Greetings and welcome to Inogen’s Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. Please note that this conference is being recorded. I will now turn the conference over to our host, Matthew Pigeon, Head of Investor Relations. Thank you. You may begin.

Thank you for participating in today’s call. Joining me from Inogen is CEO, Scott Wilkinson; and CFO and Co-Founder, Allie Bauerlein. Earlier today, Inogen released financial results for the third quarter of 2020. This earnings release and Inogen’s corporate presentation are currently available on the Investor Relations section of the company’s website. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects and strategy for 2020 and beyond, expectations related to our operating expenses for the remainder of 2020 and 2021, our ability to create shareholder value by driving awareness of our products, expectations regarding international sales and tender activity, sales expectations in our domestic sales channels, including expectations related to our rental channel, hiring expectations and expectations regarding our sales and marketing roles and related investments, product development expectations, expectations regarding reimbursement and regulatory changes, including competitive bidding, our expectations regarding the market for our products, the impact of the COVID-19 Public Health Emergency on our business and demand for our products, in both the short-term and long-term, and our ESG Program. The forward-looking statements in this call are based on information currently available to us as of today’s date. These forward-looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission. Actual results may vary, and we disclaim any obligation to update these forward-looking statements except as may be required by law. We have posted historical financial statements in our investor presentation in the Investor Relations section of the company’s website. Please refer to these files for more detailed information. During the call, we will also present certain financial information on a non-GAAP basis. Management believes that the non-GAAP financial measures taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain non-cash items and other expenses that are not indicative of Inogen's core operating results. Management uses non-GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in tables within our earnings release. With that, I will turn the call over to Inogen's President and CEO, Scott Wilkinson. Scott?

