ingn-10q_20200630.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 June 30, 2020

☐	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.)
326 Bollay 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.

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 July 31, 2020, the registrant had 22,066,049 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 as of June 30, 2020 (unaudited) and December 31, 2019	3
	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019	5
	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019	6
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2020 and June 30, 2019	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	52
Item 4.	Controls and Procedures	53
	Part II – Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 3.	Defaults Upon Senior Securities	90
Item 4.	Mine Safety Disclosures	90
Item 5.	Other Information	90
Item 6.	Exhibits	91
SIGNATURES		92

INOGEN, INC.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Inogen, Inc.

Consolidated Balance Sheets

(amounts in thousands)

	June 30,			December 31,
	2020			2019
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	214,086		$	198,037
Marketable securities		4,549			11,057
Accounts receivable, net		28,422			34,325
Inventories, net		36,180			35,664
Income tax receivable		2,984			2,976
Prepaid expenses and other current assets		16,544			10,160
Total current assets		302,765			292,219
Property and equipment
Rental equipment, net		40,614			39,308
Manufacturing equipment and tooling		10,351			9,704
Computer equipment and software		7,841			7,266
Furniture and equipment		2,269			1,730
Leasehold improvements		4,607			4,388
Land and building		125			125
Construction in process		1,104			1,773
Total property and equipment		66,911			64,294
Less accumulated depreciation		(45,381	)		(44,856	)
Property and equipment, net		21,530			19,438
Goodwill		32,957			32,954
Intangible assets, net		73,253			77,533
Operating lease right-of-use asset		9,454			5,855
Deferred tax asset - noncurrent		13,768			14,452
Other assets		4,394			4,888
Total assets	$	458,121		$	447,339

See accompanying condensed notes to the consolidated financial statements.

Inogen, Inc.

Consolidated Balance Sheets (continued)

(amounts in thousands, except share and per share amounts)

	June 30,		December 31,
	2020		2019
	(unaudited)
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses	$	29,363	$	30,730
Accrued payroll		6,405		6,215
Warranty reserve - current		5,769		4,923
Operating lease liability - current		1,823		2,014
Deferred revenue - current		6,266		5,478
Income tax payable		988		821
Total current liabilities		50,614		50,181
Long-term liabilities
Warranty reserve - noncurrent		8,039		7,648
Operating lease liability - noncurrent		8,693		4,702
Earnout liability - noncurrent		26,539		26,559
Deferred revenue - noncurrent		13,035		13,541
Deferred tax liability - noncurrent		87		87
Total liabilities		107,007		102,718
Commitments and contingencies (Note 10)
Stockholders' equity
Common stock, $0.001 par value per share; 200,000,000 authorized; 22,065,961 and 22,031,410 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		22		22
Additional paid-in capital		268,349		263,252
Retained earnings		82,425		81,434
Accumulated other comprehensive income (loss)		318		(87	)
Total stockholders' equity		351,114		344,621
Total liabilities and stockholders' equity	$	458,121	$	447,339

See accompanying condensed notes to the consolidated financial statements.

Inogen, Inc.

Consolidated Statements of Comprehensive Income

(unaudited)

(amounts in thousands, except share and per share amounts)

