Inogen, Inc. Stock

Welcome to Inogen's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] 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 a strong international growth, POC demand, and contribution from our new products, including Voxi and 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-teen digit 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. 12 months ago, that number was $400 million. In every investment we have discussed today in leadership, commercial executions, 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 continue -- 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.

[Operator Instructions] The first question comes from Mike Matson from Needham & Co.

So just wanted to ask one on this channel issue with the DTC side of things. So I mean, is this the DTC business, just sort of like a melting ice cube here that's going to just continue to fall? I mean is there any ability to sell like the CPAP masks or other products through that channel that makes it worth kind of keeping it intact. I mean I understand that while this mix shifts are negative for that part of the business, it's a positive for the B2B side. So I understand there's an offset, but I'm just trying to understand if this is -- there's any sort of bottom here, this thing is going to just keep gradually eroding over time.

Mike, this is Kevin and thanks for the question. And I think what might be helpful here is if I kind of step back a little bit and then wrap that in here. So we have confidence that we do have the right strategy and many things are going well right now. The core POC business is healthy. The underlying demand is up 12%. International growth is 15%. Geo expansion is contributing 80 basis points to the growth in the second quarter, and the new products, Voxi and Aurora, are gaining traction and velocity. They contribute more than 100 basis points of growth.

And if I look at this going forward, what's changed from where we were in the previous quarter? Well, one, and I'll start off with the international. We did have a few of our distributors have indicated that they're going to be managing inventory in the second half. We see that as transitory, right? This is -- this includes some factors like tenders getting delayed and distributor consolidation that is happening. But the international continues to grow. That is a highlight for us.

We're confident, again, as I said, that this is transitory. Now this mix shift that we talked about, it's been happening faster than we anticipated. And yes, you're right. That is a tailwind for the B2B. It's a headwind for the direct business. But we do see opportunities when we look at the DTC for that to stabilize and that to grow. And when we're looking at the second half of this year, we're seeing that total U.S. business and we bucket that 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.

Now the other piece of that headwind is the rental business. And the rental business is something that we have some additional factors that are in there. One is that shift that's happening with the HMEs providing the POCs first versus the oxygen tanks more frequently. But there's also some perspectives in there that we have to evaluate. We brought in some new folks that are taking a look at this for us, giving us a range of options to improve that business. And that is important for us going forward.

But we do believe we have the right strategy. Yes, we believe we can sell more. We've been selling the Voxi through the DTC channel. And we do believe that we have opportunities to sell other products in there. That is -- that's core to us and it's something that we're focused on. Jason, anything to add there?

I think you covered it. I mean, I think, like you said, that we see a return to growth on the sales side in the second quarter for the U.S., which is really important. And I think we have work to do on rental, and we have a few options there to try to improve performance.

Okay, I understand. And just with regard to -- I mean, it was good to see the gross margin up, especially given this mix shift into B2B from DTC, because I think that margins tend to be higher on the DTC side. So what -- I guess, what's driving or what drove the gross margin improvement that you saw in the quarter?

Jason, I'll let you take that one.

Yes, I'll take this one. This is Jason. No, I think we're really happy with what we're seeing from a gross margin standpoint. I think as you called out, we have the structural headwind from the mix shift. But at the same time, we've been able to realize cost-saving initiatives. We did have some modest one-timers in the quarter, but if you look over time, we've been able to, even with this mix shift, kind of be in that 44% to 45% range.

And the other thing I would highlight that's kind of helping us contribute here is we've been realizing lower warranty costs, which for us -- quality of our product is a big differentiator for us in the market and particularly with our B2B partners. So I think that we expect to really be able to kind of offset some of that mix shift going forward.

As we look out, I would say, we see that as stable. We -- mix shift will continue to put pressure. We have some modest inflationary pressures, but we continue to have cost improvement initiatives. New products should be accretive. So like I said, we're happy with where we are from a gross margin standpoint.

And then I guess my last question is just on getting your POCs into the Chinese market. Can you just give us an update there with your partner?

Yes, certainly, Mike. We're working through the regulatory process. We haven't guided any further on timing with that specific to the POCs. We'll provide updates as that becomes relevant. But one thing I will note also is we continue to make good progress as noted in the prepared remarks with Simeox in the Chinese market, and we do continue to expect to have that regulatory clearance before the end of the year for Simeox in China.

The next question comes from Anderson Schock from B. Riley Securities.

So first, Aurora and Voxi 5 continue to scale. Could you update us on where each stands today with contribution in the quarter, account penetration? And how much contribution from these is embedded in the revised full-year range versus the original?

Yes, maybe I'll start Jason, and you can take over there. So with the -- we've been seeing the growth, the trajectory from that velocity I talked about, both from a account basis with doubling of the accounts on a quarter-on-quarter basis. And we anticipate being able to see that continue to grow. Now, remember that Aurora, the masks, those are -- you're picking those up, even though it's account by account, it's also patient by patient in this. We like what we've seen. We have good feedback coming from the patients as well as the HCPs and similarly with Voxi.

Voxi is, again, good solid feedback that we're hearing in the market. We like the volume that we have. We like the discussions that are continuing on here going forward. We haven't really broken it down any further than that. Jason, anything you want to add?

Yes, I mean, I think -- so to answer the questions like the contribution here, in the second quarter, it contributed -- new products contributed a little over 100 basis points, specifically the Voxi and Aurora. And as we think about the second half, we expect that to accelerate. And I think importantly, as we even -- as you think about the guide-to-guide here, we have -- I would tell you that, that assumption is unchanged. I think that this is on target to what we were forecasting.

Okay, got it. And then on Simeox, I guess outside of China, could you provide an update on the IMPACTS-200 study and a timeline there from data to a U.S. coverage decision?

Yes, so we're -- again, with that one we were progressing well. We're where we expected to be from an enrollment standpoint. That is, we're happy with that. We haven't guided to the timing on that, Anderson. We'll give that update once we get to the last patient and the last visit, we will do something similar as we did with the SCOPE study in China.

But remember also we do have -- we'll need a second trial for that we're working through with the investigators on Simeox because we'll want to have at least two good trials to take to CMS and make sure that we put our best foot forward. You've got really one shot on goal with that.

The next question comes from Ilya Zubkov from Freedom Capital Markets.

So I have just a quick one. As you continue to evolve the mix toward the B2B channel, could you share your perspective on patient and provider stickiness and how transition between different channels typically play out in terms of patient retention?

Certainly. So when we think about these -- the channels and patient stickiness, part of our strategy is to really own three buckets as we look at this, owning the patient and the engagement with the patients, the HCPs, as well as the HME relationships, the B2B. When you look at the QuOTE study that we have put out, that demonstrates that level of engagement that we're working towards, one with the HCP because the HCP is going to make the recommendations to the patients. We want them to have the brand preference and loyalty and insist on the Inogen. We're working towards the evidence to be able to allow us to continue that engagement and drive preference.

Same thing with the patients. With the patients, at this QuOTE study that we have in the questionnaire is a patient and a caregiver and HCP engagement form, and that enables us to continue to build that brand preference with Inogen as we start to control some of those conversations or I should more say heavily influence those conversations.

