Sales of Invacare's HomeFill jump 57% in Q2

Friday, August 31, 2007

ELYRIA , Ohio - Invacare continued to slug it out in the United States where declining Medicare reimbursement stymied second quarter earnings, but news for the industry's largest manufacturer isn't all bad. While net sales for the second quarter reported July 31 grew just 2% over the same period last year, net sales of the company's flagship oxygen product, the HomeFill, grew 57% during the first quarter, driven by sales to a large national provider and increases in sales to small and regional HMEs, the company reported. Highlights from Invacare's second quarter earnings include the following:
* The domestic market, particularly related to power mobility devices, continues to be negatively impacted by reimbursement changes that resulted in declining revenues and profits in the North American/Home Medical Equipment segment.
* For the quarter ended June 30, North American HME net sales declined 2.8% to $166.4 million compared to $171.2 million in the same period last year, driven primarily by sales declines in the rehab and respiratory product lines.
* Standard product line net sales for the second quarter increased 0.7% compared to the second quarter last year, driven by increased volumes, particularly in manual wheelchairs and beds.
* For the first half of 2007, North American HME net sales decreased 4.4% to $327.9 million.
* Invacare Supply Group net sales for the quarter jumped 11.6% to $62.7 million driven by an increase in home delivery program sales and volume increases in incontinence, diabetic and enteral.
* For fiscal year 2007, the company expects organic growth in net sales of 0% to 2%.
Commenting on the company's performance, CEO Mal Mixon stated: "Cost reduction remains our top priority. The competitive pricing conditions driven by reimbursement changes in the U.S. remain and we expect approximately $30 million in net sales reductions in 2007 from the lower pricing. Our $38 million of cost reductions, which are weighted to the second half of the year, should offset these impacts and result in improved profitability in the second half of the year. We expect adjusted third quarter earnings to be sequentially improved from adjusted second quarter earnings but still lower than adjusted third quarter earnings last year."