INGN - Earnings call 3 2023

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Operator

Greetings, and welcome to the Inogen 2023 Third Quarter Financial Results Conference Call. [Operator Instructions]. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you, Marissa Baish from Gilmartin Group. Thank you, Marissa.

begin. may You

Unknown Attendee

and you, all joining for Great. thank call. today's Thank you

the Nabil President Inogen Interim for Investor XXXX. Relations are website, on me the with is Shabshab; earnings released quarter release The and results section today, Joining the Earlier the CEO, and supplemental available package. of Sergesketter. CFO, financial company's of third along Mike financial

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

results more update files Posted as may of these based as more XXXX. company's we filed currently forward-looking Exchange and Commission. the Relations and Securities forward-looking our in call statements, the Investor information predictions of in are to available statements financial obligation may website. uncertainties X, periodic information. recent refer most November in for on with to and date, risks that us section are our set the to and Actual statements any these are be today's only forth disclaim this historical in detail statements The required vary, Please law. except reports forward-looking These detailed by investor presentations of

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

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

Nabil Shabshab

Marissa. you, XXXX third thank quarter Good you Thank afternoon, call. for our conference joining and

I business our progress before will details walk and for our the our call, the CFO, of more questions. today's performance Then our annual performance in will guidance our across During Mike discuss of take and our initiatives quarter, rest financial the year. our Sergesketter, through we outlook

some total headwinds we basis recognized revenue in the lingering million typical the Despite third versus quarter continuing We third business. in to quarter quarter. our the third in to the by $XX revenue quarter seasonality, points second XX address while total grew

quarter, reps with revenue size total of rep, our of our direct-to-consumer team sales recognized and $XX.X a million the continue we optimize per business. Starting as strong revenue on we productivity. as result In sales DTC rep fewer by offset to in third focus the

We double units are channel per a was in and up in productivity efficiency rep, both on year-over-year basis. this to and our digits continuing drive revenue

business revenue price to while progress XXXX the due made share recognized was chain-related million, We third customer of headwinds Turning in impacted constraints supply business. to our our $XX.X base. share and volume by year we In to recapturing from experienced domestic we residual our past the BXB lower diversifying quarter, the which over loss the competition. market

in on we international million our BXB sequential growth and $XX.X strong In revenue, basis. recognized double-digit year-over-year business, a reflecting

in weighted French X Rove delay reimbursement While in we X and are witnessed Rove in customers that to the approval, we reimbursement August, introducing a currently focused secure significant market. on key

introductions we a was expected quarter as channel Rove work in to be flat we with strong, third lighter X relatively quarter expect roughly our sales BXB year-over-year France. although fourth the in through that note the Please international

rep revenue was prescriber in year-over-year to team million, per both $XX with productivity from sales benefit continues compared increases rental referrals improved sequentially. Rental revenue Our as and to QX. increasing

scale expect and core We drive and overall of prescriptions number steady optimize sales and growth. prescriber per progress as further territories to frequency we

to our due will cost details efficiency. we the our but structure write-down expenses, improve our Mike related gears noncash in to and Shifting goodwill. operating a impairment expenses the in efforts of in to increase on additional quarter, our short, an saw charges operating provide primarily operating to

$X.X while the quarter, to operating managing initiatives adjusted year-over-year. to $XX.X Our our primarily sales fell productivity spend. to of organization marketing million was This a expenses in our optimize million decrease due of

business expanding a the up that time a lifetime we acquisition, do not the Inogen the revenue to the the closed for did have any respiratory turn journey, revenue in adjacent any Physio-Assist we mucus clearance are clearance the from us predominantly their bronchiectasis. innovative Physio-Assist We call serve Simax our during and patients from revenue portfolio quarter with airway of ox with expands of opportunity at provides like from this treating and disease consistent very recurring to at Before of earlier value addition Mike, over quarter. highlight expectations airway our technology-enabled and year. in model Entering consumables. acquisition to that semi acquisition the I'd stream not recognize third delivers aimed device expect material management to I the excited standing our market the

call results. to turn financial will Mike over Mike? I for review a the our now of

