Invacare talks demand, FDA
ELYRIA, Ohio – Invacare’s earnings call Oct. 25 included the usual discussions of the company’s negotiations with the Food and Drug Administration (FDA), but what raised the eyebrow of at least one analyst?
This statement from President and CEO Gerald Blouch: “If it is determined that there are structural changes to the HME industry, the company will take the appropriate course of action.”
The question that has been nagging Invacare is whether competitive bidding and audits will decrease demand for its products and, therefore, require the company to consolidate operations or take some other action.
With Round 1 in place for almost two years now, Blouch said he remains confident that competitive bidding won’t have much of an impact on demand. What’s less clear? The impact of audits.
“They’re doing these audits because they think there’s excess demand,” he said. “The question is, if they’re right, how big is that?”
Blouch pointed out that much of the focus of audits seems to be on standard power wheelchairs, a product category that isn’t a focus for Invacare.
“Right now, we don’t see any need to resize the business,” he said.
In line with previous guidance, Blouch said Invacare will undergo a third-party audit in December and complete the process in the first quarter of 2013. He expects the FDA to follow up with a re-inspection.
Blouch said Invacare is still in talks with the FDA over the terms of a consent decree of injunction that would require the company to cease certain operations at two facilities. One analyst asked: Does Invacare have a contingency plan if a facility gets pulled out of service?
“Part of the protracted process has been addressing with the FDA how to continue to allow some production,” he said.
Invacare reported net earnings of $2.9 million for the third quarter ended Sept. 30, 2013, compared to $12.8 million for the same period last year. It reported net sales of $453 million vs. $456.5 million, a decrease of 0.8%.
The company reported net earnings of $9.1 million for the nine months ended Sept. 30, 2012, compared to $30.9 million for the same period last year. It reported net sales of $1.34 billion vs. $1.35 billion, a decrease of 0.7%.
For North America/HME, net sales were $171 million for the third quarter this year compared to $188.4 million last year, a 9.3% decrease. Net sales were $527.5 million for the first nine months of the year compared to $565 million last year, a 6.6% decrease.
For Invacare Supply Group, net sales were $85.8 million for the third quarter this year compared to $74.2 million last year, a 15.6% increase. Net sales were $246.4 million for the first nine months of the year compared to $224 million last year, a 10% increase.