Inogen, Inc

Greetings and welcome to the Inogen 2023 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Marissa Beisch from Gilmartin Group. Thank you, Marissa. You may begin.

Great, thank you, and thank you all for joining today's call. Joining me are President and CEO Nabeel Shabshab and Interim CFO Mike Curtis-Getter. Earlier today, Inogen released financial results for the third quarter of 2023. The earnings release is available on the investor relations section of the company's website, along with the 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 regarding increasing productivity of our internal and external sales teams, progress of our strategic initiatives, including innovation, our expectations regarding the market for our products, our business, and supply and demand for our products in both the short and long term. The forward-looking statements in this call are based on information currently available to us as of today's date, November 7, 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 reports filed with the Securities and Exchange Commission. 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 US 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 Inogen'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 Inogen's President and CEO, Nabeel Shabshab.

Thank you, Marisa. Good afternoon, and thank you for joining our third quarter 2023 conference call. During today's call, I will discuss our performance in the quarter, our progress across our business initiatives, and our outlook for the rest of the year. Then Mike Sergis-Ketter, our CFO, will work through more details of our financial performance and our annual guidance before we take questions. We recognized $84 million in total revenue in the third quarter while continuing to address some lingering headwinds to our business. Despite the typical third quarter seasonality, We grew total revenue by 40 basis points in the third quarter versus the second quarter. Starting with our direct-to-consumer business, in the third quarter, we recognized $25.1 million in DTC revenue as a result of strong revenue per sales rep offset by fewer total reps as we continue to optimize the size of our team and focus on sales rep productivity. We are continuing to drive efficiency in this channel and our productivity per rep, both in units and revenue was up double digits on a year over year basis. Turning to our domestic B2B business, we recognized revenue of $17.3 million, which was impacted by residual headwinds to our business from the shared loss we experienced over the past year due to the 2022 supply chain related volume constraints and lower price competition. In the third quarter, we made progress in recapturing market share while diversifying our customer base. In our international B2B business, we recognized $25.6 million in revenue, reflecting strong double-digit growth on a year-over-year and sequential basis. While we witnessed a significant delay in the Row 6 French reimbursement approval, we did secure reimbursement in August, and we are currently focused on introducing Row 6 to key customers in that market. Please note that although our third quarter was relatively strong, we expect a lighter fourth quarter in the international B2B channel, with sales expected to be roughly flat year over year as we work through the row six introductions in France. Our rental revenue was $16 million, increasing both year over year and sequentially. Rental revenue continues to benefit from improved prescriber team productivity, with increases in referrals per sales rep as compared to Q2. We expect continued steady progress as we further optimize sales territories and call frequency to drive scale and number of prescriptions per prescriber and overall growth. Shifting gears to our efforts to improve our cost structure and our operating efficiency, Mike will provide additional details on our operating expenses. But in short, we saw an increase in operating expenses in the quarter, primarily due to a non-cash impairment charges related to the write-down of Goodwill. Our adjusted operating expenses fell to $47.6 million in the quarter, a decrease of $5.5 million year over year. This was primarily due to our initiatives to optimize productivity of our sales organization while managing marketing spend. Before I turn the call over to Mike, I'd like to highlight that we are very excited to have closed our acquisition of PhysUSS during the quarter. PhysUSS expands our innovative respiratory portfolio with the addition of Simioxx, a technology-enabled airway clearance and mucus management device, predominantly aimed at treating bronchiectasis. Entering the adjacent airway clearance market provides us the opportunity to serve patients earlier in their disease journey, expanding their lifetime value for Inogen, and standing up a business model that delivers a recurring revenue stream from consumables. We did not recognize any revenue from Simioxx in the third quarter, and consistent with our expectations at the time of acquisition. We do not expect any material revenue from the acquisition this year. I will now turn the call over to Mike for a review of our financial results.