Inogen, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Sales Revenue Disaggregated by Sales Channel and Geographic Region

The following table sets forth the Company’s sales revenue disaggregated by sales channel and geographic region:

(amounts in thousands)	Years ended December 31,
Revenue by region and category	2021		2020		2019
Business-to-business domestic sales	$	91,371	$	96,423	$	106,428
Business-to-business international sales		79,460		62,147		77,960
Direct-to-consumer domestic sales		140,899		121,619		156,158
Total sales revenue	$	311,730	$	280,189	$	340,546

Summary of Fair Value Assets Measured on Recurring Basis for Cash, Cash Equivalents and Marketable Securities

The following table summarizes fair value measurements by level for the assets measured at fair value on a recurring basis for cash, cash equivalents and marketable securities:

	As of December 31, 2021
			Gross					Cash
	Adjusted		unrealized					and cash		Marketable
(amounts in thousands)	cost		gains			Fair value		equivalents		securities
Cash	$	48,817	$	—		$	48,817	$	48,817	$	—
Level 1:
Money market accounts		186,707		—			186,707		186,707		—

Level 2:
Corporate bonds		9,988		1			9,989		—		9,989
Total	$	245,512	$	1		$	245,513	$	235,524	$	9,989

	As of December 31, 2020
			Gross					Cash
	Adjusted		unrealized					and cash		Marketable
(amounts in thousands)	cost		gains (losses)			Fair value		equivalents		securities
Cash	$	52,812	$	—		$	52,812	$	52,812	$	—
Level 1:
Money market accounts		159,150		—			159,150		159,150		—

Level 2:
Corporate bonds		11,549		(1	)		11,548		—		11,548
U.S. Treasury securities		4,107		—			4,107		—		4,107
Agency mortgage-backed securities		3,601		1			3,602		—		3,602
Total	$	231,219	$	—		$	231,219	$	211,962	$	19,257

Summary of Estimated Fair Value of Company's Investments in Marketable Securities Classified by Contractual Maturity Date

The following table summarizes the estimated fair value of the Company’s investments in marketable securities, classified by the contractual maturity date of the securities:

	December 31,
(amounts in thousands)	2021
Due within one year	$	9,989
Due in one year through five years		—
Total	$	9,989

Summary of Components of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows:

	As of December 31, 2021
	Foreign			Unrealized			Unrealized			Accumulated
	currency			gains			gains (losses)			other
	translation			on marketable			on cash			comprehensive
(amounts in thousands)	adjustments			securities			flow hedges			income
Balance as of December 31, 2020	$	1,128		$	—		$	(653	)	$	475
Other comprehensive income (loss)		(800	)		1			1,793			994
Balance as of December 31, 2021	$	328		$	1		$	1,140		$	1,469

	As of December 31, 2020
	Foreign			Unrealized			Unrealized			Accumulated
	currency			gains (losses)			losses			other
	translation			on marketable			on cash			comprehensive
(amounts in thousands)	adjustments			securities			flow hedges			income (loss)
Balance as of December 31, 2019	$	271		$	6		$	(364	)	$	(87	)
Other comprehensive income (loss)		857			(6	)		(289	)		562
Balance as of December 31, 2020	$	1,128		$	—		$	(653	)	$	475

Summary of Quantitative Information about Level 3 Inputs for Fair Value Measurement of Earnout Liability

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of December 31, 2021 and December 31, 2020. Significant increases or decreases in these inputs in isolation could result in a significant impact on our fair value measurement:

	As of			As of
Simulation input	December 31, 2021			December 31, 2020
Revenue volatility		15.00	%		35.00	%
WACC		10.50	%		12.00	%
20-year risk free rate		2.02	%		1.45	%
Market price of risk		2.68	%		8.00	%

Summary of Reconciliation of Earnout Liability Measured and Carried Fair Value on a Recurring Basis

The reconciliation of the earnout liability measured and carried at fair value on a recurring basis is as follows:

(amounts in thousands)
Balance as of December 31, 2019	$	26,559
Change in fair value		1,053
Balance as of December 31, 2020	$	27,612
Change in fair value		(11,596	)
Balance as of December 31, 2021	$	16,016

Summary of Cash, Cash Equivalents and Short-term Investments

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

(amounts in thousands)	December 31,
Cash and cash equivalents	2021		2020
Cash	$	48,817	$	52,812
Money market accounts		186,707		159,150
Total cash and cash equivalents	$	235,524	$	211,962
Marketable securities
Corporate bonds	$	9,989	$	11,548
U. S. Treasury securities		—		4,107
Agency mortgage-backed securities		—		3,602
Total marketable securities	$	9,989	$	19,257

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 December 31, 2021 and December 31, 2020 were as follows:

	As of					As of
(amounts in thousands)	December 31, 2021					December 31, 2020
Net accounts receivable	$		%			$		%
Rental ⁽¹⁾	$	6,011		24.6	%	$	3,794		12.8	%
Business-to-business and other receivables ⁽²⁾		18,441		75.4	%		25,923		87.2	%
Total net accounts receivable	$	24,452		100.0	%	$	29,717		100.0	%

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

(2)

Business-to business receivables included one customer with an accounts receivable balance of $5,945 and $7,044 as of December 31, 2021 and December 31, 2020, respectively. The 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 $10,000 in coverage as of December 31, 2021 and December 31, 2020 for this customer with a $400 deductible and 10% retention.

