Inogen Announces First Quarter 2022 Financial Results

 

– Q1 2022 Total Revenue of $80.4 million –

 

GOLETA, Calif.--(BUSINESS WIRE)-- Inogen, Inc. (NASDAQ: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today reported financial results for the three months ended March 31, 2022.

First Quarter 2022 Highlights

  • Total revenue of $80.4 million, down 7.5% from the same period in 2021, primarily due to supply chain constraints
  • Total revenue up 5.2% sequentially from the fourth quarter of 2021
  • Domestic direct-to-consumer revenue of $34.4 million, up 12.2% while domestic business-to-business revenue of $5.1 million, declined 83.4% from the same period in 2021 due to supply constraints and strategic optimization of sales channel mix
  • International business-to-business revenue of $27.9 million, grew 77.7% from the same period in 2021 (86.8% increase on a constant currency basis)
  • Rental revenue of $13.0 million, up 31.8% from the same period in 2021
  • Gross margin of 43.5% declined 240 basis points from the same period in 2021, as higher cost of materials and lower labor and overhead absorption, due to temporary manufacturing shutdown in early 2022, more than offset higher average selling prices
  • GAAP loss per diluted share of $0.62 compares to a loss of $0.03 in the first quarter of 2021; adjusted loss per diluted share of $0.39, compares to adjusted earnings per diluted share of $0.14 in the prior year (see accompanying table for reconciliation of GAAP and non-GAAP measures)
  • Encouraging progress on the new commercial strategy for the prescriber channel
  • EU MDR Generic Device Group submission has been filed for the Company’s portable oxygen concentrators (POC) and is currently under review

“We are pleased with our performance for the first quarter of 2022. In spite of the current macro headwinds, we continue to effectively address higher costs and supply chain challenges,” said Inogen’s President and Chief Executive Officer, Nabil Shabshab. “We have been nimble and decisive in our efforts to strategically manage inventory and meet most of the customer demand. As part of our focus to mitigate supply related cost inflation, we have recently implemented an additional price increase in our domestic direct-to-consumer channel beginning in March 2022 in addition to the price increase that went into effect September 2021. Additionally, we have completed the submission for the EU MDR Generic Device Group pertaining to our POCs in March 2022 and are supplying product ahead of the MDD certificate expiry to meet most of the demand in Europe. We are continuing our investment in the business, strengthening our commercial, clinical and research and development capabilities to position our company for long-term, sustainable growth and profitability in the years to come.”

First Quarter 2022 Financial Results

In the first quarter of 2022, the Company reported a net loss of $14.2 million and loss per diluted share of $0.62. On an adjusted basis, the Company reported a net loss of $8.8 million, Adjusted EBITDA loss of $5.0 million, and loss per diluted share of $0.39 (see accompanying table for reconciliation of GAAP and non-GAAP measures). Current quarter financial results reflect lower revenue, higher supply chain costs, and planned investments in sales and marketing and research and development.

Total revenue for the three months ended March 31, 2022 decreased 7.5% to $80.4 million from $86.9 million in the same period in 2021, primarily driven by supply chain constraints that limited production capacity and resulted in lower sales in the domestic business-to-business channel. Total revenue in the first quarter of 2022 was up 5.2% sequentially compared to the fourth quarter of 2021.

Revenue by channel:

Domestic direct-to-consumer sales increased 12.2% to $34.4 million in the first quarter of 2022 from $30.6 million in the first quarter of 2021 while domestic business-to-business sales in the first quarter of 2022 declined 83.4% to $5.1 million compared to $30.7 million in the first quarter of 2021 due to supply constraints and strategic sales channel optimization decisions.

International business-to-business sales in the first quarter of 2022 of $27.9 million increased 77.7% (or 86.8% on a constant currency basis) driven by a strategic focus on existing demand ahead of the EU MDR certificate expiry in parallel to the ongoing regulatory filings.

