Inogen Announces Fourth Quarter and Full Year 2022 Financial Results

February 23, 2023 at 16:02 PM EST

Fourth Quarter Year-over-Year Revenue Growth of 15.3%

Full Year 2022 Year-over-Year Revenue Growth of 5.4%

Inogen, Inc. (Nasdaq: INGN), a medical technology company offering innovative respiratory products for use in the homecare setting, today announced financial results for the fourth quarter and the full year ended December 31, 2022.

Fourth Quarter 2022 Highlights

All comparisons are to the prior year period unless otherwise noted.

Reported total revenue increased 15.3% to $88.1 million, on a constant currency basis total revenue for the quarter increased 17.7%.
GAAP net loss of $56.6 million, adjusted net loss of $13.0 million, and adjusted EBITDA was a loss of $10.6 million. GAAP net loss included a one-time loss on disposal of intangible asset of $52.2 million and an offsetting reduction to the fair value of contingent liability of $13.7 million.
Cash and cash equivalents were $187.0 million as of December 31, 2022.

Full Year 2022 Highlights

All comparisons are to the prior year period unless otherwise noted.

Reported total revenue increased 5.4% to $377.2 million, on a constant currency basis total revenue for the year increased 6.9%.
Continued progress on our rental strategy led to a 22.5% increase in rental revenue, primarily due to higher rental patients on service, higher percentage of billable patients and higher reimbursement rates.
GAAP net loss of $83.8 million, adjusted net loss of $26.2 million and adjusted EBITDA was a loss of $13.5 million. GAAP net loss included a one-time loss on disposal of intangible asset of $52.2 million and an offsetting reduction to fair value of contingent liability of $15.4 million.
Achieved regulatory milestones and announced new products to be launched in 2023.

“Despite the headwinds we faced in 2022, I am pleased with how our team successfully managed these challenges, while growing revenue and executing on our transformation,” said Nabil Shabshab, President and Chief Executive Officer. “We remain focused on our innovation pipeline to provide a foundation for growth along with judicious management of operating expenses to drive medium to long-term growth.”

Fourth Quarter 2022 Financial Results

Fourth quarter total revenue increased 15.3% to $88.1 million from $76.4 million in the fourth quarter of 2021, primarily due to growth in domestic business-to-business sales and rental revenue, partially offset by lower direct-to-consumer sales.

Total gross margin was 33.5% in the fourth quarter of 2022 versus 50.5% in the comparative period in 2021. The decline was driven primarily by sales channel mix, increased material costs including premiums paid for components and higher warranty costs, partially offset by higher manufacturing productivity from increased production volumes.

Total operating expense for the quarter was $88.0 million compared to $45.3 million in the fourth quarter of 2021, representing an increase of 94.3%. The current period expenses include a one-time loss on disposal of intangible asset of $52.2 million. Excluding this loss, operating expense decreased 20.9%, primarily due to the change in fair value of the New Aera earnout liability.

GAAP net loss for the fourth quarter of 2022 was $56.6 million compared to GAAP net loss of $22.9 million in the fourth quarter of 2021. Adjusted net loss was $13.0 million compared to adjusted net loss of $20.1 million in the fourth quarter of 2021.

Adjusted EBITDA was a negative $10.6 million in the fourth quarter of 2022 compared to a negative $0.5 million in the fourth quarter of 2021.

Cash and cash equivalents were $187.0 million as of December 31, 2022, and no debt outstanding.

Full Year 2022 Financial Results

Total revenue of $377.2 million, up 5.4% versus 2021, primarily due to higher international business-to-business sales and rental revenue, partially offset by lower domestic business-to-business and direct-to-consumer sales.

Total gross margin was 40.7% for the full year 2022 versus 49.3% in 2021. The decline was primarily driven by increased material costs related to premiums paid for semiconductor chips and sales channel mix. Additional impacts included higher cost of other materials and warranty costs as well as lower manufacturing productivity. This was partially offset by the impact of higher selling prices across all channels.

Total operating expense for the full year was $238.8 million compared to $167.2 million for the full year 2021, representing an increase of 42.8%. Excluding the loss on disposal of intangible asset, operating expense increased 11.6%. The increased spend was primarily due to ongoing strategic investments required to position the Company for long-term sustainable growth. These expenses included increases in personnel-related expenses, our prescriber initiative, product development, and consulting expenses.

GAAP net loss for full year 2022 was $83.8 million compared to GAAP net loss of $6.3 million for full year 2021. Adjusted net loss was $26.2 million compared to adjusted net income of $1.8 million for full year 2021.

Adjusted EBITDA was a negative $13.5 million for the full year 2022 compared to a positive $29.5 million for the full year 2021.

