INGN - Earnings call transcript Q1 2024

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Operator

Welcome to Inogen's First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 7, 2024. I would now like to turn the call over to Ryan Peterson, Investor Relations. Please go ahead.

Unknown Executive

Thank you all for participating in today's call.

Joining me are President and CEO, Kevin Smith; and CFO, Mike Bourque.

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

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

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

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

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

Kevin Smith

the joined excited Inogen's first call. Good first our quarter conference Mike XXXX Bourque. be afternoon, and to new thank CFO, you for I'm time for joining by

over X on thrilled to Mike are financial We of have decades bringing him leadership with experience. the team,

I today's pipeline. against to growth, will progress our expanding our innovation advancing X call, priorities: on top During strategic provide line our on path profitability driving updates and our

for by improving First, and our to line the relationships a first with our evaluating in strategies top distributors new We sales positive the which of sustainable agreements. and while quarter, growth rental our had discussions of position we with sales and partners stakeholders. business-to-business endeavored some many strengthening completion led

of market-leading to We partners our will developing across with on continue the concentrators portable relationships globe. oxygen focus awareness building and fruitful

and initiative, to of arise year prepared goes As U.S. home we a U.S. exit, market market. part At this gaps of this have time, we respiratory trends are modest a from that capitalize any seen fill may tailwinds exit temporary as from are outstanding competitor's very closely on. recent potential demands will customer monitoring that the to remain the ready result we as the and

We increase across efforts reduce continue synergies efficiencies to and channels. our our friction, sales

channel. showing to projects by promising within pilot BXB encouraging to initiatives and our customers team new training are this partnership. including our seen direct-to-consumer stages, drive our promoting communication both sales our and rental launching results in personnel within have between We programs partnership initiatives, and cross results. targets sales, specific These while early rental execute These

our path to Secondly, we remain focused on profitability. establishing and advancing

time. higher By rental we manage efficiency profitability anticipate channel, calculated margin practitioners addition our in cost made efforts we and part throughput expanding hospitals the profile, to our recently decision business. and to through of in scale, our to As rental better our individual the driving over target

to the lower in on rental the our third-party the to recent we quarterly due a are cost sales addition, in and in exit spoke of expenses benefits we last form relationship In of channel, call. marketing which

We our in high-margin pilot also business. direct-to-consumer out drive are growth to to programs return a rolling

on beginning and DTC reminder, productivity our materially see a year-over-year downsized per size basis, and are to As we have a improving have we rep. a team healthy now organization achieved

are dollar business we every considering we carefully forward. into maintain return the potential philosophy we'll always, and As of the this going invest

POCs diligently Regarding accessories expand innovation and patient software and pipeline, we our our our efforts to innovative current and on market best-in-class supplementing a provider ensure products to remain bringing new focused to necessary experience. market-leading with

the to to expand to also forward the in show the U.S. Physio-Assist would We addition on FDA. touch this healthy bringing we about are engaged to portfolio, have discussions we I in pleased the that U.S. excited product with in remain Physio-Assist like plans look of to future. market our our availability the and We to

We store, specific we and forward on have in to pipeline updating an look this year. later launches exciting investors

in year-over-year I X% briefly would a achieved first for X% total from and revenue, quarter to Mike of quarter our XXXX. full financials XXXX the like line before million growth to fourth outlook. We highlight reflecting our first results turning our quarter and $XX review

a Our reflection goal. our execution against results are of strategic really

over a turn results. Now more I'd review of for like call to Mike? the Mike financial detailed to the

Michael Bourque

afternoon, you, Thank good everyone. and Kevin,

international customers $XX all volumes for from to X.X% versus year domestic sales Unless million, prior Total the period. was an primarily otherwise comparisons period. financial result the as increase are prior higher during revenue the new quarter. by business-to-business first noted, of of and XXXX the a increase driven existing and quarter comparable year The was of increased

impact exchange a positive foreign had international quarter, on on basis first XXX revenue the points positive total points impact a and basis XX For revenue.

