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II

Inogen Inc (INGN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue grew 5.5% year over year to $80.1M, with gross margin up 821 bps to 45.3% on lower raw material costs and operational efficiencies; GAAP diluted EPS was -$0.41 and adjusted EPS -$0.24, with adjusted EBITDA at -$3.6M .
  • Mix favored business-to-business: domestic B2B +24.1% to $22.4M and international B2B +31.5% to $28.3M; direct-to-consumer sales (-21.3%) and rentals (-16.5%) were intentionally reduced to enhance profitability .
  • 2025 outlook: Q1 2025 revenue $79–$81M; full-year 2025 revenue $352–$355M and gross margin 43%–45%, reflecting Yuwell/Simeox introductions and channel mix; management aims to approach adjusted EBITDA breakeven in 2025 .
  • Strategic catalysts: FDA 510(k) clearance for SIMEOX 200 (Dec 30, 2024), Rove 4 POC launch (Oct 2024), and a strategic collaboration with Yuwell (9.9% equity stake; $27.2M capital) to broaden portfolio and global reach; combined, they support medium-term growth but near-term margins see ~100 bps headwind from product introductions and legacy premium inventory .

What Went Well and What Went Wrong

  • What Went Well

    • B2B strength: “Domestic business-to-business revenue increased 24.1%… International business-to-business revenue increased 31.5%” in Q4, driven by demand from new and existing customers .
    • Gross margin expansion: Total GM reached 45.3% (+821 bps YoY) on lower raw material costs and efficiencies; sales revenue GM was 46.5% (+1,369 bps YoY) .
    • Strategic progress and pipeline: “We returned the Company to growth… pending introduction of Simeox in the U.S. and our recently announced collaboration with Yuwell” (CEO) . FDA 510(k) clearance for SIMEOX 200 expands addressable markets and potential recurring revenue via disposables .

  • What Went Wrong

    • DTC softness: Direct-to-consumer sales fell 21.3% to $15.6M due to downsized sales force; management expects unfavorability in H1 2025 until lapping headcount changes .
    • Rental pressure: Rental revenue down 16.5% and rental GM down 1,290 bps to 39.8%, as payer mix shifts toward private pay/Medicare Advantage and lower net revenue per rental patient .
    • Seasonality and near-term margins: Q4 adjusted EBITDA (-$3.6M) vs Q3 (+$0.5M); 2025 gross margin guided to 43%–45% with ~100 bps combined headwind from introducing Yuwell/Simeox and legacy premium inventory roll-off .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$75.9 $88.8 $80.1
Gross Margin (%)37.1% 46.5% 45.3%
Operating Loss ($USD Millions)$(29.0) $(7.8) $(11.4)
GAAP Diluted EPS ($)$(1.14) $(0.25) $(0.41)
Adjusted EPS ($)$(0.83) $(0.11) $(0.24)
Adjusted EBITDA ($USD Millions)$(17.3) $0.5 $(3.6)

Segment revenue mix (Q4):

SegmentQ4 2023 ($M)Q4 2024 ($M)
B2B Domestic$18.1 $22.4
B2B International$21.5 $28.3
DTC Sales$19.8 $15.6
DTC Rentals$16.5 $13.8
Total Revenue$75.9 $80.1

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Units Sold (000s)41.3 43.9 38.4
Net Rental Patients (000s, period-end)51.9 51.4 51.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025—$79–$81 Initiated
Revenue ($USD Millions)FY 2025—$352–$355 Initiated
Gross Margin (%)FY 2025—43%–45% Initiated

Management did not provide explicit guidance for OpEx, OI&E, tax rate, or dividends in Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
DTC sales force & productivityDownsized sales force; patient-first pilot; target rep range 150–170 DTC declines; improved profitability; second consecutive positive cash flow/adj. EBITDA quarter DTC -21.3%; headcount reduction not fully lapped until mid-2025; prescriber team brought in-house Challenged near term, productivity improving
B2B channel momentumStrong domestic/international B2B; tailwind from competitor exit B2B growth >20% YoY consecutive quarters Domestic +24.1%, International +31.5% in Q4 Sustained growth
Gross margin dynamics48.1% GM with ~300 bps one-time reserve benefit; H2 GM low–mid 40s 46.5% GM; mix headwind 45.3% GM; FY25 guide 43%–45% with ~100 bps headwind from Yuwell/Simeox introductions + legacy premium inventory Improved YoY; lower vs Q2; modest headwind in 2025
Rental payer mixLower billing rates due to private payer mix shift Rental revenue -13.1%; rental GM down 990 bps Rental revenue -16.5%; rental GM down 1,290 bps; shift to Medicare Advantage Continuing headwind
Innovation (Simeox, Rove 4, digital)Simeox progress; Rove 4 planned H2 launch Rove 4 launch; FDA clearance expected update upon clearance FDA-cleared SIMEOX 200; limited 2025 launch; reimbursement strategy; Rove 4 early positive feedback; connected app upgrades Advancing; expanded addressable market
Tariffs/macro & seasonalityElevated advertising costs ahead of election impacting DTC Continued advertising headwinds; Q2/Q3 strongest quarters Proposed tariffs viewed manageable (manufacturing in Plano, TX); cadence: Q2/Q3 stronger, Q1/Q4 seasonally lower Manageable macro; expected seasonality
Yuwell collaboration——Distribution partnership + 9.9% equity stake; stationary concentrators to bolster rental/B2B; limited FY25 revenue impact New strategic lever

