NASDAQ:INGN Inogen Q1 2024 Earnings Report $7.20 +0.14 (+1.98%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$7.20 0.00 (0.00%) As of 05/2/2025 05:24 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Inogen EPS ResultsActual EPS-$0.62Consensus EPS -$0.76Beat/MissBeat by +$0.14One Year Ago EPS-$0.63Inogen Revenue ResultsActual Revenue$78.03 millionExpected Revenue$73.67 millionBeat/MissBeat by +$4.36 millionYoY Revenue Growth+8.10%Inogen Announcement DetailsQuarterQ1 2024Date5/7/2024TimeAfter Market ClosesConference Call DateTuesday, May 7, 2024Conference Call Time5:00PM ETUpcoming EarningsInogen's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Inogen Q1 2024 Earnings Call TranscriptProvided by QuartrMay 7, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Welcome to the Inogen's First Quarter 2024 Earnings Conference Call. 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. Speaker 100:00:41Thank you all for participating in today's call. Joining me are President and CEO, Kevin Smith and CFO, Mike Bork. Earlier today, Anogen released financial results for the Q1 of 2024. This earnings release is available in the Investor Relations section of the company's website along with a supplemental financial package. As a reminder, the information presented today will include forward looking statements, including without limitation, statements about our growth prospects and strategy for 2024 and beyond. Speaker 100:01:13Expectations related to our financial results for Q2, 2024, progress of our strategic initiatives, including innovation, our expectations regarding the market for our products on our business and supply and demand for our products in both the short term and long term. The forward looking statements in this call are based on information currently available to us as of today's date, May 7, 2024. These forward looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission. Actual results may vary and we disclaim any obligation to update these forward looking statements except as may be required by law. We have posted historical financial statements and our investor presentations in the Investor Relations section of the company's website. Speaker 100:02:08Please refer to these files for more detailed information. During the call, we will also present certain financial information on a non GAAP basis. Management believes that non GAAP financial measures taken in conjunction with U. S. GAAP Financial Measures provide useful information for both management and investors by excluding certain non cash items and other expenses that are not indicative of Inogen's core operating results. Speaker 100:02:37Management uses non GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Reconciliations between U. S. GAAP and non GAAP results are presented in tables within our earnings release. With that, I will turn the call over to Inogen's President and CEO, Kevin Swin. Speaker 200:02:58Good afternoon and thank you for joining our Q1 2024 conference call. I'm excited to be joined for the first time by Inogen's new CFO, Mike Bork. We are thrilled to have Mike on the team, bringing with him over 2 decades of financial leadership experience. During today's call, I will provide updates on our progress against our 3 strategic priorities, driving top line growth, advancing our path to profitability and expanding in our innovation pipeline. First, we endeavor to position for sustainable top line growth by evaluating and improving our sales and rental strategies, while strengthening our relationships with distributors and stakeholders. Speaker 200:03:37We had many positive discussions with our business to business partners in the Q1, some of which led to the completion of new sales agreement. We will continue to focus on developing fruitful relationships and building awareness of our market leading portable oxygen concentrators with partners across the globe. As part of this initiative, we are closely monitoring U. S. Market trends and are prepared to fill any gaps that may arise from our recent competitors' temporary exit from the U. Speaker 200:04:05S. Home respiratory market. At this time, we have seen very modest tailwinds as a result of that exit, and we will remain ready to capitalize the potential outstanding customer demands as the year goes on. We continue our efforts to reduce friction, increase synergies and efficiencies across our sales channels. We have seen encouraging results by promoting communication between our sales personnel and launching specific pilot projects to drive this cross partnership. Speaker 200:04:34These initiatives, including training our team to execute both direct to consumer and rental sales, partnership programs within our B2B customers and new targets within our rental channel. These initiatives, while in early stages, are showing promising results. Secondly, we remain focused on establishing and advancing our path to profitability. As part of our efforts to better manage our cost and margin profile, we recently made the calculated decision to target hospitals in addition to individual practitioners through our rental business. By expanding our scale, efficiency and throughput in the rental channel, we anticipate driving higher profitability over time. Speaker 200:05:15In addition, we are seeing cost benefits in the form of lower sales and marketing expenses due to the recent exit of our 3rd party relationship in the rental channel, which we spoke to on our last quarterly call. We are also rolling out pilot programs to drive a return to growth in our high margin direct to consumer business. As a reminder, we have materially downsized our DTC team on a year over year basis and we have now achieved a healthy organization size and are beginning to see improving productivity per rep. As always, we are carefully considering the return potential of every dollar we invest into the business and we'll maintain this philosophy going forward. Regarding our efforts to expand our innovation pipeline, we remain diligently focused on bringing new innovative products to market and supplementing our current market leading POCs with necessary software and accessories to ensure a best in class provider and patient experience. Speaker 200:06:14I would also like to touch on our plans to expand Physio Assist availability in the U. S. We remain excited