What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-04 · 178 added, 148 removed, 644 unchanged (34% of the section changed)

2 unchanged sentences

(amounts in thousands)

September 30,

Current assets

23 unchanged sentences

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

September 30,

Liabilities and stockholders' equity

19 unchanged sentences

22,721,619 and 22,131,447

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

shares issued and outstanding as of September 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 Income

Consolidated Statements of Comprehensive Income (Loss)

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

Three months ended

Six months ended

Nine months ended

September 30,

Sales revenue

3 unchanged sentences

Cost of sales revenue

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

Cost of rental revenue, including depreciation of $ 2,315 and $ 1,475 , for the three months ended and $ 6,257 and $ 3,995 for the nine months ended, respectively

Total cost of revenue

11 unchanged sentences

Other income (expense)

Total other income, net

Income before provision for income taxes

Provision for income taxes

Total other income (expense), net

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

Provision (benefit) for income taxes

Net income (loss)

Other comprehensive income (loss), net of tax

4 unchanged sentences

Change in net unrealized gains (losses) on marketable securities

Total other comprehensive income (loss), net of tax

Comprehensive income

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

Total other comprehensive income, net of tax

Comprehensive income (loss)

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

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

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

share attributable to common stockholders:

4 unchanged sentences

(amounts in thousands, except share amounts)

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

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

comprehensive

1 unchanged sentence

income (loss)

Balance, March 31, 2020

Balance, June 30, 2020

Stock-based compensation

Employee stock purchases

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Stock options exercised

Other comprehensive loss

Other comprehensive income

Balance, September 30, 2020

Balance, June 30, 2021

Balance, March 31, 2021

Stock-based compensation

Employee stock purchases

Restricted stock awards issued, net of forfeitures

Vesting of restricted stock units

2 unchanged sentences

Other comprehensive income

Balance, June 30, 2021

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

Balance, September 30, 2021

Nine months ended September 30, 2021 and September 30, 2020

comprehensive

9 unchanged sentences

Other comprehensive income

Balance, June 30, 2020

Balance, September 30, 2020

Balance, December 31, 2020

6 unchanged sentences

Other comprehensive income

Balance, June 30, 2021

Balance, September 30, 2021

See accompanying condensed notes to the consolidated financial statements.

1 unchanged sentence

(amounts in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities

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

Net income (loss)

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

Depreciation and amortization

27 unchanged sentences

Proceeds from sale of former assets

Net cash (used in) provided by investing activities

Net cash used in investing activities

(continued on next page)

2 unchanged sentences

(amounts in thousands)

Six months ended June 30,

Nine months ended September 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 1,080,000 of its Inogen oxygen concentrators as of June 30, 2021.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 1,131,000 of its Inogen oxygen concentrators as of September 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 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.

The results of operations for the three months and nine months ended September 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.

7 unchanged sentences

All intercompany balances and transactions have been eliminated.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Use of estimates

2 unchanged sentences

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price (SSP) and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, impairment of long-lived assets, stock-based compensation expense, income taxes, fair value of acquired intangible assets and goodwill and fair value of earnout liabilities.

Actual results could differ from these estimates.

22 unchanged sentences

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

Cash, cash equivalents and marketable securities

5 unchanged sentences

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

As of June 30, 2021

As of September 30, 2021

Money market accounts

Corporate bonds

Treasury securities

Agency mortgage-backed securities

5 unchanged sentences

Agency mortgage-backed securities

Condensed Notes to the Consolidated Financial Statements (continued)

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

Derivative instruments and hedging activities

7 unchanged sentences

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 income.

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 (loss).

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

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

The Company had a related 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

Condensed Notes to the Consolidated Financial Statements (continued)

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

ineffectiveness.

The Company had a related receivable of $ 1,536 and a related payable $ 863 as of September 30, 2021 and December 31, 2020, respectively.

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

12 unchanged sentences

Other comprehensive income (loss)

Balance as of June 30, 2021

Balance as of September 30, 2021

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

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

Earnout liability

Condensed Notes to the Consolidated Financial Statements (continued)

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

Earnout l iability

The Com pany has obligations to pay up to $ 31,400 in earnout payments in cash if certain future financial results are met.

5 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 June 30, 2021 and December 31, 2020.

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of September 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

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

Market price of risk

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Three months ended

Six months ended

June 30, 2021

Nine months ended

September 30, 2021

Balance at beginning of period

1 unchanged sentence

Balance at end of period

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.

The Company included $ 625 and $ 672 of preacquisition loss recoveries that can be withheld from any earnout amounts payable in the earnout liability as of September 30, 2021 and December 31, 2020, respectively.

Balance sheet components

10 unchanged sentences

Credit losses and other-than-temporary impairments are declines in fair value that are not expected to recover and are charged to other income (expense), net.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

September 30,

Cash and cash equivalents

12 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 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.

