INGN - Earnings call transcript Q1 2019

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Operator

Good day and welcome to the Inogen 2019 First Quarter Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s, presentation there will be an opportunity to ask question. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matt Bacso, Investor Relations Manager. ahead. go Please

Matt Bacso

participating for call. Thank in you today's

earnings me and Co-Founder, Inogen results available the XXXX. in CEO, are Relations corporate Inogen company’s is CFO and for website. This of quarter of Wilkinson; the Scott first and Ali currently financial Inogen’s presentation Joining released from release section Bauerlein. the Investor today, Earlier

strategy for As changes, strategy our tender all bidding, of competitive marketing growth such expectations about statements, Inogen the expectations, in including a financial rollout reminder, The changes, guidance regarding One in forward-looking involve statements the of Actual based tariffs, set Chinese personnel HME the hiring timing the strategy sales impact the sales, for information and channels, GX, of expectations Securities and required that and presented including this XXXX on international strategy to expectations as law. our be expectations, us. these call are are currently we an and forward-looking in and today filed risks changes, any update of disclaim only beyond, are rental will include forward-looking and prospects may impact with reports activity, statements These available predictions detail and may vary, Commission. to statements, uncertainties results statements by Exchange for except information forward-looking and recent periodic most obligation more XXXX. forth and

presentation first company’s investor information. files our We more website. these and to in Investor have refer for Relations posted financial historical of Please quarter the section the statements detailed

in and Inogen’s excluding information that are in measures, GAAP a present non-GAAP evaluate information Reconciliations our results. for U.S. GAAP useful believes financial non-GAAP manage certain and tables Management we non-GAAP both of results earnings release. make operating other conjunction call, uses business also the internally measures understand, presented will on our the financial and indicative items by decisions. management between with core During Management U.S. and financial non-cash investors measures, taken provide to non-GAAP are basis. and not expenses that operating within certain

we discussed reconciliation guidance periods, earnings With are detail call as directly to without effort in future Scott? the For that, to our I'll Wilkinson. provide our CEO, comparable more and to of GAAP the unreasonable release. over in Inogen's turn non-GAAP unable measures most Scott a President

Scott Wilkinson

you Thanks, for quarter afternoon joining conference first thank XXXX Matt. and call. our Good

reflecting in of Looking first over at million, XXXX. of XXXX, headcount to generated XXXX, sales of quarter the representative XXXX, the quarter we advertising. Direct-to-consumer primarily consumer first and associated the XX.X% growth first total increased over XX.X% increased million due $XX quarter of revenue first of of the of $XX.X sales quarter

our of the their productivity reps half at target, than sales we average potential full up on hired historical second XXXX in curve not come the to longer However, the were and in took the quarter. first

we focus down slow sales forward, hires the new the addition to of representative plan our of on Moving improving team. productivity sales and

drive overall with two team to also focus exclusively coming roll the sales the rental new productivity. this we rental quarters. out Over on And it entire will to that across group applied a we plan last quarters, our have in additions separate

see seen increased averages. which We associated our our should our reps to historical required sales we than increased marketing overall per per throughout despite the has continue spend. expected cost grow of higher staff the trend number we grown, and productivity XXXX, lead of we sale leads As generated have believe, sales will reduce cost

XXXX as a private the to provider home sales $XX.X reduced significantly business-to-business of period care national sales in domestic decreased partner quarter to declines XXXX. label These sales one million XXXX, in due first X% XXXX compared from decline the were of orders of in the quarter our primarily who a First to to partner. same first quarter large

Specifically this quarter XXXX. from $XXX,XXX first XXXX, accounted call in provider $X.X revenue down of earnings who in the of last first of quarter for our million discussed we in the

strong continue HME Excluding from customers. to this demand see traditional provider, we

in expect order remainder to We look intake ways face, domestic access provider. monthly, in our providers the some from impacted Due sales to continue increase negatively revenue current rental September adoption. to with sales to partner of providers restructure this care ongoing criteria revenue POC don't POC revenue slightly XXXX not beginning business-to-business we The from setups recognized increasing change recognition and patients for for until of expect significantly by a a otherwise home drive year We rental rental reimbursement benefit to meaningful rental activity of to purchases do more immediate the plan to be additions to the expect next HME slow we XXXX. new to their provider is direct-to-consumer obtain rental lower to mostly patient from who challenges, new could beyond. compared

for to take to we high we lead can number rate accepted was our our altering criteria revenue for slightly rental expect time Historically, patients. our which limited the build we remaining While we threshold ramp, rental loan by intake improve and close believe Medicare. of usage patients on

intake POC sales revenue rental and near-term changing adverse increased an Going In representative our we But plan lower and our it sales conversion lead we assumes adoption. threshold forward, U.S. lead to productivity the this criteria, rates to guidance increased believe on will improve in impact to users.

