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Section 1: 8-K (8-K)

ingn-8k_20171107.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

November 7, 2017

 

INOGEN, INC.

(Exact name of registrant as specified in its charter)

Delaware

 

001-36309

 

33-0989359

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

326 Bollay Drive

Goleta, California 93117

(Address of principal executive offices, including zip code)

(805) 562-0500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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.  

 


Item 2.02.

Results of Operations and Financial Condition.

On November 7, 2017, Inogen, Inc. issued a press release reporting its financial results for the third quarter ended September 30, 2017. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished in this Current Report under Item 2.02 and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.

Financial Statements and Exhibits.

(d)  Exhibits

 

Exhibit

 

Description

 

 

 

99.1

 

Press Release, dated November 7, 2017.


EXHIBIT INDEX

 

Exhibit

No.

 

Description

 

 

 

99.1

 

Press Release, dated November 7, 2017.


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 hereunto duly authorized.

 

 

INOGEN, INC.

 

 

 

 

By:

/s/Alison Bauerlein

 

 

Alison Bauerlein

Executive Vice President, Finance,

Chief Financial Officer, Secretary and Treasurer

Date:  November 7, 2017

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

ingn-ex991_6.htm

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

Inogen Announces Record Third Quarter 2017 Financial Results

- Q3 2017 Sales Revenue up 33.8% Over the Same Period in 2016 -

- Q3 2017 Net Income up 39.9% Over the Same Period in 2016 -

- Raises 2017 Guidance and Provides 2018 Guidance -

 

Goleta, California, November 7, 2017Inogen, Inc. (NASDAQ: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today reported financial results for the three-month period ended September 30, 2017.

 

Third Quarter 2017 Highlights

Record total revenue of $69.0 million, up 26.8% over the same period in 2016  

 

Sales revenue of $63.1 million, up 33.8% over the same period in 2016

 

Rental revenue of $5.9 million, down 18.7% from the same period in 2016  

Net income of $7.3 million, reflecting a 39.9% increase over the same period in 2016 and a 10.6% return on revenue

Adjusted EBITDA of $14.1 million, representing 30.6% growth over the same period in 2016 and a 20.4% return on revenue (see accompanying table for reconciliation of GAAP and non-GAAP measures)

Total units sold were 36,000, an increase of 9,400, or 35.3%, over the same period in 2016, reflecting the strong consumer demand for the Company’s products across all sales channels

 

“The third quarter of 2017 was a record revenue quarter for us, driven by increased sales in our domestic business-to-business and direct-to-consumer channels,” said Chief Executive Officer, Scott Wilkinson. “We are executing on our strategic initiatives and remain focused on increasing adoption of our best-in-class oxygen product offerings across all of our channels. We believe we should see strong results in 2018 as portable oxygen concentrators continue to be adopted worldwide. During the third quarter of 2017, we began hiring in our Cleveland facility to continue to expand our direct-to-consumer sales and made improvements to our new customer relationship management (CRM) system that launched in June 2017. Further, in support of our European sales, we are targeted to begin production of our Inogen One G3 concentrators in the fourth quarter of 2017 using a contract manufacturer located in the Czech Republic.”

 

Third Quarter 2017 Financial Results

Total revenue for the three months ended September 30, 2017 rose 26.8% to $69.0 million from $54.4 million in the same period in 2016. Direct-to-consumer sales rose 43.5% over the same period in 2016, ahead of our expectations primarily due to an increased number of sales representatives and increased productivity. Domestic business-to-business sales exceeded our expectations and grew 41.7% over the same period in 2016, primarily driven by continued strong demand from traditional home medical equipment providers and our private label partner. International business-to-business sales in the third quarter of 2017 grew 14.9% over the comparative period in 2016, primarily due to demand from our partners in Europe. Rental

 


 

revenue decreased 18.7% from the same period in 2016, primarily due to the declines in rental reimbursement rates and our strategic focus on sales versus rentals. Rental revenue declined to 8.5% of total revenue in the third quarter of 2017 from 13.3% of total revenue in the third quarter of 2016.  

