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information concerning our possible or assumed future cash flows, revenue, sources of revenue and results of operations, operating and other expenses;
−Removed: our assessment and expectations regarding the impact of the COVID-19 pandemic and related public health emergency (PHE) on our business;
+Added: our expectations of the impact of the COVID-19 pandemic and related public health emergency (PHE) on sales, productivity, hiring, media expenditures, prescriber sales team and physician referrals, worldwide demand for oxygen therapies, and our supply chain, including supply constraints and cost inflation related to semiconductor chips used in our batteries and printed circuit boards which are components of our portable oxygen concentrators;
our assessment and expectations regarding reimbursement rates, future rounds of competitive bidding, Centers for Medicare and Medicaid Services (CMS) changes associated with the COVID-19 pandemic and related PHE impacting respiratory care, CMS proposed changes to Home Use of Oxygen national coverage determination, and future changes in rental revenue;
our expectations regarding regulatory approvals and government and third-party payor coverage and reimbursement;
−Removed: our ability to develop new products, improve our existing products and increase the value of our products, including the integration of TAV technology into our existing products;
−Removed: our expectations of the impact of the COVID-19 pandemic and related PHE on sales, productivity, hiring, media expenditures, physician-based sales team and physician referrals, worldwide demand for oxygen therapies, and our supply chain, including supply constraints and cost inflation related to semiconductor chips used in our batteries and printed circuit boards which are components of our portable oxygen concentrators;
+Added: our ability to develop new products, improve our existing products and increase the value of our products, including the potential integration of TAV technology into our existing products;
our expectations regarding the timing of new products and product improvement launches, as well as product features and specifications;
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our ability to grow our business and enter new markets;
−Removed: our expectations regarding the average selling prices and manufacturing costs of our products, including our expectations to continue to reduce average unit costs for our systems;
−Removed: our expectations regarding our sales and marketing strategy channels;
+Added: our expectations regarding the average selling prices and manufacturing costs of our products, including our expectations related to the impact of supply chain disruptions on our manufacturing costs and our ongoing efforts to reduce average unit costs for our systems;
+Added: our expectations regarding our sales and marketing channels including expectations related to our prescriber sales team, including the expansion of the sales team and implementation of healthcare intelligence platforms and tools through our partnership with Ashfield Healthcare, LLC (Ashfield) and its impact on clinician awareness, POC penetration, and sale team productivity;
our expectations with respect to our European and U.S.
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acquisitions and related acquired intangible assets and goodwill.
−Removed: There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three and six months ended June 30 , 2021 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021.
+Added: There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three and nine months ended September 30 , 2021 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021.
COVID-19 pandemic and related PHE
The novel coronavirus outbreak of COVID-19 has had and likely will continue to have significant adverse effects on businesses and healthcare institutions around the world.
−Removed: While it is not possible at this time to estimate the overall impact that the COVID-19 pandemic and related PHE could have on our business, the continued spread of COVID-19, both across the United States and throughout much of the world, and the measures taken by the governments of countries and local authorities affected has adversely impacted and will likely continue to adversely impact our business operations, demand for our products, the manufacture, shipment, or cost of our products, and our financial condition and operating results.
+Added: While it is not possible at this time to estimate the overall impact that the COVID-19 pandemic and related PHE could have on our business, the continued spread of COVID-19, both across the United States and throughout much of the world, and the measures taken by the governments of countries and local authorities affected has adversely impacted and will likely continue to adversely impact demand for our products, our business operations, including manufacturing due to supply chain constraints, hiring and continued employment of our employees and contractors, shipment, cost of our products, and our financial condition and operating results.
Our priorities during the COVID-19 pandemic and related PHE include protecting the health and safety of our employees and supporting our patients and customers.
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Starting in the first quarter of 2021 and continuing into the second quarter of 2021, consumer demand for our products improved, which we believe was due to increased vaccination rates, increased interest in POCs to enable patient mobility, stimulus payments, and increased consumer confidence.
−Removed: While we observed this increase in consumer demand in the first half of 2021, we continue to believe that future shelter-in-place orders, reduced travel, lower consumer confidence, or the impacts of new variants could reduce consumer demand in future periods.
−Removed: In the business-to-business channel, there have been certain surges in demand for oxygen concentrators by our home medical equipment (HME) providers worldwide during the COVID-19 pandemic and related PHE in specific markets with significant COVID-19 case rates.
+Added: While we observed this increase in consumer demand in the first half of 2021, we saw consumer demand slightly decline in the third quarter of 2021 compared to the second quarter of 2021, which we believe was primarily associated with traditional seasonality in consumer buying patterns and the impact of the delta variant, and we continue to believe that future shelter-in-place orders, reduced travel, lower consumer confidence, or the impacts of new variants could reduce consumer demand in future periods.
+Added: I n the business-to-business channel , there have been certain surge s in demand for oxygen concentrators by our home medical equipment (HME) providers worldwide during t he COVID-19 pandemic and related PHE in specific markets with significant COVID-19 case rates .
However, overall business-to-business demand has been lower because of the COVID-19 pandemic and related PHE due to lower retail sales, lower patient travel, physician offices limiting patient interactions for chronic obstructive pulmonary disease (COPD) patient referrals, HME providers minimizing patient interactions in response to the COVID-19 pandemic and related PHE, which includes replacing existing oxygen patient setups with POCs, and HME providers turning their purchasing focus to stationary oxygen concentrators to treat COVID-19 patients.
Also, sales in Europe declined associated with the temporary closure and reduced operating capacity of certain respiratory assessment centers and continued tender delays in certain markets due to the COVID-19 pandemic.
−Removed: However, in the second quarter of 2021, business-to-business sales improved versus the comparative period in the prior
−Removed: year due to a smaller impact of the COVID-19 pandemic and related PHE as consumer confidence, vaccination rates, and COPD patient referral volumes improved in our core markets of the United States and Europe.
+Added: I n the second quarter of 2021, business-to-business sales improved versus the comparative period in the prior year due to a smaller impact of the COVID-19 pandemic and related PHE as consumer confidence, vaccination rates, and COPD patient referral volumes improved in our core markets of the United States and Europe.
+Added: In the third quarter of 2021, business-to-business demand remained high versus the comparative period in the prior year for the same reasons as experienced in the second quarter of 2021, but supply constraints, primarily due to limited semiconductor chip availability , negatively impacted sales mainly in the domestic business-to-business channel, as discussed in more detail below.
+Added: During 2020 and through the nine months ended September 30, 2021, we were able to broadly maintain our operations.
+Added: However, the COVID-19 pandemic and related PHE have caused and could continue to cause disruption to our supply chain that could impact our operations, limit our growth, and increase our cost of goods sold.
+Added: For example, we have seen higher semiconductor chip demand and reduced semiconductor chip availability in 2021, which has impacted our ability to produce and sell systems and batteries.
+Added: We expect availability issues to continue for the remainder of 2021 and into 2022, which has impacted and will continue to impact our ability to produce and sell systems and batteries until resolved.
+Added: The semiconductor chip shortage is being experienced across many industries, placing additional pressure on existing supplies.
+Added: We have attempted to mitigate the impact of this increased supply shortage, but it has and will likely continue to negatively impact our ability to manufacture product as these chips are used across all of our portable oxygen concentrators, in both our batteries and printed circuit boards and, if we are not able to obtain sufficient components, we could be forced to further slowdown or temporarily halt production.
+Added: We are continuing to work with our Original Equipment Manufacturer (OEM) partners and exploring other open-market avenues to procure necessary semiconductor chips, but it is a product in extremely high demand, so we expect increasing challenges in terms of supply constraint and pricing inflation moving forward.
+Added: We saw inflated costs related to the acquisition of semiconductor chips begin to negatively impact our cost of goods sold in the third quarter of 2021, and we expect this to have an increased impact on our material costs in the fourth quarter of 2021 and continuing into 2022 until supply and demand get closer to equilibrium.
+Added: Even though we paid significant costs in the third quarter of 2021 associated with these chips, most of these costs increased our prepaid expense and inventory given that these components were not yet in finished products that were sold during the period.
+Added: We believe based on our assessment and industry feedback that these supply shortages and increased costs are likely to continue through the second quarter of 2022.
+Added: In addition to the semiconductor chip limitations, we are continuing to see supply chain constraints for other components used in our products albeit to a lower degree.
+Added: Thus far, we have been able to manage through these challenges with increased inventory levels and heightened supplier management and communications, but we cannot be certain we will be able to continue to do so through the remainder of the shortages.
+Added: As a result, in the interim we expect to be supply constrained and unable to meet all customer demand for our products, which we expect to negatively impact our total revenue and cost of goods sold for the duration of these supply shortages.
+Added: To partially offset these rising costs, we implemented a price increase across our products which was effective as of September 1, 2021.
+Added: Additionally, we have experienced, along with most other companies across many industries, the macro-economic impact of a challenging employment environment related to hiring and retaining employees.
+Added: We expect that these hiring and retention challenges, as well as challenges related to maintaining our current workforce, will continue throughout the remainder of 2021 and into 2022.
+Added: These hiring and retention challenges may negatively affect our ability to grow our business and keep our best employees.
+Added: In response to these challenges, we have implemented more relaxed workplace requirements depending on the role, such as increasing ability for remote work, but we still expect to be negatively impacted by the macro-economic employment environment.
The COVID-19 pandemic and related PHE has also and could continue to lead to volatility in consumer access to our products due to government actions impacting our ability to produce and ship products or impacting consumers’ movements and access to our products.
−Removed: The COVID-19 pandemic and related PHE has caused and may continue to cause reduced demand for our products across all channels due to the global economic environment and reduced regular physician interactions and testing which could lead to a lower rate of diagnosis for long-term oxygen therapy.
+Added: The COVID-19 pandemic and related PHE has caused demand to fluctuate for our products across all channels due to the global economic environment and changes to regular physician interactions and testing requirements.
Additionally, while we planned for sales and marketing expansion in 2021, we have seen lower hiring in our direct-to-consumer sales force primarily due to increased competition for sales professionals in 2021, along with reduced hiring of new sales representatives in 2020 due to the COVID-19 pandemic.
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We have also worked closely with local and national officials to keep our manufacturing facilities open due to the essential nature of our products.
−Removed: During 2020 and the first and second quarters of 2021, we were able to broadly maintain our operations.
−Removed: We intend to continue to follow government and public health authorities’ guidelines and implement our employee safety measures to help ensure that we are able to continue manufacturing and shipping our products during the COVID-19 pandemic and related PHE.
−Removed: However, the COVID-19 pandemic and related PHE have caused and could continue to cause disruption to our supply chain that could impact our operations, reduce our growth, and increase our cost of goods sold.
−Removed: For example, we have seen and expect to continue to see higher semiconductor chip demand and reduced semiconductor chip availability in 2021 and into 2022, which have and we expect will continue to impact our ability to produce and sell systems and batteries, which we expect will have an impact on our revenue and profitability in those periods.
−Removed: This semiconductor chip shortage is being experienced across many industries, placing additional pressure on existing supplies.
−Removed: We have attempted to mitigate the impact of this increased supply shortage, but it has and will likely continue to negatively impact our ability to manufacture product as these chips are used across all of our portable oxygen concentrators, in both our batteries and printed circuit boards.
−Removed: We are continuing to work with our OEM partners and exploring other open-market avenues to procure necessary semiconductor chips, but it is a product in extremely high demand, so we expect increasing challenges in terms of supply constraint and pricing inflation moving forward.
−Removed: 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.
−Removed: As a result, we expect these increased costs will increase our cost of goods sold starting in the third quarter of 2021 and continuing until chip supply meets demand.
