Invacare : 3Q20 Earnings Release Webcast Slides – 10.30.20

Invacare Corporation

Third Quarter 2020 Conference Call Webcast

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 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 third 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 September 30, 2020, unless otherwise noted.

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	2

Driving Results Amidst COVID-19

• Achieved 12th consecutive quarter of year-over-year, as well as sequential improvement in Adjusted EBITDA
• As guided, realized sequential net sales improvement
• • Double-digitincrease in Europe, driven by mobility and seating products
  • Continued strength of respiratory products drove both year-over-year and sequential growth in North America
• Timing of U.S. mobility and seating sales impacted by longer quote-to-order cycle dynamic:
• • Limited access to healthcare professionals and institutions needed for fittings impacted quotes in 2Q20, resulted in lower sales in 3Q20
  • Significantly higher quotes in 3Q20 are expected to convert to higher sales in 4Q20
• Maintained lower SG&A expenses, which more than offset lower gross profit due to reduced net sales compared to prior year, and normalization of product mix sequentially
• Retired $24.5 million in convertible notes, leaving less than $1.3 million due in February 2021
• With confidence in execution, raising guidance for 2020

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	3

Third Quarter 2020 Financial Highlights

Operating Income	Adjusted EBITDA	Free Cash Flow
⇧ $0.5 million YOY driven by:	⇧ $0.2 million YOY driven by:	⇩ $14.1 million YOY due to:

- Reduced SG&A expenses	- $7.8 million reduction in constant
- Partially offset by lower gross profit	currency SG&A expenses substantially
- Ongoing North American strength with	offset by lower gross profit reduced
operating income of $3.0 million	net sales

⇧ $5.2 million sequentially driven by:	⇧ $3.2 million sequentially driven by:
- Higher net sales	- Higher net sales primarily in Europe
- Reduced SG&A expenses	- Reduced SG&A expenses

• • Net cash used for operating activities to support working capital needs
• $0.1 million sequentially driven by:
• • Higher profitability
  • Lower inventory
  • Offset by increased working capital

		$2.9	$10.0	$9.6	$9.8
$3.0
$2.4
		$8.0
$2.0			$6.0
		+21%	$4.0		+3%
$1.0
		$2.0
$0.0	3Q19	3Q20	$0.0	3Q19	3Q20

$12.0$12.3

$7.0

$2.0

($3.0)		($1.8)
3Q19	3Q20

Sequential improvement in net sales and strong cost containment measures drove improved profitability

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	4

COVID-19: Business Dynamics

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

Anatomy of Impact

Early ramp in Respiratory and Bed demand to support COVID-19 care

demand
normal%	1Q20	2Q20	3Q20

Elevated Respiratory demand continues

Past COVID-19 bed peak offset by limited long-term care access

time

Respiratory

• Above-normaldemand for stationary oxygen concentrators for COVID-19 response continued through 3Q20
• Winter COVID-19 resurgence still affecting profile of elevated demand

Lifestyle/Beds

• 2H20 demand for bed and other lifestyle products reflect mix shift from limited access to long-term care facilities and more at-home care during pandemic restrictions

Mobility & Seating

• Europe - easing of healthcare restrictions and shorter quote-order cycle resulted in sequential improvement in 3Q20 sales
• North America - easing of healthcare restrictions resulted in increased quote volume, which delays sales increase into 4Q20
• New product launches continue to drive increased interest

Mobility & Seating past bottom as clinic / healthcare access returns

NB - For illustrative purposes only; not drawn to scale

Outlook

• While overall access to healthcare is expected to improve during the winter months, intermittent pandemic-related closures may occur
• Sales patterns anticipated to evolve as planned

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	5

3Q20 Transformation Plan Highlights

FINANCIAL HIGHLIGHTS

Compared to Prior Year

• Achieved higher year-over-year Adjusted EBITDA for the 12th consecutive quarter, as transformation initiatives are yielding continued improvement
• Reduced constant currency SG&A by $7.8 million
• Operating income improved by 21.2%
• Realized a 2.5% improvement in Adjusted EBITDA

Sequential

• Constant currency net sales improved by 4.3%, driven by mobility and seating products
• Reduced constant currency SG&A by $3.4 million, including lower stock compensation expense
• Achieved nearly 49% improvement in Adjusted EBITDA

