		589,858
Research and development expenses									69,321	75,577		71,712
Acquired intangible asset amortization									194,433	188,571		220,984
Wake Forest settlement									198,578	0		0
Impairment of goodwill and intangible assets									0	443,400	[1]	0
Operating earnings (loss)	55,299	88,347	(142,123)	32,805	57,769	(370,355)	11,456	36,536	34,328	(264,594)		163,825
Interest income and other									3,667	1,602		829
Interest expense									(412,733)	(419,877)		(466,622)
Loss on extinguishment of debt									0	(2,364)		(31,481)
Foreign currency gain (loss)									17,844	(22,226)		(13,001)
Derivative instruments gain (loss)									(5,183)	1,576		(31,433)
Earnings (loss) from continuing operations before income taxes (benefit)									(362,077)	(705,883)		(377,883)
Income tax expense (benefit)									(127,031)	(150,792)		(147,823)
Earnings (loss) from continuing operations	(30,928)	(3,235)	(153,823)	(47,060)	(51,984)	(398,607)	(61,747)	(42,753)	(235,046)	(555,091)		(230,060)
Earnings (loss) from discontinued operations, net of tax	1,392	1,398	1,106	677	(751)	46	(828)	(2,034)	4,573	(3,567)		88,643
Net earnings (loss)	$ (29,536)	$ (1,837)	$ (152,717)	$ (46,383)	$ (52,735)	$ (398,561)	$ (62,575)	$ (44,787)	$ (230,473)	$ (558,658)		$ (141,417)

[1] During 2013, we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. These amounts have been excluded from Regenerative Medicine operating earnings as management excludes these charges from operating earnings when making operating decisions about the business.

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Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Equity

Equity

Under the terms of Acelity’s Third Amended and Restated Limited Partnership Agreement dated September 1, 2014, the limited partners contributed 100% of the capital to the partnership. No partner is required to make any additional capital contributions to the partnership. Net income (loss) and distributions are allocated to the general and limited partners in proportion to their respective capital contributions.

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 09, 2015
Document Information [Line Items]
Entity Registrant Name	ACELITY 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
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Entity Public Float	$ 0
Class A-1 Partnership Units [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		341,410,892
Class A-2 Partnership Units [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		717,039

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Incentive Compensation Plans

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Incentive Compensation Plans

Incentive Compensation Plans

Equity-based compensation expense was recognized in the consolidated statements of operations as follows (in thousands):

	Year ended December 31,
	2014		2013		2012
Rental expenses	$	106	$	52	$	2
Cost of sales	105		113		88
Selling, general and administrative expenses	3,822		2,760		1,979
Total equity-based compensation expense, net of tax	$	4,033	$	2,925	$	2,069

There was no income tax impact associated with equity-based compensation during the years ended December 31, 2014, 2013 and 2012.

Investment Plan

We have an Investment Plan intended to qualify as a deferred compensation plan under Section 401(k) of the Internal Revenue Code of 1986. The Investment Plan is available to all employees in the United States and we match employee contributions up to a specified limit. During the years ended December 31, 2014, 2013 and 2012 matching contributions charged to expense were approximately $13.3 million, $12.2 million, and $14.7 million, respectively.

Equity Based Plans

Profits Interest

On November 11, 2011, the Board of Directors of Chiron Holdings GP, Inc. (“Holdings GP”), in its capacity as general partner of Chiron Guernsey Holdings L.P. Inc. (the “Limited Partnership”), approved the Chiron Guernsey Holdings L.P. Inc. Executive Equity Incentive Plan (the “Executive Plan”). The maximum aggregate number of interest units (“Profits Interest Units”) available for awards under the Executive Plan is 23,641,333, subject to adjustment as provided for in the plan. The vesting terms and expiration of each award shall be fixed by the general partner. The distribution threshold for awards granted under this plan is established by the general partner.

For incentive equity awards granted during the years ended December 31, 2014, 2013 and 2012, a portion of the awards granted vests incrementally over a period of four years. The remaining portion of awards granted during the years ended December 31, 2014, 2013 and 2012 vest at graduated levels upon the attainment of certain performance conditions established by the general partner. The performance conditions are based on achieving certain levels of multiple of invested capital and subject to the satisfaction of market conditions based upon the occurrence of a major liquidity event in the future. Subject to certain limitations, the weighted average distribution threshold (i.e., the amount of distributions that need to be made by the Limited Partnership with respect to each limited partnership unit individually prior to such Profits Interest Unit participating in the distributions of the Limited Partnership) for awards granted during the years ended December 31, 2014, 2013 and 2012 is $8.11, $7.40 and $5.00, respectively.

The weighted-average estimated fair value of time-based Profits Interest Units granted during the years ended December 31, 2014, 2013 and 2012, was $1.62, $2.30 and $1.33 per unit, respectively, using the Black-Scholes-Merton option pricing model. The weighted-average estimated fair value of performance-based Profits Interest Units granted during the years ended December 31, 2014, 2013 and 2012, was $1.42, $1.98 and $1.15 per unit, respectively, using the Black-Scholes-Merton option pricing model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Profits Interest Units. The estimated fair values for these periods included the following weighted average assumptions for both the time-based and performance-based Profits Interest Units (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Post-Merger assumptions were determined as follows. The expected stock volatility is based on the Company’s historical volatility over the previous five year period, which is the expected holding period. This historical volatility was increased to incorporate the implied volatility associated with the Company’s increase in leverage from historical levels. The expected dividend yield is zero. The risk-free interest rate for the period was based on the U.S. Treasury yield curve in effect at the time of grant. The expected life is based on the estimated holding period until a major liquidity event.

A summary of our Profits Interest Unit (“PIU”) activity, and related information is set forth in the table below (in thousands, except weighted average grant date fair value):

	Time-based		Performance-based		Total		Weighted Average Grant Date Fair Value
PIU outstanding – December 31, 2013	8,562		7,922		16,484		$	1.50
Granted	2,054		2,054		4,108		$	1.52
Repurchased	(947	)	—		(947	)	$	1.45
Forfeited/Expired	(1,698	)	(3,123	)	(4,821	)	$	1.75
PIU outstanding – December 31, 2014	7,971		6,853		14,824		$	1.42
PIU exercisable as of December 31, 2014	4,583		—		4,583		$	1.49

As of December 31, 2014, there was $4.1 million and $7.9 million of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested time-based and performance-based Profits Interest Units, respectively, granted under our plan subsequent to the Merger.  The unrecognized compensation cost for the time-based awards is expected to be recognized over a weighted average period of 2.4 years. The unrecognized compensation cost of the performance-based awards is expected to be recognized as it becomes probable the market condition will be satisfied. There is no contractual term for the PIU agreements, however, with certain consent of the Limited Partnership and plan participants, the general partner may amend, alter, suspend, discontinue, or terminate the Executive Plan or any portion thereof at any time.

Appreciation Rights

On December 14, 2011, the Board of Directors of Holdings GP, in its capacity as general partner of the Limited Partnership, approved the Chiron Guernsey Holdings L.P. Inc. Appreciation Rights Plan (as amended from time to time, the “Appreciation Rights Plan”). The maximum aggregate number of Class A-2 interests (“Appreciation Rights”) in respect of which awards can be issued under the Appreciation Rights Plan is 4,172,000, subject to adjustment as provided for in the plan. The base price of units granted under this plan is established by the administrator (the compensation committee of the board of the general partner, or any committee or subcommittee thereof to which the compensation committee of the board delegates authority to administer the Appreciation Rights Plan) as of the date of grant, which may not be less than the fair market value of a Class A-2 interest as of the date of grant. The vesting terms and expiration of each award shall be fixed by the administrator.

For incentive equity awards granted during the years ended December 31, 2014, 2013 and 2012, a portion of the awards granted vest in full upon the earlier of a change in control of the Limited Partnership or the fourth anniversary of the date of grant. The remaining portion of awards granted in 2012 vest at graduated rates upon the attainment of certain performance metrics established by the administrator and subject to the satisfaction of certain market conditions based upon the occurrence of a major liquidity event in the future. Upon exercise or redemption of vested awards, employees generally receive a cash payment equal to the product of the excess, if any, of the fair market value of a Class A-2 interest at the time of exercise or redemption over the base price times the number of Class A-2 interests under the award.

The weighted-average estimated grant-date fair value of time-based Appreciation Rights granted during the years ended December 31, 2014, 2013 and 2012, was $1.66, $1.37 and $0.81 per unit, respectively, using the Black-Scholes-Merton option pricing model. The weighted-average estimated grant-date fair value of performance-based Appreciation Rights granted during the years ended December 31, 2014, 2013 and 2012, was $1.46, $1.35 and $0.81 per unit, respectively, using the Black-Scholes-Merton option pricing model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Appreciation Rights. The estimated fair values for the years ended December 31, 2014, 2013 and 2012 included the following weighted average assumptions for both the time-based and performance-based Appreciation Rights (annualized percentages):

	Year ended December 31,
	2014	2013	2012
Expected stock volatility	39.0%	43.0%	56.0%
Expected dividend yield	—	—	—
Risk-free interest rate	0.5%	0.6%	0.9%
Expected life (years)	2	3	4

Post-Merger assumptions were determined as follows. The expected stock volatility is based on the Company’s historical volatility over the previous five year period, which is the expected holding period. This historical volatility was increased to incorporate the implied volatility associated with the Company’s increase in leverage from historical levels. The expected dividend yield is zero. The risk-free interest rate for the period was based on the U.S. Treasury yield curve in effect at the time of grant. The expected life is based on the estimated holding period until a major liquidity event.

A summary of our Appreciation Rights activity, and related information, for the year ended December 31, 2014 is set forth in the table below (in thousands, except exercise price and contractual term):

	Time-based		Performance-based		Total		Weighted Average Base Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Appreciation Rights outstanding – December 31, 2013	787		787		1,574		$	6.50	8.96
Granted	682		682		1,364		$	7.95
Exercised	—		—		—		$	—
Forfeited/Expired	(345	)	(345	)	(690	)	$	6.69
Appreciation Rights outstanding – December 31, 2014	1,124		1,124		2,248		$	7.32	8.56	$	—
Appreciation rights exercisable - December 31, 2014	—		—		—		$	—	N/A	$	—

As of December 31, 2014, there was $1.4 million and $1.8 million of total unrecognized compensation costs, net of estimated forfeitures, related to each of the non-vested time-based and performance-based Appreciation Rights granted, respectively, under our plan subsequent to the Merger.  The unrecognized compensation cost for the time-based awards is expected to be recognized over a weighted average period of 2.7 years. The unrecognized compensation cost of the performance-based awards is expected to be recognized as it becomes probable the market condition will be satisfied.

