Inogen Inc. (NASDAQ:INGN) reported third-quarter 2017 earnings of 33 cents per share which comfortably beat the Zacks Consensus Estimate of 29 cents and improved from the year-ago figure of 16 cents.
The upside was driven by roughly 26.8% growth in revenues, which totaled $69 million and surpassed the Zacks Consensus Estimate of $64.0 million.
Q3 Details
Sales revenues surged 33.8% to $63.1 million, while rental revenues declined 18.7% to $5.9 million.
Total gross margin was 48.1%, up from 46.2% in the comparative period of 2016. Sales gross margin was 50.3% compared with 48.6% in the prior-year quarter. The improvement was primarily attributable to increased mix toward direct-to-consumer sales and lower cost of goods sold per unit. This was partially offset by declining business-to-business average selling prices. Rental gross margin was 24.3% versus 30.7% in the year-ago quarter. The downside resulted from reimbursement rate reductions. This was partially offset by reduced cost of rental revenues primarily associated with lower depreciation.
General and administrative expenses were $10.4 million, up from $8.7 million in the comparative quarter of 2016. This was primarily due to $0.6 million of patent litigation settlement expenses, increased personnel-related expenses and higher patent defense legal costs.
Guidance
Considering the solid performance in the third quarter, Inogen raised its guidance for 2017 revenues to the range of $244-$248 million, compared with the previous $239-$243 million. This represents year-over-year growth of 20.3% to 22.3%.
Our Take
Inogen reported stellar third-quarter 2017 results, beating the Zacks Consensus Estimate for both the counts. The company witnessed solid growth in revenues and adjusted earnings on a year-over-year basis. In our view, solid domestic and international business-to-business sales have led to the impressive quarterly performance. In the upcoming quarters, the company expects direct-to-consumer sales to be its fastest growing channel followed by domestic business-to-business sales. In this context, the company recently signed a lease for its expansion site in Ohio to accelerate growth in domestic direct-to-consumer sales channel.
On the flip side, declining rental might mar the company's prospects. Since the company generates a significant portion of its revenues from the international market, volatile foreign exchange rate will always pose a concern.
Zacks Rank & Key Picks
Inogen currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical sector are PetMed Express, Inc. (NASDAQ:PETS) , Luminex Corporation (NASDAQ:LMNX) and Intuitive Surgical, Inc. (NASDAQ:ISRG) . PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), while Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 basis points year over year to 35.2% in the reported quarter.
Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues increased almost 4.1% year over year to $74.1 million.
Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% year over year. Also, revenues rose 18% year over year to $806.1 million.
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PetMed Express, Inc. (PETS): Free Stock Analysis Report
Intuitive Surgical, Inc. (ISRG): Free Stock Analysis Report
Luminex Corporation (LMNX): Free Stock Analysis Report
Inogen, Inc (INGN): Free Stock Analysis Report
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