Inogen, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Balance Sheet Components (Tables)

Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2019

Balance Sheet Related Disclosures [Abstract]

Summary of Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents, and marketable securities consist of the following:

	March 31,		December 31,
Cash and cash equivalents	2019		2018
Cash	$	19,300	$	33,671
Money market accounts		170,181		158,438
U.S. Treasury securities		755		4,525
Total cash and cash equivalents	$	190,236	$	196,634
Marketable securities
Corporate bonds	$	10,065	$	13,613
U.S. Treasury securities		38,946		30,102
Total marketable securities	$	49,011	$	43,715

Schedule of Gross Accounts Receivable Balance Concentrations by Major Category

Gross accounts receivable balance concentrations by major category as of March 31, 2019 and December 31, 2018 were as follows:

	March 31,		December 31,
Gross accounts receivable	2019		2018
Rental ⁽¹⁾	$	3,791	$	3,406
Business-to-business and other receivables⁽²⁾		39,802		35,656
Total gross accounts receivable	$	43,593	$	39,062

(1)	Rental includes Medicare, Medicaid/other government, private insurance and patient pay.

(2)

Business-to-business receivables included one customer with a gross accounts receivable balance of $18,615 and $16,198 as of March 31, 2019 and December 31, 2018, respectively. This customer received extended payment terms through a direct financing plan offered. The Company also has a credit insurance policy in place, which allocated up to $20,000 in coverage as of March 31, 2019 and allocated up to $18,000 in coverage as of December 31, 2018 for this customer with a $400 deductible and 10% retention.

Schedule of Net Accounts Receivable Balance Concentrations by Major Category

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2019 and December 31, 2018 were as follows:

	March 31,		December 31,
Net accounts receivable	2019		2018
Rental ⁽¹⁾	$	2,910	$	2,413
Business-to-business and other receivables ⁽²⁾		38,615		34,628
Total net accounts receivable	$	41,525	$	37,041

(1)	Rental includes Medicare, Medicaid/other government, private insurance and patient pay.

(2)

Schedule of Allowances for Accounts Receivable

The following tables set forth the accounts receivable allowances as of March 31, 2019 and December 31, 2018:

	March 31,		December 31,
Allowances - accounts receivable	2019		2018
Doubtful accounts⁽¹⁾	$	424	$	693
Rental revenue adjustments⁽¹⁾		548		438
Sales returns		1,096		890
Total allowances - accounts receivable	$	2,068	$	2,021

(1)	Prior to the adoption of ASC 842, the Company separately recorded an allowance for doubtful accounts by charging bad debt expense. Upon adoption of ASC 842, such balances are recorded as part of rental revenue adjustments to report rental revenue at an expected collectible amount.

Breakdown of Company's Revenue from U.S. and Non-U.S. Sources

A portion of revenue is earned from sales outside the United States. Approximately 72.5% of the non-U.S. revenue for the three months ended March 31, 2019 was invoiced in Euros. A breakdown of the Company’s revenue from U.S. and non-U.S. sources for the three months ended March 31, 2019 and March 31, 2018 is as follows:

	Three months ended March 31,
	2019		2018
U.S. revenue	$	70,399	$	62,145
Non-U.S. revenue		19,803		16,906
Total revenue	$	90,202	$	79,051

Schedule of Inventories

Inventories that are considered current consist of the following:

	March 31,			December 31,
	2019			2018
Raw materials and work-in-progress	$	26,162		$	24,980
Finished goods		3,398			2,756
Less: reserves		(740	)		(665	)
Inventories	$	28,820		$	27,071

Computation of Depreciation and Amortization using Straight Line Method Over Estimated Useful Lives of Assets

Property and equipment are stated at cost. Depreciation and amortization are calculated using the straight-line method over the assets’ estimated useful lives as follows:

Rental equipment		1.5-5 years
Manufacturing equipment and tooling		3-5 years
Computer equipment and software		2-3 years
Furniture and equipment		3-5 years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

Summary of Depreciation and Amortization Expense of Rental Equipment and Other Property and Equipment

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2019 and March 31, 2018, respectively.

	Three months ended March 31,
	2019		2018
Rental equipment	$	1,705	$	2,165
Other property and equipment		761		530
Total depreciation and amortization	$	2,466	$	2,695

Summary of Property Plant and Equipment and Rental Equipment with Associated Accumulated Depreciation

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2019 and December 31, 2018, respectively.

	March 31,		December 31,
Property and equipment	2019		2018
Rental equipment, net of allowances of $524 and $594, respectively	$	41,996	$	43,038
Other property and equipment		22,711		21,596
Property and equipment		64,707		64,634

Accumulated depreciation
Rental equipment		31,475		31,813
Other property and equipment		11,234		10,480
Accumulated depreciation		42,709		42,293

Property and equipment, net
Rental equipment, net of allowances of $524 and $594, respectively		10,521		11,225
Other property and equipment		11,477		11,116
Property and equipment, net	$	21,998	$	22,341

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2019 were as follows:

Balance as of December 31, 2018	$	2,257
Translation adjustment		(45	)
Balance as of March 31, 2019	$	2,212

Summary of Changes in Net Carrying Values of Intangible Assets

The following tables represent the changes in net carrying values of intangible assets as of the respective dates:

	Average
	estimated	Gross
	useful lives	carrying		Accumulated
March 31, 2019	(in years)	amount		amortization		Net amount
Licenses	10	$	185	$	158	$	27
Patents and websites	5		4,164		1,808		2,356
Customer relationships	4		1,346		645		701
Non-compete agreement	2.3		224		182		42
Commercials	2-3		633		348		285
Total		$	6,552	$	3,141	$	3,411


	Average
	estimated	Gross
	useful lives	carrying		Accumulated
December 31, 2018	(in years)	amount		amortization		Net amount
Licenses	10	$	185	$	155	$	30
Patents and websites	5		4,164		1,640		2,524
Customer relationships	4		1,373		572		801
Non-compete agreement	2.3		229		154		75
Commercials	2-3		633		308		325
Total		$	6,584	$	2,829	$	3,755

Schedule of Annual Estimated Amortization Expense

Annual estimated amortization expense for each of the succeeding fiscal years is as follows:

	March 31, 2019
Remaining 9 months of 2019	$	899
2020		1,125
2021		842
2022		545
2023		—
Thereafter		—
	$	3,411

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31,		December 31,
	2019		2018
Accounts payable	$	14,499	$	13,720
Accrued inventory (in-transit and unvouchered receipts) and trade payables		7,060		9,597
Accrued purchasing card liability		1,738		2,089
Accrued franchise, sales and use taxes		584		518
Other accrued expenses		850		862
Accounts payable and accrued expenses	$	24,731	$	26,786

Schedule of Accrued Payroll

Accrued payroll as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31,		December 31,
	2019		2018
Accrued bonuses	$	754	$	4,780
Accrued wages and other payroll related items		4,515		3,494
Accrued vacation		2,124		1,959
Accrued employee stock purchase plan deductions		439		1,174
Accrued payroll	$	7,832	$	11,407