What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-04 compared with 2020-05-05 · 167 added, 126 removed, 696 unchanged (30% of the section changed)

48 unchanged sentences

22,065,961 and 22,031,410

shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

4 unchanged sentences

See accompanying condensed notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

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

Three months ended

Six months ended

Sales revenue

3 unchanged sentences

Cost of sales revenue

Cost of rental revenue, including depreciation of $ 1,299 and $ 1,705 , respectively

Cost of rental revenue, including depreciation of $ 1,221 and $ 1,594 , for the three months ended and $ 2,520 and $ 3,299 for the six months ended, respectively

Total cost of revenue

10 unchanged sentences

Interest income

Other income (expense)

Total other income, net

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

Provision (benefit) for income taxes

Net income (loss)

Income before provision for income taxes

Provision for income taxes

Other comprehensive income (loss), net of tax

4 unchanged sentences

Change in net unrealized gains (losses) on marketable securities

Total other comprehensive income, net of tax

Comprehensive income (loss)

Basic net income (loss) per share attributable to common stockholders (Note 7)

Diluted net income (loss) per share attributable to common stockholders (Note 7)

Weighted-average number of shares used in calculating net income (loss) per

Total other comprehensive income (loss), net of tax

Comprehensive income

Basic net income per share attributable to common stockholders (Note 7)

Diluted net income per share attributable to common stockholders (Note 7)

Weighted-average number of shares used in calculating net income per

share attributable to common stockholders:

4 unchanged sentences

(amounts in thousands, except share amounts)

Three months ended March 31, 2020 and March 31, 2019

Three months ended June 30, 2020 and June 30, 2019

comprehensive

1 unchanged sentence

income (loss)

Balance, March 31, 2019 (unaudited)

Stock-based compensation

Restricted stock awards issued, net of forfeitures

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Stock options exercised

Other comprehensive loss

Balance, June 30, 2019 (unaudited)

Balance, March 31, 2020 (unaudited)

Stock-based compensation

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Stock options exercised

Other comprehensive loss

Balance, June 30, 2020 (unaudited)

Six months ended June 30, 2020 and June 30, 2019

comprehensive

stockholders'

income (loss)

Balance, December 31, 2018

1 unchanged sentence

Employee stock purchases

Restricted stock awards issued

Restricted stock awards issued, net of forfeitures

Vesting of restricted stock units

1 unchanged sentence

Stock options exercised

Other comprehensive income

Balance, March 31, 2019 (unaudited)

Other comprehensive loss

Balance, June 30, 2019 (unaudited)

Balance, December 31, 2019

6 unchanged sentences

Other comprehensive income

Balance, March 31, 2020 (unaudited)

Balance, June 30, 2020 (unaudited)

See accompanying condensed notes to the consolidated financial statements.

1 unchanged sentence

(amounts in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities

Net income (loss)

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

20 unchanged sentences

Other noncurrent liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities

1 unchanged sentence

Maturities of marketable securities

Investment in intangible assets

Investment in property and equipment

6 unchanged sentences

(amounts in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from financing activities

4 unchanged sentences

Effect of exchange rates on cash

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

9 unchanged sentences

(Company or Inogen) was incorporated in Delaware on November 27, 2001.

The Company is a medical technology company that primarily develops, manufactures and markets innovative portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.

The Company is a medical technology company that primarily develops, manufactures and markets innovative portable oxygen concentrators (POCs) used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.

Traditionally, these patients have relied on stationary oxygen concentrator systems for use in the home and oxygen tanks or cylinders for mobile use, which the Company calls the delivery model.

3 unchanged sentences

The Company’s Inogen One systems reduce the patient’s reliance on stationary concentrators and scheduled deliveries of tanks with a finite supply of oxygen, thereby improving patient quality of life and fostering mobility.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 829,000 of its Inogen oxygen concentrators as of March 31, 2020.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 875,000 of its Inogen oxygen concentrators as of June 30, 2020.

The Company incorporated Inogen Europe Holding B.V., a Dutch limited liability company, on April 13, 2017 .

11 unchanged sentences

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

The results of operations for the three months ended March 31, 2020 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2020.

The results of operations for the three months and six months ended June 30, 2020 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2020.

