Inogen, Inc. (NASDAQ:INGN) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 04:30 pm ET

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Inogen, Inc. (NASDAQ:INGN) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Scott Wilkinson

portable oxygen concentrators or POCs to travel and be active outside of the home.

In addition, physician offices in the U.S. and assessment centers in Europe, have limited patient interactions that traditionally have led to new oxygen patient referrals. Furthermore, HME providers turned their purchasing focus to stationary oxygen concentrators to treat COVID-19 patients while also minimizing patient interactions in response to the COVID-19 PHE, which includes replacing existing patient set ups with POCs. These factors have made for a challenging second quarter for our business. However we saw increased patient interest in our product sequentially in May and June. In addition, we are pleased with the positive early indicators we are seeing from our greater focus on the rental channel and its contribution to our growth and margins.

Before discussing our financial results, I wanted to quickly give an update on the CARES Act impact on our business and competitive bidding around 2021. As we noted on our last earnings call, the CARES Act stimulus bill increased medicare reimbursement rates modestly, which is reflected in our second quarter results. In addition, the CARES Act established to provide a relief fund for Medicare providers and suppliers to prevent, prepare for and respond to the COVID-19 PHE. As a Medicare supplier, we received $6.2 million dollars in funds in the second quarter of 2020, which Ali will cover in more detail when she reviews the financial results. CMS has not announced a delay in competitive bidding around 2021 for oxygen and has previously said competitive bidding pricing will be announced in the summer of 2020, with contracts going into effect on January 1, 2021.

With that, I will now provide details around our second quarter 2020 revenue by channel. We generated total revenue of $71.7 million, reflecting the decline of 29.1% compared to $101.1 million for the second quarter of 2019. Domestic business-to-business sales in the second quarter of 2020 decreased 27.3% to $21.6 million compared to $29.7 million in the second quarter of 2019. The decrease was primarily driven by reduced demand from our HME providers and resellers for POCs. We believe this decreased demand was due to physician offices limiting patient interactions that traditionally have led to new oxygen patient referrals, lower retail sales, HME providers minimizing replacement of existing oxygen patients setups with POCs to limit patient interactions and response to the COVID-19 PHE and providers focusing on supplying stationary oxygen concentrators with higher flow characteristics to treat COVID-19 patients. We believe competitive bidding around 2021 also impacted HME provider purchases as they waited to see the rates and winners of this three-year contracts.

Domestic business-to-business accessory sales were also down significantly in the second quarter of 2020, compared to the same period in prior year, when we typically experienced higher sales due to increased patient travel. International business-to-business sales in the second quarter of 2020 decreased by 38.5% on an as reported basis and 37.4% on a constant currency basis to $13.9 million compared to $22.6 million