Earnings call transcript Q1 2023

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Operator

Welcome to Inogen’s First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded today, May 4, 2023.

I would now like to turn the call over to Agnes Lee, Senior Vice President of Investor Relations and Strategic Planning. Ma’am, the floor is yours.

Agnes Lee

Karen. you, Thank thank and participating today’s in Hello, you call. everyone, for

the Joining Caltrider. President call and on CEO, Kristin are CFO, today me and Nabil Shabshab;

today, supplemental Investor Relations quarter of the the release results along released section currently XXXX. with website, a is the This earnings package. Earlier first in available company’s Inogen financial financial of for

to expectations and prospects in regarding a including our return teams, beyond, limitation, innovation, statements our for without reminder, statements both in demand our forward-looking for and and including, initiatives and XXXX, in progress regarding expectations the As result to external XXXX our financial on information and the growth market expectations include our products expectations increasing sales a productivity for presented short-term of our our related XXXX, the today strategic supply of long-term. will and to strategy about our related products, internal business profitability

more vary, to to information in in The statements by this statements available we risks These predictions results XXXX. May are forward-looking of and based with only forward-looking are and Actual call the any on detail today’s may may reports that set law. X, involve most statements in SEC. periodic forth recent obligation except forward-looking update filed required these date, disclaim currently us as uncertainties and are as our be

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

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

With CEO, turn call that, to over Nabil? Shabshab. President and I the will Inogen’s Nabil

Nabil Shabshab

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

quarter disciplined make our profitability. Our and of the strategy growth first to us to support return progress in during execution allowed

our line the during our XXXX we While EBITDA have were gross expectations, above revenue call, in our margin expectations. was with our internal communicated performance QX earnings and

that on. We clinical efforts new leverage launch to innovation already to investments the products, round our continue the work have commercial and we embarked made we progress have the capability and drive up strategy,

we XXXX, positive growth the on to low quarter. focused by revenue delivering In remain mid-single-digit and adjusted to fourth return EBITDA

inflection expecting Inogen for the year we stronger an set and bottom-line ahead. to up are growth We in point for years the be as top

cover XXXX, supply XXXX far the a of for demand portion based us the forward we able significant regular during on buys we helped XXXX. and channel, side, semiconductor meet demand be that seen to we the so in feel will supply improvement On our for have

our behind to commercial Before I some progress, strategy. update would the I first elements provide of like an our on discuss

for having leader or prescription oxygen point to patients portable and patients the most qualify As how the our in might therapy the of irrespective prescribers wide POC-based for entails of vision modality therapy, appropriate coverage access POCs.

our the management their meet therapy the Inogen while our disease Our at and DTC and point to refining model needs HME of who of in to patients switch was partners to patients through later journey. channel strategy to improve to designed diagnosis serve desire ability POC-based prescription

patient adoption the driving boundary, to POC-based profitability seeing over predictability look agnostic U.S., scale, we forward XXXX, In of accelerate one prescriber and and continued therapy, evolution a channel specifically our of the channel time. to patient-centric into strategy in to Inogen’s

continues progress strong double-digit to QX our one-year execution the on update growth The at an anniversary channel. of Rental trajectory to on renewed revenue on be strategy growth prescriber increases our respect we channel payers U.S. a focus coverage growth. of from the has referrals have moving in Now with prescriber support our the rental to – been behind more productivity and double-digit securing our private channel, delivered sequentially. in sales In net

out two addition privately-covered In coverage, XXX cover we recently CMS COPD core our to payers. patient million private can the We lives. added health care large now approximately population of

Moving channels. to BXB

larger monitor HMEs on We accretion, capital in management. the expense their channel focus of some U.S. market overall dynamic continue margin have restructuring the to and BXB where increased the

service POC quality Our of strong together with device and deployment unique for optimized best ownership to competitive Inogen’s after-sale come equity, satisfaction. brand cost HMEs and high and fleet proposition value deliver as patient remains solid total

customers expanding has competitive and normal we HME base in manage helped pattern into adding while serve across towards we pressures lending board. the and new ordering work the This

leading in level partnerships patients low of competitive POC a more HMEs the providing POC-based to Given are strategy HME U.S., the business of Inogen’s reaching more therapy oxygen and model. penetration our with with essential

have for we As have of X reimbursement progress the launching in solid XXXX international after granted end in Rove been and at during Germany made Europe business-to-business, our QX XXXX.