Michael Sergesketter

sales. XX.X% The otherwise to revenue prior direct-to-consumer by all Total comparisons BXB international driven you, sales, business-to-business prior Nabil, the afternoon, lower quarter offset comparable year noted, was period. increased good are rental versus of and domestic everyone. of period. and XXXX partially million, financial $XX decrease was by the Unless third decrease due for Thank and a

basis quarter, For foreign revenue. revenue impact impact point the on XXX basis and third a point had exchange XXX total negative a negative on international

channel to in detailed and representatives the driven and sales million towards drive spend decreased profitability. third to lower due $XX prior the overall at primarily a fewer rep as of XX.X% more on sales XXXX million revenue to marketing in Direct-to-consumer lower continue period, by Looking sales from quarter we basis. sales volume improved quarter third $XX.X productivity

million decreased in Domestic compared ago considerably and the million period. revenue in of demand had $XX.X $XX.X the XX.X% quarter the of from BXB comparable year pent-up our with revenue fulfillment the business-to-business that backlog XXXX benefited Please channel. note third in to orders

in Rental compared business-to-business increase million driven rental patients by XX.X% $XX of the the third as in International primarily increased to in increased to revenue in XXXX of of number the in $XX.X $XX.X XXXX service. $XX.X on X.X% prior revenue Growth third from total million million quarter was quarter an million the to period. prior period. the

for business-to-business carry well service, Medicare on from pressure primarily our note Rental chips rental gross and an was the on as that channel XX.X% in as was points servicing third to inventory higher rates. premium-priced by channel by margin and per the a in mix of offset XX.X% declining offset our lower discuss revenue channels. impact consumption margins. Total Please patients revenue continue components due period, as semiconductor of cost volume with the higher XX.X%, margin warranty to shift costs lower balance partially driven gross primarily from pricing quarter, prior the by units margin premium increased revenue gross price sold reimbursement components. driven Sales of by sheet higher partially Now on-hand the was primarily in basis XX adjustments gross we to inventory. direct-to-consumer through

declining components of price September now in first $X.X to cost inventory was premium Due XX, goods the rate for continue forecasted the sales our of we XXXX. XXXX, impact the components to of As half value of through expect balance to cost a premium at lower million. sold volumes,

Moving representing $XX.X an increase in expense to $XX.X in increase on prior is exclusively $XX.X impairment period, million result In total QX, to increased of of expense. XX.X%. operating compared the expense almost million to onetime the million operating The charges.

a million $XX.X has the expense balance impairment that incurred the of on noncash is we operations. mentioned, previously or cash charges. impact company's business no This As

XX.X% period. the a reduction million, the to compared expense to $XX.X representing Excluding charges, onetime as operating of decreased prior

innovation to marketing with quarter period XX.X% expense work representing quarter in through year. and on spend our was a million we in in Going investment $X.X by into decrease This on third $X.X The reduction media Sales quarter, the line with and development expenses the costs lower more personnel-related for the spend have our and a was million. from detail pipeline in advertising total the of and channel. driven primarily $XX.X million, associated of prior direct-to-consumer XXXX. continued third in with was spending our research

loss acquisition-related a The of net to $XX.X quarter EBITDA a a of of representing reported diluted per net restructuring-related $X.X a finally, share per increase million share costs. $XX prior an Adjusted was of of On $X.X in million well expenses loss as to the XXXX, $X.X costs primarily incurred in general $X.XX. reported diluted we loss QX, increase an costs we as a adjusted and $X.XX. million. we million third of as $X basis, administrative and of of was adjusted In and our the million compared And million attributable loss million $X.X period. loss for

our to on balance Moving sheet.

cash the equivalents closing had $XXX outstanding. we As securities debt million and cash, with no XXXX, September XX, and deal, Physio-Assist marketable of after of

financial I will outlook. our now to turn

expect $XX million the to We expect an XXXX with of We Physio-Assist for ox be And EBITDA million. in total of of the the questions. approximately airway acquired inclusive to portfolio, year transaction. clearance for we'll the full full semi be investments take to $XXX revenues company continue now that, your range loss year, we adjusted to $XXX our million in through which happy

Operator

And Stifel. the from [Operator first Instructions] of the Blackman Matthew question comes with line

Colin Clark

XXXX revenue be inflection the the wanted are I'm you've DTC Could this understand is the dealing efforts would the headcount curious I Any I a We're Colin a start efficiency? force implemented event? to XXXX changes to a Matt. the seeing any sales still on in ramping. color the productivity with be for and franchise tough we'll DTC from comps and event increase or moment. helpful. footprint But with there from for when recent standpoint. line still start hiring This

Nabil Shabshab

that I'll the Colin, Thank Nabil. you take inquiry. for it's question.

to continuing well productive, had up respect in we're in sales as as DTC, productivity we for continue using both drive in performance getting to revenue this calls, set as rep happy of number earlier the opportunity get we of to seats drive we terms So with well that a on communicated so productive to overall right per are growth. in as the rep to per units. more XXXX to can in people productivity And the to are XXXX as

