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Section 1: 8-K (8-K)

ingn-8k_20181106.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 6, 2018

 

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 6, 2018, Inogen, Inc. issued a press release reporting its financial results for the third quarter ended September 30, 2018. 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 6, 2018.


EXHIBIT INDEX

 

Exhibit

No.

 

Description

 

 

 

99.1

 

Press Release dated November 6, 2018.


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.

 

 

 

Date:  November 6, 2018

By:

/s/ Alison Bauerlein

 

 

Alison Bauerlein

Executive Vice President, Finance,

Chief Financial Officer, Secretary and Treasurer

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

ingn-ex991_6.htm

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

Inogen Announces Third Quarter 2018 Financial Results

- Q3 2018 Sales Revenue up 42.1% Over the Same Period in 2017 -

- Provides Updated 2018 Guidance and Initial 2019 Guidance -

 

Goleta, California, November 6, 2018Inogen, 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, 2018.

 

Third Quarter 2018 Highlights

Total revenue of $95.3 million, up 38.0% over the same period in 2017  

 

Sales revenue of $89.7 million, up 42.1% over the same period in 2017

 

Rental revenue of $5.6 million, down 5.3% from the same period in 2017

GAAP net income of $16.4 million, reflecting a 123.9% increase over the same period in 2017 and a 17.2% return on revenue

Operating income of $10.4 million, representing 24.8% growth over the same period in 2017 and a 10.9% return on revenue

Total units sold were 52,400, an increase of 16,400, or 45.6%, over the same period in 2017

 

“The third quarter of 2018 was another successful quarter for us as we generated strong revenue across all three sales channels,” said Chief Executive Officer, Scott Wilkinson. “We are continuing to execute on our strategy to hire additional sales representatives and invest in advertising activities to increase consumer awareness as we believe this is still our most effective means to drive high revenue growth and portable oxygen concentrator adoption.”

 

Third Quarter 2018 Financial Results

Total revenue for the three months ended September 30, 2018 rose 38.0% to $95.3 million from $69.0 million in the same period in 2017. Direct-to-consumer sales rose 66.3% over the same period in 2017, primarily due to increased sales representative headcount and additional consumer advertising. Domestic business-to-business sales grew 32.0% over the same period in 2017, primarily driven by continued adoption by traditional home medical equipment providers and internet resellers. International business-to-business sales in the third quarter of 2018 increased 23.0% over the comparative period in 2017, primarily due to continued adoption from the Company’s European partners. Rental revenue in the third quarter of 2018 was $5.6 million compared to $5.9 million in the third quarter of 2017, representing a decline of 5.3% from the same period in the prior year. The decrease in rental revenue was primarily due to a decline in net rental patients on service of 13.0% compared to the third quarter of 2017, partially offset by higher revenue per patient on service. Rental revenue accounted for 5.9% of total revenue in the third quarter of 2018, down from 8.5% of total revenue in the third quarter of 2017.  

 

 


 

Total gross margin was 51.2% in the third quarter of 2018 versus 48.1% in the comparative period in 2017. The increase in total gross margin was primarily due to a favorable mix shift towards direct-to-consumer sales revenue. Sales gross margin was 52.3% in the third quarter of 2018 versus 50.3% in the third quarter of 2017. The sales gross margin increase was primarily due a favorable mix shift of direct-to-consumer sales versus business-to-business sales, and lower average cost of goods sold per unit. This was partially offset by lower average selling prices in both business-to-business channels due to increased volumes and lower direct-to-consumer pricing effective June 1, 2018. Rental gross margin was 34.3% in the third quarter of 2018 versus 24.3% in the third quarter of 2017. The increase in rental gross margin was primarily due to increased rental revenue per patient and lower depreciation expense.

 

Total operating expense increased to $38.4 million, or 40.3% of revenue, in the third quarter of 2018 versus $24.8 million, or 36.0% of revenue, in the third quarter of 2017.

