What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-24 compared with 2021-02-24 · 122 added, 243 removed, 1210 unchanged (23% of the section changed)

49 unchanged sentences

Our annual meeting of stockholders will be held at 10:00 a.m.

Pacific Time on Monday, May 10, 2021, as a virtual meeting.

Holders of record at the close of business on Friday, March 12, 2021, will be entitled to vote at the meeting.

Pacific Time on Wednesday, June 8, 2022, as a virtual meeting.

Holders of record at the close of business on Monday, April 11, 2022, will be entitled to vote at the meeting.

2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan “Evergreen” Determination

1 unchanged sentence

Refer to Note 7 – Stockholders’ Equity of the Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion of the annual share increase provisions of our 2014 Equity Incentive Plan and our 2014 Employee Stock Purchase Plan.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

64 unchanged sentences

To estimate the selling price associated with the lifetime warranties, management considers the profit margins of service revenue, the average estimated cost of lifetime warranties and the price of extended warranties.

Revenue from the distinct lifetime warranty is deferred after the delivery of the equipment and recognized based on an estimated mortality rate over five years, which is the estimated performance period of the contract based on

the average patient life expectancy.

Total deferred revenue related to the lifetime warranty performance obligation totaled $17.

1 million at December 31, 20 20 .

Total deferred revenue related to the lifetime warranty performance obligation totaled $18.0 million at December 31, 2021.

Determining the estimated SSP requires significant judgment by management, which is informed by considering Company specific and external data.

63 unchanged sentences

Retained earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders' equity

24 unchanged sentences

Other income (expense)

Total other income, net

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

Provision (benefit) for income taxes

Total other income (expense), net

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

23 unchanged sentences

Restricted stock awards issued,

net of forfeitures

Vesting of restricted stock units

2 unchanged sentences

Stock options exercised

Other comprehensive income

Other comprehensive loss

Balance, December 31, 2019

7 unchanged sentences

Stock options exercised

Other comprehensive loss

Other comprehensive income

Balance, December 31, 2020

77 unchanged sentences

The Company’s Inogen One systems reduce the patient’s reliance on stationary concentrators and scheduled deliveries of tanks with a finite supply of oxygen, thereby improving patient quality of life and fostering mobility.

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 968,000 of its Inogen oxygen concentrators as of December 31, 2020.

The Company incorporated Inogen Europe Holding B.V., a Dutch limited liability company, on April 13, 2017 .

24 unchanged sentences

The Company’s products consist of its proprietary line of oxygen concentrators, non-invasive ventilators, and related accessories.

Other revenue, which is included in sales revenue on the Statements of Comprehensive Income, primarily comes from service contracts, replacement parts and freight revenue for product shipments.

Other revenue, which is included in sales revenue on the statements of comprehensive income (loss), primarily comes from service contracts, replacement parts and freight revenue for product shipments.

Sales revenue

18 unchanged sentences

Freight revenue is generally recognized upon shipment of the product but is deferred if control has not yet transferred to the customer.

Shipping and handling costs for sold products and rental assets shipped to the Company’s customers are included on the consolidated statements of comprehensive income as part of cost of sales revenue and cost of rental revenue, respectively.

Shipping and handling costs for sold products and rental assets shipped to the Company’s customers are included on the consolidated statements of comprehensive income (loss) as part of cost of sales revenue and cost of rental revenue, respectively.

The payment terms and conditions of customer contracts vary by customer type and the products and services offered.

19 unchanged sentences

Rental revenue

The Company recognizes equipment rental revenue over the non-cancelable lease term, which is one month, less estimated adjustments, in accordance with ASC 842— Leases .

The Company recognizes equipment rental revenue over the non-cancelable lease term, which is one month, less estimated adjustments, in accordance with Accounting Standards Codification (ASC) 842— Leases .

The Company has separate contracts with each patient that are not subject to a master lease agreement with any third-party payor.

10 unchanged sentences

The Company adjusts revenue for historical trends on revenue adjustments due to timely filings, deaths, hospice, and other types of analyzable adjustments on a monthly basis to record rental revenue at the expected collectible amounts.

Accounts receivable are reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received although product was delivered and revenue was earned.

Accounts receivable is reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received although product was delivered and revenue was earned.

The determination that an account is uncollectable, and the ultimate write-off of that account occurs once collection is considered to be highly unlikely, and it is written-off and charged to the allowance at that time.

