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Inogen Announces Second Quarter 2022 Financial Results

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Robust Sequential Revenue Growth Driven by Fulfilled Demand

GOLETA, Calif., August 04, 2022--(BUSINESS WIRE)--Inogen, Inc. (Nasdaq: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today announced financial results for the quarter ended June 30, 2022 and provided a business update.

Second Quarter 2022 Highlights

  • Reported total revenue was $103.4 million for the period ended June 30, 2022, representing a 1.8% increase from $101.6 million for the period ended June 30, 2021.

  • On a constant currency basis, total revenue for the period ended June 30, 2022, increased 3.6% from $101.6 million for the period ended June 30, 2021.

  • Total revenue also represented a 28.6% increase from $80.4 million for the period ended March 31, 2022.

  • GAAP net loss of $3.4 million, adjusted net loss of $0.4 million, and adjusted EBITDA was a positive $3.2 million.

  • Strong balance sheet and cash position.

"We delivered solid performance in the quarter driven by our ability to fulfill customer demand, while effectively managing supply chain challenges and macro headwinds," said Nabil Shabshab, Inogen’s President and Chief Executive Officer. "We are also seeing encouraging progress from our ongoing imperatives focused on strengthening the foundations of the company while simultaneously executing on our transformation. As we embark on the second half of the year, we are actively managing supply chain challenges, executing further on our strategic initiatives, and focusing on productivity to position us for long-term, sustainable growth and profitability. As a team, we are focused on our purpose of improving lives through respiratory care."

Second Quarter 2022 Financial Results

Second quarter total revenue increased 1.8% to $103.4 million from $101.6 million in the second quarter of 2021, primarily driven by higher international sales and domestic rentals, partially offset by lower domestic business-to-business sales.

Total gross margin was 44.7% in the second quarter of 2022 versus 49.6% in the comparative period in 2021. The decline was driven primarily by an increase in material prices and warranty costs, partially offset by higher average selling price and favorable sales channel mix.

Total operating expense for the quarter was $49.1 million compared to $38.7 million in the second quarter of 2021, representing an increase of 27.1%. The increased spend was primarily due to a non-cash decrease in the benefit from the change in fair value of the New Aera earnout liability and ongoing strategic investments required to position the Company for long-term sustainable growth.

GAAP net loss for the second quarter of 2022 was $3.4 million compared to GAAP net income of $5.1 million during the second quarter of 2021. Adjusted net loss was $0.4 million compared to adjusted net income of $1.8 million during the second quarter of 2021.

Adjusted EBITDA was $3.2 million during the second quarter of 2022 compared to $12.4 million in the second quarter of 2021.

Cash and cash equivalents were $223.6 million as of June 30, 2022.

A reconciliation of adjusted EBITDA and adjusted net income (loss) for the three and six months ended June 30, 2022 and 2021 are provided in the financial schedules that are a part of this press release. An explanation of these non-GAAP financial measures is also included below under the heading "Non-GAAP Financial Measures."

Third Quarter 2022 Financial Guidance

Inogen now projects revenue for the third quarter 2022 to be in the range of approximately $97 million to $100 million, or approximately 4% to 7% growth year-over-year.

Conference Call

Individuals interested in listening to the conference call today at 2:00pm PT/5:00pm ET may do so by dialing:

US domestic callers (877) 841-3961
International callers (201) 689-8589

Please reference Inogen 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 August 4, 2022, at 4:00pm PT/7:00pm ET through 4:00pm PT/7:00pm ET on August 18, 2022. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13730720. 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 a medical technology company offering innovative respiratory products for use in the homecare setting. The Company primarily develops, manufactures and markets innovative portable 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.

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 the Company’s expectations related to its financial and operational results for the third quarter of 2022, expectations related to the second half of 2022 for growth as well as supply chain challenges; and expectations of future growth and profitability. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "will," "intends," "potential," "possible," and similar expressions are intended to identify forward-looking statements. 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; risks related to the Company’s supply chain and limited availability of parts used in our POCs, the risk of further slowdowns or temporarily halts of production, or cost inflation for such components; the impact of changes in reimbursement rates and reimbursement and regulatory policies; the possible loss of key employees, customers, or suppliers; expenses and costs will exceed Inogen’s expectations; 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 and 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 period ended December 31, 2021, 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 period ended June 30, 2022, 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.

