Invacare improves ‘visibility’

ELYRIA, Ohio – Invacare has set the stage for a strong second half of the year, company officials say, by implementing a number of measures to address supply chain challenges and launching a number of new products. 

Invacare has increased its inventory to minimize the impact of intermittent parts shortages and shipment delays and to prepare for expected sales growth in the second half of the year, which is being driven, in part, by a $15 million higher-than-normal order backlog in the second quarter. 

“We anticipate this investment in inventory will convert to cash in the second half of 2021 and enable us to achieve our free cash flow guidance,” said Kathleen Leneghan, senior vice president and CFO, during an Aug. 5 conference call to discuss financial results. 

Invacare has reaffirmed free cash flow of $5 million for the full year 2021, in addition to constant currency net sales growth in the range of 47% and adjusted EBITDA of $45 million. 

The company believes the additional inventory, along with shifted production plans, will go a long way toward reducing the operating variances that accounted for 80% of its gross margin decline in the second quarter. 

“A big thing we’re working on is more visibility with what the day-to-day receipt of products and components are going to be, so that our operations can start the day with the staffing for the planned production for the day,” said Matt Monaghan, chairman, president and CEO. “For us, it’s getting just a bit more visibility and a bit more inventory like we purchased, so that we can get back to more normal, orderly production planning.” 

In addition to the order backlog, new products will drive sales growth in the second half of the year, company officials say, especially in seating and mobility, which saw more than 12% constant currency net sales growth in North America in the second quarter. The company launched the Aviva Storm Rx rear-wheel drive power wheelchair early in the third quarter. 

“We have a very deep product line in mobility and seating with power add-ons that are doing very well,” Monaghan said. “We have new power wheelchairs that have great features. We have great customer engagement globally.”  

Invacare has also launched a new oxygen concentrator, the P5NXG, that Monaghan hopes will “buoy” the temporary increased sales for respiratory products that the company has seen during the COVID-19 pandemic. Respiratory products saw 24% constant currency net sales growth in the second quarter. 

“At some point, we’ll see a muting of respiratory sales related to the pandemic,” he said.