Invacare helps those with disabilities stay on the move. The company is a leading maker of wheelchairs including manual, powered, custom-made, and the ultra zippy chairs used by athletes. It also makes other medical equipment including crutches, bed systems, respiratory devices, and motorized scooters, as well as home care durables such as bathing equipment, cushions, and slings. It manufactures and sells its own products to more than 25,000 home health care and medical equipment dealers in North America, Europe, and the Asia/Pacific region, as well as to government agencies and distributors.
Invacare's institutional products group manufactures health care furnishings including recliners used during dialysis, patient-handling equipment, and beds for the non-acute and long-term care facility market.
Although product development and globalization are critical initiatives for Invacare, the company had to switch gears in 2011 and 2012 after the FDA proposed a consent decree that would suspend certain operations at its wheelchair manufacturing facility in Elyria, Ohio until the agency determined that they were in compliance. The company is addressing the FDA's concerns and is working to expedite a resolution by making systemic improvements in its FDA compliance processes, directing internal resources toward improving its quality systems, and bringing in outside experts who have proven medical device regulatory experience. Once resolved, the company believes the improvements will strengthen its business.
Despite sluggishness in some of Invacare's core markets, as well as reimbursement and health care spending uncertainties, the company's net sales increased 4.6% to $1.80 billion in 2011, versus $1.72 billion in 2010, and organic net sales increased 1.7% in 2011 compared to 2010.
Invacare looks toward a future of fresh organic growth and has plans to put resources into research and development, bolster its presence in new international markets, and take on new product areas and support surfaces such as high-tech hospital beds.
Invacare continues to benefit from a population that is getting older and living longer, as well as from an increase in home care provision. However, the company also faces lower-cost overseas competitors and ongoing reimbursement challenges from public and private health care insurers, including Medicaid. Outside of the US, Invacare began facing reduced reimbursement from the French government for wheelchairs starting in 2011. These challenges have led the company to alter its customer credit practices and pay close attention to government pricing models. Along with reimbursement issues, Invacare had to make some changes to cope with the economic recession during 2009 and 2010, including cutting back on product development activities and reducing its manufacturing costs by streamlining processes and consolidating facilities.
To focus on core operations, in early 2013 the company sold its Invacare Supply Group business, which distributed other companies' medical equipment and disposable products, to AssuraMed for about $150 million. The move is part of the company's efforts reduce the complexity of its business, and Invacare plans to use proceeds to reduce its debt obligations.
Mergers and Acquisitions
Along with so-called organic growth through increasing its product sales, Invacare makes select acquisitions from time-to-time. In 2010 it bought Specialty Medical Equipment in Massachusetts, a provider of equipment to skilled nursing and long-term care providers in the Northeast. Specialty Medical Equipment was Invacare's first buy since its purchase of two Ohio-based companies (Bergmann Management and an equipment rentals business) in 2008.
In 2011 Invacare made another acquisition which opened up the rental market in the western US and bolstered its institutional products group's service offerings to nursing homes, assisted living facilities, and other long-term care providers, both regionally and nationally. The company paid almost $41.5 million in cash (with $8 million more contingent upon earnings) for California-based Dynamic Medical Systems (DMS), a solutions-based service company that specializes in wound-care and safe-patient-handling products including beds, therapeutic mattresses, bariatric lifts, and patient-transfer products. The purchase also adds DMS' clinical solution selling approach for rental applications in institutional settings.
Chairman Malachi Mixon owns just under 20% of the company. Joseph Richey, a company executive and board member, owns 10%. – less