What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 138 added, 325 removed, 497 unchanged (48% of the section changed)

2 unchanged sentences

(amounts in thousands)

September 30,

Current assets

19 unchanged sentences

Operating lease right-of-use asset

Deferred tax asset - noncurrent

See accompanying condensed notes to the consolidated financial statements.

1 unchanged sentence

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

September 30,

Liabilities and stockholders' equity

12 unchanged sentences

Deferred revenue - noncurrent

Deferred tax liability - noncurrent

Total liabilities

4 unchanged sentences

22,836,472 and 22,731,586

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

shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

4 unchanged sentences

See accompanying condensed notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

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

Three months ended

Nine months ended

September 30,

Sales revenue

3 unchanged sentences

Cost of sales revenue

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

Cost of rental revenue, including depreciation of $ 2,638 and $ 1,888 , respectively

Total cost of revenue

7 unchanged sentences

Total operating expense

Income (loss) from operations

Loss from operations

Other income (expense)

1 unchanged sentence

Other income (expense)

Total other income (expense), net

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

Total other expense, net

Loss before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income (loss)

Other comprehensive income (loss), net of tax

4 unchanged sentences

Change in net unrealized gains (losses) on marketable securities

Total other comprehensive income, net of tax

Comprehensive income (loss)

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

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

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

Total other comprehensive income (loss), net of tax

Comprehensive loss

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

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

Weighted average number of shares used in calculating net loss per

share attributable to common stockholders:

4 unchanged sentences

(amounts in thousands, except share amounts)

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

comprehensive

stockholders'

income (loss)

Balance, June 30, 2020

Stock-based compensation

Employee stock purchases

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Other comprehensive income

Balance, September 30, 2020

Balance, June 30, 2021

Stock-based compensation

Employee stock purchases

Vesting of restricted stock units

Shares withheld related to net restricted stock settlement

Stock options exercised

Other comprehensive income

Balance, September 30, 2021

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

Three months ended March 31, 2022 and March 31, 2021

comprehensive

stockholders'

income (loss)

Balance, December 31, 2020

6 unchanged sentences

Other comprehensive income

Balance, September 30, 2020

Balance, March 31, 2021

Balance, December 31, 2021

1 unchanged sentence

Employee stock purchases

Restricted stock awards issued, net of forfeitures

Vesting of restricted stock units

1 unchanged sentence

Stock options exercised

Other comprehensive income

Balance, September 30, 2021

Other comprehensive loss

Balance, March 31, 2022

See accompanying condensed notes to the consolidated financial statements.

1 unchanged sentence

(amounts in thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities

Net income (loss)

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

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

Depreciation and amortization

19 unchanged sentences

Operating lease liability

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchases of marketable securities

Maturities of marketable securities

3 unchanged sentences

Proceeds from sale of former assets

Net cash used in investing activities

Net cash provided by (used in) investing activities

(continued on next page)

2 unchanged sentences

(amounts in thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from financing activities

2 unchanged sentences

Payment of employment taxes related to release of restricted stock

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rates on cash

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

15 unchanged sentences

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

Since adopting the Company’s direct-to-consumer rental strategy in 2009, the Company has directly sold or rented more than 1,131,000 of its Inogen oxygen concentrators as of September 30, 2021.

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

11 unchanged sentences

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

The results of operations for the three months and nine months ended September 30, 2021 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2021.

The results of operations for the three months ended March 31, 2022 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2022.

In the opinion of the Company’s management, the information contained herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity.

7 unchanged sentences

All intercompany balances and transactions have been eliminated.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Use of estimates

4 unchanged sentences

Actual results could differ from these estimates.

Recently adopted accounting pronouncements

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

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies U.S.

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

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.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Business segments

13 unchanged sentences

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

Cash, cash equivalents and marketable securities

5 unchanged sentences

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

As of September 30, 2021

As of March 31, 2022

Money market accounts

Agency mortgage-backed securities

Corporate bonds

As of December 31, 2021

gains (losses)

Money market accounts

Corporate bonds

Treasury securities

Agency mortgage-backed securities

Condensed Notes to the Consolidated Financial Statements (continued)

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

Derivative instruments and hedging activities

The Company transacts business in foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk.

