Inogen Inc Q3 FY2022 Earnings Call

Welcome to Inogen's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. As a reminder, this conference is being recorded today, November 2, 2022. I would now like to turn the call over to Agnes Lee, Senior Vice President of Investor Relations and Strategic Planning.

Thank you, Brock. Good morning, everyone. Joining me today are Nabil Shabshab, President and CEO; and Kristin Caltrider, our CFO. Earlier this morning, we released financial results for the third quarter of 2022. This press release is available in the Investor Relations section of the company's website along with the supplemental financial package. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects and strategy for 2022 and beyond; expectations related to our financial results for the fourth quarter of 2022, and expectations related to a return to profitability; our expectations with respect to supply challenges and cost inflation related to semiconductor chips and other product parts used in our POCs; our expectations on European regulatory clearances and approvals; future reimbursement rates; expectations regarding increasing productivity of our internal and external sales teams; progress of our strategic initiatives, including innovation; hiring expectations; our expectations regarding the market for our products on our business, and supply and demand for our products in both the short term and long term. The forward-looking statements in this call are based on information currently available to us as of today's date, November 2, 2022. These forward-looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic report filed with the SEC. Actual results may vary, and we may disclaim any obligation to update these forward-looking statements, except as may be required by law. We have posted historical financial statements and 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 non-GAAP financial measures taken in conjunction with US 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 US GAAP and non-GAAP results are presented in the tables within our earnings release. With that, I will turn the call over to Inogen's President and CEO, Nabil Shabshab. Nabil?