As of September 30, 2021 and December 31, 2020, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 1,400 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 June 30, 2021 and December 31, 2020 were as follows:

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

September 30,

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 June 30, 2021 and December 31, 2020 were as follows:

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of September 30, 2021 and December 31, 2020 were as follows:

September 30,

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.

Business-to-business receivables included one customer with a gross accounts receivable balance of $ 6,674 and $ 7,044 as of September 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)

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

The Company also has a credit insurance policy in place, which allocated up to $ 10,000 in coverage as of September 30, 2021 and December 31, 2020 for this customer with a $ 400 deductible and 10 % retention.

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

September 30,

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 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.

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

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 6,674 and $ 5,513 , respectively, as of September 30, 2021, and $ 8,417 and $ 7,044 , respectively, as of December 31, 2020.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 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.

For the nine months ended September 30, 2021, the Company’s three major vendors accounted for 17.0 %, 12.6 % and 10.8 %, respectively, of total raw material purchases.

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

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

Approximately 71.0 % and 83.4 % of the non-U.S.

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

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

Approximately 71.9 % and 75.6 % of the non-U.S.

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

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

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

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

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

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Total revenue

2 unchanged sentences

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

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

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 1,879 and $ 1,153 as of September 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 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.

The Company prepaid for raw materials of $ 12,126 as of September 30, 2021 that are classified in prepaid expenses and other current assets.

During the nine months ended September 30, 2021 and September 30, 2020, $ 817 and $ 1,795 , 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)

September 30,

Raw materials and work-in-progress

10 unchanged sentences

Lesser of estimated useful life or remaining lease term

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

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

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 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.

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 858 and $ 653 for the three months ended September 30, 2021 and September 30, 2020, respectively, and $ 2,531 and $ 1,776 for the nine months ended September 30, 2021 and September 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 and six months ended June 30, 2021 and June 30, 2020, respectively.

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three and nine months ended September 30, 2021 and September 30, 2020, respectively.

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Rental equipment

1 unchanged sentence

Total depreciation and amortization

Condensed Notes to the Consolidated Financial Statements (continued)

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

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 and rental equipment with associated accumulated depreciation is summarized below as of September 30, 2021 and December 31, 2020, respectively.

September 30,

Property and equipment

18 unchanged sentences

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:

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Balance as of December 31, 2020

Translation adjustment

Balance as of June 30, 2021

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

Balance as of September 30, 2021

As of September 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 June 30, 2021 and December 31, 2020.

Condensed Notes to the Consolidated Financial Statements (continued)

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

There were no accumulated impairment losses related to the Company’s intangible assets as of September 30, 2021 and December 31, 2020.

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

June 30, 2021

September 30, 2021

Patents and websites

4 unchanged sentences

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

September 30,

Remaining 3 months of 2021

Condensed Notes to the Consolidated Financial Statements (continued)

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

Current liabilities

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

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

September 30,

Accounts payable

5 unchanged sentences

Accounts payable and accrued expenses

Condensed Notes to the Consolidated Financial Statements (continued)

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

Accrued payroll as of June 30, 2021 and December 31, 2020 consisted of the following:

Accrued payroll as of September 30, 2021 and December 31, 2020 consisted of the following:

September 30,

Accrued bonuses

5 unchanged sentences

These leases have terms which range from 2 years to 11 years, some of which include options to extend the leases for up to 5 years.

There are no economic penalties for the Company to extend the lease, and it is not reasonably assured that the Company will exercise the extension options.

There are no economic penalties for the Company to extend the lease, and it is not reasonably certain that the Company will exercise the extension options.

Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

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

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.

Rent expense, including short-term lease cost, was $ 1,007 and $ 675 for the three months ended September 30, 2021 and September 30, 2020, respectively, and $ 3,099 and $ 2,183 for the nine months ended September 30, 2021 and September 30, 2020, respectively.

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

Six months ended

Nine months ended

September 30,

Cash paid for operating lease liabilities

3 unchanged sentences

Weighted-average discount rate

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Less imputed interest

3 unchanged sentences

Total lease liabilities

Condensed Notes to the Consolidated Financial Statements (continued)

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

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.

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.

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 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.

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.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The computation of EPS is as follows:

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

Numerator—basic and diluted:

Net income (loss)

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

Weighted-average common shares - diluted common stock

Net income per share - basic common stock

Net income per share - diluted common stock

Net income (loss) per share - basic common stock

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

Denominator calculation from basic to diluted:

11 unchanged sentences

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

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

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

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.

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

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

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

In determining the interim provision for income taxes, the Company has historically calculated its income tax provision by applying an estimate of the annual effective tax rate for the full fiscal year to ordinary income or loss for the reporting period.

For the three and nine months ended September 30, 2021 , the Company utilized the discrete effective tax rate method, as allowed by ASC 740-270 — Income Taxes – Interim Reporting .