about the addition of Physio Assist to our portfolio and we are pleased to share that we have engaged in healthy discussions with the FDA. We look forward to bringing this product to the U. S. Speaker 200:06:31Market in the future. We have an exciting pipeline in store and we look forward to updating investors on specific launches later this year. I would like to briefly highlight our Q1 2024 results before turning the line to Mike for a full review of our financials and outlook. We achieved $78,000,000 in total first quarter revenue, reflecting 8% year over year growth and 3% from our Q4 2023. Our results are a reflection of early execution against our strategic goal. Speaker 200:07:01Now, I'd like to turn the call over to Mike for a more detailed review of our financial results. Mike? Speaker 300:07:08Thank you, Kevin, and good afternoon, everyone. Unless otherwise noted, all financial comparisons are to the prior year comparable period. Total revenue for the Q1 of 2024 was $78,000,000 an increase of 8.1% versus the prior year period. The increase was primarily driven by higher international and domestic business to business sales as a result of increased volumes from existing and new customers during the quarter. For the Q1, foreign exchange had a positive 50 basis points impact on total revenue and a positive 180 basis points impact on international revenue. Speaker 300:07:48Looking at Q1 revenue on a more detailed basis. Direct to consumer sales decreased 15.6 percent to $20,500,000 from $24,300,000 in the prior period, driven primarily by lower representative headcount, partially offset by increased average selling prices and increased unit volume per rep. Domestic business to business revenue increased 31.3 percent to $16,500,000 compared with $12,600,000 in the comparable period, driven by new customer business and increased demand from resellers. International business to business revenue increased 37.2 percent to $26,000,000 compared to $19,000,000 in the prior period. Our year over year growth in this channel was primarily driven by higher sales volumes to existing customers. Speaker 300:08:42Rental revenue decreased 8.3 percent to $14,900,000 from $16,300,000 in the prior period, primarily driven by a higher mix of lower private payer reimbursement rates and higher rental revenue adjustments. Now I want to discuss our gross margins. Total gross margin was 44.1%, increasing 150 basis points from the same period in the prior year, primarily driven by a lower average cost of components in this quarter relative to a year ago. The benefit of lower component costs was partially offset by channel mix shift with a greater proportion of total Q1 2024 sales from our lower margin B2B channel relative to total Q1 2023 sales. Sales revenue gross margin was 44.1 percent, an increase of 490 basis points, driven primarily by lower component premiums. Speaker 300:09:41Rental revenue gross margin was 43.7%, a decline of 10.40 basis points, primarily due to lower net revenue per patient as a result of a decrease in the percentage of patients billed versus total patients on service and mix shift from Medicare versus private payers and higher rental revenue adjustments. Moving on to operating expense. In the Q1, total operating expense decreased to $50,600,000 compared to $52,600,000 in the prior period, representing a decrease of 3.8%. The decrease was primarily due to restructuring costs of $1,800,000 incurred in the prior year period, as well as lower sales and marketing expenses, primarily resulting from last quarter's exit from a third party sales partnership. In the Q1 of 2024, we reported a GAAP net loss of $14,600,000 and loss per diluted share of $0.62 On an adjusted basis, we reported a net loss of $10,400,000 and adjusted loss per diluted share of $0.45 Adjusted EBITDA was a loss of $7,600,000 compared to a loss of $11,800,000 in the prior year period. Speaker 300:11:01We are pleased to be driving improvement in our adjusted EBITDA metrics as we continue to manage the business carefully with profitability as a key objective. Moving on to our balance sheet. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $119,800,000 with no debt outstanding. Before I turn the line back to Kevin, I'd like to share our revenue expectations for the Q2. We're continuing to make progress on our strategic priorities through the Q2, including our ongoing work to evaluate and optimize some dynamics in our sales and rental channels. Speaker 300:11:42Based on trends in our business today, we expect total sales to be $81,000,000 to $84,000,000 in the second quarter. We anticipate providing guidance for the back half of twenty twenty four on our Q2 earnings call. And with that, I will pass the call back to Kevin for closing remarks. Speaker 200:12:00I'm pleased that our organization made meaningful steps in the right direction during the Q1. Our resilience and progress are a testament to the strength of our team at Inogen. We recognize there's much work to be done, but we will continue to execute against our strategic goals and remain excited about the future. With that, I will open it up for questions. Operator? Operator00:12:22Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Matthew Blackman with Stifel. Please proceed with your question. Speaker 400:13:07Hi, this is Colin on for Matt. Congrats on a great quarter. I guess I wanted to start on the U. S. B2B business. Speaker 400:13:14A couple of dynamics there. You saw a little bit of a tailwind from a competitor exit in the market. But I'm also curious about any improvement in the capital environment for HMEs. Has anything changed to how we should think about these dynamics going forward? And how do you think about that when laying out the guide for the Q2? Speaker 500:13:37Thanks, Collin. This is Kevin. I'll go ahead and fill that one, Mike. So we don't we're not seeing any real headwinds that are sitting in front of us here as far as the capital markets. It hasn't been interfering with our business. Speaker 500:13:53The feedback that we have from B2B is strong. We are we've been forecasting building bottoms up within this on the month to month and quarter to quarter basis. And we feel pretty good about our ability to at least hear over the next quarters, we're providing guidance to be able to continue to build and achieve that. So in