INGN 10-Q
Inogen Inc (INGN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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(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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 May 2, 2025, the registrant had
TABLE OF CONTENTS
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Item 1. |
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3 |
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Consolidated Balance Sheets (unaudited) as of March 31, 2025 and December 31, 2024 |
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Condensed Notes to the Consolidated Financial Statements (unaudited) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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32 |
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Item 1. |
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33 |
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Item 1A. |
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33 |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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34 |
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2
INOGEN, INC.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Inogen, Inc.
Consolidated Balance Sheets
(unaudited)
(amounts in thousands, except share and per share amounts)
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March 31, |
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December 31, |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Inventories, net |
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Income tax receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangible assets, net |
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Operating lease right-of-use asset |
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Other assets |
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Total assets |
$ |
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$ |
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Liabilities and stockholders' equity |
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Current liabilities |
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Accounts payable and accrued expenses |
$ |
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$ |
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Accrued payroll |
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Warranty reserve - current |
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Operating lease liability - current |
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Earnout liability |
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Deferred revenue - current |
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Income tax payable |
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Total current liabilities |
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Long-term liabilities |
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Warranty reserve - noncurrent |
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Operating lease liability - noncurrent |
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Deferred revenue - noncurrent |
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Deferred tax liability |
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Total liabilities |
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Stockholders' equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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Accumulated other comprehensive loss |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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See accompanying condensed notes to the consolidated financial statements.
3
Inogen, Inc.
Consolidated Statements of Comprehensive Loss
(unaudited)
(amounts in thousands, except share and per share amounts)
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Three months ended |
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2025 |
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2024 |
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Revenue |
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Sales revenue |
$ |
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$ |
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Rental revenue |
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Total revenue |
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Cost of revenue |
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Cost of sales revenue |
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Cost of rental revenue, including depreciation of $ |
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Total cost of revenue |
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Gross profit |
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Gross profit-sales revenue |
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Gross profit-rental revenue |
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Total gross profit |
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Operating expense |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expense |
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Loss from operations |
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Other income (expense) |
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Interest income, net |
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Other income |
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Total other income, net |
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Loss before benefit for income taxes |
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( |
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( |
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Benefit for income taxes |
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( |
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( |
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Net loss |
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( |
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( |
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Other comprehensive income (loss), net of tax |
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Change in foreign currency translation adjustment |
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( |
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Change in net unrealized losses on foreign currency hedging |
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— |
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Less: reclassification adjustment for net losses included in net loss |
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( |
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— |
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Total net change in unrealized losses on foreign currency hedging |
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( |
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— |
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Change in net unrealized losses on marketable securities |
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— |
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( |
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Total other comprehensive income (loss), net of tax |
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( |
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Comprehensive loss |
$ |
( |
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$ |
( |
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Basic net loss per share attributable to common stockholders (Note 6) |
$ |
( |
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$ |
( |
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Diluted net loss per share attributable to common stockholders (Note 6) |
$ |
( |
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$ |
( |
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Weighted average number of shares used in calculating net loss per share attributable to common stockholders: |
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Basic shares of common stock |
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Diluted shares of common stock |
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See accompanying condensed notes to the consolidated financial statements.
4
Inogen, Inc.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(amounts in thousands, except share amounts)
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Three months ended March 31, 2025 and March 31, 2024 |
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Accumulated |
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Additional |
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other |
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Total |
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Common stock |
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paid-in |
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Accumulated |
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comprehensive |
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stockholders' |
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Shares |
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Amount |
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capital |
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deficit |
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income (loss) |
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equity |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Stock issued |
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— |
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— |
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Tax withholding related to vesting of restricted stock units |
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( |
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— |
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( |
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— |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance, March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Balance, December 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Stock issued |
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— |
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— |
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— |
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Tax withholding related to vesting of restricted stock units |
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( |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock from securities purchase agreement |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Balance, March 31, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See accompanying condensed notes to the consolidated financial statements.
5
Inogen, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(amounts in thousands)
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Three months ended |
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2025 |
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2024 |
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Cash flows from operating activities |
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Net loss |
$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Loss on rental units and other assets |
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Gain on sale of former rental assets |
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— |
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Provision for sales revenue returns and doubtful accounts |
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Provision for inventory losses |
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Loss on purchase commitments |
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— |
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Stock-based compensation expense |
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Deferred income taxes |
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( |
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Change in fair value of earnout liability |
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— |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Inventories |
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( |
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( |
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Income tax receivable |
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— |
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( |
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Prepaid expenses and other current assets |
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( |
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Operating lease right-of-use asset |
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Other noncurrent assets |
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Accounts payable and accrued expenses |
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Accrued payroll |
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( |
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Warranty reserve |
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Deferred revenue |
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( |
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( |
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Income tax payable |
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( |
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( |
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Operating lease liability |
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( |
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Earnout liability |
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( |
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— |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Purchases of available-for-sale securities |
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— |
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Maturities of available-for-sale securities |
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— |
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Investment in property and equipment |
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( |
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Production and purchase of rental equipment |
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Proceeds from sale of former assets |
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— |
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Net cash used in investing activities |
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(continued on next page) |
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See accompanying condensed notes to the consolidated financial statements.
6
Inogen, Inc.
Consolidated Statements of Cash Flows (continued)
(unaudited)
(amounts in thousands)
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Three months ended |
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2025 |
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2024 |
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Cash flows from financing activities |
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Proceeds from employee stock purchases |
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Payment of employment taxes related to release of restricted stock |
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( |
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Payments of accrued earnout |
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Proceeds from issuance of common stock from securities purchase agreement |
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— |
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Net cash provided by financing activities |
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Effect of exchange rates on cash |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
$ |
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$ |
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Supplemental disclosures of cash flow information |
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Cash paid during the period for income taxes, net of refunds received |
$ |
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$ |
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Supplemental disclosure of non-cash transactions |
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Property and equipment in accounts payable and accrued expenses |
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See accompanying condensed notes to the consolidated financial statements.
7
Inogen, Inc.
Condensed Notes to the Consolidated Financial Statements
(unaudited)
(amounts in thousands, except share and per share amounts)
1. Business overview
Inogen, Inc., or the Company, is a medical technology business that primarily focuses on respiratory health. The Company develops, manufactures, and markets innovative respiratory health products, including portable oxygen concentrators, or POCs, used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions and the Simeox® product for airway clearance treatment. The Company's proprietary Inogen One® and Inogen Rove® systems concentrate the air around the patient to offer a source of supplemental oxygen 24 hours a day, seven days a week with a battery and can be plugged into an outlet when at home, in a car, or in a public place with outlets available. While often used concomitantly with stationary oxygen concentrators and oxygen compressed gas tanks, the Company's POCs are designed to reduce the patient’s reliance on stationary concentrators and scheduled deliveries of tanks with a finite supply of oxygen, thereby improving patient quality of life and fostering mobility. The Company's Simeox product is a technology-enabled airway clearance and mucus management device predominantly aimed at serving patients with bronchiectasis, which is a condition that presents as the lung's bronchi are damaged and widened in patients with cystic fibrosis, chronic obstructive pulmonary disease, or other chronic respiratory diseases.
