Invacare : 2Q20 Earnings Release Webcast Slides - 8.6.20

Invacare Corporation

Second Quarter 2020 Conference Call Webcast

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020

Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes or expectations that are usually identified by words such as "will," "should," "could," "plan," "intend," "expect," "continue," "forecast," "believe," and "anticipate" and include, for example, any statement made regarding the company's future results. Actual results may differ materially as a result of various risks and uncertainties, including those expressed in the cautionary statement in the company's earnings press release for the second quarter 2020 posted on www.invacare.com/investorrelations, as well as in the company's annual reports on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. The company may not be able to predict and may have little or no control over many factors or events that may influence its future results and, except as required by law, shall have no obligation to update any forward-looking statements.

Financial results presented are as of June 30, 2020, unless otherwise noted.

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	2

COVID-19: Impact in 2Q20

• Accomplished rapid transition to new, safe working environment for associates, customers and end users
• Achieved 11th consecutive quarter of year-over-year, as well as sequential improvement in Adjusted EBITDA from 1Q20
• Effectively shed costs and managed cash to offset lower sales
• Overcame supply challenges to deliver products in high demand and continued to work on addressing elevated freight costs
• Business impact varied by geographic location with more decisive shutdown actions taken in Europe compared to North America

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	3

Second Quarter 2020 Financial Highlights

Operating Loss

Improved $2.3 million due to:

• Reduced SG&A expenses
• Higher gross margin of 130 basis points partially offset by higher restructuring costs
• North America returned to profitability, generating $4.8 million of operating income

2Q19 2Q20

Adjusted EBITDA

Improved $3.0 million driven by:

• $8.8 million reduction in constant currency SG&A expenses
• Partially offset by lower total sales and gross profit
• Favorable sales mix of higher acuity products

$8.0

Free Cash Flow

Decreased by $2.1 million due to:

• Increased capital expenditures
• Higher inventory partially offset by higher A/P and payment deferrals

$0.0 ($1.0)

($2.0)

($3.0)+50% ($4.0)

($5.0)($4.5)

($2.2)

$6.6

$6.0

+84%

$4.0$3.6

$2.0

$0.0

2Q19 2Q20

$1.0

2Q19 2Q20

$0.3

$0.0

($1.0)

($2.0)	($1.9)

Transformation initiatives and strong cost containment measures drive improved profitability

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	4

COVID-19: Business Dynamics

Driving Two Patterns of Demand; Phasing of Peak & Return with Recovery

					Respiratory and Beds/Lifestyles
Anatomy of Impact
❑ Strong demand for stationary oxygen concentrators for COVID-19
				Elevated	response; began in late 1Q20 and continues today
	Early ramp in Respiratory		❑ Smaller peak for bed systems - initial strong demand for expanded
		Respiratory demand
	and Bed demand to		continues	medical facilities and post-discharge home care offset by lower
	support COVID-19 care			demand from limited access to residential care facilities and lower
demand				care access	demand for post-elective surgery care. 2Q20 COVID-19 peak has
			❑ Timing of return to more normal sales rates TBD based on course of
				Past COVID-19 bed	passed; residential care facility access and elective procedures
				peak offset by	expected to resume
				limited long-term
normal		2Q20		time	pandemic
		Mobility & Seating
%					❑ Good momentum in 1Q20 driven by power mobility products with
				new product growth and improved commercial effectiveness
					❑ Limited access to clinicians from late-1Q20 for custom fitting
					reduced sales
					❑ Order volume expected to increase as access to clinicians
				Mobility & Seating past	enables custom fittings and deliveries
				bottom as clinic /	All Products
				healthcare access returns
NB - For illustrative purposes only; not drawn to scale	❑ Overall, higher value sales mix due to lower demand of low acuity
products and elective procedures, which were delayed due to
					public health measures
Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	5

2Q20 Transformation Plan Highlights

FINANCIAL HIGHLIGHTS

• Achieved higher year-over-year Adjusted EBITDA for the 11th consecutive quarter, establishing a strong track record of continued improvement
• Realized an 84% improvement in Adjusted EBITDA compared to the prior year, despite the pandemic which reduced net sales
• North America returned to profitability, generating $4.8 million of operating income
• Benefited from previous transformation initiatives, which expanded gross margin by 130 basis points
• Reduced constant currency SG&A by $8.8 million, effectively offsetting the downturn in sales
• Achieved sequential improvement in free cash flow
• Extended the maturity of a significant portion of near-term debt to 2024

