Invacare makes moves to ‘remain competitive’

ELYRIA, Ohio – Matt Monaghan provided color on Invacare’s plans to emphasize “clinically valuable products” as a way to streamline its portfolio and offset higher costs, during a May 10 conference call to discuss the company’s first quarter financial results. 

“If you take a bed, for example,  a low-end bed or a high-end bed has roughly the same amount of steel in it,” he said. “So, when the price of steel doubles or triples, you have a different problem to solve by passing that on in a low-end bed than a high-end bed, which might have 10-times the price in the marketplace. So, it’s an easier opportunity for us to talk to customers about making those adjustments in the high end. And those are in every product category.” 

The current price of steel is more than two-times the price Invacare paid in the first quarter of last year – a “significant input cost” for not only beds but also lifts and wheelchairs, says Kathy Leneghan, senior vice president and CFO. 

Invacare has also instituted additional price increases to offset higher costs, Monaghan says. Last summer, the company instituted a 10% price increase on select bed and manual wheelchair spare parts, and instituted surcharges on a range of products, including beds and recliners. 

“No one is immune from the cost increases that we're seeing – steel, diesel, plastics, transportation of all forms – and so it's just a matter of remaining competitive,” he said. “And I think the Invacare advantage is we can normally demonstrate pretty conclusively that total cost of ownership is lower when someone buys an Invacare product and puts it in their fleet because they're more reliable and tend to last longer with less refurbishment or less unreimbursed service over time.” 

Additionally, Invacare has taken actions, including reducing headcounts in North America and Europe, that provide a benefit of about $6 million in 2022 and about $9 million on an annual run rate basis and, once restructuring is completed, a benefit of about $11 million in 2022 and at least $20 million on an annual run rate basis. 

“We've taken actions to streamline our operations and lower costs by simplifying the organization, especially leveraging technology to eliminate non-core administrative processes,” Monaghan said. 

As an example of that technology, Leneghan says more than 40% of Invacare’s orders are now processed automatically, as customers enter orders directly via e-commerce tools now available in the system. 

“In addition, a large portion of quotes and orders, if received by email or fax, can now be automatically uploaded to the system,” Leneghan said. “This has significantly reduced the amount of manual intervention and reduced our costs to serve, while improving the customer experience.”