Invacare closes $150M unit sale as it reels from FDA fallout
|Invacare is working to resolve an FDA consent decree over its wheelchair manufacturing--courtesy of Invacare.|
Invacare ($IVC) has wrapped up the $150.8 million sale of its medical supplies business to AssuraMed, planning to use the proceeds to pay down debt and get out from under an FDA consent decree.
Last month, Invacare revealed it would cut 143 jobs from an Ohio plant in response to a drop in demand for its wheelchairs after the FDA took serious issue with its manufacturing practices. Under the terms of Invacare's agreement with the agency, customers buying a wheelchair made at the Ohio plant must sign a paper acknowledging they are aware of the FDA's allegation of quality violations at the facility, and they have to prove that they have to buy it rather than another company's product.
Invacare anticipates a serious decline in sales as a result, but it sees a way forward: The company said in a statement that unloading its supplies business will help streamline its business and position it to make selective acquisitions that will bring on new products. That's after it finishes quality remediations at the Ohio facility, of course, and Invacare has said it expects to complete a third-party inspection this quarter, followed by a reappraisal by the FDA.
But the company's struggles predate its December settlement with the FDA, as Invacare's earnings dropped 64% in the third quarter of 2012, and net sales declined .8% in the same period. On the bright side, Invacare posted revenue growth of 39% in its institutional products unit, and its now-sold supply business grew 15.6% to $85.8 million on the quarter.
- read Invacare's announcement