Inogen predicts growth in sales will stick

One reason: There’s plenty of runway left for growth in the POC market, says President and CEO Ray Huggenberger
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Friday, August 14, 2015

GOLETA, Calif. – Four moving parts helped Inogen grow domestic business-to-business sales a whopping 80.5% in the second quarter this year compared to the same period last year, making it the company’s fastest growing channel.

CEO Ray Huggenberger credited investments the company has made in its sales force and consumer marketing; investments its provider customers have made in marketing; the industry picking up, in “tiny little steps,” on a non-delivery business model; and the initial pay off of a private label program with Applied Home Healthcare Equipment.

“None of this individually is a reason why we would see 80% growth, but all of them combined make for a good year-over-year comparison,” he said during an Aug. 11 conference call to discuss earnings.

Overall, Inogen reported net revenues of $44 million for the second quarter compared to $30.4 million for the same period last year. Net income was $3.5 million vs. $2.3 million. The company reported net revenues of $77.8 million for the first half of the year compared to $54 million for the same period last year. Net income was $5 million vs. $3.2 million.

The first half of 2015 has gone so well for Inogen that the company has increased its guidance for the year to between $145 million-$149 million in revenues, growth of 28.8%-32.4% compared to 2014. Previous guidance was $133 million-$137 million.

When asked whether Inogen could sustain this level of growth in its business-to-business sales, Huggenberger said, “We’re increasing our guidance because we do believe it’s going to stick.”

One reason for that stickiness: There’s plenty of runway left for growth in the POC market, Huggenberger says.

“I see the journey of the POC becoming the default of how oxygen is delivered as a long and grinding one with steps made each quarter and each year,” he said. “I foresee it to take a long, long time and the reason for that is there are existing infrastructures that are not easily changed.”

Huggenberger predicts the “tipping point” everyone is waiting for to be “several years in the future.”

“POC is a cheaper way and so we see DME businesses establishing fleets of POCs for temporary rental,” he said. “We also see some businesses seriously looking at the POC as a more default means of providing oxygen therapy, but in general, the bigger the company, the bigger the infrastructure and the harder it is to make that decision.”

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