Inogen’s “great progress” in the third quarter of 2024 was led by strong portable oxygen concentrator (POC) sales, CEO Kevin Smith said in the company’s (Nasdaq: INGN) Nov. 7 earnings call.
“I am pleased to share that we are making great progress against our strategic initiatives, beginning with our progress on driving topline growth,” Smith said in his opening comments on the call. “In the third quarter, we delivered on this objective by achieving $89 million in total revenue, reflecting 6% year-over-year growth.
“Our performance was led by strong POC sales through our business-to-business channels, where we drove over 20% year-over-year revenue growth for the second consecutive quarter. We continue to expand our relationships with new and existing customers as patients and providers increasingly recognize the benefits that our solutions provide over other oxygen therapies and appreciate our quality, ease of servicing and eight-year service life. In particular, we are having success taking and expanding share within the accounts of some of our largest customers.”
Direct-to-consumer sales still down
Smith added that Inogen’s direct-to-consumer (DTC) sales continue to face challenges.
“We saw year-over-year declines as we continue to operate with a downsized and streamlined sales force,” Smith said. “Although our revenue is down, we are pleased that this channel is becoming more profitable as a result of our cost structure and careful management.
“As we complete our first full year with a smaller team and move into 2025, we anticipate better year-over-year performance. DTC is a core part of our business model, and we are working diligently to bring it back to growth.”
He added that Inogen’s patient-first program will continue to be a significant part of the company’s DTC strategy. “We continue to advance our previously announced hospital and patient-first pilot programs,” Smith said. “On the patient-first pilot, we are still in the process of expanding the program out, but we are pleased with the effects we have seen thus far and anticipate it will be fully rolled out in the first half of 2025.
“Our hospital pilot is still being evaluated for effectiveness, and we will share updates as they become available. These programs, along with a host of other improvements we have made to the organization’s structure and strategy, are a large part of our efforts to reposition Inogen for long-term, sustainable and profitable growth.”
Progress on achieving profitability
Smith said Inogen “generated $3 million of positive cash flow, strengthening our already resilient balance sheet. This marks our second consecutive quarter of positive cash flow, a testament to our team’s focus on ensuring every dollar spent is being allocated to position Inogen for growth.”
The company is expected to end 2024 “with an adjusted EBITDA loss.” But the CEO added, “We also achieved a second consecutive quarter of adjusted EBITDA profitability. This is proof that our strategy, portfolio and team can achieve long-term profitability.
“Part of our efforts to achieve this long-term profitability have been through our initiatives to improve gross margin. These include second sourcing our raw materials to ensure we are reducing costs, production streamlining and implementing even more rigorous quality control to minimize defects and product returns. Programs like these are just one part of our strategy, but we are seeing the benefits paying off and continue to expect to see this going into next year.”
Smith also praised the October introduction of the Rove 4 POC.
“Weighing less than 3 lbs., the Rove 4 delivers power and performance in the lightest weight and highest oxygen output for setting POC on the market,” he said. “Alongside this are new features, including up to 840 milliliters of medical-grade oxygen per minute and up to five hours and 45 minutes of battery life. These innovations advance our mission to deliver the highest quality of life possible for patients, allowing them to remain ambulatory for as long as possible while undergoing oxygen therapy.”
CFO Borque shares third-quarter numbers
Michael Borque, who became Inogen’s chief financial officer in January, said third-quarter revenue was $88.8 million, “an increase of 5.8% compared to the prior year. The increase was primarily driven by higher domestic and international business-to-business sales, partially offset by lower direct-to-consumer sales and rental revenue.”
Borque added that DTC sales “decreased 23.2% to $19.2 million from $25.1 million in the prior period, as we continued to operate with a smaller and more efficient team. As Kevin mentioned, we look forward to completing our first full year with this team in place and positioning the DTC business for better performance into the years ahead.
“Domestic business-to-business revenue increased 35.1% to $23.4 million versus $17.3 million in the comparable period, driven by increased demand from new customers and resellers. International business-to-business revenue increased 26.2% to $32.3 million, compared to $25.6 million in the prior period, primarily driven by increased demand with new and existing customers.”
Based on third-quarter numbers, “We are raising our full year 2024 revenue expectations to be within $329 million to $331 million, reflecting approximately 4% to 5% year-over-year growth,” Borque added.
“I am thrilled with the progress we have made thus far,” Smith said, pointing out that November 2024 marked his one-year anniversary at Inogen. “There’s much work to be done, but our team is performing at a high level and I’m very optimistic for what the end of 2024 and 2025 holds in store for Inogen.”
