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This press release contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Terms such as “will,” “should,” “plan,” “intend,” “expect,” “continue,” “forecast”, “believe,” “anticipate” and “seek,” as well as
similar comments, are forward-looking in nature. Actual results and events may differ significantly from those expressed or anticipated as a
result of risks and uncertainties which include, but are not limited to, the following: possible adverse effects of being substantially leveraged,
which could impact our ability to raise capital, limit our ability to react to changes in the economy or our industry or expose us to interest rate or
event of default risks; changes in government and other third-party payor reimbursement levels and practices; consolidation of health care
customers and our competitors; ineffective cost reduction and restructuring efforts; inability to design, manufacture, distribute and achieve
market acceptance of new products with higher functionality and lower costs; extensive government regulation of our products; lower cost
imports; increased freight costs; failure to comply with regulatory requirements or receive regulatory clearance or approval for our products or
operations in the United States or abroad; potential product recalls; uncollectible accounts receivable; difficulties in implementing a new
Enterprise Resource Planning system; legal actions or regulatory proceedings and governmental investigations; product liability claims;
inadequate patents or other intellectual property protection; incorrect assumptions concerning demographic trends that impact the market for
our products; provisions in our bank credit agreements or other debt instruments that may prevent or delay a change in control; the loss of the
services of our key management and personnel; decreased availability or increased costs of raw materials which could increase our costs of
producing our products; inability to acquire strategic acquisition candidates because of limited financing alternatives; risks inherent in managing
and operating businesses in many different foreign jurisdictions; exchange rate fluctuations, as well as the risks described from time to time in
Invacare’s reports as filed with the Securities and Exchange Commission. Except to the extent required by law, we do not undertake and
specifically decline any obligation to review or update any forward-looking statements or to publicly announce the results of any revisions to any
of such statements to reflect future events or developments or otherwise.
Safe Harbor Statement
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Strengthen global leadershipin the design, manufacturing, assembly and distribution of
innovative home and long-term care medical products
• Efficient supply chain for national providers
• Leading one-stop supplier of services and products for independent providers worldwide
Achieve “low-cost” advantagewith:
• Product line simplification
• China sourcing and manufacturing
• Factory consolidations
• Expense reductions
• Engineering and sourcing globalization
Drive profitable market share growthwith:
• Competitively priced products in light of current reimbursement realities (formularies)
• New product markets (Sleep, HomeFill
TM
, Bariatrics)
• New geographic markets (Asia & Eastern Europe)
• Greater diversification of international markets
• Respiratory in Europe
• Standard products in Australia / New Zealand
Diversify Service Offering to Customerswith:
• Home delivery
• Patient orientation and product setup
• Equipment repair
• Equipment rental
Invacare Vision
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Overview of Invacare
World’s leading manufacturer and distributor of home
medical equipment
Five primary product groups:
Rehab Products
Standard Products
Respiratory Products
Distributed Products
Continuing Care / Other Products
Sell to over 25,000 home healthcare and medical
equipment providers worldwide
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Product Group 1: Rehab Products
Custom power wheelchairs
Includes products that can be significantly customized to meet an individual’s specific needs, as
well as products that are inherently versatile and meet a broad range of individual requirements.
Consumer power wheelchairs
Manufacture a complete line of power wheelchairs for individuals who require independent
powered mobility.
Custom manual wheelchairs
Manufacture and market a range of custom manual wheelchairs for everyday, sports and
recreational uses.
Provide mobility for people with moderate to severe disabilities in their everyday activities as well
as for use in various sports such as basketball, racing, skiing and tennis.
Seating and positioning products
Invacare markets seat cushions, back supports and accessories to provides simple seating
solutions for comfort, fit and function
Market a range of personal mobility devices (“scooters”) for everyday use
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Home Care Beds / TSS
Manufacture and distribute a wide variety of manual, semi-electric and fully electric beds for
home use
Home care bed accessories include bedside rails, mattresses, overbed tables, trapeze bars
and traction equipment.
Includes patient lifts and slings, and a new series of mobile, multi-functional recliners
designed for use in home and institutional settings
Manual Wheelchairs
Sold for use inside and outside the home, institutional settings, or public places (e.g., airports,
malls, etc.)