 

Total gross margin was 48.1% in the third quarter of 2017 versus 46.2% in the comparative period in 2016. Sales gross margin was 50.3% in the third quarter of 2017 versus 48.6% in the third quarter of 2016. The sales gross margin percentage improvement was primarily attributable to an increased sales mix towards direct-to-consumer sales and lower cost of goods sold per unit, mostly due to lower materials costs, partially offset by declining business-to-business average selling prices. Rental gross margin was 24.3% in the third quarter of 2017 versus 30.7% in the third quarter of 2016. The decrease in rental gross margin was primarily driven by reimbursement rate reductions and partially offset by lower cost of rental revenue primarily associated with lower depreciation.    

 

Total operating expense increased to $24.8 million, or 36.0% of revenue, in the third quarter of 2017 versus $19.7 million, or 36.3% of revenue, in the third quarter of 2016.

 

Operating expense included research and development expense of $1.4 million in the third quarter of 2017, which was consistent with $1.4 million in the comparative period in 2016. Sales and marketing expense increased to $13.1 million in the third quarter of 2017 versus $9.7 million in the comparative period in 2016, primarily due to increased advertising expense and increased personnel-related expenses due to salesforce additions. General and administrative expense increased to $10.4 million in the third quarter of 2017 versus $8.7 million in the comparative period in 2016, primarily due to a $0.6 million patent litigation settlement expense, increased personnel-related expenses, and increased patent defense legal costs.  

 

Net income for the third quarter of 2017 increased 39.9% to $7.3 million from $5.2 million in the third quarter of 2016, or $0.33 per diluted common share compared to $0.25 in the third quarter of 2016.  In the third quarter of 2017, Inogen’s effective tax rate was 16.8% compared to 3.7% in the third quarter of 2016, due to a lower benefit from the Accounting Standards Update (ASU) No. 2016-09, Compensation – Stock Compensation.

 

During the fourth quarter of 2016, the Company elected to early adopt ASU No. 2016-09. In the third quarter of 2017, excess tax benefits recognized from stock-based compensation decreased the provision for income taxes by $1.7 million and the effective tax rate by 19.7%, as compared to the U.S. statutory rate.  In the third quarter of 2016, excess tax benefits recognized from stock-based compensation decreased the provision for income taxes by $1.8 million and the effective tax rate by 32.9%, as compared to the U.S. statutory rate.

 

Adjusted EBITDA for the three months ended September 30, 2017 rose 30.6% to $14.1 million, or 20.4% of revenue, from $10.8 million, or 19.8% of revenue, in the third quarter of 2016.  

 

Cash, cash equivalents, and marketable securities were $163.1 million as of September 30, 2017 compared to $144.2 million as of June 30, 2017, an increase of $18.9 million in the third quarter of 2017.  

 

 


 

Financial Outlook for 2017 and 2018

Inogen is increasing its guidance range for full year 2017 revenue to $244 to $248 million, which represents year-over-year growth of 20.3% to 22.3%, and compares to previous guidance of $239 to $243 million.  The Company expects direct-to-consumer sales and domestic business-to-business sales to be our strongest growing channels and to have similar growth rates, and international business-to-business sales to have a more modest growth rate where the market penetration strategy is expected to be primarily focused on the European markets.  Inogen expects rental revenue to decline in 2017 compared to 2016 by approximately 32% based on lower average rental revenue per patient and a focus on sales versus rentals.     

 

Inogen is maintaining its guidance range for full year 2017 net income of $25 to $27 million, which represents 21.8% to 31.6% year-over-year growth. Inogen continues to estimate that the effect of ASU No. 2016-09 will lead to a decrease in provision for income taxes of approximately $8.0 million in 2017 based on forecasted stock activity. However, this estimated decrease, which will continue to lower its effective tax rate, can vary depending on fluctuations due to timing, stock price changes and size of stock option exercises and stock transactions. Excluding the estimated $8.0 million decrease in provision for income taxes associated with ASU No. 2016-09 expected in 2017, the Company expects an effective tax rate of approximately 36% to 37%.