48 unchanged sentences

(amounts in thousands)

gains (losses)

Money market accounts

Corporate bonds

Treasury securities

Agency mortgage-backed securities

As of December 31, 2020

4 unchanged sentences

Treasury securities

Agency mortgage-backed securities

The following table summarizes the estimated fair value of the Company’s investments in marketable securities, classified by the contractual maturity date of the securities:

8 unchanged sentences

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

Changes in the fair value of these forward contracts designed as cash flow hedges are recorded as a component of accumulated other comprehensive income within stockholders’ equity and are recognized in the consolidated statements of comprehensive income during the period which approximates the time the corresponding sales occur.

Changes in the fair value of these forward contracts designed as cash flow hedges are recorded as a component of accumulated other comprehensive income within stockholders’ equity and are recognized in the consolidated statements of comprehensive income (loss) during the period which approximates the time the corresponding sales occur.

The Company may also enter into foreign exchange contracts that are not designated as hedging instruments for financial accounting purposes.

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

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

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

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

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

The Company had a related payable of $ 863 and $ 514 as of December 31, 2020 and 2019, respectively.

The Company had a related receivable of $ 1,671 and a related payable of $ 863 as of December 31, 2021 and 2020, respectively.

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

5 unchanged sentences

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

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

Fair value of accumulated other comprehensive income (loss)

2 unchanged sentences

gains (losses)

on marketable

1 unchanged sentence

(amounts in thousands)

income (loss)

Balance as of December 31, 2020

3 unchanged sentences

gains (losses)

on marketable

comprehensive

5 unchanged sentences

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

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

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

Fair value of earnout liability

The earnout liability will be adjusted to fair value at each reporting date until settled.

At the end of each reporting period after the acquisition date, the arrangement is remeasured at its fair value, with changes in fair value recorded in earnings.

Changes in fair value will be recognized in general and administrative expense.

At the end of each reporting period after the acquisition date, the arrangement is remeasured at its fair value, with changes in fair value recorded in general and administrative expense.

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

5 unchanged sentences

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

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of the acquisition date, December 31, 2019 and December 31, 2020.

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

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

At acquisition

Simulation input

August 9, 2019

December 31, 2021

6 unchanged sentences

Balance as of December 31, 2019

Addition for acquisition

Change in fair value

24 unchanged sentences

Total marketable securities

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

Accounts receivable

Accounts receivable are customer obligations due under normal sales and rental terms.

4 unchanged sentences

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

As adjustments to these estimates become necessary, they are reported in general and administrative expense for sales revenue and as a reduction of rental revenue in the periods in which they become known.

As adjustments to these estimates become necessary, they are reported in general and administrative expense for sales revenue in the periods in which they become known.

The allowance is increased by bad debt provisions, net of recoveries, and is reduced by direct write-offs.

2 unchanged sentences

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

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

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

These adjustments result from contractual adjustments, audit adjustments, untimely claims filings, or billings not paid due to another provider performing same or similar functions for the patient in the same period, all of which prevent billed revenue from becoming realizable.

The reserve is based on historical revenue adjustments as a percentage of rental revenue billed and unbilled during the related period.

When recording the allowance for doubtful accounts for sales revenue, the bad debt expense account (general and administrative expense account) is charged;

when recording allowance for sales returns, the sales returns account (contra sales revenue account) is charged;

and when recording the allowances for rental reserve adjustments and doubtful accounts, the rental revenue adjustments account (contra rental revenue account) is charged.

Prior to the adoption of ASC 842, the Company separately recorded an allowance for doubtful accounts by charging bad debt expense, which is now recorded as part of rental revenue adjustments during the years ended December 31, 2020 and December 31, 2019.

As of December 31, 2020 and December 31, 2019, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 459 and $ 590 , respectively.

These balances reflect gross unbilled receivables prior to any allowances for adjustments and write-offs.

When recording the allowance for doubtful accounts for sales revenue, the bad debt expense account (general and administrative expense account) is charged and when recording allowance for sales returns, the sales returns account (contra sales revenue account) is charged.

The Company consistently applies its allowance estimation methodology from period-to-period.

1 unchanged sentence

Any adjustments to the prior period estimates are included in the current period.

As additional information becomes known, the Company adjusts its assumptions accordingly to change its estimate of the allowance.

