The Scooter Store impact spreads

Friday, March 15, 2013

NEW BRAUNFELS, Texas – The woes at The Scooter Store could hurt more than The Scooter Store, say multiple industry sources.

The stream of bad news coming from the mobility giant, including a recent furlough of most of its 1,800 employees, has sources concerned about the impact on the manufacturers that stock the company with scooters, wheelchairs and lifts.

“The damage that they’re going to be causing the manufacturers—it’s enormous,” said one source.

The Scooter Store is on the hook to manufactures like Pride Mobility Products, Shoprider and Harmar Mobility for millions of dollars each for products purchased but not yet paid for, according to sources. (For an idea of how much product The Scooter Store buys and sells: Its top locations received $105 million from Medicare for one type of power wheelchair, K0823, in 2011 alone, according to CMS data.) 

Depending on The Scooter Store’s next step, manufacturers may never see that money back, sources say. If the company files for bankruptcy, for example, Sun Capital Partners, a senior secured lender, will likely be first in line to make collections, sources say. Possibly next in line: the government. The Scooter Store has agreed to return to Medicare $19.5 million in overpayments, but the agency is under pressure from lawmakers to collect up to $88 million in additional overpayments.

“The manufacturers are going to get hurt on both ends,” said one source. “I would be shocked if they ever see that money back, and then they’re looking at reduced business going forward. Their business is already down and this is another hit.”

Repeated attempts to reach Shoprider and Harmar Mobility were unsuccessful.

In a written statement to HME News, Pride Mobility stated that it is not The Scooter Store’s primary supplier of Group 2 wheelchairs. It also minimized any damage it would incur due to The Scooter Store’s woes.

“Over the past two years…Quantum Rehab and Pride’s international divisions have grown to surpass Pride’s domestic Group 2 sales,” the statement reads. “Regardless of the outcome of their current situation, Pride and Quantum continue to focus on being the product innovation leader in the complex rehab and mobility industry. Our research and development effort has never been stronger.”