confirmation received awaiting Rove and X of in coverage the France results official in over to next few published are the recently we gazette the weeks. be Additionally,

support slightly of these Europe. and rollout securing Rove about of excited across the Inogen’s are reimbursements of ahead X We expectations

the towards new DTC work business, we scaling on right DTC the disciplines productivity focused achieving as in our our have optimizing while For basis. cost growth we remained and

new management made we continue to progress we institutionalize as sales quarter, the discipline. This

units basis a we of QX decreased for in per As delivered our growth both while XXXX reps, evidence sales productivity. teens solid revenue sequential progress, the of rep and number the on

received would clearance launch I and U.S. an of to are FDA in Rove back like launch XXXX innovations expected as X, as launch commercialize in communicated we are X U.S. the Rove the we important in previously. anticipated our Inogen reiterate half portfolio. Rove the track on in that for and The XXXX, December of Europe POC X of for in summarize, I steps Inogen’s Before latest

a potentially hypercapnia. behind serve and our to about congestive Additionally, across to population broaden and very failure additional dyspnea, our larger respiratory including ambition the portfolio indications heart address COPD needs progress we are excited

driving remaining growth while by to the are and we about summary, are managing that COPD on XXXX, also imminently positive adjusted new expand excited aims indications Inogen QX beyond to essential In where respiratory EBITDA and the future delivering focused health.

We see continue to underlying scalable see demand our a we profitable to offering innovation channel as pathway and our for growth and commercial, strategies. and advance

call turn now will Kristin? the I Kristin. to over

Kristin Caltrider

XX.X% Total primarily sales by sales, everyone. Thank quarter for and rental lower international line direct-to-consumer XXXX and was in afternoon, $XX.X of our of decreased revenue. and the an XXXX. Nabil, from the lower offset million, driven business-to-business by with you, good was first Revenues partially decrease quarter first year-over-year The expectations. U.S. internal increase in revenue sales

a basis, revenue foreign exchange total and from XXXX. first negative impact a XXX total basis quarter, On revenue QX For a points XXX quarter basis negative constant revenues. on international the first decreased on currency points had impact X.X%

Looking higher we rental continued on year revenue XX.X% fruit, at investing also a to impacted Rental $XX in increased to Medicare bear XXXX it million by Rental million rates. reimbursement first first quarter of of on in in revenue quarter from patients continues basis. after the $XX.X more the XXXX. One prescriber detailed quarter initiative, revenue first was in service. growth resulting positively in began our

to first of revenue period comparable Domestic QX million that important $X.X quarter XXXX the in of constraints that channel. compared BXB the It with shipments revenue to the down limited XXXX considerably increased in million is domestic XXX.X% XXXX. in due was the note to $XX.X to business-to-business supply

international quarter certificate the decreased XXXX BXB due to Last first year, of $XX expiration of to XX.X% we period in Europe million MDD $XX.X as sales pending XXXX. million May International prioritized were to comparable sales the in EU higher the in the of XXXX. of shipments from

due decreased representatives, $XX.X of quarter by average offset to first primarily million million first by prices. of driven sales $XX.X lower to Direct-to-consumer XX.X% fewer quarter sales inside higher from XXXX XXXX partially in selling the the in volumes

and units of the channel channel lower through Now sold driven was first XXX overhead the on of margin by gross versus margins. points XXXX, costs business-to-business XXXX, offset our average prices. quarter mix the higher period revenue basis discuss partially of XX.X% declining labor higher primarily and channel. direct-to-consumer to by the comparable with gross from a This in was Sales volume selling

gross in revenue by higher of compression primarily margin quarter servicing XX.X% of quarter first by was XXXX, first partially was the XXXX the points. a patient in The higher versus offset Rental margin XX basis Medicare XX.X% rates. driven of decline reimbursement costs,

our and taking operating the steps other of our the to QX, included operating other profitability, macroeconomic on quarter compared expenses. increased reducing $XX.X operating are In $X.X many XXXX. quarter the million companies, current related in XXXX quarter mitigate in to of Like including million $XX.X first on million. business and charges to restructuring in expense Moving impact we The to total expense.