For the years ended December 31, 2020 and December 31, 2019, the Company had increases of $ 575 and $ 611 , respectively, in the provision for bad debt and revenue adjustments related to prior years.

Gross accounts receivable balance concentrations by major category as of December 31, 2020 and December 31, 2019 were as follows:

(amounts in thousands)

December 31, 2020

December 31, 2019

Gross accounts receivable

Business-to-business and other receivables (2)

Total gross accounts receivable

As additional information becomes known, the Company adjusts its assumptions accordingly to change its estimate of accounts receivable.

For the years ended December 31, 2021 and December 31, 2020, the Company had increases of $ 877 and $ 575 , respectively, in the net rental revenue related to prior years.

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

6 unchanged sentences

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

Business-to business receivables included one customer with a gross accounts receivable balance of $ 7,044 and $ 10,695 as of December 31, 2020 and December 31, 2019, respectively.

This customer received extended payment terms through a direct financing plan offered.

The Company also has a credit insurance policy in place, which allocated up to $ 10,000 in coverage as of December 31, 2020 and allocated up to $ 20,000 in coverage as of December 31, 2019 for this customer with a $ 400 deductible and 10 % retention.

The following table sets forth the percentage breakdown of the Company’s net accounts receivable (gross accounts receivable net of allowances) by aging category by invoice due date as of December 31, 2020 and December 31, 2019.

Business-to business receivables included one customer with an accounts receivable balance of $ 5,945 and $ 7,044 as of December 31, 2021 and December 31, 2020, respectively.

The customer received extended payment terms through a direct financing plan offered.

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

The following table sets forth the percentage breakdown of the Company’s net accounts receivable by aging category by invoice due date as of December 31, 2021 and December 31, 2020.

(amounts in thousands)

19 unchanged sentences

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, marketable securities and accounts receivable.

At times, cash account balances may be in excess of the amounts insured by the Federal

Deposit Insurance Corporation (FDIC).

At times, cash account balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation.

However, management believes the risk of loss to be minimal.

5 unchanged sentences

The Company also sells its products direct-to-consumers on a primarily prepayment basis.

The Medicare service reimbursement programs represented more than 10% of the Company’s total revenue for the year ended December 31, 2021.

One single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2020.

No single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2019.

One single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2018.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 8,417 and $ 7,044 , respectively, as of December 31, 2020, and $ 10,695 and $ 5,228 , respectively, as of December 31, 2019.

One single customer and Medicare each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 5,945 and $ 2,685 , respectively, as of December 31, 2021, and two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 8,417 and $ 7,044 , respectively, as of December 31, 2020.

The Company also rents products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs.

Medicare’s service reimbursement programs accounted for 81.9 %, 81.5 % and 81.1 % of rental revenue in 2021, 2020 and 2019, respectively, and based on total revenue were 10.6 %, 7.5 % and 4.8 % for 2021, 2020 and 2019, respectively.

Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $ 2,685 or 11.0 % of total net accounts receivable as of December 31, 2021 as compared to $ 1,882 or 6.3 % of total net accounts receivable as of December 31, 2020.

The Company currently purchases raw materials from a limited number of vendors, which resulted in a concentration of three major vendors.

11 unchanged sentences

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

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

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

1 unchanged sentence

Noncurrent inventories are primarily related to raw materials purchased in bulk to support long-term expected repairs to reduce costs and are classified in other assets.

The Company prepaid for raw materials of $ 15,426 as of December 31, 2021 that were classified in prepaid expenses and other current assets.

During the years ended December 31, 2021, 2020 and 2019, $ 906 , $ 1,970 and $ 1,043 , respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flows.

14 unchanged sentences

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

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

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

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 3,387 , $ 2,527 and $ 2,854 for the years ended December 31, 2021, 2020 and 2019, respectively.

26 unchanged sentences

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

During the twelve months ended December 31, 2021, the Company determined that an impairment indicator was present as a result of the court order to dismiss the Company’s preliminary injunction related to the Department of Health and Human Services and the Centers for Medicare and Medicaid Services lawsuit.

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

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

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

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

No impairments were recorded as of December 31, 2021 or 2020.

45 unchanged sentences

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

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

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

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

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

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

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

Accounting for stock-based compensation

11 unchanged sentences

Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.

Foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to functional currency are reflected as a component of foreign currency exchange gains or losses in other income (expense) in the consolidated statements of comprehensive income.