Thanks, Matt. Good afternoon, and thank you for joining our third quarter 2020 conference call. As previously discussed, the COVID-19 pandemic has had a significant impact worldwide and on our company in 2020 and has continued to have a meaningful effect on our business throughout the third quarter of this year due to a substantial reduction in patient travel and activity outside of the home, as well as reduced consumer confidence. In addition, we have seen physician offices in the U.S. and assessment centers in Europe limit patient interactions that traditionally have led to new oxygen patient referrals. Furthermore, our HME customers worldwide turned their purchasing focus to stationary oxygen concentrators to treat COVID-19 patients while also minimizing patient interactions, which includes replacing existing patient setups with POCs. While these factors made for a challenging third quarter for our business, we saw total revenue and revenue for both domestic and international business-to-business channels grow sequentially from the second quarter of 2020. Furthermore, we’re pleased that our continued focus on our rental channel has produced strong operating performance, with rental revenue in the third quarter of 2020 growing both sequentially and versus the same period in the prior year. While it is difficult to predict what impact the COVID-19 PHE will have for the remainder of 2020 and 2021, oxygen therapy is a key treatment for severe COPD and other respiratory disorders. After the pandemic, we expect the need for long-term oxygen therapy to normalize. Before discussing our financial results in more detail, I wanted to briefly give an update on the recently released Medicare traditional fee-for-service market data for the full year 2019 and competitive bidding around 2020 to 2021. While the Medicare information has certain limitations when used to assemble a picture of the oxygen therapy market, such as the absence of brand or manufacturer information, we believe that the information can serve to approximate the long-term oxygen therapy market in the United States. Based on the data set, we estimate that the share of portable oxygen concentrators in the traditional fee-for-service Medicare long-term oxygen therapy market grew from 13.9% in 2018 to 18% in 2019. However, this estimate does not include patient cash sales or private insurance transactions, so we believe that this data from CMS may represent a conservative estimate of actual portable oxygen concentrator market penetration. POCs were still the fastest-growing modality in oxygen therapy based on the CMS data, and we still believe this category has a significant growth opportunity ahead. The data also showed a continued trend for a decreasing share of stationary concentrators, transfilling systems, liquid systems, and oxygen tanks. Due to the trend of a higher percentage of patients receiving both stationary and ambulatory oxygen, we have increased our estimate of target full penetration of total long-term oxygen therapy patients using POCs to be approximately 70%. This is up from our prior estimate of 68% and is based on our estimate that 90% of the ambulatory long-term oxygen therapy patients could be served by POCs over time. Regarding competitive bidding around 2021, on October 27, CMS announced the competitive bidding contracts that were scheduled to go into effect on January 1, 2021, will not be awarded for most product categories, including oxygen, due to the payment amounts not achieving the expected savings and the current COVID-19 public health emergency. We believe that not moving forward with competitive bidding around 2021 will increase beneficiary access and also remove uncertainty for all DME suppliers. We plan to continue to focus on driving POC adoption through consumer and physician awareness and through our partners. CMS also issued a proposed rule to establish payment amounts going forward for DMEPOS items products and services covered under Medicare. We believe that Medicare rates will not change for the length of the PHE, except for the 2% Medicare sequestration that will go back into effect on January 1, 2021, and any net change for inflation and budget neutrality adjustments that typically occur annually each January but has not yet been announced. CMS is proposing to set Medicare rates after the PHE at the 50/50 blended rates in non-contagious and rural areas as a permanent construct. However, Medicare rates in all other areas would be set at the adjusted payment amount. This would reduce Medicare rates after the PHE is over in the current areas that are considered non-rural but not covered by a former CBA, as those areas are currently receiving a 75/25 blended reimbursement rate. There’s a 60-day comment period on this proposed rule, so we expect this rule to be finalized in the first quarter of 2021. I would also like to note that we have recently published our first report on our environmental, social and governance practices, which can be found in the Investor Relations section of the company's website. We plan to continue to develop our ESG program in future years. With that, I will now provide details around our third quarter 2020 revenue by channel. We generated total revenue of $74.3 million, reflecting a decline of 19% compared to $91.8 million in the third quarter of 2019. However, our third quarter of 2020 revenue was up 3.7% sequentially from the second quarter of 2020. Domestic business-to-business sales in the third quarter of 2020 decreased 23.5% to $23.1 million, compared to $30.1 million in the third quarter of 2019. We were pleased to see that domestic business-to-business sales in the third quarter of 2020 were up 6.9% sequentially compared to the second quarter of 2020, especially given the uncertainty of the competitive bidding outcome in the quarter. The decrease in domestic business-to-business sales in the third quarter of 2020 versus the comparative period in the prior year was primarily driven by reduced demand from resellers and our HME providers for POCs. We believe this decreased demand was primarily due to competitive bidding uncertainty and the continued impact of the COVID-19 PHE, including lower retail sales, reduced patient travel, physician offices continuing to limit patient interactions that traditionally have led to new oxygen patient referrals, HME providers minimizing the replacement of existing oxygen patient setups with POCs to limit patient interactions, and providers focusing on supplying stationary oxygen concentrators with higher flow characteristics to treat COVID-19 patients. International business-to-business sales in the third quarter of 2020 decreased by 21.1% on an as-reported basis and 23% on a constant currency basis to $14.6 million, compared to $18.5 million in the third quarter of 2019. The decrease was primarily driven by reduced operating capacity of certain European respiratory assessment centers due to the COVID-19 pandemic, continued tender delays in certain European markets, and decreased sales in other markets, primarily Canada and Australia. Sequentially, international business-to-business sales in the third quarter of 2020 were up 5.1% compared to the second quarter of 2020. We are also pleased to say that multiple tenders for the United Kingdom were resolved, as service contracts for them were delivered in the third quarter of 2020, which are expected to take effect starting in the fourth quarter of 2020 and the first quarter of 2021. Finally, in the fourth quarter of 2020, we received confirmation that the Inogen One G5 portable oxygen concentrator was cleared for reimbursement in France, so we expect our French customers to begin to purchase our latest and highest output POCs. Direct-to-consumer sales decreased 22.7% to $29.2 million in the third quarter of 2020 from $37.8 million in the third quarter of 2019. We believe the decrease was primarily driven by the impacts of the COVID-19 PHE on consumer travel and mobility, in addition to lower consumer confidence. Direct-to-consumer sales in the third quarter of 2020 were down 3.3% sequentially compared to the second quarter of 2020, primarily due to lower average sales representative headcount in the quarter, partially offset by improved sales representative productivity. We expect minimal direct-to-consumer hiring in the fourth quarter of 2020, and we plan to continue to focus on sales representative efficiencies, including improved sales representative productivity and lead utilization, while we monitor the impact of the COVID-19 PHE. Rental revenue in the third quarter of 2020 increased to $7.5 million from $5.4 million in the same period in the prior year, an increase of 40.1% primarily due to increased reimbursement rates and an increase in patients on service, higher billable patients as a percent of total patients on service, and lower revenue adjustments. We had approximately 29,500 patients on service as of the end of the third quarter of 2020, which was up by 11.7% sequentially compared to the second quarter of 2020, as we made notable progress in using more of our direct-to-consumer generated leads for rental setups, reduced paperwork requirements associated with the COVID-19 PHE, and increasing rentals across our physician sales force. We remain excited about our focus to drive new oxygen patient rentals, as we see meaningful patient interest in our products. We continue to believe that the rental channel is an opportunity that should provide future revenue growth and stability, as well as margin expansion to our overall business, and we plan to continue to increase rental setups. As I mentioned in our second quarter earnings release, I have decided to retire from the company by the end of 2021. As a result, the Board of Directors has initiated a process for finding a new Chief Executive Officer for Inogen. The Board is continuing the search process, and I remain committed to supporting Inogen in this transition period as we continue to execute on our initiatives to deliver innovative respiratory solutions to patients and home care providers. We believe we are a leader in POC technology with our product offerings that the market for our technology remains underpenetrated. We still see POCs as the future for oxygen therapy worldwide, as they provide increased freedom and independence for patients while also decreasing service and delivery costs to providers. In addition, POCs provide a lower touch model compared to regular tank deliveries, which we believe is critical during the period of the COVID-19 pandemic and beyond. Furthermore, while we work relentlessly to optimize our operations with the focus on improving margins, we also plan to make investments in our business to drive long-term revenue growth for our respiratory technologies and provide patients with best-in-class products and solutions for their respiratory needs. Lastly, given where Inogen stands today, and in spite of the challenges we and the global economy have been facing, we believe our strong cash, cash equivalents, and marketable securities of $220.5 million, with no debt outstanding, provides us with a certain level of stability and liquidity, so we can operate and be adaptable during this unprecedented time. With that, I will now turn the call over to our CFO, Allie Bauerlein. Allie?