In the opinion of the Company’s management, the information contained herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity.

15 unchanged sentences

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

Government grants

The Company may receive cash payments from government grants during a public health emergency (PHE).

The Company considers the nature and substance of the government grant and records the cash payment in accordance with the terms and conditions of the grant.

Income is deferred until all considerations required for receiving the grant are met and is recognized in the consolidated statements of comprehensive income based on the nature of the terms and conditions of the grant.

In the three months ended June 30, 2020, the Company received a grant of $ 6,200 from the Public Health and Social Services Emergency Fund (Relief Fund), which was among the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act signed into law on March 27, 2020.

During the three months ended June 30, 2020, t he Company recorded $ 5,600 in other income, which was associated with lost revenues from the COVID-19 PHE, and a $ 600 benefit in general and administrative expense due to COVID-19 PHE related costs incurred in the quarter.

Recently issued accounting pronouncements not yet adopted

3 unchanged sentences

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The new guidance also improves consistent application of and simplifies U.S.

GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

26 unchanged sentences

Goodwill associated with this acquisition is not expected to be deductible for income tax purposes.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition.

The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill.

The excess purchase price over the fair value of net tangible assets and identifiable intangible asset s acquired has been allocated to goodwill.

Goodwill represents the expected synergies with the existing business, the acquired assembled workforce, and future cash flows after the acquisition .

The fair value assigned to the identifiable intangible asset was determined primarily by using the excess earnings method.

T he key assumptions included in the excess earnings method included revenue recognized, cost of revenue and the discount rate.

T he key assumption s included in the excess earnings method included revenue recognized , cost of revenue and the discount rate.

The fair value of the earnout liability was measured using a Monte Carlo simulation and was discounted using a rate that appropriately captures the risk associated with the obligation.

The key assumption included in the simulation included revenue recognized .

Condensed Notes to the Consolidated Financial Statements (continued)

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

Preliminary fair values of assets acquired and liabilities assumed have been updated for deferred taxes.

10 unchanged sentences

The consolidated financial and operating results reflect the New Aera operations beginning August 9, 2019.

The following unaudited pro forma information for the three months ended March 31, 2019 presents the revenue and net income assuming the acquisition of New Aera had occurred as of January 1, 2018.

The following unaudited pro forma information for the three months and six months ended June 30, 2019 presents the revenue and net income assuming the acquisition of New Aera had occurred as of January 1, 2018.

Three months ended

March 31, 2019

Six months ended

June 30, 2019

Total revenue

9 unchanged sentences

Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses.

The carrying values of its financial instruments approximate fair value based on their short-term nature.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses.

The carrying values of its financial instruments approximate fair value based on their short-term nature.

Cash, cash equivalents and marketable securities

6 unchanged sentences

The following table summarizes fair value measurements by level for the assets measured at fair value on a recurring basis for cash, cash equivalents and marketable securities:

As of March 31, 2020

As of June 30, 2020

Money market accounts

12 unchanged sentences

Changes in the fair value of these forward contracts designed as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are recognized in the consolidated statements of comprehensive income (loss) during the period which approximates the time the corresponding sales occur.

The Company may also enter into foreign exchange contracts that are not designated as hedging instruments for financial accounting purposes.

The Company may also enter into foreign exchange contracts that are not

Condensed Notes to the Consolidated Financial Statements (continued)

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

designated as hedging instruments for financial accounting purposes.

These contracts are generally entered into to offset the gains and losses on certain asset and liability balances until the expected time of repayment.

1 unchanged sentence

The gains and losses on these contracts generally offset the gains and losses associated with the underlying foreign currency-denominated balances, which are also reported in other income (expense), net.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The Company records the assets or liabilities associated with derivative instruments and hedging activities at fair value based on Level 2 inputs in other current assets or other current liabilities, respectively, in the consolidated balance sheet.

The Company had a related receivable of $ 436 and a related payable of $ 514 as of March 31, 2020 and December 31, 2019, respectively.

The Company had a related receivable of $ 64 and a related payable of $ 514 as of June 30, 2020 and December 31, 2019, respectively.

The Company classifies the foreign currency derivative instruments within Level 2 in the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of whether it is designated and qualifies for hedge accounting.

