UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
(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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
|
☐ |
|
|
☒ |
|
|
|
|
|
|||
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 August 2, 2024, the registrant had
TABLE OF CONTENTS
|
|
|
Page |
|
Item 1. |
|
|
3 |
|
|
|
Consolidated Balance Sheets (unaudited) as of June 30, 2024 and December 31, 2023 |
|
3 |
|
|
|
4 |
|
|
|
|
5 |
|
|
|
|
6 |
|
|
|
Condensed Notes to the Consolidated Financial Statements (unaudited) |
|
8 |
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
22 |
Item 3. |
|
|
38 |
|
Item 4. |
|
|
39 |
|
|
|
|
|
|
Item 1. |
|
|
40 |
|
Item 1A. |
|
|
40 |
|
Item 2. |
|
|
40 |
|
Item 3. |
|
|
40 |
|
Item 4. |
|
|
40 |
|
Item 5. |
|
|
40 |
|
Item 6. |
|
|
41 |
|
|
42 |
|||
2
INOGEN, INC.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Inogen, Inc.
Consolidated Balance Sheets
(unaudited)
(amounts in thousands, except share and per share amounts)
|
June 30, |
|
|
December 31, |
|
||
Assets |
|
|
|
|
|
||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
||
Restricted cash |
|
|
|
|
— |
|
|
Accounts receivable, net |
|
|
|
|
|
||
Inventories, net |
|
|
|
|
|
||
Income tax receivable |
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
||
Operating lease right-of-use asset |
|
|
|
|
|
||
Other assets |
|
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
||
Liabilities and stockholders' equity |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Accounts payable and accrued expenses |
$ |
|
|
$ |
|
||
Accrued payroll |
|
|
|
|
|
||
Warranty reserve - current |
|
|
|
|
|
||
Operating lease liability - current |
|
|
|
|
|
||
Earnout liability |
|
|
|
|
|
||
Deferred revenue - current |
|
|
|
|
|
||
Income tax payable |
|
— |
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
||
Long-term liabilities |
|
|
|
|
|
||
Warranty reserve - noncurrent |
|
|
|
|
|
||
Operating lease liability - noncurrent |
|
|
|
|
|
||
Deferred revenue - noncurrent |
|
|
|
|
|
||
Deferred tax liability |
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
||
|
|
|
|
|
|||
Stockholders' equity |
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
||
Accumulated deficit |
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive income (loss) |
|
( |
) |
|
|
|
|
Total stockholders' equity |
|
|
|
|
|
||
Total liabilities and stockholders' equity |
$ |
|
|
$ |
|
||
See accompanying condensed notes to the consolidated financial statements.
3
Inogen, Inc.
Consolidated Statements of Comprehensive Loss
(unaudited)
(amounts in thousands, except share and per share amounts)
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Sales revenue |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of rental revenue, including depreciation of $ |
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit-sales revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit-rental revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Total gross profit |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from operations |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income, net |
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
||||
Total other income, net |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before provision (benefit) for income taxes |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Provision (benefit) for income taxes |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net loss |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
||||
Change in foreign currency translation adjustment |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Change in net unrealized gains (losses) on foreign currency hedging |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Change in net unrealized gains (losses) on marketable securities |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Total other comprehensive income (loss), net of tax |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Comprehensive loss |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net loss per share attributable to common stockholders (Note 7) |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted net loss per share attributable to common stockholders (Note 7) |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average number of shares used in calculating net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic common shares |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted common shares |
|
|
|
|
|
|
|
|
|
|
|
||||
See accompanying condensed notes to the consolidated financial statements.
4
Inogen, Inc.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(amounts in thousands, except share amounts)
|
Three months ended June 30, 2024 and June 30, 2023 |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
|
|
Additional |
|
|
|
|
|
other |
|
|
Total |
|
|||||||||
|
Common stock |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
stockholders' |
|
|||||||||
|
Shares |
|
|
Amount |
|
|
capital |
|
|
deficit |
|
|
income (loss) |
|
|
equity |
|
||||||
Balance, March 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted stock units |
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance, June 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, March 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock issued |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Tax withholding related to vesting of restricted stock units |
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Six months ended June 30, 2024 and June 30, 2023 |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
|
|
Additional |
|
|
|
|
|
other |
|
|
Total |
|
|||||||||
|
Common stock |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
stockholders' |
|
|||||||||
|
Shares |
|
|
Amount |
|
|
capital |
|
|
deficit |
|
|
income (loss) |
|
|
equity |
|
||||||
Balance, December 31, 2022 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Employee stock purchases |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Vesting of restricted stock units |
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Shares withheld related to net restricted stock settlement |
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock options exercised |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance, June 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock issued |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Tax withholding related to vesting of restricted stock units |
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying condensed notes to the consolidated financial statements.
5
Inogen, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(amounts in thousands)
|
Six months ended June 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities |
|
|
|
|
|
||
Net loss |
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
||
Loss on rental units and other assets |
|
|
|
|
|
||
Gain on sale of former rental assets |
|
( |
) |
|
|
( |
) |
Provision for sales revenue returns and doubtful accounts |
|
|
|
|
|
||
Provision for inventory losses |
|
|
|
|
|
||
Loss on purchase commitments |
|
( |
) |
|
|
— |
|
Stock-based compensation expense |
|
|
|
|
|
||
Deferred income taxes |
|
( |
) |
|
|
— |
|
Change in fair value of earnout liability |
|
|
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
||
Inventories |
|
( |
) |
|
|
|
|
Income tax receivable |
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
||
Operating lease right-of-use asset |
|
|
|
|
|
||
Other noncurrent assets |
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
( |
) |
|
|
( |
) |
Accrued payroll |
|
|
|
|
( |
) |
|
Warranty reserve |
|
|
|
|
|
||
Deferred revenue |
|
( |
) |
|
|
( |
) |
Income tax payable |
|
( |
) |
|
|
— |
|
Operating lease liability |
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) operating activities |
|
|
|
|
( |
) |
|
Cash flows from investing activities |
|
|
|
|
|
||
Purchases of available-for-sale securities |
|
( |
) |
|
|
( |
) |
Maturities of available-for-sale securities |
|
|
|
|
|
||
Investment in intangible assets |
|
( |
) |
|
|
( |
) |
Investment in property and equipment |
|
( |
) |
|
|
( |
) |
Production and purchase of rental equipment |
|
( |
) |
|
|
( |
) |
Proceeds from sale of former assets |
|
|
|
|
|
||
Net cash used in investing activities |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
(continued on next page) |
|
||||||
See accompanying condensed notes to the consolidated financial statements.
6
Inogen, Inc.
Consolidated Statements of Cash Flows (continued)
(unaudited)
(amounts in thousands)
|
Six months ended June 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Cash flows from financing activities |
|
|
|
|
|
||
Proceeds from stock options exercised |
|
— |
|
|
|
|
|
Proceeds from employee stock purchases |
|
|
|
|
|
||
Payment of employment taxes related to release of restricted stock |
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
||
Effect of exchange rates on cash |
|
( |
) |
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash |
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information |
|
|
|
|
|
||
Cash paid during the period for income taxes, net of refunds received |
$ |
|
|
$ |
|
||
Supplemental disclosure of non-cash transactions |
|
|
|
|
|
||
Property and equipment in accounts payable and accrued expenses |
|
|
|
|
|
||
See accompanying condensed notes to the consolidated financial statements.
7
Inogen, Inc.
Condensed Notes to the Consolidated Financial Statements
(unaudited)
(amounts in thousands, except share and per share amounts)
1. Business overview
Inogen, Inc. (Company or Inogen) was incorporated in Delaware on November 27, 2001. The Company is a medical technology business that primarily develops, manufactures, and markets innovative portable oxygen concentrators (POCs) used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. Traditionally, these patients have relied on stationary oxygen concentrator systems for use in the home and oxygen tanks or cylinders for mobile use, which the Company refers to as the delivery model. The tanks and cylinders must be delivered regularly and have a finite amount of oxygen, which requires patients to plan activities outside of their homes around delivery schedules and a finite oxygen supply. Additionally, patients must attach long cumbersome tubing to their stationary concentrators simply to enable mobility within their homes. The Company's proprietary Inogen One® and Inogen Rove systems concentrate the air around the patient to offer a source of supplemental oxygen anytime, anywhere with a battery and can be plugged into an outlet when at home, in a car, or in a public place with outlets available. The Company's Inogen One systems reduce the patient's reliance on stationary concentrators and scheduled deliveries of tanks with a finite supply of oxygen, thereby improving patient quality of life and fostering mobility.
The Company incorporated Inogen Europe Holding B.V., a Dutch limited liability company, on
2. Basis of presentation and summary of significant accounting policies
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
The results of operations for the three and six months ended June 30, 2024 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2024. In the opinion of the Company’s management, the information contained herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and stockholders’ equity. Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations relating to interim financial statements. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2024. Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K filed with the SEC on March 1, 2024.