Balance Sheet

• Retired $24.5 million in convertible notes, leaving less than $1.3 million due in February 2021

BUSINESS OPTIMIZATION & PROCESS IMPROVEMENTS

• IT modernization remains on track in North America with the first go-live in 4Q20
• Plant consolidation in Germany remains on track for completion in 2020

PRODUCT LAUNCHES

• Europe
• • Rea Clematis® Pro passive manual wheelchair
  • Product refresh/update in multiple products
• North America
• • SMOOV one™ power add-on
  • MATRX ® E2™ Back Series seating system
  • New remote marketing campaign with emphasis on AVIVA™ FX and MPS Mini Maxx power wheelchairs with standing capabilities

AWARDS

• Winner in multiple categories for product excellence from a broad North America-based industry publication, including the AVIVA FX and MPS Mini Maxx power wheelchairs, and the SMOOV one power add-on
• ASL division recognized by an expert rehabilitation organization for its contributions to advancements in assistive technology and rehabilitation engineering

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	6

Financial Results

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	7

Key Financial Metrics - Consolidated

Compared to 3Q19

	(in millions USD)	3Q20	3Q19	$ Change	% Change
	Fav/(Unfav)	Fav/(Unfav)
	Net Sales	$211.9	$235.8	($23.9)	(10.1%)
	Constant Currency Net Sales*	$208.8	$232.0	($23.2)	(10.0%)
	Gross Profit % of Net Sales	28.3%	28.7%	--	(40 bps)
	Gross Profit	$60.0	$67.6	($7.5)	(11.2%)
	Reported SG&A	$55.5	$63.5	$8.0	12.6%
	Constant Currency SG&A*	$54.7	$62.5	$7.8	12.5%
	Operating Income	$2.9	$2.4	$0.5	21.2%
	Adjusted EBITDA	$9.8	$9.6	$0.2	2.5%
	Free Cash Flow	($1.8)	$12.3	($14.1)	--
* Based on 3Q19 FX rates

• Constant currency net sales decreased 10.0%
• • Due to lower sales of mobility and seating and lifestyle products
  • Partially offset by growth in respiratory products
• Gross profit decreased 40 bps to 28.3%
• • Due to unfavorable manufacturing variances as a result of reduced net sales
• Constant currency SG&A decreased 12.5%, or by $7.8 million
• • Driven by reduced employment costs and commercial expenses
  • Favorable foreign exchange transactions
• Operating income improved by 21.2%, or by $0.5 million
• • Driven by reduced SG&A expenses
• Adjusted EBITDA improved 2.5%, or by $0.2 million
• Free Cash Flow usage increased by $14.1 million
• • Due to operating activities to support working capital needs

Cost savings initiatives support improved profitability as sales momentum rebuilds

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	8

Key Financial Metrics - Consolidated Sequential

Compared to 2Q20

	(in millions USD)	3Q20	2Q20	$ Change	% Change
	Fav/(Unfav)	Fav/(Unfav)
	Net Sales	$211.9	$196.3	$15.6	8.0%
	Constant Currency Net Sales*	$204.8	$196.3	$8.5	4.3%
	Gross Profit % of Net Sales	28.3%	28.9%	--	(60 bps)
	Gross Profit	$60.0	$56.7	$3.4	6.0%
	Reported SG&A	$55.5	$57.4	$1.9	3.3%
	Constant Currency SG&A*	$54.0	$57.4	$3.4	6.0%
	Operating Income (Loss)	$2.9	($2.2)	$5.2	--
	Adjusted EBITDA	$9.8	$6.6	$3.2	48.7%
	Free Cash Flow	($1.8)	($1.9)	$0.1	3.2%
* Based on 2Q20 FX rates

• Constant currency net sales increased 4.3%, or by $8.5 million
• • Driven by increased sales of mobility and seating products, including 30.4% growth in Europe
  • Partially offset by lower sales of lifestyle products
• Gross profit decreased 60 bps to 28.3%
• • Due to unfavorable manufacturing variances as a result of reduced net sales
  • Expected normalization to lower acuity products as elective care resumed
• Constant currency SG&A decreased 6.0%, or by $3.4 million
• • Driven by lower stock compensation expense
• Operating income improved by $5.2 million
• • Driven by reduced SG&A expenses
• Adjusted EBITDA improved 48.7%, or by $3.2 million
• • Driven by increased gross profit and reduced SG&A expenses