will expect of and quarter to time criteria while teams, the by take revenue some quarter XX,XXX service patients XXXX million due as first an the higher on primarily on of half X.X% First patients decrease quarter XXXX. change of increasing first the we revenue patient. XXXX. $X.X intake rental the of to to we the start end XX.X% rental approximately rental partially that decrease per had expect And count separate patient of the of scale rental it compared to back of We in XXXX, of service, do offset

of reported tenders business-to-business still We Despite of the in $XX.X demand European XX.X% activity basis. strong XXXX. currency meaningful XXXX XX.X% were in tender constant at on expect a quarter First international no European trends representing healthy. underlying sales remain and million quarter, growth as

we any include these associated revenues tenders Although with guidance. not potential in do

also in these South market. We Australia a than smaller although Canada, the America, are European and markets saw strong growth much

development. product into Moving

who pound we it of as United currently the say settings, available We that launched X.X we innovation are officially in minute delivery believe patient forward XXXX proud only of contact April. the the oxygen operation. represents screen technology, a Inogen GX oxygen GX of With features approximately One intelligent Inogen long and was of in Inogen's preferred the designed portable the to highest weight us. capacity oxygen and output hours a Inogen quiet of the large Inogen milliliters standard any therapy and to long-term One meet oxygen XX% GX flow One step per ambulatory per production clinical in in battery concentrator include needs of channel direct-to-consumer six double to is life very And our XX pounds the States. Connect, up with the LCD Other a access to battery optional patients

pricing when GX these GX Inogen to Inogen still volume parity the to we manufacturing Inogen One of increased GX relative is retail GX systems. launch, and demand. the plan expect a been We product One the reduce at capacity Given sales products manufacturing One features support channels. other over to the we GX Inogen and to can limited the optimized, term premium pricing Inogen intermediate initially the One priced obsolete favorable the once of volume Once in One has all and of

channel to the GX One Inogen the market. out then roll the regulatory by and in year, summer the domestic standard international to business-to-business expect the pending We clearances channel of over end business-to-business each to

begin XXXX. process which has equipment It topic and the assist and the that competitive will expected. separate supplies CPAP been July of we equipment announced expect in On respiratory around XXXX, devices supplies be we bidding had and bidding from to oxygen

announced previously amounts structured the amount. auction. instead bond competitive bidding medium billing to HCPCS the the bid incorporated, including code is maximum stationary The at bid the other have the program to program of code lead to be pricing, the oxygen surety bid lead the appear been of has and setting All the which item amount EXXXX item for requirements changes

action of on the that Medicare applying based to fee other schedule. by the While EXXXX established XXXX the code are ratio by a factor codes

the item reimbursement covered code pricing add-on to methodology would change. reduced portable program. We rates bidding the of under on schedule, XXX fee due Medicare being regions if However, the lead standard EXXXX dependent on do even in the do out be not XXXX XXX plan rates reimbursement

Although we announcements to of pricing be expect strategy in discuss timing until on cannot publicly. winners don't based these or We the announced new XXXX rounds. our prior pricing

we bidding, the in round of the last competitive As XXX a reminder, won regions. XXX of

under the covered access we program. to competitive So regions most had Medicare bidding

years. the round reminder, to in and Lastly, budget is pricing inflation for as neutrality bidding a excluding adjustments, three competitive expected annual be XXXX effect

as decreased restructuring alienate hiring reducing we great faced results. year total in customers business-to-business channel, Looking as we $XXX difficult XXXX This with the the growth range XXXX a increase are plan versus to at to already We not full million, are to United $XXX of planned XX.X% increase facing, to home provider created HME balanced from direct-to-consumer our revenue the the representing into we to $XXX providers million million, States. setups. domestic fashion full well across rental relationships to $XXX some XXXX, have growth challenges to takes rental down our million account care comparisons plan revenue over year XX.X% guidance the

technology to we care is to for patient through And home continue And our oxygen our we to mission mission. the see will very For full We penetrated. our a The unique With affordable I them provider's purchase number to model adopt given through those program advantage providers who to are plan beholden the to from call vertically for lead is the take the demand our of significant the believe adopting support We businesses, Ali integrated will increase of high product need POCs, continue to we're our that, business of patient converting plan a an or or Ali? on now believe access our it is Bauerlein. And fulfill fill for under that platform. remains for CFO, able their Inogen demand partners POCs rental. provider to continue over technology and to ability still help insurance concentrators. that this to turn rental to basis. our generate monthly we market we drive to awareness. Inogen

Ali Bauerlein

Thanks, Scott, and good everyone. afternoon

review During guidance. remarks, more will XXXX on of our my I quarter provide then financial details prepared performance and our updated first XXXX

XX.X% $XX.X of noted, the of growth Scott XXXX. over for the million representing was quarter first total As XXXX first quarter revenue

margin. gross to Turning

XX.X% total in of first XXXX, quarter XX.X% margin first For quarter gross the XXXX. the was compared of to

prices average XX% lower XX.X% per of international selling while in quarter business-to-business direct-to-consumer margin gross to and The domestic first versus XXXX. increased selling by offset primarily first service and margin the revenue sales the margin direct-to-consumer XXXX. increase flat. The primarily gross in higher quarter increase margin XX.X% in in was XXXX in of XXXX compared shift sales the towards prices to cost sales versus Our expense. rental the on mix a first average was versus were to first The was rental lower reduction favorable was sales patient due gross was goods margin both gross mix per and of sold in unit XXXX. favorable depreciation business-to-business the XX.X% Rental of in quarter business-to-business gross partially channels, due of QX a quarter

