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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, 2021

OR

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.)

301 Coromar 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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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 30, 2021, the registrant had 22,610,929 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 (unaudited) as of June 30, 2021 and December 31, 2020

 

3

 

 

Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2021 and June 30, 2020

 

5

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2021 and June 30, 2020

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2021 and June 30, 2020

 

7

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

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

 

97

Item 3.

 

Defaults Upon Senior Securities

 

97

Item 4.

 

Mine Safety Disclosures

 

97

Item 5.

 

Other Information

 

97

Item 6.

 

Exhibits

 

98

SIGNATURES

 

99

 

 

 

 

2


 

 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

 

 

June 30,

 

 

December 31,

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

238,850

 

 

$

211,962

 

Marketable securities

 

11,106

 

 

 

19,257

 

Accounts receivable, net

 

36,946

 

 

 

29,717

 

Inventories, net

 

27,225

 

 

 

24,815

 

Income tax receivable

 

1,982

 

 

 

2,048

 

Prepaid expenses and other current assets

 

11,457

 

 

 

17,898

 

Total current assets

 

327,566

 

 

 

305,697

 

Property and equipment

 

 

 

 

 

 

 

Rental equipment, net

 

52,507

 

 

 

46,953

 

Manufacturing equipment and tooling

 

10,903

 

 

 

10,361

 

Computer equipment and software

 

7,911

 

 

 

7,356

 

Furniture and equipment

 

3,016

 

 

 

2,293

 

Leasehold improvements

 

5,004

 

 

 

4,592

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

3,512

 

 

 

2,344

 

Total property and equipment

 

82,978

 

 

 

74,024

 

Less accumulated depreciation

 

(48,948

)

 

 

(45,794

)

Property and equipment, net

 

34,030

 

 

 

28,230

 

Goodwill

 

33,085

 

 

 

33,165

 

Intangible assets, net

 

64,424

 

 

 

68,797

 

Operating lease right-of-use asset

 

26,637

 

 

 

8,827

 

Deferred tax asset - noncurrent

 

9,171

 

 

 

14,467

 

Other assets

 

3,261

 

 

 

2,669

 

Total assets

$

498,174

 

 

$

461,852

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

3


 

 

Inogen, Inc.

Consolidated Balance Sheets (continued)

(unaudited)

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

 

 

June 30,

 

 

December 31,

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

31,543

 

 

$

33,712

 

Accrued payroll

 

12,108

 

 

 

7,091

 

Warranty reserve - current

 

6,210

 

 

 

5,740

 

Operating lease liability - current

 

3,562

 

 

 

1,931

 

Deferred revenue - current

 

8,013

 

 

 

6,994

 

Income tax payable

 

404

 

 

 

1,242

 

Total current liabilities

 

61,840

 

 

 

56,710

 

Long-term liabilities

 

 

 

 

 

 

 

Warranty reserve - noncurrent

 

9,128

 

 

 

8,654

 

Operating lease liability - noncurrent

 

24,911

 

 

 

8,078

 

Earnout liability - noncurrent

 

19,165

 

 

 

26,940

 

Deferred revenue - noncurrent

 

12,189

 

 

 

11,822

 

Deferred tax liability - noncurrent

 

25

 

 

 

25

 

Total liabilities

 

127,258

 

 

 

112,229

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 22,578,696 and 22,131,447

   shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

23

 

 

 

22

 

Additional paid-in capital

 

289,615

 

 

 

273,521

 

Retained earnings

 

79,975

 

 

 

75,605

 

Accumulated other comprehensive income

 

1,303

 

 

 

475

 

Total stockholders' equity

 

370,916

 

 

 

349,623

 

Total liabilities and stockholders' equity

$

498,174

 

 

$

461,852

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

4


 

 

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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

90,304

 

 

$

65,612

 

 

$

167,385

 

 

$

148,752

 

Rental revenue

 

11,259

 

 

 

6,079

 

 

 

21,110

 

 

 

11,428

 

Total revenue

 

101,563

 

 

 

71,691

 

 

 

188,495

 

 

 

160,180

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

46,565

 

 

 

36,082

 

 

 

89,200

 

 

 

83,200

 

Cost of rental revenue, including depreciation of $2,054 and $1,221, for the three months ended and $3,942 and $2,520 for the six months ended, respectively

 

4,663

 

 

 

2,860

 

 

 

9,087

 

 

 

5,865

 

Total cost of revenue

 

51,228

 

 

 

38,942

 

 

 

98,287

 

 

 

89,065

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

43,739

 

 

 

29,530

 

 

 

78,185

 

 

 

65,552

 

Gross profit-rental revenue

 

6,596

 

 

 

3,219

 

 

 

12,023

 

 

 

5,563

 

Total gross profit

 

50,335

 

 

