Business
Inogen Announces Third Quarter 2023 Financial Results
GOLETA, Calif.--(BUSINESS WIRE)-- Inogen, Inc. (Nasdaq: INGN), a medical technology company offering innovative respiratory products for use in the homecare
About this update from Inogen, Inc
GOLETA, Calif. --(BUSINESS WIRE)-- Inogen, Inc. (Nasdaq: INGN ), a medical technology company offering innovative respiratory products for use in the homecare setting, today announced financial results for the quarter ended September 30, 2023 . Third Quarter 2023 and Recent Business Highlights Reported total revenue of $84.0 million , reflecting a decrease of 20.3% from the third quarter of 2022. Completed acquisition of Physio-Assist SAS, expanding Inogen’s global respiratory care presence by addressing a sizeable, growing, and underserved airway clearance market opportunity. “We have continued to improve on executing our commercial strategy while addressing headwinds that we have faced this year. We are excited to start integrating Simeox into our product portfolio in international markets, expanding our respiratory portfolio and the patient population we serve,” said Nabil Shabshab , President and Chief Executive Officer. “Moving forward, we remain focused on returning to revenue growth, driving efficiencies in the business, and advancing the development of our innovation pipeline.” Third Quarter 2023 Financial Results Third quarter total revenue decreased 20.3% to $84.0 million from $105.4 million in the third quarter of 2022. Strong growth in rental and international business-to-business sales was more than offset by lower domestic business-to-business sales and lower direct to consumer revenue as the Company focuses on optimizing commercial investments and driving sales representative productivity. Total gross margin was 40.2% in the third quarter of 2023 versus 40.6% in the third quarter of 2022. Gross margin declined by 40 basis points as the benefit from lower premium-priced components was more than offset by an increase in warranty costs. Total operating expense, including acquisition and restructuring-related costs as well as one-time non-cash impairment charges of $32.9 million , was $80.5 million compared to $53.1 million in the third quarter of 2022, representing an increase of 51.6%. Total operating expense, excluding one-time costs, declined 10.4% due to the disciplined focus on aligning the Company’s infrastructure with its commercial strategy and ongoing cost management. Due to the one-time non-cash impairment charges of $32.9 million , the GAAP net loss for the third quarter of 2023 was $45.7 million compared to GAAP net loss of $9.5 million in the third quarter of 2022. Adjusted net loss was $8.5 million compared to Adjusted net loss of $4.1 million in the third quarter of 2022. Adjusted EBITDA was a loss of $5.5 million in the third quarter of 2023 compared to a loss of $1.2 million in the third quarter of 2022. Cash, cash equivalents and marketable securities as of September 30, 2023 , and after the closing of the Physio-Assist acquisition, were $138.0 million , and the Company had no debt outstanding. A reconciliation of Adjusted EBITDA and Adjusted net loss for the three and nine months ended September 30, 2023 , and 2022 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 “Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures.” Financial Guidance Inogen continues to expect 2023 revenue of $315 million to $320 million . Inogen now expects an Adjusted EBITDA loss of approximately $27 million for the full year, inclusive of investments in the Company’s Simeox airway clearance portfolio (Physio-Assist). Quarterly Conference Call Information Inogen will host a conference call at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on Tuesday, November 7, 2023 to discuss its third quarter 2023 financial results. 