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Welcome to Inogen's first quarter 2026 earnings Conference Call. I would now like to turn the call over to Lorna Williams, SVP of Investor Relations and Strategic Planning.

Thank you all for participating in today's call. Joining me are President and CEO, Kevin Smith, and CFO, Jason Richardson. Earlier today, Inogen released financial results for the first quarter of 2026. The earnings release is available in the investor relations section of the company's website at investor.inogen.com, along with a supplemental financial package. During today's call, we will discuss non-GAAP financial measures that we believe provide useful supplemental information for investors. This information is not intended to be considered in isolation or as a substitute for GAAP financial information. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental financial package, each of which is available in the investor relations section of our website. In addition, our discussion today will include forward-looking statements, including, but not limited to, expectations about our future financial and operating performance.

We make these statements based on current expectations and reasonable assumptions. Our actual results could differ due to risks and uncertainties. Please review our annual report and other SEC filings for discussion of risk factors that could cause our actual results to differ materially from any forward-looking statements made today. Forward-looking statements made on today's call speak only as of today. Inogen undertakes no obligation to update or revise these statements except as required by law. With that, I will turn the call over to Inogen's President and CEO, Kevin Smith.

Good afternoon, and thank you for joining our first quarter 2026 Conference Call. I wanna begin by welcoming several new leaders to the Inogen team. These team additions reflect the ambition we have for the next chapter. Jason Richardson joined us as Chief Financial Officer this quarter. Jason has over 25 years of experience, mostly in large, complex global medical device companies with significant leadership experience across finance and a track record of delivering results. He brings the operational depth that we need, has experience scaling MedTech franchises, and has respiratory industry experience, all directly relevant to what we are building. I'll let him speak to the quarter shortly. We also appointed Dominic Hulton as Chief Marketing Officer, reporting directly to me.

As we operate across oxygen therapy, sleep, and airway clearance, the work of building a coherent brand and a disciplined go-to-market approach across multiple disease states and channels has grown considerably in scope. Dom brings the commercial experience and strategic instincts that this moment calls for. We announced the appointment of Vafa Jamali to our board of directors, which will become effective on 5th June 2026. Vafa's background spans revenue growth, commercial strategy, and capital allocation. These perspectives will be valuable as we work to translate our portfolio expansion into durable financial performance. In connection with our upcoming annual meeting, the Board is asking for shareholder approval to declassify its members, starting the process with the annual meeting in 2027. This is an important step to align our governance with the long-term interests of our shareholders. Turning to Q1 results.

Q1 came in at $85.1 million in total revenue, representing 3.4% year-over-year growth, ahead of our expectations. When we set guidance, we were transparent about what was shaping the quarter. Continued strength in international, along with channel mix pressure as the U.S. market continues its structural conversion towards POCs. Those dynamics played out largely as anticipated, with unit volumes growing 14% year-over-year, and our international business delivered double-digit performance. Taken together, the quarter reflects a business performing in line with our expectations and underlying fundamentals that remain healthy. U.S. sales were $34.7 million in the quarter. Today, we estimate roughly 60% of new long-term oxygen therapy patients start on a POC, up from under 40% just a few years ago. That shift benefits our B2B sales channel meaningfully, and we see it in our volume.

It does, however, create a headwind in our direct-to-consumer and rental channel, where patients historically came to us seeking an alternative to the oxygen tank their HME had provided. We are managing this transition with discipline. Our direct sales rep efficiency continues to improve. Demand for Inogen products is strong. We're investing deliberately to educate both patients and providers on the economic and clinical benefits of Inogen technology. Our Rove 4 and Rove 6 POCs carry an eight year useful life versus the five year useful life of other POCs on the market, best-in-class serviceability and a growing body of outcomes data. That performance supports our premium positioning against pricing pressures. International sales were the clear standout in Q1. Revenue of $37.7 million represented 18% year-over-year growth. This result speaks to the quality of our commercial execution and the breadth of the opportunity ahead.