Thanks, Scott, and good afternoon, everyone. During my prepared remarks, I will review our third quarter of 2020 financial performance. As Scott noted, total revenue for the third quarter of 2020 was $74.3 million, representing a decline of 19% from the third quarter of 2019. Turning to gross margin, for the third quarter of 2020 total gross margin was 44.4%, compared to 47.2% in the third quarter of 2019. Our sales revenue gross margin was 43.5% in the third quarter of 2020 versus 48.2% in the same period of 2019. A decrease in sales revenue gross margin in the comparative period was primarily due to lower average selling prices, particularly in our direct-to-consumer channel, where consumers bought product configurations with lower margin bundles, and increased material and overhead costs per unit, partially offset by lower warranty expense per unit. Rental revenue gross margin increased to 52% in the third quarter of 2020 versus 31.5% in the third quarter of 2019, primarily due to higher Medicare reimbursement rates, higher billable patients as a percent of total patients on service, lower revenue adjustments, and lower servicing and depreciation expense per patient on service. We believe a portion of the lower servicing expense may be related to lower travel of our patient population due to the COVID-19 PHE, which may not recur in future periods. As for operating expense, total operating expense decreased to $35 million in the third quarter of 2020 versus $35.2 million in the third quarter of 2019, primarily due to a reduction in advertising expense, partially offset by an increase in intangible amortization. Research and development expense increased to $3.5 million in the third quarter of 2020, compared to $2.6 million in the third quarter of 2019, primarily associated with $1 million of increased intangible amortization expense. Sales and marketing expense decreased to $22.9 million in the third quarter of 2020 versus $24 million in the comparative period of 2019, primarily due to decreased advertising expenditures of $7.7 million in the third quarter of 2020 compared to $9 million in the third quarter of 2019. General and administrative expense increased to $8.6 million in the third quarter of 2020 versus $8.5 million in the third quarter of 2019, primarily due to higher personnel-related expenses, partially offset by lower legal and consulting expense. In addition, we adjusted $0.3 million from the CARES Act provider Relief Fund payment received in the second quarter of 2020 to offset COVID-19 PHE-related costs incurred in the third quarter of 2020, as a benefit to general and administrative expense and a reduction to lost revenues classified in other income. In the third quarter of 2020, we generated an operating loss of $2 million, adjusted EBITDA of $4.6 million, and net loss of $1.7 million and loss per diluted common share of $0.08. Now turning to guidance, because of the unprecedented market uncertainties, we are still unable to provide guidance for the full year 2020 or 2021. Given the uncertain scope and duration of the COVID-19 PHE, we are unable to estimate the impact on our financial results, including our revenue, revenue mix, net income or loss, and adjusted EBITDA estimates for such a period. While we continue to look for ways to be cost-efficient, and also drive rental setups to improve lead utilization, we do expect that the COVID-19 pandemic will continue to have an adverse impact on our business in the fourth quarter of 2020. Net revenue in the fourth quarter of 2020 will be down compared to the third quarter of 2020, primarily due to the seasonality in our business and the impacts of the COVID-19 PHE. While we expect the COVID-19 pandemic and any potential for further prolonged lockdown to have a negative impact on our sales in those periods, we also believe it is prudent to make investments to broaden our product portfolio with the use of the recently acquired New Aera technology and also build the necessary infrastructure to support our increased focus on rental. Given these investment initiatives, we expect increased operating expenses in the remainder of 2020 and 2021 that we believe will support future revenue growth. In addition, while we expect to incur minimal expenses related to bonus and performance-based stock compensation in 2020, we expect such costs to increase in 2021. I also want to reiterate Scott's comments on our liquidity position. We believe our strong cash, cash equivalents, and marketable securities of $220.5 million, with no debt outstanding as of September 30, 2020, provides us the stability and liquidity necessary to operate during this time of uncertainty, while providing the capital necessary to make investments and initiatives that will drive future growth. With that, we will be happy to take your questions.

