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Section 1: 10-Q (10-Q)

ingn-10q_20190630.htm
false Q2 Inogen Inc 0001294133 --12-31 Large Accelerated Filer false 330989359 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. P7Y P1Y 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, 2019

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, 2019, the registrant had 21,933,758 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, 2019 (unaudited) and December 31, 2018

 

3

 

 

Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2019 and June 30, 2018

 

5

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2019 and June 30, 2018

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2019 and June 30, 2018

 

7

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

9

Item 2.

 

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

 

31

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

55

Item 4.

 

Controls and Procedures

 

56

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

57

Item 1A.

 

Risk Factors

 

57

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

89

Item 3.

 

Defaults Upon Senior Securities

 

89

Item 4.

 

Mine Safety Disclosures

 

89

Item 5.

 

Other Information

 

89

Item 6.

 

Exhibits

 

90

SIGNATURES

 

91

 

 

 

 

2


 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(amounts in thousands)

 

 

June 30,

 

 

December 31,

 

 

2019

 

 

2018

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

213,947

 

 

$

196,634

 

Marketable securities

 

42,202

 

 

 

43,715

 

Accounts receivable, net

 

46,721

 

 

 

37,041

 

Inventories, net

 

24,485

 

 

 

27,071

 

Deferred cost of revenue

 

352

 

 

 

359

 

Income tax receivable

 

2,750

 

 

 

2,655

 

Prepaid expenses and other current assets

 

10,269

 

 

 

7,108

 

Total current assets

 

340,726

 

 

 

314,583

 

Property and equipment

 

 

 

 

 

 

 

Rental equipment, net

 

40,587

 

 

 

43,038

 

Manufacturing equipment and tooling

 

9,034

 

 

 

7,338

 

Computer equipment and software

 

6,943

 

 

 

6,153

 

Furniture and equipment

 

1,463

 

 

 

1,445

 

Leasehold improvements

 

3,595

 

 

 

3,407

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

2,616

 

 

 

3,128

 

Total property and equipment

 

64,363

 

 

 

64,634

 

Less accumulated depreciation

 

(43,002

)

 

 

(42,293

)

Property and equipment, net

 

21,361

 

 

 

22,341

 

Goodwill

 

2,242

 

 

 

2,257

 

Intangible assets, net

 

3,127

 

 

 

3,755

 

Operating lease right-of-use asset

 

5,461

 

 

 

 

Deferred tax asset - noncurrent

 

26,063

 

 

 

30,130

 

Other assets

 

4,793

 

 

 

2,832

 

Total assets

$

403,773

 

 

$

375,898

 

 

 

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,

 

 

2019

 

 

2018

 

 

(unaudited)

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

27,325

 

 

$

26,786

 

Accrued payroll

 

6,969

 

 

 

11,407

 

Warranty reserve - current

 

4,036

 

 

 

3,549

 

Operating lease liability - current

 

2,006

 

 

 

 

Deferred revenue - current

 

5,616

 

 

 

4,451

 

Income tax payable

 

410

 

 

 

392

 

Total current liabilities

 

46,362

 

 

 

46,585

 

Long-term liabilities

 

 

 

 

 

 

 

Warranty reserve - noncurrent

 

6,289

 

 

 

5,981

 

Operating lease liability - noncurrent

 

4,456

 

 

 

 

Deferred revenue - noncurrent

 

12,638

 

 

 

11,844

 

Deferred tax liability - noncurrent

 

230

 

 

 

232

 

Other noncurrent liabilities

 

 

 

 

832

 

Total liabilities

 

69,975

 

 

 

65,474

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 21,933,669 and 21,778,632

   shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

22

 

 

 

22

 

Additional paid-in capital

 

257,177

 

 

 

249,194

 

Retained earnings

 

75,946

 

 

 

60,484

 

Accumulated other comprehensive income

 

653

 

 

 

724

 

Total stockholders' equity

 

333,798

 

 

 

310,424

 

Total liabilities and stockholders' equity

$

403,773

 

 

$

375,898

 

 

 

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,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

95,863

 

 

$

91,987

 

 

$

180,681

 

 

$

165,571

 

Rental revenue

 

5,200

 

 

 

5,251

 

 

 

10,584

 

 

 

10,718

 

Total revenue

 

101,063

 

 

 

97,238

 

 

 

191,265

 

 

 

176,289

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

47,230

 

 

 

44,968

 

 

 

89,297

 

 

 

81,916

 

Cost of rental revenue, including depreciation of $1,594 and $1,966, for the

   three months ended and $3,299 and $4,131 for the six months ended,

   respectively

 

3,618

 

 

 

3,800

 

 

 

7,344

 

 

 

8,176

 

Total cost of revenue

 

50,848

 

 

 

48,768

 

 

 

96,641

 

 

 

90,092

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

48,633

 

 

 

47,019

 

 

 

91,384

 

 

 

83,655

 

Gross profit-rental revenue

 

1,582

 

 

 

1,451

 

 

 

3,240

 

 

 

2,542

 

Total gross profit

 

50,215

 

 

 

48,470

 

 

 

94,624

 

 

 

86,197

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

1,468

 

 

 

1,775

 

 

 

3,137

 

 

 

3,191

 

Sales and marketing

 

27,758

 

 

 

22,999

 

 

 

55,959

 

 

 

41,037

 

General and administrative

 

8,844

 

 

 

9,675

 

 

 

18,525

 

 

 

19,248

 

Total operating expense

 

38,070

 

 

 

34,449

 

 

 

77,621

 

 

 

63,476

 

Income from operations

 

12,145

 

 

 

14,021

 

 

 

17,003

 

 

 

22,721

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,394

 

 

 

673

 

 

 

2,728

 

 

 

1,216

 

Other income (expense)

 

145

 

 

 

(1,048

)

 

 

25

 

 

 

(604

)

Total other income (expense), net

 

1,539

 

 

 

(375

)

 

 

2,753

 

 

 

612

 

Income before provision (benefit) for income taxes

 

13,684

 

 

 

13,646

 

 

 

19,756

 

 

 

23,333

 

Provision (benefit) for income taxes

 

3,524

 

 

 

(964

)

 

 

4,294

 

 

 

(2,035

)

Net income

 

10,160

 

 

 

14,610

 

 

 

15,462

 

 

 

25,368

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

106

 

 

 

76

 

 

 

(31

)

 

 

184

 

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

 

(618

)

 

 

723

 

 

 

(534

)

 

 

474

 

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

 

282

 

 

 

(103

)

 

 

458

 

 

 

69

 

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

 

(336

)

 

 

620

 

 

 

(76

)

 

 

543

 

Change in net unrealized gains (losses) on marketable securities

 

23

 

 

 

19

 

 

 

36

 

 

 

 

Total other comprehensive income, net of tax

 

(207

)

 

 

715

 

 

 

(71

)

 

 

727

 

Comprehensive income

$

9,953

 

 

$

15,325

 

 

$

15,391

 

 

$

26,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

0.47

 

 

$

0.69

 

 

$

0.71

 

 

$

1.20

 

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

$

0.45

 

 

$

0.65

 

 

$

0.69

 

 

$

1.13

 

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

  share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

21,815,634

 

 

 

21,172,170

 

 

 

21,783,150

 

 

 

21,099,566

 

Diluted common shares

 

22,359,679

 

 

 

22,503,749

 

 

 

22,459,101

 

 

 

22,409,011

 

 

 

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, 2019 and June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income

 

 

equity

 

Balance, March 31, 2018 (unaudited)

 

21,214,662

 

 

$

21

 

 

$

226,635

 

 

$

19,397

 

 

$

284

 

 

$

246,337

 

Stock-based compensation

 

 

 

 

 

 

 

3,186

 

 

 

 

 

 

 

 

 

3,186

 

Vesting of restricted stock units

 

459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised

 

106,422

 

 

 

 

 

 

2,058

 

 

 

 

 

 

 

 

 

2,058

 

Net income

 

 

 

 

 

 

 

 

 

 

14,610

 

 

 

 

 

 

14,610

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

715

 

 

 

715

 

Balance, June 30, 2018 (unaudited)

 

21,321,543

 

 

$

21

 

 

$

231,879

 

 

$

34,007

 

 

$

999

 

 

$

266,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019 (unaudited)

 

21,931,342

 

 

$

22

 

 

$

255,226

 

 

$

65,786

 

 

$

860

 

 

$

321,894

 

Stock-based compensation

 

 

 

 

 

 

 

1,779

 

 

 

 

 

 

 

 

 

1,779

 

Employee stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 income

 

 

 

 

 

 

 

 

 

 

 

 

 

(207

)

 

 

(207

)

Balance, June 30, 2019 (unaudited)

 

21,933,669

 

 

$

22

 

 

$

257,177

 

 

$

75,946

 

 

$

653

 

 

$

333,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2019 and June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income

 

 

equity

 

Balance, December 31, 2017

 

20,976,350

 

 

$

21

 

 

$

218,109

 

 

$

8,639

 

 

$

272

 

 

$

227,041

 

Stock-based compensation

 

 

 

 

 

 

 

6,567

 

 

 

 

 

 

 

 

 

6,567

 

Employee stock purchases

 

12,013

 

 

 

 

 

 

988

 

 

 

 

 

 

 

 

 

988

 

Restricted stock awards issued

 

53,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

6,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld related to net restricted stock settlement

 

(2,553

)

 

 

 

 

 

(302

)

 

 

 

 

 

 

 

 

(302

)

Stock options exercised

 

276,016

 

 

 

 

 

 

6,517

 

 

 

 

 

 

 

 

 

6,517

 

Net income

 

 

 

 

 

 

 

 

 

 

25,368