Our teams have deepened relationships with key HME partners, secured important international tenders, and continued expanding into new geographies, including Eastern Europe, Latin America, and the Asia Pacific region. The global COPD market is large, under-penetrated, and shifting steadily toward home-based care. We are well positioned, and Q1 international performance is evidence of this. If the financial results reflect where we have been, the pipeline is where I want to spend most of my time because it tells you where we are going. When I joined Inogen, we were a portable oxygen concentrator company with a $400 million addressable market. Today, we operate across oxygen therapy, sleep therapy, airway clearance, and digital health with an estimated combined total addressable market of over $3.4 billion. That expansion is a result of a deliberate strategy.

Identify adjacencies with patient overlap, enter with clinical evidence, and leverage the commercial infrastructure and brand trust that we have built. Each new category we have entered follows that same logic. Let me walk through the major milestones from this quarter. We launched the Aurora CPAP mask family in the U.S. this quarter, and the early read is highly encouraging. I want to be clear about why we entered this market and why we believe we can win. First, roughly 20%-30% of our COPD patients have obstructive sleep apnea. These patients are managed by the same pulmonologists and respiratory therapists and are served by many of the same HMEs we work with every day. The channel relationships we have spent years building extend naturally into this market. What gives us particular confidence is the clinical work we completed before launch.

We ran a 90-day in-home evaluation with experienced CPAP users. These individuals were already satisfied with their existing mask, yet they preferred the Aurora mask, particularly the Aurora full face mask, which was overwhelmingly favored. That is a meaningful bar to clear, and we did it. We will be presenting the full results of that study at SLEEP 2026 in Baltimore this June, one of the premier sleep forums in sleep medicine. Presenting a peer-reviewed data set at this type of industry conference is how a new entrant like us builds credibility with clinicians and accelerates adoption through the HME channel. The early commercial feedback has been encouraging. HME partners and respiratory therapists have responded positively to the product and to the evidence behind it. We expect Aurora's revenue contribution to be more back-half weighted as that momentum builds.

We estimate the U.S. CPAP mask market at approximately $2.2 billion, growing at a high single-digit rate. Every point of market share represents roughly $20 million in potential annual revenue for Inogen. We intend to earn a meaningful position in this market, and Aurora is the foundation for that. We also launched the Rove 6 portable oxygen concentrator in Brazil this quarter. This reflects the broader international expansion strategy we have been executing. We are entering new geographies with products designed for those markets, building on our established distribution relationships, and extending Inogen's reach to patients who currently have limited access to high-quality portable oxygen therapy. Brazil is a meaningful market with a growing COPD patient population, and this launch continues the momentum we have built across Latin America over the past year.

Simeox represents what I believe is one of the most exciting long-term opportunities in our portfolio. In this quarter, we crossed a major milestone. We began patient enrollment in IMPACTs 200, our first reimbursement trial for Simeox. The trial is actively enrolling. We want to build the right evidence base to address CMS, private payers, and health economic arguments for appropriate reimbursement levels. Let me remind everyone of the opportunity here. The U.S. opportunity for Simeox is an estimated $500 million TAM in non-cystic fibrosis bronchiectasis, growing at a high single-digit rate. The device carries an attractive gross margin profile, the disposable component creates a reoccurring revenue stream that makes the financial model increasingly predictable over time. Beyond the economics, Simeox addresses a patient population that is underserved. Existing OPEP devices are ineffective for a large share of bronchiectasis patients.

Vest therapy works, but is bulky and not universally ac-accessible. Simeox offers meaningful clinical differentiation, and the data we are generating is designed to demonstrate that rigorously. These are the reasons why we are taking the time to do this right. Stepping back, the common thread across everything we discussed today is that the new Inogen is different from the Inogen of three years ago. We are a home respiratory care platform with a diversified portfolio and expanding addressable market with a commercial infrastructure and brand reputation that creates leverage as we scale each new product category. Strategically, we expect these investments in our pipeline to help drive our top-line growth and advance our path to profitability. POC remains our core business and foundation.

