Invacare Corporation Announces Financial Results for the First Quarter of 2013 and Updates Status Regarding Consent Decree

  Invacare Corporation Announces Financial Results for the First Quarter of
  2013 and Updates Status Regarding Consent Decree

Business Wire

ELYRIA, Ohio -- April 25, 2013

Invacare Corporation (NYSE: IVC) today announced its financial results for the
quarter ended March31, 2013.

On January 18, 2013, the Company completed the sale of Invacare Supply Group
(ISG), its domestic medical supplies business. Accordingly, the financial
information for all periods excludes the impact of the discontinued operations
except for cash flow information which includes the results and impact of the
sale of ISG. For more information, see the detailed condensed consolidated
financial statements at the end of the release.

CEO SUMMARY

Commenting on Invacare's first quarter 2013 results, Gerald B. Blouch,
President and Chief Executive Officer, stated, ''Our first quarter financial
results were dramatically impacted by the Company's consent decree with the
United States Food and Drug Administration (FDA), which limits the Company's
ability to manufacture products at its Taylor Street facility in Elyria, Ohio.
Principally as a result of this pressure on the Company's higher margin custom
power wheelchair product category, adjusted earnings per share^(a) decreased
to a loss of $0.36 in the first quarter of 2013 compared to adjusted earnings
per share^(a) of $0.15 in the first quarter of 2012. Organic net sales
declined by 5.6% compared to the same period last year with a strong
performance from Europe being more than offset by lower net sales for all
other segments. The Company's free cash flow^(c) in the first quarter was
negative $36.1 million, principally due to the net loss from continuing
operations, but also due to a few one-time items associated with the sale of
ISG (negative cash flow impact of approximately $16.0 million). In addition,
free cash flow^(c) was negatively impacted by increased inventory related to
weaker than expected sales (negative cash flow impact of $7.7 million).''

Commenting on the status of the FDA consent decree, Blouch said, ''I am
pleased to report that we have made progress on the third-party certification
audits at the Corporate and Taylor Street facilities. Earlier this month, the
first two third-party certification audit reports were provided to the FDA for
its review and approval. In these reports, the third-party expert certified
that the Company's equipment and process validation procedures and its design
control systems are compliant with the FDA's Quality System Regulation. The
Company expects to receive the FDA's response within a few weeks based upon
the terms of the consent decree. The third, most comprehensive certification
audit is well underway, and we expect it to be completed before the end of the
second quarter. After the FDA has reviewed this final certification report, it
will conduct its own inspection before it authorizes the Company to resume
full operations at the Corporate and Taylor Street facilities. We are making
progress, and I am grateful to all of our associates for the time and energy
that they are dedicating to quality systems compliance.''

Blouch continued, ''While there are many factors that are currently outside of
our control, we are actively managing the business to best position the
Company for the future. The Company has developed and started to implement a
comprehensive cost reduction program. As part of that plan, the Company
reduced its workforce at the Taylor Street facility earlier this month to more
closely align it with current production volume. Other aggressive cost
reduction initiatives will take place through general expense reduction and
project delays. We expect these initiatives will stabilize the business and
help drive us toward restoring positive free cash flow^(c) later in 2013. Our
board and management team are committed to making the right decisions to
ensure the Company is well-positioned to re-establish profitability and
shareholder value when we emerge from the injunctive phase of the consent
decree.''

STATUS OF THE CONSENT DECREE

In order to resume full operations at the Corporate and Taylor Street
facilities in Elyria, Ohio, the consent decree requires that three
certification audits must be completed by a third-party expert whose reports
are then submitted to the FDA for review and approval. The Company is
continuing to make progress on all three of the certification audits.

