Devices & Diagnostics

Regulatory, compliance issues continue to weigh down Invacare

Regulatory and compliance issues have diverted resources at home health products supplier Invacare (NYSE:IVC) away from “critical priorities” in the company’s business and have resulted in delays of new product introductions and slowed progress on a key globalization initiative. Those issues stem from negotiations with the U.S. Food and Drug Administration over a possible shutdown […]

Regulatory and compliance issues have diverted resources at home health products supplier Invacare (NYSE:IVC) away from “critical priorities” in the company’s business and have resulted in delays of new product introductions and slowed progress on a key globalization initiative.

Those issues stem from negotiations with the U.S. Food and Drug Administration over a possible shutdown of some wheelchair production at an Elyria, Ohio plant due to quality concerns related to manufacturing processes.

In December, Invacare announced that the FDA had asked it to enter into a legal agreement that would require the company to suspend “certain” wheelchair manufacturing operations at the Elyria plant. Those negotiations are ongoing and they’re taking a toll on the home health products supplier, Invacare CEO Gerry Blouch said in a conference call to discuss the company’s first-quarter earnings.

The company is dedicating “significant resources” to improving its quality and regulatory systems, including improvements made as a result of the FDA’s concerns. More specifically, the company is redesigning its “quality systems flow,” training employees on the new procedures and testing to ensure the new systems are working, Blouch said.

“These diversions have temporarily impacted other areas of the company’s business, including delays in new product introductions and progress on its globalization initiative,” Blouch said.

The globalization initiative refers to Invacare’s long-term strategy to “harmonize” global product lines and reduce complexity, which the Ohio company expects will generate $100 million in annual savings by 2015.

The resource diversion is exacting a toll on Invacare’s finances, too. It pushed down adjusted earnings per share by 9 cents to 25 cents, which has resulted in a 22 percent decline in adjusted earnings per share compared with the year-ago quarter.

The regulatory issues are preventing the company from issuing any financial guidance for its fiscal 2012, and that’s likely to be the case until Invacare finalizes its negotiations with the FDA.

Asked by an analyst if the negotiations would be wrapped by the end of this quarter, Blouch replied: “I don’t know. This is my first rodeo. I’d say that’s possible.”