Invacare 2012 Annual Report Download - page 4

When the Company receives the FDA’s approval on its second certification audit, it will be able to resume
new product development in its power wheelchair product line. The Company is committed to regaining its
market share through the development of one-of-a-kind technologies with clinical benefits for the people who
use its products. The Company also is actively working on marketing plans to restore its market share when it
emerges from the injunctive phase of the consent decree.
Focusing on the Future
Invacare remains committed to its globalization program to harmonize product lines to reduce complexity.
In a world of declining reimbursement, the Company recognized that its product portfolio of highly tailored
regional products would not be sufficiently cost effective. In 2010, the Company established a new global
leadership structure to better identify and implement global complexity reduction initiatives. By eliminating
redundant product platforms, leaning the supply chain and leveraging existing SG&A, including consolidating
information systems platforms, the Company plans on achieving aggregate annualized savings of $100 million
and restoring the Company’s operating margin back to high single digits by 2016. Achieving this level of
operational excellence will be critical to the future success of the organization.
The Company took a significant step forward with this strategic focus through the divestiture of Invacare
Supply Group (ISG). ISG, the Company’s domestic supplies business, did not fit the Company’s strategy to focus
on core equipment product lines. The sale, which was completed on January 18, 2013, generated net proceeds of
$146.6 million that were used primarily to reduce debt outstanding under the Company’s revolving credit
facility.
Another key to the success of globalization is the commercial acceptance of new global product platforms
allowing for the elimination of old product SKUs. To enhance this opportunity, the Company moved to
strengthen its commercial leadership in its Europe and North America/HME business segments:
•Gordon Sutherland joined Invacare in April as the Vice President and General Manager, Commercial
Operations, for Invacare EMEA (Europe, Middle East and Africa). Gordon has worked for many years
at a senior level in the medical device and bio-surgery industries holding EMEA and global general
management positions with Bristol Myers, Baxter and more recently Gambro Renal Products. His
focus at Invacare has been to optimize the impact of new global products, increase market share and
improve operating margins. He brings a wealth of experience in working across countries, cultures,
markets, businesses and critically, within matrix organizations, to deliver improved financial
performance.
• In October, Oscar Meyer joined Invacare in the role of Vice President and General Manager,
Commercial Operations, for North America/HME. Following a successful career at Johnson & Johnson
and Gambro Renal Products, Oscar is focused on driving the Company’s strategy as it emerges from
the consent decree and rebuilds its custom power wheelchair market share in North America, as well as
successfully creates business solutions for the Company’s HME division as its customers face
significant changes in their reimbursement environment.
News from Washington, D.C
In December 2012, the Internal Revenue Service issued final regulations on the 2.3% excise tax on medical
devices that is part of the Affordable Care Act. Upon review of the final regulations, the Company believes that
most of its products will be exempt from the tax based on the retail exemption provided in the regulations. The
Company believes that certain products that it sells for institutional use will be subject to the excise tax. The
impact of the tax on Invacare is expected to be less than $1.5 million annually, and the Company is passing this
increase on to the market.