Thanks, Agnes. Good morning and thank you for joining our third quarter 2022 conference call. I'm incredibly pleased with our team who did a tremendous job of fulfilling our B2B backlog orders from Q2, as well as driving revenue in Europe and the countries where we were granted delegations or exceptions. We have also demonstrated excellent progress against our subscriber strategy that we started at the end of Q1 2022, delivering excellent growth and contributing to the strong performance this quarter. The extraordinary efforts of our team resulted in third quarter year-over-year constant currency revenue growth of 14.5%. Similar to the other MedTech and consumer health companies, we are focused on understanding and addressing to the extent possible emerging risks associated with the unprecedented ongoing market conditions. Macroeconomic and inflationary pressures are generally outside our control; hence we are acutely focused on levers in our control to mitigate part of those risks and more critically, stay the course with our transformation aimed at delivering durable and sustainable growth and return to profitability in the medium to long term. Hence, during this call, I would like to take a moment to frame our strategic initiatives and time horizons, then address how we are managing the remaining supply chain challenges, update on the progress around commercial excellence and productivity, and share initial thoughts on optimizing operating expenses. These elements are intended to help deal with some macroeconomic and market headwinds, and more importantly, continue to drive the ongoing transformation. Let me cover our strategic pillars and related time horizons first. Our strategic pillars include driving oxygen therapy market penetration and accelerating new product introductions in our core markets, while diversifying our portfolio. At the right time, we plan to expand our portfolio channel and global presence through inorganic efforts. We see our strategic initiatives organized across three time horizons that build durability and sustainability in top-line growth and enable the long-term aspiration of returning to profitability. In the short term, with the best-in-class portfolio in place, commercial excellence and execution remain our primary focus. Efforts and investments are focused on standing up, enabling tools and systems, instilling higher rigor on R&D discipline in sales management, and optimizing our talent base to drive sales and service productivity and expand market penetration. In the medium to long term, while building on the expected market position as a result of the ongoing commercial execution, we anticipate introducing a pipeline of new and improved POCs, including a next-generation POC and the device plus offering that will include value-added digital health services that will benefit patients and clinicians. In the longer term, organically, we anticipate further strengthening of our portfolio with further new product introductions to address new patient populations and indications in oxygen therapy or combination therapies and making digital health value-added services a core pillar of differentiation and growth. Inorganically, we continue to look for opportunities that align with our strategy and help accelerate growth and profitability. Our R&D and product development teams are accelerating their efforts to drive innovation and hence new product introductions in the medium and long term to drive growth. Additionally, across the medium and long-term horizons, we plan to expeditiously build a dossier of clinical and potential economic evidence to drive advocacy for POC-based oxygen therapy for COPD and beyond. Turning to supply chain, we have continued the relentless focus and investments to secure semiconductor inventory. Our team's diligence and persistent efforts continue to help us mitigate most, but not all supply chain pressures by actively managing our regular suppliers, through actively sourcing parts on the open market when possible, and redesigning our products to work around certain acute shortages. We have made notable progress in managing supply chain challenges this year, but see some uncertainty continuing at least into 2023. With respect to commercial excellence and productivity, we have made steady progress this year building our prescriber teams, working towards optimizing our direct-to-consumer overall team performance, and strengthening our B2B organization and strategic account management. For our rental business, we have increased revenue more than 25% for the first nine months of this year compared to the same period in 2021. We have continued to refine our coverage and targeting strategies to add new target prescribers, while increasing the hurdles from existing and new prescribers. Additionally, we have been actively expanding our market access to secure coverage from private payers as most patients in the prescriber business are expected to be rental patients. We recently added Humana with approximately 25 million covered lives in the US, which is expected to drive sales productivity by expanding the overall number of prescriber referrals that we can convert to rental patients. We are incredibly pleased with the solid results delivered by the prescriber team and with the ongoing efforts to further refine our go-to-market strategy, and we see a path to improve productivity and accelerated performance in 2023. For our DTC business, we have continued to build and refine systems and tools that enhance our ability to be more data-driven and our efforts to improve sales management, drive productivity, and optimize performance. We are also continuing with our newly developed discipline around talent selection, development, onboarding, and training. As a result, we are seeing notable acceleration of the productivity ramp for new sales associates, as well as improvement in conversion rates across the organization. As we continue to enhance our commercial leadership and discipline, we are already seeing notable and promising productivity improvements across our direct-to-consumer and prescriber teams. As well as towards 2023, we will further focus on operating expenses including optimizing commercial operations, supplier management, and dual sourcing systems, optimized workflows, and on-demand data in support of our productivity, agility, and efficiency goals. Vijay and his team will also play a significant role in re-architecting and delivering a differentiated, sustainable, and scalable experience for our customers and patients. Before sharing thoughts on the horizon ahead, I would like to provide an update on the European regulatory clearances. The review of our European MDR submission is progressing as expected. We are cautiously encouraged by the progress; however, we cannot speculate on the timing yet. We will provide an update when we have approvals. Our previous strategy to file derogation requests in a number of European countries resulted in receiving exceptions or approvals to continue selling our POCs in five countries, including France, where we were allowed to continue commercialization until the end of October; and the UK, Austria, Portugal, and Switzerland until the end of 2022 approximately. As evidenced by our revenue growth this quarter, the underlying demand for our offerings remains steady, but we continue to monitor potential challenges should they arise as we navigate similar obstacles in 2023. At the same time, we are steadily progressing our strategic initiatives to drive productivity in the commercial organization and to strengthen our new product pipeline and build out our clinical evidence dossier. Our strong balance sheet, cash position, and pricing excellence allow us to manage medium-term cost challenges and continue to execute our long-term strategy and return to profitability. We are making progress on our strategic initiatives, setting us up for scale and return to positive free cash flow late 2023 and beyond. We have short to medium term visibility into the supply of semiconductors and as such, we are providing revenue guidance for the fourth quarter. We look forward to updating you on our progress in the fourth quarter and providing further information on our opportunity and execution to drive growth, profitability, and value creation. I will now turn the call over to Kristin. Kristin?

