UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2014
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 |
|
(I.R.S. Employer |
326 Bollay Drive |
|
93117 |
(Address of principal executive offices) |
|
(Zip Code) |
(805) 562-0500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Name of each exchange on which registered |
Common Stock, $0.001 par value |
|
The NASDAQ Global Select Market |
Securities registered pursuant to Section 12(g) of the Act: None
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 x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
¨ |
|
Accelerated filer |
|
¨ |
|
|
|
|
|||
Non-accelerated filer |
|
x (Do not check if a smaller reporting company) |
|
Smaller reporting company |
|
¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of April 30, 2014, the registrant had 18,192,534 shares of common stock, par value $0.001, outstanding.
TABLE OF CONTENTS
|
|
|
Page |
|
Item 1. |
|
|
3 |
|
|
|
|
3 |
|
|
|
Statements of Operations for the Three Months Ended March 31, 2014 and March 31, 2013 |
|
5 |
|
|
|
6 |
|
|
|
|
7 |
|
|
|
Statements of Cash Flows for the Three Months ended March 31, 2014 and March 31, 2013 |
|
8 |
|
|
|
9 |
|
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
26 |
Item 3. |
|
|
35 |
|
Item 4. |
|
|
36 |
|
|
|
|
|
|
Item 1. |
|
|
37 |
|
Item 1A. |
|
|
37 |
|
Item 2. |
|
|
59 |
|
Item 6. |
|
|
61 |
2
INOGEN, INC.
PART I – FINANCIAL INFORMATION
Inogen, Inc.
(unaudited)
(amounts in thousands)
|
March 31, |
|
|
December 31, |
|
||
|
2014 |
|
|
2013 |
|
||
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
59,550 |
|
|
$ |
13,521 |
|
Accounts receivable, net of allowances of $3,417 and $3,390 at March 31, 2014 and December 31, 2013, respectively |
|
18,084 |
|
|
|
10,231 |
|
Inventories, net of allowances of $110 and $100 at March 31, 2014 and December 31, 2013, respectively |
|
4,651 |
|
|
|
4,248 |
|
Deferred cost of rental revenue |
|
283 |
|
|
|
289 |
|
Income tax receivable |
|
— |
|
|
|
87 |
|
Deferred tax asset-current |
|
3,923 |
|
|
|
3,923 |
|
Prepaid expenses and other current assets |
|
959 |
|
|
|
531 |
|
Total current assets |
|
87,450 |
|
|
|
32,830 |
|
Property and equipment |
|
|
|
|
|
|
|
Rental equipment, net of allowances of $282 and $156 at March 31, 2014 and December 31, 2013, respectively |
|
39,832 |
|
|
|
37,573 |
|
Manufacturing equipment and tooling |
|
2,584 |
|
|
|
2,551 |
|
Computer equipment and software |
|
3,228 |
|
|
|
2,973 |
|
Furniture and equipment |
|
603 |
|
|
|
601 |
|
Leasehold improvements |
|
888 |
|
|
|
887 |
|
Construction in process |
|
971 |
|
|
|
1,093 |
|
Total property and equipment |
|
48,106 |
|
|
|
45,678 |
|
Less accumulated depreciation |
|
(18,282 |
) |
|
|
(15,956 |
) |
Property and equipment, net |
|
29,824 |
|
|
|
29,722 |
|
Intangible assets, net |
|
345 |
|
|
|
215 |
|
Deferred tax asset - noncurrent |
|
17,807 |
|
|
|
17,865 |
|
Other assets |
|
80 |
|
|
|
1,765 |
|
Total assets |
$ |
135,506 |
|
|
$ |
82,397 |
|
See accompanying condensed notes to the financial statements.
3
Inogen, Inc.