−Removed: We believe based on our assessment and industry feedback that the supply constraints may continue through the second quarter of 2022.
−Removed: As a result, in the interim we expect to be supply constrained and unable to meet all customer demand for our products, which we expect to negatively impact our total revenue and cost of goods sold during such period.
−Removed: To partially offset these rising costs, we are planning to implement price increases across our products which will be effective as of September 1, 2021.
+Added: We believe that the recent “Executive Order o n Ensuring Adequate COVID Safety Protocols for Federal Contractors” applies to Inogen , due to our Medicare and Medicaid contracts, and that we therefore are required to implement a COVID vaccine mandate across our workforce.
+Added: This mandate policy, requiring all employees to be vaccinated, will continue our policy of keeping our people, families, patients and others safe, but may negatively affect our business if a substantial number of employees decide not to get vaccinated and are subsequently terminated either voluntarily or involuntarily.
For additional information on risk factors that could impact our results, please refer to “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
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Our proprietary Inogen One ® systems concentrate the air around the patient to offer a single source of supplemental oxygen anytime, anywhere with a portable device weighing as little as approximately 2.8 pounds with a single battery.
−Removed: Our Inogen One systems range from 2.6 to 6.5 hours of battery life with a single battery and can be plugged into an outlet when at home, in a car, or in a public place
−Removed: with outlets available.
+Added: Our Inogen One systems range from 2.6 to 6.5 hours of battery life with a single battery and can be plugged into an outlet when at home, in a car, or in a public place with outlets available.
We believe our 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.
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To accomplish this goal and to grow our revenue, we intend to:
−Removed: Expand our domestic direct-to-consumer sales and physician-based sales teams and increase productivity.
+Added: Expand our domestic direct-to-consumer sales and prescriber sales teams and increase productivity.
+Added: We expect minimal net new inside sales hires in the near term due to the size and quality of the candidate pool and expected attrition, but as part of our growth plans, we are increasing our focus on improving productivity of our existing sales force.
+Added: Going forward, except as otherwise limited by the impact of the COVID-19 pandemic and related PHE, our plan is to continue to expand sales capacity while focusing on increased productivity, improved sales tools and lead distribution systems, and improved training.
+Added: We saw increased demand in the second and third quarters of 2021 versus the comparative periods in 2020, which led to improved sales representative productivity and increased average revenue per order in the period versus each of the last three quarters of 2020, which saw declines associated with the COVID-19 pandemic and related PHE.
During the year ended December 31, 2020, the number of inside sales representatives decreased to 300 from 329 as of December 31, 2019.
−Removed: 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 plan to increase our sales force and instead hope to offset attrition with replacement hiring.
+Added: Thus far in 2021, hiring has been and we expect it will continue to be challenging due to the continued impacts of the COVID-19 pandemic and related PHE , so we do not plan to increase our sales force and instead hope to offset attrition with replacement hiring .
We continue to look to add new sales representatives, while maintaining our hiring standards and being mindful of the supply constraints.
−Removed: Our rate of hiring increased in the second quarter of 2021, with headcount up slightly as of June 30, 2021 as compared to December 31, 2020.
−Removed: We expect minimal net new hires in the near term due to the size and quality of the candidate pool.
−Removed: Going forward, except as otherwise limited by the impact of the COVID-19 pandemic and related PHE, our plan is to continue to expand sales capacity while focusing on increased productivity, improved sales personnel and lead distribution systems, and improved training.
−Removed: We also plan to expand our physician sales team to drive increased physician referrals for rental patients and direct-to-consumer sales.
+Added: H eadcount was up slightly as of September 30, 2021 compared to December 31, 2020.
+Added: We also plan to expand our prescriber sales team to drive increased physician referrals for rental patients and direct-to-consumer sales.
This specialized sales team consisted of 24 sales representatives and 5 support personnel as of December 31, 2020.
−Removed: We believe there was an increased demand in our products in the first half of 2021 as compared to the fourth quarter of 2020 associated with increased vaccination rates of our patient population and the relaxation of closure orders related to the COVID-19 pandemic and related PHE leading to increased ambulation, additional stimulus payments and improving consumer confidence.
−Removed: As a result, we have seen increased demand which led to improved sales representative productivity and increased average revenue per order in the first half of 2021 versus each of the last three quarters of 2020, which saw declines associated with the COVID-19 pandemic and related PHE.
−Removed: Sales representative productivity and average revenue per order increased in the second quarter of 2021 as compared to the second quarter of 2020, when we saw a significant impact to our business associated with the COVID-19 pandemic and related PHE.
−Removed: We plan to continue to monitor the COVID-19 pandemic and related PHE given the relatively short timeframe of these improved results and may adjust our sales plans accordingly.
+Added: In addition, we are using a third-party contract sales organization, Ashfield, to enhance our go-to-market capabilities in the U.S.
+Added: They plan to add approximately 20 dedicated sales representatives to our prescriber sales team.
+Added: Additionally, Ashfield will provide access to its best-in-class data-driven sales management disciplines, proprietary prescriber insights, and analytics to support our growth strategy and drive performance in the clinician sales channel.
+Added: We expect to have these sales representatives hired and training completed during the first half of 2022, including the roll-out of new and enhanced sales processes, tools, and a field support team across our entire prescriber sales organization to help drive productivity and efficiency.
+Added: The combined sales organization will benefit from access to Ashfield’s comprehensive offering of analytics tools, sales operations support, and personalized concierge services that will help drive productivity and efficiency.
Expand our domestic direct-to-consumer marketing, drive better lead utilization, and optimize pricing.
−Removed: We increased marketing efforts to continue to drive patient awareness of our products and patient inquiries about their ability to switch from their current oxygen products to our technology as patient interest increased, so media and advertising costs increased to $8.7 million in the second quarter of 2021 compared to $7.2 million in the second quarter of 2020.
−Removed: While there was an approximate 18% reduction in average direct-to-consumer sales representatives in the second quarter of 2021 as compared to the same period in the prior year, lead utilization and pricing both increased in the comparative periods as consumer interest and ambulation increased.
−Removed: We plan to increase marketing spend to drive consumer and physician awareness of our products in 2021.
−Removed: To partially offset rising product costs, we are planning to implement price increases across our products which is expected to be effective as of September 1, 2021.
+Added: We increased marketing efforts to continue to drive patient awareness of our products and patient inquiries about their ability to switch from their current oxygen products to our technology as patient interest increased, so media and advertising costs increased to $9.4 million in the third quarter of 2021 compared to $7.7 million in the third quarter of 2020.
+Added: While there was an approximate 8% reduction in average direct-to-consumer sales representatives in the third quarter of 2021 compared to the same period in the prior year, lead utilization and pricing both increased in the comparative periods as we raised prices 10% as of September 1, 2021 to partially offset rising product costs and consumer interest and ambulation increased.
+Added: We plan to increase and optimize marketing spend to drive consumer and physician awareness of our products in 2021 and beyond.
We also plan to perform a pricing trial in 2022 to optimize pricing in our direct-to-consumer sales channel as well as look for opportunities to improve the close rate of leads through product offerings, pricing, and partnerships with HME providers;
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As this is a dynamic situation, we plan to continue to monitor the progression of the COVID-19 pandemic and related PHE in the United States and may adjust our marketing plan accordingly.
−Removed: Expand our rental revenues through a dedicated rental intake team.
+Added: Expand our rental revenues.
During the year ended December 31, 2020, we expanded our rental intake team to focus exclusively on new rental additions to drive overall sales productivity and simplify training.
We ended 2020 with 34 patient intake representatives and administrative personnel and plan to continue to improve the productivity of the rental intake team in 2021, which we believe will lead to increased patients on service and growth in rental revenue in future periods.
−Removed: In the second quarter of 2021, we saw improved rental intake team
−Removed: productivity compared to the second quarter of 2020 .
−Removed: We also have increased focus on rentals from our direct-to-consumer inside and physician-based sales team, which we believe will drive higher rental setups.
−Removed: Due to the COVID-19 pandemic and related PHE, Medicare and commercial payors have reduced some of the administrative burden for oxygen therapy, which also contributed to increased rental setups in the second quarter of 2020 through the second quarter of 2021 .
+Added: In the nine months ended September 30, 2021, we saw improved rental intake team productivity compared to the same period in the prior year.
+Added: We also have increased focus on rentals from our direct-to-consumer inside and prescriber sales team, which we believe will drive higher rental setups.
+Added: Due to the COVID-19 pandemic and related PHE, Medicare and commercial payors have reduced some of the administrative burden for oxygen therapy, which also contributed to increased rental setups in the second quarter of 2020 through the third quarter of 2021.
We believe this change will continue to contribute to increased rental setups during the remainder of the COVID-19 pandemic and related PHE.
We have also seen increased reimbursement rates in some areas for Medicare beneficiaries, which have increased rental revenue during the COVID-19 pandemic and related PHE and are expected to continue to do so for the remainder of the COVID-19 pandemic and related PHE.
−Removed: CMS has proposed additional changes to the administrative requirements to dispense and bill for oxygen therapy, which is discussed in more detail in the Reimbursement section below .
−Removed: These proposed changes may reduce the administrative burden and increase patient access to our products.
+Added: CMS has finalized additional changes to the administrative requirements to dispense and bill for oxygen therapy, which is discussed in more detail in the Reimbursement section below.
+Added: These changes may reduce the administrative burden and increase patient access to our products;
+Added: however, we still need additional clarity on how it will be implemented.
Expand our domestic HME provider and reseller sales.
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We offer patient-preferred, low service cost products and services to help providers convert their businesses to a non-delivery POC business model.
−Removed: Supplemental oxygen is a treatment prescribed by healthcare professionals for some patients with COVID-19.
−Removed: While there have been surges in demand for oxygen concentrators by our HME providers during the COVID-19 pandemic and related PHE in specific markets with significant COVID-19 case rates, domestic business-to-business demand in 2020 was lower because of the COVID-19 pandemic and related PHE due to lower retail sales, lower patient travel, physician offices limiting patient interactions for COPD patient referrals, HME providers minimizing patient interactions in response to the COVID-19 pandemic and related PHE which includes replacing existing oxygen patient setups with POCs, and HME providers turning their purchasing focus to stationary oxygen concentrators to treat COVID-19 patients.
−Removed: Domestic HME provider demand increased in the fourth quarter of 2020 and the first half of 2021, primarily due to increased demand for POCs as hospital systems and stationary oxygen concentrator supply were strained to keep up with the increase in COVID-19 cases and increased patient ambulation and consumer confidence.
−Removed: However, in spite of the increased demand, we expect supply constraints associated with the semiconductor chip shortage to continue to limit growth in this channel in the near-term.
+Added: S upplemental oxygen is a treatment prescribed by healthcare professionals for some patients with COVID-19.
+Added: While there have been surge s in demand for oxygen concentrators by our HME providers during the COVID-19 pandemic and related PHE in specific markets with significant COVID-19 case rates , domestic business-to-business demand in 2020 was lower because of the COVID-19 pandemic and related PHE due to lower retail sales, lower patient travel, physician offices limiting patient interactions for COPD patient referrals, HME providers minimizing patient interactions in response to the COVID-19 pandemic and related PHE which includes replacing existing oxygen patient setups with POCs, and HME providers turning their purchasing focus to stationary oxygen concentrators to treat COVID-19 patients.
+Added: Domestic HME provider demand increased in the fourth quarter of 2020 and in the nine months ended September 30, 2021 , primarily due to increased demand for POCs as hospital systems and stationary oxygen concentrator supply were strained to keep up with the increase in COVID-19 cases and increased patient ambulation and consumer confidence .
