Inogen, Inc. (NASDAQ:INGN) Q3 2023 Earnings Call Transcript

So I’m going to answer it that way. I think maybe the way I would provide the right context on that is as we raise the bar in terms of performance and productivity, you’re bound to get a normal attrition rate in the sales force as you continue to drive for a higher performance level in the organization. Sometimes that attrition rate is a little bit more or less than you expect. But we continue to work through it by making sure that we’ll not only elevate the performance bar, but we have hiring classes that are ongoing to make sure that we replace in kind with people that can come in, are being set up on the right training, the right tools and the right oversight in terms of sales management and discipline, and continue to work our way to what we believe will become an optimal size of the sales force in 2024 when we stabilize that organization and drive productivity at the same time.

Your third question was about B2B pressures. I think this is an — ongoing. It’s becoming a little bit more moderated, but it definitely exists, it’s a day-to-day monitoring of not only the competitive pricing activity in the field, but also in terms of back to the overhangs from a B2B. Some people are engaging and providing financing or longer terms in terms of credit, et cetera, et cetera. We had indicated before, and we’re still doing it now that we work on promotional levers as required. We are not although racing to the bottom of the pricing in the category, that’s not healthy for anybody. So we are very selective in terms of the types of customers we’re engaging with, and we’ve characterized them before as more POC-oriented, and the focus on the modality that we believe is the best for patients and the conversion rates.

But there is definitely a day-to-day management of that channel in terms of making sure that we don’t attrition any more share but on the contrary, regain some of the share as we mentioned in our prepared remarks.

Operator: And the next question comes from the line of Mike Matson with Needham & Company.

Mike Matson: Yes. Just had one on the rental business. The growth, I think it was around 8% or 9% or something year-over-year. I know you’ve invested pretty heavily in that prescriber sales force. So just wanted to get an update there in terms of the impact that’s having. And I guess I’m a little surprised it’s not seeing higher growth given that I think it was like 60 prescriber reps out there or something, I don’t — correct me if that’s wrong, but…

Nabil Shabshab: So Mike, thanks for the question. So we have about 60 sales reps in the rental channel, if that’s the question specifically. We’re continuing to see productivity in terms of both the referrals per sales rep as well as the referrals per prescriber. And we’re continuing to work through optimizing not only the size of the territories, but the frequency of core for us to continue to drive that productivity upward. We now have come to the conclusion that frequency also matters a lot for us. So we’re in the process of refining that to get back into the higher growth rates. With that said, we’re happy with the progress we made in terms of the new patients that we put on service as well as the progress that we’re making in terms of the prescriber prescriptions per office.

Mike Matson: Okay. And then the EBITDA guidance reduction, what drove that? I guess, what happened that was kind of different from what you were expecting when we gave the $20 million to $25 million loss versus the $27 million you’re guiding to now?

Mike Sergesketter: The — this is Mike. The original guidance was, I believe, based on Inogen stand-alone. And so now we’ve introduced Physio-Assist into Q4 and given the size of the revenue and the great products and so forth, that we’re going to have to do some investing to get that product lined up and off the ground. So that’s what you’re seeing kind of reflected in there is the impact of that on our Q4 revenues.