Rebounding sales and lower SG&A expenses drove improved Adjusted EBITDA

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	9

Consolidated Sales by Product Line

Compared to 3Q19

			YOY $	YOY %		Seq.%
(in millions USD)	3Q20	3Q19	Change	Change	2Q20	Change
Fav/	Fav/	Fav/
			(Unfav)	(Unfav)		(Unfav)
Reported Sales	$211.9	$235.8	($23.9)	(10.1%)	$196.3	8.0%
Mobility & Seating	$84.1	$106.2	($22.1)	(20.8%)	$68.6	22.5%
Lifestyle	$95.5	$105.8	($10.3)	(9.7%)	$96.2	(0.7%)
Respiratory	$25.7	$17.2	8.5	49.2%	$25.6	0.4%
Other	$6.6	$6.6	0.0	0.5%	$5.9	12.0%

• Mobility & Seating
• • Increased sequentially driven by rebounding sales in Europe
  • North America flat due to lower 2Q20 quotes and longer quote-to-order cycle dynamic in the U.S.
  • Higher quote activity in North America for 3Q20 expected to convert into stronger 4Q20 sales
• Lifestyle
• • Lower sales of bed and bed-related products as 2Q20 demand higher impacted by pandemic
• Respiratory
• • Continued elevated demand for stationary oxygen concentrators for COVID-19 response
  • Overcoming global supply chain challenges and expect higher demand to persist with pandemic

Anticipate stronger mobility and seating sales sequentially driven by easing public health restrictions

and conversion of 3Q20 quotes in North America

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	10

Segment Performance - Europe

Compared to 3Q19

			YOY $	YOY %		Seq.%
(in millions USD)	3Q20	3Q19	Change	Change	2Q20	Change
Fav/	Fav/	Fav/
			(Unfav)	(Unfav)		(Unfav)
Reported Sales	$116.3	$137.4	($21.1)	(15.3%)	$101.9	14.1%
Mobility & Seating	$54.9	$68.3	($13.4)	(19.7%)	$39.6	38.4%
Lifestyle	$50.3	$59.4	($9.1)	(15.3%)	$52.0	(3.3%)
Respiratory	$6.1	$4.9	$1.2	23.4%	$5.7	6.9%
Other	$5.1	$4.8	$0.3	6.2%	$4.6	11.1%
Operating Income	$7.6	$11.4	($3.8)	(33.1%)	$2.2	249.6%

Note: the numbers in the table above reflect reported sales; for the definition of constant currency net sales and constant currency sequential net sales, refer the footnotes in the 3Q20 earnings release

• Reported net sales decreased 15.3% and constant currency net sales decreased 17.5% vs. prior year
• • Due to lower sales of mobility and seating and lifestyle products
• Reported sequential net sales increased 14.1% and constant currency sequential net sales increased 8.0%
• • Driven by higher sales of mobility and seating and respiratory products
  • Partially offset by lower sales of lifestyle products
• Gross profit decreased 230 bps
• • Due to reduced net sales and unfavorable manufacturing variances, both impacted by the pandemic
• Operating income decreased $3.8 million vs prior year
• • Due to reduced gross profit as a result of lower net sales
  • Partially offset by lower SG&A expense
  • Significant improvement sequentially driven by higher net sales

Sequential improvement in net sales driven by strong sales of mobility and seating products

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	11

Segment Performance - North America

Compared to 3Q19

			YOY $	YOY %		Seq.%
(in millions USD)	3Q20	3Q19	Change	Change	2Q20	Change
Fav/	Fav/	Fav/
			(Unfav)	(Unfav)		(Unfav)
Reported Sales	$88.1	$87.1	$0.9	1.1%	$86.6	1.7%
Mobility & Seating	$26.6	$31.3	($4.7)	(15.0%)	$26.3	0.9%
Lifestyle	$41.8	$43.4	($1.6)	(3.6%)	$40.5	3.3%
Respiratory	$19.4	$12.1	$7.3	60.3%	$19.6	(0.9%)
Other	$0.2	$0.4	($0.1)	(34.7%)	$0.2	49.4%
Operating Income	$3.0	($1.7)	$4.7	--	$4.8	(37.8%)
(Loss)