marketing $XX.X Research at As in first expense increased in administrative XX.X% quarter $XX $X.X XX.X% total first expense, quarter an revenue to an and QX and expense. income or for saw sales million income XX% million in compared expenditures that spent first of XXXX. personnel-related in XXXX, primarily of first $X.X XXXX million quarter quarter by product versus the $X.X direct-to-consumer adoption of million XXXX. Sales our QX return versus versus primarily compared of the and reduction income Cleveland the from first first expense $XX.X first in first in in primarily General quarter to quarter revenue. bad an to $X.X resulting In increased quarter to Operating or the the of higher XXXX. was to as expenses. first of of XXXX, quarter the expense XXXX income reported XX.X% of of and the expense advertising XXXX XXXX expense to tax quarter compared represented first of to XXXX. million XXXX, marketing sequential to increased to XX.X% XX.X% first million to due million tax of benefit percent where first $XX return be development in in the a in increased basis first in due QX $X.X income quarter debt in compared or development to to charged of to offset expense bad of $X.X the $X.X million requires and operating advertising quarter and versus expenses to increased due the increased operating million which as increased first operating revenue sales The $X.X advertising first reclassification partially XXXX XXXX revenue. improved XXXX, primarily XXXX quarter the million recorded expenses, efficiency primarily million in of on We we was million expense XXXX quarter was the period expenditures comparative a in for a Operating million XXXX, $X.X of in In of rental of in the $XX.X facility. X.X% the XXXX-XX versus increased the ASU XXXX on of XXXX in quarter margin declined on revenue. debt of due decreased we quarter rental personnel-related million of operating a at

quarter decrease quarter expense tax compensation $X.X tax taxes in the in stock-based recognized XXXX. first of of first to million benefits from related to included a income compared $X.X the provision Our income million from a in XXXX decrease excess

effective was XXXX. XXXX the GAAP quarter was XX.X% of quarter versus we GAAP net common first to Earnings rate of non-GAAP XXXX in in of first of in the quarter net our benefit first tax XXXX, in the in compensation quarter stock-based the the $X.X quarter versus the first share million first quarter the XXXX. $X.XX $X.XX Excluding first XX.X% In income income reported XXXX. of per compared $XX.X million of of diluted of

Now turning $XXX $XXX from million revenue year of we total versus to XX.X% to growth $XXX full to guidance representing million XXXX reducing results. XXXX guidance, are year full down as to $XXX XX.X% Scott to mentioned, million, million

expect will hiring we be and While of fastest-growing we our the direct-to-consumer be sales we on channel, representative XXXX productivity. expect slowing primarily to in sales still focusing pace

sales rate, rate. have but expect to now a solid business-to-business a negative sales continued expect We domestic international business-to-business slightly to have growth growth to

growth the the providers half grow modest in rental XXXX planned the and growth difficult the increase some QX restructuring QX new net with XXXX XXXX to we plans, we domestic rental challenges channel to Given back in expect expect back revenue the comparisons to half of modestly continued the XXXX. we compared growth Despite additions, to in rental XXXX. our business-to-business of faced negative in channel in domestic compared business-to-business of

net $XX.X reduction income down excess in guidance We taxes taxes million the in in XXXX we effective still benefits from million the XXXX net $XX full income due decrease XX% expected stock-based $X provision compared income due XXXX. $X to income and compensation XXXX. our from from to in million to a non-GAAP income option guidance benefit to to are $XX This of from the primarily current tax the rate tax is related in reducing exercises million. expected stock benefit GAAP $XX estimated to When stock-based of compensation to price XXXX range for recognized excluding and deductions, our year approximately $X GAAP million fewer in estimated provision expect million in $XX million revenue for GAAP estimated decrease net in range decrease million from to

stay at increased cost imported tariffs for to at cost XX% is a with a quarter guidance these to Chinese revenue, XX% XXXX. And tariff estimated guidance XX% $XXX,XXX be materials approximately year are of from full and products Assumed listed. range associated we the additional per

protect necessary our plan monitor steps and Going material new take risks. economic the to changes and to cost tariff continue forward, we reduce to our any interests and proposals financial standard policy

$XX in to growth million representing reducing year $XX also in are results. an guidance representing guidance income million million, are investment XXXX from full range, million we assets. year spite to additional operating XX.X% our $XX to to reducing from year results. with of our of EBITDA adjusted no also million full to million full XXXX We $XX flow rental operating to XXXX, to We still to XX% And down million, meet down versus million XXXX net range XX.X% X.X% $XX XXXX, required current $XX plan, full $XX cash positive capital additional year growth versus $XX expect our of to in

lower we and investments. lower cash cash expect I as With option XXXX, rental your that, than expect exercises. we questions. to provided flow However, will happy be And by take in stock increase Scott

Operator

you. from Blair. Instructions] comes question of Kaczor Thank ahead. first go Our Please William Margaret [Operator

Margaret Kaczor

Hey! it Good can Maybe us rental walk afternoon underlying we're guys. why that think based XX guys But XX% market through it now that seems you that then, as change And earlier? the intake to criteria Thanks a criteria intake if right describe time of continue? provider question. you for outside growth rough good over that, to it? growth change the and taking relatively still large to is my start, math. one in Or look us so seems you maybe not change at the on else something through up over you walk for

Scott Wilkinson

question. take is And good a one. that I'll right. it's Scott. Margaret Yeah. This you're

down into this. represent the a go mid-XXs. channel of of have a we slowdown player. And pleased One, piece nicely assess very purchases. of things the couple back purchases market. fair larger overall with of do a the But, you situation a really that the they peel that do growing BXB there's, rest the from that. in when the national we're net If slow And is The you provider domestic

Now, is demand They're the while all nicely. absorbed the just rest was to that taking. aren't that of the growing able channel provider the other completely