Clients include people who are chronically or temporarily disabled and require basic mobility
performance with little or no frame modification.
Personal Care
Personal care products, including ambulatory aids such as crutches, canes, walkers and
wheeled walkers.
Safety aids such as tub transfer benches, shower chairs and grab bars, and patient care
products such as commodes and other toilet assist aids
Other
Manufacture and market a complete line of mattress overlays and mattress replacement
products which use air flotation to redistribute weight and move moisture away from patients
Product Group 2: Standard Products
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Oxygen concentrators
Devices for the home, that separate oxygen from the air to provide oxygen to
patients at substantially higher concentrations than those of ambient air
HomeFill™ II Oxygen Compressor
Enables ambulatory oxygen users to safely and easily make compressed
oxygen in their home and store it in cylinders for future use
These oxygen delivery systems contain lightweight aluminum oxygen cylinders, two-wheel
carts or nylon bags, piston regulators and nasal canula
Market opportunity: Currently approximately only 10% to 15% of ambulatory users use
transfill in the U.S.
• New CMS regulations favor transfill technology over traditional oxygen tanks
• Invacare has approximately 90% market share in the U.S.
Sleep Apnea
CPAP systems - provides one compressed air at a constant pressure to the patient
Humidifiers, masks and other sleep therapy products
Product Group 3: Respiratory Products
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Product Group 4: Distributed Products
We distribute numerous lines of branded medical supplies including:
Diabetic
Ostomy
Enteral
Incontinence
Urological
Durable Medical Equipment
Wound care
Recurring revenue stream with little capital requirements
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Product Group 5: Continuing Care / Other Products
Continuing Care -Health Care Furnishings
Beds, case goods and patient handling equipment for the long-term care
markets
Specialty clinical recliners for dialysis and oncology clinics
Other Products -Accessory Products
Accessory products including spare parts, wheelchair cushions, arm rests,
wheels and respiratory parts.
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Benefits of Home Care
Home care is a major part of the solution to rising costs of Medicare
and Medicaid
Patients
Prefer
Home
Care
More
Cost
Effective
Better
Results
U.S. Veterans Administration – Portland, OR : “Project at Home”
75% of eligible patients chose to receive treatment at home
versus hospital admission
Vermont has instituted a “Choices for Care” program, with federal
approval, offering home care as an option equal, yet more cost effective,
than nursing home care
Study of 530,000 elderly people on Medicaid by the University of
California, San Francisco researchers concluded that Medicaid saved an
average of $15,000 a year for each person that received care at home
Study published in December 2005 issue of Annals of Internal Medicine
concluded that at-home care resulted in a 33% cost savings when
compared to hospital care for similarly ill patients
Recent studies have shown faster recovery and lower infection rates for
home care patients
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Positive Demographic Trends Driving Home Care
The durable medical equipment (“DME”) industry will continue to experience
favorable demographics due to the aging of the US population
•The number of Americans aged 65 or older is expected to increase to
approximately 40 million by 2010, approximately 54 million by 2020 and
approximately 70 million by 2030 (or 20% of the U.S. population)
Total U.S. Population (2004 – 2015E)
(# in millions)
65 and Over U.S. Population (2004 – 2015E)
(# in millions)
Source: U.S. Census Bureau, 2004
293.6
308.9
321.8
0
50
100
150
200
250
300
350
2004
2010
2015
CAGR = 0.85%
CAGR = 0.82%
36.2
40.2
46.9
0
5
10
15
20
25
30
35
40
45
50
2004
2010
2015
CAGR = 1.77%
CAGR = 3.10%
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Long-Term Growth in DME Expenditures in U.S.
The healthcare industry in the U.S. is a large, growing segment of the economy, and the DME sector
represents a significant sub-segment of this industry
According to the CMS, national health spending increased from 9.1% of GDP, or $255 billion, in 1980 to
16.0%, or $1.9 trillion, in 2004
DME spending currently represents approximately 1.2% of total health care expenditures in 2004
DME expenditures, which are expected to grow at a CAGR of 4.3% from 2005 through 2015, are expected to
reach $36.2 billion by 2015
Source: Centers for Medicare & Medicaid Services
Durable Medical Equipment:Covers “retail” sales of items such as contact lenses, eyeglasses and other
ophthalmic products, surgical and orthopedic products, hearing aids, wheelchairs, and medical equipment
rentals.
Historical and Projected DME Expenditures in the U.S.
($ in billions)
200
0 –
200
4 CA
GR
= 4.5
%
200
5 –
201
5 C
AG
R =
4.3
%
$19.3
$19.6
$20.8
$22.1
$23.0
$23.7
$24.9
$26.0
$27.3
$28.2
$29.5
$30.8
$32.1
$33.5
$34.8
$36.2
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
$40.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
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Positive Trends
Demographics are strongly in our favor with aging population
Home care is more cost effective; people desire to stay at home; and more
accessibility legislated for disabled
Invacare is by far the worldwide market leader and largest player
Our products are innovative and of good quality
We are implementing a major cost/expense reduction program to take out $56 million
annualized by 12/31/07
China emerging as a core competency
We have developed the strongest lobbying organization in the industry supported by
major fundraising events for the key players
International is a major source of strength and growing (respiratory opportunity)
Two-thirds ($1.0 billion) of our $1.5B sales has been insulated from the major
reimbursement challenges in the U.S.
Systems much improved, but not yet a strategic advantage
New disruptive HomeFill technology
Developing next generation of Invacare management leaders
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Stock Performance – 1984 to August 2007*
$0
$500
$1,000
$1,500
$2,000
IVC
100
41
71
57
86
96
180 485 422 478 595 878 957 757 835 698 1191 1173 1158 1404 1609 1095 854
815
SP 500
100
126
145
148
166
211 197 249
261 279 275 368 443 580 735 879 789 686 526 665 725 746 848 868
'84
'85
'86
'87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
Aug
'07
*As Of August 13, 2007
All Other Dates December Year End; Except Invacare 1984 IPO Price; Ex-Dividends
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U.S. Reimbursement Changes
Low-Cost Asian Competition
Major Systems Conversion
Performance Declines Due To
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Oxygen (Negatives)
• Cuts – 41% Cuts Over Last 10 Years
• No CPI Updates Since 1997
• CAPS – 36 Months (20 - 25% Cut)
• Title Transfer To Patient
• OIG Report (Sept. 2006)
• President’s Budget Proposal – Cut Conventional Stationary
Oxygen To 13 Months (Feb. 2007)
• Competitive Bidding (10 - 20% Cuts Projected)
• House SCHIP Proposal Recommends Cut To 18 Months For
Conventional Stationary Oxygen
Oxygen (Positives)
• CMS Added $20 Monthly Premium On New Technology Effective
Jan. 2007
• President’s Budget And House SCHIP Bill Proposed Keeping New
Technology At 36 Months
• President’s Budget Proposed Stopping Ownership Transfer
Uncertainty Has Slowed Capital Investment In Oxygen Equipment
U.S. Reimbursement Changes
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New Products: Perfecto2
™
Concentrator
and HomeFill
®
Oxygen System
75% Quieter
33% smaller
25% more energy efficient
17% lighter
Offered in a contemporary design
and color
Compatible for use with the
HomeFill Oxygen System (now
available with M2 Cylinder – fills in
24 minutes, lasts over two hours
and weighs less than two pounds)
Invacare HomeFill has substantial
share of transfilling segment, but
only 12% (approximately)
penetration to date
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New Products: Flyer
™
Portable Concentrator
Available late 2007
Weighs in at six pounds
Quiet, simple operation
Contemporary, non-medical look
Exclusive, long life compressor
and the patent pending,
integrated conserver are
designed to provide sufficient
oxygen to keep patients
saturated at all settings and
activity levels
Estimated dimensions 10”H x
7”W x 4”D.