Rental revenue in the first quarter of 2022 increased 31.8% to $13.0 million from $9.9 million in the same period in 2021, primarily due to increased patients on service and higher Medicare reimbursement rates due to the removal of the budget neutrality provision effective April 1, 2021 and inflation adjustment effective January 1, 2022.

Total gross margin was 43.5% in the first quarter of 2022 versus 45.9% in the comparative period in 2021. The 240 basis points decline was driven primarily by higher cost of materials associated with higher prices paid for semiconductor chips on the open market and lower labor and overhead absorption due to the temporary manufacturing shutdown in early 2022, partially offset by higher average selling prices.

Total operating expense increased to $48.6 million in the first quarter of 2022 versus $42.0 million in the first quarter of 2021, primarily due to increased personnel-related expense, one-time recruiting and severance costs, consulting expense, product development costs, and a non-cash increase in the change in fair value of the New Aera earnout liability versus the comparative period. Research and development expense increased to $5.4 million in the first quarter of 2022, compared to $4.0 million in the first quarter of 2021. Sales and marketing expense increased to $28.0 million in the first quarter of 2022 versus $25.5 million in the comparative period of 2021. General and administrative expense increased to $15.2 million in the first quarter of 2022 versus $12.5 million in the first quarter of 2021. The increased spend is directly tied to the strategic investment required to position the Company for long-term, sustainable growth.

Financial Outlook for 2022

As previously disclosed, Inogen is not providing detailed financial guidance for full year 2022. Given the ongoing uncertainty related to the COVID-19 pandemic, supply chain disruptions, including the new complexities brought on by the war in Ukraine and the COVID-19 lockdown in China potentially impacting the second half of the year, Inogen will not be providing full year revenue guidance for 2022. The Company expects total revenue for the second quarter of 2022 to improve sequentially and to be in line with the same period in 2021.

The Company continues to incur higher material costs associated with open-market purchases of semiconductor chips used in its POC motherboards and batteries for the second quarter of 2022, as compared to prior year, consistent with our expectations. The Company expects gross margin percentage for the second quarter of 2022 to be in line with the first quarter of 2022, as higher selling prices are offset by continued cost pressure.

Inogen continues to make significant investments in clinical research, research and development, commercial operations and in building the necessary infrastructure and capabilities to support future durable revenue growth and margin expansion. For the second quarter and full year of 2022, the Company expects losses in Adjusted EBITDA and earnings per diluted share resulting from continued investment in the business.

Conference Call

Individuals interested in listening to the conference call today at 2:00pm PT/5:00pm ET may do so by dialing (877) 841-3961 for domestic callers or (201) 689-8589 for international callers. 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 May 5, 2022 at 4:00pm PT/7:00pm ET through May 19, 2022. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Access Code: 13727825. 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 develop, manufacture and market 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.

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 the Company’s expectations related to its financial results for the second quarter and full-year 2022, including revenue growth rates, cost of goods sold, operating loss, net loss, Adjusted EBITDA and operating expense; expectations with respect to the Company’s supply chain, including the availability of semiconductor chips used in its batteries and POCs; demand for the Company’s products in its various business channels; expectations regarding the Company’s initiatives to drive productivity and sales; the Company’s planned investments in clinical research and R&D; expectations regarding the Company’s prospects for long-term, sustainable growth and profitability; expectations related to the Company’s prescriber sales organization; and expectations related to the Company’s EU MDR filings. 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 semiconductor chips used in its batteries and 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 March 31, 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.

