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…

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…

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 3 questions. 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 via 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 are -- getting into deeper conversations or relationships, and I know this product is going to help that. But I'm just wondering, are there any B2B sales with Voxi 5 this quarter? Do you expect it to be in 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 it 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.

Thanks, Joseph.

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

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

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.