Inogen, Inc

Welcome to Inogen's first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference, please press star zero for operator assistance. As a reminder, this conference is being recorded today, May 4th, 2023. I would now like to turn the call over to Agnes Lee, Senior Vice President of Investor Relations and Strategic Planning. Ma'am, the floor is yours. Thank you, Karen.

Hello, everyone, and thank you for participating in today's call. Joining me on the call today are President and CEO Nabeel Shabshab and CFO Kristen Kaltreiter. Earlier today, Inogen released financial results for the first quarter of 2023. This earnings release is currently available in the investor relations section of the company's website, along with a supplemental financial package. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects and strategy for 2023 and beyond. Expectations related to our financial results for 2023. Expectations related to a return to profitability in 2023. Expectations regarding increasing productivity of our internal and external sales team. Progress of our strategic initiatives, including innovation. Our expectations regarding the market for our products. On our business and supply and demand for our products in both the short-term and long-term. The forward-looking statements in this call are based on information currently available to us as of today's date, May 4, 2023. These forward-looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic report filed with the SEC. Actual results may vary, and we disclaim any obligations to update these forward-looking statements except as may be required by law. We have posted historical financial statements and our investor presentations in the investor relations section of the company's website. Please refer to these files for more detailed information. During the call, we will also present certain financial information on a non-GAAP basis. Management believes that non-GAAP financial measures taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain non-cash items and other expenses that are not indicative of Imogen's core operating results. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in tables within our earnings release. With that, I will turn the call over to Imogen's President and CEO, Nabeel Shabshab. Nabeel?

Thanks, Agnes. Good afternoon, and thank you for joining our first quarter 2023 conference call. Our disciplined execution allowed us to make progress during the first quarter in support of our growth strategy and return to profitability. While our revenue was in line with the expectations we had communicated during our Q4 2022 earnings call, our gross margin and EBITDA performance were above our internal expectations. We continue to leverage the investments we have already made to drive our commercial strategy, launch new products, progress the innovation efforts and clinical work, and round up the capabilities that we had embarked on. In 2023, we remain focused on delivering low-to-mid single-digit revenue growth and return to positive adjusted EBITDA by the fourth quarter. We are expecting the year to be an inflection point for images. as we set up for stronger top and bottom line growth in the years ahead. On the supply side, our forward semiconductor buys during 2022 helped us cover demand for a significant portion of 2023, and based on the improvement we have seen so far in the regular supply channel, we feel that we will be able to meet demand for 2023. Before I provide an update on our commercial progress, I would first like to discuss some of the elements behind our strategy. As a leader in POC-based portable oxygen therapy, our vision entails patients and prescribers having wide access to the most appropriate therapy modality, irrespective of the point of prescription or how patients might qualify for coverage for POCs. Our channel strategy was designed to improve our ability to serve patients at the point of diagnosis and prescription through Inogen and HME partners, while refining our DTC model to meet the needs of patients who desire to switch to POC-based therapy later in their disease management journey. In 2023, we look forward to seeing the continued evolution of our channel strategy into a patient-centric one, agnostic to channel boundaries, specifically in the U.S., to accelerate patient and prescriber adoption of emergency POC-based therapy, driving scale, predictability, and profitability over time. Now moving on to an update on our Q1 progress with respect to growth. Rental revenue continues to be a strong growth trajectory at the one-year anniversary of our renewed focus on the prescriber channel. The execution behind our prescriber channel strategy has delivered double-digit increases in referrals and sales rep productivity sequentially. In support of our rental channel, we have been securing coverage from more private payers in the U.S., In addition to our core CMS coverage, we recently added two large private healthcare payers. We now can cover the COPD patient population out of approximately 160 million privately covered lives. Moving to B2B channels, we continue to monitor the overall market dynamic in the U.S. B2B channel, where some of the larger HMEs have increased their focus on margin accretion, restructuring, and capital expense management. Our strong and unique value proposition remains solid as Imogen's brand equity, device quality, and best after-sales service come together to deliver optimized POC fleet deployment and competitive total cost of ownership for HMEs with high patient satisfaction. This has helped in adding new HME customers and expanding the base we serve while we manage competitive pressures and work towards landing into normal ordering patterns across the board. Given the low level of POC-based oxygen therapy penetration in the U.S., HME partnerships are essential to our strategy of reaching more patients with energy-leading POC and providing HMEs with a more competitive business model. As for our international business-to-business, we have made solid progress after launching Rope6 in Europe at the end of 2022 and have been granted reimbursement in Germany during Q1 2023. Additionally, we recently received confirmation of Rov6 reimbursement coverage in France and are awaiting the results to be published in the official Gazette over the next few weeks. We are excited about securing these reimbursements, slightly ahead of expectations, in support of the rollout of Energen Rov6 across Europe. For our DTC business, we have remained focused on scaling the new disciplines in DTC as we work towards achieving the right growth and productivity while optimizing our cost basis. This quarter, we made progress as we continue to institutionalize the new sales management disciplines. As evidence of our progress, while we decreased the number of sales reps, Q1 2023 delivered solid sequential growth in the teams on a per rep basis for both unit and revenue productivity. Before I summarize, I would like to reiterate that in December 2022, Inogen received FDA clearance for row four, and we are on track for an anticipated U.S. launch in the back half of 2023, as communicated previously. The launch of row six in Europe and our expected launch of row four in the U.S. are important steps as we commercialize the latest innovations in Inogen's POC portfolio. Additionally, we are very excited about the progress behind our ambition to serve a larger COPD population and broaden our portfolio to address respiratory needs across additional indications, including dyspnea, congestive heart failure, and potentially hypercapnia. In summary, while remaining imminently focused on driving growth and delivering positive adjusted EBITDA by Q4 2023, we are also excited about the future where Imogen aims to expand beyond COPD and the new indications that are essential to managing respiratory health. We continue to see underlying demand for our offering and see a pathway to scalable and profitable growth as we advance our commercial, channel, and innovation strategies. I will now turn the call over to Kristen. Kristen?