  *In the first audit, the third-party expert inspected the qualification and
    validation procedures and documentation for equipment and processes at the
    Taylor Street manufacturing facility. Earlier this month, the third-party
    expert certified that these processes were in compliance with the
    equipment and process validation requirements set forth in the consent
    decree. The certification report was submitted to the FDA for the Agency's
    review and approval. According to the terms of the consent decree, the
    Company will receive a response from the FDA on this report within the
    next few weeks. Receiving the FDA's approval on the first certification
    audit would permit the Company's Taylor Street facility to resume
    supplying parts and components for the further manufacturing of medical
    devices at other Invacare facilities.
  *In the second audit, the third-party expert reviewed the Company's design
    control systems at the Corporate and Taylor Street facilities and
    certified that the Company's design control systems at these facilities
    are in compliance. Earlier this month, the certification report was
    submitted to the FDA for the Agency's review and approval. According to
    the terms of the consent decree, the Company will receive a response from
    the FDA on this report within the next few weeks. Once it receives the
    FDA's approval on this certification report, the Company may resume design
    activities, which will enable it to refocus its engineering resources on
    new product development.
  *The final, most comprehensive third-party certification audit is a
    comprehensive review of the Company's compliance with the FDA's Quality
    System Regulation at the impacted Elyria facilities. This audit is well
    underway, and the Company plans to complete this certification audit by
    the end of the second quarter. This audit will be followed by an FDA
    inspection. Once the Company receives written notification from the FDA
    that the Corporate and Taylor Street facilities appear to be in
    compliance, the Company may resume full operations at those facilities.

As the Company receives FDA approval on each of these certification audits, it
will provide timely disclosure to its shareholders. Otherwise the Company
plans to give an update in its next quarterly earnings release.

FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER

  *Loss per share on a GAAP basis from continuing operations was $0.14 as
    compared to earnings per share of $0.18 last year.
  *Adjusted loss per share^(a) from continuing operations decreased for the
    quarter to $0.36 versus adjusted earnings per share^(a) of $0.15 last
    year.
  *Free cash flow^(c) for the quarter was negative $36.1 million as compared
    to negative $2.5 million in the first quarter last year.
  *Net sales for the quarter from continuing operations decreased 4.9% while
    organic net sales decreased 5.6%, compared to the first quarter of last
    year.
  *Adjusted EBITDA^(d) was $0.7 million for the quarter versus $22.3 million
    for the same period last year.
  *Debt outstanding for the quarter decreased by $118.3 million, resulting in
    a ratio of debt to adjusted EBITDA^(d) of 1.8, compared to 2.7 at the end
    of last year.

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

Loss per share on a GAAP basis for the first quarter of 2013 was $0.14 ($4.5
million net loss) as compared to earnings per share for the same period last
year of $0.18 ($5.6 million net earnings). The net loss for the first quarter
of 2013 was significantly impacted by lower net sales, reduced gross margin
and charges related to restructuring of $0.06 per share ($1.8 million
after-tax expense). Net earnings for the first quarter of 2012 were
unfavorably impacted by charges related to restructuring of $0.01 per share
($0.4 million after-tax expense).

Adjusted net loss per share^(a) was $0.36 for the first quarter of 2013 as
compared to adjusted net earnings per share of $0.15 for the first quarter of
2012. Adjusted net loss^(b) for the quarter was $11.6 million versus adjusted
net earnings^(b) of $4.9 million for the first quarter of last year. The
adjusted net loss^(b) for the quarter was primarily the result of lower net
sales, reduced gross margin and increased SG&A expense partially offset by
decreased interest expense.

Net sales for the quarter decreased 4.9% to $337.6 million versus $355.1
million for the same period last year.Organic net sales for the quarter
decreased 5.6% over the same period last year as increases in Europe were more
than offset by declines in all other segments. The largest decline in net
sales was in the North America/Home Medical Equipment (HME) segment, primarily
in mobility and seating products, principally due to the reduced order volume
at the Company's Taylor Street manufacturing facility resulting from the FDA
consent decree. The Company estimates that sales of product manufactured from
the Taylor Street facility, which includes some products sold outside of the
North America/HME segment, were approximately $17.0 million in the first
quarter compared to $37.4 million in the first quarter of last year. Net sales
by segment and for the consolidated company, as reported and as adjusted to
exclude the impact of foreign currency translation comparing the quarter-end
and year-to-date periods ended March31, 2013 to March31, 2012 are provided
in a table accompanying this release.

