What changed in this filing

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Item 1A. Risk Factors

2024-03-01 compared with 2023-02-24 · 263 added, 315 removed, 941 unchanged (38% of the section changed)

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• our reliance on a single source or a limited group of manufacturers or suppliers;

the lack of long-term supply contracts with many of our third-party suppliers;

the possibility our manufacturing facilities could become unavailable or inoperable and other potential manufacturing problems or delays;

our reliance upon a third-party contract manufacturer for certain manufacturing and repair operations;

• the need to continue to enhance our existing products and develop and market new products;

risks associated with public health threats and epidemics, including the COVID-19 pandemic and related public health emergency (PHE);

• potential acquisitions of, or investments in, other companies;

• the complex and lengthy reimbursement process we depend upon for a significant portion of our revenue;

• increases in our operating costs;

• economic impacts that affect customer and consumer spending as well as demand for our products;

• public health threats and epidemics;

• the lack of long-term supply contracts with many of our third-party suppliers;

• the competitive bidding process or other reimbursement policy changes under Medicare or other third-party payors, including recently enacted and potential future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs;

• consolidation in the healthcare industry;

• healthcare reform measures;

the complex and lengthy reimbursement process we depend upon for a significant portion of our revenue;

• the possibility our manufacturing facilities could become unavailable or inoperable and other potential manufacturing problems or delays;

• our reliance upon a third-party contract manufacturer for certain manufacturing and repair operations;

• potential failure to maintain or obtain new private payor contracts and future reductions in reimbursement rates from private payors;

our ability to hire and retain highly qualified individuals;

• our ability to manage our anticipated growth effectively;

potential acquisitions of, or investments in, other companies;

• the possibility of non-payment of our HME providers, distributors, private label partners and resellers;

• our international sales and manufacturing activities;

• warranty or product liability claims or other litigation;

increases in our operating costs;

• our dependence on the services of our senior executives and other key technical personnel;

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We compete with a number of manufacturers and distributors of portable oxygen concentrators (POCs), as well as providers of other long-term oxygen therapy solutions such as home delivery of oxygen tanks or cylinders, stationary concentrators, transfilling concentrators, and liquid oxygen.

Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Invacare Corporation, Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura.

Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura.

Respironics, which announced in early 2024 that it would be leaving the U.S.

portable oxygen concentrator market until further regulatory assessments but continues to have product in the market.

Given the relatively straightforward regulatory path in the oxygen therapy device manufacturing market, we expect that the industry will become increasingly competitive in the future.

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Because of reimbursement reductions, we expect more industry consolidation and volatility in ordering patterns based on how providers are restructuring their businesses and their access to capital.

In addition, providers may reduce or eliminate purchases from us due to our increased focus on building out a prescriber sales team and pursuing rentals directly,

which could be in competition with our providers in the United States.

In addition, providers may reduce or eliminate purchases from us due to our increased focus on building out a prescriber sales team and pursuing rentals directly, which could be in competition with our providers in the United States.

Respiratory therapy providers compete primarily on the basis of product features and service, rather than price, since reimbursement levels are established by Medicare and Medicaid, or by the individual determinations of private payors.

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Medicare's service reimbursement programs represented more than 10% of our total revenue for the years ended December 31, 2023, 2022 and 2021.

One single customer represented more than 10% of our total revenue for the years ended December 31, 2020.

We expect that sales to relatively few customers will continue to account for a significant percentage of our total revenue in future periods.

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For example, we have previously experienced a decline in sales to one large national homecare provider who purchased through our private label partner.

We have also experienced a decline in sales from other home medical equipment providers and these providers have communicated to us that they continue to be subject to capital constraints.

Moreover, in the second quarter of 2020 and continuing through the first quarter of 2021, we experienced a decline in total sales to business-to-business customers worldwide, which we believe was primarily due to the COVID-19 pandemic and related PHE.

We have also experienced a decline in sales from other HME providers and these providers have communicated to us that they continue to be subject to capital constraints.

If we were to lose one of our key customers or have a key customer significantly reduce its volume of business with us, such as we previously experienced with the large national homecare provider, our revenue may be materially reduced and there would be an adverse effect on our business, financial condition and results of operations.

these manufacturers or suppliers or limitation on availability could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations.

We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases components required to manufacture and assemble our products are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers or limitation on availability could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations.

We utilize single-source suppliers for some of the components and subassemblies we use in our Inogen One systems and our Inogen At Home systems.

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• we may experience delays in delivery by our suppliers due to customs clearing delays, shipping delays, scarcity of raw materials and components or changes in demand from us or their other customers;

our suppliers may be unable to meet demands due to the effect of exposure to infectious diseases, epidemics or other public health emergencies, including the COVID-19 pandemic and related PHE or due to acts of terrorism, hostilities, military conflict or war, including the war in Ukraine;

• our suppliers may be unable to meet demands due to the effect of exposure to infectious diseases, epidemics or other public health emergencies, or due to acts of terrorism, hostilities, military conflict or war, including the conflict between Israel and Hamas and the war in Ukraine;

• we may not be able to find new or alternative components, even at elevated prices, or reconfigure our system and manufacturing processes in a timely manner if the necessary components become unavailable, which could lead to a production slowdown or temporary stoppage;

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We have experienced supply problems with one or more of our suppliers and may again experience supply problems in the future.

For example, we saw supply chain disruptions in the second half of 2021 and 2022, and believe we may continue to see such disruptions in 2023, primarily associated with semiconductor chips used in our batteries and printed circuit boards.

For example, we saw supply chain disruptions in the second half of 2021 as well as in 2022 and 2023, primarily associated with semiconductor chips used in our batteries and printed circuit boards.

However, we recognize that there could be supply shortages for other components used in our products.

While we have taken steps to attempt to mitigate the impact of potential supply shortages, the previously experience shortages have had and any future shortage may have a negative impact on our ability to manufacture products (including with respect to the production halt discussed below) as these chips are used across all of our portable oxygen concentrators in our batteries and printed circuit boards.

The inflated costs related to the supply shortage negatively impacted our cost of goods sold in the third and fourth quarter of 2021 and 2022 even though we paid significant costs in the second half of 2021 and throughout 2022 associated with these chips, most of these costs increased our prepaid expense and inventory given that these components were either not yet delivered or not yet sold in finished products during the period.

While we have seen improvement in semiconductors in the beginning of 2023, we expect availability issues to continue into 2023.

In addition, the uncertainty related to COVID-19 extended lockdowns in China could further impact our operations in 2023 as it relates to manufacturing and finishing of semiconductors.

As a result of the semiconductor chip shortages, we temporarily suspended manufacturing operations at our Texas and California locations from January 3, 2022 to February 7, 2022 and Foxconn, our Czech Republic-based original equipment manufacturer (OEM), suspended manufacturing due to the same supply constraints from January 3, 2022 to February 9, 2022.

We have attempted to mitigate the impact through forward buying of critical components on the open market, but it has and could continue to negatively impact our ability to manufacture product, and we could be forced to slowdown or temporarily halt production again.

This may mean that some of our customers have decided or may decide to seek other sources of products if we cannot meet their demand.

The FDA has released guidance that requires manufacturers of certain medical devices, including ventilation-related products under product code CAW, among others, to notify FDA of a permanent discontinuance or interruption in manufacturing of an applicable device under Section 506J of the Federal Food, Drug, and Cosmetic Act during the COVID-19 PHE.

To the extent we experience an interruption in our manufacturing during the COVID-19 PHE that falls within the scope of this guidance, we would be required to notify FDA.

This and other regulatory requirements could increase the cost of our operations and compliance.

In addition, we may be deemed to manufacture or contract to manufacture products that contain certain minerals that have been designated as “conflict minerals”

under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

As a result, we may be required to perform due diligence to determine the origin of such minerals and disclose and report whether or not such minerals originated in the Democratic Republic of the Congo or adjoining countries.

The inflated costs related to the supply shortage negatively impacted our cost of goods sold throughout 2022 and 2023 associated with these chips, most of these costs increased our prepaid expense and inventory given that these components were either not yet delivered or not yet sold in finished products during the period.

In addition, we may be deemed to manufacture or contract to manufacture products that contain certain minerals that have been designated as “conflict minerals” under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

As a result, we may be required to perform due diligence to determine the origin of such minerals and disclose and report whether such minerals originated in the Democratic Republic of the Congo or adjoining countries.

The implementation of these requirements could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of our products.

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This, in turn, could constitute a material modification or require a redesign of our products and, potentially, require additional FDA clearance or approval before we could use any materially modified or redesigned product with new components or subassemblies, thereby causing further costs and delays that could adversely affect our business, financial condition and results of operations.

The ongoing conflict between Russia and Ukraine as well as implications of supply chain challenges may adversely affect our business and results of operations.

It is not possible to predict the implications of this conflict, which could also include, without limitation, further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, increased threat of cyberattacks, supply shortages, and adverse effects on currency exchange rates and financial markets.

The war in Ukraine has adversely affected some shipping pathways and we anticipate that this conflict may result in disruptions to our supply chain and shipping channels.

We are continuing to monitor the situation in Ukraine and globally as well as assess its potential impact on our business.

A significant escalation or further expansion of the conflict's current scope or related disruptions to the supply chain could have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to continue to enhance our existing products, develop or acquire and market our products that respond to customer needs and preferences and achieve market acceptance, we may experience a decrease in demand for our products and our business could suffer.

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Product improvements and new product introductions also require significant planning, design, development, patent protection, and testing at the technological, product, and manufacturing process levels and we may not be able to timely develop product improvements or new products or obtain necessary patent protection and regulatory clearances or approvals for such product improvements or new products in a timely manner, or at all.

Our competitors’

new products may enter the market before our new products reach the market, be more effective with more features, obtain better market acceptance, or render our products obsolete.

Any new products that we develop or acquire, including for example the Rove 6 that we launched in Europe in December 2022, may not receive market acceptance or otherwise generate any meaningful sales or profits for us relative to our expectations based on, among other things, existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs and research and development.

Our competitors’ new products may enter the market before our new products reach the market, be more effective with more features, obtain better market acceptance, or render our products obsolete.

Any new products that we develop or acquire may not receive market acceptance or otherwise generate any meaningful sales or profits for us relative to our expectations based on, among other things, existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotional programs and research and development.

In addition, if we are unable to seek and obtain regulatory approval or adequate coverage and reimbursement for any new products that we develop or introduce, in a timely manner or at all, we may realize lower revenue than expected or even no revenue at all from these products.

As a result, our business, financial condition and results of operations could be materially harmed.

We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations, and harm our results of operations.

Our business strategy may, from time-to-time, include acquiring or investing in complementary services, technologies or businesses, such as our acquisition of Physio-Assist in 2023.

We do not have an extensive history of acquiring other companies and cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company.

Any such acquisition or investment could materially and adversely affect our financial condition and results of operations.

We may issue equity securities which could dilute current stockholders’ ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial condition, stockholder equity, and stock price.

The acquisition and integration process is complex, expensive and time-consuming, and may cause an interruption of, or loss of momentum in, product development and sales activities and operations of both companies, and we may incur substantial cost and expense, as well as divert the attention of management.

