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

¨	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.)

326 Bollay Drive Goleta, California		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

	Part I – Financial Information	Page
Item 1.	Financial Statements (Unaudited)	3
	Balance Sheets as of March 31, 2014 and December 31, 2013	3
	Statements of Operations for the Three Months Ended March 31, 2014 and March 31, 2013	5
	Statements of Redeemable Convertible Preferred Stock for the Three Months Ended March 31, 2014 and Year Ended December 31, 2013	6
	Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2014 and Year-Ended December 31, 2013	7
	Statements of Cash Flows for the Three Months ended March 31, 2014 and March 31, 2013	8
	Condensed Notes to the Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	36
	Part II – Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6.	Exhibits	61

INOGEN, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Inogen, Inc.

Balance Sheets

(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.

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.

Inogen, Inc.

Statements of Operations

(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.

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.

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.

Inogen, Inc.

Statements of Cash Flows

(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			—