Inogen Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 7, 2025

Key Takeaways

  • Positive Sentiment: Inogen reported sixth consecutive quarter of mid single-digit revenue growth, delivering $92.3 M in Q2 driven by a 19% jump in unit volumes as markets convert to portable oxygen concentrators.
  • Positive Sentiment: The company achieved $2.1 M adjusted EBITDA in Q2, marking its second straight profitable quarter (fourth out of five), and now expects to reach full-year adjusted EBITDA breakeven in 2025.
  • Positive Sentiment: Inogen launched VOXIe5, a stationary concentrator aimed at long-term care patients, expanding its product portfolio to include both stationary and portable solutions for DTC and B2B channels.
  • Negative Sentiment: Direct-to-consumer sales fell 21.1% to $17.8 M and rental revenue declined 8.6% to $13.1 M in Q2, reflecting smaller team operations and lower private payer reimbursement rates.
  • Positive Sentiment: Full-year 2025 revenue guidance was raised to $354–357 M (+6%), with Q3 revenue expected at $91–93 M (+4%), supported by sustained B2B momentum and minimal tariff impact.
AI Generated. May Contain Errors.
Earnings Conference Call
Inogen Q2 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Welcome to Energen's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Following management's prepared remarks, we will hold a Q and A session. As a reminder, this conference is being recorded today, 08/07/2025. I would now like to turn the call over to Lorna Williams, SVP of Investor Relations and Strategic Planning.

Speaker 1

Thank you for participating in today's call. Joining me are President and CEO, Kevin Smith and CFO, Mike Borg. Earlier today, Inogen released financial results for the second quarter twenty twenty five. The earnings release is available in the Investor Relations section of the company's website, along with a supplemental financial package. As a result, the information presented today will include forward looking statements, including, without limitation, statements about our growth prospects and strategy for 2025 and beyond expectations related to our financial results for the third quarter and full year 2025 progress on our strategic initiatives, including innovation our expectations regarding the market for our products and our business and supply and demand for our products in the short term and long term.

Speaker 1

The forward looking statements in this call are based on information currently available to us as of today's date, 08/07/2025. 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 obligations to update these forward looking statements except as may be required by law. During the call, we may also present certain financial information on a non GAAP basis. Management believes that non GAAP financial measures taken in conjunction with U.

Speaker 1

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. Management uses non GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Reconciliations between U. S.

Speaker 1

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 Smith.

Speaker 2

Good afternoon, and thank you for joining our second quarter twenty twenty five conference call. Today, I'll share more detail on our progress across our three strategic imperatives: driving top line growth, advancing our path to profitability and expanding our innovation pipeline. Afterwards, Mike will provide further financial details and our updated outlook. First, advancing top line growth remains central to our purpose and goals. This quarter, we achieved our sixth consecutive quarter of mid single digit growth compared to the prior year, delivering approximately $92,000,000 in revenue.

Speaker 2

We have continued to drive encouraging performance, resulting in unit growth of 19% in overall unit volumes as a result of continued market conversion from portable oxygen tanks to portable oxygen concentrators, or POC. Inogen is in the early stages of a promising turnaround, driving top line growth. Disciplined execution has brought us to an inflection point regarding adjusted EBITDA positivity. We've established a track record of meeting or exceeding our financial goals as we advance our presence in the large growing COPD market with low POC penetration. In fact, over the next five years, POCs are expected to increase from an estimated 23% to 58% of the total ambulatory market in The U.

Speaker 2

S. Our strategy focuses on increasing patient access, leveraging our brand strength and expanding our portfolio through new products, indications, digital capabilities and geographic reach, which together provide us an opportunity to increase our addressable market. With these opportunities in front of us, we are confident in our ability to accelerate growth, enhance profitability and drive long term shareholder value. In the second quarter, we completed the rollout of our Patient First initiative, which is a program based on the belief that any patient in need of oxygen therapy should be able to receive an Inogen device easily through the cross training of sales representatives to execute both cash sales and insurance rentals. This marks an important step forward in strengthening our direct to consumer sales and rental channels.