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net loss	$ (29,536)	$ (1,837)	$ (152,717)	$ (46,383)	$ (52,735)	$ (398,561)	$ (62,575)	$ (44,787)	$ (230,473)	$ (558,658)	$ (141,417)
Foreign currency translation adjustment, net of tax benefit (expense) of $(753) in 2014, $233 in 2013, and $(369) in 2012									(5,690)	(3,867)	5,324
Unrealized investment gain, net of tax expense of $1,403 in 2013									0	2,241	0
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014									(2,241)	0	0
Total comprehensive income (loss)									$ (238,404)	$ (560,284)	$ (136,093)

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Accounting for Goodwill and Other Non-current Assets

12 Months Ended

Dec. 31, 2014

Accounting for Goodwill and Other Non-current Assets [Abstract]

Accounting for Goodwill and Other Non-current Assets

Accounting for Goodwill and Other Non-current Assets

As defined by the Codification, we have three reporting units: KCI, Regenerative Medicine and Systagenix. We have two reportable operating segments which correspond to our two global 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.

(a)Goodwill

Based on the purchase price allocation, the components of goodwill by reporting unit are listed below (in thousands):

	KCI		Regenerative Medicine			Systagenix		Total
Balance at December 31, 2012	$	2,483,240	$	996,535		$	—	$	3,479,775
Goodwill acquired, net of purchase price adjustments	—		—			171,086		171,086
Impairment of goodwill	—		(272,200		)	—		(272,200		)
Balance at December 31, 2013	2,483,240		724,335			171,086		3,378,661
Adjustment to prior year acquisition	—		—			1,737		1,737
Reduction for sale of business	—		(2,100		)	—		(2,100		)
Balance at December 31, 2014	$	2,483,240	$	722,235		$	172,823	$	3,378,298

There were no impairments of goodwill or identifiable intangible assets during 2014. As of December 31, 2013, cumulative impairments of goodwill totaled $272.2 million.

(b)       Identifiable intangible assets

Identifiable intangible assets include the following (in thousands):

	December 31, 2014					December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships and non-compete agreements	$	947,638	$	(400,806	)	$	947,706	$	(291,812	)
Developed technology	761,464		(206,355		)	759,898		(128,728		)
Tradenames and patents	129,726		(16,582		)	85,693		(7,322		)
Total definite-lived intangible assets	1,838,828		(623,743		)	1,793,297		(427,862		)
Indefinite-lived intangible assets:
Tradenames	1,178,800		—			1,178,800		—
In-process research and development	3,366		—			4,966		—
Total indefinite-lived intangible assets	1,182,166		—			1,183,766		—
	$	3,020,994	$	(623,743	)	$	2,977,063	$	(427,862	)

Amortization expense, related to definite‑lived intangibles, was approximately $195.9 million, $190.3 million and $221.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The following table presents the estimated amortization expense, in total, to be incurred over the next five years for all definite-lived intangible assets as of December 31, 2014 (in thousands):

Year ending December 31,	Estimated Amortization Expense
2015	$178,498
2016	$162,717
2017	$149,423
2018	$136,083
2019	$125,348

(c)Debt issuance costs

As of December 31, 2014 and 2013, unamortized debt issuance costs related to our current senior secured credit facility and our fixed rate long-term debt, including the 10.5% Second Lien Notes and the 12.5% Unsecured Notes were collectively $77.9 million and $102.1 million, respectively. Amortization of debt issuance costs recorded for the years ended December 31, 2014, 2013 and 2012 were $24.1 million, $21.8 million and $18.2 million, respectively. Additionally, in the year ended December 31, 2012, we recorded approximately $16.2 million of debt issuance costs write offs in connection with the repurchase of senior unsecured notes. There were no write-offs of debt issuance costs during the year ended December 31, 2014 and 2013. The remaining costs for the senior secured credit facility and fixed rate long-term debt are amortized on a straight-line basis or using the effective interest method, as appropriate, over the respective term of debt to which they specifically relate.

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Supplemental Balance Sheet Data

12 Months Ended

Dec. 31, 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):

	December 31, 2014			December 31, 2013
Gross trade accounts receivable:
Billed trade accounts receivable	$	396,329		$	418,804
Unbilled receivables	39,293			50,841
Less:  Allowance for revenue adjustments	(61,460		)	(67,631		)
Gross trade accounts receivable	374,162			402,014
Less:  Allowance for bad debt	(13,087		)	(8,483		)
Net trade accounts receivable	361,075			393,531
Other receivables	9,408			14,047
	$	370,483		$	407,578

(b)       Inventories, net

Inventories consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Finished goods and tissue available for distribution	$	127,253		$	110,937
Goods and tissue in-process	6,887			12,994
Raw materials, supplies, parts and unprocessed tissue	67,567			71,876
	201,707			195,807
Less: Amounts expected to be converted into equipment for short-term rental	(7,515		)	(3,952		)
Reserve for excess and obsolete inventory	(15,970		)	(10,288		)
	$	178,222		$	181,567

(c)Net property, plant and equipment

Net property, plant and equipment consists of the following (in thousands):

	December 31, 2014			December 31, 2013
Land	$	13,121		$	13,438
Buildings	46,561			46,092
Equipment for short-term rental	313,025			297,896
Machinery, equipment and furniture	320,498			294,916
Leasehold improvements	77,810			76,224
Inventory to be converted to equipment	7,515			3,952
	778,530			732,518
Less: accumulated depreciation	(490,482		)	(398,793		)
	$	288,048		$	333,725

(d)Accrued expenses and other

Accrued expenses and other consist of the following (in thousands):

	December 31, 2014		December 31, 2013
Payroll, benefits, commissions, bonuses and related taxes	$	65,740	$	89,190
Wake Forest royalty settlement and other royalties	85,275		66,446
Interest	43,607		43,253
Sales and other taxes	24,469		21,827
Insurance	8,729		9,425
Derivative liability	13,936		914
Other accrued expenses	101,728		97,920
	$	343,484	$	328,975

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Data [Abstract]

Quarterly Financial Data (unaudited)

NOTE 15.Quarterly Financial Data (unaudited)

The unaudited consolidated results of operations by quarter are summarized below (in thousands):

	Year Ended December 31, 2014
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	442,635		$	459,178		$	481,793		$	482,733
Gross profit	$	276,596		$	293,207		$	314,413		$	325,998
Operating earnings (loss)	$	32,805		$	(142,123	)	$	88,347		$	55,299
Loss from continuing operations	$	(47,060	)	$	(153,823	)	$	(3,235	)	$	(30,928	)
Earnings from discontinued operations	$	677		$	1,106		$	1,398		$	1,392
Net loss	$	(46,383	)	$	(152,717	)	$	(1,837	)	$	(29,536	)

	Year Ended December 31, 2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	411,366		$	426,193		$	432,960		$	462,382
Gross profit	$	260,540		$	280,060		$	285,082		$	301,873
Operating earnings (loss)	$	36,536		$	11,456		$	(370,355	)	$	57,769
Loss from continuing operations	$	(42,753	)	$	(61,747	)	$	(398,607	)	$	(51,984	)
Earnings (loss) from discontinued operations	$	(2,034	)	$	(828	)	$	46		$	(751	)
Net loss	$	(44,787	)	$	(62,575	)	$	(398,561	)	$	(52,735	)

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Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2014

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

Other Comprehensive Income (Loss)

Other Comprehensive Income (loss)

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

	Accumulated Foreign Currency Translation Adjustment			Unrealized Investment Gains (Losses)			Accumulated Other Comprehensive Income (Loss)
Balances at January 1, 2012	$	(5,841	)	$	—		$	(5,841	)
Foreign currency translation adjustment, net of tax expense of $369	5,324			—			5,324
Balances at December 31, 2012	(517		)	—			(517		)
Foreign currency translation adjustment, net of tax benefit of $233	(3,867		)	—			(3,867		)
Unrealized investment gain, net of tax expense of $1,403 in 2013	—			2,241			2,241
Balances at December 31, 2013	(4,384		)	2,241			(2,143		)
Foreign currency translation adjustment, net of tax expense of $753	(5,690		)	—			(5,690		)
Unrealized investment loss, net of tax benefit	—			—			—
Reclassification of realized investment gain included in net loss, net of tax expense of $1,403 in 2014	—			(2,241		)	(2,241		)
Balances at December 31, 2014	$	(10,074	)	$	—		$	(10,074	)

During 2013 and 2012, there were no reclassification adjustments out of accumulated other comprehensive income (loss) to net earnings (loss).

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Leasing Obligations

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Leasing Obligations

Leasing Obligations

We are obligated for equipment under various capital leases, which expire at various dates during the next three years. At December 31, 2014 and 2013, the gross amount of equipment under capital leases totaled $2.6 million and $2.7 million and related accumulated depreciation was approximately $1.7 million and $1.2 million, respectively.

We lease computer and telecommunications equipment, service and sales vehicles, office space, various storage spaces and manufacturing facilities under non-cancelable operating leases, which expire at various dates over the next 20 years. Total rental expense for operating leases was $29.7 million, $27.8 million and $43.0 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Future minimum lease payments under capital and non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2014 are as follows (in thousands):

	Capital Leases			Operating Leases
2015	$	526		$	22,387
2016	394			14,947
2017	—			11,745
2018	—			8,918
2019	—			6,727
Thereafter	—			28,587
Total minimum lease payments	$	920		$	93,311
Less amount representing interest	(66		)
Present value of net minimum capital lease payments	854
Less current portion	(488		)
Obligations under capital leases, excluding current installments	$	366

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Income Taxes (Benefit) - Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Line Items]
Current, U.S. Federal	$ 18,149	$ 16,777	$ 17,693
Current, U.S. State	2,220	8,162	3,148
Current, Non-U.S.	14,633	9,125	13,218
Total current expense	35,002	34,064	34,059
Deferred, U.S. Federal	(138,046)	(158,735)	(104,476)
Deferred, U.S. State	(19,998)	(26,383)	(19,900)
Deferred, Non-U.S.	(1,126)	(1,971)	(2,013)
Total deferred tax expense (benefit)	(159,170)	(187,089)	(126,389)
Income tax expense (benefit)	(124,168)	(153,025)	(92,330)
Income tax expense (benefit) related to discontinued operations	2,863	(2,233)	55,493
Income tax expense (benefit) related to continuing operations	$ (127,031)	$ (150,792)	$ (147,823)

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Long-Term Debt

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

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

	December 31, 2014			December 31, 2013
Senior Dollar Term E-1 Credit Facility(1) – due 2018	$	1,927,241		$	1,946,708
Senior Euro Term E-1 Credit Facility(1) – due 2018	293,746			337,820
Senior Term E-2 Credit Facility(1) – due 2016	315,351			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	4,898,439			4,965,166
Senior Dollar Term E-1 Credit Facility Discount, net of accretion	(24,241		)	(30,926		)
Senior Euro Term E-1 Credit Facility Discount, net of accretion	(7,376		)	(10,693		)
Senior Term E-2 Credit Facility Discount, net of accretion	(2,955		)	(4,486		)
Second Lien Senior Secured Notes Discount, net of accretion	(20,205		)	(24,222		)
Senior Unsecured Notes Discount, net of accretion	(2,651		)	(3,025		)
Net discount on debt	(57,428		)	(73,352		)
Total debt, net of discount	4,841,011			4,891,814
Less:  Current installments	(25,721		)	(26,311		)
	$	4,815,290		$	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 credit agreement and loan documents, except as revised by the amendment.