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 months ended March 31, 2022. 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 Balance Sheets

 

(unaudited)

 

(amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

213,399

 

 

$

235,524

 

Marketable securities

 

 

9,989

 

 

 

9,989

 

Accounts receivable, net

 

 

33,983

 

 

 

24,452

 

Inventories, net

 

 

34,078

 

 

 

31,873

 

Income tax receivable

 

 

1,435

 

 

 

1,343

 

Prepaid expenses and other current assets

 

 

25,238

 

 

 

26,005

 

Total current assets

 

 

318,122

 

 

 

329,186

 

Property and equipment, net

 

 

39,329

 

 

 

38,926

 

Goodwill

 

 

32,934

 

 

 

32,979

 

Intangible assets, net

 

 

58,000

 

 

 

60,147

 

Operating lease right-of-use asset

 

 

24,080

 

 

 

24,912

 

Other assets

 

 

2,151

 

 

 

3,363

 

Total assets

 

$

474,616

 

 

$

489,513

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

32,375

 

 

$

25,689

 

Accrued payroll

 

 

8,839

 

 

 

17,307

 

Warranty reserve - current

 

 

6,519

 

 

 

6,480

 

Operating lease liability - current

 

 

3,401

 

 

 

3,393

 

Deferred revenue - current

 

 

8,689

 

 

 

8,568

 

Income tax payable

 

 

-

 

 

 

75

 

Total current liabilities

 

 

59,823

 

 

 

61,512

 

Warranty reserve - noncurrent

 

 

6,574

 

 

 

7,246

 

Operating lease liability - noncurrent

 

 

22,409

 

 

 

23,281

 

Earnout liability - noncurrent

 

 

16,016

 

 

 

15,386

 

Deferred revenue - noncurrent

 

 

11,509

 

 

 

11,861

 

Total liabilities

 

 

116,331

 

 

 

119,286

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

302,020

 

 

 

299,463

 

Retained earnings

 

 

55,058

 

 

 

69,272

 

Accumulated other comprehensive income

 

 

1,184

 

 

 

1,469

 

Total stockholders' equity

 

 

358,285

 

 

 

370,227

 

Total liabilities and stockholders' equity

 

$

474,616

 

 

$

489,513

 

Consolidated Statements of Comprehensive Loss

(unaudited)

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

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2022

 

2021

 

Revenue

 

 

 

 

 

 

 

Sales revenue

 

$

67,402

 

 

$

77,081

 

 

Rental revenue

 

 

12,983

 

 

 

9,851

 

 

Total revenue

 

 

80,385

 

 

 

86,932

 

 

Cost of revenue

 

 

 

 

 

 

 

Cost of sales revenue

 

 

39,500

 

 

 

42,635

 

 

Cost of rental revenue, including depreciation of $2,638 and $1,888, respectively

 

 

5,879

 

 

 

4,424

 

 

Total cost of revenue

 

 

45,379

 

 

 

47,059

 

 

Gross profit

 

 

35,006

 

 

 

39,873

 

 

Operating expense

 

 

 

 

 

 

 

Research and development

 

 

5,364

 

 

 

4,015

 

 

Sales and marketing

 

 

28,039

 

 

 

25,491

 

 

General and administrative

 

 

15,189

 

 

 

12,499

 

 

Total operating expense

 

 

48,592

 

 

 

42,005

 

 

Loss from operations

 

 

(13,586

)

 

 

(2,132

)

 

Other income (expense)

 

 

 

 

 

 

 

Interest income

 

 

29

 

 

 

57

 

 

Other income (expense)

 

 

(433

)

 

 

(310

)

 

Total other expense, net

 

 

(404

)

 

 

(253

)

 

Loss before provision (benefit) for income taxes

 

 

(13,990

)

 

 

(2,385

)

 

Provision (benefit) for income taxes

 

 

224

 

 

 

(1,653

)

 

Net loss

 

$

(14,214

)

 

$

(732

)

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

(203

)

 

 

(457

)

 

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

 

 

(528

)

 

 

1,144

 

 

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

 

 

454

 

 

 

(241

)

 

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

 

 

(74

)

 

 

903

 

 

Change in net unrealized gains (losses) on marketable securities

 

 

(8

)

 

 

4

 

 

Total other comprehensive income, net of tax

 

 

(285

)

 

 

450

 

 

Comprehensive loss

 

$

(14,499

)

 

$

(282

)

 

 

 

 

 

 

 

 

 

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

 

$

(0.62

)

 

$

(0.03

)

 

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

 

$

(0.62

)

 

$

(0.03

)

 

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

 

 

 

 

 

 

 

Basic common shares

 

 

22,754,421

 

 

 

22,181,394

 

 

Diluted common shares

 

 

22,754,421

 

 

 

22,181,394

 

 

(1)

 

Reconciliations of net 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 months ended March 31,2022 and March 31, 2021, diluted loss per share is the same as basic.