A reconciliation of adjusted EBITDA and adjusted net income (loss) for the three and twelve months ended December 31, 2022 and 2021 are provided in the financial schedules that are a part of this press release. An explanation of these non-GAAP financial measures is also included below under the heading “Non-GAAP Financial Measures.”

Quarterly Conference Call Information

Inogen will issue fourth quarter and full year 2022 financial results after the market closes on Thursday, February 23, 2023. On the same day, the Company will host a conference call beginning at 2:00 pm PT / 5:00 pm ET.

Individuals interested in listening to the conference call may do so by dialing:

US domestic callers (877) 841-3961

Non-US callers (201) 689-8589

Please reference Inogen to join the call. To listen to a live webcast, please visit the Investor Relations section of Inogen's website at: http://investor.inogen.com/. This webcast will also be archived on the website for 6 months.

A replay of the call will be available approximately three hours after the live webcast ends and will be accessible through March 2, 2023. To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13735129.

Inogen has used, and intends to continue to use, its Investor Relations website, http://investor.inogen.com/, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. For more information, visit http://investor.inogen.com/.

About Inogen

Inogen, Inc. (Nasdaq: INGN) is a leading global medical technology company offering innovative respiratory products for use in the homecare setting. Inogen supports patient respiratory care by developing, manufacturing, and marketing innovative best-in-class portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. Inogen partners with patients, prescribers, home medical equipment providers, and distributors to make its oxygen therapy products widely available allowing patients the chance to remain ambulatory while managing the impact of their disease.

For more information, please visit www.inogen.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, Inogen’s expectations for future growth and profitability; expectations related to our sales force and productivity; and our expectations related to management of operating expenses. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “intends,” “potential,” “possible,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from currently anticipated results, including but not limited to, risks arising from the possibility that Inogen will not realize anticipated revenue; risks related to the Company’s supply chain, or cost inflation for such components; the risks our innovation pipeline will not produce meaningful results; the impact of changes in reimbursement rates and reimbursement and regulatory policies; and the possible loss of key employees, customers, or suppliers; the risk that expenses and costs will exceed Inogen’s expectations. Information on these and additional risks, uncertainties, and other information affecting Inogen’s business operating results are contained in its Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Report on Form 10-Q for the period ended September 30, 2022, and in its other filings with the Securities and Exchange Commission. Additional information will also be set forth in Inogen’s Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. Inogen disclaims any obligation to update these forward-looking statements except as may be required by law.

Non-GAAP Financial Measures

Inogen has presented certain financial information in accordance with U.S. GAAP and also on a non-GAAP basis for the three and twelve months ended December 31, 2022, and December 31, 2021. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of Inogen’s core operating results. Management uses non-GAAP measures to compare Inogen’s performance relative to forecasts and strategic plans, to benchmark Inogen’s performance externally against competitors, and for certain compensation decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Inogen's operating results as reported under U.S. GAAP. Inogen encourages investors to carefully consider its results under U.S. GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between U.S. GAAP and non-GAAP results are presented in the accompanying tables of this release. For future periods, Inogen is unable to provide a reconciliation of non-GAAP measures without unreasonable effort as a result of the uncertainty regarding, and the potential variability of, the amounts of interest income, interest expense, depreciation and amortization, stock-based compensation, provision for income taxes, and certain other infrequently occurring items, such as acquisition-related costs, that may be incurred in the future.

Consolidated Statements of Comprehensive Loss
*(unaudited)*
*(amounts in thousands, except share and per share amounts)*

	Three months ended						Twelve months ended
	December 31,						December 31,
	2022			2021			2022			2021
Revenue
Sales revenue	$	73,184		$	63,371		$	320,549		$	311,730
Rental revenue		14,907			13,032			56,692			46,273
Total revenue		88,091			76,403			377,241			358,003
Cost of revenue
Cost of sales revenue		51,753			32,187			197,805			161,824
Cost of rental revenue, including depreciation of $2,950 and $2,603, for the three months ended and $11,103 and $8,860 for the twelve months ended, respectively		6,867			5,628			25,903			19,696
Total cost of revenue		58,620			37,815			223,708			181,520
Gross profit		29,471			38,588			153,533			176,483
Operating expense
Research and development		5,934			4,684			21,943			16,576
Sales and marketing		28,606			29,706			120,767			112,815
General and administrative		1,259			10,871			43,905			37,852
Loss on disposal of intangible asset		52,161			—			52,161			—
Total operating expense		87,960			45,261			238,776			167,243
Income (loss) from operations		(58,489	)		(6,673	)		(85,243	)		9,240
Other income (expense)
Interest income		1,715			22			2,837			129
Other income (expense)		305			(238	)		(862	)		(710	)
Total other income (expense), net		2,020			(216	)		1,975			(581	)
Income (loss) before provision for income taxes		(56,469	)		(6,889	)		(83,268	)		8,659
Provision for income taxes		141			15,988			504			14,992
Net loss	$	(56,610	)	$	(22,877	)	$	(83,772	)	$	(6,333	)
Other comprehensive income (loss), net of tax
Change in foreign currency translation adjustment		856			(215	)		(597	)		(800	)
Change in net unrealized gains (losses) on foreign currency hedging		(1,461	)		(282	)		(3,130	)		1,746
Less: reclassification adjustment for net (gains) losses included in net income		784			314			1,990			47
Total net change in unrealized gains (losses) on foreign currency hedging		(677	)		32			(1,140	)		1,793
Change in net unrealized gains (losses) on marketable securities		9			1			25			1
Total other comprehensive income (loss), net of tax		188			(182	)		(1,712	)		994
Comprehensive loss	$	(56,422	)	$	(23,059	)	$	(85,484	)	$	(5,339	)

