What changed in this filing

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Item 1A. Risk Factors

2021-08-04 compared with 2021-05-04 · 129 added, 141 removed, 1094 unchanged (20% of the section changed)

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We face intense international, national, regional and local competition and if we are unable to compete successfully, it could have an adverse effect on our revenue, revenue growth rate, if any, and market share.

The long-term oxygen therapy market and the non-invasive ventilator market are highly competitive industries.

The long-term oxygen therapy market is a highly competitive industry.

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

In the non-invasive ventilator market, we compete with manufacturers and distributors of other portable non-invasive ventilators, as well as home medical equipment (HME) providers that supply these products.

Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Invacare Corporation, Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Resmed, Gas Control Equipment (subsidiary of Colfax), Hill-Rom Holdings, Inc., Breas Medical, Ventec Life Systems, Medtronic, Nidek Medical, and 3B Medical.

Additional competitors have also pre-announced upcoming product launches of POCs including SysMed and Bellascura.

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

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

For example, some major competitors have implemented direct-to-consumer sales models, which may increase their competitiveness and sales to patients, and we have recently seen the cost per generated lead trend higher than historical averages that may in part be due to increased competition.

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We receive a significant amount of our sales revenue from a limited number of customers, including distributors, HME providers, our private label partner, resellers, and charitable organizations.

For the three months ended March 31, 2021 and March 31, 2020, sales revenue to our top 10 customers accounted for approximately 33.4% and 32.4%, respectively, of our total revenue.

One single customer represented more than 10% of our total revenue for the three months ended March 31, 2021, and for the three months ended March 31, 2020.

For the three months ended June 30, 2021 and June 30, 2020, sales revenue to our top 10 customers accounted for approximately 29.8% and 28.5%, respectively, of our total revenue.

One single customer represented more than 10% of our total revenue for the three months ended June 30, 2021 and June 30, 2020.

For the six months ended June 30, 2021 and June 30, 2020, sales revenue to our top 10 customers accounted for approximately 30.7% and 30.1%, respectively, of our total revenue.

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

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

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our suppliers may be unable to meet demands due to the effect of exposure to infectious diseases, epidemics or other public health emergencies, including the COVID-19 pandemic and related PHE;

our suppliers or their component sub-suppliers may be unable to meet demands due to global supply chain disruptions;

we or our suppliers may lose access to critical services, tools, moldings, and components, resulting in an interruption in the manufacture, assembly and shipment of our systems;

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

For example, we experienced issues with our suppliers sourcing certain components of our Inogen One G5 product in the fourth quarter of 2019 and the first quarter of 2020, which may recur in the future, and which led to orders not being filled in a timely manner.

We were not able to obtain sufficient quantities of the required component and could not validate an alternative component in a timely manner.

Therefore, we were required to delay manufacturing until additional supplies became available.

For example, we have seen supply chain disruptions in 2021, primarily associated with semiconductor chips used in our batteries and printed circuit boards, which are components of our portable oxygen concentrators.

This semiconductor chip shortage is being experienced across many industries, placing additional pressure on existing supplies.

While we have been hard at work to mitigate the impact of this supply shortage, it has and will likely have an increased negative impact our ability to manufacture products as these chips are used across all of our portable oxygen concentrators in its batteries and printed circuit boards.

We are continuing to work with our OEM partners and exploring other open-market avenues to purchase necessary semiconductor chips, but with these products facing extremely high demand, we expect continued challenges in terms of supply constraint and pricing inflation moving forward.

The acquisition costs for these chips from third parties has trended significantly higher in the third quarter of 2021 than the standard purchase price and is expected to continue to increase for any available supply if and to the extent supply continues to be limited.

As a result, we expect these higher costs will increase our cost of goods sold starting in the third quarter of 2021 and continuing until supply meets demand.

We believe based on our assessment and industry feedback that these supply shortages may continue through the second quarter of 2022.

While we expect to be supply constrained and unable to meet full customer demand for our products in the interim, we are planning on partially offsetting these rising costs by implementing price increases across our products as of September 1, 2021.

In addition, we have seen supply chain challenges tied to the COVID-19 pandemic and related PHE in printed circuit boards, corrugated boxes, aluminum machined parts, plastic molded parts, and batteries.

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Any interruption or delay in the supply of components or subassemblies, or our inability to obtain components or subassemblies from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products.

Recently, the U.S.

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

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

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

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

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

As a result, we may be required to perform due diligence to determine the origin of such minerals and disclose and report whether or not such minerals

originated in the Democratic Republic of the Congo or adjoining countries.

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

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In some cases, we would need to change the components or subassemblies if we sourced them from an alternative supplier.

