Invacare leans on subsidiaries
ELYRIA, Ohio – Invacare posted first quarter losses last week, but if you look at the company as a “long-term turnaround,” you’ll see some short-term improvements, says top exec Matthew Monaghan.
Invacare reported a net loss of $8.6 million for the first quarter of 2016 compared to a net loss of $7.3 million for the same quarter last year. It reported net sales of $257.6 million vs. $289 million.
For North America HME, which has been hardest hit by a consent decree with the U.S. Food and Drug Administration, Invacare reported net sales of $106.4 million for the first quarter, a 15% decrease compared to the same quarter last year.
But, amid the losses, a bright spot, Monaghan says: Net sales of mobility and seating products—largely from Invacare subsidiaries like Motion Concepts—increased, helping to boost gross profit margin as a percentage of net sales by 1% in the first quarter.
“We have so many subsidiaries around the world that have products that address, really well and uniquely, the complex rehab market,” said Monaghan, chairman, president and CEO. “That’s part of what’s driving the gross margin increase—the commercial success of these products already in the marketplace, including ROVI.”
Mobility and seating products make up the biggest chunk of Invacare’s portfolio of more clinically complex products, an area of aggressive focus for two quarters now, Monaghan says.
“Invacare is not a high volume, low cost supplier,” he said. “We have a good legacy of putting engineering to work to make clinically differentiated products.”
Monaghan also provided a brief update on Invacare’s consent decree, which has limited manufacturing and sales of complex rehab products from its Taylor Street facility. The FDA has responded to a third certification report from an independent auditor with clarifying questions. Invacare must now address those questions and submit its own report. Both reports must be approved by the FDA, which will then conduct a re-inspection.
While the consent decree looms large in the background, financial results for the first quarter show “very early indicators of success” from the company’s strategy of leveraging its various subsidiaries and focusing on its more clinically complex products, Monaghan says.
“We’re more than just the consent decree and our products at the Taylor Street facility,” he said.