Senior Secured Credit Facility

Our senior secured credit facility (the “Senior Secured Credit Facility”) includes a $200.0 million revolving credit facility (the “Revolving Credit Facility”). Amounts available under the Revolving Credit Facility are available for borrowing and reborrowing until maturity. At December 31, 2014 and 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 $39.0 million and $21.2 million, respectively. In addition, we had $11.4 million and $12.6 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility as of December 31, 2014 and 2013, respectively. The capacity of the Revolving Credit Facility is reduced for the $39.0 million and $21.2 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility as of December 31, 2014 and 2013, respectively. The resulting availability under the Revolving Credit Facility was $161.0 million and $178.8 million at December 31, 2014 and 2013, respectively. Commitment fees accrue at a rate of 0.50% on the amounts available under the Revolving Credit Facility.

Interest. 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. 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 fees of $1.8 million as a result of this amendment.

On March 10, 2015, we entered into Amendment No. 6 to our Senior Secured Credit Facility (“Amendment No. 6”). In connection with Amendment No. 6, certain applicable rates were modified so that (i) Dollar Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.50% or an adjusted base rate plus 2.50%, (ii) Euro Term E-1 Loans bear interest at a rate equal to, at KCI’s election, a Eurocurrency rate plus 3.75% or an adjusted base rate plus 2.75%, and (iii) Term E-2 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%. 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 may elect interest periods of one, two, three, or six months for the Eurocurrency borrowings. Interest on base rate borrowings is payable quarterly in arrears. Interest on Eurocurrency borrowings is payable at the end of each applicable interest period or every three months in the case of interest periods in excess of three months. Interest on all past due amounts will accrue at 2.00% over the applicable rate.

Collateral. The Senior Secured Credit Facility is secured by a first priority lien and security interest in (a) substantially all equity interests of each of our 100% owned U.S. and first-tier material foreign subsidiaries (limited in the case of certain subsidiaries to 65% of the voting equity interests of such subsidiary) and (b) subject to certain exceptions, substantially all of our (in this instance referring only to us and our subsidiaries that are or will be co-borrowers or guarantors under the Senior Secured Credit Facility) present and future real property (with a value in excess of $20 million individually) and present and future tangible and intangible assets. The liens securing the Senior Secured Credit Facility are subject to permitted liens.

Guarantors. Our obligations under the Senior Secured Credit Facility are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-borrowers under the senior secured credit facility, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The Revolving Credit Facility and the Term E-2 Facility mature on November 4, 2016, and the Dollar Term E-1 Facility and the Euro Term E-1 Facility mature on May 4, 2018. The principal amount of each of the Dollar Term E-1 Facility, the Euro Term E-1 Facility and the Term E-2 Facility amortizes in quarterly installments equal to 1.0% of the original principal amount of each such facility per annum until the respective final maturity date.

Voluntary Prepayments. We may prepay, in full or in part, borrowings under the Revolving Credit Facility without premium or penalty, subject to minimum prepayment amount and increment limitations.  We may prepay, in full or in part, borrowings under the Dollar Term E-1 Facility, Euro Term E-1 Facility and Dollar Term E-2 Facility without premium or penalty, subject to minimum prepayment amount and increment limitations, except that repayments of Dollar Term E-1 Loans, Euro Term E-1 Loans or Term E-2 Loans within 12 months of the effective date of Amendment No. 6 in connection with a repricing transaction will be subject to a 1.0% prepayment premium.

Mandatory Prepayments. Subject to certain exceptions, we must make periodic prepayments of the Dollar Term E-1 Facility, the Euro Term E-1 Facility and the Term E-2 Facility equal to: (i) 100% of the net cash proceeds of certain dispositions of property, (ii) 100% of the net cash proceeds of the issuance or incurrence of certain indebtedness, and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified total leverage ratios) of annual excess cash flow.

Representations. The Senior Secured Credit Facility contains representations generally customary for similar facilities and transactions.

Covenants. The Senior Secured Credit Facility contains affirmative and negative covenants customary for similar facilities and transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness (including guarantee obligations);

• incur liens;

• engage in certain fundamental changes, including changes in the nature of our business;

• sell assets;

• pay dividends and make other payments in respect of capital stock;

• make acquisitions, investments, loans and advances;

• pay and modify the terms of certain indebtedness;

• engage in certain transactions with affiliates; and

• enter into negative pledge clauses and clauses restricting subsidiary distributions.

The Senior Secured Credit Facility contains financial covenants requiring us to meet certain leverage and interest coverage ratios, subject to certain equity cure rights. Beginning March 31, 2012, it is an event of default if we permit any of the following:

• as of the last day of any fiscal quarter, our leverage ratio of debt to EBITDA, as defined in the senior secured credit agreement, to be greater than a maximum leverage ratio, initially set at 8.50 to 1.00 and stepped down periodically; and

• as of the last day of any fiscal quarter, our ratio of EBITDA to interest expense, as defined in the senior secured credit agreement, to be less than a minimum interest coverage ratio, initially set at 1.10 to 1.00 and stepped up periodically.

As of December 31, 2014, we were in compliance with the covenants under the Senior Secured Credit Facility.

As a result of Amendment No. 6, the financial covenants were amended to remove the interest coverage ratio in its entirety and to set the total leverage ratio for any test period to be no greater than 8.25:1.00.

Events of Default. The Senior Secured Credit Facility contains events of default including, but not limited to, failure to pay principal or interest, breaches of representations and warranties, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, impairments of loan documentation or security, changes of control, and defaults with respect to certain ERISA obligations.

10.5% Second Lien Senior Secured Notes

In November 2011, we issued $1.750 billion aggregate principal amount of second lien notes due 2018.

Interest. Interest on the 10.5 % Second Lien Notes accrues at the rate of 10.5% per annum and is payable semi-annually in cash on each May 1 and November 1 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. 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. Interest on the 10.5 % Second Lien Notes accrues from and includes the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months.

Collateral. The second lien senior secured notes are secured by a second priority lien and security interest in (a) substantially all equity interests of each of our 100% owned U.S. and first-tier material foreign subsidiaries (limited in the case of certain subsidiaries to 65% of the voting equity interests of such subsidiary) and (b) subject to certain exceptions, substantially all of our (in this instance referring only to us and our subsidiaries that are or will be co-issuers or guarantors of the second lien notes) present and future real property (with a value in excess of $20 million individually) and present and future tangible and intangible assets. The liens securing the second lien notes are subject to permitted liens.

Guarantors. Our obligations under the second lien senior secured notes are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the second lien notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The second lien senior secured notes will mature on November 1, 2018.

Covenants. The indenture governing the second lien senior secured notes contains affirmative and negative covenants customary for similar transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make loans and investments;

• sell or otherwise dispose of assets;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends; and

• consolidate, merge or sell all or substantially all of our assets.

As of December 31, 2014, we were in compliance with all covenants under the second lien senior secured notes indenture.

Optional Redemption. At any time prior to November 1, 2014, we may redeem up to 35% of the aggregate principal amount of the second lien senior secured notes with the net cash proceeds of certain equity offerings, at a redemption price equal to 110.500% of the aggregate principal amount of the second lien senior secured notes being redeemed plus accrued and unpaid interest.

At any time prior to November 1, 2015, we may redeem all or part of the second lien senior secured notes at a redemption price equal to 100% of the aggregate principal amount of the second lien senior secured notes to be redeemed, plus a make-whole premium and accrued and unpaid interest.

At any time on or after November 1, 2015, we may redeem the second lien senior secured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	105.250%
2016	102.625%
2017 and thereafter	100.000%

Change of Control. If we experience certain kinds of changes of control, we will be required to offer to purchase the second lien senior secured notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

Events of Default. The indenture governing the second lien senior secured notes contains events of default including, but not limited to, failure to pay principal or interest, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, and impairments of loan documentation or security.

12.5% Senior Unsecured Notes

In November 2011, we issued $750 million aggregate principal amount of senior unsecured notes due 2019; $612.0 million of which are still outstanding.

Interest. Interest on the senior unsecured notes accrues at the rate of 12.5% per annum and is payable semi-annually in cash on each May 1 and November 1 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. 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. Interest on the senior unsecured notes accrues from and includes the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months.

Collateral. The senior unsecured notes are senior unsecured obligations.

Guarantors. Our obligations under the senior unsecured notes are guaranteed by us and each of our material 100% owned subsidiaries, other than the subsidiaries that are co-issuers of the senior unsecured notes, foreign subsidiaries and subsidiaries whose only assets are investments in foreign subsidiaries.

Maturity. The senior unsecured notes will mature on November 1, 2019.

Covenants. The indenture governing the senior unsecured notes contains affirmative and negative covenants customary for similar transactions, including limitations or restrictions on our ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make loans and investments;

• sell or otherwise dispose of assets;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends; and

• consolidate, merge or sell all or substantially all of our assets.

As of December 31, 2014, we were in compliance with all covenants under the senior unsecured notes indenture.

Optional Redemption. At any time prior to November 1, 2014, we may redeem up to 35% of the aggregate principal amount of the senior unsecured notes with the net cash proceeds of certain equity offerings, at a redemption price equal to 112.500% of the aggregate principal amount of the senior unsecured notes being redeemed plus accrued and unpaid interest.

At any time prior to November 1, 2015, we may redeem all or part of the senior unsecured notes at a redemption price equal to 100% of the aggregate principal amount of the senior unsecured notes to be redeemed, plus a make-whole premium and accrued and unpaid interest.

At any time on or after November 1, 2015, we may redeem the senior unsecured notes, in whole or in part, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the twelve‑month period commencing on November 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:

Year	Price
2015	106.250%
2016	103.125%
2017 and thereafter	100.000%

Change of Control. If we experience certain kinds of changes of control, we will be required to offer to purchase the senior unsecured notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

Events of Default. The indenture governing the senior unsecured notes contains events of default including, but not limited to, failure to pay principal or interest, violations of affirmative or negative covenants, cross-defaults to other indebtedness, a bankruptcy or similar proceeding being instituted by or against us, rendering of certain monetary judgments against us, and impairments of loan documentation or security.

3.25% 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 “Indenture”).

In connection with the Merger, the holders of the Convertible Notes had the right to require us to repurchase some or all of their Convertible Notes as provided in the Indenture. The repurchase date for any Convertible Notes tendered to us was November 30, 2011. The repurchase price was the principal amount of the Convertible Notes plus accrued interest. The holders of the Convertible Notes that did not elect to require us to repurchase their Convertible Notes maintained the right to convert their Convertible Notes into cash on or before November 29, 2011. As of December 31, 2014, $101,000 aggregate principal amount of the notes remained outstanding.

