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Inogen (INGN) Beats Earnings and Revenue Estimates in Q2

Goleta, CA-based Inogen, Inc. INGN reported second-quarter 2017 earnings of 38 cents per share, up 5.6% year over year, which comfortably beat the Zacks Consensus Estimate of 28 cents and the year-ago figure of 36 cents.

The upside was driven by roughly 17.5% growth in revenues, which totaled $64.1 million, beating the Zacks Consensus Estimate of almost $60 million.

Q2 Details

Sales revenues surged 27.3% to $58 million, while rental revenues declined 32.3% to $6.1 million.

Business-to-business: Business-to-business domestic sales were up 32.2% on a year-over-year basis to almost $21.2 million, primarily driven by traditional home medical equipment provider purchases and the consistent strength of the private label partner.

Inogen, Inc Price, Consensus and EPS Surprise

Meanwhile, business-to-business International sales rose around 13.9% to almost $14.9 million on the back of solid demand from the company’s partner’s in Europe.

Direct-to-consumer: Direct-to-consumer domestic sales advanced 33.3% to almost $21.9 million.

However, direct-to-consumer rental sales fell 32.3% to $6.1 million. This decline can be attributed to decreased rental reimbursement rates and the company’s increased strategic focus on sales.

Margin Details

In the reported quarter, Inogen registered a gross margin of 49.2% (as a percentage of revenues), up 120 basis points (bps) on a year-over-year basis.

Meanwhile, sales gross margin expanded 240 bps in the quarter to 51.8%, as a percentage of revenues. Per management, an increase in sales gross margin was driven by lower material costs resulting in decreased cost of goods sold in the quarter.

Rental gross margin was 25.0% in the reported quarter, much lower than 41.0% in the second quarter of 2016. This was primarily driven by lower net revenue per rental patient led by fallen reimbursement rate. However, this decline in rental gross margin was partially offset by decreased cost of rental revenue particularly led by lower depreciation...