Inogen announces third quarter 2022 financial results
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, 2022, and provided a business update. third quarter 2022 highlights reported total revenue was $105.4 million for the period ended september 30, 2022, representing a 13.2% increase from $93.1 million for the period ended september 30, 2021. on a constant currency basis, total revenue for the period ended september 30, 2022, increased 14.5%. gaap net loss of $9.5 million, adjusted net loss of $4.1 million, and adjusted ebitda was a loss of $1.2 million. strong balance sheet and cash position. “i am pleased with the progress the team has made on our transformational journey. we fulfilled customer demand by overcoming supply chain challenges through extraordinary efforts, resulting in year-over-year double digit revenue growth,” said nabil shabshab, inogen’s president and chief executive officer. “our balance sheet remains strong and capable of driving our transformation. we are executing on our strategic initiatives, improving commercial productivity while building innovation programs that will enhance our ability to deliver sustainable long-term growth and profitability.” third quarter 2022 financial results third quarter total revenue increased 13.2% to $105.4 million from $93.1 million in the third quarter of 2021, primarily driven by higher domestic business-to-business sales, as well as continued strength in the rental channel, partially offset by lower international business-to-business and direct-to-consumer sales. total gross margin was 40.6% in the third quarter of 2022 versus 51.2% in the comparative period in 2021. the decline was driven primarily by increased material costs and unfavorable sales channel mix, partially offset by higher average selling prices. total operating expense for the quarter was $53.1 million compared to $41.3 million in the third quarter of 2021, representing an increase of 28.5%. the increased spend was primarily due to ongoing strategic investments required to position the company for long-term sustainable growth. additionally, there was a non-cash decrease in the benefit from the change in fair value of the new aera earnout liability. gaap net loss for the third quarter of 2022 was $9.5 million compared to gaap net income of $12.2 million in the third quarter of 2021. adjusted net loss was $4.1 million compared to adjusted net income of $14.4 million in the third quarter of 2021. adjusted ebitda was a negative $1.2 million in the third quarter of 2022 compared to a positive $12.2 million in the third quarter of 2021. cash and cash equivalents were $209.6 million as of september 30, 2022, and no debt outstanding. a reconciliation of adjusted ebitda and adjusted net income (loss) for the three and nine months ended september 30, 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.” fourth quarter 2022 financial guidance inogen now projects revenue for the fourth quarter of 2022 to be in the range of approximately $87 million to $92 million, or approximately 14% to 20% growth year-over-year. conference call individuals interested in listening to the conference call today at 5:30am pt / 8:30am et may do so by dialing: us domestic callers (877) 841-3961 international 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 16, 2022. to access the replay, dial (877) 660-6853 or (201) 612-7415 and reference conference id: 13732881. 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 is a medical technology company offering innovative respiratory products for use in the homecare setting. the company primarily develops, manufactures and markets innovative portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. 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, statements regarding the company’s expectations related to its financial and operational results for the fourth quarter of 2022, expectations related to 2023 for growth as well as supply chain challenges; and expectations of future growth and profitability. 