Inogen acknowledged an uptick in its home respiratory business in light of a competitor’s exit, and said it was prepared to “capitalize on potential outstanding customer demands as the year goes on.”
Those comments were made by Inogen President/CEO/Director Kevin R. Smith during the Goleta, California, company’s May 7 earnings call.
While Smith didn’t mention the competitor by name, he said, “At this time, we have seen very modest tailwinds as a result of that exit,” presumably referring to Philips Respironics, which agreed to the terms of a U.S. Food & Drug Administration (FDA) consent decree on Jan. 29.
Under the consent decree, Philips agreed not to sell new CPAP or BiPAP sleep therapy or respiratory care devices in the United States. A few days earlier, on Jan. 25, Philips Respironics said it was reducing its product portfolio and “would not return” to selling home ventilation products, portable and stationary oxygen concentrators, and sleep diagnostic products.
“We are closely monitoring U.S. market trends and are prepared to fill any gaps that may arise,” Smith said.
Discussing Inogen’s business priorities
Smith — who started out the call by welcoming Executive VP/CFO Michael J. Bourque to the company — said of the company’s priorities, “First, we endeavor to position for sustainable top-line growth by evaluating and improving our sales and rental strategies, while strengthening our relationships with distributors and stakeholders.
“We had many positive discussions with our business-to-business partners in the first quarter, some of which led to the completion of new sales agreements. We will continue to focus on developing fruitful relationships and building awareness of our market-leading portable oxygen concentrators [POCs] with partners across the globe.”
Smith said Inogen also continues efforts “to reduce friction, increase synergies and efficiencies across our sales channels.”
The company’s second major goal is to “remain focused on establishing and advancing our path to profitability,” Smith said. “As part of our efforts to better manage our cost and margin profile, we recently made the calculated decision to target hospitals in addition to individual practitioners through our rental business. By expanding our scale, efficiency and throughput in the rental channel, we anticipate driving higher profitability over time.”
Another focus is growing Inogen’s direct-to-consumer (DTC) business. “We have materially downsized our DTC team on a year-over-year basis, and we have now achieved a healthy organization size and are beginning to see improving productivity per rep,” Smith said.
Innovations on the horizon
Smith said Inogen is “diligently focused” on innovation, including “supplementing our current market-leading POCs with necessary software and accessories to ensure a best-in-class provider and patient experience.”
The company is also in talks with the FDA regarding an American rollout for Physio-Assist. Physio-Assist manufactures Simeox, a technology-enabled airway-clearance and mucus management device to treat bronchiectasis, a common condition in patients with cystic fibrosis or chronic obstructive pulmonary disease.
Inogen announced its acquisition of Physio-Assist in September. “We look forward to bringing this product to the U.S. market in the future,” Smith said of Simeox.
Earnings numbers edge upward
New CFO Michael J. Bourque reported Inogen’s total first-quarter revenue was $78 million, up 8.1% compared to the first quarter last year.
“The increase was primarily driven by higher international and domestic business-to-business sales as a result of increased volumes from existing and new customers during the quarter,” Bourque said.
“Direct-to-consumer sales decreased 15.6% to $20.5 million from $24.3 million in the prior period, driven primarily by lower representative head count, partially offset by increased average selling prices and increased unit volume per rep,” Bourque added. “Domestic business-to-business revenue increased 31.3% to $16.5 million compared with $12.6 million in the comparable period, driven by new customer business and increased demand from resellers.”
International business-to-business revenue was up 37.2% to $26 million, from $19 million in the prior period. “Our year-over-year growth in this channel was primarily driven by higher sales volumes to existing customers. Rental revenue decreased 8.3% to $14.9 million from $16.3 million in the prior period, primarily driven by a higher mix of lower private payer reimbursement rates and higher rental revenue adjustments.”
Regarding revenue expectations for Q2, Bourque said, “We’re continuing to make progress on our strategic priorities for the second quarter, including our ongoing work to evaluate and optimize some dynamics in our sales and rental channels. Based on trends in our business today, we expect total sales to be $81 million to $84 million in the second quarter. We anticipate providing guidance for the back half of 2024 on our second quarter earnings call.”
“I’m pleased that our organization made meaningful steps in the right direction during the first quarter,” Smith added. “Our resilience and progress are a testament to the strength of our team at Inogen. We recognize there is much work to be done, but we will continue to execute against our strategic goals and remain excited about the future.”