Invacare still fighting for profitability; respiratory sales down

BIRMINGHAM, Alabama (August 6, 2019)—Invacare Corp. officials said the company is on track to return to profitability, boosted in part by strong sales of its mobility and seating products and reduced costs associated with sales and administration. But the home medical equipment (HME) manufacturer and distributor still has hurdles to overcome as it works on its recovery plan.

In its second quarter earnings call on Tuesday, Invacare reported that constant currency net sales were up slightly in the second quarter and that it had $5.2 million in earnings before interest, taxes, depreciation and amortization (EBIDTA)—compared to $1.7 million in adjusted losses in the same quarter last year. Invacare’s goal is to be at $20 million in EBITDA by the end of 2019 and in the range of $85 million-$105 million by 2021.

“Per our plan, we have more work to do, and we remain confident in our ability to achieve our long-term objectives,” Matthew E. Monaghan, the company’s chairman, president and CEO, said on the call.

Overall, reported net sales decreased 4.2% to $235.9 million compared to the second quarter of last year. In North America, Invacare’s overall net sales were down 4.3%, for a total of $89.6 million. Respiratory products took the largest hit, with a 20% dropoff overall and close to a 24% dip in North America. Monaghan said he expects respiratory sales to rebound in the second half of the year as buyers prepare for flu season.

Invacare also was hit harder than expected by its decision to discontinue some of its manual mobility products last year, Monaghan said.

“We didn’t think we’d skin our knee on those,” he said, but it did turn out to be what he called “a headwind.”

However, Monaghan said, they’re excited about new products in the pipeline, including some already introduced in Europe, which saw an 11.2% boost in constant currency net sales in mobility and seating products in the second quarter of 2019 compared to the same period in 2018. Overall sales in Europe were down 3.5% over the same period last year, from $138.9 million to $134 million.

Invacare recently launched a new line of sleek manual wheelchairs in Europe under the Kuschall brand, as well as SMOOV one, a power add-on that provides electric drive for active manual wheelchair users. Monaghan also cited the company’s bariatric wheelchair, stand assist, and patient lift as strong performers.

Monaghan said the company is still evaluating the impact of a round of tariffs announced last week that will target $300 billion in Chinese goods. If anything, Monaghan said, tariffs on finished goods—as opposed to tariffs on components, which hit Invacare last year—may help level the playing field.

Even more up in the air, Monaghan said, is what may happen in the 2021 competitive bidding program, which he said he didn’t have a read on yet.

“I would say the Browns getting into the Superbowl is a little more certain than where national competitive bidding is going to turn out,” Monaghan joked.

Editor’s note: When this story was initially published it incorrectly stated Invacare’s EBITDA goal was $85 million in 2019 as opposed to $20 million in 2019 and $85 million-$105 million in 2021.