Acquisitions and other strategic investments involve significant risks and uncertainties, including:

• the potential failure to achieve the expected benefits of the combination or acquisition;

• the potential failure to successfully develop or commercialize the acquired products or technology;

• unanticipated costs and liabilities;

• difficulties in integrating new products, businesses, operations, and technology infrastructure in an efficient and effective manner;

• difficulties in maintaining customer relations;

• the potential loss of key employees of the acquired businesses;

• the diversion of the attention of our senior management from the operation of our daily business;

• the potential adverse effect on our cash position to the extent that we use cash for the purchase price;

• the potential incurrence of interest expense and debt service requirements if we incur debt to pay for an acquisition;

• the potential issuance of securities that would dilute our stockholders’ percentage ownership;

• the potential to incur large and immediate write-offs and restructuring and other related expenses;

• the potential of amortization expenses related to intangible assets;

• the potential failure to achieve anticipated reimbursement classifications for acquired products;

• the potential to become involved in intellectual property litigation related to such acquisitions or strategic investments;

• the inability to maintain uniform standards, controls, policies, and procedures.

Any acquisition or investment could expose us to unknown liabilities.

Moreover, we cannot assure you that we will realize the anticipated benefits of any acquisition or investment.

In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively, and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology, as well as on our revenues, gross margins, and expenses.

For example, as part of our ongoing efforts to advance patient preference and maintain our technology leadership position, we acquired New Aera in 2019.

We made certain assumptions relating to the New Aera acquisition, which assumptions have proven to be inaccurate, including the failure to realize the expected benefits of the acquisition, failure to realize expected revenue, higher than expected operating costs, and general economic and business conditions that adversely affected the combined company following the acquisition.

On December 19, 2022, we determined to dispose of the technology intangible assets previously acquired from New Aera related to the Tidal Assist ® Ventilator (TAV ® ) technology by ceasing development of such assets and abandoning the TAV program (the “Disposal Determination”).

We made the Disposal Determination based on our assessment that continued development of the assets would not be economically feasible.

The assessment considered many factors, including 1) the lack of compatibility and functionality of the technology intangible asset within our existing product portfolio, 2) the lack of commercial potential of such products that were not approved for ventilation Medicare reimbursement and a negative litigation outcome that occurred subsequent to the approved Healthcare Common Procedure Coding System (HCPCS) code process, and 3) the substantial additional investment that would be required in order to attempt to achieve any commercial potential with substantial risk that no benefit would ever be achievable.

We depend upon reimbursement from Medicare, private payors, Medicaid and payments from patients for a significant portion of our revenue, and if we fail to manage the complex and lengthy reimbursement process, our business and operating results could be adversely affected.

A significant portion of our rental revenue is derived from reimbursement by third-party payors.

We accept assignment of insurance benefits from customers and, in a majority of cases, invoice and collect payments directly from Medicare, private payors and Medicaid, as well as direct from patients under co-insurance provisions.

For the years ended December 31, 2023, 2022 and 2021, approximately 20.3%, 15.0% and 12.9%, respectively, of our total revenue was derived from Medicare, private payors, Medicaid, and individual patients who directly receive reimbursement from third-party payors and this percentage could increase as a percent of total revenue if we increase net patient additions faster than our sales revenue growth.

Our financial condition and results of operations may be affected by the healthcare industry’s reimbursement process, which is complex and can involve lengthy delays between the time that a product is delivered to the consumer and the time that the reimbursement amounts are settled.

Depending on the payor, we may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement.

Certain payors have filing deadlines, and they will not pay claims submitted after such time.

We are also subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material delays, refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts.

We cannot ensure that we will be able to continue to effectively manage the process which would adversely affect our business, financial condition and results of operations.

Increases in our operating costs could have a material adverse effect on our business, financial condition and results of operations.

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In particular, labor and related costs account for a significant portion of our operating costs, and we compete with other healthcare providers to attract and retain qualified or skilled personnel and with various industries for administrative and service employees.

This competitive environment has resulted in increased labor costs, which we saw in 2022 and expect to continue to see in 2023 as the labor market has tightened and there is increased competition for certain roles.

As a result, increases in our operating costs including personnel-related costs could adversely affect our financial condition and results of operations.

An economic recession, downturn, period of inflation, or economic uncertainty in our key markets may adversely affect customer and consumer spending as well as demand for our products.

Global economic conditions are uncertain and volatile, due in part to the impacts of COVID-19 and its continued influence on business models and market dynamics around the globe.

Such impacts potentially include the potential impacts of increasing inflation, geopolitical uncertainties, and any sanctions, restrictions or responses to those conditions.

As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer spending also remain unpredictable and subject to reductions due to credit constraints and uncertainties about the future.

Unfavorable economic conditions may lead customers and consumers to delay or reduce purchases of our products.

Consumer demand for our products may not reach our targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, higher inflation, bank failures, or continued unpredictable and unstable market conditions.

Unfavorable economic conditions may lead customers and consumers to delay or reduce purchases of our products and/or strain our suppliers.

Consumer demand for our products may not reach our targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets and our customers could be delayed in making payments for our products.

Our sensitivity to economic cycles and any related fluctuation in customer and consumer demand could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to risks associated with public health threats and epidemics, including the COVID-19 pandemic and related PHE.

We are subject to risks associated with public health threats and epidemics, including the COVID-19 pandemic and related public health emergency (PHE).

Public health outbreaks, epidemics, pandemics of contagious or infectious diseases, such as COVID-19, may significantly disrupt our business.

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Business disruptions could include disruptions or restrictions on our ability to travel, as well as temporary closures of our facilities or the facilities of our contractors, suppliers, and other partners.

For example, we previously experienced declines in total business-to-business demand during portions of the COVID-19 pandemic and related PHE, which we believe were due to these factors and other factors related to the COVID-19 pandemic and related PHE.

Additionally, new variants of COVID-19 could prove to be deadlier or more transmittable, or the developed vaccines may be ineffective versus these new variants, which could result in further business disruptions that could negatively impact our business and financial results.

In addition, while we and our contract manufacturer have been able to keep our manufacturing facilities open during the COVID-19 pandemic and related PHE, there can be no assurance that we would be able to keep such facilities open indefinitely during a future public health emergency.

While the extent of the impact of the COVID-19 pandemic and related PHE on our business and financial results remains uncertain, we were negatively impacted by portions of the COVID-19 pandemic and related PHE and a continued or new public health crisis in the future could have a further material negative impact on our business, financial condition, and result of operations.

Even after the COVID-19 pandemic and related PHE have subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations and many of our known risks described in this Annual Report on Form 10-K may be heightened.

For example, we previously experienced declines in total demand during portions of the COVID-19 pandemic and related PHE, which we believe were due to these factors and other factors related to the COVID-19 pandemic and related PHE.

In addition, while we and our contract manufacturer were able to keep our manufacturing facilities open during the COVID-19 pandemic and related PHE, there can be no assurance that we would be able to keep such facilities open indefinitely during a future public health emergency.

We do not have long-term supply contracts with many of our third-party suppliers.

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For example, our batteries and motherboards are sourced from a single source supplier, and sub-components of the battery are also sourced from single source suppliers.

We are experiencing limited availability of certain semiconductor chip components for our Inogen One portable oxygen concentrators in both its batteries and printed circuit boards, and we do not have long-term supply contracts that would guarantee our supply during these periods of higher demand and lower availability of these sub-components.

This has led to orders not being filled in a timely manner and a temporary production halt in the first quarter of 2022 and has led to increased costs for components and limited supply availability through 2022, which we expect to continue in 2023.

For additional discussion of potential risks related to our inability to source components of our products, please see the risk factor entitled “

We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations.

For additional discussion of potential risks related to our inability to source components of our products, please see the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations.

A significant majority of our rental patients who use our product have health coverage under the Medicare program, and recently enacted and future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs have affected and could continue to materially and adversely affect our business and operating results.

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There are no limits on the number of 60-month cycles over which a Medicare patient may receive benefits and an oxygen therapy provider may receive reimbursement, so long as such equipment continues to be medically necessary for the patient.

We anticipate that the Deficit Reduction Act of 2005

oxygen payment rules will continue to negatively affect our net revenue on an ongoing basis, as each month additional customers reach the capped rental period in month thirty-seven, resulting in potentially two or more years without rental income from these customers while we continue to incur customer service and maintenance costs.

We anticipate that the Deficit Reduction Act of 2005 oxygen payment rules will continue to negatively affect our net revenue on an ongoing basis, as each month additional customers reach the capped rental period in month thirty-seven, resulting in potentially two or more years without rental income from these customers while we continue to incur customer service and maintenance costs.

Our capped patients as a percentage of total patients on service was approximately 13.1% as of December 31, 2023 and 9.2% as of December 31, 2022.

The percentage of capped patients may fluctuate over time as new patients come on service, patients come off of service before and during the capped rental period, and existing patients enter the capped rental period.

The percentage of capped patients may fluctuate over time as new patients come on service, patients come off service before and during the capped rental period, and existing patients enter the capped rental period.

We cannot predict the potential impact to rental revenues in future periods associated with patients in the capped rental period.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, includes, among other things, face-to-face physician encounter requirements for certain durable medical equipment and home health services, and a requirement that by 2016, the competitive bidding process must be nationalized or prices in non-competitive bidding areas must be adjusted to match competitive bidding prices.

There have been significant U.S.

reimbursement and policy changes associated with the COVID-19 PHE that impact oxygen therapy and other durable medical equipment.

The CARES Act allows HHS to waive certain Medicare telehealth payment requirements during the COVID-19 PHE declared by HHS on January 31, 2020 to allow beneficiaries in all areas to receive telehealth services, including at their home, starting March 6, 2020.

• The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, included, among other things, face-to-face physician encounter requirements for certain durable medical equipment and home health services, and a requirement that by 2016, the competitive bidding process be nationalized or prices in non-competitive bidding areas be adjusted to match competitive bidding prices.

• There were significant U.S.

reimbursement and policy changes associated with the COVID-19 PHE that impacted oxygen therapy and other durable medical equipment.

The CARES Act allowed the U.S.

Department of Health and Human Services (HHS) to waive certain Medicare telehealth payment requirements during the COVID-19 PHE declared by HHS on January 31, 2020 to allow beneficiaries in all areas to receive telehealth services, including at their home, starting March 6, 2020.

The Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R.

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The 75/25 blended rate was retroactive to March 6, 2020.

The PHE is currently scheduled to expire on May 11, 2023.

The COVID-19 PHE expired on May 11, 2023.

The Coronavirus Preparedness and Response Supplemental Appropriations Act extended the 75/25 blended rates for all other non-competitively bid areas until December 31, 2023.

• In May 2020, Congress eliminated the 2% Medicare sequestration payment reduction that applies to all Medicare providers and suppliers, due to the COVID-19 PHE, and Congress extended it until March 31, 2022.

The sequestration payment reduction resumed with a 1% reduction to rates from April 1, 2022 until June 30, 2022, with the full 2% Medicare sequestration having resumed on July 1, 2022.

In addition, the CARES Act established a provider relief fund of $100 billion for Medicare providers and suppliers to prevent, prepare for, and respond to the COVID-19 PHE, and as a Medicare supplier we also received funds of $6.2 million in the second quarter of 2020.

