Inogen reports bumpy first quarter

DTC sales were down, B2B sales were up
Friday, May 8, 2020

GOLETA, Cailf. – Inogen saw an 8.9% drop in its direct-to-consumer sales in the first quarter of 2020 vs. 2019, with consumers not traveling and, therefore, not needing portable oxygen concentrators.

The impact of the coronavirus pandemic is continuing into the second quarter, as well, with the company reporting a 25% decrease in DTC sales in April.

“Typically, we would expect to see order volume increase going into the second quarter, which is seasonally stronger for us,” said Ali Bauerlein, CFO. “If you look at the historical increase we’ve seen going from Q1 to Q2, from 2012-18, that average (has been) about 25%. What we also saw, though, in April is we still are generating significant patient interest.”

Inogen reported total revenue of $88.5 million for the first quarter, a 1.9% decrease from the same period last year. Net loss was $1.6 million vs. net income of $5.3 million.

To counteract losses, Inogen is decreasing certain personnel hires, reducing advertising—it spent about $10 million on advertising in the first quarter—and implementing other cost saving measures.

“Given where Inogen stands today and in spite of the challenges we and the global economy face in the coming months, we believe our strong cash and cash equivalents of $208.4 million with no debt outstanding provides us with a certain level of stability and liquidity to operate and be adaptable during this unprecedented time,” said Scott Wilkinson, CEO.

Inogen also plans to shift its focus on increasing rental set ups during the pandemic, in light of Medicare’s decision to cover oxygen concentrators based solely on a clinician’s assessment.

“We believe this could reduce the paperwork burden on the system and allow for quicker patient set ups,” Wilkinson said. “Given this increased flexibility, we believe these changes could facilitate Inogen’s ongoing conversion of patients to portable oxygen concentrators through our rental business.”

While Inogen’s DTS sales were down, domestic business-to-business sales were up 5.7% in the first quarter, primarily driven by increased demand from its HME provider partners for oxygen concentrators during the pandemic. But that might not last.

“While there was an initial surge in demand, we believe that demand could be limited or declined while physician offices continue limiting patient interactions that traditionally have led to new oxygen patient referrals,” Wilkinson said.