INGN - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Inogen Third Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Matt Bacso with Investor Relations. Please go ahead.

Matt Bacso

in participating for you today’s call. Thank

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

regarding headcount, for HME As hiring and to the strategy bidding, our TAV on growth about statements, including financial the a reminder, and for statements our related strategy, the manufacturing our all and guidance of channels, sales, and XXXX tender expectations, expectations for information and timing XXXX. expectations changes expectations such presented for XXXX strategy expectations today rollout our changes, Inogen sales beyond, sales will expectations and strategy competitive include forward-looking and international rental impact of and expectations prospects and expectation regarding expectations, marketing cost and XXXX revenue GX, One activity,

in and and us. risks These our periodic with The forward-looking are detail to currently set in involve statements and Securities more reports this information on statements recent forth predictions the in only that forward-looking Exchange available are uncertainties Commission. most based are filed call

and results may forward-looking statements, be obligation Actual except vary we to may as required any disclaim update these by law.

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

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

earnings between release. are U.S. our within in presented results Reconciliations non-GAAP tables GAAP and

discussed a provide earnings guidance are directly in unable measures the For most GAAP periods reconciliation more to comparable to as non-GAAP our of future we in effort detail our unreasonable release. without

turn and Scott? call I’ll that, the to With Scott CEO, Inogen’s Wilkinson. over President

Scott Wilkinson

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

quarter million, was total we the in expectations generated line our of which X.X% third XXXX. XXXX, a and decline of $XX.X quarter third with revenue at Looking from the of of reflected

of $XX.X Direct million second in in XX% third X.X% of prior to an reduction approximate of quarter in only quarter versus third representative by period of sales quarter the sales in comparative XXXX the XXXX, the consumer from XXXX the the decreased despite third headcount year.

to headcount We from are offset mostly the reps. productivity the in say sales in by pleased remaining that an increase reduction was

in In their our them continued reps per addition, third are quarter to sales productivity we the we increase and seeing hire XXXX expectations. of new

While the quarter optimistic the direct-to-consumer productivity direct-to-consumer sales our ability and versus third in in of sales we teams. of intake the quarter remain grow these planned XXXX rental based same XXXX in slightly expansion and the improvements on declined in XXXX, to

third to from label business-to-business offset domestic $XX.X national partner, by in orders primarily buys of XXXX providers. million compared of who flat, to quarter private increased orders our decline a other quarter provider Third through sales large from XXXX, were due one

of in the revenue Specifically, this of quarter million provider XXXX, third quarter accounted the down $X.X for XXXX. from $XXX,XXX in third of

concentrators, from solid customers. HME lack capital continue adopting demand expenditure efforts, ongoing portable providers oxygen include of challenges credit facing see the which of are to constraints, these access and available to restructuring spite we In in

will the Additionally, win as reimbursement providers around change we rates. more to with any bidding conservative been pending in and visibility lack who believe investment contracts have in HME to competitive due of XXXX

currency expenditure of constant capital constraints, to a reported in of in as $XX.X International by quarter slowdown XX.X% and sales on third driven XXXX This orders basis due primarily the business-to-business million decreased an a tender quarter on of the was orders compared some quarter and uncertainty, basis France. Britain softness in shortfall Great third XXXX. of to Spain, Third XX.X% and

believe that we lost not to and customers remains in major competition Europe strategy do We have any unchanged. our

will we be in before, said our tender have International countries. are As quarter-to-quarter, we believe resolved, products the can issues that those sales do lumpy as for demand normalize

XXXX, Third third primarily decrease revenue patient. We patients service and quarter patients million as offset the XX,XXX XXXX. declined of partially a to X.X% had quarter third X.X%, of quarter $X.X rental of end due on higher revenue XXXX approximately of service, compared the on of per to by the rental of of

on While to team and continue also these to increased second the the make believe the rental XXXX, quarter the patient team we to of was will intake expanding count in lead team setups increased team. dedicated sales focused of down rental having progress activities. we productivity a slightly, by separate compared rental

initiative we this increase XXXX. As from to in quarter, last revenue contributions mentioned expect rental

to XXXX. XX% quarter quarter the patients in than the the the and both of were units XXXX of GX, Inogen this showing in this for product from of Greater channel third One total demand Transitioning our we launched in third providers. the business-to-business strong Inogen One product shipments GX domestic domestic

Inogen quarter One shipments the believe position. fourth competitive the CE to Inogen and we further We GX applied begun marking XXXX. also international have strengthens of customers One the We our in GX for

