Inogen Inc (INGN) 2014 Q2 法說會逐字稿

Welcome to the Inogen 2014 second-quarter financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded today, August 12th, 2014. I would now like to turn the conference over to Lynn Pieper, Investor Relations. Please go ahead.

Thank you. Just want (technical difficulty) for participating in today's call. Joining me from Inogen is President and CEO Ray Huggenberger and CFO and Founder Ali Bauerlein. Earlier today, Inogen released financial results for the second quarter ended June 30, 2014. If you have not received this news release or if you would like to be added to the Company's distribution list, please call Westwood Partners at 415-513-1281.

Before we begin, I want to remind you that our comments today will include forward-looking statements within the meaning of federal securities laws. Forward-looking statements include, among others, statements regarding our expectations, goals, or intentions, including but not limited to our assessment of the impact from competitive bidding, market-share expectations, our current views with respect to our ability to achieve revenue, net income, EBITDA, and adjusted EBITDA targets, our expectations regarding the stationary market and anticipated product releases in that category, our projections regarding our effective tax rate, our expectation that the Inogen at Home will be the lightest stationary oxygen concentrator in its class, and our expectation that we will expand our sales and marketing resources.

These forward-looking statements are based on management's current expectations, estimates, forecast and projections, and are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated in forward-looking statements. Our business is and any financial projections provided today are subject to numerous risks and uncertainties, including the possibility that Inogen will not realize anticipated revenue, the impact of reduced reimbursement rates in connection with the implementation of the competitive bidding process under Medicare, the possible loss of key employees, customers, or suppliers, and intellectual-property risk if Inogen is unable to secure and maintain patent or other intellectual-property protection for the intellectual property used in its products.

Information on these and additional risks, uncertainties, and other information affecting Inogen's business and operating results is contained in Inogen's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2013, and Inogen's subsequent reports on Form 10-Q and Form 8-K.

Forward-looking statements made during this call are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise.

Non-GAAP statements -- discussions during our call today will also include certain financial measures that were not prepared in accordance with the U.S. generally accepted accounting principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Inogen's current report on Form 8-K filed today.

For future periods, Inogen is unable to provide a reconciliation of non-GAAP earnings and adjusted EBITDA, net income or loss as a result of the uncertainty regarding and the potential variability of the amounts of interest income, interest expense, depreciation and amortization, stock-based compensation, provision for income taxes, and certain other infrequently occurring items, such as acquisition-related costs, that may be incurred in the future.

This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 12, 2014. With that, I'll now turn the call over to Ray Huggenberger. Ray?

Thank you, Lynn. Good afternoon, everyone, and thanks for joining our second-quarter call. I'd like to start with a brief review of the strategy we set forth at the beginning of the year. Then I'll cover the highlights of the quarter with some commentary on market trends. Ali will provide detail on our financial results and updated guidance for 2014. Then I'll make a few closing remarks and open the call up for questions.

I got to say that I'm very encouraged by the results we have seen in the first half of the year, as we execute against the strategy we set forth at the beginning of the year. This strategy included focusing on generating leverage on the investments we had already made in our go-to-market capacity, raising awareness of our innovative product offering in oxygen therapy through the support of our patient-centric sales and marketing efforts, receiving FDA clearance for our stationary oxygen-concentrator product that has substantially more consumer appeal than what the market standard is today, and carefully executing on our technology investments and process improvements to drive productivity not only in the sales area but across administrative and operating function as well.

This strategy has enabled us to grow revenues while adding leverage to EBITDA. Our second-quarter performance reflects continued execution throughout the entire organization and better-than-expected results in both our direct-to-consumer and business-to-business channels. Total revenue was $30.4 million in Q2, up 50.8% over the same period in 2013, and another record quarter for Inogen. I'm very encouraged with the level of productivity demonstrated throughout the first half of this year, with revenues reaching $54 million, which is 50.5% higher than the first half of the prior year.

We are seeing the impact of our investments driving direct sales demand, as well as likely generating business-to-business sales growth, as we believe there is a pull-through effect from consumers as they become more aware of our oxygen therapy products.

More specifically, looking at each of our revenue streams, sales revenue for the second quarter was $20.5 million, an increase of 60.5% over the same period last year. Total units sold increased to over 9,200 in Q2 2014, up 67.3% from Q2 2013.