Then we also -- when we look at the B2B partner, we're not necessarily giving up the control to the B2B partner. A long-range part of our strategy that we've been building towards is our digital health. And the digital health connectivity, again, allows us to engage with the patients, the health care partners, and provide that connection back to the B2B partner. So it's this broader ecosystem and we're driving all angles of that.

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. So 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 positions 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.

Welcome to Inogen's First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 7, 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 first quarter of 2026. The earnings release is available in the Investor Relations section of the company's website at investor.inogen.com, along with the supplemental financial package.

During today's call, we will discuss non-GAAP financial measures that we believe provide useful supplemental 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, each of which is available in the Investor Relations section of our website.

In addition, our discussion today will include forward-looking statements, including, but not limited to, expectations about 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 a discussion of risk factors that could cause our actual results to differ materially than 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.

With that, I will turn the call over to Inogen's President and CEO, Kevin Smith.

Good afternoon, and thank you for joining our first quarter 2026 conference call. I want to begin by welcoming several new leaders to the Inogen team. These team additions reflect the ambition we have for the next chapter. Jason Richardson joined us as Chief Financial Officer this quarter. Jason has over 25 years of experience, mostly in large complex global medical device companies with significant leadership experience across finance and a track record of delivering results. He brings the operational depth that we need, has experience scaling med tech franchises and has respiratory industry experience, all directly relevant to what we are building. I'll let him speak to the quarter shortly.

We also appointed Dominic Houlton as Chief Marketing Officer, reporting directly to me. As we operate across oxygen therapy, sleep and airway clearance, the work of building a coherent brand and a disciplined go-to-market approach across multiple disease states and channels has grown considerably in scope. Dom brings the commercial experience and strategic instincts that this moment calls for. And we announced the appointment of Vafa Jamali to our Board of Directors, which will become effective on June 5, 2026. Vafa's background spans revenue growth, commercial strategy and capital allocation. These perspectives will be valuable as we work to translate our portfolio expansion into durable financial performance.

In connection with our upcoming annual meeting, the Board is asking for shareholder approval to declassify its members starting the process with the annual meeting in 2027. This is an important step to align our governance with the long-term interests of our shareholders. Turning to Q1 results. Q1 came in at $85.1 million in total revenue, representing 3.4% year-over-year growth ahead of our expectations. When we set guidance, we were transparent about what was shaping the quarter, continued strength in international, along with channel mix pressure as the U.S. market continues its structural conversion towards POCs. Those dynamics played out largely as anticipated with unit volumes growing 14% year-over-year, and our international business delivered double-digit performance. Taken together, the quarter reflects a business performing in line with our expectations and underlying fundamentals that remain healthy. U.S. sales were $34.7 million in the quarter.

Today, we estimate roughly 60% of new long-term oxygen therapy patients start in a POC, up from under 40% just a few years ago. That shift benefits our B2B sales channel meaningfully, and we see it in our volume. It does, however, create a headwind in our direct-to-consumer and rental channel where patients historically came to us seeking an alternative to the oxygen tank their HME had provided. We are managing this transition with discipline. Our direct sales rep efficiency continues to improve. Demand for Inogen products is strong. We're investing deliberately to educate both patients and providers on the economic and clinical benefits of Inogen technology.

Our Rove 4 and Rove 6 POCs carry an 8-year useful life versus the 5-year useful life of other POCs in the market, best-in-class serviceability and a growing body of outcomes data. That performance supports our premium positioning against pricing pressure. International sales were the clear standout in Q1. Revenue of $37.7 million represented 18% year-over-year growth. This result speaks to the quality of our commercial execution and the breadth of the opportunity ahead. Our teams have deepened relationships with key HME partners, secured important international tenders and continued expanding into new geographies, including Eastern Europe, Latin America and the Asia Pacific region. The global COPD market is large, under-penetrated and shifting steadily toward home-based care. We are well positioned and Q1 international performance is evidence of this. If the financial results reflect where we have been, the pipeline is where I want to spend most of my time because it tells you where we are going.

When I joined Inogen, we were a portable oxygen concentrator company with a $400 million addressable market. Today, we operate across oxygen therapy, sleep therapy, airway clearance and digital health with an estimated combined total addressable market of over $3.4 billion. That expansion is the result of a deliberate strategy, identify adjacencies with patient overlap, enter with clinical evidence and leverage the commercial infrastructure and brand trust that we have built. Each new category we have entered follows that same logic. Now let me walk through the major milestones from this quarter. We launched the Aurora CPAP mask family in the United States this quarter, and the early read is highly encouraging.

I want to be clear about why we entered this market and why we believe we can win. First, roughly 20% to 30% of our COPD patients have obstructive sleep apnea. These patients are managed by the same pulmonologists and respiratory therapists and are served by many of the same HMEs we work with every day. The channel relationships we have spent years building extend naturally into this market. What gives us particular confidence is the clinical work we completed before launch. We ran a 90-day in-home evaluation with experienced CPAP users. These individuals were already satisfied with their existing mask, yet they prefer the Aurora mask, particularly the Aurora full face mask, which was overwhelmingly favored. That is a meaningful bar to clear, and we did it. We will be presenting the full results of that study at Sleep 2026 in Baltimore this June, one of the premier sleep forums in sleep medicine.

Presenting a peer-reviewed data set at this type of industry conference is how a new entrant like us builds credibility with clinicians and accelerates adoption through the HME channel. The early commercial feedback has been encouraging. HME partners and respiratory therapists have responded positively to the product and to the evidence behind it. We expect Aurora's revenue contribution to be more back half weighted as that momentum builds. 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 represents roughly $20 million in potential annual revenue for Inogen We intend to earn a meaningful position in this market, and Aurora is the foundation for that.

We also launched the Rove 6 portable oxygen concentrator in Brazil this quarter. This reflects the broader international expansion strategy we have been executing. We are entering new geographies with products designed for those markets, building on our established distribution relationships and extending Inogen's reach to patients who currently have limited access to high-quality portable oxygen therapy. Brazil is a meaningful market with a growing COPD patient population, and this launch continues the momentum we have built across Latin America over the past year.

Simeox represents what I believe is one of the most exciting long-term opportunities in our portfolio. In this quarter, we crossed major milestones. We began patient enrollment in IMPACTS-200, our first reimbursement trial for Simeox. The trial is actively enrolling. We want to build the right evidence base to address CMS, private payers and health economic arguments for appropriate reimbursement levels. Let me remind everyone of the opportunity here. The U.S. opportunity for Simeox is an estimated $500 million TAM in non-cystic fibrosis bronchiectasis, growing at a high single-digit rate. The device carries an attractive gross margin profile and the disposable component creates a reoccurring revenue stream that makes the financial model increasingly predictable over time.

And beyond the economics, Simeox addresses a patient population that is underserved. Existing OPEP devices are ineffective for a large share of bronchiectasis patients. Vest therapy works, but is bulky and not universally accessible. Simeox offers meaningful clinical differentiation and the data we are generating is designed to demonstrate that rigorously. These are the reasons why we are taking the time to do this right.

