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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission file number: 001-36309

INOGEN, INC.

(Exact name of registrant as specified in its charter)

Delaware

33-0989359

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

859 Ward Drive

Goleta, CA

93111

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (805) 562-0500

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

INGN

 

The NASDAQ Stock Market LLC

(NASDAQ Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of May 3, 2024, the registrant had 23,577,109 shares of common stock, par value $0.001, outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

Part I – Financial Information

 

Page

Item 1.

 

Financial Statements

3

 

 

Consolidated Balance Sheets (unaudited) as of March 31, 2024 and December 31, 2023

3

 

 

Consolidated Statements of Comprehensive Loss (unaudited) for the Three Months Ended March 31, 2024 and March 31, 2023

 

4

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2024 and March 31, 2023

 

5

 

 

Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2024 and March 31, 2023

 

6

 

 

Condensed Notes to the Consolidated Financial Statements (unaudited)

 

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

35

Item 4.

 

Controls and Procedures

 

36

 

 

Part II – Other Information

 

 

Item 1.

 

Legal Proceedings

 

37

Item 1A.

 

Risk Factors

 

37

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

Item 3.

 

Defaults Upon Senior Securities

 

38

Item 4.

 

Mine Safety Disclosures

 

38

Item 5.

 

Other Information

 

38

Item 6.

 

Exhibits

 

39

SIGNATURES

 

40

 

 

 

 

2


 

 

INOGEN, INC.

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Inogen, Inc.

Consolidated Balance Sheets

(unaudited)

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

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

107,444

 

 

$

125,492

 

Marketable securities

 

12,361

 

 

 

2,979

 

Accounts receivable, net

 

40,223

 

 

 

42,241

 

Inventories, net

 

24,601

 

 

 

21,840

 

Income tax receivable

 

976

 

 

 

669

 

Prepaid expenses and other current assets

 

13,589

 

 

 

13,846

 

Total current assets

 

199,194

 

 

 

207,067

 

Property and equipment, net

 

49,270

 

 

 

50,316

 

Goodwill

 

9,834

 

 

 

10,057

 

Intangible assets, net

 

32,907

 

 

 

34,591

 

Operating lease right-of-use asset

 

20,575

 

 

 

20,338

 

Other assets

 

3,819

 

 

 

3,825

 

Total assets

$

315,599

 

 

$

326,194

 

Liabilities and stockholders' equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued expenses

$

31,706

 

 

$

30,142

 

Accrued payroll

 

10,602

 

 

 

11,066

 

Warranty reserve - current

 

10,095

 

 

 

9,628

 

Operating lease liability - current

 

3,515

 

 

 

3,653

 

Earnout liability

 

10,570

 

 

 

10,000

 

Deferred revenue - current

 

7,422

 

 

 

7,980

 

Income tax payable

 

 

 

 

27

 

Total current liabilities

 

73,910

 

 

 

72,496

 

Long-term liabilities

 

 

 

 

 

Warranty reserve - noncurrent

 

15,435

 

 

 

13,850

 

Operating lease liability - noncurrent

 

18,595

 

 

 

18,270

 

Deferred revenue - noncurrent

 

7,613

 

 

 

8,227

 

Deferred tax liability

 

8,148

 

 

 

8,539

 

Total liabilities

 

123,701

 

 

 

121,382

 

Commitments and contingencies (Note 10)

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000,000 authorized; 23,546,478 and 23,324,750
   shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

24

 

 

 

23

 

Additional paid-in capital

 

323,213

 

 

 

320,513

 

Accumulated deficit

 

(131,527

)

 

 

(116,949

)

Accumulated other comprehensive income

 

188

 

 

 

1,225

 

Total stockholders' equity

 

191,898

 

 

 

204,812

 

Total liabilities and stockholders' equity

$

315,599

 

 

$

326,194

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

 

 

 

 

3


 

Inogen, Inc.