The Company was incorporated in Delaware on November 27, 2001. On February 14, 2014, the Company completed an initial public offering of common stock and began trading on the Nasdaq Global Select Market, trading under the ticker symbol “INGN”.
The Company incorporated Inogen Europe Holding B.V., a Dutch limited liability company, on
On January 25, 2025, the Company entered into a Strategic Collaboration Agreement, or the Collaboration Agreement, with Jiangsu Yuyue Medical Equipment & Supply Co., Ltd., or Yuwell. The collaboration with Yuwell is expected to broaden the Company's product portfolio through distribution of certain respiratory products in the United States and select other territories, expand and enhance the Company's innovation pipeline through research and development collaboration, and accelerate the entry of the Company's brand into the Chinese market. The Company will distribute certain products supplied by Yuwell in the United States and specified European countries and Yuwell will distribute certain products supplied by the Company in specified Asia Pacific countries.
2. Basis of presentation and summary of significant accounting policies
Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.
The results of operations for the three months ended March 31, 2025 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2025. In the opinion of the Company’s management, the information contained herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s results of operations, financial position, cash flows, and stockholders’ equity. Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to Securities and Exchange Commission, or SEC, rules and regulations relating to interim financial statements. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2025. Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K filed with the SEC on February 28, 2025.
Basis of consolidation
The consolidated financial statements include the accounts of Inogen, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
8
Accounting estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price, or SSP, and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, impairment of goodwill, impairment of long-lived assets, stock-based compensation expense, income taxes, fair value of acquired intangible assets and goodwill, and financing receivable. Actual results could differ from these estimates.
3. Fair value measurements
Cash, cash equivalents and restricted cash
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 restricted cash:
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As of March 31, 2025 |
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Cash |
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Adjusted |
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and cash |
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Restricted |
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cost |
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Fair value |
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equivalents |
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cash |
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Cash |
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$ |
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$ |
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$ |
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$ |
— |
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Level 1: |
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|
|
|
|
|
|
|
|
|
|
||||
Money market accounts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Institutional Insured Liquidity Deposit Savings |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
As of December 31, 2024 |
|
|||||||||||||
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
||||
|
|
Adjusted |
|
|
|
|
|
and cash |
|
|
Restricted |
|
||||
|
|
cost |
|
|
Fair value |
|
|
equivalents |
|
|
cash |
|
||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market accounts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Institutional Insured Liquidity Deposit Savings |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivative instruments and hedging activities
The Company records the assets or liabilities associated with derivative instruments and hedging activities at fair value based on Level 2 inputs in other current assets or other current liabilities, respectively, in the consolidated balance sheets. The Company had a related payable of $
Accumulated other comprehensive income (loss)
The components of accumulated other comprehensive income (loss) were as follows:
|
|
Foreign |
|
|
Unrealized |
|
|
Accumulated |
|
|||
|
|
currency |
|
|
losses |
|
|
other |
|
|||
|
|
translation |
|
|
on cash |
|
|
comprehensive |
|
|||
|
|
adjustments |
|
|
flow hedges |
|
|
loss |
|
|||
Balance as of December 31, 2024 |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
Other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Balance as of March 31, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
9
Comprehensive income (loss) is the total net earnings and all other non-owner changes in equity. Except for net loss and unrealized gains and losses on cash flow hedges, the Company does not have any transactions or other economic events that qualify as comprehensive income (loss).
Earnout liability
The Company had obligations to pay up to $
The reconciliation of the earnout liability measured and carried at fair value on a recurring basis is as follows:
Balance as of December 31, 2024 |
|
$ |
|
|
Payments of accrued earnouts |
|
|
( |
) |
Balance as of March 31, 2025 |
|
$ |
|
4. Balance sheet components
Accounts receivable and allowance for bad debts, returns, and adjustments
Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2025 and December 31, 2024 were as follows:
|
|
March 31, |
|
|
December 31, |
|
||
Net accounts receivable |
|
2025 |
|
|
2024 |
|
||
Rental (1) |
|
$ |
|
|
$ |
|
||
Business-to-business and other receivables |
|
|
|
|
|
|
||
Total net accounts receivable |
|
$ |
|
|
$ |
|
||
(1) Rental includes Medicare, Medicaid/other government, private insurance, and patient pay.
The following table sets forth the accounts receivable allowances as of March 31, 2025 and December 31, 2024:
|
|
March 31, |
|
|
December 31, |
|
||
Allowances - accounts receivable |
|
2025 |
|
|
2024 |
|
||
Doubtful accounts |
|
$ |
|
|
$ |
|
||
Sales returns |
|
|
|
|
|
|
||
Total allowances - accounts receivable |
|
$ |
|
|
$ |
|
||
Concentration of customers and vendors
The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis. The Company also sells its products direct-to-consumers primarily on a prepayment basis.
The Company also rents products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs. Medicare’s service reimbursement programs accounted for
The Company currently purchases raw materials from a limited number of vendors, which resulted in a concentration of three major vendors. The three major vendors supply the Company with raw materials used to manufacture the Company’s products. For the three months ended March 31, 2025, the Company’s three major vendors accounted for
10
A portion of revenue is earned from sales outside the United States. Approximately
|
|
Three months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
U.S. revenue |
|
$ |
|
|
$ |
|
||
Non-U.S. revenue |
|
|
|
|
|
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Inventories
Inventories are stated at the lower of cost and net realizable value, using the first-in, first-out, or FIFO, method. The Company records adjustments to inventory for potentially excess, obsolete, slow-moving or impaired items, and losses on firm purchase commitments as a component of cost of sales in the consolidated statements of comprehensive loss. The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Raw materials and work-in-progress |
|
$ |
|
|
$ |
|
||
Finished goods |
|
|
|
|
|
|
||
Less: reserves |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
||
Property and equipment
Expenditures for additions, improvements and replacements are capitalized and depreciated to a salvage value of $
Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2025 and 2024, respectively.
|
|
Three months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Rental equipment |
|
$ |
|
|
$ |
|
||
Other property and equipment |
|
|
|
|
|
|
||
Total depreciation and amortization |
|
$ |
|
|
$ |
|
||
11
Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2025 and December 31, 2024, respectively.