short, we're not seeing any constraints from the capital market. Speaker 400:14:21Okay, great. And I just had a 2 parter on the rentals business. Was there any impact during the quarter due to the exit of the 3rd party support contract for the prescribable channel? And how should we think about gross margin in that business going forward given the revised down profile during the Q1 versus last year? Speaker 500:14:47You want me to start with that, please? Yes. So I'll start at the beginning part of that. So from the impact from the 3rd party we saw is we had characterized that before we exited the 3rd party relationship. We brought select members of that team who were the highest performing members of that team in house, directly part of the Inogen team and integrated that team into the family here. Speaker 500:15:13We saw a little bit of, yes, I'll say a transition period there where as we're integrating the team into Inogen, it caused a little bit of just some lost steps and so forth. But that is behind us, that is working well now moving forward and we like what we're seeing out of that team and the collaboration that we have more broadly. But, yes, Mike, I want you to chime in on gross margin. Speaker 300:15:40Thanks, Kevin. Yes, Collin, this Speaker 600:15:42is Mike. Just a little bit on the your question on the gross margin. So, we're not providing specific guidance in terms of gross margins going forward, but I can tell you kind of what the impacts were and kind of where they came from in that rental business for Q1. So kind of we'll start with rental revenue. Couple of things impacting us there unfavorably. Speaker 600:16:05We did have lower Medicare rate that kind of went into effect on January of this year. So that's part of the impact. We're also seeing a unfavorable mix with a higher percent of our patients coming from the private payer as opposed to Medicare. So those two things are really directly impacting gross margin. In addition to that rental gross margins were also impacted by some higher service costs in that channel during the quarter. Speaker 600:16:37We do have some visibility in the patient pay plans and the patient mix going forward, but we're not able to share concrete rental gross margin outlook at Speaker 300:16:46this time and we'll revisit that at the Q2 call. Speaker 400:16:52Great. Thank you, Kevin and Mike for taking my questions. Operator00:16:58Thank you. Our next question comes from the line of Margaret Caskor with William Blair. Please proceed with your question. Speaker 700:17:07Hey, good afternoon. Thanks for taking the questions. I'm going to try to dive a little bit into the Q2 guidance, if I may, by business line and apologize in advance for the series of questions. But number 1, usually Q2 would see DTC and B2B domestic just seasonally increase in a double digit pace sequentially. So is that the assumption here and why or why not? Speaker 700:17:352, are you assuming any benefit from Phillips being off of the March in the second quarter benefit or headwind frankly? And 3, relative to our number, we saw a lot of upside coming from B2B International. Was there something specific to that number? And how repeatable is that $26,000,000 as we go along both into Q2 and the rest of the year? Speaker 600:18:04So Margaret, this is Mike. I'll take the first part of that question. So in terms of kind of what we're guiding to, so we're not providing guidance at the channel level, but I would just say that our guidance is reflective of the trends that we're seeing in the business today. We're taking into kind of a lot of different things, the evolution of our channel mix, the new leadership team that's in place here. And in terms of the question about D2C, I think it's important also that we consider 2024 to be a rebase year at D2C given the new size of our team. Speaker 600:18:43But we have seen early signs of higher productivity, which is very encouraging. Just in terms maybe a little bit more in terms of that guidance, the revenue guidance, Just kind of maybe it will be helpful to say how we approached it. We look at the pipeline and we look at what is most likely to occur, what is unlikely to occur and it's more of a bottoms up forecasting that we're instituting in the business and that gets us to that low end of the range that we provided. To get to the higher end, we really have to see higher percentage of upside in some large B2B orders coming in. Speaker 500:19:24And I'll just add on to that a little bit, Mark, there for one on the assumptions of the benefit from Phillips. We have seen a very modest tailwind coming from Philips so far. Again, as we characterized previously, we see that there is opportunity out there. We're going to position ourselves. We have been positioning ourselves to take advantage of it, But it's something that we've not been seeing coming in more than the dribs and drabs, let's say, opportunities that have presented themselves that we could particularly contribute back to that. Speaker 500:20:02But that may come more down the road and we are we're positioning ourselves to be able to take advantage of every opportunity that comes our way. And on the international B2B, I'm being able to see that continue. We're not forecasting anything right now past Q2, and we haven't broken down the channel by channel mix. But we've seen good results coming from the B2B in general and we do anticipate those opportunities continue to be there and us taking advantage wherever we can. Speaker 700:20:36Okay. And then as we think about the hospital channel, which is maybe a newer comment in your intro, my understanding in the past is hospital wasn't really something quite as focused on by the company because the flow rates maybe weren't aligned with what the hospital means. So walk me through that So it's a good dialogue there. So one of the things that Speaker 500:21:06So it's a good dialogue there. So one of the when we look at the hospital opportunity, so a large percentage of the patients are diagnosed in the hospital from an event that triggers a visit to the emergency room, leads to inpatient care and then when the patient goes home they have to have an oxygen as upon discharge from the hospital. So there's an opportunity for us to go even further upstream and be able to gain a few months at the very least, but some number