Rental revenue was $9.9 million in Q2 2014, up 34.1% versus the same 2013 period. The rental patient population increased to more than 25,100 as of the end of Q2 2014, reflecting growth of 38.7% over Q2 2013, and that was more than offsetting the rate reductions from competitive bidding. Sequentially, rental patients on service grew 9.1% in the quarter.

Our total gross margin percentage for the second quarter was 49.7%, reflecting declines in average selling prices across all channels as volume increased substantially. Gross margins were further impacted by a pricing elasticity study that was conducted in our direct-to-consumer sales channel to optimize our price structure.

I'm encouraged that we were able to increase our rental gross margin by 100 basis points in Q2 2014 over Q1 2014. The substantial increase in volume, particularly in our lower gross margin business-to-business channel, provided us with considerable revenue growth with only a modest impact to our overall gross margin.

Turning to our commercial strategy, our fastest-growing segment in the quarter was domestic business to business with 88.8% growth over the same period in the prior year, reflecting the continued strong demand for our innovative portable oxygen concentrators. We continue to simultaneously increase direct-to-consumer sales, our highest-margin sales revenue segment, by 86.1% in Q2 2014 versus Q2 2013, while also delivering a growth rate in rental revenues of 34.1%. This momentum shows the positive impact of our strategy to both raise awareness of our oxygen therapy product and leverage the investments we have made in sales and marketing.

Finally, I was particularly pleased that we were able to improve EBITDA and net income while maintaining this high sales growth rate. Adjusted EBITDA increased 68.4% in Q2 2014 over Q2 2013, reflecting a 24.4% return on revenue, up from 21.9% in the second quarter of 2013, demonstrating our substantial operating cost leverage.

Now, turning to some recent business highlights, in June we received the anticipated FDA 510(k) clearance for the Inogen at Home, which is expected to be the lightest 5-liter-per-minute continuous-flow oxygen concentrator on the market. At approximately 18 pounds, it weighs half as much as some other stationary oxygen concentrators in use today. It is also expected to have significantly lower power consumption, which should reduce the electricity cost for oxygen therapy patients.

We expect to begin shipping the Inogen at Home product in Q4. As we have commented before, while we certainly expect sales of this product will be accretive to our business, we do not expect sales to have a material impact on our revenues in 2014 and have not included it in our guidance. We plan to test various marketing and sales strategies for the Inogen at Home before it is rolled out on a broad scale.

The topic that was much discussed during the second quarter was the CMS competitive-bidding proposal that came out last month. I'd like to comment on it and the potential implications for Inogen. Keep in mind that this is a proposal from CMS, not a rule, with comments due by September 2, 2014, and changes effective in the unbid areas on January 1, 2016.

The proposal would not include the anticipated Round 3 to the competitive-bidding program but instead would adjust the fee schedule amounts for the approximately 41% of the market that was not affected by previous competitive-bidding rounds. This would be done by applying a regional average price of previously bid-out regions and providing a 10% increase for a subset of states if they are defined as rural or frontier states.

We believe that the net effect of the proposal would be approximately a 4% to 5% potential revenue exposure in 2016, when the proposal would become effective. Under this proposal, the remaining 41% of the market would not be bid out, which allows us to maintain access to all of this market segment.

CMS is also proposing a pilot program in 12 regions to remove the oxygen-capped rental and bundle stationary with portable oxygen needs into one billable code per month in order to simplify the billing process. It would also remove the premium for OGPE, or oxygen-generating portable equipment. It is unclear how the reimbursement rates would be impacted, as these areas would also be bid out. What is clear, however, is that Medicare is acknowledging the complexity of administering the cap and the low usage of the cap benefits. This is consistent with our own analysis that only 25% of patients reach the end of the 36-month period.

CMS also acknowledged that the majority of the oxygen patients use both stationary and portable oxygen, so bundling these could reduce administrative complexity. We believe this change would have a positive impact on our business, as it has the potential to add more patients and reduce complexity in sales, setup and billing processes.

Looking at the sector broadly, we continue to believe the long-term factors and trends affecting the industry are very positive for Inogen and our partners. A recent study by Leighton Consulting concerning Medicare investments in durable medical equipment concluded that substantial cost savings are realized when supplemental oxygen for treating COPD is covered by Medicare. COPD is the second-leading cause of disability and the third-leading cause of death in the U.S.