This, in turn, could constitute a material modification or require a redesign of our products and, potentially, require additional FDA clearance or approval before we could use any

materially modified or redesigned product with new components or subassemblies, thereby causing further costs and delays that could adversely affect our business, financial condition and results of operations.

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

We may not be able to compete as effectively with our competitors and ultimately satisfy the needs and preferences of our customers unless we can continue to enhance existing products and develop new innovative products.

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

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

Product development requires significant financial, technological and other resources.

While we expended $4.0 million and $3.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively, in research and development efforts, we cannot assure that this level of investment will be sufficient to maintain a competitive advantage in product innovation, which could cause our business to suffer.

In addition, we plan to sell the TAV, the newly acquired technology from New Aera, Inc.

(New Aera), through our domestic direct-to-consumer sales channel and our business-to-business sales channels worldwide, pending reimbursement and regulatory clearances in each market.

While we expended $4.1 million and $3.3 million for the three months ended June 30, 2021 and June 30, 2020, respectively, and $8.1 million and $6.9 million for the six months ended June 30, 2021 and June 30, 2020, respectively, in research and development efforts, we cannot assure that this level of investment will be sufficient to maintain a competitive advantage in product innovation, which could cause our business to suffer.

In addition, we plan to sell the TAV products acquired from the New Aera acquisition, through our domestic direct-to-consumer sales channel and our business-to-business sales channels worldwide, pending reimbursement and regulatory clearances in each market.

We also plan to incorporate the TAV technology directly into our oxygen concentrators.

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

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

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

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

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

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

In particular, it is uncertain if the current TAV product acquired from New Aera, will be reimbursable in its current configuration under Healthcare Common Procedure Coding System (HCPCS) code E0466.

As discussed in the “Legal Proceedings” section of this Quarterly Report on Form 10-Q, in September 2020, we filed a lawsuit against defendants, Alex M.

Azar, Secretary of the Department of HHS, in his official capacity, Seema Verma, Administrator of 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 TAV, thereby eliminating reimbursements for the ventilator, in violation of the Administrative Procedures Act, CMS’s failure to provide notice and the opportunity to comment on a change in HCPCS code verification for the Sidekick TAV and similar devices constitutes a violation of the procedural right provided under the Social Security Act, and Inogen’s due process rights.

If we do not receive revised coding, it could limit this product’s adoption by HME providers and also our direct rentals and could adversely affect our business, financial condition and results of operations .

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

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failure of third parties on which we rely to meet their obligations to us, or significant disruptions in their ability to do so;

and our inability to meet our customers’ needs due to disruptions to our operations or the operations of our contractors, suppliers, other partners or customers including disruptions to production, development, manufacturing, administrative and supply operations and arrangements.

and our inability to meet our customers’ needs due to disruptions to our operations or the operations of our

contractors, suppliers, other partners or customers including disruptions to production, development, manufacturing, administrative and supply operations and arrangements.

In addition, new variants of COVID-19 could prove to be deadlier or more transmittable, or the developed vaccines may be ineffective versus these new variants, which could negatively impact our business and financial results.

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Legislation, including the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the Deficit Reduction Act of 2005, the Medicare Improvements for Patients and Providers Act of 2008, and the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, contain provisions that directly impact reimbursement for the durable medical equipment products provided by us:

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 significantly reduced reimbursement for inhalation drug therapies beginning in 2005, reduced payment amounts for certain durable medical equipment, including oxygen, beginning in 2005, froze payment amounts for other covered HME items through 2008, established a competitive bidding program for home medical equipment and implemented quality standards and accreditation requirements for durable medical equipment suppliers.

The Deficit Reduction Act of 2005 limited the total number of continuous rental months for which Medicare will pay for oxygen equipment to 36 months, after which time there is generally no additional reimbursement to the supplier (other

than for periodic, in-home maintenance and servicing).

bidding program for home medical equipment and implemented quality standards and accreditation requirements for durable medical equipment suppliers.

The Deficit Reduction Act of 2005 also provided that title of the equipment would transfer to the beneficiary, which was later repealed by the Medicare Improvements for Patients and Providers Act of 2008.

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

Our capped patients as a percentage of total patients on service was approximately 9.8 % as of March 31, 202 1 and 19.5 % as of March 31, 20 20 .

Our capped patients as a percentage of total patients on service was approximately 8.7% as of June 30, 2021 and 17.2% as of June 30, 2020.

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

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This could reduce Medicare rates after the PHE is over in the current areas that are considered non-rural but not covered by a former CBA, as those areas are currently receiving a 75/25 blended reimbursement rate.

There was a 60-day comment period on this proposed rule, and we expect this rule to be finalized in the first half of 2021.

In January 2021, CMS announced the pivotal bid amounts for the competitive bidding round 2021.

In January 2021, CMS announced the pivotal bid amounts for the competitive bidding round 2021 for informational purposes only as part of its effort to increase transparency into the DMEPOS Competitive Bidding Program.