Basic net loss per share attributable to common stockholders⁽¹⁾	$	(2.47	)	$	(1.01	)	$	(3.67	)	$	(0.28	)
Diluted net loss per share attributable to common stockholders ^{(1) (2)}	$	(2.47	)	$	(1.01	)	$	(3.67	)	$	(0.28	)
Weighted-average number of shares used in calculating net loss per share attributable to common stockholders:
Basic common shares		22,926,276			22,707,987			22,852,571			22,490,027
Diluted common shares		22,926,276			22,707,987			22,852,571			22,490,027

(1)	Reconciliations of net loss attributable to common stockholders basic and diluted can be found in Inogen’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.
(2)	Due to a net loss for the three and twelve months ended December 31, 2022, and December 31, 2021 diluted loss per share is the same as basic.

Consolidated Balance Sheets
(unaudited)
*(amounts in thousands)*

	December 31,			December 31,
	2022			2021
Assets
Current assets
Cash and cash equivalents	$	187,014		$	235,524
Marketable securities		—			9,989
Accounts receivable, net		62,725			24,452
Inventories, net		34,093			31,873
Income tax receivable		1,626			1,343
Prepaid expenses and other current assets		19,187			26,005
Total current assets		304,645			329,186
Property and equipment, net		43,269			38,926
Goodwill		32,852			32,979
Intangible assets, net		177			60,147
Operating lease right-of-use asset		21,653			24,912
Other assets		2,445			3,363
Total assets	$	405,041		$	489,513
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses	$	33,974		$	25,689
Accrued payroll		11,190			17,307
Warranty reserve - current		7,790			6,480
Operating lease liability - current		3,515			3,393
Deferred revenue - current		8,880			8,568
Income tax payable		—			75
Total current liabilities		65,349			61,512
Warranty reserve - noncurrent		12,123			7,246
Operating lease liability - noncurrent		19,764			23,281
Earnout liability - noncurrent		—			15,386
Deferred revenue - noncurrent		10,399			11,861
Total liabilities		107,635			119,286
Stockholders' equity
Common stock		23			23
Additional paid-in capital		312,126			299,463
Retained earnings (deficit)		(14,500	)		69,272
Accumulated other comprehensive income (loss)		(243	)		1,469
Total stockholders' equity		297,406			370,227
Total liabilities and stockholders' equity	$	405,041		$	489,513

Condensed Consolidated Cash Flow
(unaudited)
*(amounts in thousands)*

	Twelve months ended December 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(83,772	)	$	(6,333	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		23,514			21,628
Loss on rental units and other fixed assets		3,095			1,521
Gain on sale of former rental assets		(154	)		(65	)
Provision for sales revenue returns and doubtful accounts		13,024			11,094
Provision for inventory losses		2,423			2,062
Stock-based compensation expense		12,283			10,943
Deferred income taxes		—			14,444
Change in fair value of earnout liability		(15,386	)		(11,596	)
Loss on disposal of intangible asset		52,161			—
Changes in operating assets and liabilities		(44,720	)		(20,065	)
Net cash provided by (used in) operating activities		(37,532	)		23,633
Cash flows from investing activities
Purchases of marketable securities		—			(9,987	)
Maturities of marketable securities		10,014			19,256
Investment in intangible assets		—			(132	)
Investment in property and equipment		(3,337	)		(5,482	)
Production and purchase of rental equipment		(17,885	)		(18,453	)
Proceeds from sale of former assets		331			153
Net cash used in investing activities		(10,877	)		(14,645	)
Cash flows from financing activities
Proceeds from stock options exercised		44			13,699
Proceeds from employee stock purchases		1,691			1,948
Payment of employment taxes related to release of restricted stock		(1,355	)		(647	)
Net cash provided by financing activities		380			15,000
Effect of exchange rates on cash		(481	)		(426	)
Net increase (decrease) in cash and cash equivalents	$	(48,510	)	$	23,562