One We half the first contract at Czech the also in European Inogen Republic to of manufacturer customers. plan the our XXXX in for of manufacturing GX start

the from I like would market released Medicare full-year CMS comment also recently for the on data XXXX. fee-for-service traditional

limitations certain absence has to we information serve the or the brand information believe that the the long-term as the United in therapy CMS can of such of oxygen market manufacturer States. when auction picture therapy information, a approximate market assemble used to Although

oxygen we in that market estimate long-term XXXX the in dataset, XXXX. from in the grew share the therapy portable on Medicare XX.X% oxygen Based of concentrators XX.X% to

or sales patient private cash not insurance However, include transactions. this estimate does

actual market penetration. may concentrator that conservative of So, data we from the oxygen believe CMS this estimate portable represent a

were a ahead. opportunity modality growing XX% the therapy that be oxygen We on this therapy patients penetration long-term we the our assume in based should full CMS fastest approximately growth and therapy oxygen based long-term estimates served significant of XX% of data POC's to category patients, the by oxygen over be still believe ambulatory still on has POC’s time.

respectively. XX% declined POC comparison, tanks claims XXXX HCPCS Specifically, levels. XX.X% devices KXXXX transfill beneficiary home for and By increased EXXXX above and Code: for oxygen HCPCS by X.X%, Code:

for are patients. We concentrators should to transition oxygen ambulatory that supporting POC’s of vision continued oxygen to the the standard our see pleased long-term therapy care portable become

of submitted to the prior on topic close as XXX XXXX. bids competitive expected the of of XXX On regions XXXX, bidding around bidding official window the we XX, for September

in in expect We expected the acquisition the closed be with to XXXX. announced go January fall pricing summer of contracts effect contract before XXXX August X, XXXX. era, in winners in of announced into XXXX Transitioning as the to

guidance, a contribution in assumed from the in and acquisition direct have business-to-business our We sales minimal XXXX. revenue channels in both consumer to domestic to

side, On the POC with year continue we target XXXX as launch features. to the for non-invasive view product development ventilation an advanced

results. To $XXX $XXX X.X% guidance full-year X.X% total XXXX of revenue close full-year representing to million, XXXX are XXXX, up to maintaining growth million range versus of our we

guidance. to to million, to of the XXXX, growth range of we $XXX a representing revenue our $XXX XX.X% versus midpoint Looking total are XXXX XX.X% guidance providing of

more to order team increases to convert that does approach our HME to rate POC’s reflects in of national their large our to partners the consumer that This provider guidance XXXX. not We this guidance measured discussed also also believe assume expansion. and challenges direct sales the previously

growth in and of today our spite oxygen future to faced stands tanks Inogen from remain will shift more to we benefit Given we challenges the and continue POC's. in the prospects believe XXXX, optimistic about from we

Bauerlein. now our CFO, turn over Ali I that, Ali? call With will to the

Ali Bauerlein

good afternoon and Scott everyone. Thanks

prepared quarter of then third financial remarks, provide our guidance. I’ll more and my During on performance review XXXX and XXXX XXXX details of

the for an Scott million, third As was X.X% quarter decline of XXXX. XXXX $XX.X expected noted, representing third the quarter revenue from of of total

gross margin to in of quarter the total compared XX.X% quarter XXXX. was to Turning XX.X%, third the for of margin gross XXXX, third

quarter of to XX.X% sales in international offset mix XXXX. margin domestic towards increased sales the margin sales, sales margin in active primarily higher third increased business of Our business gross lower the quarter third business partially margin for decrease was The versus XXXX by to sales business XX.X% of consumer to mix due domestic versus was gross sales.

In One which unit, Inogen addition, still with a at GX, primarily GX. higher cost higher associated per we had cost was Inogen One from

the to expect third we we Inogen One volume, XXXX. quarter GX at by occur which Although to be of cost lowest expect our to manufacture, product

a had reserves in the one-time associated higher also small of We cost, with primarily period. inventory the contribution

partially offset depreciation gross patient in due gross margin versus increased the the was revenue quarter expense. primarily rental third Rental XX.X% was and in The service lower third margin XXXX on higher cost, to decrease service, of rental XX.X% quarter of XXXX. per by in

of for of As operating quarter in to expense decreased XX.X expense, XXXX of third revenue total lower expenses. operating quarter XXXX, or XX.X% the the million primarily of or XX.X% revenue million to due third personnel-related XX.X versus in

