Inogen, Inc

excellent job strengthening relationships with DMEs and winning tenders internationally. These results bolster our confidence in our total market approach and the strength of the image of brands. Turning to our second priority, driving profitability, where we continued to advance through operational excellence and disciplined cost management. In the second quarter, we delivered meaningful operating leverage, reducing operating expenses by approximately 5% year-over-year and generating $2.1 million in adjusted EBITDA. This is our second consecutive quarter of adjusted EBITDA profitability. It also marks the fourth adjusted EBITDA profitable quarter out of the last five, highlighting consistent execution of our strategies in disciplined expense management. As a result, we now expect to achieve full year adjusted EBITDA breakeven in 2025, supported by sustained revenue growth and disciplined spending. We remain focused on driving further improvement in the coming years as we advance towards sustainable profitability. We continued to advance our innovation pipeline this quarter with meaningful progress across our key strategic priorities. We introduced BOXY5, our latest stationary oxygen concentrator designed to expand access to high-quality therapy for long-term care patients. We also continued developments of clinical data for SIMIACs around the world and launched a new mobile digital health portal. I'll begin with VOXI5, our newest stationary oxygen concentrator. This product is a meaningful extension of our oxygen therapy portfolio, complementing our portable solutions and enabling us to serve a broader range of patients in a home care setting. Developed in collaboration with UL Medical, VOXI5 reflects the strength of a product pipeline in our ability to bring high-quality, cost-effective solutions to market. The device delivers one to five liters per minute of continuous flow oxygen in a compact, quiet, and durable form. It's a strong option for patients who need a reliable and affordable second unit for use in multiple rooms. The launch of Voxie 5 also gives our sales team another valuable tool to meet the diverse needs of patients and providers, especially in the business to business channel where we previously did not have a stationary offer. This is critical as our DMA partners generally provide new patients with both SOC and POC. And having two quality offerings will allow us to reach new customers and deepen our relationships with existing partners. We're encouraged by the early response and look forward to continued progress as the launch builds momentum in the months ahead. In addition, we initiated the groundwork for our clinical trials to support premium reimbursement, advancing our efforts towards Semiox commercialization. While there are no material updates to provide at this time, the overall efforts remain on track and we will continue to share pertinent information as appropriate. Lastly, we enhanced our digital health capabilities by launching an online patient portal as part of our InogenConnect solution. The patient portal is designed to be seamlessly integrated with our mobile application, expanding access to self-service tools that improve patient engagement and streamline operations. The platform enables patients to order supplies, track shipments, access setup resources, update insurance info, and e-sign forms, all from their phones or computers. The launch supports our commitment to enhancing patient experience. We are pleased with the positive reception by early adopters and look forward to continuing to deliver tools that improve accessibility and ease of use for patients and providers. To conclude, the innovation we delivered this quarter reflects our ongoing commitments to advancing respiratory care through meaningful product development, greater affordability, and better outcomes for patients who rely on oxygen therapy every day. With that, I will pass the call over to Mike for an overview of our financials. Mike?

