Prepared remarks
Welcome to Inogen's Second Quarter 2026 Earnings Conference Call. As a reminder, this conference is being recorded today, August 6, 2026. I would now like to turn the call over to Lorna Williams, SVP of Investor Relations and Strategic Planning.
Thank you all for participating in today's call. Joining me are President and CEO Kevin Smith; and CFO Jason Richardson. Earlier today, Inogen released financial results for the second quarter of 2026. The earnings release is available in the Investor Relations section of the company's website along with a supplemental financial package. During today's call, we will discuss non-GAAP financial measures that we believe provide useful information for investors. This information is not intended to be considered in isolation or as a substitute for GAAP financial information. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental financial package. In addition, our discussion today will include forward-looking statements, including but not limited to expectations on our future financial and operating performance. We make these statements based on current expectations and reasonable assumptions. However, our actual results could differ due to risks and uncertainties. Please review our annual report and other SEC filings for discussion of risk factors that could cause our actual results to differ materially from any forward-looking statements made today. Forward-looking statements made on today's call speak only as of today, and Inogen undertakes no obligation to update or revise these statements except as required by law. The company has not provided a reconciliation of forward-looking adjusted EBITDA to the most directly comparable GAAP measure because certain items that impact net income are uncertain or outside the company's control and cannot be reasonably predicted without unreasonable effort. With that, I will turn the call over to Inogen's President and CEO, Kevin Smith.
Good afternoon, and thank you for joining our second quarter conference call. Starting with the Q2 results, Q2 total revenue came in at $95.1 million, growing 3% year over year, due to strong international growth, POC demand, and contribution from our new products, including Voxi and the Aurora mask. We believe that our continued strong POC unit volume growth of over 12% demonstrates that we continue to outpace market growth as we continue to gain traction with more U.S. distributors. In addition, we continue investing in product innovation and commercial leadership to expand our presence in the home respiratory care market with a long-term goal of consistently delivering high single-digit revenue growth. U.S. sales were $42.3 million in the quarter, as the strong mid-single-digit revenue growth in our B2B sales channel was not enough to offset the channel mix challenges in DTC. Results in DTC reflect the market shift where HMEs are prescribing POCs from day one, and in turn, HMEs are our largest and more strategic funnel. It is important to note that in total, the U.S. segment unit volume was up high single digits, indicating continued strong interest in our products and bolsters our confidence in our strategy. This quarter, we also increased our investments in the B2B sales force, and the team is working across the commercial organizations to sharpen execution and align priorities. That investment is already starting to show a return. We significantly increased the number of U.S. customers moving through the B2B sales channel sequentially over Q1. The cost of ownership case we're making to HMEs is compelling, an 8-year useful life against the 5-year industry standard, best-in-class serviceability and availability, and a growing body of real-world outcomes data. In addition to POCs, our two new products, Voxi and Aurora, continue to receive positive feedback from patients, physicians, and caregivers. We are starting to build inroads in these markets and are pleased with the progress to date. I remain excited about our path to growth with our core business as we bring new innovation to market. On rental, as more patients enter the long-term oxygen therapy pathway through HMEs with a POC, the traditional funnel for rental is narrowing. While this creates a tailwind in our B2B channel, our direct sales channels are feeling pressure. We are managing the rental business with discipline, balancing growth against profitability. At the same time, we remain committed to ensuring every patient who wants an Inogen device can get one. International was again a standout. Revenue of $41.3 million grew 15% year over year, a mid-teens expansion sustained across geographies and commercial initiatives. We are penetrating in existing countries and expanding further across Eastern Europe and Latin America, while our teams are deepening distributor relationships. Q2 was continued evidence of a repeatable model, and while we do see the timing of select distributor purchases impacting the second half, we expect the trajectory to continue to fuel further growth over the long term. One example of our continued global expansion is the Rove 6 Portable Oxygen Concentrator launch in Canada. Canada is a large opportunity with roughly 2 million COPD patients. This follows Rove 6's launch in Brazil last quarter, which continues to perform in line with our expectations. These successive launches are the execution of a deliberate international expansion strategy, entering new geographies, building upon established distribution relationships, and extending Inogen's reach to patients who currently have limited access to high-quality, portable oxygen therapy. Profitability is an active priority at Inogen, and we are diligently executing toward it. Our adjusted EBITDA this quarter was $2.4 million, reflecting 15% year-over-year improvement. At the same time, we are conducting a thorough review of our P&L. We have been examining every line of the business with a clear mandate to ensure our cost structure is aligned with our growth priorities, and that we are deploying capital to drive growth, expand into large growing markets, or expand the value proposition of our leading product. That work is underway and we will share more as it gains progress. Our approach to capital allocation also reflects a simple principle. Every dollar we spend must contribute to building a stronger company and generating sustainable shareholder returns. In practice, that means investing with conviction where we see clear returns, such as the sales force expansion, HME channel development, international market entry, and adding higher gross margin accretive products in adjacent markets. Importantly, we generated $2.9 million of operating cash flow and ended our second quarter with $107 million in cash, cash equivalents, marketable securities, and restricted cash, reflecting our strong capital position and ability to continue investing in innovation and long-term growth. We continue to operate with no debt. Innovations remain central to how we generate long-term value at Inogen. And this quarter, we made meaningful progress across our pipeline. Specifically, Voxi expands our core oxygen product portfolio as a high-quality alternative for home oxygen therapy. To date, we've shipped more than 5,000 units, and we continue to receive positive feedback from patients and increase traction with our HME partners. Beyond the encouraging early commercial performance, Voxi addresses an attractive market opportunity. We estimate the SOC market has a TAM of $300 million in the U.S. Importantly, stationary concentrators are a foundational part of oxygen therapy, as virtually every patient who uses a POC also has a stationary oxygen concentrator in the home. By expanding to both POCs and SOCs, we are able to serve a larger portion of the patient journey, deepen relationships with U.S. B2B partners, and capture additional value within our core respiratory care market. At the same time, we are building traction with Aurora CPAP masks, and we are encouraged by the strong early adoption, having more than doubled our customer count sequentially. We continue to expand the Aurora pipeline and convert those opportunities. We expect this momentum to continue. The clinical evidence confirms what our commercial teams have been hearing. At SLEEP 2026 in Baltimore in June, we presented the full results of a 90-day in-home study evaluating experienced CPAP users who are already satisfied with their existing masks. That is a deliberately high bar, as these are not dissatisfied patients looking for an alternative. And yet the data showed that they overwhelmingly preferred Aurora. The reception at SLEEP, the conversations that followed, and most importantly, the growing traction in Aurora reinforced our conviction. We have a product people want to use and the clinical foundation to prove it. Our U.S. B2B sales reps are deepening provider conversations, and we expect Aurora's contributions to gradually increase throughout the rest of the year. We estimate the U.S. CPAP mask market at approximately $2.2 billion, growing at a high single-digit rate. So every point of market share is roughly $20 million of potential annual revenue to Inogen. We continue to execute the evidence-driven HME-focused commercial strategy we have already put into motion to make this market meaningful for us. We are also actively building the clinical and commercial foundation to scale Simeox. We estimate a U.S. TAM of approximately $500 million in non-cystic fibrosis bronchiectasis alone, growing at a high single-digit rate. The path to access that vast market is through CMS reimbursement, and our IMPACTS-200 trial enrollment is progressing on track, with the goal of providing CMS and payers the clinical and economic rationale to cover this differentiated therapy. In China, we completed enrollment and achieved last patient last visit for the Simeox H-SCOPE study. We expect statistical analysis results later this year. China represents a significant long-term opportunity in respiratory care, and we are moving methodically through the regulatory pathway to access it. While we invest aggressively in new products, we are equally committed to deepening the clinical and scientific foundation of our core oxygen therapy business. I want to highlight our recently published manuscript in the ERS Open Research journal, where we introduced a simple oxygen therapy assessment tool known as the Questionnaire for Oxygen Therapy Evaluation, or QuOTE. Developed among 14 eminent pulmonologists across the U.S. and Europe, QuOTE is a clinical assessment tool designed to improve how patients on long-term oxygen therapy are evaluated and managed. This manuscript demonstrates that Inogen's contributions to respiratory medicine extends beyond our device portfolio. It strengthens our scientific credibility in oxygen therapy, deepens our engagement with key respiratory thought leaders, and advances the standard of patient assessment and management in the global long-term oxygen therapy market. The early response has been striking. Within days of publication, we received requests for translation into additional languages and interest in further development, validation, and deeper psychometric evaluation. The level of immediate engagement from the global respiratory community speaks to the unmet need this tool addresses. Beyond our current portfolio, we continue to invest in our innovation pipeline, advancing digital health capabilities designed to enhance patient engagement, connectivity, and clinical insights. I would like to take a moment to welcome Andy Reding, who joined Inogen last month as Chief Operating Officer, a newly created role that reflects the operational scale and executional demands of this next chapter. Andy brings more than 30 years of med tech experience across commercial operations, product development, and health care reimbursement. As Chief Commercial Officer of Viant Medical, he led operations across 25 facilities, serving hundreds of device companies and delivered exceptional growth over 6 years. Prior to Viant, as VP General Manager of Hillrom Respiratory Health, he held full P&L responsibility and led his team through global sales force expansion, new product launches, and successful FDA and CMS navigation. We are glad to have him on board. Today, Inogen operates across oxygen therapy, sleep therapy, airway clearance, and digital health with an estimated combined TAM of over $3.4 billion. Twelve months ago, that number was $400 million. In every investment we have discussed today in leadership, commercial execution, new products, and clinical evidence is oriented towards the same outcome: durable top-line growth, and a clear, accelerating path to profitability. We remain committed to at least one new product launch per year. And with that, I will turn the call over to Jason to discuss the financial results in more detail. Jason?
Thank you, Kevin, and good afternoon, everyone. As Kevin mentioned, total revenue for the second quarter was $95.1 million, an increase of 3% from the prior year period, primarily driven by strong international growth, the favorable impact of foreign exchange rates, and new product contributions. For the second quarter, foreign exchange had a positive 240-basis-point impact on total revenue. U.S. sales were $42.3 million, down 2% year over year. This quarter, our distributor business benefited from both healthy POC volumes through DMEs and contributions from our new product launches. Looking ahead, we expect U.S. sales to return to growth as these new products continue to gain traction and B2B customers convert patient new starts to POCs. However, the DTC sales channel will continue to be under pressure from the broader market channel mix dynamics. As a result, we currently expect gains in the U.S. B2B sales channel to be partially offset by continued declines in DTC in the second half of the year. International sales were $41.3 million, up 15% year over year. This marks the 10th consecutive quarter of double-digit growth of our international sales. U.S. rentals were $11.6 million, down 12% year over year, reflecting the continued and structural sales channel mix shift Kevin described. Total gross margin was 45.5% in the second quarter of 2026 compared to 44.8% in the prior year period. Adjusted gross margin improved by 65 basis points to 45.6% compared to 44.9% in the prior year period due to cost improvements and lower warranty expenses. Expanding gross margin over time is critical to our overall profitability goals, particularly given the structural headwinds in the U.S., and we are pleased with the second quarter and first half expansion. Adjusted operating expenses for the second quarter of 2026 was $44.6 million, an increase of 1.2% compared to the prior year period. Adjusted R&D expense in the quarter was $4.9 million, an increase of 13.3% versus the prior year period as we are investing in clinical evidence generation and new product development that we believe will differentiate Inogen over the long term. Adjusted SG&A expense in the quarter was $39.8 million, in line with prior year as investments to support new products and additions to our U.S. B2B sales channel were offset by cost reductions. The GAAP net loss for the second quarter of 2026 was $3.9 million compared to a net loss of $4.2 million in the prior year period. Adjusted net loss improved nearly 95% year over year to less than $0.1 million in the second quarter of 2026, compared with an adjusted net loss of $0.7 million in the prior year period. Adjusted EBITDA was $2.4 million in the second quarter of 2026, compared to $2.1 million in the prior year period, an improvement of $300,000. Q2's profitability was a strong quarter for us, and we continue to plan to drive operating leverage and efficiency while also prioritizing investments that support long-term growth. Moving to cash, we generated positive operating cash flow of $2.9 million