Thank you. At this time, we will be conducting a question-and-answer session. Our first question comes from Robbie Marcus with J.P. Morgan. Please state your question.

Hi, this is actually Lily on for Robbie. Thanks for taking the question. I was wondering if you could give a little bit more detail on trends that you've been seeing on a monthly basis. Did things continue to improve throughout the quarter? Or was that kind of disrupted by rising cases in the U.S. and elsewhere? And if you could provide any detail on what you've been seeing in October and November as well, that would be really helpful. Thanks.

Yes, thanks. So I'll take that one. We tried to reflect a little bit of the answer in our prepared remarks, but let me go into a little more detail. When we really got into the heart of the second quarter, our country, and really most of the world went into pretty strong lockdown. We had shelter-in-place orders. Physicians were not seeing patients, most restaurants closed, and there was a significant decrease in travel, which has been pretty well chronicled. That hit our business pretty hard. We have a freedom and mobility product, and a lot of the homecare providers turned their focus to treat those acutely ill COVID patients and tried not to touch the current patients to do the swap-outs of POCs that they had been engaged in. And we talked about our retail side; while we still had strong leads, we were able to execute a considerable amount of retail sales, but people were very careful about spending money for a product that they were not able to take advantage of due to reduced travel and being stuck at home. Moreover, oxygen patients are particularly vulnerable to disastrous outcomes if they were to contract COVID-19. So we saw that affect our business pretty hard in Q2. In Q3, we did see a little bit of stabilization. The variability within the quarter that you don’t see everything outside, we reported by the whole quarter but within the quarter, it was a lot more stable than Q2, which was pretty difficult for our ops team to handle with the swings in demand. Additionally, we started to see some growth sequentially that I think is a direct result of relaxing of restrictions and the shelter-in-place orders. Restaurants started to open on a limited basis, and people that had been stuck at home were eager to get outside for a walk and some fresh air. So we certainly saw improvements in our business in Q3 compared to Q2. I think that reflects the demand for our product and the place it serves. I’m particularly pleased with this on the domestic front because you still had the uncertainty throughout the entire quarter about competitive bidding and how that would be resolved. Looking ahead to Q4, we’ve already received signals that things could tighten up. The news indicates that the UK and France are considering tightening restrictions again, and the prevalence of COVID-19 cases is rising in the U.S. as we get into Q4. There’s talk about what needs to be done to control it and curb it. These are all potential headwinds in Q4. While we’d love to continue the trend of sequential growth, we need to acknowledge that those signals are out there, and they are causing concern. That really leads to Allie’s comments that we do not expect our revenue in Q4 to be higher than in Q3. Additionally, the fourth quarter is usually a slower time in normal circumstances, and that's part of it too. So, even though this has a big negative impact on our business, it is not nearly as severe as it is for the travel industry. But it definitely does have an impact.