million versus intangible development recorded quarter XX% New decreased the in X.X in third quarter the with XX.X expense million million compared personnel-related incurred the in the in decline amortization XXXX, the third comparative XXXX, XXXX. quarter in decreased and in X.X $X expense XX versus expense to to Sales with quarter period marketing comparative increased primarily period XXXX sales million of associated Research to in XXXX, representative million due in the of and the Aera headcount in third to third of of primarily associated XXXX. expenses

we transaction was of to administrative offset on for in expense revenue. compared of XXXX quarter an in New the million, the General of million quarter XXXX. quarter XXXX, personnel-related expenses, In million of X.X of million. X.X% as X.X by versus Aera X.X XXXX, advertising spent third QX decreased return in income in the partially quarter XXXX million decreased Operating and the third primarily X.X which third due third to X XX represented to million cost

quarter XX.X% million were quarter EBITDA reduction of offset of XX.X expenses. the Adjusted of XXXX margin, profit, quarter Adjusted of versus EBITDA lower XX.X million, XXXX on XX.X% the XXXX the third quarter a third primarily revenue. EBITDA to due third declined XX% gross for third represented quarter operating lower on or partially third The in revenue. by which to XXXX in EBITDA XXXX was compared adjusted return was the return adjusted was

expense quarter quarter of third of reported of we tax benefit to million, in an the XXXX, XXXX. X.X million tax income income X.X the of In compared third

of Our the stock-based income XXXX quarter the excess an to of in tax XX,XXX recognized from quarter benefit million third third deficiencies XXXX. of $X.X tax in compared included expense compensation,

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

revenue guidance, total Now, to $XXX are X.X% maintaining as turning growth guidance we X.X% Scott million, XXXX full-year range our representing of of to results. to versus full-year mentioned, $XXX XXXX million

our XXXX, For we all expect consumer be business channel fastest growing international the by to full-year direct business sales. sales to to

$XX million, are our million, to of range to income guidance of $XX range $XX million. XXXX million EBITDA our also of million million guidance $XX adjusted operating We income net to maintaining $XX $XX full-year and range

the guidance to XX.X% midpoint. in XXXX, be to million million, of Scott $XXX for growth we of the XX.X% expect as Moving XXXX range to $XXX to mentioned, representing revenue

solid consumer to We business international expect rate. growing our grow growth business business channel expect and sales channel business to direct to to domestic a fastest have and to we

increase compared XXXX. revenue rental modestly, to expect We to

of half Overall, versus in the the we tougher expect comparable the remainder year. first of XXXX

the expect We revenue begin direct minimal in assist business channel. and business the with ventilator to both to title contribution domestic Inogen to of consumer to XXXX sales in

million midpoint over We $XX are guidance of of also income to of growth the providing X.X% million, net XX.X% XXXX million. a $XX growth year estimate full XXXX to $XX representing

XXXX. expenses amortization net Please million million income intangible rate effective in estimated development X.X New $X.X income note, and an estimated Net in an an in in in research also tax recorded assumes versus XXXX XX% guidance that assumes Aera of XXXX. approximately

We of guidance XX% XX% the for XXXX are million. EBITDA providing $XX growth representing of of guidance to million million, full-year adjusted a $XX XXXX to range midpoint $XX

cash flow additional capital meet no positive XXXX net current expect with to plan. We required our for operating

will I your and With questions. that, Scott to take be happy

Operator

Antalffy First Instructions] with [Operator Danielle from question SVB Leerink. comes

Danielle Antalffy

on Hi, the and business guys. for good Looks afternoon a bit. Thanks like quarter. taking has question stabilized a congrats the solid

wondering you of if look on to little a could back revenue, you Scott, appreciate if the start and I see. the being I sales you should I dig more we a guidance, put and bit ahead wondering finer domestic the double-digit of guys BXB are Aera some said would Ali on getting talked you you puts about last, color takes piece as to growing the know the how generating business, was about we potentially good as point you how much thinking consumer talk XXXX? to direct about last that’s are hoping can contribution that? but you look growth at into So, when in did to give quarter. there you, XXXX minimal, but And New to the business the you know that fastest

Ali Bauerlein

I take Yes. Thanks that the for Danielle. can question.