Speaker 2

We are also seeing steady improvements in crucial metrics of sales team success. For example, close rates are already trending up as we continue to enhance our training programs, refine our commercial approach and expand our product offerings. With our sales force size stabilized and the initiative now fully implemented, we expect to see more favorable year over year comparisons towards the end of the third quarter and remain focused on driving stronger performance across the sales organization. We added several new private payers during the quarter, reflecting our ongoing efforts to expand access and strengthen our rental business. Looking ahead, we remain focused on driving operational efficiency and further optimizing performance across our rental operations.

Speaker 2

In the quarter, we reported strong momentum in our business to business channels with growth of approximately 18%. The team has done an excellent job strengthening relationships with DMEs and winning tenders internationally. These results bolster our confidence in our total market approach and the strength of the Inogen brand. Turning to our second priority, driving profitability, where we continued to advance through operational excellence and disciplined cost management. In the second quarter, we delivered meaningful operating leverage, reducing operating expenses by approximately 5% year over year and generating $2,000,000 in adjusted EBITDA.

Speaker 2

This is our second consecutive quarter of adjusted EBITDA profitability. It also marks the fourth adjusted EBITDA profitable quarter out of the last five, highlighting consistent execution of our strategies and disciplined expense management. As a result, we now expect to achieve full year adjusted EBITDA breakeven in 2025, supported by sustained revenue growth and disciplined spending. We remain focused on driving further improvement in the coming years as we advance towards sustainable profitability. We continued to advance our innovation pipeline this quarter with meaningful progress across our key strategic priorities.

Speaker 2

We introduced BOXY5, our latest stationary oxygen concentrator designed to expand access to high quality therapy for long term care patients. We also continued developments of clinical data for SymeoX around the world and launched a new mobile digital health portal. I'll begin with VOXI5, our newest stationary oxygen concentrator. This product is a meaningful extension of our oxygen therapy portfolio, complementing our portable solutions and enabling us to serve a broader range of patients in the home care setting. Developed in collaboration with UL Medical, VOXI5 reflects the strength of our product pipeline and our ability to bring high quality, cost effective solutions to market.

Speaker 2

The device delivers one to five liters per minute of continuous flow oxygen in a compact, quiet and durable form. It's a strong option for patients who need a reliable and affordable second unit for use in multiple rooms. The launch of VOXIe five also gives our sales team another valuable tool to meet the diverse needs of patients and providers, especially in the business to business channel where we previously did not have a stationary offering. This is critical as our DME partners generally provide new patients with both SOC and POC. And having two quality offerings will allow us to reach new customers and deepen our relationships with existing partners.

Speaker 2

We're encouraged by the early response and look forward to continued progress as the launch builds momentum in the months ahead. In addition, we initiated the groundwork for our clinical trials to support premium reimbursement, advancing our efforts towards Cemiox commercialization. While there are no material updates to provide at this time, the overall efforts remain on track, and we will continue to share pertinent information as appropriate. Lastly, we enhanced our digital health capabilities by launching an online patient portal as part of our Inogen Connect solution. The patient portal is designed to be seamlessly integrated with our mobile application, expanding access to self-service tools that improve patient engagement and streamline operations.

Speaker 2

The platform enables patients to order supplies, track shipments, access setup resources, update insurance info and e sign forms, all from their phones or computers. The launch supports our commitment to enhancing patient experience. We are pleased with the positive reception by early adopters and look forward to continuing to deliver tools that improve accessibility and ease of use for patients and providers. To conclude, the innovation we delivered this quarter reflects our ongoing commitments to advancing respiratory care through meaningful product development, greater affordability and better outcomes for patients who rely on oxygen therapy every day. With that, I will pass the call over to Mike for an overview of our financials.

Speaker 2

Mike?