The Company has entered into foreign currency forward contracts, generally with maturities of twelve months or less, to reduce the volatility of cash flows primarily related to forecasted revenue denominated in certain foreign currencies.

These contracts allow the Company to sell Euros in exchange for U.S.

dollars at specified contract rates.

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.

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 (loss).

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

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

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

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

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

For derivative instruments that are designed and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported in other comprehensive income and reclassified into earnings in the same periods during which the hedged transaction affects earnings.

Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current period earnings.

The Company will discontinue hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedge risk.

The cash flow hedge is de-designated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge.

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.

The Company had a related receivable of $ 1,637 and $ 1,671 as of March 31, 2022 and December 31, 2021, respectively.

Accumulated other comprehensive income

The components of accumulated other comprehensive income were as follows:

The components of accumulated other comprehensive income (loss) were as follows:

gains (losses)

on marketable

1 unchanged sentence

Balance as of December 31, 2021

Other comprehensive income (loss)

Balance as of September 30, 2021

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

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

Earnout l iability

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

Other comprehensive loss

Balance as of March 31, 2022

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

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 other comprehensive income (loss).

Earnout liability

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

The earnout liability was valued using Level 3 inputs.

4 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 September 30, 2021 and December 31, 2020.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of March 31, 2022 and December 31, 2021.

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

Simulation input

September 30, 2021

March 31, 2022

December 31, 2021

4 unchanged sentences

Three months ended

Nine months ended

September 30, 2021

March 31, 2022

Balance at beginning of period

1 unchanged sentence

Balance at end of period

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

The Company recorded $ 630 and $ 630 of preacquisition loss recoveries that can be withheld from any earnout amounts payable as of March 31, 2022 and December 31, 2021, respectively.

Balance sheet components

13 unchanged sentences

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

September 30,

Cash and cash equivalents

3 unchanged sentences

Corporate bonds

Treasury securities

Agency mortgage-backed securities

Total marketable securities

6 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.

As of September 30, 2021 and December 31, 2020, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 1,400 and $ 459 , respectively.

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

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.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

September 30,

Gross accounts receivable

Business-to-business and other receivables (2)

Total gross accounts receivable

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

September 30,

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

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2022 and December 31, 2021 were as follows:

Net accounts receivable

March 31, 2022

December 31, 2021

Business-to-business and other receivables (2)

1 unchanged sentence

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 $ 6,674 and $ 7,044 as of September 30, 2021 and December 31, 2020, respectively.

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

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

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

September 30,

Condensed Notes to the Consolidated Financial Statements (continued)

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

Business-to-business receivables included one customer with an accounts receivable balance of $ 4,268 and $ 5,945 as of March 31, 2022 and December 31, 2021, 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 March 31, 2022 and December 31, 2021 for this customer with a $ 400 deductible and 10 % retention.

The following tables sets forth the accounts receivable allowances as of March 31, 2022 and December 31, 2021:

Allowances - accounts receivable

March 31, 2022

December 31, 2021

Doubtful accounts

Rental revenue adjustments

Sales returns

9 unchanged sentences

The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis.

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

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

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

The Medicare service reimbursement programs represented more than 10% of the Company’s total revenue for the three months ended March 31, 2022.

Medicare represented more than 10% of the Company’s total revenue for the three months ended March 31, 2022 and one single customer for the three months ended March 31, 2021.

Three single customers and Medicare each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 5,778 , $ 4,268 , $ 3,673 and $ 3,461 , respectively, as of March 31, 2022, and one single customer and Medicare of $ 5,945 and $ 2,685 , respectively, as of December 31, 2021.

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 79.0 % and 83.9 % of rental revenue in the three months ended March 31, 2022 and March 31, 2021, respectively, and based on total revenue were 12.8 % and 9.5 % for the three months ended March 31, 2022 and March 31, 2021, respectively.

Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $ 3,461 or 10.2 % of total net accounts receivable as of March 31, 2022 as compared to $ 2,685 or 11.0 % of total net accounts receivable as of December 31, 2021.

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

The three major vendors supply the Company with raw materials used to manufacture the Company’s products.

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

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

For the three months ended March 31, 2022, the Company’s three major vendors accounted for 25.2 %, 19.9 % and 8.4 %, respectively, of total raw material purchases.