Stepping back, the common thread across everything we discuss today is that the new Inogen is different from the Inogen of 3 years ago. We are a home respiratory care platform with a diversified portfolio and expanding addressable market with a commercial infrastructure and brand reputation that creates leverage as we scale each new product category. Strategically, we expect these investments in our pipeline to help drive our top line growth and advance our path to profitability. POC remains our core business and foundation. We believe we have the best durability, the longest useful life and the deepest evidence base in the category. And we are building out the clinical, commercial and connectivity capabilities to keep widening that competitive moat, but we are no longer constrained by that single market.

And the new products we have launched are primarily in higher-growth markets with higher gross margin profile than our historical mix. Going forward, we have committed to at least one new product launch each year, and each launch will be held to the same standard. The trajectory we have seen gives us confidence that we are on the right path.

And with that, I will turn the call over to Jason for his first earnings call as Inogen's CFO. Jason?

Thank you, Kevin, and good afternoon, everyone. I'm excited to be here for my first earnings call as Inogen's CFO. I joined the company just one month ago, and I've been spending that time getting deeply into the business and getting to know the team and the opportunities ahead. What I have found reinforces why I joined. We have a strong foundation and brand, opportunities to grow and an organization that is leveraging the strength of the legacy team while building out new capabilities to support our strategy. With that, I'll turn to our first quarter performance and the outlook ahead.

As Kevin mentioned, total revenue for the first quarter was $85.1 million, an increase of 3.4% from the prior year period. This exceeded our expectations. Total sales revenue for the quarter increased by 5.7% and was primarily driven by higher growth in international POCs and favorable foreign exchange rates, which more than offset lower U.S. sales. For the quarter, foreign exchange had a positive 460 basis point impact on total revenue. U.S. sales were $34.7 million, down 5% year-over-year, and international sales were $37.7 million, up 18% year-over-year and more than offsetting a strong performance in the first quarter of last year, including the impact of large stocking orders. U.S. rentals were $12.7 million, down 8% year-over-year. Both U.S. direct sales businesses were impacted by the continued channel mix shift and reduced patient counts Kevin described.

Moving to adjusted gross margin in the first quarter was 44.7%, an increase of 30 basis points from 44.4% in the prior year period, primarily the result of cost improvements. Expanding gross margin over time is critical to our overall profitability goals, and we are pleased with the first quarter performance. Adjusted operating expenses for the first quarter of 2026 were $43 million, an increase of 5.1% from $40.9 million in the prior year period. Adjusted R&D expense in the quarter was $4.1 million, an increase of $0.9 million versus the prior year 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 in the quarter was $39 million, an increase of 3.1% versus the prior year, driven by commercial organization investment to support the new product launches and the timing of advertising spend. GAAP net loss for the first quarter of 2026 was $8.3 million compared to a GAAP net loss of $6.2 million in the prior year period. Adjusted net loss was $4 million compared to an adjusted net loss of $2.9 million in the prior year. And adjusted EBITDA was a negative $1.4 million in the first quarter compared to approximately breakeven in the prior year period. The increase in losses year-over-year is a direct result of the timing of planned incremental R&D and commercial investments mentioned earlier.

Looking forward, we expect Q2 and Q3 to be our strongest quarters for profitability, in line with our historic top line seasonality, and we continue to expect adjusted EBITDA growth for the full year. Moving to cash. We ended the quarter with $111.5 million in cash, cash equivalents, marketable securities and restricted cash with 0 debt outstanding. During the quarter, we began execution of our stock repurchase program. We purchased approximately 298,000 shares of our common stock for consideration of nearly $1.9 million. We continue to believe our stock is undervalued relative to the fundamentals and the strategic opportunity in front of us.

Returning capital to shareholders while also investing in growth is something we believe we are well positioned to do, and we intend to continue to do it thoughtfully over the course of the program.

Now let me turn to our second quarter and full year 2026 outlook. We are reaffirming our 2026 revenue guidance of $366 million to $373 million, representing approximately 6% growth at the midpoint. That guidance reflects continued trends in our core POC business, a growing contribution from international sales, the scaling of Aurora and Voxi 5, particularly in the second half, partially offset by continued mix pressures in our D2C and rental channels.

For the second quarter of 2026, we expect reported revenue in the range of $94 million to $97 million, reflecting approximately 3.5% growth at the midpoint of the range relative to the second quarter 2025 revenue. Regarding profitability, we remain committed to driving adjusted EBITDA improvement for the full year 2026, following the positive adjusted EBITDA achieved in 2025.

With that, I will turn the call back to Kevin for closing remarks.

Thank you, Jason. We're executing against the plan we laid out. We're launching new products into larger, higher-growth markets, building the clinical and commercial infrastructure to support them and managing the P&L with discipline while continuing to invest in the long term. We've also strengthened the organization with new leadership across finance, marketing, the Board and a commercial team that is focused on execution. I am optimistic about what the next few years hold for Inogen.

To our shareholders, thank you for your continued support and confidence in us. We look forward to updating you throughout the year. Operator, please open the call for questions.

[Operator Instructions] We'll take our first question from Anderson Schock with B. Riley Securities.

Congrats on the quarter. So first, on the Rove 6 launch in Brazil, could you frame the size of the Brazilian COPD market and the current state of POC penetration? Is this largely an oxygen tank replacement opportunity? Or are you stepping into an established POC market?

Anderson, this is Kevin. Thanks for the call. We have not quantified the size of the market in Brazil. It is a -- that's an emerging market opportunity for us. There is an existing population of tanks that in Brazil as well as POCs. There's other POCs that are in the market. So we're not the first entrant that is in there, but we are entering in, of course, as the premium brand in Brazil. We have partnerships that with local HMEs that exist also in other markets who are familiar with us and know how to position the Inogen brand. We're looking forward to the growth coming out of there, but this is one that will continue to develop over time with market access.

Okay. Got it. And then net rental patients at the end of the first quarter had a steeper decline than the recent trends. Could you walk us through what drove the acceleration this quarter and how we should be thinking about this channel through the remainder of the year?

Yes. When we look at the rental program, we talked about -- and I'm going to bucket this first if we step back and you think about the dynamics that are happening within the markets that we have been planning for and strategizing and optimizing the channels. But the shift that we see from -- within the U.S., which is where, of course, rental is from the oxygen tanks to the POCs has an impact on both the headwind on the DTC as well as the rental patients, which is also creating that tailwind for us within the B2B channels, allows us to have additional pull-through with other technology, the products with the Aurora masks, the Voxi 5 and eventually the Simeox.

But that is one that is still under pressure as we go through the year, we do expect to see total U.S. back end of the year growth, which certainly we can talk through, but we'll see that pressure continue within the rental channel.

Okay. Got it. And then how is early 2026 Voxi 5 has the ramp tracking against your expectations? And are you beginning to see pull-through benefits with HMEs that are bundling Voxi 5 alongside the POC?

Yes, we are. We like the signs that we're seeing so far in the market. The feedback has been very good. We are seeing pull-through and attachment rates. So this is lining up with our expectations and supports the view that we have for this in the long term.

And next, we'll move to Mike Matson with Needham & Company.

