Invacare re-evaluates business segments, product lines

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Friday, February 15, 2019

ELYRIA, Ohio – Amid headwinds from tariffs and changes to Medicare’s competitive bidding program, Invacare announced an “enhanced transformation and growth plan” during a conference call on Feb. 14 to discuss its fourth quarter and full year financial results.

A key element of the plan: re-evaluating all business segments and product lines for potential profitability. For the North America/HME business segment, specifically, that means adjusting the portfolio to support consistent growth and drive faster innovation, and redesign business processes to lower cost and improve customer experience, says Matt Monaghan.

“We have engaged third-party experts to help assess, plan and support the execution of improvement opportunities to ensure the best plans are adopted across the entire enterprise,” said Monaghan, chairman, president and CEO.

Other elements of the plan include: in Europe, leveraging centralized innovation and supply chain capabilities, while reducing the cost and complexity of a legacy infrastructure; in Asia/Pacific, remaining focused on sustainable growth and expansion; and globally, taking actions to reduce working capital and improve cash flow.

Invacare has also adjusted its EBITDA target of $100 million run rate by the third quarter of 2020 to $85 million to $100 million by the end of 2020.

“While it’s still early in the development of external factors, we think we’re well positioned to deliver EBITDA at or near the original target,” Monaghan said.

Monaghan declined to provide specific changes to Invacare’s product portfolio, but he said, “Actions are already under way.”

“We need to do more consolidation and distribution,” he said. “We need to look at every single product to say, ‘Can we really afford to continue making it with the mix of imported goods? Can we consolidate many varieties of products into fewer varieties that still provide those features and benefits, but have greater sourcing synergies?’”

One product line that will likely be safe: seating and mobility. Net sales for the line increased 5% in the fourth quarter of 2018 and 8.5% for all of 2018, while net sales decreased 7.3% for all of NA/HME in the fourth quarter.

“We have more time and market to continue selling the (seating and mobility) products that we’ve been delivering since 2017 that are new,” Monaghan said. “We have some new line extensions and software features, and I think there’s better uptake now in the marketplace with the benefits of remote diagnostics.”

Overall, Invacare ended 2018 on a slightly higher note: It reported net sales of $972.3 million for 2018, a 0.6% increase compared to 2017, and a net loss of $43.9 million vs. 76.5 million.

“2018 was a strong year of progress in our transformation,” Monaghan said.

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