Inogen Inc Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Strategic Priorities:
  • Top Line Growth: 2024 revenue was $335.7 million (+6.4% year-over-year), Q4 2024 revenue $80 million (+5.5% year-over-year) driven by B2B. DTC channel focus to improve.
  • Profitability: 2024 had two quarters of adjusted EBITDA profitability. Expect improved adjusted EBITDA in 2025.
  • Innovation Pipeline: Launched Rove 4 POC, received FDA clearance for Simeox. Collaboration with Yuwell Medical: Yuwell invests $27M, distributes Inogen products in China and Inogen distributes Yuwell products in US. Simeox launch in 2025 with reimbursement efforts. Digital health offerings enhanced for device connectivity.

Segment Performance

• Revenue by Segment:
  • Domestic B2B: Fourth quarter 2024 revenue was $22.4 million, up 24.1% year-over-year. Full year 2024 domestic B2B contributed to overall growth.
  • International B2B: Fourth quarter 2024 revenue was $28.3 million, up 31.5% year-over-year. Full year 2024 international B2B also contributed.
  • DTC: Fourth quarter 2024 revenue was $15.6 million, down 21.3% year-over-year due to downsized sales force.
  • Rental: Fourth quarter 2024 revenue was $13.8 million, down 16.5% year-over-year, driven by mix shift to private payers and lower net revenue per rental patient.
• Gross Margins:
  • Total gross margin for fourth quarter 2024 was 45.3%, up 821 basis points year-over-year. Sales revenue gross margin was 46.5%, up 1,369 basis points. Rental revenue gross margin was 39.8%, down 1,290 basis points. Full year 2024 total gross margin was 46.1%, up 596 basis points year-over-year.

Guidance

• 2025 Outlook:
  • Q1 2025 revenue expected $79M-$81M (1%-4% growth year-over-year).
  • Full year 2025 revenue expected $352M-$355M (5%-6% growth year-over-year).
  • Gross margins expected 43%-45% for full year 2025.
  • Aim for adjusted EBITDA breakeven in 2025 through top line growth and expense management.

Risks

• Tariffs: Primary manufacturing in Plano, Texas; potential headwinds from proposed tariffs, but manageable.
• Yuwell Integration: Slow integration of Yuwell products may impact near-term results.
• DTC Channel: Continued challenges in DTC channel due to downsized sales force.

Question and Answer

Q: What's contemplated in the guide in terms of the Yuwell agreement throughout 2025? Any puts and takes on the guide overall? And second part on synergies from Yuwell.

A: Yuwell won't have significant impact in 2025 results. Some one-time impacts on gross margins from Yuwell and Simeox introductions, totaling ~100 basis points. Synergies include leveraging purchasing power and selling Yuwell products across channels without incremental sales force investment.

Q: How to think about the cadence through the rest of the year after Q1 guide?

A: Q2 and Q3 are traditionally strongest revenue quarters, with Q1 and Q4 being seasonally lower due to DTC seasonality.

Q: Introduction of Yuwell products to US and channels involved?

A: Yuwell products can go across channels, starting with stationary oxygen concentrator in B2B and rental segments, leveraging existing channels without incremental sales force investment.

Q: Payer mix shift towards private payer in rentals and if it'll change?

A: Shift from traditional Medicare to Medicare Advantage likely to continue, dependent on administration policies.

Q: Simeox pathway, KOL engagement, and prescriber sales force?

A: Simeox has clinical data from Europe, ongoing trials for reimbursement. Engaging KOLs and private insurers. DTC sales force reduced, prescriber sales force reorganized with in-house team.