Invacare faces lawsuit from shareholder
ELYRIA, Ohio – Invacare officials will “vigorously defend” themselves against new allegations that they misled shareholders about the company’s noncompliance with Food and Drug Administration (FDA) regulations, according to a spokeswoman.
A shareholder last week filed a lawsuit in U.S. District Court for the Northern District of Ohio, alleging Invacare officials violated federal securities laws between July 22, 2010, and Dec. 7, 2011, with statements that “masked the fact that the company suffered from widespread operational, quality and regulatory deficiencies,” according to a press release from the Shareholders Foundation.
“We believe that this litigation is without merit, and we intend to vigorously defend ourselves in this matter,” said Lara Mahoney, director of investor relations and corporate communication, in a statement to HME News.
In late 2012, as part of a consent decree with the FDA, Invacare agreed to limit production and certain design activities at its manufacturing facility and corporate headquarters in Elyria, Ohio. Recently, the company announced that it has passed the first of three audits, allowing it to resume certain production at its manufacturing facility.
Back in 2010, the plaintiff alleges that Invacare officials concealed from investors that the company received a series of warnings from the FDA—known as Forms 483—that identified serious compliance violations at its two major U.S.-based manufacturing facilities.
The plaintiff alleges it wasn’t until January 2011 that Invacare officials commented on such a warning related to an inspection of the company’s manufacturing facility in Sanford, Fla., and it wasn’t until December 2011 that they announced discussions with the FDA.
Invacare’s stock has tumbled due its troubles with the FDA. It declined from $34 per share in July 2011 to as low as $15.12 per share in December 2011. On May 24, 2013, it closed at $14.70 per share.
This isn’t the first time Invacare officials have been sued over their handling of the FDA situation. In July 2012, Invacare reached a $1.3 million settlement with two shareholders that claimed officials “breached their fiduciary duties” in connection with the company’s compliance with regulations.
Invacare restructures credit agreement
ELYRIA, Ohio – Invacare has amended its credit agreement, giving the company greater financial flexibility for the remainder of 2013, according to a press release. As part of the amendment, Invacare will reduce its revolving credit facility from $400 million to $250 million through October 2015. The company will also limit its borrowings to an amount below $200 million until the end of the year, the release noted.