We believe we have the best durability, the longest useful life, and the deepest evidence base in the category. We are building out the clinical, commercial, and connectivity capabilities to keep widening that competitive moat. We are no longer constrained by that single market. The new products we have launched are primarily in higher growth markets with higher gross margin profiles than our historical mix. Going forward, we have committed to at least one new product launch each year, and each launch will be held to the same standard. The trajectory we have seen gives us confidence that we are on the right path. With that, I will turn the call over to Jason for his first earnings call as Inogen CFO. Jason?

Thank you, Kevin, and good afternoon, everyone. I'm excited to be here for my first earnings call as Inogen CFO. I joined the company just one month ago, and I've been spending that time getting deeply into the business and getting to know the team and the opportunities ahead. What I have found reinforces why I joined. We have a strong foundation and brand, opportunities to grow, and an organization that is leveraging the strength of the legacy team while building out new capabilities to support our strategy. With that, I'll turn to our first quarter performance and the outlook ahead. As Kevin mentioned, total revenue for the first quarter was $85.1 million, an increase of 3.4% from the prior year period. This exceeded our expectations.

Total sales revenue for the quarter increased by 5.7% and was primarily driven by higher growth in international POCs and favorable foreign exchange rates, which more than offset lower U.S. sales. For the quarter, foreign exchange had a positive 460 basis point impact on total revenue. U.S. sales were $34.7 million, down 5% year-over-year, and international sales were $37.7 million, up 18% year-over-year and more than offsetting a strong performance in the first quarter of last year, including the impact of large stocking orders. U.S. rentals were $12.7 million, down 8% year-over-year. Both U.S. direct sale businesses were impacted by the continued channel mix shift and reduced patient counts Kevin described.

Moving to adjusted gross margin in the first quarter was 44.7%, an increase of 30 basis points from 44.4% in the prior year period, primarily the result of cost improvements. Expanding gross margin over time is critical to our overall profitability goals, and we are pleased with the first quarter performance. Adjusted operating expenses for the first quarter of 2026 were $43 million, an increase of 5.1% from $40.9 million in the prior year period. Adjusted R&D expense in the quarter was $4.1 million, an increase of $0.9 million versus the prior year, as we are investing in clinical evidence generation and new product development that we believe will differentiate Inogen over the long term.

Adjusted SG&A in the quarter was $39 million, an increase of 3.1% versus the prior year, driven by commercial organization investment to support the new product launches and the timing of advertising spend. GAAP net loss for the first quarter of 2026 was $8.3 million compared to a GAAP net loss of $6.2 million in the prior year period. Adjusted net loss was $4 million compared to an adjusted net loss of $2.9 million in the prior year. Adjusted EBITDA was a negative $1.4 million in the first quarter compared to approximately break even in the prior year period. The increase in losses year-over-year is a direct result of the timing of planned incremental R&D and commercial investments mentioned earlier.

Looking forward, we expect Q2 and Q3 to be our strongest quarters for profitability in line with our historic top-line seasonality, and we continue to expect adjusted EBITDA growth for the full year. Moving to cash, we ended the quarter with $111.5 million in cash equivalents, marketable securities, and restricted cash with 0 debt outstanding. During the quarter, we began execution of our stock repurchase program. We purchased approximately 298,000 shares of our common stock for consideration of nearly $1.9 million. We continue to believe our stock is undervalued relative to the fundamentals and the strategic opportunity in front of us. Returning capital to shareholders while also investing in growth is something we believe we are well-positioned to do, and we intend to continue to do it thoughtfully over the course of the program.

Now let me turn to our second quarter and full year 2026 outlook. We are reaffirming our 2026 revenue guidance of $366 million-$373 million, representing approximately 6% growth at the midpoint. That guidance reflects continued trends in our core POC business, a growing contribution from international sales, the scaling of Aurora and Voxi 5, particularly in the second half, partially offset by continued mix pressures in our D2C and rental channels. For the second quarter of 2026, we expect reported revenue in the range of $94 million-$97 million, reflecting approximately 3.5% growth at the midpoint of the range relative to second quarter 2025 revenue. Regarding profitability, we remain committed to driving adjusted EBITDA improvement for the full year 2026, following the positive adjusted EBITDA achieved in 2025.