Interest and Future Maturities

Interest paid during the years ended December 31, 2014, 2013 and 2012 was $367.0 million, $385.7 million, and $432.2 million, respectively.

Future maturities of long-term debt at December 31, 2014 were (in thousands):

Year	Amount
2015	$	25,721
2016	$	334,584
2017	$	22,434
2018	$	3,903,700
2019	$	612,000
Thereafter	$	—

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Derivative Financial Instruments and Fair Value Measurements

12 Months Ended

Dec. 31, 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 sheet at fair value. We do not use financial instruments for speculative or trading purposes.

Derivatives Not Designated as Hedges

At December 31, 2014 and 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 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 chart summarizes these agreements (dollars in thousands):

Effective Dates	Outstanding Notional Amount	Fixed Interest Rate
12/31/13-12/31/16	$487,667	2.256%
12/31/13-12/31/16	$487,667	2.249%
12/31/13-12/31/16	$487,667	2.250%

During the years ended December 31, 2013 and 2012, we had interest rate cap agreements with initial notional amounts of $1.600 billion at a cost of $2.2 million that effectively limited the interest rate to 2% on a portion of the borrowings under our Senior Secured Credit Facility. The interest rate cap agreements expired on December 31, 2013.

We also use derivative instruments to manage our transactional currency exposures when our foreign subsidiaries enter into transactions denominated in currencies other than their local currency. These nonfunctional currency exposures relate primarily to existing and forecasted intercompany receivables and payables arising from intercompany purchases of manufactured products. We enter into foreign currency exchange contracts to mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, thereby limiting risk that would otherwise result from changes in exchange rates. These contracts are not designated as hedges; 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 consolidated balance sheet. The periods of the foreign currency exchange contracts generally do not exceed one year and correspond to the periods of the exposed transactions and related settlements. At December 31, 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 sheet 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 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 $2.501 billion and $2.584 billion, respectively, at December 31, 2014. The fair value of our borrowings under our Senior Secured Credit Facility and fixed rate long-term debt was $2.615 billion and $2.694 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.

All of our derivatives, as of the reporting date, use inputs considered as Level 2. The interest rate swap agreements and interest rate cap agreements are valued using a discounted cash flow model that takes into account the present value of the expected 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
		December 31, 2014		December 31, 2013			December 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments
Interest rate swap agreements	Prepaid expenses and other	$	—	$	—	Accrued expenses and other	$	13,936	$	345
Interest rate swap agreements	Other non-current assets	—		—		Other non-current liabilities	8,067		31,906
Foreign currency exchange contracts	Prepaid expenses and other	—		146		Accrued expenses and other	—		569
Total derivatives		$	—	$	146		$	22,003	$	32,820

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

	Year ended December 31,
	2014			2013			2012
Interest rate swap agreements	$	(5,245	)	$	2,618		$	(25,486	)
Interest rate cap agreements	—			(9		)	(1,583		)
Foreign currency exchange contracts	62			(1,033		)	(4,364		)
	$	(5,183	)	$	1,576		$	(31,433	)

Certain of our derivative instruments contain provisions that require compliance with the restrictive covenants of our Senior Secured Credit Facility. See Note 5 for further discussion of the restrictive covenants of our Senior Secured Credit Facility.

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 December 31, 2014, we could be required to settle or post the full amount as collateral to its counterparties.

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

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Income Taxes (Benefit)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes (Benefit)

Income Taxes (Benefit)

The following table summarizes earnings (loss) before income taxes (benefit) of U.S. and non-U.S. operations (in thousands):

	Year ended December 31,
	2014			2013			2012
U.S.	$	(515,976	)	$	(845,261	)	$	(492,869	)
Non-U.S.	161,335			133,578			259,122
	(354,641		)	(711,683		)	(233,747		)
Earnings (loss) from discontinued operations before income taxes	7,436			(5,800		)	144,136
Earnings (loss) from continuing operations before income taxes	$	(362,077	)	$	(705,883	)	$	(377,883	)

The following table summarizes the composition of income tax expense (benefit) (in thousands):

	Year ended December 31,
	2014			2013			2012
Current:
U.S. Federal	$	18,149		$	16,777		$	17,693
U.S. State	2,220			8,162			3,148
Non-U.S.	14,633			9,125			13,218
Total current expense	35,002			34,064			34,059
Deferred:
U.S. Federal	(138,046		)	(158,735		)	(104,476		)
U.S. State	(19,998		)	(26,383		)	(19,900		)
Non-U.S.	(1,126		)	(1,971		)	(2,013		)
Total deferred tax expense (benefit)	(159,170		)	(187,089		)	(126,389		)
	(124,168		)	(153,025		)	(92,330		)
Income tax expense (benefit) related to discontinued operations	2,863			(2,233		)	55,493
Income tax expense (benefit) related to continuing operations	$	(127,031	)	$	(150,792	)	$	(147,823	)

The reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate is as follows:

	Year ended December 31,
	2014(1)		2013(1)		2012(1)
Computed “expected” tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.4		1.7		3.8
Non-deductible items	(0.1	)	(0.9	)	(0.5	)
Effect of international operations	(4.4	)	(1.5	)	0.1
Section 199 production deduction	0.8		0.2		0.5
Research and development credit	0.1		0.3		—
Goodwill impairment	—		(13.4	)	—
Other, net	0.2		0.1		0.6
	35.0		21.5		39.5
Change in rate related to discontinued operations	0.1		(0.1	)	(0.4	)
Effective tax rate related to continuing operations	35.1	%	21.4	%	39.1	%

⁽¹⁾  The years ended December 31, 2014, 2013 and 2012 include a loss before income tax benefit. The consolidated effective income tax rates represent adjustments to the computed “expected” income tax benefit rate for the period. Therefore, negative percentages represent reductions to the income tax benefit rate.

The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Deferred Tax Assets:
Non-U.S. tax credit	$	76,320		$	67,765
U.S. research and development tax credit	978			—
Net operating loss	100,772			67,229
Accounts receivable	(1,468		)	9,377
Non-U.S. net operating loss carry forwards	36,904			23,259
Accrued liabilities	87,412			12,156
Deferred non-U.S. tax asset	43,864			48,223
Accrued interest	14,686			20,296
Disallowed interest carry forward	106,860			52,407
Unrealized foreign exchange currency loss, net	—			371
Inventory	9,717			2,124
Other	891			618
Total gross deferred tax assets	476,936			303,825
Less: valuation allowances	(82,299		)	(55,944		)
Net deferred tax assets	394,637			247,881
Deferred Tax Liabilities:
Intangible assets, amortizable	(384,485		)	(447,286		)
Intangible assets, indefinite-lived	(454,779		)	(455,417		)
Loan fees	(30,751		)	(31,343		)
U.S. tax on non-U.S. earnings	(256,039		)	(190,665		)
Deferred U.S. state tax liability	3,556			(831		)
Unrealized foreign exchange currency gain, net	(19,883		)	—
Depreciation	(56,865		)	(70,870		)
Other	(6,489		)	(2,372		)
Total gross deferred tax liabilities	(1,205,735		)	(1,198,784		)
Net deferred tax liability	(811,098		)	(950,903		)
Less: current deferred tax asset	(63,025		)	(23,621		)
Less: non-current deferred tax asset	(31,692		)	(31,459		)
Less: current deferred tax liability	113,658			2,199
Non-current deferred tax liability	$	(792,157	)	$	(1,003,784	)

The change in the balance sheet deferred tax accounts reflect deferred income tax benefit, the deferred tax impact of other comprehensive income items and purchase accounting adjustments.

At December 31, 2014,$219.2 millionof U.S. federal net operating losses,$545.9 million of U.S. state net operating losses and $154.9 million of non-U.S. net operating losses were available for carry forward. In addition, non-U.S. unrealized tax credits of $78.6 million were recorded relating to the anticipated tax credits that will be available when non-U.S. earnings will be repatriated to the U.S. These non-U.S. unrealized tax credits are netted against the deferred tax liability for U.S. tax on non-U.S. earnings. Additionally, for U.S. federal income tax purposes, non-U.S. tax credit carry forwards of $76.3 million are available to be utilized once sufficient non-U.S. source income is recognized. The losses generally expire within a period of three to 20 years, with some non-U.S. losses available indefinitely. The non-U.S. tax credit expiration period is 10 years which will begin when the credits become realized. At December 31, 2014, we had valuation allowances of $36.7 million associated with U.S. state net operating losses and $45.6 million associated with non-U.S. loss carry forwards. The net valuation allowance increased by $26.3 million in 2014 due primarily to uncertainty regarding the ability to utilize U.S. state net operating losses and non-U.S. operating losses. We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary differences and expected repatriation of non-U.S. earnings to the U.S. Accordingly, we believe that no additional valuation allowances are necessary.

We provide tax reserves for U.S. federal, U.S. state, U.S. local and non-U.S. uncertain tax positions. The development of these tax positions requires subjective, critical estimates and judgments about tax matters, potential outcomes and timing. Although the outcome of open tax examinations is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities resulting from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in assumptions in future periods, are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes.

At December 31, 2014 and 2013, we had $33.3 million and $53.7 million, respectively, of unrecognized tax benefits that were classified as long-term liabilities, of which $26.2 million and $30.5 million, respectively, would favorably impact our effective tax rate, if recognized. The reconciliation of the allowance for uncertain tax positions is as follows (in thousands):

	December 31, 2014			December 31, 2013
Balance at beginning of year	$	41,694		$	33,634
Gross additions for tax positions of prior years	10,683			6,644
Gross reductions for tax positions of prior years	(18,331		)	(1,488		)
Gross additions on positions related to the current year	6,494			5,056
Reductions resulting from a lapse of the applicable statute of limitation	(724		)	(2,152		)
Balance at end of year	39,816			41,694
Accrued interest and penalties	8,341			11,988
ASU 2013-11 reclassification	(14,857		)	—
Gross unrecognized income tax benefit	$	33,300		$	53,682

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. We recognized a decrease of net interest and penalties in the consolidated statement of operations of approximately $3.6 million in 2014 comprised of an increase of $0.9 million associated with ongoing accruals and a decrease of $4.5 million associated with releases. In 2013, we recognized an increase of net interest and penalties in the consolidated statement of operations of approximately $1.2 million, comprised of an increase of $1.8 million associated with ongoing accruals and a decrease of $0.6 million associated with releases. Additionally, $8.3 million and $12.0 million of interest and penalties were recorded in the consolidated balance sheets as of December 31, 2014 and 2013, respectively.

We operate in multiple tax jurisdictions, both inside and outside the United States and are routinely under audit by U.S. federal, U.S. state and non-U.S. tax authorities. These reviews can involve complex matters that may require an extended period of time for resolution. Our U.S. federal income tax returns have been examined and settled through tax year ending November 3, 2011. We have ongoing audits in various U.S. state and U.S. local jurisdictions, as well as audits in various non-U.S. jurisdictions. In general, the tax years 2009 through 2013 remain open in the major taxing jurisdictions, with some U.S. state and non-U.S. jurisdictions remaining open longer as a result of net operating losses and longer statute of limitation periods.

