Invacare 2006 Annual Report Download - page 3

•Standardization of product platforms. To further simplify and reduce production costs, as well as to leverage
development and tooling investment, the Company has begun the process of standardizing some of its
product platforms globally.
As part of the product line simplification, the Company spent much of 2006 developing more cost effective
product designs. For example, within the rehab area, the Invacare»TDX»SP and Pronto»M41
TM
power wheelchairs
were developed with the innovative features that providers expect from Invacare, but both were produced to be more
cost-effective in the new HME reimbursement environment.
Within the respiratory group, development is almost complete on the new Invacare»Perfecto2
TM
concentrator.
This new concentrator is smaller and lighter making it more cost-effective to manufacture and ship. It also includes
new features that make it more energy efficient and quiet, enhancing its value to the consumer.
The TDX SP, Pronto M41 and other significantly cost-reduced and improved products are beginning to ship.
Combined with the significant cost reduction actions previously discussed, Invacare should improve operating
margins in 2007.
Also in 2007, the Company looks forward to capitalizing upon the continued growth potential of its HomeFill
oxygen technology. For the first time, national respiratory providers are considering HomeFill and, effective
January 1, 2007, one of these providers launched a large-scale implementation. Invacare also launched its first
HomeFill contract in Europe and gained approval for HomeFill technology in the United Kingdom. This is a great
opportunity to expand the Company’s respiratory business into Europe.
Another major area of focus in 2007 will be identifying opportunities for profit and growth that are less
reimbursement dependent. In 2006, for example, the Invacare»5-Star Service Plan was created to increase revenue
while driving costs out of our providers’ business model. The 5-Star Service Plan utilizes a third-party nationwide
service to repair and maintain consumer powerchairs or scooters, and will result in increased revenues from services
and replacement parts. The provider will purchase the plan when it buys a chair, and the consumer works directly
with the third-party for any maintenance needs, in or out of warranty. While the provider continues to offer a higher
level of service, it is able to reallocate its technicians to sales-related tasks.
No One is Better Positioned
Despite the challenges within the HME industry, Invacare could not be in a fundamentally stronger area of
business. A study published in the December 2005 issue of Annals of Internal Medicine concluded that at-home care
resulted in a 33% cost savings when compared to hospital care for similarly ill patients. At a time when the number
of Americans aged 65 or older is expected to increase to approximately 40 million by 2010, approximately
54 million by 2020 and approximately 70 million by 2030, it soon will be realized that homecare is one of the key
solutions to the country’s rising healthcare costs.
In the meantime, Invacare will continue to reduce costs throughout its business, making it a lean and efficient
organization. The Company’s diversity in both geography and product, as well as the fundamental strength of the
homecare market, make it a strong and well positioned Company for the future. We thank Invacare’s customers,
associates and shareholders for their continued support.
Sincerely,
A. Malachi Mixon, III
Chairman and Chief Executive Officer
Gerald B. Blouch
President and Chief Operating Officer