Inogen Announces First Quarter 2023 Financial Results

Total Revenue of $72.2 Million In Line with Company Expectations

Rental Revenue Year-over-Year Growth of 25%

Inogen, Inc. (Nasdaq: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today announced financial results for the quarter ended March 31, 2023.

First Quarter 2023 Highlights

All comparisons are to the prior year period unless otherwise noted.

  • Reported total revenue of $72.2 million, in line with company expectations, reflecting a decrease of 10.2%; currency fluctuations accounted for 1.7% of the decrease.
  • Continued progress on rental strategy led to a 25.4% increase in rental revenue, primarily due to higher rental patients on service and higher reimbursement rates.
  • GAAP net loss of $20.3 million, adjusted net loss of $14.5 million and adjusted EBITDA was a loss of $11.8 million, all slightly better than company expectations.
  • Increased total covered lives to approximately 160 million with the recent additions of two large private healthcare payers in support of Inogen’s prescriber channel and overall rental strategy.
  • Notified that we will be granted reimbursement in France for Rove 6.

“First quarter revenue was in line with our internal expectations. We remain confident that our focus on revenue growth and disciplined execution will support our return to profitability and result in an anticipated positive adjusted EBITDA by Q4 2023,” said Nabil Shabshab, President and Chief Executive Officer. “We believe that 2023 is an inflection point for Inogen with continued successful execution on our channel strategy, further advancement of our innovation agenda, and focus on returning to profitability.”

First Quarter 2023 Financial Results

First quarter total revenue decreased 10.2% to $72.2 million from $80.4 million in the first quarter of 2022, primarily due to a decrease in direct-to-consumer sales and international business-to-business sales, partially offset by higher domestic business-to-business sales and higher rental revenue.

Total gross margin was 42.6% in the first quarter of 2023 versus 43.5% in the comparative period in 2022. The decline was driven primarily by channel mix, partially offset by improved manufacturing productivity and higher average selling prices.

Total operating expense for the quarter, excluding restructuring costs, increased 4.6%. Total operating expense with restructuring costs was $52.6 million compared to $48.6 million in the first quarter of 2022, representing an increase of 8.3%.

GAAP net loss for the first quarter of 2023 was $20.3 million compared to GAAP net loss of $14.2 million in the first quarter of 2022. Adjusted net loss was $14.5 million compared to adjusted net loss of $8.7 million in the first quarter of 2022.

Adjusted EBITDA was a negative $11.8 million in the first quarter of 2023 compared to a negative $5.0 million in the first quarter of 2022.

Cash, cash equivalents and marketable securities were $174.6 million as of March 31, 2023, and no debt outstanding.

A reconciliation of adjusted EBITDA and adjusted net loss for the three months ended March 31, 2023 and 2022 are provided in the financial schedules that are a part of this press release. An explanation of these non-GAAP financial measures is also included below under the heading “Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures.”

Quarterly Conference Call Information

Inogen will issue first quarter 2023 financial results after the market closes on Thursday, May 4, 2023. On the same day, the Company will host a conference call at 2:00 pm Pacific Time / 5:00 pm Eastern Time. Individuals interested in listening to the conference call may do so by dialing:

US domestic callers (888) 645-4404

Non-US callers (862) 298-0702

Please reference Inogen to join the call. To listen to a live webcast, please visit the Investor Relations section of Inogen's website at: http://investor.inogen.com/. This webcast will also be archived on the website for 6 months.

A replay of the call will be available approximately three hours after the live webcast ends and will be accessible through May 11, 2023. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13737870.

Inogen has used, and intends to continue to use, its Investor Relations website, http://investor.inogen.com/, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. For more information, visit http://investor.inogen.com/.

About Inogen

Inogen, Inc. (Nasdaq: INGN) is a leading global medical technology company offering innovative respiratory products for use in the homecare setting. Inogen supports patient respiratory care by developing, manufacturing, and marketing innovative best-in-class portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. Inogen partners with patients, prescribers, home medical equipment providers, and distributors to make its oxygen therapy products widely available allowing patients the chance to remain ambulatory while managing the impact of their disease.

