INGN - Earnings call transcript Q1 2020

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Operator

Greetings and welcome to the Inogen First Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

I would now like to turn the conference over to your host today, Matt Bacso. sir. proceed, Please

Matt Bacso

participating for call. Thank in you today's

earnings me and Co-Founder, Inogen results available the XXXX. on 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

and and our As related tender or regarding statements about limitation changes. statements, including a reminder, without of expectations impact the the PHE expectations regulatory demand and information growth activity, presented our strategy prospects COVID-XX today international emergency regarding XXXX products and and sales will business include forward-looking health for for our reimbursement public and on

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

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

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

that also by basis. excluding will US certain non-cash financial investors we not financial call, and a measures of certain are provide expenses non-GAAP indicative operating financial GAAP results. the During taken in on both for Management and management information non-GAAP that Inogen's with believes present measures conjunction useful core other information items

results in within evaluate Reconciliations US make decisions. release. non-GAAP measures between presented our manage internally tables non-GAAP business and uses to and earnings and Management understand, our GAAP operating are

our GAAP of to directly to we the periods, future in effort in earnings reconciliation -- comparable unable unreasonable non-GAAP release. guidance a without discussed detail are as our more most For provide measures not

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

Scott Wilkinson

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

take and our of is a a and everyone our COVID-XX the responded like emergency impacted what quarter have how terrible moment we the health into results, to public for company update on how I'd world. around been crisis everyone has a our country Before review truly moving to to PHE or

an and expectations to Medicare's will of on response its impact update our on our COVID-XX PHE provide potential the I Additionally, company.

no As including Symptoms place is the in and across globe. was higher transmission. among COVID-XX further aware, conditions. in XXXX COVID-XX residents with the led illness order and everyone and pandemic from to symptoms ranged distancing medical some in of social reduce governments death virus resulting resulting China practice to spread severe shelter first in chronic with to mild The to late certain quickly older reported have with those including adults very rates mortality identified

healthcare with system, impact treatment patients professionals certain by is to for the the prescribed COVID-XX. therapy Given oxygen respiratory for

in more recovery also believe patients patients global home, an and in oxygen or room effort could hospital. post treatment appropriate to be the stationary allowing to disease by the who severe early concentrators those professionals relief discharge, in progression such the systems making We by portable need healthcare in patients hospital in as be provide thus treated for hospital to prescribed

The reduced emanating mandates direct-to-consumer and channels direct-to-consumer We behaviors believe sales. sales business-to-business was consumer from toward was first the Europe first lower the in in end channel. domestic pandemic, XXXX, for sales by our and including United started the shelter-in-place of lower the in oxygen quarter and COVID-XX reduced and the the partially orders, late impact pandemic sales the quarter, States business-to-business of the concentrators there travel demand within increase quarter. sales offset As to the interest our heightened particularly confidence,

non-contagious in as illnesses non-competitive of XX expansion It through an HME blended would on Act to to is like March the the the signed a other COVID-XX extended to PHE. response rural COVID-XX update Medicare established the March also to providers on all for the announced bid I recently coverage XX/XX provide bid duration rate PHE stimulus respiratory Next, CARES related blended a areas. of non-competitive and areas and rate X, retroactive new for XXXX. XX/XX bill

Furthermore, duration HXNX the lasted effect emergencies in and reference, reduction as is XXXX Medicare lasted that flu of While Zika public to went the be days X, XX, XXXX. outbreak COVID-XX PHE virus XXXX predict, through the impossible sequestration XXX May the XXX health the approximately the approximately a to days. will removed into X% for

consolidating estimate and compared PHE to rate suppliers in the duration established CARES prevent, respond and PHE. April Medicare place also provide Act billion, a modest to reimbursement of to XXXX When for of for Medicare the fund $XX changes, was The to what was COVID-XX for $XXX providers relief which increases billion of on XX, distributed these we COVID-XX the prepare before.

distribution. XXXX. a be XXXX received Human this April we of which distribute XX, Health patient revenues billion These based announced to funds, provide of million distributions on relief all billion Services allocations $X.X supplier, On funding related net payers. Medicare additional $XX remaining across $XX new started and a As funds and April to on the XX, XXXX, will