Government grants

2 unchanged sentences

Income is deferred until all considerations required for receiving the grant are met and is recognized in the consolidated statements of comprehensive income (loss) based on the nature of the terms and conditions of the grant.

In 2020, the Company

received a grant of $ 6,200 from the Public Health and Social Services Emergency Fund (Relief Fund), which was among the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act signed into law on March 27, 2020.

In 2020, the Company received a grant of $ 6,200 from the Public Health and Social Services Emergency Fund (Relief Fund), which was among the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act signed into law on March 27, 2020.

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

Earnings per share

Earnings (loss) per share

Earnings (loss) per share (EPS) is computed in accordance with ASC 260 — Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period.

Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents (which can include dilution of outstanding stock options, restricted stock units and restricted stock awards) unless the effect is to reduce a loss or increase the income per share.

For purposes of this calculation, common stock subject to repurchase by the Company, options, and other dilutive awards are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive.

Basic earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares.

22 unchanged sentences

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

Due to a net loss for the year ended December 31, 2020, diluted loss per share is the same as basic.

The computations of diluted net income (loss) attributable to common stockholders excluded common stock options, restricted stock units, and restricted stock awards, which were anti-dilutive for the year ended December 31, 2020.

Due to net losses for the years ended December 31, 2021 and December 31, 2020, diluted loss per share is the same as basic.

Business segments

1 unchanged sentence

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

Recently issued accounting pronouncements not yet adopted

Recently adopted accounting pronouncements

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

4 unchanged sentences

GAAP for other areas of Topic 740 by clarifying and amending the existing guidance .

The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

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

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No.

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

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

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

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

In January 2017, the FASB issued ASU No.

2017-04, Simplifying the Test for Goodwill Impairment .

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

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

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

In August 2018, the FASB issued ASU No.

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

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

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

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

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

Kapust, as stockholder representative.

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

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

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

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

Acquisition-related expenses of approximately $ 784 were incurred in the twelve months ended December 31, 2019 and classified within general and administrative expense.

Goodwill associated with this acquisition is not expected to be deductible for income tax purposes.

Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition.

The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill.

Goodwill represents the expected synergies with the existing business, the acquired assembled workforce, and future cash flows after the acquisition.

The fair value assigned to the identifiable intangible asset was determined primarily by using the excess earnings method.

The key assumptions included in the excess earnings method included revenue recognized, cost of revenue and the discount rate.

The fair value of the earnout liability was measured using a Monte Carlo simulation and was discounted using a rate that appropriately captures the risk associated with the obligation.

The key assumption included in the simulation included revenue recognized.

The purchase accounting for this acquisition has been finalized.

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

(amounts in thousands)

Other current assets

Property and equipment

Intangible assets

Total assets acquired

Deferred tax liability - noncurrent

Earnout liability - noncurrent

Total liabilities assumed

Total purchase price

The consolidated financial and operating results reflect the New Aera operations beginning August 9, 2019.

The following unaudited pro forma information for the twelve months ended December 31, 2019 and the twelve months ended December 31, 2018 presents the revenue and net income assuming the acquisition of New Aera had occurred as of January 1, 2018.

Twelve months ended

(amounts in thousands)

Total revenue

Goodwill and other identifiable intangible assets

8 unchanged sentences

Intangible assets

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

Amortization expense for intangible assets for the years ended December 31, 2020, 2019 and 2018 were as follows:

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

Amortization expense for intangible assets for the years ended December 31, 2021, 2020 and 2019 was as follows:

Years ended December 31,

33 unchanged sentences

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

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

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

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

1 unchanged sentence

Rent expense, including short-term lease cost, was $ 4,095 , $ 2,864 , and $ 2,288 for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company leases a property owned by a related party.

Operating lease cost for the property was $ 33 , $ 31 , and $ 33 for the years ended December 31, 2020, 2019 and 2018, respectively, which was included in the total operating lease cost.

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

(amounts in thousands)

Twelve months ended

December 31, 2021

Twelve months ended

December 31, 2020

10 unchanged sentences

Total lease liabilities

As of December 31, 2020, the Company has additional operating leases for its corporate headquarters in California and industrial space in Texas that have not yet commenced, with total minimum lease payments of $ 21,446 .

Lease payments for its corporate headquarters will increase annually by the lesser of the change, if any, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S.