+Added: However, in spite of the increased demand, in the third quarter we saw supply constraints associated with the semiconductor chip shortage to continue to limit growth in this channel and expect this to continue in the near-term.
Increase international business-to-business adoption.
−Removed: Although our main growth opportunity remains POC adoption in the United States given what we still believe is a relatively low penetration rate, we believe there is a large international market opportunity.
−Removed: In order to take advantage of these international markets, we have built out an infrastructure over the past few years, which includes sales in 58 international countries or overseas regions and a contract manufacturing partner, Foxconn, located in the Czech Republic to support European sales volumes.
+Added: Although our main growth opportunity remains POC adoption in the United States given what we still believe is a relatively low penetration rate, we believe there is a sizable international market opportunity, particularly in Europe where there is existing oxygen reimbursement for respiratory conditions.
+Added: In order to take advantage of these international markets, we have partnered with distributors who serve those markets and key customers in them.
+Added: We additionally have an Inogen base of operations for sales and customer service in the Netherlands, and use a contract manufacturer, Foxconn, located in the Czech Republic to support the majority of our European sales volumes.
+Added: We have sales in 59 international countries or overseas regions.
As in the United States, there have been surges in demand for oxygen concentrators by our international HME customers during the COVID-19 pandemic in specific markets with significant COVID-19 case rates.
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In addition, as in the United States, providers turned their focus to supplying stationary oxygen concentrators with higher flow characteristics in response to the COVID-19 pandemic.
−Removed: We experienced increased demand during the second quarter of 2021, which we believe is due to improving COVID-19 vaccination rates and increased ambulation of patients in Europe, increased operational capacity of certain European respiratory assessment centers, and increased sales in India associated with the spike in COVID-19 cases in that market.
+Added: We experienced increased demand during the second and third quarters of 2021, which we believe was due to improving COVID-19 vaccination rates and increased ambulation of patients in Europe, increased operational capacity of certain European respiratory assessment centers, and increased sales in certain markets associated with spikes in COVID-19 cases in such instances.
To grow our international sales markets, we are also in the process of developing regulatory and sales pathways to capture opportunities in new and emerging markets.
−Removed: We expect to begin sales in the Chinese market as early as 2022 although this could be delayed due to regulatory clearance delays, other impacts of the COVID-19 pandemic or government actions, by the United States or China that impose barriers or restrictions that would impact our ability to access the Chinese market.
Over time, as the U.S.
−Removed: and European markets mature, our growth will depend on our ability to drive POC adoption in emerging markets, where limited oxygen therapy treatment exists today.
−Removed: However, growth may also be limited by currency fluctuations, capital expenditure constraints, ongoing restructuring challenges, and tender uncertainty.
+Added: and European markets mature, our growth will depend on our ability to drive POC adoption in emerging markets, where limited oxygen therapy treatment and reimbursement exists today.
+Added: However, growth may also be limited by regulatory and reimbursement clearances, currency fluctuations, capital expenditure constraints, ongoing restructuring challenges, and tender uncertainty.
Invest in our oxygen product offerings to develop innovative products and expand clinical evidence .
We incurred $14.1 million and $9.4 million in 2020 and 2019, respectively, in research and development expenses, and we intend to continue to make such investments in the foreseeable future.
−Removed: We incurred $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 costs.
+Added: We incurred $3.8 million and $3.5 million for the three months ended September 30, 2021 and September 30, 2020, respectively, and $11.9 million and $10.4 million for the nine months ended September 30, 2021 and September 30, 2020, respectively, in research and development costs.
We launched our fifth-generation POC, the Inogen One G5 in 2019.
−Removed: The Inogen One G5 weighs 4.7 pounds and produces 1,260 ml per minute of oxygen output, with very quiet operation at 38 dBA and our longest battery life at 6.5 hours for a single battery and up to 13 hours for a double
+Added: The Inogen One G5 weighs 4.7 pounds and produces 1,260 ml per minute of oxygen output, with very quiet operation at 38 dBA and our longest battery life at 6.5 hours for a single battery and up to 13 hours for a double battery.
We estimate that the Inogen One G5 is suitable for over 90% of ambulatory long-term oxygen therapy patients based on our analysis of the patients who have contacted us and their clinical needs.
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Manufacturing cost for our Inogen One G5 was at parity with our Inogen One G3 starting in the third quarter of 2020, and we still expect the Inogen One G5 to be our lowest cost to manufacture over time.
−Removed: The Inogen One G5 represented more than 80 % of total domestic POC units sold in the six months ended June 3 0 , 2021 , showing the strong demand for this product from both patients and providers.
+Added: The Inogen One G5 represented more than 80% of total domestic POC units sold in the nine months ended September 30, 2021, showing the strong demand for this product from both patients and providers.
Inogen Connect, our connectivity platform on our Inogen One G4 ® and Inogen One G5 products in the United States and Canada is compatible with Apple and Android platforms and includes patient features such as purity status, battery life, product support functions, notification alerts, and remote software updates.
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Expand our product offerings.
+Added: We are primarily focused on creating innovative, evidence-based chronic respiratory care solutions to strengthen and build preference and advocacy for our respiratory therapies and brand across patients, prescribers, and payors.
+Added: We plan to do this with an expanded, high quality, connected, and innovative product portfolio that strengthens our differentiation.
+Added: We are also committed to pursuing complementary acquisition opportunities to strengthen our technology, product offerings, and channel access.
In August 2019, we acquired New Aera.
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We began a limited launch of the TAV product in December 2019 in our domestic direct-to-consumer channel and in our domestic business-to-business channel.
−Removed: We plan to only sell this product across our domestic direct-to-consumer channel and in our domestic business-to-business channel in 2021, and we expect limited contributions to revenue in 2021.
−Removed: The COVID-19 pandemic and related PHE also had an impact on sales of this product in the second quarter of 2020 continuing through the second quarter of 2021, primarily due to lower retail demand.
−Removed: We plan to incorporate the TAV technology directly into our Inogen One POCs and make the TAV product compatible with our Inogen At Home stationary concentrators to continue to advance patient preference and maintain our technology leadership position in the long-term oxygen therapy market.
−Removed: Device modifications to facilitate compatibility may require FDA premarket review before product commercialization.
+Added: We plan to only sell this product across our domestic direct-to-consumer channel and in our domestic business-to-business channel in 2021, and we expect limited contributions to revenue in its existing configuration.
+Added: We continue to investigate opportunities to incorporate the TAV technology directly into our Inogen One POCs as we believe it will enhance patient preference and maintain our technology leadership position in the long-term oxygen therapy market.
+Added: Device modifications to facilitate compatibility may require FDA premarket review and approval commensurate with new products before product commercialization.
+Added: Additionally, securing the appropriate reimbursement rate would be a critical enabler for success.
We have been developing and refining the manufacturing of our Inogen One systems since 2004.
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We expect to maintain our assembly operations for our products at our facilities in Texas and California.
−Removed: In 2021, we are focused on reducing the cost of our Inogen One G5 product, expanding manufacturing of the TAV product and increasing the robustness of our supply chain to reduce potential component constraints as we grow our business.
+Added: In 2021, we are focused on securing supply for components to make our products in spite of the higher costs of semiconductor chips, reducing the cost of our Inogen One G5 product (excluding semiconductor chips), and increasing the robustness of our supply chain to reduce potential component constraints as we grow our business.
We also use lean manufacturing practices to maximize manufacturing efficiency.
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We have elected to source certain key components from single sources of supply, including our batteries, motors, valves, TAV-compatible stationary concentrators, columns, and some molded plastic components.
−Removed: We believe that maintaining a single source of supply allows us to control production costs and inventory levels and to manage component quality.
+Added: In some cases, maintaining a single source of supply can allow us to control production costs and inventory levels and to manage component quality, but also may lead to supply availability risks.
In order to help mitigate against the risks related to a single source of supply, for certain components we qualify alternative suppliers and develop contingency plans for responding to disruptions.
−Removed: However, any reduction or halt in supply from one of these single-source suppliers could limit our ability to manufacture our products or devices until a replacement supplier is found and qualified.
+Added: However, a continued reduction or halt in supply from one of these single-source suppliers or dual-sourced suppliers with similar sub-component suppliers could limit or prevent our ability to manufacture our products or devices until a replacement supplier is found and qualified.
For additional discussion of potential risks related to our manufacturing and raw materials, please see 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.
Historically, we have generated a majority of our revenue from sales and rentals to customers in the United States.
−Removed: In the three months ended June 30, 2021 and June 30, 2020, approximately 21.5% and 19.3%, respectively, and 19.9% and 21.2% for the six months ended June 30, 2021 and June 30, 2020, respectively, of our total revenue was from sales to customers outside the United States, primarily in Europe.
+Added: In the three months ended September 3 0 , 20 2 1 and September 3 0 , 20 20 , approximately 23.5 % and 19.
+Added: 6 %, respectively, and 2 1.1 % and 2 0.7 % for the nine months ended September 30, 2021 and September 30, 2020, respectively, of our total revenue was from sales to customers outside the United States, primarily in Europe.
Approximately 71.0 % and 83.4 % of the non-U.S.
−Removed: revenue for the three months ended June 30, 2021 and June 30, 2020, respectively, and 72.4% and 72.2% for the six months ended June 30, 2021 and June 30, 2020, respectively, was
−Removed: invoiced in E uros with the remainder invoiced in U n ited States dollars.
+Added: revenue for the three months ended September 3 0 , 20 2 1 and September 3 0 , 20 20 , respectively, and 71.9 % and 75.6 % for the nine months ended September 30, 2021 and September 30, 2020, respectively, was invoiced in E uros with the remainder invoiced in U n ited States dollars.
W e s ell our products in 5 9 international countries or overseas regions outside the United States through our wholly - owned subsidiary, distributors or directly to large “house” accounts, which include gas companies, HME oxygen providers, and resellers.
In those instances, we sell to and bill the distributor or “house” accounts directly, leaving responsibility for the patient billing, support and clinical setup to the local provider.
−Removed: Our total revenue was $101.6 million and $71.7 million for the three months ended June 30, 2021 and June 30, 2020, respectively, and $188.5 million and $160.2 million for the six months ended June 30, 2021 and June 30, 2020, respectively.
−Removed: The increase in total revenue in the three months and six months ended June 30, 2021 compared to the three months and six months ended June 30, 2020 was primarily due to an increase in direct-to-consumer sales and worldwide business-to-business sales, primarily associated with reduced impact of the COVID-19 pandemic and related PHE, and an increase in rental revenue.
−Removed: We generated net income of $5.1 million and $2.6 million for the three months ended June 30, 2021 and June 30, 2020, respectively, $4.4 million and $1.0 million for the six months ended June 30, 2021 and June 30,2020, respectively.
−Removed: We generated Adjusted EBITDA of $12.4 million and $10.0 million in the three months ended June 30, 2021 and June 30, 2020, respectively, and $17.8 million and $14.1 million for the six months ended June 30, 2021 and June 30, 2020, respectively, (see “Non-GAAP financial measures” for reconciliations between U.S.
+Added: Our total revenue was $93.1 million and $74.3 million for the three months ended September 30, 2021 and September 30, 2020, respectively, and $281.6 million and $234.5 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.
+Added: The increase in total revenue in the three months and nine months ended September 30, 2021 compared to the three months and nine months ended September 30, 2020 was primarily due to an increase in direct-to-consumer sales and international business-to-business sales, primarily associated with reduced impact of the COVID-19 pandemic and related PHE, and an increase in rental revenue.
+Added: We generated net income (losses) of $12.2 million and $(1.7) million for the three months ended September 30, 2021 and September 30, 2020, respectively, $16.5 million and $(0.7) million for the nine months ended September 30, 2021 and September 30, 2020, respectively.