 

Inogen is increasing its guidance range for full year 2017 Adjusted EBITDA to $49 to $51 million, which represents year-over-year growth of 12.9% to 17.5%, and compares to previous guidance of $48 to $50 million.  

 

Inogen continues to expect net positive cash flow for 2017 with no additional equity capital required to meet its current operating plan.  

 

Inogen is also providing a guidance range for full year 2018 total revenue of $295 to $305 million, representing 19.9% to 24.0% growth over the 2017 guidance mid-point of $246 million.  The Company expects direct-to-consumer sales to be its fastest growing channel, domestic business-to-business sales to have a solid growth rate, and international business-to-business sales to have a modest growth rate, where the strategy will continue to be heavily focused on the European markets.  Inogen expects rental revenue to be relatively flat in 2018 compared to 2017 with reimbursement rates stable and a continued focus on sales versus rentals.     

 

Inogen is providing a full year 2018 net income estimate of $31 to $35 million, representing 19.2% to 34.6% growth over the 2017 guidance mid-point of $26 million. Inogen is providing a guidance range for the full year 2018 Adjusted EBITDA of $60 to $64 million, representing 20.0% to 28.0% growth over the 2017 guidance mid-point of $50 million. Inogen estimates that the effect of ASU No. 2016-09 will decrease the provision for income taxes by approximately $8.0 million in 2018 (same dollar benefit compared to 2017) based on forecasted stock activity, which will continue to lower its effective tax rate as compared to the U.S. statutory rate.  Excluding the $8.0 million decrease in provision for income taxes expected in 2018, the Company expects an effective tax rate of approximately 37%. After applying the effect of ASU No. 2016-09, the Company expects its effective tax rate including stock compensation deductions to vary quarter-to-quarter depending on the amount of pre-tax net income and on the timing and size of stock option exercises.

 

Inogen also expects net positive cash flow for 2018 with no additional equity capital required to meet its current operating plan.  

 


 

 

Conference Call

Individuals interested in listening to the conference call today at 1:30pm PT/4:30pm ET may do so by dialing (855) 238-8123 for domestic callers or (412) 317-5217 for international callers. Please reference Inogen (INGN) to join the call. To listen to a live webcast, please visit the Investor Relations section of Inogen's website at: http://investor.inogen.com/.  

 

A replay of the call will be available beginning November 7, 2017 at 3:30pm PT/6:30pm ET through 3:30pm PT/6:30pm ET on November 14, 2017. To access the replay, dial (877) 344-7529 or (412) 317-0088 and reference Access Code: 10113139. The webcast will also be available on Inogen's website for one year following the completion of the call.

 

Inogen has used, and intends to continue to use, its Investor Relations website, http://investor.inogen.com/, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. For more information, visit http://investor.inogen.com/.

About Inogen

Inogen is innovation in oxygen therapy. We are a medical technology company that develops, manufactures and markets innovative oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.

 

For more information, please visit www.inogen.com.

 