For more information, please visit www.inogen.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, Inogen’s expectations for future revenue growth and profitability; and expectations for positive adjusted EBITDA by Q4 2023. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “intends,” “potential,” “possible,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from currently anticipated results, including but not limited to, risks arising from the possibility that Inogen will not realize anticipated revenue or expenses will not decrease; risks related cost inflation for components; the risks our innovation pipeline will not produce meaningful results; the impact of changes in reimbursement rates and reimbursement and regulatory policies; and the possible loss of key employees, customers, or suppliers; the risk that expenses and costs will exceed Inogen’s expectations. Information on these and additional risks, uncertainties, and other information affecting Inogen’s business operating results are contained in its Annual Report on Form 10-K for the year ended December 31, 2022, and in its other filings with the Securities and Exchange Commission. Additional information will also be set forth in Inogen’s Quarterly Report on Form 10-Q for the period ended March 31, 2023, to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Inogen disclaims any obligation to update these forward-looking statements except as may be required by law.

Non-GAAP Financial Measures

Inogen has presented certain financial information in accordance with U.S. GAAP and also on a non-GAAP basis for the three months ended March 31, 2022, and March 31, 2023. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of Inogen’s core operating results. Management uses non-GAAP measures to compare Inogen’s performance relative to forecasts and strategic plans, to benchmark Inogen’s performance externally against competitors, and for certain compensation decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Inogen's operating results as reported under U.S. GAAP. Inogen encourages investors to carefully consider its results under U.S. GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between U.S. GAAP and non-GAAP results are presented in the accompanying tables of this release. For future periods, Inogen is unable to provide a reconciliation of non-GAAP measures without unreasonable effort as a result of the uncertainty regarding, and the potential variability of, the amounts of interest income, interest expense, depreciation and amortization, stock-based compensation, provision for income taxes, and certain other infrequently occurring items, such as acquisition-related costs, that may be incurred in the future.

Consolidated Statements of Comprehensive Loss

(unaudited)

(amounts in thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2023

 

2022

Revenue

 

 

 

 

 

 

Sales revenue

 

$

55,887

 

 

$

67,402

 

Rental revenue

 

 

16,275

 

 

 

12,983

 

Total revenue

 

 

72,162

 

 

 

80,385

 

Cost of revenue

 

 

 

 

 

 

Cost of sales revenue

 

 

33,964

 

 

 

39,500

 

Cost of rental revenue, including depreciation of $3,078 and $2,638, respectively

 

 

7,465

 

 

 

5,879

 

Total cost of revenue

 

 

41,429

 

 

 

45,379

 

Gross profit

 

 

30,733

 

 

 

35,006

 

Operating expense

 

 

 

 

 

 

Research and development

 

 

5,344

 

 

 

5,364

 

Sales and marketing

 

 

28,441

 

 

 

28,039

 

General and administrative

 

 

18,863

 

 

 

15,189

 

Total operating expense

 

 

52,648

 

 

 

48,592

 

Loss from operations

 

 

(21,915

)

 

 

(13,586

)

Other income (expense)

 

 

 

 

 

 

Interest income

 

 

1,525

 

 

 

29

 

Other income (expense)

 

 

237

 

 

 

(433

)

Total other income (expense), net

 

 

1,762

 

 

 

(404

)

Loss before provision for income taxes

 

 

(20,153

)

 

 

(13,990

)

Provision for income taxes

 

 

196

 

 

 

224

 

Net loss

 

$

(20,349

)

 

$

(14,214

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

170

 

 

 

(203

)

Change in net unrealized gains (losses) on foreign currency hedging

 

 

 

 

 

(528

)

Less: reclassification adjustment for net (gains) losses included in net income

 

 

 

 

 

454

 

Total net change in unrealized gains (losses) on foreign currency hedging

 

 

 

 

 

(74

)

Change in net unrealized gains (losses) on marketable securities

 

 

69

 

 

 

(8

)

Total other comprehensive income (loss), net of tax

 

 

239

 

 

 

(285

)

Comprehensive loss

 

$

(20,110

)

 

$

(14,499

)

 

 

 

 

 

 

 

Basic net loss per share attributable to common stockholders (1)

 

$

(0.88

)

 

$

(0.62

)

Diluted net loss per share attributable to common stockholders (1) (2)

 

$

(0.88

)

 

$

(0.62

)

Weighted-average number of shares used in calculating net loss per share attributable to common stockholders:

 

 

 

 

 

 

Basic common shares

 

 

23,009,617

 

 

 

22,754,421

 

Diluted common shares

 

 

23,009,617

 

 

 

22,754,421

 

(1)

Reconciliations of net loss attributable to common stockholders basic and diluted can be found in Inogen’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission.