The Paycheck Protection Program and Heath Care Enhancement Act was also signed into law on April 24, 2020 and provides additional funding of $484 billion to programs enacted under the CARES Act.

Of the $484 billion, $75 billion is additional funding for healthcare providers to reimburse healthcare related expenses and lost revenues attributable to COVID-19 PHE, which is in addition to the $100 billion approved in the CARES Act.

The sequestration payment reduction resumed with a 1% reduction to rates from April 1, 2022 until June 30, 2022, and the full 2% Medicare sequestration resumed on July 1, 2022.

• The CARES Act established a provider relief fund of $100 billion for Medicare providers and suppliers to prevent, prepare for, and respond to the COVID-19 PHE, and as a Medicare supplier we also received funds of $6.2 million in the second quarter of 2020.

The Paycheck Protection Program and Heath Care Enhancement Act was also signed into law on April 24, 2020 and provided additional funding of $484 billion to programs enacted under the CARES Act.

Of the $484 billion, $75 billion was additional funding for healthcare providers to reimburse healthcare related expenses and lost revenues attributable to COVID-19 PHE, which was in addition to the $100 billion approved in the CARES Act.

• On April 6, 2020, CMS issued an Interim Final Rule (IFR) in the Federal Register for policy and regulatory revisions in response to the COVID-19 PHE.

This IFR included that for the duration of the COVID-19 PHE, the face-to-face requirements and clinical indications of coverage for home oxygen, among other respiratory products, will be waived.

The Trump administration also issued a number of regulatory waivers to increase the flexibility in durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers’

ability to service patients quickly and without the normal requirements.

For example, the patient signature for proof of delivery for DMEPOS is waived when signatures cannot be collected during the COVID-19 PHE for dates of services within the PHE.

In addition, CMS increased Medicare contractors’

ability to waive replacement product requirements, paused the national prior authorization program for certain DMEPOS, automatically extended expiring accreditations, granted contractors the flexibility to grant appeals extensions, and suspended medical review of claims.

This IFR included that for the duration of the COVID-19 PHE, the face-to-face requirements and clinical indications of coverage for home oxygen, among other respiratory products, were waived.

• The Trump administration also issued a number of regulatory waivers to increase the flexibility in durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers’ ability to service patients quickly and without the normal requirements.

For example, the patient signature for proof of delivery for DMEPOS was waived when signatures could not be collected during the COVID-19 PHE for dates of services within the PHE.

In addition, CMS increased Medicare contractors’ ability to waive replacement product requirements, paused the national prior authorization program for certain DMEPOS items, automatically extended expiring accreditations, granted contractors the flexibility to grant appeals extensions, and suspended medical review of claims.

Both the IFR and temporary regulatory changes show significant flexibility from CMS to improve access for oxygen and other DMEPOS items during this COVID-19 PHE.

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In August 2020, CMS resumed medical review of claims and the prior authorization program for certain DMEPOS.

CMS also issued a final rule in December 2021 (CMS-1738-P) to establish payment amounts that will be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.

We believe that Medicare rates will not change for the length of the COVID-19 PHE, except for any net change for inflation and sequestration, as outlined above.

• CMS issued a final rule in December 2021 (CMS-1738-P) to establish payment amounts that were to be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.

• CMS established three different fee schedule adjustment methodologies for non-CBAs after the termination of the COVID-19 PHE:

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• In January 2021, CMS announced, for informational purposes only, the payment amounts that would have been effective for the competitive bidding round 2021 as part of its effort to increase transparency into the DMEPOS Competitive Bidding Program.

As a reminder, the bids for oxygen were based on the Healthcare Common Procedure Coding System (HCPCS) code E1390, which is for stationary oxygen, and there were 130 regions bid.

As a reminder, the bids for oxygen were based on the HCPCS code E1390, which is for stationary oxygen, and there were 130 regions bid.

The simple average of the 2018 payment amounts for these regions for this code was $73.98.

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• In September 2021, CMS published a Decision Memo which revised the Home Use of Oxygen national coverage determination and removed the national coverage determination for Home Oxygen Use to Treat Cluster Headaches.

This will allow the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.

This allows the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.

CMS also expanded patient access to oxygen and oxygen equipment in the home by allowing oxygen use for acute or short-term needs instead of limiting coverage to chronic hypoxemia, removed the requirements for alternative treatment measures before dispensing of oxygen therapy, and removed the limited list of conditions for which oxygen may be covered to respiratory-related diseases, to allow the physician flexibility to make that determination.

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CMS delayed the implementation date for the revised national coverage determination until January 3, 2023.

However, we do not yet have visibility on the details of how the Medicare Administrative Contractors will change their coverage determinations.

These legislative provisions have had and may continue to have a material and/or adverse effect on our business, financial condition and results of operations.

• On March 11, 2021, the American Rescue Plan Act of 2021 (ARP) became federal law.

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The Congressional Budget Office previously estimated that a Statutory PAYGO sequester in fiscal year 2022 resulting from the ARP passage would cause a 4% reduction in Medicare spending.

In December 2021, Congress deferred action on waiving Statutory PAYGO and has delayed implementation of this payment reduction until 2023.

• On December 29, 2022, the Consolidated Appropriations Act of 2023 (Pub.

L.) was signed into law.

117-328) was signed into law.

Included in this law was a provision deferring for two years, until January 1, 2025, the Statutory PAYGO Medicare payment reductions.

This law also extended the DME 75/25 blended rates in non-competitive bidding areas and extended the COVID-19 PHE telehealth waivers until the end of 2024.

We cannot currently determine if, or to what extent, our business, results of operations, financial condition or liquidity will ultimately be impacted by mandated sequestration triggers under the PAYGO Act, or if or when the mandated sequestration will occur.

Medicare’s service reimbursement programs accounted for 77.0%, 81.9% and 81.5% of rental revenue for the years ended December 31, 2022, 2021 and 2020, respectively, and based on total revenue were 11.6%, 10.6% and 7.5% for the years ended December 31, 2022, 2021 and 2020, respectively.

Medicare’s service reimbursement programs accounted for 67.7%, 77.0% and 81.9% of rental revenue for the years ended December 31, 2023, 2022 and 2021, respectively, and based on total revenue were 13.7%, 11.6% and 10.6% for the years ended December 31, 2023, 2022 and 2021, respectively.

These legislative provisions have had and may continue to have a material and/or adverse effect on our business, financial condition and results of operations.

The HHS Office of Inspector General (OIG) has recommended that states review Medicaid reimbursement for durable medical equipment (DME) and supplies.

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The competitive bidding process or other reimbursement policy changes under Medicare or other third-party payors could negatively affect our business and financial condition.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires the Secretary of HHS to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment, including oxygen equipment.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required the Secretary of HHS to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment, including oxygen equipment.

We rely significantly on reimbursement from Medicare and private payors, including Medicare Advantage plans, Medicaid and patients for our rental revenue.

For the year ended December 31, 2022, approximately 77.0% of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs.

For the year ended December 31, 2023, approximately 67.7% of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs.

list price for our stationary oxygen rentals (HCPCS E1390) is $260 per month and the U.S.

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As of January 1, 2023

As of January 1, 2022

As of April 1, 2021

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As of January 1, 2018

CMS also issued a final rule in December 2021 (CMS-1738-P) to establish payment methodologies that will be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.

We believe that Medicare rates will not change for the length of the PHE, except for inflation and sequestration adjustments that typically occur annually each January but have not yet been announced.

CMS also issued a final rule in December 2021 (CMS-1738-P) to establish payment methodologies to be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.

CMS established three different fee schedule adjustment methodologies for non-CBAs after the termination of the COVID-19 PHE:

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Non-CBA payment rates are based on regional pricing, that are derived from former competitive bidding payment rates.

In rural areas and non-contiguous states, payment rates are based on a higher 50-50 blended rate, to account for higher

servicing costs in those areas.

In rural areas and non-contiguous states, payment rates are based on a higher 50-50 blended rate, to account for higher servicing costs in those areas.

We estimate that approximately 18% of our patients are eligible to receive the higher reimbursement rates based on the geographic locations of our current patient population.

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As of January 1, 2023

As of January 1, 2022

As of April 1, 2021

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Effective April 1, 2021, rates were adjusted to remove a percentage reduction that was put in place to meet the budget neutrality requirement previously mandated by section 1834(a)(9)(D)(ii) of the Social Security Act.

Note that the 2021 rates listed below include CARES Act increased rates due to the COVID-19 PHE, which may not be in place for all of 2022.

Once the Administration ends the COVID-19 PHE, the rates in these non-former CBAs, non-rural areas are expected to adjust down to the former CBA rates listed in the table above.

Note that the 2021 rates listed below include CARES Act increased rates due to the COVID-19 PHE.

In December 2022, Congress' Consolidated Appropriations Act extended the higher 75/25 blended rates in non-CBAs until December 31, 2023.

As of January 1, 2024, the rates in former non-CBAs were reduced to the former CBA rates listed in the table above.

Rates in rural areas continue to be based upon a 50/50 blended rates, consistent with CMS' December 2021 final rule described above.

Average Medicare reimbursement rates in non-former CBAs, non-rural areas

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As of January 1, 2023

As of January 1, 2022

As of April 1, 2021

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Medicare reimbursement for oxygen rental equipment is limited to a maximum of 36 months within a 60-month service period, and the equipment remains the property of the home oxygen supplier.

The supplier that billed Medicare for the 36th month of service continues to be responsible for the patient’s oxygen therapy needs for months 37 through 60, and there is generally no additional reimbursement for oxygen generating portable equipment for these later months.

CMS does not separately reimburse suppliers for oxygen tubing, cannulas and supplies that may be required for the patient.

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Our capped patients as a percentage of total patients on service was approximately 13.1% as of December 31, 2023 and 9.2% as of December 31, 2022.

Our obligations to service Medicare patients over the rental period include supplying working equipment that meets each patient’s oxygen needs pursuant to his/her doctor’s prescription and supplying all disposables required for the patient to operate the equipment, including cannulas, filters, replacement batteries, carts and carry bags, as needed.

If the equipment malfunctions, we must repair or replace the equipment.

We determine what equipment the patient receives, and we can deploy used assets in working order as long as the prescription requirements are met.

We must also procure a renewal from the patient’s doctor to confirm the patient’s need for oxygen therapy one year after the patient first receives oxygen therapy and one year after each new 36-month reimbursement period begins.

The patient can choose to receive oxygen supplies and services from another supplier at any time, but the supplier may only transition the patient to another supplier in certain circumstances.

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The home medical equipment market is highly competitive, and our products face significant competition from other well-established manufacturers.

Numerous initiatives and reforms instituted by legislators, regulators and third-party payors to reduce home medical equipment costs have caused pricing pressures which have resulted in a consolidation trend in the home medical equipment industry as well as among the company's customers, including home healthcare providers.

Numerous initiatives and reforms instituted by legislators, regulators and third-party payors to reduce home medical equipment costs have caused pricing pressures which have resulted in a consolidation trend in the home medical equipment industry as well as among our customers, including home healthcare providers.

In the past, some of our competitors, which may include distributors, have been lowering the purchase prices of their products in an effort to attract customers.