Available with convenient
carrying bag (bottom right)
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Power
• 27% Cuts – Consumer Power (November 2006)
• 5% Cuts – Custom Power (November 2006)
• Documentation Problems
• President’s Budget And Recent House Medicare Bill For SCHIP
Proposed 13 Months Payment Plan
Capped Rental (Standard Wheelchairs/Beds/Other)
• Cut Reimbursement From 15 To 13 Months (13% Cut January 2006)
• Title Transfer At 13 Months Beginning February 2007
Relative Stability Now, But Competitive Bidding In 10 Large Markets
Commences In April 2008 – Potential Credit Issues If Small Players Exit
U.S. Reimbursement Changes
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New Products: TDX
™
SP Power Wheelchair
Center-Wheel Drive offers the
tightest turning radius possible
along with ease of driving over all
other configurations
Surestep™ ensures all obstacles
are navigated smoothly
Stability Lock allows CWD to be
stable and in control
TrueTrack™ benefits drivers with
marginal control
Latest advance in MK Series
Electronics (MK6i™) is as simple
as plug and play
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These Changes Impact One-Third Of Our Global
Businesses ($500M) Other Two-Thirds Remain Strong
Major Lobbying Efforts In Washington
U.S. Reimbursement Changes
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Knock-Offs Of Our Products
Significantly Lower Pricing
Commoditization Of Some Product Sectors
Deliver $38 Million Cost Out In 2007; $56 Million Run Rate By
12/31/07
Beginning To Establish 2008 Cost Out Targets
We Now Have Major Presence In China - Our Own Manufacturing
And Sourcing - $210 Million In 2006
$400 Million By 2008
Price Reductions To Market Levels (20-25%)
Our Unit Volumes And Market Share In Many Standard Product
Sectors Are Now Growing
Low-Cost Asian Products
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Negatively Impacted Customer Service Response Time
Difficulty Configuring Some Products
Stock Outages
Systems Performance Issues Largely Behind Us
We Now Have A Platform For Future Growth
Systems Changes
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2007 Operating Initiatives
The Company is focused on the following key strategic initiatives in response
to reimbursement and competitive challenges in the U.S.
Simplify the product offering (“formularies”)
Achieve low cost position through production changes and facility
consolidation
Expand outsourcing of commodities and basic fabrication
Reduce inventory
Limit capital spending
FY 2007 EBITDA will include at least $38 million of cost savings; $16
million realized in first half ‘07
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Simplify the Product Offering
Introduction of product formularies to streamline selection
Redesign products
Extensive product rationalization
:
Reducing the number of power wheelchair chassis from 10 to 6
Reducing the number of SKUs in custom manual wheelchairs from 29 to 11
Benefits:
More ability to drive-out costs
• Longer manufacturing runs and less specialization
Improved service and quality
• More simplified product offering for customers to work with
• Simplified formulary pricing
• Shorter lead times
Reduces inventory pressures
• Inventory reduction is expected to generate at least $15.0 million in 2007
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Achieve Low-Cost Position
Consolidation of facilities
Outsourcing of commodities and basic fabrication
Conversion from highly integrated fabrication to regional assemble to order facilities
R&D efforts focused on cost reduction and innovation – making better products more efficiently
Chinese manufacturing and Asian
third party sourcing*
Primary Manufacturing Facilities:
•Integrated Fabrication
•Assembly
•Total
2004
$88 million
17
1
18
2006
$210 million
14
2
16
2009
$400 million
4
6
10
*Based on costs of goods sold
2004
$88 million
17
1
18
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Cost Savings Initiatives
2007
2008
EBITDA Impact:
Sourcing / Rationalization / Product Simplification
$20
$26
Manufacturing Consolidation / Facilities Reduction
8
17
SG&A / Other
10
13
Total
$38
$56
Restructuring Costs:
Cash
$11
$10
Non-Cash
4
16
Total
$15
$26
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Financial Guidance
2007 Year Guidance (effective July 31, 2007)
• Organic growth in net sales of 0% to 2%
• Adjusted EBITDA* increase of 4% to 6% over 2006 levels
• Adjusted Earnings Per Share* of $0.95 to $1.15
• Free cash flow* of $40 million to $50 million
• Performance heavily weighted to 2
nd
half of year
*Excludes impact of restructuring charges and one-time debt refinancing costs
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Conclusion
We are a well positioned company …
Industry Leading Market Positions
Strong Brand Reputation With Superior Products
Complete Range Of Home Healthcare Products
Geographically Diversified Revenue Base
Experienced Management Team With Significant Ownership (14%)
… in an industry with strong underlying fundamentals
Positive Demographic Trends
Benefits Of Home Care Leading To A Shift In The Method Of Healthcare Delivery
Technological Advancements Enabling More Home Healthcare Delivery Solutions
… We are in a turnaround mode and will return to sound profitability in the near future
08/13/07
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