1.) Average age of consumers are 75+, only 10% of its sales come from medicare. <---- UNACCEPTABLE
2.) WRONG INFO GIVEN BY RESELLERS TO CUSTOMERS.
Per Citron:
Citron estimates that Inogen sells about 90% of its POC units vs. only renting about 10% through Medicare. Assuming 40% of POC units were rented through Medicare, Inogen’s revenue would decline by about 20% while EPS would decline by about 80% due to the negative mix shift to Medicare’s much lower margins. Evidently, the multiple would see meaningful contraction as well.
Citron jumps into muddy waters and assigns a conservative $46 target on Inogen.
“On July 11, 2018, CMS released a new proposal to change the payment rules for Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), including our portable oxygen concentrators. This includes a proposal that when the current competitive bidding contracts expire December 31, 2018, beneficiaries can obtain DMEPOS items from any enrolled Medicare supplier. ”
Now that any DME can offer you a portable oxygen concentrator, Inogen will get much fewer Medicare leads that can be turned into cash sales.
PLEASE READ Citron's report: citronresearch.com/w...n’s-Sale-Tactics.pdf
Per Muddy Water:
"We believe management has created egregiously false narrative re TAM & growth. Real TAM is ~1. 3M users, not 3M as claimed. TAM is shrinking, NOT growing at 7%-10%."
2.) WRONG INFO GIVEN BY RESELLERS TO CUSTOMERS.
Per Citron:
Citron estimates that Inogen sells about 90% of its POC units vs. only renting about 10% through Medicare. Assuming 40% of POC units were rented through Medicare, Inogen’s revenue would decline by about 20% while EPS would decline by about 80% due to the negative mix shift to Medicare’s much lower margins. Evidently, the multiple would see meaningful contraction as well.
Citron jumps into muddy waters and assigns a conservative $46 target on Inogen.
“On July 11, 2018, CMS released a new proposal to change the payment rules for Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), including our portable oxygen concentrators. This includes a proposal that when the current competitive bidding contracts expire December 31, 2018, beneficiaries can obtain DMEPOS items from any enrolled Medicare supplier. ”
Now that any DME can offer you a portable oxygen concentrator, Inogen will get much fewer Medicare leads that can be turned into cash sales.
PLEASE READ Citron's report: citronresearch.com/w...n’s-Sale-Tactics.pdf
Per Muddy Water:
"We believe management has created egregiously false narrative re TAM & growth. Real TAM is ~1. 3M users, not 3M as claimed. TAM is shrinking, NOT growing at 7%-10%."