Management Commentary

  • “2024 was a stellar year for Inogen. With our new leadership team in place, we returned the Company to growth… pending introduction of Simeox in the U.S. and our recently announced collaboration with Yuwell” — Kevin Smith, CEO .
  • “Total gross margin was 45.3%, increasing 821 basis points… Sales revenue gross margin was 46.5%… Rental revenue gross margin was 39.8%, a decline of 1,290 basis points” — Michael Bourque, CFO .
  • “We intend to commercialize Simeox through an initial capital sale, followed by ongoing sales of disposables… attractive recurring revenue stream. We will begin efforts to submit Simeox for reimbursements in the first quarter of 2025” — Kevin Smith .
  • “For the full year 2025, we expect gross margins to be in the range of 43% to 45%… our goal for full year 2025 is to approach adjusted EBITDA breakeven” — Michael Bourque .
  • “Given that our primary manufacturing facilities are located in Plano, Texas, we believe any possible [tariff] headwinds will be manageable” — Michael Bourque .

Q&A Highlights

  • Yuwell/Simeox margin impact: Management quantified ~100 bps combined gross margin headwind in 2025 from product introductions and legacy premium raw material inventory; minimal 2025 revenue contribution as the deal closed in late February .
  • Guidance cadence and mix: B2B remains the primary growth driver but at a lower rate than 2024; DTC remains pressured through H1 2025 until headcount comps normalize; Q2/Q3 typically strongest quarters .
  • Yuwell portfolio in U.S.: Stationary oxygen concentrator will be branded Inogen; expected cross-channel leverage (rental, B2B, DTC) and positive margin impact on rental placements .
  • Rental payer mix: Shift from traditional Medicare to Medicare Advantage driving lower reimbursement rates and rental GM declines; mix trend expected to continue near term .
  • Simeox reimbursement strategy: Engaging KOLs and CMS with aim to maximize reimbursement; pursuing limited 2025 launch and private payer engagement steps prior to CMS .

Estimates Context

  • We attempted to retrieve S&P Global (Capital IQ) consensus for Q4 2024 revenue and EPS, but the request limit was exceeded and consensus data was unavailable at time of analysis. As a result, comparisons vs Wall Street estimates cannot be provided for this quarter [GetEstimates errors].
  • Implication: Absent published consensus, investors should focus on YoY performance, sequential trends, margin trajectory, and 2025 guidance until updated consensus is accessible.

Key Takeaways for Investors

  • B2B momentum is intact and driving top-line growth; watch for sustained international demand and U.S. reseller wins to offset DTC/rental headwinds .
  • Margin expansion YoY is real, but 2025 gross margins will moderate to 43%–45% given product introductions/mix; execution on cost reductions and mix optimization remains key .
  • DTC will likely remain soft through H1 2025 until rep count comps normalize; patient-first and digital connectivity upgrades aim to lift productivity and conversion in H2 .
  • Rental channel headwinds (Medicare Advantage mix) persist; hospital discharge capture and bundling with stationary concentrators via Yuwell could improve economics if scaled .
  • Strategic collaboration with Yuwell adds capital (9.9% stake) and product breadth; limited FY25 revenue impact expected, but potential medium-term portfolio and supply chain benefits .
  • SIMEOX 200 provides a new therapy category with potential recurring consumable revenue; reimbursement pathway is the key unlocking event to watch in 2025 .
  • Trading lens: Near-term narrative hinges on confidence in FY25 guide, mix-driven margin durability, and evidence of DTC/rental stabilization; catalysts include reimbursement milestones for Simeox and initial traction of Yuwell stationary concentrators .