– Q4 2021 Total Revenue increased 3.3%
year-over-year to $76.4 million –
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- and
twelve-month periods ended December 31, 2021.
Fourth Quarter 2021 Highlights
- Total revenue of $76.4 million, up 3.3% from the same period in
2020, in line with the mid-point of its preliminary, unaudited
revenue estimate provided on January 10, 2022
- Domestic direct-to-consumer revenue of $33.0 million, up 23.3%
from the same period in 2020
- Rental revenue of $13.0 million, up 39.4% from the same period
in 2020
Full Year 2021 Highlights
- Total revenue of $358.0 million, up 16.1% versus 2020,
primarily due to higher direct-to-consumer sales, rental revenue,
and international business-to-business sales
- Increased focus on rentals, leading to a 63.5% increase in
rental revenue, primarily due to a 33.2% increase in patients on
service and an improved rental gross margin of 57.4% in 2021
compared to 52.1% in 2020
- Signed agreement with contract sales organization, Ashfield
Healthcare, LLC to enhance the Company’s go-to-market capabilities
in the prescriber channel
- Enhanced management team with new additions: President and
Chief Executive Officer, Nabil Shabshab; Chief Commercial Officer,
George Parr; Chief Technology Officer, Dr. Stanislav Glezer;
General Counsel, Jason Somer; and Mike Sergesketter, Interim Chief
Financial Officer
- Continued refreshment of board of directors with new additions:
Elizabeth Mora, also appointed as Chair of the Board, and Kristen
Miranda
“Over the past year, our team has made steady progress to
advance our overall strategy, working to expand our sales footprint
in the prescriber channel and implement initiatives aimed at
driving productivity of our overall commercial operations,” said
Inogen’s President and Chief Executive Officer, Nabil Shabshab. “We
have been nimble and decisive in looking to meet steady customer
demand in the face of significant supply chain headwinds, including
semiconductor availability and the resulting cost impact. At the
same time, we are focused on investing in the business to
strengthen our clinical research and R&D capabilities and
commercial strategies that will position us for long-term,
sustainable growth and profitability in the years to come.”
Fourth Quarter 2021 Financial Results
Total revenue for the three months ended December 31, 2021
increased 3.3% to $76.4 million from $74.0 million in the same
period in 2020, primarily driven by improved average selling
prices, sustained demand, and the reduced impact of the COVID-19
pandemic and related public health emergency (PHE), partially
offset by supply chain constraints that primarily limited sales in
the domestic business-to-business channels. This was in line with
the mid-point of the Company’s preliminary, unaudited revenue
estimate provided on January 10, 2022. Results for each revenue
channel were also in line with preliminary, unaudited estimates
previously provided.
Domestic business-to-business sales in the fourth quarter of
2021 decreased 57.6% to $10.3 million compared to $24.2 million in
the fourth quarter of 2020, primarily due to the supply chain
constraints that limited product availability in this channel.
International business-to-business sales in the fourth quarter
of 2021 increased 47.6% (50.0% increase on a constant currency
basis - see accompanying table for reconciliation of GAAP and
non-GAAP measures) to $20.1 million compared to $13.6 million in
the fourth quarter of 2020. The increase was primarily driven by
increased ambulation of patients in Europe and improving
operational capacity of certain European respiratory assessment
centers closer to normal levels, as improving COVID-19 vaccination
rates had enabled patients to return to more normalized activity
levels and seek treatments, partially offset by the supply chain
constraints that limited product availability in this channel.
Domestic direct-to-consumer sales increased 23.3% to $33.0
million in the fourth quarter of 2021 from $26.8 million in the
fourth quarter of 2020. The increase was primarily driven by higher
average selling prices versus the comparative period in the prior
year. Inside sales representative productivity increased in the
quarter despite lower average inside sales representative
headcount, which was down approximately 3% from the comparative
period in the prior year.
Rental revenue in the fourth quarter of 2021 increased 39.4% to
$13.0 million from $9.4 million in the same period in 2020,
primarily due to increased patients on service, higher Medicare
reimbursement rates, and higher billable patients as a percent of
total patients on service. As of December 31, 2021, the Company had
approximately 42,900 patients on service, which was up 33.2%
compared to December 31, 2020. The increase in patients on service
was primarily driven by greater utilization of leads for rental
opportunities and physician facing initiatives to increase
prescriber awareness by the Company’s sales force as well as the
relaxed Medicare criteria for oxygen therapy reimbursement due to
the COVID-19 PHE.
