Invacare Moves into Acquisition Mode; CEO Decision by End of the Year

ELYRIA, Ohio — Last week Invacare officials reported organic sales growth of 2.4 percent in
the third quarter compared to the same quarter in 2009. Net sales,
however, rose less than 1 percent to $437.5 million.

The HME manufacturer generated $17.2 million in free cash flow,
a number that Gerald Blouch, interim CEO, characterized as strong
in light of the working capital required to support organic sales.
“We are pleased that we are regaining momentum,” said Blouch on an
Oct. 28 call with investors. “It’s impressive relative to recent
history, but certainly not where we want to be, or expect to be, or
have been historically — and what we are aiming to return
to.”

To speed things up, Blouch said Invacare has been reducing and
refinancing its debt in order to make acquisitions and get back to
historic growth rates of 4 to 5 percent. For the past several years
as the company has focused on making its operations more efficient,
Blouch said, “we’ve kind of kept our heads down” when it comes to
acquisitions. Now, he said, “we’re beginning to aggregate
simultaneously the focus on completing the process of globalizing
our product platforms and looking at acquisitions as opportunities
to accelerate that process.”

The quarterly call marked the second in a row in which Invacare
Chairman A. Malachi Mixon III, was not present. Blouch updated
Mixon’s condition following a mild stroke in April and reiterated
the plan concerning the CEO position. “Mal’s attitude is great,”
said Blouch. “He is positive and engaged. He has started back as
chairman actively, and he is in the office with great regularity.
The situation with regards to the CEO slot remains unchanged. He
intends to make a decision by the end of the year, and we will make
an announcement then.”

Other highlights for the company’s third quarter include:

• Adjusted EBITDA increased to $42.2 million versus $40.1 million
  last year.
• Debt decreased by $18.6 million.
• North American HME net sales increased 3.2 percent to $190.9
  million.
• Rehab product line net sales increased 2.6 percent compared to
  last year, driven primarily by higher sales of custom power and
  consumer power products.
• Respiratory product line sales decreased slightly by 0.1
  percent compared to the third quarter of last year, primarily due
  to a reduction in sales of stationary concentrators related to a
  national account.
• Invacare Supply Group net sales increased 6.2 percent to $75.2
  million, attributable to continued growth in sales to national
  providers, particularly in diabetic and incontinence products.