June Federal XXXX was is X, the In with until that an interim the addition, there comment on period published in Register XXXX. X, final April rule

proposal determining additional patients clinicians home. allow at patient in allow Medicare to needs for respiratory their manage flexibility This treatments would to devices

for allow for We Medicare paperwork the burden proposing PHE, X, system, and COVID-XX such of the on quicker and solely to retroactive the based concentrators March this respiratory products cover is products. the patients' assessment believe reduce other patient setups. XXXX, oxygen clinicians' on could to During the need

believe bidding of Round announced product in April Also, XXXX changes the in remove flexibility, patients, the for facilitate ongoing X, non-invasive the through oxygen XXXX pricing on bidding could the competitive CMS our we from PHE. oxygen. COVID-XX of competitive conversion ventilator announced competitive we Given portable result, concentrators this bidding be summer the program a due not it the these Inogen's And Round to increased announced has as the category business. to still expect was XXXX. CMS rental delay

changes, these all to Given the provide a respiratory in aid COVID-XX providers Medicare's receiving proper as respiratory well by products We increase to the treatment rapid the response much necessary timely as to access to changes financial needed COVID-XX PHE. allow with in minimal we encouraged will manner HME PHE, patients during service these of assistance are believe disruption. patients during and

will greater serve for meet this company our patients' needs addition, demand flexibility our In products. their to and allow our

will actions, place. to in as no However, is we there while how by are we certainty recognize Medicare's these encouraged changes long remain

provide XXXX. first reflecting XXXX of quarter channel. a by our We will the I X.X% generated total now details of revenue first that, revenue of decline around from quarter With $XX.X million,

we first XXXX some quarter component quarter to As the XXXX. and experienced a previously that shortage manufacturing due of on of part Inogen the One challenges disclosed, the fourth impacted GX

our of GX in production earnings midway were announced first XXXX. we through to return the As last able normal the Inogen quarter to we call, One levels of

demand COVID-XX medical PHE, competitive bidding was the uncertainty business-to-business early quarter the for partners to due availability partially and of XXXX. offset in Inogen equipment increased by to in X.X% sales impact the our quarter Round response increase first home One in around the demand in to provider GX oxygen the by XXXX. Domestic to lower on concentrators the XXXX The first compared of from driven $XX.X $XX.X quarter increased primarily million million

limiting referrals. While continue demand concentrators while home early declined there the provider was believe demand traditionally patient our led or COVID-XX to for surge medical oxygen limited an initial partners patient offices physician we that have in oxygen be that in new equipment PHE, for could interactions

associated sales $XX.X as certain first markets, are quarter tenders PHE. Kingdom million Australia. with in increase of the in with million partially continued hold constant International increased in the pending the offset a in in slightly The PHE to reported the quarter primarily Sales down by the and the XXXX. of XXXX uncertainty tender were business-to-business and to The the quarter. COVID-XX currency increased X.X% on X.X% on associated Canada first basis was driven compared on in in European higher to United primarily due $XX.X demand basis demand an by COVID-XX Europe,

the from $XX.X quarter the approximate first beginning the the mandated to of an concentrators sales confidence, of driven population. our in head the reduction decrease sales count initiatives quarter in in from in primarily sales shelter-in-place was year. million decreased March, mobility, of headcount government increase by by across the was which versus first XXXX economic reduced XX% in million and XXXX seasonal for rolled average the in oxygen plans the The resulting X.X% States increase to lack partially to that Reduction prior XXXX. our believe patient representative mobility in offset consumer reduced an decline the tends the comparative be Direct-to-consumer in of remaining period an in from $XX of reps. quarter with combined first among of consumers, particularly a travel United demand. sales slowdown This portable We the productivity

increased our In seasonality approximately first representatives XX% our sales due of the the quarter compared quarter expectations in XXXX dropped April, first to hire typically in volumes we did XXXX. direct-to-consumer volumes new order order by business. when to see to of We

and sales coaching, However, and due for the remote representative plan direct-to-consumer new to challenges the hiring to rates of XXXX. reduce of close reduced training we hiring, remainder