This in turn has resulted in greater pricing pressures, including pressure to offer customers more competitive pricing terms, exclusion of products from or unfavorable position on provider formularies and the exclusion of certain suppliers from important market segments as group purchasing organizations, independent delivery networks and large single accounts continue to consolidate purchasing decisions for some of the company's customers.

Further consolidation could result in a loss of customers, increased collectability risks, or increased competitive pricing pressures.

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On August 2, 2011, the Budget Control Act of 2011 created, among other things, measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic sequestration reduction to several government programs.

This includes aggregate reductions of Medicare reimbursements to providers up to 2% per fiscal year, which went into effect on April 1, 2013, and will remain in effect through 2030 unless additional Congressional action is taken.

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In addition to the legislative changes discussed above, the Patient Protection and Affordable Care Act requires healthcare providers to voluntarily report and return an identified overpayment within 60 days after identifying the overpayment.

Failure to repay the overpayment within 60 days will result in the claim being considered a “false claim”

and the healthcare provider will be subject to False Claims Act liability.

Failure to repay the overpayment within 60 days will result in the claim being considered a “false claim” and the healthcare provider will be subject to False Claims Act liability.

State legislative bodies also have the right to enact legislation that would impact requirements of home medical equipment providers, including oxygen therapy providers.

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We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation in the United States may have on our business.

A significant portion of our rental revenue is derived from reimbursement by third-party payors.

For the years ended December 31, 2022, 2021 and 2020, approximately 15.0%, 12.9% and 9.2%, respectively, of our total revenue was derived from Medicare, private payors, Medicaid, and individual patients who directly receive reimbursement from third-party payors and this percentage could increase as a percent of total revenue if we increase net patient additions faster than our sales revenue growth.

Depending on the payor, we may be required to obtain certain payor-specific documentation from physicians and other healthcare providers before submitting claims for reimbursement.

Certain payors have filing deadlines and they will not pay claims submitted after such time.

We cannot ensure that we will be able to continue to effectively manage the process which would adversely affect our business, financial condition and results of operations.

If our manufacturing facilities become unavailable or inoperable, we could be unable to continue manufacturing our products and, as a result, our business, financial condition and results of operations could be adversely affected until we are able to secure a new facility.

We assemble our products at our facilities in Plano, Texas and Goleta, California and through our contract manufacturer in the Czech Republic.

We assemble our products at our facility in Plano, Texas and through our contract manufacturer in the Czech Republic.

No other manufacturing facilities are currently available to us, particularly facilities of the size and scope of our Texas facility.

Our facilities and the equipment we use to manufacture our products would be costly to replace and could require

substantial lead time to procure, repair or replace.

Our facilities are in areas that have and may in the future be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, the COVID-19 pandemic and related PHE related facility shutdowns, fire, flood, earthquakes and power outages, which may render it difficult or impossible for us to manufacture our products for some period of time.

Our facilities and the equipment we use to manufacture our products would be costly to replace and could require substantial lead time to procure, repair or replace.

Our facilities are in areas that have and may in the future be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, pandemic and related facility shutdowns, fire, flood, earthquakes and power outages, which may render it difficult or impossible for us to manufacture our products for some period of time.

If any of our facilities become unavailable to us, we cannot provide assurances that we will be able to secure and equip a new manufacturing facility on acceptable terms in a timely manner.

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We utilize a third-party contract manufacturer located in the Czech Republic for production of a portion of our Inogen One G3 and Inogen One G5 concentrators and for repair services for these products.

Since 2018, our contract manufacturer has produced the vast majority of the concentrators required to support our European demand and we expect this to continue in 2023.

Since 2018, our contract manufacturer has produced the vast majority of the concentrators required to support our European demand.

There are a number of risks associated with our dependence on a contract manufacturer, including:

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• reliance on the quality assurance procedures of a third party;

risks associated with our contract manufacturer failing to manufacture our products according to our specifications, quality regulations, including the FDA’s Quality System regulations, or otherwise manufacturing products that we or regulatory authorities deem to be unsuitable for commercial use;

risks associated with our contract manufacturer’s ability to successfully undergo FDA and other regulatory authority quality inspections;

• risks associated with our contract manufacturer failing to manufacture our products according to our specifications, quality regulations, including the FDA’s Quality System regulations, or otherwise manufacturing products that we or regulatory authorities deem to be unsuitable for commercial use;

• risks associated with our contract manufacturer’s ability to successfully undergo FDA and other regulatory authority quality inspections;

• potential uncertainty regarding manufacturing yields and costs;

availability of manufacturing capability and capacity, particularly during periods of high demand and the COVID-19 pandemic and related PHE;

• availability of manufacturing capability and capacity, particularly during periods of high demand;

• risks and uncertainties associated with the location or country where our products are manufactured, including potential manufacturing disruptions caused by social, geopolitical or environmental factors;

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For example, as our business has grown, we have seen the cost per generated lead trend higher than historical averages.

In addition, many of the sales representatives we hired in 2018 were unable to meet sales targets and were thus transitioned out.

To continue to grow our business, we must attract and retain capable personnel and manage and train them effectively, particularly related to sales representatives and supporting sales personnel.

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While we believe we are making the necessary changes to improve sales management infrastructure to support sales representative training and onboarding, it will take more time to evaluate whether these changes are effective in the long term, and to the extent they are not effective, it may negatively affect our financial condition and results of operations.

Additionally, while we believe that our investments in the prescriber sales organization, especially through Ashfield, our contract sales organization, will enhance our growth in direct-to-consumer sales and rental revenue, it will take time for these sales representatives to be fully trained and ramped up to full productivity, and it will take time for the sales tools to be implemented across our existing prescriber sales representatives.

To the extent that the sales tools being implemented, or the sales representatives hired either through us or Ashfield are not effective or our relationship with Ashfield was to terminate, or the number of sales representatives does not reach the number anticipated, it may negatively affect our future growth and results of operations.

We have also experienced increased demand for our products in certain markets in certain periods of time, particularly during portions of the COVID-19 pandemic.

If such demand increases resume or recur and we are unable to meet such demand due to supply constraints or other limitations, we may lose market share to competitors or lose customers, which may negatively affect our financial condition and results of operations.

Furthermore, if demand and sales increase, and we meet that increase through an increase in our business-to-business sales mix, it may negatively impact our gross margin as HME provider purchases have a significantly lower average selling price that direct-to-consumer purchases.

During 2019, we signed leases to expand our facilities located in Plano, Texas and Goleta, California, which commenced in 2021.

Domestic expansion, combined with our use of a contract manufacturer in Europe to produce a portion of our Inogen One G3 and Inogen One G5 concentrators and perform product repairs, is expected to be sufficient to meet our manufacturing needs provided that these facilities remain operational.

However, our anticipated growth may place additional strain on our supply chain and manufacturing facilities, resulting in an increased need for us to carefully monitor parts inventory, capable staffing and quality assurance.

Any failure by us to manage the scalability of our process or other aspects of our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals and negatively affect our financial condition and results of operations.

Our business strategy may, from time-to-time, include acquiring or investing in complementary services, technologies or businesses, such as our acquisition of New Aera in 2019.

Any such acquisition or investment could materially and adversely affect our financial condition and results of operations.

We may issue equity securities which could dilute current stockholders’

ownership, incur debt, assume contingent or other liabilities and expend cash in acquisitions, which could negatively impact our financial condition, stockholder equity, and stock price.

Acquisitions and other strategic investments involve significant risks and uncertainties, including:

the potential failure to achieve the expected benefits of the combination or acquisition;

the potential failure to successfully develop or commercialize the acquired products or technology;

unanticipated costs and liabilities;

difficulties in integrating new products, businesses, operations, and technology infrastructure in an efficient and effective manner;

difficulties in maintaining customer relations;

the potential loss of key employees of the acquired businesses;

the diversion of the attention of our senior management from the operation of our daily business;

the potential adverse effect on our cash position to the extent that we use cash for the purchase price;

the potential incurrence of interest expense and debt service requirements if we incur debt to pay for an acquisition;

the potential issuance of securities that would dilute our stockholders’

percentage ownership;

the potential to incur large and immediate write-offs and restructuring and other related expenses;

the potential of amortization expenses related to intangible assets;

the potential failure to achieve anticipated reimbursement classifications for acquired products;

the potential to become involved in intellectual property litigation related to such acquisitions or strategic investments;

the inability to maintain uniform standards, controls, policies, and procedures.

Any acquisition or investment could expose us to unknown liabilities.

Moreover, we cannot assure you that we will realize the anticipated benefits of any acquisition or investment.

For example, as part of our ongoing efforts to advance patient preference and maintain our technology leadership position, we acquired New Aera in 2019.

On December 19, 2022, we determined to dispose of the technology intangible assets previously acquired from New Aera related to the TAV technology by ceasing development of such assets and abandoning the TAV program (the “Disposal Determination”).

We made the Disposal Determination based on our assessment that continued development of the assets would not be economically feasible.

The assessment considered many factors, including 1) the lack of compatibility and functionality of the technology intangible asset within our existing product portfolio, 2) the lack of commercial potential of such products that were not approved for ventilation Medicare reimbursement and a negative litigation outcome that occurred subsequent to the approved HCPCS code process, and 3) the substantial additional investment that would be required in order to attempt to achieve any commercial potential with substantial risk that no benefit would ever be achievable.

We are exposed to the credit and non-payment risk of our HME providers, distributors, private label partners and resellers, especially during times of economic uncertainty and tight credit markets, which could result in material losses.

We sell our products to certain HME providers, distributors, private label partner and resellers on unsecured credit, with terms that vary depending upon the customer’s credit history, solvency, cash flow, credit limits and sales history, as well as prevailing terms with similarly situated customers and whether sufficient credit insurance can be obtained.

In particular, two single customers each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $22.6 million and $9.9 million, respectively, as of December 31, 2022, and one single customer and Medicare each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $5.9 million and $2.7 million, respectively, as of December 31, 2021.

In particular, two single customers each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $8.6 million and $5.0 million, respectively, as of December 31, 2023, and $22.6 million and $9.9 million, respectively, as of December 31, 2022.

Challenging economic conditions, including those associated with the recent recessionary effects and inflationary pressure, may impair the ability of our customers to pay for products they have purchased, and as a result, our reserve for doubtful accounts could increase and, even if increased, may turn out to be insufficient.

Moreover, even in cases where we have insolvency risk insurance to protect against a customer’s bankruptcy, insolvency or liquidation, this insurance typically contains a significant deductible and co-payment obligation and does not cover all instances of non-payment.

Our exposure to credit risks of our business partners may increase if our business partners and their end customers are adversely affected by potential worsening global economic conditions or the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, the COVID-19 pandemic and related PHE, the war in Ukraine, potential uncertainty related to Taiwan and its relationship with China or other events affecting the United States or global economy.

Our exposure to credit risks of our business partners may increase if our business partners and their end customers are adversely affected by potential worsening global economic conditions or the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, the COVID-19 pandemic and related PHE, the conflict between Israel and Hamas and the war in Ukraine, potential uncertainty related to Taiwan and its relationship with China or other events affecting the United States or global economy.

