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Section 1: 10-Q (10-Q)

ingn-10q_20190930.htm
false Q3 Inogen Inc 0001294133 --12-31 Large Accelerated Filer true P10Y 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 September 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 October 31, 2019, the registrant had 21,998,485 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 September 30, 2019 (unaudited) and December 31, 2018

 

3

 

 

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

 

5

 

 

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

 

6

 

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2019 and September 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

 

32

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

 

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)

 

 

September 30,

 

 

December 31,

 

 

2019

 

 

2018

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

156,131

 

 

$

196,634

 

Marketable securities

 

44,514

 

 

 

43,715

 

Accounts receivable, net

 

41,180

 

 

 

37,041

 

Inventories, net

 

34,072

 

 

 

27,071

 

Deferred cost of revenue

 

356

 

 

 

359

 

Income tax receivable

 

2,867

 

 

 

2,655

 

Prepaid expenses and other current assets

 

10,716

 

 

 

7,108

 

Total current assets

 

289,836

 

 

 

314,583

 

Property and equipment

 

 

 

 

 

 

 

Rental equipment, net

 

39,821

 

 

 

43,038

 

Manufacturing equipment and tooling

 

9,455

 

 

 

7,338

 

Computer equipment and software

 

7,051

 

 

 

6,153

 

Furniture and equipment

 

1,678

 

 

 

1,445

 

Leasehold improvements

 

4,295

 

 

 

3,407

 

Land and building

 

125

 

 

 

125

 

Construction in process

 

1,461

 

 

 

3,128

 

Total property and equipment

 

63,886

 

 

 

64,634

 

Less accumulated depreciation

 

(43,998

)

 

 

(42,293

)

Property and equipment, net

 

19,888

 

 

 

22,341

 

Goodwill

 

33,277

 

 

 

2,257

 

Intangible assets, net

 

79,536

 

 

 

3,755

 

Operating lease right-of-use asset

 

6,355

 

 

 

 

Deferred tax asset - noncurrent

 

11,176

 

 

 

30,130

 

Other assets

 

4,664

 

 

 

2,832

 

Total assets

$

444,732

 

 

$

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)

 

 

September 30,

 

 

December 31,

 

 

2019

 

 

2018

 

 

(unaudited)

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

30,418

 

 

$

26,786

 

Accrued payroll

 

6,700

 

 

 

11,407

 

Warranty reserve - current

 

4,311

 

 

 

3,549

 

Operating lease liability - current

 

2,193

 

 

 

 

Deferred revenue - current

 

5,835

 

 

 

4,451

 

Income tax payable

 

586

 

 

 

392

 

Total current liabilities

 

50,043

 

 

 

46,585

 

Long-term liabilities

 

 

 

 

 

 

 

Warranty reserve - noncurrent

 

7,165

 

 

 

5,981

 

Operating lease liability - noncurrent

 

5,123

 

 

 

 

Earnout liability - noncurrent

 

25,749

 

 

 

 

Deferred revenue - noncurrent

 

13,285

 

 

 

11,844

 

Deferred tax liability - noncurrent

 

221

 

 

 

232

 

Other noncurrent liabilities

 

 

 

 

832

 

Total liabilities

 

101,586

 

 

 

65,474

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 21,998,374 and 21,778,632

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

 

22

 

 

 

22

 

Additional paid-in capital

 

260,071

 

 

 

249,194

 

Retained earnings

 

82,809

 

 

 

60,484

 

Accumulated other comprehensive income

 

244

 

 

 

724

 

Total stockholders' equity

 

343,146

 

 

 

310,424

 

Total liabilities and stockholders' equity

$

444,732

 

 

$

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

 

 

Nine months ended

 

 

September 30,

 

 

September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenue

$

86,392

 

 

$

89,712

 

 

$

267,073

 

 

$

255,283

 

Rental revenue

 

5,369

 

 

 

5,579

 

 

 

15,953

 

 

 

16,297

 

Total revenue

 

91,761

 

 

 

95,291

 

 

 

283,026

 

 

 

271,580

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales revenue

 

44,769

 

 

 

42,810

 

 

 

134,066

 

 

 

124,726

 

Cost of rental revenue, including depreciation of $1,482 and $1,689, for the

   three months ended and $4,781 and $5,820 for the nine months ended,

   respectively

 

3,677

 

 

 

3,668

 

 

 

11,021

 

 

 

11,844

 

Total cost of revenue

 

48,446

 

 

 

46,478

 

 

 

145,087

 

 

 

136,570

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit-sales revenue

 

41,623

 

 

 

46,902

 

 

 

133,007

 

 

 

130,557

 

Gross profit-rental revenue

 

1,692

 

 

 

1,911

 

 

 

4,932

 

 

 

4,453

 

Total gross profit

 

43,315

 

 

 

48,813

 

 

 

137,939

 

 

 

135,010

 

Operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

2,636

 