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

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In addition, in the 2020 DMEPOS proposed rule, CMS stated that they solicited comments on the 2018 IFR, but have not yet responded to the comments received, and will do so in the final rule, expected to be published by May 11, 2022.

In July 2021, CMS announced a proposed change to the Home Use of Oxygen national coverage determination and proposed removing the national coverage determination for Home Oxygen Use to Treat Cluster Headaches.

If approved, this would allow the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.

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

In addition, CMS proposes to define exercise more broadly to include functional performance of the patient and to give more flexibility on pulse oximetry readings to reduce racial disparities in care.

Lastly, CMS proposed to reduce provider burden by removing the oxygen certificate of medical necessity requirement.

CMS is seeking comments to their proposed decisions and will respond to public comments in the final decision memorandum.

We believe these proposed changes would both expand coverage for patients who would benefit from oxygen therapy, reduce administrative burdens, and give more decision-making authority on proper patient care to the physicians.

However, we cannot guarantee these changes will be finalized, and do not yet have visibility on how the Medicare Administrative Contractors will change their coverage determinations.

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

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

For the three months ended March 31, 2021 and March 31, 2020, approximately 83.9% and 78.2%, respectively, of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs.

For the three months ended June 30, 2021 and June 30, 2020, approximately 82.5% and 80.0%, respectively, and approximately 83.1% and 79.2% for the six months ended June 30, 2021 and June 30, 2020, respectively, of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs.

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

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In all five rounds of competitive bidding in which we have participated, we have gained access to certain CBAs and been excluded from other CBAs.

Medicare revenue, including patient co-insurance and deductible obligations, represented 9.5% of our total revenue in the three months ended March 31, 2021 and 4.7% in the three months ended March 31, 2020.

If approved, this would allow the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.

Lastly, CMS proposed to reduce provider burden by removing the oxygen certificate of medical necessity requirement.

CMS is seeking comments to their proposed decisions and will respond to public comments in the final decision memorandum.

However, we cannot guarantee these changes will be finalized, and do not yet have visibility on how the Medicare Administrative Contractors will change their coverage determinations.

Medicare revenue, including patient co-insurance and deductible obligations, represented 9.1% and 6.8% of our total revenue in the three months ended June 30, 2021 and June 30, 2020, respectively, and 9.3% and 5.6% in the six months ended June 30, 2021 and June 30, 2020, respectively.

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

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The supplier may not arbitrarily issue new equipment.

We have analyzed the potential impact to revenue associated with patients in the capped rental period and have deferred $0 associated with the capped rental period as of March 31, 2021 and March 31, 2020.

Our capped patients as a percentage of total patients on service was approximately 9.8% as of March 31, 2021 and 19.5% as of March 31, 2020.

We have analyzed the potential impact to revenue associated with patients in the capped rental period and have deferred $0 associated with the capped rental period as of June 3 0 , 202 1 and June 3 0 , 20 20 .

Our capped patients as a percentage of total patients on service was approximately 8.7 % and 17.2% as of June 30, 2021 and June 30, 2020, respectively.

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

Average Medicare reimbursement rates for NIV HCPCS code E0466 are listed in the table below and were a monthly, non-capped rental.

These rates exclude Puerto Rico, where rates have ranged from $1,786.16 to $1,847.38 over the periods presented.

Average Medicare reimbursement rates for NIV (excludes Puerto Rico)

As of January 1, 2021

As of January 1, 2020

As of January 1, 2019

As of January 1, 2018

While NIV has been removed from competitive bidding round 2021, NIV may be included in future rounds, which could reduce the reimbursement rates for these products.

In addition, the Medicare Coverage Advisory Committee (MEDCAC) had a meeting on July 22, 2020 to discuss home use of non-invasive positive pressure ventilation in patients with chronic respiratory failure consequent to COPD.

CMS is seeking MEDCAC’s recommendations regarding the characteristics that define patient selection and usage criteria for these items.

This request could signal forthcoming changes in Medicare coverage of these items, and possibly changes in HCPCS codes, which could impact our NIV business and growth initiatives.

It is uncertain if the current TAV product acquired from New Aera, will be reimbursable in its current configuration under HCPCS code E0466.

We requested confirmation on the assigned HCPCS codes for the TAV system from the PDAC Contractor in August 2019 following the closing of the New Aera transaction.

In August 2019, we received positive confirmation that this product was assigned HCPCS code E0466.

However, in September 2019, we received a revised communication that the product was assigned HCPCS code E1390 and E1352, which was then revoked at our request in December 2019.

In September 2019, we appealed to CMS, and in January 2020 our appeal was denied.