It is reasonably possible that the total amount of unrecognized tax benefits could decrease within the next twelve months by $0.5 million. This decrease would result from the expiration of the statute of limitations and the completion of tax examinations in multiple jurisdictions.

Income taxes paid, net of income tax refunds, were $24.9 million, $36.3 million, and $28.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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Equity (Details)	12 Months Ended
	Dec. 31, 2014
Equity [Line Items]
Limited partners' percentage of ownership	100.00%

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Incentive Compensation Plans - Equity-Based Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 14, 2011	Nov. 11, 2011
Weighted Average Exercise Price [Roll Forward]
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	$ 0	$ 0	$ 0
Appreciation Rights [Member] | Appreciation Rights Plan [Member]
Equity-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards authorized				4,172,000
Weighted average assumptions:
Expected stock volatility	39.00%	43.00%	56.00%
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	0.50%	0.60%	0.90%
Expected life (years)	2 years	3 years	4 years
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	1,574,000
Granted	1,364,000
Exercised	0
Forfeited/Expired	(690,000)
Outstanding, end of period	2,248,000	1,574,000
Exercisable	0
Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, outstanding, beginning of period (in usd per unit)	$ 6.50
Weighted average exercise price, granted (in usd per unit)	$ 7.95
Weighted average exercise price, exercised (in usd per unit)	$ 0.00
Weighted average exercise price, forfeited/expired (in usd per unit)	$ 6.69
Weighted average exercise price, outstanding, end of period (in usd per unit)	$ 7.32	$ 6.50
Weighted average exercise price, exercisable (in usd per unit)	$ 0.00
Weighted Average Remaining Contractual Term (years)	8 years 6 months 22 days	8 years 11 months 15 days
Aggregate Intrinsic Value, exercisable	0
Appreciation Rights - Service-Based [Member] | Appreciation Rights Plan [Member]
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	787,000
Granted	682,000
Exercised	0
Forfeited/Expired	(345,000)
Outstanding, end of period	1,124,000	787,000
Exercisable	0
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant date fair value, granted (in usd per unit)	$ 1.66	$ 1.37	$ 0.81
Weighted Average Exercise Price [Roll Forward]
Total unrecognized compensation cost, net of estimated forfeitures	1,400,000
Unrecognized compensation cost, recognition period (in years)	2 years 7 months 25 days
Profits Interest Units - Service-Based [Member] | Executive Plan [Member]
Equity-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years	4 years	4 years
Profits interest distribution threshold	8.11	7.4	5.0
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	8,562,000
Granted	2,054,000
Exercised	(947,000)
Forfeited/Expired	(1,698,000)
Outstanding, end of period	7,971,000	8,562,000
Exercisable	4,583,000
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant date fair value, granted (in usd per unit)	$ 1.62	$ 2.30	$ 1.33
Weighted Average Exercise Price [Roll Forward]
Total unrecognized compensation cost, net of estimated forfeitures	4,100,000
Unrecognized compensation cost, recognition period (in years)	2 years 4 months 13 days
Profits Interest Units - Performance-Based [Member] | Executive Plan [Member]
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	7,922,000
Granted	2,054,000
Exercised	0
Forfeited/Expired	(3,123,000)
Outstanding, end of period	6,853,000	7,922,000
Exercisable	0
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant date fair value, granted (in usd per unit)	$ 1.42	$ 1.98	$ 1.15
Weighted Average Exercise Price [Roll Forward]
Total unrecognized compensation cost, net of estimated forfeitures	7,900,000
Profits Interest Units [Member] | Executive Plan [Member]
Equity-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards authorized					23,641,333.333
Weighted average assumptions:
Expected stock volatility	39.00%	43.00%	56.00%
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	0.50%	0.60%	0.90%
Expected life (years)	2 years	3 years	4 years
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	16,484,000
Granted	4,108,000
Exercised	(947,000)
Forfeited/Expired	(4,821,000)
Outstanding, end of period	14,824,000	16,484,000
Exercisable	4,583,000
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant date fair value, outstanding, beginning of period (in usd per unit)	$ 1.50
Weighted average grant date fair value, granted (in usd per unit)	$ 1.52
Weighted average grant date fair value, exercised (in usd per unit)	$ 1.45
Weighted average grant date fair value, forfeited/expired (in usd per unit)	$ 1.75
Weighted average grant date fair value, outstanding, end of period (in usd per unit)	$ 1.42	$ 1.50
Weighted average grant date fair value, exercisable (in usd per unit)	$ 1.49
Appreciation Rights - Performance-Based [Member] | Appreciation Rights Plan [Member]
Profits Interest Unit and Appreciation Rights Activity [Roll Forward]
Outstanding, beginning of period	787,000
Granted	682,000
Exercised	0
Forfeited/Expired	(345,000)
Outstanding, end of period	1,124,000	787,000
Exercisable	0
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted average grant date fair value, granted (in usd per unit)	$ 1.46	$ 1.35	$ 0.81
Weighted Average Exercise Price [Roll Forward]
Total unrecognized compensation cost, net of estimated forfeitures	$ 1,800,000

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Income Taxes (Benefit) - Reconciliation of the allowance for uncertain tax positions (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 41,694,000	$ 33,634,000
Net additions for tax positions of prior years	10,683,000	6,644,000
Net reductions for tax positions of prior years	(18,331,000)	(1,488,000)
Net additions on positions related to the current year	6,494,000	5,056,000
Reductions resulting from a lapse of the applicable statute of limitation	(724,000)	(2,152,000)
Balance at end of year	39,816,000	41,694,000	33,634,000
Accrued interest and penalties	8,341,000	11,988,000
Unrecognized tax benefit, ASU 2013-11 reclass	(14,857,000)	0
Gross unrecognized income tax benefit	33,300,000	53,682,000
Unrecognized tax benefits that would favorably impact effective tax rate	26,200,000	30,500,000
Recognized increase of net interest and penalties	(3,600,000)	1,200,000
Increase associated with with ongoing accruals	900,000	1,800,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Decrease Resulting from Release of Accruals	4,500,000	600,000
Lower bound that unrecognized tax benefits could decrease by	500,000
Income taxes paid	$ 24,900,000	$ 36,300,000	$ 28,100,000

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Income Taxes (Benefit) (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The following table summarizes earnings (loss) before income taxes (benefit) of U.S. and non-U.S. operations (in thousands):

	Year ended December 31,
	2014			2013			2012
U.S.	$	(515,976	)	$	(845,261	)	$	(492,869	)
Non-U.S.	161,335			133,578			259,122
	(354,641		)	(711,683		)	(233,747		)
Earnings (loss) from discontinued operations before income taxes	7,436			(5,800		)	144,136
Earnings (loss) from continuing operations before income taxes	$	(362,077	)	$	(705,883	)	$	(377,883	)

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes the composition of income tax expense (benefit) (in thousands):

	Year ended December 31,
	2014			2013			2012
Current:
U.S. Federal	$	18,149		$	16,777		$	17,693
U.S. State	2,220			8,162			3,148
Non-U.S.	14,633			9,125			13,218
Total current expense	35,002			34,064			34,059
Deferred:
U.S. Federal	(138,046		)	(158,735		)	(104,476		)
U.S. State	(19,998		)	(26,383		)	(19,900		)
Non-U.S.	(1,126		)	(1,971		)	(2,013		)
Total deferred tax expense (benefit)	(159,170		)	(187,089		)	(126,389		)
	(124,168		)	(153,025		)	(92,330		)
Income tax expense (benefit) related to discontinued operations	2,863			(2,233		)	55,493
Income tax expense (benefit) related to continuing operations	$	(127,031	)	$	(150,792	)	$	(147,823	)

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of the U.S. federal statutory rate to the consolidated effective tax rate is as follows:

	Year ended December 31,
	2014(1)		2013(1)		2012(1)
Computed “expected” tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.4		1.7		3.8
Non-deductible items	(0.1	)	(0.9	)	(0.5	)
Effect of international operations	(4.4	)	(1.5	)	0.1
Section 199 production deduction	0.8		0.2		0.5
Research and development credit	0.1		0.3		—
Goodwill impairment	—		(13.4	)	—
Other, net	0.2		0.1		0.6
	35.0		21.5		39.5
Change in rate related to discontinued operations	0.1		(0.1	)	(0.4	)
Effective tax rate related to continuing operations	35.1	%	21.4	%	39.1	%

⁽¹⁾  The years ended December 31, 2014, 2013 and 2012 include a loss before income tax benefit. The consolidated effective income tax rates represent adjustments to the computed “expected” income tax benefit rate for the period. Therefore, negative percentages represent reductions to the income tax benefit rate.

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Deferred Tax Assets:
Non-U.S. tax credit	$	76,320		$	67,765
U.S. research and development tax credit	978			—
Net operating loss	100,772			67,229
Accounts receivable	(1,468		)	9,377
Non-U.S. net operating loss carry forwards	36,904			23,259
Accrued liabilities	87,412			12,156
Deferred non-U.S. tax asset	43,864			48,223
Accrued interest	14,686			20,296
Disallowed interest carry forward	106,860			52,407
Unrealized foreign exchange currency loss, net	—			371
Inventory	9,717			2,124
Other	891			618
Total gross deferred tax assets	476,936			303,825
Less: valuation allowances	(82,299		)	(55,944		)
Net deferred tax assets	394,637			247,881
Deferred Tax Liabilities:
Intangible assets, amortizable	(384,485		)	(447,286		)
Intangible assets, indefinite-lived	(454,779		)	(455,417		)
Loan fees	(30,751		)	(31,343		)
U.S. tax on non-U.S. earnings	(256,039		)	(190,665		)
Deferred U.S. state tax liability	3,556			(831		)
Unrealized foreign exchange currency gain, net	(19,883		)	—
Depreciation	(56,865		)	(70,870		)
Other	(6,489		)	(2,372		)
Total gross deferred tax liabilities	(1,205,735		)	(1,198,784		)
Net deferred tax liability	(811,098		)	(950,903		)
Less: current deferred tax asset	(63,025		)	(23,621		)
Less: non-current deferred tax asset	(31,692		)	(31,459		)
Less: current deferred tax liability	113,658			2,199
Non-current deferred tax liability	$	(792,157	)	$	(1,003,784	)

Reconciliation of the Allowance for Uncertain Tax Positions

The reconciliation of the allowance for uncertain tax positions is as follows (in thousands):