XXXX, of rates. the XXXX million, Medicare first XXXX. as to quarter of X.X% of quarter We in reduction first $X.X the reimbursement higher of approximately on XX,XXX the a by on first the of patients primarily offset due in but partially to of revenue service, Rental decreased decrease X.X% to end had patients service quarter compared a

as setups While intake increased should we sales fourth of patient team. productivity in made rental team count well increased rental to of expanding quarter X.X% to progress as lead compared which inside was down XXXX, our the our

and as coming decreasing $XXX.X stability believe We where independence this adaptable strong service cash we and given of Inogen for today debt oxygen operate future no with we and with the outstanding be during stands level certain global providers. see to us and delivery cash as spite challenges cost in it increased provides worldwide time. the therapy million to equivalents in while of the for of and months, freedom POCs liquidity economy unprecedented also provides patients, still and a patients and Lastly, face the our

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

Ali Bauerlein

Scott, Thanks, good afternoon and everyone.

first XXXX the discuss quarter review remarks, I surrounding XXXX withdraw of prepared our financial my to details and performance our guidance. will decision During

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

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

inefficiencies manufacturing of sales cost in gross XXXX. decrease the sales in that margin the first higher unit and the was primarily associated expenses. with The per margin XXXX certain to labor of versus overhead XX.X% quarter in was in XX.X% higher Our first gross due period to contributed quarter

In increase a we addition, period. remained the toward an the higher GX, GX One than experienced sales Inogen mix cost at Inogen during in the which One product

year. Finally, down lower increased the prior first prior gross mix first of average the and the business-to-business quarter first the versus selling prices XX.X% of reimbursement XXXX margin quarter in quarter sales gross all the gross a sales XX.X% to the were XXXX of increased same XXXX, higher rates And versus of and XXXX expense. the quarter primarily versus margin has also to margin year period due lower total depreciation comparative which in in period servicing Medicare Rental across in in channel. the the to sales first reduced in

As a for benefit New the first expense $XX.X the from first million, operating of $X $XX.X million total fair primarily in of earn-out quarter quarter change increased liability. value in intangible XXXX, the by million operating XXXX $X.X to expense, of Aera amortization million versus partially offset expense to due the in of

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

compared the $X.X fees. as lower of In of quarter $X.X in Aera in This the legal cost a first in increased the advertising the of $XX.X $X to fair first quarter General the due the due consulting quarter to a benefit and spent primarily by associated increased million of partially of in versus interest administrative value assumption debt in million from earnout which offset change reduction XXXX in was of to the expense was first first rate XXXX, we XXXX, liability primarily million with million New quarter environment. million $XX XXXX. and to

generated the first of million benefit of loss an of XXXX, and $X.X quarter quarter reported of we to EBITDA the $X.X In of adjusted first $X.X income In $X.X tax operating quarter million, we in compared an an million. expense first income the of XXXX. of million tax XXXX,

benefit the quarter compared of versus common million diluted loss $X.XX included of first compared excess income per share was common Loss first deficiencies a per $X.X of in XXXX. Our the first the tax of in to XXXX in compensation earnings quarter million net tax $X.X XXXX, the XXXX of quarter in stock-based $X.X income $X.X reported of quarter we of of to from of million diluted first million first $X.XX XXXX. in In the of a net quarter recognized share first quarter benefit the XXXX.

of to guidance. turning withdrawing announced we full-year uncertainties, because the unprecedented our are market guidance, previously Now XXXX

duration Given unable the COVID-XX we estimates scope to the for our financial our true on uncertain revenue the estimate and PHE, the of results including year. full impact are

revenue the to to our full and impact and to be material, results between makes our operations direct-to-consumer and withdraw the mix business-to-business XXXX In us us financial GAAP leading uncertainty in overall the the income could guidance. unable net addition, channels for which adjusted EBITDA year, also forecast our

continue increases. sales direct-to-consumer to until decline could our in patient we a believe We see and in consumer mobility confidence channel