Speaker 3

Thank you, Kevin, and good afternoon, everyone. Unless otherwise stated, all financial comparisons presented refer to the prior year comparable period. Total revenue for the 2025 was $92,300,000 an increase of 4% on a reported basis. The increase was primarily driven by higher demand in our business to business channels. Looking at second quarter revenue on a more detailed basis, domestic business to business revenue increased 19.3 to $25,400,000 versus $21,300,000 in the prior period, driven by increased demand.

Speaker 3

International business to business revenue increased 17.7% to $35,900,000 compared to $30,500,000 in the prior period, primarily driven by higher demand. Direct to consumer sales decreased 21.1% to $17,800,000 from $22,600,000 in the prior period, as we continue to operate with a smaller and more efficient team. We've taken meaningful steps over the last twelve to twenty four months to reshape our DTC operations, focusing on efficiency and productivity to support our broader profitability goals. These changes helped drive nearly 19% sequential growth in our DTC channel, nearly double the 10% sequential improvement from the prior year. This improvement strengthens our belief that our current team operating with an updated structure is well positioned for the future.

Speaker 3

Rental revenue decreased 8.6% to $13,100,000 from $14,300,000 in the prior period. The decrease was primarily driven by a higher mix of lower private payer reimbursement rates. Now I want to discuss gross margins. Total gross margin was 44.8% in the 2025, decreasing three thirty five basis points from the same period in the prior year, primarily driven by increased business to business sales as a percentage of total revenue. On a sequential basis, gross margin increased 60 basis points driven by higher volumes.

Speaker 3

Our cost of goods sold in the quarter included premium price components, which resulted in a 121 basis points headwind to gross margin. We do not expect a material impact from these components going forward. Moving on to operating expense. In the 2025, total operating expense decreased $47,500,000 compared to $49,800,000 in the prior period, representing a decrease of 4.7, primarily related to a one time bad debt expense in the prior period. Due to the timing of planned expenses for advancement of clinical trials related to Symiox commercialization, we expect operating expense to slightly increase in the second half as compared to the first half of the year, reflecting ongoing investments in product development and commercialization.

Speaker 3

In the 2025, we reported a GAAP net loss of $4,200,000 compared to a loss of $5,600,000 in the prior period and loss per diluted share of $0.15 in the 2025 versus a loss of $0.24 in the prior period. On an adjusted basis, we had a net loss of $700,000 in the 2025 compared to a loss of $1,600,000 in the prior period and an adjusted loss per diluted share of $02 in the 2025 compared to a loss of $07 in the prior period. Adjusted EBITDA was $2,100,000 in the 2025 compared to $1,300,000 in the prior period. Moving on to our balance sheet. As of 06/30/2025, we had cash, cash equivalents, marketable securities and restricted cash of $123,700,000 with no debt outstanding.

Speaker 3

We were pleased to increase cash by $1,200,000 in the quarter. We also generated $4,400,000 in operating cash flow in the second quarter, a testament to the health of our business and a result of our focus on working capital optimization and expense management. On that note, I will now discuss our full year 2025 and third quarter financial outlook. We now expect full year 2025 reported revenue to be in the range of $354,000,000 to $357,000,000 reflecting 6% growth at the midpoint relative to the full year 2024. For the full year 2025, we now expect to reach adjusted EBITDA breakeven.

Speaker 3

For the third quarter twenty twenty five, we expect reported revenue to be in the range of $91,000,000 to $93,000,000 reflecting 4% growth at the midpoint relative to the 2024. Given our current exemptions for certain medical devices, we continue to expect no material impact from tariffs on our gross margin and adjusted EBITDA. However, we will closely monitor developments and we'll share updates as appropriate. Our turnaround is progressing well with mid single digit top line growth and disciplined execution. These results highlight the strength of our strategy and position us to drive sustainable performance and create long term shareholder value.