Total gross margin was 50.5% in the fourth quarter of 2021
versus 46.0% in the comparative period in 2020. Sales revenue gross
margin increased to 49.2% in the fourth quarter of 2021 versus
44.5% in the fourth quarter of 2020, primarily due to increased
average selling prices and decreased mix of domestic
business-to-business sales, which have a lower gross margin than
direct-to-consumer and international sales, partially offset by
higher cost of goods sold per unit in the quarter, primarily due to
increased material and labor and overhead costs. The fourth quarter
of 2021 included $2.3 million of higher material costs associated
with open-market purchases of semiconductor chips used in the
Company’s batteries and portable oxygen concentrators (POCs).
Rental revenue gross margin increased to 56.8% in the fourth
quarter of 2021 versus 56.5% in the fourth quarter of 2020,
primarily due to higher Medicare reimbursement rates, higher
billable patients as a percent of total patients on service, and
lower service expense per patient on service, partially offset by
higher depreciation expense per patient on service.
Total operating expense increased to $45.3 million in the fourth
quarter of 2021 versus $39.6 million in the fourth quarter of 2020,
primarily due to increased personnel-related expense and consulting
expense, partially offset by a $2.9 million non-cash decrease in
the change in fair value of the New Aera earnout liability versus
the comparative period.
Research and development expense increased to $4.7 million in
the fourth quarter of 2021, compared to $3.7 million in the fourth
quarter of 2020, primarily associated with increased
personnel-related expense. Sales and marketing expense increased to
$29.7 million in the fourth quarter of 2021 versus $25.4 million in
the comparative period of 2020, primarily due to increased
personnel-related expense, consulting expense, and credit card and
financing fees. Media and advertising costs were $9.5 million in
the fourth quarter of 2021 compared to $9.3 million in the fourth
quarter of 2020. General and administrative expense increased to
$10.9 million in the fourth quarter of 2021 versus $10.5 million in
the fourth quarter of 2020, primarily due to increased
personnel-related expense and increased consulting expense,
partially offset by the non-cash change in fair value of the New
Aera earnout liability versus the comparative period.
In the fourth quarter of 2021, the Company reported an income
tax expense of $16.0 million, which included a $17.4 million
non-cash income tax provision expense associated with the
revaluation of its deferred tax asset. The valuation allowance was
recorded in the period due to uncertainty around the Company’s
ability to utilize existing deferred tax assets to offset tax
liabilities in future periods, primarily due to cumulative pre-tax
losses, planned strategic investments in future periods, and the
impact of the COVID-19 pandemic, including related supply chain
impacts on parts availability and cost inflation.
In the fourth quarter of 2021, the Company reported an operating
loss of $6.7 million, Adjusted EBITDA of ($0.5) million, net loss
of $22.9 million, and loss per diluted common share of $1.01 (see
accompanying table for reconciliation of GAAP and non-GAAP
measures).
As of December 31, 2021, the Company had cash, cash equivalents,
and marketable securities of $245.5 million with no debt
outstanding. The Company paid significant additional costs in the
fourth quarter of 2021 for the semiconductor chips purchased on the
open market but not yet sold, which increased its prepaid expense
and other current assets and inventory as of December 31, 2021 by
$15.4 million and $0.7 million, respectively.
Financial Outlook for 2022
The Company continues to see ongoing uncertainty in the business
mainly related to supply chain disruptions, in addition to
increased cost of critical components, and the continued and
varying impacts of the COVID-19 pandemic. As a result, the Company
is not providing detailed guidance for 2022, but expects total
revenue in the first quarter of 2022 to be similar to the fourth
quarter of 2021 and expects 2022 full year-over-year revenue growth
to be in the mid-single digit range versus 2021.
The Company believes the semiconductor chip shortage experienced
across many industries has and will likely continue to have a
negative impact on its ability to manufacture products as these
chips are used across all its POCs in both its batteries and
printed circuit boards. The Company is actively working with its
suppliers both in the regular and open market channels to continue
to procure necessary semiconductor chips in addition to working on
certain product redesign opportunities. The Company expects
challenges in terms of supply and pricing inflation until supply
meets demand and prices stabilize. If the Company is unable to
obtain sufficient supply, it could be forced to further slowdown or
temporarily halt production.
The Company also expects increased cost of goods sold per unit
in the first quarter of 2022 due to cost inflation of materials and
labor throughout the supply chain, primarily related to
semiconductor chips price increases. The Company expects $4.5
million to $5.5 million of incrementally higher material costs
associated with open-market purchases of semiconductor chips used
in its batteries and POCs for the first quarter of 2022, which will
vary based on total systems and batteries sold with semiconductor
chips bought on the open market.
The Company has made and plans to continue to make investments
in clinical research, research and development, commercial
operations and building the necessary infrastructure and
capabilities to support future durable revenue growth and margin
expansion. As a result, operating expense for full-year 2022 is
expected to increase compared to 2021.
In total, the Company expects negative Adjusted EBITDA and
operating and net losses in the first quarter of 2022 and operating
and net losses for the full year, reflecting the anticipated
supply-constrained environment, increased cost of goods sold and
incremental growth investments versus the prior year.
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 February 24,
2022 at 4:00pm PT/7:00pm ET through March 10, 2022. To access the
replay, dial (877) 660-6853 or (201) 612-7415 and reference Access
Code: 13725354. 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
We are a medical technology company offering innovative
respiratory products for use in the homecare setting. We 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 first quarter
and full-year 2022 revenue growth rates, cost of goods sold,
operating loss, net loss, and Adjusted EBITDA; the anticipated
impact of the COVID-19 pandemic on the Company’s business;
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; the Company’s operating and sales strategy in respect to
the COVID-19 pandemic; expectations regarding changes to
reimbursement rates; expectations related to the Company’s
prescriber sales organization, including the expansion of the sales
team and implementation of healthcare intelligence platforms and
tools through its partnership with Ashfield Healthcare, LLC;
expectations regarding the Company’s compensation expense; and
expectations related to the Company’s rental strategy and growth
prospects. 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 risks related to the COVID-19 pandemic; the impact
of changes in reimbursement rates and reimbursement and regulatory
policies; the possible loss of key employees, customers, or
suppliers; risks relating to Inogen’s acquisition of New Aera, Inc.
and the possibility that Inogen will not realize anticipated
revenue from the technology acquired from New Aera or that 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, including, among
others, risks relating to market acceptance of its products;
competition; its sales, marketing and distribution capabilities;
its planned sales, marketing, and research and development
activities; interruptions or delays in the supply of components or
materials for, or manufacturing of, its products; seasonal
variations; unanticipated increases in costs or expenses; and risks
associated with international operations. Information on these and
additional risks, uncertainties, and other information affecting
Inogen’s business operating results are contained in its Quarterly
Report on Form 10-Q for the period ended September 30, 2021, and in
its other filings with the Securities and Exchange Commission.
Additional information will also be set forth in Inogen’s Annual
Report on Form 10-K for the period ended December 31, 2021, 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 and
twelve months ended December 31, 2021 and December 31, 2020.
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)
December 31,
December 31,
2021
2020
Assets
Current assets
Cash and cash equivalents
$
235,524
$
211,962
Marketable securities
9,989
19,257
Accounts receivable, net
24,452
29,717
Inventories, net
31,873
24,815
Income tax receivable
1,343
2,048
Prepaid expenses and other current
assets
26,005
17,898
Total current assets
329,186
305,697
Property and equipment, net
38,926
28,230
Goodwill
32,979
33,165
Intangible assets, net
60,147
68,797
Operating lease right-of-use asset
24,912
8,827
Deferred tax asset - noncurrent
-
14,467
Other assets
3,363
2,669
Total assets
$
489,513
$
461,852
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued expenses
$
25,689
$
33,712
Accrued payroll
17,307
7,091
Warranty reserve - current
6,480
5,740
Operating lease liability - current
3,393
1,931
Deferred revenue - current
8,568
6,994
Income tax payable
75
1,242
Total current liabilities
61,512
56,710
Warranty reserve - noncurrent
7,246
8,654
Operating lease liability - noncurrent
23,281
8,078
Earnout liability - noncurrent
15,386
26,940
Deferred revenue - noncurrent
11,861
11,822
Deferred tax liability - noncurrent
-
25
Total liabilities
119,286
112,229
Stockholders' equity
Common stock
23
22
Additional paid-in capital
299,463
273,521
Retained earnings
69,272
75,605
Accumulated other comprehensive income
1,469
475
Total stockholders' equity
370,227
349,623
Total liabilities and stockholders'
equity
$
489,513
$
461,852
Consolidated Statements of
Comprehensive Loss
(unaudited)
(amounts in thousands, except
share and per share amounts)
Three months ended
Twelve months ended
December 31,
December 31,
2021
2020
2021
2020
Revenue
Sales revenue
