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  "documentTitle": "Inogen, Inc. (INGN)",
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  "authorName": "Carson Block",
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  "presentationDate": "2019-02-08 00:00:00",
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  "notes": "The slide serves as a critical research note arguing that management is using accounting adjustments to mask business pressure and that growth is slowing.",
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      "text": "In Q3 2018, INGN lowered provisions in two categories, sales returns and bad debts and warranties. Doing so increased gross margin by 1.77%.",
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      "text": "gross margin: 1.77%",
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      "text": "Estimates for both scenarios are based on averaging the prevalence of oxygen therapy among the seven EU countries found in http://www.efanet.org/images/2012/07/EFACOPDBook.pdf, p. 14",
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      "text": "Based on current sales forecasts, INGN is likely to hit its saturation point between 2019 and 2020. Once that happens, the company goes ex-growth and will significantly de-rate.",
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      "text": "We believe management's constant repetition of the seven-to-ten-year process for full conversion to POCs on slides, which discuss low levels of penetration, is an attempt to paint the company as a long-term growth story.",
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      "text": "Since the IPO, INGN has been slowly shifting its sales from DTC to B2B. While this is logical as the company has scaled, we view the acceleration of growth in the B2B channel at the expense of the DTC channel over the last 24 months with concern because the margins are lower. B2B customers pay approximately $1,500 compared to retail, which pays closer to $2,200 depending on the model purchased.",
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      "text": "In Q3 2018, INGN lowered provisions in two categories, sales returns and bad debts and warranties. Doing so increased gross margin by 1.77%. We believe management did this to boost margins at a time when the business was experiencing pressure.",
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      "text": "INGN's management team appears to be running out of runway in their quest to maintain the pace of sales growth. Management have recently characterized the impact that new sales initiatives are having on the financials as tradeoffs, or “investment that we think will drive growth”. We believe that moves such as the launch of two separate financing programs (one for small homecare providers and one for DTC), an increase in advertising spending, and white labeling are attempts to reach users that would otherwise be unable to afford the devices. A recent conversation we had with a former senior executive of The HELPcard, INGN's financing partner, confirmed the suspicion. He explained that financing rates for consumers were as high as 20% with FICO scores in the low 600s and occasionally lower.",
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      "text": "Beyond the accounting gimmicks, INGN is seemingly pulling every available lever to maintain growth, which would appear to be at odds with the narrative of a company that has a leading market position for a product that is only 11% penetrated.",
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      "text": "INGN Is Employing Accounting Gimmicks that Mask the Recent Decline in Gross Margins.",
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