Invacare 2009 Annual Report Download - page 23

product recalls; legal actions or regulatory proceedings and governmental investigations; product liability
claims; possible adverse effects of being substantially leveraged, which could impact our ability to raise capital,
limit our ability to react to changes in the economy or our industry or expose us to interest rate or event of
default risks; increased freight costs; inadequate patents or other intellectual property protection; extensive
government regulation of our products; failure to comply with regulatory requirements or receive regulatory
clearance or approval for our products or operations in the United States or abroad; incorrect assumptions
concerning demographic trends that impact the market for our products; decreased availability or increased
costs of materials which could increase our costs of producing or acquiring our products; the loss of the services
of our key management and personnel; inability to acquire strategic acquisition candidates because of limited
financing alternatives; increased security concerns and potential business interruption risks associated with
political and/or social unrest in foreign countries where the company’s facilities or assets are located;
provisions of Ohio law or in our debt agreements, our shareholder rights plan or our charter documents that
may prevent or delay a change in control, as well as the risks described from time to time in Invacare’s reports
as filed with the Securities and Exchange Commission. Except to the extent required by law, we do not undertake
and specifically decline any obligation to review or update any forward-looking statements or to publicly
announce the results of any revisions to any of such statements to reflect future events or developments or
otherwise.
Item 1A. Risk Factors.
The company’s business, operations and financial condition are subject to various risks and uncertainties.
You should carefully consider the risks and uncertainties described below, together with all of the other
information in this annual report on Form 10-K and in the company’s other filings with the SEC, before making
any investment decision with respect to the company’s securities. The risks and uncertainties described below
may not be the only ones the company faces. Additional risks and uncertainties not presently known by the
company or that the company currently deems immaterial may also affect the company’s business. If any of these
known or unknown risks or uncertainties actually occur, develop or worsen, the company’s business, financial
condition, results of operations and future growth prospects could change substantially.
Changes in government and other third-party payor reimbursement levels and practices have negatively
impacted and could continue to negatively impact the company’s revenues and profitability.
The company’s products are sold primarily through a network of medical equipment and home health care
providers, extended care facilities, hospital and HMO-based stores and other providers. In addition, the company
sells directly to various government providers throughout the world. Many of these providers (the company’s
customers) are reimbursed for the products and services provided to their customers and patients by third-party
payors, such as government programs, including Medicare and Medicaid, private insurance plans and managed
care programs. Most of these programs set maximum reimbursement levels for some of the products sold by the
company in the United States and abroad. If third-party payors deny coverage, make the reimbursement process
or documentation requirements more uncertain or further reduce their current levels of reimbursement (i.e.,
beyond the reductions described below), or if the company’s costs of production increase faster than increases in
reimbursement levels, the company may be unable to sell the affected product(s) through its distribution channels
on a profitable basis.
Reduced government reimbursement levels and changes in reimbursement policies have in the past added,
and could continue to add, significant pressure to the company’s revenues and profitability. For example, the
Centers for Medicare and Medicaid Services (CMS) imposed U.S. reimbursement cuts of 9.5%, which became
effective January 1, 2009 for those product categories which had been included in phase one of the National
Competitive Bidding (NCB) program and competitive bidding for nine metropolitan areas in the U.S. is planned
to go into effect January 2011. Furthermore, any health care reform legislation that is adopted by the U.S.
government may increase the pressure to the company’s profitability. For example, recently proposed health care
reform legislation contemplating an excise tax on sales by medical device manufacturers, if adopted, could have
an adverse impact on the company’s profitability.
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