+Added: We generated Adjusted EBITDA of $12.2 million and $4.6 million in the three months ended September 30, 2021 and September 30, 2020, respectively, and $30.0 million and $18.7 million for the nine months ended September 30, 2021 and September 30, 2020, respectively, (see “Non-GAAP financial measures” for reconciliations between U.S.
GAAP and non-GAAP results).
−Removed: As of June 30, 2021, our retained earnings were $80.0 million.
+Added: As of September 30, 2021, our retained earnings were $92.1 million.
Sales revenue
1 unchanged sentence
We plan to grow our system sales in the coming years through multiple strategies including:
−Removed: hiring additional sales representatives, improving productivity, investing in consumer and physician awareness and advocacy through increased sales and marketing efforts, expanding our clinical evidence, expanding our sales infrastructure and efforts outside of the United States, expanding our business-to-business sales through key partnerships, and enhancing our product offerings through additional product launches, although, as mentioned above, these plans have been and may continue to be impacted by the COVID-19 pandemic and related PHE.
+Added: hiring additional sales representatives directly or through our contract sales organization, improving productivity, investing in consumer and physician awareness and advocacy through increased sales and marketing efforts, expanding our clinical evidence, expanding our sales infrastructure and efforts outside of the United States, expanding our business-to-business sales through key partnerships, and enhancing our product offerings through additional product launches, although, as mentioned above, these plans have been and may continue to be impacted by the COVID-19 pandemic and related PHE.
While we believe most HME providers are still in the process of converting their business model to a non-delivery model and purchase POCs, growth has been challenged and we expect it could continue to be challenged due to the COVID-19 pandemic and related PHE, their ongoing restructuring efforts, lack of access to available credit, provider capital expenditure constraints, and potential changes in reimbursement rates.
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As a result of these factors, product purchases can be subject to changes in demand by customers.
−Removed: We sold approximately 52,400 systems in the three months ended June 30, 2021 and 42,500 systems for the same period in 2020.
−Removed: We sold approximately 101,800 systems in the six months ended June 30, 2021 compared to 95,900 systems for the same period in 2020.
+Added: We sold approximately 44 , 600 systems in the three months ended September 3 0 , 20 2 1 and 42 , 2 00 systems for the same period in 20 20 .
+Added: We sold approximately 146 , 400 systems in the nine months ended September 30, 2021 compared to 138 , 1 00 systems for the same period in 2020.
Management focuses on system sales as an indicator of current business success.
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Our direct-to-consumer rental process involves numerous interactions with the individual patient, their physician and the physician’s staff.
−Removed: The process includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, and their medical history to confirm the appropriateness of our product for the patient’s oxygen therapy and compliance with Medicare and private payor billing requirements, which often necessitates additional physician evaluation and/or testing as well as a Certificate of Medical Necessity for oxygen.
+Added: The process includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, and their medical history to confirm the appropriateness of our product for the patient’s oxygen therapy and compliance with Medicare and private payor billing requirements, which often necessitates additional physician evaluation and/or testing for oxygen.
Once the product is deployed, the patient receives instruction on product use and may receive a clinical titration from our licensed staff to confirm the product meets the patient’s medical oxygen needs prior to billing.
As a result, the period of time from initial contact with a patient to billing can vary significantly and be up to one month or longer.
−Removed: However, due to the COVID-19 PHE, CMS has reduced the paperwork requirements for Medicare oxygen therapy patients, as discussed in more detail in the Reimbursement section below, effective in early March 2020.
−Removed: CMS has also proposed additional changes to the administrative requirements to dispense and bill for oxygen therapy, which is discussed in more detail in the Reimbursement section below, which may reduce the administrative burden and increase patient access to our products.
−Removed: Rental revenue increased in the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, primarily due to a greater number of patients on service, higher Medicare reimbursement rates, and higher billable patients as a percent of total patients on service.
+Added: However, during the COVID-19 PHE, CMS has reduced the paperwork requirements for Medicare oxygen therapy patients, as discussed in more detail in the Reimbursement section below.
+Added: CMS has also adopted additional changes to the administrative requirements to dispense and bill for oxygen therapy, which is discussed in more detail in the Reimbursement section below, which may reduce the administrative burden and increase patient access to our products.
+Added: Rental revenue increased in the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to a greater number of patients on service, higher Medicare reimbursement rates, and higher billable patients as a percent of total patients on service.
Medicare reimbursement rates for oxygen therapy have increased, as detailed in the Reimbursement section below.
1 unchanged sentence
The 50/50 blended rate for HME providers in rural and non-contiguous, non-competitive bid areas was extended for the duration of the COVID-19 PHE and has been proposed to be extended permanently as part of the proposed rule published on November 4, 2020, which is expected to be finalized by May 11, 2022.
−Removed: We plan to add new rental patients on service in future periods through multiple strategies, including expanding our rental intake team and physician-based sales teams, expanding our direct-to-consumer marketing efforts, investing in patient and physician awareness and advocacy, expanding clinical evidence, and securing additional insurance contracts.
+Added: We plan to add new rental patients on service in future periods through multiple strategies, including expanding our rental intake team and prescriber sales teams, expanding our direct-to-consumer marketing efforts, investing in patient and physician awareness and advocacy, expanding clinical evidence, and securing additional insurance contracts.
A portion of rentals include a capped rental period during which no additional reimbursement is allowed unless additional criteria are met.
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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.
−Removed: We had approximately 37,100 and 26,400 oxygen rental patients as of June 30, 2021 and June 30, 2020, respectively.
+Added: We had approximately 40,400 and 29,500 oxygen rental patients as of September 30, 2021 and September 30, 2020, respectively.
Management focuses on patients on service as a leading indicator of likely future rental revenue;
1 unchanged sentence
Reimbursement
−Removed: Medicare and private insurance rentals represented 11.1% and 8.5% of our total revenue in the three months ended June 30, 2021 and June 30, 2020, respectively, and 11.2% and 7.1% in the six months ended June 30, 2021 and June 30, 2020, respectively.
+Added: Medicare and private insurance rentals represented 13.0% and 10.1% of our total revenue in the three months ended September 30, 2021 and September 30, 2020, respectively, and 11.8% and 8.1% in the nine months ended September 30, 2021 and September 30, 2020, respectively.
The increased rental revenue as a percentage of total revenue was primarily due to increased rental patients on service, and increased reimbursement rates.
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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.
−Removed: For the three months ended June 30, 2021 and June 30, 2020, approximately 82.5% and 80.0%, respectively, and for the six months ended June 30, 2021 and June 30, 2020, approximately 83.1% and 79.2%, respectively, of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs.
+Added: For the three months ended September 3 0 , 20 2 1 and September 3 0 , 2020 , approximately 81.6 % and 8 2 .
+Added: 8 %, respectively, and for the nine months ended September 30, 2021 and September 30, 2020, approximately 82.6 % and 80.6 %, 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.
1 unchanged sentence
The average Medicare reimbursement rates in former competitive bidding areas (CBAs) in the prior four years are outlined in the table below for E1390 and E1392, which are the two primary codes that we bill to Medicare and other payors for our oxygen product rentals.
−Removed: These rates are typically updated annually
−Removed: each January as they are subject to Consumer Price Index (CPI) and budget neutrality adjustments but a re also subject to adjustments during the year due to legislative rulings .
+Added: These rates are typically updated annually each January as they are subject to Consumer Price Index (CPI) and budget neutrality adjustments but a re also subject to adjustments during the year due to legislative rulings .
Competitive bidding contracts were scheduled to go into effect on January 1, 2021 ;
30 unchanged sentences
The Medicare rates announced previously were a simple average of $103.18 for HCPCS code E1390 and $39.62 for HCPCS code E1392, which were increased to $104.07 and $40.06, respectively.
−Removed: Effective April 1, 2021, rates will be adjusted to remove a percentage reduction that was put in place to meet the budget neutrality requirement previously mandated by section 1834(a)(9)(D)(ii) of the Social Security Act.
+Added: Effective April 1, 2021, rates were adjusted to remove a percentage reduction that was put in place to meet the budget neutrality requirement previously mandated by section 1834(a)(9)(D)(ii) of the Social Security Act.
Note that the 2021 rates listed below include Coronavirus Aid, Relief, and Economic Security (CARES Act) increased rates due to the COVID-19 PHE, which may not be in place for all of 2021.
19 unchanged sentences
The CARES Act also extended the end date of the Medicare sequestration reduction by one year, through 2030, in order to offset the 2020 suspension.
+Added: House of Representatives bill H.R.
+Added: 1868 was signed into law on April 14, 2021 and extended the suspension period to December 31, 2021, but increased the fiscal year 2030 sequestration cuts.
On April 6, 2020, an Interim Final Rule (IFR) was published in the Federal Register for policy and regulatory revisions in response to the COVID-19 PHE.
14 unchanged sentences
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.
−Removed: There was a 60-day comment period on this proposed rule, and we expected this rule to be finalized in the first half of 2021.
−Removed: This may be delayed due to the fact that on April 26, 2021, CMS published a notice stating that the Biden Administration published a “Regulatory Freeze Pending Review” memorandum advising all agencies, unless otherwise excepted by the Director of Office of Management and Budget, not to issue any rule until an appointee by the new Administration reviews and approves the rule.
+Added: There was a 60-day comment period on this proposed rule, and we expect ed this rule to be finalized in the first half of 2021.
+Added: This was delayed due to the fact that on April 26, 2021, CMS published a notice stating that the Biden Administration published a “Regulatory Freeze Pending Review” memorandum advising all agencies, unless otherwise excepted by the Director of Office of Management and Budget, not to issue any rule until an appointee by the new Administration reviews and approves the rule.
Pending this review and approval, CMS is continuing the rules already in effect until May 11, 2022.
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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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Lastly, CMS proposed to reduce provider burden by removing the oxygen certificate of medical necessity requirement.
−Removed: CMS is seeking comments to their proposed decisions and will respond to public comments in the final decision memorandum.
−Removed: 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.
−Removed: 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.
−Removed: 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% of our total revenue in the six months ended June 30, 2021 and June 30, 2020, respectively.
+Added: In September 2021, CMS published a Decision Memo which revised the Home Use of Oxygen national coverage determination and removed the national coverage determination for Home Oxygen Use to Treat Cluster Headaches.
+Added: This allows the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.
+Added: CMS also expanded 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, removed the requirement for alternative treatment measures before dispensing of oxygen therapy, and removed the limited list of conditions for which oxygen may be covered to respiratory-related diseases, to allow the physician flexibility to make that determination.
+Added: In addition, CMS defined exercise more broadly to include functional performance of the patient and allow more flexibility on pulse oximetry readings to account for differences in skin pigmentation.
+Added: Lastly, CMS reduced provider burden by removing the oxygen certificate of medical necessity requirement.
+Added: We believe these changes will 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.
+Added: However, we do not yet have visibility on how the Medicare Administrative Contractors will change their coverage determinations.
+Added: Medicare revenue, including patient co-insurance and deductible obligations, represented 10.6 % and 8.4 % of our total revenue in the three months ended September 3 0 , 20 2 1 and September 30, 2020, respectively, and 9.7 % and 6 .
+Added: 5 % of our total revenue in the nine months ended September 30, 2021 and September 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.
4 unchanged sentences
The supplier may not arbitrarily issue new equipment.
−Removed: 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 for the three and six months ended June 30, 2021 and June 30, 2020, respectively.
−Removed: 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.
+Added: 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 for the three and nine months ended September 30, 2021 and September 30, 2020, respectively.