 

Operating expense included research and development expense of $2.1 million in the third quarter of 2018, which was up from $1.4 million in the comparative period in 2017, primarily due to increased personnel-related expenses. Sales and marketing expense increased to $26.3 million in the third quarter of 2018 versus $13.1 million in the comparative period in 2017, primarily due increased personnel-related expenses as the Company continued to hire inside sales representatives at its Cleveland facility and increased advertising expenditures. General and administrative expense decreased to $10.0 million in the third quarter of 2018 versus $10.4 million in the comparative period in 2017, primarily due to a reduction in patent defense costs and bad debt expense, which was partially offset by increased personnel-related expenses.

 

The Company reported an income tax benefit of $5.1 million in the third quarter of 2018, compared to an income tax expense of $1.5 million reported in the third quarter of 2017. The Company’s income tax benefit in the third quarter of 2018 included an $8.1 million decrease in provision for income taxes related to excess tax benefits recognized from stock-based compensation compared to $1.7 million in the third quarter of 2017. Excluding the stock-based compensation benefit, the Company’s non-GAAP effective tax rate in the third quarter of 2018 was 26.4% versus 36.5% in the third quarter of 2017, primarily due to the impact of the U.S. federal tax reform. A reconciliation of GAAP and non-GAAP measures is included in the accompanying tables attached hereto. 

 

In the third quarter of 2018, the Company reported net income of $16.4 million, compared to net income of $7.3 million in the third quarter of 2017. Earnings per diluted common share was $0.73 in the third quarter of 2018 versus $0.33 in the third quarter of 2017, an increase of 121.2%.    

 

Adjusted EBITDA for the three months ended September 30, 2018 rose 16.2% to $16.3 million, or 17.1% of revenue, from $14.1 million, or 20.4% of revenue, in the third quarter of 2017. The reduction in third quarter 2018 Adjusted EBITDA margin compared to the third quarter of 2017 was primarily due to investments in sales infrastructure and related advertising, lower rental depreciation expense, and a continued shift in revenue mix towards sales revenue.

 

Cash, cash equivalents and marketable securities were $223.9 million as of September 30, 2018 compared to $208.4 million as of June 30, 2018, an increase of $15.4 million in the third quarter of 2018.  

 

 


 

Financial Outlook for 2018

Inogen is increasing its full year 2018 total revenue guidance range to $345 to $355 million, up from $340 to $350 million, representing growth of 38.3% to 42.3% versus 2017 full year results. The Company still expects direct-to-consumer sales to be its fastest growing channel, domestic business-to-business sales to have a significant growth rate, and international business-to-business sales to have a solid growth rate. The Company also still expects rental revenue to be down approximately 10% in 2018 compared to 2017 due to a continued focus on sales versus rentals.

 

Further, the Company is narrowing its full year 2018 GAAP net income and non-GAAP net income guidance range to $46 to $48 million, from $45 to $48 million, representing growth of 119.0% to 128.5% compared to 2017 GAAP net income of $21.0 million and growth of 61.0% to 67.9% compared to 2017 non-GAAP net income of $28.6 million. The Company estimates that the decrease in provision for income taxes related to excess tax benefits recognized from stock-based compensation will lead to a reduction in provision for income taxes of approximately $18 million in 2018, up from $12 million, based on forecasted stock activity, which would lower its effective tax rate as compared to the U.S. statutory rate. The Company expects its effective tax rate including stock-based compensation deductions to vary quarter-to-quarter depending on the amount of pre-tax net income, share price, and on the timing and size of stock option exercises. Excluding the estimated $18 million decrease in provision for income taxes expected in 2018, the Company now expects a non-GAAP effective tax rate of 24% compared to the previous expectation of 25%.

 

Inogen is reducing its guidance range for full year 2018 Adjusted EBITDA to $60 to $62 million, down from $65 to $69 million, representing growth of 18.0% to 22.0% versus 2017 full year results due to continued sales and marketing investments expected in the fourth quarter of 2018.