In September 2020, we filed a lawsuit against Palmetto GBA, LLC and Alex Azar and Seema Verma in their official capacities at the Department of Health and Human Services and the Centers for Medicare and Medicaid Services, respectively.

The lawsuit seeks to invalidate the retraction of a valid HCPCS code to Inogen’s TAV system and claims a violation of our procedural rights provided under the Social Security Act, the Administrative Procedure Act, and our due process rights due to CMS’ failure to provide notice and the opportunity to comment on a change in HCPCS code verification for the TAV product.

If we do not receive revised coding, it could limit this product’s adoption by HME providers and also our direct rentals.

Although we continue to monitor developments regarding the implementation of the competitive bidding program, we cannot predict the outcome of the competitive bidding program on our business when fully implemented, nor the Medicare reimbursement rates that will be in effect in future years for the items subject to competitive bidding, including our products.

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

For the three months ended March 31, 2021 and March 31, 2020, approximately 11.3% and 6.0%, respectively, of our total revenue was derived from Medicare, private payors, Medicaid, and individual patients who directly receive reimbursement from third-party payors and this percentage could increase as a percent of total revenue if we increase net patient additions faster than our sales revenue growth.

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

reimbursement amounts are settled.

For the three months ended June 30, 2021 and June 30, 2020, approximately 11.1% and 8.5%, respectively, and for the six months ended June 30, 2021 and June 30, 2020, approximately 11.2% and 7.1%, respectively, of our total revenue was derived from Medicare, private payors, Medicaid, and individual patients who directly receive reimbursement from third-party payors and this percentage could increase as a percent of total revenue if we increase net patient additions faster than our sales revenue growth.

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

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We do not maintain large volumes of inventory from most of these suppliers.

For example, our TAV product is sold in some cases with a stationary concentrator produced by another oxygen concentrator manufacturer.

Due to the COVID-19 pandemic and related PHE and related increased demand for stationary oxygen concentrators, we have limited supply of these stationary oxygen concentrators at this time.

This has had and will continue to have an impact on TAV sales until supply is stabilized or we receive regulatory clearance or approval to use the TAV with another oxygen concentrator source.

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

While our printed circuit boards are sourced from dual sources, the sub-components of these boards are sourced from single source suppliers.

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

This has led to orders not being filled in a timely manner and is expected to lead to increased costs for components and limited supply availability.

Therefore, we were unable to meet full customer demand for our products and expect these supply constraints to continue into the first half of 2022.

We may also be affected by other supply limitations during the COVID-19 pandemic and related PHE that could impact our ability to fulfill orders.

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

In 2018, 2019, 2020 and the three months ended March 31, 2021, our contract manufacturer produced the vast majority of the concentrators required to support our European demand and we expect this to continue in 2021.

In 2018, 2019, 2020 and the six months ended June 30, 2021, our contract manufacturer produced the vast majority of the concentrators required to support our European demand and we expect this to continue in 2021.

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

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If our contract manufacturer is unable or unwilling to manufacture our products or components of our products, or if our contract manufacturer discontinues operations, we may be required to identify and qualify alternative manufacturers, which could cause us to be unable to meet our supply requirements to our customers and result in the breach of our customer agreements.

The process of qualifying a new contract manufacturer and commencing volume production is expensive and time-consuming, and if we are required to change or qualify a new contract manufacturer, we would likely lose sales revenue and damage our existing customer relationships.

The process of

qualifying a new contract manufacturer and commencing volume production is expensive and time-consuming, and if we are required to change or qualify a new contract manufacturer, we would likely lose sales revenue and damage our existing customer relationships.

Failure to maintain or obtain new private payor contracts and future reductions in reimbursement rates from private payors could have a material adverse effect on our financial condition and results of operations.

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We must also upgrade our internal business processes and capabilities to create the scalability that a growing business demands.

Going forward, we plan to hire additional sales representatives at a more controlled pace across all three facilities to expand sales capacity, but our sales representative headcount was down significantly at year-end 2019 compared to year-end 2018 and, due to the impact of the COVID-19 pandemic and related PHE, it was also down at year-end 2020 compared to year-end 2019 and continued down in the first quarter of 2021 compared to year-end 2020.

Our growth expectations in direct-to-consumer sales are lower given the slowdown of hiring new sales representatives that has not offset sales representative attrition and the COVID-19 pandemic and related PHE that has lowered sales representative productivity.

In addition, our growth expectations have been impacted by lower consumer

travel and consumer confidence as a result of the COVID-19 pandemic and related PHE .

Our rate of hiring increased in the second quarter of 2021, with headcount up slightly as of June 30, 2021 compared to December 31, 2020.

In 2021, we expect hiring will continue to be challenging due to the continued impacts of the COVID-19 pandemic and related PHE, so we do not expect to increase our sales force and instead expect to offset attrition with replacement hiring.

