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Inogen's streak continues

Inogen's streak continues Company also addresses connected technology trend

GOLETA, Calif. - Despite headwinds from a new CRM system, Inogen's direct-to-consumer channel still recorded an impressive 43.5% increase in sales for the third quarter of 2017.

“There has been a learning curve and in spite of that, productivity in Q3 improved versus 2016,” CFO Ali Bauerlein, told investors during a conference call on Nov. 7 to discuss the company's latest financial results. “So we're really proud of our sales team's ability to hire and train personnel.”

Inogen reported total revenues of $69 million for the third quarter, up 26.8% from the same period last year. Sales revenue was $63.1 million, up 33.8%; and rental revenue was $5.9 million, down 18.7%.It reported net income of $7.3 million, up 39.9%.

With company officials calling 2017 “an investment year,” Inogen may be just getting started.

“While we're starting to see contributions, we expect the people we hire in the second half of this year to contribute more materially in 2018,” Bauerlein said.

That's a big reason why, for 2018, Inogen expects revenues to be in the $295 million to $305 million range. By comparison, for 2017, the company expects revenues of $239 million to $243 million.

Asked whether Inogen's product pipeline includes a POC with connected technology, company officials downplayed the trend—for now. CEO Scott Wilkinson noted that, unlike for CPAP devices, there are no compliance requirements for oxygen concentrators, minimizing the importance of the technology.

“If we go back to what's really important, it's the right reliability and the right price—that's what we've focused on,” he said. “It's patient preference, as well, and they don't have the burning need for connectivity right now. These wireless launches that we're seeing—we think it's a solution that's ahead of its time.”

Still, Wilkinson believes there's a “long-term place for connectivity in oxygen.”

“That's why our engineers are working on it,” he said. “That's also why we've built a product that's connectivity ready. We're not ignoring (the trend); it's just not the most important thing right now.”

Inogen's business-to-business channel also recorded an impressive increase, 41.7%, adding more grist to the mill that an increasing number of traditional HME providers are converting their fleets to POCs.

“Based on CMS data, the share of POCs in Medicare oxygen therapy was 8% in 2015 and 9.1% in 2016, and that doesn't include patient cash sales,” Wilkinson said. “POCs are still the fastest growing modality and they still have significant growth opportunity before they reach full market saturation.”


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