Speaker 3

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

Speaker 2

Thank you, Mike. We're proud of the progress made this quarter as we sharpened our focus on operational discipline, launched new products and advanced our innovation efforts. The introduction of VOXIe five opens new doors in stationary oxygen therapy, and we continue to lay the groundwork for future growth through investments in digital health and our broader innovation pipeline. With a solid foundation in place, we're entering the second half of the year with confidence and a clear path forward. With that, operator, please open the call for questions.

Operator

Thank you. We will now be conducting a question and answer session. And our first question comes from the line of Anderson Shock with B. Riley Securities. Please proceed with your question.

Speaker 4

Hi. Thank you for taking the questions and congrats on a really strong quarter. So first, could you talk about the initial demand you've seen for VOXIe five? How should we think about the revenue contribution for this in the back half of the year? And what percent of new VOXIe five users are also being prescribed one of your POCs alongside it?

Speaker 2

Mike, I'll go ahead and start with that. Thanks, Anderson. And I appreciate the comment there too. When we look at Foxy five, so we just launched that of course as you're here recently and we're excited with what we've seen so far from that. The it's baked into our guidance for the rest of the year.

Speaker 2

We do see opportunity for that to have an impact more in the fourth quarter than it would earlier, but that is baked into the guidance that we have already provided. But I think it's one thing that's important to note when you ask about the market for that and what's the contribution will be for the company going forward. When we look at the patients that have a portable oxygen concentrator versus a stationary concentrator, look at that population that has long term oxygen. Nearly one hundred percent of those over ninety percent certainly have an SOC. So that is nearly every patient that's on long term oxygen therapy.

Speaker 2

Portable oxygen concentrators are used with about twenty three percent of that population. So it is a significant increase in our addressable markets that FOXY5 brings for us. So that is something as we look at going forward and we look at our path towards double digit growth and sustainable profitability that represents a significant uplift for us in the future.

Speaker 4

Okay. Got it. Thank you. That's helpful. And then do you have any updates on the reimbursement for Cemiox and how should we think about this impacting the timing of a full commercial launch?

Speaker 2

Yes. So Cemiox, we are working towards reimbursements. We have a number of processes that are going forward to generate health economic data, the clinical data to make sure that we maximize that reimbursement. We are focused not just on reimbursement in The United States, but certainly across the globe. We have trials that are going internationally that would support our European as well as other international markets.

Speaker 2

We're tracking that. We are happy with the progress that we've been making and we have not guided towards timing on that externally, but we are we're happy with the progress that we've been making there. And I will say too that that is when we look at the Semiox and what that represents for us in the future, we talk about expanding our pipeline and Inogen being a platform play. The SOC is the first opportunity for us to really go beyond the portable oxygen concentrators, especially on a large scale, not on a niche play. And when we look at airway clearance and what Semiox ultimately represents for us, again, is a high margin razor razor blade product that we're looking forward to.

Speaker 2

But at the appropriate time we'll provide some additional guidance on timing.

Speaker 4

Okay. Thank you for taking our questions and congrats again on the great quarter.

Speaker 2

Thank

Operator

you. And our next question comes from the line of Robbie Marcus with JPMorgan. Please proceed with your question.

Speaker 5

Hey, this is actually Rohan on for Robbie. Thanks for taking the question. Just wanted to start with guidance. You raised the guide by the size of the beat and I was hoping you could provide some segment level commentary just for the balance of the year and how you're thinking about the fundamentals?

Speaker 3

Sure, Ruben. I'll take that. This is Mike. I think the best way maybe to explain guidance really talk a little bit about what our rationale was as we entered into this second half of the year. So if you look at second half growth is expected to be 7% at the midpoint of the guidance.

Speaker 3

And that would be with mid single digit revenue growth in Q3 and low double digit revenue growth in Q4. Historically, Q2 and Q3 have been our strongest quarters with Q3 revenue roughly in line with Q2, and our outlook reiterates that trend. I think we've said before that in Q4, we expect to have lapsed the year over year sales force changes in our DTC business. So we expect to see performance stabilizing in the fourth quarter. We do continue to expect B2B growth.