Supplemental Financial Information
*(unaudited)*
*(in thousands, except units and patients)*

	Three months ended				Twelve months ended
	December 31,				December 31,
	2022		2021		2022		2021
Revenue by region and category
Business-to-business domestic sales	$	27,190	$	10,277	$	86,049	$	91,371
Business-to-business international sales		20,703		20,083		101,163		79,460
Direct-to-consumer domestic sales		25,291		33,011		133,337		140,899
Direct-to-consumer domestic rentals		14,907		13,032		56,692		46,273
Total revenue	$	88,091	$	76,403	$	377,241	$	358,003
Additional financial measures
Units sold		43,500		29,400		170,500		175,800
Net rental patients as of period-end		45,600		42,900		45,600		42,900

Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures
*(unaudited)*
*(in thousands)*

	Three months ended						Twelve months ended
	December 31,						December 31,
Non-GAAP EBITDA and Adjusted EBITDA	2022			2021			2022			2021
Net loss (GAAP)	$	(56,610	)	$	(22,877	)	$	(83,772	)	$	(6,333	)
Non-GAAP adjustments:
Interest income		(1,715	)		(22	)		(2,837	)		(129	)
Provision for income taxes		141			15,988			504			14,992
Depreciation and amortization		5,978			5,767			23,514			21,628
EBITDA (non-GAAP)		(52,206	)		(1,144	)		(62,591	)		30,158
Stock-based compensation		3,098			2,396			12,283			10,943
Change in fair value of earnout liability		(13,687	)		(1,727	)		(15,386	)		(11,596	)
Loss on disposal of intangible asset		52,161			—			52,161			—
Adjusted EBITDA (non-GAAP)	$	(10,634	)	$	(475	)	$	(13,533	)	$	29,505

	Three months ended December 31,
	Net Loss						Diluted EPS
Non-GAAP Adjusted Net Loss and Diluted EPS	2022			2021			2022			2021
Financial Results (GAAP)	$	(56,610	)	$	(22,877	)	$	(2.47	)	$	(1.01	)
Non-GAAP adjustments:
Amortization of intangibles		2,022			2,153
Stock-based compensation		3,098			2,396
Change in fair value of earnout liability		(13,687	)		(1,727	)
Loss on disposal of intangible asset		52,161			—
Income tax impact of adjustments ⁽¹⁾		—			—
Adjusted	$	(13,016	)	$	(20,055	)	$	(0.57	)	$	(0.88	)


	Twelve months ended December 31,
	Net Income (Loss)						Diluted EPS
Non-GAAP Adjusted Net Income (Loss) and Diluted EPS	2022			2021			2022			2021
Financial Results (GAAP)	$	(83,772	)	$	(6,333	)	$	(3.67	)	$	(0.28	)
Non-GAAP adjustments:
Amortization of intangibles		8,469			8,775
Stock-based compensation		12,283			10,943
Change in fair value of earnout liability		(15,386	)		(11,596	)
Loss on disposal of intangible asset		52,161			—
Income tax impact of adjustments ⁽¹⁾		—			—
Adjusted	$	(26,245	)	$	1,789		$	(1.15	)	$	0.08

⁽¹⁾ Income tax impact of adjustments represents the tax impact related to the non-GAAP adjustments listed above and reflects an effective tax rate of 0% for 2022 and 2021, which is due to the recording of a valuation allowance.

	Three months ended December 31,					Twelve months ended December 31,
Non-GAAP constant currency revenue	2022			2021		2022			2021
Business-to-business domestic sales	$	27,190		$	10,277	$	86,049		$	91,371
Business-to-business international sales		20,703			20,083		101,163			79,460
Direct-to-consumer domestic sales		25,291			33,011		133,337			140,899
Direct-to-consumer domestic rentals		14,907			13,032		56,692			46,273
Total revenue (GAAP)		88,091			76,403		377,241			358,003
Hedging gains		784			414		1,990			62
Total revenue, excluding hedging effect (non-GAAP)		87,307			75,989		375,251			357,941
Exchange rate impact		2,111			331		7,279			(2,524	)
Constant currency revenues (non-GAAP)	$	89,418		$	76,320	$	382,530		$	355,417

Revenue growth (GAAP)		15.3	%				5.4	%
Constant currency revenue growth (non-GAAP)		17.7	%				6.9	%