	December 31, 2014			December 31, 2013
Balance at beginning of year	$	41,694		$	33,634
Gross additions for tax positions of prior years	10,683			6,644
Gross reductions for tax positions of prior years	(18,331		)	(1,488		)
Gross additions on positions related to the current year	6,494			5,056
Reductions resulting from a lapse of the applicable statute of limitation	(724		)	(2,152		)
Balance at end of year	39,816			41,694
Accrued interest and penalties	8,341			11,988
ASU 2013-11 reclassification	(14,857		)	—
Gross unrecognized income tax benefit	$	33,300		$	53,682

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Accounting for Goodwill and Other Non-current Assets Schedule of Estimated Amortization Expense (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Accounting for Goodwill and Other Non-current Assets [Abstract]
2015	$ 178,498
2016	162,717
2017	149,423
2018	136,083
2019	$ 125,348

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Related Party Transactions

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Services Agreements and Merger Related Fees

On November 4, 2011, in connection with the Merger, entities affiliated with the Sponsors (the “Managers”) entered into services agreements and material event services agreements with KCI and LifeCell or, in certain cases, their affiliates (the “Services Agreements”), pursuant to which the Managers will provide strategic and consulting services, including financing and strategic business planning and analysis services, to KCI, LifeCell and/or their subsidiaries, parent entities and controlled affiliates. Pursuant to the Services Agreements, the Managers are entitled to receive an annual consulting fee, as well as certain fees for specified material events, including sales of KCI or LifeCell and refinancings. The Managers will also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with the provision of services pursuant to the Services Agreements. The Services Agreements will continue indefinitely unless terminated by the consent of all the parties thereto. However, the Services Agreements will terminate automatically upon an initial public offering of KCI, LifeCell or one of their subsidiaries, parent entities or controlled affiliates, unless KCI or LifeCell or, in certain cases, an affiliate of KCI or LifeCell, as applicable, elects by prior written notice to continue the Services Agreements. The Services Agreements may also terminate upon certain change of control events involving KCI or LifeCell. On November 4, 2011, the Managers also entered into an indemnification agreement with the Company and its parent entities (the “Indemnification Agreement”). The Indemnification Agreement contains customary exculpation and indemnification provisions in favor of the Managers and certain of their affiliates. During the years ended December 31, 2014, 2013 and 2012, we paid management fees of $5.1 million, $8.7 million and $5.1 million, respectively, to the Managers. We expect to pay approximately $5.1 million in management fees to the Managers during each of the years ended December 2015 through the term of the agreements.

Management Investment

Subsequent to the Merger, Messrs. Ball, Bibb, Busenlehner and Woody have each entered into subscription agreements with Guernsey Holdings and GP, pursuant to which each individual agreed to subscribe for and acquire from Guernsey Holdings Class A-2 Units of Guernsey Holdings (each, a “Subscription”). In connection with the Subscription, each individual became a party to the limited partnership agreement of Guernsey Holdings as a limited partner of Guernsey Holdings.

Indemnification Agreement

On November 4, 2011, the Managers also entered into an indemnification agreement with the Company and its parent entities (the “Indemnification Agreement”). The Indemnification Agreement contains customary exculpation and indemnification provisions in favor of the Managers and certain of their affiliates.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

On November 4, 2011, Kinetic Concepts, Inc. (“KCI”) completed its merger (the “Merger”) with Chiron Merger Sub, Inc. (“Merger Sub”), a direct subsidiary of Chiron Holdings, Inc. (“Holdings”) and an indirect subsidiary of Acelity L.P. Inc. (“Acelity”), pursuant to the terms of the Agreement and Plan of Merger, dated as of July 12, 2011 (the “Merger Agreement”), by and among Holdings, Merger Sub and KCI. As a result of the Merger, KCI is a 100% owned subsidiary of Acelity. In connection with this transaction, LifeCell Corporation (“LifeCell”), formerly a 100% owned subsidiary of KCI, was promoted to be a sister corporation of KCI, such that each of KCI and LifeCell are now 100% owned subsidiaries of Acelity. Acelity is a non-operating holding company indirectly controlled by investment funds advised by Apax Partners (“Apax”) and controlled affiliates of Canada Pension Plan Investment Board (“CPPIB”) and the Public Sector Pension Investment Board (“PSP Investments” and with Apax and CPPIB, collectively, the “Sponsors”) and certain other co-investors. The consolidated financial statements presented herein include the accounts of Acelity L.P. Inc., together with its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise noted in this report, the terms “we,” “us,” “our,” or the “Company” refers to Acelity L.P. Inc. and subsidiaries. The accompanying audited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP” or “the Codification”). Certain prior period amounts have been reclassified to conform to the 2014 presentation.

Net earnings (loss) per share information is not presented as such information is not meaningful. Chiron Guernsey Holdings L.P. Inc. owns over 99% of the limited partnership interests of Acelity, while Acelity’s Managing Limited Partner owns less than 1% of the limited partnership interests.  Chiron Guernsey GP Co. Limited owns all of the general partnership interests in Acelity and has no economic interest in Acelity. We do not have any publicly traded common stock or potential common stock.

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.

On October 29, 2014, LifeCell entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”) to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. 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.

The Company has two reportable operating segments: Advanced Wound Therapeutics and Regenerative Medicine. 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.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

We recognize revenue in accordance with the “Revenue Recognition” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification when each of the following four criteria are met:

1) a contract or sales arrangement exists;

2) products have been shipped, title has transferred or services have been rendered;

3) the price of the products or services is fixed or determinable; and

4) collectibility is reasonably assured.

We recognize rental revenue based on the number of days a product is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.  Sales revenue is recognized when products are shipped and title has transferred.  In addition, we establish realization reserves against revenue to provide for adjustments including capitation agreements, estimated credit memos, volume discounts, pricing adjustments, utilization adjustments, product returns, cancellations, estimated uncollectible amounts and payer adjustments based on historical experience. In addition, revenue is recognized net of administrative fees paid to GPOs and state sales tax paid on post-acute rentals and sales.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of ninety days or less to be cash equivalents. 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.

Accounts Receivable

Accounts Receivable

The Americas trade accounts receivable consist of amounts due directly from acute and extended care organizations, third-party payers (“TPP”), both governmental and non-governmental, third-party distributors and patient pay accounts.  Included within the TPP accounts receivable balances are amounts that have been or will be billed to patients once the primary payer portion of the claim has been settled by the TPP.  EMEA/APAC trade accounts receivable consist of amounts due primarily from acute care organizations and third-party distributors.

Significant concentrations of accounts receivable include:

	2014		2013
Acute and extended care organizations	51	%	53	%
Managed care, insurance and other	28	%	28	%
Medicare/Medicaid	10	%	9	%
Other	11	%	10	%

The TPP reimbursement process in the United States requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, could increase total accounts receivable.  Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in our home care business may, in some cases, extend beyond one year prior to full settlement of the claim.

We utilize a combination of factors in evaluating the collectibility of our accounts receivable. For unbilled receivables, we establish reserves to allow for expected denied or uncollectible items.  In addition, items that remain unbilled for more than a specified period of time, or beyond an established billing window, are reserved against revenue.  For billed receivables, we generally establish reserves using a combination of factors including historic adjustment rates for credit memos and canceled transactions, historical collection experience, and the length of time receivables have been outstanding.  The reserve rates vary by payer group.  In addition, we record specific reserves for bad debt when we become aware of a customer’s inability or refusal to satisfy its debt obligations, such as in the event of a bankruptcy filing.

Inventories

Inventories

Advanced Wound Therapeutics inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On October 28, 2013, inventories purchased as part of our acquisition of Systagenix were recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Costs include material, labor and manufacturing overhead costs. Inventory expected to be converted into equipment for short-term rental is reclassified to property, plant and equipment. We review our inventory balances monthly for excess sale products or obsolete inventory levels. Inventory quantities of sale-only products in excess of anticipated demand are considered excess and are reserved at 100%. For rental products, we review both product usage and product life cycle to classify inventory as active, discontinued or obsolete. Obsolescence reserve balances are established on an increasing basis from 0% for active, high-demand products to 100% for obsolete products. The reserve is reviewed and, if necessary, adjustments are made on a monthly basis. We rely on historical information and production planning forecasts to support our reserve and utilize management’s business judgment for “high risk” items, such as products that have a fixed shelf life. Once the value of inventory is reduced, we do not adjust the reserve balance until the inventory is sold or otherwise disposed.

Regenerative Medicine inventories

Prior to the completion of the Merger on November 4, 2011, inventories were stated at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. On November 4, 2011, inventories were recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to inventory recorded at the lower of cost or market (net realizable value), with cost being determined on a first-in, first-out basis. Inventories on hand include the cost of materials, freight, direct labor and manufacturing overhead. We record a provision for excess and obsolete inventory based primarily on inventory quantities on hand, the historical product sales and estimated forecast of future product demand and production requirements. In addition, we record a provision for tissue that will not meet tissue standards based on historic rejection rates.

Vendor Rebates

Vendor Rebates

We may receive consideration from vendors in the normal course of business in the form of rebates of purchase price paid. Our policy for accounting for these funds is in accordance with the “Revenue Recognition” Topic of the FASB Accounting Standards Codification. Funds are recognized as a reduction of cost of sales and inventory if the funds are a reduction of the price for the vendor’s products.

Long-Lived Assets

Long-Lived Assets

Prior to the completion of the Merger on November 4, 2011, property, plant and equipment was stated at cost. On November 4, 2011, property, plant and equipment was recorded at fair value with the application of preliminary purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. On October 28, 2013, property, plant and equipment purchased as part of our acquisition of Systagenix was recorded at fair value with the application of purchase accounting adjustments, with subsequent additions to property, plant and equipment recorded at cost. Betterments, which extend the useful life of the equipment, are capitalized. Debt issuance costs, which represent fees and other direct costs incurred in connection with our borrowings are capitalized and amortized using the effective interest method over the contractual term of the borrowing. Other assets consisted principally of other investments at December 31, 2014 and 2013.

When an event occurs that indicates the carrying value of long-lived assets might not be recoverable, we review property, plant and equipment for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. During 2013, we recorded a $30.6 million fixed asset impairment charge. There were no impairments of fixed assets in 2014.

Depreciation on property, plant and equipment is calculated on the straight-line method over the estimated useful lives (20 to 30 years for buildings and between 3 and 7 years for most of our other property and equipment) of the assets. Amortization for leasehold improvements is taken over the shorter of the estimated useful life of the asset or over the remaining lease term.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Business combinations are accounted for under the acquisition method. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values as of the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

Goodwill is tested for impairment by reporting unit annually as of October 31, or more frequently when events or changes in circumstances indicate that the asset might be impaired. Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition.

Impairment of goodwill is tested by comparing the carrying value of the reporting unit to the reporting unit’s fair value. The carrying value of each reporting unit is determined by taking the reported net assets of the consolidated entity, identifying reporting unit specific assets (including goodwill) and liabilities and allocating shared operational and administrative assets and liabilities to the appropriate reporting unit. The fair value of each reporting unit is determined using current industry multiples as well as discounted cash flow models using certain performance assumptions and appropriate discount rates determined by our management. To ensure the reasonableness of the estimated fair value of our reporting units, we perform a reconciliation of the estimated fair value of our consolidated entity to the total estimated fair value of all our reporting units. When it is determined that the carrying value of goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, the measurement of any impairment is determined and the carrying value is reduced as appropriate.