Speaker 3

And as Kevin alluded to earlier, we talked about the VOXI as not being significant to our 2025 results, being more meaningful in 2026 going forward. But we do expect some level of contribution from the VOXI launch. And that's what's driving that double digit overall Q4 growth.

Speaker 5

Got it. That's helpful. And then I had a follow-up just on adjusted EBITDA and profitability. You guided to breakeven for the year. And I also believe that I heard positive cash flow from operations in the quarter as well.

Speaker 5

So maybe if you could talk more about some of the drivers behind profitability in your outlook as well as some of the working capital adjustments? And when should we expect for the company to reach free cash flow breakeven? Thanks.

Speaker 3

I'll take that one as well, Robin. I think the way probably to phrase this is our focus has been on profitability. We've been talking about that for quite some time now. Q2 marked the second quarter of positive adjusted EBITDA as we continue to execute our strategy. Overall, we're really pleased with the progress of profitability with positive adjusted EBITDA in the last two quarters.

Speaker 3

In fact, we've reported positive adjusted EBITDA in four of the five last quarters. I think it'd be this is a good time to talk about profitability metrics. What do I mean by that? I'm talking about operating income, adjusted operating income, net income, adjusted net income, EBITDA and adjusted EBITDA. You look at these metrics, they're all favorable for every quarter over the past year and a half compared to the prior period the comparable prior period.

Speaker 3

So I would just say we're really pleased with the execution over the past year and a half on that priority as we continue to drive towards that path to profitability. Hopefully, that answers that question. In terms of cash, yes, we're pleased to have generated $1,200,000 in cash in the second quarter of the year. We've also generated about $4,500,000 of cash from operations and about $05,000,000 of positive free cash flow. We really haven't guided to any future cash forecasting.

Speaker 3

However, we'll continue to look at our cash balance, our capital allocation, focus on the strategic needs of our business with a balance between maintaining an adequate cost structure and investing in the company where we see favorable returns on investment. With all that being said, we're as we said in the past, we're very comfortable with our current cash position and our ability to fund all aspects of the business as needed.

Speaker 5

Thank you.

Operator

Thank you. And our final question comes from the line of Mike Matson with Needham and Company. Please proceed with your question.

Speaker 6

Yes, thanks. So another one on VOXIe V, just wondering, can you comment at all on the pricing and gross margins of that product and particularly interested in how it compares to the POCs? Is it substantially above or below POCs in either of those metrics? And if you can give us more specifics, that would be helpful, but

Speaker 3

Yeah. Think, Mike, in terms of we as you know, we really we don't guide in terms of revenue per channel even in getting into the expected margins. We've our reporting has been basically in terms of gross margin has been based on looking at sales gross margin and rental gross margin. So we really rather not get into the expectation of what we look for in terms of gross margin for that product. It would be different, when you look at some of our other products and you look at our different channels, right?

Speaker 3

So D2C, obviously, and we look at what we sell a unit to one single patient versus what we sell hundreds of units, say to a B2B customer. The price will be different based on that. And therefore gross margin would also be different based on what channel. And we do look at the BOGSY-five as the ability to really enhance all those channels. Yes.

Speaker 3

And I think I'll just add on to

Speaker 2

that is it's overall, we do see that as a key piece on our path to profitability. And when we look at this, as Mike was saying, look at different segments and the Boxy five fits into each of our segments. It is it's an opportunity for us when we look at the rental channel, it will improve our profitability in the rental channel as well as give our salespeople an opportunity to sell an Inogen package for patients rather than just the Inogen POC plus a different stationary concentrated for those patients. For the DTC, that's a higher margin sale as Mike was talking about even though we haven't quantified that. But we are happy with what we've seen as we've launched the VOXN5 that we are selling those to patients forecast through that through our DTC channel.

Speaker 2

Those are that's more sales per patient, more revenue and it's an opportunity for us to continue to bolster that. And when we look at this from contributing to overall profit, one thing to keep in mind that this is, it's the same patient, it's the same physician, same customer when looking at our B2B channel, it's the same sales rep. So we're able to leverage the existing organization as well as our branding.