like on in feel we quarter are domestic and results granular side. as more the So, pretty said, proud direct do third XXXX, the there, on stabilized the consumer obviously getting to little side we of business and business our both business have to you the a bit

have to necessary direct a to that it pace facilities all more the side, moderate hiring to capacity three the across as On continue to I to getting consumer business. at back expand said, is now

appropriate and expand particularly focus continue that’s an QX that doing room in they for year-over-year is sure they where QX a manner. half now are of some of full-level versus also we at headwind and to there, we it to a XXXX the of down a there primary sales. making but producing, half of in us of the headcount force that sales is average while producing for So, on Obviously XX% did weren’t the lot the a in with second in headcount in significant the lot have first us that XXXX level were

productivity of benefits should that think the reasonable more more productivity who seen those curve a reps percentage reps historically of consumer a because gains continued the lot have understand. important is year-over-year rid it’s we're get direct weren’t do we now to I points. smaller looking getting the at coming side, and the expect of to as gotten to So, up performing and few on We the increases we’ve learning but it, moving that

talking really perspective. from overcome BXB front, challenge the XXXX, This about. large domestic been we’ve year, at we a have the longer On looking national the associated no there headwind with will provider has that growth to been a

Now, outside the timing that given uncertainty. that the be year of fact first think rate competitive the XXXX, and of the that of half we growth of bidding, half some the rates there XXXX and will announced because the that, impact won't winners until is on the have do in second

business. and and lumpy these So, we that in into factored we these know can have customers guidance, have be restructuring their sales challenges

and we reflected So, factored into have guidance that. that

Now, New selling that Aera, we haven't product yet. started

level, have talking BXB the work on this. any we’ve interest while customers cautious So, those or and at of this we don't DXC to on to either the programs about pretty the designing point, guidance we're because experience from side perspective a yet started

I’d and guidance pretty towards Until that where the say, the side obviously trials about we're back of and all getting ready on we we sell really half run selling, weighted trial, the those to expect you volume be a that be first will we’ve do versus on product things the the will pricing of to side, XXXX cautious more types there talked half heavily start we DXC bit. of part on will scale

Danielle Antalffy

the the percent that the if I'm about in X-ish bit there? growth, right, about last the right the great math deeper given BXB little like least if us XX% the you correctly, headwind half was so growth, the think can it ex about ex major my of did models first this then I domestic, I had headwind, remembering uncertainty looks think we I talking you provider just from percent as little drill given, is the XX%, a could than X-ish That quarter And if you're at a help bit so Okay. color. in the more XXXX

Ali Bauerlein

double-digit rate level out. appropriate think will more Yes, to clarity we on bidding I more growth how low come a that’s X% that that competitive do have until closer

general, that’s business think Now, is overall I in a this but reasonable obviously just assumption. lumpier

Danielle Antalffy

Thank Perfect. much. you so

Operator

Kaczor comes Blair. next William Margaret Our from with question

Margaret Kaczor

the I guys. the Hi, and may like assuming from international Thanks XXXX hoping a tender us guidance it again. and to sounds uncertainty and you through domestic fact good switch around walk bit afternoon at for this maybe little for as side, both question. we be international that from grow does in look period was XXXX taking to calls what the initially, maybe

your through demand regions? So, maybe of kind can us and walk those you into in dynamics those visibility

Scott Wilkinson

thanks Margaret, I’ll for walk take Scott that it. This the you Yes, is and through and question. one

said in quarter-to-quarter we emphasize to past, As continue that. we the sales are lumpy. Certainly, international

you else. in If for solid it drill but the had probably really down consistently you more it anywhere than at last done year-to-year, quarter-to-quarter look to lumpy we’ve well international. when We’ve it’s multiple start it growth years, consistently

you this the than year, a a little third was little were at stronger quarter than that you a that little weaker, kind to average, quarter demonstrates stronger probably lumpiness. expectations our If and look of second of it was know then

the a comment share of be key some the what and of we Now the let back onion know that’s and third of drivers kind quarter. peel softness me in kind general

from some UK we’ve some upside. actually resolved. seen get out upside. major in because things the generally out First of past. all, tenders is until guidance expectations tender, when on recently multinational it’s of stalled accounts about purchases the volatility but the bit little mentioned you on tender include missing uncertainty in more and some talked than you miss in tender We a don't miss out there, on It’s some uncertainty I What a we or

under that there the years. bidding an extend third in XX to is XX were tender the program. areas seven-year In Great contracts with up These were contracts quarter, to our opportunity Britain,

high-stakes game. of So, bidding it’s kind a

that lot major in about completed a tenders talked to regions found each winners UK, in region. determined, past be of four those we and at two the under seven Europe, the are of that, regions dispute. tend These bidding know, what risk after of You markets are in were was four the or now three the years. we’ve is years And

of tenders, is, are in who is UK you region, to are an that’s everybody caused who take kind have that gas whoever and to with that. but on what there are know is companies the pop to are all and going These side bidders upside mom whoever that pretty home they one players. win generally So, in halted is care because wins, so – that and winner product and big loser, there and the out each not so the large home figure much Europe you out companies these is redeploy they will together, loses the small is retrench to understand going large a then the multinational to organizations, some and trying they’re has of

uncertainty caused everybody that’s slowed that purchases. their is just with What

rather not on capitalizing than So, slowed the upside, everybody down.