 

32,749

 

 

 

90,208

 

 

 

71,115

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

4,123

 

 

 

3,290

 

 

 

8,138

 

 

 

6,895

 

Sales and marketing

 

29,317

 

 

 

22,086

 

 

 

54,808

 

 

 

49,249

 

General and administrative

 

5,224

 

 

 

9,724

 

 

 

17,723

 

 

 

19,501

 

Total operating expense

 

38,664

 

 

 

35,100

 

 

 

80,669

 

 

 

75,645

 

Income (loss) from operations

 

11,671

 

 

 

(2,351

)

 

 

9,539

 

 

 

(4,530

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

29

 

 

 

176

 

 

 

86

 

 

 

728

 

Other income (expense)

 

304

 

 

 

5,700

 

 

 

(6

)

 

 

5,640

 

Total other income, net

 

333

 

 

 

5,876

 

 

 

80

 

 

 

6,368

 

Income before provision for income taxes

 

12,004

 

 

 

3,525

 

 

 

9,619

 

 

 

1,838

 

Provision for income taxes

 

6,902

 

 

 

945

 

 

 

5,249

 

 

 

847

 

Net income

 

5,102

 

 

 

2,580

 

 

 

4,370

 

 

 

991

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

123

 

 

 

178

 

 

 

(334

)

 

 

20

 

Change in net unrealized gains (losses) on foreign currency hedging

 

390

 

 

 

(417

)

 

 

1,534

 

 

 

244

 

Less: reclassification adjustment for net (gains) losses included in net income

 

(132

)

 

 

134

 

 

 

(373

)

 

 

146

 

Total net change in unrealized gains (losses) on foreign currency hedging

 

258

 

 

 

(283

)

 

 

1,161

 

 

 

390

 

Change in net unrealized gains (losses) on marketable securities

 

(3

)

 

 

1

 

 

 

1

 

 

 

(5

)

Total other comprehensive income (loss), net of tax

 

378

 

 

 

(104

)

 

 

828

 

 

 

405

 

Comprehensive income

$

5,480

 

 

$

2,476

 

 

$

5,198

 

 

$

1,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share attributable to common stockholders (Note 6)

$

0.23

 

 

$

0.12

 

 

$

0.20

 

 

$

0.05

 

Diluted net income per share attributable to common stockholders (Note 6)

$

0.22

 

 

$

0.12

 

 

$

0.19

 

 

$

0.04

 

Weighted-average number of shares used in calculating net income per

  share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

22,444,246

 

 

 

21,963,472

 

 

 

22,313,546

 

 

 

21,939,919

 

Diluted common shares

 

22,874,321

 

 

 

22,221,356

 

 

 

22,734,079

 

 

 

22,229,744

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

5


 

 

Inogen, Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

(amounts in thousands, except share amounts)

 

 

Three months ended June 30, 2021 and June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, March 31, 2020

 

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

 

22,065,961

 

 

$

22

 

 

$

268,349

 

 

$

82,425

 

 

$

318

 

 

$

351,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2021

 

22,385,794

 

 

$

22

 

 

$

280,464

 

 

$

74,873

 

 

$

925

 

 

$

356,284

 

Stock-based compensation

 

 

 

 

 

 

 

3,239

 

 

 

 

 

 

 

 

 

3,239

 

Employee stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards issued, net of forfeitures

 

(19,835

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

42,804

 

 

 

 

 

 

(82

)

 

 

 

 

 

 

 

 

(82

)

Shares withheld related to net restricted stock settlement

 

(1,615

)

 

 

 

 

 

(97

)

 

 

 

 

 

 

 

 

(97

)

Stock options exercised

 

171,548

 

 

 

1

 

 

 

6,091

 

 

 

 

 

 

 

 

 

6,092

 

Net income

 

 

 

 

 

 

 

 

 

 

5,102

 

 

 

 

 

 

5,102

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

378

 

 

 

378

 

Balance, June 30, 2021

 

22,578,696

 

 

$

23

 

 

$

289,615

 

 

$

79,975

 

 

$

1,303

 

 

$

370,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2021 and June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, December 31, 2019

 

22,031,410

 

 

$

22

 

 

$

263,252

 

 

$

81,434

 

 

$

(87

)

 

$

344,621

 

Stock-based compensation

 

 

 

 

 

 

 

4,061

 

 

 

 

 

 

 

 

 

4,061

 

Employee stock purchases

 

27,954

 

 

 

 

 

 

1,088

 

 

 

 

 

 

 

 

 

1,088

 

Restricted stock awards issued, net of forfeitures

 

(27,729

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

30,216

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

(11

)

Shares withheld related to net restricted stock settlement

 

(5,214

)

 

 

 

 

 

(227

)

 

 

 

 

 

 

 

 

(227

)