Basis of consolidation
The consolidated financial statements include the accounts of Inogen, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
Accounting estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price (SSP) and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, impairment of goodwill, impairment of long-lived assets, stock-based compensation expense, income taxes, fair value of acquired intangible assets and goodwill, and fair value of earnout liabilities. Actual results could differ from these estimates.
8
Cash, cash equivalents, marketable securities and restricted cash
The Company considers all short-term highly liquid investments with a maturity of three months or less to be cash equivalents. Restricted cash and cash equivalents are considered to be legally restricted as to withdrawal or usage. The Company's restricted cash is a legally restricted deposit held as a compensating balance against its corporate credit card balances.
The Company’s marketable debt securities are classified and accounted for as available-for-sale. Cash equivalents are recorded at cost plus accrued interest, which is considered adjusted cost, and approximates fair value. Marketable debt securities are included in cash equivalents and marketable securities based on the maturity date of the security.
The Company considers investments with maturities greater than three months, but less than one year, to be marketable securities. Investments are reported at fair value with realized and unrealized gains or losses reported in other income (expense), net.
The Company reviews its investments to identify and evaluate investments that have an indication of possible impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company's intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. Expected credit losses are declines in fair value that are not expected to recover and are charged to other income (expense), net.
3. Acquisitions
On July 10, 2023, the Company entered into a share purchase agreement to acquire Physio-Assist, which is in the business of the design, production, and marketing of medical devices for bronchial decongestion (airway clearance technique) for patients suffering from obstructive respiratory diseases. On September 14, 2023, the Company completed the acquisition of all of the issued and outstanding capital stock of Physio-Assist and its wholly-owned subsidiary PhysioAssist GmbH for a purchase price consisting of $
A potential earnout payment of either $
Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill. Goodwill represents the expected synergies with the existing business, the acquired assembled workforce, and future cash flows after the acquisition. The fair value assigned to the identifiable intangible assets was determined primarily by using the excess earnings method. The key assumptions included in the excess earnings method included revenue recognized, cost of revenue, and the discount rate.
The Company's allocation of the purchase price of Physio-Assist is preliminary and any measurement period adjustments that result from the finalization of the purchase price allocation will be recorded retrospectively to the acquisition date. Changes are possible and could change the allocation of the purchase price.
9
The following table summarizes the preliminary allocation of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in the acquisition of Physio-Assist:
Cash |
|
$ |
|
|
Accounts receivable |
|
|
|
|
Inventories |
|
|
|
|
Other assets |
|
|
|
|
Property and equipment |
|
|
|
|
Operating lease right-of-use asset |
|
|
|
|
Intangible assets |
|
|
|
|
Goodwill |
|
|
|
|
Total assets acquired |
|
$ |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
|
|
Bank loans |
|
|
|
|
Other current liabilities |
|
|
|
|
Operating lease liability |
|
|
|
|
Deferred tax liability - noncurrent |
|
|
|
|
Total liabilities assumed |
|
|
|
|
Total identifiable net assets |
|
$ |
|
|
|
|
|
|
|
Cash consideration |
|
$ |
|
|
Fair value of contingent earnout consideration |
|
|
|
|
Total purchase price |
|
$ |
|
|
The consolidated financial and operating results reflect the Physio-Assist operations beginning September 14, 2023.
|
|
Three months ended |
|
|
Six months ended |
|
||
|
|
June 30, 2023 |
|
|
June 30, 2023 |
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
10
4. Fair value measurements
Cash, cash equivalents, marketable securities and restricted cash
The following table summarizes fair value measurements by level for the assets measured at fair value on a recurring basis for cash, cash equivalents, marketable securities and restricted cash:
|
|
As of June 30, 2024 |
|
|||||||||||||||||||||
|
|
|
|
|
Gross |
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
||||||
|
|
Adjusted |
|
|
unrealized |
|
|
|
|
|
and cash |
|
|
Marketable |
|
|
Restricted |
|
||||||
|
|
cost |
|
|
gains |
|
|
Fair value |
|
|
equivalents |
|
|
securities |
|
|
cash |
|
||||||
Cash |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money market accounts |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||
Institutional Insured Liquidity Deposit Savings |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
As of December 31, 2023 |
|
|
|
|
||||||||||||||||||
|
|
|
|
|
Gross |
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
||||||
|
|
Adjusted |
|
|
unrealized |
|
|
|
|
|
and cash |
|
|
Marketable |
|
|
|
|
||||||
|
|
cost |
|
|
gains |
|
|
Fair value |
|
|
equivalents |
|
|
securities |
|
|
|
|
||||||
Cash |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
|
|
||||
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money market accounts |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate bonds |
|
|||||||||||||||||||||||