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

Lease payments for the Company’s industrial space in Texas will increase annually by two and one-half percent ( 2.5 %) at each annual adjustment date

These operating leases are estimated to commence in the first quarter of 202 1 with a leas e term of approximately 10 years .

This table above exc lude s lease payments that were not fixed at commencement or modification.

The components of the Company’s income (loss) before provision (benefit) for income taxes are as follows:

The components of the Company’s income (loss) before provision for income taxes are as follows:

Years ended December 31,

1 unchanged sentence

United States

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

The provision (benefit) for income taxes consists of the following:

Income (loss) before provision for income taxes

The provision for income taxes consists of the following:

Years ended December 31,

3 unchanged sentences

Deferred tax expense (benefit)

Total deferred tax expense (benefit)

Income tax expense (benefit)

Total deferred tax expense

Interest and penalties

Provision for income taxes

The components of deferred tax assets and liabilities consist of the following:

12 unchanged sentences

Deferred tax liabilities

Valuation allowance

Reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31, 2021, 2020 and 2019 is as follows:

4 unchanged sentences

R&D credit, net of reserve

Change in fair value

Nondeductible compensation

Valuation allowance

Effective income tax rate

10 unchanged sentences

Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization.

The Company assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets.

As of December 31, 2020, the Company determined that it is more likely than not that deferred tax assets are realizable due to significant positive evidence of cumulative earnings.

Accordingly, the Company did not record a valuation allowance as of December 31, 2020.

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

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

The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced.

As of December 31, 2021, the Company determined that net deferred tax assets are not more likely than not realizable based on projected future taxable losses primarily due to planned strategic investments in future periods and the impact of the COVID-19 pandemic, including related supply chain impacts on parts availability and cost inflation.

Accordingly, the Company recorded a valuation allowance of $ 17,423 as of December 31, 20 2 1 .

The Company’s valuation allowance may increase or decrease during the next 12 months based on future operating results .

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

Included in the balance of unrecognized tax benefits as of December 31, 2021, 2020 and 2019, were $ 2,078 , $ 1,932 and $ 1,889 , respectively, of tax benefits that, if recognized, would affect the effective tax rate.

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Stock incentive plans

The Company has a 2002 Stock Incentive Plan (2002 Plan) as amended, under which the Company granted options to purchase shares of its common stock.

As of December 31, 2020, options to purchase 333 shares of common stock remained outstanding under the 2002 Plan.

The 2002 Plan was terminated in March 2012 in connection with the adoption of the 2012 Plan, and, accordingly, no new options are available for issuance under this plan.

The 2002 Plan continues to govern outstanding awards granted thereunder.

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

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As of December 31, 2021, awards with respect to 757,401 shares of the Company’s common stock were outstanding, and 1,481,328 shares of common stock remained available for issuance under the 2014 Plan.

The shares available for issuance under the 2014 Plan will be increased by any shares returned to the 2002 Plan, 2012 Plan and the 2014 Plan as a result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2014 Plan pursuant to such previously granted awards under the 2002 Plan and 2012 Plan is 2,328,569 shares).

The shares available for issuance under the 2014 Plan will be increased by any shares returned to the 2012 Plan and the 2014 Plan as a result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2014 Plan pursuant to such previously granted awards under the 2012 Plan is 2,328,569 shares).

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

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such other amount as the Company’s board of directors may determine.

For the year ended December 31, 2020, no additional shares were added to the 2014 Plan share reserve pursuant to the provision described above.

For 2021, no additional shares were added to the 2014 Plan share reserve pursuant to the provision described above.

Stock options

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The portion of the Stock Award that is earned may equal or be less than the targeted number of shares subject to the Stock Award depending on whether the performance criteria are met.

Stock Awards activity for the years ended December 31, 2020, 2019 and 2018 are summarized below:

Stock Awards activity for the years ended December 31, 2021, 2020 and 2019 is summarized below:

Restricted stock units

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Unvested restricted stock awards outstanding as of December 31, 2018 (1)

Forfeited/canceled

Unvested restricted stock awards outstanding as of December 31, 2019 (1)

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Under the terms of this plan, eligible employees are able to make contributions to the plan on a tax-deferred basis.

The Company matched employees’ contributions from

January 1, 2017 through June 30, 2020 .

The Company matched employees’ contributions from January 1, 2017 through June 30, 2020.