With that, I will turn the call back to Kevin for closing remarks.

Thank you, Jason. We're executing against the plan we laid out. We're launching new products into larger, higher growth markets, building the clinical and commercial infrastructure to support them, and managing the P&L with discipline while continuing to invest in the long term. We've also strengthened the organization with new leadership across finance, marketing, the board, and a commercial team that is focused on execution. I am optimistic about what the next few years hold for Inogen. To our shareholders, thank you for your continued support and confidence in us. We look forward to updating you throughout the year. Operator, please open the call for questions.

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. We'll pause for just a moment. We'll take our first question from Anderson Schock with B. Riley Securities.

Hi. Thank you for taking the questions and congrats on the quarter. First, on the Rove 6 launch in Brazil, could you frame the size of the Brazilian COPD market and the current state of POC penetration? Is this largely an oxygen tank replacement opportunity, or are you stepping into an established POC market?

Hey, Anderson Schock. This is Kevin. Thanks for that. Thanks for the call. We have not, you know, quantified the size of the market in Brazil. That's an emerging market opportunity for us. There is an existing population of tanks that in Brazil as well as POC. There's other POCs that are in the market. We're not the first entrant that is in there, but we are entering in, of course, as the premium brand in Brazil. We have partnerships that with local HMEs that exist also in other markets who are familiar with us and know how to position the Inogen brand. We're looking forward to the growth coming out of there, but this is one that will continue to develop over time with market access.

Okay, got it. Net rental patients at the end of the first quarter had a steeper decline than the recent trends. Could you walk us through what drove the acceleration this quarter and how we should be thinking about this channel through the remainder of the year?

When we look at the rental program, we talked about, and I'm going to bucket this first if we step back and you think about the dynamics that are happening within the markets that we have been, you know, planning for and strategizing and optimizing the channels. The shift that we see from within the U.S., which is where, of course, rental is, from the oxygen tanks to the POCs, has an impact on both the headwind on the DTC as well as the rental patients, which is also creating that tailwind for us within the B2B channels. It allows us to have additional pull-through with other technology, the products with the Aurora masks, the Voxi 5, and eventually the Simeox.

That is one that is still under pressure as we go through the year. We do expect to see a total U.S. back end of the year growth, which, certainly we can talk through, but we'll see that pressure continue within the rental channel.

Okay, got it. How's the ramp tracking against your expectations? Are you beginning to see pull-through benefits with HMEs that are bundling Voxi 5 alongside the POC?

Yeah, we are. We like the signs that we're seeing so far in the market. The feedback has been very good. We are seeing pull-through and attachment rates. This is lining up with our expectations and supports the view that we have for this in the long term.

Okay, got it. Thank you for taking our questions.

Thanks, Anderson.

Next we'll move to Mike Matson with Needham & company.

Thanks for taking my questions. I guess I'll start with a couple of macro ones. Just wanted to get your take on the impact of kind of the elevated oil prices that we're seeing, any material impact expected there. I wanted to see if you have any sales into the Middle East. I know you're selling in Europe, but I didn't know if that included the Middle East. You know, if so, like how, you know, how significant is that?

Hey, Mike. Yeah, thank you for the question again. I'll start, and then Jason, if you have anything to add, please, you know, please do. From the from the macro level with the impact on the oil, you know, we're not seeing anything for ourselves that is that is outsized from the rest of the industry. You know, there are some implications, certainly where surcharges that happen with logistics. It's less of an impact for us than, you know, than perhaps some others. If this carries on, you know, we may start to see more impact as as the year goes through, but to date, it's not it's not a significant piece. With, when you also look at petroleum-based components and products, we think about resin material.