Consolidated Statements of Comprehensive Loss

(unaudited)

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

 

Three months ended
March 31,

 

 

2024

 

 

2023

 

Revenue

 

 

 

 

 

Sales revenue

$

63,095

 

 

$

55,887

 

Rental revenue

 

14,930

 

 

 

16,275

 

Total revenue

 

78,025

 

 

 

72,162

 

Cost of revenue

 

 

 

 

 

Cost of sales revenue

 

35,244

 

 

 

33,964

 

Cost of rental revenue, including depreciation of $3,179 and $3,078, respectively

 

8,410

 

 

 

7,465

 

Total cost of revenue

 

43,654

 

 

 

41,429

 

Gross profit

 

 

 

 

 

Gross profit-sales revenue

 

27,851

 

 

 

21,923

 

Gross profit-rental revenue

 

6,520

 

 

 

8,810

 

Total gross profit

 

34,371

 

 

 

30,733

 

Operating expense

 

 

 

 

 

Research and development

 

6,578

 

 

 

5,344

 

Sales and marketing

 

26,936

 

 

 

28,441

 

General and administrative

 

17,131

 

 

 

18,863

 

Total operating expense

 

50,645

 

 

 

52,648

 

Loss from operations

 

(16,274

)

 

 

(21,915

)

Other income (expense)

 

 

 

 

 

Interest income, net

 

1,403

 

 

 

1,525

 

Other income, net

 

143

 

 

 

237

 

Total other income, net

 

1,546

 

 

 

1,762

 

Loss before provision (benefit) for income taxes

 

(14,728

)

 

 

(20,153

)

Provision (benefit) for income taxes

 

(150

)

 

 

196

 

Net loss

 

(14,578

)

 

 

(20,349

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

Change in foreign currency translation adjustment

 

(1,035

)

 

 

170

 

Change in net unrealized gains (losses) on marketable securities

 

(2

)

 

 

69

 

Total other comprehensive income (loss), net of tax

 

(1,037

)

 

 

239

 

Comprehensive loss

$

(15,615

)

 

$

(20,110

)

 

 

 

 

 

 

Basic net loss per share attributable to common stockholders (Note 7)

$

(0.62

)

 

$

(0.88

)

Diluted net loss per share attributable to common stockholders (Note 7)

$

(0.62

)

 

$

(0.88

)

Weighted average number of shares used in calculating net loss per share attributable to common stockholders:

 

 

 

 

 

Basic common shares

 

23,401,598

 

 

 

23,009,617

 

Diluted common shares

 

23,401,598

 

 

 

23,009,617

 

 

 

See accompanying condensed notes to the consolidated financial statements.

4


 

Inogen, Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

(amounts in thousands, except share amounts)

 

Three months ended March 31, 2024 and March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

other

 

 

Total

 

 

Common stock

 

 

paid-in

 

 

Accumulated

 

 

comprehensive

 

 

stockholders'

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

income (loss)

 

 

equity

 

Balance, December 31, 2022

 

22,941,643

 

 

$

23

 

 

$

312,126

 

 

$

(14,500

)

 

$

(243

)

 

$

297,406

 

Stock-based compensation

 

 

 

 

 

 

 

3,442

 

 

 

 

 

 

 

 

 

3,442

 

Employee stock purchases

 

47,676

 

 

 

 

 

 

630

 

 

 

 

 

 

 

 

 

630

 

Vesting of restricted stock units

 

77,530

 

 

 

 

 

 

(454

)

 

 

 

 

 

 

 

 

(454

)

Shares withheld related to net restricted stock settlement

 

(495

)

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Stock options exercised

 

54,432

 

 

 

 

 

 

384

 

 

 

 

 

 

 

 

 

384

 

Net loss

 

 

 

 

 

 

 

 

 

 

(20,349

)

 

 

 

 

 

(20,349

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

239

 

 

 

239

 

Balance, March 31, 2023

 

23,120,786

 

 

$

23

 

 

$

316,127

 

 

$

(34,849

)

 

$

(4

)

 

$

281,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

23,324,750

 

 

$

23

 

 

$

320,513

 

 

$

(116,949

)

 

$

1,225

 

 

$

204,812

 

Stock-based compensation

 

 

 

 

 

 

 

2,416

 

 

 

 

 

 

 

 

 

2,416

 

Stock issued

 

233,927

 

 

 

1

 

 

 

369

 

 

 

 

 

 

 

 

 

370

 

Tax withholding related to vesting of restricted stock units

 

(12,199

)

 

 

 

 

 

(85

)

 

 

 

 

 

 

 

 

(85

)

Net loss

 

 

 

 

 

 

 

 

 

 

(14,578

)

 

 

 

 

 

(14,578

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,037

)

 

 

(1,037

)

Balance, March 31, 2024

 

23,546,478

 

 

$

24

 

 

$

323,213

 

 

$

(131,527

)

 

$

188

 

 

$

191,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying condensed notes to the consolidated financial statements.