operating charges, to increased expenses due to $XX.X primarily costs. higher Excluding and million, administrative restructuring general

on first more expenses into our detail the Going quarter. in

We declined have partially quarter related we in the activity. the with and roughly quarter of first employee continued our for research $X.X to and development Amortization line in the in XXXX. product to intangible invest innovation of in further offset third-party with development expenses spend total pipeline, increase million, of as assets by period, an

advertising $X.X mostly media Sales decrease and to $XX.X marketing was offset period expenses million a primarily the in by increase and million. The fees, higher in were third-party spending related in costs.

development increase and administrative compared an personnel-related expenses $XX.X and QX, And related the and as This a increase a in prior million expenses finally, million to other included business charge well incurred $X.X general in we as period. $X.X charges for restructuring for million as charges. representing

per net In share we per the of EBITDA reported a On loss million negative was a share and and of $XX.X adjusted million $X.XX. diluted million. XXXX, of of a $XX.X basis, loss adjusted an net $XX.X loss an first Adjusted loss of reported quarter we $X.XX. a diluted

on sheet. Moving our balance to

marketable As cash, outstanding. million no XX, $XXX.X of securities debt have we equivalents of and March cash with XXXX,

the carry semiconductor on components yet prepaid not expense These We to items as and purchased inventory chips in inventory but and is sheet the goods. on price market, sold finished other of for reside open assets. premium balance current continue

our premium the $XX.X in of March balances million. value As components XXXX, prepaid XX, was and inventory of

will financial turn to I now our outlook.

we Nabil annual guidance. As are our revenue reiterating mentioned,

total company mid expect We to digits. the year grow full revenue XXXX the low in to for

as increase, supply price deplete return expansion quarter EBITDA we In We positive by reduced. components we see the on are and improve remain margin to the continues costs to production price and back focused profitability of half and increases to addition, reaching XXXX, volumes XXXX. fourth anticipate in material remain, expect adjusted premium our as of

And to we will with take questions. your be that, happy

Operator

question Ladies questions. Marcus floor [Operator first And is ahead, from the take our Instructions] and Robbie. gentlemen, you. open we’ll Robbie Thank go from Please now for JPMorgan.

Unidentified Analyst

thinking, that? were on for Robbie. do we so the a you Lily was BXB there? lot about the see so Are going of for have Domestic business? you year? actually is talk Thanks supply you over something can And Or than bit question. the this course trending of softer prioritizing you the drivers that how the segment much on Hi, little the is taking a that there what else in elsewhere

Nabil Shabshab

Lily This you, for Thank question. Yes. the Nabil. is

if BXB. you about messaging we So remediation you of part that we was the the think and sequentially back in efforts XXXX that go had, had

to that the system pushed really excess an of were sometimes in had for we So time, of the XX extended orders back months. an period remediate

able towards in the focus a on to the our be meet was customers the there So the major proposition. and those demand, remediate end orders year – the Inogen push of value to

a the into soft went bit quarter and little a start. to led – that’s So

As our of we customers deployment, terms challenges channel thinking about were the in said in capital expenses. little U.S.-specific of restructuring terms bit a operating there BXB that, in some

it was with of to in that So work terms softer, we the progress we bit making. be. very start but a them need ordering we’re landing The by to continue we’re little where encouraged

Unidentified Analyst

much. we helpful. improve? we backdrop as normal a think the see the hopefully backloaded with so Or year? of about of course being should more supply you continue Thanks the it. the And challenges, Should Got in we cadence year just do to over more seasonality That’s thinking how XXXX? this the could see trends be as

Nabil Shabshab

Thank you, Lily.

the let get the have that we part the able DTC to message. the other that first me with start side, And on we maybe of So also going productivity to half the we’re to to back XXXX of need. said take be

all a So in channels. with in different to supply-related. make I of the is going first not across little of indication sure that half stress the that bit XXXX a the that you’re see want that. half just ramp back it’s performance to I relatively an But year

to we the strategy execution of to only making earlier. We normal DTC not supply have to the it very a levels have just progress needs be, planned. the direct channel in we we’re It’s around quarter, and on and commented productivity that first enough to the back focus meet good as but the And in remarks to this where land getting demand. rollout pattern, our our BXB ordering

Unidentified Analyst

Great. so much. That’s helpful. Thanks

Nabil Shabshab

you, Thank Lily.

