Invacare juggles demand, costs

ELYRIA, Ohio – Invacare reported net sales of $201 million for the first quarter of 2022, a 2.4% increase compared to the same period last year. 

For North America, net sales were $75.3 million vs. $76 million, a 0.9% decrease, with double-digit growth in sales of mobility and seating products offset by lower sales of lifestyle and respiratory products.  

"In 1Q22, we delivered 2.4% reported net sales and 6.4% constant currency net sales growth driven by sales of mobility & seating products, which achieved double-digit growth,” said Matt Monaghan, chairman, president and CEO. “We are pleased that strong demand continued across our entire portfolio of products. As we work to increase our capability to fulfill strong demand, we continue to experience an adverse impact on cost and availability of inputs. In response, we are streamlining our portfolio to emphasize more clinically valuable products and implementing pricing actions to offset increased costs. Coupled with the introduction of new high value products, we expect these actions to be increasingly impactful throughout the remainder of the year.” 

In a May 4 filing with the U.S. Securities and Exchange Commission, Invacare outlined actions to reduce headcounts in the United States and Europe. 

Other highlights from Invacare’s financial results: 

• Gross profit as a percent of net sales was 23.7%, a decrease of 410 basis points attributable to higher costs, primarily in freight and material, as well as operational inefficiencies from intermittent production stoppages, which more than offset the benefit of price increases. 
• SG&A expense increased by $1.7 million, or 3.0%, and constant currency SG&A(b) increased by $3.5 million, or 5.9% primarily related to ERP expenses taken in the quarter that were not capitalized due to a temporary pause in new deployments. 
• Operating loss was $16.6 million due to lower gross profit and higher SG&A expense, as well as increased restructuring costs. 
• Adjusted EBITDA(c) loss of $8.6 million was primarily attributable to lower gross margin and higher SG&A expense. 
• Free cash flow(d) usage was $29.8 million, an increase of $12.0 million. 1Q22 free cash flow usage funded the operating loss, customer bonus payments, and increased inventory and lower accounts payable. 

For full year 2022, Invacare expects improved adjusted EBITDA sequentially and over the prior year, and it expects revenues to be flat or slightly lower over the prior year.