Gross margin as a percentage of net sales for the first quarter was lower by
2.7 percentage points compared to last year's first quarter. The margin was
negatively impacted principally by the North America/HME sales decline in
custom power wheelchairs, which is one of the Company's higher margin product
lines. In addition, the negative impact on order volume out of the Taylor
Street manufacturing facility caused an unfavorable absorption of fixed costs
for this facility. Gross margin also was negatively impacted by sales mix
favoring lower margin products and customers and increased research and
development costs.

SG&A expense increased 3.3% to $104.0 million in the first quarter compared to
$100.7 million in the first quarter of last year.Foreign currency translation
increased SG&A expense by 0.5 of a percentage point. Excluding the impact of
foreign currency translation and increased regulatory and compliance costs
related to quality system improvements ($1.4 million pre-tax expense), SG&A
expense increased by 1.4% compared to the first quarter of last year primarily
related to unfavorable foreign currency transactions, primarily in Europe, and
increased associate costs, also primarily in Europe.

The Company incurred restructuring charges for the first quarter of $1.8
million after-tax, principally related to severance costs in the North
America/HME, Asia/Pacific and Europe segments. These restructuring charges are
excluded from adjusted earnings per share^(a).

NORTH AMERICA/HOME MEDICAL EQUIPMENT (HME)

For the quarter ended March31, 2013, North America/HME net sales decreased
13.6% to $152.2 million compared to $176.1 million in the same period last
year. Organic net sales were down 13.6% compared to last year primarily driven
by declines in mobility and seating and lifestyle products, partially offset
by increased net sales in respiratory products. The sales decline in mobility
and seating products was primarily driven by the impact of the consent decree
with the FDA, which limits production at the Taylor Street manufacturing
facility. Early in the first quarter, the flow of verification of medical
necessity (VMN) documentation, as required by the consent decree to provide
product from the Taylor Street facility, was in line with the Company's
expectations. However, during the quarter the FDA provided the Company with
feedback regarding its intent relating to the appropriate completion of the
VMN documentation. As it better understood the FDA's expectations, the Company
modified its VMN review processes, which resulted in a dramatic weakening of
the acceptance rate of VMNs throughout the quarter. While the Company
continues to ship orders and quotes that existed prior to the date of the
consent decree, the number of new orders that were fulfilled in the first
quarter of 2013 with the appropriate VMN documentation would have represented
only 4.1% of Invacare's unit volume of domestic power wheelchair shipments
from the Taylor Street facility in the same period last year. Loss before
income taxes was $9.7 million, excluding restructuring charges of $1.7
million, as compared to earnings before income taxes of $5.8 million last
year, excluding restructuring charges of $0.1 million, primarily as a result
of volume declines, unfavorable sales mix favoring lower margin customers and
lower margin products, unfavorable absorption of fixed costs at the Taylor
Street manufacturing facility as a result of volume declines in mobility and
seating products and increased associate costs related to quality system
improvements.

INSTITUTIONAL PRODUCTS GROUP (IPG)

IPG net sales for the first quarter decreased by 2.8% to $35.1 million
compared to $36.1 million last year. Organic net sales decreased 2.7% driven
primarily by declines in beds, safe patient handling equipment and therapeutic
support surfaces partially offset by increases in interior design projects for
long-term care facilities and dialysis chairs. Earnings before income taxes
were $2.0 million, excluding restructuring charges of $0.2 million, compared
to $3.4 million in the first quarter of last year. The decrease in earnings
before income taxes was largely attributable to volume declines, increased
research and development expenses and associate costs.

EUROPE

For the first quarter, European net sales increased 9.8% to $137.6 million
versus $125.3 million for the first quarter of last year.Organic net sales
for the quarter increased 7.9% primarily related to increases in net sales of
lifestyle, respiratory and mobility and seating products. For the first
quarter, earnings before income taxes increased to $6.0 million, excluding
restructuring charges of $0.1 million, as compared to $5.8 million last year,
excluding restructuring charges of $0.3 million.The increase in earnings
before income taxes was largely attributable to volume increases, which were
partially offset by an unfavorable sales mix favoring lower margin product
lines and lower margin customers, increased SG&A expenses, primarily due to
unfavorable foreign currency transactions and increased associate costs.

ASIA/PACIFIC

For the first quarter, Asia/Pacific net sales decreased 27.6% to $12.7 million
versus $17.5 million last year.Organic net sales for the quarter decreased
27.8%. The Company's Australian distribution business experienced declines in
mobility and seating and lifestyle products. The net sales decline in the
Company's subsidiary which produces microprocessor controllers was primarily
related to its sale of controllers and to its contract manufacturing business
with companies outside of the healthcare industry. For the first quarter, loss
before income taxes was $1.7 million, excluding restructuring charges of $0.5
million, as compared to loss before income taxes of $0.9 million last year,
excluding restructuring charges of $0.1 million.The decrease in earnings
before income taxes was primarily attributable to the Company's subsidiary
which produces microprocessor controllers as a result of the volume declines.
Earnings for the first quarter were favorable to last year for the Company's
Australian and New Zealand distribution businesses as a result of a
significant restructure to the business implemented in the fourth quarter of
last year.

FINANCIAL CONDITION

Total debt outstanding was $119.8 million as of March31, 2013, as compared to
$238.1 million as of December31, 2012 (including the convertible debt
discount, which reduced convertible debt and increased equity by $3.2 million
as of March31, 2013 and by $3.3 million as of December31, 2012). The
Company's total debt outstanding as of March31, 2013 consisted of $99.4
million drawn on the revolving credit facility, $13.4 million in convertible
debt and $7.0 million of other debt. The Company's debt levels have been
reduced significantly as a result of the application of the $144.7 million in
net proceeds from the sale of its medical supplies business, ISG, during the
first quarter of 2013.

The Company reported negative $36.1 million of free cash flow^(c) in the first
quarter of 2013 as compared to negative $2.5 million of free cash flow^(c) in
the first quarter of 2012. The first quarter 2013 negative free cash flow^(c)
was primarily driven by the net loss from continuing operations compared to
earnings in the same period a year ago, a reduction in accounts payable
(negative cash flow impact of $15.7 million) principally due to accelerated
payments associated with the sale of ISG and increased inventory (negative
cash flow impact of $7.7 million) due to weaker than anticipated sales. In
addition, free cash flow^(c) was also negatively impacted by approximately
$3.2 million of expenses paid as a result of the sale of ISG.

The Company's ratio of debt to adjusted EBITDA^(d) was 1.8 as of March31,
2013, compared to 2.7 as of December31, 2012 and 1.9 as of March31, 2012.

Days sales outstanding were 50 days at the end of the first quarter of 2013,
compared to 49 days as of December31, 2012 and 51 days as of March31, 2012.
Inventory turns at the end of the first quarter of 2013 were 4.4, compared to
4.6 as of December31, 2012 and 4.7 as of March31, 2012.

^(a) Adjusted earnings (loss) per share (EPS) is a non-GAAP financial measure
which is defined as adjusted net earnings (loss)^(b) divided by weighted
average shares outstanding - assuming dilution.It should be noted that the
Company's definition of Adjusted EPS may not be comparable to similar measures
disclosed by other companies because not all companies and analysts calculate
Adjusted EPS in the same manner. The Company believes that these types of
exclusions are also recognized by the industry in which it operates as
relevant in computing Adjusted EPS as a supplementary non-GAAP financial
measure used by financial analysts and others in the Company's industry to
meaningfully evaluate operating performance. This financial measure is
reconciled to the related GAAP financial measure in the ''Reconciliation''
table included after the Condensed Consolidated Statement of Operations
included in this press release.

^(b) Adjusted net earnings (loss) is a non-GAAP financial measure which is
defined as net earnings (loss) from continuing operations excluding the impact
of restructuring charges ($2.5 million pre-tax for the three months ended
March31, 2013 compared to $0.6 million pre-tax for the three months ended
March31, 2012), amortization of the convertible debt discount recorded in
interest ($0.2 million pre-tax for the three months ended March31, 2013
compared to $0.1 million pre-tax for the three months ended March31, 2012)
and changes in tax valuation allowances.This financial measure is reconciled
to the related GAAP financial measure in the ''Reconciliation'' table included
after the Condensed Consolidated Statement of Operations included in this
press release.

