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false Q2 0001294133 --12-31 Large Accelerated Filer true The number of shares available for issuance under the 2014 Plan also is increased annually on the first day of each fiscal year equal to the least of: 895,346 shares; 4% of the outstanding shares of common stock as of the last day of the Company's immediately preceding fiscal year; or such other amount as the Company's board of directors may determine. The number of shares available for sale under the ESPP is increased annually on the first day of each fiscal year equal to the least of: 179,069 shares; 1.5% of the outstanding shares of the Company's common stock on the last day of the Company's immediately preceding fiscal year; or such other amount as may be determined by the administrator. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From              to             

Commission file number: 001-36309

 

INOGEN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

33-0989359

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

326 Bollay Drive

Goleta, CA

93117

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (805) 562-0500

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

INGN

 

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

As of July 31, 2020, the registrant had 22,066,049 shares of common stock, par value $0.001, outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

 

Part I – Financial Information

 

Page

Item 1.

 

Financial Statements

 

3

 

 

Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019

 

3

 

 

Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019

 

5

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2020 and June 30, 2019

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2020 and June 30, 2019

 

7

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

9

Item 2.

 

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

 

29

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

52

Item 4.

 

Controls and Procedures

 

53

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

54

Item 1A.

 

Risk Factors

 

55

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

90

Item 3.

 

Defaults Upon Senior Securities

 

90

Item 4.

 

Mine Safety Disclosures

 

90

Item 5.

 

Other Information

 

90

Item 6.

 

Exhibits

 

91

SIGNATURES

 

92

 

 

 

 

2


 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(amounts in thousands)

 

 

June 30,

 

 

December 31,

 

 

2020

 

 

2019

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

214,086

 

 

$

198,037

 

Marketable securities

 

4,549

 

 

 

11,057

 

Accounts receivable, net

 

28,422

 

 

 

34,325

 

Inventories, net

 

36,180

 

 

 

35,664

 

Income tax receivable

 

2,984

 

 

 

2,976

 

Prepaid expenses and other current assets

 

16,544

 

 

 

10,160

 

Total current assets

 

302,765

 

 

 

292,219

 

Property and equipment

 

 

 

 

 

 

 

Rental equipment, net

 

40,614

 

 

 

39,308

 

Manufacturing equipment and tooling

 

10,351

 

 

 

9,704

 

Computer equipment and software

 

7,841

 

 

 

7,266

 

Furniture and equipment

 

2,269

 

 

 

1,730

 

Leasehold improvements

 

4,607

 

 

 

4,388

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

1,104

 

 

 

1,773

 

Total property and equipment

 

66,911

 

 

 

64,294

 

Less accumulated depreciation

 

(45,381

)

 

 

(44,856

)

Property and equipment, net

 

21,530

 

 

 

19,438

 

Goodwill

 

32,957

 

 

 

32,954

 

Intangible assets, net

 

73,253

 

 

 

77,533

 

Operating lease right-of-use asset

 

9,454

 

 

 

5,855

 

Deferred tax asset - noncurrent

 

13,768

 

 

 

14,452

 

Other assets

 

4,394

 

 

 

4,888

 

Total assets

$

458,121

 

 

$

447,339

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

3


 

Inogen, Inc.

Consolidated Balance Sheets (continued)

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

 

 

June 30,

 

 

December 31,

 

 

2020

 

 

2019

 

 

(unaudited)

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

29,363

 

 

$

30,730

 

Accrued payroll

 

6,405

 

 

 

6,215

 

Warranty reserve - current

 

5,769

 

 

 

4,923

 

Operating lease liability - current

 

1,823

 

 

 

2,014

 

Deferred revenue - current

 

6,266

 

 

 

5,478

 

Income tax payable

 

988

 

 

 

821

 

Total current liabilities

 

50,614

 

 

 

50,181

 

Long-term liabilities

 

 

 

 

 

 

 

Warranty reserve - noncurrent

 

8,039

 

 

 

7,648

 

Operating lease liability - noncurrent

 

8,693

 

 

 

4,702

 

Earnout liability - noncurrent

 

26,539

 

 

 

26,559

 

Deferred revenue - noncurrent

 

13,035

 

 

 

13,541

 

Deferred tax liability - noncurrent

 

87

 

 

 

87

 

Total liabilities

 

107,007

 

 

 

102,718

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 22,065,961 and 22,031,410

   shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

 

22

 

 

 

22

 

Additional paid-in capital

 

268,349

 

 

 

263,252

 

Retained earnings

 

82,425

 

 

 

81,434

 

Accumulated other comprehensive income (loss)

 

318

 

 

 

(87

)

Total stockholders' equity

 

351,114

 

 

 

344,621

 

Total liabilities and stockholders' equity

$

458,121

 

 

$

447,339

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

4


 

Inogen, Inc.

Consolidated Statements of Comprehensive Income

(unaudited)

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

 

 

Three months ended

 

 

Six months ended

 

 

June 30,

 

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

65,612

 

 

$

95,863

 

 

$

148,752

 

 

$

180,681

 

Rental revenue

 

6,079

 

 

 

5,200

 

 

 

11,428

 

 

 

10,584

 

Total revenue

 

71,691

 

 

 

101,063

 

 

 

160,180

 

 

 

191,265

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

36,082

 

 

 

47,230

 

 

 

83,200

 

 

 

89,297

 

Cost of rental revenue, including depreciation of $1,221 and $1,594, for the three months ended and $2,520 and $3,299 for the six months ended, respectively

 

2,860

 

 

 

3,618

 

 

 

5,865

 

 

 

7,344

 

Total cost of revenue

 

38,942

 

 

 

50,848

 

 

 

89,065

 

 

 

96,641

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

29,530

 