is to good news for Now, short-term is our us phenomena. this

and the will clarity lose be fourth some going to resolved who there to going win end at least expect the it who of by be is quarter. We will is and

normalcy people resolved mentioned quarter. is far executing something that we so the we has I how early fourth their a return generally purchases, would once and as on is that Now, plan, start next this probably say, to you as if the year in there get resolved lag impacts know

Spain really country then, that’s in lumpiness, and smaller be than has a we, we softness yet by in have second and third continued France. tender it effect was some lighter we little but There mentioned is a I region to a some had quarter also strong effect, France. see It one the Again a country disputed quarter. in that’s some

like tend the have net growth to Over past. and seen in we we with strong these the the things year, out rate out average

that this understand still we’re again to companies news from the and good of we’ve to any our there’s in the out that going it. confirmed major strategy, as just of So, us real we’ve Europe have that’s market why I to on, we you mentioned probed primary for – that POC’s, what’s the is, and remarks, ride lost competition, the my prepared stalls haven’t change to no but in kind sometimes

Margaret Kaczor

follow-up switching answer knew gave it. domestic the maybe you had And was digit Got then what in high well, domestic of think on Understood. and Danielle the back I of to bidding. BXB we for kind as growth asked, just outlook the until competitive kind single

So, three kind the picture into your of that, any purchasing the further assume that to from strategic next is it getting maybe big does kind accounts, you're then? years top pause until on over two indication then And of the some product referenced? and years, growth, that stimulate of what other do other or to that Thanks. price, features the that’s you guys products way you channel do advanced of within whether outside kind ventilation diving just whether further one or

Scott Wilkinson

domestic start on it, for – I'll challenge mean, that’s it’s delivering look mean, really market, business they you the from I’ll if patient are that asking their is providers Ali at really tanks, said not standpoint, granular POC's. BXB I for it’s we’ve and know but to has the rates to more just and in and continuing qualitative add preferred, or when Yes. numbers, it are try you to it, a business convert a patients sustainable. reimbursement, something obviously see see I but

anything people than on and to there The is trying I’ll to leader, be in about positive that’s bidding competitive in they’re the the the we’ve challenges in are psychological side, one they growth talked but say, is the issue that probably and else. POC's past. push and more we more we have challenge you So, those are know business the the that’s where change see purchasing continue

acquisition large you they know more pop play, going bidding lose, mom are or buy larger even a region. up you They a their cautious if if win get are don’t program, past, lose companies, to to you are even a if and the will back they and through in. multi-national out and the screened not of said be If way scoop the then we you’re to going in going

they So, they I but being want to shakes more that’s do don't what’s to be, going out, how concerned that or think see get about think they uncertainty I the that really rate out. worry about and

You’ve that the model have if we’ve eliminate don’t they got have to bit a then make and just hurdles you do to pay that non-delivery sprinkle about work, don’t the and the and for that, talked other really more you infrastructure with you assets you to delivery little save anything.

ahead So, that’s an while face. still continue demand these ongoing bidding favor is face to a there in little got the so to we're credit hurdles. more and are being things still in you sprinkle we CapEx kind What going desire little our issues resolved. that some are challenge a now you there, know into and same year realizing that POC's to to things and that that constraints constraints of that a in are are little some change they looking causes infrastructure that, and you’ve They of until be constraints wraps competitive conservative, for uncertainty CapEx that the know next get things a you know probably challenges slower

help with we’ve as provider us break far help we work be problems can continue programs other whether got try community it can as to to to what solve down and with those barriers. financing or that do, those Now, the

helped have what we that programs smaller to but finance those launched and do to we financing comes the We’re restructuring our barriers. that’s of business, continue will have developed custom contribution probably larger players not we’ve that to for partner players it is down best break part the and when programs their

or all numbers of without any said I Now, that anything.