I it at an frankly, certainly to an it the access way and want opportunity, So, call we're issue it. there's look at looking that way. if you That's

couple Now, that of I the let's spend with that we also satisfied aren't it made, sales that team. our our just some comments productivity other with increase we advertising but

to got some productivity. opportunities there we've So, their improve

that taking every already lot of primarily you tree of for focused you're leads by are leaving sales, money not on when And thousands a tens are rentals. We paying on literally month. retail it more of

we the productivity, issues sales to of market goals our result you the of or taking address both issues in when access. assessment team will. rentals, also intake coupled, our satisfied improve So and three us criteria, some more to that our of guess all those I issues our relaxing regarding The was those if on

marketing for. landed how that's, more the accept patients, don't then, at to have have have with and increase which is just already spend we leads to the that those some paid we we to drive harvest rentals, our access consistent leads create in use sales access have going of we team, of So to And we're our that the better more for to productivity vision. And mission point them.

Margaret Kaczor

Okay.

looking given the And what we at profile what So you go follow-up other look changes how metrics that like push looking rates? to at of making you're margin within rental just minor? on criteria on into you them are in But can Obviously, lower you're the aggressive rental, intake gross out you close more that are should more at? profitability that maybe then the it out sounds As the Are for steps that. improvement today? long-term field? to look are

Scott Wilkinson

about for we the I dramatic remaining rentals. and it. When going front. a require service target of another patient an criteria, right is shift. of minimum But you question would call on a a billable a not a number we rental bringing to POC. It's consider up over criteria deploying or that It's patient we've them the change wholesale that shift are relax last are good got Margaret. talk we subtle Yeah. why And on to in months This insurance

the candidates. So criteria creates that a come bigger in leads month portion relax every of that become we rental can it more and

what that's shift. massive we'll a it's It But not change. be So a subtle doing. is

more they to order had group we forward in and as are of They that I that people because efficient that, to as area just through drive a a much opposed the not you two Now a it. our proficient intake sales had going team. this more narrower execute do month mentioned here rental may at and in experts this of that volume are piloted or there rental wholesale they're team

And the very be rest will scale will but of have of And kind a say, this it improve been efficiency, the roll these should I’ll our efficiency. So slow will take we positive But that shift, it will year results drive out. of we as go. that to trials to steady but a shift.

mentioned close benefits improve to should re-scripting more with reps GX Now bring management some that is with responsible focusing rates. to the up training rates A, speed. the of of the trainings the Yes close you the on team, our it for leveraging sales the help

improve our should rate. All of that close

thing in They is Another we’ve industries close best a performing better generally have can letting leads. piloted higher we actually up better practice a and earn reps is rates. reps that performing more started other that

people We of can a to give higher as you close level performer. gets once get that everybody rate you high So leads. a a leads base more

bias And de a closers, give the close facto improves. so more higher to of you you’re rate ultimately if leads

of So it spend the better marketing the even becomes in utilization leads.

progress in And continue the past lot that. opportunities year margin. Now do we've you need got to do We've to made that. mentioned Yes, the we great some there. on to a gross rental of improve

folks of are that to that the in look when right there margin the at entire that rental got gross subsidize. you with cap pretty associated substantial you there's remember the pool, a in You number

the start patients, cap level of to none are take in of the out higher to newer of as gate So, start. a them we on

on it going improving driving which further, business they'll certainly ultimately but of do that? is of up that that list continue need assets, add us if gross anything optimizing to we the cap, to to have the and in denials you at future. margin, things our of that we're do rentals hit top some that do to Now Ali, our gives focus reducing runway our more utilization to something is on

Ali Bauerlein

mostly margin a that do that was in rental up we note But gross an we covered the rental with though the top cuts it additional with want of lease margin, side. change standards bad Xst drivers gross you think move the a from were of few expense that from needed to effective January there decline also debt to associated I I just a sequential X.X%. with accounting have where associated new a of expense. to G&A line expense rate

that does rental margin margin, impact So gross impact of net it doesn’t the business. but the

costs We pool winter changes so tend see higher higher year, the a also other year as well as have in of tends quarter the quarters you rate death period. have servicing of also to that versus the in in first the insurance

the Scott said, about focused But to as So time. you to margin their really improving sales interest spend need side associated is what's gross on great the drive or marketing very over we're leads that. the rental don't with more and on that

leverage you're the can getting. that leads You already

sequential incremental in So margin the increases throughout you to We there's expenses. gross that operating have time margin corporate in revenue rental overall to have our margin. But see additional and gross drive in incremental cost over initiatives in improvements is play do we than multiple XXXX. using expect obviously lower you drive already just to operating expenses gross very rental business. the the on an basis, It's little

Margaret Kaczor

kind of wrap to up, guess. Just it I

into they’re more take going If to your be numbers. rental those It's criteria going minor. your input time to changes, to

on that's guys You will big you pretty took see hit impact side HME guidance a adverse. that to the assuming

right above at through us are is the that? confident below how Thanks. maybe the assumption you -- drawn that? or that overall something walk way this And point? why Is versus So in guidance

Alison Bauerlein

Yes.

in not the So change I that with side. is highlight associated direct-to-consumer It's also to want just BXB. guidance the on

when talking we're rental remember shift. about So this

to you to -- that the monthly rental going use immediate previously revenue on that side. If you're a going that revenue for now the they're BXC recognize have that time now would over you benefits, patient able to you're cash versus the be have recognition bought mostly

would that a component driven So the do that's changes that you on sales the revenue of direct-to-consumer on certainly you have recognition. portion these lose that incremental immediate whatever

the of have that last that the focusing we hiring We get And of year. associated that's improvements making is slowing do the also with our some guidance a and made lowering expect on hiring productivity in investments of the BXC on on is that really with side we part impact that return change and sure the associated that forces for We across entire range. BXB a good what there rental the numbers our is slower restructuring that from a intake major is feel market their still do the -- this business. account achieve into taken criteria. we're currently business. but But to we we seeing And And that these can just challenges the these revised believe HMEs numbers. that we overall the have still we or change Obviously, just large guidance.

