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, 2016

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, 2016
			Gross					Cash
	Adjusted		unrealized					and cash		Marketable
(amounts in thousands)	cost		losses			Fair value		equivalents		securities
Cash	$	48,533	$	—		$	48,533	$	48,533	$	—
Level 1:
Money market accounts		39,277		—			39,277		39,277		—

Level 2:
Certificates of deposit		15,904		(8	)		15,896		5,041		10,855
Corporate bonds		10,200		(22	)		10,178		—		10,178
Total	$	113,914	$	(30	)	$	113,884	$	92,851	$	21,033

	As of December 31, 2015
			Gross					Cash
	Adjusted		unrealized					and cash		Marketable
(amounts in thousands)	cost		losses			Fair value		equivalents		securities
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

Summary of Estimated Fair Value of Company's Investments in Marketable Debt Securities, Accounted for as Available-for-Sale Securities

The following table summarizes the estimated fair value of the Company’s investments in marketable securities, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:

	December 31,
(amounts in thousands)	2016
Due within one year	$	21,033
Due in one year through five years		—
Total	$	21,033

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			Unrealized			Accumulated
	gains (losses) on			gains (losses)			other
	available-for-			on cash			comprehensive
(amounts in thousands)	sale investments			flow hedges			income (loss)
Balance as of December 31, 2015	$	(23	)	$	(14	)	$	(37	)
Other comprehensive gain (loss), net of tax		(59	)		61			2
Balance as of December 31, 2016	$	(82	)	$	47		$	(35	)

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	2016		2015
Cash	$	48,533	$	52,164
Money market accounts		39,277		6,725
Certificates of deposit		5,041		7,217
Total cash and cash equivalents	$	92,851	$	66,106
Marketable securities
Certificates of deposit	$	10,855	$	16,793
Corporate bonds		10,178		—
Total marketable securities	$	21,033	$	16,793

Schedule of Gross Accounts Receivable Balance Concentrations by Major Category

Gross accounts receivable balance concentrations by major category as of December 31, 2016 and December 31, 2015 were as follows:

	As of					As of
(amounts in thousands)	December 31, 2016					December 31, 2015
Gross accounts receivable	$		%			$		%
Medicare	$	12,500		31.8	%	$	10,510		40.4	%
Medicaid/other government		617		1.6	%		683		2.6	%
Private insurance		3,475		8.8	%		4,852		18.6	%
Patient responsibility		3,227		8.2	%		3,603		13.9	%
Business-to-business & other receivables		19,541		49.6	%		6,369		24.5	%
Total gross accounts receivable	$	39,360		100.0	%	$	26,017		100.0	%

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, 2016 and December 31, 2015 were as follows:

	As of					As of
(amounts in thousands)	December 31, 2016					December 31, 2015
Net accounts receivable	$		%			$		%
Medicare	$	7,208		23.4	%	$	7,441		37.4	%
Medicaid/other government		410		1.3	%		550		2.8	%
Private insurance		1,832		6.0	%		3,895		19.6	%
Patient responsibility		2,538		8.2	%		2,060		10.4	%
Business-to-business & other receivables		18,840		61.1	%		5,926		29.8	%
Total net accounts receivable	$	30,828		100.0	%	$	19,872		100.0	%

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 (gross accounts receivable net of allowances) by aging category by invoice due date as of December 31, 2016 and December 31, 2015.

	As of					As of
(amounts in thousands)	December 31, 2016					December 31, 2015
Net accounts receivable by aging category	$		%			$		%
Held & Unbilled	$	4,163		13.5	%	$	4,140		20.8	%
Aged 0-90 days		22,634		73.4	%		10,818		54.5	%
Aged 91-180 days		1,452		4.7	%		1,666		8.4	%
Aged 181-365 days		1,801		5.9	%		2,446		12.3	%
Aged over 365 days		778		2.5	%		802		4.0	%
Total net accounts receivable	$	30,828		100.0	%	$	19,872		100.0	%

Schedule of Allowances for Accounts Receivable

The following table sets forth the accounts receivable allowances as of December 31, 2016 and December 31, 2015:

	As of					As of
(amounts in thousands)	December 31, 2016					December 31, 2015
Allowances - accounts receivable	$		%			$		%
Doubtful accounts	$	1,869		4.7	%	$	1,664		6.4	%
Rental revenue adjustments		6,078		15.4	%		4,115		15.8	%
Sales returns		585		1.5	%		366		1.4	%
Total allowances - accounts receivable	$	8,532		21.6	%	$	6,145		23.6	%

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 70.6% of the non-U.S. revenue for 2016 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, 2016, 2015 and 2014 is as follows:

	Years ended December 31,
(amounts in thousands)	2016		2015		2014
U.S. revenue	$	152,723	$	123,660	$	88,094
Non-U.S. revenue		50,106		35,345		24,443
Total revenue	$	202,829	$	159,005	$	112,537

Schedule of Inventories

Inventories consist of the following:

	December 31,
(amounts in thousands)	2016			2015
Raw materials and work-in-progress	$	12,382		$	7,097
Finished goods		2,152			1,679
Less: reserves		(191	)		(128	)
Inventories	$	14,343		$	8,648

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	Lesser of estimated useful life or remaining lease term

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 are summarized below for the years ended December 31, 2016, 2015 and 2014, respectively.