Great. Thank you for all that detail. Just one quick follow-up. I think you had previously mentioned that you relaunched the New Aera product a few months ago. So if you could share any updates on how that's been progressing and how significant of a revenue contribution that is right now, that'd be really helpful. Thank you.

Yes. We actually started a limited launch at the very end of 2019 and the beginning of this year. Things progressed nicely in the limited launch, but then COVID-19 impacted that just like it did our POC business. It’s had a similar negative result on that as it has on POCs. We are continuing to market and sell the product and learn how it fits in the current market. However, it's not a material contribution right now at all. I'd say we're still in a learning phase with positioning and identifying the right patient for this product. Moreover, I would remind everyone that the real excitement surrounding New Aera isn't the product in its current state, which largely connects to a tank or stationary concentrator. Our vision and mission is, over time, to obsolete tanks. That being said, we are more excited about integrating that into our POC and other products in our pipeline; that's more of a medium- to long-term play. That’s where we think we’ll deliver the real value from that technology and the innovative new products that it allows us to develop.

Great. Thank you.

Hi, good afternoon, everyone. Thanks so much for taking the question. Scott, just a quick question for you. It's about the long-term, how to think about the long-term mix of rental versus direct. You're seeing decent growth, I understand off a small base, but it seems like gross margins were a little bit better lately in the rental business. Does it make sense to more aggressively push the shift to rental longer-term? Or how should we be thinking about that?

Yes. We're very pleased with the progress we've made in rentals. Our gross margins a couple of years ago were really impacted by the last round of competitive bidding. We had to focus on delivering operational efficiencies to make it attractive financially for us. Now, Allie reflected that our gross margins are now in the 50s; our team's done great work. We do see rentals as a bigger part of our future. It aligns perfectly with our goals of driving efficiency and margin expansion in the company, and it gives us better lead utilization when we utilize more leads for rentals. However, I don’t want to predict what mix it might be in the future. I will say we are going to continue to pursue rentals. The challenge around rentals, in the short-term, in terms of P&L impact, is that rental revenue recognition occurs over time rather than upfront like cash sales. For example, a retail sale today might account for several thousand dollars while a rental today only amounts to about $100 this month, $100 next month, and so forth. Hence, as we expand our rental base and build this annuity, it should have a significant contribution down the line. It’s also improves our market access as it allows patients to utilize their Medicare or insurance benefits to help pay for the product. While I don’t want to make predictions about future numbers, I can tell you that when we executed our IPO in 2014, rental revenue accounted for about 40% of our total revenue. We have been in a spot where it was a heavier revenue contributor, and we endured the storm and are ready to climb that mountain again.

Got it. Thanks so much for that. And then just specifically regarding the pending reimbursement, I apologize if you provided this in the prepared remarks, but what is that going to contribute in Q4? I imagine it's relatively small, but you guys pointed it out in press releases, so just curious about what to expect? And how to think about that contributing in Q4? And is that something that carries into 2021? Thanks.