add. anything on like comment Ali else let she to I’ll So, would

Ali Bauerlein

point still POC’s that how should is mean, we XX%. to penetration really go the about are early our I of Yes. market with in I that estimate what XX.X% to would at

still out of is think have during we quarter know, that So, we’re volume and have we remarks primarily know rolling rate the conversion third domestic GX that quarter. really focused I providers I surprised we the the the the helping XX% been in pleasantly of GX on said prepared BXB do third it in adoption. with really we what with. the about started was domestic

we’ve adoption seen really strong So, patients providers. and both there, from

to So, on help at happy It I other POC's. that widely as that accepted over the a stay in advantage will a product. us see competitive like market think the interest do the and seems product it the that is best we’re

is that internal hearing the of their I our you adoption first are BXB talked from XXXX. and more guidance for seeing with that off terms uncertainty, cautious, and customers, of to numbers are So, of we’re but in of plans given the accounts on went forecast based that of process, what and the also our information being But and they setting guidance, XXXX in major will in know half we as and obviously help think our terms the what of guidance our of accounts. the process part the particularly the all they the the own that give we're us

Margaret Kaczor

guys. Great. Thank you,

Operator

Robert comes Marcus question from next Our with JPMorgan.

Robert Marcus

in question. was gross a puts the could first I P&L bit and expected, we there? just through hoping than walk came Hi. Thanks was taking Ali, for will margin takes question, you start us lower the the if hoping I

Ali Bauerlein

Yes, sure.

us I of gross domestic is similar, that quarter, they're reimbursement in BXB mixed they margin the gross And So, our people gross larger business-to-business, the because higher heavily but the we we’ve and BXB. higher percent BXB many And assume pressure actually much are biggest impact businesses, much, this a U.S. at us. is percent international times dependent both look is is margin that lower the while margin international most a domestic of had when you than for given and for much know said over, business-to-business, primarily

So, because margin. a large of that on because sales in sales of had international – impact gross decline the our that

we GX And was volume. in was of is still One our international none our remarks, as up coming of while portion and the volume, said to Inogen scale. the it said also We domestic prepared it a large

our higher still it's And than cost running so, a Inogen product. GX at One

shortfall margin gross our in of driver a was also the that so quarter. And

of other On had quarter, top a versus much in smaller but inventory contributor reserves a contributor we the the that, small was that also of higher two.

So, is most mix-related, or it's customer cost-related. of it whether

lower We FX impact, the well. also that international as had of the ASPs drove on on a also because year-over-year side basis

Robert Marcus

BXB. was year-over-year DXC ASP in the any In there U.S., or change

Ali Bauerlein

DXC actually recall, an year-over-year GX BXB and you premium domestic side a both ASP BXB the the were up of both product $XXX on slightly the mid-single-digit if GX coming revenue level. now, down because And per was in. the on right the has international unit basis year-over-year in

Robert Marcus

DXC? and Okay,

Ali Bauerlein

mid-single-digit around DXC up. it, that was call up,

Robert Marcus

Got it.

guidance in similar some It user. you're guidance was always from given DXC And that, until your further the just I something sounded language like of for like the bidding. that, most Okay. for you better international single-digit The here? end sense XXXX. sales high the then with then were kind response; on competitive range a for about BXB and get and away be Should comfortable plus saying you're you're conservative turning to into BXB U.S. we know of XXXX, the Danielle’s mid-teens to we thinking guidance back

Ali Bauerlein

Yes.

Robert Marcus

color would supporting the great? of could to us be you kind give Thanks. details any And to build up

Ali Bauerlein

Yes.

QX should QX than from year-over-year challenges we comp that the growth be that a because have, and different So, particularly QX and of perspective. in QX, very

side and XXXX. DXC first-half have high-teens to I the on single increasing the digits would the the So, back-half mid-to-high of the in proportionally in then

Operator

from comes Co. with & Our Matson Needham next question Mike

Mike Matson

just to want competitive my Hi. start with guess, questions. Thanks I bidding. for I taking

but expectation maybe relative calculator, reimbursement the kind it? of of is pricing, your moves POCs kind lead for relative don't to versus it tanks? of item misreading get tanks, with of hit Playing seems hard I know disproportionately I'm POCs like Given what

Ali Bauerlein

Yes.

calculator, you non-lead other are any lead at the the lead fee that's works the right not the item the based item you off disproportionally harder gotten had gets versus the that bid because calculator So, every look bid in is item XXXX And how hit that rates items. when declines basically of hit case are schedule. in the harder,

tanks. tanks would see concentrator and So, for you're harder is hit the lead correct which regions stationary and POCs an the that EXXXX both versus than reduction be competitive the POCs item, would bid outsized

the hope within where that out, case I next the items. items, calculator their account. But bid taken distributed shake the the providers that into they think know When for all don't was that the know is the various all will we DMV And of bids, rates we’ll middle obviously, industry. the of of did have we well year. this Now,