|
|
March 31, |
|
|
December 31, |
|
||
Property and equipment |
|
2025 |
|
|
2024 |
|
||
Rental equipment, net of allowances of $ |
|
$ |
|
|
$ |
|
||
Other property and equipment |
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
|
|
|
|
||
Rental equipment |
|
|
|
|
|
|
||
Other property and equipment |
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Rental equipment, net of allowances of $ |
|
|
|
|
|
|
||
Other property and equipment |
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Long-lived assets
The Company accounts for the impairment and disposition of long-lived assets in accordance with Accounting Standards Codification, or ASC, 360 — Property, Plant, and Equipment. Long-lived assets are reviewed for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Goodwill and other identifiable intangible assets
Goodwill
The changes in the carrying amount of goodwill for the three months ended March 31, 2025 were as follows:
Balance as of December 31, 2024 (1) |
|
$ |
|
|
Translation adjustment |
|
|
|
|
Balance as of March 31, 2025 (1) |
|
$ |
|
(1) Includes $
12
Intangible assets
Intangible assets as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
Average |
|
|
|
|
|
|
|
|
|
|||
|
|
estimated |
|
Gross |
|
|
|
|
|
|
|
|||
|
|
useful lives |
|
carrying |
|
|
Accumulated |
|
|
|
|
|||
March 31, 2025 |
|
(in years) |
|
amount |
|
|
amortization |
|
|
Net amount |
|
|||
Developed technology |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Licenses |
|
|
|
|
|
|
|
|
|
— |
|
|||
Patents and websites |
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
|
|
|
|
|
|
|
|
|
||||
Trade name |
|
|
|
|
|
|
|
|
|
|
||||
Commercials |
|
|
|
|
|
|
|
|
|
|
||||
Internally developed software |
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Average |
|
|
|
|
|
|
|
|
|
|||
|
|
estimated |
|
Gross |
|
|
|
|
|
|
|
|||
|
|
useful lives |
|
carrying |
|
|
Accumulated |
|
|
|
|
|||
December 31, 2024 |
|
(in years) |
|
amount |
|
|
amortization |
|
|
Net amount |
|
|||
Developed technology |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Licenses |
|
|
|
|
|
|
|
|
|
— |
|
|||
Patents and websites |
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
|
|
|
|
|
|
|
|
|
||||
Trade name |
|
|
|
|
|
|
|
|
|
|
||||
Commercials |
|
|
|
|
|
|
|
|
|
|
||||
Internally developed software |
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Annual estimated amortization expense for each of the succeeding fiscal years is as follows:
|
|
March 31, |
|
|
|
|
2025 |
|
|
Remaining 9 months of 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
Current liabilities
Accounts payable and accrued expenses as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued inventory (in-transit and unvouchered receipts) and trade payables |
|
|
|
|
|
|
||
Accrued loss on purchase commitments |
|
|
|
|
|
|
||
Forward contract payable |
|
|
|
|
|
— |
|
|
Other accrued expenses |
|
|
|
|
|
|
||
Total accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
13
Accrued payroll as of March 31, 2025 and December 31, 2024 consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Accrued bonuses |
|
$ |
|
|
$ |
|
||
Accrued wages and other payroll related items |
|
|
|
|
|
|
||
Accrued vacation |
|
|
|
|
|
|
||
Accrued severance |
|
|
|
|
|
|
||
Accrued employee stock purchase plan deductions |
|
|
|
|
|
|
||
Total accrued payroll |
|
$ |
|
|
$ |
|
||
5. Leases
The Company has entered into operating leases primarily for commercial buildings. These leases have terms that range from
In July 2023, the Company entered into an Assignment and Assumption of Lease Agreement in which a third party, referred to as the Assignee, assumed the rights, title, and interest in the lease, including assumption of lease payments. Commencing February 1, 2024 and ending May 31, 2031, the Assignee assumed responsibility for the monthly lease payments. Notwithstanding the Assignee's assumption of lease payments, the Company remains the primary obligor under the lease to the landlord.
Lease payments assumed by the Assignee are:
Payments due in the 12-month period ending March 31, |
|
|
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
Information related to the Company's right-of-use assets and related operating lease liabilities were as follows:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash paid for operating lease liabilities |
|
$ |
|
|
$ |
|
||
Operating lease cost |
|
|
|
|
|
|
||
Non-cash right-of-use assets obtained in exchange for new operating lease obligations |
|
|
|
|
|
|
||
Weighted-average remaining lease term |
|
|
|
|
||||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
Maturities of lease liabilities due in the 12-month period ending March 31, |
|
|
|
|
|
|
2026 |
|
$ |
|
|
|
|
2027 |
|
|
|
|
|
|
2028 |
|
|
|
|
|
|
2029 |
|
|
|
|
|
|
2030 |
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less imputed interest |
|
|
( |
) |
|
|
Total lease liabilities |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Operating lease liability - current |
|
$ |
|
|
|
|
Operating lease liability - noncurrent |
|
|
|
|
|
|
Total lease liabilities |
|
$ |
|
|
|
|
14
6. Loss per share
Loss per share, or EPS, is computed in accordance with ASC 260—Earnings per Share and is calculated using the weighted-average number of shares of common stock outstanding during each period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents (which can include dilution of outstanding stock options and restricted stock units) unless the effect is to reduce a loss or increase the income per share. For purposes of this calculation, common stock subject to repurchase by the Company, options, and other dilutive awards are considered to be common stock equivalents and are only included in the calculation of diluted loss per share when their effect is dilutive.
Basic loss per share is calculated using the Company's weighted-average outstanding shares of common stock. Diluted loss per share is calculated using the Company's weighted-average outstanding shares of common stock including the dilutive effect of stock awards as determined under the treasury stock method.
The computation of EPS is as follows:
|
|
Three months ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Numerator—basic and diluted: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Denominator: |
|
|
|
|
|
|
||
Weighted average shares of common stock - basic common stock (1) |
|
|
|
|
|
|
||
Weighted average shares of common stock - diluted common stock |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net loss per share - basic common stock |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share - diluted common stock (2) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Denominator calculation from basic to diluted: |
|
|
|
|
|
|
||
Weighted average shares of common stock - basic common stock (1) |
|
|
|
|
|
|
||
Stock options and other dilutive awards |
|
|
|
|
|
|
||
Weighted average shares of common stock - diluted common stock |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Shares excluded from diluted weighted average shares: |
|
|
|
|
|
|
||
Stock options |
|
|
— |
|
|
|
|
|
Restricted stock units |
|
|
|
|
|
|
||
Shares excluded from diluted weighted average shares |
|
|
|
|
|
|
||
(1) Unvested restricted stock units are not included as shares outstanding in the calculation of basic earnings per share. Vested restricted stock units are included in basic earnings per share if all vesting and performance criteria have been met. Performance-based restricted stock units are included in the number of shares used to calculate diluted earnings per share as long as all applicable performance criteria are met, and their effect is dilutive.
(2) Due to net losses for the three months ended March 31, 2025 and March 31, 2024, diluted loss per share is the same as basic loss per share.
7
The Company accounts for income taxes in accordance with ASC 740 — Income Taxes. Under ASC 740, income taxes are recognized for the amount of taxes payable or refundable for the current period and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. As of December 31, 2024, the Company recorded a full valuation allowance of $
The Company accounts for uncertainties in income tax in accordance with ASC 740-10 — Accounting for Uncertainty in Income Taxes. ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
15
The Company recognizes interest and penalties on taxes, within its income tax provision on its consolidated statements of comprehensive loss.
8. Stockholders’ equity
The Company has a 2014 Equity Incentive Plan, or the 2014 Plan, under which the Company granted restricted stock units, restricted stock awards, performance units, performance shares, and options to purchase shares of its common stock. As of March 31, 2025, awards with respect to
The Company has an Amended and Restated 2023 Equity Incentive Plan, or the 2023 Plan, that provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any parent and subsidiary corporation’s employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, restricted stock awards, stock appreciation rights, performance units and performance shares to its employees, directors and consultants and its parent and subsidiary corporations’ employees and consultants.
