Ohio-based medical device maker Invacare (NYSE:IVC) jumped a few points today, despite posting a tough 2nd quarter, as the company reported progress in emerging from an FDA consent decree that has limited research, development and manufacturing abilities.
Invacare’s Q2 2013 sales dropped 5.6% compared with the same period last year, and losses more than tripled in the 3 months ended June 30, 2013. Nonetheless, IVC shares jumped 4.8% today, trading at $16.40 as of about 1:30 p.m.
Invacare has since last year been operating under an FDA order that temporarily shuttered 2 manufacturing facilities and forced the company to divest its medical supplies business. The FDA in December 2012 said that it had flagged problems with Invacare’s quality control system over 7 inspections since 2002, "along with failures to properly report adverse events to the agency."
Invacare’s corporate headquarters and a wheelchair manufacturing facility were largely shut down and ordered to undergo 3rd-party inspections to demonstrate compliance with FDA manufacturing guidelines. The device maker managed to eke out a modest profit in Q2, despite struggling through a year that CEO Gerald Blouch called "1 of the most challenging in the company’s history."
Earlier this month Invacare announced that it was permitted to resume design activities at headquarters and at the manufacturing facility, having won a partial go-ahead from the FDA and getting one step closer to exiting the injunction phase of the consent decree. The device maker said it planned to ramp up wheelchair and power bed design operations and that it will keep investors updated on the final of 3 certification reports mandated by the FDA, which Invacare said it expects to file mid-November.
"We have made significant investments to ensure we have a comprehensive and sustainable compliance environment, and the verification of the expert auditor combined with the FDA’s acceptance of the 1st 2 certification reports confirm that we are on the right track," Blouch said in prepared remarks. "Nevertheless, our financial results continue to be significantly impacted by the consent decree, which limits the company’s ability to manufacture high-margin, custom power wheelchair products at our Taylor Street facility in Elyria, Ohio, and ongoing costs related to improvements to our quality system."
Invacare reported losses of $9.3 million, or 29¢ per diluted share, on revenues of $351.8 million during the 2nd quarter. That compared with losses of $2 million, or 7¢ per share, on sales of $372.7 million during the same period last year.
Adjusted to exclude 1-time expenses, the device maker posted per-share losses of 27¢, compared to analysts’ consensus estimate of 20¢ in per-share losses.