10 unchanged sentences

gains (losses)

on marketable

comprehensive

2 unchanged sentences

Other comprehensive income (loss)

Balance as of March 31, 2020

Balance as of June 30, 2020

Comprehensive income (loss) is the total net earnings and all other non-owner changes in equity.

Except for net income (loss) and unrealized gains and losses on cash flow hedges, the Company does not have any transactions or other economic events that qualify as comprehensive income (loss).

Except for net income and unrealized gains and losses on cash flow hedges, the Company does not have any transactions or other economic events that qualify as comprehensive income (loss).

Earnout liability

8 unchanged sentences

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

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of March 31, 2020 and December 31, 2019.

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of June 30, 2020 and December 31, 2019.

Significant increases or decreases in these inputs in isolation could result in a significant impact on our fair value measurement:

Simulation input

March 31, 2020

June 30, 2020

December 31, 2019

4 unchanged sentences

Three months ended

Six months ended

Balance at beginning of period

41 unchanged sentences

and when recording the allowances for rental reserve adjustments and doubtful accounts, the rental revenue adjustments account (contra rental revenue account) is charged.

As of March 31, 2020 and December 31, 2019, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 596 and $ 590 , respectively.

As of June 30, 2020 and December 31, 2019, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 1,520 and $ 590 , respectively.

These balances reflect gross unbilled receivables prior to any allowances for adjustments and write-offs.

3 unchanged sentences

As additional information becomes known, the Company adjusts its assumptions accordingly to change its estimate of the allowance.

Gross accounts receivable balance concentrations by major category as of March 31, 2020 and December 31, 2019 were as follows:

Gross accounts receivable balance concentrations by major category as of June 30, 2020 and December 31, 2019 were as follows:

Gross accounts receivable

3 unchanged sentences

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

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2020 and December 31, 2019 were as follows:

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of June 30, 2020 and December 31, 2019 were as follows:

Net accounts receivable

2 unchanged sentences

Rental includes Medicare, Medicaid/other government, private insurance and patient pay.

Business-to-business receivables included one customer with a gross accounts receivable balance of $ 8,978 and $ 10,695 as of March 31, 2020 and December 31, 2019, respectively.

Business-to-business receivables included one customer with a gross accounts receivable balance of $ 5,866 and $ 10,695 as of June 30, 2020 and December 31, 2019, respectively.

This customer received extended payment terms through a direct financing plan offered.

The Company also has a credit insurance policy in place, which allocated up to $ 20,000 in coverage as of March 31, 2020 and allocated up to $ 20,000 in coverage as of December 31, 2019 for this customer with a $ 400 deductible and 10 % retention.

The following tables set forth the accounts receivable allowances as of March 31, 2020 and December 31, 2019:

The Company also has a credit insurance policy in place, which allocated up to $ 20,000 in coverage as of June 30, 2020 and allocated up to $ 20,000 in coverage as of December 31, 2019 for this customer with a $ 400 deductible and 10 % retention.

The following tables set forth the accounts receivable allowances as of June 30, 2020 and December 31, 2019:

Allowances - accounts receivable

13 unchanged sentences

The Company also sells its products direct-to-consumers on a primarily prepayment basis.

One single customer represented more than 10% of the Company’s total revenue for the three months ended March 31, 2020, and no single customer represented more than 10% of the Company’s total revenue for the three months ended March 31, 2019.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 10,341 and $ 8,978 , respectively, as of March 31, 2020, and $ 10,695 and $ 5,228 , respectively, as of December 31, 2019.

One single customer represented more than 10% of the Company’s total revenue for the six months ended June 30, 2020, and no single customer represented more than 10% of the Company’s total revenue for the six months ended June 30, 2019.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 5,866 and $ 8,900 , respectively, as of June 30, 2020, and $ 10,695 and $ 5,228 , respectively, as of December 31, 2019.

The Company currently purchases raw materials from a limited number of vendors, which resulted in a concentration of three major vendors.

The three major vendors supply the Company with raw materials used to manufacture the Company’s products.

For the three months ended March 31, 2020, the Company’s three major vendors accounted for 23.6 %, 15.2 %, and 9.4 %, respectively, of total raw material purchases.