So, they going we we I that hit to understood need their costs turns will be factor where the out. items, but actually think items certain, for know and until account into see that non-lead in do need the to pricing lead the they items, harder for that providers in than non-lead that won't take

that on the they're positive side, to they maximum strategy said Now, from strategy. pricing moving have pricing a median a

EXXXX the non-lead So rates decline potential the of that that some we on the because the also in headwinds EXXXX. majority EXXXX, the mass both of lead remember and for is portion, reimbursement the POC dual that our from on coded may item our product for offset item still but receive is based

Mike Matson

to why great XXXX guidance the XXXX? it it's is when more now? just XXXX, visibility guess, and where into give I then coming that's in guess, not given where XXXX And everything but helpful. guidance wait just the really you Why is, see till have quarter the was just I happened fourth it that Okay,

Ali Bauerlein

Yes.

So, the our have year we've or This we completed is guidance. the when normal also budgeting is have this typically next we year time of the – that XXXX, our rather later. as given the given and understand takes frankly, we earlier the XXXX and I we've that think, where And than seen in investors want cycle. puts understand XXXX, to see challenges the

trying business sure we're by surprised what seeing make the and what drivers we're we're into So, expecting going the and understand XXXX. to of people aren't

Mike Matson

sorry, New the with category ventilation Aera. the last question the you Okay, if or can't more, on place on I this said XXXX? call, New bidding thanks. non-invasive remember for Aera one you in then just bids did And but guys

Ali Bauerlein

Yes. We in NIV XXXX. bid Inogen around for as

Mike Matson

Okay. Thank you.

Ali Bauerlein

XXX same we that In the for bid oxygen. regions

Mike Matson

all That’s thanks. Okay, I have.

Operator

from with next Our comes question Mishan Matthew KeyBanc.

Matthew Mishan

growth sales and in EBITDA. and to XXXX? nice an kind talk really for P&L question. the all, that it's you of kind increase Great, and of increase see first low leverage double-digit count you're how to Can thank double advertising kind with the a digits you expense about in of sales compares taking Hi, XXXX, and in you where expecting of have in to mid-teens in the guys

Ali Bauerlein

show Yes. to We on and associated the closer to in general leverage worldwide. don't costs DXC business. There's give on our sales ties And sales are specific in spend our focused Obviously, sales sales business-to-business sales. marketing we guidance trying marketing much and the with spend. marketing overall our than sales minimal and

So, small that's a contributor.

little to spend we XXXX. show usually side on expect there, investing happening bit training lag leverage with follow a as but sales in DXC on do tends marketing the and of or to what's you're it So,

Matthew Mishan

the you – nine what measured Okay. to kind expansion? force into factors approach to you And to size you're nine And back bringing that a how ago? talk then – like through, of did us sales compared the now to of months to six classes to walk like through can

Scott Wilkinson

exact Matt. Yes. color one, I'll give some size, around don't share I'll take we it. you that the And but

forward, of to hiring were hiring One remember whereas going before, major primarily we of in the things locations we're our key three is in Ohio. now, all

say So, more – what of shrink of I'll to a the year class x, smaller you much x. the of are, now it's locations, class, have a of class. last in allows When instead different peak spread kind classes say, XX% recruit that does our if us the are in now a size of classes classes multiple were sizes location. is, at then all magnitude classes onboard locations in the workout, one it

growth class, by drive smaller much still much, on a we're focusing all but three So, locations. to able

Matthew Mishan

potentially Is stage same a it you [COP], Okay, excellent. does of four salesforce, it XXXX stage salesforce, And incremental same outlook? rule then New customers question, last kind a earlier three, as that what going bigger than are stage market? an Aera, like on

Scott Wilkinson

of It's good our Matt. existing question, It's all Yes. a sales channels.

So, salesforce proven retail it we'll I ourselves think, sell as a sale. on our through We've, sale. direct-to-consumer retail

on excited use providers. homecare really this community. do could the a they'll a like their what it the opportunity as And could We’ll have this there basis. BXB POCs, That's through retail business. we the for And to we're well. product BXB with retail sell So, to in players be also about multiple options

got we've field calls you on also, physicians. our a own salesforce recall, small that relatively of We've if

focus points will part [RDMs] and point. of as are of our offering, essentially call it they our offering, certainly, pulmonologist on the that those first have our So, their as same call service

is So, much everything there pretty the same.

Now, the second part of your question?

Matthew Mishan

could of No, market? around some – it was the you address addressable if

Scott Wilkinson

Yes.

Matthew Mishan

Yes.