Thank you, Nabil, and good morning, everyone. For the third quarter, foreign exchange had a negative 130 basis points impact on total revenue and a negative 550 basis points impact on international revenue. On a constant currency basis, third quarter total revenue increased 14.5% over Q3 2021. Looking at revenue on a more detailed level, it decreased from $21.8 million in the comparative period, driven by a limited ability to ship internationally due to the expiration of the EU MDD certificates. Domestic direct-to-consumer sales decreased 9.1% to $33.1 million in the third quarter of 2022 from $36.3 million in the comparative period, primarily driven by lower volume as well as higher Medicare reimbursement rates. Now on to discuss our gross margin. Sales revenue gross margin was 38.4% in the third quarter of 2022, declining 1,170 basis points from the third quarter of 2021 due to the unfavorable channel mix and higher material costs driven by open-market buys and inflationary pressures, partially offset by higher selling prices. Rental revenue gross margin was 54.5% in the third quarter of 2022 versus 58.9% in the third quarter of 2021, a decline of 440 basis points. The decrease was primarily driven by increased service costs and device write-offs, partially offset by higher Medicare reimbursement rates. Moving on to operating expenses, total operating expense increased to $53.1 million in the quarter compared to $41.3 million in the third quarter of 2021, an increase across all categories. First, we have continued to invest in research and development with a total spend for the quarter of $4.6 million, an increase of $800,000 versus the third quarter of 2021. The majority of this increased spend was in support of product development activities. Our sales and marketing total spend for the quarter was $33.7 million, a $5.4 million increase in spending primarily related to bolstering our prescriber business, increases in media and advertising costs, and increased subscription fees and consulting expenses. The $5.5 million increase was primarily due to higher personnel-related expenses aimed at rebuilding core capabilities, as well as a decrease in the benefit from the change in fair value of the New Aera earnout liability. In the third quarter of 2022, we reported a net loss of $9.5 million and loss per diluted share of $0.42. On an adjusted basis, we reported a net loss of $4.1 million and an adjusted loss per diluted share of $0.18. Moving onto our balance sheet, Inogen continues to maintain a strong balance sheet as of September 30, 2022, with cash and cash equivalents of $209.6 million with no debt outstanding. Accounts receivable balances increased to $50.5 million as of September 30, 2022 driven by the large increase in B2B shipments in the quarter. We continue to make investments this quarter in our inventory, incurring significant additional costs for the semiconductor chips purchased on the open market but not yet sold in finished goods. These items reside on the balance sheet as prepaid expenses and other current assets and inventory. As of September 30, 2022, the value of prepaid components in these balances were $9.8 million and $3.6 million, respectively. I will now turn to our financial outlook. As Nabil mentioned earlier, we are providing revenue guidance for the fourth quarter. We are now expecting total company revenue for Q4 2022 in the range of $87 million to $92 million, resulting in growth of 14% to 20% on a year-over-year basis. To further help provide context for modeling, we will continue to actively manage our supply-chain constraints, including forward buying of semiconductor chips. This increased cost is expected to cause margin compression in Q4 2022 and into 2023. We do not have line-of-sight to when the supply-chain disruptions might subside. As this impact is reduced, the offsetting impact of increases to our selling prices taken in Q3 21 and Q1 22 will remain, potentially allowing for margin expansion over time. We also anticipate that prepaid and inventory balances will decline as these components are sold through in the form of finished goods. From an operating expense perspective, we expect to see similar levels of spend in the fourth quarter, in line with our original long-range plans aimed at strengthening capabilities. As we look to 2023 and with the economic uncertainties ahead, we are judiciously looking for ways to drive towards positive free cash flow while continuing to invest in our key initiatives, which set us up for long-term revenue growth and a return to profitability. And with that, we will be happy to take your questions.

At this time, we will be conducting a question-and-answer session. Our first question today is from Mathew Blackman of Stifel. Please proceed with your question.

Good morning, everybody. Thank you for taking my questions. Just two for me. Maybe Nabil, I think one of the biggest challenges in our seat is trying to get a sense of true underlying demand in each of your channels, especially in the US, given the supply noise, but also price increases. Is there any way you can talk to what you think the demand picture looks like in the US DTC and B2B businesses? And then I've got one follow-up.

Yes. Hey, Matt. How are you today? So let me start by saying, I wish that we were in a full supply situation for me to really have a strong assessment; can we actually meet and do we have excess capacity versus the demand in case, just like softening a little bit. In general, we have not seen a major softening in demand, as evidenced by either the cash sales in the DTC channel and/or the B2B orders that we've remediated. We continue to see a very healthy conversation in terms of how we're going to end the year and get back to normalized supply situations on the B2B side, especially in the US. So it's difficult. We know that the macroeconomic conditions potentially inflationary pressures might have an impact; we are working hard to try and isolate that. As you said, it's not easy to be able to pull that out from the performance, but we're being very diligent in terms of how we're watching for that. But so far, I think the demand is, I would say, steady and we're keeping an eye in terms of if there is any impact from the macroeconomic conditions.

Great. And then the follow-up. As we think about the fourth quarter, what percent of your OUS business do you have line of sight to be able to sell into? And it also sounds like the delegations you do have will expire by year end. I know you don't want to speculate on the timing of approval, but is it realistic to expect MDR approval could come such that there isn't a gap early next year? Thanks.