Yes. I’d love to give you a number, but I can’t. It's just too big a wildcard, especially with the lockdown in the UK next month. However, we are excited that several previously disputed tenders got resolved during a very difficult time when everything was shut down in Europe. We feared nothing would move on this front. It’s probably not top of everyone’s list to finalize these tenders, but some progress was made with contracts awarded and people ready to execute. Normally, you would see fulfillment of those contracts occur in Q4 after their resolution in Q3. However, I think it will likely be pushed out and might even flow into the first or even second quarter, depending on how events unfold. Naturally, these uncertainties illustrate why it's difficult to provide guidance right now—things can change quickly, so I’d be wrong to speculate on timing without any guarantees.

Good afternoon, guys. Scott, this might be a little hard to estimate, but any sense of kind of where new patient volumes or new oxygen prescriptions from doctor's offices are as a percentage of where they were pre-COVID? And then how far down is that? Did it improve in Q3 versus Q2?

Yes. I'll provide some rough estimates of what we’ve heard in the market, which varies by geography. We've been told figures are in the range of 40% to 60% for capacity compared to pre-COVID. So, we’re operating at about half throttle. Similar feedback is coming from Europe in that 40% to 60% range. We heard things improved in Q3 as restrictions eased slightly. In Q2, I estimate the figure was probably less than 20%. So, conditions have definitely improved in Q3. As for Q4, it’s a wildcard, and we’ll have to see how that plays out. My guess would be that things will decline due to the tightening in the UK and France that I mentioned earlier. In the U.S., we’ll need to wait and observe. But, 40% to 60% seems to be the average across the country.

Okay, thank you for the insight there. I’m trying to understand the difference between rental customers and direct-to-consumer sales. How incremental are these? Is there some level of cannibalization occurring between the two?

Yes, I’ll take that one. When a patient calls in responding to our advertisement for a POC, they are generally not considering whether to use their insurance for rental or pay cash. We do determine the paths they can take based on the number of months remaining and their coverage. For instance, someone with six months of coverage remaining would be brought on as a rental for those remaining months. However, we largely lack private insurance contracts. So, depending on their out-of-network benefits and eligibility for rental or cash sales, that influences their decision. As COVID-19 has hit our market, consumer willingness to pay cash has decreased, which has impacted our close rates. It's important to note that making a cash purchase involves a rather hefty expense, so our close rate on rentals tends to be higher than on cash sales. Even though we're seeing some cannibalization with the shift towards rentals, our close rate for renting is significantly better than cash sales. We added over 3,000 rental patients this quarter, which is a significant increase. We plan to continue to pursue this aggressive growth strategy for rentals, as we know patients have a high preference for POCs and we want to be able to provide them access, especially in these challenging circumstances.

Yes. Thanks for taking my questions. I apologize if you've already covered this; I joined the call late. But I saw some commentary about the sales representative headcount being down in the quarter. What drove that decline—was it involuntary moves, voluntary moves, or something else?

Yes. First off, on a year-over-year basis, our average headcount was still up about 8% in the third quarter of 2020, compared to the third quarter of 2019. So, that was actually a boost in that period. However, as stated on the call, it was down sequentially from the second quarter. We did minimal hiring during the quarter, which caused a sequential decline due to natural attrition in our sales force. The turnover in the quarter was not out of line with previous quarters regarding the size of terminations. Therefore, while it dropped a bit from Q2, it's not an unusual level of turnover.

Okay, thanks. With the international tenders resolved, how impactful will that be on your international growth? Could we see that business return to growth as a result, or is it not that meaningful?

We’re cautious here. We didn’t provide specific guidance for international business, particularly in light of the recent lockdowns we’re seeing in parts of Europe. However, this could serve as an enhancement if the contracts can be executed in this quarter. But with the lockdowns occurring, we do not know if they will be fulfilled or whether it’ll push on to 2021. So, we’re not factoring that into our Q4 model.

Okay, thanks. And then, just...

It's really a tough therapy.