Operator

And we’ll & Mike. Needham our from Mike Matson go you. from Thank ahead, take next Co. question Please

Mike Matson

I guess start Thanks. the Yes. quarter. second I’ll with

So I first you’re – you’re your but also giving guidance, the analyst the meet quarter, kind annual didn’t I expectations, understand but rough like it seeing unfortunately that understand I own of understand that expectations.

second any you is flat expect quarter in year? So terms the relative it there revenue? to us be last you to Like up, help give do of can modeling down,

Nabil Shabshab

Nabil. you, Thank Yes. Mike. It’s

time conversations the growth later for being, We We’re to doubling the adjusted low the only return positive time One by EBITDA have being. is down little But detailed two bit on a we’re calls. mid-single-digit annual going a the and to for to of revenue more on things. the QX can make comments year. guidance on

so on for time can what we And that’s the being. comment

Mike Matson

Okay. mean I Got wondering by implying today? just that revenue it. as does the the your dictated to was was are opposed that And constrained in on comments you clarify, first then quarter of not could you if anymore. being just Or as demand supply? really supply

Nabil Shabshab

answer two Yes, part so to this. maybe

the be the Mike. and will the transparency. a our XXXX, complete not end supply for from As we And regular today perspective, of year, towards are from totality QX constrained we between the we the here preordered commitments we’re performance that look meeting and comfortable for stand just the was what suppliers that not constrained channel supply of

Mike Matson

Okay. pretty All it your in that level mean right. a just able year? I being given big to the get for And I growth. got grow mean, that, And like to to seems ramp mid-single-digit confidence you’ve just

Nabil Shabshab

on the call, you math quickly Yes. year. is ramp Naturally, a like the if in there back do of the the doing you’re half

back to going I I’m it to think take the fundamentals.

good seeing in on putting really are place. We productivity, strategy DTC the we’re of discipline the progress terms in

around very I progress . components value terms progress listed U.S. the of encouraging BXB dynamics, the proposition terms in making because solid challenges making call. on market We’re in our in – of the we’re despite remains the

Also, course, international bound drive to on we’re is has scale increased then, that focus been you forward saw so on prescribers the acquiring and – within the results with BXB – new steady and prescriber demand And and the has to of pleased channel with also we’re been growing, productivity that. channel. continue that

a half but with in there’s of naturally, stand we steep reiterating annual comfortable back year, overall where we’re the So the guidance.

Operator

Thank Matthew ahead, from go KeyBanc. next, we’ll go Please you. Mishan And to Matthew.

Matthew Mishan

you Hi, for questions. Nabil. the taking Thank

Nabil Shabshab

Hi, you? are Matt. How

Matthew Mishan

you in direct-to-consumer just what this of on sales a you’re spring-summer, advantage take strong lot changes good. – I’m the the I I your really the Do done time force. that point time of guess, generate entering – remind you you you between in sales sales, commercial to you’ve and this lead of to enough think able seasonally us your of, made can close being for what segment? actually to is just amount kind of period And like out? the would most when contact the also,

Nabil Shabshab

Okay.

you, me let – So thank Matt.

me part of question. with start Let first the the

I the late think early early April, starts typically, up seasonality ramping March, April. around sometimes

and fact the maybe for to right I the we think you that have digit despite in disciplines changes is place. in both we is best enough made to very have lower grow revenue, point to – And the us encouraging. the put like evidence the of the had number QX. in teens, terms of sales per rep which salespeople in We and teens double productivity

the is review we team and in continuing apparatus terms to a seasonality right we seeing. says from as we’re are we’re where to demand what and place week, meet as update by perspective, and the Every improve. the an well there encouraged we’re right have That of productivity in

kicks an So the to ability seasonality a as see capture in. seasonality I don’t issue sales from the and

is in point We it, funnel the question do like on progression not comment of days Your of from opportunity call second lead a an the, sales of successful into close to typically. but XX part typically XX time into that, around the typically contact.

you’re patient, the contract. within has to capture it to if that So going of happen days XX

Matthew Mishan

of is for is of potential on kind it the there BXB to I’m ratable your sales then not those – your just guys the difficult got forward sure it make moving swings it The important volatility to how if are on sales? tough you the – more Is And reduce – difficult have side? margins and around swings a manufacturing. are in

