Inogen(INGN)2023-05-05 22:34Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $72.2 million, a decrease of 10.2% year-over-year from Q1 2022, primarily due to lower international and direct-to-consumer sales, partially offset by increased U.S. business-to-business sales and rental revenue [35][36] - Gross margin for sales revenue was 39.2% in Q1 2023, declining 220 basis points from the same period in 2022, driven by a higher volume of units sold through the business-to-business channel [18] - The company reported a net loss of $20.3 million and an adjusted EBITDA of negative $11.8 million for Q1 2023 [43][44] Business Line Data and Key Metrics Changes - Rental revenue increased by 25.4% to $16.3 million in Q1 2023 from $13 million in Q1 2022, supported by higher Medicare reimbursement rates [36] - Domestic business-to-business revenue surged 146.7% to $12.6 million in Q1 2023 compared to $5.1 million in Q1 2022, recovering from previous supply constraints [17] - Direct-to-consumer sales decreased by 29.2% to $24.3 million in Q1 2023 from $34.4 million in Q1 2022, primarily due to lower volumes from fewer inside sales representatives [38] Market Data and Key Metrics Changes - International business-to-business sales decreased by 32.1% to $19 million in Q1 2023 from $27.9 million in Q1 2022, as last year's sales were prioritized due to the pending expiration of the EU MDD certificate [37] - Foreign exchange had a negative impact of 170 basis points on total revenue and 460 basis points on international revenues [35] Company Strategy and Development Direction - The company aims to deliver low to mid-single-digit revenue growth and return to positive adjusted EBITDA by Q4 2023, viewing this year as an inflection point for stronger growth [31][34] - The strategy includes a focus on a patient-centric channel approach to enhance adoption of Inogen's POC-based therapy, driving scale and profitability [32][33] - The company is excited about expanding beyond COPD to address additional respiratory needs, including dyspnea and congestive heart failure [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the first half of 2023 would be focused on regaining productivity, particularly in the direct-to-consumer segment, with expectations for improved performance in the latter half of the year [48][54] - The company is confident in its ability to meet demand for 2023, stating that Q1 performance was not supply-constrained [65] - Management expressed optimism about the progress in the prescriber channel and the overall demand for their offerings [34][54] Other Important Information - The company continues to invest in research and development, with total spending of $5.3 million in Q1 2023, consistent with the previous year [19] - As of March 31, 2023, the company had cash, cash equivalents, and marketable securities totaling $174.6 million with no debt outstanding [21] Q&A Session Summary Question: What are the drivers behind the softer domestic B2B performance? - Management indicated that the softness was due to customers reassessing capital deployment and restructuring operating expenses, but they are encouraged by the progress being made [23][54] Question: How should analysts think about the cadence of revenue throughout the year? - Management suggested that the first half of 2023 may show different performance, with expectations for a ramp-up in the back half of the year [48][54] Question: Can you clarify if the Q1 revenue was constrained by supply? - Management confirmed that Q1 performance was not supply-constrained and emphasized the importance of executing their channel strategy [65] Question: How confident is the company in achieving mid-single-digit growth for the year? - Management expressed confidence in achieving growth, citing good progress in direct-to-consumer productivity and a solid value proposition in the B2B market [54][65] Question: What is the lead time from point of contact to closing a sale? - Management indicated that the typical lead time is around 10 to 14 days from initial contact to closing [69]