Note: the numbers in the table above reflect reported sales; for the definition of constant currency net sales and constant currency sequential net sales, refer the footnotes in the 3Q20 earnings release

• Reported net sales increased 1.1% and constant currency net sales increased 1.2%
• • Growth in respiratory products offset lower sales of mobility and seating and lifestyle products
  • As a result of the long quote-to-order cycle in the U.S., lower quotes in 2Q20 for mobility and seating products resulted in a 14.9% reduction in sales due to timing
• Reported sequential net sales increased 1.7% and constant currency sequential net sales increased 1.3%
• • Driven by growth in lifestyle products
  • Mobility and seating products increased 0.2% on a constant currency basis; significantly higher quote activity in 3Q20 expected to convert into stronger 4Q20 sales
• Gross profit increased 170 bps
• • Driven by higher net sales and reduced material and freight costs
  • Partially offset by unfavorable variances and higher warranty expenses
• Operating income increased $4.7 million
• • Driven by lower SG&A expenses
  • Increased gross profit

Continued growth in respiratory products driving sequential increase in net sales

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	12

Segment Performance - All Other*

Compared to 3Q19

			YOY $	YOY %		Seq.%
(in millions USD)	3Q20	3Q19	Change	Change	2Q20	Change
Fav/	Fav/	Fav/
			(Unfav)	(Unfav)		(Unfav)
Reported Sales	$7.6	$11.3	($3.7)	(33.0%)	$7.8	(3.5%)
Mobility & Seating	$2.7	$6.6	($4.0)	(59.8%)	$2.7	0.7%
Lifestyle	$3.4	$3.0	$0.4	12.5%	$3.7	(8.0%)
Respiratory	$0.2	$0.2	$0.0	11.4%	$0.3	(38.1%)
Other	$1.3	$1.5	($0.1)	(9.4%)	$1.2	10.4%
Operating Loss	($6.1)	($5.6)	($0.5)	(8.1%)	($7.7)	21.4%

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

Note: the numbers in the table above reflect reported sales; for the definition of constant currency net sales and constant currency sequential net sales, refer the footnotes in the 3Q20 earnings release

• Constant currency net sales decreased 3.1%
• • Excludes reported net sales of $3.7 million in 3Q19, or 33.1%, related to the divesture of Dynamic Controls
  • Sales of mobility and seating products continue to be impacted by the pandemic
  • Partially offset by higher sales of lifestyle products
• Operating loss increased by $0.5 million
• • Due to lower operating profit as a result of the Dynamic Controls divestiture in 1Q20
  • Improved sequentially by $1.7 million primarily driven by reduced stock compensation expense

Sequential improvement in operating loss due to management of SG&A expenses

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	13

Balance Sheet Supports Transformation

Debt *

Cash

Total Debt of $273 million comprised of:

• $42 million drawn on the ABL credit facility and government loan programs
• $231 million in convertible debt

$300	$254	$273
$250

$200

$150 $100 $50

Total Cash increased to $87 million due to:

• Cash borrowed on the company's credit facility
• Proceeds from the sale of DCL
• Government loan programs
• Offset by cash used to retire convertible notes and to extend the maturity of a portion of convertible notes to 2024 and
• Cash used to fund operations

$100	$80	$87
$80
$60
$40
$20

In 3Q20, the company retired $24.5 million of convertible notes due in 2021, leaving less than $1.3 million maturing in February 2021

In 2Q20, 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

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 transformation

$0

12/31/19 9/30/20

$0	12/31/19	9/30/20

plans and enable it to address future debt maturities

• Excludes $80.3 million in operating and financing leases obligations as of 9/30/20 and $47.8 million as of 12/31/19

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020

14

Full Year 2020 Guidance

Based on continuing access to healthcare facilities without new public health restrictions, and adoption of new products, the company now anticipates the following:

Full Year 2020 Guidance:

• Reported net sales of at least $840 million, up from the previous range of $810 to $840 million;
• Adjusted EBITDA in the range of $28 to $32 million, up from the previous range of $27 to $30 million; and,
• Free cash flow usage in the range of $8 to $12 million, changed from the previous range of usage of $7 to $10 million.