While we believe we are making the necessary changes to improve sales management infrastructure to support sales representative training and onboarding, it will take more time to evaluate whether these changes are effective in the long term, particularly given the impact of the COVID-19 pandemic and related PHE, and to the extent they are not effective it may negatively affect our financial condition and results of operations.

In addition, our sales expansion and productivity improvements for 2021 may continue to be negatively impacted due to the COVID-19 pandemic and related PHE.

In connection with the COVID-19 pandemic and related PHE, we expect minimal sales representative headcount additions for the first half of 2021, and we expect the COVID-19 pandemic and related PHE may continue to reduce the number of oxygen therapy patients who purchase our products directly through our direct-to-consumer sales channel, and the number of sales generated from physician offices or make it more difficult to get paperwork and testing from physician offices.

In connection with the COVID-19 pandemic and related PHE, we expect minimal sales representative headcount additions for the second half of 2021, and we expect the COVID-19 pandemic and related PHE may continue to reduce the number of oxygen therapy patients who purchase our products directly through our direct-to-consumer sales channel, and the number of sales generated from physician offices or make it more difficult to get paperwork and testing from physician offices.

The reduction in nonessential travel may also continue to harm our business, particularly for our physician-based sales representatives and business-to-business partners who rely on physician office and hospital visits to drive business, and patients who rely on physicians to prescribe them oxygen therapy after in-office testing.

We also experienced increased demand for our products towards the end of the first quarter of 2020 and towards the end of the fourth quarter of 2020 and in the first quarter of 2021, since physicians may prescribe supplemental oxygen as a treatment for COVID-19.

We also have experienced increased demand for our products in various markets associated with rising rates of COVID-19, since physicians may prescribe supplemental oxygen as a treatment for COVID-19.

As a result, in these periods we saw increased demand for our products for applicable patients who may be treated in the home instead of an acute hospital setting.

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In addition, even if we are able to meet any such increased demand, such an increase in business-to-business sales mix may negatively impact our gross margin as HME provider purchases have a significantly lower average selling price than direct-to-consumer purchases.

During 2019, we signed leases to expand our facilities located in Richardson, Texas and Goleta, California, which are expected to commence in 2021.

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

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

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

However, our anticipated growth may place additional strain on our supply chain and

manufacturing facilities, resulting in an increased need for us to carefully monitor parts inventory, capable staffing and quality assurance.

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

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

As part of our ongoing efforts to advance patient preference and maintain our technology leadership position, we acquired New Aera in 2019 and have completed our integration process.

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

If our assumptions relating to the acquisition are inaccurate, we may not be able to realize anticipated synergies and opportunities as a result of the acquisition, and the business may not perform as planned as a result of many of the risks and uncertainties that apply to the acquisition and to the rest of our business.

For example, additional risks and uncertainties that could cause actual results to differ materially from currently anticipated results include, but are not limited to;

risks relating to our ability to successfully integrate New Aera’s business and operations within our existing business and operations;

our ability to commercialize the TAV;

market acceptance of the TAV;

our ability to obtain Medicare or commercial reimbursement for the TAV;

our ability to successfully incorporate TAV into our existing products;

our sales, marketing and distribution capabilities;

our planned sales, marketing, and research and development activities;

interruptions or delays in the supply of components or materials for, or manufacturing of, our products, which in certain cases are purchased through sole and single source suppliers;

seasonal variations in customer operations;

unanticipated increases in costs or expenses;

risks associated with international operations;

intellectual property risks and the other risks identified in this Quarterly Report on Form 10-Q.

We may also encounter difficulties in integrating New Aera into our existing business.

If anticipated synergies and opportunities are not realized, our business, operating results and financial condition would be harmed.

As part of our ongoing efforts to advance patient preference and maintain our technology leadership position, we acquired New Aera in 2019 and completed our integration process.

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

After integration of New Aera, and partially as a result of the negative litigation outcome in our case against the Department of Health and Human Services, more fully described in Part II, Item 1 “ Litigation ” above,

we believe that our assumptions regarding New Aera will not be fully realized.

We believe that there are still many risks associated with the TAV product, including whether we will be able to successfully incorporate TAV into our existing products , what sort of competition there may be for the TAV product, and the other risks identified in this Quarterly Report on Form 10- Q .

These unrealized synergies may be beneficial to short - term operating results, but we believe may be harmful to our long -term term operating results.

We may experience manufacturing problems or delays that could limit our growth or adversely affect our operating results .

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Also, although we believe we are addressing these issues, we may experience additional unexpected product defects or errors that could have adverse effects.

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

In addition to these manufacturing issues, we also have experienced issues with our supply chain, as discussed in detail in the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations.

In addition, the introduction of new products may require the development of new manufacturing processes and procedures.