 

 

2,096

 

 

 

5,773

 

 

 

5,287

 

Sales and marketing

 

24,047

 

 

 

26,339

 

 

 

80,006

 

 

 

67,376

 

General and administrative

 

8,525

 

 

 

9,982

 

 

 

27,050

 

 

 

29,230

 

Total operating expense

 

35,208

 

 

 

38,417

 

 

 

112,829

 

 

 

101,893

 

Income from operations

 

8,107

 

 

 

10,396

 

 

 

25,110

 

 

 

33,117

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,149

 

 

 

895

 

 

 

3,877

 

 

 

2,111

 

Other income (expense)

 

(503

)

 

 

8

 

 

 

(478

)

 

 

(596

)

Total other income, net

 

646

 

 

 

903

 

 

 

3,399

 

 

 

1,515

 

Income before provision (benefit) for income taxes

 

8,753

 

 

 

11,299

 

 

 

28,509

 

 

 

34,632

 

Provision (benefit) for income taxes

 

1,890

 

 

 

(5,133

)

 

 

6,184

 

 

 

(7,168

)

Net income

 

6,863

 

 

 

16,432

 

 

 

22,325

 

 

 

41,800

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

(309

)

 

 

(47

)

 

 

(340

)

 

 

137

 

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

 

(420

)

 

 

102

 

 

 

(954

)

 

 

577

 

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

 

338

 

 

 

(354

)

 

 

796

 

 

 

(286

)

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

 

(82

)

 

 

(252

)

 

 

(158

)

 

 

291

 

Change in net unrealized gains (losses) on marketable securities

 

(18

)

 

 

3

 

 

 

18

 

 

 

3

 

Total other comprehensive income (loss), net of tax

 

(409

)

 

 

(296

)

 

 

(480

)

 

 

431

 

Comprehensive income

$

6,454

 

 

$

16,136

 

 

$

21,845

 

 

$

42,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

0.31

 

 

$

0.77

 

 

$

1.02

 

 

$

1.97

 

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

$

0.31

 

 

$

0.73

 

 

$

1.00

 

 

$

1.86

 

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

  share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic common shares

 

21,840,473

 

 

 

21,324,256

 

 

 

21,802,468

 

 

 

21,175,286

 

Diluted common shares

 

22,191,688

 

 

 

22,659,052

 

 

 

22,387,146

 

 

 

22,512,125

 

 

 

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 September 30, 2019 and September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

income

 

 

equity

 

Balance, June 30, 2018 (unaudited)

 

21,321,543

 

 

$

21

 

 

$

231,879

 

 

$

34,007

 

 

$

999

 

 

$

266,906

 

Stock-based compensation

 

 

 

 

 

 

 

3,216

 

 

 

 

 

 

 

 

 

3,216

 

Employee stock purchases

 

13,519

 

 

 

 

 

 

1,360

 

 

 

 

 

 

 

 

 

1,360

 

Restricted stock awards issued

 

3,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

8,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld related to net restricted stock settlement

 

(3,022

)

 

 

 

 

 

(801

)

 

 

 

 

 

 

 

 

(801

)

Stock options exercised

 

158,708

 

 

 

 

 

 

4,447

 

 

 

 

 

 

 

 

 

4,447

 

Net income

 

 

 

 

 

 

 

 

 

 

16,432

 

 

 

 

 

 

16,432

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(296

)

 

 

(296

)

Balance, September 30, 2018 (unaudited)

 

21,503,012

 

 

$

21

 

 

$

240,101

 

 

$

50,439

 

 

$

703

 

 

$

291,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019 (unaudited)

 

21,933,669

 

 

$

22

 

 

$

257,177

 

 

$

75,946

 

 

$

653

 

 

$

333,798

 

Stock-based compensation

 

 

 

 

 

 

 

1,565

 

 

 

 

 

 

 

 

 

1,565

 

Employee stock purchases

 

31,049

 

 

 

 

 

 

1,223

 

 

 

 

 

 

 

 

 

1,223

 

Restricted stock awards issued, net of forfeitures

 

24,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

3,441

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

(6

)

Shares withheld related to net restricted stock settlement

 

(979

)

 

 

 

 

 

(46

)

 

 

 

 

 

 

 

 

(46

)

Stock options exercised

 

6,738

 

 

 

 

 

 

158

 

 

 

 

 

 

 

 

 

158

 

Net income

 

 

 

 

 

 

 

 

 

 

6,863

 

 

 

 

 

 

6,863

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(409

)

 

 

(409

)

Balance, September 30, 2019 (unaudited)

 

21,998,374

 

 

$

22

 

 

$

260,071

 

 

$

82,809

 

 

$

244

 

 

$

343,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2019 and September 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

 

 

 

 

 

 

 

9,783

 

 

 

 

 

 

 

 

 

9,783

 

Employee stock purchases

 

25,532

 

 

 

 

 

 

2,348