For the three months ended March 31, 2019, the Company’s three major vendors accounted for 20.6 %, 11.6 % and 11.4 %, respectively, of total raw material purchases.

For the six months ended June 30, 2020, the Company’s three major vendors accounted for 21.4 %, 10.6 %, and 10.4 %, respectively, of total raw material purchases.

For the six months ended June 30, 2019, the Company’s three major vendors accounted for 21.5 %, 13.1 % and 9.3 %, respectively, of total raw material purchases.

Condensed Notes to the Consolidated Financial Statements (continued)

2 unchanged sentences

Approximately 77.2 % and 71.8 % of the non-U.S.

revenue for the three months ended March 31, 2020 and March 31, 2019, respectively, were invoiced in Euros.

revenue for the three months ended June 30, 2020 and June 30, 2019, respectively, were invoiced in Euros.

Approximately 72.2 % and 71.6 % of the non-U.S.

revenue for the six months ended June 30, 2020 and June 30, 2019, respectively, were invoiced in Euros.

A breakdown of the Company’s revenue from U.S.

sources for the three months ended March 31, 2020 and March 31, 2019, respectively, is as follows:

sources for the three and six months ended June 30, 2020 and June 30, 2019, respectively, is as follows:

Three months ended

Six months ended

Total revenue

2 unchanged sentences

The Company records adjustments at least quarterly to inventory for potentially excess, obsolete, slow-moving or impaired items.

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 2,150 and $ 1,076 as of March 31, 2020 and December 31, 2019, respectively.

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 2,091 and $ 1,076 as of June 30, 2020 and December 31, 2019, respectively.

Noncurrent inventories are primarily related to raw materials purchased in bulk to support long-term expected repairs to reduce costs and are classified in other assets.

During the three months ended March 31, 2020 and March 31, 2019, $ 368 and $ 441 , respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flow.

During the six months ended June 30, 2020 and June 30, 2019, $ 1,193 and $ 670 , respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flow.

Inventories that are considered current consist of the following:

13 unchanged sentences

Repair and maintenance costs on rental equipment are included in cost of rental revenue on the consolidated statements of comprehensive income.

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 524 and $ 662 for the three months ended March 31, 2020 and March 31, 2019, respectively.

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 598 and $ 701 for the three months ended June 30, 2020 and June 30, 2019, respectively, and $ 1,123 and $ 1,363 for the six months ended June 30, 2020 and June 30, 2019, respectively.

Included within property and equipment is construction in process, primarily related to the design and engineering of tooling, jigs and other machinery.

4 unchanged sentences

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

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2020 and March 31, 2019, respectively.

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three and six months ended June 30, 2020 and June 30, 2019, respectively.

Three months ended

Six months ended

Rental equipment

1 unchanged sentence

Total depreciation and amortization

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2020 and December 31, 2019, respectively.

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of June 30, 2020 and December 31, 2019, respectively.

Property and equipment

14 unchanged sentences

The Company periodically reviews the carrying value of long-lived assets to determine whether or not impairment to such value has occurred.

No impairments were recorded as of March 31, 2020 and March 31, 2019.

The changes in the carrying amount of goodwill for the three months ended March 31, 2020 were as follows:

No impairments were recorded as of June 30, 2020 and June 30, 2019.

The changes in the carrying amount of goodwill for the six months ended June 30, 2020 were as follows:

Balance as of December 31, 2019

Translation adjustment

Balance as of March 31, 2020

Balance as of June 30, 2020

Intangible assets

There were no impairments recorded related to the Company’s intangible assets as of March 31, 2020 and March 31, 2019.

Amortization expense for intangible assets for the three months ended March 31, 2020 and March 31, 2019 was $ 2,242 and $ 328 , respectively.

There were no impairments recorded related to the Company’s intangible assets as of June 30, 2020 and June 30, 2019.

Amortization expense for intangible assets for the three months ended June 30, 2020 and June 30, 2019 was $ 2,250 and $ 324 , respectively, and for the six months ended June 30, 2020 and June 30, 2019 was $ 4,492 and $ 652 , respectively.