are products interaction. in first in for future business-to-business may PHE new demand demand in may be to patient the we quarter referrals We physician experienced could decline due channels, our decline offices as also COVID-XX believe limiting our limited or the in increase that the patient COPD that as

to with our uncertainties, implementing comments spend are also the Scott's position, advertising on strong cost debt this liquidity no our while provides operate liquidity setups to decreasing utilization. I these we million and want outstanding improve reiterate increasing Given savings rental uncertainty. also lead and equivalents certain cash by of us cash hires reducing to and we during believe necessary time of $XXX.X stability personnel

we that, your take to question. will With be happy

Operator

your Our Thank with Margaret Blair. Please you. with proceed [Operator question question. from William Kaczor first Instructions] comes

Margaret Kaczor

Yes, is Hey, and sense good afternoon, one us or stabilizing with questions. maybe Thanks more line And guys. give April the me DTC the BXB first for businesses a for taking you can of the [indiscernible] should a as or business we from that? DTC down is plug in severely pretty demand decreasing in sticky it or same. the down travel trend which

Ali Bauerlein

I'll Yes, sure, take Margaret. that question.

stronger we second order of As seasonally down did expect April. volumes saw see in as going quarter remarks, Scott typically, his is approximately what XX% order direct-to-consumer for on the know, bit And in shared compared Those would XXXX. which the to give to into a visibility prepared first volumes of volume we we increase little the you were on us. quarter,

increase, that average QX from XX%. from sequential that If look increase to the to about XXXX we've you going seen at historical QX XXXX

saw April of side terms the a in close rates. decline in it we direct-to-consumer was So, that in large

though we still what also saw is we significant are in generating patient interest. Now, April

the So compared strong. seen been the lead actually is very historically. really close rate to what down volume has we've that It's

it predict in rental area, business to last. that's And as to will traveling, that about utilization well consumer for how confidence elderly because difficult we as long return crisis for So, population. really lead this it's long return will why particularly the to toward the how increasing a talked take

subset business-to-business business-to-business of demand, April. similar On is in drop-offs side, Internet domestic course which demand a reseller the of saw that

seen of the domestic of that direct-to-consumer course, follow side for of business-to-business is pretty providers. So, business. additional HME with majority what we the to closely the bucket on But, we've expect that

also COVID-XX. are interaction. moving because up you results, parts be time, first for with provider as in to of business-to-business expect a limited We But there our lot And patients orders being expectation. down right that and do versus the COPD just saw were we in lumpy is now patients treatment with continue certain there's a the obviously for therapy oxygen quarter over seeing traditional physician referrals to potential

oxygen right patients just eventually COPD and appointments those now. doctor their may that are So, happening not seeing conventional need

quickly quickly really removed normalcy how that and depend So, to the how will on we are orders there. return shelter-in-place

the obviously trying seen in side also business-to-business on to limit We home wanting of to the some really domestic the interactions have due spread potential to patient's reduce COVID-XX.

So, that POCs. to I period, activities limit for BXB from partners of that do it also our tanks think could the restructuring

outlook the and we to turn Now, it a better of the that good see patients interested is about talk Scott being continue solution maybe long-term thing the in though and to there. I'll to POCs benefit wanting

Scott Wilkinson

Yes, I treatments all, the a therapy it. first COVID-XX long-term, is guess, if oxygen ailment of of is one and mean, the respiratory it's at we looked I used, for

term, we After this by So, pandemic, COVID-XX of system, in you might to an the the into and they the we turn oxygen our always kind short have is respiratory look may chance if from is of of the go impact smoke business, therapy clears but kind on there that kind business. uncertain a that saw impact at what's up over damage kind in the the needs long it's the uptick. In the what term, do our the that's of air. had people patients, long-term on there if long-term where and

on Certainly, play. it's there for demand -- But that, time demand more long-term to that's not increase, product. going an be tell the or our harm could a the put decrease will

of of product Most their do concerns homes. supply, having to had also, a come marketing stranger that go lot different and concerns -- have our patients -- trip them for their aren't called down hunkered are these has on about deliver still as patients to But a they a the all Ali been have in have go visit, the tanks. about to on do we've their think on answering everybody's home campaign. said, looking I kind or a with dialogue they

of concerns of you a themselves. If They have patient's other the equation into at exposed exposing boat. patient's the the are home either side being home to in kind same care them going or look about a home companies or

another deliver I in pressure to We've a it. non-delivery it with pressure if on with reimbursement delivery and really future expenses the model look ahead. you difficult So, piece puts had that already shines continue from the really the all to associated the model think this make light cuts or sustain of

