Robust Sequential Revenue Growth Driven by Fulfilled Demand

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.

 

Agnes Lee alee@inogen.net 650.677.9138

Inogen (NASDAQ:INGN)
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