Thank you for the question, Matt. To begin, we remain cautiously optimistic about the progress we have made so far. We have not changed the approval date for the EU and BR certificates, which is still set for Q4. Additionally, we received delegations and exceptions from five countries that allowed us to continue supplying them. We have also shipped more against open orders in Europe to ensure we can meet demand. Considering these three factors, we believe we can address any potential revenue gaps you may be concerned about for this year.

Thank you. Appreciate it. The next question is from Mike Matson of Needham and Company. Please proceed with your question.

Hi, this is Joseph on for Mike this morning. So I guess just first one, it seems like with inflation, the labor shortage that we're seeing, the economics of POCs may have become more favorable for HMEs. Just kind of want to get your thoughts on that and what you've been hearing from your B2B customers?

So maybe, Joe, let me go back to the basic premise. I think if you look at the industry coverage and the lobbying by the HME industry, I think the macroeconomic condition and the inflation beat in wages or in other costs are not favorable to the HME model. I think they might be favorable to the rental model slightly. But if you look at how the lobbying is happening in terms of the reimbursement rate, the first and foremost thing that is cited is the increasing cost of the HME delivery model. That's why we think that the demand delivery model in terms of POC-based therapy remains advantageous and continues, I think, to be a very strong proposition in terms of overcoming some of those challenges. I think the second part of your question was with respect to what we're hearing from B2B. Ongoing, I think healthy conversations in terms of how first of all, we mitigated most, but not all of the backlog orders, which I think was received very positively in the channel itself and the B2B business. Now the discussions are ongoing in terms of how we mitigate the remainder of the orders for the year, as well as when we get back to normalized sales levels, what does that look like? But we are continuing to see healthy orders coming in, in general with a few exceptions here and there, but they're not notable in general.

Maybe just a quick continuation on that and then one more. If possible, do you think you can size the backlog, I guess, still remaining with the US customers that have been worked through? And then just a follow-up on that. In terms of the physician sales force and I guess some of the productivity improvements, is there any way you can kind of give more detail on the metrics of the productivity gains? Just kind of give a little bit more color about what you guys have done there this quarter, this last quarter? Thank you.

Okay, Joe. Let me address the simpler question first. We won't provide details on the backlog of B2B orders. However, if you examine our quarterly performance, we've made significant progress in addressing the backlog. Historically, the B2B shipments have shown that this quarter has been notably strong in that area, and Kristin will discuss this further later. Now, regarding the physician sales force, as we mentioned earlier in March, this is a relatively new initiative and a key strategic focus for enhancing the reach of POC-based oxygen therapy. The productivity gains we are witnessing are attributed to three main factors: firstly, effectively covering the most significant prescribers; secondly, ensuring we maintain the right frequency of interactions; and thirdly, shortening the sales cycle for obtaining referrals. Additionally, we are now engaging new prescribers we haven't worked with before. For both existing and new prescribers, we are also focusing on securing repeat business rather than just one-time referrals. We're currently not ready to discuss specific metrics until we achieve a steady state in this organization, but we anticipate providing concrete metrics in 2023 to illustrate our progress. Looking at our revenue performance indicates that our strategy is effective. We are learning and refining our coverage and frequency strategy; the insights gained from the first six months have been invaluable, alongside the data-driven approach we employ. We are adjusting our call frequency and methods for improved productivity, and we foresee this adjustment leading to acceleration early in 2023 as we implement these changes for the rest of the year.

The next question is from Margaret Kaczor of William Blair. Please proceed with your question.

Good morning, everyone. Thank you for taking my question. I wanted to start by discussing guidance, particularly as we approach the fourth quarter. What factors contribute to the high end and low end of your expectations? I'm trying to understand how we should view 2023. How are you considering various elements such as supply, the possibility of a recession, or any other factors? The guidance for Q4 seems a bit broad, and I would like to understand your perspective on how you are approaching 2023. Thank you.

Hey, Margaret. I'm going to have Kristin answer the guidance question, and then I'm going to comment on 2023.