As of March 31, 2025, awards with respect to
The Company previously granted restricted stock units to induce an employee to accept employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). As of March 31, 2025, awards with respect to
Securities purchase agreement
On January 25, 2025, the Company entered into a Securities Purchase Agreement, or the Purchase Agreement, with Yuwell (Hong Kong) Holdings Limited, or the Investor, a wholly-owned subsidiary of Yuwell, pursuant to which the Investor purchased
Stock incentive awards
The Company grants restricted stock units, or RSUs, under the 2014 and 2023 Plans and made one inducement grant of RSUs in 2024. RSUs vest either based solely on the satisfaction of time-based service conditions or on the satisfaction of time-based service conditions combined with performance criteria. RSUs are subject to forfeiture if the holder’s services to the Company terminate before vesting.
RSUs granted with only time-based service vesting conditions generally vest over
RSU
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
||||
|
|
|
|
|
|
|
|
|
|
|
average |
|
||||
|
|
|
|
|
|
|
|
|
|
|
grant |
|
||||
|
|
|
|
|
Performance |
|
|
|
|
|
date fair |
|
||||
|
|
|
|
|
and |
|
|
|
|
|
value |
|
||||
Restricted stock units |
|
Time-based |
|
|
time-based |
|
|
Total |
|
|
per share |
|
||||
Unvested restricted stock units as of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Forfeited/canceled |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Unvested restricted stock units as of March 31, 2025 (1) |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Unvested and expected to vest restricted stock units outstanding as of |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
16
(1) Outstanding RSUs are based on the maximum payout of the targeted number of shares.
As of March 31, 2025, the unrecognized compensation cost related to unvested employee restricted stock units was $
Employee stock purchase plan
The Company’s 2014 Employee Stock Purchase Plan, or ESPP, provides all eligible employees the option to purchase shares of the Company’s common stock at a discount through payroll deductions. As of March 31, 2025, a total of
Stock-based compensation
Stock-based compensation expense recognized for the three months ended March 31, 2025 and 2024, was as follows:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Stock-based compensation expense by type of award: |
|
|
|
|
|
|
||
Restricted stock units |
|
$ |
|
|
$ |
|
||
Employee stock purchase plan |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
For the three months ended March 31, 2025 and 2024, respectively, stock-based compensation expense recognized under ASC 718, included in cost of revenue, research and development expense, sales and marketing expense, and general and administrative expense was as follows:
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Sales and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
17
9. Commitments and contingencies
Purchase obligations
The Company had approximately $
Warranty obligation
The following table identifies the changes in the Company’s aggregate product warranty liabilities for the three-month and 12-month periods ended March 31, 2025 and December 31, 2024, respectively:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Product warranty liability at beginning of period |
|
$ |
|
|
$ |
|
||
Accruals for warranties issued |
|
|
|
|
|
|
||
Adjustments related to preexisting warranties (including changes in estimates) |
|
|
( |
) |
|
|
|
|
Settlements made (in cash or in kind) |
|
|
( |
) |
|
|
( |
) |
Product warranty liability at end of period |
|
$ |
|
|
$ |
|
||
Contract liabilities
Contract liabilities primarily consist of deferred revenue related to lifetime warranties on direct-to-consumer sales revenue when cash payments are received in advance of services performed under the contract. The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product or service purchase. The decrease in deferred revenue related to lifetime warranties for the three months ended March 31, 2025 was primarily driven by $
Legislation and HIPAA
The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Compliance with government laws and regulations can be subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time. The Health Insurance Portability and Accountability Act of 1996, or HIPAA, was enacted to ensure health insurance portability, reduce healthcare fraud and abuse, guarantee security and privacy of health information, and enforce standards for health information. The Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, in part, imposes notification requirements of certain security breaches relating to protected health information. The Company is not aware of any pending claims against it under the HIPAA and HITECH regulations that are applicable to the Company’s business.
Legal proceedings
The Company is party to various legal proceedings and investigations arising in the normal course of business. The Company carries insurance, subject to specified deductibles under the policies, to protect against losses from certain types of legal claims. At this time, the Company does not anticipate that any of these other proceedings arising in the normal course of business will have a material adverse effect on the Company’s business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
18
10. Foreign currency exchange contracts and hedging
As of March 31, 2025 and March 31, 2024, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $
11. Segments
Operating segments are defined as components of an enterprise engaging in business activities for which separate financial information is available that is regularly evaluated by the Group’s chief operating decision makers, or CODM. Based on the criteria established by ASC 280 Segment Reporting, the Company’s CODM has been identified as the executive leadership team, or ELT, which includes the Chief Executive Officer and the Chief Financial Officer. The ELT reviews a monthly executive reporting package based on consolidated results of the Company when making decisions about allocating resources and assessing performance. The Company derives revenues from customers through the development, manufacturing, marketing, sales, and rental of respiratory products. The Company considered the following when assessing its segment determination: the similar nature of the Company’s products and services that are included together in the oxygen therapy and respiratory care markets; the consistent production processes used to manufacture the Company’s products; the same channels used to distribute and sell the Company’s products; and the products align and qualify as respiratory durable medical equipment per the regulatory definition. Therefore, the Company determined that it operates and reports in only one operating and reportable segment. The CODM assesses performance for the one operating and reportable segment and decides how to allocate resources based on the segment profit or loss measure and adjusted EBITDA. The measure of segment assets is reported on the balance sheet as “total assets.” The CODM determined that the Company’s segment profit or loss measure that is most consistent with GAAP measurement principles is net loss to evaluate income and loss generated from segment assets (return on assets). Net Loss for the Company’s one operating and reportable segment is reported on the consolidated statements of comprehensive loss. The Company evaluated the monthly executive reporting package and did not identify any significant or other expenses for disclosure that are not already presented on the consolidated statements of comprehensive loss.
19
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
The following discussion and analysis of the financial condition and results of our operations should be in conjunction with the consolidated financial statements and related notes elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the section entitled “Risk Factors” of our Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q filed with the SEC. Forward-looking statements include, but are not limited to, statements concerning the following:
20
Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the sections entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and our Annual Report on Form 10-K filed with the SEC on February 28, 2025. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events, or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.
“Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” “Inogen Rove,” and the Inogen design, are registered trademarks with the United States Patent and Trademark Office of Inogen, Inc. We own pending applications for the marks “Rove,” “Inogen Rove 4,” “Inogen Rove 6,” and “VOXI” with the United States Patent and Trademark Office. We own trademark registrations for the mark “Inogen” in Argentina, Australia, Bermuda, Canada, Chile, China, Columbia, Ecuador, Hong Kong, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Indonesia, Israel, Japan, Kuwait, New Zealand, Norway, Dominican Republic, Paraguay, Peru, Philippines, Turkey, Singapore, South Africa, Switzerland, Uruguay, and Vietnam. We own pending applications for the mark “Inogen” in Thailand, and the UAE. We own a trademark registration for the mark “イノジェン” in Japan. We own trademark registrations for the marks “印诺真” and “艾诺根” in China. We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom. We own a trademark registration for the mark “Satellite Conserver” in Canada. We own trademark registrations for the mark “Inogen At Home” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the mark “G4” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the marks “Inogen Rove 4” and “Inogen Rove 6” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the mark “G5” in Europe (European Union Registration) and the United Kingdom. We own pending applications for the marks “Inogen Rove 4” and “Inogen Rove 6” in Canada. We own trademark registrations for the mark “Rove” in Australia, China, Europe (European Union Registration), Indonesia, Mexico, and the United Kingdom. We own pending applications for the mark “Rove” in Argentina, Brazil, Canada, Colombia, India, South Korea, and Saudi Arabia. We own trademark registrations for the mark “Inogen Rove” in Australia, China, Europe (European Union Registration), Indonesia, Mexico, and the United Kingdom. We own pending applications for the mark “Inogen Rove” in Argentina, Brazil, Canada, Colombia, India, South Korea, and Saudi Arabia. We own trademark registrations for the Inogen design in Bolivia and China. We own a trademark registration for the mark “إنوجن” in Saudi Arabia. We own a pending application for the Inogen One G5 design in Brazil. We own a pending application for “Inogen Simeox” in China. We own a pending application for the mark “VOXI” in Europe (European Union Registration). Other service marks, trademarks, and trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. “PHYSIOASSIST,” the Physio-Assist logo, “SIMEOX,” and the Pissenlit logo are registered trademarks of Inogen’s wholly-owned subsidiary Physio-Assist. Physio-Assist owns
21
trademark registrations for the mark “PHYSIOASSIST” in Europe (European Union Registration), France, Japan, United Kingdom, and USA. Physio-Assist owns trademark registrations for the Physio-Assist logo in China, Europe (European Union Registration), France, Japan, South Korea, United Kingdom, and USA. Physio-Assist owns trademark registrations for the mark “SIMEOX” in Europe (European Union Registration), France, Japan, Russia, United Kingdom, and USA. Physio-Assist owns pending applications for the mark “SIMEOX” in Argentina, Canada, Colombia, Mexico, Norway, and Switzerland. Physio-Assist owns a trademark registration for the Pissenlit logo in France.
In this Quarterly Report on Form 10-Q, “the Company,” “we,” “us,” and “our” refer to Inogen, Inc. and its subsidiaries.
The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements and the accompanying condensed notes to those statements included elsewhere in this document. In addition, you should refer to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.
Critical accounting policies and estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with U.S. GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates and such differences could be material to the financial position and results of operations.
Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to:
There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three months ended March 31, 2025 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.
Recent accounting pronouncements
Information about recently adopted and proposed accounting pronouncements, if applicable, is included in Note 2 to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q under the heading “Recent Accounting Pronouncements” and is incorporated herein by reference.
Macroeconomic environment
While we have worked to improve our global supply chain, challenges and potential disruptions still exist. We have experienced, and may continue to experience, increases in cost and limited availability of certain raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and inflation within the global supply chain, as well as increases in wage costs and the cost and time to distribute our products. Uncertainty around inflationary pressures, interest rates, monetary policy, and changes in tariffs and tax laws could potentially cause new, or exacerbate existing, economic challenges that we may face, including the impact of foreign currency fluctuations on our results of operations, or result in an economic downturn or recession, which could negatively impact our business operations and results. Existing and future potential geopolitical dynamics may create economic, supply chain, energy, and other challenges, including disruptions to business operations, which has impacted, and may in the future negatively impact our business. In particular, international conflicts could create instability, have and may further result in sanctions, tariffs, and other measures that restrict international trade and may negatively affect our business operations and results.
We continue to monitor the additional tariffs announced by the U.S. government, and potential tariff modifications or the imposition of tariffs or export controls by other countries. As the tariffs are currently detailed, we do not expect a material impact to our business.
22
For additional information on risk factors that could impact our results, please refer to the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.
Overview
We are a medical technology company that primarily develops, manufactures, and markets innovative respiratory market products, including our portable oxygen therapy solutions for patients with chronic respiratory conditions as well as our Simeox product for airway clearance treatment. Our leading portfolio of innovative POCs is designed to deliver high output ratio-to-weight, meaningful sound suppression and has among the longest run times in the industry so that we can meet the needs of patients across a variety of disease states. We are positioned in the market as both a medical technology company and as a home medical equipment provider that is accredited in all 50 states in the United States with a significant patient, prescriber and provider reach. Our products are sold in the United States through direct patient and prescriber sales, as well as resellers and home medical equipment companies, and internationally through distributors and medical equipment companies.
We derive the majority of our revenue from the sale and rental of our portable oxygen concentrator systems and related accessories to patients, insurance carriers, home healthcare providers, resellers, and distributors, including our private label collaborator. We sell multiple configurations of our Inogen One®, Inogen Rove and Inogen At Home systems with various batteries, accessories, warranties, power cords, and language settings. Our goal is to design, build, and market oxygen solutions that redefine how long-term oxygen therapy is delivered.
To accomplish this goal, we intend to:
We plan to also continue to invest in clinical studies to evaluate expected improvements in clinical, economic and patient reported outcomes associated with the use of our products as part of our efforts to drive payor and prescriber advocacy for our products.
23
Our Simeox product is a technology-enabled airway clearance and mucus management device predominantly aimed at serving patients with bronchiectasis which is a condition that presents as the lung’s bronchi are damaged and widened in patients with cystic fibrosis, COPD, or other respiratory conditions. Simeox is used in pulmonary rehabilitation centers as well as at home. Simeox has been cleared under CE mark in the European Union and is currently being sold in Europe and several other markets. In addition, we obtained 510(k) clearance for Simeox in December 2024 and plan to leverage our commercial infrastructure and capabilities to market the device in the United States, while continuing to market it in the other geographies. We intend to commercialize Simeox through the sale or rental of the product initially, followed by recurring sales of device disposables. We will begin efforts to obtain market feedback in the first half of 2025, as well as to initialize the work towards reimbursement coverage for the Simeox product in the U.S.
In January 2025, we entered into the Collaboration Agreement with Yuwell. The collaboration with Yuwell is expected to broaden our product portfolio through distribution of certain respiratory products, including Yuwell’s stationary oxygen concentrators, in the United States and select other territories, expand and enhance our innovation pipeline through research and development collaboration, and accelerate the entry of our brand into the Chinese market. In the United States, we expect a limited launch in 2025 with a more extensive launch in 2026 as we focus on market development. In China, we continue to work through the registration process.
Results of operations
Comparison of three months ended March 31, 2025 and 2024
Revenue
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Sales revenue |
|
$ |
68,470 |
|
|
$ |
63,095 |
|
|
$ |
5,375 |
|
|
|
8.5 |
% |
|
|
83.2 |
% |
|
|
80.9 |
% |
Rental revenue |
|
|
13,810 |
|
|
|
14,930 |
|
|
|
(1,120 |
) |
|
|
-7.5 |
% |
|
|
16.8 |
% |
|
|
19.1 |
% |
Total revenue |
|
$ |
82,280 |
|
|
$ |
78,025 |
|
|
$ |
4,255 |
|
|
|
5.5 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Sales revenue increased $5.4 million, or 8.5%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The increase was primarily attributable to higher demand in domestic and international business-to-business sales. We sold approximately 43,000 oxygen systems during the three months ended March 31, 2025 compared to approximately 33,900 oxygen systems sold during the three months ended March 31, 2024, an increase of 26.8%.