For the three months ended March 31, 2021, the Company’s three major vendors accounted for 19.9 %, 10.8 % and 9.6 %, respectively, of total raw material purchases.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Approximately 73.2 % and 79.3 % of the non-U.S.

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

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

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

revenue for the three months ended March 31, 2022 and March 31, 2021, respectively, were invoiced in Euros.

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

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

sources for the three months ended March 31, 2022 and March 31, 2021, respectively, is as follows:

Three months ended

September 30,

Nine months ended

September 30,

Total revenue

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

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

Inventories are stated at the lower of cost and net realizable value, using the first-in, first-out (FIFO) method.

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

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 1,879 and $ 1,153 as of September 30, 2021 and December 31, 2020, respectively.

The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $ 797 and $ 1,943 as of March 31, 2022 and December 31, 2021, respectively.

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

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

During the nine months ended September 30, 2021 and September 30, 2020, $ 817 and $ 1,795 , respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flows.

The Company prepaid for raw materials of $ 10,968 and $ 15,426 as of March 31, 2022 and December 31, 2021, respectively, that were classified in prepaid expenses and other current assets.

During the three months ended March 31, 2022 and March 31, 2021, $ 533 and $ 607 , respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flows.

Inventories that are considered current consist of the following:

September 30,

Raw materials and work-in-progress

10 unchanged sentences

Lesser of estimated useful life or remaining lease term

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

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

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

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

Repair and maintenance expense, which includes labor, parts and freight, for rental equipment was $ 1,030 and $ 935 for the three months ended March 31, 2022 and March 31, 2021, respectively.

Included within property and equipment is construction in process, primarily related to the design and engineering of tooling, jigs and other machinery.

2 unchanged sentences

therefore, no depreciation or amortization was recognized for these items in the respective periods.

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2022 and March 31, 2021, respectively.

Three months ended

September 30,

Nine months ended

September 30,

Rental equipment

1 unchanged sentence

Total depreciation and amortization

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

September 30,

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2022 and December 31, 2021, respectively.

Property and equipment

13 unchanged sentences

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

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

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

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

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

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

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

No impairments were recorded as of March 31, 2022 and March 31, 2021.

Goodwill and other identifiable intangible assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2022 were as follows:

Balance as of December 31, 2021

Translation adjustment

Balance as of September 30, 2021

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

Balance as of March 31, 2022

As of March 31, 2022, the Company had no accumulated impairment losses related to goodwill.

Intangible assets

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

There were no accumulated impairment losses related to the Company’s intangible assets as of March 31, 2022 and December 31, 2021.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

September 30, 2021

March 31, 2022

Patents and websites

4 unchanged sentences

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

September 30,

Remaining 9 months of 2022

Condensed Notes to the Consolidated Financial Statements (continued)

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

Current liabilities

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

September 30,

Accounts payable and accrued expenses as of March 31, 2022 and December 31, 2021 consisted of the following:

Accounts payable

Accrued inventory (in-transit and unvouchered receipts) and trade payables

Accrued litigation settlement

Accrued purchasing card liability

2 unchanged sentences

Accounts payable and accrued expenses

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

September 30,

Condensed Notes to the Consolidated Financial Statements (continued)

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

Accrued payroll as of March 31, 2022 and December 31, 2021 consisted of the following:

Accrued bonuses

8 unchanged sentences

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

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

Rent expense, including short-term lease cost, was $ 971 and $ 987 for the three months ended March 31, 2022 and March 31, 2021.

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

Nine months ended

September 30,

Three months ended

Cash paid for operating lease liabilities

3 unchanged sentences

Weighted average discount rate

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Maturities of lease liabilities due in the 12-month period ending March 31,

Less imputed interest

6 unchanged sentences

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

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

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

Diluted earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Diluted earnings (loss) per share is calculated using the Company’s weighted average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

The computation of EPS is as follows:

Three months ended

September 30,

Nine months ended

September 30,

Numerator—basic and diluted:

Net income (loss)

Weighted average common shares - basic common stock (1)

15 unchanged sentences

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

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

Due to net losses for the three months ended March 31, 2022 and March 31, 2021, diluted loss per share is the same as basic.

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

3 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.

As of March 31, 2022, the Company continued to record a valuation allowance against its deferred tax assets.