I guess I'll start with a couple of macro ones. So just wanted to get your take on the impact of kind of the elevated oil prices that we're seeing. Any material impact expected there? And then I wanted to see if you have any sales into the Middle East. I know you're selling in Europe, I didn't know if that included the Middle East. And if so, like how significant is that?

Mike, thank you for the question. Again, I'll start and then Jason, if there's anything to add, please do. From the macro level with the impact on the oil, we're not seeing anything for ourselves that is outsized from the rest of the industry. Here, there are some implications, certainly where surcharges that happen with logistics. It's less of an impact for us than perhaps some others. We don't -- if this carries on, we may start to see more impact as the year goes through. But to date, it's not a significant piece. With -- when you also look at petroleum-based components and products, we think about resin material, we do have some of the material within our POCs.

However, we do have supply agreements in place that protect us in the near term. We wouldn't expect to see an impact there unless this does carry on for beyond within a quarter, it's not a big deal. If we start seeing this carry on throughout the year, we may see additional impact from that.

And then for the business in the Middle East, we do have business in the Middle East. The majority of our international business is still coming from the European markets. We are not impacted by this yet. We have been focused on making sure that we can continue to serve our patients, make sure that our team and partners are safe, which they all are. But so far, this hasn't been a negative impact. Jason, anything else there?

No, I think that's right. And I think as we've even scenarioed kind of current prices from an oil standpoint, we feel like even because of the timing that Kevin mentioned, because of the limited freight that we have that we'd be able to -- we would expect to be able to offset it at current levels for 2026.

Okay. Got it. And then wondering if you could give us an update on the CPAP mask launch. How is that going? And what kind of feedback are you getting from customers?

Yes, Mike, it's been very good for us. It's meeting and exceeding the expectations. And of course, it is -- the early stages introducing the Aurora mask to the market. Fortunately, we're able to come to the market with clinical data that supports patient preference and the quality of the mask that gives us a leg up as far as early adoption. But one of the things that we've liked so far is extremely high reorder rates from the customers that have started the process with Aurora, take the samples, start to get patients on them, place an order. We've seen those reorder rates coming in on a monthly basis at a very high level. So that tells us that it's sticky, and this is a good signal for us.

Okay. Got it. And then just looking at your adjusted net loss, if I'm remembering correctly when I glanced at the press release, but a lot of companies report tonight. But I think it was flat to maybe even down from last year on an adjusted basis. I know EBITDA was not the same, but can you maybe just talk about what's happening there and why you weren't getting more kind of leverage, I guess, or cost savings from an OpEx perspective or whatever?

Yes, I'll take that one. I mean I think what -- first quarter, in particular, we accelerated some of our clinical evidence investments, particularly around Simeox. And we also had moved forward the timing of some advertising spend to try to generate some additional business over the back half of the year. But as we've mentioned before, we're managing OpEx to kind of make sure that we end up in a position of growing EBITDA over the course of the year.

Okay. Got it. And then the advertising, yes, go ahead, sorry.

No, I was going to say the other thing I would highlight, though, is like we talked about in the prepared remarks, which is the gross margin expansion, which I think is really critical for us as we think about some of the mix pressures we see in the market. I think some of the other levers that we're pulling to improve margins, leverage the volume that we're seeing are really important to us moving forward.

Okay. Got it. The advertising spending that you mentioned, is that geared at the consumer business? Or is that geared at like the B2B side of things?

Yes. The advertising spend is geared historically more towards the direct-to-consumer business, although it does benefit broadly across all of the markets, creating brand awareness. However, we have been revising that strategy, the channels, how we do that marketing and broadening that out to include both the HCPs, the HMEs. This is now a much more sophisticated marketing project going forward. And that's one of the benefits, too, that when we added Dominic here to the team, he brings a lot of that expertise and that savviness to the team here.

And there are no further questions at this time. I would like to turn the floor back to Kevin Smith for closing remarks.

So before we wrap up, I want to highlight one core theme that underpins our strategy, innovation, which is the engine driving our future growth. Early feedback on our new products, Aurora, Voxi, Simeox, it's all been positive. Confirming these innovations address key market needs. This progress stems from strategic investments in our pipeline, and we aim to launch one new product per year as part of our long-term plan. These efforts strengthen our position for broader reach and sustained growth. While we are still early in this journey, the momentum we are building today gives us real confidence and excitement about what lies ahead.

And I would also like to formally recognize and express my gratitude to the entire Inogen team. Your dedication to patient care, consistent execution and collective contributions has been essential to our ongoing transformation. I value the energy and commitments you bring every day, and I'm proud of what we've built together. Thank you.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Welcome to Inogen's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, February 24, 2026.

I would now like to turn the call over to Lorna Williams, Senior Vice President, Investor Relations and Strategic Planning.

Thank you 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 fourth quarter and full year 2025. The earnings release is available in the Investor Relations section of the company's website, along with a supplemental financial package.

Please note, we have also published a new investor presentation on our investor website, which contains forward-looking statements and long-term financial goals. As a result, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects and strategy for 2026 and beyond, expectations related to our financial results for the first quarter and full year 2026; progress on 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, February 24, 2026. 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 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 for both management and investors by excluding certain noncash 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 fourth quarter 2025 conference call. I want to use today's call to recap our 2025 success, outline progress on our strategic initiatives and share why I am confident in delivering improving performance in 2026 and beyond. Our focus remains anchored on 3 priorities: driving top line growth; advancing profitability; and expanding our innovation pipeline.

Let me start by discussing our recent results. We delivered approximately $82 million in total revenue in the fourth quarter and nearly $349 million for the full year, reflecting 4% year-over-year growth and meeting our goals to deliver mid-single-digit growth for 2025. Although we experienced a shift in the timing of a few orders from the fourth quarter into the first half of 2026 due in part to capital and budgeting constraints from certain customers, it was not a loss of customers, and our underlying market fundamentals remain encouraging. Unit volumes grew more than 20% year-over-year in the fourth quarter and for the full year, driven by continued demand for our products and the conversion from traditional portable oxygen tanks to POCs. Looking forward, we are well positioned to continue building on the progress made in 2025 to drive revenue growth and penetrate the substantial market opportunities in front of us.

In the U.S., we're investing deliberately to educate both patients and providers on the economic and clinical benefits of Inogen products. Our products are engineered to a fundamentally different standard than competing POC manufacturers and oxygen tanks. We believe our superior reliability, extended life cycles and better patient outcomes justify our premium positioning today and going forward. We are also seeing positive early traction with our newer products in the U.S., including Voxi 5, Simeox and our Aurora CPAP masks, which I will touch on shortly.

Growth from international customers is also central to our strategy. Our international business delivered $32.5 million in Q4 revenue, representing 15% year-over-year growth and a clear bright spot in our recent results. The team has executed well on deepening HME relationships and securing key international tenders, which is expanding our brand visibility and reinforcing our position as a trusted global partner in oxygen therapy. This performance underscores why international expansion remains central to our long-term growth strategy. The global COPD market is both large and underpenetrated with long-term oxygen therapy remaining significantly underutilized in many regions. We see substantial opportunity to leverage our portfolio breadth, brand reputation and local partnerships to reach more patients worldwide. As health care systems continue shifting care into the home, international markets represent a sustained multiyear growth driver for Inogen.

