Invacare tries to rejuvenate sales

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Friday, October 23, 2015

ELYRIA, Ohio – Invacare’s sales were soft in the third quarter, but Matthew Monaghan, chairman, president and CEO, remains bullish on the company’s growth.

During a conference call to discuss third quarter financial results, Monaghan told investors and analysts that Invacare continues to shift its sales team from being generalists to specialists, especially for complex rehab.

“The enhancements to the sales team will continue ad nauseam,” he said. “The clinical requirements for selling complex rehab are a career-long journey for our sales team and we are prepared to make investments in those folks. Remember that the order to cash cycle is pretty long in complex rehab. So the evidence of that focus will take some time to fully materialize.”

Overall, Invacare reported net sales of $283.78 million in the third quarter compared to $320.52 million for the same period in 2014. For the nine months ended Sept. 30, 2015, it reported net sales of $859.07 million compared to $951.96 million for the same period last year.

For North America/HME, Invacare reported net sales of $114.6 million for the third quarter compared to $124.3 million for the same period last year, a 7.8% decrease. For the first nine months of the year, it reported net sales of $358.8 million compared to $383.1 million for the same period last year, a 6.3% decrease.

Casting a long shadow on Invacare’s efforts to fine-tune its sales team: a consent decree with the Food and Drug Administration, which has limited its ability to manufacture and sell custom power wheelchairs and seating systems from its Taylor Street facility. One analyst noted that it has been nearly four years since the company announced the decree.

“They do take a long time,” Monaghan said. “You have to overhaul a number of policies and procedures, and then you have to accumulate enough data for 180 or 360 days to demonstrate to the audit bodies that you’re doing this sustainably.”

There’s another wild card that could affect Invacare’s sales going forward: On Jan. 1, CMS plans to start phasing in bid pricing in non-bid areas, many of them rural. While Monaghan was quick to point out that the reimbursement cuts affect the company’s customers, not the company itself, he acknowledged the change could create a “headwind in purchasing patterns.”

“It’s a good opportunity for us in areas like our HomeFill system,” he said. “We can go to those customers and talk to them about how to make good money in respiratory care by eliminating the need for drivers and vans and all other services that are required to deliver oxygen. That’s a great place for us to be.”

Overall, Invacare reported a net loss of $7.79 million in the third quarter compared to a net loss of $15.1 million for the same period in 2014. For the nine months ended Sept. 30, 2015, it reported a net loss of $23.26 million compared to $46.69 million for the same period last year.