Balance Sheets (continued)
(unaudited)
(amounts in thousands, except share and per share amounts)
|
March 31, |
|
|
December 31, |
|
||
|
2014 |
|
|
2013 |
|
||
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
10,411 |
|
|
$ |
9,219 |
|
Accrued payroll |
|
3,829 |
|
|
|
2,898 |
|
Current portion of long-term debt |
|
5,038 |
|
|
|
5,258 |
|
Warranty reserve |
|
490 |
|
|
|
420 |
|
Deferred revenue |
|
1,716 |
|
|
|
1,487 |
|
Income tax payable |
|
432 |
|
|
|
— |
|
Total current liabilities |
|
21,916 |
|
|
|
19,282 |
|
Long-term liabilities |
|
|
|
|
|
|
|
Warranty reserve-noncurrent |
|
431 |
|
|
|
389 |
|
Preferred stock warrant liability |
|
— |
|
|
|
260 |
|
Deferred revenue-noncurrent |
|
1,104 |
|
|
|
776 |
|
Long-term debt, net of current portion |
|
4,151 |
|
|
|
5,391 |
|
Total liabilities |
|
27,602 |
|
|
|
26,098 |
|
Commitments and contingencies (Note 5) |
|
|
|
|
|
|
|
Redeemable convertible preferred stock |
|
|
|
|
|
|
|
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized; 0 and 9,541,631 shares issued and outstanding; liquidation preference of $0 and $136,660 at March 31, 2014 and December 31, 2013, respectively |
|
— |
|
|
|
118,671 |
|
Stockholders' equity (deficit) |
|
|
|
|
|
|
|
Preferred stock, $0.001 par value per share; 100,000 shares authorized; 0 and 66,666 shares issued and outstanding; liquidation preference of $0 and $250 at March 31, 2014 and December 31, 2013, respectively |
|
— |
|
|
|
247 |
|
Common stock, $0.001 par value per share; 60,000,000 shares authorized for both periods; 18,151,551 and 280,974 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively |
|
18 |
|
|
|
1 |
|
Additional paid-in-capital |
|
170,517 |
|
|
|
— |
|
Accumulated deficit |
|
(62,631 |
) |
|
|
(62,620 |
) |
Total stockholders' equity (deficit) |
|
107,904 |
|
|
|
(62,372 |
) |
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) |
$ |
135,506 |
|
|
$ |
82,397 |
|
See accompanying condensed notes to the financial statements.
4
Inogen, Inc.
(unaudited)
(amounts in thousands, except share and per share amounts)
|
Three months ended March 31, |
|
|||||
|
|
2014 |
|
|
|
2013 |
|
Revenue |
|
|
|
|
|
|
|
Sales revenue |
$ |
14,857 |
|
|
$ |
8,895 |
|
Rental revenue |
|
8,776 |
|
|
|
6,852 |
|
Total revenue |
|
23,633 |
|
|
|
15,747 |
|
Cost of revenue |
|
|
|
|
|
|
|
Cost of sales revenue |
|
7,541 |
|
|
|
5,191 |
|
Cost of rental revenue, including depreciation of $2,257 and $1,342, respectively |
|
4,154 |
|
|
|
2,439 |
|
Total cost of revenue |
|
11,695 |
|
|
|
7,630 |
|
Gross profit |
|
11,938 |
|
|
|
8,117 |
|
Operating expenses |
|
|
|
|
|
|
|
Research and development |
|
635 |
|
|
|
503 |
|
Sales and marketing |
|
5,705 |
|
|
|
4,147 |
|
General and administrative |
|
4,049 |
|
|
|
2,834 |
|
Total operating expenses |
|
10,389 |
|
|
|
7,484 |
|
Income from operations |
|
1,549 |
|
|
|
633 |
|
Other income (expense) |
|
|
|
|
|
|
|
Interest expense |
|
(133 |
) |
|
|
(104 |
) |
Interest income |
|
6 |
|
|
|
3 |
|
Decrease in fair value of preferred stock warrant liability |
|
36 |
|
|
|
20 |
|
Other income |
|
7 |
|
|
|
209 |
|
Total other income (expense), net |
|
(84 |
) |
|
|
128 |
|
Income before provision for income taxes |
|
1,465 |
|
|
|
761 |
|
Provision for income taxes |
|
577 |
|
|
|
31 |
|
Net income |
$ |
888 |
|
|
$ |
730 |
|
Less deemed dividend on redeemable convertible preferred stock |
|
(987 |
) |
|
|
(1,723 |
) |
Net loss attributable to common stockholders |
$ |
(99 |
) |
|
$ |
(993 |
) |
Basic net loss per share attributable to common stockholders |
$ |
(0.01 |
) |
|
$ |
(3.65 |
) |
Diluted net loss per share attributable to common stockholders |
$ |
(0.01 |
) |
|
$ |
(3.65 |
) |
Weighted-average number of shares used in calculating loss per share |
|
|
|
|
|
|
|
attributable to common stockholders - basic common |
|
9,437,525 |
|
|
|
272,226 |
|
attributable to common stockholders - dilutive common |
|
9,437,525 |
|
|
|
272,226 |
|
See accompanying condensed notes to the financial statements.
5
Inogen, Inc.