Given the significant uncertainty with respect to the impact of the COVID-19 pandemic and related public health emergency on its supply chain and the developments during the three months ended September 30, 2021 in its ability to forecast the supply and cost of semiconductor chips , the Company was not able to reliably estimate its annual effective income tax rate for the year ending December 31, 2021.

The discrete method treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis.

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 June 30, 2021, there are no remaining options to purchase shares of common stock under the 2002 Plan.

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

As of June 30, 2021, options to purchase 86,502 shares of common stock remained outstanding under the 2012 Plan.

As of September 30, 2021, options to purchase 71,452 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 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.

As of September 30, 2021, awards with respect to 799,150 shares of the Company’s common stock were outstanding, and 1,450,669 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).

9 unchanged sentences

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

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

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

Outstanding as of December 31, 2020

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.

Outstanding as of September 30, 2021

Vested and exercisable as of September 30, 2021

Vested and expected to vest as of September 30, 2021

The total intrinsic value of options exercised during the nine months ended September 30, 2021 and September 30, 2020 was $ 14,524 and $ 269 , respectively.

As of September 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 six months ended June 30, 2021 is summarized below:

Stock Awards activity for the nine months ended September 30, 2021 is summarized below:

Restricted stock units

1 unchanged sentence

Forfeited/canceled

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

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

Unvested and expected to vest restricted stock units outstanding as

of June 30, 2021

of September 30, 2021

Restricted stock awards

1 unchanged sentence

Forfeited/canceled

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

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

Unvested and expected to vest restricted stock awards outstanding as

of June 30, 2021

of September 30, 2021

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

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.

As of September 30, 2021, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 17,481 , 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 June 30, 2021, a total of 592,466 shares of common stock were available for sale pursuant to the ESPP.

As of September 30, 2021, a total of 569,866 shares of common stock were available for sale pursuant to the ESPP.

Condensed Notes to the Consolidated Financial Statements (continued)

6 unchanged sentences

Stock-based compensation

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

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

Three months ended

Six months ended

Nine months ended

September 30,

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 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:

For the three and nine months ended September 30, 2021 and September 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

Nine months ended

September 30,

Cost of revenue

9 unchanged sentences

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.

The Company contributed $ 212 and $ 455 , net of forfeitures, to the 401(k) plan for the nine months ended September 30, 2021 and September 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 June 30, 2021, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

As of September 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 $ 65,100 of outstanding purchase orders due within one year with its outside vendors and suppliers as of June 30, 2021.

The Company had approximately $ 65,700 of outstanding purchase orders due within one year with its outside vendors and suppliers as of September 30, 2021.

Warranty obligations

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:

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the nine and twelve-month periods ended September 30, 2021 and December 31, 2020, respectively:

September 30,

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 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.

The increase in deferred revenue related to lifetime warranties for the nine months ended September 30, 2021 was primarily driven by $ 5,339 of payments received in advance of satisfying performance obligations, partially offset by $ 4,319 of revenue recognized that was included in the deferred revenue balances as of December 31, 2020.

Deferred revenue related to lifetime warranties was $ 18,098 and $ 17,078 as of September 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

29 unchanged sentences

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

that motion is currently pending.

The Company intends to vigorously defend itself against these allegations.

On August 13, 2021, the court granted Defendants’ motion to dismiss, and on September 27, 2021, the court entered judgment dismissing the action in its entirety.

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

10 unchanged sentences

2:19-cv-5568-FMO-AGR and ordered that the consolidated action be stayed pending the resolution of the motion to dismiss stage in In re Inogen, Inc., Sec.

The parties are currently engaged in discussions regarding future proceedings in this action.

Condensed Notes to the Consolidated Financial Statements (continued)

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

On September 13, 2019, plaintiff Dustin Weller filed a shareholder derivative lawsuit against Inogen, Scott Wilkinson, Alison Bauerlein, Benjamin Anderson-Ray, Scott Beardsley, R.

2 unchanged sentences

1:19-cv-01723-MN.

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

the same court, captioned Soltanipour v.

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

Wilkinson, et al.

8 unchanged sentences

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

On November 3, 2021, the court approved the parties’ stipulation to voluntarily dismiss the Delaware derivative action without prejudice.

Department of Health and Human Services and the Centers for Medicare and Medicaid Services lawsuit

14 unchanged sentences

Foreign currency exchange contracts and hedging

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.

As of September 30, 2021 and September 30, 2020, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 2,772 and $ 31,118 , respectively, and $ 2,221 and $ 1,176 , respectively.

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

During the nine months ended September 30, 2021 and September 30, 2020, these contracts had, net of tax, unrealized gains of $ 1,761 and $ 95 , 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 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.

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

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

As of September 30, 2020, the Company had nineteen 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