Welcome to Inogen's Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded today, November 5, 2025. I'd now like to turn the call over to Lorna Williams, Senior Vice President of Investor Relations and Strategic Planning. Please go ahead.

Thank you all for participating in today's call. Joining me are President and CEO, Kevin Smith; and CFO, Mike Bourque. Earlier today, Inogen released financial results for the third quarter of 2025. The earnings 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 2025 and beyond, expectations related to our financial results for the fourth quarter and full year 2025, progress of our strategic initiatives, including innovation, our expectations regarding the market for our products and 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 5, 2025. 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 it may be required by law. 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 U.S. GAAP financial measures provide useful information to 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, Kevin Smith.

Good afternoon, and thank you for joining our third quarter 2025 conference call. Today, I'll share more detail on our progress across our three strategic priorities: driving top line growth, advancing profitability, and expanding our innovation pipeline. Afterwards, Mike will provide further financial details and our updated outlook. Our first strategic priority is to drive top line growth, and I am pleased to report that this quarter marked our seventh consecutive period of mid-single-digit revenue growth as we delivered over $92 million in total revenue. Continued market conversion from portable oxygen tanks to POCs fueled year-over-year unit growth of more than 15%, reflecting steady execution and increasing market adoption. Our domestic B2B channel delivered strong performance with 7% year-over-year growth, driven by disciplined commercial execution and a differentiated market-leading product portfolio. International B2B was a standout contributor, achieving 19% year-over-year growth as we advanced our strategy to expand in the high-opportunity global markets. The team has continued to do a great job deepening DME relationships and securing international tenders. These efforts are enhancing our brand visibility, expanding our reach, and reinforcing our position as a trusted global oxygen therapy partner. International expansion remains a key pillar of our long-term growth strategy. The global COPD market is large and growing, and the need for long-term oxygen therapy is underdiagnosed, and we see significant opportunity to leverage our portfolio breadth, brand reputation, and local partnerships to reach more patients outside the U.S. As health systems continue shifting care into the home, we believe international markets will be a sustained growth driver for Inogen in the years ahead. Collectively, these results bolster confidence as we execute our turnaround strategy. With seven consecutive quarters of mid-single-digit growth, we are establishing a track record of consistent execution and delivery. We are reiterating revenue guidance for the year. Looking ahead, we remain focused on accelerating growth within the large and underpenetrated COPD market, which represents a $600 million long-term conversion opportunity. Building on our commitment to top line growth, we are more focused than ever on advancing our path to profitability, our second key priority. Through a combination of operational excellence and disciplined cost management, we continue to strengthen our financial foundation this quarter. In the third quarter, we delivered meaningful operating leverage with operating expenses down 1.4% year-over-year and adjusted EBITDA of $2.3 million. This marks our third consecutive quarter of adjusted EBITDA profitability and the fifth adjusted EBITDA profitable quarter out of the last six, highlighting the durability of our model and consistency of execution. We also generated positive operating cash flow of $2.2 million or $4.6 million, excluding one-time legal and settlement expenses, demonstrating improved working capital efficiency and prudent cost control. Given this inflection point, we now expect full year adjusted EBITDA to be approximately $2 million compared to our prior expectation of breakeven. This upward revision reflects sustained revenue growth, operating discipline, and continued progress towards sustainable profitability. We have made all of this progress while continuing to prioritize our R&D and expand our innovation pipeline, our last strategic priority. In the third quarter, this included our work to launch the Voxi 5, demonstrating that our partnership with UL Medical continues to enable portfolio expansion and drive our broader respiratory care ambitions. Let me share more about Voxi 5, our newest stationary oxygen concentrator. This product launch is progressing well, and we're seeing positive early market reception, particularly in our B2B channel, where we previously did not have a stationary offering. This is an important milestone as our DME partners typically provide new patients with both stationary and portable oxygen concentrators. Having two strong products in the portfolio allows us to reach new customers and deepen relationships with existing partners. As a reminder, Voxi 5 is a meaningful extension of our oxygen therapy portfolio, complementing our portable solutions and enabling us to serve a broader range of patients in the home care setting. This product reflects the strength of our innovation pipeline and our ability to deliver high-quality, cost-effective solutions. The device provides one to five liters per minute of continuous flow oxygen in a compact, quiet, and durable design, making it an excellent option for patients who need a reliable and affordable second unit for use in multiple rooms. Lastly, turning to Simeox, our solution for effective and fatigue-free bronchial decongestion. We recently began our limited market release of Simeox in the U.S. as communicated earlier this year. It is the first step in our process to build support for reimbursement and advance our efforts towards broad commercialization. We are thoughtfully laying the groundwork for a scalable and sustainable commercial launch. Over time, this could position Simeox as a differentiated solution that enhances patient outcomes, deepens our engagement with clinicians and expands our participation across the broader respiratory care continuum. To conclude, the innovation we delivered this quarter reflects our ongoing commitment to advancing respiratory care through meaningful product development, greater affordability, and better outcomes for patients who rely on oxygen therapy every day. With that, I will pass the call over to Mike for an overview of our financial results.

