Inogen, Inc. INGN has been gaining from its unique direct-to-customer business model. A solid performance in the first quarter of 2021 and a strong product portfolio also buoy optimism. However, continued pandemic-led adverse results and escalating expenses are major downsides.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 73.9% compared with the 13.6% growth of the industry and 44.7% rise of the S&P 500.
The renowned provider of portable oxygen concentrators (POCs) has a market capitalization of $1.46 billion. The company projects 32.6% growth for 2022 and expects to witness continued improvements in its business. Inogen surpassed the Zacks Consensus Estimates in three of the trailing four quarters and missed the same in one, the average surprise being 14.29%.
Let’s delve deeper.
Strong Q1 Results: Inogen’s better-than-expected results in first-quarter 2021 buoy optimism. The company saw growth in revenues within its Rental segment and domestic business-to-business segment during the period. Significant gross margin expansion is another plus. Sequential growth in total revenues is encouraging as well. A solid product portfolio also acts as a catalyst.
Unique Direct-to-Customer Business Model: We are upbeat about the sequential improvement in Inogen’s direct-to-consumer sales revenues in the first quarter of 2021. This uptick was primarily on the back of higher demand for POCs. Also, higher vaccination rates within Inogen’s patient population and the relaxation of COVID-19 PHE-related closure orders leading to increased ambulation, additional stimulus payments and improved consumer confidence, drove the product sales.
Strong Product Portfolio: We are optimistic about Inogen’s expanding product portfolio. The company provides oxygen concentrator solutions for portable and stationary use. Inogen’s flagship product, One G4, is a single-solution POC. Notable products offered by the company include Inogen One G5 in the domestic business-to-business arm and Inogen One G3 POC. Inogen has officially launched the Inogen One G5 in its direct-to-consumer channel as well. Inogen At Home is aptly formulated for patients who need oxygen therapy while asleep.
Inogen has also received confirmation that the Inogen One G5 POC was cleared for reimbursement in France and Germany. Management also confirmed Inogen’s plan of incorporating the Tidal Assist Ventilator directly into the Inogen One Portable Oxygen Concentrators and making the SideKick TAV product compatible with the Inogen At-Home Stationary Concentrator.
However, downsides might result from Inogen’s rising expenses. The company registered a steep rise in both its research and development, and general and administrative expenses in the reported quarter, resulting in operating loss. Although the operating loss was narrower in the reported quarter than the operating loss in the year-ago quarter, continued loss is a matter of concern. Further, rising expenses lead to a significant pressure on the company’s margins, raising apprehensions.
Inogen has been putting up a dismal overall performance over the past few months, primarily due to the pandemic-led challenges. In first-quarter 2021, Inogen witnessed a drop in total revenues as well as softness in segmental revenues. International business-to-business sales also fell significantly, mainly due to the continued pandemic-led impacts with intermittent lockdowns in many European countries, along with reduced operational capacity of certain European respiratory assessment centers.
Inogen has been witnessing an upward estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its loss per share has narrowed from a loss of 63 cents per share to a loss of 43 cents per share.
The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $88.2 million, suggesting a 22.9% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are The Cooper Companies, Inc. COO, DaVita Inc. DVA and Amedisys, Inc. AMED, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Cooper Companies’ long-term earnings growth rate is estimated at 11%.
DaVita’s long-term earnings growth rate is estimated at 14.4%.
Amedisys’ long-term earnings growth rate is estimated at 12%.
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