Rental revenue decreased $1.1 million, or 7.5%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in rental revenue was primarily related to a higher mix of lower private-payor reimbursement rates.
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(dollar amounts in thousands) |
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
Revenue by region and category |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Business-to-business domestic sales |
|
$ |
21,454 |
|
|
$ |
16,519 |
|
|
$ |
4,935 |
|
|
|
29.9 |
% |
|
|
26.1 |
% |
|
|
21.2 |
% |
Business-to-business international sales |
|
|
31,985 |
|
|
|
26,035 |
|
|
|
5,950 |
|
|
|
22.9 |
% |
|
|
38.9 |
% |
|
|
33.4 |
% |
Direct-to-consumer domestic sales |
|
|
15,031 |
|
|
|
20,541 |
|
|
|
(5,510 |
) |
|
|
-26.8 |
% |
|
|
18.2 |
% |
|
|
26.3 |
% |
Direct-to-consumer domestic rentals |
|
|
13,810 |
|
|
|
14,930 |
|
|
|
(1,120 |
) |
|
|
-7.5 |
% |
|
|
16.8 |
% |
|
|
19.1 |
% |
Total revenue |
|
$ |
82,280 |
|
|
$ |
78,025 |
|
|
$ |
4,255 |
|
|
|
5.5 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Domestic business-to-business sales increased 29.9% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the result of increased demand from existing customers.
International business-to-business sales increased 22.9% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to higher demand. In the three months ended March 31, 2025, sales in Europe as a percentage of total international sales revenue decreased to 85.6% from 88.2% during the comparable period in 2024.
Domestic direct-to-consumer sales decreased 26.8% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by lower volume due to lower sales representative headcount versus the comparable period in 2024.
Domestic direct-to-consumer rentals decreased 7.5% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily related to a higher mix of lower private-payor reimbursement rates.
24
Cost of revenue and gross profit
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Cost of sales revenue |
|
$ |
38,083 |
|
|
$ |
35,244 |
|
|
$ |
2,839 |
|
|
|
8.1 |
% |
|
|
46.3 |
% |
|
|
45.1 |
% |
Cost of rental revenue |
|
|
7,825 |
|
|
|
8,410 |
|
|
|
(585 |
) |
|
|
-7.0 |
% |
|
|
9.5 |
% |
|
|
10.8 |
% |
Total cost of revenue |
|
$ |
45,908 |
|
|
$ |
43,654 |
|
|
$ |
2,254 |
|
|
|
5.2 |
% |
|
|
55.8 |
% |
|
|
55.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross profit - sales revenue |
|
$ |
30,387 |
|
|
$ |
27,851 |
|
|
$ |
2,536 |
|
|
|
9.1 |
% |
|
|
36.9 |
% |
|
|
35.7 |
% |
Gross profit - rental revenue |
|
|
5,985 |
|
|
|
6,520 |
|
|
|
(535 |
) |
|
|
-8.2 |
% |
|
|
7.3 |
% |
|
|
8.4 |
% |
Total gross profit |
|
$ |
36,372 |
|
|
$ |
34,371 |
|
|
$ |
2,001 |
|
|
|
5.8 |
% |
|
|
44.2 |
% |
|
|
44.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross margin percentage - sales revenue |
|
|
44.4 |
% |
|
|
44.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross margin percentage- rental revenue |
|
|
43.3 |
% |
|
|
43.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total gross margin percentage |
|
|
44.2 |
% |
|
|
44.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales revenue increased $2.8 million, or 8.1%, for the three months ended March 31, 2025 from the three months ended March 31, 2024 due primarily to an increase in the number of systems sold.
Cost of rental revenue decreased $0.6 million, or 7.0%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in cost of rental revenue was primarily attributable to a decrease in logistics costs. Cost of rental revenue included $3.0 million of rental asset depreciation for the three months ended March 31, 2025 compared to $3.2 million for the three months ended March 31, 2024.
Gross margin on sales revenue increased to 44.4% for the three months ended March 31, 2025 from 44.1% for the three months ended March 31, 2024. The increase was driven primarily by lower warranty expense, partially offset by channel and customer mix as well as higher material cost premiums associated with open-market purchases of semiconductor chips used in our POCs. Total worldwide business-to-business sales revenue accounted for 78.0% of total sales revenue in the three months ended March 31, 2025 versus 67.4% in the three months ended March 31, 2024.
Gross margin on rental revenue decreased to 43.3% for the three months ended March 31, 2025 from 43.7% for the three months ended March 31, 2024, primarily due to a higher mix shift of private-payor reimbursement and lower net revenue per rental patient as a result of a decrease in the percentage of patients billed compared to total patients on service.
Research and development expense
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Research and development expense |
|
$ |
4,034 |
|
|
$ |
6,578 |
|
|
$ |
(2,544 |
) |
|
|
-38.7 |
% |
|
|
4.9 |
% |
|
|
8.4 |
% |
Research and development expense decreased $2.5 million, or 38.7%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. This decrease was due primarily to a $1.8 million decrease in consulting and a $0.5 million decrease in personnel-related expenses.
25
Sales and marketing expense
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Sales and marketing expense |
|
$ |
23,757 |
|
|
$ |
26,936 |
|
|
$ |
(3,179 |
) |
|
|
-11.8 |
% |
|
|
28.9 |
% |
|
|
34.5 |
% |
Sales and marketing expense decreased $3.2 million, or 11.8%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. This decrease was primarily due to decreases of $1.8 million in consulting fees and $0.9 million in media and advertising costs. In the three months ended March 31, 2025, we spent $7.6 million in media and advertising costs versus $8.4 million in the comparable period in 2024.
General and administrative expense
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
General and administrative expense |
|
$ |
16,237 |
|
|
$ |
17,131 |
|
|
$ |
(894 |
) |
|
|
-5.2 |
% |
|
|
19.7 |
% |
|
|
22.0 |
% |
General and administrative expense decreased $0.9 million, or 5.2%, for the three months ended March 31, 2025 from the three months ended March 31, 2024, primarily due to $0.6 million in the change in fair value of the earnout liability.
Other income, net
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Interest income, net |
|
$ |
1,029 |
|
|
$ |
1,403 |
|
|
$ |
(374 |
) |
|
|
-26.7 |
% |
|
|
1.3 |
% |
|
|
1.8 |
% |
Other income, net |
|
|
356 |
|
|
|
143 |
|
|
|
213 |
|
|
|
149.0 |
% |
|
|
0.4 |
% |
|
|
0.2 |
% |
Total other income, net |
|
$ |
1,385 |
|
|
$ |
1,546 |
|
|
$ |
(161 |
) |
|
|
-10.4 |
% |
|
|
1.7 |
% |
|
|
2.0 |
% |
Total other income, net decreased $0.2 million, or 10.4%, for the three months ended March 31, 2025 from the three months ended March 31, 2024.