of months in billing prior to a patient hitting a capitated period there. So in those patients, of course, that follow-up by prescribers leads to another connected relationship back to the prescriber. We see this as an opportunity for us to continue to explore. Speaker 500:21:59We've been engaging in that. We like what we're seeing so far. It's early stages to see how well we roll this out further, but it looks promising at this point. Speaker 700:22:10Okay. And just last question for me is, as we think about COGS, and I appreciate not wanting to go too far into gross margins, but we can back into a COGS per unit number. And it seems like it actually did quite well. So you've talked historically about getting the high cost consumables off the books. That directionally points to continued gross margin improvement from here, but maybe you can provide some color around that and kind of any long term profitability comments that may change from the last quarter? Speaker 700:22:44Thank you. Speaker 600:22:46Yes. Thank you, Margaret. So just in terms of the improvement in COGS, the improvement in COGS and related gross margin really was largely driven by continued depletion of those premiums, price components that we have been incurring in the previous year. In terms of kind of where we're looking at going forward with that, we still do have some premium cost on our balance sheet and we will be seeing some of that we kind of like make its way through the P and L over the course of the remainder of the year. But certainly to no degree that we've seen in 20222023 search so to a much lower level, but we still have a little bit to get through. Speaker 700:23:35Thank you, guys. Operator00:23:39Thank you. Our next question comes from the line of Mike Matson with Needham and Company. Please proceed with your question. Mike, you might still have yourself on mute. Speaker 800:23:58Yes, sorry about that. The DTC sales team, did the headcount change at all there? What kind of drove the decline in sales in that business? Speaker 500:24:18Sorry, Mike. I think maybe the first part of that might have been cut off, but I think I asked I think I heard you asking where we are right now with the headcount on the D2C business? Speaker 800:24:30Yes, the salespeople, the inside salespeople. Speaker 500:24:34Yes. So it's right now, we have a sales team that's in the range of 150 to 170 sales reps in the provide any additional provide any additional updates on that going forward unless there's any deviation from it. But that is a that's a headcount that we feel comfortable with right now. We have initiatives that are running through that we've talked about with reducing the friction and enabling any patient who reaches into the DTC channel and to Inogen to help them all get an Inogen POC, whether that be for a cash sale, whether that be somebody who's covered by a rental plan, being able to leverage that sales organization and the contact point to allow that to happen. We've been seeing positive results coming from that. Speaker 500:25:26That still is in pilot phases right now, but we like when that has been trending and we're very comfortable and happy with the size of that organization. We're going to continue to focus on growing it profitably forward. Speaker 800:25:39Okay. And then just I missed some of the prepared remarks, I apologize, you might have touched on this, but just the decline there in that business, I mean, what was the reason for that? Speaker 500:25:52Yes. So the DTC channel is one thing to keep in mind there too is that organization, the size of that organization year on year from same time prior year is it's been considerably reduced and we're focused on growing that piece of the business profitably. So quarter on quarter, we've been happy with what we're seeing coming out of that. We're happy with what we see in the going forward with that channel, but not just growing it at all costs, but growing it profitably. Speaker 800:26:26Yes. Okay. I understand. And then what about just in terms of pricing? So on the B2B side in particular, I mean, you did see really strong growth there with Respironics, Philips Respironics having exited the market. Speaker 800:26:42Is there been potentially a shortage of POCs? And is that an opportunity to raise give you some pricing power there? Speaker 500:26:51So we feel that it was a couple of points in there I think to raise or to talk to. 1, the characterization of that business potentially being part of an exit from there with a competitor. We're not seeing that that has been a meaningful contributor to the growth that we're seeing there or the business that we have coming out of this past quarter. We've seen very limited impact from that. We are going to continue to monitor and position ourselves to take advantage. Speaker 500:27:26But we are positioning ourselves strongly against low priced competitors in the marketplace. We see price pressure that is coming in, but we have a POC with an 8 year useful life on it, which is 3 years longer than the next closest competitor. And those are meaningful years that an HME, that a B2B partner could continue to deploy a POC and bill for it. We have a very strong brand name recognition. We know from our experiences working with our B2B partners, working with prescriber channels and also having patients reach into us through our DTC channel that more often than not patients are asking for an Inogen rather than asking for a POC. Speaker 500:28:08So that brand name recognition that link to the quality of Inogen is all gives us a distinct advantage. And right now, we feel like we are sitting alone at Speaker 300:28:18the top as the Speaker 500:28:18premium player in the marketplace. So we're going to continue to have Speaker 200:28:24to fight off price pressure, but Speaker 500:28:25we feel that we have a good message to sell. Speaker 200:28:29Okay, got it. Thank you. Operator00:28:34Thank you. There are no further questions at this time. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallInogen Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Inogen Earnings HeadlinesInogen to Report First Quarter 2025 Financial Results on May 7, 2025 | INGN Stock NewsApril 16, 2025 | gurufocus.comInogen to Report First Quarter 2025 Financial Results on May 7, 2025April 16, 2025 | gurufocus.comWhat if America bought gold like it used to?History Says Gold Wins When This Signal Flashes — and It’s Flashing Now Every time the Buffett Indicator has hit extreme levels, stocks have crashed — and gold has dominated the decade that followed. 