Operator

Our next go ahead. question Robbie of Please Marcus from JPMorgan. comes

Unidentified Analyst

Thanks the I for is be wanted actually This taking Robbie. Hi. Christian on side. DTC to on start may the for questions.

on unknown issue here? in lower productivity marketing like drive outlook XXXX It return on going to Is for end XXXX just hiring? revision when view what it an of the incremental sounds isn't the a quarter. more high was that the the towards higher, you you as think into I from end have and that of guidance getting what leading as now any the color too Just hiring? of And rep you the hiring productivity can the better to at and both of view changed large saturated? how your

Scott Wilkinson

Yes.

historical a of is to our the probably exceeded at first even We half of to And the of back heavier met started to half hire a XXXX kind I'll say, the me Let expectations. things in up first rate year. benchmark. than

into an higher little hiring And have productivity prepared a went we we ahead actually management. didn't bit in things look to got the our at said they what matching rate on no As meet we quarter my reps a third continued productivity of were from that's where up historical cranked standpoint. seen we longer even ourselves and remarks, as expectations. as when of We I

the need up resource new we invest we have. think to previous we reps we found in to they're had that shore better I mentioned for still even that in our that management, on we training the that so management, but call further

at That's the most facility. where of hiring space. you is If we Cleveland incremental our in look have

the facility. by a of reps most new five there. why there. surrounded that's So is year But folks It's are the hiring better not relatively

into training make to it and of that to need we drive productivity. bigger investment even So reps new support those

it's short the of the first yes, second because said first half. falling into always -- I We were the going is quarter trapped our As slow. quarter into seasonally little in expectations

kind you're assess to proofs we where and period. assess where things come to and slow seasonally what’s we in, But that where and conclusion you're can looking that we should analyzing historical traditionally at trying be to and So classes the not a are rates convinced we of be. the we is just

potentially the we standpoint. that team could more to take hiring we see expectations higher have are of going investing be when resources time right does our than the a rate think on opportunities that. just a those it's folks So that rather of into we lot execute that and to resources as to some That take We that you a imagine productivity in adding of you're we pool. to should do the some redeploy to continue below where at from

going we're every programs. don't as share reinvest to have. that want plan training initiative resources and the to that's we into I our So other

force you space also in guys trialing As there's initiatives. other the direct-to-consumer that know some are

dramatically opportunity we things in detail an the suffice say efficiency we're way. decision not going improve we're to idea of our invest But every going try that we if we improvement see trialing. forward that And So, that to there's out to every made. that

Unidentified Analyst

it. Got

So, with fact DTC taking the in up that in expectations I with to first you is over guess, in actually the first reduction just in decelerate line is the past. And course line the DTC that I quarter. guidance of implies the think seasonally year. numbers guys relatively the put still slow quarter and the the in quarters

going guidance And in worse? forward gotten that your has XQ? between changing to what's So, adjustment results incrementally the

Ali Bauerlein

Yeah.

saw the expecting slowdown we're is So, a that not in channel. BXC significant the rates growth we QX versus in there in that guidance

which that So, guidance a we those previously. were rates also significant aren't acceleration -- what of the showing assuming however, growth is is there models

and we focusing on differences So not repetitions. on essentially that that's productivity are really focusing the

instead of are that leveling off year. of this We for rate growth kind

Unidentified Analyst

Got it. Thank you.

Operator

Our next Antalffy from Leerink. Danielle ahead. from question Please comes SVB go

Danielle Antalffy

good afternoon, question. the taking so Thanks for much Hey, guys.

follow-up more on call productivity taking a calls, they're spend that Can good? in a leads the you is am guess more advertising have ensure advertising, coming in you from good -- at it first productivity get and you down? bit how could good are on they do Like a you center reps a how are step target Because Was bit color perspective to from the have weren't how perspective Is question? Just where follow-up. if leads? and curious second a incoming a able I this what color the because were little leads rep that leads? the did And rep business. like I BXC And would are there? coming is, not then question take BXC a to the just a start works give the lease? little been I that the

Scott Wilkinson

Yeah.

is that to the fresh. that's -- advertise, over optimize you things same And ad computer print channel And keep an and per the distribute forces. same we have -- rates the -- of that all marketing periodical we the in close And to or internal leads sale the cost can't team over. way measure the we've and the are lead of you does So optimization got our When different that. we always trying referencing algorithm have can't you that. part

always mix You've it close your and keep your doing And up fresh. that you're it got to results necessary changes. by making the and measuring rates,

doing is always team the So that.

