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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, 2021

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 29, 2021, the registrant had 22,724,098 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, 2021 and December 31, 2020

 

3

 

 

Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Nine Months Ended September 30, 2021 and September 30, 2020

 

5

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2021 and September 30, 2020

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2021 and September 30, 2020

 

7

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

9

Item 2.

 

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

 

29

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

57

Item 4.

 

Controls and Procedures

 

58

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

59

Item 1A.

 

Risk Factors

 

61

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

101

Item 3.

 

Defaults Upon Senior Securities

 

101

Item 4.

 

Mine Safety Disclosures

 

101

Item 5.

 

Other Information

 

101

Item 6.

 

Exhibits

 

102

SIGNATURES

 

103

 

 

 

 

2


 

 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

 

 

September 30,

 

 

December 31,

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

241,576

 

 

$

211,962

 

Marketable securities

 

3,552

 

 

 

19,257

 

Accounts receivable, net

 

32,905

 

 

 

29,717

 

Inventories, net

 

31,785

 

 

 

24,815

 

Income tax receivable

 

1,787

 

 

 

2,048

 

Prepaid expenses and other current assets

 

24,226

 

 

 

17,898

 

Total current assets

 

335,831

 

 

 

305,697

 

Property and equipment

 

 

 

 

 

 

 

Rental equipment, net

 

55,612

 

 

 

46,953

 

Manufacturing equipment and tooling

 

11,811

 

 

 

10,361

 

Computer equipment and software

 

8,375

 

 

 

7,356

 

Furniture and equipment

 

3,033

 

 

 

2,293

 

Leasehold improvements

 

6,682

 

 

 

4,592

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

1,826

 

 

 

2,344

 

Total property and equipment

 

87,464

 

 

 

74,024

 

Less accumulated depreciation

 

(50,398

)

 

 

(45,794

)

Property and equipment, net

 

37,066

 

 

 

28,230

 

Goodwill

 

33,028

 

 

 

33,165

 

Intangible assets, net

 

62,299

 

 

 

68,797

 

Operating lease right-of-use asset

 

25,830

 

 

 

8,827

 

Deferred tax asset - noncurrent

 

15,481

 

 

 

14,467

 

Other assets

 

3,322

 

 

 

2,669

 

Total assets

$

512,857

 

 

$

461,852

 

 

 

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,

 

 

2021

 

 

2020

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

29,223

 

 

$

33,712

 

Accrued payroll

 

12,223

 

 

 

7,091

 

Warranty reserve - current

 

6,310

 

 

 

5,740

 

Operating lease liability - current

 

3,518

 

 

 

1,931

 

Deferred revenue - current

 

8,424

 

 

 

6,994

 

Income tax payable

 

235

 

 

 

1,242

 

Total current liabilities

 

59,933

 

 

 

56,710

 

Long-term liabilities

 

 

 

 

 

 

 

Warranty reserve - noncurrent

 

8,606

 

 

 

8,654

 

Operating lease liability - noncurrent

 

24,121

 

 

 

8,078

 

Earnout liability - noncurrent

 

17,118

 

 

 

26,940

 

Deferred revenue - noncurrent

 

12,135

 

 

 

11,822

 

Deferred tax liability - noncurrent

 

24

 

 

 

25

 

Total liabilities

 

121,937

 

 

 

112,229

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 22,721,619 and 22,131,447

   shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

23

 

 

 

22

 

Additional paid-in capital

 

297,097

 

 

 

273,521

 

Retained earnings

 

92,149

 

 

 

75,605

 

Accumulated other comprehensive income

 

1,651

 

 

 

475

 

Total stockholders' equity

 

390,920

 

 

 

349,623

 

Total liabilities and stockholders' equity

$

512,857

 

 

$

461,852

 

 

 

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

 

 

Nine months ended

 

 

September 30,

 

 

September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

80,974

 

 

$

66,809

 

 

$

248,359

 

 

$

215,561

 

Rental revenue

 

12,131

 

 

 

7,520

 

 

 

33,241

 

 

 

18,948

 

Total revenue

 

93,105

 

 

 

74,329

 

 

 

281,600

 

 

 

234,509

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

40,437

 

 

 

37,714

 

 

 

129,637

 

 

 

120,914

 

Cost of rental revenue, including depreciation of $2,315 and $1,475, for the three months ended and $6,257 and $3,995 for the nine months ended, respectively

 

4,981

 

 

 

3,609

 

 

 

14,068

 

 

 

9,474

 

Total cost of revenue

 

45,418

 

 

 

41,323

 

 

 

143,705

 

 

 

130,388

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

40,537

 

 

 

29,095

 

