Invacare, a manufacturer and distributer of long-term care and home care medical equipment, reported a first quarter loss as earnings were dragged down by declines in the company’s North American segment.
The company reported net sales of $309.1 million for the first quarter ended March 31, 2014, down 6.7% from the first quarter of 2013. Invacare’s first quarter net loss was $17.98 million, with a loss per share of $0.49, compared to net earnings of $35.18 million last year.
”While the European business segment continued its strong performance, it was more than offset by the continued impact of the Company’s consent decree with the United States Food and Drug Administration (FDA), which limits the Company’s ability to manufacture products at its Taylor Street facility in Elyria, Ohio,” said Gerry Blouch, president and CEO of Invacare, in the earnings report.
However, organic net sales for the North American HME segment decreased 14.4% to $129.1 million in the first quarter, driven by declines in all product categories. The segment logged a net loss of $16 million, versus profits of $9.5 million in the same period last year.
“The decrease was primarily driven by equal declines in mobility and seating products and lifestyle products,” said CFO Rob Gudbranson during a first quarter earnings call.
Invacare is awaiting an FDA inspection for clearance to resume full operations in its Taylor Street manufacturing and corporate facilities. While the FDA has approved two out of three required third-party certification audits for Invacare, the company says the third audit is the most comprehensive.
“While this is a complex and exhausting process we are diligently working our way through it,” Blouch said.
Competitive bidding rounds have resulted in new winners and losers being identified, and patients getting transferred from legacy providers to new authorized providers. Invacare has to identify those new and old providers, and clinicians are learning about new documentation, as well, creating a “perfect storm at a lot of change going on simultaneously,” Blouch said.
“Competitive bidding has caused many bid winners to abandon certain products and geographies due to inadequate margins,” he said. “Medicare utilization is down, [and] there appears to be a meaningful shift towards retails sales for certain lifestyle products. We’ll continue to evaluate this market shift and our distribution footprint.”
Access Invacare’s first quarter 2014 earnings report.
Written by Alyssa Gerace