^(c) Free cash flow is a non-GAAP financial measure which is defined as net
cash used by operating activities, excluding net cash flow impact related to
restructuring activities, less purchases of property and equipment, net of
proceeds from sales of property and equipment.Management believes that this
financial measure provides meaningful information for evaluating the overall
financial performance of the Company and its ability to repay debt or make
future investments (including, for example, acquisitions). This financial
measure is reconciled to the related GAAP financial measure in the
''Reconciliation'' table included after the Condensed Consolidated Balance
Sheets included in this press release.

^(d)Adjusted EBITDA (adjusted earnings (loss) before interest, taxes,
depreciation and amortization)is a non-GAAP financial measure which is
defined as net earnings (loss) from continuing operations excluding the
following: interest expense, income taxes (benefit), depreciation and
amortization, as further adjusted to exclude restructuring charges as adjusted
for debt covenant limitations regarding cash charges ($2.4 million for the
three months ended March31, 2013), amortization of the convertible debt
discount (recorded in interest expense), bank fees and stock option expense.
It should be noted that the Company's definition of Adjusted EBITDA may not be
comparable to similar measures disclosed by other companies because not all
companies and analysts calculate Adjusted EBITDA in the same manner. The
Company believes that these types of exclusions are also recognized by the
industry in which it operates as relevant in computing Adjusted EBITDA as a
supplementary non-GAAP financial measure widely used by financial analysts and
others in the Company's industry to meaningfully evaluate a company's future
operating performance and cash flow. Moreover, the definition of Adjusted
EBITDA as presented herein also may be useful in reflecting certain debt
covenant measurements under the Company's senior secured credit facility,
although, in particular, a larger acquisition during a given year may make it
difficult to replicate the exact calculations for the covenants. In addition
to these recognized purposes, the Company also uses EBITDA and Adjusted EBITDA
to evaluate the Company's performance. This financial measure is reconciled to
the related GAAP financial measure in the ''Reconciliation'' table included
after the Condensed Consolidated Statement of Operations included in this
press release.

CONFERENCE CALL

As previously announced, the Company will host a conference call for investors
and other interested parties today at 8:30 AM ET to discuss the Company's
performance. Those wishing to participate in the live call should dial
1-888-498-8379, or +1-706-679-5239 for international callers, and enter
meeting ID 34526733. A digital recording will be available two hours after
completion of the conference call from April 25, 2013 to May 2, 2013. To
access the recording, US/Canada callers should dial 1-855-859-2056, or
+1-404-537-3406 for international callers, and enter the Conference ID
34526733.

Invacare Corporation (NYSE:IVC), headquartered in Elyria, Ohio, is the global
leader in the manufacture and distribution of innovative home and long-term
care medical products that promote recovery and active lifestyles.The Company
has 5,800 associates and markets its products in approximately 80 countries
around the world. For more information about the Company and its products,
visit Invacare's website at www.invacare.com.