 

 

118,722

 

 

 

94,647

 

Gross profit-rental revenue

 

7,150

 

 

 

3,911

 

 

 

19,173

 

 

 

9,474

 

Total gross profit

 

47,687

 

 

 

33,006

 

 

 

137,895

 

 

 

104,121

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

3,754

 

 

 

3,511

 

 

 

11,892

 

 

 

10,406

 

Sales and marketing

 

28,301

 

 

 

22,882

 

 

 

83,109

 

 

 

72,131

 

General and administrative

 

9,258

 

 

 

8,586

 

 

 

26,981

 

 

 

28,087

 

Total operating expense

 

41,313

 

 

 

34,979

 

 

 

121,982

 

 

 

110,624

 

Income (loss) from operations

 

6,374

 

 

 

(1,973

)

 

 

15,913

 

 

 

(6,503

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

21

 

 

 

114

 

 

 

107

 

 

 

842

 

Other income (expense)

 

(466

)

 

 

(54

)

 

 

(472

)

 

 

5,586

 

Total other income (expense), net

 

(445

)

 

 

60

 

 

 

(365

)

 

 

6,428

 

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

 

5,929

 

 

 

(1,913

)

 

 

15,548

 

 

 

(75

)

Provision (benefit) for income taxes

 

(6,245

)

 

 

(214

)

 

 

(996

)

 

 

633

 

Net income (loss)

 

12,174

 

 

 

(1,699

)

 

 

16,544

 

 

 

(708

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

(251

)

 

 

385

 

 

 

(585

)

 

 

405

 

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

 

494

 

 

 

(82

)

 

 

2,028

 

 

 

162

 

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

 

106

 

 

 

(213

)

 

 

(267

)

 

 

(67

)

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

 

600

 

 

 

(295

)

 

 

1,761

 

 

 

95

 

Change in net unrealized gains (losses) on marketable securities

 

(1

)

 

 

(1

)

 

 

 

 

 

(6

)

Total other comprehensive income, net of tax

 

348

 

 

 

89

 

 

 

1,176

 

 

 

494

 

Comprehensive income (loss)

$

12,522

 

 

$

(1,610

)

 

$

17,720

 

 

$

(214

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

0.54

 

 

$

(0.08

)

 

$

0.74

 

 

$

(0.03

)

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

$

0.53

 

 

$

(0.08

)

 

$

0.73

 

 

$

(0.03

)

Weighted-average number of shares used in calculating net income (loss) per

  share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

22,619,272

 

 

 

21,998,299

 

 

 

22,416,575

 

 

 

21,959,521

 

Diluted common shares

 

22,854,229

 

 

 

21,998,299

 

 

 

22,803,355

 

 

 

21,959,521

 

 

 

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, 2021 and September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, June 30, 2020

 

22,065,961

 

 

$

22

 

 

$

268,349

 

 

$

82,425

 

 

$

318

 

 

$

351,114

 

Stock-based compensation

 

 

 

 

 

 

 

2,050

 

 

 

 

 

 

 

 

 

2,050

 

Employee stock purchases

 

40,513

 

 

 

 

 

 

996

 

 

 

 

 

 

 

 

 

 

996

 

Vesting of restricted stock units

 

11,431

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Shares withheld related to net restricted stock settlement

 

(1,614

)

 

 

 

 

 

(47

)

 

 

 

 

 

 

 

 

(47

)

Net loss

 

 

 

 

 

 

 

 

 

 

(1,699

)

 

 

 

 

 

(1,699

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

89

 

 

 

89

 

Balance, September 30, 2020

 

22,116,291

 

 

$

22

 

 

$

271,345

 

 

$

80,726

 

 

$

407

 

 

$

352,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2021 and September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, December 31, 2019

 

22,031,410

 

 

$

22

 

 

$

263,252

 

 

$

81,434

 

 

$

(87

)

 

$

344,621

 

Stock-based compensation

 

 

 

 

 

 

 

6,111

 

 

 

 

 

 

 

 

 

6,111

 

Employee stock purchases

 

68,467

 

 

 

 

 

 

2,084

 

 

 

 

 

 

 

 

 

2,084

 

Restricted stock awards issued, net of forfeitures

 

(27,729

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

41,647

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

(14

)

Shares withheld related to net restricted stock settlement

 

(6,828

)

 

 

 

 

 

(274

)

 

 

 

 

 

 

 

 

(274

)

Stock options exercised

 

9,324

 

 

 

 

 

 

186

 

 

 

 

 

 

 

 

 

186

 

Net loss

 

 

 

 

 

 

 

 

 

 

(708

)

 

 

 

 

 

(708

)