Identifiable intangible assets include developed technology, in-process research and development, customer relationships, tradenames and patents. For intangible assets that are subject to amortization, we amortize the assets over the estimated economic or contractual life of the individual asset. When an event occurs that indicates the carrying value of definite-lived intangible assets might not be recoverable, we review the assets for impairment using an undiscounted cash flow analysis. If an impairment occurs on an undiscounted basis, we compute the fair market value of the applicable assets on a discounted cash flow basis and adjust the carrying value accordingly. Indefinite-lived intangibles are tested for impairment annually as of October 31, or more frequently when events or changes in circumstances indicate that the assets might be impaired. If the carrying amount of the indefinite-lived intangible assets exceeds their fair value, an impairment is recognized in an amount equal to that excess.

The Company performed an interim impairment test on goodwill of its Regenerative Medicine reporting unit during the third quarter of 2013. In our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, we disclosed that in the event of an approximate 6% and 4% drop in the fair value of our Regenerative Medicine reporting unit and the fair value of our Regenerative Medicine indefinite-lived identifiable intangible assets, respectively, the fair value of the Regenerative Medicine reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2012. The Company continued to monitor the close proximity of the reporting unit’s carrying value compared to its fair value and, in the third quarter, determined it was required to complete the interim impairment test, as defined under GAAP. The results of the third quarter 2013 interim impairment test indicated that the estimated fair value of the Regenerative Medicine reporting unit was less than its carrying value; consequently, during the third quarter of 2013 we recorded a $272.2 million impairment of goodwill and a $171.2 million impairment of indefinite-lived intangible assets related to our Regenerative Medicine reporting unit. There were no impairments of goodwill or identifiable intangible assets during 2014 or 2012.

During 2013, write-offs of $16.9 million of other intangible assets were recorded due primarily to the discontinuation of certain projects.

Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions, changes to our business model or changes in operating performance. Significant differences between these estimates and actual cash flows could materially affect our future financial results. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units. In the event of an approximate 27% and 10% drop in the fair value of our KCI reporting unit and the fair value of our KCI indefinite-lived identifiable intangible assets, respectively, the fair value of the KCI reporting unit and indefinite-lived identifiable intangible assets would still exceed their book values as of October 31, 2014. In the event of an approximate 21% drop in the fair value of our Systagenix reporting unit, the fair value of the Systagenix reporting unit would still exceed its book value as of October 31, 2014. Additionally, in the event of an approximate 11% drop in the fair value of our Regenerative Medicine reporting unit, the fair value of the Regenerative Medicine reporting unit would still exceed its book value as of October 31, 2014. Certain Regenerative Medicine indefinite-lived identifiable intangible assets approximated their fair value as of October 31, 2014.

Income Taxes

Income Taxes

Deferred income taxes are accounted for using the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statements and the tax bases of assets and liabilities, as measured by current enacted tax rates.  When appropriate, we evaluate the need for a valuation allowance to reduce our deferred tax assets.

A liability is recorded for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.  We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

We have established a valuation allowance to reduce deferred tax assets associated with foreign net operating losses, certain state net operating losses, and certain foreign deferred tax assets to an amount whose realization is more likely than not. We believe that the remaining deferred income tax assets will be realized based on reversals of existing taxable temporary differences and expected repatriation of foreign earnings. Accordingly, we believe that no additional valuation allowances are necessary.

Royalties

Royalties

We pay royalties for the right to market certain of our medical devices. Royalties are generally based on applicable revenue or the number of units sold and are recognized in the period that the related revenue is earned. Royalties related to rental revenue are included in rental expense. Royalties on sales revenue are included in cost of sales.

Self-Insurance

Self-Insurance

We self-insure certain employee benefit and casualty insurance risks. Our group medical plan for U.S. employees is a qualified self-insured plan subject to specific stop loss insurance coverage. Our short-term disability plan for U.S. based employees is self-insured. The Texas Employee Injury Benefit Plan is self-insured subject to a $750,000 per occurrence retention. Our casualty insurance program has a $750,000 deductible for workers’ compensation, auto liability, and general liability. Our products liability program has a $1,000,000 self-insured retention. Our group life and accidental death and dismemberment plan and our long-term disability plan are all fully insured. We fully accrue our retained loss liabilities, including claims incurred but not reported. Based on historical trends, we believe our accruals for retained losses are adequate to cover future losses.

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.

Periodically, 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; 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 consolidated balance sheet.

All derivative instruments are recorded on the balance sheet 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.

Foreign Currency Translation and Transaction Gains and Losses

Foreign Currency Translation and Transaction Gains and Losses

The functional currency for the majority of our foreign operations is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from the foreign currency translations are included in accumulated other comprehensive income. Transaction gains and losses, such as those resulting from the settlement of nonfunctional currency receivables or payables, including intercompany balances, are included in foreign currency gain (loss) in our consolidated statements of operations. Additionally, payable and receivable balances and long-term debt denominated in nonfunctional currencies are marked-to-market at month-end, and the gain or loss is recognized in our consolidated statements of operations.

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 December 31, 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 $487.7 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.

Equity-based Compensation

Equity-based Compensation

We account for equity-based payments to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires that equity-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values.

As required by ASC 718, we recognize equity-based compensation expense for equity-based payment awards that are expected to vest based on estimated fair values on the date of grant. For awards classified as liability awards, the fair value of these awards is reviewed on a regular basis and the expense associated with these awards is adjusted accordingly as the fair value changes. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rates. To the extent our actual forfeitures are different than our estimates, we record a true-up for the differences in the period that the awards vest, and such true-ups could materially affect our operating results. We also consider whether there have been any significant changes in facts and circumstances that would affect our expected forfeiture rate.

We are also required to determine the fair value of equity-based awards at the grant date. We estimate the fair values of employee incentive equity awards using a Black-Scholes-Merton valuation model. A discount for lack of marketability was applied to the per unit fair value to reflect increased risk arising from the inability to readily sell the Profits Interest Units and Appreciation Rights. These determinations require judgment, including estimating expected volatility. If actual results differ significantly from these estimates, equity-based compensation expense and our results of operations could be impacted.

Research and Development

Research and Development

The focus of our research and development program has been to invest in clinical studies and the development of new advanced wound healing systems, products and dressings. This includes the development of new and synergistic technologies across the continuum of wound care including tissue regeneration, preservation and repair, new applications of negative pressure technology, and the leveraging of our core understanding of biological tissues in order to develop biosurgery products in our Regenerative Medicine business. The types of costs classified as research and development expense include salaries of technical staff, consultant costs, facilities and utilities costs related to offices occupied by technical staff, depreciation on equipment and facilities used by technical staff, supplies and materials for research and development and outside services such as prototype development and testing and third-party research and development costs. Expenditures for research and development, including expenses related to clinical studies, are expensed as incurred.

Shipping and Handling

Shipping and Handling

We include shipping and handling costs in rental expense and cost of sales, as appropriate.

Taxes Collected from Customers and Remitted to Governmental Units

Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a government authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes and value added taxes, are accounted for on a net (excluded from revenues and costs) basis.

Advertising Expenses

Advertising Expenses

Advertising costs are expensed as incurred.

Legal Proceedings and Other Loss Contingencies

 Legal Proceedings and Other Loss Contingencies

We are subject to various legal proceedings, many involving routine litigation incidental to our business. The outcome of any legal proceeding is not within our complete control, is often difficult to predict and is resolved over very long periods of time. Estimating probable losses associated with any legal proceedings or other loss contingencies is very complex and requires the analysis of many factors including assumptions about potential actions by third parties. Loss contingencies are disclosed when there is at least a reasonable possibility that a loss has been incurred and are recorded as liabilities in the consolidated financial statements when it is both (1) probable or known that a liability has been incurred and (2) the amount of the loss is reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. If a loss contingency is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements.

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.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carry forward, similar tax loss, or a tax credit carry forward exists at the reporting date. This new guidance became effective for annual and interim period for fiscal years beginning on or after December 15, 2013. The Company has applied the requirements of ASU 2013-11 prospectively in preparing the December 31, 2014 consolidated balance sheet, which resulted in a decrease to non-current deferred tax assets of $14.9 million and a decrease to non-current reserves for uncertain tax positions of $14.9 million. Had the Company applied the requirements of ASU 2013-11 retrospectively to the December 31, 2013 consolidated balance sheet, there would not have been a material impact.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In April 2014, the FASB issued 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.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements — Going Concern (Subtopic 205-40).” The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating this update, however we do not anticipate that the adoption of this guidance will have a material impact on our results of operations, financial position or disclosures.

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Accounting for Goodwill and Other Non-current Assets Schedule of Goodwill (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 segment	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Line Items]
Number of Reportable Operating Segments	2
Number of Reporting Units	3
Goodwill	$ 3,378,298	$ 3,378,661	$ 3,479,775
Goodwill, Acquired During Period		171,086
Goodwill, Impairment Loss		(272,200)
Goodwill, Purchase Accounting Adjustments	1,737
Goodwill, Other Changes	(2,100)
KCI [Member]
Goodwill [Line Items]
Goodwill	2,483,240	2,483,240	2,483,240
Goodwill, Acquired During Period		0
Goodwill, Impairment Loss		0
Goodwill, Purchase Accounting Adjustments	0
Goodwill, Other Changes	0
Regenerative Medicine [Member]
Goodwill [Line Items]
Goodwill	722,235	724,335	996,535
Goodwill, Acquired During Period		0
Goodwill, Impairment Loss		(272,200)
Goodwill, Purchase Accounting Adjustments	0
Goodwill, Other Changes	(2,100)
Systagenix [Member]
Goodwill [Line Items]
Goodwill	172,823	171,086	0
Goodwill, Acquired During Period		171,086
Goodwill, Impairment Loss		0
Goodwill, Purchase Accounting Adjustments	1,737
Goodwill, Other Changes	$ 0

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Summary of Significant Accounting Policies - Schedule of Concentrations of Accounts Receivable (Details) (Americas [Member], Accounts Receivable [Member])	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Acute and Extended Care Organizations [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	51.00%	53.00%
Managed Care, Insurance and Other [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	28.00%	28.00%
Medicare/Medicaid [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%	9.00%
Other [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%	10.00%

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Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Foreign currency translation adjustment, taxes	$ (753)	$ 233	$ (369)
Unrealized investment gain, taxes	0	(1,403)	0
Reclassification of realized investment gain included in net loss, taxes	$ 1,403	$ 0	$ 0

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Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2014

Business Combinations and Discontinued Operations [Abstract]

Acquisitions and Divestitures

Acquisitions and Divestitures

Acquisitions

Systagenix

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 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 using the income approach. 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 following table represents the allocation of the purchase price (in thousands):

	December 31, 2013			Adjustment			December 31, 2014
Goodwill	$	171,086		$	1,737		$	172,823
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		)	(1,737		)	(36,489		)
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 net deferred tax liability relates primarily to the tax impact of future amortization associated with the intangible assets acquired, which is not deductible for tax purposes.