Hi, Margaret. Thank you for your question. As we approach Q4, if you review our Q3 results, you'll notice that our domestic B2B sector had an exceptional quarter as we addressed most of our backlog during that time. To understand the typical ordering patterns for this channel, we need to look back to the period before the supply constraints started, which began to impact us in late Q3 and into Q4. By examining the first three quarters of last year, you can identify what we consider a normal ordering pattern for that channel. Additionally, considering the seasonality we've observed over the years, Q4 usually experiences a decline of about 3% compared to the previous quarter. Combining these factors will inform our estimates.

Margaret, I would like to share some thoughts on 2023. We are closely monitoring the macroeconomic conditions and potential inflationary pressures. We believe that demand will remain steady going forward. As we assess future growth rates, we will provide more insights towards the end of the year when we have greater visibility. However, we do not anticipate any significant acceleration or deceleration in growth rates. We will update you at the end of the year.

Okay. Obviously, the growth rates are a little bit different throughout 2022. So I hope that you're referencing maybe the full year growth that you guys saw or maybe slightly above, but we'll find out. I also wanted to touch on the demand maybe you're seeing on the domestic side. So just to follow-up, how much of that backlog that you saw was in the HME channel versus the online resellers? And again, looking at ‘23, is this a relatively sticky business, assuming it's in the HME channel; maybe you have some tailwinds there? Or is it kind of maybe a little bit more similar to the DTC channel with the resellers? Thanks guys.

So, Margaret, let me make sure I understand the question. You're asking if the demand in the B2B channel is sticky, right?

Yes. The drivers of the backlog this quarter, was that online resellers or HME?

Yes. The demand is present among resellers and B2B customers, including both large and medium to small businesses. The brand and demand for the Inogen POC remain very strong, particularly in the HME channel. Additionally, we haven't addressed the backlogs, and the previous state remains largely unchanged; most of it did not get canceled or deferred, indicating the stickiness and strength of the business. There is ongoing discussion regarding the total cost of ownership compared to acquisition cost, encouraging customers to make informed decisions when expanding their fleet and ensuring profitability. While there are challenges such as increasing costs, these factors are leading customers to reconsider delivery models, which tend to have tighter margins. Overall, we believe the business is healthy and resilient. We are evaluating what normalized demand might look like, and we are encouraged by the discussions we have had so far.

Thanks, guys.

The next question is from Matt Mishan of KeyBanc Capital Markets. Please proceed with your question.

Hi. This is actually Liz on for Matt. Thanks for taking the question. If I could just follow up on the 2023 comments, like what would you need to see in order to provide guidance for 2023 during your next earnings?

Yes. It's relatively a simple question. What we're looking for is visibility from a supply perspective and in all honesty. So let me take a step back and characterize how we've evolved in terms of that and how we've managed it. At the peak of the crisis, we used to have weekly visibility, nothing beyond that. Then we moved to monthly visibility. We're now around quarterly visibility, which is good. But I don't have full year visibility. And in our opinion, the biggest variable that will allow us to guide consistently is the fact that we have a line of sight for the full year supply chain. So we'll make sure that we can meet the demand that is in the market. And honestly, if you look at the semiconductor industry and the outlook, I think things are going to extend into 2023. Now we're being very judicious and trying to forward buy and secure part of what we need in 2023. We will not stop at securing as much as we can, but it's simple that the supply is not all available for us. So towards the end of the year, we may be potentially early in 2023. If that abates as potentially a risk, we will start talking about longer-term guidance.

Okay. And then assuming that you have enough supply to meet demand for DTC rentals as a top priority, what do you think the right long-term growth rate for the business looks like?

Yes, that’s a common theme regarding growth rates on a business-by-business basis. Earlier this year, we focused on that channel, which was essential for us to satisfy the demand we've generated in direct-to-consumer. To explain why things were delayed this quarter, we found ourselves balancing strategic financial goals with potential business factors. Consequently, we shifted our focus to address a long-standing backlog in business-to-business. We hope to return to balancing these channels as much as we can, but those factors tend to fluctuate based on our business situation, market conditions, and competitor actions. However, we will refrain from speculating since we are not providing guidance on any growth rates at either the overall or business level.

Okay, and just the last question for me. As your supply improves, do you lift your advertising, do you increase the sales rep count, or do you feed the B2B channels that have been more constrained over the last year?