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

In particular, two customers each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $10.4 million and $8.1 million, respectively, as of March 31, 2021, and two customers each with an accounts receivable balance of $8.4 million and $7.0 million, respectively, as of December 31, 2020.

In particular, two customers each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $10.3 million and $7.8 million, respectively, as of June 30, 2021, and two customers each with an accounts receivable balance of $8.4 million and $7.0 million, respectively, as of December 31, 2020.

Challenging economic conditions, including those associated with the COVID-19 pandemic and related PHE, may impair the ability of our customers to pay for products they have purchased, and as a result, our reserve for doubtful accounts could increase and, even if increased, may turn out to be insufficient.

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In addition, any disruption or delay in the shipping of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations.

During the three months ended March 31, 2021,and March 31, 2020, approximately 18.1% and 22.7%, respectively, of our total revenue was generated from customers located outside of the United States.

During the six months ended June 30, 2021,and June 30, 2020, approximately 19.9% and 21.2%, respectively, of our total revenue was generated from customers located outside of the United States.

We believe that a significant percentage of our future revenue will continue to come from international sources as we expand our international operations and develop opportunities in other countries.

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dollars and fluctuations in the value of the U.S.

dollar relative to foreign currencies could decrease demand for our products and adversely impact our financial performance.

dollar relative to foreign currencies could decrease demand for our products and adversely impact our financial results.

For example, if the value of the U.S.

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

For example, for the three months ended March 31, 2021 and March 31, 2020, we experienced net foreign currency losses of $0.3 million and $0.1 million, respectively.

For example, for the six

months ended June 3 0 , 202 1 and June 3 0 , 2020, we experienced net foreign currency losses of less than $0.1 million and net foreign currency gains of less than $0.1 million , respectively.

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

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§ 201, the U.S.

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

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

We face significant risks and liability if we fail to comply with the FCPA and other anti-corruption and anti-bribery laws that prohibit companies and their employees and third-party business partners, such as distributors or resellers, from authorizing, offering or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties or candidates, employees of public international organizations including healthcare professionals, or private-sector recipients for the corrupt purpose of obtaining or retaining business, directing business to any person, or securing any advantage.

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We cannot assure you that we will be able to successfully retain or develop our relationships with third-party distributors internationally.

In addition, we are subject to United States export control and economic sanctions laws relating to the sale of our products, the violation of which could result in substantial penalties being imposed against us.

In addition, we are subject to United States export control and economic sanctions laws relating to the sale of our products, the

violation of which could result in substantial penalties being imposed against us.

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

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Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims.

Any adverse determination related to

litigation could require us to change our technology or our business practices, pay monetary damages or enter into royalty or licensing arrangements, which could adversely affect our business, financial condition and results of operations .

Any adverse determination related to litigation could require us to change our technology or our business practices, pay monetary damages or enter into royalty or licensing arrangements, which could adversely affect our business, financial condition and results of operations .

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

Reimbursement rates are established by fee schedules mandated by Medicare, private payors and Medicaid, and are likely to remain constant or decrease due, in part, to federal and state government budgetary constraints.

As a result, with respect to Medicare and Medicaid related revenue, we are not able to offset the effects of general inflation on our operating costs through increases in prices for our products.

Reimbursement rates are established by fee schedules mandated by Medicare, private payors and Medicaid, and are likely to be set, in part, to federal and state government budgetary constraints.

As a result, with respect to Medicare and Medicaid related revenue, we may not be able to offset the effects of general inflation on our operating costs through increases in prices for our products, as these inflation adjustments are subject to annual approval outside of our control.

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

This competitive environment could result in increased labor costs.

As such, we must control our operating costs, particularly labor and related costs and failing to do so could adversely affect our financial condition and results of operations.

This competitive environment could result in increased labor costs, which we have seen in 2021 as the labor market has tightened and there is increased competition for certain roles.

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

We depend on the services of our senior executives and other key technical personnel, the loss of whom could negatively affect our business.

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

Our President and Chief Executive Officer, Nabil Shabshab, joined us in February 2021, and our Executive Vice President, Chief Commercial Officer, George Parr, joined us in April 2021.

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

As new employees gain experience in their roles, we could experience inefficiencies or a lack of business continuity due to loss of historical knowledge and a lack of familiarity of new employees with business processes, operating requirements, policies and procedures, and we may experience additional costs as new employees gain necessary experience.

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If they are unable to do so, our business and financial results could be materially adversely affected.

In addition, much of our corporate expertise is concentrated in relatively few employees, the loss of which for any reason could negatively affect our business.

In addition, much of our corporate expertise is concentrated in relatively few employees, the loss of which for any reason could

negatively affect our business.

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

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For example, many jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.