and to sales in prior lower representative more primarily million by by driven a quarter prices period, Looking the rep. head offset detailed at partially count increased average increased $XX.X selling Direct-to-consumer first XX.X% revenue from basis. volume per $XX.X million decreased unit on

comparable in from business XX.X% period. business-to-business the compared $XX.X demand new period, million $XX increased increased revenue business-to-business increased the to Domestic International driven to and million million by $XX compared prior with to customer XX.X% million and resellers. in revenue $XX.X

to channel was in year-over-year by sales Our customers. volumes higher growth this driven existing primarily

to rates revenue rental increased in million million primarily adjustments. Rental private mix period, the $XX.X by higher X.X% driven higher $XX.X a and from payer revenue of lower prior reimbursement

our a XXXX I gross total quarter to year, year channel lower gross basis ago. of total same margin in with BXB The prior points from driven costs to average the this increasing shift our XXX channel benefit component from XXXX partially was offset components Now XX.X%, by the of cost discuss Total by primarily a of period want lower in relative sales margins. to margin greater relative QX sales. mix proportion was a QX lower

gross net on the premiums. XX.X%, result of points from revenue billed a XXX a of patients total of was private was increase per patients decrease patient margin versus Medicare points, by in Rental payers shift driven versus higher a mix decline service, of rental and adjustments. basis margin due as XX.X%, a to gross revenue revenue lower revenue basis primarily primarily X,XXX an lower Sales component percentage

on operating to Moving expense.

total and from of quarter the due The in resulting first restructuring lower $X.X operating as period quarter's in from a X.X%. to as expenses, incurred decrease marketing well prior million $XX.X representing year was primarily of The $XX.X decreased sales the expense exit primarily decrease partnership. million period, to a third-party sales prior compared million to last costs

loss On the GAAP reported million Adjusted diluted and of reported loss of a was million period. an XXXX, a of basis, net in $XX.X of and per first adjusted per of loss prior we diluted million $XX.X net of to a EBITDA year adjusted loss loss of a we loss share the million quarter $X.XX. In share $X.X $X.XX. compared $XX.X

with driving in be to business objective. carefully metrics improvement pleased to are We continue adjusted key our as as profitability a we manage the EBITDA

on our Moving balance to sheet.

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

would to the back second share our the Kevin, to turn I quarter. for revenue like I Before line expectations

are call. and today, business the our our million $XX be half the priorities Based on total to We to expect progress second We and anticipate quarter including earnings rental trends optimize in channels. second in dynamics on quarter, to quarter. second our guidance our ongoing sales we the XXXX continuing providing to some evaluate on million in work make of through for our back sales $XX strategic

the closing call And I back remarks. to will with pass that, Kevin for

Kevin Smith

direction organization steps right our first that the quarter. made meaningful pleased in the I'm during

progress against our execute a at to to Inogen. testament recognize strength and work the continue our goals is will are team there of excited Our to much we strategic We about resilience be future. and remain done, but the

it for With will questions. that, up Operator? I open

Operator

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

Colin Clark

quarter. dynamics there. start guess I Congrats couple A Colin to U.S. on BXB of wanted on I for is a on This business. great Matt. the

think for you I'm a the market, of saw that also You bit the about exiting And when environment how how HMEs. we to about do from the forward? should quarter? in these anything tailwind curious a the changed competitor out a but second about laying dynamics going Has any improvement little for think guide capital

Kevin Smith

Thanks, Colin. I This go I'll ahead can fill that is one, Kevin. and Mike.

we in not any capital -- markets. It we hasn't as that from our here headwinds feedback of real business. BXB The that interfering don't sitting the been are front So seeing we're as have far is us with strong.

a to at we to and we're we've quarter-to-quarter within able our build guidance this basis. feel forecasting, quarters, month-to-month providing ability We are the to up and least to over been good building And on be bottoms pretty -- about next here continue achieve.

from constraints market. we're short, not in the So any capital seeing

Colin Clark

on given in the quarter Was profile gross prescribable we And margin third-party rentals contract Great. the just going during the to the think during first for Okay. revised-down quarter And X-parter the there support last business. exit year? due forward had a impact the how versus of should the business I about that any channel?

