Invacare's sales slump continues

ELYRIA, Ohio - Invacare ended the year the same way it started—hamstrung by a consent decree with the U.S. Food and Drug Administration (FDA) that has limited manufacturing at its Taylor Street facility.

The company on Feb. 6 reported net sales of $1.35 billion for 2013 compared to $1.43 billion for 2013, a 5.6% decrease. For the North America/HME segment, it reported net sales of $607.1 million for 2013 compared to $692.7 million for 2012, a 12.4% decrease.

“We're focused like a laser on exiting the injunctive phase of the consent decree,” Gerry Blouch, president and CEO, told investors during a conference call.

The consent decree has been in place for a little more than a year. Standing between Invacare and resuming full operation: a final audit by a third-party auditor that has been delayed from June to November and now to February. Once that audit is submitted and approved by the FDA, the agency will conduct its own inspection.

When pressed by investors about the delays in getting the decree lifted, Blouch said much of the process was out of Invacare's control.

“There (are) a number of issues,” he said. “The availability of the auditors—the pool of auditors hasn't expanded to accommodate the expansion of actions by the FDA. The outcomes and the opinion of the third party. There is no FDA label—it's a broad guideline on what you should accomplish. So there is a fair amount of ambiguity.”

More specifically, the consent decree slashed sales of products manufactured at the Taylor Street facility from $147.1 million in 2012 to $55.5 million in 2013.

Not helping matters: Invacare initiated a recall of certain joysticks and driver controls in October of 2013. That meant logging an incremental warranty expense of $7.2 million after-tax for 2013.

Helping to offset losses was a 6.7% increase in net sales for the European segment, from $546.5 million in 2012 to $583.1 million in 2013.

“There's a very good management team there with history,” said Rob Gudbranson, CFO. “They realize this is a time that we're counting on them to perform well.”

Invacare also reported fourth quarter results: company wide, net sales of $334.9 million in 2013 vs. $354.9 million in 2012; and for North America/HME, $144.8 million vs. $165.6 million.