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Invacare Corporation Announces Financial Results For The Quarter And Year Ended December 31, 2012

Stocks in this article: IVC

Adjusted earnings per share (a) from continuing operations were $0.37 for the year ended December 31, 2012 as compared to $1.59 for 2011. Adjusted net earnings (b) from continuing operations for 2012 were $11.9 million versus $51.2 million in 2011. The decline in adjusted net earnings (b) was primarily driven by increased SG&A expenses attributable to incremental regulatory and compliance costs related to quality system improvements of $14.8 million after-tax expense ($22.8 million pre-tax expense), reduced gross margin and a slightly higher effective tax rate on adjusted pre-tax earnings.

Net sales from continuing operations for the year ended December 31, 2012 decreased 3.1% to $1.46 billion versus $1.50 billion for the same period last year while organic net sales decreased 1.7% as a result of increases for the Europe and IPG segments being partially offset by declines for the North America/HME and Asia/Pacific segments.


For the quarter ended December 31, 2012, North America/HME net sales decreased 8.8% to $165.8 million compared to $181.8 million in the same period last year. Organic net sales decreased 9.0% compared to last year driven by declines in the three major product categories of lifestyle, mobility and seating and respiratory therapy. Many of the drivers of the sales decline in the third quarter carried into the fourth quarter, including external pressures on the Company's customers relating to the second round of National Competitive Bidding, as well as prepayment reviews and post-payment audits from Medicare and Medicaid. On December 21, 2012, the United States District Court approved the terms of the Company's consent decree of injunction with the FDA related to its corporate and Taylor Street wheelchair manufacturing facilities in Elyria, Ohio. In order to bring the Company into immediate compliance with the terms of the decree, the Company suspended production at its Taylor Street facility for two days in December in order to take an inventory of all products that were in production the day the consent decree became effective. The Company then slowly began releasing product from the facility in order to ensure its new consent decree compliance protocols were effective. The sales decline for the quarter also was impacted by lack of new products and general uncertainty relating to the consent decree for a significant portion of the quarter. Loss before income taxes for the fourth quarter of 2012 was $1.8 million, excluding restructuring charges of $2.0 million and intangible impairment charges of $0.1 million, as compared to earnings before income taxes of $15.0 million in the fourth quarter of 2011, excluding goodwill and intangible impairment charges of $8.5 million and restructuring charges of $4.4 million. The loss before income taxes for the quarter was primarily a result of the incremental costs mentioned previously related to quality system improvements, volume declines, unfavorable sales mix toward lower margin customers and unfavorable product mix away from higher margin products. These factors were partially offset by reduced bad debt expense.

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