Inogen makes progress on supply chain, backlog

GOLETA, Calif. – Inogen’s CEO is “cautiously optimistic” that the company has made enough progress mitigating supply chain challenges that it can project revenue growth of 4% to 7% in the third quarter this year compared to the same period last year. 

The company now projects revenues of about $97 million to $100 million in Q3. 

“While we have not mitigated all the supply risks, we feel we are making adequate progress to secure most of the needed parts for the third quarter, the remainder of 2022 and early 2023,” said Nabil Shabshab, CEO, during a call to discuss Inogen’s second quarter financial results. “Opportunistic forward buying of semiconductor parts will remain part of our strategy to mitigate risks moving forward. I would like to stress that, although we have been successfully managing an unstable supply situation for several quarters, any delays in securing supply or receiving materials would impact our ability to meet customer demand potentially into 2023.” 

Inogen reported total revenues of $103.4 million for the second quarter of 2022, a 1.8% increase compared to the same period in 2021 and a 28.6% increase compared to the prior quarter. It reported a GAAP net loss of $3.4 million for Q2 2022 vs. a GAAP net income of $5.1 million for Q2 2021. 

Of Inogen’s business segments, rental revenue saw the largest increase in the second quarter, 25.1%, year over year, driven primarily by more patients on service and slightly higher Medicare reimbursement rates. That growth should continue as the company’s prescriber sales force – put in the field between February and March – becomes more established. 

“The rental channel continues to grow at a healthy pace,” Shabshab said. “We're building a prescriber sales force, (and) as of this call, we're at 60 approximately. So, the focus continues to be there in terms of driving prescriptions into rental at the onset of care, because then we can maximize the billable months that we have ahead of us.” 

Inogen reported domestic direct-to-consumer sales decreased 0.7% year over year, driven by lower volume due to lower sales rep accounts. Domestic business-to-business revenue decreased 59.3% year over year but increased 120% sequentially, as the company began to fulfill back orders. 

“The B2B side, which was more of a supply issue not a demand issue, is getting remediated,” Shabshab said. “We actually curtailed some of the supply to the B2B channel, because we were trying to manage the short supply overall. Despite that, we have not seen a lot of movement in terms of cancellation of backlog orders. They remain in place, and we are working very diligently in remediating them.” 

Inogen also hasn’t seen a lot of movement in terms of reduced demand due to price increases that it implemented in March of this year and September of last year. 

“(It) has worked and will stick,” Shabshab said.