You're new fresh for as always well. to some outlets things keep looking

or target XX% marketing So by new and past that out new try ideas that's test to it keep in We we kind our mix. put the them media we'll that our to spend things and driven team. fresh. Again, of let's things into of try said,

they're Now CRM distributed system. leads our the by

amount So mixture gets the all get everybody should of from of leads. lease Everybody sources. the a base

source a of that's from randomly don't of the reps, to give group one all certain kind we So, distributed. leads

Some leads than close better others.

Some more than leads others. cost

road meets the sale. really the is where the per rubber So cost

lead has to imagine can close you if As -- higher for it may well it significantly more pay money rate. spent be

sale. always in per measured the So, we cost that of terms

of As -- media rate I that enhance mentioned And kind an to it you to the our we give opportunity leads should us leads, at our more earlier, reps allow high-performing so if better we are look higher than more leads. close, in giving when spend. of use you ultimately base in the earn you are should mix, number a close can

Ali Bauerlein

When to we at just And reps and your on we up the question. add reps productivity coming that still Danielle, season look before second Yeah. the curve. at look both productivity,

in not to going reps broad-based issue lead was and then it like would be be challenges sales are those is the if training to to that the you where was you some saw with getting reps or wholesale when the that. going that’s competitive with are when But the market where or performing the the productivity rates. team it close leads there coming or just a it's something speed productivity just expected up issue. across forces challenge curve at either primarily usually So associated It's assume

Danielle Antalffy

ramp just is BXB curious as they -- am Okay, business can got Are by system it. BXB I patients purchased that's of around as a question term then redeploying the the to one the how the bigger once CME? market device devices opportunity so And seeing Thanks you're a there? piece my what into longer patient's serve adoption, get are sense How they the second many we about they trying much. business. expires? think redeploying of do becomes back

Scott Wilkinson

Yeah.

same on redeployed. rental Danielle, our owned of So providers. way and on by provider the does the know Inogen all asset business, the by it That side, thing the so but is is the other rental owner

new they So out unit the a on patient. put may

it asset with years. Other to that five-year for that new and owns out the get fit. the may provider is expires at asset they'll their in one to that we've couple several through might own life. to next five-year patient more We But goes bucket. It look exercise. of always Inogen key again a becomes lives for battery patient assets be patient companies as depreciate provider, the see whatever asset test Let's It it. that devices. When same say, defected, a back really for utilization to how asset. The they They the drive depreciation out and asset. a is a -- it's us. have these That's asset an a as redeployed. referred schedules, these of before bring we And it in an could the on patients it will

as life rented cap for on want that many You the probably possible, that's months XX to it the be this months. thing the patient's over as will in keep realizing through asset's

stationary for to It's assets If and you've XX you asset not got people. everything good the are darn That's concentrators, same they that's months, new play. think I reuse rented with able keep game on of XX frankly But else. that the those an of pretty them. game some tanks out results. They kind and a

Operator

Needham ahead. Matson Please Our next go Company. & from of Mike question comes

Mike Matson

my questions. Hi. Thanks taking for

companies completely issue other to transition certain seen these the being the one-time some have able a Just prevent is that it wanted words, to of would companies able do the is the customers having from HME there some the in the make model. that to proper In you transition start executing with been to way? or successfully? challenges that kind with Have are of just here that structural POCs

Scott Wilkinson

different first Yeah. of me I good should your let question. answer it question. And the a spectrum. from Mike, two it's Maybe answer ends overall

a We restructured and ourselves, that. know what are, transition our converted with there's of the have have I of. small in At mean, player navigated trucks haven't our other state. screen. is than But that's has There somebody not out didn't that we've way people the drivers white Nobody complete added we a in challenge. out there. sheet If a seen not pretty is business, remote started -- don't and yet. I we've that But model. anybody We But assets. that's as all running fully paper, grown least Inogen we we radar is call through would

Now if the look of at spectrum. two again you ends challenges, the

a trucks If player, model many a probably de you're of have that drivers, many got it's economies branches bigger and exercise make many delivery the side on you got you scale and because restructure facto larger really the in work.

money in need with eliminate POCs, also you cost save deliveries. you're five If to the associated to going

They're knock seems pretty that good is some well. along We've not challenge plan. companies out going executing there delivery a the to yet, They're out So infrastructure. have that the to plan. done seen be

or of let dispose some off. structure. going to tough have do how make you're that going you're access your to going probably to to of that business assets. You or bigger so trucks. tend other purchase players that have. redeploy they more they the reduce off on and That's Are can literally challenge to to have it larger restructure you people decisions go capital, choke to It’s kind the the less the that They areas

the trucks. branches of call other couple have many to pop many, couple Obviously, mom and they the or they of don't may end providers. spectrum, branches go you smaller we of have the If what usually

is exercise is lot than restructure capital as their But access the daunting. So to big not tougher the guys. nearly a

So the they They've other tend issues purchasing to just of credit their assets. got business. the be constrained on in

mom-and-pop restructure the driver brother-in-law your times want out Some you be to might in business.

– where in on we our last least five years. a several nuances year there or its a said bite event. we really challenges call, Nobody can an some of process bit have We both we in at our In A really from not it. it's a cap two, So other are are off is It's that, different didn't little why this at today, the said view years. always there. ends spectrum. this put more

their and best the how And addition, to exercise demand help going we opportunity then to us, for our product harvest how is It's there while. is to at good and how the provider we and have demand going of the good what is play? product I a in there. And our We current on trampling to be we and know for pick-up lead the some users that look support partner? slack because – can challenge take the Probably, the it's becomes So generate. news think see some our it the fulfillment POCs partners? hand, there you’re is demand, in end the and out a we of throughout when get And without becomes we of going continue them an strong them can business role we customers exercise.