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding anticipated growth opportunities; expectations for all revenue channels for the remainder of 2017 and full year 2018; the expected impact of ASU No. 2016-09 for the remainder of 2017 and full year 2018; expectations regarding commencement of production with our contract manufacturer in Europe; hiring expectations; expectations of improved long-term productivity resulting from the implementation of the new CRM system; and financial guidance for 2017 and 2018, including revenue, net income, Adjusted EBITDA, net cash flow, effective tax rates and tax benefit adjustments, and the need for equity financing. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from currently anticipated results, including but not limited to, risks arising from the possibility that Inogen will not realize anticipated revenue; the impact of reduced reimbursement rates, including private payor reductions and reductions in connection with competitive bidding and the Center for Medicare and Medicaid Services (CMS) rules; the possible loss of key employees, customers, or suppliers; risks related to Inogen’s ability to integrate acquired business; and intellectual property risks if Inogen is unable to secure and maintain patent or other intellectual property protection for the intellectual property used in its products. In addition, Inogen's business is subject to numerous additional risks and uncertainties, including, among others, risks relating to market acceptance of its products; competition; its sales, marketing and distribution capabilities; its planned sales, marketing, and research and development activities; interruptions or delays in the supply of components or materials for, or manufacturing of, its products; seasonal variations; unanticipated increases in costs or expenses; and risks associated with international operations. Information on these and additional risks, uncertainties, and other information affecting Inogen’s business operating results are contained in its Annual Report on Form 10-K for the year ended December 31, 2016 and in Inogen’s subsequent reports on Form 10-Q and Form 8-K, including

 


 

Inogen's Quarterly Report on Form 10-Q for the period ended September 30, 2017 to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof.  Inogen disclaims any obligation to update these forward-looking statements except as may be required by law.

 

Use of Non-GAAP Financial Measures

Inogen has presented certain financial information in accordance with U.S. GAAP and also on a non-GAAP basis for the three and nine months ended September 30, 2017 and September 30, 2016. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of Inogen's core operating results. Management uses non-GAAP measures to compare Inogen's performance relative to forecasts and strategic plans, to benchmark Inogen's performance externally against competitors, and for certain compensation decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Inogen's operating results as reported under U.S. GAAP. Inogen encourages investors to carefully consider its results under U.S. GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between U.S. GAAP and non-GAAP results are presented in the accompanying table of this release. For future periods, Inogen is unable to provide a reconciliation of non-GAAP measures without unreasonable effort as a result of the uncertainty regarding, and the potential variability of, the amounts of interest income, interest expense, depreciation and amortization, stock-based compensation, provisions for income taxes, and certain other infrequently occurring items, such as acquisition related costs, that may be incurred in the future.

 

 

Investor Relations Contact:

Matt Bacso, CFA

mbacso@inogen.net

 

Media Contact:

Byron Myers

805-562-0503

 

 

-- Financial Tables Follow --

 


 


 

Consolidated Balance Sheets

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

129,693

 

 

$

92,851

 

Marketable securities

 

 

33,395

 

 

 

21,033

 

Accounts receivable, net

 

 

34,699

 

 

 

30,828

 

Inventories, net

 

 

16,855

 

 

 

14,343

 

Deferred cost of revenue

 

 

358

 

 

 

398

 

Income tax receivable

 

 

1,593

 

 

 

433

 

Prepaid expenses and other current assets

 

 

3,186

 

 

 

1,659

 

Total current assets

 

 

219,779

 

 

 

161,545

 

Property and equipment, net

 

 

20,951

 

 

 

25,199

 

Goodwill

 

 

2,330

 

 

 

 

Intangible assets, net

 

 

1,650

 

 

 

241

 

Deferred tax asset - noncurrent

 

 

24,619

 

 

 

26,654

 

Other assets

 

 

512

 

 

 

410

 

Total assets

 

$

269,841

 

 

$

214,049

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

22,367

 

 

$

12,795

 

Accrued payroll

 

 

6,871

 

 

 

6,123

 

Warranty reserve - current

 

 

2,298

 

 

 

1,688

 

Deferred revenue - current

 

 

3,646

 

 

 

2,239

 

Income tax payable

 

 

251

 

 

 

 

Total current liabilities

 

 

35,433

 

 

 

22,845

 

Warranty reserve - noncurrent

 

 

3,269

 

 

 

1,792

 

Deferred revenue - noncurrent

 

 

8,622

 

 

 

7,042

 

Deferred tax liability - noncurrent

 

 

414

 

 

 

 

Other noncurrent liabilities

 