These mandatory disclosures regarding a security breach could result in negative publicity to us, which may cause our customers to lose confidence in the effectiveness of our data security measures which could adversely affect our business, financial condition and results of operations.

These mandatory disclosures regarding a security breach could result in negative publicity to us, which may cause our customers

to lose confidence in the effectiveness of our data security measures which could adversely affect our business, financial condition and results of operations.

Increasing data privacy regulations could impact our business and expose us to increased liability.

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Any failure to adjust spending quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations.

Our results of operations may not meet the expectations of research analysts or investors, in which case the price of our common stock could decrease significantly.

Our results of operations

may not meet the expectations of research analysts or investors, in which case the price of our common stock could decrease significantly.

If the market opportunities for our products are smaller than we believe they are, our revenues may be adversely affected and our business may suffer.

Our projections regarding (i) the size of the oxygen therapy and NIV markets, both in the United States and internationally, (ii) the size and percentage of the long-term oxygen therapy market and NIV market that is subject to competitive bidding in the United States, (iii) the number of oxygen therapy and NIV patients, (iv) the number of patients requiring ambulatory and stationary oxygen, (v) the number of patients who rely on the delivery model, (vi) the percentage of the long-term oxygen therapy and NIV markets serviced by Medicare, Medicare Advantage, and other third party-payors, (vii) the size of the retail long-term oxygen therapy market and how the opportunity may change as POC penetration increases, (viii) the share of POCs as a percentage of the total oxygen therapy spend, (ix) the size of the early-stage COPD market and the interest and clinical benefit of NIV technology to this patient population, and (x) the impact of the COVID-19 pandemic and related PHE on our business and our markets generally are based on estimates that we believe are reliable.

These estimates may prove to be incorrect, new data or studies may change the estimated incidence or prevalence of patients requiring long-term oxygen therapy or NIV therapy, or the type of long-term oxygen therapy patients.

Our projections regarding (i) the size of the oxygen therapy market, both in the United States and internationally, (ii) the size and percentage of the long-term oxygen therapy market that is subject to competitive bidding in the United States, (iii) the number of oxygen therapy patients, (iv) the number of patients requiring ambulatory and stationary oxygen, (v) the number of patients who rely on the delivery model, (vi) the percentage of the long-term oxygen therapy market serviced by Medicare, Medicare Advantage, and other third party-payors, (vii) the size of the retail long-term oxygen therapy market and how the opportunity may change as POC penetration increases, (viii) the share of POCs as a percentage of the total oxygen therapy spend, and (ix) the impact of the COVID-19 pandemic and related PHE on our business and our markets generally are based on estimates that we believe are reliable.

These estimates may prove to be incorrect, new data or studies may change the estimated incidence or prevalence of patients requiring long-term oxygen therapy, or the type of long-term oxygen therapy patients.

The COVID-19 pandemic and related PHE may also reduce the number of oxygen therapy patients worldwide due to the higher risk of mortality of elderly patients with existing respiratory diseases if they are exposed to the virus.

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As a result of the audit, the California State Board of Equalization confirmed that our sales are not subject to California sales and use tax.

We believe that our sales of concentrators and accessories may be subject to sales and use tax, but in other states they should be exempt from sales and use tax.

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

There can be no assurance, however, that other states may agree with our position and we may be subject to an audit that may not be resolved in our favor.

Such an audit could be expensive and time-consuming and result in substantial management

Such an audit could be expensive and time-consuming and result in substantial management distraction.

If the matter were to be resolved in a manner adverse to us, it could have a material adverse effect on our results of operations and financial condition.

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The Consolidated Appropriations Act of 2021 was signed into law on December 27, 2020 and extended the suspension period to March 31, 2021.

House of Representatives bill H.R.

1868 was signed into law on April 14, 2021 and extended the suspension period to December 31, 2021, but would increase the fiscal year 2030 sequestration cuts.

Once the sequestration reduction is reinstated, this could adversely affect our financial condition and results of operations.

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Food and Drug Administration, or FDA.

We cannot market or commercially distribute our products without obtaining and maintaining necessary regulatory clearances or approvals.

We cannot market or commercially distribute our products without obtaining and maintaining necessary regulatory clearances or approvals and such approvals may be revoked or revised if an agency like the FDA believes it necessary.

Our products are medical devices subject to extensive regulation in the United States and in the foreign markets where we distribute our products.

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

If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline.

In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain pre-market approval process.

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

If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or pre-market approval for modifications to

our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.

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

The FDA issued a new Final Guidance titled Enforcement Policy for Ventilators and Accessories and Other Respiratory Devices During the Coronavirus Disease 2019 (COVID-19) Public Health Emergency (PHE) in March 2020.

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Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including adverse publicity, FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.

We may also be required to bear other costs or take

other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.

We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.

