Inogen, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Balance Sheet Components (Tables)

Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2017

Balance Sheet Related Disclosures [Abstract]

Summary of Cash, Cash Equivalents and Short-term Investments

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

	September 30,		December 31,
Cash and cash equivalents	2017		2016
Cash	$	50,670	$	48,533
Money market accounts		77,020		39,277
Certificates of deposit		—		5,041
Agency mortgage-backed securities		2,003		—
Total cash and cash equivalents	$	129,693	$	92,851
Marketable securities
Certificates of deposit	$	14,299	$	10,855
Corporate bonds		18,096		10,178
Agency mortgage-backed securities		1,000		—
Total marketable securities	$	33,395	$	21,033

Schedule of Gross Accounts Receivable Balance Concentrations by Major Category

Gross accounts receivable balance concentrations by major category as of September 30, 2017 and December 31, 2016 were as follows:

	September 30,		December 31,
Gross accounts receivable	2017		2016
Medicare	$	4,168	$	12,500
Medicaid/other government		400		617
Private insurance		2,034		3,475
Patient responsibility		2,781		3,227
Business-to-business & other receivables (1)		29,651		19,541
Total gross accounts receivable	$	39,034	$	39,360

Business-to-business receivables included one customer with an accounts receivable balance of $11,790 and $9,791 as of September 30, 2017 and December 31, 2016, respectively. This customer received extended payment terms through a direct financing plan offered. The Company also has a credit insurance policy in place, which allocates up to $12,000 in coverage as of September 30, 2017 and allocated up to $9,000 in coverage as of December 31, 2016 for this customer with a $1,000 deductible and 10% retention.

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 September 30, 2017 and December 31, 2016 were as follows:

	September 30,		December 31,
Net accounts receivable	2017		2016
Medicare	$	2,877	$	7,208
Medicaid/other government		280		410
Private insurance		1,545		1,832
Patient responsibility		1,351		2,538
Business-to-business & other receivables (1)		28,646		18,840
Total net accounts receivable	$	34,699	$	30,828

(1)

Schedule of Allowances for Accounts Receivable

The following tables set forth the accounts receivable allowances as of September 30, 2017 and December 31, 2016:

	September 30,		December 31,
Allowances - accounts receivable	2017		2016
Doubtful accounts	$	1,920	$	1,869
Rental revenue adjustments		1,593		6,078
Sales returns		822		585
Total allowances - accounts receivable	$	4,335	$	8,532

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 77.2% and 72.8% of the non-U.S. revenue for the three months ended September 30, 2017 and September 30, 2016, respectively, were invoiced in Euros. Approximately 75.2% and 70.7% of the non-U.S. revenue for the nine months ended September 30, 2017 and September 30, 2016, respectively, were invoiced in Euros. A breakdown of the Company’s revenue from U.S. and non-U.S. sources for the three months and nine months ended September 30, 2017 and September 30, 2016 is as follows:

	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
U.S. revenue	$	51,844	$	39,470	$	142,123	$	113,963
Non-U.S. revenue		17,186		14,952		43,528		38,015
Total revenue	$	69,030	$	54,422	$	185,651	$	151,978

Schedule of Inventories

Inventories that are considered current consist of the following:

	September 30,			December 31,
	2017			2016
Raw materials and work-in-progress	$	13,945		$	12,382
Finished goods		3,209			2,152
Less: reserves		(299	)		(191	)
Inventories	$	16,855		$	14,343

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 three and nine months ended September 30, 2017 and September 30, 2016, respectively.

	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Rental equipment	$	2,366	$	2,878	$	7,577	$	8,733
Other property and equipment		469		510		1,427		1,484
Total depreciation and amortization	$	2,835	$	3,388	$	9,004	$	10,217

Summary of Property Plant and Equipment and Rental Equipment with Associated Accumulated Depreciation

Property and equipment and rental equipment with associated accumulated depreciation are summarized below for September 30, 2017 and December 31, 2016, respectively.

	September 30,		December 31,
Property and equipment	2017		2016
Rental equipment, net of allowances of $808 and $725, respectively	$	51,010	$	54,582
Other property and equipment		14,729		12,633
Property and equipment		65,739		67,215

Accumulated depreciation
Rental equipment		35,323		33,937
Other property and equipment		9,465		8,079
Accumulated depreciation		44,788		42,016

Property and equipment, net
Rental equipment, net of allowances of $808 and $725, respectively		15,687		20,645
Other property and equipment		5,264		4,554
Property and equipment, net	$	20,951	$	25,199

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2017 were as follows:

Balance as of December 31, 2016	$	—
Acquisition		2,154
Translation adjustment		176
Balance as of September 30, 2017	$	2,330

Summary of Intangible Assets

The following tables represent the net carrying values of intangible assets as of the respective dates:

	Average
	estimated	Gross
	useful lives	carrying		Accumulated
September 30, 2017	(in years)	amount		amortization		Net amount
Licenses	10	$	185	$	132	$	53
Patents and websites	5		873		832		41
Customer relationships	4		1,417		147		1,270
Non-compete agreement	3		236		33		203
Commercials	2-3		303		220		83
Total		$	3,014	$	1,364	$	1,650


	Average
	estimated	Gross
	useful lives	carrying		Accumulated
December 31, 2016	(in years)	amount		amortization		Net amount
Licenses	10	$	185	$	118	$	67
Patents and websites	5		873		810		63
Commercials	2-3		287		176		111
Total		$	1,345	$	1,104	$	241

Schedule of Annual Estimated Amortization Expense for Intangibles

Annual estimated amortization expense for intangibles for each of the succeeding fiscal years is summarized as follows:

	September 30, 2017
Remaining 3 months of 2017	$	133
2018		526
2019		472
2020		390
2021		125
Thereafter		4
	$	1,650

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2017 and December 31, 2016 consisted of the following:

	September 30,		December 31,
	2017		2016
Accounts payable	$	11,033	$	5,738
Accrued inventory (in-transit and unvouchered receipts) and trade payables		6,999		4,290
Accrued purchasing card liability		2,610		1,760
Accrued franchise, sales and use taxes		582		281
Other accrued expenses		1,143		726
Accounts payable and accrued expenses	$	22,367	$	12,795