Inogen expects better second half of 2020

GOLETA, Calif. - Following Inogen's multiple years of high revenue growth, the fourth quarter of 2019 represented a “slowdown,” acknowledges CEO Scott Wilkinson.

The company reported revenue of $78.9 million for the fourth quarter of 2019 compared to $86.5 million for the same period in 2018, an 8.8% decrease. It reported a net loss of $1.4 million vs. a net income of $10 million.

“We are assessing our organization from both a commercial and operational perspective to identify how to best maintain an attractive revenue growth profile, while also delivering leverage into our business model,” Wilkinson said during a conference call on Feb. 25 to discuss the company's latest financial results. “Already, we have identified several opportunities to do so and we are now in the process of evaluating each. While we have our challenges, we believe we can create long-term shareholder value by focusing on increasing patient and physician awareness of our products.”

For the full year, Inogen reported revenue of $361.9 million compared to $358.1 million in 2018, a 1.1% increase; and a net income of $21 million vs. $51.8 million, a 59% decrease.

One opportunity company officials have identified to improve revenue growth: better using the tens of thousands of leads it gets every month through its advertising campaign.

“We've paid for them; they're part of our advertising spend,” Wilkinson said. “So if we can optimize more of those leads, that's going to help us on both the top and bottom line, because I don't need to pay for more of that. I just get more revenue out of that pile.”

Company officials cautioned that the first quarter of 2020 will also be impacted by manufacturing challenges related to a component shortage for its Inogen One G5 that resulted in unshipped units in the fourth quarter.

“We have worked diligently with our supplier and I'm pleased to say we have currently returned to normal production now,” Wilkinson said. “However, this situation will have an impact on revenue and profitability in the first quarter of 2020. In addition, we are currently in the process of validating a second supplier for this component to reduce the risk of part shortages going forward.”

Manufacturing challenges aside, company officials say they are pleased with the adoption of the G5, which was just launched last year. They estimate that their newest POC accounted for more than 40% of total unit volume in the fourth quarter.

“As far as for providers, as well as for patients, we're really happy with the adoption of the product,” Wilkinson said. “That's kind of the good news in this message—that's a preferred product. We really think we have a winner.”

Another highlight for Inogen in the fourth quarter: the limited launch of the Inogen Tidal Assist Ventilator in December.

“This year is kind of a learning and figure out our sales process and who's the right patient for this year,” Wilkinson said. “We'll also run the appropriate pricing trials to figure out what the optimum price is. When we've got this at scale and rolled out to everybody, those leads should be coming right from the current leads that we're driving.”