Here is going thing to again, down clears prepare next the better for time how that when another the this we people road are do smoke around. say,

While there emerging more is a talked a this. tele-medicine from trends, few in about maybe lot the have being future people

there'll on pressure think I be to put that. to model more non-delivery convert the

we and future risks that control. in So avoid more these the and the patients are in exposures

Ali So, more outlined, long think lot now. I'll term, going Short we our term, coping is there through introduced is pressure could to cope have we're a of there I for positive not world right with that whole as The some, and with alone. be say, a business. variability lot variability obviously

Margaret Kaczor

No, Got that's helpful. it.

dive are little but they you kind discharge? distributed, you know bit patients used the as COVID unclear. And of it as into so a patient's And are far products deeper post being in if they we did get know demand, maybe as that like those as far on house sounds HME where was

Ali Bauerlein

Yes.

some used some seen COVID-XX have being we of it for So, indication patients.

of mass really right the COPD for now usage course, majority Of patients. oxygen is

they're some oxygen the need portion oxygen after acute the to in treat some of for a need later discharged, still but in is either some hospital for time. of early period state there and or COVID-XX level they're but may patients and support disease the of -- So

those as are month, or are So, uses, for a a not oxygen for it long-term few yes, may term those we long-term patient that are use, remember of need short where but potential uses a a uses seeing not use. weeks

Margaret Kaczor

do one Okay. a improved and Can of go heard That's you it year-over-year. all and maybe the what us the this just how travel that's sales a from but strategic as XX% you next is three, ongoing kind sense five for people changing around rep declined four, helpful. trended last alluded sequentially do Thanks. quarters give a and lot. while I And down to you of plan then headcount me, DTC,

Ali Bauerlein

question. that take I'll Yes.

did expectations we hire our first the in quarter. to So,

here, get So, kind sequentially, glad reps to forward the we stay do hiring, and we went headcount continue able were home was level even did And in we are as to at into that place. some of up door. the of so the looking from orders

difficult than so some been did remote but far in-person that we more So, successful. learning, has obviously, learning, that's

we rentals to that close planned be going hire level we have into of do initially more will group rates we it some than a the what return So, really do group. but XXXX lower can until of and/or employees, the of see plan as

Operator

proceed Marcus with Our next Robbie Morgan. question. your question comes from J.P. with Please

Robbie Marcus

on taking wondering profitable the us Ali, to P&L deleverage we think, on most the walk is P&L. is the expense? versus on fixed is of for cut the think basis How as to you manufacturing? can be Thanks should question. much down, about through XX% impact the would Any April. DTC variable I appreciated. help impacts you some could if the How How was and I much which a in the dollar down

Ali Bauerlein

Yes, sure.

the uptick again, usually compared our first we of be an April And, XXXX. seasonality down would -- were XX% traditional So, quarter from to April said sales just given the was amount in patterns. QX

mentioned, deleveraging, million. to going of as we reduce $XX are advertising. in was Advertising terms QX In we

operating million significant expenses. a that's portion over our -- of So, in we a that had $XX little

most costs. gross costs of are the labor overhead those costs terms In versus fixed material margin and profile, of costs and

that BXB portion our course, rate can can a becomes but of be, leveraged a percent. of that overall at gross bigger mix impact as So, margin the also sales better

depend mix will our business. the that something in as that highlight on to want do I So, overall

prudent we that term. with we're entire are investments we're company see we the making our for and are careful reducing hiring really being the we hiring there, still are making did decline spending the we long that's that investments we the But think sure the that and across said our As group. and across

where it you a some but is course, more you these cost, but be of DXC rep overall the sales rate. level sales certainly will times in close have deleveraging, the challenging lower cost, of still there So, have

So that rate close confidence to expected an business our of in for is impact associated certainly the lower travel. with duration this bottom the lower on and consumer have line

Now, be small planning cash return investments will use should a a in But rental that time more cash on we stable are of the stream of said, doing on, revenue also we investments. our those scheme a overall that produce more over and as balances.

that plan So, to that is something we do.