We do have some of the material within our POCs. However, we do have supply agreements in place that protect us in the near term. We wouldn't expect to see an impact there unless this does carry on for, you know, beyond. Within a quarter, it's not a big deal. If we start seeing this carry on throughout the year, we may see additional impact from that. To the business in the Middle East, we do have business in the Middle East. The majority of our international business is still coming from the European markets. We are not impacted by this yet. We have been focused on making sure that we can continue to serve our patients, make sure that our team and partner or partners are safe, which they all are.

So far, this hasn't been a negative impact. Jason, anything else there?

No, I think that's right. I think, you know, as we've even scenarioed kind of current prices from a oil standpoint. You know, we feel like even because of the timing that Kevin mentioned, because of the limited freight that we have, you know, that we'd be able to, we would expect to be able to offset it at current levels for 2026.

Okay, got it. Wondering if you could give us an update on the CPAP mask launch?

You know, how is that going? You know, what kind of feedback are you getting from customers?

Hey, yeah, Mike, it's been a very good for us. It is, it's meeting and exceeding the expectations. It, of course, is a, you know, the early stages, introducing the Aurora masks to the market. Fortunately, we're able to come to the market with clinical data that supports the supports patient preference and the quality of the mask that gives us a leg up as far as early adoption. One of the things that we've liked so far is extremely high reorder rates from the customers that have started the process with Aurora, take the samples, start to get patients on them, place an order. We've seen those reorder rates coming in at a monthly on a monthly basis at a very high level. That tells us that it's sticky, and this is a good signal for us.

Okay, got it. you know, just looking at your adjusted net loss, if I'm remembering correctly when I glanced at the press release, but not a lot of companies report tonight. I think it was flat to maybe even down from last year on an adjusted basis. I know EBITDA was not the same, but, you know, can you maybe just talk about what's happening there and what, you know, why you weren't getting more kind of leverage, I guess, or cost savings from a, you know, OpEx perspective or whatever?

Yeah, I'll take that one. I mean, I think first quarter, in particular, we accelerated some of our clinical evidence investments, particularly around Simeox. We also had moved forward the timing of some advertising spend to try to generate some additional business over the back half of the year. You know, as we've mentioned before, we're managing OpEx to kind of make sure that we end up in a position of growing EBITDA over the course of the year.

Okay, got it.

But I-

And then the advert-

The, the, maybe-

The advertising. Yeah, go ahead. Sorry.

No, I was going to say the other thing I would highlight, though, is like we talked about in the prepared remarks, which is the gross margin expansion, which I think is really critical for us as we think about some of the mixed pressures we see in the market. I think some of the other levers that we're pulling to improve margins, leverage the volume that we're seeing, are really important to us moving forward.

Okay, got it. The advertising spending that you mentioned, is that geared at the consumer business, or was that geared at like the B2B side of things?

The advertising spend is geared historically more towards the direct-to-consumer business, although it does benefit broadly the, you know, across all the markets, creating brand awareness. We have been, you know, revising that strategy, the channels, how we do that marketing, and broadening that out to include both the HCPs, the HMEs. This is now, this is now a much more sophisticated marketing project going forward, and that's one of the benefits too that when we added Dominic here to the team. He brings a lot of that expertise and that savviness to the team here.

Okay, got it. Thank you.

Thanks, Mike.

There are no further questions at this time. I would like to turn the floor back to Kevin Smith for closing remarks.

Before we wrap up, I wanna highlight one core theme that underpins our strategy, innovation, which is the engine driving our future growth. Early feedback on our new products, Aurora, Voxi, Simeox, it's all been positive. Confirming these innovations address key market needs. This progress stems from strategic investments in our pipeline, and we aim to launch one new product per year as part of our long-term plan. These efforts strengthen our position for broader reach and sustained growth. While we are still early in this journey, the momentum we are building today gives us real confidence and excitement about what lies ahead. I would also like to formally recognize and express my gratitude to the entire Inogen team. Your dedication to patient care, consistent execution, and collective contributions has been essential to our ongoing transformation.

I value the energy and commitments you bring every day, and I'm proud of what we've built together. Thank you.