Statements of Redeemable Convertible Preferred Stock
(unaudited)
(amounts in thousands, except share amounts)
|
Series B |
|
|
Series C |
|
|
Series D |
|
|
Series E |
|
|
Series F |
|
|
Series G |
|
|
Total |
|
|||||||||||||||||||||||||||||||
|
redeemable |
|
|
redeemable |
|
|
redeemable |
|
|
redeemable |
|
|
redeemable |
|
|
redeemable |
|
|
redeemable |
|
|||||||||||||||||||||||||||||||
|
convertible |
|
|
convertible |
|
|
convertible |
|
|
convertible |
|
|
convertible |
|
|
convertible |
|
|
convertible |
|
|||||||||||||||||||||||||||||||
|
preferred stock |
|
|
preferred stock |
|
|
preferred stock |
|
|
preferred stock |
|
|
preferred stock |
|
|
preferred stock |
|
|
preferred |
|
|||||||||||||||||||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
stock |
|
|||||||||||||
Balance, December 31, 2012 |
|
425,511 |
|
|
$ |
5,056 |
|
|
|
365,903 |
|
|
$ |
6,460 |
|
|
|
1,487,225 |
|
|
$ |
32,571 |
|
|
|
1,634,874 |
|
|
$ |
28,044 |
|
|
|
2,701,957 |
|
|
$ |
14,055 |
|
|
|
2,840,260 |
|
|
$ |
23,159 |
|
|
$ |
109,345 |
|
Warrants exercised |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
39,510 |
|
|
|
909 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
909 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
268 |
|
|
|
— |
|
|
|
376 |
|
|
|
— |
|
|
|
1,079 |
|
|
|
1,723 |
|
Balance, March 31, 2013 |
|
425,511 |
|
|
|
5,056 |
|
|
|
365,903 |
|
|
|
6,460 |
|
|
|
1,526,735 |
|
|
|
33,480 |
|
|
|
1,634,874 |
|
|
|
28,312 |
|
|
|
2,701,957 |
|
|
|
14,431 |
|
|
|
2,840,260 |
|
|
|
24,238 |
|
|
|
111,977 |
|
Warrants exercised |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
46,391 |
|
|
|
1,139 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,139 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
818 |
|
|
|
— |
|
|
|
1,189 |
|
|
|
— |
|
|
|
3,548 |
|
|
|
5,555 |
|
Balance, December 31, 2013 |
|
425,511 |
|
|
|
5,056 |
|
|
|
365,903 |
|
|
|
6,460 |
|
|
|
1,573,126 |
|
|
|
34,619 |
|
|
|
1,634,874 |
|
|
|
29,130 |
|
|
|
2,701,957 |
|
|
|
15,620 |
|
|
|
2,840,260 |
|
|
|
27,786 |
|
|
|
118,671 |
|
Warrants exercised |
|
— |
|
|
|
— |
|
|
|
11,094 |
|
|
|
279 |
|
|
|
11,415 |
|
|
|
314 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
593 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
139 |
|
|
|
— |
|
|
|
207 |
|
|
|
— |
|
|
|
641 |
|
|
|
987 |
|
Conversion of preferred stock to common stock in connection with initial public offering |
|
(425,511 |
) |
|
|
(5,056 |
) |
|
|
(376,997 |
) |
|
|
(6,739 |
) |
|
|
(1,584,541 |
) |
|
|
(34,933 |
) |
|
|
(1,634,874 |
) |
|
|
(29,269 |
) |
|
|
(2,701,957 |
) |
|
|
(15,827 |
) |
|
|
(2,840,260 |
) |
|
|
(28,427 |
) |
|
|
(120,251 |
) |
Balance, March 31, 2014 |
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
See accompanying condensed notes to the financial statements.
6
Inogen, Inc.