Robbie Marcus

Great. And we maybe to just how apologize. much how out should far? April as you Thanks. a impact follow-up, quarter you've you in I'm be business-to-business jumping on so in that was this think you thinking between said call the what about seen could the sales calls, what and so I if But due based was COVID

Ali Bauerlein

interchangeably, same a really number it majority difficult frankly, didn't may or for COPD for call or COPD because us us for us out Yes, buying their customers month it of And or are COVID-XX then would do a be for the from they that specific patients from using us patient them there. patient. start we they're core to for customers entities it the units a use buying and the using and a mass

material we pattern, that being hear our call see units in none of out that specifically didn't of don't provider We but were did level from from purpose. see those were did amount some hospitals but in organizations charitable buys the smaller typically qualitatively we ordering that that quarter. So, normal used for and our we was, partners what

Operator

Mishan Our with Please with comes next Matt question proceed your from KeyBanc. question.

Matt Mishan

throughout everything were the you open this environment. or the just taking office to curious for Thanks a back to able you the everyone Great. And -- safely? thank how call time. you do throughout I'm work-at-home get where can for so, system your support questions. you crisis if at centers to doing to this the adjust healthcare And

Scott Wilkinson

Yes, moved office of to good of a reps. We've does a include lot that environment inside sales our our staff question, it's Matt. work home from a portion large

to that it. say home. not We've you but forced left prudent working probably really it's if encouraged said people we go We comfortable optional haven't I'll probably mandated it thing from to a feel home, and do.

to out XX%, happen our XX% give are a number IT of from throwing team let really migrated home. don't you to mind, a Just in now short just for a out time. working office staff And me shout our if making of period that

That's that people March right we had worked at back many obviously we've and early beginning the work well. tell in before. started home I'll this from really And never you,

So, we -- we the had some going that of let's tip problem. patient can. around we we I that to of every cry that the questions go. part has on hat care And can to kind my everybody was do and employees, to everything to in our dug rallied how of solution are this of take And

I'm great so and of proud And incredibly staff our they've done a job.

because is any not great Now, bring somewhere down we're everybody said, doing really job. the back, rush back, I line, to we'll like have come them those people in a

sense do engagement I to no is that. there a want So, level urgency in our of But of company. maintain to

bring the them back. term, is long plan to So,

come is our to home. building course, manufacturing work of Now, people got to our products from today, they nobody

coming work products my get and patients. very the every the to the So, them job. has out really But for to everybody them those build well. day done a think door terrific to changes and tip help we've I hat handled And and I

Matt Mishan

are That's it go you gone going you through UK think, you the Has update through. was confident have to first expecting I there European or that XXXX, on that tenders still specifically of some the in in are great. in one, was flux? that's And the any of then half

Scott Wilkinson

was started on in put actually March. we to then Yes, see hold some and progress first the quarter in everything

losers. no has But an some even work So, the those from lot and standpoint, we of the been from standpoint on have some of to make a transition though it's informed decision because sorted has been take of out some winners of changes. place a been there execution that

put And stop. so the was UK, on everything in a hard

all provider from on that taking product entire So instead care system and of the of care patients could the companies to one switching of around healthcare home focus another.

when nothing going again, lifted. the -- that and move will but until this take health do that all expect is we itself we'll transition sort place, to see when emergency is is out over that So, public

Operator

proceed Matson question. Our question & Please comes Company. with your next with Needham from Mike

Mike Matson

Yes, thanks.