Thank you, Kevin, and good afternoon, everyone. Unless otherwise stated, all financial comparisons presented refer to the prior year comparable period. Total revenue for the second quarter of 2025 was $92.3 million, an increase of 4% on a reported basis. The increase was primarily driven by higher demand in our business-to-business channels. Looking at second quarter revenue on a more detailed basis, domestic business-to-business revenue increased 19.3 percent to $25.4 million versus $21.3 million in the prior period, driven by increased demand. International business-to-business revenue increased 17.7 percent to $35.9 million compared to $30.5 million in the prior period, primarily driven by higher demand. Direct consumer sales decreased 21.1% to $17.8 million from $22.6 million in the prior period as we continue to operate with a smaller and more efficient team. We've taken meaningful steps over the last 12 to 24 months to reshape our DTC operations, focusing on efficiency and productivity to support our broader profitability goals. These changes helped drive nearly 19% sequential growth in our DTC channel, nearly double the 10% sequential improvement from the prior year. This improvement strengthens our belief that our current team operating with an updated structure is well positioned for the future. Rental revenue decreased 8.6% to $13.1 million from $14.3 million in the prior period. The decrease was primarily driven by a higher mix of lower private payer reimbursement rates. Now, I want to discuss gross margins. Total gross margin was 44.8% in the second quarter of 2025, decreasing 335 basis points from the same period in the prior year, primarily driven by increased business-to-business sales as a percentage of total revenue. On a sequential basis, gross margin increased 60 basis points driven by higher volumes. Our cost of goods sold in the quarter included premium price components, which resulted in a 121 basis points headwind to gross margin. We do not expect a material impact from these components going forward. Moving on to operating expense, in the second quarter of 2025, total operating expense decreased $47.5 million compared to $49.8 million in the prior period, representing a decrease of 4.7% primarily related to a one-time bad debt expense in the prior period. Due to the timing of planned expenses for advancement of clinical trials related to Simioxx commercialization, we expect operating expense to slightly increase in the second half as compared to the first half of the year, reflecting ongoing investments in product development and commercialization. In the second quarter of 2025, we reported a gap net loss of $4.2 million compared to a loss of $5.6 million in the prior period and loss per diluted share of 15 cents in the second quarter of 2025 versus a loss of 24 cents in the prior period. On an adjusted basis, we had a net loss of $700,000 in the second quarter of 2025 compared to a loss of $1.6 million in the prior period and an adjusted loss per diluted share of 2 cents in the second quarter of 2025 compared to a loss of 7 cents in the prior period. Adjusted EBITDA was $2.1 million in the second quarter of 2025, compared to $1.3 million in the prior period. Moving on to our balance sheet. As of June 30th, 2025, we had cash, cash equivalents, marketable securities, and restricted cash of $123.7 million with no debt outstanding. We were pleased to increase cash by $1.2 million in the quarter. We also generated $4.4 million in operating cash flow in the second quarter, a testament to the health of our business and a result of our focus on working capital optimization and expense management. On that note, I will now discuss our full year 2025 and third quarter financial outlook. We now expect full year 2025 reported revenue to be in the range of $354 million to $357 million, reflecting 6% growth at the midpoint relative to the full year 2024. For the full year 2025, we now expect to reach adjusted EBITDA breakeven. For the third quarter 2025, we expect reported revenue to be in the range of $91 million to $93 million, reflecting 4% growth at the midpoint relative to the third quarter of 2024. Given our current exemptions for certain medical devices, we continue to expect no material impact from tariffs on our gross margin and adjusted EBITDA. However, we will closely monitor developments and will share updates as appropriate. Our turnaround is progressing well with mid-single-digit top-line growth and disciplined execution. These results highlight the strength of our strategy and position us to drive sustainable performance and create long-term shareholder value. And with that, I will pass the call back to Kevin.

Thank you, Mike. We're proud of the progress made this quarter as we sharpened our focus on operational discipline, launched new products, and advanced our innovation efforts. The introduction of Oxy5 opens new doors in stationary oxygen therapy, and we continue to lay the groundwork for future growth through investments in digital health in our broader innovation pipeline. With a solid foundation in place, we're entering the second half of the year with confidence and a clear path forward. With that, operator, please open the call for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, It may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. And our first question comes from the line of Anderson Shock with BU Riley Securities. Please proceed with your question.

Hi. Thank you for taking the questions and congrats on a really strong quarter. So first, could you talk about the initial demand you've seen for Voxy 5? How should we think about the revenue contribution for this in the back half of the year? And what percent of new Voxy 5 users are also being prescribed one of your POCs alongside it?

Mike, I'll go ahead and start with that. Thanks, Anderson, and I appreciate the comment there, too. When we look at Voxy 5, so We just launched that, of course, as you'll hear recently, and we're excited with what we've seen so far from that. It's baked into our guidance for the rest of the year. We do see an opportunity for that to have an impact more in the fourth quarter than it would earlier, but that is baked into the guidance that we have already provided. I think it's one thing that's important to note when you ask about the market for that and what the contribution will be for the company going forward. When we look at the patients that have a portable oxygen concentrator versus a stationary concentrator, look at that population that has long-term oxygen. Nearly 100% of those, over 90% certainly, have an SOC. So that is nearly every patient that's on long-term oxygen therapy. Portable oxygen concentrators are used with about 23% of that population. So it is a significant increase in our addressable markets that FOXI 5 brings for us. So that is something as we look at going forward and we look at our path towards double-digit growth and sustainable profitability, that represents a significant uplift for us in the future.

Okay, got it. Thank you. That's helpful. And then do you have any updates on the reimbursement for SEMIOX and how should we think about this impacting the timing of a full commercial launch?

