What changed in this filing

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Item 1. Financial Statements

2021-05-04 compared with 2020-11-04 · 143 added, 295 removed, 616 unchanged (42% of the section changed)

2 unchanged sentences

(amounts in thousands)

September 30,

Current assets

23 unchanged sentences

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

September 30,

Liabilities and stockholders' equity

19 unchanged sentences

22,385,794 and 22,131,447

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

shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders' equity

1 unchanged sentence

See accompanying condensed notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

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

Three months ended

Nine months ended

September 30,

Sales revenue

3 unchanged sentences

Cost of sales revenue

Cost of rental revenue, including depreciation of $ 1,475 and $ 1,482 , for the three months ended and $ 3,995 and $ 4,781 for the nine months ended, respectively

Cost of rental revenue, including depreciation of $ 1,888 and $ 1,299 , respectively

Total cost of revenue

7 unchanged sentences

Total operating expense

Income (loss) from operations

Loss from operations

Other income (expense)

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)

Other expense

Total other income (expense), net

Loss before benefit for income taxes

Benefit 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 (loss), 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, net of tax

Comprehensive loss

Basic net loss per share attributable to common stockholders (Note 6)

Diluted net loss per share attributable to common stockholders (Note 6)

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

share attributable to common stockholders:

4 unchanged sentences

(amounts in thousands, except share amounts)

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

comprehensive

stockholders'

income (loss)

Balance, June 30, 2019 (unaudited)

Stock-based compensation

Employee stock purchases

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, September 30, 2019 (unaudited)

Balance, June 30, 2020 (unaudited)

Stock-based compensation

Employee stock purchases

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Other comprehensive income

Balance, September 30, 2020 (unaudited)

Nine months ended September 30, 2020 and September 30, 2019

Three months ended March 31, 2021 and March 31, 2020

comprehensive

8 unchanged sentences

Stock options exercised

Other comprehensive loss

Balance, September 30, 2019 (unaudited)

Other comprehensive income

Balance, March 31, 2020

Balance, December 31, 2020

6 unchanged sentences

Other comprehensive income

Balance, September 30, 2020 (unaudited)

Balance, March 31, 2021

See accompanying condensed notes to the consolidated financial statements.

1 unchanged sentence

(amounts in thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

Net income (loss)

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

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

Depreciation and amortization

19 unchanged sentences

Operating lease liability

Other noncurrent liabilities

Net cash provided by operating activities

Cash flows from investing activities

Purchases of marketable securities

Maturities of marketable securities

3 unchanged sentences

Proceeds from sale of former assets

Payment for acquisition, net of cash acquired

Net cash used in investing activities

Net cash provided by investing activities

(continued on next page)

2 unchanged sentences

(amounts in thousands)

Nine months ended September 30,

Three months ended March 31,

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

3 unchanged sentences

Supplemental disclosure of non-cash transactions

Accrued value of earnout related to acquisition

Property and equipment in accounts payable and accrued liabilities

10 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 922,000 of its Inogen oxygen concentrators as of September 30, 2020.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 1,023,000 of its Inogen oxygen concentrators as of March 31, 2021.

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 and nine months ended September 30, 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 ended March 31, 2021 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2021.

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.

5 unchanged sentences

The consolidated financial statements include the accounts of Inogen, Inc.

and its wholly owned subsidiaries.

and its wholly owned subsidiary.

All intercompany balances and transactions have been eliminated.

3 unchanged sentences

Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable.

Significant areas requiring the use of management estimates relate to revenue recognition and determining the stand-alone selling price (SSP) of performance obligations, inventory and rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, warranty expense, stock compensation expense, depreciation and amortization, income tax provision and uncertain tax positions, fair value of financial instruments, fair value of acquired intangible assets and goodwill and fair value of earnout liabilities.

Actual results could differ from these estimates.

Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price (SSP) and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and

Condensed Notes to the Consolidated Financial Statements (continued)

(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 (loss) based on the nature of the terms and conditions of the grant.

In the nine months ended September 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 nine months ended September 30, 2020, t he Company recorded $ 5,300 in other income, which was associated with lost revenues from the COVID-19 PHE, and a $ 900 benefit in general and administrative expense due to COVID-19 PHE related costs incurred in the period.