5


 

Inogen, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(amounts in thousands)

 

Three months ended March 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(14,578

)

 

$

(20,349

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

5,265

 

 

 

4,086

 

Loss on rental units and other assets

 

1,162

 

 

 

1,099

 

Gain on sale of former rental assets

 

(38

)

 

 

(21

)

Provision for sales revenue returns and doubtful accounts

 

2,164

 

 

 

2,258

 

Provision for inventory losses

 

(53

)

 

 

603

 

Stock-based compensation expense

 

2,416

 

 

 

3,442

 

Deferred income taxes

 

(201

)

 

 

 

Change in fair value of earnout liability

 

570

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(267

)

 

 

6,726

 

Inventories

 

(2,973

)

 

 

(6,362

)

Income tax receivable

 

(312

)

 

 

(233

)

Prepaid expenses and other current assets

 

248

 

 

 

5,173

 

Operating lease right-of-use asset

 

(249

)

 

 

550

 

Other noncurrent assets

 

4

 

 

 

47

 

Accounts payable and accrued expenses

 

1,488

 

 

 

(1,845

)

Accrued payroll

 

(449

)

 

 

(436

)

Warranty reserve

 

2,052

 

 

 

180

 

Deferred revenue

 

(1,172

)

 

 

(684

)

Income tax payable

 

(27

)

 

 

 

Operating lease liability

 

201

 

 

 

(535

)

Net cash used in operating activities

 

(4,749

)

 

 

(6,301

)

Cash flows from investing activities

 

 

 

 

 

Purchases of available-for-sale securities

 

(12,384

)

 

 

(10,359

)

Maturities of available-for-sale securities

 

3,000

 

 

 

 

Investment in property and equipment

 

(1,310

)

 

 

(1,076

)

Production and purchase of rental equipment

 

(2,820

)

 

 

(5,733

)

Proceeds from sale of former assets

 

70

 

 

 

58

 

Net cash used in investing activities

$

(13,444

)

 

$

(17,110

)

 

 

 

 

 

 

(continued on next page)

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

6


 

Inogen, Inc.

Consolidated Statements of Cash Flows (continued)

(unaudited)

(amounts in thousands)

 

Three months ended March 31,

 

 

2024

 

 

2023

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from stock options exercised

 

 

 

 

384

 

Proceeds from employee stock purchases

 

370

 

 

 

630

 

Payment of employment taxes related to release of restricted stock

 

(85

)

 

 

(455

)

Net cash provided by financing activities

 

285

 

 

 

559

 

Effect of exchange rates on cash

 

(140

)

 

 

(25

)

Net decrease in cash and cash equivalents

 

(18,048

)

 

 

(22,877

)

Cash and cash equivalents, beginning of period

 

125,492

 

 

 

187,014

 

Cash and cash equivalents, end of period

$

107,444

 

 

$

164,137

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Cash paid during the period for income taxes, net of refunds received

$

422

 

 

$

418

 

Supplemental disclosure of non-cash transactions

 

 

 

 

 

Property and equipment in accounts payable and accrued liabilities

 

100

 

 

 

65

 

 

 

See accompanying condensed notes to the consolidated financial statements.

 

7


 

Inogen, Inc.

Condensed Notes to the Consolidated Financial Statements

(unaudited)

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

1. Business overview

Inogen, Inc. (Company or Inogen) was incorporated in Delaware on November 27, 2001. The Company is a medical technology business that primarily develops, manufactures, and markets innovative portable oxygen concentrators (POCs) used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. Traditionally, these patients have relied on stationary oxygen concentrator systems for use in the home and oxygen tanks or cylinders for mobile use, which the Company refers to as the delivery model. The tanks and cylinders must be delivered regularly and have a finite amount of oxygen, which requires patients to plan activities outside of their homes around delivery schedules and a finite oxygen supply. Additionally, patients must attach long cumbersome tubing to their stationary concentrators simply to enable mobility within their homes. The Company's proprietary Inogen One® and Inogen Rove systems concentrate the air around the patient to offer a source of supplemental oxygen anytime, anywhere with a battery and can be plugged into an outlet when at home, in a car, or in a public place with outlets available. 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.