+Added: Our capped patients as a percentage of total patients on service was approximately 8.3% as of September 30, 2021 and 13.8% as of September 30, 2020.
The decrease in percentage of capped patients in the comparative periods was primarily due to the significant increase in new patients coming on service, which substantially exceeded the number of patients that entered the capped period.
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.
−Removed: Our obligations to service Medicare patients over the rental period include supplying working equipment that meets each patient’s oxygen needs pursuant to his/her doctor’s prescription and certificate of medical necessity form and supplying all disposables required for the patient to operate the equipment, including cannulas, filters, replacement batteries, carts and carry bags, as needed.
+Added: Our obligations to service Medicare patients over the rental period include supplying working equipment that meets each patient’s oxygen needs pursuant to his/her doctor’s prescription and supplying all disposables required for the patient to operate the equipment, including cannulas, filters, replacement batteries, carts and carry bags, as needed.
If the equipment malfunctions, we must repair or replace the equipment.
We determine what equipment the patient receives, and we can deploy used assets in working order as long as the prescription requirements are met.
−Removed: We must also procure a recertification of the certificate of medical necessity from the patient’s doctor to confirm the patient’s need for continued oxygen therapy one year after the patient first receives oxygen therapy and one year after each new 36-month reimbursement period begins.
+Added: We must also procure a renewal from the patient’s doctor to confirm the patient’s need for continued oxygen therapy one year after the patient first receives oxygen therapy and one year after each new 36-month reimbursement period begins.
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.
1 unchanged sentence
As a result, patients can rent or purchase our systems at the same patient obligation as other in-network oxygen suppliers.
−Removed: W e had 91 contracts a s of June 3 0 , 20 21.
+Added: We had 92 contracts as of September 30, 2021.
Based on our patient population, we believe at least 42% of all oxygen therapy patients are covered by Medicare Advantage, government, and other private payors.
17 unchanged sentences
For example, we typically experience higher total sales in the second and third quarters, as a result of consumers traveling and vacationing during warmer weather in the spring and summer months, but this may vary year-over-year.
−Removed: In particular, due to the COVID-19 pandemic and related PHE, we have seen and expect to continue to see a disruption in our normal seasonal trends due to the mandates and behaviors emanating from the COVID-19 pandemic and related PHE, including shelter-in-place orders, reduced travel, and lower consumer confidence, and we did not see the typical seasonal increases in direct-to-consumer sales in 2020 that we have seen in prior years.
−Removed: We also expect the semiconductor chip shortage to negatively impact our total revenue during such period.
+Added: In particular, due to the COVID-19 pandemic and related PHE, we have seen and expect to continue to see a disruption in our normal seasonal trends due to the mandates and behaviors emanating from the COVID-19 pandemic and related PHE, including shelter-in-place orders, reduced travel, and lower consumer confidence, and we did not see the typical seasonal increases in direct-to-consumer sales in 2020 that we have seen in prior years, but have seen seasonality in our direct-to-consumer sales in 2021 to be similar to historical periods excluding 2020, although this may not continue in future periods.
+Added: We also expect the semiconductor chip shortage to negatively impact our total revenue during the fourth quarter of 2021 and the first half of 2022.
Additionally, a s more home medical equipment (HME) providers adopt portable oxygen concentrators in their businesses, we expect our historical seasonality in the domestic business-to-business channel could change as well, which was previously influenced mainly by consumer buying patterns.
6 unchanged sentences
Our rental revenue is primarily derived from the rental of our Inogen One and Inogen At Home systems to patients through reimbursement from Medicare, private payors and Medicaid, which typically also includes a patient responsibility component for patient co-insurance and deductibles.
−Removed: Rental revenue increased in the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020, primarily due to higher patients on service, higher billable patients as a percent of total patients on service, and higher Medicare reimbursement rates.
+Added: Rental revenue increased in the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020, primarily due to higher patients on service, higher billable patients as a percent of total patients on service, and higher Medicare reimbursement rates.
We expect our rental revenue to increase in future periods as we scale the rental intake and sales teams and increase new rental setups.
In addition, for the duration of the COVID-19 PHE, we expect to benefit from higher Medicare reimbursement rates and reduced administrative requirements for oxygen therapy enacted due to the COVID-19 PHE.
−Removed: We also expect that our rental revenue will be impacted by the number of our sales and rental intake representatives, reimbursement rate changes, including the impact of COVID-19 PHE changes, the level of and response from potential customers to direct-to-
−Removed: consumer marketing spend, product launches, the number of billable patients and denial rates, and other uncontrollable factors such as changes in the market and competition.
+Added: We also expect that our rental revenue will be impacted by the number of our sales and rental intake representatives, reimbursement rate changes, including the impact of COVID-19 PHE changes, the level of and response from potential customers to direct-to-consumer marketing spend, product launches, the number of billable patients and denial rates, and other uncontrollable factors such as changes in the market and competition.
Cost of revenue
4 unchanged sentences
Provisions for warranty obligations are included in cost of sales revenue and are provided for at the time of revenue recognition.
−Removed: We continue to make progress towards reducing the average unit costs of our products as a result of our ongoing efforts to develop lower-cost systems, negotiate with our suppliers, improve our manufacturing processes, and increase production volume and yields.
−Removed: However, we have experienced and expect to continue experiencing 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.
−Removed: 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.
−Removed: As a result, we expect these increased costs will increase our cost of goods sold starting in the third quarter of 2021 and continuing until chip supply meets demand.
−Removed: We believe based on our assessment and industry feedback that the supply constraints may continue through the second quarter of 2022.
+Added: We continue to make progress towards reducing the average unit costs of our products (excluding the impact of the semiconductor chip cost increases) as a result of our ongoing efforts to develop lower-cost systems, negotiate with our suppliers, improve our manufacturing processes, and increase production volume and yields.
+Added: However, we have experienced and expect to continue experiencing supply chain disruptions in 2021 and through the first half of 2022, primarily associated with semiconductor chips used in our batteries and printed circuit boards which are components of our portable oxygen concentrators, which have driven up the cost of our products in 2021.
+Added: As a result, we saw these inflated costs begin to negatively impact our cost of goods sold in the third quarter of 2021, and we expect this to have an increased impact on our material costs in the fourth quarter of 2021 and continuing into 2022 until supply and demand get closer to equilibrium.
+Added: Even though we paid significant costs in the third quarter of 2021 associated with these chips, most of these costs increased our prepaid expense and inventory given that these components were not yet sold in finished products during the period.
+Added: We believe based on our assessment and industry feedback that these supply shortages may likely continue through the second quarter of 2022.
+Added: In addition to the semiconductor chip limitations, we are continuing to see supply chain constraints for other components used in our products.
+Added: While thus far we have been able to manage through these challenges with increased inventory levels and heightened supplier management and communications, we cannot be certain we will be able to continue to do so through the remainder of the shortages and we believe this is an increased risk to the business for the rest of 2021 and into the first half of 2022.
As a result, in the interim we expect to be supply constrained and unable to meet all customer demand for our products.
2 unchanged sentences
We continue to monitor the Section 301 tariffs being imposed by the United States on certain imported Chinese materials and products in addition to potential retaliatory responses from other nations.
−Removed: In 2020 and the six months ended June 30, 2021, the impact of the Chinese tariffs on our financial results was minimal as we have received some exemptions, negotiated cost sharing and price reductions with suppliers, and re-allocated purchases.
+Added: In 2020 and the nine months ended September 30, 2021, the impact of the Chinese tariffs on our financial results was minimal as we have received some exemptions, negotiated cost sharing and price reductions with suppliers, and re-allocated purchases.
Assuming the Chinese tariffs stay at the current levels, we currently expect the overall financial impact to our business to be minimal to the average unit cost for 2021.
12 unchanged sentences
We plan to continue to invest in research and development activities to stay at the forefront of patient preference in oxygen therapy.
−Removed: We expect research and development expense to increase in absolute dollars in future periods as we continue to invest in our engineering and technology teams to support our new and enhanced product research and development efforts and manufacturing
−Removed: improvements.
−Removed: We expect increased research and development costs associated with the New Aera acquisition to incorporate the TAV technology into our oxygen concentrator as well as intangible amortization costs.
+Added: We expect research and development expense to increase in absolute dollars in future periods as we continue to invest in our engineering and technology teams to support our new and enhanced product research and development efforts and manufacturing improvements.
+Added: We expect increased research and development costs associated with broadening our product portfolio including incorporating the TAV technology into our oxygen concentrator.
Sales and marketing
1 unchanged sentence
It also includes expenses for media and advertising, printing, informational kits, dues and fees, credit card fees, recruiting, training, sales promotional activities, travel and entertainment expenses as well as allocated facilities costs.
−Removed: Sales and marketing expense increased in the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, primarily associated with higher personnel-related expense and higher advertising expense.
−Removed: Our average direct-to-consumer sales representative headcount was down approximately 18% in the three months ended June 30, 2021 from the comparative period in the prior year as attrition outpaced hiring, primarily due to increased competition for skilled labor and sales professionals in 2021, along with the reduced hiring of new sales representatives in 2020 due to the COVID-19 pandemic.
+Added: Sales and marketing expense in creased in the three month s ended September 3 0 , 202 1 compared to the three months ended September 3 0 , 20 20, primarily associated with higher personnel-related expense and higher advertising expense .
+Added: Our average direct-to-consumer sales representative headcount was down approximately 8 % in the three months ended September 30, 2021 from the comparative period in the prior year as attrition outpac ed hiring, primarily due to increased competition for skilled labor and sales professionals in 2021, along with the reduced hiring of new sales representatives in 2020 due to the COVID-19 pandemic.
We continue to look to add new sales representatives, while maintaining our hiring standards and being mindful of the supply constraints.
−Removed: Our rate of hiring increased in the second quarter of 2021, with headcount up slightly as of June 30, 2021 as compared to December 31, 2020.
−Removed: We expect minimal net new hires in the near term due to the size and quality of the candidate pool and plan to focus on sales representative efficiencies, including improved sales representative productivity and lead utilization, while we continue to monitor the impact of the COVID-19 pandemic and related PHE.
−Removed: We still expect an increase in sales and marketing expense in future periods as we continue to invest in our business, including expanding our sales and sales support team which includes our physician-based sales team, increasing our rental infrastructure, increasing media spend to drive consumer awareness, and rising patient support costs as our patient and customer base increases.
+Added: H eadcount was up slightly as of September 30, 2021 compared to December 31, 2020.
+Added: We expect minimal net new hires in the near term due to the size and quality of the candidate pool and expected attrition, but as part of our growth plans, we are increasing our focus on improving productivity of our existing sales force.
+Added: Going forward, except as otherwise limited by the impact of the COVID-19 pandemic and related PHE, our plan is to continue to expand sales capacity while focusing on increased productivity, improved sales personnel and lead distribution systems, and improved training.
+Added: W e still expect an increase in sales and marketing expense in future periods as we continue to invest in our business, including expanding our sales and sales support team which includes our prescriber sales team , increasing our rental infrastructure, increasing media spend to drive consumer awareness, and rising patient support costs as our patient and customer base increases.
General and administrative
17 unchanged sentences
Results of operations
−Removed: Comparison of three months ended June 30, 2021 and June 30, 2020
+Added: Comparison of three months ended September 30, 2021 and September 30, 2020
Three months ended
+Added: September 30,
Change 2021 vs.
3 unchanged sentences
Total revenue
−Removed: Sales revenue increased $24.7 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 37.6% from the comparable period.
−Removed: The increase was primarily attributable to increased direct-to-consumer sales and increased worldwide business-to-business sales, primarily due to increased consumer demand and the reduced impact of the COVID-19 pandemic and related PHE.