Income tax benefit
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Income tax benefit |
|
$ |
(97 |
) |
|
$ |
(150 |
) |
|
$ |
53 |
|
|
|
-35.3 |
% |
|
|
-0.1 |
% |
|
|
-0.2 |
% |
Effective income tax rate |
|
|
1.5 |
% |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax benefit decreased less than $0.1 million, or 35.3%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. We continued to record a valuation allowance on the use of deferred tax assets in the current and prior periods. The decrease was attributable to lower foreign and state taxes.
Our effective tax rate for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024, primarily due to a lower net loss and foreign and state taxes.
26
Net loss
|
|
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
|
% of Revenue |
|
|||||||||||||||
(dollar amounts in thousands) |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
|
2025 |
|
|
2024 |
|
||||||
Net loss |
|
$ |
(6,174 |
) |
|
$ |
(14,578 |
) |
|
$ |
8,404 |
|
|
|
57.6 |
% |
|
|
-7.5 |
% |
|
|
-18.7 |
% |
Net loss decreased $8.4 million, or 57.6%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in net loss was primarily related to an increase in sales revenue and lower operating expense.
Liquidity and capital resources
As of March 31, 2025, we had cash and cash equivalents of $118.9 million, which consisted of highly liquid investments with a maturity of three months or less. For the three months ended March 31, 2025, we received $27.2 million from Yuwell and $0.5 million in proceeds related to our ESPP, partially offset by the payment of the earnout liability of $13.0 million. For the three months ended March 31, 2024, we received $0.4 million in proceeds related to our ESPP.
Our principal use of our funds for liquidity and capital resources in the three months ended March 31, 2025 consisted of cash used in investing activities of $2.0 million for additional rental equipment, other property and plant and equipment, partially offset by cash used in operating activities of $16.8 million.
We believe that our current cash, cash equivalents, and marketable securities and the cash to be generated from expected product sales and rentals will be sufficient to meet our projected operating and investing requirements for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. Our future funding requirements will depend on many factors, including market acceptance of our products; the cost of our research and development activities; payments from customers; the cost, timing, and outcome of litigation or disputes involving intellectual property rights, our products, employee relations, cyber security incidents, or otherwise; the cost and timing of acquisitions and integration thereof; the cost and timing of regulatory clearances or approvals; the cost and timing of establishing additional sales, marketing, and distribution capabilities; and the effect of competing technological and market developments. In the future, we may acquire businesses or technologies from third parties, and we may decide to raise additional capital through debt or equity financing to the extent we believe this is necessary to successfully complete these acquisitions. Our future capital requirements will also depend on many additional factors, including those set forth in the risk factors included in Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 28, 2025.
If we require additional funds in the future, we may not be able to obtain such funds on acceptable terms, or at all. In the future, we may also attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we will be subject to increased fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital, which would adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected.
The following tables show a summary of our cash flows and working capital for the periods and as of the dates indicated:
|
|
Three months ended |
|
|
|
|
|
|
|
|||||||
(amounts in thousands) |
|
March 31, |
|
|
Change 2025 vs. 2024 |
|
||||||||||
Summary of consolidated cash flows |
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Cash used in operating activities |
|
$ |
(16,790 |
) |
|
$ |
(4,749 |
) |
|
$ |
(12,041 |
) |
|
|
-253.5 |
% |
Cash used in investing activities |
|
|
(2,038 |
) |
|
|
(13,444 |
) |
|
|
11,406 |
|
|
|
84.8 |
% |
Cash provided by financing activities |
|
|
23,951 |
|
|
|
285 |
|
|
|
23,666 |
|
|
|
8303.9 |
% |
Effect of exchange rates on cash |
|
|
1 |
|
|
|
(140 |
) |
|
|
141 |
|
|
|
-100.7 |
% |
Net decrease in cash and cash equivalents |
|
$ |
5,124 |
|
|
$ |
(18,048 |
) |
|
$ |
23,172 |
|
|
|
-128.4 |
% |
(amounts in thousands) |
|
March 31, |
|
|
December 31, |
|
||
Summary of working capital |
|
2025 |
|
|
2024 |
|
||
Total current assets |
|
$ |
200,708 |
|
|
$ |
185,451 |
|
Total current liabilities |
|
|
65,451 |
|
|
|
76,686 |
|
Net working capital |
|
$ |
135,257 |
|
|
$ |
108,765 |
|
27
Operating activities
Historically, we derive operating cash flows from cash collected from the sales and rental of our products and services. These cash flows received are partially offset by our use of cash for operating expenses to support the growth of our business.
Net cash used in operating activities for the three months ended March 31, 2025 consisted primarily of our net loss of $6.2 million, partially offset by non-cash adjustment items of depreciation of equipment and leasehold improvements and amortization of intangibles of $5.2 million, stock-based compensation expense of $2.1 million, provision for sales returns and doubtful accounts of $1.7 million, and net loss on disposal of rental assets and other assets of $0.9 million. The net changes in operating assets and liabilities resulted in net cash used of $21.3 million, which included the payment of the earnout liability of $9.8 million.
Net cash used in operating activities for the three months ended March 31, 2024 consisted primarily of our net loss of $14.6 million, partially offset by non-cash adjustment items such as depreciation of equipment and leasehold improvements and amortization of intangibles of $5.3 million, stock-based compensation expense of $2.4 million, provision for sales returns and doubtful accounts of $2.2 million, net loss on disposal of rental assets and other assets of $1.2 million, and change in fair value of earnout liability of $0.6 million. The net changes in operating assets and liabilities resulted in a net decrease in cash of $1.5 million.
Investing activities
Net cash used in investing activities generally includes the production and purchase of rental assets, property, plant and equipment, acquisitions, and intangibles to support our expanding business as well as maturities (purchases) of marketable securities.
For the three months ended March 31, 2025, we invested $2.0 million in the production and purchase of rental assets and other property and equipment.
For the three months ended March 31, 2024, we invested $12.4 million in the purchase of marketable securities, $4.1 million in the production and purchase of rental assets and other property and equipment, partially offset by $3.0 million we received from maturities of marketable securities.
We expend significant manufacturing and production expense in connection with the development and production of our oxygen concentrator and other respiratory care products and, in connection with our rental business, we incur expense in the deployment and maintenance of rental equipment to our patients. Investments will continue to be required in order to grow our sales and rental revenue and continue to supply and replace rental equipment to our rental patients on service.
Financing activities
Historically, we have funded our operations through our sales and rental revenue and the issuance of preferred and common stock.
For the three months ended March 31, 2025, net cash provided by financing activities consisted of $27.2 million of proceeds from issuance of common stock pursuant to the Purchase Agreement, $0.5 million of proceeds received from purchases under our ESPP, partially offset by the payment of the earnout liability of $3.2 million and employment taxes related to the vesting of RSUs of $0.6 million.
For the three months ended March 31, 2024, net cash provided by financing activities consisted of $0.4 million from the proceeds received from purchases under our ESPP, partially offset by the payment of employment taxes related to the vesting of RSUs of $0.1 million.
Sources of funds
During the three months ended March 31, 2025, our primary source of cash related to $27.2 million of proceeds from issuance of common stock pursuant to the Purchase Agreement. Our net cash used in operating activities in the three months ended March 31, 2025 was $16.8 million compared to $4.7 million in the three months ended March 31, 2024. As of March 31, 2025, we had cash and cash equivalents of $118.9 million.