Schedule of Percentage Breakdown of Net Accounts Receivable by Aging Category by Invoice Due Date

The following table sets forth the percentage breakdown of the Company’s net accounts receivable by aging category by invoice due date as of December 31, 2021 and December 31, 2020.

	As of					As of
(amounts in thousands)	December 31, 2021					December 31, 2020
Net accounts receivable by aging category	$		%			$		%
Held and Unbilled	$	848		3.5	%	$	298		1.0	%
Aged 0-90 days		22,194		90.8	%		28,604		96.2	%
Aged 91-180 days		888		3.6	%		560		1.9	%
Aged 181-365 days		450		1.8	%		230		0.8	%
Aged over 365 days		72		0.3	%		25		0.1	%
Total net accounts receivable	$	24,452		100.0	%	$	29,717		100.0	%

Schedule of Allowances for Accounts Receivable

The following table sets forth the accounts receivable allowances as of December 31, 2021 and December 31, 2020:

	As of					As of
(amounts in thousands)	December 31, 2021					December 31, 2020
Allowances - accounts receivable	$		%			$		%
Doubtful accounts	$	52		0.2	%	$	52		0.2	%
Rental revenue adjustments		—		0.0	%		396		1.3	%
Sales returns		810		3.1	%		742		2.4	%
Total allowances - accounts receivable	$	862		3.3	%	$	1,190		3.9	%

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 74.1%, 73.6% and 70.2% of the non-U.S. revenue for the years ended December 31, 2021, 2020 and 2019, respectively, were invoiced in Euros. A breakdown of the Company’s revenue from U.S. and non-U.S. sources for the years ended December 31, 2021, 2020 and 2019, respectively, is as follows:

	Years ended December 31,
(amounts in thousands)	2021		2020		2019
U.S. revenue	$	278,543	$	246,340	$	283,983
Non-U.S. revenue		79,460		62,147		77,960
Total revenue	$	358,003	$	308,487	$	361,943

Schedule of Inventories

Inventories that are considered current consist of the following:

	December 31,
(amounts in thousands)	2021			2020
Raw materials and work-in-progress	$	21,909		$	22,318
Finished goods		12,116			3,743
Less: reserves		(2,152	)		(1,246	)
Inventories, net	$	31,873		$	24,815

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 years ended December 31, 2021, 2020 and 2019, respectively.

	Years ended December 31,
(amounts in thousands)	2021		2020		2019
Rental equipment	$	8,860	$	5,695	$	6,253
Other property and equipment		3,993		3,882		3,421
Total depreciation and amortization	$	12,853	$	9,577	$	9,674

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 December 31, 2021 and 2020, respectively.

(amounts in thousands)	December 31,
Property and equipment	2021		2020
Rental equipment, net of allowances of $1,290 and $575, respectively	$	59,073	$	46,953
Other property and equipment		31,522		27,071
Property and equipment		90,595		74,024

Accumulated depreciation
Rental equipment		33,355		30,283
Other property and equipment		18,314		15,511
Accumulated depreciation		51,669		45,794

Property and equipment, net
Rental equipment, net of allowances of $1,290 and $575, respectively		25,718		16,670
Other property and equipment		13,208		11,560
Property and equipment, net	$	38,926	$	28,230

Computation of Earnings Per Share

The computation of EPS is as follows:

	Years ended December 31,
(amounts in thousands, except share and per share amounts)	2021			2020			2019
Numerator—basic and diluted:
Net income (loss)	$	(6,333	)	$	(5,829	)	$	20,950

Denominator:
Weighted-average common shares - basic common stock ⁽¹⁾		22,490,027			21,980,326			21,821,104
Weighted-average common shares - diluted common stock		22,490,027			21,980,326			22,241,064

Net income (loss) per share - basic common stock	$	(0.28	)	$	(0.27	)	$	0.96
Net income (loss) per share - diluted common stock ⁽²⁾	$	(0.28	)	$	(0.27	)	$	0.94

Denominator calculation from basic to diluted:
Weighted-average common shares - basic common stock ⁽¹⁾		22,490,027			21,980,326			21,821,104
Stock options and other dilutive awards		166,258			64,471			419,960
Weighted-average common shares - diluted common stock		22,656,285			22,044,797			22,241,064
Shares excluded from diluted weighted-average shares:
Stock options		151,344			467,378			53,888
Restricted stock units and restricted stock awards		167,237			292,795			169,305
Shares excluded from diluted weighted-average shares		318,581			760,173			223,193

(1)

Unvested restricted stock units and restricted stock awards are not included as shares outstanding in the calculation of basic earnings per share. Vested restricted stock units and restricted stock awards are included in basic earnings per share if all vesting and performance criteria have been met. Performance-based restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings per share as long as all applicable performance criteria are met, and their effect is dilutive. Restricted stock awards are eligible to receive all dividends declared on the Company’s common shares during the vesting period; however, such dividends are not paid until the restrictions lapse.

(2)	Due to net losses for the years ended December 31, 2021 and December 31, 2020, diluted loss per share is the same as basic.