Moving on, I'm proud to report meaningful progress on our second strategic priority, advancing profitability. Through operational excellence and disciplined cost management, we fundamentally strengthened our financial foundation. 2025 represented a turning point for Inogen. We delivered positive adjusted EBITDA of $2.7 million for the full year. This is our first year of adjusted EBITDA profitability since 2021. This significant milestone demonstrates the operational leverage in our business model and validates the efficiency initiatives we've implemented over the past 2 years. This improvement extends across our P&L. Net loss for the full year 2025 was $23 million. Our adjusted net loss narrowed to $8 million, a 61% reduction from $20 million in 2024.

Equally important is the strength of our balance sheet. We ended the year with $120.9 million in cash, cash equivalents, marketable securities and restricted cash with 0 debt outstanding. This financial flexibility is critical as it allows us to invest in the growth drivers I outlined earlier, develop our innovation pipeline and execute our international expansion strategy.

In addition to investing back in the business, our strong balance sheet and cash flow enables us to pursue a share repurchase program. We announced today that our Board of Directors has authorized a $30 million share repurchase program, and we intend to execute those buybacks over the course of 2026 and 2027 or until the maximum authorized dollar amount has been utilized. The share repurchase program reflects our confidence in our strategy, our flexibility to deploy capital and our commitment to enhance shareholder value. The trajectory is clear. We've returned to adjusted EBITDA profitability, dramatically reduced our losses and strengthened our cash position. As we drive improved revenue performance in 2026, we expect to see meaningful operating leverage flow through to the bottom line. We're building a sustainably profitable business.

Turning to our third strategic priority, expanding our innovation pipeline, where our team delivered transformative progress in 2025. For years, Inogen was synonymous with portable oxygen concentrators. While that remains our core strength, we've now established a multiproduct portfolio spanning 4 distinct areas of respiratory care, oxygen therapy, sleep therapy, airway clearance and digital health solutions. This diversification significantly expands our addressable market, derisks our business model and positions us to better serve patients across the full respiratory continuum.

First, we have now initiated a limited market release in the United States of Simeox, our airway clearance device for effective bronchial decongestion. The methodical approach of a limited release allows us to build clinical evidence, establish reimbursement pathways and refine our commercial strategy before a broader launch. We've already achieved an important milestone. Our U.S. trial to support reimbursement has kicked off and is actively enrolling its first patients, marking a critical step towards securing coverage and competing meaningfully in this market. We expect to gather enough data to provide CMS with a compelling case in the near future. Simultaneously, we initiated a clinical study in China. We are nearing completion of the trial, which we expect to support our commercial launch anticipated in the second half of this year, pending NMPA regulatory clearance.

Meanwhile, we are seeing strong commercial traction and enthusiastic customer feedback for Simeox in Europe, which reinforces our conviction in its clinical differentiation and potential to become a meaningful contributor to both our portfolio diversification and long-term growth. Simeox represents a clear and strategic expansion into an underserved area of respiratory care. Over time, we believe this will position us to offer a differentiated solution that enhances patient outcomes, deepens clinician engagement and extends our leadership across the respiratory care spectrum.

As a reminder, we see an incremental $500 million total addressable market opportunity in the U.S. airway clearance. Importantly, airway clearance devices carry attractive gross margins, making Simeox a key driver of our strategy to grow at or above market rates while simultaneously expanding profitability over time.

Shifting to our other innovations. In oxygen therapy, we introduced Voxi 5, our newest stationary oxygen concentrator, expanding our addressable market by an incremental $300 million. This launch is strategically important for several reasons. First, it addresses a significant gap in our portfolio. HME providers typically furnace new patients with both stationary and portable units. And until the launch, we can only compete for half of that equation. Voxi 5 allows us to capture the full scope of patient requirements and deepen partnerships with our existing distribution network. Early market reception has been positive. More importantly, Voxi 5 demonstrates our ability to extend our oxygen therapy leadership into adjacent product categories with high-quality, cost-effective solutions.

Our most significant portfolio expansion in early 2026 is our entry into sleep therapy with Aurora CPAP masks, developed in partnership with Yuwell. This marks a natural and meaningful extension beyond oxygen therapy into the large and growing sleep apnea market, which represents a $2.2 billion total addressable market growing at a high single-digit rate. We believe this expansion will be a key driver in sustaining a return to double-digit growth over time. The strategic rationale is compelling. There is a substantial patient overlap of 20% to 30% between COPD and obstructive sleep apnea, which means we can leverage our existing brand recognition, commercial infrastructure and trusted patient relationships to reach an adjacent high-volume market. Aurora allows us to access new revenue through distribution channels and clinical partnerships we already serve.

The Aurora portfolio includes 3 mask options: the F1 Full Face; N1 Nasal Cushion; and P1 Nasal Pillows, all designated to meet diverse patient needs and facial structures and our FDA 510(k) cleared. Importantly, Aurora is supported by patient use data showing high satisfaction rates, which give us confidence in both clinical acceptance and commercial viability. This is a scalable synergistic growth opportunity that meaningfully broadens our addressable market and reinforces our position across the respiratory care continuum.

Finally, we launched the Inogen patient portal to enhance our digital health capabilities and improve the patient experience. The self-service platform empowers patients to manage insurance details, order accessories and access on-demand support tools seamlessly. As health care continues its digital transformation, tools like this strengthen patient engagement, reduce service costs and differentiate our offering. Collectively, these launches represent a fundamental transformation in what Inogen is and what markets we can address.

We've moved from a single product company dependent on one market to a diversified respiratory care platform with multiple growth vectors. From a market opportunity perspective, this transformation is substantial. Our estimated TAM has expanded from approximately $400 million in POC concentrators alone to a market growing low single digits to over $3 billion across our combined portfolio, with the broader opportunity growing high single digits. This sixfold expansion in the estimated TAM, coupled with accelerated growth rates has the potential to change our financial trajectory and long-term value creation. Going forward, we are committed to launching at least 1 new product per year. And critically, we expect these new launches to be gross margin accretive, as we increasingly focus on higher-margin, clinically differentiated solutions that address unmet needs across the respiratory care continuum.

With that, I will pass the call over to Mike for an overview of our financial results. Mike?

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 through the results, starting with the income statement, cash flow and then ending with guidance. Please note that today, we are updating our revenue reporting structure to provide investors with insights into more meaningful trends in our business. This change reflects the evolution from a single platform, single disease state company to a diversified respiratory care platform serving multiple disease states across COPD, sleep apnea and broader respiratory conditions. I will detail our revenue performance and our new reporting structure, which includes U.S. sales, international sales and U.S. rentals. A reconciliation of our revenue results from the prior reporting structure to the new reporting structure is available in the supplemental financial tables on the Investor Relations website.

Total revenue for the fourth quarter of 2025 was $81.7 million, an increase of 2% on a reported basis. Total revenue for the full year 2025 was $348.7 million, an increase of 4% on a reported basis, primarily driven by higher growth in international POC sales of 18.4%, partially offset by lower U.S. sales and U.S. rentals. U.S. sales for the fourth quarter were $36.1 million, down 5.1% from $38 million in the prior year.

From a product mix perspective, our U.S. business remains predominantly POC revenue today, but we're seeing the early stages of diversification. Voxi posted strong sequential growth from Q3, demonstrating solid commercial traction despite being in the very early stage of launch. As we execute our 2026 commercial plan, we expect Voxi to emerge as a more meaningful growth driver for the U.S. business.

On the POC side, we experienced a shift of large customer orders out of Q4 into the first half of 2026. Our customers cited capital constraints and year-end budget limitations as the reason for the delay. We expect them to materialize as customer budgets are approved through the first half of 2026.

Our international business for the fourth quarter was a bright spot with revenue of $32.5 million, up 14.8% from $28.3 million in the prior period. The strong performance was driven by higher demand and our successful expansion into new geographies, validating the growth potential Kevin outlined earlier. POCs continue to gain traction, while Simeox is building meaningful momentum internationally with strong commercial feedback reinforcing our confidence in its applicability in the U.S. We are excited to share that we generated over $6 million in global revenue from Simeox in 2025, reflecting strong early interest and the strength of our unique value proposition.

Rental revenue was $13.1 million, down 4.5% from $13.8 million in the prior period, primarily driven by a higher mix of lower private payer reimbursement rates and fewer patients on service.

Now on to discuss fourth quarter gross margins. Total gross margin was 43.1% in the fourth quarter of 2025, decreasing 220 basis points from the same period in the prior year, primarily driven by channel mix as a higher proportion of POC sales shifted to business customers. For the full year 2025, gross margin was 44.2%, a decline of 190 basis points from 2024. Roughly 2/3 of that compression was also driven by a shift in channel mix, specifically a greater proportion of POC sales to business customers. The remaining 1/3 reflected higher premiums.

Now turning to what I'm particularly pleased to discuss, our profitability trajectory. Operating expenses in Q4 were $44.5 million. Adjusted operating expenses in Q4 decreased to $41.4 million from $43.7 million in the prior period, representing a 5.2% reduction. This improvement reflects our disciplined approach to cost management and ongoing efficiency efforts, while we continue to invest in R&D and new product launches to support long-term growth.

Net loss in Q4 was $7.1 million, an improvement of 27% from the prior year period. On an adjusted basis, net loss was $4 million compared to an adjusted net loss of $5.8 million in Q4 of 2024. Loss per diluted share was negative $0.26 in the fourth quarter. Adjusted loss per diluted share improved to a negative $0.15 per share versus negative $0.24 per share in the fourth quarter last year.

For the full year 2025, GAAP net loss was $22.7 million, an improvement of 36.6% compared to $35.9 million in the prior year period. Adjusted net loss was $8 million, an improvement of 60.6% from the adjusted net loss of $20.4 million in the full year of 2024.

GAAP loss per diluted share was a negative $0.86 per diluted share for the full year 2025. Adjusted loss per diluted share was negative $0.30 per share versus negative $0.86 per share in the prior year.

Fourth quarter adjusted EBITDA improved to negative $1.7 million from negative $3.6 million in Q4 of 2024. For the full year, these improvements were even more pronounced. We delivered positive adjusted EBITDA of $2.7 million for 2025. This is our first year of adjusted EBITDA profitability since 2021.

We fundamentally reshaped our cost structure while investing in our future. As of December 31, 2025, we had cash, cash equivalents, marketable securities and restricted cash of $120.9 million with no debt outstanding, an increase of $3.4 million from year ended 2024. As Kevin mentioned, our balance sheet positions us well to continue investing in growth drivers for our business while also pursuing our share repurchase program of up to $30 million.

Looking ahead, I want to outline our expectations for 2026. As a reminder, Q2 and Q3 are typically our strongest quarters seasonally. We are initiating full year revenue guidance of approximately 6% year-over-year growth at the midpoint of the range of $366 million to $373 million. This guidance reflects our commitment to continuing to drive healthy mid-single-digit growth and includes the contribution of new product launches and a strong demand for our POCs, which we expect to drive stronger growth in the back half versus the first half of 2026.

For full year 2026, we expect to continue to drive positive adjusted EBITDA, building on the momentum we established in 2025. We're committed to improving profitability while strategically investing in innovation, commercial execution and product launches that will accelerate revenue growth.

For the first quarter of 2026, we're expecting reported revenue to be in line with the first quarter of 2025. This reflects overall POC unit growth, offset by a change in channel mix and declining rental revenue. The expected decline in rental revenue is driven by a change in our overall reimbursement mix and fewer customers on service. While we continue to expect demand for antigens POCs to increase, there is an important market dynamic that is changing how POCs are delivered. Historically, most new long-term oxygen therapy patients received oxygen tanks for the ambulatory needs. Today, we estimate that 59% of new patients start with a POC, which is provided by either HMEs or directly from manufacturers. As a result, we are expecting higher growth with our large business customers or B2B sales channel, creating pressure in our channel mix. Bottom line, we expect to continue to grow our POC business just in a slightly different way.

To summarize, we've returned to adjusted EBITDA profitability, dramatically reduced our losses, strengthened our balance sheet and improved our operational efficiency, all while investing in new product launches and strategic initiatives that will drive future growth.

Looking ahead, our focus is clear to continue transforming Inogen from a single-product POC company into a comprehensive home respiratory care platform. We'll do this by growing our existing POC and SoC products, scaling Voxi, launching CPAP masks and building momentum for Simeox, all while driving continued leverage and improving our bottom line. With a diversified product portfolio and expanding addressable market increasing from approximately $400 million to approximately $3.4 billion and multiple growth vectors across geographies, indices states, we're building a fundamentally different and more valuable company. We're excited about what lies ahead.

And with that, I will pass the call back to Kevin.

Thank you, Mike. Building off the 2026 guidance Mike described, we are also pleased to share our long-term financial goals today. Fitting with our strategic priorities for the business, we are working to improve revenue growth, profitability and our innovation engine. We are excited to share that as we execute those priorities, we see a path to achieving high single-digit revenue growth and reaching 10% or better adjusted EBITDA over the next 3 to 5 years. And as I mentioned earlier, launching at least 1 new product per year going forward. We look forward to updating you on the progress towards these goals over the course of this year and beyond.

Before we open it up for questions, let me step back and frame what we have accomplished over the last 2 years in this turnaround and what it means for Inogen going forward. When I look at the financial recovery, the numbers tell a clear story. We've achieved average revenue growth of 5% over the last 2 years, which is a meaningful turnaround from the 16% decline in 2023. We delivered 7 of 8 quarters of mid-single-digit revenue growth, which shows we've stabilized the business and built consistent momentum. Gross margin expanded to over 44% in 2025, up 411 basis points from 2023. At the same time, we reduced total adjusted net loss to $8 million in 2025 versus $48.3 million in 2023, and we did that while continuing to invest in the new products that are going to drive our future.

But the more important story is the strategic transformation in 2025 was the year we fundamentally transformed Inogen from a single product oxygen company into a diversified respiratory care platform with meaningful presence across oxygen therapy, sleep therapy, airway clearance and digital health. We also delivered strong international growth that validates our global expansion strategy and returned to profitability for the first time in 4 years. 2026 is about translating the strong foundation into future growth. We have the strategy, products, market dynamics and financial strength to execute, and I am confident in the path forward.

With that, operator, please open the call for questions.

[Operator Instructions] Our first question today is coming from Anderson Schock from B. Riley Securities.

So first, you attributed the fourth quarter miss to multiple large customer orders shifting into the first half of this year. Can you help us understand the magnitude of these orders? And of what shifted, how much has already been shipped in the first quarter versus is expected in the second?

Yes. So Anderson, this is Mike. We haven't really -- I think we talked about at the pre-release that we figured it was maybe a couple of hundred basis points of impact. But we really haven't gotten into the specific dollar amounts to that. But what I would say is that, what's an important thing is that, we have received some of those orders to date. But we did talk about having these orders spread out over the first half of the year. So some of those items will continue to sprinkle in as we go through the first half of the year as opposed to just in the first quarter.

Yes. And maybe, Anderson, if I can just add a little bit here. So, if we -- because I think there's some important dynamics here that we should -- that we need to consider as well. So POC demand is up nearly 20% in 2025, and we expect that to continue to be up in 2026. So the HMEs are now more likely to provide a POC to patients. And our research tells us that in 2019, they were a little bit under 30% -- excuse me, a little under 40% for new starts for portable oxygen. Patients were getting a POC compared to tanks. Now we see that has shifted and it's about 60% of those patients are getting a POC on a new start basis. And this is -- it's an important dynamic because while this is a good shift for the B2B, it creates some headwinds in some other areas of the business. But when we talk about the growth going forward, we look at Q1, we look at beyond, this is -- we continue to expect the B2B channel to grow. We expect to have mid-single-digit growth in Q1 for B2B and for the full year in B2B, and that's specific for the POC business.

So again, while that is a good shift, creates some headwinds in the POC -- excuse me, in the DTC and the rental business, -- while we're committed to those, it's an important dynamic. So when we think about that shift, that shift that happened from Q4 into Q1, as Mike said, it's not just going to be in Q1, it's going to be sprinkled throughout the year. But even where we're guiding to the Q1 revenue that we have here, that doesn't give the proper illustration for where we see the B2B continue to grow.

Okay. Got it. And then on the move to the new U.S. sales reporting category, so you're blending the growing domestic B2B channel to the declining or historically declining DTC channel. So with the mix driven by B2B orders pushed into the first half and through this year, how did the DTC channel perform in the fourth quarter? And how should we think about the blended growth here going forward?

Yes. So first, I can answer your direct question first in terms of -- we're, of course, moving to that new format. But one of the things that we talked about with the direct-to-consumer channel was that, we're looking at the tough comps during the course of the year related to the fact that we rebased that business about a year ago. What we have seen and what we expected to see was those negative growth numbers continuing to improve each quarter, and that continued into Q4. So if you go back, Q1, we were off 27%. That dropped to 21% in Q2 to 18% in Q3, and then you'll see the numbers in supplemental schedules. Direct-to-consumer was down 15% in Q4, so continue to improve.

In terms of that -- the new reporting structure, we -- the change is really to simplify the overall reporting structure and really allow us to focus more on product growth drivers as opposed to how we've done in the past, as you know, sales channels. And that's really, I think, going to be helpful given our new focus on innovation. The change really reflects -- Kevin talked about this, and then we mentioned in our prepared remarks, from a single platform, single disease state company to a more diversified respiratory care platform and crossing multiple disease states, COPD, sleep apnea and broader respiratory conditions, again, as Kevin mentioned. So our goal really is at the end of the day is to provide investors with more meaningful trends in our business.

And the last thing I would say, just keeping in mind that not all products are sold in all channels. So I think the old reporting format kind of really is more relevant to the POCs as opposed to some of these other things we're getting into.

Okay. Got it. That's helpful. And then just finally, how should we think about the ramp of revenue from the Aurora mask launch through '26? And what's the go-to-market strategy here? And can you walk us through what gives you confidence that you can carve out share in this market?

So we view this as a transformational strategic decision, really kind of an important step moving again from -- this is somewhat of a repetitive thing, but moving us more from a single product company to broader home respiratory care company, getting into these other areas that we just talked about.

As we look at 2026, we're not really necessarily guiding to what the expectation is on a quarter-over-quarter basis. But the expectation is that, we'll probably see, not too much in the first quarter regarding the masks, but as we progress, keeping in mind that Q2 and Q3 are normally our strongest quarters. We expect to start getting traction, but we expect it to be more back-end loaded with the masks.

Yes. And we are primarily going through the -- through our B2B channel with the masks. We've been building out the sales organization, adding some additional headcounts into that area. But when we brought the masks to market prior to that, we conducted a patient satisfaction study, and we had exceptional results with that. We're very happy with how that played out. The early indications that we have from the customers that we've been engaging has been very positive. It's a process to go through because this is a patient preference market. We feel that we have an extremely competitive mask in that market. The early engagements that we've had, the sampling, the feedback from the respiratory therapists that work with the HMEs as well as the initial patient feedback has given us the confidence that we're going to be able to grow that business.

Remember, it is a $2.2 billion market here in the United States for the masks. That's a repeatable business. Once a patient gets satisfied, they like a mask, they get a good night sleep, it's hard to get them off of that mask. And the patient study that we did demonstrates that we're able to bring something that's competitive that will be preferred by the -- not just the RTs, but ultimately, of course, by the patients. And remember, every 1% growth in that market is about a $20 million opportunity for Inogen. So we're going to leverage the relationships that we have with the POCs, the Inogen brand name, the reputation for quality, and we're bringing the clinical evidence to support that launch.

Congrats on all the progress.

Your next question today is coming from Mike Matson from Needham & Company.

This is Joseph on for Mike. Maybe one on Simeox. I believe you both said $6 million in 2025 from Simeox. I guess the assumption is that's all international. But I'm curious, was this consistent orders from existing customers kind of flat throughout the year more or less? Or was there a large step-up in second half of the year as more customers have become familiar with the platform? And maybe just on top of that, what are your expectations there, I guess, internationally for growth for Simeox in 2026?

Yes. Thank you for that question. The Simeox was a steady growth, although we did have in the first quarter into the second quarter of the year, we did have a onetime buy that was Eastern European tender that was for multiple years on the disposable sets that happened in the first quarter. We anticipate still being able to grow that business, of course, on top of that. But we're really happy with the results that we've seen, happy with the feedback that we have and what the data is telling us.

We have the clinical trial that is running internationally that will be able to support our European reimbursement submissions. We have a clinical trial that is running that I've mentioned in China, which will be able to support the commercial launch of that. And we've started now, of course, the trial, the first trial that we need to have for reimbursement support here in the United States. We're actively enrolling in that. But that revenue was, of course, primarily outside the United States, and we continue to expect to see that grow.

And remember, that $6 million is cash pay. This is out-of-pocket payments in a market that are primarily tax-based health care systems, and that's not usual for patients to want to pay that out of their pocket for a therapy. That gives us confidence. It gives us the -- some of the information that we need to be able to take that to market, both in the United States as well as other markets across the globe, and it gives us confidence that we'll be able to succeed.

Okay. Great. That's helpful. Yes, the cash paid speaks to the therapeutic benefit, you can imagine. I guess maybe just on the EBITDA guidance, the expectations for 2026. I think you said you're guiding towards improvement. I assume that's obviously on a year-over-year basis and not chasing quarterly. But I'm just curious on a quarterly basis, is Inogen targeting or expecting to be EBITDA positive in every quarter in 2026? I know -- I think it's the fourth quarter usually has higher expenses versus the prior 3. So I'm just wondering how you guys are thinking about that.

Yes, Joseph, this is Mike. I guess the first way I would -- first thing I would say about that is keeping in mind that a lot of this starts being driven by the strength of that quarter, right? So again, we look at Q2s and Q3s historically, those are our strongest quarters, and we've been adjusted EBITDA positive in the last 2 years, both of those quarters been cash positive. So it's a little bit -- when we hit Q1 and Q4, it's a little bit more challenging.

I think I'm going to answer your question on an overall basis and maybe can help you with the quarterly cadence piece of it. But -- so the way we're looking at adjusted EBITDA in the future, and we're not guiding to a number today, not even on a full year basis, but we remain committed to improving that profitability metrics, generating -- and we do expect to generate positive adjusted EBITDA again this coming year. But I will say this is we need to keep in mind, we do have some additional investments planned in 2026 to further our diversification strategy. We are planning on investing more in R&D in 2026 as opposed to previous years. So that will -- depending on the timing of that, that will impact the impacts of adjusted EBITDA, again, depending on the cadence of those -- the strength of those quarters. So that -- I think that's something to keep in mind.

But again, I think if you're looking at the cadence of how we look at each quarter, I think you can look at maybe the historical years, and they should be relatively consistent to what you've seen in previous years. It should be too far off. They'll be a little different, but they shouldn't be too far off.

Okay. That's very helpful. And congratulations on the improvement in profitability this year as well as the transformation in Inogen that's ongoing.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Kevin for any further or closing comments.

Thank you very much, and I appreciate the questions that we had here today. But before we end the call, I'd like to highlight that we did announce a share repurchase authorization for $30 million today. This program reflects my confidence in our strategy, our ability to generate cash in the future and that we believe our stock is undervalued.

And I'm going to close by recognizing the Inogen team. 2025 was a demanding year that required us to drive operational improvements, launch multiple new products, expand internationally and execute on our 3 strategic initiatives. The progress we've made is a direct result of their dedication and execution, and I'm grateful for their commitment to our mission and to the patients we serve.

To our shareholders, thank you for your continued support as we execute this turnaround. We've built a stronger, more diversified and sustainably profitable Inogen, and we look forward to demonstrating that progress throughout the year ahead.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Welcome to Inogen's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 details 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 in both management and investors by excluding certain noncash 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 3 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 7 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 6, 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 onetime 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 2 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 1 to 5 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. Mike?

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 onetime 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 onetime legal settlement of $1.8 million and related legal expenses of $0.6 million. This performance reflects the overall health of our business and as 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 puts and takes 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 we'll share updates as appropriate.

As Kevin mentioned, we are progressing well on our 3 strategic priorities and are in a great position to finish the year out strong with an estimated 6% revenue growth at the midpoint of our guidance range and adjusted EBITDA of approximately $2 million.

And with that, I will pass the call back to Kevin.

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.

[Operator Instructions] Our first question comes from the line of Mike Matson with Needham & Company.

This is Joseph on for Mike. I guess maybe to start out with just congrats on the continued improvement in turnaround. I guess focusing on international B2B, is it safe to say that, I guess there's maybe a larger tender in the quarter that drove the market growth? Any help -- any color on that would be helpful. But as well as just maybe if you could expand on some of the market dynamics you guys have talked about in POCs internationally. What are you seeing there? And then I believe you guys mentioned additional geographies. So if you could just maybe give a little bit of color on that? Is there more planned international expansion? Is it more expanding within the countries you're already in or expanding into brand-new countries?

Joseph, this is Kevin. Thank you for your question. Indeed, when we look at the international, we have -- there's not a one-off, a one tender that was contributing to the growth there. We're continuing to build the momentum with our international team. They've done an excellent job on executing our plan, 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 the international business. This quarter was a 19% growth. It's 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 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 fourth quarter or really more in 2026?

Yes. So with Voxi 5, we've been pretty consistent that this is more of a 2026 event from a revenue line versus a '25. But we've been building that foundation, and we will continue through the second half of this year into this fourth quarter. We're happy with the results that we've seen so far, the feedback that we've had both from customers as well as patients. And we see this as something that's going to continue to build and scale. So we've started some of the scaling process here in the back end of this year that's already begun.

We've had some initial sales coming from it, although it's not a material impact yet. We see that coming in '26 and contributing to growth beyond '26 as well. But it's also -- when we think of Voxi, Voxi is not just the play in the B2B market, but we really need to think about Voxi addressing roughly 90% of the oxygen therapy market. So when you think about patients that are on long-term oxygen therapy, there is somewhere in the mid-20s. We peg around 23% of patients that have a portable oxygen concentrator, but around 90% of those patients have a stationary oxygen concentrator. So that expands our TAM considerably.

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.

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?

Anderson, this is Mike. Yes, you're right. When you talk about gross margin in total, as we talked about, we continue to grow the business in B2B, so we're selling a lot more units, right? If you look at units sales, I think they're up 20% on a year-to-date basis, units that we put out into the market. So that is the main driver and we look at the total gross margin being slightly lower. But in terms of your specific question on the rental, I think if you look at Q3, you probably see more likely good comparators on the rental gross margin. But I'll talk a little bit about the -- I'm talking on a year-to-date basis.

When we look at Q3 by itself, I think it's a 470 basis point lower gross margin than we had last year. The main driver of that was a true-up adjustment we had logistic related that we posted in the quarter. That represents, I'm going to say, roughly 350 of those 427 basis points. But the remainder of that is really what we've been talking about with the rental business, some of the headwind we've had there that we actually are seeing those headwinds stabilize a little bit and those are being -- when we look at total patient service and the percent of those patients that are on Medicare, that continues to go down, Medicare having a higher reimbursement rate. So that's impacting not only the top line, it's impacting gross margin as well.

And the second item that's been a headwind that we've been talking about, again, that as well is stabilizing a bit is when we look at capped patients. So for example, Medicare patients capped at 36 months, we continue to service those patients for the next 24 months until we can start billing again. That has also started to level off a little bit. So if you're looking at the total gross margin, say, from a rental perspective, most of the Q3 basis point reduction is related to that trough adjustment we booked in the quarter, onetime adjustment and the rest of that is really related to those headwinds that we've been talking about for the last few quarters.

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 -- we're happy with the progress that we've been making. And 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. And that LMR is working through the prescriber channel, calling on physicians, building those first experiences with Simeox here in the United States, which is important for us to inform the clinical trial and help make sure that we're able to maximize the reimbursement level there.

So although I'm not guiding to that specific time line as to when we'll have reimbursement here in the U.S., we're happy with the progress. We're excited about the opportunity, 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 have been exceptionally positive, which gives us a favorable outlook. So that's something that is exciting. And at the right time, we'll give you some more clarity on time lines.

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.