Elyria, Ohio-based medical device maker Invacare (NYSE:IVC) rode the Wall Street roller-coaster last week, with shares still trying to gain back some of their value after the company’s restated 2nd-quarter financial report sent shares down 2.3% from their pre-dive August 6 closing price of $15.88.
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IVC shares dropped in the hours after the company posted an update to its Q2 2013 earnings statement, noting that a previously disclosed warranty expense would likely be more than 9 times higher than expected. Invacare had originally estimated warranty costs tied to issues with one of its power wheelchairs to cost about $400,000, but is now projecting the "anomaly" to cost the company about $3.8 million.
That puts the company’s adjusted Q2 losses at $11.9 million, or 37¢ per shares, compared to the previously reported $8.7 million, or 27¢ per share. The news, which was released after market close on August 6, had only sapped a penny from the company’s share value by the next morning, with shares trading at $15.87. But IVC shares lost 2.3% by the end of the day on August 7, with shares trading at $15.52.
Wall Street appeared to respond more favorably to the news the Invacare had completed the sale of its Champion Manufacturing business, primarily focused on medical recliners, to California-based investment firm Levine Leichtman Capital Partners for a cash payment of $45 million.
Invacare called the divestiture "consistent with Invacare’s focus on its globalization strategy to harmonize core global product lines and reduce complexity within its business."
"As we continue to reduce complexity in our business and focus on our core global product lines for the home and long-term care setting, Champion’s specialized focus on the domestic medical recliner business for dialysis clinics no longer fits that streamlined portfolio," Invacare president & CEO Gerald Blouch said in prepared remarks. "The net proceeds from this divestiture also give us the opportunity to strengthen our balance sheet through the continued reduction of debt. I am grateful to the associates at commercial real estate for the contributions that they have made to Invacare."
IVC shares slowly clambered back up to their previous values, trading at $15.87 as of midday August 12.