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Email Address About InogenInogen (NASDAQ:INGN), a medical technology company, develops, manufactures, and markets portable oxygen concentrators to patients, physicians and other clinicians, and third-party payors in the United States and internationally. Its oxygen concentrators are used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. The company offers Inogen One, a portable device that concentrate the air around the patient to provide a source of supplemental oxygen; Inogen At Home stationary oxygen concentrators; Simeox airway clearance; batteries; and related accessories. It also rents its products directly to patients. Inogen, Inc. was incorporated in 2001 and is headquartered in Goleta, California.View Inogen ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 9 speakers on the call. Operator00:00:00Welcome to the Inogen's First Quarter 2024 Earnings Conference Call. 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. Speaker 100:00:41Thank you all for participating in today's call. Joining me are President and CEO, Kevin Smith and CFO, Mike Bork. Earlier today, Anogen released financial results for the Q1 of 2024. This earnings release is available in the Investor Relations section of the company's website along with a supplemental financial package. As a reminder, the information presented today will include forward looking statements, including without limitation, statements about our growth prospects and strategy for 2024 and beyond. Speaker 100:01:13Expectations related to our financial results for Q2, 2024, progress of our strategic initiatives, including innovation, our expectations regarding the market for our products on our business and supply and demand for our products in both the short term and long term. The forward looking statements in this call are based on information currently available to us as of today's date, May 7, 2024. These forward looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission. Actual results may vary and we disclaim any obligation to update these forward looking statements except as may be required by law. We have posted historical financial statements and our investor presentations in the Investor Relations section of the company's website. Speaker 100:02:08Please refer to these files for more detailed information. During the call, we will also present certain financial information on a non GAAP basis. Management believes that non GAAP financial measures taken in conjunction with U. S. GAAP Financial Measures provide useful information for both management and investors by excluding certain non cash items and other expenses that are not indicative of Inogen's core operating results. Speaker 100:02:37Management uses non GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Reconciliations between U. S. GAAP and non GAAP results are presented in tables within our earnings release. With that, I will turn the call over to Inogen's President and CEO, Kevin Swin. Speaker 200:02:58Good afternoon and thank you for joining our Q1 2024 conference call. I'm excited to be joined for the first time by Inogen's new CFO, Mike Bork. We are thrilled to have Mike on the team, bringing with him over 2 decades of financial leadership experience. During today's call, I will provide updates on our progress against our 3 strategic priorities, driving top line growth, advancing our path to profitability and expanding in our innovation pipeline. First, we endeavor to position for sustainable top line growth by evaluating and improving our sales and rental strategies, while strengthening our relationships with distributors and stakeholders. Speaker 200:03:37We had many positive discussions with our business to business partners in the Q1, some of which led to the completion of new sales agreement. We will continue to focus on developing fruitful relationships and building awareness of our market leading portable oxygen concentrators with partners across the globe. As part of this initiative, we are closely monitoring U. S. Market trends and are prepared to fill any gaps that may arise from our recent competitors' temporary exit from the U. Speaker 200:04:05S. Home respiratory market. At this time, we have seen very modest tailwinds as a result of that exit, and we will remain ready to capitalize the potential outstanding customer demands as the year goes on. We continue our efforts to reduce friction, increase synergies and efficiencies across our sales channels. We have seen encouraging results by promoting communication between our sales personnel and launching specific pilot projects to drive this cross partnership. Speaker 200:04:34These initiatives, including training our team to execute both direct to consumer and rental sales, partnership programs within our B2B customers and new targets within our rental channel. These initiatives, while in early stages, are showing promising results. Secondly, we remain focused on establishing and advancing our path to profitability. As part of our efforts to better manage our cost and margin profile, we recently made the calculated decision to target hospitals in addition to individual practitioners through our rental business. By expanding our scale, efficiency and throughput in the rental channel, we anticipate driving higher profitability over time. Speaker 200:05:15In addition, we are seeing cost benefits in the form of lower sales and marketing expenses due to the recent exit of our 3rd party relationship in the rental channel, which we spoke to on our last quarterly call. We are also rolling out pilot programs to drive a return to growth in our high margin direct to consumer business. As a reminder, we have materially downsized our DTC team on a year over year basis and we have now achieved a healthy organization size and are beginning to see improving productivity per rep. As always, we are carefully considering the return potential of every dollar we invest into the business and we'll maintain this philosophy going forward. Regarding our efforts to expand our innovation pipeline, we remain diligently focused on