−Removed: We sold approximately 52,400 oxygen systems during the three months ended June 30, 2021 compared to approximately 42,500 oxygen systems sold during the three months ended June 30, 2020, or an increase of 23.3%.
−Removed: The increase in the number of systems sold resulted mainly from an increase in sales in the direct-to-consumer and worldwide business-to-business channels, primarily due to the reduced impact of the COVID-19 pandemic and related PHE.
−Removed: Rental revenue increased $5.2 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 85.2% from the comparable period.
+Added: Sales revenue increased $14.2 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 21.2% from the comparable period.
+Added: The increase was primarily attributable to increased direct-to-consumer sales and increased international business-to-business sales, primarily due to increased consumer demand, increased selling prices, and the reduced impact of the COVID-19 pandemic and related PHE.
+Added: We sold approximately 44,600 oxygen systems during the three months ended September 30, 2021 compared to approximately 42,200 oxygen systems sold during the three months ended September 30, 2020, or an increase of 5.7%.
+Added: The increase in the number of systems sold resulted mainly from an increase in sales in the direct-to-consumer and international business-to-business channels.
+Added: Rental revenue increased $4.6 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 61.3% from the comparable period.
The increase in rental revenue was primarily related to higher rental patients on service, higher billable patients as a percent of total patients on service, and higher Medicare reimbursement rates.
1 unchanged sentence
(amounts in thousands)
+Added: September 30,
Change 2021 vs.
5 unchanged sentences
Total revenue
−Removed: Domestic business-to-business sales increased 27.8% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.
−Removed: The increase was primarily due to greater demand for portable oxygen concentrators (POCs) for both traditional long-term oxygen therapy patients and COVID-19 patients upon hospital discharge, as well as higher reseller demand.
−Removed: International business-to-business sales increased 57.3% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily driven by improving COVID-19 vaccination rates and increased ambulation of patients in Europe and the increased operational capacity of certain European respiratory assessment centers.
−Removed: In addition, the international business-to-business sales in the second quarter of 2021 included $2.0 million in sales to our distributor in India, versus no sales in the second quarter of 2020.
−Removed: In the three months ended June 30, 2021, sales in Europe as a percentage of total international sales revenue decreased to 81.3% versus 87.2% in the comparative period in 2020.
−Removed: Domestic direct-to-consumer sales increased 35.6% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to increased demand for POCs due to higher COVID-19 vaccination rates within our patient population and the relaxation of closure orders related to the COVID-19 PHE leading to increased ambulation, and improved consumer confidence.
−Removed: This increased demand was partially offset by lower average inside sales representative headcount, which was down approximately 18.0% from the comparative period primarily due to increased competition for skilled labor and sales professionals in 2021, along with the reduced hiring of new sales representatives in 2020 due to the COVID-19 pandemic.
−Removed: Domestic direct-to-consumer rentals increased 85.2 % for the three months ended June 3 0 , 202 1 compared to the three months ended June 3 0 , 20 20 , primarily due to a n increase in patients on service , higher billable patients as a percent of total patients on service, and increased Medicare reimbursement rates .
+Added: Domestic business-to-business sales decreased 1.1% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.
+Added: The decrease was primarily due to supply chain constraints limiting product availability.
+Added: International business-to-business sales increased 49.7% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily driven by improving COVID-19 vaccination rates and increased ambulation of patients in Europe and the improving operational capacity of certain European respiratory assessment centers closer to normal levels.
+Added: In the three months ended September 30, 2021, sales in Europe as a percentage of total international sales revenue decreased to 88.2% versus 90.2% in the comparative period in 2020.
+Added: Domestic direct-to-consumer sales increased 24.6% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to increased demand for POCs due to higher COVID-19 vaccination rates and the relaxation of closure orders related to the COVID-19 PHE, leading to increased ambulation, and improved consumer confidence.
+Added: This increased demand was partially offset by lower average inside sales representative headcount, which was down approximately 8.0% from the comparative period as attrition outpaced hiring.
+Added: Domestic direct-to-consumer sales were also impacted by the reduced battery accessory sales in the period due to supply chain constraints.
+Added: Domestic direct-to-consumer rentals increased 61.3% for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to an increase in patients on service, higher billable patients as a percent of total patients on service, and increased Medicare reimbursement rates.
Cost of revenue and gross profit
Three months ended
+Added: September 30,
Change 2021 vs.
9 unchanged sentences
Total gross margin percentage
−Removed: Cost of sales revenue increased $10.5 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 29.1% from the comparable period.
−Removed: The increase in cost of sales revenue was primarily attributable to increased sales and related bill of material costs, and higher labor and overhead costs per unit and material costs per unit.
−Removed: Cost of rental revenue increased $1.8 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 63.0% from the comparable period.
+Added: Cost of sales revenue increased $2.7 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 7.2% from the comparable period.
+Added: The increase in cost of sales revenue was primarily attributable to increased sales and related bill of material costs as well as higher labor, overhead and material costs per unit.
+Added: The third quarter of 2021 included $0.9 million of higher material costs associated with open-market purchases of semiconductor chips used in its batteries and POCs.
+Added: Cost of rental revenue increased $1.4 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 38.0% from the comparable period.
The increase in cost of rental revenue was primarily attributable to increased rental asset depreciation expense and servicing costs resulting from a 36.9% increase in the number of patients on service.
−Removed: Cost of rental revenue included $2.1 million of rental asset depreciation for the three months ended June 30, 2021 compared to $1.2 million for the three months ended June 30, 2020.
−Removed: Sales revenue gross margin percentage increased to 48.4% for the three months ended June 30, 2021 from 45.0% for the three months ended June 30, 2020.
−Removed: The increase was primarily related to higher average selling pricings due to an increased mix of domestic direct-to-consumer sales, which have a higher gross margin than our business-to-business sales.
+Added: Cost of rental revenue included $2.3 million of rental asset depreciation for the three months ended September 30, 2021 compared to $1.5 million for the three months ended September 30, 2020.
+Added: Sales revenue gross margin percentage increased to 50.1% for the three months ended September 30, 2021 from 43.5% for the three months ended September 30, 2020.
+Added: The increase was primarily related to higher average selling prices.
These increases were partially offset by higher labor and overhead costs and bill of material costs per unit.
−Removed: Total worldwide business-to-business sales revenue accounted for 54.7% of total sales revenue in the three months ended June 30, 2021 versus 54.0% in the three months ended June 30, 2020.
−Removed: Rental revenue gross margin percentage increased to 58.6% for the three months ended June 30, 2021 from 53.0% for the three months ended June 30, 2020, primarily due to higher billable patients as a percent of total patients on service and higher Medicare reimbursement rates, partially offset by higher service and depreciation expense per patient on service.
+Added: Total worldwide business-to-business sales revenue accounted for 55.1% of total sales revenue in the three months ended September 30, 2021 versus 56.3% in the three months ended September 30, 2020.
+Added: Rental revenue gross margin percentage increased to 58.9% for the three months ended September 30, 2021 from 52.0% for the three months ended September 30, 2020, primarily due to higher billable patients as a percent of total patients on service, higher Medicare reimbursement rates, lower service expense per patient on service, partially offset by higher depreciation expense per patient on service.
Research and development expense
Three months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Research and development expense
−Removed: Research and development expense increased $0.8 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 25.3% over the comparable period, primarily due to a $0.7 million increase in personnel-related expense.
+Added: Research and development expense increased $0.2 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 6.9% over the comparable period, primarily due to a $0.2 million increase in personnel-related expense.
Sales and marketing expense
Three months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Sales and marketing expense
−Removed: Sales and marketing expense increased $7.2 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 32.7% from the comparable period, primarily attributable to increases of $4.0 million in personnel-related expense, $1.5 million in advertising costs, $0.8 million in credit card fees, and $0.4 million in other marketing expenses.
−Removed: In the three months ended June 30, 2021, we spent $8.7 million in media and advertising costs versus $7.2 million in the comparative period in 2020.
+Added: Sales and marketing expense increased $5.4 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 23.7% from the comparable period, primarily attributable to increases of $2.0 million in personnel-related expense, $1.7 million in advertising costs, $0.7 million in credit card fees, and $0.4 million in other professional services.
+Added: In the three months ended September 30, 2021, we spent $9.4 million in media and advertising costs versus $7.7 million in the comparative period in 2020.
General and administrative expense
Three months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
General and administrative expense
−Removed: General and administrative expense decreased $4.5 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or a decrease of 46.3% from the comparable period.
−Removed: The decrease was primarily attributable to a $9.0 million decrease in the change in fair value of the New Aera earnout liability and $1.1 million in lower consulting fees, partially offset by increases of $3.0 million in personnel-related expense, $0.8 million in officer transition costs, $0.6 million reimbursement from the CARES Act Provider Relief Fund due to the COVID-19 PHE in the comparable period, and $0.5 million in legal fees.
−Removed: The change in fair value of the New Aera earnout liability was a benefit of $8.1 million in the second quarter of 2021 compared to an expense of $0.9 million in the second quarter of 2020.
−Removed: The reduction in fair value of the earnout liability in the second quarter of 2021 was associated with the reduced expected revenue from the TAV technology due to the negative Medicare reimbursement coding outlook based on the recent court decision to dismiss our legal case against CMS with regards to non-invasive ventilation coding.
+Added: General and administrative expense increased $0.7 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 7.8% from the comparable period.
+Added: The increase was primarily attributable to increases of $1.4 million in personnel-related expense and $0.5 million in higher consulting fees, partially offset by a $1.9 million decrease in the change in fair value of the New Aera earnout liability.
+Added: The change in fair value of the New Aera earnout liability was a benefit of $2.0 million in the third quarter of 2021 compared to a benefit of $0.1 million in the third quarter of 2020.
Other income (expense)
Three months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Interest income
−Removed: Total other income, net
−Removed: Total other income, net decreased $5.5 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or a decrease of 94.3% from the comparable period.
−Removed: The decrease was primarily attributable to $5.6 million in other income from the CARES Act Provider Relief Fund due to lost revenues from the COVID-19 PHE received in the second quarter of 2020 and not received in the second quarter of 2021.
−Removed: Income tax expense
+Added: Other expense
+Added: Total other income (expense), net
+Added: Total other income (expense), net decreased $0.5 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or a decrease of 841.7% from the comparable period.
+Added: The decrease was primarily attributable to an increase of $0.7 million in other expense primarily related to net foreign currency losses, partially offset by a decrease of $0.3 million in other expense as a reduction to lost revenues from the CARES Act Provider Relief Fund that was reclassified to general and administrative expense in the comparative period.
+Added: Income tax benefit
Three months ended
+Added: September 30,
Change 2021 vs.
(amounts in thousands)
−Removed: Income tax expense
+Added: Income tax benefit
Effective income tax rate
−Removed: Income tax expense increased $6.0 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, primarily resulting from the reduction in the fair value of the New Aera earnout liability, partially offset by an increase in excess tax benefits recognized from stock-based compensation.
−Removed: Our effective tax rate in the three months ended June 3 0 , 20 2 1 in creased compared to the three months en ded June 3 0 , 20 20 , primarily due to the reduction in the fair value of the New Aera earnout liability, partially offset by an increase in excess tax benefits recognized from stock-based compensation .
+Added: Income tax benefit increased $6.0 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, primarily resulting from the reduction in the fair value of the New Aera earnout liability and an increase in excess tax benefits recognized from stock-based compensation.
+Added: The income tax benefit for the period ended September 30, 2021 was based on the application of the discrete method.
+Added: Our effective tax rate for the three months ended September 30, 2021 decreased compared to the three months ended September 30, 2020, primarily due to the reduction in the fair value of the New Aera earnout liability and an increase in excess tax benefits recognized from stock-based compensation.