4Q20 Assumptions

• Consolidated net sales to improve sequentially and lower than 4Q19
• • Europe to recover slowly and below 4Q19 in the mid-teens
  • North America to be below 4Q19 in the low single-digits
• Selling expenses to increase sequentially to support higher sales
• Free cash flow impacted by timing of cash collections from higher sequential sales

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020

$35 $30 $25 $20 $15 $10

$5 $0

$4

($6)

($16)

($26)

($36)

($46)

($56)

Full Year Adjusted EBITDA

(in millions)

$28 - $32

$28.7

$6.6

2018

2019

2020 Est

Full Year Free Cash Flow

(in millions)

201820192020 Est

($8.1)

($8) - ($12)

($52.7)

15

Key Takeaways

• Delivered 12th consecutive quarter of year-over-year improvement in Adjusted EBITDA
• Overcame multiple challenges since the beginning of the pandemic
• • Mitigated global supply chain challenges
  • Found innovative ways to engage with customers remotely
  • Balanced lower sales with durable cost reductions
• New product pipeline continues unabated
• Key transformation initiatives remain on track
• Increased financial flexibility by addressing the significant majority of convertible notes due 2021

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	16

Thank you for your time

Q&A

Invacare 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	17

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

(Dollars in millions)	3Q19		2Q20		3Q20
Net Loss	(8.0)	(16.6)	(7.3)
Income Taxes	3.3	0.7	2.1
Loss Before Taxes	(4.7)		(15.9)		(5.2)
Interest Expense*	7.3	13.7	8.2
Interest Income	(0.1)	(0.0)	(0.0)
Operating Income (Loss)	2.4		(2.2)		2.9
Operating Income (Loss)	2.4	(2.2)	2.9
Depreciation and Amortization	4.0	3.3	3.7
Gain on Sale of Business	-	(0.2)	-
EBITDA	6.4	0.8	6.6
Restructuring Charges	1.6		1.7		1.6
Stock Compensation	1.6	4.1	1.6
Adjusted EBITDA	9.6		6.6		9.8
Net Cash Provided by Operating Activities	15.1	6.5	4.1
Plus: Sales of PPE, including advances	(0.0)	(0.4)	(0.0)
Less: Purchases of Property and Equipment	(2.9)	(8.8)	(5.9)
Free Cash Flow	12.3		(1.9)		(1.8)
Reported Net Sales % Change	-3.6%	-16.8%	-10.1%
Less: Foreign Exchange Impact	-2.7%	-1.9%	1.5%
Less: Impact of Divested Entities	0.0%	-2.0%	-1.6%
Constant Currency Sales % Change	-0.9%		-12.9%		-10.0%
Reported SG&A % Change	-9.2%	-15.9%	-12.6%
Less: Foreign Exchange Impact	-1.6%	-1.0%	1.5%
Less: Impact of Divested Entities	0.0%	-1.7%	-1.6%
Constant Currency SG&A % Change	-7.6%		-13.2%		-12.5%

* includes loss on debt ext inguishment including financing charges & fees

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 points 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 the company's earnings press release for the third quarter

2020. The company uses non-GAAP financial measures including the following:

• "Adjusted EBITDA" - EBITDA plus equity compensation and charges related to restructuring activities.
• "Constant currency net sales" - net sales excluding the impact of foreign currency translation and divestiture.
• "Constant currency sequential net sales" - a given quarter's net sales compared to the most recent prior quarter's net sales with each quarter's net sales translated using the prior quarters foreign exchange rates.
• "Constant currency SG&A" - SG&A excluding the impact of foreign currency translation and divestiture.
• "Constant currency sequential SG&A" - a given quarter's SG&A expense compared to the most recent prior quarter's SG&A expense with each quarter's SG&A expense translated using the prior quarters foreign exchange rates.
• "EBITDA" - 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" - 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 3Q20 Earnings Release Conference Call Webcast Slides - October 30, 2020	18