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

The Company contributed $ 455 , $ 871 , and $ 865 , net of forfeitures , to the 401(k) plan for the year s ended December 31, 20 20 , 201 9 and 201 8 , respectively .

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

The Company contributed $ 479 , $ 455 , and $ 871 , net of forfeitures, to the 401(k) plan for the years ended December 31, 2021, 2020 and 2019, respectively.

Commitments and contingencies

Non-cancelable contractual obligations

The Company enters into non-cancelable contractual obligations for software licenses and maintenance agreements.

At December 31, 2020, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

Non-cancelable

(amounts in thousands)

Purchase obligations

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Warranty obligation

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the twelve-month periods ended December 31, 2020, 2019 and 2018, respectively:

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the years ended December 31, 2021, 2020 and 2019, respectively:

(amounts in thousands)

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Legal proceedings

Intellectual property lawsuit

On November 21, 2019, Breathe Technologies, Inc.

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

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

Breathe alleged:

willful infringement of the ‘250 patent assigned to Breathe;

that inventorship was incorrectly assigned and that Breathe owns rights to certain patents filed by New Aera, Inc.

and Silverbow Development LLC;

breach of contract;

inducing breach of contract;

interference with contract;

and violation of California Business and Professional Code Section 17200.

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

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

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

On the same day, Breathe re-filed the ‘250 patent infringement claims in the United States District Court for the Central District of California (C.D.

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

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

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

On January 20, 2021, the Company entered into a comprehensive settlement agreement with Breathe, which has resolved all disputes in the two lawsuits and the arbitration filed by Breathe.

As a result of the settlement agreement, the lawsuits and arbitration have been dismissed.

The Company recorded a contingent liability of $ 8,000 during the year ended December 31, 2020.

The related payable was recorded in accounts payable and accrued expenses and receivable from the New Aera acquisition escrow account in prepaid expenses and other current assets as of December 31, 2020.

Securities class action and derivative lawsuits

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

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

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

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

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

that motion is currently pending.

The Company intends to vigorously defend itself against these allegations.

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

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

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Between October 7, 2019 and October 31, 2019, three additional shareholder derivative complaints were filed in the United States District Court for the Central District of California based on similar factual allegations.

These lawsuits purport to bring claims on behalf of Inogen for breach of

fiduciary duty, unjust enrichment, waste of corporate assets, insider trading and misappropriation of information, and violations of section 14(a) of the Securities Exchange Act of 1934, as amended.

These lawsuits purport to bring claims on behalf of Inogen for breach of fiduciary duty, unjust enrichment, waste of corporate assets, insider trading and misappropriation of information, and violations of section 14(a) of the Securities Exchange Act of 1934, as amended.

On January 13, 2020, the court consolidated the four derivative lawsuits before it under the name In re Inogen, Inc.

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

On November 10, 2021, the plaintiffs filed a Notice of Voluntary Dismissal Without Prejudice.

On February 8, 2022, the court dismissed the California derivative action without prejudice.

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

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

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

On September 21, 2020, Inogen filed a lawsuit against defendants, Alex M.

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

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

§§ 551 , et seq.

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

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

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

Other litigation

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

During the years ended December 31, 2020, 2019, and 2018, these contracts had, net of tax, an unrealized loss of $ 289 , an unrealized loss of $ 694 , and an unrealized gain of $ 404 , respectively.

During the years ended December 31, 2021, 2020, and 2019, these contracts had, net of tax, unrealized gains of $ 1,793 , and unrealized losses of $ 289 and $ 694 , respectively.

The nonperformance risk of the Company and the counterparty did not have a material impact on the fair value of the derivatives.

During the years ended December 31, 2021, 2020 and 2019, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of December 31, 2021, the Company had thirteen designated hedges and two non-designated hedges.

As of December 31, 2020, the Company had seventeen designated hedges and no non-designated hedges.

As of December 31, 2019, the Company had eleven designated hedges and one non-designated hedge.

Quarterly summary of information (unaudited)

The following table sets forth the Company’s unaudited quarterly statements of income data in dollars for each of the eight quarters in the period ended December 31, 2020.

The Company has prepared the quarterly statements of income data on a basis consistent with the audited financial statements.

In the opinion of management, the financial information reflects all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of this data.

The results of historical periods are not necessarily indicative of the results of operations for any future period.