One or more of these business partners could delay payments or default on credit extended to them, either of which could adversely affect our business, financial condition and results of operations.

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If one or more of these risks occurs, it could require us to dedicate significant resources to remedy, and if we are unsuccessful in finding a solution, our financial condition and results of operations will suffer.

In addition, adverse consequences concerning the United Kingdom's exit from the European Union (Brexit) or the future of the European Union could include deterioration in global economic conditions, instability in global financial markets, political

uncertainty, volatility in currency exchange rates or adverse changes in the cross-border agreements currently in place, any of which could have an adverse impact on our financial results in the future.

A portion of our international product sales are currently denominated in U.S.

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We have experienced and will continue to experience fluctuations in our net income or loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.

For example, for the years ended December 31, 2022 and 2021, we experienced net foreign currency losses of $0.8 million and $0.7 million, respectively, and for the year ended December 31, 2020 we experienced a net foreign currency gain of $0.6 million.

For example, for the year ended December 31, 2023, we experienced a net foreign currency gain of $0.2 million, and for the years ended December 31, 2022 and 2021, we experienced net foreign currency losses of $0.8 million and $0.7 million, respectively.

Fluctuations in currency exchange rates could have an adverse impact on our financial results in the future.

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Quantitative and Qualitative Disclosures about Market Risk in this Annual Report on Form 10-K for the year ended December 31, 2023.

Additional information on our hedging arrangements is also contained in Note 3 –

Fair value measurements and Item 3 –

Quantitative and Qualitative Disclosures About Market Risk in the notes in our consolidated financial statements in this Annual Report on Form 10-K.

Additional information on our hedging arrangements is also contained in Note 3 – Fair value measurements and Item 3 – Quantitative and Qualitative Disclosures About Market Risk in the notes to our consolidated financial statements in this Annual Report on Form 10-K.

We rely on shipping providers to deliver products to our customers globally.

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§ 201, the U.S.

Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010 and possibly other anti-corruption, anti-bribery and anti-money laundering laws in the more than fifty-nine countries around the world where we have conducted activities and have sold our products.

Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010 and possibly other anti-corruption, anti-bribery and anti-money laundering laws in the more than sixty-two countries around the world where we have conducted activities and have sold our products.

We face significant risks and liability if we fail to comply with the FCPA and other anti-corruption and anti-bribery laws that prohibit companies and their employees, agents, representatives, business partners, and third-party intermediaries, such as distributors or resellers, from authorizing, offering or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.

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While we have policies and procedures to address compliance with such laws, and while we provide training to all employees, including management, to ensure compliance with the FCPA and other applicable anti-bribery and anti-corruption laws, we cannot assure you that none of our employees, agents, representatives, business partners or third-party intermediaries will take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

settlements, prosecutions, enforcement action, fines, damages, loss of export privileges and suspension or debarment from government contracts, which could have a material and adverse effect on our reputation, business, operating results and prospects.

In addition, responding to any allegation, enforcement action or related investigation may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Any violation of the FCPA, other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, settlements, prosecutions, enforcement action, fines, damages, loss of export privileges and suspension or debarment from government contracts, which could have a material and adverse effect on our reputation, business, operating results and prospects.

If we fail to comply with U.S.

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In particular, we have secured annual export licenses from the U.S.

Treasury Department’s Office of Foreign Assets Control to sell our products to a distributor and hospital and clinic end-users in Iran.

The use of this license requires us to observe strict conditions with respect to products sold, end-user limitations and payment requirements.

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Our success depends upon the skills, experience, and efforts of our senior executives and other key technical personnel, including certain members of our engineering, accounting, and compliance staff as well as our sales and marketing personnel.

Our President and Chief Executive Officer, Nabil Shabshab, joined us in February 2021, our Executive Vice President, Chief Commercial Officer, George Parr, joined us in April 2021, our Executive Vice President, Chief Technology Officer, Stanislav Glezer, joined us in June 2021, our Executive Vice President, General Counsel, Jason Somer, joined us in July 2021, and our Executive Vice President, Chief Financial Officer, Kristin Caltrider, joined us in March 2022.

We have experienced, and may continue to experience, turn-over in our senior executives and other key technical personnel.

If experienced employees leave, we could experience inefficiencies or a lack of business continuity due to loss of historical knowledge and a lack of familiarity of the new employees with business processes, operating requirements, policies and procedures.

If we are not able to find a qualified permanent replacement for these positions, it could have a material adverse effect on our ability to effectively pursue our business strategy.

Executive leadership and key technical personnel transitions can be difficult to manage and could cause disruption to our business.

It is important to our success that these key employees quickly adapt to and excel in their new roles.

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Competition for our highly skilled employees is intense and we cannot prevent the resignation of any employee.

We have experienced increased turnover at all levels since the start of the COVID-19 pandemic and general labor shortages in various areas of our business, all of which could have a material adverse impact on our business.

For example, we have been challenged in our ability to hire qualified sales professionals in our direct-to-consumer sales force during this time.

We may need to increase employee wages and benefits in order to attract and retain the personnel necessary to achieve our goals, and our business, operations, and financial results may suffer if we are unable to do so.

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We may face challenges in retaining and recruiting such individuals due to sustained declines in our stock price that could reduce the retention value of equity awards.

We do not maintain “key man”

life insurance on any of our senior executives.

We do not maintain “key man” life insurance on any of our senior executives.

None of our senior executive team is bound by written employment contracts to remain with us for a specified period.

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Like other companies, we have experienced data security incidents before.

For example, on April 13, 2018, we announced that messages within an employee email account were accessed by unknown persons outside of our company without authorization.

Some of the messages and attached files in that email account contained personal information belonging to our rental customers.

We immediately took steps to secure customer information and hired a leading forensics firm to investigate the incident and to bolster our security.

The unauthorized access of the potentially impacted email account appears to have occurred between January 2, 2018 and March 14, 2018.

We notified approximately 30,000 current and former rental customers of this incident as well as the applicable regulatory authorities.

We also provided resources, including credit monitoring and an insurance reimbursement policy, to assist all potentially affected individuals.

We have incurred remedial, legal and other costs in connection with this incident.

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If our information technology networks and systems or those provided by our third-party service providers and vendors suffer unauthorized access, severe damage, disruption or shutdown, and our business does not effectively identify or resolve the issues in a timely manner, our operations could be disrupted, we could be subject to regulatory and consumer lawsuits and other proceedings and our business could be negatively affected.

In addition, cybersecurity risks and data security incidents could lead to potential unauthorized access to or acquisition of confidential information (including protected health information), and data loss, corruption, unavailability, or other unauthorized processing.

In addition, cybersecurity risks and data security incidents could lead to potential unauthorized access to or acquisition of confidential information (including personally identifiable information and protected health information), and data loss, corruption, unavailability, or other unauthorized processing.

There is no assurance that we will not experience service interruptions, security breaches, cybersecurity risks and data security incidents, or other information technology failures, whether suffered by us or third parties on which we rely, in the future.

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There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data.

The compromise of our technology systems resulting in the loss, disclosure, misappropriation of, or access to, customers’, employees’

or business partners’

information or failure to comply with regulatory or contractual obligations with respect to such information, or the perception that any of these has occurred, could result in legal claims and proceedings, initiated by private parties, investigations or other proceedings by regulatory authorities, and liability or regulatory penalties, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business.

The compromise of our technology systems resulting in the loss, disclosure, misappropriation of, or access to, customers’, employees’ or business partners’ information or failure to comply with regulatory or contractual obligations with respect to such information, or the perception that any of these has occurred, could result in legal claims and proceedings, initiated by private parties, investigations or other proceedings by regulatory authorities, and liability or regulatory penalties, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business.

The costs to remediate breaches and similar system compromises that do occur could adversely affect our results of operations.

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In addition, California voters recently passed the California Privacy Rights Act (CPRA), which modified the CCPA significantly as of January 1, 2023, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.

In addition, several states within the United States have enacted or proposed data privacy laws.

For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, Utah passed the Utah Consumer Privacy Act, and Connecticut enacted similar legislation.

It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our practices.

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seasonal cycles in consumer spending;

HME providers’

ability to adopt and finance POC purchases and restructure their businesses to remove delivery expenses;

HME providers’ ability to adopt and finance POC purchases and restructure their businesses to remove delivery expenses;

our ability to design, manufacture and deliver products to our consumers in a timely and cost-effective manner;

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and fluctuations in foreign currency exchange rates.

In particular, due to the COVID-19 pandemic and related PHE, we have seen a disruption in our normal seasonal trends, as, due to the mandates and behaviors emanating from the COVID-19 pandemic and related PHE, including shelter-in-place orders, reduced travel, and lower consumer confidence, we did not see the typical seasonal increases in direct-to-consumer sales in 2020, 2021 and 2022 that we have seen in prior years.

As more HME providers adopt POCs in their businesses, we expect that this could change our historical seasonality in the domestic business-to-business channel as well, which was previously influenced mainly by consumer buying patterns.

The foregoing factors are difficult to forecast, and these, as well as other factors, could materially and adversely affect our quarterly and annual results of operations.

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We operate in multiple taxing jurisdictions and certain revenue streams may be subject to sales and use tax.

Any changes, ambiguity, or uncertainty in taxing jurisdictions’

administrative interpretations, decisions, policies and positions, including the position of taxing authorities with respect to taxability of our revenue also materially impact our sales and use tax liabilities.

Any changes, ambiguity, or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, including the position of taxing authorities with respect to taxability of our revenue also materially impact our sales and use tax liabilities.

We believe that our sales of concentrators and accessories may be subject to sales and use tax in certain states, but that there are exemptions from sales and use tax in most states.

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Additionally, significant changes to U.S.

GAAP resulting from the FASB’s and IASB’s efforts may require that we change how we process, analyze and report financial information and that we change financial reporting controls.

It is not clear if or when these potential changes in accounting principles may become effective, whether we have the proper systems and controls in place to accommodate such changes and the impact that any such changes may have on our financial condition and results of operations.

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Finally, future changes in tax laws could limit our ability to obtain the future tax benefits represented by our deferred tax assets.

See Note 6 –

Income taxes in the notes of our consolidated financial statements in this Annual Report on Form 10-K for additional information and factors that could impact the Company’s ability to realize the deferred tax assets.

See Note 7 – Income taxes in the notes to our consolidated financial statements in this Annual Report on Form 10-K for additional information and factors that could impact our ability to realize the deferred tax assets.

The adoption and interpretation of new tax legislation, tax rulings, or exposure to additional tax liabilities, could materially affect our financial condition, results of operations, and cash flows.

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The Inflation Reduction Act of 2022 imposed a 1% excise tax on certain repurchases of stock.

changes may have a significant impact on our deferred tax assets, income tax provision and effective tax rate.

Such changes may have a significant impact on our deferred tax assets, income tax provision and effective tax rate.

Proposed legislation before the Administration and Congress may make further changes to the U.S.

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The implementation of prior authorization rules for DMEPOS under Medicare could negatively affect our business and financial condition.

CMS has issued a final rule to require Medicare prior authorization (PA) for certain DMEPOS that the agency characterizes as “frequently subject to unnecessary utilization”

and that have an average purchase fee of $1,000 or greater, or an average rental fee schedule of $100 or greater.