Recently issued accounting pronouncements not yet adopted

adjustments, impairment of long-lived assets, stock -based compensation expense, income ta xes , fair value of acquired intangible assets and goodwill and fair value of earnout liabilities .

Actual results could differ from these estimates.

Recently adopted accounting pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

4 unchanged sentences

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.

The Company is currently evaluating the effect of the new guidance.

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Accounting for Credit Losses (Topic 326) .

The new standard requires the use of an “expected loss” model on certain types of financial instruments.

The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities.

The Company adopted this standard on January 1, 2021 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In January 2017, the FASB issued ASU No.

2017-04, Simplifying the Test for Goodwill Impairment .

The new guidance eliminates step two of the goodwill impairment test.

Under the new guidance, an entity should recognize an impairment charge for the amount by which a reporting unit’s carrying value exceeds its fair value.

The Company adopted this standard on January 1, 2020 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement .

The new guidance modifies the disclosure requirements on fair value measurements.

The Company adopted this standard on January 1, 2020 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

Business segments

1 unchanged sentence

Management reports financial information on a consolidated basis to the Company’s chief operating decision maker.

On August 6, 2019, the Company entered into an Agreement and Plan of Merger (Merger Agreement) by and among the Company, New Aera, Inc., a Delaware corporation, Move Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, and Gregory J.

Kapust, as stockholder representative.

On August 9, 2019, the Company completed the acquisition of New Aera pursuant to and on the terms set forth in the Merger Agreement.

In connection with the Merger Agreement, the Company also separately acquired certain intellectual property assets from Silverbow Development, LLC, an affiliate of New Aera (Silverbow).

New Aera is an innovative developer and manufacturer of portable non-invasive ventilators for people suffering from various chronic lung diseases.

Under the terms of the Merger Agreement, all outstanding shares of capital stock of New Aera were cancelled and converted into the right to receive merger consideration with a value equal to up to $ 101,923 in cash in the aggregate (inclusive of payments to Silverbow) comprised of $ 70,523 of cash paid at closing and up to $ 31,400 in earnout payments if certain performance targets are achieved.

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 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 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 .

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

The purchase accounting for this acquisition has been finalized.

The following table summarizes the purchase price allocation for the acquisition of New Aera:

Other current assets

Property and equipment

Intangible assets

Total assets acquired

Deferred tax liability - noncurrent

Earnout liability - noncurrent

Total liabilities assumed

Total purchase price

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 and nine months ended September 30, 2019 presents the revenue and net income assuming the acquisition of New Aera had occurred as of January 1, 2018.

Three months ended

Nine months ended

September 30, 2019

Total revenue

Fair value measurements

8 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.

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.

7 unchanged sentences

As all significant inputs were observable, derived from observable information in the marketplace or supported by observable levels at which transactions are executed in the marketplace, the Company has classified its marketable securities within Level 2 of the fair value hierarchy.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 September 30, 2020

As of March 31, 2021

gains (losses)

Money market accounts

Corporate bonds

Treasury securities

Agency mortgage-backed securities

As of December 31, 2020

gains (losses)

Money market accounts

1 unchanged sentence

Treasury securities

Agency mortgage-backed securities

Derivative instruments and hedging activities

4 unchanged sentences

Forward contracts are used to hedge forecasted sales over specific months.

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.

Changes in the fair value of these forward contracts designed as cash flow hedges are recorded as a component of accumulated other comprehensive income within stockholders’ equity and are recognized in the consolidated statements of comprehensive 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.

These contracts are generally entered into to offset the gains and losses on certain asset

Condensed Notes to the Consolidated Financial Statements (continued)

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

and liability balances until the expected time of repayment.

Accordingly, any gains or losses resulting from changes in the fair value of the non-designated contracts are reported in other expense, net in the consolidated statements of comprehensive income.

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

Accordingly, any gains or losses resulting from changes in the fair value of the non-designated contracts are reported in other expense, net in the consolidated statements of comprehensive loss.

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.

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 payable of $ 470 and $ 514 as of September 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.

The Company documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness.

The Company had a related receivable of $ 246 and payable of $ 863 as of March 31, 2021 and December 31, 2020, respectively.

Condensed Notes to the Consolidated Financial Statements (continued)

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

ineffectiveness.

The Company assesses hedge effectiveness and ineffectiveness at a minimum quarterly but may assess it monthly.

For derivative instruments that are designed and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported in other comprehensive income (loss) and reclassified into earnings in the same periods during which the hedged transaction affects earnings.

For derivative instruments that are designed and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported in other comprehensive income and reclassified into earnings in the same periods during which the hedged transaction affects earnings.

Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current period earnings.

2 unchanged sentences

In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in the fair value in earnings.

When it is probable that a forecasted transaction will not occur, the Company will discontinue hedge accounting and recognize immediately in earnings gains and losses that were accumulated in other comprehensive income (loss) related to the hedging relationship.

Accumulated other comprehensive income (loss)

The components of accumulated other comprehensive income (loss) were as follows:

gains (losses)

Accumulated other comprehensive income

The components of accumulated other comprehensive income were as follows:

gains (losses)

1 unchanged sentence

comprehensive

income (loss)

Balance as of December 31, 2020

Other comprehensive income (loss)

Balance as of September 30, 2020

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

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).

Balance as of March 31, 2021

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

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

Earnout liability

6 unchanged sentences

The earnout period for recognized revenue is each calendar year beginning with calendar year 2019 and ending on the calendar year in which the earnout consideration equals the earnout cap .

Condensed Notes to the Consolidated Financial Statements (continued)

(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 September 30, 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 March 31, 2021 and December 31, 2020.

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

Simulation input

September 30, 2020

March 31, 2021

December 31, 2020

2 unchanged sentences

Market price of risk

Condensed Notes to the Consolidated Financial Statements (continued)

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

The reconciliation of the earnout liability measured and carried at fair value on a recurring basis is as follows:

Three months ended

Nine months ended

September 30,

Balance at beginning of period

1 unchanged sentence

Balance at end of period

The Company included $ 672 of preacquisition loss recoveries that can be withheld from any earnout amounts payable in the earnout liability as of March 31, 2021 and December 31, 2020, respectively.

Balance sheet components

11 unchanged sentences

Cash, cash equivalents, and marketable securities consist of the following:

September 30,

Cash and cash equivalents

4 unchanged sentences

Treasury securities

Agency mortgage-backed securities

Total marketable securities

12 unchanged sentences

Therefore, provision for returns applies primarily to direct-to-consumer sales.

This reserve is calculated based on actual historical return rates under the Company’s 30-day return program and is applied to the related sales revenue for the last month of the quarter reported.

This reserve is calculated primarily based on actual historical return rates under the Company’s 30-day return program and is applied to the related sales revenue for the last month of the quarter reported.

The Company also records an allowance for rental revenue adjustments which is recorded as a reduction of rental revenue and net rental accounts receivable balances.

4 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 September 30, 2020 and December 31, 2019, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 1,659 and $ 590 , respectively.

As of March 31, 2021 and December 31, 2020, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 569 and $ 459 , 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 September 30, 2020 and December 31, 2019 were as follows:

September 30,

Gross accounts receivable balance concentrations by major category as of March 31, 2021 and December 31, 2020 were as follows:

Gross accounts receivable

1 unchanged sentence

Total gross accounts receivable

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

September 30,

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2021 and December 31, 2020 were as follows:

Net accounts receivable

1 unchanged sentence

Total net accounts receivable

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 $ 5,568 and $ 10,695 as of September 30, 2020 and December 31, 2019, respectively.

Business-to-business receivables included one customer with a gross accounts receivable balance of $ 8,102 and $ 7,044 as of March 31, 2021 and December 31, 2020, 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 $ 10,000 in coverage as of September 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 September 30, 2020 and December 31, 2019:

September 30,

The Company also has a credit insurance policy in place, which allocated up to $ 10,000 in coverage as of March 31, 2021 and as of December 31, 2020 for this customer with a $ 400 deductible and 10 % retention.

The following tables set forth the accounts receivable allowances as of March 31, 2021 and December 31, 2020:

Allowances - accounts receivable

11 unchanged sentences

Concentration of customers and vendors

The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries primarily on a credit basis.

The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis.