The Company incorporated Inogen Europe Holding B.V., a Dutch limited liability company, on April 13, 2017. On May 4, 2017, Inogen Europe Holding B.V. acquired all issued and outstanding capital stock of MedSupport Systems B.V. (MedSupport) and began operating under the name Inogen Europe B.V. The Company merged Inogen Europe Holding B.V. and Inogen Europe B.V. on December 28, 2018. Inogen Europe B.V. is the remaining legal entity. Inogen completed the acquisition of New Aera, Inc. (New Aera) on August 9, 2019. On September 14, 2023, the Company completed the acquisition of all of the issued and outstanding capital stock of Physio-Assist SAS (Physio-Assist) and its wholly-owned subsidiary PhysioAssist GmbH.

2. Basis of presentation and summary of significant accounting policies

Basis of presentation

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. GAAP).

The results of operations for the three months ended March 31, 2024 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2024. 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. Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations relating to interim financial statements. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2024. Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K filed with the SEC on March 1, 2024.

Basis of consolidation

The consolidated financial statements include the accounts of Inogen, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Accounting estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price (SSP) and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and

8


 

adjustments, impairment of goodwill, impairment of long-lived assets, stock-based compensation expense, income taxes, fair value of acquired intangible assets and goodwill, and fair value of earnout liabilities. Actual results could differ from these estimates.

3. Acquisitions

On July 10, 2023, the Company entered into a share purchase agreement to acquire Physio-Assist, which is in the business of the design, production, and marketing of medical devices for bronchial decongestion (airway clearance technique) for patients suffering from obstructive respiratory diseases. On September 14, 2023, the Company completed the acquisition of all of the issued and outstanding capital stock of Physio-Assist and its wholly-owned subsidiary PhysioAssist GmbH for a purchase price consisting of $32,250 in cash consideration and the fair value of a potential earnout of $3,178 based on future regulatory clearances.

A potential earnout payment of either $13,000 (without a clinical trial requirement) or $11,000 (with a required clinical trial less related development costs) is dependent upon the achievement of one of two milestones related to U.S. Food and Drug Administration (FDA) de novo authorization or 510(k) clearance for the Simeox Airway Clearance System within four years of the date of the closing of the transaction. The fair value of the earnout liability was measured using the probability weighted expected return methodology and was discounted using a rate and probability that appropriately captures the risk associated with the obligation.

Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill. Goodwill represents the expected synergies with the existing business, the acquired assembled workforce, and future cash flows after the acquisition. The fair value assigned to the identifiable intangible assets was determined primarily by using the excess earnings method. The key assumptions included in the excess earnings method included revenue recognized, cost of revenue, and the discount rate.

The Company's allocation of the purchase price of Physio-Assist is preliminary and any measurement period adjustments that result from the finalization of the purchase price allocation will be recorded retrospectively to the acquisition date. Changes are possible and could change the allocation of the purchase price.

The following table summarizes the preliminary allocation of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in the acquisition of Physio-Assist:

Cash

 

$

2,617

 

Accounts receivable

 

 

184

 

Inventories

 

 

296

 

Other assets

 

 

325

 

Property and equipment

 

 

82

 

Operating lease right-of-use asset

 

 

306

 

Intangible assets

 

 

34,100

 

Goodwill

 

 

9,755

 

Total assets acquired

 

$

47,665

 

 

 

 

 

Accounts payable and accrued expenses

 

$

1,108

 

Bank loans

 

 

1,922

 

Other current liabilities

 

 

376

 

Operating lease liability

 

 

306

 

Deferred tax liability - noncurrent

 

 

8,525

 

Total liabilities assumed

 

 

12,237

 

Total identifiable net assets

 

$

35,428

 

 

 

 

 

Cash consideration

 

$

32,250

 

Fair value of contingent earnout consideration

 

 

3,178

 

Total purchase price

 

$

35,428

 

The consolidated financial and operating results reflect the Physio-Assist operations beginning September 14, 2023. The following unaudited pro forma information for the three months ended March 31, 2023 presents the revenues and net loss assuming the acquisition of Physio-Assist had occurred as of January 1, 2022.