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,'' ''could,'' ''plan,'' ''intend,''
''expect,'' ''continue,'' ''believe'' and ''anticipate,'' as well as similar
comments, are forward-looking in nature that are subject to inherent
uncertainties that are difficult to predict. 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:
compliance costs, limitations on the design, production and/or distribution of
Invacare's products, inability to bid on or win certain contracts, or other
adverse effects of the FDA consent decree of injunction; unexpected
circumstances or developments that might delay or adversely impact the results
of the third-party expert certification audits or FDA inspections of
Invacare's quality systems at the Elyria, Ohio, facilities impacted by the FDA
consent decree, including any possible requirement to perform additional
remediation activities; the failure or refusal of customers or healthcare
professionals to sign VMN or other certification forms required by the
exceptions to the consent decree; possible adverse effects of being leveraged,
including interest rate or event of default risks, including those relating
the the company's financial covenants under its credit facility (particularly
as might result from the impacts associated with the FDA consent decree);
Invacare's inability to satisfy its liquidity needs, or additional costs to do
so; adverse changes in government and other third-party payor reimbursement
levels and practices both in the U.S. and in other countries (such as, for
example, more extensive pre-payment reviews and post-payment audits by payors,
or the Medicare national competitive bidding program covering nine
metropolitan statistical areas that started in 2011 and an additional 91
metropolitan statistical areas beginning in July 2013), impacts of the U.S.
Affordable Care Act that was enacted in 2010 (such as, for example, the
expected annual impact on Invacare of the excise tax beginning in 2013 on
certain medical devices and Invacare's ability to successfully offset such
impact); legal actions, regulatory proceedings or Invacare's failure to comply
with regulatory requirements or receive regulatory clearance or approval for
Invacare's products or operations in the United States or abroad; product
liability claims; exchange rate or tax rate fluctuations; inability to design,
manufacture, distribute and achieve market acceptance of new products with
greater functionality or lower costs or new product platforms that deliver the
anticipated benefits of the Company's globalization strategy; consolidation of
health care providers; lower cost imports; uncollectible accounts receivable;
difficulties in implementing/upgrading Enterprise Resource Planning systems;
risks inherent in managing and operating businesses in many different foreign
jurisdictions; ineffective cost reduction and restructuring efforts; potential
product recalls; decreased availability or increased costs of materials which
could increase the Company's costs of producing or acquiring the Company's
products, including possible increases in commodity costs or freight costs;
heightened vulnerability to a hostile takeover attempt arising from depressed
market prices for Company shares; provisions of Ohio law or in the Company's
debt agreements, shareholder rights plan or charter documents that may prevent
or delay a change in control, 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, the Company does 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.



INVACARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
                                                    
(In thousands, except per share data)                  Three Months Ended
                                                       March 31,
                                                       2013         2012
Net sales                                              $ 337,616     $ 355,100
Cost of products sold                                  241,838      244,503
Gross Profit                                           95,778        110,597
Selling, general and administrative expenses           104,019       100,713
Charges related to restructuring activities            2,522         561
Interest expense - net                                 1,220        2,050
Earnings (Loss) from Continuing Operations before      (11,983   )   7,273
Income Taxes
Income taxes                                           (7,450    )   1,668
Net Earnings (Loss) from Continuing Operations         (4,533    )   5,605
                                                                     
Net Earnings from Discontinued Operations (Net of      392           2,628
tax amounts of $10 and $482)
Gain on Sale of Discontinued Operations (Net of        39,322       —
tax amount of $20,080)
Total Net Earnings from Discontinued Operations        39,714        2,628
                                                                    
Net Earnings                                           $ 35,181     $ 8,233
                                                                     
Net Earnings per Share—Basic
Net Earnings (Loss) from Continuing Operations         $ (0.14   )   $ 0.18
Total Net Earnings from Discontinued Operations        $ 1.24        $ 0.08
Net Earnings per Share—Basic                           $ 1.10        $ 0.26
                                                                     
Weighted Average Shares Outstanding—Basic              31,902        31,819
                                                                     
Net Earnings per Share—Assuming Dilution
Net Earnings (Loss) from Continuing Operations *       $ (0.14   )   $ 0.18
Total Net Earnings from Discontinued Operations        $ 1.24        $ 0.08
Net Earnings per Share—Assuming Dilution               $ 1.10        $ 0.26
                                                                     
Weighted Average Shares Outstanding—Assuming           31,934        31,822
Dilution
                                                                     

* Net earnings (loss) per share assuming dilution calculated using weighted
average shares outstanding - basic for periods in which there is a loss.



INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS (LOSS) TO ADJUSTED EBITDA ^(1)
                                                      
(In thousands)                                           Three Months Ended
                                                         March 31,
Continuing Operations:                                   2013        2012
Net earnings (loss)                                      $ (4,533 )   $ 5,605
Interest expense                                         1,327        2,351
Income taxes (benefit)                                   (7,450   )   1,668
Depreciation and amortization                            8,848       9,497
EBITDA                                                   (1,808   )   19,121
Restructuring charges                                    2,522        561
Cash restructuring charges covenant limitation           (2,436   )   —
adjustment
Bank fees                                                1,270        1,060
Stock option expense                                     1,160       1,534
Adjusted EBITDA^(1)                                      $ 708       $ 22,276
                                                                        