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 six months ended June 30, 2022 and June 30, 2021. 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 tables 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 for income taxes, and certain other infrequently occurring items, such as acquisition-related costs, that may be incurred in the future.

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

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

Three months ended

Six months ended

June 30,

June 30,

2022

2021

2022

2021

Revenue

Sales revenue

$

89,291

$

90,304

$

156,693

$

167,385

Rental revenue

14,085

11,259

27,068

21,110

Total revenue

103,376

101,563

183,761

188,495

Cost of revenue

Cost of sales revenue

50,661

46,565

90,161

89,200

Cost of rental revenue, including depreciation of $2,720 and $2,054, for the three months ended and $5,358 and $3,942 for the six months ended, respectively

6,457

4,663

12,336

9,087

Total cost of revenue

57,118

51,228

102,497

98,287

Gross profit

46,258

50,335

81,264

90,208

Operating expense

Research and development

6,064

4,123

11,428

8,138

Sales and marketing

30,388

29,317

58,427

54,808

General and administrative

12,682

5,224

27,871

17,723

Total operating expense

49,134

38,664

97,726

80,669

Income (Loss) from operations

(2,876

)

11,671

(16,462

)

9,539

Other income (expense)

Interest income

225

29

254

86

Other income (expense)

(722

)

304

(1,155

)

(6

)

Total other income (expense), net

(497

)

333

(901

)

80

Income (loss) before provision for income taxes

(3,373

)

12,004

(17,363

)

9,619

Provision for income taxes

69

6,902

293

5,249

Net income (loss)

$

(3,442

)

$

5,102

$

(17,656

)

$

4,370

Other comprehensive income (loss), net of tax

Change in foreign currency translation adjustment

(634

)

123

(837

)

(334

)

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

(1,204

)

390

(1,878

)

1,534

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

606

(132

)

1,206

(373

)

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

(598

)

258

(672

)

1,161

Change in net unrealized gains (losses) on marketable securities

7

(3

)

(1

)

1

Total other comprehensive income (loss), net of tax

(1,225

)

378

(1,510

)

828

Comprehensive income (loss)

$

(4,667

)

$

5,480

$

(19,166

)

$

5,198

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

$

(0.15

)

$

0.23

$

(0.77

)

$

0.20

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

$

(0.15

)

$

0.22

$

(0.77

)

$

0.19

Weighted-average number of shares used in calculating net income (loss) per share attributable to common stockholders:

Basic common shares

22,845,040

22,444,246

22,799,981

22,313,546

Diluted common shares

22,845,040

22,874,321

22,799,981

22,734,079

(1)

Reconciliations of net income (loss) 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.

(2)

Due to a net loss for the three and six months ended June 30,2022, diluted loss per share is the same as basic.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

June 30,

December 31,

2022

2021

Assets

Current assets

Cash and cash equivalents

$

223,621

$

235,524

Marketable securities

-

9,989

Accounts receivable, net

31,146

24,452

Inventories, net

33,496

31,873

Income tax receivable

1,670

1,343

Prepaid expenses and other current assets

25,514

26,005

Total current assets

315,447

329,186

Property and equipment, net

40,418

38,926

Goodwill

32,803

32,979

Intangible assets, net

55,850

60,147

Operating lease right-of-use asset

23,484

24,912

Other assets

2,067

3,363

Total assets

$

470,069

$

489,513

Liabilities and stockholders' equity

Current liabilities

Accounts payable and accrued expenses

$

26,808

$

25,689

Accrued payroll

12,659

17,307

Warranty reserve - current

7,360

6,480

Operating lease liability - current

3,506

3,393

Deferred revenue - current

9,007

8,568

Income tax payable

-

75

Total current liabilities

59,340

61,512

Warranty reserve - noncurrent

7,144

7,246

Operating lease liability - noncurrent

21,678

23,281

Earnout liability - noncurrent

13,975

15,386

Deferred revenue - noncurrent

11,395

11,861

Total liabilities

113,532

119,286

Stockholders' equity

Common stock

23

23

Additional paid-in capital

304,939

299,463

Retained earnings

51,616

69,272

Accumulated other comprehensive income (loss)

(41

)

1,469

Total stockholders' equity

356,537

370,227

Total liabilities and stockholders' equity

$

470,069

$

489,513

Condensed Consolidated Cash Flow

(unaudited)

(amounts in thousands)

Six months ended June 30,

2022

2021

Cash flows from operating activities

Net income (loss)

$

(17,656

)

