Invacare: Earnings Down, Restructuring Scheduled
Invacare, Elyria, Ohio, announced that fourth quarter earnings were down, due mainly to disruptions arising out of the enterprise resource planning system (ERP) implementation and uncertainty in Medicare policy. ERP implementation resulted in lost fourth quarter sales of approximately $30 million in the company’s North American home care businesses, primarily due to start-up difficulties in processing orders and the inability to ship products to customers within required lead times. Net earnings for the quarter, excluding the charge related to restructuring activities, were $10.5 million versus $20.4 million last year. Including the charge, earnings per share for the fourth quarter were $0.22 and net earnings were $7.1 million. Net sales for the quarter decreased 7% to $367.3 million versus $393.2 million last year.

A. Malachi Mixon

The company outlook shows that uncertainty related to Medicare’s reimbursement policies for power wheelchairs in particular, and equipment in general, remains and is now expected to continue into 2006. CMS is currently scheduled to issue a new rule on face-to-face examinations and documentation requirements for power wheelchairs and other mobility devices by April 1, 2006, along with new reimbursement codes, possibly later in the year. Additionally, Congress recently passed the Deficit Reduction Act, which includes payment cuts to home oxygen that will take effect in January 2009, as well as reductions for certain durable HME spending that will take effect in 2007. President Bush’s just released fiscal year 2007 budget proposal includes further, potentially significant cuts to home oxygen, but whether Congress will enact such payment reductions, particularly in an election year, is doubtful.

From left: Erika Laskey, vice president, sales and marketing, CHAD Therapeutics; Greg Caressi, vice president, healthcare and life sciences, Frost & Sullivan; Earl Yager, CEO and president, CHAD Therapeutics; and Thomas Jones, chairman, CHAD Therapeutics (shown here at Medtrade Spring, Las Vegas).

As a result of these reimbursement uncertainties and continuing pricing pressures, the company continues to reduce its cost structure. During 2006, it will reduce approximately 300 positions with a pretax restructuring charge estimated at approximately $7 million. “Although the ERP implementation was difficult and significantly impacted results for the quarter, Invacare did achieve its revised earnings guidance in the fourth quarter. Net sales, excluding acquisitions and foreign currency, were down for the quarter due to the ERP issues. The ERP system is now functioning at preimplementation service levels for our customers and we have replaced the legacy systems that were inadequate to support future growth,” said A. Malachi Mixon III, chairman and CEO. “We are now positioned going forward to enhance service levels through accelerating order processing and product shipments.”

CHAD Receives Frost & Sullivan Strategy/leadership Award
In a ceremony at the Medtrade Spring Conference in Las Vegas, CHAD Therapeutics Inc, Chatsworth, Calif, received the Frost & Sullivan Award for Oxygen Therapy Product Line Strategy Leadership. The award is presented each year to the company that has demonstrated the most insight into customer needs and product demands.

CHAD Revenue Results
In a company statement, CHAD Therapeutics, Chatsworth, Calif, stated that revenue was down due to pricing pressure and a decrease in sales to one of its major customers. For the 3 months ended December 31, 2005, revenue declined to $5,907,000 from $6,444,000 for the third quarter of fiscal 2005. For the 9 months ended December 31, 2005, revenue also declined to $17,177,000 from $18,852,000 for the same period last year.

Sales of oxygen conservers to domestic customers declined 30% during the first 9 months of fiscal 2006 compared to the prior year. During the same period, international conserver sales increased 312%, while sales of CHAD’s proprietary TOTAL O2 home oxygen filling system declined 2% during the first 9 months of fiscal 2006 compared to the first 9 months of fiscal 2005, primarily because a large customer deferred purchases during the third quarter of fiscal 2006. The customer has now resumed purchasing TOTAL O2 systems.

Clearview Under New US Ownership
Clearview Healthcare Products LLC, New Philadelphia, Ohio, has purchased the North American assets of Clearview Healthcare Products Inc, a Korea-based manufacturer of medical products. The purchase includes the exclusive marketing and distribution rights to the Comfortechnology line of DME and Clearview Korea’s gel-based line of operating room positioning devices. “You can tell by our decision to maintain the Clearview name that there is a strong relationship between Clearview Korea and the new, independent U.S. Clearview Healthcare Products LLC,” says K.C. Jensen, president of the newly formed Ohio-based LLC. The Comfortechnology product line includes advanced gel, air, and foam-based wheelchair seat and back cushions, and a full line of gel-based operating room positioning devices. Additionally, the company has recently introduced a line of vacuum positioning forms for use with patients who have severe short-term positioning needs.

Access Point Medical Expands Distribution, outlines goals
Access Point Medical, St Louis, is implementing five new distribution warehouses as part of the company’s service strategy. “Five shipping sites give us the geographic locations we need to ship to every region in the United States quickly,” said Rick Davis, VP of marketing. “As the company grows, we’re growing the distribution network and anticipating where we can offer a competitive advantage to our customers. Freight cost and distribution have to be viewed by our dealers as a piece of the total value we bring.” Distribution warehouses are now in St Louis, Jacksonville, Baltimore, Dallas/Ft Worth, and Ontario, Calif.

Hans Stover, CEO, Access Point Medical, at Medtrade Spring.

In a press conference at Medtrade Spring, Las Vegas, Access Point Medical executives reiterated the benefits of the new distribution network, while CEO Hans Stover outlined the company’s strategy to manufacture products in China to keep costs down without sacrificing quality. Stover says the strategy will give providers more opportunities to remain successful in business.

Graham-Field Enters Agreement With Premier
Graham-Field Health Products, Atlanta, has signed a 3-year contract with health care alliance Premier Inc, Charlotte, NC, for the category of patient beds. Graham-Field will now have an opportunity to place several beds in thousands of facilities across the United States; likewise, the four-tier contract allows Premier to receive advantageous volume pricing for Graham-Field’s line of beds.

In Brief
Sterling Star Corp, St Petersburg, Fla, has appointed Richard Basch as director, sales and marketing. Basch has been involved in the health care software market for more than 16 years, the last 7 in the DME software field. • Maddak LLC, Pequannock, NJ, has appointed Brad Mahood as new president of the company. • Sunrise Medical, Longmont, Colo, has received a new broad-based patent covering key design concepts for its Quickie® IRIS™ and Zippie® IRIS tilt-in-space manual wheelchairs. • SeQual Technologies Inc, San Diego, has named Alex W. “Pete” Hart and Vernon R. Pertelle to its board of directors. • The MED Group, Lubbock, Tex, has added the following organizations to its purchasing network: Classic Medical Inc in Carol Stream, Ill, with Norman Atkins, president; Mobility Rehab Products LLC in Finksburn, Md, with Robert Huddler, Jr. vice president of operations; Medical Supplies Depot, in Mobile, Ala, with Charles Simpson, national sales manager and Henry B. Fulgham, vice president of operations. Their membership is effective immediately. DP