bringing new innovative products to market and supplementing our current market leading POCs with necessary software and accessories to ensure a best in class provider and patient experience. Speaker 200:06:14I would also like to touch on our plans to expand Physio Assist availability in the U. S. We remain excited about the addition of Physio Assist to our portfolio and we are pleased to share that we have engaged in healthy discussions with the FDA. We look forward to bringing this product to the U. S. Speaker 200:06:31Market in the future. We have an exciting pipeline in store and we look forward to updating investors on specific launches later this year. I would like to briefly highlight our Q1 2024 results before turning the line to Mike for a full review of our financials and outlook. We achieved $78,000,000 in total first quarter revenue, reflecting 8% year over year growth and 3% from our Q4 2023. Our results are a reflection of early execution against our strategic goal. Speaker 200:07:01Now, I'd like to turn the call over to Mike for a more detailed review of our financial results. Mike? Speaker 300:07:08Thank you, Kevin, and good afternoon, everyone. Unless otherwise noted, all financial comparisons are to the prior year comparable period. Total revenue for the Q1 of 2024 was $78,000,000 an increase of 8.1% versus the prior year period. The increase was primarily driven by higher international and domestic business to business sales as a result of increased volumes from existing and new customers during the quarter. For the Q1, foreign exchange had a positive 50 basis points impact on total revenue and a positive 180 basis points impact on international revenue. Speaker 300:07:48Looking at Q1 revenue on a more detailed basis. Direct to consumer sales decreased 15.6 percent to $20,500,000 from $24,300,000 in the prior period, driven primarily by lower representative headcount, partially offset by increased average selling prices and increased unit volume per rep. Domestic business to business revenue increased 31.3 percent to $16,500,000 compared with $12,600,000 in the comparable period, driven by new customer business and increased demand from resellers. International business to business revenue increased 37.2 percent to $26,000,000 compared to $19,000,000 in the prior period. Our year over year growth in this channel was primarily driven by higher sales volumes to existing customers. Speaker 300:08:42Rental revenue decreased 8.3 percent to $14,900,000 from $16,300,000 in the prior period, primarily driven by a higher mix of lower private payer reimbursement rates and higher rental revenue adjustments. Now I want to discuss our gross margins. Total gross margin was 44.1%, increasing 150 basis points from the same period in the prior year, primarily driven by a lower average cost of components in this quarter relative to a year ago. The benefit of lower component costs was partially offset by channel mix shift with a greater proportion of total Q1 2024 sales from our lower margin B2B channel relative to total Q1 2023 sales. Sales revenue gross margin was 44.1 percent, an increase of 490 basis points, driven primarily by lower component premiums. Speaker 300:09:41Rental revenue gross margin was 43.7%, a decline of 10.40 basis points, primarily due to lower net revenue per patient as a result of a decrease in the percentage of patients billed versus total patients on service and mix shift from Medicare versus private payers and higher rental revenue adjustments. Moving on to operating expense. In the Q1, total operating expense decreased to $50,600,000 compared to $52,600,000 in the prior period, representing a decrease of 3.8%. The decrease was primarily due to restructuring costs of $1,800,000 incurred in the prior year period, as well as lower sales and marketing expenses, primarily resulting from last quarter's exit from a third party sales partnership. In the Q1 of 2024, we reported a GAAP net loss of $14,600,000 and loss per diluted share of $0.62 On an adjusted basis, we reported a net loss of $10,400,000 and adjusted loss per diluted share of $0.45 Adjusted EBITDA was a loss of $7,600,000 compared to a loss of $11,800,000 in the prior year period. Speaker 300:11:01We are pleased to be driving improvement in our adjusted EBITDA metrics as we continue to manage the business carefully with profitability as a key objective. Moving on to our balance sheet. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $119,800,000 with no debt outstanding. Before I turn the line back to Kevin, I'd like to share our revenue expectations for the Q2. We're continuing to make progress on our strategic priorities through the Q2, including our ongoing work to evaluate and optimize some dynamics in our sales and rental channels. Speaker 300:11:42Based on trends in our business today, we expect total sales to be $81,000,000 to $84,000,000 in the second quarter. We anticipate providing guidance for the back half of twenty twenty four on our Q2 earnings call. And with that, I will pass the call back to Kevin for closing remarks. Speaker 200:12:00I'm pleased that our organization made meaningful steps in the right direction during the Q1. Our resilience and progress are a testament to the strength of our team at Inogen. We recognize there's much work to be done, but we will continue to execute against our strategic goals and remain excited about the future. With that, I will open it up for questions. Operator? Operator00:12:22Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Matthew Blackman with Stifel. Please proceed with your question. Speaker 400:13:07Hi, this is Colin on for Matt. Congrats on a great quarter. I guess I wanted to start on the U. S. B2B business. Speaker 400:13:14A couple of dynamics there. You saw a little bit of a tailwind from a competitor exit in the market. But I'm also curious about any improvement in the capital environment for HMEs. Has anything changed to how we should think about these dynamics going forward? And how do you think about that when laying out the guide for the Q2? Speaker 500:13:37Thanks, Collin. This is Kevin. I'll go ahead and fill that one, Mike. So we don't we're not seeing any real headwinds that are sitting in front of us here as far as the capital markets. It hasn't been interfering with our business. Speaker 500:13:53The