The following table reflects the unaudited pro forma condensed consolidated results of operations, as though the acquisition had occurred as of the beginning of the period presented (in thousands):

	Year Ended December 31,
	2013			2012
Pro forma revenue	$	1,931,683		$	1,943,296
Pro forma net loss	$	(552,153	)	$	(168,001	)

Pro forma condensed consolidated results of operations for the year ended December 31, 2013 were adjusted to exclude nonrecurring charges of $16.2 million related to transaction costs recognized as selling, general and administrative expenses. Pro forma condensed consolidated results of operations for the year ended December 31, 2012 were adjusted to include these nonrecurring charges.  Additionally, the pro forma condensed consolidated results of operations for the year ended December 31, 2012 were adjusted to include $9.8 million of additional nonrecurring cost of sales associated with the preliminary purchase accounting adjustments related to the step up in value of inventory.

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 periods presented, nor are they indicative of future operating results. 

TauTona Injector, LLC

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. For the year ended December 31, 2014, LifeCell paid $1.5 million under the asset purchase agreement related to milestone achievement. As of December 31, 2014, the accompanying consolidated balance sheet included $7.1 million under the caption “accrued expenses and other” and $9.0 million under the caption “other non-current liabilities” related to future anticipated milestone payments.

GID Group

In November 2014, LifeCell entered into an asset purchase agreement with GID Group to purchase certain assets, including patents and know-how. Under the terms of the asset purchase agreement, LifeCell made an initial cash payment of $5.0 million at the closing of the transaction. The asset purchase agreement also calls for additional payments by LifeCell of up to $10.0 million upon the achievement of certain milestones. As of December 31, 2014, the accompanying consolidated balance sheet included $4.5 million under the caption “accrued expenses and other” and $3.7 million under the caption “other non-current liabilities” related to future anticipated milestone payments.

Divestitures

Therapeutic Support Systems

On November 8, 2012, KCI closed on the divestiture of its TSS business to Getinge AB. The final adjusted purchase price paid by Getinge to KCI was $241.5 million. Under the terms of the Agreement, we agreed to provide transition services to Getinge after the close of the transaction. The historical results of operations of the disposal group, 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 and the service fee payable by Getinge under the transition services agreement.

The Company utilized the net proceeds from the sale to fund the acquisition of Systagenix and internal investments, which satisfied our reinvestment requirement associated with our senior secured credit facility.

The operating results of the TSS product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2013			2012
Revenue	$	—		$	188,121
Earnings (loss) before income taxes	$	(5,371	)	$	149,916
Income tax expense (benefit)	$	(2,068	)	$	57,718
Earnings (loss) from discontinued operations	$	(3,303	)	$	92,198

SPY® Elite System

On October 29, 2014, LifeCell Corporation entered into an agreement with Novadaq® Technologies Inc. (“Novadaq”)

to transfer all marketing and distribution rights to the SPY® Elite System from LifeCell to Novadaq, effective November 30, 2014. In connection with the transfer, the parties agreed to terminate various distribution agreements entered into between 2010 and 2011. LifeCell received a one-time payment of $4.5 million and sold existing inventory back to Novadaq. Under the terms of the agreement, LifeCell has agreed to provide limited transition services to Novadaq through December 31, 2014. In connection with the transfer, the parties have also resolved all legal disputes between them.

The operating results of the SPY® Elite System product portfolio included in discontinued operations are as follows (in thousands):

	Year Ended December 31,
	2014		2013			2012
Revenue	$	22,204	$	26,010		$	16,950
Earnings (loss) before income taxes	$	7,436	$	(429	)	$	(5,780	)
Income tax expense (benefit)	$	2,863	$	(165	)	$	(2,225	)
Earnings (loss) from discontinued operations	$	4,573	$	(264	)	$	(3,555	)

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Leasing Obligations - Schedule of Future Minimum Lease Payments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Capital Leases
2015	$ 526
2016	394
2017	0
2018	0
2019	0
Thereafter	0
Total minimum lease payments	920
Less amount representing interest	(66)
Present value of net minimum capital lease payments	854
Less current portion	(488)
Obligations under capital leases, excluding current installments	366
Operating Leases
2015	22,387
2016	14,947
2017	11,745
2018	8,918
2019	6,727
Thereafter	28,587
Total minimum lease payments	$ 93,311

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Related Party Transactions (Details) (Managers [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Managers [Member]
Related Party Transaction [Line Items]
Management fees paid	$ 5.1	$ 8.7	$ 5.1
Expected management fees	$ 5.1

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Schedule of Concentrations of Accounts Receivable

Significant concentrations of accounts receivable include:

	2014		2013
Acute and extended care organizations	51	%	53	%
Managed care, insurance and other	28	%	28	%
Medicare/Medicaid	10	%	9	%
Other	11	%	10	%

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Segment and Geographic Information Schedule of information on the geographical location of select financial information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended										12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013		Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 482,733		$ 481,793	$ 459,178	$ 442,635	$ 462,382		$ 432,960	$ 426,193	$ 411,366	$ 1,866,339		$ 1,732,901		$ 1,729,503
Long-Lived Assets	288,048	[1]				333,725	[1]				288,048	[1]	333,725	[1]	388,482	[1]
Domestic [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue											0		0		0
Long-Lived Assets	0	[1]				0	[1]				0	[1]	0	[1]	0	[1]
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue											1,329,306		1,321,517		1,335,043
Long-Lived Assets	198,754	[1]				224,789	[1]				198,754	[1]	224,789	[1]	287,700	[1]
Other Foreign Country [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue											537,033		411,384		394,460
Long-Lived Assets	$ 89,294	[1]				$ 108,936	[1]				$ 89,294	[1]	$ 108,936	[1]	$ 100,782	[1]

[1] Long-lived assets exclude intangible assets.

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Data [Abstract]

Unaudited Consolidated Results of Operations by Quarter

Quarterly Financial Data (unaudited)

The unaudited consolidated results of operations by quarter are summarized below (in thousands):

	Year Ended December 31, 2014
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	442,635		$	459,178		$	481,793		$	482,733
Gross profit	$	276,596		$	293,207		$	314,413		$	325,998
Operating earnings (loss)	$	32,805		$	(142,123	)	$	88,347		$	55,299
Loss from continuing operations	$	(47,060	)	$	(153,823	)	$	(3,235	)	$	(30,928	)
Earnings from discontinued operations	$	677		$	1,106		$	1,398		$	1,392
Net loss	$	(46,383	)	$	(152,717	)	$	(1,837	)	$	(29,536	)

	Year Ended December 31, 2013
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	411,366		$	426,193		$	432,960		$	462,382
Gross profit	$	260,540		$	280,060		$	285,082		$	301,873
Operating earnings (loss)	$	36,536		$	11,456		$	(370,355	)	$	57,769
Loss from continuing operations	$	(42,753	)	$	(61,747	)	$	(398,607	)	$	(51,984	)
Earnings (loss) from discontinued operations	$	(2,034	)	$	(828	)	$	46		$	(751	)
Net loss	$	(44,787	)	$	(62,575	)	$	(398,561	)	$	(52,735	)

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Commitments and Contingencies

12 Months Ended

Dec. 31, 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.

In August 2013, Vital Needs International, L.P. ("Vital Needs") filed a Demand for Arbitration with the American Arbitration Association seeking to recover in excess of $100 million in damages and legal fees 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. The arbitration hearing took place in January 2015, and we are currently awaiting a decision from the panel, which is expected during the second quarter of 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 arbitration.

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”). On November 18, 2014, a jury found that the ‘200 Patent was not invalid and was infringed and further awarded LifeNet a lump sum damages amount of $34.7 millionAs a result of this decision, we recorded a liability of $34.7 millionin the fourth quarter of 2014. We disagree with the result at this stage in the litigation and believe that LifeCell’s defenses to the claims are meritorious. LifeCell will continue to vigorously assert its defenses during the post-trial and appeal stages of this litigation and intends to defend any further claims by LifeNet. If LifeCell’s post-verdict motions are denied, LifeCell plans to appeal to the U.S. Federal Circuit Court of Appeals in Washington D.C. on multiple grounds.

On June 30, 2014, KCI entered into a settlement agreement with Wake Forest  University Health Sciences to fully and finally resolve the historical patent and royalty disputes between them relating to negative pressure wound therapy. As of December 31, 2014, the accompanying consolidated balance sheet included $82.7 million under the caption “accrued expenses and other” and $104.3 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.

Products Liability Litigation

LifeCell Corporation is a defendant in approximately 335lawsuits 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 each selected two bellwether cases from which one case to be tried will be selected. Further discovery is proceeding on each of the four bellwether cases. Trial of the first bellwether case is currently scheduled for January 2016. 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. 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 further fact discovery is proceeding in these cases, 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.

LifeCell Corporation has been named as a defendant in approximately 180 lawsuits in state and federal courts 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 175LifeCell cases filed in a consolidated docket in Middlesex County, Massachusetts. The cases are in the initial phase and no discovery has occurred. Three cases are pending in a multi-district federal case in West Virginia that is proceeding very slowly. The remaining cases are in Massachusetts, Delaware, Minnesota, and New York. None of these cases are proceeding at this time. We intend to defend these suits vigorously, and 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 before a 3 member panel. On January 16, 2015, the Ninth Circuit entered an order scheduling oral argument en banc before the U.S. Court of Appeals for the Ninth Circuit which is currently scheduled for March 17, 2015. 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 durable medical equipment (“DME”) claims submitted to Medicare Part B. These audits typically involve a complex medical review, by Medicare or its designated contractors and representatives, of documentation supporting 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 obtain the written medical record in advance of therapy as long as the underlying medical records reported to us support the coverage criteria and medical necessity 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 clinical providers, medical facilities and prescribers. Obtaining these medical records in connection with a claims audit may be challenging and, in any event, all of these records are subject to further examination, interpretation 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, we could be subject to denial or overpayment demands for claims submitted for Medicare reimbursement. In the rare event that an audit results in major discrepancies of claims records which lacked proof of medical necessity, Medicare may be entitled to take additional corrective measures, including: extrapolation of the results of the audit across a wider population of claims, submitting recoupment demands for claims other than those examined in the audit, or placing the organization on a full prepayment review. These audits have increased over the last two years from being negligible to approximately 10% of our claims.  While eventually receiving payment on a high percent of the claims subject to these audits, payment timeliness may range from a few months up to a year resulting in increasing Medicare accounts receivable balances.

As of December 31, 2014, our commitments for the purchase of new product inventory were $50.6 million. We expect the total inventory commitments at December 31, 2014 to occur in 2015.