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

Quarterly Results 2020

Total revenue

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

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share attributable to

common stockholders:

Weighted-average number of shares used in

calculating net income (loss) per share attributable

to common stockholders:

Basic common shares

Diluted common shares

Due to net loss for periods Q1 March, Q3 September and Q4 December, diluted loss per share is the same as basic.

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

Quarterly Results 2019

Total revenue

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

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share attributable to

common stockholders:

Weighted-average number of shares used in

calculating net income (loss) per share attributable

to common stockholders:

Basic common shares

Diluted common shares

Due to net loss for period Q4 December, diluted loss per share is the same as basic.

Earnings (loss) per share is computed independently for each of the quarters presented.

Therefore, the sum of the quarterly amounts will not necessarily equal the total for the year.

Valuation and Qualifying Accounts

3 unchanged sentences

Allowance for sales returns (2)

Allowance for rental revenue adjustments (3)

Allowance for rental asset loss (3)

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Deductions are the actual returns of products.

The additions to the allowance for rental revenue adjustments represent estimates of revenue adjustments that will need to be recorded for billing adjustments on rental revenue, net of recoveries.

Deductions are the actual adjustments and write-offs of the rental receivables for such revenue adjustments.

The additions to the allowance for rental asset loss represent estimated losses of the Company’s rental assets that will potentially be unrecoverable from the patient.

Deductions are the actual write-offs of the rental assets.

The additions to the allowance for rental revenue adjustments represent estimates of revenue adjustments that will need to be recorded for billing adjustments on rental revenue, net of recoveries.

Deductions are the actual adjustments and write-offs of the rental receivables for such revenue adjustments.

EXHIBIT INDEX

55 unchanged sentences

Transition Agreement and Release by and between the Company and Scott Wilkinson, dated January 22, 2021.

Filed Herewith

First Amendment to Agreement and Plan of Merger, dated August 6, 2019 between the Company and New Aera, dated January 18, 2021.

Filed Herewith

Transition Agreement and Release between the Company and Arron Retterer, dated April 5, 2021.

Transition Agreement and Release between the Company and Byron Myers, dated April 5, 2021.

Employment and Severance Agreement between the Company and George Parr, dated April 12, 2021.

Employment and Severance Agreement, between the Company and Stanislav Glezer, dated June 21, 2021.

Employment and Severance Agreement, between the Company and Jason M.

Somer, dated July 12, 2021.

First Amendment to Lease dated as of June 17, 2021, by and between the Company and RAF Pacifica Group – Real Estate Fund IV, LLC, APG Hollywood Center, LLC and APG Airport Freeway Center, LLC.

Private Label Distribution Agreement, by and between the Company and OxyGo HQ Florida, LLC, dated as of September 23, 2021.

Transition Agreement and Release, dated September 30, 2021, between the Company and Brenton Taylor.

Amended and Restated Employment and Severance Agreement, dated October 11, 2021, between the Company and Stanislav Glezer.

Offer Letter by and between the Company and Michael K.

Sergesketter, dated December 10, 2021.

Transition Agreement and Release between the Company and Alison Bauerlein, dated December 10, 2021.

Consulting Agreement by and between the Company and Raymond Huggenberger, effective December 29, 2021.

Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.

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Indicates a management contract or compensatory plan.

Portions of the exhibit have been omitted pursuant to an order granted by the Securities and Exchange Commission for confidential treatment.

Portions of the exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

The Company agrees to furnish to the Securities and Exchange Commission a copy of any omitted portions of the exhibit upon request.

The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K, are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Inogen, Inc.

7 unchanged sentences

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nabil Shabshab and Alison Bauerlein, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nabil Shabshab and Michael Sergesketter, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

4 unchanged sentences

(Principal Executive Officer)

/s/ Alison Bauerlein

/s/ Michael Sergesketter

Chief Financial Officer

February 24, 2022

Alison Bauerlein

Michael Sergesketter

(Principal Accounting and Financial Officer)

/s/ Elizabeth Mora

Chairperson of the Board

February 24, 2022

Elizabeth Mora

/s/ Heath Lukatch, Ph.D.

Chairman of the Board

February 24, 2022

9 unchanged sentences

Loren McFarland

February 24, 2021

/s/ Raymond Huggenberger

/s/ Kristen Miranda

February 24, 2022

Raymond Huggenberger

Kristen Miranda

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures