What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-04 · 151 added, 118 removed, 641 unchanged (30% of the section changed)

48 unchanged sentences

22,578,696 and 22,131,447

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

shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

4 unchanged sentences

See accompanying condensed notes to the consolidated financial statements.

Consolidated Statements of Comprehensive 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 $ 1,888 and $ 1,299 , respectively

Cost of rental revenue, including depreciation of $ 2,054 and $ 1,221 , for the three months ended and $ 3,942 and $ 2,520 for the six months ended, respectively

Total cost of revenue

7 unchanged sentences

Total operating expense

Loss from operations

Income (loss) from operations

Other income (expense)

Interest income

Other expense

Total other income (expense), net

Loss before benefit for income taxes

Benefit for income taxes

Other income (expense)

Total other income, net

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 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

Total other comprehensive income (loss), net of tax

Comprehensive income

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

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

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, 2021 and March 31, 2020

Three months ended June 30, 2021 and June 30, 2020

comprehensive

1 unchanged sentence

income (loss)

Balance, March 31, 2020

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

Balance, March 31, 2021

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 income

Balance, June 30, 2021

Six months ended June 30, 2021 and June 30, 2020

comprehensive

stockholders'

income (loss)

Balance, December 31, 2019

6 unchanged sentences

Other comprehensive income

Balance, March 31, 2020

Balance, June 30, 2020

Balance, December 31, 2020

6 unchanged sentences

Other comprehensive income

Balance, March 31, 2021

Balance, June 30, 2021

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

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

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

Depreciation and amortization

21 unchanged sentences

Cash flows from investing activities

Purchases of marketable securities

Maturities of marketable securities

3 unchanged sentences

Proceeds from sale of former assets

Net cash provided by investing activities

Net cash (used in) provided by investing activities

(continued on next page)

2 unchanged sentences

(amounts in thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from financing activities

22 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 1,023,000 of its Inogen oxygen concentrators as of March 31, 2021.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 1,080,000 of its Inogen oxygen concentrators as of June 30, 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 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.

The results of operations for the three months and six months ended June 30, 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.

49 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, 2021

gains (losses)

As of June 30, 2021

Money market accounts

14 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 within stockholders’ equity and are recognized in the consolidated statements of comprehensive 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 income 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 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.

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.

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 receivable of $ 246 and payable of $ 863 as of March 31, 2021 and December 31, 2020, respectively.

The Company had a related receivable of $ 774 and a related payable $ 863 as of June 30, 2021 and December 31, 2020, respectively.

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

16 unchanged sentences

Other comprehensive income (loss)

Balance as of March 31, 2021

Balance as of June 30, 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).

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 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 .

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:

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of June 30, 2021 and December 31, 2020.

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

Simulation input

March 31, 2021

June 30, 2021

December 31, 2020

6 unchanged sentences

Three months ended

Six months ended

June 30, 2021

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.

The Company included $ 630 and $ 672 of preacquisition loss recoveries that can be withheld from any earnout amounts payable in the earnout liability as of June 30, 2021 and December 31, 2020, respectively.

Balance sheet components

19 unchanged sentences

Total marketable securities

Condensed Notes to the Consolidated Financial Statements (continued)

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

Accounts receivable and allowance for bad debts, returns, and adjustments

4 unchanged sentences

The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their net realizable value.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The allowance for doubtful accounts is based on estimates, and ultimate losses may vary from current estimates.

10 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, 2021 and December 31, 2020, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 569 and $ 459 , respectively.

As of June 30, 2021 and December 31, 2020, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 785 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 March 31, 2021 and December 31, 2020 were as follows:

Gross accounts receivable balance concentrations by major category as of June 30, 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 March 31, 2021 and December 31, 2020 were as follows:

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of June 30, 2021 and December 31, 2020 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 $ 7,800 and $ 7,044 as of June 30, 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 June 30, 2021 and December 31, 2020 for this customer with a $ 400 deductible and 10 % retention.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 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:

The following tables set forth the accounts receivable allowances as of June 30, 2021 and December 31, 2020:

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, 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.

One single customer represented more than 10% of the Company’s total revenue for the six months ended June 30, 2021 and for the six months ended June 30, 2020.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 10,309 and $ 7,800 , respectively, as of June 30, 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 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.

For the six months ended June 30, 2021, the Company’s three major vendors accounted for 16.3 %, 14.1 % and 11.7 %, 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.

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

Approximately 67.4 % and 77.2 % of the non-U.S.

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

revenue for the three months ended June 30, 2021 and June 30, 2020, respectively, were invoiced in Euros.

Approximately 72.4 % and 72.2 % of the non-U.S.

revenue for the six months ended June 30, 2021 and June 30, 2020, respectively, were invoiced in Euros.

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

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

sources for the three and six months ended June 30, 2021 and June 30, 2020, respectively, is as follows:

Three months ended

Six months ended

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)

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

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.

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

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.

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 1,814 and $ 1,153 as of June 30, 2021 and December 31, 2020, 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 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.

During the six months ended June 30, 2021 and June 30, 2020, $ 706 and $ 1,193 , 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 flows.

Inventories that are considered current consist of the following:

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 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.

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 $ 739 and $ 598 for the three months ended June 30, 2021 and June 30, 2020, respectively, and $ 1,674 and $ 1,123 for the six months ended June 30, 2021 and June 30, 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 months ended March 31, 2021 and March 31, 2020, 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, 2021 and June 30, 2020, respectively.

Three months ended

Six months ended

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 March 31, 2021 and December 31, 2020, respectively.

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of June 30, 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.

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:

During the three months ended June 30, 2021, the Company determined that an impairment indicator was present as a result of the court order to dismiss the Company’s preliminary injunction related to the Department of Health and Human Services and the Centers for Medicare and Medicaid Services lawsuit.

The relevant long-lived asset grouping was evaluated for impairment.

An undiscounted cash flow analysis demonstrated sufficient undiscounted cash flows in excess of the asset group’s carrying value.

Estimates and significant assumptions included in the long-lived asset impairment analysis included identification of the asset group and undiscounted cash flow projections.

The Company concluded that its definite-lived intangible assets and long-lived assets were not impaired based on the results of the quantitative analyses performed.

No impairments were recorded as of June 30, 2021 and June 30, 2020.

The changes in the carrying amount of goodwill for the six months ended June 30, 2021 were as follows:

Balance as of December 31, 2020

Translation adjustment

Balance as of March 31, 2021

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

Balance as of June 30, 2021

As of June 30, 2021, the Company had no accumulated impairment losses related to goodwill.

Intangible assets

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

There were no accumulated impairments losses related to the Company’s intangible assets as of June 30, 2021 and December 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:

March 31, 2021

June 30, 2021

Patents and websites

6 unchanged sentences

Current liabilities

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

Accounts payable and accrued expenses as of June 30, 2021 and December 31, 2020 consisted of the following:

Accounts payable

7 unchanged sentences

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

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

Accrued payroll as of June 30, 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.

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

Rent expense, including short-term lease cost, was $ 1,105 and $ 757 for the three months ended June 30, 2021 and June 30, 2020, respectively, and $ 2,093 and $ 1,508 for the six months ended June 30, 2021 and June 30, 2020, respectively.

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, 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.

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.

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.

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 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:

1 unchanged sentence

Weighted-average common shares - diluted common stock

Net loss per share - basic common stock

Net 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:

11 unchanged sentences

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

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)

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

The Company accounts for income taxes in accordance with ASC 740 — Income Taxes .

4 unchanged sentences

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.

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 (benefit) on its consolidated statements of comprehensive loss.

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

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 March 31, 2021, there are no remaining options to purchase shares of common stock under the 2002 Plan.

As of June 30, 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.

The 2002 Plan continues to govern outstanding awards granted thereunder.

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, 2021, options to purchase 119,840 shares of common stock remained outstanding under the 2012 Plan.

As of June 30, 2021, options to purchase 86,502 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.

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).

As of June 30, 2021, awards with respect to 896,995 shares of the Company’s common stock were outstanding, and 1,460,709 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 2012 Plan and 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 2012 Plan is 2,328,569 shares).

The number of shares available for issuance under the 2014 Plan also is increased annually on the first day of each fiscal year by an amount equal to the least of:

8 unchanged sentences

(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:

The activity for stock options under the Company’s stock plans for the six months ended June 30, 2021 is as follows:

Outstanding as of December 31, 2020

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.

Outstanding as of June 30, 2021

Vested and exercisable as of June 30, 2021

Vested and expected to vest as of June 30, 2021

The total intrinsic value of options exercised during the six months ended June 30, 2021 and June 30, 2020 was $ 11,402 and $ 269 , respectively.

As of June 30, 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 three months ended March 31, 2021 is summarized below:

Stock Awards activity for the six months ended June 30, 2021 is summarized below:

Restricted stock units

1 unchanged sentence

Forfeited/canceled

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

Unvested restricted stock units as of June 30, 2021 (1)

Unvested and expected to vest restricted stock units outstanding as

of March 31, 2021

of June 30, 2021

Restricted stock awards

1 unchanged sentence

Forfeited/canceled

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

Unvested restricted stock awards outstanding as of June 30, 2021 (1)

Unvested and expected to vest restricted stock awards outstanding as

of March 31, 2021

of June 30, 2021

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

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.

As of June 30, 2021, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 18,770 , excluding estimated forfeitures.

This amount is expected to be recognized over a weighted-average period of 2.6 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, 2021, a total of 592,466 shares of common stock were available for sale pursuant to the ESPP.

As of June 30, 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 months ended March 31, 2021 and March 31, 2020, was as follows:

Stock-based compensation expense recognized for the three and six months ended June 30, 2021 and June 30, 2020, was as follows:

Three months ended

Six months ended

Stock-based compensation expense by type of award:

5 unchanged sentences

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, 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:

For the three and six months ended June 30, 2021 and June 30, 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

Six months ended

Cost of revenue

8 unchanged sentences

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

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.

however, matching contributions were reinstated on June 21, 2021.

The Company contributed $ 52 and $ 459 , net of forfeitures, to the 401(k) plan for the six months ended June 30, 2021 and June 30, 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 March 31, 2021, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

As of June 30, 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 $ 64,400 of outstanding purchase orders due within one year with its outside vendors and suppliers as of March 31, 2021.

The Company had approximately $ 65,100 of outstanding purchase orders due within one year with its outside vendors and suppliers as of June 30, 2021.

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, 2021 and December 31, 2020, 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, 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 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.

The increase in deferred revenue related to lifetime warranties for the six months ended June 30, 2021 was primarily driven by $ 3,680 of payments received in advance of satisfying performance obligations, partially offset by $ 2,814 of revenue recognized that was included in the deferred revenue balances as of December 31, 2020.

Deferred revenue related to lifetime warranties was $ 17,944 and $ 17,078 as of June 30, 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

20 unchanged sentences

(i) Inogen had overstated the true size of the total addressable market for its portable oxygen concentrators and had misstated the basis for its calculation of the total addressable market;

(ii) Inogen had falsely attributed its sales growth to the strong sales acumen of its salesforce, rather than to deceptive sales practices;

(ii) Inogen had falsely attributed its sales growth to the strong sales acumen of its sales force, rather than to deceptive sales practices;

(iii) the growth in Inogen’s domestic business-to-business sales to home medical equipment providers was inflated, unsustainable and was eroding direct-to-consumer sales;

45 unchanged sentences

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

On June 17, 2021, the United States District Court for the District of Columbia issued an order to deny the Company’s motion for a preliminary injunction and dismissed the complaint stating that the Company had failed to present its claim to CMS and exhaust its administrative remedies.

The Company does not intend to appeal the court order or pursue additional alternatives to meet the Medicare reimbursement coding requirements.

Therefore, the Company adjusted its recognized revenue estimates for the fair value of the earnout liability and evaluated the relevant long-lived asset grouping for impairment.

Other litigation

4 unchanged sentences

Foreign currency exchange contracts and hedging

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.

As of June 30, 2021 and June 30, 2020, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 2,353 and $ 38,516 , respectively, and $ 3,152 and $ 12,278 , respectively.

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

During the six months ended June 30, 2021 and June 30, 2020, these contracts had, net of tax, unrealized gains of $ 1,161 and $ 390 , 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, 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.

During the six months ended June 30, 2021 and June 30, 2020, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of June 30, 2021, the Company had twenty-eight designated hedges and three non-designated hedges.

As of June 30, 2020, the Company had five 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