^(1) Adjusted EBITDA (earnings (loss) before interest, taxes, depreciation and
amortization)is a non-GAAP financial measure which is defined as net earnings
(loss) from continuing operations excluding the following: interest expense,
income taxes, depreciation and amortization, as further adjusted to exclude
restructuring charges, as adjusted for debt covenant limitations regarding
cash charges, bank fees, stock option expense and amortization of the
convertible debt discount (recorded in interest expense). It should be noted
that the Company's definition of Adjusted EBITDA may not be comparable to
similar measures disclosed by other companies because not all companies and
analysts calculate Adjusted EBITDA in the same manner.The Company believes
that these types of exclusions are also recognized by the industry in which it
operates as relevant in computing Adjusted EBITDA as a supplementary non-GAAP
financial measure widely used by financial analysts and others in the
Company's industry to meaningfully evaluate a Company's future operating
performance and cash flow.Moreover, the definition of Adjusted EBITDA as
presented herein also may be useful in reflecting certain debt covenant
measurements under the Company's senior secured credit facility, although, in
particular, a larger acquisition during a given year may make it difficult to
replicate the exact calculations for the covenants.In addition to these
recognized purposes, the Company also uses EBITDA and Adjusted EBITDA to
evaluate the Company's performance.



INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS (LOSS) PER SHARE
TO ADJUSTED EARNINGS (LOSS) PER SHARE ^(2)
                                                      
(In thousands, except per share data)                    Three Months Ended
                                                         March 31,
Continuing Operations:                                   2013         2012
Net earnings (loss) per share - assuming dilution *      $ (0.14   )   $ 0.18
Weighted average shares outstanding- assuming            31,902        31,822
dilution
Net earnings (loss)                                      (4,533    )   5,605
Income taxes (benefit)                                   (7,450    )   1,668
Earnings (loss) before income taxes                      (11,983   )   7,273
Restructuring charges                                    2,522         561
Amortization of discount on convertible debt             152          141
Adjusted earnings (loss) before income taxes             (9,309    )   7,975
Income taxes                                             2,265        3,054
Adjusted net earnings (loss)                             $ (11,574 )   $ 4,921
                                                                       
Weighted average shares outstanding - assuming           31,902        31,822
dilution
Less: Diluted shares related to convertible debt         —            —
Adjusted weighted average shares outstanding -           31,902       31,822
assuming dilution
Adjusted earnings (loss) per share - assuming            $ (0.36   )   $ 0.15
dilution (2) *
                                                                         

^(2) Adjusted Earnings (Loss) per share (EPS) is a non-GAAP financial measure
which is defined as net earnings (loss) from continuing operations excluding
the impact of restructuring charges, amortization of the convertible debt
discount (recorded in interest expense) and changes in tax valuation
allowances divided by weighted average shares outstanding - assuming dilution.
It should be noted that the Company's definition of Adjusted EPS may not be
comparable to similar measures disclosed by other companies because not all
companies and analysts calculate Adjusted EPS in the same manner.The Company
believes that these types of exclusions are also recognized by the industry in
which it operates as relevant in computing Adjusted EPS as a supplementary
non-GAAP financial measure used by financial analysts and others in the
Company's industry to meaningfully evaluate operating performance.

* Net earnings (loss) per share assuming dilution calculated using weighted
average shares outstanding - basic for periods in which there is a loss.

Business Segments - The Company operates in four primary business segments:
North America / Home Medical Equipment (HME), Institutional Products Group,
Europe and Asia/Pacific.The four reportable segments represent operating
groups, which offer products to different geographic regions.Intersegment
revenue for reportable segments was $29,054,000 and $43,443,000 for the three
months ended March31, 2013 and March31, 2012, respectively.

