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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission file number: 001-36309

 

INOGEN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

33-0989359

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

301 Coromar Drive

Goleta, CA

93117

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (805) 562-0500

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

INGN

 

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of October 28, 2022, the registrant had 22,921,002 shares of common stock, par value $0.001, outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

Part I – Financial Information

 

Page

Item 1.

 

Financial Statements

 

3

 

 

Consolidated Balance Sheets (unaudited) as of September 30, 2022 and December 31, 2021

 

3

 

 

Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Nine Months Ended September 30, 2022 and September 30, 2021

 

5

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2022 and September 30, 2021

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2022 and September 30, 2021

 

7

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

50

Item 4.

 

Controls and Procedures

 

51

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

52

Item 1A.

 

Risk Factors

 

53

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

58

Item 3.

 

Defaults Upon Senior Securities

 

58

Item 4.

 

Mine Safety Disclosures

 

58

Item 5.

 

Other Information

 

58

Item 6.

 

Exhibits

 

59

SIGNATURES

 

60

 

 

 

 

2


 

 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

 

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

209,633

 

 

$

235,524

 

Marketable securities

 

 

 

 

9,989

 

Accounts receivable, net

 

50,533

 

 

 

24,452

 

Inventories, net

 

35,725

 

 

 

31,873

 

Income tax receivable

 

1,579

 

 

 

1,343

 

Prepaid expenses and other current assets

 

20,306

 

 

 

26,005

 

Total current assets

 

317,776

 

 

 

329,186

 

Property and equipment

 

 

 

 

 

Rental equipment, net

 

58,698

 

 

 

59,073

 

Manufacturing equipment and tooling

 

11,246

 

 

 

12,050

 

Computer equipment and software

 

9,219

 

 

 

8,585

 

Furniture and equipment

 

3,194

 

 

 

3,167

 

Leasehold improvements

 

6,126

 

 

 

5,956

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

2,843

 

 

 

1,639

 

Total property and equipment

 

91,451

 

 

 

90,595

 

Less accumulated depreciation

 

(50,819

)

 

 

(51,669

)

Property and equipment, net

 

40,632

 

 

 

38,926

 

Goodwill

 

32,674

 

 

 

32,979

 

Intangible assets, net

 

53,700

 

 

 

60,147

 

Operating lease right-of-use asset

 

22,479

 

 

 

24,912

 

Other assets

 

2,323

 

 

 

3,363

 

Total assets

$

469,584

 

 

$

489,513

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

3


 

Inogen, Inc.

Consolidated Balance Sheets (continued)

(unaudited)

(amounts in thousands, except share and per share amounts)

 

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

Liabilities and stockholders' equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued expenses

$

33,512

 

 

$

25,689

 

Accrued payroll

 

11,789

 

 

 

17,307

 

Warranty reserve - current

 

7,830

 

 

 

6,480

 

Operating lease liability - current

 

3,486

 

 

 

3,393

 

Deferred revenue - current

 

9,119

 

 

 

8,568

 

Income tax payable

 

 

 

 

75

 

Total current liabilities

 

65,736

 

 

 

61,512

 

Long-term liabilities

 

 

 

 

 

Warranty reserve - noncurrent

 

7,630

 

 

 

7,246

 

Operating lease liability - noncurrent

 

20,662

 

 

 

23,281

 

Earnout liability - noncurrent

 

13,687

 

 

 

15,386

 

Deferred revenue - noncurrent

 

11,027

 

 

 

11,861

 

Total liabilities

 

118,742

 

 

 

119,286

 

Commitments and contingencies (Note 9)

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 22,919,781 and 22,731,586
   shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

23

 

 

 

23

 

Additional paid-in capital

 

309,140

 

 

 

299,463

 

Retained earnings

 

42,110

 

 

 

69,272

 

Accumulated other comprehensive income (loss)

 

(431

)

 

 

1,469

 

Total stockholders' equity

 

350,842

 

 

 

370,227

 

Total liabilities and stockholders' equity

$

469,584

 

 

$

489,513

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

4


 

Inogen, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(amounts in thousands, except share and per share amounts)

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

90,672

 

 

$

80,974

 

 

$

247,365

 

 

$

248,359

 

Rental revenue

 

14,717

 

 

 

12,131

 

 

 

41,785

 

 

 

33,241

 

Total revenue

 

105,389

 

 

 

93,105

 

 

 

289,150

 

 

 

281,600

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

55,891

 

 

 

40,437

 

 

 

146,052

 

 

 

129,637

 

Cost of rental revenue, including depreciation of $2,795 and $2,315, for the three months ended and $8,153 and $6,257 for the nine months ended, respectively

 

6,700

 

 

 

4,981

 

 

 

19,036

 

 

 

14,068

 

Total cost of revenue

 

62,591

 

 

 

45,418

 

 

 

165,088

 

 

 

143,705

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

34,781

 

 

 

40,537

 

 

 

101,313

 

 

 

118,722

 

Gross profit-rental revenue

 

8,017

 

 

 

7,150

 

 

 

22,749

 

 

 

19,173

 

Total gross profit

 

