Invacare reduces workforce again
ELYRIA, Ohio – Invacare will reduce its workforce by about 100 associates, a move that will generate about $6.6 million annually in pre-tax savings, the company announced late on Jan. 31.
The reduction in workforce is necessary to realign Invacare’s infrastructure, says Matt Monaghan, chairman, president and CEO, in the wake of efforts in 2016 to recruit associates to the North America commercial team as part of its transformation from a generalist DME to a more clinical company.
“These changes, while difficult, are an essential part of our transition to becoming a more sustainably profitable, growing business,” he said.
As a result of the reduction, Invacare expects to incur restructuring charges of about $2.2 million on a pre-tax basis, the company says.
The 100 associates come from across Invacare’s North America business and are all salaried or hourly employees, according to Lara Mahoney, senior director of investor relations and corporate communications.
Invacare still has about 4,600 associates globally, Mahoney said.
Layoffs are becoming an annual event at Invacare. In a conference call in November to discuss its third quarter financial results for 2016, Monaghan noted Invacare’s decision in October to “right-size” certain parts of the North America/HME business in line with shifts in staffing needs, a move that saves about $2.6 million annually.
Invacare also reduced its workforce in 2015, when the company laid off 30 employees, 20 at its North Ridgeville campus in Elyria, and in 2014, when it laid off 190 associates, 60 at the North Ridgeville campus.
Shortly after taking the reins at Invacare in April of 2015, Monaghan laid out a three-phase transformation for the company. During the call in November, Monaghan said the company was in the first phase of the transformation, which entails strengthening the balance sheet, developing and expanding talent, accelerating quality efforts, strengthening the North America commercial team, shifting product mix and restarting the innovation pipeline.
Invacare is still in the process of trying to lift a consent decree with the U.S. Food and Drug Administration that has limited the company’s ability to manufacture and sell custom power wheelchairs and seating systems since 2012. Most recently, in June, the FDA outlined additional steps the company must take before completing the third and final phase of lifting the decree. Those steps include completing the remediation of certain design history files referenced in the FDA’s 2015 inspection report and in the decree.
Invacare is slated to release its fourth quarter and year-end 2016 financial results on Feb. 9.