It’s a good question, Mike. If it's the right match, then we wouldn’t shy away from exploring acquisitions, regardless of the pandemic or my impending retirement. The decision revolves around the best fit and would go under the usual scrutiny with input from our management team and our board of directors. Our cash position is strong, and if a suitable opportunity arises, we would investigate it. It would not be dismissed simply due to the current environment.

Okay, great. Thank you.

Can you hear me?

Yes.

Perfect. Sorry about that. Good afternoon, everyone. I wanted to follow up about competitive bidding. You provided some commentary, but it wasn’t clear whether you foresee that it will extend past the PHE, toward the three-year time horizon, meaning it would be rebid after that, or do you expect it to be a short-term change? Ultimately, how does that short-term change affect new demand?

That’s a great question. There’s still uncertainty on how the competitive bidding program will unfold in the future. As noted in our prepared remarks, they opted against moving forward with competitive bidding due to the COVID-19 PHE and because they did not realize the expected savings across 13 of 15 product categories. This indicates that the competitive bidding program may be an expensive administrative process for the government. If they do not realize any savings, it raises the question of whether they proceed with future rounds and what an appropriate timing would look like. I expect we'll likely retain these rates for at least a couple of years, as the bidding process is time-consuming. To give you some context, when we bid last September, it took over a year before they announced the results. So it’s a lengthy process. We do see this as a good sign that rates may have bottomed and that we face less risk of reductions moving forward. It also allows all providers to participate, which should alleviate access issues from the previous bidding challenges. What we’re focusing on is enhancing patient and physician awareness of POCs and driving adoption, whether through our own rentals or those of our partners respectively, creating that rental annuity over time.

I appreciate that insight. Can you comment on how HME budgets have responded to the pandemic? Could that change demand as we go forward, given they may lack the necessary cash or capital to invest in POCs? Is that a risk for you guys, or is it more business as usual?

I think, in the long-term, nothing changes, Margaret. In the short-term, budgets have definitely shifted as home medical equipment providers try to acquire more stationary concentrators for higher flow, specifically to treat COVID-19 patients. So, there's been a notable change in the short-term. However, I believe that our opportunities haven't changed in the long term. The pandemic will eventually end, but POCs provide significant advantages over tanks and traditional delivery models, which indicates to me that they will dominate in the future. Will this pandemic slow POC adoption? Yes, absolutely. We can see that reflected in our sales as the market leader. Even if budgets are tighter now, our long-term position remains firm.

I know you guys aren’t providing guidance for 2021, but let's say we see a vaccine come out in the spring or summer. What do you expect for those various business segments at that point? Will the recovery be immediate, or more gradual? Additionally, how does that relate to consensus estimates versus your own expectations?

I'll keep it pretty general, as we aren't offering guidance for 2021. There is considerable variability regarding how this might unfold both in the U.S. and Europe, our two primary markets. The arrival of a vaccine and its influence on consumer confidence, economic health, and patients' willingness to travel are substantial components. Patients with oxygen needs have underlying health conditions, making them more vulnerable. While the availability of a vaccine will signal a gradual return to normal, it won’t be an immediate switch where the market suddenly opens back up. We recognize that patients need oxygen; however, that doesn’t mean they won’t feel hesitant to leave their homes. Currently, we're putting more emphasis on rentals because that’s where we have better control and execution capabilities in this challenging landscape. Therefore, I expect rental revenue to outperform compared to other segments in the current context. Conversely, I think the domestic B2B side remains challenging, influenced by years of structural changes. Certainly, those providers who understand POC benefits will seek to grow their businesses and rental roles using our POC. However, we can't predict precisely how or when these trends will materialize.

Thank you very much.

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks.

Okay, thank you. The COVID-19 PHE has placed all of us in unprecedented times, and we continue to respond by ensuring we are part of the solution that helps patients with respiratory disorders while also keeping our employees healthy and safe. While the COVID-19 PHE has created a challenging impact on our financial performance, given our strong balance sheet, we believe we can continue executing on our plan to deliver attractive revenue growth with long-term improvements in operating leverage. With that, I would like to thank our employees for the extraordinary effort they make every day to take care of patients who require oxygen therapy. Thank you all for your time today.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.