Nabil Shabshab

Yes.

just one me let like back maybe So for point context. to go

rolled lot is just penetration we market, of be low to POCs modalities, a total to the and our in volume of As by say, partners. is by HME out and there both be achieved the of by us up evidenced always that

the I’m in as be but point progress and the part well. that, on. is continues one interim. few of you very for The we start of moving us. question. answer that and to to The able control partial this able the of sort part me. a prescribers, HME our me are It part Let reason the the – through my working The control when The is to in we at of is with want happy reason sure the upstream prescription, is with destiny patients like that make the part strategy, partnerships covering and one a diagnosis we our fully look that my we’re through – we be to went said, both that terms be important at forward progressing to and is the in channel of to headwinds prescriber your I

we’re despite a the some if in are perspective, challenges our what customers that facing. market terms said, new and that depending challenges happy around we’re with in the of the base overall of from I we’re the customers adding With they’re on working look progress the at

Matthew Mishan

Thank you, Nabil.

Nabil Shabshab

Matt. you, Thank

Operator

Blackman And ahead, Instructions] go Mathew. we’ll take our [Operator Stifel. question from Mathew Please next from

Unidentified Analyst

Colin This for Matt. on is Hi.

can a now of in the guys quarter are progressing extent entering quarter? had right a know said first those efforts give productivity Just through DTC, putting stand couple. halfway frankly, versus to the well us things exiting And I And nearly levels the where are you throughout study absolute quarter pilot you Starting sense you’re the to and that second, we’re willing, either relative the productivity plan. was with improving the in now? you or guys

Nabil Shabshab

I’m to on itself make not quarter we’re Colin. QX. you, the comment going on Thank because to comments going

remarks, to As said prepared it rep digit the to is the level on were before. accomplished that that the We very side per when are in where same teens, the can so in later this look the is I bit the more call, we teens. on have channel, a little prescriber put And progress double productivity compared productivity also color in too. around good DTC we but I at the

only time and the is how So DTC in profitability of of not it there good diligently. at value we spend. executing of same we right and number terms and that the to signs envisioned we around optimizing it the progress It’s very model, how by salespeople, we’re that show starting the track but drive performance also are can advertising envisioned the on whereby encouraging the

Unidentified Analyst

some much Okay. full is a could There way out reimbursement. the the the growth higher with guide One roll baked a got tailwind components could to was versus there. major mix from into How U.S. the benefit guidance? new a bit it guidance. products of year from follow-up into price be volume? that bit tease a hoping on You’ve Any decompose standpoint. little I you

Nabil Shabshab

to a yet April. Colin. thing price I’m BXB, able to from one single price they on the and didn’t that and be. Yes, because are we as promotional, comments, is in – you land question, increase be digits going not need Low it’s say running interventions price the other the in can certain mix maybe general orders We we in increase a in good to is so had But activities we that we in take a things. took where made a make element our like, comment to DTC April. support sure interpret

able net-net where a recover. expect worried curve, Overall, good be. we’re but is the versus it that’s trending bit behind pricing So a bad ASP about on to – guy not Albeit we the very and other guy little us side. the to being

Unidentified Analyst

I’ll Great. queue. in Thank you. back the hop

Nabil Shabshab

Okay.

Operator

Instructions] [Operator

Nabil Shabshab

are just in there let remarks me a If questions, make Okay. closing. few no

we So launch be channel fourth as focusing adjusted of growth we look an on our EBITDA while into scalable quarter. returning up for securing and to positive support progress the future large and commercial new capabilities the Inogen, this the in year the execute by and as will set on point access inflection products channels and future with we I’m pleased patient that our profitably ahead. devices build to for geographies, to a our the – across business the population processes made larger plan scale years continuing have patient to will strategy,

collective conclude, investors to your the our a efforts team’s for support I purpose business thank through proud so good Inogen. lives care. day. progress and Thank would As we much, your respiratory fulfill Inogen that extremely I’m to interest our so can improving our you have of and I in of like

Operator

participation. you gentlemen, Thank thank teleconference. does today’s you. Ladies conclude and for this We your

have great your a time, at and may lines day. You this disconnect

Inogen (INGN) 4 May 232023 Q1 Earnings call transcript