Thank you, Kevin, and good afternoon, everyone. Unless otherwise stated, all financial comparisons presented refer to the prior year comparable period. I will now walk you through the results, starting with the income statement, cash flow, and then ending with guidance. Total revenue for the third quarter of 2025 was $92.4 million, an increase of 4% on a reported basis. The increase was primarily driven by higher demand from our international and domestic business-to-business sales. Looking at third quarter revenue on a more detailed basis, domestic business-to-business revenue increased 6.6% to $24.9 million versus $23.4 million in the prior period, driven by increased demand. International business-to-business revenue increased 18.8% to $38.4 million compared to $32.3 million in the prior period, primarily driven by higher demand and a successful expansion into new geographies. Direct-to-consumer sales decreased 17.9% to $15.8 million from $19.2 million in the prior period. As a reminder, we have intentionally shifted this channel towards a leaner operating model. Over the past 12 to 24 months, we have taken meaningful steps to streamline DTC operations, prioritizing efficiency, productivity, and profitability. We anticipate that DTC performance will stabilize over the next few quarters as we establish a foundation for broadening our product portfolio in this channel. We believe that these initiatives will serve as catalysts for long-term growth. Rental revenue decreased 4.4% to $13.3 million from $13.9 million in the prior period, primarily driven by a higher mix of lower private payer reimbursement rates. Now on to discuss third quarter gross margins. Total gross margin was 44.7% in the third quarter of 2025, decreasing 182 basis points from the same period in the prior year, primarily driven by increased business-to-business sales as a percentage of total revenue. Moving on to operating expense. In the third quarter of 2025, total operating expense decreased to $48.4 million, compared to $49.1 million in the prior period, representing a decrease of 1.4%, reflecting effective cost structure management and ongoing savings initiatives. Due to the timing of planned expenses for the advancement of clinical trials related to Simeox commercialization, we continue to expect ongoing operating expenses in the second half to be slightly higher than the first half of the year, reflecting investments in product development and commercialization. In the third quarter of 2025, we reported a GAAP net loss of $5.3 million that included one-time legal and settlement expenses of approximately $1.8 million, compared to a loss of $6 million in the prior period. This resulted in a loss per diluted share of $0.20 in the third quarter of 2025 versus a loss of $0.25 per share in the prior period. On an adjusted basis, we had a net loss of $0.5 million in the third quarter of 2025, compared to a loss of $2.6 million in the prior period and an adjusted loss per diluted share of $0.02 in the third quarter of 2025 compared to a loss of $0.11 in the prior period. Adjusted EBITDA was a positive $2.3 million in the third quarter of 2025, compared to a positive $0.5 million in the prior period. Moving on to our balance sheet. As of September 30, 2025, we had cash, cash equivalents, marketable securities, and restricted cash of $124.5 million with no debt outstanding. We generated positive operating cash flow of $2.2 million or $4.6 million when excluding the one-time legal settlement of $1.8 million and related legal expenses of $0.6 million. This performance reflects the overall health of our business and is a result of our commitment to financial discipline and effective expense management. Kevin mentioned earlier, I will outline our financial outlook for the full year 2025 and Q4. Remember, Q2 and Q3 are typically our strongest quarters. We are reiterating our full year revenue guidance of $354 million to $357 million for the year, reflecting approximately 6% year-over-year growth at the midpoint of the range. This reflects potential fluctuations this quarter, including the pace of stabilization in our DTC business, the timing of some sizable customer orders in our international B2B channel, and the continued execution of the Voxi launch. For the full year 2025, we are now raising adjusted EBITDA to approximately $2 million. For the fourth quarter of 2025, we expect reported revenue to be in the range of $87 million to $90 million, reflecting approximately 10% growth at the midpoint relative to the fourth quarter of 2024. Given current exemptions for certain medical devices, we continue to expect no material impact from tariffs on our gross margin and adjusted EBITDA. However, we will closely monitor developments and will share updates as appropriate. As Kevin mentioned, we are progressing well on our three strategic priorities and are in a great position to finish the year strong with an estimated 6% revenue growth at the midpoint of our guidance range and adjusted EBITDA of approximately $2 million.