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

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 9,386 and $ 5,568 , respectively, as of September 30, 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 three months ended March 31, 2021 and for the three months ended March 31, 2020.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 10,434 and $ 8,102 , respectively, as of March 31, 2021, and $ 8,417 and $ 7,044 , respectively, as of December 31, 2020.

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 nine months ended September 30, 2020, the Company’s three major vendors accounted for 20.7 %, 11.1 %, and 9.7 %, respectively, of total raw material purchases.

For the nine months ended September 30, 2019, the Company’s three major vendors accounted for 22.1 %, 13.8 % and 9.7 %, respectively, of total raw material purchases.

For the three months ended March 31, 2021, the Company’s three major vendors accounted for 19.9 %, 10.8 %, and 9.6 %, respectively, of total raw material purchases.

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.

A portion of revenue is earned from sales outside the United States.

Approximately 79.3 % and 68.7 % of the non-U.S.

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

Approximately 75.6 % and 71.2 % of the non-U.S.

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

revenue for the three months ended March 31, 2021 and March 31, 2020, respectively, were invoiced in Euros.

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

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

sources for the three months ended March 31, 2021 and March 31, 2020, respectively, is as follows:

Three months ended

September 30,

Nine months ended

September 30,

Total revenue

Inventories are stated at the lower of cost and net realizable value.

Cost is determined using a standard cost method, including material, labor and manufacturing overhead, whereby the standard costs are updated at least quarterly to reflect approximate actual

Condensed Notes to the Consolidated Financial Statements (continued)

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

Inventories are stated at the lower of cost and net realizable value.

Cost is determined using a standard cost method, including material, labor and manufacturing overhead, whereby the standard costs are updated at least quarterly to reflect approximate actual costs using the first-in, first-out (FIFO) method.

costs using the first-in, first-out (FIFO) method.

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 $ 2,459 and $ 1,076 as of September 30, 2020 and December 31, 2019, respectively.

The Company recorded noncurrent inventor y related to inventories that are expected to be realized or consumed after one year of $ 1,145 and $ 1,153 as of March 3 1 , 20 2 1 and December 31, 20 20 , 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 nine months ended September 30, 2020 and September 30, 2019, $ 1,795 and $ 798 , 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 three months ended March 3 1 , 202 1 and March 3 1 , 20 20 , $ 607 and $ 368 , 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:

September 30,

Raw materials and work-in-progress

11 unchanged sentences

Expenditures for additions, improvements and replacements are capitalized and depreciated to a salvage value of $ 0 .

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 $ 653 and $ 938 for the three months ended September 30, 2020 and September 30, 2019, respectively, and $ 1,776 and $ 2,301 for the nine months ended September 30, 2020 and September 30, 2019, respectively.

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

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 935 and $ 524 for the three months ended March 31, 2021 and March 31, 2020, respectively.

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

2 unchanged sentences

therefore, no depreciation or amortization was recognized for these items in the respective periods.

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

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2021 and March 31, 2020, respectively.

Three months ended

September 30,

Nine months ended

September 30,

Rental equipment

3 unchanged sentences

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

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

September 30,

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2021 and December 31, 2020, respectively.

Property and equipment

13 unchanged sentences

In accordance with ASC 360, long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.

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 September 30, 2020 and September 30, 2019.

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

No impairments were recorded as of March 31, 2021 and March 31, 2020.

The changes in the carrying amount of goodwill for the three months ended March 31, 2021 were as follows:

Balance as of December 31, 2020

Translation adjustment

Balance as of September 30, 2020

Balance as of March 31, 2021

As of March 31, 2021, the Company had no accumulated impairment losses related to goodwill.

Intangible assets

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

Amortization expense for intangible assets for the three months ended September 30, 2020 and September 30, 2019 was $ 2,255 and $ 1,269 , respectively, and for the nine months ended September 30, 2020 and September 30, 2019 was $ 6,747 and $ 1,921 , respectively.

There were no accumulated impairments losses related to the Company’s intangible assets as of March 31, 2021 and March 31, 2020.

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:

September 30, 2020

March 31, 2021

Patents and websites

4 unchanged sentences

Annual estimated amortization expense for each of the succeeding fiscal years is as follows:

September 30,

Remaining 9 months of 2021

Current liabilities

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

September 30,

Accounts payable and accrued expenses as of March 31, 2021 and December 31, 2020 consisted of the following:

Accounts payable

Accrued inventory (in-transit and unvouchered receipts) and trade payables

Accrued litigation settlement

Accrued purchasing card liability

4 unchanged sentences

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

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

September 30,

Accrued payroll as of March 31, 2021 and December 31, 2020 consisted of the following:

Accrued bonuses

8 unchanged sentences

The operating leases do not contain material residual value guarantees or material restrictive covenants.

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

Operating lease cost for the property was $ 8 and $ 25 for the three and nine months ended September 30, 2020, respectively, which was included in the total operating lease cost.

Rent expense, including short-term lease cost, was $ 987 and $ 751 for the three months ended March 31, 2021 and March 31, 2020, respectively.

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

Nine months ended

September 30,

Three 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 September 30,

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

Less imputed interest

5 unchanged sentences

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

As of September 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 $ 21,433 .

As of March 31, 2021, the Company has additional operating leases for its corporate headquarters in California that has not yet commenced, with total minimum lease payments of $ 11,359 .

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.

Department of Labor or three and one-half percent ( 3.5 %) at each annual adjustment date thereafter.

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 first quarter of 2021 with a lease term of approximately 10 years.

The operating lease for its corporate headquarters is estimated to commence in the second quarter of 2021 with a lease term of approximately 10 years.

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

7 unchanged sentences

Three months ended

September 30,

Nine months ended

September 30,

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 loss per share - basic common stock

Net loss per share - diluted common stock (2)

Denominator calculation from basic to diluted:

11 unchanged sentences

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

Due to a net loss for the three and nine months ended September 30, 2020, dilutive loss per share is the same as basic.

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 nine months ended September 30, 2019.

Due to a net loss for the three months ended March 31, 2021 and March 31, 2020, diluted loss per share is the same as basic.

Condensed Notes to the Consolidated Financial Statements (continued)

2 unchanged sentences

Under ASC 740, income taxes are recognized for the amount of taxes payable or refundable for the current period and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or tax returns.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company accounts for uncertainties in income tax in accordance with ASC 740-10 —Accounting for Uncertainty in Income Taxes .

The Company accounts for uncertainties in income taxes in accordance with ASC 740-10 — Accounting for Uncertainty in Income Taxes .

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes interest and penalties on taxes, if any, within its income tax provision on its consolidated statements of comprehensive income.

No significant interest or penalties were recognized during the periods presented.

The Company operates in several taxing jurisdictions, including U.S.

federal, multiple U.S.

states and the Netherlands.

The statute of limitations has expired for all tax years prior to 2016 for federal and prior to 2015 to 2016 for various state tax purposes.

However, the net operating loss generated on the Company’s federal and state tax returns in prior years may be subject to adjustments by the federal and state tax authorities.

The Company determined the income tax provision for interim periods using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in that quarter.

In each quarter, the Company updates its estimated annual effective tax rate, and if the estimated annual effective tax rate changes, a cumulative adjustment is recorded in that quarter.

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 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 tax impact on the Company’s consolidated financial statement presentation or results as of and for the three and nine months ended September 30, 2020.

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

The Company recognizes interest and penalties on taxes, if any, within its income tax provision (benefit) on its consolidated statements of comprehensive loss.

Stockholders’ equity

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

As of March 31, 2021, there are no remaining options to purchase shares of common stock 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 September 30, 2020, options to purchase 138,736 shares of common stock remained outstanding under the 2012 Plan.

As of March 31, 2021, options to purchase 119,840 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.

1 unchanged sentence

The Company has a 2014 Equity Incentive Plan (2014 Plan) that provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any parent and subsidiary corporation’s employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, restricted stock awards, stock appreciation rights, performance units and performance shares to its employees, directors and consultants and its parent and subsidiary corporations’ employees and consultants.

Condensed Notes to the Consolidated Financial Statements (continued)

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

As of September 30, 2020, awards with respect to 1,206,292 shares of the Company’s common stock were outstanding, and 1,609,397 shares of common stock remained available for issuance under the 2014 Plan.

As of March 31, 2021, awards with respect to 1,146,603 shares of the Company’s common stock were outstanding, and 1,380,980 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 nine months ended September 30, 2020 is as follows:

Condensed Notes to the Consolidated Financial Statements (continued)

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

The activity for stock options under the Company’s stock plans for the three months ended March 31, 2021 is as follows:

Outstanding as of December 31, 2020

Outstanding as of September 30, 2020

Vested and exercisable as of September 30, 2020

Vested and expected to vest as of September 30, 2020

The total intrinsic value of options exercised during the nine months ended September 30, 2020 and September 30, 2019 was $ 269 and $ 7,017 , respectively.

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

Outstanding as of March 31, 2021

Vested and exercisable as of March 31, 2021

Vested and expected to vest as of March 31, 2021

The total intrinsic value of options exercised during the three months ended March 31, 2021 and March 31, 2020 was $ 6,504 and $ 239 , respectively.

As of March 31, 2021, 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 nine months ended September 30, 2020 is summarized below:

Stock Awards activity for the three months ended March 31, 2021 is summarized below:

Restricted stock units

1 unchanged sentence

Forfeited/canceled

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

Unvested restricted stock units as of March 31, 2021 (1)

Unvested and expected to vest restricted stock units outstanding as

of September 30, 2020

of March 31, 2021

Restricted stock awards

1 unchanged sentence

Forfeited/canceled

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

Unvested restricted stock awards outstanding as of March 31, 2021 (1)

Unvested and expected to vest restricted stock awards outstanding as

of September 30, 2020

of March 31, 2021

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

As of September 30, 2020, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 14,971 , excluding estimated forfeitures.

As of March 31, 2021, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 21,694 , excluding estimated forfeitures.

This amount is expected to be recognized over a weighted-average period of 2.8 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 September 30, 2020, a total of 630,165 shares of common stock were available for sale pursuant to the ESPP.

As of March 31, 2021, a total of 592,466 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 and nine months ended September 30, 2020 and September 30, 2019, was as follows:

Stock-based compensation expense recognized for the three months ended March 31, 2021 and March 31, 2020, was as follows:

Three months ended

Nine months ended

September 30,

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 nine months ended September 30, 2020 and September 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 and nine months ended September 30, 2020 and September 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:

For the three months ended March 31, 2021 and March 31, 2020, 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

Nine months ended

September 30,

Cost of revenue

8 unchanged sentences

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

The Company contributed $ 455 and $ 695 , net of forfeitures, to the 401(k) plan for the nine months ended September 30, 2020 and September 30, 2019, respectively.

The Company contributed $ 0 and $ 252 , net of forfeitures, to the 401(k) plan for the three months ended March 31, 2021 and March 31, 2020, 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 September 30, 2020, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

As of March 31, 2021, 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 $ 56,500 of outstanding purchase orders with its outside vendors and suppliers as of September 30, 2020.

The Company had approximately $ 64,400 of outstanding purchase orders due within one year with its outside vendors and suppliers as of March 31, 2021.

Warranty obligations

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

September 30,

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the three and twelve-month periods ended March 31, 2021 and December 31, 2020, 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 nine months ended September 30, 2020 was primarily driven by $ 3,980 of payments received in advance of satisfying performance obligations, partially offset by $ 3,901 of revenue recognized that were included in the deferred revenue balances as of December 31, 2019.

Deferred revenue related to lifetime warranties was $ 17,807 and $ 17,728 as of September 30, 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 three months ended March 31, 2021 was primarily driven by $ 1,604 of payments received in advance of satisfying performance obligations, partially offset by $ 1,375 of revenue recognized that was included in the deferred revenue balances as of December 31, 2020.

Deferred revenue related to lifetime warranties was $ 17,307 and $ 17,078 as of March 31, 2021 and December 31, 2020, respectively, and is classified within deferred revenue – current and deferred revenue – noncurrent in the consolidated balance sheet.

Legislation and HIPAA

11 unchanged sentences

Legal proceedings

Intellectual property lawsuit

On November 21, 2019, Breathe Technologies, Inc.

(Breathe), a subsidiary of Hill-Rom Holdings, filed a lawsuit against Inogen, Inc., New Aera, Inc., Silverbow Development, LLC, and Todd W.

