Credit: Shutterstock photoInogen Inc. INGN reported fourth-quarter 2015 adjusted earnings (excluding tax benefit) of 14 cents per share, which steered past the Zacks Consensus Estimate by 7 cents and more-than-doubled on a year-over-year basis, thanks to its outstanding top-line performance.
Inogen Inc. (INGN) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany
Revenues jumped 38.9% year over year to $40.4 million, breezing past the Zacks Consensus Estimate of $35 million. The upside can mainly be attributed to better-than-expected growth in Inogen's domestic and international business-to-business sales. Rising patient demand along with brand alertness of the company's direct-to-consumer channel also paved the way to higher revenues.
Inogen reported revenues of $159 million, which surged 41.3% year over year in full-year 2015. Adjusted earnings were 48 cents as compared with 33 cents reported in full-year 2014.
Following the stellar fourth-quarter results, shares of Inogen surged 12.3% to $39.70 in after-hours trading.
Segment Details
Sales surged 57.7% to $28.9 million, while rental revenues increased 6.8% to $11.5 million.
Business-to-business domestic sales were up 81.5% on a year-over-year basis to $8.9 million. The remarkable improvement can be attributed to rising patient awareness about the benefits of Inogen's portable oxygen concentrators.
Business-to-business International sales shot up 21.2% to $8.5 million, on the back of strong performance in Europe (89% of international sales).
Direct-to-consumer domestic sales soared 79.5% to $11.6 million. Meanwhile, direct-to-consumer rental sales climbed 6.8% to $11.5 million.
Unit sales in the quarter surged 62.9% on a year-over-year basis to 14,500. Rental patient population increased 15.5% to 32,800.
Margin Details
Gross margin expanded 210 basis points (bps) on a year-over-year basis to 49.5% in the fourth quarter of 2015. The upside can be largely attributed to favorable sales mix toward higher margin direct-to-consumer sales, which accounted for 40% of total sales in the reported quarter versus 35.2% in the year-ago quarter. Moreover, lower material, labor and freight costs drove the gross margin.
Favorable sales mix and lower costs helped Inogen fully offset a decline in business-to-business average selling price (ASP). The lower ASP resulted from a reduction in international ASP's due to currency headwinds, additional discounts provided to raise sales volumes and an increasing proportion of private label sales.
Adjusted EBITDA soared 63.8% from the year-ago quarter to $8.1 million.
Operating expenses, as a percentage of revenues, decreased 160 bps on a year-over-year basis to 41% in the reported quarter. As a percentage of revenues, research & development (R&D) expenses surged 70 bps, which was however, fully offset by lower sales & marketing (S&M) and general & administrative (G&A) expenses that declined 50 bps and 190 bps, respectively.
The increase in R&D expenses was primarily due to higher personnel and product development expenses attributed to the upgraded Inogen One G3 and upcoming Inogen One G4.
As a result of lower operating expenses, operating margin expanded 370 bps on a year-over-year basis to 8.6%.
Product Update
Inogen noted that Inogen One G4 is on track for launch by the second quarter of 2016. The product is expected to be smaller, lighter and less expensive to develop than Inogen One G2 and G3 products. The company also does not expect that it will require a new 510-K clearance for the product.
Guidance
Inogen updated its outlook for full-year 2016. The company now projects revenues in the range of $187-$191 million, reflecting year-over-year growth of 17.6%-20.1%, up from previous guidance of $177-$183 million.
Inogen continues to expect total revenue headwind from Medicare competitive bidding national rollout of 2.5%-3.5% in 2016. Management expects direct-to-consumer sales to be Inogen's fastest growing channel in 2016.
Adjusted EBITDA is expected to be $37 million to $39 million, representing an increase of 14.6% to 20.7% over 2015. This is better than the previous guidance of $35 million to $37 million.
Adjusted net income is expected to be around $12-$14 million, representing 19.8% to 39.8% growth over 2015. Inogen expects net positive cash flow for 2016.
Zacks Rank
Inogen carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector include Abiomed ABMD , CryoLife CRY and Luminex LMNX . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