Yeah, so SEMIOX, we are working towards the reimbursements. We have We have a number of processes that are going forward to generate health economic data, the clinical data to make sure that we maximize that reimbursement. We are focused not just on reimbursement in the United States, but certainly across the globe. We have trials that are going internationally that would support our European as well as other international markets. We're tracking that. We are happy with the progress that we've been making, and we have not you're guided towards timing on that externally, but we are, we're happy with the progress that we've been making there. And I will say too, that that is, yeah, when we look at the semi-ox and what that represents for us in the future, we talk about expanding our pipeline and Inogen being a platform play. The SOC is the, as the first opportunity for us to really go beyond the portable oxygen concentrators, especially on a large scale, not the, not on a niche play. And when we look at airway clearance and what Semiox ultimately represents for us, again, that is a high-margin razor blade product that we're looking forward to, but at the appropriate time, we'll provide some additional guidance on timing.

Okay. Thank you for taking our questions and congrats again on the great quarter.

Thank you.

Thank you. And our next question comes from the line of Robbie Marcus with JP Morgan. Please proceed with your question.

Hey, this is actually Rohan on for Robbie. Thanks for taking the question. I just wanted to start with guidance. You raised the guide by the size of the beat and I was hoping you could provide some segment-level commentary just for the balance of the year and how you're thinking about the fundamentals.

Sure, Rohan. I'll take that. This is Mike. I think the best way maybe to explain guidance really talk a little bit about what our rationale was as we entered into this second half of the year. So if you look at second half growth is expected to be 7% of the midpoint of the guidance. And that would be with mid single digit revenue growth in Q3 and low double digit revenue growth in Q4. Historically Q2 and Q3 have been our strongest quarters with Q3 revenue roughly in line with Q2. And our outlook reiterates that trend. I think we've said before that in Q4, we expect to have lapsed the year-over-year Salesforce changes in our D2C business. So we expect to see performance stabilizing in the fourth quarter. We do continue to expect B2B growth. And as Kevin alluded to earlier, we talked about Divoxi as not being significant to our 2025 results. being more meaningful in 26 going forward. But we do expect some level of contribution from the Voxy launch, and that's what's driving that double-digit overall Q4 growth.

Got it. That's helpful. And then I have a follow-up just on adjusted EBITDA and profitability. You guided to break even for the year, and I also believe that I heard positive cash flow from operations in the quarter as well. So maybe if you could talk more about some of the the drivers behind profitability and your outlook, as well as some of the working capital adjustments. And when should we expect for the company to reach free cash flow break even? Thanks.

I'll take that one as well, Robin. I think the way probably to phrase this is our focus has been on profitability. We've been talking about that for quite some time now. Q2 marked the second quarter of positive adjusted EBIT as we continue to execute our strategy. Overall, we're really pleased with progress of profitability with positive adjusted EBITDA in the last two quarters. In fact, we've reported positive adjusted EBITDA in four of the five last quarters. I think it'd be, this is a good time to talk about profitability metrics. What do I mean by that? I'm talking about operating income, adjusted operating income, net income, adjusted net income, EBITDA, and adjusted EBITDA. when you look at these uh these metrics they're all favorable for every quarter over the past year and a half compared to their prior period uh the comparable prior period so i would just say we're really pleased with the execution you know over the past year and a half on that priorities continue to drive towards that path to profitability uh hopefully that answers that question in terms of of cash um yeah we're pleased to have uh generate 1.2 million in cash in the second quarter of the year we've also generated about four and a half million dollars of cash from operations and about half a million dollars of positive free cash flow. We really haven't guided to any future cash forecasting. However, we'll continue to look at our cash balance, our capital allocation, focus on the strategic needs of our business with a balance between maintaining an adequate cost structure and investing in the company where we see favorable returns on investment. With all that being said, as we said in the past, we're very comfortable with our current CAASPP position and our ability to fund all aspects of the business as needed. Thank you.

Thank you. And our final question comes from the line of Mike Mattson with Needham and Company. Please proceed with your question.

Yeah, thanks. So, another one on DOCSIS 5, just wondering, Can you comment at all on the pricing and gross margins of that product? I'm particularly interested in how it compares to the POCs. Is it substantially above or below POCs on either of those metrics? If you can give us more specifics, that would be helpful.

Yeah, I think, Mike, in terms of, you know, as you know, we don't guide in terms of revenue per channel even in getting into the expected margins. You know, our reporting has been basically in terms of gross margin has been based on looking at sales gross margin and rental gross margin. So we really, you know, rather not get into the expectation of what we look for in terms of gross margin for that product. It would be different when you look at some of our other products and you look at our different channels, right? So D2C, obviously, we look at what we sell, you know, a unit to one single patient versus what we sell hundreds of units, say, to a B2B customer. The price will be different based on that. And therefore, gross margin would also be, you know, different based on what channel. And we do look at the BOGSI 5 as the ability to really enhance all those channels.

