Inogen Announces Third Quarter 2022 Financial Results

Inogen, Inc. today announced financial results for the quarter ended September 30, 2022, and provided a business update.

Double Digit Year-over-Year Revenue Growth of 13.2%

Constant Currency Year-over-Year Revenue Growth of 14.5%

GOLETA, Calif.--(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 September 30, 2022, and provided a business update.

Third Quarter 2022 Highlights

  • Reported total revenue was $105.4 million for the period ended September 30, 2022, representing a 13.2% increase from $93.1 million for the period ended September 30, 2021.
  • On a constant currency basis, total revenue for the period ended September 30, 2022, increased 14.5%.
  • GAAP net loss of $9.5 million, adjusted net loss of $4.1 million, and adjusted EBITDA was a loss of $1.2 million.
  • Strong balance sheet and cash position.

“I am pleased with the progress the team has made on our transformational journey. We fulfilled customer demand by overcoming supply chain challenges through extraordinary efforts, resulting in year-over-year double digit revenue growth,” said Nabil Shabshab, Inogen’s President and Chief Executive Officer. “Our balance sheet remains strong and capable of driving our transformation. We are executing on our strategic initiatives, improving commercial productivity while building innovation programs that will enhance our ability to deliver sustainable long-term growth and profitability.”

Third Quarter 2022 Financial Results

Third quarter total revenue increased 13.2% to $105.4 million from $93.1 million in the third quarter of 2021, primarily driven by higher domestic business-to-business sales, as well as continued strength in the rental channel, partially offset by lower international business-to-business and direct-to-consumer sales.

Total gross margin was 40.6% in the third quarter of 2022 versus 51.2% in the comparative period in 2021. The decline was driven primarily by increased material costs and unfavorable sales channel mix, partially offset by higher average selling prices.

Total operating expense for the quarter was $53.1 million compared to $41.3 million in the third quarter of 2021, representing an increase of 28.5%. The increased spend was primarily due to ongoing strategic investments required to position the Company for long-term sustainable growth. Additionally, there was a non-cash decrease in the benefit from the change in fair value of the New Aera earnout liability.

GAAP net loss for the third quarter of 2022 was $9.5 million compared to GAAP net income of $12.2 million in the third quarter of 2021. Adjusted net loss was $4.1 million compared to adjusted net income of $14.4 million in the third quarter of 2021.

Adjusted EBITDA was a negative $1.2 million in the third quarter of 2022 compared to a positive $12.2 million in the third quarter of 2021.

Cash and cash equivalents were $209.6 million as of September 30, 2022, and no debt outstanding.

A reconciliation of adjusted EBITDA and adjusted net income (loss) for the three and nine months ended September 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.”

Fourth Quarter 2022 Financial Guidance

Inogen now projects revenue for the fourth quarter of 2022 to be in the range of approximately $87 million to $92 million, or approximately 14% to 20% growth year-over-year.

Conference Call

Individuals interested in listening to the conference call today at 5:30am PT / 8:30am 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/. This webcast will also be archived on the website for 6 months.

A replay of the call will be available approximately three hours after the live webcast ends and will be accessible through November 16, 2022. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13732881.

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 fourth quarter of 2022, expectations related to 2023 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 September 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 nine months ended September 30, 2022 and September 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

Nine months ended

September 30,

September 30,

2022

2021

2022

2021

Revenue

Sales revenue

$

90,672

$

80,974

$

247,365

$

248,359

Rental revenue

14,717

12,131

41,785

33,241

Total revenue

105,389

93,105

289,150

281,600

Cost of revenue

Cost of sales revenue

55,891

40,437

146,052

129,637

Cost of rental revenue, including depreciation of $2,795 and $2,315, for the three months ended and $8,153 and $6,257 for the nine months ended, respectively