 

As the business continues to shift toward sales revenue versus rental revenue, and depreciation expense decreases as a percent of total revenue, the Company believes operating income is more relevant when analyzing profitability trends of the business. Thus, Inogen will plan to also give guidance on operating income and expects full year 2018 operating income to be $35 to $37 million, representing growth of 26.9% to 34.1% versus 2017 full year results.

 

Financial Outlook for 2019

The Company is also providing a full year 2019 guidance range for total revenue of $430 to $440 million, representing 22.9% to 25.7% growth over the 2018 guidance mid-point of $350 million.  The Company expects direct-to-consumer sales to be its fastest growing channel and expects domestic business-to-business sales and international business-to-business sales to have a solid growth rate. Lastly, rental revenue is expected to grow modestly in 2019 compared to 2018.

 

The Company forecasts full year 2019 GAAP net income to be in the range of $48 to $52 million, representing growth of 2.1% to 10.6% over the 2018 guidance mid-point of $47 million.  This growth rate is impacted by a predicted decline in tax benefits in 2019.  Inogen estimates that the decrease in provision for income taxes related to excess tax benefits recognized from stock-based compensation will lead to a reduction in provision for income taxes of approximately $12 million in 2019 compared to $18 million expected in 2018 based on forecasted stock activity, which would further lower the Company’s effective tax rate as compared to the U.S. statutory rate. When excluding the benefit from the estimated $12 million decrease in provision for income taxes expected in 2019 from stock-based compensation deductions, the Company expects a non-GAAP effective tax rate of approximately 24% in 2019 compared to 24% expected in 2018.  

 

 


 

The Company is also providing a guidance range for full year 2019 Adjusted EBITDA of $67 to $71 million, representing 9.8% to 16.4% growth over the 2018 guidance mid-point of $61 million. Inogen expects full year 2019 operating income to be $46 to $50 million, representing 27.8% to 38.9% growth over the 2018 guidance mid-point of $36 million, primarily due to continued sales and marketing investments expected in 2019.

 

The Company still expects net positive cash flow for 2018 and 2019 with no additional 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 6, 2018 at 3:30pm PT/6:30pm ET through 3:30pm PT/6:30pm ET on November 13, 2018. To access the replay, dial (877) 344-7529 or (412) 317-0088 and reference Access Code: 10125445. 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; hiring and marketing expectations; expectations for all revenue channels for full year 2018 and full year 2019; and financial guidance for 2018 and 2019, including revenue, GAAP net income, Adjusted EBITDA, non-GAAP net income, net cash flow, effective tax rates, operating income and the need for additional capital. 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 possible loss of key employees, customers, or suppliers; 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; risks related to the recent data security incident, remediation measures, and potential claims; 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, 2017 and in its other filings with the Securities and Exchange Commission. Additional information will also be set forth in Inogen’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 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, 2018 and September 30, 2017. 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, provision (benefit) 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

805-879-8205

 

Media Contact:

Byron Myers

805-562-0503

 

 

-- Financial Tables Follow --


 


 

Consolidated Balance Sheets

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,282

 

 

$

142,953

 

Marketable securities

 

 

47,574

 

 

 

30,991

 

Accounts receivable, net

 

 

34,250

 

 

 

31,444

 

Inventories, net

 

 

30,621

 

 

 

18,842

 

Deferred cost of revenue

 

 

401

 

 

 

361

 

Income tax receivable

 

 

2,356

 

 

 

1,313

 

Prepaid expenses and other current assets

 

 

8,066

 

 

 

2,584

 

Total current assets

 

 

299,550

 

 

 

228,488

 

Property and equipment, net

 

 

23,015

 

 

 

20,103

 

Goodwill

 

 

2,288

 

 

 

2,363

 

Intangible assets, net

 

 

4,103

 

 

 

4,717

 

Deferred tax asset - noncurrent

 

 

26,282

 

 

 

18,636

 

Other assets

 

 

1,874

 

 

 

765

 

Total assets

 

$

357,112

 

 

$

275,072

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

26,769

 

 

$

20,626

 

Accrued payroll

 

 

11,904

 

 

 

6,877

 

Warranty reserve - current

 

 

