Inogen ‘fell short’ in Q2

 GOLETA, Calif. – Inogen’s new strategy is taking longer than expected, says CEO Nabil Shabshab, resulting in “disappointing” financial results for the second quarter, especially for its direct-to-consumer sales channel. 

The company reported $26.8 million in DTC sales for the quarter compared to $40.6 million for the same period last year. 

“While we have made progress with the execution of our commercial strategy, we are disappointed with the performance this quarter,” he said during a conference call to discuss the company’s recent financial results. “Our revenue for the quarter fell short, mainly due to slower-than-expected progress on our DTC productivity initiatives, despite continued sequential improvement.” 

As part of its new strategy, Inogen has been working to decrease the number of sales reps working DTC sales – from about 300 to about 200 – and reduced its advertising spend, which, in turn, has reduced leads. 

But Shabshab noted that the performance of Inogen’s reps is improving – “plus 30%, both in terms of unit productivity, as well as revenue productivity per rep” – which is “very encouraging.” 

“DTC will always be part of our go-to-market strategy,” he said. “It’s a unique channel that differentiates us. What we were trying to do against that is to get to the right balance between growth, but at the right price from a profitability perspective.” 

Revenue also fell short due to Inogen's continued work to win back old customers and close new customers in its business-to-business channel, following overall reduced capital spending in the market and a supply chain-related backlog – and there, too, the company is making progress, Shabshab said. 

“We are focusing on advancing Inogen’s ability to consistently deliver value beyond the unidimensional benefits of lower acquisition price,” he said. “Additionally, our business development efforts now include the value of future partnerships with B2B customers, as the result of our investment in innovations that could expand our customers’ access to patient populations and indications beyond COPD.” 

That investment includes Inogen’s recent acquisition of Physio-Assist SAS, a privately held company in France that makes a technology-enabled airway clearance device called Simeox, and its launch of the Rove 6 portable oxygen concentrator in the United States, which has an extended eight-year expected service life. 

"The Rove 6 is an update of the G5, but it’s very important for us to actually think of it as the new platform for the innovation that we said is coming around 2024, in terms of a larger than six-setting device,” Shabshab said. 

As a result of its performance in the first and second quarter and what might be “a small step back” in the third quarter, Inogen now expects 2023 annual revenue of $315 million to $320 million and adjusted EBITDA loss of $20 million to $25 million for the full year.   

“Our transformational journey continues, and we remain committed to driving value for our patients, customers and shareholders over the medium to long-term organically and with an expanded portfolio, including Airway Clearance solutions,” he said.