Thank you, Mike. We are pleased to report strong progress this quarter. Our focus on operational excellence has resulted in the successful launch of new products and meaningful advancements in our innovation strategy. The release of Voxi 5 significantly enhances our respiratory care portfolio and broadens our presence in stationary oxygen therapy. Concurrently, our investments in digital health, product development, and global growth ensure sustained success over the long term. With this strong foundation in place, we're entering the fourth quarter with confidence, focus, and a clear path toward delivering growth and creating lasting value for patients, partners, and shareholders alike. With that, operator, please open the call for questions.

Our first question comes from the line of Mike Matson with Needham & Company.

This is Joseph speaking on behalf of Mike. To begin, congratulations on the ongoing improvement in turnaround. Regarding international B2B, can we say that there was a significant tender during the quarter that contributed to market growth? Any insights on this would be appreciated. Additionally, could you expand on the market dynamics you've discussed concerning POCs internationally? What trends are you observing? Lastly, I understand you mentioned further geographic expansions. Could you provide more details on that? Are you planning to expand internationally, or is it more about deepening your presence in existing countries, or venturing into new ones?

Joseph, this is Kevin. Thank you for your three questions. Indeed, when we look at the international, there’s not a one-off, one tender that was contributing to the growth there. We're continuing to build momentum with our international team. They've done an excellent job executing our plan and building relationships. The growth is coming from growing larger share, certainly within our customer base as well as expanding in individual markets. Primarily this quarter coming from growth within the existing markets, primarily being out of Europe. Now we have also been opening up new markets. We have new markets that will be impacting us going forward, which gives us confidence that we can continue to grow via the international business. This quarter was a 19% growth. In the future, we see the ability to continue to stay in that upper single-digit, double-digit range, but perhaps not at the same 19% level, although there are upside opportunities when we think about large markets that we'll be opening. We've talked before about China. We're not yet in China. We're working through that process. But that represents a very significant opportunity, especially working with our partner, UL, who knows that market quite well and does exceptionally well with the SOC business in China. We have other significant markets. I won't go into the details parsing out individual ones, but we have high confidence both in being able to grow the POC internationally as well as continue the work towards getting reimbursement for Simeox internationally, which will contribute high margin growth for us in the future as well.

Okay. Great. That's all very helpful. And then maybe, I guess, just Voxi 5, had sales started there? I know you guys are getting into deeper conversations or relationships, and I know this product is going to help that. But I'm just wondering, are there any B2B sales with Voxi 5 this quarter? Do you expect it to be in the fourth quarter or really more in 2026?

With Voxi 5, we have consistently indicated that we expect significant revenue to materialize in 2026 rather than in 2025. We are laying the groundwork and will continue our efforts into the latter part of this year and into the fourth quarter. We are pleased with the results and the positive feedback we have received from both customers and patients. We see this initiative as something that will progressively grow and expand. We've already started some scaling efforts this year, and while our initial sales from it are not yet impactful, we anticipate that these will contribute to growth in 2026 and beyond. Furthermore, when considering Voxi, it's important to recognize that it aims to cover about 90% of the oxygen therapy market. Currently, we estimate that about 23% of patients on long-term oxygen therapy use a portable oxygen concentrator, while the vast majority, around 90%, rely on stationary oxygen concentrators. This significantly increases our total addressable market.

