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Invacare Corporation Announces Financial Results For The Third Quarter And First Nine Months Of 2012

NORTH AMERICA/HOME MEDICAL EQUIPMENT (HME)

For the quarter ended September 30, 2012, North America/HME net sales decreased 9.3% to $171.0 million compared to $188.4 million in the same period last year. Organic net sales were down 9.1% compared to last year driven by declines in all three product categories. The sales decline in the segment was primarily related to the Company's previously mentioned delay of new product introductions. The sales decline also is related to slowness in power wheelchair sales in the United States due to the ongoing uncertainty and general slowness in the market where mobility and seating customers are dealing with prepayment reviews and post-payment audits of power mobility devices from Medicare and Medicaid. Also in the United States, customers in the next 91 metropolitan statistical areas for National Competitive Bidding continue to leverage their existing inventory as they wait for the Fall 2012 announcement of the bid rates and the related contracting process for the winners. Uncertainty regarding the resolution of the Company's consent decree with the FDA impacted the Company's ability to renegotiate existing contracts that require uninterrupted supply and likely led some providers to be cautious in their spending with Invacare. Earnings before income taxes were $1.9 million, excluding restructuring charges of $0.4 million, as compared to earnings before income taxes of $11.9 million last year, excluding restructuring charges of $0.4 million, primarily as a result of the incremental costs mentioned previously related to quality systems improvements, volume declines, unfavorable sales mix favoring lower margin customers and unfavorable product mix away from higher margin products. These factors were partially offset by reduced bad debt expense and favorable foreign currency transactions.

For the nine months ended September 30, 2012, North America/HME net sales decreased 6.6% to $527.5 million compared to $565.0 million in the same period last year. Organic net sales were down 6.4% compared to last year primarily driven by declines in all three product categories. Earnings before income taxes for the first nine months of 2012 were $15.3 million, excluding restructuring charges of $2.2 million, as compared to earnings before income taxes of $38.7 million last year, excluding restructuring charges of $0.4 million. The reduction in 2012 earnings before income taxes is primarily as a result of the incremental costs mentioned previously related to quality systems improvements, volume declines, unfavorable sales mix favoring lower margin customers and unfavorable product mix away from higher margin products. These factors were partially offset by reduced bad debt expense and favorable foreign currency transactions.

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