Scott Wilkinson

Yes.

opportunities the So, see we multiple New Aera event actually with technology.

POC, about, competitive patient address our a upstream launch. again, talked opportunities. our downstream POC that therapy XXXX We we into market. and on we that preference and and our primarily ambulatory strengthens current position the build As side, it think the But to see plan that's would oxygen we

can more therapy traditional you've than much we market NIV COPD, patient which I'll there, than say, the less. Downstream, applications that is oxygen a at is generally of oxygen you then and in if COPD your And just arena. that market the are, see look therapy general more traditional obviously patients patients subset sicker OX therapy, we the traditional market got a a larger or go participate upstream, COPD

adjacent markets of from there's opportunities therapy in So, oxygen kind play. core our

Matthew Mishan

you. Thank

Operator

comes JP question from next Piper with Our McKim Jaffray.

Drew Stafford

quarter and JP. Drew is nice questions guys, Hi, Thank you for taking on this here. for the

it XXXX to DXC similarly say to expect the side, of is so average. are months And at what of continue a those obviously, converted, time, how see seeing add comfortable more your get be you in that your historical little how you I looking leads get you new on? quantify historical largest with ads cetera? line more per And ramp you in dollars guess, XXXX, the the the can of ramping et you typically hires? – when rep reps is, point that bullish. here clearly the evaluate rep My as is DXC question then to commentary I that here On to them many perform start do trying I growing pretty we them repetitions segment, just at I'm is you back-half guess approximately how in and kind kind the is, guess point without

Scott Wilkinson

it’s Yes, good a question.

talk brought So, productivity business. are level in reps why how delivering new have a that comfort we the now assess let we what the relatively of we to and me through

three, month rep historical one, tracked output always curve. we've in four, a two, month and month to month an that have We compared

well when two month one, saw it was trouble And so, one, three. them when they what we into reps what the were below that of in month and frankly, delivered and XXXX, bringing say, two, we is and had look we reps before what ran in in, we second-half three, delivered

and to make in according that two, it going our about with was dive isn't changes that – it's something of past. new the we're one, and is historical that the pleased so and or changes we had reps, to flag we again at the those to comment plan in curve now When according three. in talked And first some make basically the productivity we month month that looking month hey,

We of have, multiple multiple across now locations, looking multiple months. that we in have platforms, over advantage at the

been consistent a good it's you across get that, wonder, when some hit one you've metrics positive pretty a it's feel got the So, not that Board.

continue well rep, made criteria So, programs intake and our right and Board. we're gives to some across those confident what onboarding get sales make management changes both that paying are to we that sure as confidence the us to of to matter. in growth we've as well, that that made drive things as and that off That's to changes all we've the consistently the hire training

been as month point, far disclose deliver through same to months and the level curve to some them. a four it's But a a a here work that six season's a up as month rep some to expect ramp performing before for we one. that's they beginning. in may reps to number rep. and And or said They six-month not steady state, Now, the a at then to them get don't we've that x we well, contributes, somebody there's contribution expect what in plus one, at generally when of would call we we numbers. contribute as be at units they them but came those sell And break-even

our that's and measure how kind progress forward. general that we of So, curve going

Drew Stafford

weeks. recent trade in previously I wrapped believe just which you. had And mentioned up then a Very helpful. pretty Thank show, you large

there, to you I Thank you. see you guess, new competitive is, front? anything question the So, did or want on highlight the anything

Scott Wilkinson

Yes.

new materially the We competitive haven't really anything on front. seen

I've me GX, think horn mind mean, seen the out my you best second, ours. the there product tooting and don't a I is new own I if that for that's

we're Ali said, well, said with third as GX. XX% of on our the quarter That expectations were very I it in pleased that the pretty actually and So, exceeded pleased shipments that, uptake reception. the domestic we're with as and our

to major advance We're anxious scaled our is can international that launch, samples of the so test get right markets. over on in customers, going to sent they already which We've now. them in up that

say, have new pleased that most on I newest we POC the market. the significant we're would So,

Drew Stafford

Thank you.

Operator

would questions, further to back remarks. over no have like turn question-and-answer closing Wilkinson I session. this we our Scott conference concludes As the for any to

Scott Wilkinson

again, of look to make ventilation your for to and continue We standard for markets oxygen patients the you, Thank time in in execute you. non-invasive today. worldwide, our to XXXX. therapy Thank also care POC’s on ambulatory the forward vision expand

Operator

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

now may You disconnect.

Inogen (INGN) 5 Nov 192019 Q3 Earnings call transcript