Yeah, and the thing I'll just add on to that is that, you know, overall, we do see that as a key piece on our path to profitability. And when we look at this, as Mike was saying, we look at different segments and the BOXY-5 fits into each of our segments. It's an opportunity for us when we look at the rental channel, it will improve our profitability in the rental channel, as well as give our salespeople an opportunity to sell an Inogen package for patients rather than just the Inogen POC plus a different stationary concentrate for those patients. For the DTC, that's a higher margin sale, as Mike was talking about, even though we haven't quantified that. But we are happy with what we've seen as we've launched the Voxin 5, that we are selling those to patients for cash through our DTC channel. That's more sales per patient, more revenue, and it's an opportunity for us to continue to bolster that. And when we look at this from contributing to overall profit, So one thing to keep in mind that this is, it's the same patient, it's the same physician, same customer when we're looking at our B2B channel, it's the same sales rep. So we're able to leverage the existing organization as well as our brand name.

Yeah, okay, that all makes sense. And then I thought I heard something in the prepared remarks when you were talking about operating expenses. Correct me if this is wrong, but I thought I heard that there was a mention of a Semiox trial or something. Is that right? And I guess why are you running the trial? Is it to support the marketing of the product? Is it to support reimbursement of the product or clearance or something else or?

Yeah, thanks for asking for the clarification. We have trials that are running both outside the United States and inside the United States that are related to reimbursement. So developing the health economic data that is needed with the value dossier to support reimbursement. as well as the trials that are designed to boost acceptance and develop marketing claims. So there's different sides of that. We like the data that we've been seeing. We like the feedback that we've had. But the ones that I'm referring to specifically here in the United States are related to developing health economic data supporting reimbursement. Okay, got it.

And then... Just wondering where things stand with developing, or maybe enhancing is a better word, your kind of connectivity features on your products. It seems like, you know, there could be some synergies there now that you have the SOC and the POC where, you know, if they were both internet connected and using the same kind of software, you know, platform to track location, maintenance, et cetera, for the customers, DME customer as well as, you know, for the patient having their own sort of data in there, that that could kind of, you know, sort of tie those products together better and create a, you know, more stickiness between them where, you know, if you're buying one, you want to buy the other one.

You know, I couldn't have said it better myself. You're spot on with that. That is, you know, when we're looking at our connectivity and our digital health, We are creating an ecosystem, and part of that is to drive that brand preference, that loyalty, adding value back to, as you said, with our B2B customers to be able to monitor device health, to be able to interrogate devices, to be able to evaluate those in the field as they get calls back from patients to consider if they have a question on something, also to be able to provide easier ways for the patients to be able to access information, to be able to order supplies, and general value that we're able to add there. But that is something that when we look at not just the technology that we have today in the field, but looking at future ones to be able to wrap everything into that same ecosystem and time into our connected applications.

Got it. Thank you.

Thank you. And with that, there are no further questions at this time. I would like to turn the call back to Kevin Smith for closing remarks.

Thank you. And I'd like to take a minute here and reinforce some previous points. In our second quarter, it represented another strong step forward in executing our strategic priorities and delivering solid financial performance. With significant opportunities ahead, we remain confident in our ability to accelerate revenue, enhance profitability, cash flow, and drive long-term value for our shareholders. This quarter marks our sixth consecutive period of year-over-year, mid-single-digit, top-line growth, fueled by continued strength across both our domestic and international business-to-business channels. We also made meaningful strides in profitability, achieving our second consecutive quarter and fourth quarter out of the last five. of positive adjusted EBITDA while generating $1.2 million in cash. These are important milestones in our path to sustained profitability. The successful launch of VOXI5 expands our SOC portfolio and improves access to high-quality oxygen therapy for long-term care patients. We also advanced our digital health capabilities and made important progress towards the commercialization of Simeon. And as we look ahead to the second half of 2025, we remain focused on discipline, commercial, and operational execution. We're encouraged by the momentum across the business and excited about what's to come. And I'm proud of the team's commitments and excellent performance during the first half of the year. Looking ahead, I'm confident in our collective ability to meet our financial goals. Our ongoing efforts to drive revenue growth, enhance profitability, and expand our innovation pipelines position us well for continued progress in the second half of the year. But before we conclude, I want to take a moment and thank the incredible team at Inogen. Your dedication, resilience, and passion for improving the lives are what drives our success. Every milestone we've reached this quarter is a direct reflection of your hard work and commitment. Inogen is more than a company. It's a community of innovators, caregivers, and problem It's a place where people come to make a difference. And I'm proud to say it's a truly great place to work. So thank you for all that you do. We look forward to continuing this journey together.

Thank you. And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.