Use of funds
Our principal uses of cash are funding our new rental asset deployments and other capital purchases, operations, and other working capital requirements and, from time-to-time, the acquisition of businesses and the payment of the earnout liability. Over the
28
past several years our cash flows from customer collections have remained consistent and our annual cash provided by operating activities has generally been a significant source of capital to the business.
We may need to raise additional funds to support our investing operations, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.
Non-GAAP financial measures
EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with U.S. GAAP. We define EBITDA as net loss excluding interest income, interest expense, taxes and depreciation and amortization. Adjusted EBITDA also excludes stock-based compensation, change in fair value of earnout liability, acquisition-related expenses, and restructuring-related and other charges. Below, we have provided a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA should not be considered alternatives to a net loss or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. Our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other organizations because other organizations may not calculate EBITDA and Adjusted EBITDA in the same manner as we calculate these measures.
We include EBITDA and Adjusted EBITDA in this Quarterly Report on Form 10-Q because they are important measures upon which our management assesses our operating performance. We use EBITDA and Adjusted EBITDA as key performance measures because we believe they facilitate operating performance comparisons from period-to-period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of depreciation and amortization expense on our fixed assets and intangible assets, the impact of stock-based compensation expense, the impact of the change in fair value of the earnout liability, the impact of acquisition-related expenses, the impact of restructuring-related costs, and impairment charges. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use EBITDA and Adjusted EBITDA for business planning purposes, to incentivize and compensate our management personnel, and in evaluating acquisition opportunities. In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.
Our uses of EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:
In evaluating EBITDA and Adjusted EBITDA, we anticipate that in the future we will incur expenses within these categories similar to this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by certain expenses. When evaluating our financial results, EBITDA and Adjusted EBITDA should be considered alongside other financial performance measures, including U.S. GAAP results.
29
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most comparable U.S. GAAP measure, for each of the periods indicated:
(amounts in thousands) |
|
Three months ended |
|
|||||
Non-GAAP EBITDA and Adjusted EBITDA |
|
2025 |
|
|
2024 |
|
||
Net loss (GAAP) |
|
$ |
(6,174 |
) |
|
$ |
(14,578 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
||
Interest income, net |
|
|
(1,029 |
) |
|
|
(1,403 |
) |
Benefit for income taxes |
|
|
(97 |
) |
|
|
(150 |
) |
Depreciation and amortization |
|
|
5,189 |
|
|
|
5,265 |
|
EBITDA (non-GAAP) |
|
|
(2,111 |
) |
|
|
(10,866 |
) |
Stock-based compensation |
|
|
2,147 |
|
|
|
2,416 |
|
Acquisition-related expenses |
|
|
— |
|
|
|
238 |
|
Change in fair value of earnout liability |
|
|
— |
|
|
|
570 |
|
Adjusted EBITDA (non-GAAP) |
|
$ |
36 |
|
|
$ |
(7,642 |
) |
30
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, including fluctuation in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. We do not hold or issue financial instruments for trading purposes.
Foreign currency exchange risk
The principal market risk we face is foreign currency exchange risk. The majority of our revenue is denominated in U.S. dollars while the majority of our European sales are denominated in Euros. Our results of operations, certain balance sheet balances and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income or loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency in which they are recorded. The effect of a 10% adverse change in exchange rates on foreign denominated cash, receivables and payables as of March 31, 2025 would not have had a material effect on our financial position, results of operations or cash flows. As our operations in countries outside of the United States grow, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future.
We began entering into foreign exchange forward contracts to protect our forecasted U.S. dollar-equivalent earnings from adverse changes in foreign currency exchange rates. These hedging contracts reduce, but will not entirely eliminate, the impact of adverse currency exchange rate movements on revenue, cash, receivables, and payables. We performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign exchange rates to the hedging contracts and the underlying exposures described above. As of March 31, 2025, the analysis indicated that these hypothetical market movements would not have a material effect on our financial position, results of operations or cash flows. We estimate prior to any hedging activity that a 10% adverse change in exchange rates on our foreign denominated sales would have resulted in a $2.5 million decline in revenue for the three months ended March 31, 2025. We designate these forward contracts as cash flow hedges for accounting purposes. The fair value of the forward contract is separated into intrinsic and time values. The fair value of forward currency-exchange contracts is sensitive to changes in currency exchange rates. Changes in the time value are coded in other income, net. Changes in the intrinsic value are recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into revenue to offset the hedged exposures as they occur.
Interest rate fluctuation risk
We had cash, cash equivalents and restricted cash of $122.5 million as of March 31, 2025, which consisted of highly liquid investments with a maturity of three months or less. The primary goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents. Declines in interest rates, however, would reduce future investment income. We considered the historical volatility of short-term interest rates and determined that it was reasonably possible that an adverse change of 100 basis points could be experienced in the near term. A hypothetical 1.00% (100 basis points) increase in interest rates would not have materially impacted the fair value of our marketable securities as of March 31, 2025 and March 31, 2024. If overall interest rates had increased or decreased by 1.00% (100 basis points), our interest income would not have been materially affected during the three months ended March 31, 2025 or March 31, 2024.
31
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
The Company maintains a system of disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, which are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported accurately and completely within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, among other processes, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions over time, or that the degree of compliance with the policies and procedures may deteriorate. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. Based upon the evaluation described above, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in internal control over financial reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on effectiveness of controls
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.
32
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
We are party to various legal proceedings and investigations arising in the normal course of business. We carry insurance, subject to specified deductibles under the policies, to protect against losses from certain types of legal claims. At this time, we do not anticipate that any of these other proceedings arising in the normal course of business will have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Item 1A. Risk Factors
The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in our 2024 Annual Report on Form 10-K filed with the SEC on February 28, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered sales of equity securities
Not applicable.
Issuer purchases of equity securities
We did not repurchase any shares of our common stock during the three months ended March 31, 2025.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2025, none of our directors or Section 16 reporting officers
33
Item 6. Exhibits
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Incorporated |
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Incorporated |
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by Reference |
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Exhibit |
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by Reference |
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From Exhibit |
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Date |
Number |
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Description |
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From Form |
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Number |
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Filed |
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10.1 |
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8-K |
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10.1 |
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01/27/25 |
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10.2 |
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8-K |
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10.3 |
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01/27/25 |
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31.1 |
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Filed herewith |
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31.2 |
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Filed herewith |
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32.1(1) |
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Filed herewith |
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32.2(1) |
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Filed herewith |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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104 |
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The cover page of this Quarterly Report on Form 10-Q, formatted in inline XBRL. |
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34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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inogen, inc. |
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Dated: |
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May 8, 2025 |
By: |
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/s/ Kevin R.M. Smith |
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Kevin R.M. Smith |
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Chief Executive Officer President Director (Principal Executive Officer) |
Dated: |
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May 8, 2025 |
By: |
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/s/ Michael Bourque |
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Michael Bourque |
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Executive Vice President Chief Financial Officer Treasurer (Principal Financial and Accounting Officer) |
35