CMS has issued a final rule to require Medicare prior authorization (PA) for certain DMEPOS that the agency characterizes as “frequently subject to unnecessary utilization” and that have an average purchase fee of $1,000 or greater, or an average rental fee schedule of $100 or greater.

The final rule was published on December 30, 2015 and specified an initial master list of 135 items that could potentially be subject to PA.

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The presence of an item on the master list does not automatically mean that a PA is required.

CMS selects a subset of these master list items for its “Required Prior Authorization List.”

There will be a notice period of at least 60 days prior to implementation.

CMS selects a subset of these master list items for its “Required Prior Authorization List.” There will be a notice period of at least 60 days prior to implementation.

The ruling does not create any new clinical documentation requirements, instead the same information necessary to support Medicare payment will be required prior to the item being furnished to the beneficiary.

CMS has proposed that reasonable efforts are made to provide a PA decision within 10 days of receipt of all applicable information, unless this timeline could seriously jeopardize the life or health of the beneficiary or the beneficiary’s ability to regain maximum function, in which case the proposed PA decision would be 2 business days.

CMS will issue additional sub-regulatory guidance on these timelines in the future.

If our products are subject to prior authorization, it could reduce the number of patients qualified to come on service using their Medicare benefits, it could delay the start of those patients while we wait for the prior authorization to be received, and/or it could decrease sales productivity.

If our products become subject to prior authorization, it could reduce the number of patients qualified to come on service using their Medicare benefits, it could delay the start of those patients while we wait for the prior authorization to be received, and/or it could decrease sales productivity.

As a result, this could adversely affect our business, financial conditions and results of operations.

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Before we can market or sell a medical device in the United States, we must obtain either 510(k) clearance, clearance under the de novo process or approval of a pre-market approval application from the FDA, unless an exemption applies.

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent”

to a device legally on the market, known as a “predicate”

device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing.

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing.

Our commercial products have received 510(k) clearance by the FDA.

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The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

we may not be able to demonstrate to the FDA’s satisfaction that our products are safe and effective for their intended uses;

• we may not be able to demonstrate to the FDA’s satisfaction that our products are safe and effective for their intended uses;

• the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;

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Any modification we make to our products that could significantly affect their safety or effectiveness, or would constitute a material change in intended use, manufacture, design, materials, labeling, or technology requires the submission and clearance of a new 510(k) pre-market notification, a de novo application or, possibly, pre-market approval.

The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review and disagree with any manufacturer’s decision.

The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary.

We have modified some of our 510(k) cleared products and have determined that in certain instances new 510(k) clearances or pre-market approval are not required.

We plan to make similar determinations regarding modifications to our 510(k) products, which may include the redesign of the G5 System motherboard pending validation testing.

We plan to make similar determinations regarding modifications to our 510(k) products, which may include the redesign of the Inogen One G5 system motherboard pending validation testing.

If the FDA disagrees with our determinations and requires us to submit new 510(k) notifications or pre-market approval for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory penalties or fines.

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If Inogen uses this guidance to commercialize devices that do not have the FDA clearance, these products will have to go through FDA 510(k) clearance in the future, and may not be granted such clearance, which would mean we would have to withdraw these products from the market when the FDA terminates or revokes such guidance or enforcement policy, which could harm our business, financial condition and results of operations.

In December 2021, the FDA issued the draft Transition Plan for Medical Devices That Fall Within Enforcement Policies Issued During the Coronavirus Disease 2019 (COVID-19) Public Health Emergency (the “Transition Plan”) for public comment which, among other things, proposes a 180-day transition period for manufacturers to submit permanent marketing applications (e.g., 510(k) clearance, de novo classification or PMA) prior to the date that an enforcement discretion policy terminates.

After the 180 days, a manufacturer may continue to market its device while the application is pending, provided that the FDA has accepted the application for substantive review prior to the end of the 180-day period.

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• criminal prosecution.

For example, our devices are labeled with a 5-year product life duration and we and our distributors, in some instances, have provided serviced devices after their useful life duration to rental patients in the United States and internationally, or conducted repairs on such devices for the patients who have purchased them.

For example, our devices are labeled with a 5 or 8-year product life duration and we and our distributors, in some instances, have provided serviced devices after their useful life duration to rental patients in the United States and internationally, or conducted repairs on such devices for the patients who have purchased them.

We have taken measures to confirm that continued use of such units was not reported to have created an undue safety risk to patients and is not associated with increased product quality concerns, but there can be no assurance that the risk profile of the devices will not change or that governmental regulatory authorities could not view the practice as a violation of applicable regulations under certain circumstances resulting in adverse regulatory or enforcement action, exposing us to potential fines and other penalties or litigation related to government insurance reimbursement, or warranty or product liability, claims.

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Repeated product malfunctions may result in a voluntary or involuntary product recall.

Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.

Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner.

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Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and results of operations.

If we, our contract manufacturer, or our component manufacturers fail to comply with the FDA’s Quality System Regulation, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.

We, our contract manufacturer, and our component manufacturers are required to comply with the FDA’s Quality System Regulation, or QSR, which covers the procedures and documentation of the design, calibration, testing, production, control, quality assurance, labeling, packaging, storage and shipping of our devices.

The FDA audits compliance with the QSR through periodic announced and unannounced inspections of manufacturing and other facilities.

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The primary regulatory body in Europe is the European Commission, which includes most of the major countries in Europe.

An assessment by a Notified Body of one country within the European Union is required in order for a manufacturer to commercially distribute the product throughout the European Union.

The European Commission has adopted numerous directives and standards regulating the design, manufacture, clinical trial, labeling and adverse event reporting for medical devices and assesses whether devices can be commercially distributed throughout Europe based on the class of the product, and typically, a combination of self-assessment by the manufacturer and a third-party assessment by a “Notified Body.” An assessment by a Notified Body of one country within the European Union is required in order for a manufacturer to commercially distribute the product throughout the European Union.

The EU MDR does not apply in Great Britain (England, Scotland and Wales) and the commercialization of medical devices in that territory must comply with rules set out in domestic legislation including the UK Medical Devices Regulations 2002.

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Devices such as portable oxygen concentrators require third-party assessment by a UK approved body, which is an independent organization designated by the UK Medicines and Healthcare products Regulatory Agency (MHRA) to conduct the conformity assessment.

The commercialization of medical devices in the UK are also subject to additional national requirements (e.g.

registration and where the manufacturer is not established in the UK, the appointment of a UK Responsible Person).

The commercialization of medical devices in the UK are also subject to additional national requirements (e.g., registration and where the manufacturer is not established in the UK, the appointment of a UK Responsible Person).

If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited.

Approximately 28.3%, 26.8% and 22.2% of our total revenue was from sales outside of the United States for the years ended December 31, 2023, 2022, and 2021, respectively.

We have sold our products in multiple international countries and overseas regions outside of the United States through our wholly owned subsidiary, distributors and directly to large “house”

We have sold our products in multiple international countries and overseas regions outside of the United States through our wholly-owned subsidiaries, distributors and directly to large “house” accounts.

In order to market our products in the European Union or other foreign jurisdictions, we are required to obtain and maintain separate regulatory approvals and comply with numerous and varying regulatory requirements.

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The time required to obtain approval abroad may be longer than the time required to obtain FDA clearance.

For example, the European Union requires that manufacturers of medical devices obtain the right to bear the “CE”

conformity marking which designates compliance with existing directives and standards regulating the design, manufacture and distribution of medical devices in member countries of the European Union.

In 2017, the European Union adopted the European

Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements for the marketing and sale of medical devices, including new clinical evaluation, quality system, and post-market surveillance requirements.

For example, the European Union requires that manufacturers of medical devices obtain the right to bear the “CE” conformity marking which designates compliance with existing directives and standards regulating the design, manufacture and distribution of medical devices in member countries of the European Union.

In 2017, the European Union adopted the European Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements for the marketing and sale of medical devices, including new clinical evaluation, quality system, and post-market surveillance requirements.

The regulation had a three-year implementation period, with full application of the regulation occurring in May 2021 and replacing the pre-existing directives on medical devices in the European Union.

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We have authorization to affix the CE Mark to our oxygen therapy products and to commercialize our devices in the EU and EEA.

Inogen obtained its United Kingdom Conformity Assessed (UKCA) certificate covering the G4, G5 and Inogen at Home oxygen concentrators on April 27, 2022, which allowed Inogen to affix a UKCA mark to these devices and market them in Great Britain.

Inogen obtained its United Kingdom Conformity Assessed (UKCA) certificate covering the Inogen One G4, Inogen One G5 and Inogen at Home oxygen concentrators on April 27, 2022, which allowed Inogen to affix a UKCA mark to these devices and market them in Great Britain.

The foreign regulatory approval process, including with respect to MDR and other jurisdictions, includes many of the risks associated with obtaining FDA clearance and we may not obtain foreign regulatory approvals on a timely basis, if at all.

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• delays or failure in obtaining approval of our clinical trial protocols from the FDA, other regulatory authorities, or IRBs;

we, the applicable IRBs, the Data Safety Monitoring Board for such trial, or the FDA or other applicable regulatory authorities may require that we or our investigators suspend or terminate our data collection for various reasons, including, among others (i) failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (GCP), regulations, or our clinical protocols, (ii) by the FDA or other applicable regulatory authority resulting in the imposition of a clinical hold, or (iii) lack of adequate patient informed consent;

• we, the applicable IRBs, the Data Safety Monitoring Board for such trial, or the FDA or other applicable regulatory authorities may require that we or our investigators suspend or terminate our data collection for various reasons, including, among others (i) failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (GCP), regulations, or our clinical protocols, (ii) by the FDA or other applicable regulatory authority resulting in the imposition of a clinical hold, or (iii) lack of adequate patient informed consent;

• delays if the FDA concludes that our financial relationships with our data collection partners result in a perceived or actual conflict of interest that may have affected the interpretation or integrity of the data collected.

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We could experience a significant increase in pre-payment reviews of our claims by the Durable Medical Equipment Medicare Administrative Contractors, which could cause substantial delays in the collection of our Medicare accounts receivable as well as related amounts due under supplemental insurance plans.

Current law provides for a significant expansion of the government’s auditing and oversight of suppliers who care for patients covered by various government healthcare programs.

Examples of this expansion include audit programs being implemented by the Durable Medical Equipment Medicare Administrative Contractors, the Unified Program Integrity Contractors, the Recovery Audit Contractors, and the Comprehensive Error Rate Testing contractors, operating under the direction of CMS, and the various state Medicaid Fraud Control Units.

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We cannot currently predict the adverse impact that these audits, methodologies and interpretations might have on our business, financial condition or results of operations, but such impact could be material.

We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label”

uses, resulting in damage to our reputation and business.

We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label” uses, resulting in damage to our reputation and business.

Our promotional materials and training methods are required to comply with the FDA and other applicable laws and regulations, including the prohibition of the promotion of a medical device for a use that has not been cleared or approved by the FDA.

Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.

If the FDA determines that our promotional materials or training constitutes promotion of an off-label use that is either false or misleading, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, which could have an adverse effect on our reputation and results of operations.

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The Privacy Standards and Security Standards under HIPAA establish a set of basic national privacy and security standards for the protection of individually identifiable health information by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services.