feedback that we have from B2B is strong. We are we've been forecasting building bottoms up within this on the month to month and quarter to quarter basis. And we feel pretty good about our ability to at least hear over the next quarters, we're providing guidance to be able to continue to build and achieve that. So in short, we're not seeing any constraints from the capital market. Speaker 400:14:21Okay, great. And I just had a 2 parter on the rentals business. Was there any impact during the quarter due to the exit of the 3rd party support contract for the prescribable channel? And how should we think about gross margin in that business going forward given the revised down profile during the Q1 versus last year? Speaker 500:14:47You want me to start with that, please? Yes. So I'll start at the beginning part of that. So from the impact from the 3rd party we saw is we had characterized that before we exited the 3rd party relationship. We brought select members of that team who were the highest performing members of that team in house, directly part of the Inogen team and integrated that team into the family here. Speaker 500:15:13We saw a little bit of, yes, I'll say a transition period there where as we're integrating the team into Inogen, it caused a little bit of just some lost steps and so forth. But that is behind us, that is working well now moving forward and we like what we're seeing out of that team and the collaboration that we have more broadly. But, yes, Mike, I want you to chime in on gross margin. Speaker 300:15:40Thanks, Kevin. Yes, Collin, this Speaker 600:15:42is Mike. Just a little bit on the your question on the gross margin. So, we're not providing specific guidance in terms of gross margins going forward, but I can tell you kind of what the impacts were and kind of where they came from in that rental business for Q1. So kind of we'll start with rental revenue. Couple of things impacting us there unfavorably. Speaker 600:16:05We did have lower Medicare rate that kind of went into effect on January of this year. So that's part of the impact. We're also seeing a unfavorable mix with a higher percent of our patients coming from the private payer as opposed to Medicare. So those two things are really directly impacting gross margin. In addition to that rental gross margins were also impacted by some higher service costs in that channel during the quarter. Speaker 600:16:37We do have some visibility in the patient pay plans and the patient mix going forward, but we're not able to share concrete rental gross margin outlook at Speaker 300:16:46this time and we'll revisit that at the Q2 call. Speaker 400:16:52Great. Thank you, Kevin and Mike for taking my questions. Operator00:16:58Thank you. Our next question comes from the line of Margaret Caskor with William Blair. Please proceed with your question. Speaker 700:17:07Hey, good afternoon. Thanks for taking the questions. I'm going to try to dive a little bit into the Q2 guidance, if I may, by business line and apologize in advance for the series of questions. But number 1, usually Q2 would see DTC and B2B domestic just seasonally increase in a double digit pace sequentially. So is that the assumption here and why or why not? Speaker 700:17:352, are you assuming any benefit from Phillips being off of the March in the second quarter benefit or headwind frankly? And 3, relative to our number, we saw a lot of upside coming from B2B International. Was there something specific to that number? And how repeatable is that $26,000,000 as we go along both into Q2 and the rest of the year? Speaker 600:18:04So Margaret, this is Mike. I'll take the first part of that question. So in terms of kind of what we're guiding to, so we're not providing guidance at the channel level, but I would just say that our guidance is reflective of the trends that we're seeing in the business today. We're taking into kind of a lot of different things, the evolution of our channel mix, the new leadership team that's in place here. And in terms of the question about D2C, I think it's important also that we consider 2024 to be a rebase year at D2C given the new size of our team. Speaker 600:18:43But we have seen early signs of higher productivity, which is very encouraging. Just in terms maybe a little bit more in terms of that guidance, the revenue guidance, Just kind of maybe it will be helpful to say how we approached it. We look at the pipeline and we look at what is most likely to occur, what is unlikely to occur and it's more of a bottoms up forecasting that we're instituting in the business and that gets us to that low end of the range that we provided. To get to the higher end, we really have to see higher percentage of upside in some large B2B orders coming in. Speaker 500:19:24And I'll just add on to that a little bit, Mark, there for one on the assumptions of the benefit from Phillips. We have seen a very modest tailwind coming from Philips so far. Again, as we characterized previously, we see that there is opportunity out there. We're going to position ourselves. We have been positioning ourselves to take advantage of it, But it's something that we've not been seeing coming in more than the dribs and drabs, let's say, opportunities that have presented themselves that we could particularly contribute back to that. Speaker 500:20:02But that may come more down the road and we are we're positioning ourselves to be able to take advantage of every opportunity that comes our way. And on the international B2B, I'm being able to see that continue. We're not forecasting anything right now past Q2, and we haven't broken down the channel by channel mix. But we've seen good results coming from the B2B in general and we do anticipate those opportunities continue to be there and us taking advantage wherever we can. Speaker 700:20:36Okay. And then as we think about the hospital channel, which is maybe a newer comment in your intro, my understanding in the past is hospital wasn't really something quite as focused on by the company because the flow rates maybe weren't aligned with what the hospital means. So walk me through that So it's a good dialogue there. So one of the things that Speaker 500:21:06So it's a good dialogue there. So one of the when we look at the hospital opportunity, so a large percentage of the patients are diagnosed in the