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

4 unchanged sentences

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

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

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

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

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

Stockholders’ equity

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

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

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

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

As of September 30, 2021, options to purchase 71,452 shares of common stock remained outstanding under the 2012 Plan.

As of March 31, 2022, options to purchase 67,953 shares of common stock remained outstanding under the 2012 Plan.

The 2012 Plan was terminated in connection with the Company’s initial public offering in February 2014, and accordingly, no new options are available for issuance under this plan.

1 unchanged sentence

The Company has a 2014 Equity Incentive Plan (2014 Plan) that provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any parent and subsidiary corporation’s employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, restricted stock awards, stock appreciation rights, performance units and performance shares to its employees, directors and consultants and its parent and subsidiary corporations’ employees and consultants.

As of September 30, 2021, awards with respect to 799,150 shares of the Company’s common stock were outstanding, and 1,450,669 shares of common stock remained available for issuance under the 2014 Plan.

As of March 31, 2022, awards with respect to 1,033,824 shares of the Company’s common stock were outstanding, and 1,111,771 shares of common stock remained available for issuance under the 2014 Plan.

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

7 unchanged sentences

Options have been granted to employees, directors and consultants of the Company, as determined by the board of directors, at the deemed fair market value of the shares underlying the options at the date of grant.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

The activity for stock options under the Company’s stock plans for the three months ended March 31, 2022 is as follows:

Outstanding as of December 31, 2021

Outstanding as of September 30, 2021

Vested and exercisable as of September 30, 2021

Vested and expected to vest as of September 30, 2021

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

As of September 30, 2021, all stock-based compensation expense for options granted under the Plans was recognized.

Outstanding as of March 31, 2022

Vested and exercisable as of March 31, 2022

Vested and expected to vest as of March 31, 2022

The total intrinsic value of options exercised during the three months ended March 31, 2022 and March 31, 2021 was $ 84 and $ 6,504 , respectively.

As of March 31, 2022, all stock-based compensation expense for options granted under the Plans was recognized.

Stock incentive awards

2 unchanged sentences

Stock Awards are subject to forfeiture if the holder’s services to the Company terminate before vesting.

Condensed Notes to the Consolidated Financial Statements (continued)

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

Stock Awards granted with only time-based service vesting conditions generally vest over a four-year service period, as defined in the terms of each award.

1 unchanged sentence

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.

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Stock Awards activity for the three months ended March 31, 2022 is summarized below:

Restricted stock units

1 unchanged sentence

Forfeited/canceled

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

Unvested restricted stock units as of March 31, 2022 (1)

Unvested and expected to vest restricted stock units outstanding as

of September 30, 2021

of March 31, 2022

Restricted stock awards

Unvested restricted stock awards outstanding as of December 31, 2021

Forfeited/canceled

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

Unvested restricted stock awards outstanding as of March 31, 2022 (1)

Unvested and expected to vest restricted stock awards outstanding as

of September 30, 2021

of March 31, 2022

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

As of September 30, 2021, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 17,481 , excluding estimated forfeitures.

As of March 31, 2022, the unrecognized compensation cost related to unvested employee restricted stock units and restricted stock awards was $ 22,969 , excluding estimated forfeitures.

This amount is expected to be recognized over a weighted average period of 2.7 years.

6 unchanged sentences

The offering periods are currently approximately six months in length beginning on the first business day on or after March 1 and September 1 of each year and ending on the first business day on or after September 1 and March 1 approximately six months later.

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

As of March 31, 20 2 2 , a total of 539,308 shares of common stock were available for sale pursuant to the ESPP.

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

4 unchanged sentences

Stock-based compensation

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

Stock-based compensation expense recognized for the three months ended March 31, 2022 and March 31, 2021, was as follows:

Three months ended

Nine months ended

September 30,

Stock-based compensation expense by type of award:

Stock option plan awards

Restricted stock units and restricted stock awards

3 unchanged sentences

ASC 718 – Compensation-Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For the three and nine months ended September 30, 2021 and September 30, 2020, respectively, stock-based compensation expense recognized under ASC 718, included in cost of revenue, research and development expense, sales and marketing expense, and general and administrative expense was as follows:

For the three months ended March 31, 2022 and March 31, 2021, respectively, stock-based compensation expense recognized under ASC 718, included in cost of revenue, research and development expense, sales and marketing expense, and general and administrative expense was as follows:

Three months ended

Nine months ended

September 30,

Cost of revenue

3 unchanged sentences

Total stock-based compensation expense

401(k) retirement savings plan

The Company maintains a 401(k) retirement savings plan for the benefit of eligible employees.