 

817

 

 

 

282

 

Total liabilities

 

 

48,555

 

 

 

31,961

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock

 

 

21

 

 

 

20

 

Additional paid-in capital

 

 

211,817

 

 

 

194,466

 

Retained earnings (accumulated deficit)

 

 

9,245

 

 

 

(12,363

)

Accumulated other comprehensive income (loss)

 

 

203

 

 

 

(35

)

Total stockholders' equity

 

 

221,286

 

 

 

182,088

 

Total liabilities and stockholders' equity

 

$

269,841

 

 

$

214,049

 


 


 

Consolidated Statements of Comprehensive Income

 

(unaudited)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

 

$

63,137

 

 

$

47,177

 

 

$

167,141

 

 

$

125,566

 

Rental revenue

 

 

5,893

 

 

 

7,245

 

 

 

18,510

 

 

 

26,412

 

Total revenue

 

 

69,030

 

 

 

54,422

 

 

 

185,651

 

 

 

151,978

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

 

31,401

 

 

 

24,271

 

 

 

81,307

 

 

 

63,824

 

Cost of rental revenue, including depreciation of $2,366 and $2,878

  for the three months ended and $7,577 and $8,733 for the nine

  months ended, respectively

 

 

4,459

 

 

 

5,023

 

 

 

13,863

 

 

 

15,532

 

Total cost of revenue

 

 

35,860

 

 

 

29,294

 

 

 

95,170

 

 

 

79,356

 

Gross profit

 

 

33,170

 

 

 

25,128

 

 

 

90,481

 

 

 

72,622

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,375

 

 

 

1,350

 

 

 

3,944

 

 

 

3,897

 

Sales and marketing

 

 

13,095

 

 

 

9,679

 

 

 

35,569

 

 

 

28,220

 

General and administrative

 

 

10,368

 

 

 

8,702

 

 

 

28,568

 

 

 

23,812

 

Total operating expense

 

 

24,838

 

 

 

19,731

 

 

 

68,081

 

 

 

55,929

 

Income from operations

 

 

8,332

 

 

 

5,397

 

 

 

22,400

 

 

 

16,693

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

(1

)

 

 

 

 

 

(6

)

Interest income

 

 

221

 

 

 

61

 

 

 

468

 

 

 

126

 

Other income (expense)

 

 

264

 

 

 

(8

)

 

 

994

 

 

 

78

 

Total other income, net

 

 

485

 

 

 

52

 

 

 

1,462

 

 

 

198

 

Income before provision for income taxes

 

 

8,817

 

 

 

5,449

 

 

 

23,862

 

 

 

16,891

 

Provision for income taxes

 

 

1,479

 

 

 

203

 

 

 

2,254

 

 

 

1,632

 

Net income

 

$

7,338

 

 

$

5,246

 

 

$

21,608

 

 

$

15,259

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

115

 

 

 

 

 

 

312

 

 

 

 

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

 

 

(196

)

 

 

10

 

 

 

(442

)

 

 

(24

)

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

 

 

305

 

 

 

2

 

 

 

297

 

 

 

51

 

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

 

 

109

 

 

 

12

 

 

 

(145

)

 

 

27

 

Change in net unrealized gains (losses) on available-for-sale investments

 

 

13

 

 

 

(4

)

 

 

71

 

 

 

16

 

Total other comprehensive income, net of tax

 

 

237

 

 

 

8

 

 

 

238

 

 

 

43

 

Comprehensive income

 

$

7,575

 

 

$

5,254

 

 

$

21,846

 

 

$

15,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share attributable to common stockholders (1)

 

$

0.35

 

 

$

0.26

 

 

$

1.05

 

 

$

0.76

 

Diluted net income per share attributable to common stockholders (1)

 

$

0.33

 

 

$

0.25

 

 

$

0.99

 

 

$

0.73

 

Weighted-average number of shares used in calculating net income

  per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

 

20,753,789

 

 

 

20,157,688

 

 

 

20,622,848

 

 

 

19,986,544

 

Diluted common shares

 

 

21,998,660

 

 

 

21,182,587

 

 

 

21,832,544

 

 

 

21,000,945

 

 

(1) Reconciliations of net income attributable to common stockholders basic and diluted can be found in Inogen’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission.