Yes, absolutely. Massive opportunity there. Well, I guess just based on the guide, it looks like fourth quarter is going to see some meaningful revenue growth. So congrats on this quarter and the continued progress.

Thanks, Joseph.

Our next question comes from the line of Anderson Schock with B. Riley Securities.

Congrats on a strong quarter. So first, you've talked about the gross margin decline from the growth in the B2B revenue mix. But could you talk about the decline in rental gross margin this quarter? What's driving this? And I guess, should we expect to see continued pressure on margins in this business going forward?

Mike here. You're correct in noting that while our gross margin overall has seen some decline, we're experiencing significant growth in our B2B segment, with unit sales up 20% year-to-date. This increase in unit sales is a key factor in the situation. For your specific question about rental gross margin, when we review Q3, you'll likely find more favorable comparisons for rental gross margin. Speaking specifically about Q3, the gross margin has decreased by 470 basis points compared to last year, primarily due to a true-up adjustment related to logistics, which accounts for approximately 350 of those 427 basis points. The remainder reflects the challenges we’ve encountered in our rental business. However, it appears that those challenges are beginning to stabilize. Likewise, as we look at total patient services, the percentage of patients on Medicare continues to decline, which affects both our revenue and gross margin, since Medicare offers a higher reimbursement rate. Another challenge we've highlighted is related to capped Medicare patients, who we continue to support for 24 months before we can bill again; this situation is also beginning to level off. Thus, the main reduction in Q3 gross margin related to rentals is primarily due to that one-time true-up adjustment, along with the ongoing headwinds we've previously discussed.

Okay. Got it. And then can you share any updates on the progress towards achieving reimbursement for Simeox and the timing of a full commercial launch?

With Simeox, we are happy with the progress that we've been making. If we think about this on a global scale, we've been enrolling patients in a European trial that is geared towards advancing that pathway to reimbursement in Europe. We've also been enrolling patients in a trial in China that is working towards the commercialization efforts for the Chinese market once we have the registration approved. In the United States, we started our limited marketing release, the first phase of our LMR. That LMR is working through the prescriber channel, calling on physicians, and building those first experiences with Simeox here in the United States, which is important for us to inform the clinical trial and help ensure that we're able to maximize the reimbursement level there. So although I'm not guiding to that specific timeline as to when we'll have reimbursement here in the U.S., we're happy with the progress. We're excited about the opportunity, and the feedback that we've had from the first patients using Simeox, as well as the KOLs that are involved with our building the market and putting those initial blocks in place, has been exceptionally positive, which gives us a favorable outlook. So that's something that is exciting. At the right time, we'll give you some more clarity on timelines.

This now concludes our question-and-answer session. I would like to turn the floor back over to Kevin Smith for closing comments.

Thank you, operator. The third quarter was another strong step forward in executing our strategy and advancing Inogen's transformation. We continue to deliver consistent mid-single-digit top line growth, marking our seventh consecutive quarter of progress, driven by strength across both our domestic and international B2B channels. At the same time, we achieved meaningful improvement in profitability. And strategically, we took important steps to expand and diversify our portfolio. As we look to the remainder of the year and beyond, our focus is clear: to drive sustained revenue growth, expand margins, and build a stronger, more diversified respiratory platform. We have significant opportunities ahead, and we are confident in our ability to capture them through continued execution and operational excellence. I want to close by expressing my deep appreciation for our team at Inogen. Your dedication, passion, and belief in our mission to improve the lives of respiratory patients worldwide are what makes our progress possible. Thank you for your commitment and your contribution to another successful quarter. We're proud of the momentum we've built and energized by what lies ahead. Thank you.

Ladies and gentlemen, thank you for your participation.