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 2023

 

Total revenue

 

$

73,008

 

Net loss

 

$

(20,689

)

 

9


 

4. Fair value measurements

Cash, cash equivalents, and marketable securities

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 March 31, 2024

 

 

 

 

 

 

Gross

 

 

 

 

 

Cash

 

 

 

 

 

 

Adjusted

 

 

unrealized

 

 

 

 

 

and cash

 

 

Marketable

 

 

 

cost

 

 

gains

 

 

Fair value

 

 

equivalents

 

 

securities

 

Cash

 

$

22,587

 

 

$

 

 

$

22,587

 

 

$

22,587

 

 

$

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market accounts

 

 

53,607

 

 

 

 

 

 

53,607

 

 

 

53,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

22,167

 

 

 

134

 

 

 

22,301

 

 

 

9,940

 

 

 

12,361

 

Institutional Insured Liquidity Deposit Savings

 

 

21,310

 

 

 

 

 

 

21,310

 

 

 

21,310

 

 

 

 

Total

 

$

119,671

 

 

$

134

 

 

$

119,805

 

 

$

107,444

 

 

$

12,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

 

 

 

 

 

Gross

 

 

 

 

 

Cash

 

 

 

 

 

 

Adjusted

 

 

unrealized

 

 

 

 

 

and cash

 

 

Marketable

 

 

 

cost

 

 

gains

 

 

Fair value

 

 

equivalents

 

 

securities

 

Cash

 

$

12,611

 

 

$

 

 

$

12,611

 

 

$

12,611

 

 

$

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market accounts

 

 

72,368

 

 

 

 

 

 

72,368

 

 

 

72,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

2,979

 

 

 

 

 

 

2,979

 

 

 

 

 

 

2,979

 

U.S. Treasury securities

 

 

19,252

 

 

 

136

 

 

 

19,388

 

 

 

19,388

 

 

 

 

Institutional Insured Liquidity Deposit Savings

 

 

21,125

 

 

 

 

 

 

21,125

 

 

 

21,125

 

 

 

 

Total

 

$

128,335

 

 

$

136

 

 

$

128,471

 

 

$

125,492

 

 

$

2,979

 

Derivative instruments and hedging activities

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 $64 and payable of $155 as of March 31, 2024 and December 31, 2023, respectively.

Accumulated other comprehensive income (loss)

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

 

 

Foreign

 

 

Unrealized

 

 

Accumulated

 

 

 

currency

 

 

gains (losses)

 

 

other

 

 

 

translation

 

 

on marketable

 

 

comprehensive

 

 

 

adjustments

 

 

securities

 

 

income (loss)

 

Balance as of December 31, 2023

 

$

1,089

 

 

$

136

 

 

$

1,225

 

Other comprehensive loss

 

 

(1,035

)

 

 

(2

)

 

 

(1,037

)

Balance as of March 31, 2024

 

$

54

 

 

$

134

 

 

$

188

 

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

Earnout liability

The Company has obligations to pay up to $13,000 in an earnout payment for the Physio-Assist acquisition in cash if certain future regulatory results are met. The earnout liability was valued using Level 3 inputs.

The reconciliation of the earnout liability measured and carried at fair value on a recurring basis is as follows:

Balance as of December 31, 2023

 

$

10,000

 

Change in fair value

 

 

570

 

Balance as of March 31, 2024

 

$

10,570

 

 

10


 

5. Balance sheet components

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

Net accounts receivable (gross accounts receivable, net of allowances) balance concentrations by major category as of March 31, 2024 and December 31, 2023 were as follows:

 

 

March 31,

 

 

December 31,

 

Net accounts receivable

 

2024

 

 

2023

 

Rental (1)

 

$

6,975

 

 

$

6,401

 

Business-to-business and other receivables (2)

 

 

33,248

 

 

 

35,840

 

Total net accounts receivable

 

$

40,223

 

 

$

42,241

 

 

(1)
Rental includes Medicare, Medicaid/other government, private insurance, and patient pay.
(2)
Business-to-business receivables included extended terms for two customers: 1) one customer had a net accounts receivable balance of $6,665 and $8,639 as of March 31, 2024 and December 31, 2023, respectively; and 2) one customer had a net accounts receivable balance of $2,758 and $4,994 as of March 31, 2024 and December 31, 2023, respectively. Each customer received extended payment terms through a direct financing plan offered.

The following table sets forth the accounts receivable allowances as of March 31, 2024 and December 31, 2023:

 

 

March 31,

 

 

December 31,

 

Allowances - accounts receivable

 

2024

 

 

2023

 

Doubtful accounts

 

$

2,401

 

 

$

2,341

 

Sales returns

 

 

605

 

 

 

479

 

Total allowances - accounts receivable

 

$

3,006

 

 

$

2,820

 

Concentration of customers and vendors

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 primarily on a prepayment basis. Medicare's service reimbursement programs represented more than 10% of the Company's total revenue for the three months ended March 31, 2024 and March 31, 2023. One customer represented more than 10% of the Company’s net accounts receivable balance with a net accounts receivable balance of $6,665 as of March 31, 2024, and two customers each represented more than 10% of the Company's net accounts receivable balance with net accounts receivable balances of $8,639 and $4,994, respectively, as of December 31, 2023.

