Inogen (INGN) Beats Earnings and Revenue Estimates in Q1
Goleta, CA-based Inogen Inc. INGN reported first-quarter 2017 earnings of 27 cents per share, which comfortably beat the Zacks Consensus Estimate and the year-ago figure of 12 cents.
The upside was driven by roughly 22.1% growth in revenues, which totaled $52.5 million, beating the Zacks Consensus Estimate of almost $49.6 million.
Segment Details
Sales revenues surged 40.1% to $46 million, while rental revenues plunged 35.8% to $6.5 million.
Business-to-business: Business-to-business domestic sales were up 84.2% on a year-over-year basis to almost $17.4 million, primarily driven by traditional home medical equipment provider purchases and the consistent strength of the private label partner.
Meanwhile, business-to-business International sales rose around 14.6% to almost $11.4 million on the back of solid demand.
Inogen, Inc Price, Consensus and EPS Surprise
Inogen, Inc Price, Consensus and EPS Surprise | Inogen, Inc Quote
Direct-to-consumer: Direct-to-consumer domestic sales advanced 27.8% to almost $17 million.
However, direct-to-consumer rental sales fell 35.8% to $6.5 million.
Margin Details
In the reported quarter, Inogen registered a gross margin of 49% (as a percentage of revenues), down 50 basis points (bps) on a year-over-year basis.
Meanwhile, sales gross margin expanded 260 bps in the quarter to 52.3%, as a percentage of revenues. Per management, an increase in sales gross margin was driven by lower cost of goods sold in the quarter.
Rental gross margin was 25.9% in the reported quarter, much lower than 48.9% in the first quarter of 2016. This was primarily driven by lower net revenue per rental patient.
Adjusted EBITDA rose 34% to $10.9 million on a year-over-year basis.
Guidance
Inogen reiterated its 2017 revenue and adjusted EBITDA guidance. However, the company raised its full-year adjusted net income guidance.
Inogen projects revenues in the range of $233–$239 million, higher than the previous range of $230–$236 million. This represents year-over-year growth of 14.9%–17.8%. The company expects rental revenue to decline in 2017, courtesy of lower average rental revenue per patient.
Adjusted EBITDA is projected in the band of $46–$50 million, representing an increase of 6%–15.2% year over year.
Inogen expects adjusted net income in the range of $22 million to $24 million, up from the previously provided range of $21–$23 million. This represents 7.2%–17% year-over-year growth.
Our Take
Inogen reported a stellar first quarter of 2017, beating the Zacks Consensus Estimate for both the counts. The company witnessed solid growth in revenues and adjusted earnings on a year-over-year basis. In our view, solid domestic and international business-to-business sales has driven the stellar quarterly performance. In fact, the company expects direct-to-consumer sales to be its fastest growing channel, followed by domestic business-to-business sales in the coming quarters, with solid focus in Europe.
However, falling rental revenues raise concern, which might mar the company’s prospects going ahead.
Key Picks
Inogen has a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader medical sector include Neovasc Inc. NVCN, Hologic, Inc. HOLX and Sunshine Heart Inc SSH. Notably, Neocasc sports a Zacks Rank #1(Strong Buy), while Hologic and Sunshine Heart carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Neovasc has a solid return of 24.3% for the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 33.4%.
Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.
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