The study concluded that when Medicare pays for supplemental oxygen therapy, the cost of treating medical complications of COPD drops dramatically. Patients are able to be treated at home, and significant net spending savings are realized. Given our leadership position within the portable oxygen concentrator market and the patient demand for our solutions, we are confident that our strong foundation will enable us to take advantage of the factors and trends to drive our future growth.

I'll now turn the call over to Ali to provide more detail on the financials.

Thanks, Ray. During my prepared remarks I will review the details of our second-quarter financial performance and provide our updated full-year 2014 outlook.

As Ray mentioned, our total revenue in the second quarter was $30.4 million, which is an increase of 50.8% in the second quarter of 2014 versus the second quarter of 2013. This reflects continued strong performance on the top line and high growth in all segments.

Similar to last quarter, we continued to see a shift towards our direct-to-consumer cash sales from rentals in some markets but still managed high growth in rental revenue. Our first-half revenues were $54 million, which is a 50.5% increase over the first half of 2013. Total units sold in the second quarter increased to over 9,200, which is a 67.3% increase over the same period in 2013.

Turning to our second-quarter revenue and direct-to-consumer and business-to-business, we were pleased to continue to see strong revenue growth in all categories. Direct-to-consumer sales grew 86.1% in the second quarter over the same period in 2013 and accounted for 29% of total revenues. Direct-to-consumer rentals in the second quarter grew 34.1% over the same period in the prior year, in spite of competitive bidding reimbursement rate reductions, and accounted for 32.7% of total revenues.

At the end of the second quarter, we had more than 25,100 patients on rentals, a 38.7% increase over the number of patients on service as of June 30, 2013. This is a 9.1% sequential quarterly increase, so equivalent of 2,100 net patients added in the quarter.

Business-to-business domestic sales were our fastest-growing segment in the second quarter, at 88.8% over the same period in the prior year, and represented 18.1% of total sales.

Business-to-business international sales grew 20.6%, representing 20.3% of our total revenue. International was the slowest-growing segment for us during the quarter, although still growing faster than expected due to the large Q2 of 2013 comparable revenues resulting from the timing of some tender-related orders in the previous year. International sales may be lumpy due to the timing and size of distributor orders as they manage their inventory and receive tender contracts.

Looking at gross margin, in the second quarter of 2014 total gross profit dollars expanded 36.7% over the same period in the prior year. Gross margin for the second quarter was 49.7%, down from 54.9% in the second quarter of 2013. Sales gross margin for the second quarter was 47.8%, down from 49.3% for the same 2013 period. The decline in sales margin primarily resulted from the decline in selling prices across all segments as volume increased substantially.

In addition, a pricing elasticity study was conducted in the quarter, which we periodically perform in an effort to optimize our price structure to maximize gross profit over the long term. This was partially offset by increased mix of direct-to-consumer sales versus business-to-business sales in the quarter. Direct-to-consumer sales carry a higher gross margin than business-to-business sales.

Rental gross margin for the second quarter was 53.7%, a 100-basis-point improvement from the first quarter of 2014 but down from 64.4% for the same period in 2013, which was pre-implementation of competitive bidding round-two and round-one re-competes.

In terms of operating expenses, overall operating expense was $11.2 million in the second quarter of 2014 versus $8.7 million in the 2013 period, which is a 28.7% increase.

For research and development expenses, in the second quarter of 2014 we continued to invest in R&D efforts primarily associated with the Inogen at Home product launch expected later this year. We had $0.9 million in R&D expenditures for the second quarter of 2014 versus $0.6 million in the same 2013 period, which is a 37.3% increase.

For selling, general, and administrative expense, sales and marketing expense was $6.4 million for the second quarter versus $4.6 million in the same 2013 period, primarily associated with an increase in personnel-related expenses in sales and sales support and media-related marketing costs. General and administrative expense was $3.9 million for the second quarter, compared to $3.4 million in the same 2013 period. This increase is primarily associated with an increase in personnel-related expenses and other incremental costs associated with being a public Company.

Total SG&A expenses increased 28% to $10.3 million in the second quarter of 2014 versus $8 million in the same 2013 period. We had $0.2 million in net other expenses, which was primarily comprised of interest expense and partially offset by interest income in the second quarter of 2014 versus $0.4 million in other expenses in the second quarter of 2013.

