Inogen faces fears head-on

GOLETA, Calif. - Inogen on Monday provided additional full-year guidance for next year, perhaps in a move to quell fears surrounding the national rollout of competitive bidding pricing on Jan. 1, 2016.

The company, which manufactures and provides portable oxygen concentrators, expects adjusted EBITDA for 2016 to be in the range of $35 million to $37 million, representing 14.8% to 21.3% growth compared to its mid-point guidance of $30.5 million for 2015. It expects net income for 2016 to be between $11 million to $13 million, representing 18.9% to 40.5% growth.

“INGN shares have fallen in recent weeks and we think that the primary factor driving the decline was concern about the impact of the expansion of Medicare's competitive bidding program during 2016,” wrote Mike Matson, an analyst for Needham & Co., in a report following the announcement. “While we expect the additional reimbursement cuts to create a modest headwind for revenue growth and margins, we still expect INGN to see strong revenue and earnings growth next year.”

Inogen shares dropped from $43.86 per share on Nov. 16 to $38.76 per share on Nov. 19, an 11.6% decrease. Currently, they're trading at $38.27 per share.

Inogen also confirmed revenue guidance for 2016 of $177 million to $183 million, representing 16.8% growth compared to mid-point guidance of $151.5 million for 2015.

“We remain confident in our ability to continue to grow the top line, while at the same time leveraging operating efficiencies for continued strong profitability despite the reimbursement headwinds from the national rollout of competitive bidding pricing we anticipate in 2016,” stated Ray Huggenberger, president and CEO of Inogen.

CMS recently released revised fee schedule amounts for oxygen equipment and 10 other products categories in non-bid areas as part of the national rollout.

In its most recent earnings report, Inogen detailed its plans to offset the expected hit to rental sales with strong growth in direct-to-consumer sales.