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Inogen tries to ‘block and tackle’ supply chain challenges

Inogen tries to ‘block and tackle’ supply chain challenges Efforts include strategic sourcing, product redesigns, price increases

GOLETA, Calif. – Supply chain challenges, as well as a temporary shutdown at facilities in Texas and California earlier this year, forced Inogen to prioritize available supply in the first quarter of 2022 to its domestic direct-to-consumer and rental channels, contributing to an 83.4% drop in revenues for its business-to-business channel. 

“As of early May, we have started shipments to our domestic B2B channel in order to alleviate some of the backlog in our system,” said Nabil Shabshab, president and CEO, during a conference call on May 6 to discuss financial results for the first quarter of 2022

Inogen’s efforts to manage supply chain and other challenges include “strategic sourcing” through regular channels and the open market, redesigning the motherboard in its products and increasing prices, Shabshab says. 

The company implemented another price increase in the first quarter, this time only for its domestic DTC business, to address higher costs related to supply chain challenges. It first implemented a price increase in the “low double-digit range” in September for all channels, except rental. 

“We’re hoping we can continue to block and tackle,” Shabshab said. “This is not something we’re managing in the long term; this is daily and weekly. We’ve managed for, call it six quarters, with the supply shortages and we hope our efforts will help us to continue to manage going forward.”  

While Inogen didn’t provide guidance for full year 2022, CFO Kristin Caltrider expects total revenue for the second quarter to improve sequentially from the first quarter and to be similar to the second quarter of 2021. She also expects supply chain challenges to persist into the second half the year, especially in light of “additional complexities” due to the lockdown in China and war in Ukraine. 

Other highlights from the call: 

Inogen is up to 54 sales representatives as part of its efforts to increase the size of its prescriber sales organization and expects to hit 60 in the second quarter. 

“The theme is focused on top oxygen prescribers nationwide, which we believe will allow us to cover 65% of the oxygen therapy patients in the U.S. at the point of diagnosis and prescription,” Shabshab said. “While still in the early months, we are pleased with initial results across both our contract organization, Ashfield, as well as our internal Inogen team. This is evidenced from a faster productivity ramp for new hires, increases in patient referrals and growing referrals from new prescribers.” 

Inogen says its new product pipeline consists of “new and improved” products, but in the current environment of supply chain challenges, the company is also working on how it can “leap forward in its motherboard design…to take into consideration where investments are going from the foundries,” Shabshab says. 

“Part of the challenges we face are that lower margin, low power chips were the ones under the most constrained supply, because they didn’t privatize them, and they were going toward the more complex (devices,)” he said. “The new game is to really factor that into our design, so we don’t have to go through the same issues we suffered in the last year or so.”  


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