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

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

The Company contributed $ 212 and $ 455 , net of forfeitures, to the 401(k) plan for the nine months ended September 30, 2021 and September 30, 2020, respectively.

Condensed Notes to the Consolidated Financial Statements (continued)

1 unchanged sentence

Commitments and contingencies

Non-cancelable contractual obligations

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

As of September 30, 2021, the minimum aggregate payments due under specified non-cancelable contractual obligations are summarized as follows:

Non-cancelable

Remaining 3 months of 2021

Purchase obligations

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

Warranty obligations

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

September 30,

The Company had approximately $ 122,900 of outstanding purchase orders due within one year with its outside vendors and suppliers as of March 31, 2022.

Warranty obligation

The following table identifies the changes in the Company’s aggregate product warranty liabilities for the three and twelve-month periods ended March 31, 2022 and December 31, 2021, respectively:

Product warranty liability at beginning of period

Accruals for warranties issued

Adjustments related to preexisting warranties (including changes in estimates)

Adjustments related to preexisting warranties

Settlements made (in cash or in kind)

1 unchanged sentence

Contract liabilities

Contract liabilities primarily consist of deferred revenue related to lifetime warranties on direct-to-consumer sales revenue when payments are received in advance of services performed under the contract.

Contract liabilities primarily consist of deferred revenue related to lifetime warranties on direct-to-consumer sales revenue when cash payments are received in advance of services performed under the contract.

The contract with the customer states the final terms of the sale, including the description, quantity, and price of each product or service purchase.

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

Deferred revenue related to lifetime warranties was $ 18,098 and $ 17,078 as of September 30, 2021 and December 31, 2020, respectively, and is classified within deferred revenue – current and deferred revenue – noncurrent in the consolidated balance sheet.

The decrease in deferred revenue related to lifetime warranties for the three months ended March 31, 2022 was primarily driven by $ 1,595 of revenue recognized that was included in the deferred revenue balances as of December 31, 2021, partially offset by $ 1,342 of payments received in advance of satisfying performance obligations.

Deferred revenue related to lifetime warranties was $ 17,723 and $ 17,976 as of March 31, 2022 and December 31, 2021, respectively, and is classified within deferred revenue – current and noncurrent deferred revenue in the consolidated balance sheet.

Legislation and HIPAA

3 unchanged sentences

Violations of these laws and regulations could result in exclusion from government healthcare programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed.

Condensed Notes to the Consolidated Financial Statements (continued)

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

The Company believes that it is in compliance in all material respects with applicable fraud and abuse regulations and other applicable government laws and regulations.

Compliance with such laws and regulations can be subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to en sure health insurance portability, reduce healthcare fraud and abuse, guarantee security and privacy of health information, and enforce standards for health information.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to ensure health insurance portability, reduce healthcare fraud and abuse, guarantee security and privacy of health information, and enforce standards for health information.

The Health Information Technology for Economic and Clinical Health Act (HITECH Act), in part, imposes notification requirements of certain security breaches relating to protected health information.

The Company believes that it complies in all material respects with the provisions of those regulations that are applicable to the Company’s business.

Legal proceedings

Securities class action and derivative lawsuits

On March 6, 2019, plaintiff William Fabbri filed a lawsuit against Inogen, Scott Wilkinson, and Alison Bauerlein, in the United States District Court for the Central District of California on behalf of a purported class of purchasers of the Company’s securities.

On March 21, 2019, plaintiff Steven Friedland filed a substantially similar lawsuit against the same defendants in the same court.

On May 20, 2019, the court issued an order consolidating the two lawsuits under the name In re Inogen, Inc.

2:19-cv-01643-FMO-AGR, appointing Dr.

John Vasil and Paragon Fund Management as lead plaintiffs, and appointing Robbins Geller Rudman & Dowd LLP and Glancy Prongay & Murray LLP as lead plaintiffs’ counsel.

On July 10, 2019, the lead plaintiffs filed a consolidated amended complaint on behalf of a purported class of purchasers of the Company’s common stock between November 8, 2017 and May 7, 2019.

The complaint generally alleges that the defendants failed to disclose that:

(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 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;

and (iv) Inogen’s decision to focus on sales over rentals of portable oxygen concentrators harmed its ability to serve the Medicare market, in violation of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended.

The complaint seeks compensatory damages in an unspecified amount, costs and expenses, including attorneys’ fees and expert fees, prejudgment and post-judgment interest and such other relief as the court deems proper.

O n January 2, 2020, the court dismissed the consolidated amended complaint with leave to amend.

On January 9, 2020, the plaintiffs filed a second amended complaint generally alleging substantially similar claims as those in the previous complaint.

On January 23, 2020, the defendants filed a motion to dismiss the second amended complaint.

On September 2, 2020, the court denied the defendants’ motion to dismiss without prejudice and instructed defendants to file another motion to dismiss if the parties are unable to resolve the issues relating to the second amended complaint.

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

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.

Scott Greer, Raymond Huggenberger, Heath Lukatch, Loren McFarland, and Heather Rider in the United States District Court for the Central District of California.

The complaint purports to bring claims on behalf of Inogen against the individual defendants for breaches of their fiduciary duties as directors and/or officers of Inogen, unjust enrichment, waste of corporate assets and violations of section 14(a) of the Securities Exchange Act of 1934, as amended.

The complaint generally alleges similar claims to the securities class action.

The complaint seeks compensatory damages and restitution in an unspecified amount, changes to the Company’s corporate governance and internal procedures, costs and expenses, including attorneys’ fees and expert fees, and such other relief as the court deems proper.

On August 5, 2019, the court issued an order staying the derivative action pending the resolution of the motion to dismiss stage in In re Inogen, Inc.

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.

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

S’holder Deriv.

, Lead Case No.

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

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

Condensed Notes to the Consolidated Financial Statements (continued)

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

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

Scott Greer, Raymond Huggenberger, Heath Lukatch, Loren McFarland, and Heather Rider in the United States District Court for the District of Delaware captioned Weller v.

Wilkinson, et al.

1:19-cv-01723-MN.

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

Wilkinson, et al.

1:19-cv-1968-MN.

The complaints generally allege similar claims to those in In re Inogen, Inc., S’holder Deriv.

The complaints purport to bring claims on behalf of Inogen for breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control, gross mismanagement, insider selling and misappropriation of information, violations of section 14(a) of the Securities Exchange Act of 1934, as amended, and for contribution from certain of the individual defendants.

The complaints seek compensatory damages in unspecified amounts, changes to the Company’s corporate governance and internal procedures, return of compensation, disgorgement of profits from sale of stock, costs and expenses, including attorneys’ fees and expert fees, and such other relief as the court deems proper.

On May 15, 2020, the court consolidated the two derivative lawsuits before it under the name In re Inogen, Inc.

S’holder Deriv.

, Lead Case No.

1:19-cv-01723-MN-JLH.

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

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

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

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

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

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

Other litigation

In addition to the lawsuits discussed above, the Company is party to various legal proceedings arising in the normal course of business.

Legal proceedings

The Company is party to various legal proceedings arising in the normal course of business.

The Company carries insurance, subject to specified deductibles under the policies, to protect against losses from certain types of legal claims.

2 unchanged sentences

Foreign currency exchange contracts and hedging

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

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

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

As of March 31, 2022 and March 31, 2021, the Company’s total non-designated and designated derivative contracts had notional amounts totaling approximately $ 2,445 and $ 15,680 , respectively, and $ 1,704 and $ 20,491 , respectively.

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

During the three months ended March 31, 2022 and March 31, 2021, these contracts had, net of tax, an unrealized loss of $ 74 and an unrealized gain of $ 903 , 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 nine months ended September 30, 2021 and September 30, 2020, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

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

As of September 30, 2020, the Company had nineteen designated hedges and one non-designated hedge.

During the three months ended March 31, 2022 and March 31, 2021, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of March 31, 2022, the Company had eight designated hedges and one non-designated hedge.

As of March 31, 2021, the Company had twenty-two designated hedges and two non-designated hedges.

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

What changed 10-Q

Item 1. Financial Statements