Mike Matson

Okay. issues. just Thanks. productivity And back then the rep to

you other really reps? kind legacy or and on without based maybe not? new the confined existing you're your it's reps some It's vertical productivity other a or that issue confined your sign, kind would of saw assume these seeing on reps new can So saturation of I reps what to words, really just not Cleveland issue. or stable not issues versus to existing the levels? productivity it's with training of were a the in productivity comment So Cleveland-based these

Scott Wilkinson

to it's make lesser along. primarily yeah, we mean, to investment. need where newer them that's - Cleveland. right. to That's The seasoned help where in I And you're Yes. Mike and we have structure support reps continue

to bad As numbers, or we other number a I'll people far to they're we just historical publicly. that our are – this I give say saturation. Again, some one able have is, there actual what been things below work they're mentioned, curve don't want the the a to trying number and what's potentially All expectations below don't themselves. I post. as giving through are you when say, good term But

people the the that tank POC. a Our issue. every dragging many thousands issue weren't thousands tens wouldn't month, if around have still the leads come one many, in saturation We of of isn't of there

challenge penetration full of today. are our the saturation is not So market

Mike Matson

Yeah.

consisting wasn't the I this really as stable? wanted more being reps Or more mean, - I I just numbers. looking is guess, they the I to reps recently? issue for it's if the productivity know, of newer limited have hired kind Okay. is you to

Scott Wilkinson

rep the Yeah. yeah. It's more to newer is issue/opportunity. rep. answer And of that the A

Mike Matson

domestic think normal, pricing? channel could I right. just stable been think you BXB if which product on could in the some – saw I It said price that but you a the more All one see heard as like have you DTC as finally Okay. And comment decline is the then I past? sounds well that

Ali Bauerlein

Yeah.

we pricing couple you trial a QX. points last we X% – in did then, pricing if after decline a trial. that of remember, And put place So recall

trial we change. associated that So still were pricing lapping the QX with in comps

Mike Matson

Okay. Got it. you. Thank

Operator

of question go next comes McKim from JP Our Piper Please Jaffray. ahead.

JP McKim

I Hi. confident back I me a on it's like how are close feel train But telegraphed. sounds And lead Thanks you wanted just question. to to folks need BXB for these than circle the the to before? like because you DTC being not issue. just the lead generation taking well softness the weaker issue. better it was a in It's leads versus

Ali Bauerlein

Yeah.

you force. weaker seen the have just as sales across would whole the that lead would it if have earlier, said we being been So,

generation the lead higher just seeing as at BXC looking of still we're obviously, percent our revenue. a spend cost Now, marketing

improve mix productivity sales having decline can the rate do the as marketing increased we to close as being really believe there. to lower cost a or of with get that's the we spend. able over both direct-to-consumer, time, us well associated But BXC, Now,

sales that productivity there. the driving we’re -- what focused the XXXX on, do of but that’s area we primary in focused are is force and that sales believe So is improving we the on incremental

just been broad-based again, it issue, just would the team. you across more quality have If lead had a would wholesale have

JP McKim

on when sales give don’t outright. tight to still then anger is And units make Okay. outlook issue? to you mean, leads Is make just move rentals? BXB around, an the And diverting the you bidding with anything purely to the just reps I this around a to more it's side. confidence you just -- want Scott, that, That's competitive that, alluded customers all tiptoe. access the rope then to those can us to one you it your any you that sell all rentals there and Or do changes And you and helpful. don’t rental want to

you sure on line you. -- So properly? And make your Thank how do you how do that confidence? what's you tiptoe can

Ali Bauerlein

have you change why to make That's gradually. that

more, change step important are some anyway I also to criteria to we your does But, -- slight mean, long-term which side. this the some and this period be patient in to don't a that is the there get in in BXB You we blowback to know on just to to do BXC POCs. issues now But expect on have strategy change and drive access sales potential impact want getting criteria.

next the to Obviously, tied the changes make positive they're lead the time know overall bid that what billing past. But year. of a to mid bidding better right bidding to decision. making the strategy. seen Nothing until late in to So we than changes our people should we or competitive in program that that sometime think the bidding will approach think to outcome are we've how probably it's we that specifically the won't

as partners the versus those going overlap drive efforts struggle possible. in to want have as do future be bidding able POC their will they it we and absolutely before be the make with help volumes that environment those compete want to right. conversion. as rates, site, competitive understand driving the And sometime of max just our of So will minimize that, this, reimbursement we work case, providers relationships to you're access are We that be will with sure we like, make adoption to to matter maintain what round POC will but we much both and convert really POCs are in patient think majority do of as their to as that way look and happens only people preference well next in the efforts we But POCs. we to that sure that no what patient for

Scott Wilkinson

me I of for just think let a initiatives success -- And the with to lot to customers. Yes. your good that is communication key second. A add

They're that's the if how care a one most much a at a want They bite of to patients. take to they freedom as step We to do want product wants similar, time. give the a that care take goals. have to the dragging of same better patients. community going We can not give want We to them than off seen, of well. just with And part HME around. for tank struggling the we've from what majority them

goals got are today, got to leads month. them, discussions look, customers with in but POCs. we some you We've to conundrum When before the which already to every for have. them, our qualified of in some -- sit alive. had, want our coming helping key So you this thousands share call down They’re people with with patients These of we've here's POCs.

that's it Somehow doesn't to you serve to them. we But figure working happen. to them. the the Absolutely And out bit not. the the role got partners we community will that year our side than hand-in-hand have on way. plan And of anybody is with service whole got going going play last in not out POC. how benefits little throwing them provider that's just a these own the to so. the Either provider to to deny and sales people bigger or a or forward rental that it we service our we’re at got make Yes, shift service But to we're we all.