Profit before income taxes was $3.8 million in the second quarter of 2014 versus $2 million in the second quarter of 2013, an increase of 85.4% over the prior period and a 12.4% return on revenue. In addition, in Q2 of 2013 we had minimal tax provision expense, whereas in the second quarter of 2014 we had tax provision expense of $1.5 million.

As a reminder we revalued our deferred-tax asset valuation allowance at year-end 2013, which resulted in a one-time tax benefit of $21.8 million. This change impacted our effective tax rate for 2014 and going forward.

Accordingly, in the second quarter of 2014 we had a higher effective tax rate of 39.5% versus an effective tax rate of 3.8% in the second quarter of 2013. As a result, our net income after tax in the second quarter was $2.3 million, compared to a net income of $2 million in the second quarter of 2013, which is a 16.6% increase over the same period in the prior year, in spite of the significantly higher effective tax rate in the second quarter of 2014 versus the second quarter of 2013. Our first-half net income was $3.2 million, a 5.9% return on revenue.

Moving to our cash balance, the Company ended the second quarter with $69 million of cash and cash equivalents, an increase of $9.5 million in the quarter. As of quarter end we had debt outstanding of $13.4 million, an increase of $4.2 million from the first quarter of 2014.

In addition, I'd like to cover some key non-GAAP financial measures. Adjusted EBITDA for the second quarter was $7.4 million, which is a 24.4% return on sales. Adjusted EBITDA increased $3 million over the same period in the prior year, reflecting 68.4% growth. Earnings per diluted common share on a pro-forma, non-GAAP basis was $0.11 in the second quarter of 2014 and $0.12 in the second quarter of 2013. In the first half of 2014 earnings per diluted common share on a pro-forma, non-GAAP basis was $0.16 and $0.17 in the same period in the previous year.

Now we'll turn to our outlook for 2014. Looking at total revenue and our strong second-quarter 2014 results, we are raising our 2014 revenue guidance to a range of $102 million to $106 million, which represents year-over-year growth ranging from 35% to 41%. This compares to the previous revenue expectations of $92 million to $96 million that was provided on May 13 of 2014. We expect similar sales seasonality as we have seen historically, where patient demand is the highest in the second quarter. We are also raising our 2014 adjusted EBITDA guidance to a range of $19 million to $20.5 million, representing an approximate increase of 41% to 53% over 2013, which is adjusted from a previous range of $18 million to $19.5 million.

We do expect to invest in additional sales and marketing resources in the second half of 2014 associated with both the launch of the Inogen at Home product and scaling our sales infrastructure to drive future revenues. We are also raising our 2014 net-income guidance to be in the range of $4.5 million to $5.5 million, which is updated from the previous guidance of $4 million to $5 million.

I will now turn it back to Ray for closing comments.

Thank you, Ali. So I believe the balance of 2014 will continue to be a year of high growth, execution, and productivity. Our focus will be on driving consumer awareness to create more and more demand. We are excited to bring the Inogen at Home to the market later this year and build out our go-to-market capacity with targeted investments for future growth. We believe that as we continue to progress on our corporate objectives we will bring significant value to our shareholders, innovation to the market, and fill an unmet need in the current oxygen therapy market.

With that, thank you for joining us today, and we look forward to updating you on our progress in future calls. We will now open it up for questions. Operator, can you take over?

Certainly. (Operator Instructions) And our first question will come from the line of Ben Andrew with William Blair. Your line is now open. Please proceed with your question.

Great. Thank you very much for taking the questions. A couple things. Ray, can you talk a little bit about the plans that you have for the sales and marketing organization specifically in the second half or if you've already made some expansions versus where we were before, and then kind of how significant of an increase you're planning for the media spending?

Well, let me answer the second part first. The media spend is commensurate to the number of sales reps that we have on the phones, because we're using a pull system. So we're basically spending enough media to keep the sales force occupied. The size of the expansion, I don't want to put a number to it, because we certainly don't want to compromise. We've got to find the right people, but the nature of it is just to hire more sales reps.

And so the B2B business in the U.S. was particularly strong. How did those conversations go with those partners/customers, and do you see a change in attitude from them now that CD2 is a bit further behind us?