Statements of Stockholders’ Equity (Deficit)
(unaudited)
(amounts in thousands, except share amounts)
|
Series A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
convertible |
|
|
|
|
|
Additional |
|
|
|
|
|
|
Total |
|
||||||||||||
|
preferred stock |
|
|
Common stock |
|
|
paid-in |
|
|
Accumulated |
|
|
stockholders' |
|
|||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
deficit |
|
|
equity (deficit) |
|
|||||||
Balance, December 31, 2012 |
|
66,666 |
|
|
$ |
247 |
|
|
|
272,096 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
(81,018 |
) |
|
$ |
(80,770 |
) |
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
24 |
|
Stock options exercised |
|
— |
|
|
|
— |
|
|
|
222 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25 |
) |
|
|
(1,698 |
) |
|
|
(1,723 |
) |
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
730 |
|
|
|
730 |
|
Balance, March 31, 2013 |
|
66,666 |
|
|
|
247 |
|
|
|
272,318 |
|
|
|
1 |
|
|
|
— |
|
|
|
(81,986 |
) |
|
|
(81,738 |
) |
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
206 |
|
|
|
— |
|
|
|
206 |
|
Stock options exercised |
|
— |
|
|
|
— |
|
|
|
8,656 |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
9 |
|
Warrants exercised - preferred |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(216 |
) |
|
|
(5,339 |
) |
|
|
(5,555 |
) |
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24,705 |
|
|
|
24,705 |
|
Balance, December 31, 2013 |
|
66,666 |
|
|
|
247 |
|
|
|
280,974 |
|
|
|
1 |
|
|
|
— |
|
|
|
(62,620 |
) |
|
|
(62,372 |
) |
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
43 |
|
|
|
88 |
|
|
|
131 |
|
Stock options exercised |
|
— |
|
|
|
— |
|
|
|
8,975 |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
11 |
|
Warrants exercised |
|
— |
|
|
|
— |
|
|
|
72,544 |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
|
|
22 |
|
Reclassification of warrant liability |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
76 |
|
Deemed dividend on redeemable convertible preferred stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(987 |
) |
|
|
(987 |
) |
Conversion of preferred stock |
|
(66,666 |
) |
|
|
(247 |
) |
|
|
14,259,647 |
|
|
|
14 |
|
|
|
120,484 |
|
|
|
— |
|
|
|
120,251 |
|
Issuance of common stock in connection with initial public offering |
|
— |
|
|
|
— |
|
|
|
3,529,411 |
|
|
|
3 |
|
|
|
49,881 |
|
|
|
— |
|
|
|
49,884 |
|
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
888 |
|
|
|
888 |
|
Balance, March 31, 2014 |
|
— |
|
|
$ |
— |
|
|
|
18,151,551 |
|
|
$ |
18 |
|
|
$ |
170,517 |
|
|
$ |
(62,631 |
) |
|
$ |
107,904 |
|
See accompanying condensed notes to the financial statements.
7
Inogen, Inc.
(unaudited)
(amounts in thousands)
|
Three months ended March 31, |
|
|||||
|
2014 |
|
|
2013 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
|
Net income |
$ |
888 |
|
|
$ |
730 |
|
Adjustments to reconcile net income to net cash provided by (used in) by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,658 |
|
|
|
1,661 |
|
Loss on rental units and other fixed assets |
|
338 |
|
|
|
73 |
|
Provision for sales returns |
|
948 |
|
|
|
362 |
|
Provision for doubtful accounts |
|
196 |
|
|
|
482 |
|
Provision for rental revenue adjustments |
|
1,672 |
|
|
|
1,159 |
|
Provision for inventory obsolescence |
|
26 |
|
|
|
41 |
|
Stock-based compensation expense |
|
131 |
|
|
|
24 |
|
Deferred tax assets |
|
58 |
|
|
|
— |
|
Decrease in fair value of preferred stock warrant liability |
|
(36 |
) |
|
|
(20 |
) |
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(10,669 |
) |
|
|
(3,169 |
) |
Inventories |
|
(429 |
) |
|
|
11 |
|
Deferred costs of rental revenue |
|
6 |
|
|
|
(4 |
) |
Prepaid expenses and other current assets |
|
(428 |
) |
|
|
(189 |
) |
Accounts payable and accrued expenses |
|
1,193 |
|
|
|
797 |
|
Accrued payroll |
|
931 |
|
|
|
325 |
|
Warranty reserve |
|
112 |
|
|
|
213 |
|
Deferred revenue |
|
556 |
|
|
|
166 |
|
Income tax receivable |
|
87 |
|
|
|
31 |
|
Income tax payable |
|
432 |
|
|
|
— |
|
Net cash provided by (used in) operating activities |
|
(1,330 |
) |
|
|
2,693 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Investment in intangible assets |
|
(169 |
) |
|
|
— |
|
Production of rental equipment |
|
(2,890 |
) |
|
|
(3,162 |
) |
Purchases of property and equipment |
|
(169 |
) |
|
|
(406 |
) |
Refund of deposit |
|
— |
|
|
|
(1 |
) |
Net cash used in investing activities |
|
(3,228 |
) |
|
|
(3,569 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds from redeemable convertible preferred stock warrants and common stock warrants exercised |
|
467 |
|
|
|
865 |
|
Proceeds from stock options exercised |
|
11 |
|
|
|
1 |
|
Proceeds from initial public offering |
|
56,471 |
|
|
|
— |
|