JP McKim

Thank you.

Operator

question of next KeyBanc. Please Mishan Matthew comes go from ahead. Our

Matthew Mishan

else work to receive a or accident an the be base potentially to reimbursed from can stationary I would And with ship concentrators reinvestment? return somebody rented manufacture it reimbursed concert and for questions. and in The station for are you guys POC? the current you taking Great how or your stationary of tandem with typically thank auction guess, adequate POCs concentrators. and does you reimbursed

Ali Bauerlein

Yeah.

are clear, quarter both be EXXXX So for to POCs dual reimbursement. and EXXXX

the stationary as means both written concentrators. need for has and oxygen, as our a prescription do you full ambulatory reimbursement our the can receive long deploy that So to both you stationary codes, physician not and so POC deploy for

on providers code top you concentrators dual have concentrators our to for reimbursement of them them stationary to well continue decide incremental it's chosen to you if are but POC. and Now they some the reimbursement up POC deploy courts can't to both stationary deploy get to as build or separately, a and then build if the going

concentrators provider, for both sales So retail built reimbursement. but typical POC concentrators. for product when perspective, we in well stationary We than really from higher do codes cost the deploy stationary the our that the is designed is we it built a as as

it fit HME as product the make standpoint. it community price-sensitive doesn’t natural So a a for

Matthew Mishan

that proxy then was And of D&E good D&E, XX% what problem is throughout XXXX? business-to-business the for a sales

Ali Bauerlein

of also in the So, the was dollar highest the QX rest versus QX headwind year. the was high. very

for slightly takes it QX down size And the then comp to QX will easiest similar but QX So, in us smaller. then of step and XXXX. be in a

half down throughout year. step lower the a does And back of particularly perspective. from it So, the XXXX comp much in

Operator

comes Blackman next Mathew Please Our of ahead. question from Stifel. go

Mathew Blackman

for afternoon. taking Good Thanks questions. you the directly. wanted ask to just I

the DTC. competitive comments newer understand about want answered, did to you're in issues being reps to also Although just I Scott pressures whether rep be you bring your productivity channel? but isolated in up competition seem seeing that to

Scott Wilkinson

we’re somebody's new got nothing anything. a say out It’s would as Yes. I mean always I there. revising program that you why hear

haven't recently. significant new the products one mean we've launch products. We been really seen I any new that

and best the it took product made he better. So,

competitive in a a position we standpoint. So from we're strong feel very

haven't We side. pricing seen wild anything on the

pump right asking but in up I sub-free pairing then that GX been address have in GX a competitive position now we're of standpoint our So, the no as chance product. appreciate -- directly, a us a and you're give and stronger the that's to that we with to Matt with the it from launch I think

Mathew Blackman

positive strong on that. And end Okay. another more did maybe appreciate performance. to I really international then note, we have a

growth? about think in you the for you're of Thanks. And sustainable type all what hoping growth terms And could of this more is? broadly, that's runway I'm talk have. inning So in how I you

Scott Wilkinson

international. the shuttle. thanks in comment It And on oftentimes lost for the gets Yes.

don't look the you they downward at Europe, pressure reimbursement. If have on

quite the don't reimbursement, seems is opposite there's not dramatic. the it’s of in lot side a with product have U.S. of first. price Europe, also struggle we tend what as In that work, focus this like So bias we more but want, people on the the to Europe, patients it that, whereas make a for to fix model in on see delivery

So we've into last had over Europe. had some good when year success period in even strong broke the growth XX, We've we Europe. first XX

change if their. going it at it sense it POC's. trending. adoption to doesn't some kind to trend a to have you going deliver POC, game to I look make as unless change think -- you about just expect big U.S. take I It will a the drives in going there reimbursement a in think is we we of is is end terms you're is that see conversion, changes think that you ultimately year-over-year, is is the to lag think model. don't see Europe better patient in Again I cost of when tanks but also provider

international we that the tend be to just you delighted with as saw conservative first the even Now demand in know, we more the And we're further our guidance away customers. we're on from quarter.

be a would market great us. continue We to for think, it

sheer I calls about even said market then growth the the As XXXX looking will said unsung that beyond an be Europe we that for talk population our higher just China. to as look and markets and enter we're like probably in market when past that at the opportunities we about you in is emerging talk little and -- China. we But say in when expect a

Mathew Blackman

Okay. That’s I had. all Thank you.

Operator

like I our the session. remarks. This back closing to question-and-answer conference to Wilkinson concludes would turn over any Scott for

Scott Wilkinson

believe Thank market the patient believe you. we products. our is We and for penetrated this POCs for from under remain demand

to or it business provider Given from today. our drive us Thank through fill to patient this access, is time your vertically integrated either our our you need directly. mission unique model partners for

Operator

today's concluded. now conference for The you has presentation. Thank attending

may You disconnect. now

Inogen (INGN) 7 May 192019 Q1 Earnings call transcript