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  "docSlug": "a08bb897003a",
  "documentTitle": "Inogen, Inc. (INGN)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-02-08 00:00:00",
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  "notes": "The slide uses a 'fraud-exposure' or 'preempt_rebuttal' logic to discredit management's TAM claims by recalculating the patient population using Medicare data.",
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      "kind": "callout",
      "text": "The bottom line is that we see no way to get close to the three million users that management cites.",
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      "text": "average monthly patients: 642,852",
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      "kind": "other",
      "text": "642,859 / (1 - 18% capped) = 783,966",
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      "text": "Management’s claims related to market size and growth largely rest on highly questionable estimates from a company called WinterGreen Research. We reviewed the 2017 WinterGreen report, and were flabbergasted that this work has served as the basis for TAM size and growth estimates the company and analysts use.",
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      "text": "We account for “capped” patients by adding back in the 18% of patients that are outside of the cap, according to management. Dividing average monthly patients (642,852) by 82% yields a total Medicare patient population of 783,966:",
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      "text": "We then adjust for patients that are outside of the “cap period”. This is a patient population that is still using oxygen therapy, but has been on it for over 36 months, which no longer entitles their suppliers to a Medicare reimbursement, other than for filling tanks. We adjust by the 2018 capped percentage management gives: 18%.",
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      "text": "To develop a reality-based TAM estimate, we started with CMS’s number of monthly stationary oxygen reimbursements for 2017. There were 7.71 million “allowed services”. Each time Medicare allows a monthly reimbursement for a stationary oxygen concentrator, this counts for one monthly service. Dividing this figure by 12 will provide us with the average number of reimbursed patients under all stationary codes. The average number of patients per month using oxygen is then 642,852.",
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      "text": "Note that allowed charges are a better proxy to use than the number of Medicare beneficiaries because Medicare beneficiaries overcounts. Classifying a person who uses oxygen therapy for six months in January and then dies and another person starting oxygen therapy in July as two beneficiaries significantly overstates the population of oxygen therapy users over a 12-month period.",
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      "kind": "quote",
      "text": "If you only use Medicare data, you’re missing 18% of the market that is still in the cap period. — Bloomberg transcript from conference presentation 1/9/2019",
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      "text": "5 https://www.medicare.gov/coverage/oxygen-equipment-accessories 6 “If you only use Medicare data, then you’re missing 18% of the market that is still in the cap period.” Bloomberg transcript from conference presentation 1/9/2019",
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      "kind": "table",
      "text": "Table showing annual allowed services for stationary oxygen equipment from 2010 to 2017, culminating in a monthly total of 642,852.",
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