Condensed Notes to the Consolidated Financial Statements (continued)

1 unchanged sentence

The following tables represent the changes in net carrying values of intangible assets as of the respective dates:

March 31, 2020

June 30, 2020

Patents and websites

6 unchanged sentences

Current liabilities

Accounts payable and accrued expenses as of March 31, 2020 and December 31, 2019 consisted of the following:

Accounts payable and accrued expenses as of June 30, 2020 and December 31, 2019 consisted of the following:

Accounts payable

6 unchanged sentences

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

Accrued payroll as of March 31, 2020 and December 31, 2019 consisted of the following:

Accrued payroll as of June 30, 2020 and December 31, 2019 consisted of the following:

Accrued bonuses

9 unchanged sentences

T he Company leases a property owned by a related party.

Operating lease cost for the property was $ 8 for the three months ended March 31, 2020, which was included in the total operating lease cost.

Operating lease cost for the property was $ 8 and $ 16 for the three and six months ended June 30, 2020, respectively, which was included in the total operating lease cost.

Information related to the Company's right-of-use assets and related operating lease liabilities were as follows:

Three months ended

Six months ended

Cash paid for operating lease liabilities

3 unchanged sentences

Weighted-average discount rate

Maturities of lease liabilities due in the 12-month period ending March 31,

Maturities of lease liabilities due in the 12-month period ending June 30,

Less imputed interest

5 unchanged sentences

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

As of March 31, 2020, the Company has additional operating leases for its corporate headquarters in California and industrial space in Texas that have not yet commenced, with total minimum lease payments of $ 21,548 .

As of June 30, 2020, the Company has additional operating leases for its corporate headquarters in California and industrial space in Texas that have not yet commenced, with total minimum lease payments of $ 21,548 .

Lease payments for its corporate headquarters will increase annually by the lesser of the change, if any, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S.

1 unchanged sentence

Lease payments for the Company’s industrial space in Texas will increase annually by two and one-half percent ( 2.5 %) at each annual adjustment date thereafter .

These operating leases are estimated to commence in the third and fourth quarters of 2020 with a lease term of 10- 11 years.

This table excludes lease payments that were not fixed at commencement or modification.

Earnings (loss) per share

Earnings (loss) per share (EPS) is computed in accordance with ASC 260 —Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period.

These operating leases are estimated to commence in the first quarter of 2021 with a lease term of 10 to 11 years .

The table above excludes lease payments that were not fixed at commencement or modification.

Earnings per share

Earnings per share (EPS) is computed in accordance with ASC 260 —Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period.

Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents (which can include dilution of outstanding stock options, restricted stock units and restricted stock awards) unless the effect is to reduce a loss or increase the income per share.

For purposes of this calculation, common stock subject to repurchase by the Company, options, and other dilutive awards are considered to be common stock equivalents and are only included in the calculation of diluted earnings (loss) per share when their effect is dilutive.

Basic earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares.

Diluted earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

Basic earnings per share is calculated using the Company’s weighted-average outstanding common shares.

Diluted earnings per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

The computation of EPS is as follows:

Three months ended

Six months ended

Numerator—basic and diluted:

Net income (loss)

Weighted-average common shares - basic common stock (1)

Weighted-average common shares - diluted common stock

Net income (loss) per share - basic common stock

Net income (loss) per share - diluted common stock (2)

Net income per share - basic common stock

Net income per share - diluted common stock

Denominator calculation from basic to diluted:

6 unchanged sentences

Shares excluded from diluted weighted-average shares

Unvested restricted stock units and restricted stock awards are not included as shares outstanding in the calculation of basic earnings (loss) per share.

Vested restricted stock units and restricted stock awards are included in basic earnings (loss) per share if all vesting and performance criteria have been met.

Performance-based restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings (loss) per share as long as all applicable performance criteria are met, and their effect is dilutive.

Unvested restricted stock units and restricted stock awards are not included as shares outstanding in the calculation of basic earnings per share.

Vested restricted stock units and restricted stock awards are included in basic earnings per share if all vesting and performance criteria have been met.

Performance-based restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings per share as long as all applicable performance criteria are met, and their effect is dilutive.

Restricted stock awards are eligible to receive all dividends declared on the Company’s common shares during the vesting period;

however, such dividends are not paid until the restrictions lapse.

