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, 2015

Summary of Fair Value Assets Measured on Recurring Basis for Cash, Cash Equivalents and Short-term Investments

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 short-term investments:

	As of December 31, 2015
			Gross					Cash		Short-
	Adjusted		unrealized					and cash		term
(amounts in thousands)	cost		losses			Fair value		equivalents		investments
Cash	$	52,164	$	—		$	52,164	$	52,164	$	—
Level 1:
Money market accounts		6,725		—			6,725		6,725		—

Level 2:
Certificates of deposit		24,047		(37	)		24,010		7,217		16,793

Total	$	82,936	$	(37	)	$	82,899	$	66,106	$	16,793



	As of December 31, 2014
			Gross					Cash		Short-
	Adjusted		unrealized					and cash		term
(amounts in thousands)	cost		losses			Fair value		equivalents		investments
Cash	$	2,941	$	—		$	2,941	$	2,941	$	—
Level 1:
Money market accounts		42,262		—			42,262		42,262		—

Level 2:
Certificates of deposit		11,633		—			11,633		11,633		—

Total	$	56,836	$	—		$	56,836	$	56,836	$	—

Summary of Fair Value Measurements using Significant Level 3 Inputs

The following table summarizes the fair value measurements using significant Level 3 inputs, and changes therein, for the years ended December 31, 2015 and 2014:

(amounts in thousands)	Warrant liability
Balance as of December 31, 2013	$	260
Fair value of preferred stock warrants exercised		(148	)
Change in fair value		(36	)
Reclassification of liability to additional paid-in capital		(76	)
Balance as of December 31, 2014		—
Balance as of December 31, 2015	$	—

Summary of Components of Accumulated Other Comprehensive Income (Loss), Net of Tax

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

	Unrealized						Accumulated
	losses on			Unrealized			other
	available-for-			losses on cash			comprehensive
(amounts in thousands)	sale investments			flow hedges			loss
Balance as of December 31, 2014	$	—		$	—		$	—
Other comprehensive loss		(23	)		(14	)		(37	)
Balance as of December 31, 2015	$	(23	)	$	(14	)	$	(37	)

Summary of Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents, and short-term investments consist of the following:


(amounts in thousands)	December 31,
Cash and cash equivalents	2015		2014
Cash	$	52,164	$	2,941
Money market accounts		6,725		42,262
Certificates of deposit		7,217		11,633
Total cash and cash equivalents	$	66,106	$	56,836
Short-term investments
Certificates of deposit	$	16,793	$	—
Total short-term investments	$	16,793	$	—

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 53.6% of the non-U.S. revenue for 2015 was invoiced in Euros. The Company did not begin to invoice in Euros until the first quarter of 2015. A breakdown of the Company’s revenue from U.S. and non-U.S. sources for the years ended December 31, 2015, 2014 and 2013, respectively, is as follows:

	Years ended December 31,
(amounts in thousands)	2015		2014		2013
U.S. revenue	$	123,660	$	88,094	$	58,677
Non-U.S. revenue		35,345		24,443		16,766
Total revenue	$	159,005	$	112,537	$	75,443

Schedule of Inventories

Inventories consist of the following:

	December 31,
(amounts in thousands)	2015			2014
Raw materials and work-in-progress	$	7,097		$	6,774
Finished goods		1,679			983
Less: reserves		(128	)		(141	)
Inventories	$	8,648		$	7,616

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		2-5 years
Computer equipment and software		2-3 years
Furniture and equipment		3-5 years
Leasehold improvements		Shorter of 3-10 years or remaining life of underlying lease

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

Depreciation and amortization expense related to property and equipment and rental equipment is summarized below for the years ended December 31, 2015, 2014 and 2013, respectively.

	Years ended December 31,
(amounts in thousands)	2015		2014		2013
Rental equipment	$	11,965	$	10,339	$	7,132
Other property and equipment		1,961		1,591		1,209
Total depreciation and amortization	$	13,926	$	11,930	$	8,341

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 for the years ended December 31, 2015 and 2014, respectively.

(amounts in thousands)	Years ended December 31,
Property and equipment	2015		2014
Rental equipment, net of allowance	$	54,677	$	48,359
Other property and equipment		11,596		9,408
Property and equipment		66,273		57,767

Accumulated depreciation
Rental equipment		28,894		21,084
Other property and equipment		6,699		4,756
Accumulated depreciation		35,593		25,840

Net property and equipment
Rental equipment		25,783		27,275
Other property and equipment		4,897		4,652
Property and equipment, net	$	30,680	$	31,927

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)	2015		2014			2013
Numerator—basic:
Net income	$	11,585	$	6,826		$	25,435
Less deemed dividend on redeemable convertible preferred stock		—		(987	)		(7,278	)
Net income before preferred rights dividend		11,585		5,839			18,157
Less preferred rights dividend		—		—			(7,165	)
Less undistributed earnings to preferred stock - basic		—		(567	)		(10,781	)
Net income attributable to common stockholders - basic	$	11,585	$	5,272		$	211

Numerator—diluted:
Net income	$	11,585	$	6,826		$	25,435
Less deemed dividend on redeemable convertible preferred stock		—		(987	)		(7,278	)
Net income before preferred rights dividend		11,585		5,839			18,157
Less preferred rights dividend		—		—			(7,165	)
Less undistributed earnings to preferred stock - diluted		—		(514	)		(9,625	)
Net income attributable to common stockholders - diluted	$	11,585	$	5,325		$	1,367

Denominator:
Weighted-average common shares - basic common stock		19,398,991		16,182,569			276,535
Weighted-average common shares - diluted common stock		20,708,170		18,037,498			2,008,156

Net income per share - basic common stock	$	0.60	$	0.33		$	0.76
Net income per share - diluted common stock	$	0.56	$	0.30		$	0.68

Denominator calculation from basic to diluted:
Weighted-average common shares - basic common stock		19,398,991		16,182,569			276,535
Warrants		10,579		128,016			219,766
Stock options		1,298,600		1,726,913			1,511,855
Weighted-average common shares - diluted common stock		20,708,170		18,037,498			2,008,156
Shares excluded from diluted weighted-average shares:
Stock options		744,301		546,142			—
Shares excluded from diluted weighted-average shares:		744,301		546,142			—