Notably, whereas HIPAA previously directly regulated only these covered entities, the HITECH Act, which was signed into law in 2009, makes certain of HIPAA’s privacy and security standards directly applicable to covered entities’

business associates.

Both covered entities and business associates are subject to significant civil and criminal penalties for failure to comply with the Privacy Standards and Security Standards under HIPAA.

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The costs of complying with privacy and security related legal and regulatory requirements are burdensome and could have a material adverse effect on our results of operations.

Regulations requiring the use of “standard transactions”

for healthcare services issued under HIPAA may negatively affect our profitability and cash flows.

Regulations requiring the use of “standard transactions” for healthcare services issued under HIPAA may negatively affect our profitability and cash flows.

Pursuant to HIPAA, final regulations have been implemented to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions while protecting the privacy and security of the information exchanged.

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Failure to meet all requirements of a safe harbor is not determinative of a kickback issue but could subject the practice to increased scrutiny by the government.

The Physician Self-Referral Law, commonly known as the “Stark Law,”

prohibits a physician from referring a patient to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, for the furnishing of certain designated health services (DHS) for which payment may be made by Medicare or Medicaid, unless an exception applies.

The Physician Self-Referral Law, commonly known as the “Stark Law,” prohibits a physician from referring a patient to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, for the furnishing of certain designated health services (DHS) for which payment may be made by Medicare or Medicaid, unless an exception applies.

Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received under a non-compliant arrangement, civil penalties, and exclusion from Medicare, Medicaid or other federal healthcare programs.

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Penalties under these state laws can be comparable to those under their federal equivalents.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, also created the federal Physician Payments Sunshine Act, which requires applicable manufacturers of drugs, devices, biologicals, and medical supplies covered under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to CMS, information related to payments or other transfers of value made to physicians, as defined, and teaching hospitals, as well as ownership and investment interests in such manufacturer held by physicians and their immediate family members.

Additionally, the Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients and Communities Act enacted in 2018, extends the reporting and transparency requirements for physicians under the Physician Payments Sunshine Act to physician assistants, nurse practitioners and other mid-level practitioners, with reporting requirements going into effect in 2022 for payments made in 2021.

Failure to submit the required information under the federal Physician Payment Sunshine Act may result in civil monetary penalties of up to an aggregate of $0.19 million per year (and up to an aggregate of $1.265 million per year for “knowing failures”), subject to an annual adjustment for inflation.

Failure to submit the required information under the federal Physician Payment Sunshine Act may result in civil monetary penalties of up to an aggregate of $0.2 million per year (and up to an aggregate of $1.363 million per year for “knowing failures”), subject to an annual adjustment for inflation.

In addition, there has been a recent trend of increased federal and state regulation of payments and other transfers of value made to applicable recipients, including physicians.

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Any penalties, damages, fines, curtailment or restructuring or our operations could harm our ability to operate our business and our results of operations.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from operation of our business.

Moreover, achieving and sustaining compliance with applicable federal and state fraud laws may prove costly.

HHS makes annual inflation-related increases to the civil monetary penalties in its regulations pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

The HHS Annual Civil Monetary Penalties Inflation Adjustment Final Rule issued on May 9, 2022 sets forth adjusted civil monetary penalty amounts that apply to penalties assessed on or after May 9, 2022, if the violation occurred on or after November 2, 2015.

The HHS Annual Civil Monetary Penalties Inflation Adjustment Final Rule issued on October 6, 2023, sets forth adjusted civil monetary penalty amounts that apply to penalties assessed on or after October 6, 2023, if the violation occurred on or after November 2, 2015.

We are also exposed to the risks of fraud, misconduct, or other illegal activity by our employees and third parties who act for us or on our behalf, such as our independent contractors, consultants, commercial partners, and vendors.

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Foreign governments tend to impose strict price controls, which may adversely affect our future profitability.

We have sold our products in a total of 59 international countries or overseas regions outside the United States through our wholly owned subsidiary, distributors or directly to large “house”

We have sold our products in a total of 62 international countries or overseas regions outside the United States through our wholly-owned subsidiary, distributors or directly to large “house” accounts.

In some foreign countries, particularly in the European Union, the pricing of medical devices is subject to governmental control.

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Regulatory requirements under Proposition 65 could adversely affect our business.

We are subject to California’s Proposition 65, or Prop 65, which requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.

Prop 65 required that all businesses must be in compliance by August 30, 2018 with new regulations that require modifications to product warnings and for businesses to coordinate with upstream vendors or downstream customers for the 800+ regulated chemicals in consumer products and assess whether new occupational exposure warnings need to be posited in California facilities.

We are subject to California’s Proposition 65 which requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.

Proposition 65 required that all businesses must be in compliance by August 30, 2018 with new regulations that require modifications to product warnings and for businesses to coordinate with upstream vendors or downstream customers for the 800+ regulated chemicals in consumer products and assess whether new occupational exposure warnings need to be posited in California facilities.

We have taken steps to add warning labels to our products packaged in California and manufactured after August 30, 2018.

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Furthermore, we might in the future opt to license intellectual property from other parties.

reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position.

If we, or the other parties from whom we would license intellectual property, fail to obtain, defend, and maintain adequate patent or other intellectual property protection for intellectual property used in our products, or if any protection is reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position.

In addition, patent and other intellectual property protection may not:

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If our patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded our products could be impaired, which could make our products less competitive.

As of December 31, 2022, we have twenty-four pending U.S.

and international patent applications, fifty-one issued U.S.

patents, and twenty-one issued foreign patents relating to the design and construction of our oxygen concentrators and our intelligent delivery technology.

As of December 31, 2023, we have thirty-three pending U.S.

and international patent applications, fifty-five issued U.S.

patents, and thirty-two issued foreign patents relating to the design and construction of our oxygen concentrators and our intelligent delivery technology.

We cannot specify which of these patents individually or as a group will permit us to gain or maintain a competitive advantage.

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Third parties have in the past asserted and may in the future assert that we are employing their proprietary technology without authorization.

For example, Breathe Technologies, Inc.

(Breathe), a subsidiary of Hill-Rom Holdings, filed a lawsuit against us, New Aera, Inc., Silverbow Development LLC, and one of our employees on November 21, 2019 in the United States District Court for the Northern District of California.

The lawsuit alleged, among other things, willful infringement of a patent assigned to Breathe, that inventorship was incorrectly assigned and that Breathe has rights to certain patents filed by New Aera, Inc.

and Silverbow Development LLC, breach of contract, inducing breach of contract, interference with contract, and violation of California Business and Professional Code section 17200.

While we settled our lawsuit with Breathe in January 2021, if we fail in defending against lawsuits or claims brought against us in the future, we could be subject to substantial monetary damages, injunctive relief, and loss of valuable intellectual property rights, and we cannot predict the outcome of any lawsuit.

If we fail in defending against lawsuits or claims brought against us in the future, we could be subject to substantial monetary damages, injunctive relief, and loss of valuable intellectual property rights, and we cannot predict the outcome of any lawsuit.

An adverse determination or protracted defense costs of such lawsuits could have a material effect on our business and operating results.

From time to time, we have also commenced litigation to enforce our intellectual property rights.

For example, we previously pursued litigation against Inova Labs, Inc.

(a subsidiary of ResMed Corp.) for infringement of two of our patents seeking damages, injunctive relief, costs, and attorneys’

While we settled our lawsuit with Inova Labs in June 2016, an adverse decision in any other legal action could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise negatively affect our business, financial condition and results of operations.

An adverse decision in any other legal action could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise negatively affect our business, financial condition and results of operations.

Monitoring unauthorized use of our intellectual property is difficult and costly.

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As the number of competitors in the market for respiratory products and the number of patents issued in this area grows, the possibility of patent infringement claims against us increases.

In certain situations, we may determine that it is in our best interests to voluntarily challenge a party’s patents in litigation or other proceedings, including declaratory judgment actions, patent reexaminations, post grant reviews, or inter partes reviews.

As a result, we may become involved in unwanted protracted litigation that could be costly, result in diversion of management’s attention, require us to pay damages and/or licensing royalties and force us to discontinue selling our products.

Infringement and other intellectual property claims and proceedings brought against us, whether successful or not, could result in substantial costs and harm to our reputation.

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As a result, other parties may be able to use our proprietary technology or information, and our ability to compete in the market would be harmed.

“Inogen,”

“Inogen One,”

“Inogen One G3,”

“G4,”

“G5,”

“Live Life in Moments, not Minutes,”

“Never Run Out of Oxygen,”

“Oxygen Therapy on Your Terms,”

“Oxygen.Anytime.Anywhere,”

“Reclaim Your Independence,”

“Intelligent Delivery Technology,”

“Inogen At Home,”

the Inogen design, “TIDAL ASSIST,”

“TAV,”

and “SIDEKICK”

are registered trademarks with the United States Patent and Trademark Office.

We own pending trademark applications in the United States for the marks “INOGEN ROVE 4”

and “INOGEN ROVE 6”.

We own trademark registrations for the mark “Inogen”

in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay.

We own a trademark registration for the mark “イノジェン”

We own trademark registrations for the marks “印诺真”

and “艾诺根”

We own trademark registrations for the mark “Inogen One”

in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom.

We own a trademark registration for the mark “Satellite Conserver”

We own a trademark registration for the mark “Inogen At Home”

in Europe (European Union registration) and the United Kingdom.

We own trademark registrations for the mark “G4”

in Europe (European Union registration) and the United Kingdom.

We own trademark registrations for the mark “G5”

in Europe (European Union registration) and the United Kingdom.

“Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,”,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” the Inogen design, “TIDAL ASSIST,” “TAV,” and “SIDEKICK” are registered trademarks with the United States Patent and Trademark Office of Inogen, Inc.

We own pending applications for the marks “Rove,” “Inogen Rove,” “Inogen Rove 4,” and “Inogen Rove 6” with the United States Patent and Trademark Office.

We own trademark registrations for the mark “Inogen” in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay.

We own a pending application for the mark “Inogen” in the Dominican Republic.

We own a trademark registration for the mark “ イノジェン ” in Japan.

We own trademark registrations for the marks “ 印诺真 ” and “ 艾诺根 ” in China.

We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom.

We own a trademark registration for the mark “Satellite Conserver” in Canada.

We own a trademark registration for the mark “Inogen At Home” in Europe (European Union Registration) and the United Kingdom.

We own trademark registrations for the mark “G4” in Europe (European Union Registration) and the United Kingdom.

We own trademark registrations for the mark “G5” in Europe (European Union Registration) and the United Kingdom.

We own trademark registrations for the marks “Inogen Rove 4” and “Inogen Rove 6” in Europe (European Union Registration) and the United Kingdom.

We own pending applications for the marks “Inogen Rove” and “Rove” in Canada, Europe (the European Union), and the United Kingdom.

We own pending applications for the marks “Inogen Rove 4” and “Inogen Rove 6” in Canada.

We own a trademark application for the Inogen design in Bolivia.

We own a trademark registration for the Inogen design in China.

We own a trademark registration for the mark “إنوجن”

in Saudi Arabia.

We own a trademark registration for the mark “إنوجن” in Saudi Arabia.