BUSINESS OPTIMIZATION & PROCESS IMPROVEMENTS

• IT modernization remains on track in North America
• Plant consolidation in Germany remains on track, with 3rd party warehouse operational

NEW PRODUCT LAUNCHES

• MPS Mini Maxx standing wheelchair
• ASL proportional head array with custom programming
• SMOOV one™ power add-on in the U.S. (Jul)
• Clematis Pro manual chair and new rollators in Europe (Jun-Jul)

PANDEMIC INITIATIVES SUPPORTING CUSTOMERS & DRIVING SALES

• Leveraged remote programming and remote diagnostics capabilities of LiNX™ technology to enable social distancing for the safety of customers, end users and associates
• In conjunction with virtual assessments, launched the Assurance Program, giving customers the confidence to choose Invacare power wheelchairs and guarantee a proper fit
• Introduced PinDot Silhouette Basic, a hands-free method to build custom seating
• Launched a digital catalog, product visualizer and new website in Europe
• Conducted virtual seminars on topical subjects such as infection control and patient safety

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	6

Financial Results

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	7

Key Financial Metrics - Consolidated

Compared to 2Q19

(in millions USD)	2Q20	2Q19	$ Change	% Change
Fav/(Unfav)	Fav/(Unfav)
Net Sales	$196.3	$235.9	$(39.6)	(16.8)%
Constant Currency Net Sales	$201.4	$231.3	$(29.9)	(12.9)%
Gross Profit % of Net Sales	28.9%	27.6%		130 bps
Gross Profit	$56.7	$65.1	$(8.4)	(12.9)%
Reported SG&A	$57.4	$68.3	$10.9	15.9%
Constant Currency SG&A	$58.3	$67.1	$8.8	13.2%
Operating Income (Loss)	$(2.2)	$(4.5)	$2.3	50.4%
Free Cash Flow	$(1.9)	$0.3	$(2.1)	--
Adjusted EBITDA	$6.6	$3.6	$3.0	84.3%

• Constant currency net sales decreased 12.9%
• • Driven by declines in mobility and seating and non-bed lifestyle products
  • Partially offset by growth in respiratory products
• Gross profit increased 130 bps to 28.9%
• • Due to favorable product mix
  • Previously executed cost improvement initiatives
  • Partially offset by unfavorable foreign exchange
• Constant currency SG&A decreased 13.2%, or by $8.8 million
• • Driven by reduced employment costs and commercial expenses
• Operating loss improved by 50.4%, or $2.3 million
• • Driven by reduced SG&A expenses
  • Partially offset by lower net sales and higher restructuring costs
• Adjusted EBITDA improved 84.3%, or by $3.0 million
• • Driven by reduced SG&A expenses
  • Improved gross profit as a percent of net sales
• Free Cash Flow usage increased by $2.1 million
• • Due to increased capital expenditures

Traction from transformation initiatives and lower SG&A

expenses drove improved Adjusted EBITDA

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	8

Consolidated Sales by Product Line

Compared to 2Q19

(in millions USD)	2Q20	2Q19	$ Change	% Change
Fav/(Unfav)	Fav/(Unfav)
Reported Sales	$196.3	$235.9	($39.6)	(16.8%)
Mobility & Seating	$68.6	$100.2	($31.5)	(31.5%)
Lifestyles	$96.2	$108.3	($12.1)	(11.2%)
Respiratory	$25.6	$20.5	$5.1	25.0%
Other	$5.9	$7.0	($1.0)	(15.0%)

Net sales declined due to public health restrictions which limited access to healthcare facilities and elective care. Excluding the impact of foreign currency translation and the divestiture of Dynamic Controls, constant currency net sales declined by 12.9%

• Mobility & Seating
• • Declined across all product categories due to limited access to healthcare facilities
  • Expect sequential growth as quotes and orders in 3Q20 have been higher than the run rate in 2Q20
• Lifestyles
• • Higher sales of bed systems used in expanded medical facilities and for post-discharge home care
  • Offset by limited sales to long-term care facilities where new resident restrictions were in place
• Respiratory
• • Strong demand for stationary oxygen concentrators for COVID-19 response, as well as portable oxygen concentrators
  • Limited by pandemic-related global supply chain challenges