(2)

Due to a net loss for the three months ended March 31, 2023 and March 31, 2022 diluted loss per share is the same as basic.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2023

 

2022

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

164,137

 

 

$

187,014

 

Marketable securities

 

 

10,428

 

 

 

 

Accounts receivable, net

 

 

53,885

 

 

 

62,725

 

Inventories, net

 

 

38,822

 

 

 

34,093

 

Income tax receivable

 

 

1,859

 

 

 

1,626

 

Prepaid expenses and other current assets

 

 

14,016

 

 

 

19,187

 

Total current assets

 

 

283,147

 

 

 

304,645

 

Property and equipment, net

 

 

45,942

 

 

 

43,269

 

Goodwill

 

 

32,887

 

 

 

32,852

 

Operating lease right-of-use asset

 

 

21,108

 

 

 

21,653

 

Other assets

 

 

2,590

 

 

 

2,622

 

Total assets

 

$

385,674

 

 

$

405,041

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

32,183

 

 

$

33,974

 

Accrued payroll

 

 

10,757

 

 

 

11,190

 

Warranty reserve - current

 

 

8,075

 

 

 

7,790

 

Operating lease liability - current

 

 

3,570

 

 

 

3,515

 

Deferred revenue - current

 

 

8,794

 

 

 

8,880

 

Total current liabilities

 

 

63,379

 

 

 

65,349

 

Warranty reserve - noncurrent

 

 

12,018

 

 

 

12,123

 

Operating lease liability - noncurrent

 

 

19,179

 

 

 

19,764

 

Deferred revenue - noncurrent

 

 

9,801

 

 

 

10,399

 

Total liabilities

 

 

104,377

 

 

 

107,635

 

Stockholders' equity

 

 

 

 

 

 

Common stock

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

316,127

 

 

 

312,126

 

Accumulated deficit

 

 

(34,849

)

 

 

(14,500

)

Accumulated other comprehensive loss

 

 

(4

)

 

 

(243

)

Total stockholders' equity

 

 

281,297

 

 

 

297,406

 

Total liabilities and stockholders' equity

 

$

385,674

 

 

$

405,041

 

Condensed Consolidated Cash Flow

(unaudited)

(amounts in thousands)

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

2023

 

2022

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(20,349

)

 

$

(14,214

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

4,086

 

 

 

5,760

 

Loss on rental units and other assets

 

 

1,099

 

 

 

706

 

Gain on sale of former rental assets

 

 

(21

)

 

 

(52

)

Provision for sales revenue returns and doubtful accounts

 

 

2,258

 

 

 

2,953

 

Provision for inventory losses

 

 

603

 

 

 

934

 

Stock-based compensation expense

 

 

3,442

 

 

 

2,665

 

Change in fair value of earnout liability

 

 

 

 

 

630

 

Changes in operating assets and liabilities

 

 

2,581

 

 

 

(17,480

)

Net cash used in operating activities

 

 

(6,301

)

 

 

(18,098

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(10,359

)

 

 

 

Investment in property and equipment

 

 

(1,076

)

 

 

(1,366

)

Production and purchase of rental equipment

 

 

(5,733

)

 

 

(2,777

)

Proceeds from sale of former assets

 

 

58

 

 

 

91

 

Net cash used in investing activities

 

 

(17,110

)

 

 

(4,052

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from stock options exercised

 

 

384

 

 

 

29

 

Proceeds from employee stock purchases

 

 

630

 

 

 

915

 

Payment of employment taxes related to release of restricted stock

 

 

(455

)

 

 

(1,052

)

Net cash provided by (used in) financing activities

 

 

