Earnings: Apria, Invacare, ResMed

Sunday, February 10, 2008

LAKE FOREST, Calif. - Apria Healthcare last week reported revenues of $452.7 million for the fourth quarter of 2007, a 15.7% increase from the same quarter of 2006. Net income was $25 million for the fourth quarter this year compared to $21.4 million for the same quarter last year.

Respiratory therapy and infusion therapy experienced solid revenue growth in the fourth quarter of 2007: 5.1% and 8.2%, respectively. Including the impact of Apria's December acquisition of Coram, infusion therapy grew 66.9% for the quarter.

"Revenue grew in the second half of the year due to a heightened focus on sales force training, development and retention, as well as the expansion of the sales force," said Lawrence Higby, CEO. "Additionally, the cost-reduction initiative we implemented during the year contributed to our strong financial results. Strategically, with the fourth quarter acquisition of Coram, we also positioned the company for long-term success by diversifying our therapy and payer mix and significantly enhancing our position in the home infusion industry."

Apria also reported revenues of $1.632 billion for the year ended Dec. 31, 2007, a 7.6% increase from the year ended Dec. 31, 2006. Net income was $86 million for 2007 compared to $74.3 million for 2006.

In 2008, Apria expects revenue to grow 33% to 35%.

Invacare improves financial performance
ELYRIA, Ohio - Invacare's cost cutting efforts paid off handsomely in 2007, but reimbursement pressures and a resulting shift by providers to lower-margin products ate up a "significant portion" of the $40 million in savings, the company reported Jan. 30.

For the year, Invacare generated $73 million in free cash flow, driven by stronger than expected cash collections on receivables and inventory turns. This allowed the company to reduce debt in the fourth quarter by about $38 million. For the year, Invacare's debt totaled $537.9 million.

Here are a few highlights from the company's fourth-quarter and year-end financial statement:

-- The company earned $7 million the fourth quarter compared to a $337.6 million loss last year.
-- Net sales for 2007 increased 7% to $1.6 billion vs. $1.5 billion last year.
-- Adjusted net earnings for 2007 were $42.9 million compared to $37.8 million last year.
-- Two national accounts made significant purchases of the HomeFill oxygen system in 2007. Thanks to that, sales of the unit jumped 20% in the fourth quarter.
-- For the year, North American HME sales decreased 1.2% to $668.3 million, but they jumped 4.7% in the forth quarter, driven primarily by sales of rehab and standard products.
-- For the year, Invacare Supply Group increased its net sales 12.6%; European sales jumped 15.7%; Asian sales increased 29%.

CEO Mal Mixon stated the following:

"CMS continues to move forward with the implementation of competitive bidding in 10 metropolitan statistical areas (MSAs) with the bid awards effective as of July 1, 2008, and an additional 70 MSAs in 2009. There is discussion in Washington regarding the possibility of proposed Medicare changes later this year, particularly with regard to oxygen and power wheelchairs. We continue to work for the industry and lobby against oxygen reimbursement reductions and against elimination of the power wheelchair first month purchase option. We are also lobbying for modification to the competitive bidding program to ensure small business participation and consumer access. At this point, it is still possible oxygen reimbursement cuts will be included in a Medicare bill, as could the power wheelchair issue. We continue to believe that should reimbursement reductions occur, new oxygen technologies such as our HomeFill product will remain at current reimbursement levels."

ResMed: 'Q2 was a difficult quarter'
SAN DIEGO - ResMed last week reported revenues of $202.7 million for the quarter ended Dec. 31, 2007, a 14% increase from the same quarter in 2006. Income from operations and net income were $36.8 million and $26.9 million, respectively, for the quarter.

For the six months ended Dec. 31, 2007, revenues were $388.4 million, a 14% increase over the $342 million for the same period in 2006. Income from operations and net income were $68.6 million and $51 million, respectively, for the period.

Research and development expenses for the quarter were $14.9 million or about 7% of revenue. R&D expenses increased 24% year over year. The company expects it to remain about 7% of revenue through fiscal year 2008.

Selling, general and administrative (SG&A) costs were $67.6 million for the quarter, an increase of $10.3 million or 18% more than the same period in fiscal year 2007. The increase was due to "the addition of selling and administration personnel and related expenses necessary to support our sales growth."

President and CEO Kieran Gallahue stated:

"As expected, Q2 was a difficult quarter in the Americas as we bridged the gap to new product introductions over the second half of the fiscal year. Looking forward, we are encouraged by the opportunities for growth, as we recently released a next generation nasal mask, the Mirage Micro(TM), which sets a new standard for size and comfort. We also launched a new bilevel device, the VPAP Auto, which represents our first bilevel in the smaller S8 flow generator platform and incorporates our new motor technology, including the Easy-Breathe waveform."

Gallahue continued: "In addition, we are planning to release an updated version of our S8 flow generator platform for the U.S. market and an additional new mask during the fiscal fourth quarter. This new device, the S8 II, was launched in Europe last quarter, and we are pleased with the traction the international team has made with it in a short period of time. I am excited about our future as we continue to see penetration into new markets, including diabetes and cardiology, and I firmly believe we are very well positioned to capitalize on the continuing development of our industry."