+Added: The effective tax rate for the period ended September 30, 2021 was based on the application of the discrete method.
+Added: Net income (loss)
Three months ended
+Added: September 30,
Change 2021 vs.
(amounts in thousands)
−Removed: Net income increased $2.5 million for the three months ended June 30, 2021 from the three months ended June 30, 2020, or an increase of 97.8% from the comparable period.
−Removed: The increase in net income was primarily related to an increase in gross profit and the reduction in the fair value of the New Aera earnout liability, partially offset by higher operating expense.
−Removed: Comparison of six months ended June 30, 2021 and June 30, 2020
−Removed: Six months ended
+Added: Net income (loss)
+Added: Net income (loss) increased $13.9 million for the three months ended September 30, 2021 from the three months ended September 30, 2020, or an increase of 816.5% from the comparable period.
+Added: The increase in net income was primarily related to an increase in gross profit, the reduction in the fair value of the New Aera earnout liability and income tax benefit, partially offset by higher operating expense.
+Added: Comparison of nine months ended September 30, 2021 and September 30, 2020
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
3 unchanged sentences
Total revenue
−Removed: Sales revenue increased $18.6 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 12.5% from the comparable period.
+Added: Sales revenue increased $32.8 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 15.2% from the comparable period.
The increase was primarily attributable to increased direct-to-consumer sales and worldwide business-to-business sales, primarily due to increased consumer demand and the reduced impact of the COVID-19 pandemic and related PHE.
−Removed: We sold approximately 101,800 oxygen systems during the six months ended June 30, 2021 compared to approximately 95,900 oxygen systems sold during the six months ended June 30, 2020, or an increase of 6.2%.
+Added: We sold approximately 146,400 oxygen systems during the nine months ended September 30, 2021 compared to approximately 138,100 oxygen systems sold during the nine months ended September 30, 2020, or an increase of 6.0%.
The increase in the number of systems sold resulted mainly from an increase in sales in the direct-to-consumer and worldwide business-to-business channels, primarily due to the COVID-19 pandemic and related PHE.
−Removed: Rental revenue increased $9.7 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 84.7% from the comparable period.
+Added: Rental revenue increased $14.3 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 75.4% from the comparable period.
The increase in rental revenue was primarily related to higher rental patients on service, higher billable patients as a percent of total patients on service, and higher Medicare reimbursement rates.
−Removed: Six months ended
+Added: Nine months ended
(amounts in thousands)
+Added: September 30,
Change 2021 vs.
5 unchanged sentences
Total revenue
−Removed: Domestic business-to-business sales increased 18.7% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.
−Removed: The increase was primarily due to increased demand from our HME partners for oxygen concentrators for both traditional long-term oxygen therapy patients and in response to the COVID-19 pandemic and related PHE due to greater demand for POCs for COVID-19 patients at hospital discharge.
−Removed: International business-to-business sales increased 10.6% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, mostly driven by the reduced impact of the COVID-19 pandemic with increased vaccination rates and increased operating capacity of certain European respiratory assessment centers, and in response to the COVID-19 pandemic and related PHE due to greater demand for POCs for COVID-19 patients at hospital discharge in certain markets with high case rates of COVID-19 like India.
−Removed: In the six months ended June 30, 2021, sales in Europe as a percentage of total international sales revenue decreased to 83.5% versus 85.6% in the comparative period in 2020.
−Removed: Domestic direct-to-consumer sales in creased 8.9 % for the six months ended June 3 0 , 20 21 compared to the six months ended June 3 0 , 20 20 , primarily due to increased demand for POCs which we believe was primarily due to higher vaccination rates within our patient population and the relaxation of closure orders related to the COVID-19 PHE leading to increased ambulation, additional stimulus payments, and improved consumer confidence.
+Added: Domestic business-to-business sales increased 12.4% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.
+Added: The increase was primarily due to increased demand from our HME partners for oxygen concentrators for both traditional long-term oxygen therapy patients and in response to the COVID-19 pandemic and related PHE due to greater demand for POCs for COVID-19 patients at hospital discharge, partially offset by supply chain constraints that limited sales primarily in the third quarter of 2021.
+Added: International business-to-business sales increased 22.3% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, mostly driven by the reduced impact of the COVID-19 pandemic with increased vaccination rates and increased operating capacity of certain European respiratory assessment centers, and in response to the COVID-19 pandemic and related PHE due to greater demand for POCs for COVID-19 patients at hospital discharge in certain markets with high case rates of COVID-19 like India.
+Added: In the nine months ended September 30, 2021, sales in Europe as a percentage of total international sales revenue decreased to 85.2% versus 87.0% in the comparative period in 2020.
+Added: Domestic direct-to-consumer sales in creased 13.7 % for the nine months ended September 3 0 , 20 21 compared to the nine months ended September 3 0 , 20 20 , primarily due to increased demand for POCs which we believe was primarily due to higher vaccination rates within our patient population and the relaxation of closure orders related to the COVID-19 PHE leading to increased ambulation, additional stimulus payments, and improved consumer confidence.
This led to improved sales representative productivity and increased average revenue per order in the comparative periods.
This was partially offset by lower average inside sales representative headcount, which was down approximately 15.0 % from the comparative period in 2020.
−Removed: Domestic direct-to-consumer rentals increased 84.7% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to an increase in patients on service, higher billable patients as a percent of total patients on service, and increased Medicare reimbursement rates.
+Added: Domestic direct-to-consumer rentals increased 75.4% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to an increase in patients on service, higher billable patients as a percent of total patients on service, and increased Medicare reimbursement rates.
Cost of revenue and gross profit
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
9 unchanged sentences
Total gross margin percentage
−Removed: Cost of sales revenue increased $6.0 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 7.2% from the comparable period.
−Removed: The increase in cost of sales revenue was primarily attributable to higher sales and related bill of material costs, and higher labor and overhead per unit and material cost per unit.
−Removed: Cost of rental revenue increased $3.2 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 54.9% from the comparable period.
+Added: Cost of sales revenue increased $8.7 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 7.2% from the comparable period.
+Added: The increase in cost of sales revenue was primarily attributable to higher sales and related bill of material costs as well as higher material cost per unit and labor and overhead per unit.
+Added: The nine months ended September 30, 2021 included $0.9 million of higher material costs associated with open-market purchases of semiconductor chips used in its batteries and POCs.
+Added: Cost of rental revenue increased $4.6 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 48.5% from the comparable period.
The increase in cost of rental revenue was primarily attributable to increased rental asset depreciation expense and servicing costs resulting from a 36.9% increase in the number of patients on service.
−Removed: Cost of rental revenue included $3.9 million of rental asset depreciation for the six months ended June 30, 2021 compared to $2.5 million for the six months ended June 30, 2020.
−Removed: Sales revenue gross margin percentage increased to 46.7% for the six months ended June 30, 2021 from 44.1% for the six months ended June 30, 2020.
−Removed: The increase was primarily related to higher average selling prices due to an increased mix of domestic direct-to-consumer sales, which have a higher gross margin than our business-to-business sales.
−Removed: This increase was partially offset by higher labor and overhead per unit and material cost per unit due to higher component cost in the comparative periods.
−Removed: Total worldwide business-to-business sales revenue accounted for 57.3% of total sales revenue in the six months ended June 30, 2021 versus 55.8% in the six months ended June 30, 2020.
−Removed: Rental revenue gross margin percentage increased to 57.0% for the six months ended June 30, 2021 from 48.7% for the six months ended June 30, 2020, primarily due to higher billable patients as a percent of total patients on service and higher Medicare reimbursement rates, partially offset by higher service expense per patient on service.
+Added: Cost of rental revenue included $6.3 million of rental asset depreciation for the nine months ended September 30, 2021 compared to $4.0 million for the nine months ended September 30, 2020.
+Added: Sales revenue gross margin percentage increased to 47.8% for the nine months ended September 30, 2021 from 43.9% for the nine months ended September 30, 2020.
+Added: The increase was primarily related to higher average selling prices, partially offset by higher labor and overhead per unit and material cost per unit due to higher component cost versus the comparative period.
+Added: Total worldwide business-to-business sales revenue accounted for 56.6% of total sales revenue in the nine months ended September 30, 2021 versus 56.0% in the nine months ended September 30, 2020.
+Added: Rental revenue gross margin percentage increased to 57.7% for the nine months ended September 30, 2021 from 50.0% for the nine months ended September 30, 2020, primarily due to higher billable patients as a percent of total patients on service and higher Medicare reimbursement rates, partially offset by higher service and depreciation expense per patient on service.
Research and development expense
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Research and development expense
−Removed: Research and development expense increased $1.2 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 18.0% over the comparable period, primarily due to a $0.8 million increase in personnel-related expenses and $0.3 million in product development expenses.
+Added: Research and development expense increased $1.5 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 14.3% over the comparable period, primarily due to a $1.0 million increase in personnel-related expenses and $0.3 million in product development expenses.
Sales and marketing expense
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Sales and marketing expense
−Removed: Sales and marketing expense increased $5.6 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 11.3% from the comparable period, primarily attributable to an increase of $5.1 million of personnel-related expenses, $0.9 million in credit card fees, and $0.4 million of other marketing expenses, partially offset by a decrease of $0.9 million in media and advertising costs.
−Removed: In the six months ended June 30, 2021, we spent $16.3 million in media and advertising costs versus $17.2 million in the comparative period in 2020.
+Added: Sales and marketing expense increased $11.0 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 15.2% from the comparable period, primarily attributable to an increase of $7.3 million of personnel-related expenses, $1.6 million in credit card fees, $0.9 million of professional services, and $0.8 million in media and advertising costs.
+Added: In the nine months ended September 30, 2021, we spent $25.7 million in media and advertising costs versus $24.9 million in the comparative period in 2020.
General and administrative expense
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
General and administrative expense
−Removed: General and administrative expense decreased $1.8 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or a decrease of 9.1% from the comparable period.
−Removed: The decrease was primarily attributable to a $7.8 million decrease in the change in fair value of the New Aera earnout liability and $1.5 million in lower consulting fees, partially offset by increases of $2.7 million in personnel-related expenses, $2.0 million in CEO transition costs, $0.8 million in officer transition costs, $0.7 million in legal fees, $0.6 million reimbursement from the CARES Act Provider Relief Fund due to the COVID-19 PHE received in the comparable period, and $0.3 million in dues, fees and licenses.
+Added: General and administrative expense decreased $1.1 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or a decrease of 3.9% from the comparable period.
+Added: The decrease was primarily attributable to a $9.7 million decrease in the change in fair value of the New Aera earnout liability and $0.8 million in lower consulting fees, partially offset by increases of $5.8 million in personnel-related expenses, $2.0 million in CEO transition costs, $1.4 million in legal and consulting fees, $0.9 million reimbursement from the CARES Act Provider Relief Fund due to the COVID-19 PHE received in the comparable period, $0.8 million in officer transition costs, $0.4 million in dues, fees and licenses, and $0.4 million in insurance expense.
Other income (expense)
−Removed: Six months ended
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
2 unchanged sentences
Other income (expense)
−Removed: Total other income, net
−Removed: Total other income, net decreased $6.3 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or a decrease of 98.7% from the comparable period.
−Removed: The decrease was primarily attributable to $5.6 million in other income from the CARES Act Provider Relief Fund due to lost revenues from the COVID-19 PHE received in the comparable period last year and not received this year, and a decrease of $0.5 million in interest income on marketable securities due to the lower interest rate environment and lower invested balances in marketable securities in the six months ended June 30, 2021 compared to the six months ended June 30, 2020.