42,798

 

 

 

47,687

 

 

 

124,062

 

 

 

137,895

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

4,581

 

 

 

3,754

 

 

 

16,009

 

 

 

11,892

 

Sales and marketing

 

33,734

 

 

 

28,301

 

 

 

92,161

 

 

 

83,109

 

General and administrative

 

14,775

 

 

 

9,258

 

 

 

42,646

 

 

 

26,981

 

Total operating expense

 

53,090

 

 

 

41,313

 

 

 

150,816

 

 

 

121,982

 

Income (loss) from operations

 

(10,292

)

 

 

6,374

 

 

 

(26,754

)

 

 

15,913

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

868

 

 

 

21

 

 

 

1,122

 

 

 

107

 

Other expense

 

(12

)

 

 

(466

)

 

 

(1,167

)

 

 

(472

)

Total other income (expense), net

 

856

 

 

 

(445

)

 

 

(45

)

 

 

(365

)

Income (loss) before provision (benefit) for income taxes

 

(9,436

)

 

 

5,929

 

 

 

(26,799

)

 

 

15,548

 

Provision (benefit) for income taxes

 

70

 

 

 

(6,245

)

 

 

363

 

 

 

(996

)

Net income (loss)

 

(9,506

)

 

 

12,174

 

 

 

(27,162

)

 

 

16,544

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

(616

)

 

 

(251

)

 

 

(1,453

)

 

 

(585

)

Change in net unrealized gains (losses) on foreign currency hedging

 

209

 

 

 

494

 

 

 

(1,669

)

 

 

2,028

 

Less: reclassification adjustment for net (gains) losses included in net income

 

 

 

 

106

 

 

 

1,206

 

 

 

(267

)

Total net change in unrealized gains (losses) on foreign currency hedging

 

209

 

 

 

600

 

 

 

(463

)

 

 

1,761

 

Change in net unrealized gains (losses) on marketable securities

 

17

 

 

 

(1

)

 

 

16

 

 

 

 

Total other comprehensive income (loss), net of tax

 

(390

)

 

 

348

 

 

 

(1,900

)

 

 

1,176

 

Comprehensive income (loss)

$

(9,896

)

 

$

12,522

 

 

$

(29,062

)

 

$

17,720

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share attributable to common stockholders (Note 6)

$

(0.42

)

 

$

0.54

 

 

$

(1.19

)

 

$

0.74

 

Diluted net income (loss) per share attributable to common stockholders (Note 6)

$

(0.42

)

 

$

0.53

 

 

$

(1.19

)

 

$

0.73

 

Weighted average number of shares used in calculating net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

22,882,333

 

 

 

22,619,272

 

 

 

22,827,733

 

 

 

22,416,575

 

Diluted common shares

 

22,882,333

 

 

 

22,854,229

 

 

 

22,827,733

 

 

 

22,803,355

 

 

 

See accompanying condensed notes to the consolidated financial statements.

5


 

Inogen, Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

(amounts in thousands, except share amounts)

 

 

Three months ended September 30, 2022 and September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, June 30, 2021

 

22,578,696

 

 

$

23

 

 

$

289,615

 

 

$

79,975

 

 

$

1,303

 

 

$

370,916

 

Stock-based compensation

 

 

 

 

 

 

 

2,792

 

 

 

 

 

 

 

 

 

2,792

 

Employee stock purchases

 

22,600

 

 

 

 

 

 

1,021

 

 

 

 

 

 

 

 

 

1,021

 

Vesting of restricted stock units

 

12,131

 

 

 

 

 

 

(39

)

 

 

 

 

 

 

 

 

(39

)

Shares withheld related to net restricted stock settlement

 

(545

)

 

 

 

 

 

(33

)

 

 

 

 

 

 

 

 

(33

)

Stock options exercised

 

108,737

 

 

 

 

 

 

3,741

 

 

 

 

 

 

 

 

 

3,741

 

Net income

 

 

 

 

 

 

 

 

 

 

12,174

 

 

 

 

 

 

12,174

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

348

 

 

 

348

 

Balance, September 30, 2021

 

22,721,619

 

 

$

23

 

 

$

297,097

 

 

$

92,149

 

 

$

1,651

 

 

$

390,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

22,865,715

 

 

$

23

 

 

$

304,939

 

 

$

51,616

 

 

$

(41

)

 

$

356,537

 

Stock-based compensation

 

 

 

 

 

 

 

3,500

 

 

 

 

 

 

 

 

 

3,500

 

Employee stock purchases

 

31,770

 

 

 

 

 

 

776

 

 

 

 

 

 

 

 

 

776

 

Restricted stock awards issued, net of forfeitures

 

(123

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

22,536

 

 

 

 

 

 

(72

)

 

 

 

 

 

 

 

 

(72

)

Shares withheld related to net restricted stock settlement

 

(117

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

(9,506

)

 

 

 

 

 

(9,506

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(390

)

 

 

(390

)

Balance, September 30, 2022

 

22,919,781

 

 

$

23

 

 

$

309,140

 

 

$

42,110

 

 

$

(431

)

 

$

350,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2022 and September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital