Inogen Inc. INGN recently announced the availability of an advanced Inogen One G3 portable oxygen container (POC). The new device has been expanded to five flow settings and can produce 25% more oxygen in comparison to its predecessors, without any weight addition. The device also features a sound level of 39 decibels as compared to 42 decibel of the previous device.
The advanced Inogen One G3 device will be initially available to the company’s domestic direct-to-consumer channel followed by a phased global rollout. The domestic direct-to-consumer channel has been one of the fastest growing revenue sources for the company in recent quarters. In the third quarter of 2015, the channel sales soared 63.7% to $11.6 million.
The advanced Inogen One G3 is an important addition to the company’s product portfolio. The company expects to further expand its portfolio with the launch of Inogen One G4. Inogen recently noted that the final design of Inogen One G4 is on track for completion by the end of 2015. The company plans to launch the product by the second quarter of 2016.
Inogen One G4 is expected to be smaller, lighter and less expensive to develop than Inogen One G2 and G3 products, thereby driving gross margin expansion. The company also does not expect that it will require a new 510-K clearance for the product.
We believe Inogen’s unique direct-to-customer business model, innovative product portfolio and growing patient base will likely drive significant top-line growth in the long run. Expansion of the company’s direct-to-consumer network and an increase in the business-to-business distribution, both domestic and international, will also open up multiple avenues.
However, foreign exchange volatility, pricing pressure and unfavorable product mix are significant headwinds.
Zacks Rank & Key Picks
Inogen carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the medical sector include Masimo Corp MASI, Natus Medical BABY and Steris STE. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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