If I understand your question correctly, we are consistently working to enhance the performance of all teams. I'll begin with the DTC team. We adjust our advertising spend according to the supply situation while also ensuring we generate the appropriate level of demand. We remain cautious regarding our expenses and the acquisition costs for patients. This process is ongoing and reflects the current supply-demand situation. I believe that addresses your question. If not, please share the second part and I will respond. Okay. Thank you.

The next question is from Robbie Marcus of JPMorgan. Please proceed with your question.

Hi, this is actually Alan on for Robbie. I kind of wanted to touch on the backlog, but maybe from a different angle. You mentioned that in the quarter the US DTC business suffered a little bit because you were prioritizing addressing the backlog in US B2B. So while I don't want to push you on projecting that business forward, what should we think of as being the actual underlying demand of US DTC in the quarter that you would have been able to satisfy if you hadn't been prioritizing the backlog in B2B?

So regarding the direct-to-consumer business, as I mentioned earlier, I wish we had complete supply conditions to accurately assess whether demand is softening or remaining stable. Without that clarity, it's challenging for us to analyze the situation. The DTC segment has shorter sales funnels compared to our regular business, and we don’t have a backlog that would allow for easy measurement. This adds to the complexity of understanding the variables at play. Overall, we aren’t hearing significant concerns from our sales team about inflation or weakened demand. However, as I mentioned previously, we also took this opportunity to balance other factors and specifically in this quarter and the last one in Europe, we redirected some volume to the U.S. B2B market and the European market to optimize our DTC sales strategy. We have work to do in enhancing productivity and efficiency within our sales team and are using this somewhat quieter time to complete training, updates, and implement new sales management practices. We believe these efforts will help us improve performance in that area and address any softening in demand. Additionally, let me share some insights regarding inflation. We conducted primary research focusing on patients using oxygen therapy and those with COPD. A significant percentage of them, between 67% and 77%, are either fully employed, business owners, or retired, indicating they either have stable income, insurance, or access to Social Security. With the increase in Social Security payments expected in January 2023, there could be financial relief for a large portion of our target patient population if inflation persists. This is part of our approach to gauge the inflationary impact. While risks remain, the situation seems more manageable. Looking at coverage under CMS, between 46% and 53% of our patients are under Medicare and Medicaid, and when private insurance is included, it covers between 96% and 97% of our patient population. These data points help us closely monitor the impact on demand, but until we reach a steady state of supply, we cannot accurately pinpoint any demand softening.

Got it. Thank you very much. And then just a quick follow-on. When we think about your efforts to optimize the DTC sales force, should we think about that as basically continuing to pressure, if you will, your average sales rep number through the balance of 2022? And what should we really view as kind of a good steady state for your sales force going forward, recognizing that you are, as you said, in the process of figuring that out yourself? Thank you.

I think it's a good question. So when we piloted earlier, some of the new disciplines that I cited earlier on the Q&A. We realize that there is a lot of potential in terms of improving productivity and efficiency of our sales effort and overall cost of acquisition. So we continue to roll these out. I think the number and the zip code of 300 people is relatively where we should land, but there is continued effort to try and understand how do we drive the highest optimization of that sales force and other factors that we have in terms of the spend for the acquisition of the patient base. So roughly 300 give or take, but yes, you're right, we are not for increased productivity as evidenced by what we demonstrated through the pilots and institutionalizing and scaling that training and experience across the rest of the organization.

There are no additional questions at this time. I'd like to turn the call back over to Nabil Shabshab for closing remarks.

Thank you. I'm pleased with the incredible progress that we have made to manage and mitigate supply headwinds. I'm equally pleased with the steady and incremental improvement to drive commercial productivity, develop an innovation pipeline, and start to build our clinical evidence dossier as part of our transformation. Although there is work ahead of us, we have made great progress in terms of rebuilding and strengthening the fundamental capabilities, while simultaneously growing revenue. In 2023, we will be well on our way in terms of institutionalizing scaling capabilities, processes, systems, and embedding our Inogen culture in all that we do to help manage current and ongoing macroeconomic headwinds and in support of accelerated and sustainable performance and a path to profitability in the long term. As I conclude, I would like to thank our investors for their support and continued interest in Inogen. I would also like to recognize and thank the Inogen team for their dedication and hard work that has allowed us to continue to serve patients with oxygen therapy needs all around the world. Thank you and have a good day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.