Due to a net loss for the three months ended March 31, 2020, dilutive loss per share is the same as basic.

The computations of diluted net income (loss) attributable to common stockholders exclude common stock options, restricted stock units, and restricted stock awards, which were anti-dilutive for the three months ended March 31, 2019.

The computations of diluted net income attributable to common stockholders exclude common stock options, restricted stock units, and restricted stock awards, which were anti-dilutive for the three and six months ended June 30, 2020 and June 30, 2019.

Condensed Notes to the Consolidated Financial Statements (continued)

16 unchanged sentences

The Company’s quarterly income tax provision and quarterly estimate of the annual effective tax rate are subject to volatility due to several factors, including our ability to accurately predict the proportion of our income before provision for income taxes in multiple jurisdictions, the tax effects of our stock-based compensation, and the effects of its foreign entity.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted and signed into U.S.

On March 27, 2020, the CARES Act was enacted and signed into U.S.

law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 PHE.

The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act did not have a material impact on the Company’s results of operations as of and for the three months ended March 31, 2020.

The CARES Act did not have a material tax impact on the Company’s consolidated financial statement presentation or results as of and for the three and six months ended June 30, 2020.

The Company is continuing to assess the future implications of these provisions within the CARES Act.

1 unchanged sentence

The Company has a 2002 Stock Incentive Plan (2002 Plan) as amended, under which the Company granted options to purchase shares of its common stock.

As of March 31, 2020, options to purchase 333 shares of common stock remained outstanding under the 2002 Plan.

As of June 30, 2020, options to purchase 333 shares of common stock remained outstanding under the 2002 Plan.

The 2002 Plan was terminated in March 2012 in connection with the adoption of the 2012 Plan, and, accordingly, no new options are available for issuance under this plan.

1 unchanged sentence

The Company has a 2012 Equity Incentive Plan (2012 Plan) under which the Company granted options to purchase shares of its common stock.

As of March 31, 2020, options to purchase 138,736 shares of common stock remained outstanding under the 2012 Plan.

As of June 30, 2020, options to purchase 138,736 shares of common stock remained outstanding under the 2012 Plan.

The 2012 Plan was terminated in connection with the Company’s initial public offering in February 2014, and accordingly, no new options are available for issuance under this plan.

3 unchanged sentences

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

As of March 31, 2020, awards with respect to 1,217,373 shares of the Company’s common stock were outstanding, and 1,643,970 shares of common stock remained available for issuance under the 2014 Plan.

As of June 30, 2020, awards with respect to 1,212,795 shares of the Company’s common stock were outstanding, and 1,620,935 shares of common stock remained available for issuance under the 2014 Plan.

The shares available for issuance under the 2014 Plan will be increased by any shares returned to the 2002 Plan, 2012 Plan and the 2014 Plan as a result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2014 Plan pursuant to such previously granted awards under the 2002 Plan and 2012 Plan is 2,328,569 shares).

7 unchanged sentences

Options have been granted to employees, directors and consultants of the Company, as determined by the board of directors, at the deemed fair market value of the shares underlying the options at the date of grant.

The activity for stock options under the Company’s stock plans for the three months ended March 31, 2020 is as follows:

The activity for stock options under the Company’s stock plans for the six months ended June 30, 2020 is as follows:

Outstanding as of December 31, 2019

Outstanding as of March 31, 2020

Vested and exercisable as of March 31, 2020

Vested and expected to vest as of March 31, 2020

The total intrinsic value of options exercised during the three months ended March 31, 2020 and March 31, 2019 was $ 239 and $ 6,733 , respectively.

The unrecognized compensation expense related to non-vested stock-based compensation granted under the Plans as of March 31, 2020 was $ 163 .

This amount is expected to be recognized over a weighted-average period of 0.1 years.

Outstanding as of June 30, 2020

Vested and exercisable as of June 30, 2020

Vested and expected to vest as of June 30, 2020

The total intrinsic value of options exercised during the six months ended June 30, 2020 and June 30, 2019 was $ 269 and $ 6,870 , respectively.

As of June 30, 2020, all stock-based compensation expense for options granted under the Plans was recognized.