hospital from an event that triggers a visit to the emergency room, leads to inpatient care and then when the patient goes home they have to have an oxygen as upon discharge from the hospital. So there's an opportunity for us to go even further upstream and be able to gain a few months at the very least, but some number of months in billing prior to a patient hitting a capitated period there. So in those patients, of course, that follow-up by prescribers leads to another connected relationship back to the prescriber. We see this as an opportunity for us to continue to explore. Speaker 500:21:59We've been engaging in that. We like what we're seeing so far. It's early stages to see how well we roll this out further, but it looks promising at this point. Speaker 700:22:10Okay. And just last question for me is, as we think about COGS, and I appreciate not wanting to go too far into gross margins, but we can back into a COGS per unit number. And it seems like it actually did quite well. So you've talked historically about getting the high cost consumables off the books. That directionally points to continued gross margin improvement from here, but maybe you can provide some color around that and kind of any long term profitability comments that may change from the last quarter? Speaker 700:22:44Thank you. Speaker 600:22:46Yes. Thank you, Margaret. So just in terms of the improvement in COGS, the improvement in COGS and related gross margin really was largely driven by continued depletion of those premiums, price components that we have been incurring in the previous year. In terms of kind of where we're looking at going forward with that, we still do have some premium cost on our balance sheet and we will be seeing some of that we kind of like make its way through the P and L over the course of the remainder of the year. But certainly to no degree that we've seen in 20222023 search so to a much lower level, but we still have a little bit to get through. Speaker 700:23:35Thank you, guys. Operator00:23:39Thank you. Our next question comes from the line of Mike Matson with Needham and Company. Please proceed with your question. Mike, you might still have yourself on mute. Speaker 800:23:58Yes, sorry about that. The DTC sales team, did the headcount change at all there? What kind of drove the decline in sales in that business? Speaker 500:24:18Sorry, Mike. I think maybe the first part of that might have been cut off, but I think I asked I think I heard you asking where we are right now with the headcount on the D2C business? Speaker 800:24:30Yes, the salespeople, the inside salespeople. Speaker 500:24:34Yes. So it's right now, we have a sales team that's in the range of 150 to 170 sales reps in the provide any additional provide any additional updates on that going forward unless there's any deviation from it. But that is a that's a headcount that we feel comfortable with right now. We have initiatives that are running through that we've talked about with reducing the friction and enabling any patient who reaches into the DTC channel and to Inogen to help them all get an Inogen POC, whether that be for a cash sale, whether that be somebody who's covered by a rental plan, being able to leverage that sales organization and the contact point to allow that to happen. We've been seeing positive results coming from that. Speaker 500:25:26That still is in pilot phases right now, but we like when that has been trending and we're very comfortable and happy with the size of that organization. We're going to continue to focus on growing it profitably forward. Speaker 800:25:39Okay. And then just I missed some of the prepared remarks, I apologize, you might have touched on this, but just the decline there in that business, I mean, what was the reason for that? Speaker 500:25:52Yes. So the DTC channel is one thing to keep in mind there too is that organization, the size of that organization year on year from same time prior year is it's been considerably reduced and we're focused on growing that piece of the business profitably. So quarter on quarter, we've been happy with what we're seeing coming out of that. We're happy with what we see in the going forward with that channel, but not just growing it at all costs, but growing it profitably. Speaker 800:26:26Yes. Okay. I understand. And then what about just in terms of pricing? So on the B2B side in particular, I mean, you did see really strong growth there with Respironics, Philips Respironics having exited the market. Speaker 800:26:42Is there been potentially a shortage of POCs? And is that an opportunity to raise give you some pricing power there? Speaker 500:26:51So we feel that it was a couple of points in there I think to raise or to talk to. 1, the characterization of that business potentially being part of an exit from there with a competitor. We're not seeing that that has been a meaningful contributor to the growth that we're seeing there or the business that we have coming out of this past quarter. We've seen very limited impact from that. We are going to continue to monitor and position ourselves to take advantage. Speaker 500:27:26But we are positioning ourselves strongly against low priced competitors in the marketplace. We see price pressure that is coming in, but we have a POC with an 8 year useful life on it, which is 3 years longer than the next closest competitor. And those are meaningful years that an HME, that a B2B partner could continue to deploy a POC and bill for it. We have a very strong brand name recognition. We know from our experiences working with our B2B partners, working with prescriber channels and also having patients reach into us through our DTC channel that more often than not patients are asking for an Inogen rather than asking for a POC. Speaker 500:28:08So that brand name recognition that link to the quality of Inogen is all gives us a distinct advantage. And right now, we feel like we are sitting alone at Speaker 300:28:18the top as the Speaker 500:28:18premium player in the marketplace. So we're going to continue to have Speaker 200:28:24to fight off price pressure, but Speaker 500:28:25we feel that we have a good message to sell. Speaker 200:28:29Okay, got it. Thank you. Operator00:28:34Thank you. There are no further questions at this time. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by