 


 

Supplemental Financial Information

 

(unaudited)

 

(in thousands, except units and patients)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenue by region and category

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business-to-business domestic sales

 

$

22,919

 

 

$

16,173

 

 

$

61,534

 

 

$

41,647

 

Business-to-business international sales

 

 

17,186

 

 

 

14,952

 

 

 

43,528

 

 

 

38,015

 

Direct-to-consumer domestic sales

 

 

23,032

 

 

 

16,052

 

 

 

62,079

 

 

 

45,904

 

Direct-to-consumer domestic rentals

 

 

5,893

 

 

 

7,245

 

 

 

18,510

 

 

 

26,412

 

Total revenue

 

$

69,030

 

 

$

54,422

 

 

$

185,651

 

 

$

151,978

 

Additional financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units sold

 

 

36,000

 

 

 

26,600

 

 

 

94,000

 

 

 

68,700

 

Net rental patients as of period-end

 

 

31,600

 

 

 

33,700

 

 

 

31,600

 

 

 

33,700

 

 

Reconciliation of U.S. GAAP to Other Non-GAAP Financial Information

 

(unaudited)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP EBITDA and Adjusted EBITDA

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

7,338

 

 

$

5,246

 

 

$

21,608

 

 

$

15,259

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

1

 

 

 

 

 

 

6

 

Interest income

 

 

(221

)

 

 

(61

)

 

 

(468

)

 

 

(126

)

Provision for income taxes

 

 

1,479

 

 

 

203

 

 

 

2,254

 

 

 

1,632

 

Depreciation and amortization

 

 

2,936

 

 

 

3,416

 

 

 

9,257

 

 

 

10,290

 

EBITDA (non-GAAP)

 

 

11,532

 

 

 

8,805

 

 

 

32,651

 

 

 

27,061

 

Stock-based compensation

 

 

2,523

 

 

 

1,953

 

 

 

6,630

 

 

 

5,404

 

Adjusted EBITDA (non-GAAP)

 

$

14,055

 

 

$

10,758

 

 

$

39,281

 

 

$

32,465

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP Adjusted net income

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

7,338

 

 

$

5,246

 

 

$

21,608

 

 

$

15,259

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax benefit adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (non-GAAP)

 

$

7,338

 

 

$

5,246

 

 

$

21,608

 

 

$

15,259

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP Operating expense

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Operating expense

 

$

24,838

 

 

$

19,731

 

 

$

68,081

 

 

$

55,929

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement benefit (expense), net 1

 

 

(594

)

 

 

72

 

 

 

(476

)

 

 

92

 

Operating expense, excluding certain operating expenses (non-GAAP)

 

$

24,244

 

 

$

19,803

 

 

$

67,605

 

 

$

56,021

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP - Sales, General & Administrative (SG&A) expense

 

2017

 

 

2016

 

 

2017

 

 

2016

 

SG&A expense

 

$

23,463

 

 

$

18,381

 

 

$

64,137

 

 

$

52,032

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement benefit (expense), net 1

 

 

(594

)

 

 

72

 

 

 

(476

)

 

 

92

 

SG&A expense, excluding certain operating expenses (non-GAAP)

 

$

22,869

 

 

$

18,453

 

 

$

63,661

 

 

$

52,124

 

 

1 Amounts in 2017 consist of a patent litigation settlement expense, net of a benefit, in the third quarter. Amounts in 2016 consist of a patent litigation settlement benefit in the second quarter, partially offset by a litigation expense associated with a labor law class-action lawsuit that was accrued in the first quarter.

 

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