I think there is a small sliver of realization that something's going to have to change with some, certainly not with the majority of the market. We don't see that yet. I think the bigger driver of the business-to-business success we've had, specifically in the second quarter, was that we are educating patients about this technology, and not every call goes to us. Many call their current provider and say, here, this is what I want, and if you don't give it to me, I'll go somewhere else. We'll be there to receive them.

And I think we created pull-through demand. And the reason I believe that is just if you look at the size of the orders of the business-to-business in the HME channel, lots of relatively small orders. I think the resellers saw a good quarter in terms of their ability to do the same thing we do and sell to consumers. But I think it's more a pull-through effect than a paradigm shift or a tipping point in the market yet.

Okay. And then, Ali, could you maybe talk a little bit about the sequential dynamics in Q3 and Q4? I mean, how much were things down last year in Q3, and what has changed this year versus last that we might need to factor into our projections?

So, last year in the second quarter and, really, where you see the seasonality in the business is on the sales revenue side. The rental revenue is, of course, impacted by the reimbursement rate, but you wouldn't expect to see the same seasonality that you see in the sales business.

So, just specifically looking at the sales line in the second quarter of 2013, we had $12.8 million in sales, and that came down to $12.1 million in the third quarter of 2013 and $11.1 million in the fourth quarter of 2013. So, declining with the second quarter being the peak of the year for sales revenue.

Got you. Great. Strong results. Thank you.

Thank you.

Our next question comes from the line of Puneet Souda with Leerink Partners. Your line is now open. Please proceed with your question.

Congratulations on the quarter. This is Puneet in for Danielle. Just as you look at 2015, as you sort of -- you talked about it briefly that as gross margin expands on the DTC end and with the at-home product coming on board, what sort of other drivers and expansion that you see as you move forward into that?

Well, I mean, 2015 is going to be driven by, first and foremost, more of the same of what we are already doing right now, continuing to educate more patients, create momentum in the market that switches from the traditional modalities to the POCs, drive sales revenue, drive rental revenue, do that with a larger sales force than what we have today, continue to make improvements on productivity. And then on top of that -- so the cherry on top of it, hopefully, will be the Inogen at Home.

Okay. Thanks so much for that. And then just the second one on tax efforts, you mentioned it briefly before that. As you look into the impact on 2015, you're going to be planning that during the sort of the second half. And so if you could give an update on that and help us understand where things are headed on that end.

So, on the tax side, similar to what we expect in 2014 of an effective tax rate, we would expect that to continue go forward. At this point, though, we're not really prepared to give specific guidance on 2015 expectations.

Okay. That's fair. Thank you so much.

Your next question comes from the line of Mike Weinstein with J.P. Morgan. Your line is now open. Please proceed with your question.

Thank you. [Glad I did the universal]. First off, great quarter, obviously [finessed] performance of the first half of the year. I want to push you a little bit on the second half, because your innovation [to pretend to fit in] impact from last year on the rental side of the business. And the guidance for the second half of the year, it would seem to imply 20% to 30% growth versus the 50% we saw in the first half. So, anything else other than seasonality and conservatism we should be factoring in with our model in the back half of the year?

So, obviously seasonality is an impact, and wanting to continue to have put out numbers that we see as achievable targets. But also, on top of that, our sales rep count, we have in the first quarter of 2014 -- over the first half of 2014 versus the first half of 2013, the number of sales reps that we had was significantly higher in those comparative periods. That difference will lessen over the course of the next two quarters and really will be based on how many additional sales reps we can hire. But that gap will be narrowing. So we did also factor that into our guidance expectations.

And, Ali and Ray, is that really the likely in the first half of the year that kind of the bet you guys made, going back to the middle of last year on moving it more towards the direct model and building up this what you guys call reps. This internal calling effort is paying off and that this model shift is working. So now that you've seen it in Year one continue to fuel that, and that's what's going to drive the adoption of the business going forward?

You're exactly right. I mean, we made a shift in focus late in last year, really starting at the beginning of this year to kind of focus more on the cash sales. We weren't quite sure how that exactly was going to turn out.