$
63,371
$
64,628
$
311,730
$
280,189
Rental revenue
13,032
9,350
46,273
28,298
Total revenue
76,403
73,978
358,003
308,487
Cost of revenue
Cost of sales revenue
32,187
35,850
161,824
156,764
Cost of rental revenue, including
depreciation of $2,603 and $1,700, for the three months ended and
$8,860 and $5,695 for the twelve months ended, respectively
5,628
4,069
19,696
13,543
Total cost of revenue
37,815
39,919
181,520
170,307
Gross profit
38,588
34,059
176,483
138,180
Operating expense
Research and development
4,684
3,674
16,576
14,080
Sales and marketing
29,706
25,389
112,815
97,520
General and administrative
10,871
10,518
37,852
38,605
Total operating expense
45,261
39,581
167,243
150,205
Income (loss) from operations
(6,673
)
(5,522
)
9,240
(12,025
)
Other income (expense)
Interest income
22
67
129
909
Other income (expense)
(238
)
250
(710
)
5,836
Total other income (expense),
net
(216
)
317
(581
)
6,745
Income (loss) before provision
(benefit) for income taxes
(6,889
)
(5,205
)
8,659
(5,280
)
Provision (benefit) for income
taxes
15,988
(84
)
14,992
549
Net loss
$
(22,877
)
$
(5,121
)
$
(6,333
)
$
(5,829
)
Other comprehensive income (loss), net
of tax
Change in foreign currency translation
adjustment
(215
)
452
(800
)
857
Change in net unrealized gains (losses) on
foreign currency hedging
(282
)
(244
)
1,746
(82
)
Less: reclassification adjustment for net
(gains) losses included in net income
314
(140
)
47
(207
)
Total net change in unrealized gains
(losses) on foreign currency hedging
32
(384
)
1,793
(289
)
Change in net unrealized gains (losses) on
marketable securities
1
-
1
(6
)
Total other comprehensive income
(loss), net of tax
(182
)
68
994
562
Comprehensive loss
$
(23,059
)
$
(5,053
)
$
(5,339
)
$
(5,267
)
Basic net loss per share attributable
to common stockholders (1)
$
(1.01
)
$
(0.23
)
$
(0.28
)
$
(0.27
)
Diluted net loss per share attributable
to common stockholders (1)
$
(1.01
)
$
(0.23
)
$
(0.28
)
$
(0.27
)
Weighted-average number of shares used
in calculating net income per share attributable to common
stockholders:
Basic common shares
22,707,987
21,878,004
22,490,027
21,980,326
Diluted common shares
22,707,987
21,878,004
22,490,027
21,980,326
(1)
Reconciliations of net loss attributable
to common stockholders basic and diluted can be found in Inogen’s
Annual Report on Form 10-K to be filed with the Securities and
Exchange Commission.
(2)
Due to a net loss for the three and twelve
months ended December 31,2021 and for the three and twelve months
ended December 31, 2020, diluted loss per share is the same as
basic.
Supplemental Financial
Information
(unaudited)
(in thousands, except units
and patients)
Three months ended
Twelve months ended
December 31,
December 31,
2021
2020
2021
2020
Revenue by region and category
Business-to-business domestic sales
$
10,277
$
24,249
$
91,371
$
96,423
Business-to-business international
sales
20,083
13,609
79,460
62,147
Direct-to-consumer domestic sales
33,011
26,770
140,899
121,619
Direct-to-consumer domestic rentals
13,032
9,350
46,273
28,298
Total revenue
$
76,403
$
73,978
$
358,003
$
308,487
Additional financial measures
Units sold
29,400
40,800
175,800
178,900
Net rental patients as of period-end
42,900
32,200
42,900
32,200
Reconciliation of U.S. GAAP to
Other Non-GAAP Financial Measures
(unaudited)
(in thousands)
Three months ended
Twelve months ended
December 31,
December 31,
Non-GAAP EBITDA and Adjusted
EBITDA
2021
2020
2021
2020
Net loss
$
(22,877
)
$
(5,121
)
$
(6,333
)
$
(5,829
)
Non-GAAP adjustments:
Interest income
(22
)
(67
)
(129
)
(909
)
Provision (benefit) for income taxes
15,988
(84
)
14,992
549
Depreciation and amortization
5,767
4,927
21,628
18,581
EBITDA (non-GAAP)
(1,144
)
(345
)
30,158
12,392
Stock-based compensation
2,396
2,092
10,943
8,203
Change in fair value of earnout
liability
(1,727
)
1,219
(11,596
)
1,053
Adjusted EBITDA (non-GAAP)
$
(475
)
$
2,966
$
29,505
$
21,648
Three months ended
Twelve months ended
December 31,
2021
December 31,
2021
Non-GAAP international constant
currency revenue
(using 2020
FX rates)
December 31,
2020
(using 2020
FX rates)
December 31,
2020
International revenues (GAAP)
$
20,082
$
13,609
$
79,460
$
62,147
Foreign exchange impact
331
—
(2,524
)
—
International constant currency revenues
(non-GAAP)
$
20,413
$
13,609
$
76,936
$
62,147
International revenue growth (GAAP)
47.6
%
27.9
%
International constant currency revenue
growth (non-GAAP)
50.0
%
23.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220224006025/en/
Investor and Media Contacts Bryan Locke, Mike DeGraff,
Gabriella Coffey ir@inogen.net
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