Inogen, Inc

Welcome to Inogen's third quarter 2024 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, November 7th, 2024. I would now like to turn the call over to Ryan Peterson, Investor Relations.

Thank you all for participating in today's call. Joining me are President and CEO Kevin Smith and CFO Mike Bork. Earlier today, Energen released financial results for the third quarter of 2024. This earnings release is 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 2024 and beyond, expectations related to our financial results for the full year 2024, 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, November 7, 2024. 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 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 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 Intergen's President and CEO, Kevin Smith.

Good afternoon, and thank you for joining our third quarter 2024 conference call. During today's call, I will review our third quarter performance and provide an update on our progress towards our three strategic priorities, driving top-line growth, advancing our path to profitability, and expanding our innovation pipeline. I will then turn the line to Mike for a full review of our financials and outlook. I am pleased to share that we are making great progress against our strategic initiatives, beginning with our progress on driving top-line growth. In the third quarter, we delivered on this objective by achieving $89 million in total revenue, reflecting 6% year-over-year growth. Our performance was led by strong POC sales through our business-to-business channels, where we drove over 20% year-over-year revenue growth for the second consecutive quarter. We continue to expand our relationships with new and existing customers. as patients and providers increasingly recognize the benefits that our solutions provide over other oxygen therapies and appreciate our quality, ease of servicing, and eight-year service life. In particular, we are having success taking and expanding share within the accounts of some of our largest customers. Turning to our direct-to-consumer sales channel, we saw year-over-year declines as we continue to operate with a downsized and streamlined sales force. Although our revenue is down, we are pleased that this channel is becoming more profitable as a result of our cost structure and careful management. As we complete our first full year with the smaller team and move into 2025, we anticipate better year-over-year performance. DTC is a core part of our business model and we are working diligently to bring it back to growth. As part of these efforts within the DTC business, we continue to advance our previously announced hospital and patient first pilot programs. On the patient first pilot, we are still in the process of expanding the program out, but we are pleased with the effects we have seen thus far and anticipate it will be fully rolled out in the first half of 2025. Our hospital pilot is still being evaluated for effectiveness and we will share updates as they become available. These programs, along with a host of other improvements we have made to the organization's structure and strategy, are a large part of our efforts to reposition Inogen for long-term, sustainable, and profitable growth. Before I move on to talk about our next strategic priorities, I would like to highlight the recent addition of Eric Pauls to our team as Vice President of North American Sales. Eric joined us in early September, and we are excited for the two-plus decades of experience he brings to our sales force. In addition to his years of experience, Eric brings a number of strong relationships from his years of leadership in the respiratory field. And as part of our efforts to reduce friction between our business channels and scale overall growth, Eric is now managing both the rental and domestic business-to-business channels, marking a change from our prior sales structure in which separate leaders manage our business-to-business, direct-to-consumer, and rental channels. We believe this change will improve alignment across our business and ensure that we are directing every customer and patient to the right resources for sales to be completed successfully. I will now discuss our progress on our second strategic priority, to reach sustained profitability. During the quarter, we generated $3 million of positive cash flow, strengthening our already resilient balance sheet. This marks our second consecutive quarter of positive cash flow, a testament to our team's focus on ensuring every dollar spent is being allocated to position Imogen for growth. We also achieved a second consecutive quarter of adjusted EBITDA profitability. While we still expect to end the second half of 2024 with an adjusted EBITDA loss, this is proof that our strategy, portfolio, and team can achieve long-term profitability. Part of our efforts to achieve this long-term profitability have been through our initiatives to improve gross margin. These include second sourcing our raw materials to ensure we are reducing costs, production streamlining, and implementing even more rigorous quality control to minimize defects and product returns. Programs like these are just one part of our strategy, but we are seeing the benefits paying off and continue to expect to see this going into next year. On the topic of operating expenses, We have continued to see rising advertising costs due to the excess demand for TV spots in advance of the election. As a result, we have reduced some campaigns that were not returning value to the organization. This decision is emblematic of our efforts to evaluate the return on every dollar invested in the business. Finally, I would like to share updates on our innovation pipeline. We recently announced the launch of the Road 4, our newest POC. Weighing less than three pounds, the Rho4 delivers power and performance in the lightest weight and highest oxygen output for setting POC in the market. Alongside this are new features, including up to 840 milliliters of medical grade oxygen per minute and up to five hours and 45 minutes of battery life. These innovations advance our mission to deliver the highest quality of life possible for patients, allowing them to remain ambulatory for as long as possible while undergoing oxygen therapy. With respect to Semiox, we continue to have very productive discussions with the FDA. And as we've stated before, we'll provide a formal update upon clearance. We remain committed to investing in innovation to drive growth in our business and expand our ability to serve patients with respiratory conditions around the world, as well as our business customers. We are making significant progress against our strategic priorities and are taking meaningful steps towards profitability. in addition to introducing another leading POC to the market and expanding the capabilities and network of our sales team. I will now turn the call over to Mike for a more detailed review of our financial results. Mike?