$1.5 Billion ($41.3B Total)
No. of Employees: 6,100

With a multi-year global cost reduction initiative in effect, Invacare has been able to remain competitive in the face of competition abroad and changing Medicare reimbursement policies. In 2005, Invacare managed to increase net sales by 9% to $1.5 billion. The increased sales, however, belie net earnings of $49 million, down from $75 million in 2004.

Although the current state of Invacare may not characterized by double-digit growth, streamers and popping corks, the company is banking on future growth from its presence in the $1.7 billion sleep therapy market. With 20 million Americans suffering from obstructive sleep apnea, and only a small percentage actually diagnosed and treated, Invacare is now including clinical research data about its SoftX Technology with its Polaris EX Continuous Positive Airway Pressure system. SoftX, named after the soft exhalation sensation it creates, has been shown to increase patient compliance.

During 2005, the company also looked to penetrate markets of interest through strategic purchases. In April that year, Invacare acquired Medical Support Systems Holdings Limited, a UK-based company that designs and manufactures high quality, foam pressure-reducing products for the healthcare market.

Additionally, in June 2005 Invacare acquired Altimate Medical, Inc., a US-based company (Morton, MN) that designs and manufactures standing frames and mobility aids for the rehabilitation market. Altimate’s products fit well with Invacare’s Helixx Group, which has a number of highly customized products for the rehab market.

“The addition of Altimate continues Invacare’s goal of adding accretive acquisitions to our core markets of home and long term care,” said A. Malachi Mixon, III, chairman and CEO of Invacare.

Product launches have continued to play a role in the company’s strategies. In January 2006, Invacare launched the Top End Crossfire T6, an ultra-lightweight rigid wheelchair, one of the lightest-weight aluminum wheelchairs on the market making it easy to propel and transport. Also expected later this year is the launch of Invacare’s MK series MK6i, an advanced electronics system for high-end custom power wheelchairs.

Invacare’s first-quarter numbers for 2006 indicate that Medicare reimbursement issues could create some problems down the line. “The Administration’s budget proposal to cut Medicare payments for home oxygen therapy would dramatically erode the quality of care for beneficiaries who rely upon home oxygen therapy. Home oxygen therapy sustains life for the approximately one million seniors who rely upon the therapy,” said Mixon.

The first quarter produced many shrinking numbers. Net sales decreased 2% to $362 million versus $371 million last year. Further, net earnings were down to $9 million versus $20 million due to lower gross margins and restructuring costs. North American and European sales were down a bit, and Asia sales lowered 10%.

Sales of consumer power wheelchairs were flat, and projections are uncertain due to recently released (June 2006) CMS guidelines on power wheelchair eligibility. The guidelines affirm face-to-face physician examinations with required documentation provided by the physician to equipment providers within 45 days thereafter.

Not only is the Medicare issue causing unfavorable results, so is competition from low-cost, Asian imports. In light of these pressures, Invacare’s strategy in 2006 is to remain focused on cost-cutting initiatives by rarifying its workforce, closing facilities, moving production to its China manufacturing facilities and discontinuing several product lines. Invacare hopes to achieve savings of $42 million by 2008, and has already recorded a savings of $7.3 million in 2005 with another $7 million expected in 2006.

One of the bright spots in Invacare’s 2006 numbers comes from the Invacare Supply Group, which continued to grow with a 4% sales increase due to broadening its product offering and channels of distribution. Invacare Continuing Care Group sales increased by 3% for the quarter.