Speaker 6

Yes. Okay. That all makes sense. And then, I thought I heard something in the prepared remarks, when you were talking about operating expenses. Me if this is wrong, but I thought I heard that there was a mention of a CIMIOX trial or something.

Speaker 6

Is that right? And I guess why are you running the trials with the support and the marketing of the product, support reimbursement of the product or clearance or something else or?

Speaker 2

Yes. It's thanks for asking for the clarification. It is for we have trials that are running in both outside The United States and inside The United States and that are related to reimbursement. So developing the health economic data that is needed with the value dossier to support reimbursement as well as the trials that are designed to boost acceptance and develop marketing claims. So there's different sides of that.

Speaker 2

We like the data that we've been seeing. We like the feedback that we've had, but the other ones that I'm referring to specifically here in The United States are related to developing health economic data supporting reimbursement.

Speaker 6

Okay, got it. And then, just wondering where things stand with developing or maybe enhancing is a better word, kind of connectivity features on your products. It seems like there could be some synergies there now that you have the SOC and the POC where if they were both Internet connected and using the same kind of software platform to track location, maintenance, etcetera, for the DME customer as well as for the patient, having their own sort of data in there, that could kind of sort of tie those products together better and create more stickiness between them where if you're buying one, want to buy the other one?

Speaker 2

I couldn't have said it better myself. It's the you're spot on with that. That is when we're looking at our connectivity and our digital health, we are creating an ecosystem. And part of that is to drive that brand preference, that loyalty, adding value back to, as you said, with our B2B customers to be able to monitor device health, to be able to interrogate devices for to be able to evaluate those in the field as they get calls back from patients to consider they have a question on something, also to be able to provide easier ways to for the patients to be able to access information, to be able to order supplies and general value that we're able to add there. But that is something that when we look at not just the technology that we have today in the field, but looking at future ones to be able to wrap everything into that same ecosystem and tie them into our connected applications.

Speaker 6

Got it. Thank you.

Operator

Thank you. And with that, there are no further questions at this time. I would like to turn the call back to Kevin Smith for closing remarks.

Speaker 2

Thank you. And I'd like to take a minute here and reinforce some previous points. In our second quarter, that represented another strong step forward in executing our strategic priorities and delivering solid financial performance. With significant opportunities ahead, we remain confident in our ability to accelerate revenue, enhance profitability, cash flow and drive long term value for our shareholders. This quarter marks our sixth consecutive period of year over year mid single digit top line growth fueled by continued strength across both our domestic and international business to business channels.

Speaker 2

We also made meaningful strides in profitability, achieving our second consecutive quarter and fourth quarter out of the last five of positive adjusted EBITDA, while generating $1,200,000 in cash. These are important milestones in our path to sustained profitability. The successful launch of VOXI5 expands our SOC portfolio and improves access to high quality option therapy for long term care patients. We also advanced our digital health capabilities and made important progress towards the commercialization of Semiox. And as we look ahead to the 2025, we remain focused on disciplined commercial and operational execution.

Speaker 2

We're encouraged by the momentum across the business and excited about what's to come. And I'm proud of the team's commitments and excellent performance during the first half of the year. Looking ahead, I'm confident in our collective ability to meet our financial goals. Our ongoing efforts to drive revenue growth, enhance profitability and expand our innovation pipeline position us well for continued progress in the second half of the year. But before we conclude, I want to take a moment and thank the incredible team at Inogen.

Speaker 2

Your dedication, resilience and passion for improving the lives are what drives our success. Every milestone we've reached this quarter is a direct reflection of your hard work and commitment. Inogen is more than a company, it's a community of innovators, caregivers and problem solvers. It's a place where people come to make a difference and I'm proud to say it's a truly great place to work. So thank you for all that you do.

Speaker 2

We look forward to continuing this journey together.

Operator

Thank you. And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

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