The first quarter was very encouraging. The second quarter actually is confirming those numbers and those trends. I said at the last call I don't want to call one quarter a trend. I'm going to be cautious calling a second quarter, two quarters in a row a trend, but I think we can conclude that that focus shift has paid off and has exactly done what we wanted it to do. We were able to drive some substantial growth without purely relying on increased head count to drive the growth. Now that we know and have the sandbox redefined, I think it's time to invest in more capacity in order to do more of it.

And on that front, you're obviously outperforming fairly meaningfully for the first half of the year on the top line. The EBITDA guidance raise was very sort of modest relative to the top-line raise. And can you just give us a better sense, maybe, on that spending, what you're planning in the second half, and how much of that is going to the reps relative to the original plan? How much of that might be going to other programs that you want to highlight? And then I'll let some others jump in. Thanks.

So, the biggest contributor is the increase in the sales reps and wanting to make sure that we're setting ourselves up for success in 2015, primarily, because the results of what those reps contribute in the second half will be relatively modest in terms of the top line, but it sets us up for 2015 results. So that's the majority of it. There also is some investments in the launch of the Inogen at Home product that we're certainly planning on incurring in the second half of 2014.

Okay. Great. Thank you, guys, and congrats again on the quarter.

Thank you.

Thank you.

Your next question comes from the line of Tom Carroll with Stifel. Your line is now open. Please proceed with your question.

Hey, guys. So, I jumped on a bit late, so hopefully not duplicating anything, but any presale opportunity with Inogen at Home or that new product, I mean? And maybe can you give us a sense of sales visibility with the new product into the back half of the year?

So, we deliberately stayed away from trying to presell it. I want to kind of circle back -- and the idea of the Inogen at Home was initially conceived because we needed a solution for the backup concentrators that we're currently buying in the market by other manufacturers that ended up having substantially higher failure rates in the field than the portable ones that we are putting out. And the portable ones are the ones that are getting banged around pretty good, and the stationaries are just sitting at home. They are being shipped, though, and not hand-carried in.

And so what we found was that there really wasn't a product in the market that was perfectly suited for our business model, so we basically set out to build the Inogen at Home as a cost-reduction exercise, as an exercise that would reduce failure instances in the field and all the related costs that come with that, emergency shipments, what have you.

And once that product was designed, we said, you know what? There is a sales opportunity that comes along with that in about 30% of the market. This is a very attractive product.

We will totally focus on the consumer with this product, but it is a different sales strategy than the whole freedom and independence message that we are using for our POCs. It's a different marketing that we have to test out. We have to find a couple of strategies, and we don't want to do that until the product actually ships. So, preselling usually works when you have a lot of business-to-business customers. In our particular case, the product's probably going to be too costly for business-to-business use.

When do you think you'll have sales visibility for the product?

Well, I mean, honestly I think we will be in a trial-and-see-what-works mode for the remainder of the year at least. At least. We won't ship until early in the fourth quarter, and then you always have to factor three, four, five months of see what works in terms of marketing message, lead generation, scripting. All of that is a living, breathing thing that will develop over time. So, that's why we're so cautious in including it in a guidance, because we could be -- at least from a timing perspective, we could be off quite significantly.

Switching gears quickly, you talked about new sales reps and stuff. And what type of sales rep growth will we see for the second half of the year? Forgive me if you already answered this.

No, I didn't, and I'm not going to now.

Come on, Ray.

Sorry. And the reason simply is that as much as we can pull off without compromising, we are looking for specific traits in a person that is successful in this role. And we won't just hire people just to hire them to make a quota, which is why we're not giving guidance on how many, but we will put a good, solid effort into increasing our capacity. To whether that ends up being 10 or 30 or whatever the number is, that really depends on resume flow, who are the candidates, how many can we find.

But it will be higher by the end of the year. You feel strongly about that. Is that fair?

We feel pretty strongly that the rep count will be higher by the end of the year than it is now.

Great. And then when do you expect to provide guidance for 2015?

Probably with the third quarter, right?

We'll start doing some preliminary guidance with the third quarter.

Okay. Great. Thank you so much.

Thank you.

Thank you. We have no further questions in the queue. I would like to turn the call back over to the speakers for any closing remarks.

All right. Well, thanks for taking the time out of your day to listen to our second-quarter call. And hopefully we will be able to talk to you again on our next quarter call if we don't see you until then. And thanks for being interested in Inogen.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Have a good day, everyone.