It has been about a month since the last earnings report for Inogen (INGN). Shares have lost about 7.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Inogen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Inogen (INGN) Q3 Earnings Beat, 2018 Revenue Guidance Up
Inogen posted third-quarter 2018 earnings per share of 73 cents, which surpassed the Zacks Consensus Estimate by 40.4%. The bottom line also improved a whopping 121.1% from the figure registered in the year-ago quarter.
Revenues totaled $95.3 million, which trumped the Zacks Consensus Estimate of $91 million. On a year-over-year basis, the top line climbed 38%.
Sales revenues totaled $89.7 million, up 42.1% on a year-over-year basis.
Business-to-business revenues in the United States amounted to $30.3 million, up 32% on a year-over-year basis. The uptick was primarily driven by increased sales representative headcount and additional consumer advertising.
Internationally, this segment recorded revenues of $21.1 million, up 23% year over year, courtesy of continued adoption from the company's European partners.
Direct-to-consumer revenues in the United States grossed $38.3 million in the third quarter. This reflects an increase of 66.3% from the prior-year quarter. The upside can be attributed to continued adoption by traditional home medical equipment providers and internet resellers.
Rental revenues totaled $5.6 million, down 5.3% on a year-over-year basis. Per management, the downturn was primarily due to a decline in net rental patients.
In the quarter under review, gross profit was $48.8 million, up 47.2% year over year. Gross margin came in at 51.2%, which expanded 310 basis points (bps).
Adjusted operating profit was $10.4 million, up 24.8% year over year. Adjusted operating margin came in at 10.9%, down 120 bps from the prior-year quarter.
Adjusted EBITDA was $16.3 million, up 16.2% on a year-over-year basis.
Inogen raised its 2018 revenue guidance. The company expects revenues to be within $345-$355 million, up from the previously guided $340-$350 million. Notably, this reflects a year-over-year growth of 38.3-42.3%. The Zacks Consensus Estimate is pegged at $347.9 million, within the guided range.
However, Inogen expects its rental revenues to decline by 10% on a year-over-year basis in 2018.
The company envisions adjusted net income between $46 million and $48 million compared with $45 million and $48 million projected earlier. This represents a year-over-year growth of 119-128.5%.
Furthermore, 2018 EBITDA is expected to be within $60-$62 million, down from the earlier issued guidance of $65-$69 million, representing a year-over-year growth of 18-22%.
Inogen provided an outlook for 2019 as well. Revenues are expected between $430 million and $440 million, representing 22.9-25.7% growth over 2018. The Zacks Consensus Estimate stands at $432.7 million, within the guided range.
Full-year adjusted EBITDA is projected between $67 million and $71 million, representing 9.8-16.4% growth over 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -36.4% due to these changes.
Currently, Inogen has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Inogen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.