So, I benefit was from from you -- And that something, that for is you I has assist I there launch you and I yet. wanted remind potential the know know to there me, to can ask tidal have any that? formally clamoring New ventilators been benefited about product, Is if that? don't this Aera

Ali Bauerlein

that one. take Yes, sure. I'll

we So, launched TAV limited launch December. the product in in a

that through few really it's we really a rolling oxygen DXC our with invasive months available a domestic it and was been channels, an side. ventilator, been direct-to-consumer it's launch were not is across going and as force meant the across well the business-to-business it and sales it's core traditional that just assist domestic So, both really

yet that also We to business reps impacted was core the stay-at-home our trained the side similar direct-to-consumer with have all not consumer the but mandates confidence. on oxygen sales on the product, really and that lower

the in we've product. similar pullback So, a in direct-to-consumer interest seen that

we POC that in we to great product done interest purpose COVID-XX lot small be to stationary really if still have and for for think have still that's the product we're we've we'll we're and received into patients. there right product this on product to Obviously, The we really But in effort focused uptick now. I a exploring anyway. ongoing XXXX treatment for into and concentrator. not goal role That's a TAV the But press some really that contributor there. of and know not learning that's that a overall see right play to of while effort. didn't that that R&D larger seen expect a benefit the ventilators really, integrate is now, really our Now, the significant is where an

Mike Matson

question count. Okay. your on a Understand. just And then rep DTC

So, when expect year. you count were rep where And least do to, and would you you does you -- the year-over-year you year-over-year to when the were quarter. increase basis, -- your between said stop down but then the you still to the at this planning XX% hiring, I actually on What's declining and are at when the you're guess, beginning that? end -- a count of year, the of you're or -- slow going now

Ali Bauerlein

Yes.

recall the the you occurred the reduction year, in last sales force if half. in first So, large

reduction expect large end we quarter. to of lap the second that So, the at

So, we're to it. close

year it DXC as seen reporting mid Now, this to last business. as a headwind you've that decrease since started headwind sequentially a we

of many terms out exact a to hiring, expect models attrition there how reps some And also of level of put of we In number remember haven't obviously the into as is well. our built we reps hire.

headcount exactly to year, at will to -- So, not of the we end going in do give normal we remainder the hire we on where expect we be kind specific where depend But can of at model that lose guidance this on how XXXX. shake rates. we where plan to end in of we're depend we attrition. to just lower execute the then also many year on many reps actually how will out the And and remote

Mike Matson

is basis to But plan understand your -- willing you you're right I on year now than number, higher but on a end started? the a a not give net to

Ali Bauerlein

Yes.

Mike Matson

Okay. not you're Or sure?

Ali Bauerlein

I as will is Yes, including how add in period we factors on, depend rep our to so still execute hiring now that come actually leave yes, that out mean, many where and to we well. reps plan have on base, to our

Mike Matson

concentrator, Yes. have stationary demand. really given you And just make COVID-related I the all that just, then these know days heard I've a finally stationary become concentrators the scarce

at have concentrators able all? as And have advantage you of one, take substitute So, with for used product? that being a own been POCs two, if stationary your to not,

Ali Bauerlein

Yes.

there. heightened have concentrators, well reported I interest some we stationary in there So, shortages been that seen been that's has think,

Our rental a lower product that partners is more higher business-to-business by are premium weight would and stationary for put patients noise things things is willing because not power providers and product cost product of that to care it into fleet. not our be that concentrators, necessarily about a less our with used is lower typically consumption, product that the

up interest So, there but a product. chain. that how stationary ramp concentrators, But course that historically, can by product in of we limited been that focused we we are seen has more product, the shortages of also direct-to-consumer have quickly supply with

the volume and choose in ramp the have other in bit concentrators it also the will chain ramped that supply when there is market, the to needs, up also supply stationary fact So, just are adequate accommodate being most cost -- we we that comes scenarios. but product to are lower providers tried balancing the know the for up when we a the to given

have So, treatment and we POCs to certainly using driver that's major oxygen to we treat POCs. the a stationary as patients. a the as are think other don't business, mass looking at get are concentrators, of providers still but that, source for shortage another seen our though, us majority of therapy patient we sales COVID-XX In

Operator

SVB Danielle Our Antalffy your comes Instructions] Please proceed from with with question. [Operator question next Leerink.

