Inogen, Inc. INGN reported adjusted first-quarter earnings per share of 48 cents, beating the Zacks Consensus Estimate by a whopping 77.8%. Earnings also rose by the same margin from the year-ago figure of 27 cents.
Total revenues in the reported quarter came in at $79.1 million, beating the Zacks Consensus Estimate by 26.4%. Revenues surged 50.6% from the prior-year quarter.
Notably, 45,400 of total units were sold, reflecting an increase of 77.3% on a year-over-year basis.
Meanwhile, in the past six months, Inogen’s shares have rallied 43.4%, against the industry’s decline of 11.2%.
Inogen, Inc Price, Consensus and EPS Surprise
Inogen, Inc Price, Consensus and EPS Surprise | Inogen, Inc Quote
Segmental Analysis
Sales revenues came in at $73.6 million, up 60.1% year over year, while rental revenues totaled $5.5 million, down 16.3%.
Business-to-business domestic sales were $28 million, up 60.4% from a year ago. The upside can be attributed to the company’s private label partner and traditional home medical equipment providers.
International sales in the segment came in at $16.9 million, up 48% on a year-over-year basis, primarily on continued adoption by the company’s European partners and favorable currency rates.
Direct-to-consumer sales rose 67.8% year over year to $28.7 million. Per management, the upside can be attributed to increased sales representative headcount and associated consumer spending.
Margins
Gross profit in the reported quarter was $37.7 million, down 46.5% year over year. Total gross margin was 47.7% of net revenues, down 130 basis points (bps) year over year. The contraction in gross margin was primarily led by lower sales revenue per unit and rental gross margin, partially offset by reduced cost of sales revenue per unit.
In the quarter under review, operating expenses increased 43.9% to $29 million. Operating margin, as a percentage of revenues contracted by 170 bps. This was mainly impacted by an upside in research and development (R&D) expenses, which totaled $1.4 million in the quarter.
Adjusted EBITDA came in at $15.5 million, indicating year-over-year growth of 42.7%.
Financial Condition
Inogen exited the quarter with cash, cash equivalents, and marketable securities worth $188.3 million, compared with $173.9 million in the last report.
Guidance
Buoyed by the solid first-quarter results, Inogen raised the outlook for 2018. The revenue guidance range is $310-320 million, representing growth of 24.3-28.3% from 2017 results. Notably, the Zacks Consensus Estimate for full-year revenues of $303.3 million lies below this range. Direct-to-consumer is expected to be the fastest growing channel for the company.
Net income guidance for the full year is $38-$41 million, up from $36-$39 million, representing growth of 80.9-95.2% from 2017.
Inogen also raised the guidance for 2018 adjusted EBITDA to $62-$67 million from $60-$64 million, representing 22.0-31.8% growth from 2017 results.
The company further expects net positive cash flow for 2018 with no additional equity capital required to meet its current operating plan.
In Conclusion
Inogen exited the first quarter of 2018 on a solid note, beating the consensus mark for both the counts. Strong sales in the United States and Europe raise optimism. A raised guidance for 2018 also paints a bright picture. On the flip side, declining margins owing to surging R&D expenses raise concern. The decline in rental revenues adds to the woes. Additionally, management expects rental revenues to decline around 10% in 2018 from 2017.
Zacks Rank & Key Picks
Inogen carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical sector which reported solid results this season are Intuitive Surgical ISRG, Chemed Corporation CHE and Baxter International Inc. BAX. While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical reported first-quarter 2018 adjusted earnings per share of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the consensus estimate by 10.6%.
Chemed posted first-quarter 2018 adjusted earnings per share of $2.72, surpassing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.
Baxter posted first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9%. Revenues of $2.68 billion also edged past the Zacks Consensus Estimate of $2.62 billion.
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