in the second quarter of 2026 and free cash flow of $1 million. We ended the quarter with $106.8 million in cash, cash equivalents, marketable securities, and restricted cash with no debt outstanding. In the first half of 2026, we repurchased over 1.1 million shares of our common stock for a total consideration of $7.5 million. We continue to believe our stock is undervalued relative to the fundamentals and the strategic opportunity in front of us. We are well positioned to return capital to shareholders while investing in growth, and we intend to continue to do it thoughtfully. Now, let me turn to our third quarter and full year 2026 outlook. We are updating our full-year 2026 revenue guidance to a range of $355 million to $361 million, representing approximately 3% growth at the midpoint of the range. This represents a reduction from our previous guidance range of $366 million to $373 million. We continue to expect strong demand for our core POC products and further growth in the scaling of Aurora and Voxi. These factors will be partly offset by continued U.S. market channel mix shift pressure on our direct businesses and the timing of certain select distributor inventory purchases in international. For the third quarter of 2026, we expect reported revenue to be in line with the third quarter of 2025 reported revenue of $92.4 million. This reflects the impact of continued U.S. sales channel mix, as well as the impact of international distributor inventory purchases. As we manage through channel mix shifts on the top line while prioritizing growth investments, we are pleased to raise our full-year adjusted EBITDA guidance. We now expect adjusted EBITDA of approximately $4 million for the full year 2026, representing 48% growth over the $2.7 million reported for the full year 2025. With that, I will turn the call back to Kevin for closing remarks.
Thank you, Jason. I want to address the updated outlook we shared today. While our performance this quarter was in line with our expectations, and we are lowering our guidance, we are approaching this period with a clear understanding of the market dynamics, a strong sense of accountability, and a focused plan to drive improvement. As we look ahead, our focus remains on execution. In the second quarter, we delivered continued international POC growth, realized strong U.S. POC unit growth, and made meaningful progress in our U.S. B2B sales channel with new leadership and expanded sales team and positive traction for Voxi and Aurora. We have strengthened our leadership team with the addition of a Chief Operating Officer, while increasing our focus on financial discipline and operational execution, reflected in the increased full-year adjusted EBITDA guidance. While we remain mindful of near-term headwinds, including international customer inventory management and ongoing channel mix pressure in our U.S. direct business, we are taking decisive action to improve execution, drive profitability, and create long-term shareholder value. Operator, please open the call for questions.
Questions and answers
The first question comes from Mike Matson from Needham & Co.
Just wanted to ask one on this channel issue with the DTC side of things. Is the DTC business likely to continue to decline? Is there any ability to sell CPAP masks or other products through that channel that would make it worth keeping intact? I understand the mix shifts are negative for that part of the business, while it's a positive for the B2B side. I understand there's an offset, but I'm trying to understand if there's any bottom here or if this will keep gradually eroding over time.
Mike, thanks for the question. I think it might be helpful to step back and provide context. We have confidence that we do have the right strategy and many things are going well. The core POC business is healthy. The underlying demand is up 12%. International growth is 15%. Geo expansion contributed 80 basis points to growth in the second quarter, and the new products, Voxi and Aurora, are gaining traction and velocity. They contributed more than 100 basis points of growth. Looking forward, what's changed from the previous quarter? First, some distributors have indicated they will manage inventory in the second half. We see that as transitory. This includes factors like tenders getting delayed and distributor consolidation. International continues to grow and that is a highlight for us. The mix shift has been happening faster than we anticipated. That is a tailwind for B2B and a headwind for the direct business. We do see opportunities for DTC to stabilize and grow. For the second half of this year, when we look at total U.S. business together with the B2B U.S., we see us being able to overcome that headwind and see overall growth in the U.S. business in the second half. The rental business is another piece of that headwind. The rental business is affected by HMEs providing POCs more frequently instead of oxygen tanks. We've brought in new people to evaluate options to improve that business, which is important going forward. We do believe we have the right strategy. We believe we can sell more; we've been selling Voxi through the DTC channel. We see opportunities to sell other products there. That's core to us and it's something we're focused on. Jason, anything to add?
