Invacare 2007 Annual Report Download - page 23

have been lowering the purchase prices of their products in an effort to attract customers. This in turn has
resulted in greater pricing pressures, including pressure to offer customers more competitive pricing terms, and
the exclusion of certain suppliers from important market segments as group purchasing organizations,
independent delivery networks and large single accounts continue to consolidate purchasing decisions for some
of the company’s customers. Further consolidation could result in a loss of customers, including increased
collectibility risks, or in increased competitive pricing pressures.
The industry in which the company operates is highly competitive and some of the company’s competitors
may be larger and may have greater financial resources than the company does.
The home medical equipment market is highly competitive and the company’s products face significant
competition from other well-established manufacturers. Any increase in competition may cause the company to
lose market share or compel the company to reduce prices to remain competitive, which could materially
adversely affect the company’s results of operations.
If the company’s cost reduction efforts are ineffective, the company’s revenues and profitability could be
negatively impacted.
In response to the reductions in Medicare power wheelchair and oxygen reimbursement levels and other
governmental and third party payor pricing pressures and competitive pricing pressures, the company initiated cost
reduction efforts and continues to implement further reductions. The company may not be successful in achieving
the operating efficiencies and operating cost reductions expected from these efforts, including the estimated cost
savings described above, and the company may experience business disruptions associated with the restructuring
and cost reduction activities, including the restructuring activities previously announced and, in particular, the
company’s facility consolidations initiated in connection with these activities. These efforts may not produce the
full efficiency and cost reduction benefits that the company expects. Further, these benefits may be realized later
than expected, and the costs of implementing these measures may be greater than anticipated. If these measures are
not successful, the company intends to undertake additional cost reduction efforts, which could result in future
charges. Moreover, the company’s ability to achieve other strategic goals and business plans and the company’s
financial performance may be adversely affected and the company could experience business disruptions with
customers and elsewhere if the company’s cost reduction and restructuring efforts prove ineffective.
The company’s success depends on the company’s ability to design, manufacture, distribute and achieve
market acceptance of new products with higher functionality and lower costs.
The company sells products to customers primarily in markets that are characterized by technological
change, product innovation and evolving industry standards and in which product price is increasingly the
primary consideration in customers’ purchasing decisions. The company is continually engaged in product
development and improvement programs. The company must continue to design and improve innovative
products, effectively distribute and achieve market acceptance of those products, and reduce the costs of
producing the company’s products, in order to compete successfully with the company’s competitors. If
competitors’ product development capabilities become more effective than the company’s product development
capabilities, if competitors’ new or improved products are accepted by the market before the company’s products
or if competitors are able to produce products at a lower cost and thus offer products for sale at a lower price, the
company’s business, financial condition and results of operation could be adversely affected.
The company is subject to extensive government regulation, and if the company fails to comply with
applicable laws or regulations, the company could suffer severe criminal or civil sanctions or be required to
make significant changes to the company’s operations that could have a material adverse effect on the
company’s results of operations.
The company sells its products principally to medical equipment and home health care providers who resell
or rent those products to consumers. Many of those providers (the company’s customers) are reimbursed for the
Invacare®products sold to their customers and patients by third-party payors, including Medicare and Medicaid.
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