Coming off of recent leadership changes — and witnessing a key competitor’s exit from the oxygen segment — has Inogen’s (Nasdaq: INGN) C-suite feeling bullish on its 2024 outlook.
New President and CEO Kevin R. Smith spoke about those and other topics during the company’s fourth-quarter call at the end of February.
Smith’s first Inogen financial results call came approximately three months after he took over the CEO position, a time he said he’s spent learning about Inogen’s history, portfolio and business challenges.
Positioning Inogen for future growth
Headquartered in Goleta, California, Inogen is a global medical technology company focused on respiratory products for use in the home-care setting.
“During my first months as CEO, I have observed and reflected on the strengths and challenges within our business, seeking substantial internal and external feedback regarding our portfolio, strategy, sales structure, field organization and performance,” Smith said during the Feb. 27 call. “I have spent much of my time visiting our global teams, investors and management to understand the company from its roots.
“From my conversations with our leaders, I have immense confidence in the opportunity ahead of the company and our capability to make improvements across the business,” he added.
Smith noted that welcoming Chief Commercial Officer Greg Ramade in January and new CFO Michael Bourque this week has strengthened the company for the future.
“A top priority is positioning the business for revenue growth,” Smith said. As an example, he discussed Physio-Assist, which Inogen acquired in September and for which Inogen is now seeking regulatory clearance for the U.S. market.
Inogen described Physio-Assist’s Simeox as a “technology-enabled airway clearance and mucus management device predominantly aimed at treating bronchiectasis, which is a condition that presents as the lung’s bronchi are damaged and widened, in patients with cystic fibrosis or chronic obstructive pulmonary disease.”
Smith added that Inogen is working “to make our products more accessible, mobile and effective.”
This includes innovation within the company’s digital health portfolio, he explained.
“Inogen devices are known for their superior patient compliance, monitoring and diagnostic capabilities,” the CEO said. “And we know that continued investment in our platforms to improve their ease of use and cost effectiveness can take us even further with our business-to-business partners, further establishing patient and provider preference and loyalty.”
By the numbers: Inogen’s financial performance
Earnings wise, Inogen’s total revenue for the fourth quarter of 2023 “was $75.9 million, a decrease of 13.8% versus the prior year period,” said Inogen Interim CFO Michael K. Sergesketter.
“The decline was primarily driven by a decrease in domestic business-to-business sales and direct-to-consumer sales, partially offset by higher rental revenue,” he said. “Domestic business-to-business revenue decreased 33.6% to $18.1 million in the fourth quarter of 2023, compared with $27.2 million in the comparable period driven by competitive pricing pressure, increased cost of capital, and HME expense management.”
Sergesketter added that Inogen’s international business-to-business revenue increased 4% in the fourth quarter to $21.5 million, compared to $20.7 million in the prior year period, “primarily driven by the addition of Physio-Assist Simeox sales revenue, partially offset by competitive pricing pressure and an increasing cost of capital.”
Rental revenue also increased in the last quarter of 2023 compared to the same quarter the year before. Fourth-quarter 2023 rental revenue was $16.5 million, an increase of 10.6%, “driven primarily by an increase in the number of patients on service,” Sergesketter said.
For the full year of 2023, Inogen’s total revenue was $315.7 million, a decrease of 16.3% compared to the prior year period.
“The decrease was driven by declines in direct-to-consumer sales, as well as domestic and international business-to-business sales, partially offset by higher rental revenue,” Sergesketter said.
Sergesketter added that Inogen’s Generally Accepted Accounting Principles (GAAP) net loss for the year was $102.4 million. In 2022, Inogen’s GAAP net loss was $83.8 million. Adjusted EBITDA for 2023 was a negative $37.8 million versus a negative $13.5 million for 2022.
“We expect first-quarter 2024 revenue of $73 million to $74 million, reflecting growth of 1% to 3% compared to the first quarter of 2023,” Sergesketter said.
Smith comments on Philips Respironics’ exit
While not mentioning Philips Respironics by name, Smith said he wanted to address “the news of a recent competitor exiting the market.”
“Due to this development, we are seeing some volatility in the domestic business-to-business channel, but we also see the potential opportunity to capitalize on a market leadership, differentiated product offering and brand recognition,” Smith said. “We expect that there may be a void in the market, and if so, we will be ready to step in and fill it.”
Philips announced on Jan. 29 that it had agreed to terms of a U.S. Food & Drug Administration (FDA) consent decree, and that it would not sell new CPAP or BiPAP sleep therapy devices or other respiratory care devices in the U.S.
Several days earlier, Philips said it was reducing its product portfolio and “will not return to the sale of hospital ventilation products, certain home ventilation products, portable and stationary oxygen concentrators and sleep diagnostic products.”
Those developments followed a Philips voluntary recall in June 2021 of CPAP, BiPAP, and mechanical ventilator products that used polyester-based polyurethane foam, which, when degraded, could be inhaled or ingested by device users.
“With the exits from the market both on the SOC [stationary oxygen concentrator] and POC [portable oxygen concentrator] business, we do see that there is a shift in dynamics there,” Smith said in response to a question from an analyst on the earnings call. “We are closely monitoring that. We believe that there [are] going to be opportunities for us, and we’re putting ourselves in position to be able to take advantage as they present themselves. But it’s not a light switch. This isn’t a windfall. This is something that is going to present itself over time. We’re focused on those opportunities.”
2024 to be ‘a new chapter’ for Inogen
Smith concluded by calling this year “a new chapter” for Inogen.
“I remain optimistic for the future, and I’m excited to welcome the new additions to our management team,” Smith said. “Our products are trusted and reliable. Our innovation pipeline is robust, and we have a particularly exciting opportunity to increase our ability to impact patients’ lives with the recent addition of Physio-Assist to our portfolio.
“While there’s much work to be done, our team is equipped to handle the challenges ahead.”