Supplemental Financial Information

(unaudited)

(in thousands, except units and patients)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

March 31,

 

 

 

 

2022

 

 

2021

 

 

Revenue by region and category

 

 

 

 

 

 

 

 

 

Business-to-business domestic sales

 

$

5,101

 

 

$

30,743

 

 

Business-to-business international sales

 

 

27,941

 

 

 

15,720

 

 

Direct-to-consumer domestic sales

 

 

34,360

 

 

 

30,618

 

 

Direct-to-consumer domestic rentals

 

 

12,983

 

 

 

9,851

 

 

Total revenue

 

$

80,385

 

 

$

86,932

 

 

Additional financial measures

 

 

 

 

 

 

 

 

 

Units sold

 

 

30,400

 

 

 

49,400

 

 

Net rental patients as of period-end

 

 

43,200

 

 

 

34,700

 

 

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

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31,

 

Non-GAAP EBITDA and Adjusted EBITDA

 

2022

 

2021

 

Net loss (GAAP)

 

$

(14,214

)

 

$

(732

)

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Interest income

 

 

(29

)

 

 

(57

)

 

Provision (benefit) for income taxes

 

 

224

 

 

 

(1,653

)

 

Depreciation and amortization

 

 

5,760

 

 

 

5,098

 

 

EBITDA (non-GAAP)

 

 

(8,259

)

 

 

2,656

 

 

Stock-based compensation

 

 

2,665

 

 

 

2,516

 

 

Change in fair value of earnout liability

 

 

630

 

 

 

265

 

 

Adjusted EBITDA (non-GAAP)

 

$

(4,964

)

 

$

5,437

 

 

 

 

Three months ended March 31,

 

 

Net Income (Loss)

 

Diluted EPS

Non-GAAP Net Income (Loss) and Diluted EPS

 

2022

 

2021

 

2022

 

2021

Financial Results (GAAP)

 

$

(14,214

)

 

$

(732

)

 

$

(0.62

)

 

$

(0.03

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangibles

 

 

2,147

 

 

 

2,264

 

 

 

 

 

 

 

Stock-based compensation

 

 

2,665

 

 

 

2,516

 

 

 

 

 

 

 

Change in fair value of earnout liability

 

 

630

 

 

 

265

 

 

 

 

 

 

 

Income tax impact of adjustments (1)

 

 

87

 

 

 

(1,211

)

 

 

 

 

 

 

Adjusted

 

$

(8,685

)

 

$

3,102

 

 

$

(0.38

)

 

$

0.14

 

(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 -1.6% for 2022 and 24% for 2021.

 

 

Three months ended

 

 

 

 

March 31,

2022

 

 

 

 

 

 

Non-GAAP international constant currency revenue

 

(using 2021

FX rates)

 

 

March 31,

2021

 

 

International revenues (GAAP)

 

$

27,941

 

 

$

15,720

 

 

Foreign exchange impact

 

 

1,424

 

 

 

 

 

International constant currency revenues (non-GAAP)

 

$

29,365

 

 

$

15,720

 

 

 

 

 

 

 

 

 

 

 

 

International revenue growth (GAAP)

 

 

77.7

%

 

 

 

 

 

International constant currency revenue growth (non-GAAP)

 

 

86.8

%

 

 

 

 

 

 

Contacts

Investor and Media Contacts
Bryan Locke, Mike DeGraff, Gabriella Coffey
ir@inogen.net

 
 

Source: Inogen, Inc.

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