 

 

48,633

 

 

 

65,552

 

 

 

91,384

 

Gross profit-rental revenue

 

3,219

 

 

 

1,582

 

 

 

5,563

 

 

 

3,240

 

Total gross profit

 

32,749

 

 

 

50,215

 

 

 

71,115

 

 

 

94,624

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

3,290

 

 

 

1,468

 

 

 

6,895

 

 

 

3,137

 

Sales and marketing

 

22,086

 

 

 

27,758

 

 

 

49,249

 

 

 

55,959

 

General and administrative

 

9,724

 

 

 

8,844

 

 

 

19,501

 

 

 

18,525

 

Total operating expense

 

35,100

 

 

 

38,070

 

 

 

75,645

 

 

 

77,621

 

Income (loss) from operations

 

(2,351

)

 

 

12,145

 

 

 

(4,530

)

 

 

17,003

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

176

 

 

 

1,394

 

 

 

728

 

 

 

2,728

 

Other income

 

5,700

 

 

 

145

 

 

 

5,640

 

 

 

25

 

Total other income, net

 

5,876

 

 

 

1,539

 

 

 

6,368

 

 

 

2,753

 

Income before provision for income taxes

 

3,525

 

 

 

13,684

 

 

 

1,838

 

 

 

19,756

 

Provision for income taxes

 

945

 

 

 

3,524

 

 

 

847

 

 

 

4,294

 

Net income

 

2,580

 

 

 

10,160

 

 

 

991

 

 

 

15,462

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

178

 

 

 

106

 

 

 

20

 

 

 

(31

)

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

 

(417

)

 

 

(618

)

 

 

244

 

 

 

(534

)

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

 

134

 

 

 

282

 

 

 

146

 

 

 

458

 

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

 

(283

)

 

 

(336

)

 

 

390

 

 

 

(76

)

Change in net unrealized gains (losses) on marketable securities

 

1

 

 

 

23

 

 

 

(5

)

 

 

36

 

Total other comprehensive income (loss), net of tax

 

(104

)

 

 

(207

)

 

 

405

 

 

 

(71

)

Comprehensive income

$

2,476

 

 

$

9,953

 

 

$

1,396

 

 

$

15,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share attributable to common stockholders (Note 7)

$

0.12

 

 

$

0.47

 

 

$

0.05

 

 

$

0.71

 

Diluted net income per share attributable to common stockholders (Note 7)

$

0.12

 

 

$

0.45

 

 

$

0.04

 

 

$

0.69

 

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

  share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

21,963,472

 

 

 

21,815,634

 

 

 

21,939,919

 

 

 

21,783,150

 

Diluted common shares

 

22,221,356

 

 

 

22,359,679

 

 

 

22,229,744

 

 

 

22,459,101

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

5


 

Inogen, Inc.

Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share amounts)

 

 

Three months ended June 30, 2020 and June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, March 31, 2019 (unaudited)

 

21,931,342

 

 

$

22

 

 

$

255,226

 

 

$

65,786

 

 

$

860

 

 

$

321,894

 

Stock-based compensation

 

 

 

 

 

 

 

1,779

 

 

 

 

 

 

 

 

 

1,779

 

Restricted stock awards issued, net of forfeitures

 

(12,342

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

10,111

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

(8

)

Shares withheld related to net restricted stock settlement

 

(978

)

 

 

 

 

 

(63

)

 

 

 

 

 

 

 

 

(63

)

Stock options exercised

 

5,536

 

 

 

 

 

 

243

 

 

 

 

 

 

 

 

 

243

 

Net income

 

 

 

 

 

 

 

 

 

 

10,160

 

 

 

 

 

 

10,160

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(207

)

 

 

(207

)

Balance, June 30, 2019 (unaudited)

 

21,933,669

 

 

$

22

 

 

$

257,177

 

 

$

75,946

 

 

$

653

 

 

$

333,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020 (unaudited)

 

22,044,527

 

 

$

22

 

 

$

267,011

 

 

$

79,845

 

 

$

422

 

 

$

347,300

 

Stock-based compensation

 

 

 

 

 

 

 

1,277

 

 

 

 

 

 

 

 

 

1,277

 

Vesting of restricted stock units

 

20,049

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

(4

)

Shares withheld related to net restricted stock settlement

 

(1,605

)

 

 

 

 

 

(61

)

 

 

 

 

 

 

 

 

(61

)

Stock options exercised

 

2,990

 

 

 

 

 

 

126

 

 

 

 

 

 

 

 

 

126

 

Net income

 

 

 

 

 

 

 

 

 

 

2,580

 

 

 

 

 

 

2,580

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(104

)

 

 

(104

)

Balance, June 30, 2020 (unaudited)

 

22,065,961

 

 

$

22

 

 

$

268,349

 

 

$

82,425

 

 

$

318

 

 

$

351,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2020 and June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income (loss)

 

 

equity

 

Balance, December 31, 2018

 

21,778,632

 

 

$

22

 

 

$

249,194

 

 

$

60,484

 

 

$

724

 

 

$

310,424

 

Stock-based compensation

 

 

 

 

 

 

 

5,365

 

 

 

 

 

 

 

 

 

5,365

 

Employee stock purchases

 

16,767

 

 

 

 

 

 

1,525

 

 

 

 

 

 

 

 

 

1,525

 

Restricted stock awards issued, net of forfeitures

 

54,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

21,376

 

 

 

 

 

 

(67

)

 

 

 

 

 

 

 

 

(67

)

Shares withheld related to net restricted stock settlement

 

(13,023

)

 

 

 

 

 

(718

)

 

 

 

 

 

 

 

 

(718

)

Stock options exercised

 

75,315

 

 

 

 

 

 

1,878