Michael Bourque

start... want you to me Do

Kevin Smith

Yes.

part I'll of So beginning the start that. with

before. So of into a ] working members We party in-house, little like caused had is integrated directly bit Inogen from little behind of saw, and that the the family that well integrating some say, a saw brought the broadly. select what bit from that period that we're we have Inogen, team of now that and a moving team forward, and forth, steps so more transition team [ yes, collaboration who I'll team that of we third just third-party team we as but here. under part the and where impact it we we're that are characterized is the the us, into exited there highest-performing of, the We relationship. We team seeing members lost the that

you in margin. I'll But Mike, on gross let chime

Michael Bourque

Kevin. this Colin, Mike. Thanks, is

on the little a Just your on gross margin. the question -- on bit

in But terms So for guidance kind in that not you the and were tell business kind QX. rental from of what margins impacts specific came going forward. where we're they of providing gross can of I

things rate into with have of did We revenue. start unfavorably. there Medicare effect we'll of year. kind went of So on lower January rental kind impact couple A this of that

an seeing higher percent private mix from also payer We're impact. the the of unfavorable with opposed part patients coming that's to So as of our a Medicare.

So those gross directly really X margin. things impacting are

service impacted share going pay margin In not patient rental that, margins were in channel able higher We at forward. addition we'll outlook the quarter. the and to to mix the also at by we're this rental that during in revisit that costs do patient have gross time, some QX visibility the But some gross plans concrete and call.

Operator

line from Margaret Our Blair. the with of next William question Kaczor comes

Margaret Kaczor

sequentially. the going number just to increase would advance if questions in and apologize pace second bit domestic see DTC but, into guidance, a double-digit try QX I'm by usually one, a dive business series may, seasonally line for I to little and quarter BXB the in of

why that from second to benefit and repeatable march the of being how is Two, And the headwind, any of of the lot quarter rest that million we upside coming to assumption frankly? our the off a along $XX are number? saw as is year? number, specific or into why BXB in QX or And there go benefit International. relative something So we three, both Philips that the and Was you here from not? assuming

Michael Bourque

So Margaret, the take Mike. of this question. first that is I'll part

the guiding our different would business of here. that today. of So a took the guidance things, of the in of lot reflective We're the seeing terms new I we're kind taking place just say channel evolution kind mix, into trends is that of we're but not we're at to, in our leadership team of channel what level, the providing guidance that

which year in a to is of question DXC, team, terms our think have the the productivity, XXXX seen but rebase size it's given we of signs of DXC that early consider also I about And encouraging. be new we of important very higher

in Just in maybe of more bit terms guidance, of that terms revenue a the little guidance.

percentage occur, to look it's a will most and of range get that gets we instituting higher more we up say kind us helpful how at Just coming is forecasting look business likely the the pipeline really in. it. upside To higher end, the have at low-end and that it and maybe occur provided. that we we be to and what to orders that BXB larger to is of that bottoms what in of to approached we're to see We unlikely some

Kevin Smith

And a very there we Philips -- of I'll coming that that little for is just modest previously, a to we characterized tailwind from of there. one ourselves. assumptions Philips, the We're to position see seen from And we've benefit -- bit, on add there Margaret, the going so as opportunity out we far. have

road, we're than we've [indiscernible], that come that. it's advantage them the way. every it. let's have of ourselves to back opportunity of positioning ourselves positioning have more themselves that in take the that and that to able down to more contribute been particularly something that comes But opportunities could We But coming our we take be say, advantage to not seeing presented may

And good from on results haven't we that coming do able we've the those mix. In opportunities broken continue BXB. to on to the down us the and see seen and But advantage be channel-by-channel we're anticipate QX, anything international taking we now general, can. wherever not continue, we past there being right BXB forecasting

Margaret Kaczor

maybe then the past intro, we which is a with on flow the what weren't the quite channel, hospital is aligned by in think as something needs. because wasn't comment rates focused really Okay. your as in And company my maybe hospital hospital the about understanding the newer

me walk guys? you hospital that? as to strategy, you market that how is big for And going pursuing how an that aggressively through So are end be

Kevin Smith

opportunity, an event from inpatient oxygen emergency the a to hospital. of the the when large to then patient are So they the care. hospital have [indiscernible], leads when home, triggers a there's -- upon an one that look from the discharge at patients have percentage in the we diagnosed at goes room, visit And hospital to the

the an there's a patient a upstream further to capitated months gain to billing a opportunity hitting to even least period some prior there. for but very So at be months go us able of and number in few

follow-up prescribers. So have those course, of a patients, by

see It's we well connected out we're see at relationship this opportunity another an been to continue to it stages to leads in us. this like point to that what So but seeing explore. We for as so promising We to for back We've the prescriber. further, far. early engaging this us looks how that. roll