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 and limited availability of parts used in our pocs, the risk of further slowdowns or temporarily halts of production, or cost inflation for such components; the impact of changes in reimbursement rates and reimbursement and regulatory policies; the possible loss of key employees, customers, or suppliers; expenses and costs will exceed inogen’s expectations; intellectual property risks if inogen is unable to secure and maintain patent or other intellectual property protection for the intellectual property used in its products. in addition, inogen's business is subject to numerous additional risks and uncertainties and 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 period ended december 31, 2021, 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, 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 nine months ended september 30, 2022 and september 30, 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 income (loss) (unaudited) (amounts in thousands, except share and per share amounts) three months ended nine months ended september 30, september 30, 2022 2021 2022 2021 revenue sales revenue $ 90,672 $ 80,974 $ 247,365 $ 248,359 rental revenue 14,717 12,131 41,785 33,241 total revenue 105,389 93,105 289,150 281,600 cost of revenue cost of sales revenue 55,891 40,437 146,052 129,637 cost of rental revenue, including depreciation of $2,795 and $2,315, for the three months ended and $8,153 and $6,257 for the nine months ended, respectively 6,700 4,981 19,036 14,068 total cost of revenue 62,591 45,418 165,088 143,705 gross profit 42,798 47,687 124,062 137,895 operating expense research and development 4,581 3,754 16,009 11,892 sales and marketing 33,734 28,301 92,161 83,109 general and administrative 14,775 9,258 42,646 26,981 total operating expense 53,090 41,313 150,816 121,982 income (loss) from operations (10,292 ) 6,374 (26,754 ) 15,913 other income (expense) interest income 868 21 1,122 107 other expense (12 ) (466 ) (1,167 ) (472 ) total other income (expense), net 856 (445 ) (45 ) (365 ) income (loss) before provision (benefit) for income taxes (9,436 ) 5,929 (26,799 ) 15,548 provision (benefit) for income taxes 70 (6,245 ) 363 (996 ) net income (loss) $ (9,506 ) $ 12,174 $ (27,162 ) $ 16,544 other comprehensive income (loss), net of tax change in foreign currency translation adjustment (616 ) (251 ) (1,453 ) (585 ) change in net unrealized gains (losses) on foreign currency hedging 209 494 (1,669 ) 2,028 less: reclassification adjustment for net (gains) losses included in net income — 106 1,206 (267 ) total net change in unrealized gains (losses) on foreign currency hedging 209 600 (463 ) 1,761 change in net unrealized gains (losses) on marketable securities 17 (1 ) 16 - total other comprehensive income (loss), net of tax (390 ) 348 (1,900 ) 1,176 comprehensive income (loss) $ (9,896 ) $ 12,522 $ (29,062 ) $ 17,720 basic net income (loss) per share attributable to common stockholders (1) $ (0.42 ) $ 0.54 $ (1.19 ) $ 0.74 diluted net income (loss) per share attributable to common stockholders (1) (2) $ (0.42 ) $ 0.53 $ (1.19 ) $ 0.73 weighted-average number of shares used in calculating net income (loss) per share attributable to common stockholders: basic common shares 22,882,333 22,619,272 22,827,733 22,416,575 diluted common shares 22,882,333 22,854,229 22,827,733 22,803,355 (1) reconciliations of net income (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 30,2022, diluted loss per share is the same as basic. consolidated balance sheets (unaudited) (amounts in thousands) september 30, december 31, 2022 2021 assets current assets cash and cash equivalents $ 209,633 $ 235,524 marketable securities - 9,989 accounts receivable, net 50,533 24,452 inventories, net 35,725 31,873 income tax receivable 1,579 1,343 prepaid expenses and other current assets 20,306 26,005 total current assets 317,776 329,186 property and equipment, net 40,632 38,926 goodwill 32,674 32,979 intangible assets, net 53,700 60,147 operating lease right-of-use asset 22,479 24,912 other assets 2,323 3,363 total assets $ 469,584 $ 489,513 liabilities and stockholders' equity current liabilities accounts payable and accrued expenses $ 33,512 $ 25,689 accrued payroll 11,789 17,307 warranty reserve - current 7,830 6,480 operating lease liability - current 3,486 3,393 deferred revenue - current 9,119 8,568 income tax payable - 75 total current liabilities 65,736 61,512 warranty reserve - noncurrent 7,630 7,246 operating lease liability - noncurrent 20,662 23,281 earnout liability - noncurrent 13,687 15,386 deferred revenue - noncurrent 11,027 11,861 total liabilities 118,742 119,286 stockholders' equity common stock 23 23 additional paid-in capital 309,140 299,463 retained earnings 42,110 69,272 accumulated other comprehensive income (loss) (431 ) 1,469 total stockholders' equity 350,842 370,227 total liabilities and stockholders' equity $ 469,584 $ 489,513 condensed consolidated cash flow (unaudited) (amounts in thousands) nine months ended september 30, 2022 2021 cash flows from operating activities net income (loss) $ (27,162 ) $ 16,544 adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: depreciation and amortization 17,536 15,861 loss on rental units and other fixed assets 2,488 952 gain on sale of former rental assets (93 ) (59 ) provision for sales revenue returns and doubtful accounts 10,816 8,248 provision for rental revenue adjustments — 3,543 provision for inventory losses 2,060 1,452 stock-based compensation expense 9,185 8,547 deferred income taxes — (1,014 ) change in fair value of earnout liability (1,699 ) (9,822 ) changes in operating assets and liabilities (35,181 ) (27,117 ) net cash provided by (used in) operating activities (22,050 ) 17,135 cash flows from investing activities maturities of marketable securities 10,005 15,705 investment in intangible assets — (132 ) investment in property and equipment (2,770 ) (4,807 ) production and purchase of rental equipment (11,320 ) (13,156 ) proceeds from sale of former assets 152 122 net cash used in investing activities (3,933 ) (2,268 ) cash flows from financing activities proceeds from stock options exercised 35 13,699 proceeds from employee stock purchases 1,691 1,948 payment of employment taxes related to release of restricted stock (1,234 ) (617 ) net cash provided by financing activities 492 15,030 effect of exchange rates on cash (400 ) (283 ) net increase (decrease) in cash and cash equivalents $ (25,891 ) $ 29,614 supplemental financial information (unaudited) (in thousands, except units and patients) three months ended nine months ended september 30, september 30, 2022 2021 2022 2021 revenue by region and category business-to-business domestic sales $ 42,546 $ 22,793 $ 58,859 $ 81,094 business-to-business international sales 15,078 21,834 80,460 59,377 direct-to-consumer domestic sales 33,048 36,347 108,046 107,888 direct-to-consumer domestic rentals 14,717 12,131 41,785 33,241 total revenue $ 105,389 $ 93,105 $ 289,150 $ 281,600 additional financial measures units sold 54,200 44,600 127,000 146,400 net rental patients as of period-end 44,600 40,400 44,600 40,400 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 2022 2021 2022 2021 net income (loss) (gaap) $ (9,506 ) $ 12,174 $ (27,162 ) $ 16,544 non-gaap adjustments: interest income (868 ) (21 ) (1,122 ) (107 ) provision (benefit) for income taxes 70 (6,245 ) 363 (996 ) depreciation and amortization 5,928 5,522 17,536 15,861 ebitda (non-gaap) (4,376 ) 11,430 (10,385 ) 31,302 stock-based compensation 3,500 2,792 9,185 8,547 change in fair value of earnout liability (288 ) (2,052 ) (1,699 ) (9,869 ) adjusted ebitda (non-gaap) $ (1,164 ) $ 12,170 $ (2,899 ) $ 29,980 three months ended september 30, net income (loss) diluted eps non-gaap adjusted net income (loss) and diluted eps 2022 2021 2022 2021 financial results (gaap) $ (9,506 ) $ 12,174 $ (0.42 ) $ 0.53 non-gaap adjustments: amortization of intangibles 2,150 2,155 stock-based compensation 3,500 2,792 change in fair value of earnout liability (288 ) (2,052 ) income tax impact of adjustments (1) - (695 ) adjusted $ (4,144 ) $ 14,374 $ (0.18 ) $ 0.63 nine months ended september 30, net income (loss) diluted eps non-gaap adjusted net income (loss) and diluted eps 2022 2021 2022 2021 financial results (gaap) $ (27,162 ) $ 16,544 $ (1.19 ) $ 0.73 non-gaap adjustments: amortization of intangibles 6,447 6,622 stock-based compensation 9,185 8,547 change in fair value of earnout liability (1,699 ) (9,869 ) income tax impact of adjustments (1) - (1,272 ) adjusted $ (13,229 ) $ 20,572 $ (0.58 ) $ 0.90 (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, which is due to the recording of a valuation allowance, and 24% for 2021.