559

 

 

 

(108

)

Effect of exchange rates on cash

 

 

(25

)

 

 

133

 

Net decrease in cash and cash equivalents

 

$

(22,877

)

 

$

(22,125

)

Supplemental Financial Information

(unaudited)

(in thousands, except units and patients)

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

 

2023

 

2022

Revenue by region and category

 

 

 

 

Business-to-business domestic sales

 

$

12,585

 

$

5,101

Business-to-business international sales

 

 

18,972

 

 

27,941

Direct-to-consumer domestic sales

 

 

24,330

 

 

34,360

Direct-to-consumer domestic rentals

 

 

16,275

 

 

12,983

Total revenue

 

$

72,162

 

$

80,385

Additional financial measures

 

 

 

 

Units sold

 

 

26,900

 

 

30,400

Net rental patients as of period-end

 

 

45,800

 

 

43,200

Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

Non-GAAP EBITDA and Adjusted EBITDA

 

2023

 

2022

Net loss (GAAP)

 

$

(20,349

)

 

$

(14,214

)

Non-GAAP adjustments:

 

 

 

 

 

 

Interest income

 

 

(1,525

)

 

 

(29

)

Provision for income taxes

 

 

196

 

 

 

224

 

Depreciation and amortization

 

 

4,086

 

 

 

5,760

 

EBITDA (non-GAAP)

 

 

(17,592

)

 

 

(8,259

)

Stock-based compensation

 

 

3,442

 

 

 

2,665

 

Acquisition-related expenses

 

 

554

 

 

 

 

Restructuring-related and other charges (1)

 

 

1,809

 

 

 

 

Change in fair value of earnout liability

 

 

 

 

 

630

 

Adjusted EBITDA (non-GAAP)

 

$

(11,787

)

 

$

(4,964

)

 

Three months ended March 31,

 

 

Net Loss

 

Diluted EPS

Non-GAAP Adjusted Net Loss and Diluted EPS

 

2023

 

2022

 

2023

 

2022

Financial Results (GAAP)

 

$

(20,349

)

 

$

(14,214

)

 

$

(0.88

)

 

$

(0.62

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangibles

 

 

26

 

 

 

2,147

 

 

 

 

 

 

 

Stock-based compensation

 

 

3,442

 

 

 

2,665

 

 

 

 

 

 

 

Acquisition-related expenses

 

 

554

 

 

 

 

 

 

 

 

 

 

Restructuring-related and other charges (1)

 

 

1,809

 

 

 

 

 

 

 

 

 

 

Change in fair value of earnout liability

 

 

 

 

 

630

 

 

 

 

 

 

 

Income tax impact of adjustments (2)

 

 

 

 

 

87

 

 

 

 

 

 

 

Adjusted

 

$

(14,518

)

 

$

(8,685

)

 

$

(0.63

)

 

$

(0.38

)

(1)

Charges represent the costs associated with workforce reductions and associated costs and other restructuring-related activities.

(2)

Income tax impact of adjustments represents the tax impact related to the non-GAAP adjustments listed above and reflects an effective tax rate of 0% for 2023 and -1.6% for 2022, which is due to the recording of a valuation allowance.

 

 

Three months ended

March 31,

Non-GAAP constant currency revenue

 

2023

 

 

2022

Business-to-business domestic sales

 

$

12,585

 

 

$

5,101

Business-to-business international sales

 

 

18,972

 

 

 

27,941

Direct-to-consumer domestic sales

 

 

24,330

 

 

 

34,360

Direct-to-consumer domestic rentals

 

 

16,275

 

 

 

12,983

Total revenue (GAAP)

 

 

72,162

 

 

 

80,385

Hedging gains

 

 

 

 

 

600

Total revenue, excluding hedging effect (non-GAAP)

 

 

72,162

 

 

 

79,785

Exchange rate impact

 

 

860

 

 

 

1,424

Constant currency revenues (non-GAAP)

 

$

73,022

 

 

$

81,209

 

 

 

 

 

 

Revenue growth (GAAP)

 

 

-10.2

%

 

 

Constant currency revenue growth (non-GAAP)

 

 

-8.5

%

 

 

 

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