3,539

 

 

 

2,505

 

Deferred revenue - current

 

 

3,549

 

 

 

3,533

 

Income tax payable

 

 

369

 

 

 

345

 

Total current liabilities

 

 

46,130

 

 

 

33,886

 

Warranty reserve - noncurrent

 

 

5,703

 

 

 

3,666

 

Deferred revenue - noncurrent

 

 

12,781

 

 

 

9,402

 

Deferred tax liability - noncurrent

 

 

338

 

 

 

348

 

Other noncurrent liabilities

 

 

896

 

 

 

729

 

Total liabilities

 

 

65,848

 

 

 

48,031

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

240,101

 

 

 

218,109

 

Retained earnings

 

 

50,439

 

 

 

8,639

 

Accumulated other comprehensive income

 

 

703

 

 

 

272

 

Total stockholders' equity

 

 

291,264

 

 

 

227,041

 

Total liabilities and stockholders' equity

 

$

357,112

 

 

$

275,072

 


 


 

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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

 

$

89,712

 

 

$

63,137

 

 

$

255,283

 

 

$

167,141

 

Rental revenue

 

 

5,579

 

 

 

5,893

 

 

 

16,297

 

 

 

18,510

 

Total revenue

 

 

95,291

 

 

 

69,030

 

 

 

271,580

 

 

 

185,651

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

 

42,810

 

 

 

31,401

 

 

 

124,726

 

 

 

81,307

 

Cost of rental revenue, including depreciation of $1,689 and $2,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for the three months ended and $5,820 and $7,577 for the nine

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

months ended, respectively

 

 

3,668

 

 

 

4,459

 

 

 

11,844

 

 

 

13,863

 

Total cost of revenue

 

 

46,478

 

 

 

35,860

 

 

 

136,570

 

 

 

95,170

 

Gross profit

 

 

48,813

 

 

 

33,170

 

 

 

135,010

 

 

 

90,481

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,096

 

 

 

1,375

 

 

 

5,287

 

 

 

3,944

 

Sales and marketing

 

 

26,339

 

 

 

13,095

 

 

 

67,376

 

 

 

35,569

 

General and administrative

 

 

9,982

 

 

 

10,368

 

 

 

29,230

 

 

 

28,568

 

Total operating expense

 

 

38,417

 

 

 

24,838

 

 

 

101,893

 

 

 

68,081

 

Income from operations

 

 

10,396

 

 

 

8,332

 

 

 

33,117

 

 

 

22,400

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

895

 

 

 

221

 

 

 

2,111

 

 

 

468

 

Other income (expense)

 

 

8

 

 

 

264

 

 

 

(596

)

 

 

994

 

Total other income, net

 

 

903

 

 

 

485

 

 

 

1,515

 

 

 

1,462

 

Income before provision (benefit) for income taxes

 

 

11,299

 

 

 

8,817

 

 

 

34,632

 

 

 

23,862

 

Provision (benefit) for income taxes

 

 

(5,133

)

 

 

1,479

 

 

 

(7,168

)

 

 

2,254

 

Net income

 

$

16,432

 

 

$

7,338

 

 

$

41,800

 

 

$

21,608

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

(47

)

 

 

115

 

 

 

137

 

 

 

312

 

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

 

 

102

 

 

 

(196

)

 

 

577

 

 

 

(442

)

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

 

 

(354

)

 

 

305

 

 

 

(286

)

 

 

297

 

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

 

 

(252

)

 

 

109

 

 

 

291

 

 

 

(145

)

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

 

 

3

 

 

 

13

 

 

 

3

 

 

 

71

 

Total other comprehensive income (loss), net of tax

 

 

(296

)

 

 

237

 

 

 

431

 

 

 

238

 

Comprehensive income

 

$

16,136

 

 

$

7,575

 

 

$

42,231

 

 

$

21,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.77

 

 

$

0.35

 

 

$

1.97

 

 

$

1.05

 

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

 

$

0.73

 

 

$

0.33

 

 

$

1.86

 

 

$

0.99

 