−Removed: Income tax expense
−Removed: Six months ended
+Added: Total other income (expense), net
+Added: Total other income (expense), net decreased $6.8 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or a decrease of 105.7% from the comparable period.
+Added: The decrease was primarily attributable to $5.3 million in other income from the CARES Act Provider Relief Fund due to lost revenues from the COVID-19 PHE received in the comparable period and not received this year, a $0.8 million increase in net foreign currency losses, and a decrease of $0.7 million in interest income on marketable securities due to the lower interest rate environment and lower invested balances in marketable securities in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.
+Added: Income tax expense (benefit)
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
(amounts in thousands)
−Removed: Income tax expense
+Added: Income tax expense (benefit)
Effective income tax rate
−Removed: Income tax expense increased $4.4 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, primarily resulting from the reduction in the fair value of the New Aera earnout liability, partially offset by an increase in excess tax benefits recognized from stock-based compensation.
−Removed: Our effective tax rate in the six months ended June 30, 2021 increased compared to the six months ended June 30, 2020, primarily due to the reduction in the fair value of the New Aera earnout liability, partially offset by an increase in excess tax benefits recognized from stock-based compensation.
−Removed: Six months ended
+Added: Income tax expense (benefit) decreased $1.6 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, primarily due to higher excess tax benefits recognized from stock-based compensation, partially offset by an increase in the income tax provision expense.
+Added: The income tax benefit for the period ended September 30, 2021 was based on the application of the discrete method.
+Added: Our effective tax rate in the nine months ended September 30, 2021 increased compared to the nine months ended September 30, 2020, primarily due to higher excess tax benefits recognized from stock-based compensation, partially offset by t he changes in income (loss) before income tax expense (benefit) .
+Added: The effective tax rate for the period ended September 30, 2021 was based on the application of the discrete method.
+Added: Net income (loss)
+Added: Nine months ended
+Added: September 30,
Change 2021 vs.
(amounts in thousands)
−Removed: Net income increased $3.4 million for the six months ended June 30, 2021 from the six months ended June 30, 2020, or an increase of 341.0% from the comparable period.
−Removed: The increase in net income was primarily related to an increase in gross profit and the reduction in the fair value of the New Aera earnout liability, partially offset by higher operating expense.
+Added: Net income (loss)
+Added: Net income (loss) increased $17.3 million for the nine months ended September 30, 2021 from the nine months ended September 30, 2020, or an increase of 2436.7% from the comparable period.
+Added: The increase in net income was primarily related to an increase in gross profit, the reduction in the fair value of the New Aera earnout liability, partially offset by higher operating expense.
Contractual obligations
2 unchanged sentences
Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier.
−Removed: As of June 30, 2021, we had purchase obligations with outside vendors and suppliers of approximately $65.1 million of which the timing varies depending on demand, current supply on hand and other factors.
+Added: As of September 30, 2021, we had purchase obligations with outside vendors and suppliers of approximately $65.7 million of which the timing varies depending on demand, current supply on hand and other factors.
The obligations normally do not extend beyond twelve-month time frames.
6 unchanged sentences
Liquidity and capital resources
−Removed: As of June 30, 2021, we had cash and cash equivalents of $238.9 million, which consisted of highly liquid investments with a maturity of three months or less.
+Added: As of September 30, 2021, we had cash and cash equivalents of $241.6 million, which consisted of highly liquid investments with a maturity of three months or less.
In addition, we held marketable securities of $3.6 million in available-for-sale corporate bonds, U.S.
Treasury securities, and agency mortgage-backed securities, which had maturities greater than three months.
−Removed: For the six months ended June 30, 2021 and June 30, 2020, we received $10.9 million and $1.3 million, respectively, in proceeds related to stock option exercises and our employee stock purchase plan.
−Removed: Our principal uses of cash for liquidity and capital resources in the six months ended June 30, 2021 consisted of capital expenditures of $11.7 million including additional rental equipment, other property, plant and equipment, and intangible assets.
−Removed: The COVID-19 pandemic and related PHE has not materially impacted our liquidity position to date, and we believe our current cash and cash equivalents provide us with a certain degree of stability and liquidity during this time of uncertainty.
+Added: For the nine months ended September 30, 2021 and September 30, 2020, we received $15.6 million and $2.3 million, respectively, in proceeds related to stock option exercises and our employee stock purchase plan.
+Added: Our principal uses of cash for liquidity and capital resources in the nine months ended September 30, 2021 consisted of capital expenditures of $18.1 million including additional rental equipment, other property, plant and equipment, and intangible assets.
+Added: T he COVID-19 pandemic and related PHE has not materially impact ed our liquidity position to date , and we believe our current cash and cash equivalents provide us with a certain degree of stability and liquidity during this time of uncertainty .
We believe that our current cash, cash equivalents and the cash to be generated from expected product sales and rentals will be sufficient to meet our projected operating and investing requirements for at least the next twelve months.
−Removed: However, our liquidity assumptions may prove to
−Removed: be incorrect, and we could utilize our available financial resources sooner than we currently expect.
+Added: However, our liquidity assumptions may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect.
Our future funding requirements will depend on many factors, including market acceptance of our products;
16 unchanged sentences
The following tables show a summary of our cash flows and working capital for the periods and as of the dates indicated:
−Removed: Six months ended
+Added: Nine months ended
(amounts in thousands)
+Added: September 30,
Change 2021 vs.
1 unchanged sentence
Cash provided by operating activities
−Removed: Cash (used in) provided by investing activities
+Added: Cash used in investing activities
Cash provided by financing activities
2 unchanged sentences
(amounts in thousands)
+Added: September 30,
Working capital
17 unchanged sentences
These cash flows received are partially offset by our use of cash for operating expenses to support the growth of our business.
−Removed: Net cash provided by operating activities for the six months ended June 30, 2021 consisted primarily of our net income of $4.4 million as well as non-cash expense items, such as depreciation of equipment and leasehold improvements and amortization of our intangibles of $10.3 million, stock-based compensation expense of $5.8 million, provision for sales returns and doubtful accounts of
−Removed: $5.3 million, decrease in deferred tax assets of $5.3 million , provision for rental revenue adjustments of $ 2.1 million, provision for inventory obsolescence and other inventory losses of $ 0.9 million , and net loss on disposal of rental equipment and other fixed assets of $ 0.6 million ;
−Removed: partially offset b y the change in fair value of earnout liability of $7.8 million and net changes in operating assets and liabilities resulting in a net use of cash of $ 6.6 million .
−Removed: Net cash provided by operating activities for the six months ended June 30, 2020 consisted primarily of our net income of $1.0 million as well as non-cash expense items such as depreciation of equipment and leasehold improvements and amortization of our intangibles of $8.9 million, provision for sales returns and doubtful accounts of $5.7 million, stock-based compensation expense of $4.1 million, provision for rental revenue adjustments of $1.5 million, decrease in deferred tax assets of $0.7 million, and provision for inventory obsolescence and other inventory losses of $0.6 million.
+Added: Net cash provided by operating activities for the nine months ended September 3 0 , 20 2 1 consisted primarily of our net income of $ 16.5 million as well as non-cash expense items , such as depreciation of equipment and leasehold improvements and amortization of our intangibles of $ 15.9 million, stock-based compensation expense of $ 8.5 million, provision for sales returns and doubtful accounts of $ 8.2 million, provision for rental revenue adjustments of $ 3.5 million, provision for inventory obsolescence and other inventory losses of $ 1.5 million , and net loss on disposal of rental equipment and other fixed assets of $ 0.9 million ;
+Added: partially offset b y the change in fair value of earnout liability of $ 9.8 million , an increase in deferred tax assets of $1.0 million, and net changes in operating assets and liabilities resulting in a net use of cash of $ 27.1 million .
+Added: Net cash provided by operating activities for the nine months ended September 30, 2020 consisted primarily of non-cash expense items such as depreciation of equipment and leasehold improvements and amortization of our intangibles of $13.7 million, provision for sales returns and doubtful accounts of $8.3 million, stock-based compensation expense of $6.1 million, provision for rental revenue adjustments of $2.1 million, provision for inventory obsolescence and other inventory losses of $0.7 million, decrease in deferred tax assets of $0.4 million, net loss on disposal of rental equipment and other fixed assets of $0.4 million and our net loss of $0.7 million.
The net changes in operating assets and liabilities resulted in a net use of cash of $10.0 million.
1 unchanged sentence
Net cash (used in) provided by investing activities for each of the periods presented included cash used for acquisitions and in the production and purchase of rental assets, manufacturing tooling, and computer equipment and software to support our expanding business as well as net maturities of marketable securities.
−Removed: For the six months ended June 30, 2021, we invested $11.7 million in the production and purchase of rental assets and other property, equipment, and intangible assets, partially offset by $8.2 million we received in maturities of marketable securities.
−Removed: For the six months ended June 30, 2020, we received $11.1 million in maturities of marketable securities, partially offset by $4.6 million in purchases of marketable securities.
+Added: For the nine months ended September 30, 2021, we invested $18.1 million in the production and purchase of rental assets and other property, equipment, and intangible assets, partially offset by $15.7 million we received in maturities of marketable securities.
+Added: For the nine months ended September 30, 2020, we received $11.1 million in maturities of marketable securities, partially offset by $6.5 million in purchases of marketable securities.
In addition, we invested $11.8 million in the production and purchase of rental assets and other property, equipment, and intangible assets.
5 unchanged sentences
Historically, we have funded our operations through our sales and rental revenue, the issuance of preferred and common stock, and the incurrence of indebtedness.
−Removed: For the six months ended June 30, 2021, net cash provided by financing activities consisted of $10.9 million from the proceeds received from stock options that were exercised and purchases under our employee stock purchase program, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.5 million.
−Removed: For the six months ended June 30, 2020, net cash provided by financing activities consisted of $1.3 million from purchases under our employee stock purchase program and the proceeds received from stock options that were exercised, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.2 million.
+Added: For the nine months ended September 30, 2021, net cash provided by financing activities consisted of $15.6 million from the proceeds received from stock options that were exercised and purchases under our employee stock purchase program, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.6 million.
+Added: For the nine months ended September 30, 2020, net cash provided by financing activities consisted of $2.3 million from purchases under our employee stock purchase program and the proceeds received from stock options that were exercised, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.3 million.
Sources of funds
−Removed: Our cash provided by operating activities in the six months ended June 30, 2021 was $20.1 million compared to $14.1 million in the six months ended June 30, 2020.
−Removed: As of June 30, 2021, we had cash and cash equivalents of $238.9 million.
+Added: Our cash provided by operating activities in the nine months ended September 30, 2021 was $17.1 million compared to $20.8 million in the nine months ended September 30, 2020.
+Added: As of September 30, 2021, we had cash and cash equivalents of $241.6 million.
Our principal uses of cash are funding our new rental asset deployments and other capital purchases, operations, and other working capital requirements and, from time-to-time, the acquisition of businesses.
2 unchanged sentences
We may need to raise additional funds to support our investing operations, and such funding may not be available to us on acceptable terms, or at all.
−Removed: If we are unable to raise additional funds when needed, our operations and ability to execute our business
−Removed: strategy could be adversely affected.
+Added: If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected.
We may seek to raise additional funds through equity, equity-linked or debt financings.
27 unchanged sentences
Three months ended
−Removed: Six months ended
+Added: September 30,
+Added: Nine months ended
+Added: September 30,
Non-GAAP EBITDA and Adjusted EBITDA
+Added: Net income (loss)
Non-GAAP adjustments:
Interest income
−Removed: Provision for income taxes
+Added: Provision (benefit) for income taxes
Depreciation and amortization
4 unchanged sentences
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.