Stock incentive awards

7 unchanged sentences

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

Stock Awards activity for the three months ended March 31, 2020 is summarized below:

Stock Awards activity for the six months ended June 30, 2020 is summarized below:

Restricted stock units

1 unchanged sentence

Forfeited/canceled

Unvested restricted stock units as of March 31, 2020 (1)

Unvested restricted stock units as of June 30, 2020 (1)

Unvested and expected to vest restricted stock units outstanding as

of March 31, 2020

of June 30, 2020

Restricted stock awards

1 unchanged sentence

Forfeited/canceled

Unvested restricted stock awards outstanding as of March 31, 2020 (1)

Unvested restricted stock awards outstanding as of June 30, 2020 (1)

Unvested and expected to vest restricted stock awards outstanding as

of March 31, 2020

of June 30, 2020

Outstanding restricted stock units and restricted stock awards are based on the maximum payout of the targeted number of shares.

As of March 31, 2020, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 18,992 , excluding estimated forfeitures.

As of June 30, 2020, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 16,438 , excluding estimated forfeitures.

This amount is expected to be recognized over a weighted-average period of 2.7 years.

6 unchanged sentences

The offering periods are currently approximately six months in length beginning on the first business day on or after March 1 and September 1 of each year and ending on the first business day on or after September 1 and March 1 approximately six months later.

As of March 31, 2020, a total of 670,678 shares of common stock were available for sale pursuant to the ESPP.

As of June 30, 2020, a total of 670,678 shares of common stock were available for sale pursuant to the ESPP.

Condensed Notes to the Consolidated Financial Statements (continued)

6 unchanged sentences

Stock-based compensation

Stock-based compensation expense recognized for the three months ended March 31, 2020 and March 31, 2019, was as follows:

Stock-based compensation expense recognized for the three and six months ended June 30, 2020 and June 30, 2019, was as follows:

Three months ended

Six months ended

Stock-based compensation expense by type of award:

4 unchanged sentences

Employee stock-based compensation expense was calculated based on awards of stock options, restricted stock units and restricted stock awards ultimately expected to vest based on the Company’s historical award cancellations.

The employee stock-based compensation expense recognized for the three months ended March 31, 2020 and March 31, 2019 has been reduced for estimated forfeitures of stock option plan awards at a rate of 7.3 % and 7.3 %, respectively.

The employee stock-based compensation expense recognized for the six months ended June 30, 2020 and June 30, 2019 has been reduced for estimated forfeitures of stock option plan awards at a rate of 7.3 % and 7.3 %, respectively.

ASC 718 – Compensation-Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For the three months ended March 31, 2020 and March 31, 2019, respectively, stock-based compensation expense recognized under ASC 718, included in cost of revenue, research and development expense, sales and marketing expense, and general and administrative expense was as follows:

For the three and six months ended June 30, 2020 and June 30, 2019, respectively, stock-based compensation expense recognized under ASC 718, included in cost of revenue, research and development expense, sales and marketing expense, and general and administrative expense was as follows:

Three months ended

Six months ended

Cost of revenue

6 unchanged sentences

Under the terms of this plan, eligible employees are able to make contributions to the plan on a tax-deferred basis.

The Company began matching employees’ contributions, effective January 1, 2017.

The Company contributed $ 252 and $ 318 , net of forfeitures, to the 401(k) plan for the three months ended March 31, 2020 and March 31, 2019, respectively.

The Company matched employees’ contributions from January 1, 2017 through June 30, 2020.

The Company suspended its 401(k) match, effective July 1, 2020.

The Company contributed $ 459 and $ 505 , net of forfeitures, to the 401(k) plan for the six months ended June 30, 2020 and June 30, 2019, respectively.

Condensed Notes to the Consolidated Financial Statements (continued)

3 unchanged sentences

The Company enters into non-cancelable contractual obligations for software licenses and maintenance agreements.

As of March 31, 2020, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

As of June 30, 2020, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

Non-cancelable

1 unchanged sentence

Purchase obligations

The Company had approximately $ 61,400 of outstanding purchase orders with its outside vendors and suppliers as of March 31, 2020.

The Company had approximately $ 68,200 of outstanding purchase orders with its outside vendors and suppliers as of June 30, 2020.