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 November 14, 2023 . To access the replay, dial (877) 660-6853 or (201) 612-7415 and reference Conference ID: 13740970. 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 of returning to revenue growth, driving efficiencies in the business, and advancing the development of our innovation pipeline; and revenue and Adjusted EBITDA 2023 expectations. 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 or expenses will not decrease; risks related to cost inflation; the risks our innovation pipeline will not produce meaningful results; risks related to our acquisition of Physio-Assist including on expenses; 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, 2022 , and in its other filings with the Securities and Exchange Commission . Additional information will also be set forth in Inogen’s Quarterly Report on Form 10-Q for the period ended September 30, 2023 , 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 nine months ended September 30, 2023 , and September 30, 2022 . 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 impairment charges and 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 Nine months ended September 30 , September 30 , 2023 2022 2023 2022 Revenue Sales revenue $ 67,973 $ 90,672 $ 192,203 $ 247,365 Rental revenue 15,994 14,717 47,561 41,785 Total revenue 83,967 105,389 239,764 289,150 Cost of revenue Cost of sales revenue 42,708 55,891 118,700 146,052 Cost of rental revenue, including depreciation of $3,364 and $2,795 for the three months ended and $9,680 and $8,153 for the nine months ended, respectively 7,495 6,700 22,523 19,036 Total cost of revenue 50,203 62,591 141,223 165,088 Gross profit 33,764 42,798 98,541 124,062 Operating expense Research and development 4,489 4,581 14,126 16,009 Sales and marketing 26,091 33,734 81,438 92,161 General and administrative 17,011 14,775 50,487 42,646 Impairment charges 32,894 — 32,894 — Total operating expense 80,485 53,090 178,945 150,816 Loss from operations (46,721 ) (10,292 ) (80,404 ) (26,754 ) Other income (expense) Interest income, net 1,801 868 4,972 1,122 Other income (expense) (398 ) (12 ) 176 (1,167 ) Total other income (expense), net 1,403 856 5,148 (45 ) Loss before provision for income taxes (45,318 ) (9,436 ) (75,256 ) (26,799 ) Provision for income taxes 401 70 638 363 Net loss $ (45,719 ) $ (9,506 ) $ (75,894 ) $ (27,162 ) Other comprehensive income (loss), net of tax Change in foreign currency translation adjustment (752 ) (616 ) (575 ) (1,453 ) Change in net unrealized gains (losses) on foreign currency hedging 33 209 40 (1,669 ) Less: reclassification adjustment for net losses included in net income 13 — 13 1,206 Total net change in unrealized gains (losses) on foreign currency hedging 46 209 53 (463 ) Change in net unrealized gains on marketable securities 49 17 182 16 Total other comprehensive loss, net of tax (657 ) (390 ) (340 ) (1,900 ) Comprehensive loss $ (46,376 ) $ (9,896 ) $ (76,234 ) $ (29,062 ) Basic net loss per share attributable to common stockholders (1) $ (1.97 ) $ (0.42 ) $ (3.28 ) $ (1.19 ) Diluted net loss per share attributable to common stockholders (1) (2) $ (1.97 ) $ (0.42 ) $ (3.28 ) $ (1.19 ) Weighted-average number of shares used in calculating net loss per share attributable to common stockholders: Basic common shares 23,231,217 22,882,333 23,129,795 22,827,733 Diluted common shares 23,231,217 22,882,333 23,129,795 22,827,733 (1) Reconciliations of net loss attributable to common stockholders basic and diluted can be found in Inogen’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission . (2) Due to a net loss for the three and nine months ended September 30, 2023 and September 30, 2022 , diluted loss per share is the same as basic. Consolidated Balance Sheets (unaudited) (amounts in thousands) September 30 , December 31 , 2023 2022 Assets Current assets Cash and cash equivalents $ 124,608 $ 187,014 Marketable securities 13,432 — Accounts receivable, net 48,380 62,725 Inventories, net 24,015 34,093 Income tax receivable 470 1,626 Prepaid expenses and other current assets 14,363 19,187 Total current assets 225,268 304,645 Property and equipment, net 49,525 43,269 Goodwill 9,869 32,852 Intangibles and other non-current assets 34,067 177 Operating lease right-of-use asset 21,184 21,653 Other assets 3,783 2,445 Total assets $ 343,696 $ 405,041 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued expenses $ 30,413 $ 33,974 Accrued payroll 8,369 11,190 Warranty reserve - current 9,027 7,790 Operating lease liability - current 3,894 3,515 Deferred revenue - current 8,479 8,880 Income tax payable 200 — Total current liabilities 60,382 65,349 Warranty reserve - noncurrent 13,329 12,123 Operating lease liability - noncurrent 18,873 19,764 Earnout liability - noncurrent 3,178 — Deferred revenue - noncurrent 8,883 10,399 Deferred tax liability - noncurrent 8,421 — Total liabilities 113,066 107,635 Stockholders' equity Common stock 23 23 Additional paid-in capital 321,584 312,126 Accumulated deficit (90,394 ) (14,500 ) Accumulated other comprehensive loss (583 ) (243 ) Total stockholders' equity 230,630 297,406 Total liabilities and stockholders' equity $ 343,696 $ 405,041 Condensed Consolidated Cash Flow (unaudited) (amounts in thousands) Nine months ended September 30 , 2023 2022 Cash flows from operating activities Net loss $ (75,894 ) $ (27,162 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 13,008 17,536 Loss on rental units and other assets 3,377 2,488 Gain on sale of former rental assets (58 ) (93 ) Provision for sales revenue returns and doubtful accounts 7,075 10,816 Provision for inventory losses 2,343 2,060 Stock-based compensation expense 8,484 9,185 Change in fair value of earnout liability — (1,699 ) Impairment charges 32,894 — Changes in operating assets and liabilities 8,685 (35,181 ) Net cash used in operating activities (86 ) (22,050 ) Cash flows from investing activities Maturities of available-for-sale securities 10,500 10,005 Purchases of available-for-sale securities (23,750 ) — Investment in intangible assets (494 ) — Investment in property and equipment (3,824 ) (2,770 ) Production and purchase of rental equipment (16,391 ) (11,320 ) Proceeds from sale of former assets 149 152 Acquisition of business, net of cash acquired (29,633 ) — Net cash used in investing activities (63,443 ) (3,933 ) Cash flows from financing activities Proceeds from stock options exercised 384 35 Proceeds from employee stock purchases 1,094 1,691 Payment of employment taxes related to release of restricted stock (504 ) (1,234 ) Net cash provided by financing activities 974 492 Effect of exchange rates on cash 149 (400 ) Net decrease in cash and cash equivalents $ (62,406 ) $ (25,891 ) Supplemental Financial Information (unaudited) (in thousands, except units and patients) Three months ended Nine months ended September 30 , September 30 , 2023 2022 2023 2022 Revenue by region and category Business-to-business domestic sales $ 17,288 $ 42,546 $ 48,145 $ 58,859 Business-to-business international sales 25,613 15,078 67,877 80,460 Direct-to-consumer domestic sales 25,072 33,048 76,181 108,046 Direct-to-consumer domestic rentals 15,994 14,717 47,561 41,785 Total revenue $ 83,967 $ 105,389 $ 239,764 $ 289,150 Additional financial measures Units sold 35,400 54,200 96,400 127,000 Net rental patients as of period-end 51,900 44,600 51,900 44,600 Reconciliation of U.S. GAAP to Other Non-GAAP Financial Measures (unaudited) (in thousands) Three months ended Nine months ended September 30 , September 30 , Non-GAAP EBITDA and Adjusted EBITDA 2023 2022 2023 2022 Net loss (GAAP) $ (45,719 ) $ (9,506 ) $ (75,894 ) $ (27,162 ) Non-GAAP adjustments: Interest income, net (1,801 ) (868 ) (4,972 ) (1,122 ) Provision for income taxes 401 70 638 363 Depreciation and amortization 4,614 5,928 13,008 17,536 EBITDA (non-GAAP) (42,505 ) (4,376 ) (67,220 ) (10,385 ) Stock-based compensation 1,779 3,500 8,484 9,185 Acquisition-related expenses 960 — 1,981 — Restructuring-related and other charges (1) 1,416 — 3,426 — Impairment charges 32,894 — 32,894 — Change in fair value of earnout liability — (288 ) — (1,699 ) Adjusted EBITDA (non-GAAP) $ (5,456 ) $ (1,164 ) $ (20,435 ) $ (2,899 ) Three months ended September 30 , Net Loss Diluted EPS Non-GAAP Adjusted Net Loss and Diluted EPS 2023 2022 2023 2022 Financial Results (GAAP) $ (45,719 ) $ (9,506 ) $ (1.97 ) $ (0.42 ) Non-GAAP adjustments: Amortization of intangibles 205 2,150 Stock-based compensation 1,779 3,500 Acquisition-related expenses 960 — Restructuring-related and other charges (1) 1,416 — Impairment charges 32,894 — Change in fair value of earnout liability — (288 ) Income tax impact of adjustments (2) — — Adjusted $ (8,465 ) $ (4,144 ) $ (0.36 ) $ (0.18 ) Nine months ended September 30 , Net Loss Diluted EPS Non-GAAP Adjusted Net Loss and Diluted EPS 2023 2022 2023 2022 Financial Results (GAAP) $ (75,894 ) $ (27,162 ) $ (3.28 ) $ (1.19 ) Non-GAAP adjustments: Amortization of intangibles 284 6,447 Stock-based compensation 8,484 9,185 Acquisition-related expenses 1,981 — Restructuring-related and other charges (1) 3,426 — Impairment charges 32,894 — Change in fair value of earnout liability — (1,699 ) Income tax impact of adjustments (2) — — Adjusted $ (28,825 ) $ (13,229 ) $ (1.25 ) $ (0.58 ) (1) Charges represent the costs associated with workforce reductions and associated costs and other restructuring-related activities. (2) 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 2023 and 2022. Three months ended September 30, 2023 % Change from Prior Period Three months ended September 30 , 2022 2023 FX Effect Constant Currency Revenues As Reported Less FX Effect Constant Currency Revenues Business-to-business domestic sales $ 42,546 $ 17,288 $ — $ 17,288 -59.4 % 0.0 % -59.4 % Business-to-business international sales 15,078 25,600 (1,181 ) 24,419 69.8 % -7.8 % 62.0 % Direct-to-consumer domestic sales 33,048 25,072 — 25,072 -24.1 % 0.0 % -24.1 % Direct-to-consumer domestic rentals 14,717 15,994 — 15,994 8.7 % 0.0 % 8.7 % Revenues, excluding hedging effect $ 105,389 $ 83,954 $ (1,181 ) $ 82,773 -20.3 % -1.2 % -21.5 % Hedging gains — 13 — Total revenues (3) $ 105,389 $ 83,967 $ 82,773 -20.3 % Nine months ended September 30, 2023 % Change from Prior Period Nine months ended September 30 , 2022 2023 FX Effect Constant Currency Revenues As Reported Less FX Effect Constant Currency Revenues Business-to-business domestic sales $ 58,859 $ 48,145 $ — $ 48,145 -18.2 % 0.0 % -18.2 % Business-to-business international sales 79,254 67,864 (215 ) 67,649 -14.4 % -0.2 % -14.6 % Direct-to-consumer domestic sales 108,046 76,181 — 76,181 -29.5 % 0.0 % -29.5 % Direct-to-consumer domestic rentals 41,785 47,561 — 47,561 13.8 % 0.0 % 13.8 % Revenues, excluding hedging effect $ 287,944 $ 239,751 $ (215 ) $ 239,536 -16.7 % -0.1 % -16.8 % Hedging gains 1,206 13 — Total revenues (3) $ 289,150 $ 239,764 $ 239,536 -17.1 % (3) Total constant currency revenues of $82,773 for the three months ended September 30, 2023 decreased $22,616 compared to $105,389 in revenues, excluding hedging effect for the three months ended September 30, 2022 . Total constant currency revenues of $239,536 for the nine months ended September 30, 2023 decreased $48,408 compared to $287,944 in revenues, excluding hedging effect for the nine months ended September 30, 2022 . View source version on businesswire.com : https://www.businesswire.com/news/home/20231107046633/en/ [email protected] Source: Inogen, Inc.