• Total Revenue: $88.8 million, a 5.8% increase year-over-year.
• Direct to Consumer Sales: Decreased 23.2% to $19.2 million.
• Domestic Business to Business Revenue: Increased 35.1% to $23.4 million.
• International Business to Business Revenue: Increased 26.2% to $32.3 million.
• Rental Revenue: Decreased 13.1% to $13.9 million.
• Total Gross Margin: 46.5%, an increase of 630 basis points.
• Sales Revenue Gross Margin: 47.2%, an increase of 1,000 basis points.
• Rental Revenue Gross Margin: 43.2%, a decline of 990 basis points.
• Total Operating Expense: Decreased to $49.1 million, a 39% decrease.
• GAAP Net Loss: $6 million, compared to a loss of $45.7 million in the prior year.
• Adjusted Net Loss: $2.6 million, compared to a loss of $8.5 million in the prior year.
• Adjusted EBITDA: Positive $0.5 million, compared to a loss of $5.5 million in the prior year.
• Cash and Equivalents: $124.3 million with no debt outstanding.
• Full Year 2024 Revenue Expectations: Raised to $329 million to $331 million, reflecting approximately 45% year-over-year growth.

• Warning! GuruFocus has detected 3 Warning Signs with INGN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Inogen Inc (NASDAQ:INGN) achieved a 6% year-over-year revenue growth, reaching $89 million in total revenue for the third quarter of 2024.
• The company reported strong performance in its business-to-business channels, with over 20% year-over-year revenue growth for the second consecutive quarter.
• Inogen Inc (NASDAQ:INGN) generated $3 million of positive cash flow, marking the second consecutive quarter of positive cash flow.
• The company achieved a second consecutive quarter of adjusted EBITDA profitability, indicating progress towards long-term profitability.
• Inogen Inc (NASDAQ:INGN) launched the Rove 4, a new portable oxygen concentrator (POC) with advanced features, enhancing its innovation pipeline.

Negative Points

• Direct-to-consumer sales declined by 23.2% year-over-year, reflecting challenges in this sales channel.
• Rental revenue decreased by 13.1%, primarily due to lower average billing rates and a mix shift to private payers.
• The company continues to face rising advertising costs, particularly due to increased demand for TV spots ahead of the election.
• Inogen Inc (NASDAQ:INGN) expects to end the second half of 2024 with an adjusted EBITDA loss, despite recent profitability improvements.
• Foreign exchange had a negative impact on revenue, with a 20 basis points impact on total revenue and a 70 basis points impact on international revenue.

Q & A Highlights

Q: Can you provide more color on the sales force size and productivity heading into 2025, especially with the downsized team? A: Kevin Smith, President and CEO, explained that the sales force size is down year-over-year as planned, with increased productivity per representative. The focus is on the patient-first initiative and optimizing advertising spend. The company anticipates a positive outlook for the direct-to-consumer (DTC) channel, with a full rollout of the patient-first program expected in the first half of next year.

Q: What are your expectations for top and bottom line growth into 2025, particularly regarding cash flow generation? A: Michael Bourque, CFO, stated that the company is pleased with two consecutive quarters of positive cash generation. The focus remains on executing strategic initiatives, managing costs, and investing wisely. While not providing specific guidance, he noted that Q4 is typically seasonally impacted, especially in DTC, due to advertising expenses.

Q: When will the DTC sales rep headcount stabilize, and how does it impact year-over-year comparisons? A: Kevin Smith indicated that the current rep count is aligned with profitability goals, showing improved productivity and profitability. The headcount is expected to stabilize by the middle of next year, with a slight decrease at the beginning of the year compared to the previous year.

Q: Can you clarify the status of Simios with the FDA and the use of the term "clearance"? A: Kevin Smith mentioned ongoing positive interactions with the FDA but did not confirm a filing. An update will be provided once the regulatory pathway is completed. Michael Bourque added that the accrual for the earnout agreement with Physios Systems indicates progress, with the accrual at $11.9 million out of a $13 million maximum.

Q: How is the new Row 4 product being received, and which channels is it targeting? A: Kevin Smith noted that the Row 4 is expected to be influential in 2025, primarily targeting the DTC side in the U.S. market. It aims to capture patients earlier in their disease state, with potential future upgrades to the Row 6. Internationally, it may also appeal to the B2B side, although domestic B2B tends to prefer longer-term use of a single POC.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.