Inogen Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Inogen, Inc. INGN incurred an adjusted loss per share of 7 cents for the second quarter of 2024, narrower than the adjusted loss per share of 25 cents in the year-ago period. The Zacks Consensus Estimate was pegged at a loss of 54 cents per share.

GAAP loss per share for the quarter was 24 cents, better than the year-earlier loss of 42 cents per share.

Revenues in Detail

Inogen registered revenues of $88.8 million for the second quarter, up 6.1% year over year. The figure beat the Zacks Consensus Estimate by 7.8%.

At constant exchange rate (CER), total revenues for the reported quarter increased 6.2%.

Per management, the year-over-year uptick in the top line was primarily driven by higher international and domestic business-to-business sales. However, this was partially offset by lower direct-to-consumer sales and rental revenues.

Segmental Details

Inogen derives revenues from two sources — rental and sales.

Rental revenues for the reported quarter grossed $14.3 million, down 6.5% from the year-ago period, both on a reported basis and at CER. Per management, the decrease resulted from a higher mix of lower private payer reimbursement rates and higher rental revenue adjustments.

Sales revenues were $74.4 million, up 8.9% from the prior-year quarter.

Revenues by Region & Category

Domestic business-to-business sales for second-quarter 2024 amounted to $21.3 million, up 16.5% on a year-over-year basis.

International business-to-business sales for the reported quarter amounted to $30.5 million, up 31.1% year over year on a reported basis and up 31.4% at CER.

Domestic direct-to-consumer sales decreased 15.6% year over year to $22.6 million in the quarter. Domestic direct-to-consumer rentals decreased 6.5% year over year to $14.3 million in the quarter.

Margins

For the quarter under review, Inogen's gross profit rose 25.6% from the year-ago period to $42.7 million. The gross margin expanded 740 basis points to 48.1%.

Sales and marketing expenses decreased 4.8% from the year-ago quarter to $25.6 million. Research and development expenses increased 30.2% year over year to $5.6 million. General and administrative expenses increased 27.4% to $18.6 million. Operating expenses of $49.8 million increased 8.7% year over year.

Operating loss totaled $7.1 million compared with the prior-year quarter's loss of $11.8 million.

Financial Position

Inogen exited the second quarter of 2024 with cash and cash equivalents of $98 million compared with $121.2 million at the end of the first quarter of 2024.

The company ended the quarter with no debt on its balance sheet.

Net cash provided by operating activities at the end of the second quarter of 2024 was $1.9 million against net cash used in operating activities of $2.3 million a year ago.

Guidance

Inogen provided its revenue outlook for 2024.

The company expects the metric to be between $325 million and $330 million. The Zacks Consensus Estimate currently stands at $322.3 million.

Our Take

Inogen exited the second quarter of 2024 with better-than-expected top and bottom-line numbers. The year-over-year improvement on both counts was encouraging. The robust year-over-year uptick in domestic and international business-to-business sales was impressive. The expansion of the gross margin also bodes well.

Inogen announced the launch of its latest Portable Oxygen Concentrator (POC) Rove 4 in the latter half of the year. Rove 4 introduces a fourth flow setting, offers up to eight years of service life and provides the highest oxygen production in the lightest POC on the market. These innovations align with its mission to enhance patient mobility and quality of life during oxygen therapy. With Rove 4, Inogen continues to lead the way in advanced, patient-focused oxygen therapy solutions.

However, the decline in domestic direct-to-consumer sales and rental revenues is concerning. Inogen continued to incur operating losses in the second quarter, which does not bode well.

Zacks Rank & Key Picks

Currently, Inogen carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader medical space are Universal Health Service, Quest Diagnostics and ABM Industries. While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each.

Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.

Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.

Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.

Quest Diagnostics shares have gained 3.7% so far this year compared with the industry's 10.2% rise.

ABM Industries' earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.

ABM's shares have risen 24.1% so far this year compared with the industry's 11.9% increase.

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