Inogen Inc (INGN)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue of $78.0M rose 8.1% YoY and 2.8% QoQ, driven by stronger domestic and international B2B shipments; gross margin expanded 700 bps QoQ to 44.1% on lower component premiums despite mix shift to lower-margin B2B .
• GAAP loss narrowed to $14.6M and $(0.62) diluted EPS versus $(20.3)M and $(0.88) a year ago; Adjusted EBITDA improved to $(7.6)M from $(11.8)M YoY .
• Q2 2024 revenue guidance initiated at $81–$84M; management will provide 2H24 outlook on the Q2 call and noted only “very modest” tailwinds so far from a competitor’s U.S. exit .
• Stock reaction catalysts: above prior Q1 guide ($73–$74M) and margin expansion, plus narrative on potential share capture and a cleaner cost base after exiting a rental channel third-party relationship .

What Went Well and What Went Wrong

• What Went Well

  • B2B strength: Domestic B2B +31% YoY to $16.5M; International B2B +37% YoY to $26.0M, reflecting new and existing customer volume .
  • Gross margin expansion: Total GM 44.1% (+150 bps YoY; +700 bps QoQ) on lower component premiums; sales gross margin +490 bps YoY .
  • Operating discipline: Total OpEx down 3.8% YoY to $50.6M; Adjusted EBITDA loss improved to $(7.6)M vs $(11.8)M a year ago .

• What Went Wrong

  • DTC softness: Direct-to-consumer sales fell 15.6% YoY to $20.5M on lower headcount; management characterizes 2024 as a “rebase year” for DTC .
  • Rental pressure: Rental gross margin dropped 1,040 bps YoY to 43.7% on lower net revenue per patient, payer mix shift (more private pay), higher adjustments, and a lower Medicare rate in January .
  • Guidance visibility limited: Only Q2 provided; H2 outlook deferred; Philips U.S. market exit contribution so far “very modest,” tempering expectations for near-term windfall .

Financial Results

Segment/Channel Revenue

KPIs

Actuals vs Wall Street Consensus

• S&P Global consensus data was unavailable at time of analysis due to access limits; we therefore cannot characterize beats/misses vs consensus for Q1 2024. Actuals are shown below.

Guidance Changes

Management also stated they will provide guidance for the back half of 2024 on the Q2 call .

Earnings Call Themes & Trends

Management Commentary

• “We remain focused on positioning the business for revenue growth, improving our operating discipline to drive long-term profitability, and investing in our innovation pipeline.” – Kevin Smith, CEO .
• “Total gross margin was 44.1%, increasing 150 bps from the same period… driven primarily by a lower average cost of components… partially offset by channel mix shift with a greater proportion of… B2B.” – Mike Bourque, CFO .
• On competitor exit: “We have seen very modest tailwinds… we will remain ready to capitalize [on] potential outstanding customer demands as the year goes on.” – Kevin Smith .
• On rentals: Lower Medicare rate effective January, unfavorable payer mix, and higher service costs pressured rental margins in Q1; gross margin outlook to be revisited on the Q2 call – Mike Bourque .
• On DTC: “We consider 2024 to be a rebase year… early signs of higher productivity” – Mike Bourque .

Q&A Highlights

• B2B dynamics: Management not seeing capital access headwinds now; pipeline-based, bottoms-up forecasting underpins Q2 guide, with higher-end requiring larger B2B orders .
• Rental transition effects: Exited third-party prescriber partnership; brief transition disruption but integration “behind us”; rental margins pressured by lower Medicare rate, payer mix, higher service costs .
• Philips/Respironics exit: Only modest tailwind so far; company positioned to capture potential demand over time .
• Hospital channel: Early-stage initiative to move upstream, capture patients at diagnosis/discharge, and improve rental scale/throughput .
• DTC headcount/productivity: Team at ~150–170 reps; organization right-sized; focus on profitable growth and cross-channel synergy .

Estimates Context

• S&P Global consensus estimates were unavailable at time of analysis due to access limitations; we cannot quantify beat/miss vs Street for Q1 2024. However, the company exceeded its own Q1 revenue guidance ($73–$74M vs $78.0M actual) and expanded gross margin, which typically support positive estimate revisions if trends sustain .
• Where updates occur: Street may raise near-term revenue/margin assumptions for sales channel mix and component cost normalization, but could trim rental margin assumptions given payer and reimbursement dynamics discussed on the call .

Key Takeaways for Investors

• Momentum inflection: Revenue growth returned (+8.1% YoY) with broad-based B2B strength and sequential GM expansion to 44.1%; operating discipline improved OpEx and adjusted EBITDA loss YoY .
• Guidance signals: Q2 revenue guide ($81–$84M) implies continued sequential growth; H2 outlook pending, keeping some uncertainty near-term .
• Rental caution: Reimbursement headwinds (lower Medicare rate, private payer mix) and higher service costs weigh on rental margins; monitor mix and margin commentary in Q2 .
• DTC stabilization: 2024 is a rebase year; early productivity improvements but revenue remains below prior-year levels; cross-channel pilots could lift conversion over time .
• Share capture optionality: Competitor exit tailwind modest so far; sustained upside depends on execution and order timing rather than a “windfall” .
• Balance sheet: $119.8M cash and securities, no debt, providing flexibility to execute on pipeline and commercial initiatives .
• Watch list for Q2: B2B order cadence (to reach high end of guide), rental GM trajectory, DTC productivity trends, and any updates on U.S. Physio-Assist regulatory path .

Supporting detail references:

• Q1 2024 8-K/press release: revenue/margins/P&L, guidance, segment/KPI breakouts, non-GAAP reconciliations .
• Q1 2024 earnings call: channel dynamics, margin drivers, guidance framework, Philips commentary, hospital strategy .
• Prior quarters for trend: Q4 2023 and Q3 2023 8-Ks and calls .