Invacare’s chairman and CEO said he is pleased with the company’s execution of business as it manages the current difficulties made apparent by the COVID-19 pandemic.
The company suffered a decrease in net sales by 16.8% to $196.3m, a figure which has been dramatically affected by the coronavirus impact.
Invacare saw revenue growth in respiratory and bed products but this was offset by a decline in mobility and seating and other products within the lifestyle product category.
Despite the impact the pandemic had, in reflection to the financial results for the quarter, the company’s CEO, president and chairman, said the Invacare pipeline is currently bursting with new product lines.
Matt Monaghan said: “As the pandemic persists and geographic markets react differently, we will continue to be responsive and make adjustments while being ready to react quickly to the recovery in the parts of the business negatively affected by public health restrictions.
“In addition, our team remains focused on executing long-term transformational initiatives that will continue to improve business results. In particular, we have developed and are in the process of launching a full pipeline of new and innovative products, such as the MPS Mini Maxx wheelchair with standing capabilities and the SMOOV oneTM power add-on.”
Adding: “We also remain on track with previously announced initiatives that will increase operational efficiencies, including our global IT modernization and plant consolidation in Germany.”
Gross profit as a percent of net sales increased 130 basis points to 28.9%, attributable to previously executed cost improvement initiatives, and favorable product mix, partially offset by unfavorable foreign exchange.
Operating loss improved by $2.3m, or over 50%, to a loss of $2.2 million due to reduced SG&A expenses, partially offset by higher restructuring costs.
Commenting more widely on Invacare’s position, Monaghan said: “I am pleased with our execution as we continue to navigate the current challenging environment while transforming Invacare for the long-term. We achieved higher year-over-year Adjusted EBITDA for the 11th consecutive quarter and have established a strong track record of continued improvement, despite a pandemic which reduced constant currency net sales by almost 13%.
“This accomplishment is a testament to our prior transformation initiatives, which have positioned Invacare to regain market leadership and continue to drive improved profitability. I am grateful for all of our associates who remain committed to keeping our workplace safe and productive in these uncertain times.”
GAAP loss per share was $0.48 compared to a loss per share of $0.38. GAAP loss per share for 2Q20 included $6.6m or $0.19 per share related to debt extinguishment including debt finance charges and fees.
Adjusted EBITDA improved by $3.0m, or 84.3%, to $6.6 million driven by reduced SG&A expenses and improved gross profit as a percent of net sales, which represents the 11th consecutive quarter of year-over-year improvement.
Free cash flow usage was $1.9m, an increase of $2.1m primarily due to increased capital expenditures.
Monaghan continued: “During the quarter, the company delivered an 84% improvement in Adjusted EBITDA as we overcame significant supply chain challenges to deliver products that were in higher demand as a result of the pandemic.
“At the same time, we effectively shed costs and managed cash in the areas of the business that experienced lower demand due to healthcare access restrictions and quarantine measures. Profitability expanded in spite of lower net sales and supply chain challenges caused by the pandemic, driven by stronger gross profit as a percentage of sales resulting from favorable sales mix of higher acuity products, as well as cost savings from continuous improvement initiatives and reduced SG&A expense.”
On moving forward, he concluded: “Looking ahead, we see encouraging signs that the markets are recovering, albeit slowly, as quotes and orders for mobility and seating products are improving in the major markets we serve. Meanwhile, we continue to experience sustained demand for respiratory products.
“As pandemic-related quarantining restrictions loosen, we expect consolidated net sales to improve sequentially, driven by renewed access to healthcare professionals with new products that have novel features and superior clinical value.”