Colin Clark

strategy Understood. for highlight a Okay. you on business prescriber side. could rental channel rental in to your guys. general, the and be If continues one The I ask seemingly

what not, was run the DTC effect revenue if wondering have So as I any DTC new business downstream if the yet? of cannibalization your of any the of been on patient there's side rate would acquisitions business and And things? rental

Nabil Shabshab

Colin. Yes. a question, That's good

cash the they're that prescription the from actual there for let are in our they're rental no in we whereby actually prescriber me the not is cash. journey and of that gone prescriber, DME through or an go we willing pay ourselves. dissatisfied patients and So go devices covered the direct-to-consumer on, these through. the go terms to here. buying overall that is sell to just they're secure sales to cannibalization And material HME or by downstream, anymore are process have When that depict general, journey insurance, intended the it we and that upstream, we hence, for the with which the physician patients device maybe is as Typically,

capture typically, earlier impact and put and run them device on slight right the ones there you out and them options But of that bit coverage. the little If rental, upstream could DTC are a patients be downstream. a on have

cash really there. not latest a only for no device that's want why the If them. technology, on can other they they're we same sell to the get option and So option left new and that's them the patients, on have because they

Operator

Malgorzata question with Kaczor the of next the Blair. comes line William And from

Margaret Kaczor

any not you just BXB not the to or on are in seeing comments, start, kind whether DTC I impact, guys it's I'm of intro a macro heard Maybe sure domestic. whether or

it's to Now sales is or commercial one harder friction on? with dynamics there it the Is change get and all the for so of any force financing. kind folks of in

Nabil Shabshab

the question. Thanks for

into didn't So you're the we go details. actually right,

terms business. with their cost accretion BXB or customers. dealing headwinds as in doing of people with some there own borrowing then, still working for are margin to And characterize some capital some is have in We are, you instances of there and overhang What the they are lingering them, in is looking the access we're businesses. we're that an of course, -- in

diligently we acquisition revenue proposition whereby put of types So continue is generate to value we're that cost in our customers with asset of operate that we forward of a price and these total believe terms ownership resonating head-to-head an working from it. very to versus actually as

you If at total margins you result, and it actually your a see look return favorably. as the

work Of in a But the everybody to some course, naturally, not in overhang terms is uses of purchasing able financial the metric market good decision. customers, is also market some customer that not are of focusing a only customers diversify remaining perspective. a the to base. there make of progress this our with we're right regain challenges from to And of with be progress definitely, making types share we the on but

Margaret Kaczor

that Or domestic? Okay. And in both BXB was DTC that BXB and to domestic? more reference is

Nabil Shabshab

not It's price DTC, of In in BXB we stable. seems impact clarification. seen demand domestic. that have DTC an of elasticity to the for the -- terms be are in at in now. we terms general, Thanks pricing a

Margaret Kaczor

return kind as growth helpful. market the do growth That's business, And potentially, at contracts way phrasing BXB we XXXX? tender of should of into especially rate Great. your then as rate as as maybe How maybe go is it's and XXXX into today you to get as out Okay. right them best like we look the it And it. 'XX you see whether beyond? that seems of think or international, kind growth you about

Nabil Shabshab

Yes.

comment tenders. the on the the with question start me let So on

seeing of We're some in in Europe it general bit delays We're actually seeing forward. of with moving actually been in there So forward of decisions. terms a some little it tender move has remain. of

there actually our that happen of Fortunately, be And change is also biggest those the terms in customers tenders. they customers. in participate a share to in all

is gaining with in value. parties focus deal we in work and one on best provide value place cases, And losing and like same sort them the our within another all then of we are that franchise with with. some to place, general, in So continuing in proposition that of the customers

bit normal outlook So of a the gather and used from for what work that see our distributors and before. market, we that little more more with the XXXX stable to we feedback return we the is demand from can a to

Operator

the And question with the of JPMorgan. from line comes next Robbie Marcus

Rohin Patel

on Rohin Robbie. for This is actually

end. a of questions couple our Just on

we as them can and competitive of takes just walk the through between some DTC as between XXXX, but firstly, this, of Just touched just and the the you as about puts you pressures the and on BXB just for -- think business. attrition some sales in well force

chain to sense as this out views another? to trending Just the then are And supply a and just get one for your relative these moderated environment close year? on also you how

Nabil Shabshab

Okay.