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 58.4% and 73.8% of rental revenue in the three months ended March 31, 2024 and 2023, respectively, and based on total revenue were 11.2% and 16.6% for the three months ended March 31, 2024 and 2023, respectively. Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $1,427 or 3.5% of total net accounts receivable as of March 31, 2024 compared to $2,059 or 4.9% of total net accounts receivable as of December 31, 2023.

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 three months ended March 31, 2024, the Company’s three major vendors accounted for 24.6%, 17.2%, and 10.0%, respectively, of total raw material purchases. For the three months ended March 31, 2023, the Company’s three major vendors accounted for 34.1%, 13.1%, and 7.3%, respectively, of total raw material purchases.

A portion of revenue is earned from sales outside the United States. Approximately 79.9% and 77.0% of the non-U.S. revenue for the three months ended March 31, 2024 and 2023, respectively, were invoiced in Euros. A breakdown of the Company’s revenue from U.S. and non-U.S. sources for the three months ended March 31, 2024 and 2023, respectively, is as follows:

 

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

U.S. revenue

 

$

51,990

 

 

$

53,190

 

Non-U.S. revenue

 

 

26,035

 

 

 

18,972

 

Total revenue

 

$

78,025

 

 

$

72,162

 

 

11


 

Inventories

Inventories are stated at the lower of cost and net realizable value, using the first-in, first-out (FIFO) method. The Company records adjustments to inventory for potentially excess, obsolete, slow-moving, or impaired items, and losses on firm purchase commitments as a component of cost of sales in our consolidated statements of comprehensive loss. The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $1,377 and $1,225 as of March 31, 2024 and December 31, 2023, 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. During the three months ended March 31, 2024 and 2023, $331 and $1,013, 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:

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Raw materials and work-in-progress

 

$

19,011

 

 

$

18,036

 

Finished goods

 

 

8,702

 

 

 

6,871

 

Less: reserves

 

 

(3,112

)

 

 

(3,067

)

Inventories, net

 

$

24,601

 

 

$

21,840

 

Property and equipment

Repair and maintenance expense, which includes labor, parts, and freight, for rental equipment was $1,759 and $1,311 for the three months ended March 31, 2024 and 2023, respectively.

Depreciation and amortization expense related to rental equipment and other property and equipment are summarized below for the three months ended March 31, 2024 and 2023, respectively.

 

 

Three months ended
March 31,

 

 

 

2024

 

 

2023

 

Rental equipment

 

$

3,179

 

 

$

3,078

 

Other property and equipment

 

 

1,154

 

 

 

982

 

Total depreciation and amortization

 

$

4,333

 

 

$

4,060

 

 

Property and equipment and rental equipment with associated accumulated depreciation is summarized below as of March 31, 2024 and December 31, 2023, respectively.

 

 

March 31,

 

 

December 31,

 

Property and equipment

 

2024

 

 

2023

 

Rental equipment, net of allowances of $2,916 and $2,606, respectively

 

$

66,352

 

 

$

67,804

 

Other property and equipment

 

 

31,044

 

 

 

30,357

 

Property and equipment

 

 

97,396

 

 

 

98,161

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

Rental equipment

 

 

30,783

 

 

 

31,023

 

Other property and equipment

 

 

17,343

 

 

 

16,822

 

Accumulated depreciation

 

 

48,126

 

 

 

47,845

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

 

 

 

 

Rental equipment, net of allowances of $2,916 and $2,606, respectively

 

 

35,569

 

 

 

36,781

 

Other property and equipment

 

 

13,701

 

 

 

13,535

 

Property and equipment, net

 

$

49,270

 

 

$

50,316

 

Long-lived assets

The Company accounts for the impairment and disposition of long-lived assets in accordance with Accounting Standards Codification (ASC) 360 Property, Plant, and Equipment. 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. No impairments were recorded for the three months ended March 31, 2024 and March 31, 2023.

12


 

Goodwill and other identifiable intangible assets

Goodwill

The changes in the carrying amount of goodwill for the three months ended March 31, 2024 were as follows:

 

Balance as of December 31, 2023 (1)

 

$

10,057

 

Translation adjustment

 

 

(223

)

Balance as of March 31, 2024 (1)

 

$