$

4,370

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

11,608

10,339

Loss on rental units and other fixed assets

1,466

601

Gain on sale of former rental assets

(93

)

(40

)

Provision for sales revenue returns and doubtful accounts

6,200

5,266

Provision for rental revenue adjustments

2,065

Provision for inventory losses

1,552

888

Stock-based compensation expense

5,685

5,755

Deferred income taxes

5,297

Change in fair value of earnout liability

(1,411

)

(7,775

)

Changes in operating assets and liabilities

(19,918

)

(6,637

)

Net cash provided by (used in) operating activities

(12,567

)

20,129

Cash flows from investing activities

Maturities of marketable securities

9,988

8,152

Investment in intangible assets

(101

)

Investment in property and equipment

(2,236

)

(3,594

)

Production and purchase of rental equipment

(7,083

)

(7,957

)

Proceeds from sale of former assets

153

78

Net cash provided by (used in) investing activities

822

(3,422

)

Cash flows from financing activities

Proceeds from stock options exercised

35

9,958

Proceeds from employee stock purchases

915

927

Payment of employment taxes related to release of restricted stock

(1,159

)

(545

)

Net cash provided by (used in) financing activities

(209

)

10,340

Effect of exchange rates on cash

51

(159

)

Net increase (decrease) in cash and cash equivalents

$

(11,903

)

$

26,888

Supplemental Financial Information

(unaudited)

(in thousands, except units and patients)

Three months ended

Six months ended

June 30,

June 30,

2022

2021

2022

2021

Revenue by region and category

Business-to-business domestic sales

$

11,212

$

27,558

$

16,313

$

58,301

Business-to-business international sales

37,441

21,823

65,382

37,543

Direct-to-consumer domestic sales

40,638

40,923

74,998

71,541

Direct-to-consumer domestic rentals

14,085

11,259

27,068

21,110

Total revenue

$

103,376

$

101,563

$

183,761

$

188,495

Additional financial measures

Units sold

42,400

52,400

72,800

101,800

Net rental patients as of period-end

43,800

37,100

43,800

37,100

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

(unaudited)

(in thousands)

Three months ended

Six months ended

June 30,

June 30,

Non-GAAP EBITDA and Adjusted EBITDA

2022

2021

2022

2021

Net income (loss) (GAAP)

$

(3,442

)

$

5,102

$

(17,656

)

$

4,370

Non-GAAP adjustments:

-

Interest income

(225

)

(29

)

(254

)

(86

)

Provision for income taxes

69

6,902

293

5,249

Depreciation and amortization

5,848

5,241

11,608

10,339

EBITDA (non-GAAP)

2,250

17,216

(6,009

)

19,872

Stock-based compensation

3,020

3,239

5,685

5,755

Change in fair value of earnout liability

(2,041

)

(8,082

)

(1,411

)

(7,817

)

Adjusted EBITDA (non-GAAP)

$

3,229

$

12,373

$

(1,735

)

$

17,810

Three months ended June 30,

Net Income (Loss)

Diluted EPS

Non-GAAP Adjusted Net Income (Loss) and Diluted EPS

2022

2021

2022

2021

Financial Results (GAAP)

$

(3,442

)

$

5,102

$

(0.15

)

$

0.22

Non-GAAP adjustments:

Amortization of intangibles

2,150

2,203

Stock-based compensation

3,020

3,239

Change in fair value of earnout liability

(2,041

)

(8,082

)

Income tax impact of adjustments (1)

(53

)

(634

)

Adjusted

$

(366

)

$

1,828

$

(0.02

)

$

0.08

Six months ended June 30,

Net Income (Loss)

Diluted EPS

Non-GAAP Adjusted Net Income (Loss) and Diluted EPS

2022

2021

2022

2021

Financial Results (GAAP)

$

(17,656

)

$

4,370

$

(0.77

)

$

0.19

Non-GAAP adjustments:

Amortization of intangibles

4,297

4,467

Stock-based compensation

5,685

5,755

Change in fair value of earnout liability

(1,411

)

(7,817

)

Income tax impact of adjustments (1)

(146

)

(577

)

Adjusted

$

(9,231

)

$

6,198

$

(0.40

)

$

0.27

(1)

Income tax impact of adjustments represents the tax impact related to the non-GAAP adjustments listed above and reflects an effective tax rate of -1.7% for 2022 and 24% for 2021.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005173/en/

Contacts

Agnes Lee
alee@inogen.net
650.677.9138