We own a pending application for the Inogen One G5 design in Brazil.

Other service marks, trademarks, and trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.

“PHYSIO-ASSIST,” “PHYSIOASSIST,” the Physio-Assist logo, “SIMEOX,” “SIMEOX PRO,” “SIMESOFT,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” and the Pissenlit logo are registered trademarks of Inogen’s wholly-owned subsidiary Physio-Assist.

Physio-Assist owns trademark registrations for the mark “PHYSIO-ASSIST” in European Union, France, Japan, United Kingdom, and USA.

Physio-Assist owns trademark registrations for the Physio-Assist logo in China, European Union, France, Japan, South Korea, United Kingdom, and USA.

Physio-Assist owns trademark registrations for the mark SIMEOX in European Union, France, Japan, Russia, United Kingdom, and USA.

Physio-Assist owns trademark registrations in France for the mark “PHYSIOASSIST,” “SIMESOFT,” “SIMEOX PRO,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” and the Pissenlit logo.

We may be subject to damages resulting from claims that our employees, agents or we have wrongfully used or disclosed alleged trade secrets of other companies.

Some of our employees and consultants, including employees who joined us following our acquisition of New Aera, were previously employed by or contracted with other medical device companies focused on the development of oxygen therapy products, including our competitors.

Some of our employees and consultants were previously employed by or contracted with other medical device companies focused on the development of oxygen therapy products, including our competitors.

We may be subject to claims that these employees or agents have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.

Litigation may be necessary to defend against these claims.

For example, Breathe Technologies, Inc.

(Breathe), a subsidiary of Hill-Rom Holdings, filed a lawsuit against us, New Aera, Inc., Silverbow Development, LLC, and one of our employees on November 21, 2019 in the United States District Court for the Northern District of California.

The lawsuit alleged, among other things, willful infringement on certain patents, declared that inventorship was incorrectly assigned and their rights to certain patents filed by New Aera, Inc.

and Silverbow Development, LLC, breach of contract, inducing breach of contract, interference with contract, and violation of California Business and Professional Code section 17200.

While we settled our lawsuit with Breathe, if we fail in defending against such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights and may be enjoined from using valuable technology in our products.

If we fail in defending against such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights and may be enjoined from using valuable technology in our products.

Even if we are successful in defending against these claims, litigation could result in substantial costs, damage to our reputation and be a distraction to management.

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We will incur increased costs as a result of operating as a public company and our management will be required to devote substantial time to compliance initiatives and corporate governance practices.

As a public company, we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.

As a public company, we will continue to incur significant legal, accounting and other expenses.

In addition, the Sarbanes-Oxley Act of 2002 and rules enforced by the Public Companies Oversight Board (PCAOB) subsequently implemented by the SEC and the NASDAQ Global Select Market impose numerous requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

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If an active trading market does not develop, you may have difficulty selling any of our shares of common stock that you buy.

In addition, the trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control.

In addition, the trading price of our common stock may be highly volatile.

During the last twelve months, our common stock traded as high as $26.11 per share and as low as $4.13 per share.

The trading price of our common stock could continue to be subject to wide fluctuations in price in response to various factors, some of which are beyond our control.

These factors include:

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• announcements by us or our competitors of new commercial products, significant contracts, commercial relationships, or capital commitments;

issuance of new or changed securities analysts’

reports or recommendations for our stock;

• issuance of new or changed securities analysts’ reports or recommendations for our stock;

• developments or disputes concerning our intellectual property or other proprietary rights;

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• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments;

the other factors described in this “Risk Factors”

• the other factors described in this “Risk Factors” section;

• general economic conditions and slow or negative growth of our markets.

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These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating performance.

Price volatility over a given period or a low stock price could result in a number of negative outcomes, including, but not limited to:

• creating potential limitations on the ability to raise capital through the issuance of equity or equity linked securities;

• impacting the value of our equity compensation, which affects our ability to recruit and retain employees;

• impairing goodwill or long-lived assets;

• difficulty complying with the listing standards of NASDAQ;

• increasing the risk of regulatory proceedings and litigation, including class action securities litigation.

For example, the decline in our stock price caused our market capitalization to fall below its carrying amount (stockholders' equity) during July 2023 and was noted by management to be more than temporary as the quarter progressed.

We determined that the goodwill carrying amount exceeded its fair value and, as such, an impairment charge of $32.9 million was incurred in the quarter ended September 30, 2023.

In several recent situations where the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.

Stockholder litigation has been filed against us in the past, and a class action securities lawsuit and related derivatives complaints against us are currently pending, as discussed in the “Legal Proceedings”

section of this Annual Report on Form 10-K.

Stockholder litigation has been filed against us in the past, and a class action securities lawsuit and related derivatives complaints against us are currently pending as previously disclosed.

While we are continuing to defend such actions vigorously, the defense of such actions can be costly, divert the time and attention of our management and harm our operating results, and any judgment against us or any future stockholder litigation could result in substantial costs.

Our certificate of incorporation and our amended and restated bylaws designate the Court of Chancery of the Delaware as the exclusive forum for substantially all disputes between us and our stockholders, and our amended and restated bylaws also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, each of which could limit our stockholders’

ability to choose the judicial forum for disputes with us or our directors, officers, stockholders, or employees.

Our thirteenth amended and restated certificate of incorporation, filed with the Delaware Secretary of State on February 20, 2014, and our amended and restated bylaws, as amended and restated effective as of October 27, 2022, provide that, unless we consent in writing to the selection of an alternative forum (an “Alternative Forum Consent”), the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware.

The foregoing shall not apply to any claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act of 1933, as amended (the “Securities Act”).

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide that, unless we give an Alternative Forum Consent, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of the Company’s securities, including any auditor, underwriter, expert, control person or other defendant.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide that, unless we give an Alternative Forum Consent, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of our securities, including any auditor, underwriter, expert, control person or other defendant.

The foregoing shall not apply to any claims under the Exchange Act.

Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing provisions of the bylaws and certificate of incorporation.

Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or any of our current or former directors, officers, stockholders, employees, auditors, underwriters, experts, control persons or others, which may discourage lawsuits with respect to such claims against such defendants.

In addition, a stockholder that is unable to bring a claim in the judicial forum of its choosing may be required to incur additional costs in the pursuit of actions which are subject to the exclusive forum provisions described above.

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These stockholders may also delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders.

The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’

perception that conflicts of interest may exist or arise.

The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

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UNRESOLVE D STAFF COMMENTS

CY BERSECURITY

Introduction:

The medical device industry faces unique cybersecurity challenges, given the sensitive nature of the data and the critical role of devices in patient care.

Cybersecurity, data privacy, and data protection are critical to our business.

In the ordinary course of our business, we collect and store certain confidential information such as information about our employees, contractors, vendors, suppliers, patients and customers.

We remain committed to implementing robust security measures to protect against potential cyber threats and vulnerabilities that are constantly evolving across the globe.

Risk Management and Strategy:

We have processes for assessing, identifying, and managing cybersecurity threats, and cybersecurity is an integral part of our overall enterprise risk management program which is overseen by our Audit Committee and the Board.

Our strategy includes a comprehensive cybersecurity framework, utilizing advanced technologies and methodologies, such as cloud migrations and deployment of threat detection tools to effectively mitigate potential risks.

Continuous risk assessments help us better refine our strategy, guiding the deployment of technical safeguards and shaping our incident response plans.

For acquired companies, our integration strategies prioritize establishing comprehensive timelines for harmonizing information security, data privacy, and cybersecurity practices.

This includes a strong focus on aligning employee education programs to ensure a seamless transition and uphold security and privacy standards across our entities.

Our cybersecurity infrastructure is based on a multi-layered defense framework, aligned with the U.S.

National Institute of Standards and Technology (NIST) guidelines.

We take a risk-based approach to cybersecurity, which begins with the identification and evaluation of cybersecurity risks or threats that could affect our operations, finances, legal or regulatory compliance, or reputation.

The scope of our evaluation encompasses risks that may be associated with both our internally managed IT systems and key business functions and sensitive data operated or managed by third-party service providers, ensuring the service providers adhere to our security standards, thereby safeguarding our integrated operations.

The strategic migration of our data centers and infrastructure to secure cloud environments, coupled with the implementation of targeted technical cybersecurity measures, underscores our dedication to establishing foundational security across our users, applications, data, systems, and networks.

We have established a comprehensive incident response plan to swiftly address and recover from cybersecurity incidents, minimizing operational impact.

We conduct regular trainings and simulations to enhance our team's awareness and preparedness against cyber threats.

Biannual penetration testing and regular assessments by external experts validate the effectiveness of our cybersecurity measures.

Our proactive approach to addressing identified vulnerabilities affirms the continuous improvement of our security posture.

Use of Consultants and Advisors:

We engage various third-party cybersecurity service providers to assess and enhance our cybersecurity practices and assist with protection and monitoring of our systems and information, including with respect to, network monitoring, endpoint protection, vulnerability assessments and penetration testing.

We engage cybersecurity consultants, auditors, and other third parties to assess and enhance our cybersecurity practices, such as a third-party consulting firm to evaluate our cyber processes including an assessment of our incident response procedures.

We have processes to evaluate third-party service providers and vendors that have access to sensitive systems and company and customer data, which may include due diligence procedures such as assessments of that service provider’s cybersecurity posture or a recommendation of specific mitigation controls.

Following an assessment, we determine and prioritize service provider risk based on potential threat impact and likelihood, and such risk determinations drive the level of due diligence and ongoing compliance monitoring required for each service provider.

Board Oversight and Management’s Role:

The Board of Directors, both directly and through the delegation of responsibilities to the Audit Committee oversees the proper functioning of our cybersecurity risk management program to ensures strategic alignment and governance of our cybersecurity efforts at the highest level.

In particular, the Audit Committee assists the Board in its oversight of management’s responsibility to assess, manage and mitigate risks associated with our business and operational activities, to administer our various compliance programs, in each case including cybersecurity concerns, and to oversee our information technology systems, processes and data.

Management has implemented risk management structures, policies and procedures, and Management is responsible for our day-to-day cybersecurity risk management.

Our Chief Data and Information Officer (CDIO) is responsible for our day-to-day assessment and management of cybersecurity risks.

Our Enterprise Enablement function facilitates a cross-departmental approach, ensuring the executive leadership team receives quarterly updates on cybersecurity from various teams.

This strategy promotes a comprehensive stakeholder engagement and enhances management oversight on cybersecurity.

The updates cover progress on ongoing cybersecurity initiatives, insights from any potential threats or incidents, outputs and action plans from external vulnerability and penetration tests, and key performance metrics in line with industry standards.

Risks from Material Cybersecurity Threats:

Despite ongoing threats like cyber-attacks, phishing, and ransomware, we have not identified any cybersecurity threats that have materially affected or are reasonably anticipated to have a material effect on our business strategy, results of operations or financial condition.

Our proactive security measures, alongside those of our third-party vendors, aim to protect our information technology systems and the sensitive data they hold.

Although these risks have not yet materially impacted our business, we remain vigilant, continuously monitoring and adapting to evolving cybersecurity threats.

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What changed 10-K

Item 1A. Risk Factors