Hill-Rom Reports Second Quarter Financi...(d flat primarily due to the popularity o...),Health

-- International and Surgical. Revenue increased $3.8 million, or 3.9 percent, to $100.8 million, principally driven by the acquisition of Liko and strong growth outside of Europe. Constant currency growth was 16.5 percent. European revenues slowed during the quarter, decreasing low-single digits organically. Revenues in the rest of the world increased in excess of 40 percent. Allen Medical continued to grow at high single digit rates, indicating that the demand for surgical capital equipment remains reasonably strong.

-- North America Post-Acute Care. Revenue increased $0.9 million, or 1.9 percent, to $48.9 million. Capital sales increased by $2.7 million, or 31.8 percent, primarily due to the Liko acquisition, sales channel initiatives and direct to consumer sales. Rental revenue declined by $1.8 million, or 4.6 percent, with strong respiratory care performance offset by weaker home care and extended care revenues. Our extended care business was impacted by prior year contract losses, the effects of the economy on capital sales and a weak flu season compared to last year.

Other Second Quarter Financial and Operational Highlights

-- Gross profit declined $13.9 million to $153.4 million, primarily related to reduced capital volume; however, gross margin increased by 90 basis points to 45.5 percent due to the strength of rental margins, manufacturing cost savings initiatives and other job elimination actions announced in August and January. Capital gross profit declined by 17.7 percent, and gross margin was down 180 basis points versus the prior year primarily due to the reduced volume and
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