Net sales impacted by public health measures which

limited access to customers and end users

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	9

Segment Performance - Europe

Compared to 2Q19

(in millions USD)	2Q20	2Q19	$ Change	% Change
Fav/(Unfav)	Fav/(Unfav)
Reported Sales	101.9	134.0	(32.1)	(24.0%)
Mobility & Seating	39.6	62.8	(23.1)	(36.9%)
Lifestyles	52.0	60.9	(8.9)	(14.5%)
Respiratory	5.7	5.4	0.2	4.3%
Other	4.6	4.9	(0.3)	(6.7%)

• Constant currency net sales decreased 20.7%
• • Significantly impacted by public health restrictions in certain countries severely limiting access to healthcare professionals and institutions needed for certain product selections
  • Driven by declines in mobility and seating and non-bed lifestyle products
  • Partially offset by growth in bed systems and respiratory products
• Gross profit decreased 90 bps
• • Driven by unfavorable product mix
• Operating income decreased $3.3 million
• • Due to reduced gross profit as a result of lower net sales

Operating Income	2.2	5.5	3.3	(60.3%)	‒	Unfavorable foreign exchange
					‒	Partially offset by reduced SG&A expense including the
						benefit of furloughs and reduced work hours
						implemented to mitigate the negative impact on the
						business as result of the pandemic and gain on sale of a
						German facility

Net sales impacted by strict quarantining

measures in key markets

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	10

Segment Performance - North America

Compared to 2Q19

(in millions USD)	2Q20	2Q19	$ Change	% Change
Fav/(Unfav)	Fav/(Unfav)
Reported Sales	86.6	89.6	(3.0)	(3.3%)
Mobility & Seating	26.3	29.9	(3.6)	(12.0%)
Lifestyles	40.5	44.8	(4.3)	(9.7%)
Respiratory	19.6	14.3	5.3	36.9%
Other	0.2	0.5	(0.3)	(67.6%)
Operating Income (Loss)	4.8	(1.2)	6.1	---

• Constant currency net sales decreased 3.0%
• • Declines in mobility and seating and non-bed lifestyle products partially offset by growth in respiratory products
  • Higher margin power mobility product sales resilient, only experiencing slight decline of 1%
  • Favorable mix shift towards higher acuity products as end users with more severe needs continued to access healthcare, while less urgent, elective care was more often delayed.
• Gross profit increased 230 bps
• • Driven by favorable product mix
  • Lower operational costs including reduced material and freight costs
• Operating income improved by $6.1 million
• • Driven by lower SG&A expenses, primarily in employment costs

Prior transformation initiatives driving significant SG&A

improvement and return to profitability

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	11

Segment Performance - All Other*

Compared to 2Q19

(in millions USD)	2Q20	2Q19	$ Change	% Change
Fav/(Unfav)	Fav/(Unfav)
Reported Sales	7.8	12.3	(4.5)	(36.4%)
Mobility & Seating	2.7	7.5	(4.8)	(64.4%)
Lifestyles	3.7	2.6	1.1	43.8%
Respiratory	0.3	0.7	(0.4)	(56.0%)
Other	1.2	1.6	(0.4)	(24.6%)
Operating Loss*	(7.7)	(7.4)	(0.3)	(4.4%)

* Includes Asia Pacific, unallocated corporate SG&A and intersegment eliminations.

• Constant currency net sales increased 8.1%
• • Excludes reported net sales related to the divesture of Dynamic Controls of $4.6 million in 2Q19, or 37.4%
  • Driven by growth in lifestyle and mobility and seating products
  • Partially offset by declines in respiratory products
• Operating loss increased by $0.3 million
• • Corporate SG&A expense: primarily related to higher equity compensation
  • Asia Pacific: improved operating income from SG&A reduction

Constant currency net sales growth and improved profitability in Asia Pacific

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	12

Balance Sheet Supports Transformation

Debt *

Cash

Total Debt of $319 million

• $37 million drawn on the ABL credit facility and government loan programs
• $254 million in convertible debt
• $28 million of other debt, primarily financing leases

$400

$319

Total Cash increased to $104 million due to:

• Cash borrowed on the company's credit facility
• Proceeds from the sale of Dynamic Controls
• Government loan programs
• Partially offset by cash used to fund operations and cash paid to extend a portion of convertible debt in 2Q20

$120$104

On June 5, 2020, the company extended the debt maturities of a significant portion of its 2021 and 2022 Notes, until November 2024

The company has accessed global government programs to bolster short-term liquidity including the temporary delay of direct and indirect tax payments

The company has a U.S. Federal tax loss carryforward and tax credits in excess of $377 million as of December 31, 2019

$300$283

$100

$80

$200

$100

$80

$60 $40 $20

The company continues to believe that generation of Adjusted EBITDA driven by operational performance, cash balances on hand, and expected free cash flow will support the company's ongoing

$0

12/31/19 6/30/20

$0

12/31/19 6/30/20

transformation plans and enable it to address future debt maturities

• Excludes $15.9 million in operating lease obligations capitalized on the balance sheet as of 6/30/20
  Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020

13

Full Year 2020 Guidance

Based on loosening of public health restrictions and renewed access to

healthcare facilities and the assumptions listed below, the company

anticipates the following:

Full Year 2020 Guidance:

• Reported net sales in the range of $810 to $840 million;
• Adjusted EBITDA similar to 2019, in the range of $27 to $30 million; and,
• Free cash flow usage in line with 2019, in the range of $7 to $10 million.

2020 Assumptions

• Consolidated net sales to improve sequentially, staying less than 2019
• • Europe to recover slowly and below 2019 in the mid-teens
  • North America to be below 2019 in the low single-digits
• Gross margin to reduce modestly on a sequential basis
• Selling expenses to increase sequentially to support higher sales
• Adjusted EBITDA to improve sequentially

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020

$30 $25

$20

$15 $10

$5

$0

$4 ($6)

($16) ($26)

($36)

($46)

($56)

Full Year Adjusted EBITDA

(in millions)

$27 - $30

$28.7

$6.6

2018

2019

2020 Est

Full Year Free Cash Flow

(in millions)

2018	2019	2020 Est
	($8.1)	($7) - ($10)
($52.7)

14

Thank you for your time

Q&A

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	15

Appendix: Reconciliation of Non-GAAP Performance Metrics to GAAP Financial Measures

(Dollars in millions) Net Loss Income Taxes

Income Loss Before Taxes Interest Expense* Interest Income

Net Gain on Convertible Debt Derivatives Operating Loss

Operating Loss

Depreciation and Amortization

Gain on Sale of Business

EBITDA

Restructuring Charges

Stock Compensation

Adjusted EBITDA

2Q19 2Q20

(12.7) (16.6)

2.1 0.7

(10.6) (15.9)

7.7 13.7

(0.1) (0.0)

(1.5) -

(4.5) (2.2)

(4.5) (2.2)

3.9 3.3

• (0.2)

(0.6) 0.8

1.3 1.7

2.9 4.1

3.6 6.6

Non-GAAP Financial Measures

Some of the information in this presentation is derived from the company's consolidated financial data but not presented in its financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered "non-GAAP financial measures" under Securities and Exchange Commission rules. These non-GAAP financial measures supplement the company's GAAP disclosures and should not be considered an alternative to the GAAP measure. The reconciliations to their most directly comparable GAAP financial measures are included in Appendix A. The

company uses non-GAAP financial measures including the following:

• "Adjusted EBITDA", which is EBITDA plus equity compensation and charges related to restructuring activities.
• "Adjusted net loss", which is defined as net earnings (loss) before income taxes net of adjusted income taxes.

Net Cash Provided (Used) by Operating Activities	2.7	6.5
Plus: Sales of Property and Equipment, including advances	(0.0)	(0.4)
Less: Purchases of Property and Equipment	(2.5)	(8.8)
Free Cash Flow	0.3		(1.9)
Reported Net Sales % Change	-4.2%	-16.8%
Less: Foreign Exchange Impact	-4.8%	-1.9%
Less: Impact of Divested Entities	0.0%	-2.0%
Constant Currency Sales % Change	0.6%		-12.9%
Reported SG&A % Change	-7.5%	-15.9%
Less: Foreign Exchange Impact	-3.7%	-1.0%
Less: Impact of Divested Entities	0.0%	-1.7%
Constant Currency SG&A % Change	-3.8%		-13.2%

* includes loss on debt extinguishment including fin charges & fees

• "Constant currency net sales", which is net sales excluding the impact of foreign currency translation and divestiture.
• "Constant currency SG&A", which is SG&A excluding the impact of foreign currency translation and divestiture.
• "EBITDA", which is net earnings (loss) from continuing operations plus: income taxes, interest expense-net, net gain or loss on debt extinguishment including debt financing charges and fees, net gain or loss on convertible debt derivatives, gain/loss on sale of business, asset write-downs related to intangible assets, and depreciation and amortization.
• "Free cash flow", which is net cash provided (used) by operating activities less purchases of property and equipment plus proceeds, including the advances from sales of property and equipment.

Invacare 2Q20 Earnings Release Conference Call Webcast Slides - August 6, 2020	16