Invacare 2015 Annual Report Download - page 3

Invacare Corporation
One Invacare Way, Elyria, OH 44035 USA
440-329-6000 www.invacare.com
April 2016
Dear Fellow Shareholders,
As you open Invacare’s 2015 annual report, you are opening the cover of a progress report about a company transforming
itself to be a long-term leader in post-acute care following years of declining sales and disappointing financial results. With new
leadership, clear priorities and capital to accelerate its recovery, Invacare is on its way to being a leader in a global healthcare
revolution.
I joined Invacare as CEO in April 2015. Having been in the medical device industry for years, I have seen shifts in
reimbursement, markets and technology. I have never before seen such a confluence of reinforcing pressures as we have now, and
never as much opportunity. I want to take the occasion of our annual report to summarize my view on the industry, highlight our
strategy and outline our path forward.
Benefitting from good fundamentals
The world’s population is growing and more people are requiring healthcare. Regardless of their age or physical challenges,
people want to be active and engage with the world around them. At the same time, private and public budgets for healthcare
spending are growing more slowly. The squeeze between healthcare demand and funding is driving ever more judicious healthcare
spending – spending on clearer cases of need, preference for therapies that demonstrate better clinical benefits, accountability for
total cost of care and better outcomes. As a result, payors and acute care providers are migrating therapies to alternative settings
– ambulatory care centers, specialized residential facilities and at home – where costs are lower, outcomes are better and where
patients prefer to be treated. These are long-term shifts in healthcare and the characteristics of an environment where Invacare can
win.
Invacare provides medical device solutions for congenital, acquired and degenerative conditions. In these circumstances,
the people who use our devices may be otherwise challenged with basic needs of living, or may be immobile or dependent on
others for essential care. Unfortunately, there are rarely cures for many of these conditions, and our solutions may be part of a life-
long therapy. Our solutions help people with these challenges in four areas of care: move, breathe, rest and hygiene. Using our
medical devices, people can engage with their family, community and the world around them and live as independently as possible.
We are passionate about the medical solutions we create.
Our devices are found in residential care facilities, rehabilitation centers and in homes. We work with customers who provide
our medical devices to consumers in exchange for healthcare reimbursement or direct payment. Our customers include medical
equipment providers with retail and e-commerce outlets, residential living operators, government payors and distributors.
Through a history of acquisitions and organic growth, Invacare built its market leadership with the broadest product portfolio
in the industry. Today, the portfolio ranges from highly differentiated clinically complex devices to basic aids for daily living.
Historically, this breadth has been an advantage, as customers have desired to work with companies that have the broadest portfolio
in order to simplify their purchasing and to make their own offering more consistent. More recently, challenges have emerged that
make success with that strategy increasingly difficult.
As a result of economic pressures affecting healthcare spending, our industry has been faced with substantial reimbursement
reductions. This has led to commercial channel disintermediation and customer consolidation. Now there is more competition and
providers have easier access to low-cost foreign supply alternatives. Tightening industry economics are converging with the
increasing costs and complexity of running a medical device business. These long-term trends are forcing us to evaluate our
strategy.