Market Overview

Invacare Reports Results for Third Quarter 2017


Invacare Corporation (NYSE:IVC) ("Invacare" or the "company") today
reported results for the quarter ended September 30, 2017.


  • Reported net sales decreased 6.4% to $250.9 million compared to the
    third quarter last year. Excluding the divested Garden City Medical,
    Inc. (GCM), constant currency net sales(a) decreased 4.5%
    compared to the third quarter last year.
  • Constant currency sequential net sales(b) increased 3.7%
    compared to second quarter 2017 driven by increases in the Europe,
    North America/Home Medical Equipment (NA/HME) and Asia/Pacific
  • Gross margin as a percentage of net sales increased 80 basis points to
    28.2% compared to the third quarter last year, principally as a result
    of the strategic mix shift toward mobility and seating products and
    reduced freight costs.
  • Operating loss increased by $8.5 million to $5.9 million compared to
    the third quarter last year. Excluding a $7.4 million gain on sale of
    the GCM business realized in the third quarter of 2016, the operating
    loss increased by $1.1 million primarily due to lower net sales.
  • GAAP loss per share was $0.57 and adjusted net loss per share(c)
    was $0.41 in the third quarter 2017.
  • Free cash flow(d) usage was $4.8 million in the third
    quarter 2017, which was $17.7 million more favorable than the second
    quarter 2017.

Key Indicators of the Transformation(1)

  Phase Two        
(in millions USD)  


  Q3 17   Q3 16  

$ Change

  % Change
Net Sales

$250.9 $268.1 $(17.2) (6.4)%
Constant Currency Net Sales, excluding GCM

$248.0 $259.8 $(11.8) (4.5)%
Gross Margin % of Net Sales

28.2% 27.4% 80 bps
Gross Profit

$70.7 $73.4 $(2.7) (3.7)%
Constant Currency SG&A, excluding GCM

$75.2 $76.6 $(1.4) (1.9)%
Free Cash Flow

$(4.8) $1.5 $(6.2) (426.0)%
EBITDA       $(2.2)   $(1.1)   $(1.1)   (98.2)%

(1)As previously disclosed, the key indicators of
the transformation noted in this table are measures of progress used by
the company as it moves through its three-phase transformation from a
generalist durable medical equipment company toward one more focused on
clinically complex products and solutions.

CEO Summary

"In the third quarter, constant currency sequential net sales grew 3.7%
compared to the second quarter of 2017 driven by the Europe, NA/HME and
Asia/Pacific segments. We are pleased to see this turn in sequential
sales growth in NA/HME, which is largely the result of new product
offerings and increased commercial effectiveness," said Matthew E.
Monaghan, chairman, president and chief executive officer. "Also during
the quarter, the company's continued focus on cash resulted in a $17.7
million improvement in free cash flow compared to the second quarter
2017 driven by inventory reductions. In parallel, we remain focused on
deploying quality best practices and improving the fundamental way we do
business globally. With our continued focus on quality, new product
launches, product mix, cost reductions and free cash flow, we are making
progress on our journey to achieve our long-term earnings objectives and
to create shareholder value."

Q3 17 Segment Results

(in millions USD)   Net Sales     Operating Income (Loss)
Reported Currency
Q3 17   Q3 16   % Change   % Change Q3 17   Q3 16   % Change
Europe $ 143.3 $ 141.7 1.1 % (0.5 )% $ 12.0 $ 11.6 3.0 %
NA/HME 79.5 99.3 (19.9 ) (20.3 ) (12.4 ) (11.0 ) (13.1 )
NA/HME, excluding GCM 79.5 90.9 (12.6 ) (12.9 ) (12.4 ) (11.4
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