Earnings: Invacare down; Apria, Viasys up

Sunday, May 13, 2007

Declining Medicare reimbursement continued to hamper Elyria, Ohio-based Invacare's North American HME division in the first quarter of 2007, with net sales slipping 5.9% to $161.5 million compared to the same period last year, the company reported May 1.

In its first quarter financial report, Invacare stated:

-- Rehab sales declined 9.2%, primarily due to Medicare reimbursement changes.

-- Standard product line sales increased 0.2% driven by increased volumes, particularly in manual wheelchairs and patient aids.

-- Respiratory product sales declined 12.6% due to the loss of a large customer, pricing declines in concentrators and reduced purchases by providers.

-- HomeFill II oxygen system sales jumped 38% due to increased purchases from national and smaller providers.

-- Invacare Supply Group (ISG) sales increased 12% to $61.7 million driven by volume increases primarily in diabetic and incontinence products.

-- Asia/Pacific net sales increased 29.4% to $20.9 million.

-- European net sales increased 12% to $107 million.

-- The Institutional Products Group increased sales 2.3%.

-- Days sales outstanding (DSO) at the end of the first quarter stood at 67 days compared to 69 days for the same period last year and 66 days at the end of 2006.

-- For fiscal year 2007, Invacare expects organic growth of 0% to 2% in net sales.

-- Cost-cutting efforts should save the company $38 million in 2007.

"We are confident our restructuring plans are achievable and will put us back in front of the curve by year end, with net year-over-year improved operating income," said CEO Mal Mixon.

'Good foundation' for Apria Healthcare
The Lake Forest, Calif.-based Apria Healthcare on May 1 reported a 5.8% increase in revenues for the first quarter ended March 31, 2007 ($389.3 million) compared to revenues for the same period last year ($368.1 million).

Net income was $19.1 million for the quarter, an 18.7% increase from last year ($16.1 million). Days sales outstanding (DSO) were 49 days at March 31, 2007, compared to 56 days last year, thanks to increased cash collections.

"Growth over the prior year is encouraging and our operational programs continue to yield additional improvements," stated CEO Lawrence Higby. "We still have work to do in 2007 in both operations and sales, but the quarter gives us a good foundation on which to build."

Respiratory products buoy Viasys earnings
The Conshohocken, Pa.-based Viasys Healthcare on May 7 reported earnings of $161.4 million for the first quarter of 2007 compared to $135.5 million for the same quarter last year. Net income was $7.7 million for the quarter compared to $5.5 million last year.

For the company's respiratory care division, which includes ventilators and sleep therapy products, revenues increased 31.2% to $113.2 million in the first quarter of 2007.

"We continue to leverage our strong balance sheet and cash flow to invest in R&D projects and strategic acquisitions that we expect will further strengthen our performance," stated Randy Thurman, chairman, president and CEO of the company.