Weighted-average number of shares used in calculating net income

  per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

 

21,324,256

 

 

 

20,753,789

 

 

 

21,175,286

 

 

 

20,622,848

 

Diluted common shares

 

 

22,659,052

 

 

 

21,998,660

 

 

 

22,512,125

 

 

 

21,832,544

 

 

(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)

 

(amounts in thousands, except units and patients)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue by region and category

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business-to-business domestic sales

 

$

30,263

 

 

$

22,919

 

 

$

91,222

 

 

$

61,534

 

Business-to-business international sales

 

 

21,142

 

 

 

17,186

 

 

 

58,807

 

 

 

43,528

 

Direct-to-consumer domestic sales

 

 

38,307

 

 

 

23,032

 

 

 

105,254

 

 

 

62,079

 

Direct-to-consumer domestic rentals

 

 

5,579

 

 

 

5,893

 

 

 

16,297

 

 

 

18,510

 

Total revenue

 

$

95,291

 

 

$

69,030

 

 

$

271,580

 

 

$

185,651

 

Additional financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units sold

 

 

52,400

 

 

 

36,000

 

 

 

152,500

 

 

 

94,000

 

Net rental patients as of period-end

 

 

27,500

 

 

 

31,600

 

 

 

27,500

 

 

 

31,600

 

 

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

 

(unaudited)

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP EBITDA and Adjusted EBITDA

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

16,432

 

 

$

7,338

 

 

$

41,800

 

 

$

21,608

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(895

)

 

 

(221

)

 

 

(2,111

)

 

 

(468

)

Provision (benefit) for income taxes

 

 

(5,133

)

 

 

1,479

 

 

 

(7,168

)

 

 

2,254

 

Depreciation and amortization

 

 

2,712

 

 

 

2,936

 

 

 

8,521

 

 

 

9,257

 

EBITDA (non-GAAP)

 

 

13,116

 

 

 

11,532

 

 

 

41,042

 

 

 

32,651

 

Stock-based compensation

 

 

3,216

 

 

 

2,523

 

 

 

9,783

 

 

 

6,630

 

Adjusted EBITDA (non-GAAP)

 

$

16,332

 

 

$

14,055

 

 

$

50,825

 

 

$

39,281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP net income

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

16,432

 

 

$

7,338

 

 

$

41,800

 

 

$

21,608

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 U.S. tax reform (1)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

16,432

 

 

$

7,338

 

 

$

41,800

 

 

$

21,608

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Non-GAAP provision (benefit) for income taxes and effective tax rate

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Income before provision (benefit) for income taxes

 

$

11,299

 

 

$

8,817

 

 

$

34,632

 

 

$

23,862

 

Provision (benefit) for income taxes

 

 

(5,133

)

 

 

1,479

 

 

 

(7,168

)

 

 

2,254

 

Effective tax rate

 

 

-45.4

%

 

 

16.8

%

 

 

-20.7

%

 

 

9.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

$

(5,133

)

 

$

1,479

 

 

$

(7,168

)

 

$

2,254

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits from stock-based compensation

 

 

8,120

 

 

 

1,739

 

 

 

15,225

 

 

 

6,441

 

2017 U.S. tax reform (1)

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes (non-GAAP)

 

$

2,987

 

 

$

3,218

 

 

$

8,057

 

 

$

8,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

11,299

 

 

$

8,817

 

 

$

34,632

 

 

$

23,862

 

Provision for income taxes (non-GAAP)

 

 

2,987

 

 

 

3,218

 

 

 

8,057

 

 

 

8,695

 

Effective tax rate (non-GAAP)

 

 

26.4

%

 

 

36.5

%

 

 

23.3

%

 

 

36.4

%

 

(1) On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted into law, which significantly changes existing U.S. tax law and includes numerous provisions that affect the Company. During the fourth quarter of 2017, the Company recorded an estimated one-time net charge due to the impact of changes in the tax rate, primarily on deferred tax assets. There were no related charges during the third quarter or the first nine months of 2018.

 

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