Invacare: Conservative short-term, bullish long-term

‘We want to end the year sequentially flat’
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Friday, August 11, 2017

ELYRIA, Ohio – Despite the excitement surrounding its recent clearance by the U.S. Food and Drug Administration to resume full operations at its Taylor Street manufacturing facility, Invacare CEO Matt Monaghan told investors Aug. 8 that the company is still trying to “report some conservatism.”

Monaghan expects Invacare’s financial results to stabilize in the second half of 2017, but there are a number of factors that are tempering a rebound right out of the gate.

“I want to end the year sequentially flat, quarter-over-quarter, so Q4 over Q3,” said Monaghan, also chairman and president, during a conference call to discuss financial results for the second quarter. “So we’ll see how close we can get on Q3 over Q2.”

For the six months ended June 30, Invacare reported net sales of $465.2 million this year vs. $532.6 million last year. It reported a net loss of $40.3 million vs. $20.2 million.

Monaghan acknowledged that it’s “hard to predict” how quickly providers will “come back” to its line of complex rehab products, which were most affected by the consent decree that limited manufacturing from its Taylor Street facility for almost five years.

“It’s a little hard for us, just 10 days into that ability to sell freely,” he said.

Additionally, Monaghan called the performance of Invacare’s respiratory product category in the second quarter “a little disappointing.” While there are signs that providers are buying more portable oxygen concentrators as they transition to non-delivery business models, POCs have been, traditionally, a small part of its product mix in the category.

“There’s really incredible growth, and I’m excited to be participating in that (with our Platinum Mobile Oxygen Concentrator),” he said. “But the challenge is, the marketplace, I think, is putting their new asset purchase dollars into that category. So for us, the decline in respiratory really reflects a mix shift to a segment of that pie that's relatively small for us. So we see the exciting startup growth, but we've got to manage that mix shift.”

“Conservatism” aside, Monaghan remains “bullish on the long term,” especially for Invacare’s lineup of complex rehab products, which includes the new TDX SP2 power wheelchair with LiNX Technology.

“I have a lot of confidence in complex rehab because of the training and talent we have in the commercial organization, and the products we’ve given them,” he said. “What we see in the book of quotes and the commercial interests for appointments to get closed going forward—I’m relatively sanguine about mobility and seating and the complex rehab part of the business.”

Invacare reported $233.5 million in net sales for the second quarter of this year compared to $275 million for the same period last year, a 15.1% decrease. For North America/HME, it reported $77.7 million in net sales compared to $110.7 million, an 86.4% decrease.

Invacare reported a net loss of $23.5 million for the second quarter this year compared to a net loss of $11.58 million for the same period last year.