	Years ended December 31,
(amounts in thousands)	2016		2015		2014
Rental equipment	$	11,429	$	11,965	$	10,339
Other property and equipment		2,028		1,961		1,591
Total depreciation and amortization	$	13,457	$	13,926	$	11,930

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, 2016 and 2015, respectively.

(amounts in thousands)	December 31,
Property and equipment	2016		2015
Rental equipment, net of allowances of $725 and $850, respectively	$	54,582	$	54,677
Other property and equipment		12,633		11,596
Property and equipment		67,215		66,273
Accumulated depreciation
Rental equipment		33,937		28,894
Other property and equipment		8,079		6,699
Accumulated depreciation		42,016		35,593
Net property and equipment
Rental equipment		20,645		25,783
Other property and equipment		4,554		4,897
Property and equipment, net	$	25,199	$	30,680

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)	2016		2015		2014
Numerator—basic:
Net income	$	20,519	$	11,585	$	6,826
Less deemed dividend on redeemable convertible preferred stock		—		—		(987	)
Net income before preferred rights dividend		20,519		11,585		5,839
Less undistributed earnings to preferred stock - basic		—		—		(567	)
Net income attributable to common stockholders - basic	$	20,519	$	11,585	$	5,272

Numerator—diluted:
Net income	$	20,519	$	11,585	$	6,826
Less deemed dividend on redeemable convertible preferred stock		—		—		(987	)
Net income before preferred rights dividend		20,519		11,585		5,839
Less undistributed earnings to preferred stock - diluted		—		—		(514	)
Net income attributable to common stockholders - diluted	$	20,519	$	11,585	$	5,325

Denominator:
Weighted-average common shares - basic common stock		20,067,152		19,398,991		16,182,569
Weighted-average common shares - diluted common stock		21,095,867		20,708,170		18,037,498

Net income per share - basic common stock	$	1.02	$	0.60	$	0.33
Net income per share - diluted common stock	$	0.97	$	0.56	$	0.30

Denominator calculation from basic to diluted:
Weighted-average common shares - basic common stock		20,067,152		19,398,991		16,182,569
Warrants		—		10,579		128,016
Stock options		1,028,715		1,298,600		1,726,913
Weighted-average common shares - diluted common stock		21,095,867		20,708,170		18,037,498
Shares excluded from diluted weighted-average shares:
Stock options		841,760		744,301		546,142
Shares excluded from diluted weighted-average shares:		841,760		744,301		546,142

Schedule of Adoption of ASU Impacted on Previously Reported Unaudited Quarterly Results

The adoption of this ASU impacted our previously reported unaudited quarterly results during fiscal year 2016 as follows:

	(unaudited)
	March 31, 2016						June 30, 2016						September 30, 2016
(amounts in thousands)	As reported			As adjusted			As reported			As adjusted			As reported			As adjusted
Deferred tax assets	$	14,474		$	26,856		$	11,504		$	26,236		$	9,514		$	26,037
Total assets		168,400			180,782			182,786			197,518			194,791			211,314
Accumulated deficit		(42,743	)		(30,361	)		(37,601	)		(22,869	)		(34,146	)		(17,623	)
Total stockholders' equity		138,189			150,571			147,503			162,235			156,082			172,605

	(unaudited)
	For the Three Months Ended
(amounts in thousands, except share and	March 31, 2016				June 30, 2016				September 30, 2016
per share amounts)	As reported		As adjusted		As reported		As adjusted		As reported		As adjusted
Provision for income taxes	$	1,035	$	879	$	2,900	$	550	$	1,994	$	203
Net income		2,365		2,521		5,142		7,492		3,455		5,246

Weighted-average common shares -		19,827,669		19,827,669		19,972,395		19,972,395		20,157,688		20,157,688
basic common stock
Weighted-average common shares -		20,783,943		20,840,367		20,925,613		20,997,429		21,100,725		21,182,587
diluted common stock

Net income per share - basic common stock	$	0.12	$	0.13	$	0.26	$	0.38	$	0.17	$	0.26
Net income per share - diluted common stock		0.11		0.12		0.25		0.36		0.16		0.25

	(unaudited)
	For the Six Months Ended				For the Nine Months Ended
(amounts in thousands, except share and	June 30, 2016				September 30, 2016
per share amounts)	As reported		As adjusted		As reported		As adjusted
Provision for income taxes	$	3,935	$	1,429	$	5,929	$	1,632
Net income		7,507		10,013		10,962		15,259

Weighted-average common shares -		19,900,032		19,900,032		19,986,544		19,986,544
basic common stock
Weighted-average common shares -		20,860,878		20,931,802		20,924,022		21,000,945
diluted common stock

Net income per share - basic common stock	$	0.38	$	0.50	$	0.55	$	0.76
Net income per share - diluted common stock		0.36		0.48		0.52		0.73