Any adverse event involving our products, whether in the United States or abroad, could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection, mandatory recall or other enforcement action.

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

Approximately 18.1% and 22.7% of our total revenue was from sales outside of the United States for the three months ended March 31, 2021 and March 31, 2020, respectively.

We sell our products in 58 countries outside of the United States through our wholly owned subsidiary, distributors or directly to large “house” accounts.

Approximately 21.5% and 19.3% of our total revenue was from sales outside of the United States for the three months ended June 30, 2021 and June 30, 2020, respectively, and 19.9% and 21.2% for the six months ended June 30, 2021 and June 30, 2020, respectively.

We sell our products in 58 international countries or overseas regions outside of the United States through our wholly owned subsidiary, distributors or directly to large “house” accounts.

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

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

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

The regulation has a three-year implementation period, with full application of the regulation to occur in May 2021 and will replace the existing directives on medical devices in the European Union.

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

The regulation has a three-year implementation period, with full application of the regulation to occur in May 2021 and will replace the existing directives on medical

devices in the European Union.

After May 2021, medical devices marketed in the European Union will require certification according to these new requirements, except that devices with valid CE certificates, issued pursuant to the Medical Device Directive before May 2021, including our oxygen therapy products with CE Marks issued under the Medical Device Directive, may be placed on the market until May 2024.

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Any such delay or rejection could prevent us from commercializing any of our products currently in development.

Any delays in completing our data collection and analysis will increase our costs, slow down our product development and regulatory authorization process and jeopardize our ability to commence sales and generate associated revenue with respect to the

applicable product.

Any of these occurrences may significantly harm our business, financial condition, results of operations and prospects.

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The HITECH Act expands the notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations.

actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions.

The HITECH Act also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions.

Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

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Sanctions under this federal law may include civil monetary penalties, exclusion from federal and state healthcare programs, criminal fines and imprisonment.

In addition, the recently enacted Patient Protection and Affordable Care Act, among other things, amends the

intent requirement of the federal anti-kickback and criminal healthcare fraud statutes.

In addition, the recently enacted Patient Protection and Affordable Care Act, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes.

A person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it.

In addition, the Patient Protection and Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statutes.

Because of the breadth of these laws and the narrowness of the safe harbors and exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

Because of the breadth of these laws and the

narrowness of the safe harbors and exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

Such a challenge, regardless of the outcome, could have a material adverse effect on our business, business relationships, reputation, financial condition and results of operations.

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

We sell our products in 58 countries outside the United States through our wholly owned subsidiary, distributors or directly to large “house” accounts.

We sell our products in 58 international countries or overseas regions outside the United States through our wholly owned subsidiary, distributors or directly to large “house” accounts.

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

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

As of March 31, 2021, we have twenty-nine pending U.S.

and international patent applications, forty-four issued U.S.

patents, and sixteen issued foreign patents relating to the design and construction of our oxygen concentrators, our intelligent delivery technology and our non-invasive ventilator, including its proprietary nasal interface.

As of June 30, 2021, we have twenty-eight pending U.S.

and international patent applications, forty-two issued U.S.

patents, and seventeen issued foreign patents relating to the design and construction of our oxygen concentrators, our intelligent delivery technology and our TAV product, including its proprietary nasal interface.

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

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Our patents and patent applications are directed to particular aspects of our products.

Other parties may develop and obtain patent protection for more effective technologies, designs or methods for oxygen therapy or non-invasive ventilation therapy.

Other parties may develop and obtain patent protection for more effective technologies, designs or methods for oxygen therapy.

If these developments were to occur, it would likely have an adverse effect on our sales.

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

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

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

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

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

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

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

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commencement of, or our involvement in, litigation;

market conditions in the oxygen therapy or NIV markets;

reimbursement or legislative changes in the oxygen therapy or NIV markets;

market conditions in the oxygen therapy market;

reimbursement or legislative changes in the oxygen therapy market;

failure to complete significant sales;

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These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of March 31, 2021, one holder of approximately 2.7 million shares, or approximately 12.3% of our outstanding shares, has rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

As of June 30, 2021, one holder of approximately 2.1 million shares, or approximately 9.2% of our outstanding shares, has rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

We have also registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans.

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Our directors, executive officers and principal stockholders will continue to have substantial control over us and could limit your ability to influence the outcome of key transactions, including changes of control.

As of March 31, 2021, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock and their respective affiliates beneficially owned or controlled approximately 64.8% of the outstanding shares of our common stock.

As of June 30, 2021, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock and their respective affiliates beneficially owned or controlled approximately 60.5% of the outstanding shares of our common stock.

Accordingly, these executive officers, directors and stockholders who owned more than 5% of our outstanding common stock and their respective affiliates, acting as a group, have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions.

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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 1A. Risk Factors