	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenue
Sales revenue	$	65,612		$	95,863		$	148,752		$	180,681
Rental revenue		6,079			5,200			11,428			10,584
Total revenue		71,691			101,063			160,180			191,265
Cost of revenue
Cost of sales revenue		36,082			47,230			83,200			89,297
Cost of rental revenue, including depreciation of $1,221 and $1,594, for the three months ended and $2,520 and $3,299 for the six months ended, respectively		2,860			3,618			5,865			7,344
Total cost of revenue		38,942			50,848			89,065			96,641
Gross profit
Gross profit-sales revenue		29,530			48,633			65,552			91,384
Gross profit-rental revenue		3,219			1,582			5,563			3,240
Total gross profit		32,749			50,215			71,115			94,624
Operating expense
Research and development		3,290			1,468			6,895			3,137
Sales and marketing		22,086			27,758			49,249			55,959
General and administrative		9,724			8,844			19,501			18,525
Total operating expense		35,100			38,070			75,645			77,621
Income (loss) from operations		(2,351	)		12,145			(4,530	)		17,003
Other income (expense)
Interest income		176			1,394			728			2,728
Other income		5,700			145			5,640			25
Total other income, net		5,876			1,539			6,368			2,753
Income before provision for income taxes		3,525			13,684			1,838			19,756
Provision for income taxes		945			3,524			847			4,294
Net income		2,580			10,160			991			15,462
Other comprehensive income (loss), net of tax
Change in foreign currency translation adjustment		178			106			20			(31	)
Change in net unrealized gains (losses) on foreign currency hedging		(417	)		(618	)		244			(534	)
Less: reclassification adjustment for net (gains) losses included in net income		134			282			146			458
Total net change in unrealized gains (losses) on foreign currency hedging		(283	)		(336	)		390			(76	)
Change in net unrealized gains (losses) on marketable securities		1			23			(5	)		36
Total other comprehensive income (loss), net of tax		(104	)		(207	)		405			(71	)
Comprehensive income	$	2,476		$	9,953		$	1,396		$	15,391

Basic net income per share attributable to common stockholders (Note 7)	$	0.12		$	0.47		$	0.05		$	0.71
Diluted net income per share attributable to common stockholders (Note 7)	$	0.12		$	0.45		$	0.04		$	0.69
Weighted-average number of shares used in calculating net income per share attributable to common stockholders:
Basic common shares		21,963,472			21,815,634			21,939,919			21,783,150
Diluted common shares		22,221,356			22,359,679			22,229,744			22,459,101

See accompanying condensed notes to the consolidated financial statements.

Inogen, Inc.

Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share amounts)

	Three months ended June 30, 2020 and June 30, 2019
											Accumulated
						Additional					other			Total
	Common stock					paid-in			Retained		comprehensive			stockholders'
	Shares			Amount		capital			earnings		income (loss)			equity
Balance, March 31, 2019 (unaudited)		21,931,342		$	22	$	255,226		$	65,786	$	860		$	321,894
Stock-based compensation		—			—		1,779			—		—			1,779
Restricted stock awards issued, net of forfeitures		(12,342	)		—		—			—		—			—
Vesting of restricted stock units		10,111			—		(8	)		—		—			(8	)
Shares withheld related to net restricted stock settlement		(978	)		—		(63	)		—		—			(63	)
Stock options exercised		5,536			—		243			—		—			243
Net income		—			—		—			10,160		—			10,160
Other comprehensive loss		—			—		—			—		(207	)		(207	)
Balance, June 30, 2019 (unaudited)		21,933,669		$	22	$	257,177		$	75,946	$	653		$	333,798

Balance, March 31, 2020 (unaudited)		22,044,527		$	22	$	267,011		$	79,845	$	422		$	347,300
Stock-based compensation		—			—		1,277			—		—			1,277
Vesting of restricted stock units		20,049			—		(4	)		—		—			(4	)
Shares withheld related to net restricted stock settlement		(1,605	)		—		(61	)		—		—			(61	)
Stock options exercised		2,990			—		126			—		—			126
Net income		—			—		—			2,580		—			2,580
Other comprehensive loss		—			—		—			—		(104	)		(104	)
Balance, June 30, 2020 (unaudited)		22,065,961		$	22	$	268,349		$	82,425	$	318		$	351,114

	Six months ended June 30, 2020 and June 30, 2019
											Accumulated
						Additional					other			Total
	Common stock					paid-in			Retained		comprehensive			stockholders'
	Shares			Amount		capital			earnings		income (loss)			equity
Balance, December 31, 2018		21,778,632		$	22	$	249,194		$	60,484	$	724		$	310,424
Stock-based compensation		—			—		5,365			—		—			5,365
Employee stock purchases		16,767			—		1,525			—		—			1,525
Restricted stock awards issued, net of forfeitures		54,602			—		—			—		—			—
Vesting of restricted stock units		21,376			—		(67	)		—		—			(67	)
Shares withheld related to net restricted stock settlement		(13,023	)		—		(718	)		—		—			(718	)
Stock options exercised		75,315			—		1,878			—