of that in chain prepaid we just have down. the So our -- seeing to burning return as start before. on some order quickly. we're We're let levels me sheet, and the that through still From supply them think in a made normal with environment, we comments reverse balance working prepared I like remarks, our parts

expect rate, actually As P&L that trickling go to of -- we of by the Mike the into a at XXXX. out middle said,

we assume no time. in very general, to you're supply chain. force in that and this are the remain sales the a in lingering concerning things that issues attrition, to There I effect, that made sales a So comments few resizing With is point here but as there DTC really nothing force. respect at major referring about

that to I'm way. So going answer it

rate the drive sales of as for bonds you a the your we bar normal in in I the get attrition force continue and would performance in level a the performance as context the is on organization. right to maybe higher I provide that terms think way raise productivity,

terms expect. rate that we through are only kind replace performance bit less ongoing work attrition that in, not hiring we way the a our in up same work sales and the making or and it on management tools that become right when discipline, have the optimal the continue what right continue little to size come sure in XXXX to by than Sometimes more organization is that people force you set and that sure we elevate the an and training, stabilize of make we'll oversight productivity time. but we are bar, of being with But to will right drive believe at classes to can sales the we in that

was third question about Your BXB pressures.

exists, the the of think of pricing monitoring also I in BXB. ongoing. not It's terms is an little this a is to but it in more definitely only overhangs back field, the moderated, a competitive activity from day-to-day becoming a bit but

longer engaging terms indicated work cetera. are credit, financing and it terms levers doing promotional cetera, Some et and we before, had or we're now et in still as We people on providing required. of that

in to the category pricing We healthy anybody. are for that's not though not bottom of the racing the

very best the there is we're are sure with, of the engaging share some of and and channel that of we we've But don't them any before for attrition in management focus prepared contrary, But we day-to-day patients our rates. the we types is making on in we as of remarks. definitely that So gained terms modality believe and POC-oriented on the more characterized the selective conversion that the the more in as we terms of mentioned share. a customers

Operator

from comes And line with the of next the Needham Matson & question Mike Company.

Michael Matson

Yes.

the Just that invested or know it business. or had rental X% force. The sales pretty think I prescriber growth, one heavily was around you've in X% year-over-year. I on something

was if like that's don't the terms there guess that's seeing I correct to something, having. think I XX but... or that growth me little out it wrong, not prescriber it's wanted get reps just So surprised And an higher in there I'm impact a update I of given

Nabil Shabshab

Mike, thanks for So the question.

the continuing prescriber. in reps We're specifically. the optimizing productivity channel, frequency if in the through as see only of of XX the per us. also we're continuing come We rental matters the as for that's referrals not size conclusion about have both us to the now to have frequency drive rep sales work lot per that to upward. the that well territories, question of to continue but to for terms we So And referrals the a productivity sales

new put higher terms the in office. in making we're refining we're that patients the into prescriptions get So well progress said, that the as that rates. we the of we of happy With in the back made process we're as that to the of growth progress with on service terms per

Michael Matson

Okay. And then I the that, guess, was different million to guidance drove million EBITDA loss kind of guiding the what you happened expecting what $XX million $XX reduction, what when we from $XX that versus the were to now? you're gave

Michael Sergesketter

this was, I Mike. -- stand-alone. is Inogen original The guidance on based The believe,

now have size QX and up line of Physio-Assist so some great forth, given we're and we've the to and to And revenue so the and product the off to that get introduced investing the products do that going into ground.

seeing you're revenues. of what of on QX impact reflected the that's kind that in is So there

Nabil Shabshab

add, getting just I'll Mike, regulatory investment of for ready goes work FDA the approval. in the securing, to terms terms clinical of the And the of majority filing in

Michael Matson

kind Okay. would you -- that, excluding Got the I reiterated excluding prior acquisition? that But guidance, assume, it. the of have

Michael Sergesketter

the guidance, end have yes. of been the in Yes. We would lower towards original -- that probably of

Operator

Nabil are the over time. further comments. for floor closing at There like And questions no to would back to I this any turn

Nabil Shabshab

you. Thank Okay.

oxygen includes while executing concentrators patient drive our on Our as serve indications, into our to the plan hypercapnia. expanding well including our continued to our extend and adjacent portfolio larger current strategy COPD focus of commercial population dyspnea as portable adoption

to efficiently plan in and Simeox Physio-Assist U.S. pursue the clearance integrate for regulatory We also

and a to diligently we while remain ahead, managing Looking return expenses revenue cash. growth on supporting focused

care thank headwinds right are forward. conclude, are improving remaining I who in of working The who we foundation passionate on diligently focused our team to patients the our to path fulfilling patients' setting our through on Inogen years is some foundational to while Inogen's and for lives focus on purpose growth the through and come. respiratory would To like

your for you thank participation call. conclude we said, and that the With

Operator

concludes this teleconference. today's And

participation. disconnect may You you this your time. Thank at for your lines

Inogen (INGN) 7 Nov 232023 Q3 Earnings call transcript