Warranty obligations

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the three and twelve-month periods ended March 31, 2020 and December 31, 2019, respectively:

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the six and twelve-month periods ended June 30, 2020 and December 31, 2019, respectively:

Product warranty liability at beginning of period

6 unchanged sentences

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product or service purchase.

The increase in deferred revenue related to lifetime warranties for the three months ended March 31, 2020 was primarily driven by $ 1,648 of payments received in advance of satisfying performance obligations, partially offset by $ 1,289 of revenue recognized that were included in the deferred revenue balances as of December 31, 2019.

Deferred revenue related to lifetime warranties was $ 18,087 and $ 17,728 as of March 31, 2020 and December 31, 2019, respectively, and is classified within deferred revenue – current and deferred revenue – noncurrent in the consolidated balance sheet.

The increase in deferred revenue related to lifetime warranties for the six months ended June 30, 2020 was primarily driven by $ 2,845 of payments received in advance of satisfying performance obligations, partially offset by $ 2,594 of revenue recognized that were included in the deferred revenue balances as of December 31, 2019.

Deferred revenue related to lifetime warranties was $ 17,979 and $ 17,728 as of June 30, 2020 and December 31, 2019, respectively, and is classified within deferred revenue – current and deferred revenue – noncurrent in the consolidated balance sheet.

Legislation and HIPAA

27 unchanged sentences

On the same day, Breathe re-filed the ‘250 patent infringement claims in the United States District Court for the Central District of California (C.D.

Both of these lawsuits are stayed until June 2020.

The Company intends to vigorously defend itself against the allegations in both lawsuits should the stays be lifted.

The Company intends to vigorously defend itself against the allegations in both lawsuits.

The Company recorded a contingent liability of $ 6,000 during the three months ended June 30, 2020.

The related payable was recorded in accounts payable and accrued expenses and receivable from the New Aera acquisition escrow account in prepaid expenses and other current assets as of June 30, 2020.

Securities class action and derivative lawsuits

39 unchanged sentences

The complaints seek compensatory damages in unspecified amounts, changes to the Company’s corporate governance and internal procedures, return of compensation, disgorgement of profits from sale of stock, costs and expenses, including attorneys’ fees and expert fees, and such other relief as the court deems proper.

On December 23, 2019 and January 6, 2020, plaintiffs filed cross-motions to consolidate the two cases and to appoint lead counsel.

On May 15, 2020, the court consolidated the two derivative lawsuits before it under the name In re Inogen, Inc.

S’holder Deriv.

, Lead Case No.

1:19-cv-01723-MN-JLH.

On July 8, 2020, the court ordered that the consolidated action be stayed pending the resolution of the motion to dismiss in the securities class action, In re Inogen, Inc., Sec.

Other litigation

4 unchanged sentences

Foreign currency exchange contracts and hedging

As of March 31, 2020 and March 31, 2019, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 3,885 and $ 23,788 , respectively, and $ 2,369 and $ 16,072 , respectively.

These contracts were comprised of offsetting contracts with the same counterparty, each expires within one to nine months .

During the three months ended March 31, 2020 and March 31, 2019, these contracts had, net of tax, an unrealized gain of $ 673 and $ 260 , respectively.

As of June 30, 2020 and June 30, 2019, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 3,152 and $ 12,278 , respectively, and $ 2,388 and $ 8,926 , respectively.

These contracts were comprised of offsetting contracts with the same counterparty, each expires within one to six months .

During the six months ended June 30, 2020 and June 30, 2019, these contracts had, net of tax, an unrealized gain of $ 390 and an unrealized loss of $ 76 , respectively.

The nonperformance risk of the Company and the counterparty did not have a material impact on the fair value of the derivatives.

During the three months ended March 31, 2020 and March 31, 2019, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of March 31, 2020, the Company had eight designated hedges and one non-designated hedge.

As of March 31, 2019, the Company had twenty-two designated hedges and three non-designated hedges.

During the six months ended June 30, 2020 and June 30, 2019, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of June 30, 2020, the Company had five designated hedges and one non-designated hedge.

As of June 30, 2019, the Company had thirteen designated hedges and three non-designated hedges.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements