Margaret Kaczor: Okay. And then as we think about the hospital channel, which is maybe a newer comment in your intro my understanding in the past is a hospital wasn’t really something quite as focused on by the company because the flow rates maybe weren’t aligned with what the hospital needs. So walk me through that hospital strategy, how big is that as an end market for you guys? And how aggressively are you going to be pursuing that?
Kevin Smith:
–: So in those patients, of course, have follow-up by prescribers. So that leads to another connected relationship back to the prescriber. We see this as an opportunity for us to continue to explore. We’ve been engaging in that. We like what we’re seeing so far. Its early stages to see how well we roll this out further, but it looks promising at this point for us.
Margaret Kaczor: Okay. And just last question for me. As we think about COGS, and I appreciate not wanting to go too far into gross margins, but we can back into the COGS per unit number. And it seems like it actually did quite well. So you’ve talked historically about getting the high COGS consumables off the books that directionally points to continued gross margin improvement from here, but maybe you can provide some color around that and kind of any long-term profitability comments that may have changed from the last quarter. Thank you.
Mike Bourque: Thank you, Margaret. So just in terms of the improvement in COGS. The improvement in COGS and related gross margin really was largely driven by continued depletion the premiums, price components that we have been incurring in the previous year. In terms of kind of where we’re looking at going forward with that, we still do have some premium costs on our balance sheet. And we will be seeing some of that. We kind of like make its way for the P&L over the course of the remainder of the year. But certainly, to no degree that we’ve seen in 2022 and 2023, sort to a much lower level, but we still have a little bit to get through.
Margaret Kaczor: Thank you guys.
Operator: Thank you. Our next question comes from the line of Mike Matson with Needham & Company. Please proceed with your question. Mike, you might still have yourself unmute.
Mike Matson: Yes, sorry about that. The DTC sales team, did the head count change at all there? And what kind of drove the decline in sales in that business?
Kevin Smith:
— :
Mike Matson: Yes, the sales people, the inside sales people.
Kevin Smith:
–: We have initiatives that are running through that we’ve talked about with reducing the friction and enabling any patient who reaches into the DTC channel and to Inogen to help them all get an Inogen POC, whether that be for a cash sale or whether that be somebody who’s covered by a rental plan being able to leverage that sales organization and the contact point to allow that to happen. We’ve been seeing positive results coming from that. That still is in pilot phases right now, but we like what has been trending, and we’re very comfortable and happy with the size of that organization. We’re going to continue to focus on growing across the go forward.
— : We have initiatives that are running through that we’ve talked about with reducing the friction and enabling any patient who reaches into the DTC channel and to Inogen to help them all get an Inogen POC, whether that be for a cash sale or whether that be somebody who’s covered by a rental plan being able to leverage that sales organization and the contact point to allow that to happen. We’ve been seeing positive results coming from that. That still is in pilot phases right now, but we like what has been trending, and we’re very comfortable and happy with the size of that organization. We’re going to continue to focus on growing across the go forward.
Mike Matson:
–:
Kevin Smith:
–:
Mike Matson:
–:
Kevin Smith: So we feel that is, it was a couple of points in the other thing to raise or to talk to. One, the characterization of that business potentially being part of an exit from there with a competitor. We’re not seeing that, that has been a meaningful contributor to the growth that we’re seeing there or the business that we have coming out of this past quarter. We’ve seen very limited impact from that. We are going to continue to monitor and position ourselves to take advantage but we are positioning ourselves strongly against low-price competitors in the marketplace. We see price pressure that is coming in, but we have a POC with an eight year useful life on it, which is three years longer than the next closest competitor.
And those are meaningful the years that an HME that B2B partner could continue to deploy a POC and built for. We have a very strong brand name recognition. We know from our experiences working with our B2B partners, working with prescriber channels and also having patients reach into us through our DTC channel that more often than not, patients are asking for an Inogen rather than asking for a POC. So that brand name recognition that weight to the quality of Inogen is all gives us a distinct advantage. And right now, we feel like we are sitting alone at the top of the premium player in the marketplace. So we’re going to continue to have to fight off price pressing, but we feel we have a good message to sell.
Mike Matson: Okay. Got it. Thank you.
Operator: Thank you. There are no further questions at this time. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
