Inogen raises the bar

‘This is something else,’ said one investor
Friday, May 4, 2018

GOLETA, Calif. – Inogen wowed investors with its earnings for the first quarter of 2018—historically, a seasonally slower quarter—but company officials cautioned that they face tougher comps for the rest of the year.

In a performance that prompted one investor to react, “This is something else,” Inogen reported total revenues of $79.1 million for the first quarter, a 50.6% increase compared to the same period last year. It reported net income of $10.8 million vs. $5.8 million.

“The comps do get tougher for us throughout the year, where the second and third quarter are tougher,” said Ali Bauerlein, co-founder and CFO. “The first quarter was certainly the easiest comp for us.”

Based on its performance, Inogen increased its full year guidance to $310 million to $320 million in total revenues, up from $298 million to $308 million, representing growth of 24.3% to 28.3% compared to 2017; and to $38 million to $41 million in net income, up from $36 million to $39 million, representing growth of 80.9% to 95.2%.

Inogen reported significant increases in sales in the third quarter for both its domestic direct-to-consumer (67.8%) and its domestic business-to-business (60.4%) channels.

For the DTC channel, company officials credited a growing sales team—“We are currently ahead of schedule to meet our plan of hiring 240 Cleveland-based employees by 2020, with the majority of those being sales reps,” said CEO Scott Wilkinson—and an increase in its marketing spend, something that will continue throughout the year.

“In fact, we expect to release a new TV commercial to showcase the benefits of our portable oxygen concentrators in the second quarter,” Wilkinson said.

For the B2B channel, company officials credited growth to a larger scale conversion from stationary to portable oxygen concentrators.

“We had commented in the middle of last year that, while a lot of the B2B players said they were trialing POCs, we said look they’ve gone down the path far enough and have enough of a track record that we felt like really a conversion was underway, even if some players didn’t even realize they were converting,” Wilkinson said. “You can only call it a trial for so long. I think that’s exactly what we’re seeing. The reimbursement pressures on providers continues to force that conversion.”

All this growth begged the question from investors about whether or not Inogen can meet demand. Wilkinson reminded them about Foxconn, which is now manufacturing the company’s G3 products for the European market, freeing up capacity at its 37,000-square-foot facility in Richardson, Texas. He also announced that the company has signed a lease for 23,000 square feet in additional space, also in Richardson.

“That gives us significant space for expansions,” he said. “Over the next at least couple of years, I’ll say we’re in pretty good shape from a capacity standpoint.”