Inogen (INGN) Inks Buyout Agreement to Expand Product Portfolio
Inogen, Inc. INGN recently announced its entry into a definitive agreement to acquire a privately-held France-headquartered company, Physio-Assist SAS. The buyout is aimed at diversifying Inogen’s Respiratory Product portfolio and expanding market opportunities in the rest of the world and potentially in the United States.
The transaction, which has been approved by the Board of Directors of Inogen and Physio-Assist, is subject to the satisfaction of customary closing conditions. The transaction is expected to close in the fourth quarter of 2023.
The latest acquisition is expected to provide a significant boost to Inogen’s portfolio, thereby solidifying its foothold in the niche space.
Rationale Behind the Acquisition
Physio-Assist’s Simeox, a technology-enabled airway clearance device, is currently used outside of the United States to treat a lung condition known as bronchiectasis. In this condition, the lung’s bronchi become damaged and widened and is often present in cystic fibrosis and chronic obstructive pulmonary disease (COPD). Simeox has been cleared under the CE mark in the European Union and is currently being sold in Europe, Asia and the Middle East.
Inogen’s management believes that the buyout aligns with its strategy to diversify its portfolio to improve patient lives via respiratory care on a global basis. Management also added that Simeox should expand Inogen’s product offering in Europe, the Middle East, and Africa to serve COPD and other chronic disease patients suffering from bronchiectasis with an innovative, non-invasive and next-generation airway clearance solution. A potential approval by the FDA for Simeox going forward will also bring the innovative technology to the United States. The buyout will likely expand Inogen’s addressable market opportunity, boost its long-term growth and profitability and generate an attractive return on investment.
Per Physio-Assist’s management, the buyout will likely enable to scale the Simeox differentiated product offerings worldwide to address bronchiectasis and cystic fibrosis patients with unmet needs.
Financial Details
In 2023, the acquisition is expected to be immaterial to Inogen’s revenues but immediately accretive to gross margin. Given the clinical and commercial investment required to obtain the FDA’s clearance and launch Simeox in the United States, the transaction is expected to be accretive to adjusted earnings beginning in 2027.
Preliminary Results
In the same press release, Inogen also announced preliminary revenues for the second quarter of 2023.
Per the preliminary report, second-quarter 2023 revenues are estimated to be within $83 million to $84 million.
Industry Prospects
Per a report by Data Bridge Market Research, the global respiratory care devices market was valued at $18.40 billion in 2021 and is anticipated to reach $36.66 billion by 2029 at a CAGR of 9%. Factors like the increased incidence of respiratory disorders, high prevalence of cigarette smoking and rising levels of pollution are likely to drive the market.
Given the market potential, the acquisition seems to have been timed well.
Notable Development
In May, Inogen announced its first-quarter 2023 results, wherein it registered a robust year-over-year uptick in rental revenues and domestic business-to-business sales. Management had also confirmed that Inogen had increased the total covered lives to approximately 160 million, with the recent additions of two large private healthcare payers supporting its prescriber channel and overall rental strategy.
Price Performance
Shares of the company have lost 67.7% in the past year against the industry’s 18.3% rise and the S&P 500’s 17.8% growth.
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Zacks Rank & Key Picks
Currently, Inogen carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Becton, Dickinson and Company BDX, popularly known as BD, HealthEquity, Inc. HQY and Boston Scientific Corporation BSX.
BD, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.1%. BDX’s earnings surpassed estimates in all the trailing four quarters, with an average of 5.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BD has gained 10.7% compared with the industry’s 22.1% rise over the past year.
HealthEquity, flaunting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 6.5% against the industry’s 12.9% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.7% against the industry’s 19.9% decline over the past year.
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