6,700

4,981

19,036

14,068

Total cost of revenue

62,591

45,418

165,088

143,705

Gross profit

42,798

47,687

124,062

137,895

Operating expense

Research and development

4,581

3,754

16,009

11,892

Sales and marketing

33,734

28,301

92,161

83,109

General and administrative

14,775

9,258

42,646

26,981

Total operating expense

53,090

41,313

150,816

121,982

Income (loss) from operations

(10,292

)

6,374

(26,754

)

15,913

Other income (expense)

Interest income

868

21

1,122

107

Other expense

(12

)

(466

)

(1,167

)

(472

)

Total other income (expense), net

856

(445

)

(45

)

(365

)

Income (loss) before provision (benefit) for income taxes

(9,436

)

5,929

(26,799

)

15,548

Provision (benefit) for income taxes

70

(6,245

)

363

(996

)

Net income (loss)

$

(9,506

)

$

12,174

$

(27,162

)

$

16,544

Other comprehensive income (loss), net of tax

Change in foreign currency translation adjustment

(616

)

(251

)

(1,453

)

(585

)

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

209

494

(1,669

)

2,028

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

106

1,206

(267

)

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

209

600

(463

)

1,761

Change in net unrealized gains (losses) on marketable securities

17

(1

)

16

-

Total other comprehensive income (loss), net of tax

(390

)

348

(1,900

)

1,176

Comprehensive income (loss)

$

(9,896

)

$

12,522

$

(29,062

)

$

17,720

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

$

(0.42

)

$

0.54

$

(1.19

)

$

0.74

Diluted net income (loss) per share attributable to common stockholders (1) (2)

$

(0.42

)

$

0.53

$

(1.19

)

$

0.73

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

Basic common shares

22,882,333

22,619,272

22,827,733

22,416,575

Diluted common shares

22,882,333

22,854,229

22,827,733

22,803,355

(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 nine months ended September 30,2022, diluted loss per share is the same as basic.

Consolidated Balance Sheets

(unaudited)

(amounts in thousands)

September 30,

December 31,

2022

2021

Assets

Current assets

Cash and cash equivalents

$

209,633

$

235,524

Marketable securities

-

9,989

Accounts receivable, net

50,533

24,452

Inventories, net

35,725

31,873

Income tax receivable

1,579

1,343

Prepaid expenses and other current assets

20,306

26,005

Total current assets

317,776

329,186

Property and equipment, net

40,632

38,926

Goodwill

32,674

32,979

Intangible assets, net

53,700

60,147

Operating lease right-of-use asset

22,479

24,912

Other assets

2,323

3,363

Total assets

$

469,584

$

489,513

Liabilities and stockholders’ equity

Current liabilities

Accounts payable and accrued expenses

$

33,512

$

25,689

Accrued payroll

11,789

17,307

Warranty reserve - current

7,830

6,480

Operating lease liability - current

3,486

3,393

Deferred revenue - current

9,119

8,568

Income tax payable

-

75

Total current liabilities

65,736

61,512

Warranty reserve - noncurrent

7,630

7,246

Operating lease liability - noncurrent

20,662

23,281

Earnout liability - noncurrent

13,687

15,386

Deferred revenue - noncurrent

11,027

11,861

Total liabilities

118,742

119,286

Stockholders’ equity

Common stock

23

23

Additional paid-in capital

309,140

299,463

Retained earnings

42,110

69,272

Accumulated other comprehensive income (loss)

(431

)

1,469

Total stockholders’ equity

350,842

370,227

Total liabilities and stockholders’ equity

$

469,584

$

489,513

Condensed Consolidated Cash Flow

(unaudited)

(amounts in thousands)

Nine months ended September 30,

2022

2021

Cash flows from operating activities

Net income (loss)

$

(27,162

)

$

16,544

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

Depreciation and amortization

17,536

15,861

Loss on rental units and other fixed assets

2,488

952

Gain on sale of former rental assets

(93

)

(59

)

Provision for sales revenue returns and doubtful accounts

10,816

8,248

Provision for rental revenue adjustments

3,543

Provision for inventory losses

2,060

1,452

Stock-based compensation expense

9,185

8,547

Deferred income taxes

(1,014

)

