Invacare shines in second quarter

Sunday, August 29, 2010

ELYRIA, Ohio - Invacare outperformed Wall Street's expectations in the second quarter, and company officials feel good about their chances to operate successfully under competitive bidding.

"If you are a provider, you have the broadest product line with us," CFO Rob Gudbranson told analysts during a July 22 conference call. "(With) all the things we can do to help the provider, I think we are well positioned to be the manufacturer of choice for the industry. We feel good about where we are."

That said, competitive bidding's 32%, on average, decline "was surprising," he added.

Acting CEO Gerald Blouch was a bit more dramatic in describing the competitive bidding results, saying it had a "shock and awe" effect on providers.

"Not even the government anticipated the depths of the average reductions," Blouch said. "The flaws in the process encouraged people to bid low so that they (could) get a bid and then live on the average."

The numbers

After Invacare announced in early July that its second quarter earnings beat Wall Street expectations, investors went crazy, pushing the company's stock up 19.9%. Factors that contributed to the strong performance: Net sales increased 4.4% to $430.8 million (analysts expected $416.3 million); the company paid down about $75 million of high-interest debt; and earnings before income tax were $27.9 compared to $18.9 last year. In North America, net sales rose 1.1% to $190.1 million, primarily due to increased sales of respiratory and rehab products.

Mixon update

Invacare CEO Mal Mixon continues to rehab from the stroke he had earlier this year and planned to return to his role as chairman of the board in early August. When asked by an analyst if Mixon would eventually resume his CEO duties, Blouch said: "Mal is phasing himself back in and we'll see what the future holds."