Margaret Kaczor

Okay. And just last question for me.

go and think And per quite As can far we margins, did actually we the about COGS number. into COGS, seems I it appreciate not into unit back to well. like too wanting but gross it

getting some comments improvement directionally the COGS of the from you to from you've changed but that So high here, and books that about margin around points provide last may talked historically can have off consumables continued color gross profitability long-term quarter. maybe the any kind that

Michael Bourque

Margaret. you, Thank

money that and previous continued by incurring So been of price premiums, was improvement just components those in COGS we really The the improvement in have gross depletion related in terms year. the COGS. in of driven largely

sort have the to level, course we're forward balance with In terms to to the through. premium in kind going costs that. kind sheet. a some over through be of XXXX, we XXXX lower like that seeing certainly, we but and looking still of on degree its we've that, year. will where do P&L But bit we have of of of seen no remainder And at We our the get much the of make still a way little some

Operator

on of next have line Mike, might with you yourself Mike comes from mute. Company. Our still Matson question & the Needham

Michael Matson

count in [Technical drove in all what change And Yes, at about team, did decline that. the DTC business? sales the of sales there? that kind Difficulty] head the sorry

Kevin Smith

-- maybe Mike, the have business. heard of we off, the now the Sorry, think I been count where think head DXC right but first cut asked are on I part that might I you I think asking with I

Michael Matson

inside the Yes, sales the sales people. people,

Kevin Smith

Yes.

So on XXX additional forward that's we it. range now. in going the provide feel with comfortable sales have team of count deviation not And it's head is a going now, to we that a updates that reps But XXX the -- right there's channel. any probably any -- that to unless in from DTC sales that's right we're a

coming is be We've and size through a to contact with or that that focus initiatives organization. seeing who's cash running whether forward. but has the by them and happy talked to growing the any POC, to now, have reducing we're results an who been rental enabling from somebody a phases be what friction We've patient We're happen. are and reaches DTC allow been them. that help that comfortable still being right into We pilot channel for point leverage like with continue covered that and of that. about to organization and across to sales very positive able that all to get the going whether sale the plan That we Inogen in to trending, on [indiscernible] Inogen

Michael Matson

some the you this, Okay. was And I what the that? I on the decline mean, might then just of just remarks, I touched there in -- reason missed that apologize, have but prepared for business.

Kevin Smith

we're Yes, organization been the too, to year-on-year channel, prior same the the year that profitably. mind time piece of of thing that from business there, is that focused one in keep the size on considerably DTC organization, reduced. growing And has

we with costs not that but all quarter-on-quarter, coming the with it So We're what we're but in at it what out forward growing been of going see that. happy seeing we've channel, with -- profitably. happy growing just

Michael Matson

Yes.

Okay. I pricing. just terms what And about of in then understand.

growth Has that of strong there a on opportunity did there you side, raise shortage potentially And give -- mean, Philips I market. some is an there? the having Respironics BXB pricing to Respironics the power with exited been POCs? really So in -- you see particular,

Kevin Smith

So We're or that was We've there that. with that we have potentially meaningful the seeing part not we seeing points of we're coming from of a a being raise of there, been growth there very that, feel contributor impact competitor. this characterization the to business that of think, that to to that or limited talk seen in a the quarter. couple out business has there past from One, to. exit I an

the advantage, to competitors going to to strongly and are position ourselves marketplace. take are We positioning in against we continue ourselves monitor low-price but

coming in, it, with it. see is longer are POC the X the a And pressure that We that HME, life those and for X-year could bill is closest meaningful years which we than price partner useful on but deploy an POC BXB a an continue to have years next that competitor.

Inogen a name DTC know with from BXB reaching have strong working having are to We that very channel rather than prescriber We channels also recognition. experiences patients brand asking for partners, not, more than an a POC. through with working our patients us for often asking our our and

us we are player the So the in that sitting like advantage. that premium the Inogen alone we feel of to quality marketplace. top And distinct name is link right recognition brand at the of a now, all gives

continue to pressure, sell. have message to we to going to good have we're So feel fight a we off price but

Operator

teleconference. time. no are concludes There at further This questions this today's

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

Inogen (INGN) 7 May 242024 Q1 Earnings call transcript