ingn-10q_20200930.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 September 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 October 30, 2020, the registrant had 22,117,647 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 September 30, 2020 (unaudited) and December 31, 2019	3
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Nine Months Ended September 30, 2020 and September 30, 2019	5
	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2020 and September 30, 2019	6
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2020 and September 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	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 4.	Controls and Procedures	55
	Part II – Other Information
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 3.	Defaults Upon Senior Securities	93
Item 4.	Mine Safety Disclosures	93
Item 5.	Other Information	93
Item 6.	Exhibits	94
SIGNATURES		95

INOGEN, INC.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Inogen, Inc.

Consolidated Balance Sheets

(amounts in thousands)

	September 30,			December 31,
	2020			2019
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	213,984		$	198,037
Marketable securities		6,525			11,057
Accounts receivable, net		31,691			34,325
Inventories, net		29,220			35,664
Income tax receivable		3,105			2,976
Prepaid expenses and other current assets		18,856			10,160
Total current assets		303,381			292,219
Property and equipment
Rental equipment, net		44,464			39,308
Manufacturing equipment and tooling		10,274			9,704
Computer equipment and software		7,196			7,266
Furniture and equipment		2,277			1,730
Leasehold improvements		4,567			4,388
Land and building		125			125
Construction in process		1,572			1,773
Total property and equipment		70,475			64,294
Less accumulated depreciation		(45,155	)		(44,856	)
Property and equipment, net		25,320			19,438
Goodwill		33,054			32,954
Intangible assets, net		71,009			77,533
Operating lease right-of-use asset		9,318			5,855
Deferred tax asset - noncurrent		14,083			14,452
Other assets		4,166			4,888
Total assets	$	460,331		$	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)

	September 30,		December 31,
	2020		2019
	(unaudited)
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses	$	29,200	$	30,730
Accrued payroll		7,234		6,215
Warranty reserve - current		5,887		4,923
Operating lease liability - current		1,890		2,014
Deferred revenue - current		6,628		5,478
Income tax payable		1,132		821
Total current liabilities		51,971		50,181
Long-term liabilities
Warranty reserve - noncurrent		8,040		7,648
Operating lease liability - noncurrent		8,570		4,702
Earnout liability - noncurrent		26,393		26,559
Deferred revenue - noncurrent		12,766		13,541
Deferred tax liability - noncurrent		91		87
Total liabilities		107,831		102,718
Commitments and contingencies (Note 10)
Stockholders' equity
Common stock, $0.001 par value per share; 200,000,000 authorized; 22,116,291 and 22,031,410 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		22		22
Additional paid-in capital		271,345		263,252
Retained earnings		80,726		81,434
Accumulated other comprehensive income (loss)		407		(87	)
Total stockholders' equity		352,500		344,621
Total liabilities and stockholders' equity	$	460,331	$	447,339

See accompanying condensed notes to the consolidated financial statements.

Inogen, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

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

	Three months ended						Nine months ended
	September 30,						September 30,
	2020			2019			2020			2019
Revenue
Sales revenue	$	66,809		$	86,392		$	215,561		$	267,073
Rental revenue		7,520			5,369			18,948			15,953
Total revenue		74,329			91,761			234,509			283,026
Cost of revenue
Cost of sales revenue		37,714			44,769			120,914			134,066
Cost of rental revenue, including depreciation of $1,475 and $1,482, for the three months ended and $3,995 and $4,781 for the nine months ended, respectively		3,609			3,677			9,474			11,021
Total cost of revenue		41,323			48,446			130,388			145,087
Gross profit
Gross profit-sales revenue		29,095			41,623			94,647			133,007
Gross profit-rental revenue		3,911			1,692			9,474			4,932
Total gross profit		33,006			43,315			104,121			137,939
Operating expense
Research and development		3,511			2,636			10,406			5,773
Sales and marketing		22,882			24,047			72,131			80,006
General and administrative		8,586			8,525			28,087			27,050
Total operating expense		34,979			35,208			110,624			112,829
Income (loss) from operations		(1,973	)		8,107			(6,503	)		25,110
Other income (expense)
Interest income		114			1,149			842			3,877
Other income (expense)		(54	)		(503	)		5,586			(478	)
Total other income, net		60			646			6,428			3,399
Income (loss) before provision (benefit) for income taxes		(1,913	)		8,753			(75	)		28,509
Provision (benefit) for income taxes		(214	)		1,890			633			6,184
Net income (loss)		(1,699	)		6,863			(708	)		22,325
Other comprehensive income (loss), net of tax
Change in foreign currency translation adjustment		385			(309	)		405			(340	)
Change in net unrealized gains (losses) on foreign currency hedging		(82	)		(420	)		162			(954	)
Less: reclassification adjustment for net (gains) losses included in net income		(213	)		338			(67	)		796
Total net change in unrealized gains (losses) on foreign currency hedging		(295	)		(82	)		95			(158	)
Change in net unrealized gains (losses) on marketable securities		(1	)		(18	)		(6	)		18
Total other comprehensive income (loss), net of tax		89			(409	)		494			(480	)
Comprehensive income (loss)	$	(1,610	)	$	6,454		$	(214	)	$	21,845

Basic net income (loss) per share attributable to common stockholders (Note 7)	$	(0.08	)	$	0.31		$	(0.03	)	$	1.02
Diluted net income (loss) per share attributable to common stockholders (Note 7)	$	(0.08	)	$	0.31		$	(0.03	)	$	1.00
Weighted-average number of shares used in calculating net income (loss) per share attributable to common stockholders:
Basic common shares		21,998,299			21,840,473			21,959,521			21,802,468
Diluted common shares		21,998,299			22,191,688			21,959,521			22,387,146

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 September 30, 2020 and September 30, 2019
												Accumulated
						Additional						other			Total
	Common stock					paid-in			Retained			comprehensive			stockholders'
	Shares			Amount		capital			earnings			income (loss)			equity
Balance, June 30, 2019 (unaudited)		21,933,669		$	22	$	257,177		$	75,946		$	653		$	333,798
Stock-based compensation		—			—		1,565			—			—			1,565
Employee stock purchases		31,049			—		1,223			—			—			1,223
Restricted stock awards issued, net of forfeitures		24,456			—		—			—			—			—
Vesting of restricted stock units		3,441			—		(6	)		—			—			(6	)
Shares withheld related to net restricted stock settlement		(979	)		—		(46	)		—			—			(46	)
Stock options exercised		6,738			—		158			—			—			158
Net income		—			—		—			6,863			—			6,863
Other comprehensive loss		—			—		—			—			(409	)		(409	)
Balance, September 30, 2019 (unaudited)		21,998,374		$	22	$	260,071		$	82,809		$	244		$	343,146

Balance, June 30, 2020 (unaudited)		22,065,961		$	22	$	268,349		$	82,425		$	318		$	351,114
Stock-based compensation		—			—		2,050			—			—			2,050
Employee stock purchases		40,513			—		996			—			—			996
Vesting of restricted stock units		11,431			—		(3	)		—			—			(3	)
Shares withheld related to net restricted stock settlement		(1,614	)		—		(47	)		—			—			(47	)
Net loss		—			—		—			(1,699	)		—			(1,699	)
Other comprehensive income		—			—		—			—			89			89
Balance, September 30, 2020 (unaudited)		22,116,291		$	22	$	271,345		$	80,726		$	407		$	352,500

	Nine months ended September 30, 2020 and September 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		—			—		6,930			—			—			6,930
Employee stock purchases		47,816			—		2,748			—			—			2,748
Restricted stock awards issued, net of forfeitures		79,058			—		—			—			—			—
Vesting of restricted stock units		24,817			—		(73	)		—			—			(73	)
Shares withheld related to net restricted stock settlement		(14,002	)		—		(764	)