I think Kevin covered it. We see a return to growth on the sales side in the second half for the U.S., which is important. We have work to do on rental, and we have a few options to try to improve performance.
Understood. Regarding gross margin — it was good to see gross margin up, especially given the shift into B2B from DTC, since margins tend to be higher on DTC. What drove the gross margin improvement in the quarter?
We're pleased with what we're seeing from a gross margin standpoint. Even with the structural headwind from the mix shift, we've realized cost-saving initiatives. We did have some modest one-time items in the quarter, but over time we've been able to be in the 44% to 45% range. Also, we've realized lower warranty costs, which reflects product quality and is a differentiator in the market, particularly with B2B partners. We expect to offset some of the mix shift going forward. Mix shift will continue to put pressure, and we have modest inflationary pressures, but we continue to have cost improvement initiatives. New products should be accretive. We're happy with where we are from a gross margin standpoint.
Last question from me: can you provide an update on getting POCs into the Chinese market with your partner?
We're working through the regulatory process in China. We haven't provided timing guidance specific to POCs yet. We'll provide updates as they become relevant. One note: we continue to make good progress with Simeox in the Chinese market, as noted in the prepared remarks, and we expect to have regulatory clearance for Simeox in China before the end of the year.
The next question comes from Anderson Schock from B. Riley Securities.
Aurora and Voxi continue to scale. Could you update us on where each stands today with contribution in the quarter and account penetration? How much contribution from these is embedded in the revised full-year range versus the original?
We've seen growth and velocity for both products. Account penetration has been increasing, with some metrics such as doubling of accounts sequentially. Aurora masks are adopted account by account and patient by patient; feedback from patients and healthcare providers has been positive. Similarly with Voxi, we've received solid feedback and like the volumes and the ongoing discussions in the market. We haven't provided a more detailed breakdown than that. Jason, anything to add?
To answer the contribution question, in the second quarter, new products contributed a little over 100 basis points, specifically Voxi and Aurora. As we think about the second half, we expect that to accelerate. That assumption is unchanged relative to our internal forecast and is on target with what we were forecasting.
On Simeox, outside of China, could you provide an update on the IMPACTS-200 study and the timeline from data to a U.S. coverage decision?
We're progressing well with IMPACTS-200 and are where we expected to be on enrollment. We haven't guided timing on the study outcome. We'll provide an update once we reach last patient last visit, similar to how we communicated for the SCOPE study in China. Also note that we'll likely need a second trial — we're working with investigators on that — because for CMS reimbursement we intend to present at least two robust trials to make the strongest case.
The next question comes from Ilya Zubkov from Freedom Capital Markets.
As you continue to evolve the mix toward the B2B channel, could you share your perspective on patient and provider stickiness and how transitions between different channels typically play out in terms of patient retention?
When we think about channels and patient stickiness, our strategy focuses on owning three buckets: the patient and their engagement, the healthcare providers who make recommendations, and the HME relationships in B2B. The QuOTE study demonstrates the level of engagement we're aiming for with HCPs to influence recommendations and build brand preference and loyalty for Inogen. The QuOTE tool engages patients, caregivers, and HCPs, enabling us to continue building brand preference as we influence clinical conversations. We are not relinquishing control to B2B partners; our digital health initiatives are designed to connect patients, healthcare partners, and the B2B partner, allowing us to engage across the ecosystem.
There are no further questions. And at this time, I'd like to hand the call back to CEO, Kevin Smith, for closing remarks. Thank you, Kevin. Over to you.
Thank you. At the midpoint of 2026, our path forward is increasingly clear. Our commercial strategy is gaining traction, our product and clinical pipeline are advancing, and the new additions to our executive team position us well for the future. This progress would not be possible without the hard work, dedication, and resilience of our employees who drive Inogen forward every day. Thank you for your continued support. We look forward to updating you on our progress next quarter.
This concludes today's conference. Thank you for participating. You may now disconnect.