The information by segment is as follows:

                                                   Three Months Ended
(In thousands)                                       March 31,
                                                     2013         2012
Revenues from external customers
North America / HME                                  $ 152,157     $ 176,119
Institutional Products Group                         35,128        36,138
Europe                                               137,634       125,303
Asia/Pacific                                         12,697       17,540    
Consolidated                                         $ 337,616    $ 355,100 
                                                                   
Earnings (loss) before income taxes
North America / HME                                  $ (11,352 )   $ 5,696
Institutional Products Group                         1,847         3,378
Europe                                               5,843         5,485
Asia/Pacific                                         (2,261    )   (1,061    )
All Other                                            (6,060    )   (6,225    )
Consolidated                                         $ (11,983 )   $ 7,273   
                                                                   
Restructuring charges before income taxes
North America / HME                                  $ 1,679       $ 117
Institutional Products Group                         188           35
Europe                                               115           291
Asia/Pacific                                         540          118       
Consolidated                                         $ 2,522      $ 561     
                                                                   
Earnings (loss) before income taxes excluding
restructuring charges
North America / HME                                  $ (9,673  )   $ 5,813
Institutional Products Group                         2,035         3,413
Europe                                               5,958         5,776
Asia/Pacific                                         (1,721    )   (943      )
All Other                                            (6,060    )   (6,225    )
Consolidated                                         $ (9,461  )   $ 7,834   
                                                                             

''All Other'' consists of unallocated corporate selling, general and
administrative expenses, which do not meet the quantitative criteria for
determining reportable segments.In addition, ''All Other'' earnings before
income taxes includes loss on debt extinguishment including finance charges
and associated fees.

Business Segment Net Sales - The following table provides net sales from
continuing operations as reported and as adjusted to exclude the impact of
foreign currency translation comparing quarters ended March31, 2013 to
March31, 2012:

                                            Foreign
                               Reported  Currency     Adjusted*
                                            Translation
                                            Impact
North America / HME              (13.6 )%   —      %      (13.6  )%
Institutional Products Group     (2.8  )%   (0.1   )%     (2.7   )%
Europe                           9.8   %    1.9    %      7.9    %
Asia/Pacific                     (27.6 )%   0.2    %      (27.8  )%
Consolidated                     (4.9  )%   0.7    %      (5.6   )%
                                                                 

*Adjusted net sales percent change equal to reported net sales change less
impact of foreign currency translation.



INVACARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                              
                                                  March 31,       December 31,
                                                  2013            2012
                                                  (In thousands)
Assets
Current Assets
Cash and cash equivalents                         $ 25,081        $  38,791
Trade receivables, net                            199,382         198,791
Installment receivables, net                      1,970           2,188
Inventories, net                                  187,697         183,246
Deferred income taxes and other current           40,878          41,776
assets
Assets held for sale - current                    —              103,157
Total Current Assets                              455,008         567,949
Other Assets                                      111,821         113,914
Property and Equipment, net                       116,066         118,231
Goodwill                                          462,294        462,200
Total Assets                                      $ 1,145,189    $  1,262,294
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable                                  $ 119,737       $  133,048
Accrued expenses                                  127,626         135,189
Accrued income taxes                              12,082          2,713
Short-term debt and current maturities of         3,294           5,427
long-term obligations
Liabilities held for sale - current               —              23,358
Total Current Liabilities                         262,739         299,735
Long-Term Debt                                    113,324         229,375
Other Long-Term Obligations                       112,058         112,195
Shareholders’ Equity                              657,068        620,989
Total Liabilities and Shareholders’ Equity        $ 1,145,189    $  1,262,294
                                                                     



INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION FROM NET CASH USED BY
OPERATING ACTIVITIES TO FREE CASH FLOW ^(3)
                                                   
(In thousands)                                        Three Months Ended
                                                      March 31,
                                                      2013         2012
Net cash used by operating activities                 $ (35,303 )   $ (825   )
Plus:
Net cash impact related to restructuring              3,100         2,963
activities
Less:
Purchases of property and equipment, net              (3,861    )   (4,636   )
Free Cash Flow                                        $ (36,064 )   $ (2,498 )
                                                                             

^(3) Free cash flow is a non-GAAP financial measure that is comprised of net
cash used by operating activities, excluding net cash flow impact related to
restructuring activities less purchases of property and equipment, net of
proceeds from sales of property and equipment.Management believes that this
financial measure provides meaningful information for evaluating the overall
financial performance of the Company and its ability to repay debt or make
future investments (including, for example, acquisitions).

Contact:

Invacare Corporation
Lara Mahoney, 440-329-6393
 
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