Inogen: Sales issues are largely behind us

GOLETA, Calif. - Inogen officials say they stabilized the business in the third quarter of 2019, after spending the past few quarters right-sizing the company's direct-to-consumer sales force.

The company reported DTC sales decreased to $37.8 million in the third quarter compared to $38.3 million for the same period last year, amid a 40% reduction in its sales force for the channel, which was offset by an increase in productivity.

“On the direct-to-consumer side, now it's getting back to hiring at a more moderate pace across all three facilities to have the capacity to continue to expand that business,” said Ali Bauerlein, CFO and executive vice president of finance, during a conference call to discuss the company's latest financial results. “That's our primary focus right now.”

An issue that should also improve business-to-business sales going forward: tough year-over-year comps created by a national provider decreasing its orders to Inogen's private label partner. This provider accounted for revenue of $800,000 in the third quarter, down significantly from $3.3 million in the same period last year.

Inogen's B2B sales did get a nice boost in the third quarter from the Inogen One G5. More than 40% of orders in the quarter were for the company's latest POC.

“I do think we have been pleasantly surprised with the rate of adoption,” Bauerlein said.

Something that will continue to be an issue for B2B sales through 2020, however, is Round 2021 of competitive bidding. Inogen officials say providers are largely holding off on purchasing decisions until they know what the reimbursement will be (summer 2020) and who the contract suppliers will be (fall 2020).

“Looking ahead to next year, the same issues are there (for providers)—the infrastructure challenges and the capital expenditure constraints—and now we're going to sprinkle in a little competitive bidding uncertainty, which probably causes things to be a little slower until that gets resolved,” said Scott Wilkinson, president and CEO.

Inogen itself submitted bids for oxygen in 129 out of 130 areas. The company also submitted bids for non-invasive ventilation for the same 129 areas, fresh off its acquisition of New Aera, the manufacturer of the Tidal Assist Ventilator system, earlier this year. It plans to begin actively selling the system in 2020.

“(We plan to use) all of our existing sales channels,” Wilkinson said. “So we'll sell it through our direct-to-consumer salesforce as a retail sale. We've proven ourselves on retail sales, so we're really excited about what we can do with this product on a retail basis. And like POCs, there could be a retail opportunity for the B2B players, as well.”