Danielle Antalffy

for quarter. of basis, giving declines, Hey, guys. you a the question looks around think first question improvement/less guess, Thank all, adjusted you about, basis so afternoon. see I My bad much business-to-business some over like on first is you the how on it on comp-adjusted have. Good domestic, comp the color taking that to a did the fourth and

more driving that you're quarter, it and feels to there there maybe talking So, Are way about that it that's right out in think about sound nature. beneifit seeing like doesn't understand that? that in might Is much think what's help like anything the have COVID a the organic any that QX, in us is you so I call don't growth? you -- seasonality driven of

Ali Bauerlein

Yes.

the see did COVID-XX level we So, because buying of of increased some the from business-to-business crisis. partners

numbers part So, QX there. was certainly that of the

instead muted putting products which the expecting other buying GX were quarter the product part course, of BXB of wait and in we shortages it is would dealing part the in GX, of interest the we period, the first the because into fleet. with for why their Of component they were

in the we later those to until So, quarter. expect didn't orders push

they weren't emergency did a not to saw and we that out us really mostly increases buying But as inventory break increase in it's potential hospitals. And started hard for of providers was it through many charitable new demand. was buying wanting partners, as with really provider see Those existing the have our accounts. amount health said the through and any and deal material make in sure earlier, level I certainly some from evolving, organizations specific to COVID-XX because impact and to we COVID-XX levels their the order supply

Danielle Antalffy

Got it.

Okay.

margin to the potential much. here, long-term does it look margin I ramp business any DXC? question sort my business, little about think next different And -- potential. mean, shift mix on margins this think is I longer so as versus term, a then the shift us BXB mean, quarter the help toward bit we you you BXB think Okay. do long-term how about with the Thanks of in saw about

Ali Bauerlein

sure. Yes,

lot So, our as margins BXB historically, will on of a higher obviously a our but marketing we've gross is said, and costs gross also it gross profile, business. versus BXB, sales based as that the has fluctuate mix with percentage higher profile, have Direct-to-consumer direct-to-consumer. you lower it. associated much with has expenses operating lower And of margin margin more a associated also

to So, as we fluctuates. margins. gross fluctuate the a of expect do profile, impact those If expect become our DXC does over also that margins would revenue we certainly time to portion lower gross mix total our then

a well with by than quarter, also being the the shortages inefficiencies component GX impacted in costs we were as the at higher GX. still the manufacturing part obviously, as Now,

a that costs, by we'll GX COGS on still cost really there reducing be top like for We we the feel priority mid-year is and parity at making progress are us.

So, so to dependent actual are be sold, gross it mix margin at gross will out goods cost a margin our on portion headwinds. of But comes to can reducing our we continue what offset those at. we drive least focused of heavily

Danielle Antalffy

much. so you Thank

Ali Bauerlein

associated of want to you business, -- mention we're length rentals and of to PHE. we're for Now, rates, to the me, as tailwinds improvement see of excuse particularly higher more we fleet the I the to gross of on and into continue improve rates in COVID-XX do something with the the that's rental add proud the the course, margin really that with side expect incrementally looking the do lower there

Operator

call Thank this Scott you. would time, the to to At Mr. for like turn Wilkinson I closing back over comments.

Scott Wilkinson

Thank you.

proud to the of PHE we with of will our a Despite respiratory standard bright in be all these oxygen disorders. portable care the COVID-XX to continue worldwide. that solution unprecedented helps future and believe for challenges, has part of patients concentrators times, we that are therapy us patients oxygen immediate While be placed is

we the And Given storm believe plan on storm. to have deliver our improvements balance attractive can we in the ability our operating revenue passes, with sheet, execute we to growth strong leverage. the we believe weather once

require extraordinary our With for care that, day they therapy. I to would the who employees make like to patients oxygen take effort thank every of

day. have a and you Thank good

Operator

conclude you. Thank This does today's teleconference.

this your day. participation have and You for a may and thank you time at lines disconnect your great

Inogen (INGN) 6 May 202020 Q1 Earnings call transcript