Change in fair value of earnout liability

(1,699

)

(9,822

)

Changes in operating assets and liabilities

(35,181

)

(27,117

)

Net cash provided by (used in) operating activities

(22,050

)

17,135

Cash flows from investing activities

Maturities of marketable securities

10,005

15,705

Investment in intangible assets

(132

)

Investment in property and equipment

(2,770

)

(4,807

)

Production and purchase of rental equipment

(11,320

)

(13,156

)

Proceeds from sale of former assets

152

122

Net cash used in investing activities

(3,933

)

(2,268

)

Cash flows from financing activities

Proceeds from stock options exercised

35

13,699

Proceeds from employee stock purchases

1,691

1,948

Payment of employment taxes related to release of restricted stock

(1,234

)

(617

)

Net cash provided by financing activities

492

15,030

Effect of exchange rates on cash

(400

)

(283

)

Net increase (decrease) in cash and cash equivalents

$

(25,891

)

$

29,614

Supplemental Financial Information

(unaudited)

(in thousands, except units and patients)

Three months ended

Nine months ended

September 30,

September 30,

2022

2021

2022

2021

Revenue by region and category

Business-to-business domestic sales

$

42,546

$

22,793

$

58,859

$

81,094

Business-to-business international sales

15,078

21,834

80,460

59,377

Direct-to-consumer domestic sales

33,048

36,347

108,046

107,888

Direct-to-consumer domestic rentals

14,717

12,131

41,785

33,241

Total revenue

$

105,389

$

93,105

$

289,150

$

281,600

Additional financial measures

Units sold

54,200

44,600

127,000

146,400

Net rental patients as of period-end

44,600

40,400

44,600

40,400

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

(unaudited)

(in thousands)

Three months ended

Nine months ended

September 30,

September 30,

Non-GAAP EBITDA and Adjusted EBITDA

2022

2021

2022

2021

Net income (loss) (GAAP)

$

(9,506

)

$

12,174

$

(27,162

)

$

16,544

Non-GAAP adjustments:

Interest income

(868

)

(21

)

(1,122

)

(107

)

Provision (benefit) for income taxes

70

(6,245

)

363

(996

)

Depreciation and amortization

5,928

5,522

17,536

15,861

EBITDA (non-GAAP)

(4,376

)

11,430

(10,385

)

31,302

Stock-based compensation

3,500

2,792

9,185

8,547

Change in fair value of earnout liability

(288

)

(2,052

)

(1,699

)

(9,869

)

Adjusted EBITDA (non-GAAP)

$

(1,164

)

$

12,170

$

(2,899

)

$

29,980

Three months ended September 30,

Net Income (Loss)

Diluted EPS

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

2022

2021

2022

2021

Financial Results (GAAP)

$

(9,506

)

$

12,174

$

(0.42

)

$

0.53

Non-GAAP adjustments:

Amortization of intangibles

2,150

2,155

Stock-based compensation

3,500

2,792

Change in fair value of earnout liability

(288

)

(2,052

)

Income tax impact of adjustments (1)

-

(695

)

Adjusted

$

(4,144

)

$

14,374

$

(0.18

)

$

0.63

Nine months ended September 30,

Net Income (Loss)

Diluted EPS

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

2022

2021

2022

2021

Financial Results (GAAP)

$

(27,162

)

$

16,544

$

(1.19

)

$

0.73

Non-GAAP adjustments:

Amortization of intangibles

6,447

6,622

Stock-based compensation

9,185

8,547

Change in fair value of earnout liability

(1,699

)

(9,869

)

Income tax impact of adjustments (1)

-

(1,272

)

Adjusted

$

(13,229

)

$

20,572

$

(0.58

)

$

0.90

(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 0% for 2022, which is due to the recording of a valuation allowance, and 24% for 2021.

Contacts

Agnes Lee
ir@inogen.net

Source: Inogen, Inc.

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