Allum in the United States District Court for the Northern District of California (N.D.

Breathe alleged:

willful infringement of the ‘250 patent assigned to Breathe;

that inventorship was incorrectly assigned and that Breathe owns 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.

The complaint seeks to correct inventorship of certain patents now owned by the Company, injunctive relief, compensatory and punitory damages in an unspecified amount including trebling of all damages awarded with respect to infringement of the ‘250 patent, costs and expenses, including attorneys’ fees and expert fees, prejudgment and post-judgment interest and such other relief as the court deems proper.

On March 31, 2020, Breathe filed a First Amended Complaint in which it dropped the patent infringement claims in the N.D.

Lawsuit and added another claim for violation of California Business and Professional Code Section 17200.

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.

On August 17, 2020, the court in the N.D.

Lawsuit ordered that Breathe’s claims be arbitrated, with the sole exception of the correction of inventorship claim, which the court ordered be stayed pending completion of the arbitration on the other claims.

On September 4, 2020, Breathe filed a demand for arbitration with the American Arbitration Association, in which Breathe reiterated the claims it filed in the N.D.

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

The Company recorded a contingent liability of $ 7,000 during the nine months ended September 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 September 30, 2020.

Securities class action and derivative lawsuits

16 unchanged sentences

The Company filed its motion to dismiss on October 28, 2020;

that motion is currently pending.

The Company intends to vigorously defend itself against these allegations.

Condensed Notes to the Consolidated Financial Statements (continued)

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

On June 26, 2019, plaintiff Twana Brown filed a shareholder derivative lawsuit against Inogen, Scott Wilkinson, Alison Bauerlein, Benjamin Anderson-Ray, Scott Beardsley, R.

14 unchanged sentences

1:19-cv-01723-MN.

On October 17, 2019, plaintiff Sharokh Soltanipour filed a shareholder derivative lawsuit against the same defendants in the same court, captioned Soltanipour v.

On October 17, 2019, plaintiff Sharokh Soltanipour filed a shareholder derivative lawsuit against the same defendants in

Condensed Notes to the Consolidated Financial Statements (continued)

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

the same court, captioned Soltanipour v.

Wilkinson, et al.

11 unchanged sentences

Azar, Secretary of the Department of Health and Human Services (HHS), in his official capacity, Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS), in her official capacity and Palmetto GBA, LLC.

The lawsuit seeks to invalidate the defendants’ arbitrary and capricious decision to retract a valid HCPCS code to Inogen’s Tidal Assist Ventilator, thereby eliminating reimbursements for the ventilator, in violation of the Administrative Procedures Act (5 U.S.C.

The lawsuit seeks to invalidate the defendants’ arbitrary and capricious decision to retract a valid HCPCS code to Inogen’s Tidal Assist ® Ventilator (TAV ® ), thereby eliminating reimbursements for the ventilator, in violation of the Administrative Procedures Act (5 U.S.C.

§§ 551 , et seq.

Further, CMS’s failure to provide notice and the opportunity to comment on a change in HCPCS code verification for the Sidekick Tidal Assist Ventilator and similar devices constitutes a violation of the procedural right provided under the Medicare Act (42 U.S.C.

§§ 1395hh(a)(2)), and Inogen’s due process rights.

4 unchanged sentences

Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Foreign currency exchange contracts and hedging

As of September 30, 2020 and September 30, 2019, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 2,221 and $ 1,176 , respectively, and $ 20,805 and $ 4,105 , respectively.

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

During the nine months ended September 30, 2020 and September 30, 2019, these contracts had, net of tax, unrealized gains of $ 95 and unrealized losses of $ 158 , respectively.

As of March 31, 2021 and March 31, 2020, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 1,704 and $ 20,491 , respectively, and $ 3,885 and $ 23,788 , respectively.

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

During the three months ended March 31, 2021 and March 31, 2020, these contracts had, net of tax, unrealized gains of $ 903 and $ 673 , 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 nine months ended September 30, 2020 and September 30, 2019, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

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

As of September 30, 2019, the Company had five designated hedges and two non-designated hedges.

During the three months ended March 31, 2021 and March 31, 2020, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of March 31, 2021, the Company had twenty-two designated hedges and two non-designated hedges.

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

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