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What changed in Inogen Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Inogen Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+524 added−575 removedSource: 10-K (2024-03-01) vs 10-K (2023-02-24)

Top changes in Inogen Inc's 2023 10-K

524 paragraphs added · 575 removed · 423 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

112 edited+34 added−37 removed124 unchanged
Biggest changeThe following table summarizes our key product features: Key Product Specifications Rove 6 Inogen One G5 Inogen One G4 Capacity (ml/min) 1,260 1,260 630 Weight (lbs) 4.8 (single battery) 4.7 (single battery) 2.8 (single battery) 5.8 (double battery) 5.7 (double battery) 3.3 (double battery) Battery run-time Up to 6.25 hours Up to 6.5 hours Up to 2.6 hours (single battery) (single battery) (single battery) Up to 12.75 hours Up to 13 hours Up to 5 hours (double battery) (double battery) (double battery) Technology effective for overnight use Yes Yes Yes Sound 37 dBA 38 dBA 40 dBA All of our portable oxygen systems are equipped with Intelligent Delivery Technology, a form of pulse-dose technology from which the patient receives a bolus of oxygen upon inhalation.
Biggest changeThe technology in our Inogen One and Inogen Rove systems are effective for nocturnal use. All of our portable oxygen systems are equipped with Intelligent Delivery Technology, a form of pulse-dose technology from which the patient receives a bolus of oxygen upon inhalation.
The performance goal for FDA to make a decision is within 90 FDA Days (calculated as the number of calendar days between the date the 510(k) was “accepted” by the FDA for substantive review and date of a decision, excluding the days the submission was on hold for an Additional Information request).
The performance goal for the FDA to make a decision is within 90 FDA Days (calculated as the number of calendar days between the date the 510(k) was “accepted” by the FDA for substantive review and date of a decision, excluding the days the submission was on hold for an Additional Information request).
Additionally, as more home medical equipment (HME) providers adopt portable oxygen concentrators in their businesses, we expect our historical seasonality in the domestic business-to-business channel could change as well, which was previously influenced mainly by consumer buying patterns. Direct-to-consumer sales seasonality may also be impacted by the number of sales representatives and the amount of marketing spend in each quarter.
As more home medical equipment (HME) providers adopt portable oxygen concentrators in their businesses, we expect our historical seasonality in the domestic business-to-business channel could change as well, which was previously influenced mainly by consumer buying patterns. Direct-to-consumer sales seasonality may also be impacted by the number of sales representatives and the amount of marketing spend in each quarter.
We must also prepare a technical file and declaration of conformity to essential requirements under Australian law, provide evidence of CE Marking of the device and submit this information via our agent sponsor to the TGA in a Medical Device Application. On June 4, 2007, we received our Certificate for Inclusion of a Medical Device in Australia. 14 U.S.
We must also prepare a technical file and declaration of conformity to essential requirements under Australian law, provide evidence of CE Marking of the device and submit this information via our agent sponsor to the TGA in a Medical Device Application. On June 4, 2007, we received our Certificate for Inclusion of a Medical Device in Australia. U.S.
The 2013 final HITECH omnibus rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches. In addition to federal regulations issued under HIPAA, some states have enacted privacy and security statutes or regulations that, in some cases, are more stringent than those issued under HIPAA.
The 2013 final HITECH omnibus rule modified the breach reporting standard in a manner that made more data security incidents qualify as reportable breaches. 13 In addition to federal regulations issued under HIPAA, some states have enacted privacy and security statutes or regulations that, in some cases, are more stringent than those issued under HIPAA.
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 3 oxygen supply. Additionally, patients must attach long, cumbersome tubing to their stationary concentrators simply to enable mobility within their homes.
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.
See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to our U.S. and non-U.S. revenue. Seasonality We believe our sales may be impacted by seasonal factors.
See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to our U.S. and non-U.S. revenue. Seasonality We believe our sales may be impacted by seasonal factors.
The increased rental revenue as a percentage of total revenue was primarily due to increased rental patients on service and increased reimbursement rates. We rely significantly on reimbursement from Medicare and private payors, including Medicare Advantage plans, Medicaid and patients for our rental revenue.
The increased rental revenue as a percentage of total revenue was primarily due to increased rental patients on service and increased reimbursement rates. 7 We rely significantly on reimbursement from Medicare and private payors, including Medicare Advantage plans, Medicaid and patients for our rental revenue.
We believe that any global or national strategy to address climate change must be developed with input from stakeholder communication, including the public and private sectors, non-governmental organizations, academia, and investors. 17 4.
We believe that any global or national strategy to address climate change must be developed with input from stakeholder communication, including the public and private sectors, non-governmental organizations, academia, and investors. 4.
Our direct-to-consumer sales and marketing efforts are focused on generating awareness and demand for our Inogen One systems and Inogen At Home systems among patients, physicians and other clinicians, and third-party payors.
Our direct-to-consumer sales and marketing efforts are focused on generating awareness and demand for our Inogen One, Inogen Rove and Inogen At Home systems among patients, physicians and other clinicians, and third-party payors.
We believe that any policy to regulate GHG emissions should fairly account for companies that have already taken voluntary steps to reduce their GHG emissions. Inogen is a responsible corporate citizen that has done business in 59 countries and territories around the world. Our business success and our environmental stewardship both depend on the efficiency of our global distribution network.
We believe that any policy to regulate GHG emissions should fairly account for companies that have already taken voluntary steps to reduce their GHG emissions. Inogen is a responsible corporate citizen that has done business in 62 countries and territories around the world. Our business success and our environmental stewardship both depend on the efficiency of our global distribution network.
To date, we have sold our products in a total of 59 countries outside the United States through distributors or directly to large “house” accounts, which include gas companies and home oxygen providers. In this case, we sell to and bill the distributor or house accounts directly, leaving the patient billing, support, and clinical setup to the local provider.
To date, we have sold our products in a total of 62 countries outside the United States through distributors or directly to large “house” accounts, which include gas companies and home oxygen providers. In this case, we sell to and bill the distributor or house accounts directly, leaving the patient billing, support, and clinical setup to the local provider.
A peer-reviewed publication in the New England Journal of Medicine has stated that long-term oxygen therapy has been shown help COPD patients who have severely low blood oxygen or hypoxemia. Hypoxemic patients are unable to convert oxygen found in the air into the bloodstream in an efficient manner.
A peer-reviewed article in the New England Journal of Medicine has stated that long-term oxygen therapy has been shown help COPD patients who have severely low blood oxygen or hypoxemia. Hypoxemic patients are unable to convert oxygen found in the air into the bloodstream in an efficient manner.
Failure to repay the overpayment within 60 days will result in the claim being considered a “false claim” and the healthcare provider will be subject to False Claims Act liability, and additional CMPs of $0.022 million for each item or service that is not reported and returned.
Failure to repay the overpayment within 60 days will result in the claim being considered a “false claim” and the healthcare provider will be subject to False Claims Act liability, and additional CMPs of $0.024 million for each item or service that is not reported and returned.
Our proprietary conserver technology utilizes differentiated triggering sensitivity to quickly detect a breath and ensure oxygen delivery within the first 400 milliseconds of inspiration, the interval when oxygen has the most effect on lung gas exchange. During periods of sleep, respiratory rates typically decrease.
Our proprietary conserver technology utilizes differentiated triggering sensitivity to quickly detect a breath and ensure oxygen delivery within the first 250 milliseconds of inspiration, the interval when oxygen has the most effect on lung gas exchange. During periods of sleep, respiratory rates typically decrease.
In 2022, we were focused on securing supply for components to make our products which included higher costs of semiconductor chips, reducing the cost of our Inogen One G5 product (excluding semiconductor chips), and increasing the robustness of our supply chain to reduce potential component constraints as we grow our business.
In 2023, we were focused on securing supply for components to make our products which included higher costs of semiconductor chips, reducing the cost of our Inogen One G5 product (excluding semiconductor chips), and increasing the robustness of our supply chain to reduce potential component constraints as we grow our business.
Further, our customers can change or cancel orders with limited or no penalty and limited advance notice prior to shipment. Geographic information During the years ended December 31, 2022, 2021, and 2020, substantially all of our long-lived assets were located within the United States.
Further, our customers can change or cancel orders with limited or no penalty and limited advance notice prior to shipment. Geographic information During the years ended December 31, 2023, 2022, and 2021, substantially all of our long-lived assets were located within the United States.
If we are found to be in non-compliance, we could be subject to CMPs of up to $0.112 million for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from Medicare, Medicaid and other federal healthcare programs.
If we are found to be in non-compliance, we could be subject to CMPs of up to $0.121 million for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from Medicare, Medicaid and other federal healthcare programs.
We believe the following have hindered the market acceptance of portable oxygen concentrators: • to obtain portable oxygen concentrators, patients are dependent on home medical equipment providers, which have made significant investments in the physical distribution infrastructure to support the delivery model and which we believe are therefore disincentivized to encourage adoption of portable oxygen concentrators; • home medical equipment providers cannot easily convert their businesses to non-delivery models in oxygen due to low total reimbursement for oxygen therapy, capital expenditure constraints, investments that are spread across multiple product lines, and uncertainty around reimbursement rate changes; • lack of access to switch from oxygen tank or liquid deliveries to a portable oxygen concentrator using their insurance benefits due to the nature of the capped reimbursement structure; and • constrained manufacturing costs of conventional portable oxygen concentrators, driven by home medical equipment provider preference for products that have lower upfront equipment cost.
We believe the following have hindered the market acceptance of portable oxygen concentrators: • to obtain portable oxygen concentrators, patients are dependent on home medical equipment providers, which have made significant investments in the physical distribution infrastructure to support the distribution and delivery of stationary devices and therefore may be disincentivized to encourage adoption of portable oxygen concentrators; • home medical equipment providers cannot easily convert their businesses to non-delivery models in oxygen due to low total reimbursement for oxygen therapy, capital expenditure constraints, investments that are spread across multiple product lines, and uncertainty around reimbursement rate changes; • lack of access to switch from oxygen tank or liquid deliveries to a portable oxygen concentrator using their insurance benefits due to the nature of the capped reimbursement structure; and • constrained manufacturing costs of conventional portable oxygen concentrators, driven by home medical equipment provider preference for products that have lower upfront equipment cost.
One example of a patent in this category is U.S. patent 9,907,926, which is directed to an oxygen concentrator for mechanical ventilation. This category of patents expires in 2023 or later (without taking into account any patent term adjustments).
One example of a patent in this category is U.S. patent 9,907,926, which is directed to an oxygen concentrator for mechanical ventilation. This category of patents expired in 2023 or later (without taking into account any patent term adjustments).
As of December 31, 2022, we had a dedicated customer service team that was trained on our products, a clinical support team made up of licensed nurses or respiratory therapists, a patient intake team, an order intake team, and a dedicated billing services team.
As of December 31, 2023, we had a dedicated customer service team that was trained on our products, a clinical support team made up of licensed nurses or respiratory therapists, a patient intake team, an order intake team, and a dedicated billing services team.
For additional discussion of the impact of the recent Medicare reimbursement proposals, see “Risk Factors” herein. Manufacturing and raw materials We assemble the compressors, sieve beds, concentrators and certain manifolds in-house in order to improve quality control and reduce cost.
For additional discussion of the impact of the recent Medicare reimbursement proposals, see “Risk Factors” herein. Manufacturing and raw materials We assemble the compressors, sieve beds, and concentrators in-house in order to improve quality control and reduce cost.
For additional discussion of potential risks related to our manufacturing and raw materials, please see the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations. ” We currently manufacture in two leased buildings in Plano, Texas and Goleta, California, that we have registered with the Food and Drug Administration (FDA) and maintain a Quality Management system for which we have obtained International Standards Organization (ISO) 13485 certification.
For additional discussion of potential risks related to our manufacturing and raw materials, please see the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations. ” We currently manufacture in a leased building in Plano, Texas and have a design facility at our Corporate Headquarters in Goleta, California, that we have registered with the Food and Drug Administration (FDA) and maintain a Quality Management system for which we have obtained International Standards Organization (ISO) 13485 certification.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our Inogen One, Inogen At Home, or non-invasive ventilation systems, sell counterfeit versions of our products, or obtain and use information that we regard as proprietary.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our Inogen One or Inogen At Home systems, sell counterfeit versions of our products, or obtain and use information that we regard as proprietary.
We believe features of the back-end database portal such as remote troubleshooting, equipment health checks, and a location tracker will drive operational efficiencies for home oxygen providers and lower the total cost of servicing oxygen therapy patients. In Europe, we released our latest portable oxygen concentrator, Rove 6, in December 2022.
We believe features of the back-end database portal such as remote troubleshooting, equipment health checks, and a location tracker will drive operational efficiencies for home oxygen providers and lower the total cost of servicing oxygen therapy patients. We released our latest portable oxygen concentrator, Rove 6, in Europe in December 2022, and in the U.S. in July 2023.
No single international customer and no single foreign country represented more than 10% of our total revenue in 2022, 2021 or 2020. Our fully-owned subsidiary, Inogen Europe B.V. operates a European customer support site in the Netherlands. This site offers multi-lingual customer service and sales support to improve our European customer support at lower cost.
No single international customer and no single foreign country represented more than 10% of our total revenue in 2023, 2022 or 2021. Our wholly-owned subsidiary, Inogen Europe B.V. operates a European customer support site in the Netherlands. This site offers multi-lingual customer service and sales support to improve our European customer support at lower cost.
Failure to submit required ownership and investment interest information may result in civil monetary penalties of up to an aggregate of $0.18 million per year (or up to an aggregate of $1.191 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission.
Failure to submit required ownership and investment interest information may result in civil monetary penalties of up to an aggregate of $0.2 million per year (or up to an aggregate of $1.363 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission.
The Code of Ethics and Conduct summarizes the compliance and ethical standards we expect of our employees and directors, the procedures for a suspected breach, and the consequences of any substantiated breach. The Code of Ethics and Conduct also constitutes Inogen’s Code of Ethics and Conduct under US law and the NASDAQ exchange’s listing standards.
The Code of Ethics and Conduct summarizes the compliance and ethical standards we expect of our employees and directors, the procedures for a suspected breach, and the consequences of any substantiated breach. The Code of Ethics and Conduct also constitutes Inogen’s Code of Ethics and Conduct under U.S. law and the NASDAQ exchange’s listing standards.
As of December 31, 2022, we employed 491 people in our Sales and Marketing organization. Concentration of customers We primarily sell our products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis. We also sell our products direct-to-consumers on a primarily prepayment basis.
As of December 31, 2023, we employed 379 people in our Sales and Marketing organization. Concentration of customers We primarily sell our products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis. We also sell our products direct-to-consumers on a primarily prepayment basis.
We own trademark registrations for the marks “印诺真” and “艾诺根” in China. We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom. We own a trademark registration for the mark “Satellite Conserver” in Canada.
We own a trademark registration for the mark “ イノジェン ” in Japan. We own trademark registrations for the marks “ 印 诺 真 ” and “ 艾 诺 根 ” in China. We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom.
We own trademark registrations for the mark “Inogen” in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay. We own a trademark registration for the mark “イノジェン” in Japan.
We own trademark registrations for the mark “Inogen” in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay. We own a pending application for the mark “Inogen” in the Dominican Republic.
As of December 31, 2022, we had 286 employees in operations, manufacturing, quality assurance, manufacturing engineering and repair in the United States. 8 Research and development We are committed to ongoing research and development to stay at the forefront of patient preference in the oxygen concentrator field.
As of December 31, 2023, we had 206 employees in operations, manufacturing, quality assurance, manufacturing engineering and repair in the United States. 8 Research and development We are committed to ongoing research and development to stay at the forefront of patient preference in the oxygen concentrator field.
Dr Glezer holds a doctor of medicine from Moscow State University of Medicine and Dentistry and a MBA from California Coast University. Jason Somer has served as our Executive Vice President and General Counsel and Secretary since July 2021. Most recently, Mr. Somer served as head Legal Counsel at Invoca, Inc., a SaaS analytics company.
Dr Glezer holds a doctor of medicine from Moscow State University of Medicine and Dentistry and an MBA from California Coast University. 19 Jason Somer has served as our Executive Vice President and General Counsel and Secretary since July 2021. Previously, Mr. Somer served as head Legal Counsel at Invoca, Inc., a SaaS analytics company.
Civil monetary penalties law The Federal Civil Monetary Penalties Law grants authority to the U.S. Department of Health & Human Services Office of Inspector General (OIG) to seek civil monetary penalties (CMPs) against an individual or entity based on a wide variety of conduct including violations of the Anti-Kickback Statute, Stark Law, and False Claims Act.
Department of Health & Human Services Office of Inspector General (OIG) to seek civil monetary penalties (CMPs) against an individual or entity based on a wide variety of conduct including violations of the Anti-Kickback Statute, Stark Law, and False Claims Act.
Prior to joining Becton Dickinson, Dr. Glezer served as the Chief Medical Officer at Adocia S.A. a biotechnology company, from 2017 to 2018. From 2016 to 2017, Dr. Glezer served as Vice President of Global Medical Affairs at Novo Nordisk, Inc., a healthcare company. Earlier, Dr.
Glezer served as the Chief Medical Officer at Adocia S.A. a biotechnology company from 2017 to 2018. From 2016 to 2017, Dr. Glezer served as Vice President of Global Medical Affairs at Novo Nordisk, Inc., a healthcare company. Earlier, Dr.
Our systems actively respond to this changing physiology through the use of proprietary technology that increases bolus size. Our Intelligent Delivery Technology is designed to provide effective levels of blood oxygen saturation during sleep and all other periods of rest and activity that are substantially equivalent to continuous flow systems.
Our systems actively respond to this changing physiology through the use of proprietary technology that increases bolus size. Our Intelligent Delivery Technology is designed to provide effective levels of blood oxygen saturation during sleep and all other periods of rest and activity.
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. We merged Inogen Europe Holding B.V. and Inogen Europe B.V. on December 28, 2018. Inogen Europe B.V. is the remaining legal entity.
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. We merged Inogen Europe Holding B.V. and Inogen Europe B.V. on December 28, 2018. Inogen Europe B.V. is the remaining legal entity. We completed the acquisition of New Aera, Inc.
As of December 31, 2022, we had 482 people located in the United States who focused on selling our products and providing service and support to distributors and house accounts worldwide and 9 in-house and contract employees and independent employees located in Europe who provided sales and customer support services to a portion of our international customers.
As of December 31, 2023, we had 371 people located in the United States who focused on selling our products and providing service and support to distributors and house accounts worldwide and 8 in-house and contract employees and independent employees located in Europe who provided sales and customer support services to a portion of our international customers.
In certain cases, these agreements can be terminated by either party upon relatively short notice. We expect to maintain our assembly operations for our products at our facilities in Texas and California.
In certain cases, these agreements can be terminated by either party upon relatively short notice. We expect to maintain our assembly operations for our products at our facility in Texas.
Health and safety Our approach to health and safety uses both our management systems and our quality culture to minimize workplace incidents and maximize the care taken for employees who suffer from a workplace incident, per our health and safety policy. Inogen also has a corporate wellness program to promote improved physical and emotional wellbeing.
Health and safety Our approach to health and safety uses our management systems, preventative training, problem solving safety committees, and our quality culture to minimize workplace incidents and maximize the care taken for employees who suffer from a workplace incident, per our health and safety policy. Inogen also has a corporate wellness program to promote improved physical and emotional wellbeing.
International Approximately 26.8% of our total revenue was from outside the United States in 2022. We sell through distributors, resellers, and home medical equipment providers in certain markets within Canada, Europe, the Asia-Pacific region, Latin America, the Middle East, and Africa.
International Approximately 28.3% of our total revenue was from outside the United States in 2023. We sell through distributors, resellers, and home medical equipment providers in certain markets within Canada, Europe, the Asia-Pacific region, Latin America, the Middle East, and Africa.
Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura. This is not an exhaustive list of competitors.
Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.) Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura.
Medicare’s service reimbursement programs accounted for 77.0%, 81.9% and 81.5% of 6 rental revenue in 2022, 2021 and 2020, respectively, and based on total revenue were 11.6%, 10.6% and 7.5% for 2022, 2021 and 2020, respectively.
Medicare’s service reimbursement programs accounted for 67.7%, 77.0% and 81.9% of rental revenue in 2023, 2022 and 2021, respectively, and based on total revenue were 13.7%, 11.6% and 10.6% for 2023, 2022 and 2021, respectively.
Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled receivables, net of allowances) amounted to $2.1 million or 3.4% of total net accounts receivable as of December 31, 2022 compared to $2.7 million or 11.0% of total accounts receivable as of December 31, 2021.
Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled receivables, net of allowances) amounted to $2.1 million or 4.9% of total net accounts receivable as of December 31, 2023 compared to $2.1 million or 3.4% of total accounts receivable as of December 31, 2022.
For the year ended December 31, 2022, approximately 77.0% of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs. 7 Medicare revenue, including patient co-insurance and deductible obligations, represented 11.6% of our total revenue in the year ended December 31, 2022 and 10.6% in the year ended December 31, 2021.
For the year ended December 31, 2023, approximately 67.7% of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs. Medicare revenue, including patient co-insurance and deductible obligations, represented 13.7% of our total revenue in the year ended December 31, 2023 and 11.6% in the year ended December 31, 2022.
In support of our European sales, we use a contract manufacturer located in the Czech Republic to manufacture high volume products and perform product repairs to improve delivery to our European accounts. We typically enter into master service agreements for these components that specify quantity and quality requirements and delivery terms.
In support of our European sales, we use a contract manufacturer located in the Czech Republic to manufacture low to medium volume products and perform product repairs to improve delivery to our European accounts. We typically enter into master service agreements with our major vendors for these components that specify supply requirements, quality and delivery terms.
We market the Inogen One G3, Inogen One G4, and Inogen One G5 systems pursuant to the original Inogen One 510(k) clearance. We obtained 510(k) clearance for the Inogen At Home system on June 20, 2014. We obtained 510(k) clearance for the Rove 4 system on December 9, 2022.
We market the Inogen One G3, Inogen One G4, and Inogen One G5 systems pursuant to the original Inogen One 510(k) clearance. We obtained 510(k) clearance for the Inogen At Home system on June 20, 2014.
The 2019 acquisition of New Aera added a significant number of issued and pending patent applications to Inogen’s portfolio. The additional patents and patent filings include U.S. and international pending and issued patents. The combined portfolio of Inogen and New Aera include several categories. Our patent portfolio contains four principal categories of patents and patent applications.
The 2023 acquisition of Physio-Assist added a significant number of issued and pending patent applications to Inogen’s portfolio. The additional patents and patent filings include U.S. and international pending and issued patents. The combined portfolio of Inogen and Physio-Assist include several categories. Our patent portfolio contains four principal categories of patents and patent applications.
We own a trademark registration for the mark “Inogen At Home” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the mark “G4” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the mark “G5” in Europe (European Union Registration) and the United Kingdom.
We own a trademark registration for the mark “Satellite Conserver” in Canada. We own a trademark registration for the mark “Inogen At Home” in Europe (European Union Registration) and the United Kingdom. We own trademark registrations for the mark “G4” in Europe (European Union Registration) and the United Kingdom.
For example, we typically experience higher total sales in the second and third quarters, as a result of consumers traveling and vacationing during warmer weather in the spring and summer months, but this may vary year-over-year.
For example, we historically experienced higher sales revenue in the second and third quarters, as a result of consumers traveling and vacationing during warmer weather in the spring and summer months, but this may vary year-over-year.
We have created a market leading portfolio of portable oxygen concentrators. POC product features We market our current portable product offerings, the Inogen One G5 and the Inogen One G4, as single solutions for long-term oxygen therapy.
We have created a market leading portfolio of portable oxygen concentrators. POC product features We market our current portable product offerings, the Inogen Rove 6 system and the Inogen One G4 system as ambulatory solutions for long-term oxygen therapy.
We use a combination of research and development staff along with third party resources to develop our products. As of December 31, 2022, our research and development staff included 28 engineers and scientists with expertise in air separation, compressors, pneumatics, electronics, embedded software, mechanical design, sensor, automation, connectivity, non-invasive ventilation and manufacturing automation.
We use a combination of research and development staff along with third party resources to develop our products. As of December 31, 2023, our research and development staff included 25 engineers and scientists with expertise in air separation, compressors, pneumatics, electronics, embedded software, mechanical design, sensor, automation, connectivity, digital health, and manufacturing automation.
Of the $276.1 million of our 2022 revenue derived from the United States, approximately 48.3% represented direct-to-consumer sales, 31.2% represented sales to traditional home medical equipment providers, distributors (including our private label partner) and resellers, and 20.5% represented direct-to-consumer rentals. 5 We believe we were the first oxygen therapy manufacturer to employ a direct-to-consumer marketing strategy, meaning we advertise directly to patients, process their physician paperwork, and provide clinical support as needed.
Of the $226.3 million of our 2023 revenue derived from the United States, approximately 42.4% represented direct-to-consumer sales, 29.3% represented sales to traditional home medical equipment providers, distributors (including our private label partner) and resellers, and 28.3% represented direct-to-consumer rentals. 5 We believe we were the first oxygen therapy manufacturer to employ a direct-to-consumer marketing strategy, meaning we advertise directly to patients, process their physician paperwork, and provide clinical support as needed.
Medicare’s service reimbursement programs represented more than 10% of our total revenue for the years ended December 31, 2022 and 2021. One single customer represented more than 10% of our total revenue for the year ended December 31, 2020.
Medicare’s service reimbursement programs represented more than 10% of our total revenue for the years ended December 31, 2023, 2022 and 2021.
Violations of the False 12 Claims Act can result in penalties up to $0.02 million for each claim, plus three times the amount of damages that the federal government sustained. The Company is not aware of any pending claims against it under the False Claims Act.
Violations of the False Claims Act can result in penalties up to $0.024 million for each claim, plus three times the amount of damages that the federal government sustained. The Company is not aware of any pending claims against it under the False Claims Act. Civil monetary penalties law The Federal Civil Monetary Penalties Law grants authority to the U.S.
Patents As of December 31, 2022, we had twenty-four pending patent applications and seventy-two issued patents relating to the design and construction of our respiratory devices. We anticipate it could take several years for the most recent of these patent applications to result in issued patents, if successful.
Patents As of December 31, 2023, we had thirty-three pending patent applications and eighty-seven issued patents relating to the design and construction of our respiratory devices. We anticipate it could take several years for the most recent of these patent applications to result in issued patents, if successful.
In some cases, maintaining a single source of supply can allow us to control production costs and inventory levels and to manage component quality, but also may lead to supply availability risks and means our ability to maintain production is dependent on these single source suppliers, which may put us at an increased risk of supply disruption, as we have seen from the production halt we implemented in early January 2022 through early February 2022.
In some cases, maintaining a single source of supply can allow us to control production costs and inventory levels and to manage component quality, but also may lead to supply availability risks and means our ability to maintain production is dependent on these single source suppliers, which may put us at an increased risk of supply disruption.
Patents and patent applications in this category and others may facilitate the design and development of future respiratory products that can serve patients in need of supplemental oxygen and or mechanical ventilation therapies. 15 Trademarks “Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Live Life in Moments, not Minutes,” “Never Run Out of Oxygen,” “Oxygen Therapy on Your Terms,” “Oxygen.Anytime.Anywhere,” “Reclaim Your Independence,” “Intelligent Delivery Technology,” “Inogen At Home,” the Inogen design, “TIDAL ASSIST,” “TAV,” and “SIDEKICK” our registered trademarks with the United States Patent and Trademark Office.
Patents and patent applications in this category and others may facilitate the design and development of future respiratory products that can serve patients in need of supplemental oxygen and or mechanical ventilation therapies. 15 Trademarks “Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” the Inogen design, “TIDAL ASSIST,” “TAV,” and “SIDEKICK” are registered trademarks with the United States Patent and Trademark Office of Inogen, Inc.
Glezer has also served as our Executive Vice President and Chief Medical Officer from June 2021 to October 2021. Previously, Dr. Glezer was with Becton, Dickinson and Company, a global medical technology company where he served as the Worldwide Vice President of Medical Affairs for Diabetes Care since September 2018 with Business Development responsibilities added under him since January 2021.
Glezer was with Becton, Dickinson and Company, a global medical technology company where he served as the Worldwide Vice President of Medical Affairs for Diabetes Care since September 2018 with Business Development responsibilities added under him since January 2021. Prior to joining Becton Dickinson, Dr.
Most of our state licenses are renewed on an annual or bi-annual basis. If we were found not to be in compliance with applicable state regulations regarding licensure requirements, we could lose our licensure in that state, which could prohibit us from selling our current or future products to patients in that state.
If we were found not to be in compliance with applicable state regulations regarding licensure requirements, we could lose our licensure in that state, which could prohibit us from selling our current or future products to patients in that state.
We are committed to creating and maintaining a workplace in which all employees have an opportunity to participate and contribute to the success of the business and are valued for their skills, experience, and unique perspectives.
Diversity, equity, inclusion, belonging and accessibility (DEIBA) Diversity, equity, inclusion, belonging and accessibility are essential elements of Inogen’s business practices. We are committed to creating and maintaining a workplace in which all employees have an opportunity to participate and contribute to the success of the business and are valued for their skills, experience, and unique perspectives.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: warning letters, fines, injunctions, civil or criminal penalties, recall or seizure of our products, operating restrictions, partial suspension or total shutdown of production, refusing our request for 510(k) clearance or pre-market approval of new products, rescinding previously granted 510(k) clearances or withdrawing previously granted pre-market approvals.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: warning letters, fines, injunctions, civil or criminal penalties, recall or seizure of our products, operating restrictions, partial suspension or total shutdown of production, refusing our request for 510(k) clearance or pre-market approval of new products, rescinding previously granted 510(k) clearances or withdrawing previously granted pre-market approvals. 11 As a medical device manufacturer, our manufacturing facilities are subject to periodic inspections and audits by the FDA, certain other regulatory agencies and authorities and our notified body.
We believe that any global or national strategy to address climate change must be environmentally sustainable and economically viable. 2. We believe that any climate change policy should be technology-neutral and designed to encourage private sector innovation and investment so that emissions reductions can be achieved in the most efficient manner possible. 3.
We believe that any climate change policy should be technology-neutral and designed to encourage private sector innovation and investment so that emissions reductions can be achieved in the most efficient manner possible. 3.
Somer joined Neoforma from Morrison & Foerster where he was a corporate/securities associate based in New York. Mr. Somer holds a L.L.M. from Boston University, a L.L.B from the University of British Columbia School of Law, and a B.Sc. from the University of Western Ontario in Biology/Pharmacology. Bart Sanford has served as our Executive Vice President, Operations since September 2018.
Somer joined Neoforma from Morrison & Foerster where he was a corporate/securities associate based in New York. Mr. Somer holds a L.L.M. from Boston University, a L.L.B from the University of British Columbia School of Law, and a B.Sc. from the University of Western Ontario in Biology/Pharmacology.
In terms of economic impact, the total economic cost from COPD in the United States was approximately $50 billion in 2020 with close to 1.6 million COPD emergency department visits in 2019.
In terms of economic impact, the total economic cost from COPD in the United States was approximately $49 billion in 2020 with close to 925,000 COPD emergency department visits in 2020.
Our products enable us to address a patient’s particular clinical needs, as well as lifestyle and performance preferences. Domestic sales and marketing In the United States, we market and distribute our products directly to consumers through a wide variety of direct-to-consumer sales and marketing strategies including consumer advertising, an inside sales staff, and a physician referral model.
Domestic sales and marketing In the United States, we market and distribute our products directly to consumers through a wide variety of direct-to-consumer sales and marketing strategies including consumer advertising, an inside sales staff, and a physician referral model.
Our pipeline and future innovation are informed by our Scientific Advisory Board and engagement with KOLs. We continue to focus our efforts on design and functionality improvements that enhance patient quality of life and reduce service costs. Competition The long-term oxygen therapy market is a highly competitive industry.
We continue to focus our efforts on design and functionality improvements that enhance patient quality of life and reduce service costs. Competition The long-term oxygen therapy market is a highly competitive industry.
One single customer and Medicare each represented more than 10% of our net accounts receivable balance with accounts receivable balances of $5.9 million and $2.7 million, respectively, as of December 31, 2021. We rent products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs.
Two customers each represented more than 10% of our net accounts receivable balance with net accounts receivable balances of $8.6 million and $5.0 million as of December 31, 2023 and $22.6 million and $9.9 million as of December 31, 2022. 6 We rent products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs.
We own pending trademark applications for the marks “INOGEN ROVE 4” and “INOGEN ROVE 6” in the United States.
We own pending applications for the marks “Rove,” “Inogen Rove,” “Inogen Rove 4” and “Inogen Rove 6” with the United States Patent and Trademark Office.
Employees As of December 31, 2022, we had 1,026 full and part-time employees worldwide, consisting of 491 employees in sales, marketing, clinical and client services, 286 employees in operations, manufacturing, quality assurance, manufacturing engineering, and repair, 218 employees in general administration and 31 employees in research and development.
Employees As of December 31, 2023, we had 834 full and part-time employees worldwide, consisting of 387 employees in sales, marketing, clinical and client services, 206 employees in operations, manufacturing, quality assurance, manufacturing engineering, and repair, 207 employees in general administration and 34 employees in research and development.
Our Medicare accreditation must be renewed every three years by passing an on-site inspection. Our current accreditation with Medicare is due to expire in May 2024. Several states require that durable medical equipment providers be licensed in order to sell products to patients in that state. Certain of these states require that durable medical equipment providers maintain an in-state location.
Our current accreditation with Medicare is due to expire in May 2024. Several states require that durable medical equipment providers be licensed in order to sell products to patients in that state. Certain of these states require that durable medical equipment providers maintain an in-state location. Most of our state licenses are renewed on an annual or bi-annual basis.
Also in support of our European operations, we produce our Inogen One G3 and Inogen One G5 concentrators and perform related repair activities using a contract manufacturer, Foxconn, located in the Czech Republic to improve our ability to service our European customers.
Also, in support of our European operations, we produce our Inogen One G5 concentrators and perform related repair activities using a contract manufacturer, Foxconn, located in the Czech Republic to improve our ability to efficiently service our European customers. Physio-Assist sells their Simeox product throughout Europe, the Middle East, Canada, and Australia.
Our current research and development efforts are focused primarily on increasing functionality, improving design for ease-of-use, and reducing production costs of our existing products, as well as developing our next-generation oxygen concentrators.
The team is augmented with expertise and resources of our third-party partners specialized in medical device development. Our current research and development efforts are focused primarily on increasing functionality, improving design for ease-of-use, and reducing production costs of our existing products, as well as developing our next-generation oxygen concentrators.
Federal False Claims Act The Federal False Claims Act (as amended) provides that the federal government, and under certain circumstances a private party or whistleblower, may bring claims against a person who knowingly presents or causes to be presented a false or fraudulent request for payment to the federal government or uses a false statement or false record to get a claim approved.
While we have attempted to operate in compliance with these laws and regulations, our arrangements may ultimately be found to be not in compliance with applicable federal law. 12 Federal False Claims Act The Federal False Claims Act (as amended) provides that the federal government, and under certain circumstances a private party or whistleblower, may bring claims against a person who knowingly presents or causes to be presented a false or fraudulent request for payment to the federal government or uses a false statement or false record to get a claim approved.
We selectively evaluate potential strategic transactions to grow our portfolio or capabilities to serve the respiratory care market. 4 Our products Our Inogen One portable oxygen systems provide patients who require long-term oxygen therapy with a reliable, lightweight single solution product that we believe allows patients the chance to remain ambulatory while managing the impact of their disease and eliminates dependence on both oxygen tanks and cylinders as well as stationary concentrators.
The KOLs goals are focused on advocating for the right therapy for patients and changing the behavior of prescribers. 4 Our products Our Inogen One and Inogen Rove portable oxygen systems provide patients who require long-term oxygen therapy with a reliable, lightweight single solution product that we believe allows patients the chance to remain ambulatory while managing the impact of their disease and eliminates dependence on both oxygen tanks and cylinders as well as stationary concentrators.
Talent acquisition and development We encourage Inogen employees to take advantage of learning opportunities and we provide financial support through a tuition reimbursement program to help employees complete their college education and be prepared for higher level positions.
We also promote from within and encourage Inogen employees to take advantage of learning opportunities and we provide financial support through a tuition reimbursement program to help employees complete their college education and be prepared for higher level positions. We have a strong leadership and manager program and standardized cultural onboarding for all associates.
As of January 1, 2019, Health Canada implemented the Medical Device Single Audit Program (MDSAP) as the sole mechanism for manufacturers to demonstrate compliance with the quality management system requirements of the Medical Device Regulations, replacing the Canadian Medical Devices Conformity Assessment System (CMDCAS) program.
As of January 1, 2019, Health Canada implemented the Medical Device Single Audit Program (MDSAP) as the sole mechanism for manufacturers to demonstrate compliance with the quality management system requirements of the Medical Device Regulations, replacing the Canadian Medical Devices Conformity Assessment System (CMDCAS) program. 14 In Australia, we must appoint an agent sponsor who will interact on our behalf with the Therapeutics Goods Administration (TGA).
Internal communications and celebration are further proof points for our efforts as we routinely measure employee engagement in these categories. Inogen is committed to compliance with all applicable federal and state laws prohibiting discrimination in employment and, therefore, does not discriminate against its employees or applicants based on any legally recognized “protected class”.
Inogen is committed to compliance with all applicable federal and state laws prohibiting discrimination in employment and, therefore, does not discriminate against its employees or applicants based on any legally recognized “protected class”.
As a result, patients can rent or purchase our systems at the same patient obligation as other in-network oxygen suppliers. We had 100 contracts as of December 31, 2022. Private payors typically provide reimbursement at a rate similar to Medicare allowables for in-network plans.
As a result, patients can rent or purchase our systems at the same patient obligation as other in-network oxygen suppliers. Private payors typically provide reimbursement at a rate similar to Medicare allowables for in-network plans. We anticipate that private payor reimbursement levels will generally be reset in accordance with Medicare payment amounts.
The Centers for Disease Control (CDC) and Prevention in the United States estimates that prevalence of COPD amongst adults 18 years or older was around 5.2% to 6.2% based on CDC data of age-adjusted prevalence of COPD from 2011 to 2020.
The Centers for Disease Control (CDC) and Prevention in the United States estimates that prevalence of COPD among adults 18 years or older was approximately 6.1% based on CDC data of age-adjusted prevalence of COPD from 2011 to 2021. COPD is a major cause of disability and the sixth leading cause of death according to the CDC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk factors include, but are not limited to, statements concerning the following: Risks related to our business and strategy: • the intense international, national, regional and local competition we face in our industry; • our dependence on a limited number of customers for a significant portion of our sales revenue; • our reliance on a single source or a limited group of manufacturers or suppliers; • the lack of long-term supply contracts with many of our third-party suppliers; • the possibility our manufacturing facilities could become unavailable or inoperable and other potential manufacturing problems or delays; • our reliance upon a third-party contract manufacturer for certain manufacturing and repair operations; • the need to continue to enhance our existing products and develop and market new products; • risks associated with public health threats and epidemics, including the COVID-19 pandemic and related public health emergency (PHE); • the competitive bidding process or other reimbursement policy changes under Medicare or other third-party payors, including recently enacted and potential future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs; • healthcare reform measures; • the complex and lengthy reimbursement process we depend upon for a significant portion of our revenue; • potential failure to maintain or obtain new private payor contracts and future reductions in reimbursement rates from private payors; • our ability to hire and retain highly qualified individuals; • our ability to manage our anticipated growth effectively; • potential acquisitions of, or investments in, other companies; • our international sales and manufacturing activities; • warranty or product liability claims or other litigation; • increases in our operating costs; • our dependence on the services of our senior executives and other key technical personnel; • variance in our financial condition and results of operations; and • the market opportunities for our products. 21 Risks related to the regulatory environment: • extensive federal, state, and international regulations related to our business by numerous government agencies, including the U.S.
Biggest changeRisk factors include, but are not limited to, statements concerning the following: Risks related to our business and strategy: • the intense international, national, regional and local competition we face in our industry; • our dependence on a limited number of customers for a significant portion of our sales revenue; • our reliance on a single source or a limited group of manufacturers or suppliers; • the need to continue to enhance our existing products and develop and market new products; • potential acquisitions of, or investments in, other companies; • the complex and lengthy reimbursement process we depend upon for a significant portion of our revenue; • increases in our operating costs; • economic impacts that affect customer and consumer spending as well as demand for our products; • public health threats and epidemics; • the lack of long-term supply contracts with many of our third-party suppliers; • the competitive bidding process or other reimbursement policy changes under Medicare or other third-party payors, including recently enacted and potential future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs; • consolidation in the healthcare industry; • healthcare reform measures; • the possibility our manufacturing facilities could become unavailable or inoperable and other potential manufacturing problems or delays; • our reliance upon a third-party contract manufacturer for certain manufacturing and repair operations; • potential failure to maintain or obtain new private payor contracts and future reductions in reimbursement rates from private payors; • our ability to manage our anticipated growth effectively; • the possibility of non-payment of our HME providers, distributors, private label partners and resellers; • our international sales and manufacturing activities; • warranty or product liability claims or other litigation; • our dependence on the services of our senior executives and other key technical personnel; • variance in our financial condition and results of operations; and • the market opportunities for our products. 21 Risks related to the regulatory environment: • extensive federal, state, and international regulations related to our business by numerous government agencies, including the U.S.
The simple average of the payment amounts for these regions for this code was $122.61, or an average increase of 65.7%.
The simple average of the payment amounts for these regions for this code was $122.61, or an average increase of 65.7%.
These factors include: • actual or anticipated quarterly variation in our results of operations or the results of our competitors; • announcements of secondary offerings; • announcements by us or our competitors of new commercial products, significant contracts, commercial relationships or capital commitments; • issuance of new or changed securities analysts’ reports or recommendations for our stock; • developments or disputes concerning our intellectual property or other proprietary rights; • commencement of, or our involvement in, litigation; • market conditions in the oxygen therapy market; • reimbursement or legislative changes in the oxygen therapy market; • failure to complete significant sales; • manufacturing disruptions that could occur if we were unable to successfully expand our production in our current or an alternative facility or due to any other reason; • any future sales of our common stock or other securities; • any major change to the composition of our board of directors or management; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • the other factors described in this “Risk Factors” section; and • general economic conditions and slow or negative growth of our markets.
These factors include: • actual or anticipated quarterly variation in our results of operations or the results of our competitors; • announcements of secondary offerings; • announcements by us or our competitors of new commercial products, significant contracts, commercial relationships, or capital commitments; • issuance of new or changed securities analysts’ reports or recommendations for our stock; • developments or disputes concerning our intellectual property or other proprietary rights; • commencement of, or our involvement in, litigation; • market conditions in the oxygen therapy market; 57 • reimbursement or legislative changes in the oxygen therapy market; • failure to complete significant sales; • manufacturing disruptions that could occur if we were unable to successfully expand our production in our current or an alternative facility or due to any other reason; • any future sales of our common stock or other securities; • any major change to the composition of our board of directors or management; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments; • the other factors described in this “Risk Factors” section; and • general economic conditions and slow or negative growth of our markets.
For additional discussion of potential risks related to our inability to source components of our products, please see the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations. ” A significant majority of our rental patients who use our product have health coverage under the Medicare program, and recently enacted and future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs have affected and could continue to materially and adversely affect our business and operating results.
For additional discussion of potential risks related to our inability to source components of our products, please see the risk factor entitled “ We obtain some of the components, subassemblies and completed products included in our products from a single source or a limited group of manufacturers or suppliers, and in some cases those components are available in only limited supplies from limited manufacturers or suppliers, and the partial or complete loss of one or more of these manufacturers or suppliers could cause significant production delays or stoppages, an inability to meet customer demand, substantial loss in revenue, and an adverse effect on our financial condition and results of operations. ” 27 A significant majority of our rental patients who use our product have health coverage under the Medicare program, and recently enacted and future changes in the reimbursement rates or payment methodologies under Medicare, Medicaid and other government programs have affected and could continue to materially and adversely affect our business and operating results.
We may experience numerous unforeseen events in relation to a clinical trial process that could delay or prevent us from receiving regulatory clearance or approval for new products or modifications of existing products, including new indications for existing products, including: • delays or failure in obtaining approval of our clinical trial protocols from the FDA, other regulatory authorities, or IRBs; • we, the applicable IRBs, the Data Safety Monitoring Board for such trial, or the FDA or other applicable regulatory authorities may require that we or our investigators suspend or terminate our data collection for various reasons, including, among others (i) failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (GCP), regulations, or our clinical protocols, (ii) by the FDA or other applicable regulatory authority resulting in the imposition of a clinical hold, or (iii) lack of adequate patient informed consent; and • delays if the FDA concludes that our financial relationships with our data collection partners result in a perceived or actual conflict of interest that may have affected the interpretation or integrity of the data collected.
We may experience numerous unforeseen events in relation to a clinical trial process that could delay or prevent us from receiving regulatory clearance or approval for new products or modifications of existing products, including new indications for existing products, including: • delays or failure in obtaining approval of our clinical trial protocols from the FDA, other regulatory authorities, or IRBs; • we, the applicable IRBs, the Data Safety Monitoring Board for such trial, or the FDA or other applicable regulatory authorities may require that we or our investigators suspend or terminate our data collection for various reasons, including, among others (i) failure to conduct the clinical trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (GCP), regulations, or our clinical protocols, (ii) by the FDA or other applicable regulatory authority resulting in the imposition of a clinical hold, or (iii) lack of adequate patient informed consent; and 48 • delays if the FDA concludes that our financial relationships with our data collection partners result in a perceived or actual conflict of interest that may have affected the interpretation or integrity of the data collected.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide that, unless we give an Alternative Forum Consent, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of the Company’s securities, including any auditor, underwriter, expert, control person or other defendant.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide that, unless we give an Alternative Forum Consent, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of our securities, including any auditor, underwriter, expert, control person or other defendant.
Any violation of the FCPA, other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, 38 settlements, prosecutions, enforcement action, fines, damages, loss of export privileges and suspension or debarment from government contracts, which could have a material and adverse effect on our reputation, business, operating results and prospects.
Any violation of the FCPA, other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, settlements, prosecutions, enforcement action, fines, damages, loss of export privileges and suspension or debarment from government contracts, which could have a material and adverse effect on our reputation, business, operating results and prospects.
We anticipate that the Deficit Reduction Act of 2005 27 oxygen payment rules will continue to negatively affect our net revenue on an ongoing basis, as each month additional customers reach the capped rental period in month thirty-seven, resulting in potentially two or more years without rental income from these customers while we continue to incur customer service and maintenance costs.
We anticipate that the Deficit Reduction Act of 2005 oxygen payment rules will continue to negatively affect our net revenue on an ongoing basis, as each month additional customers reach the capped rental period in month thirty-seven, resulting in potentially two or more years without rental income from these customers while we continue to incur customer service and maintenance costs.
The Coronavirus Preparedness and Response Supplemental Appropriations Act extended the 75/25 blended rates for all other non-competitively bid areas until December 31, 2023. • In May 2020, Congress eliminated the 2% Medicare sequestration payment reduction that applies to all Medicare providers and suppliers, due to the COVID-19 PHE, and Congress extended it until March 31, 2022.
The Coronavirus Preparedness and Response Supplemental Appropriations Act extended the 75/25 blended rates for all other non-competitively bid areas until December 31, 2023. 28 • In May 2020, Congress eliminated the 2% Medicare sequestration payment reduction that applies to all Medicare providers and suppliers, due to the COVID-19 PHE, and Congress extended it until March 31, 2022.
There have been and will continue to be regulatory initiatives affecting our business and we cannot predict the extent to which future legislation and regulatory changes could have a material adverse effect on our business. We are subject to significant regulation by numerous government agencies, including the U.S. Food and Drug Administration, or FDA.
There have been and will continue to be regulatory initiatives affecting our business and we cannot predict the extent to which future legislation and regulatory changes could have a material adverse effect on our business. 43 We are subject to significant regulation by numerous government agencies, including the U.S. Food and Drug Administration, or FDA.
Additional information on our hedging arrangements is also contained in Note 3 – Fair value measurements and Item 3 – Quantitative and Qualitative Disclosures About Market Risk in the notes in our consolidated financial statements in this Annual Report on Form 10-K. We rely on shipping providers to deliver products to our customers globally.
Additional information on our hedging arrangements is also contained in Note 3 – Fair value measurements and Item 3 – Quantitative and Qualitative Disclosures About Market Risk in the notes to our consolidated financial statements in this Annual Report on Form 10-K. 36 We rely on shipping providers to deliver products to our customers globally.
Any such delay or rejection could prevent us from commercializing any of our products currently in development. 49 Any delays in completing our data collection and analysis will increase our costs, slow down our product development and regulatory authorization process and jeopardize our ability to commence sales and generate associated revenue with respect to the applicable product.
Any such delay or rejection could prevent us from commercializing any of our products currently in development. Any delays in completing our data collection and analysis will increase our costs, slow down our product development and regulatory authorization process and jeopardize our ability to commence sales and generate associated revenue with respect to the applicable product.
As a result, we may be required to perform due diligence to determine the origin of such minerals and disclose and report whether or not such minerals originated in the Democratic Republic of the Congo or adjoining countries. The implementation of these requirements could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of our products.
As a result, we may be required to perform due diligence to determine the origin of such minerals and disclose and report whether such minerals originated in the Democratic Republic of the Congo or adjoining countries. The implementation of these requirements could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of our products.
Our sensitivity to economic cycles and any related fluctuation in customer and consumer demand could have a material adverse effect on our business, financial condition, and results of operations. We are subject to risks associated with public health threats and epidemics, including the COVID-19 pandemic and related PHE.
Our sensitivity to economic cycles and any related fluctuation in customer and consumer demand could have a material adverse effect on our business, financial condition, and results of operations. We are subject to risks associated with public health threats and epidemics, including the COVID-19 pandemic and related public health emergency (PHE).
One or more of these business partners could delay payments or default on credit extended to them, either of which could adversely affect our business, financial condition and results of operations. We generate a substantial portion of our revenue internationally and are subject to various risks relating to such international activities, which could adversely affect our operating results.
One or more of these business partners could delay payments or default on credit extended to them, either of which could adversely affect our business, financial condition and results of operations. 35 We generate a substantial portion of our revenue internationally and are subject to various risks relating to such international activities, which could adversely affect our operating results.
The commercialization of medical devices in the UK are also subject to additional national requirements (e.g. registration and where the manufacturer is not established in the UK, the appointment of a UK Responsible Person). If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited.
The commercialization of medical devices in the UK are also subject to additional national requirements (e.g., registration and where the manufacturer is not established in the UK, the appointment of a UK Responsible Person). 47 If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited.
In the event of an accident or failure to comply with environmental laws, we could be held liable for resulting damages, and any such liability could exceed our insurance coverage and adversely affect our financial condition and results of operations. Regulatory requirements under Proposition 65 could adversely affect our business.
In the event of an accident or failure to comply with environmental laws, we could be held liable for resulting damages, and any such liability could exceed our insurance coverage and adversely affect our financial condition and results of operations. 52 Regulatory requirements under Proposition 65 could adversely affect our business.
We are subject to California’s Proposition 65, or Prop 65, which requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.
We are subject to California’s Proposition 65 which requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.
In rural areas and non-contiguous states, payment rates are based on a higher 50-50 blended rate, to account for higher 30 servicing costs in those areas. We estimate that approximately 18% of our patients are eligible to receive the higher reimbursement rates based on the geographic locations of our current patient population.
In rural areas and non-contiguous states, payment rates are based on a higher 50-50 blended rate, to account for higher servicing costs in those areas. We estimate that approximately 18% of our patients are eligible to receive the higher reimbursement rates based on the geographic locations of our current patient population.
For example, our devices are labeled with a 5-year product life duration and we and our distributors, in some instances, have provided serviced devices after their useful life duration to rental patients in the United States and internationally, or conducted repairs on such devices for the patients who have purchased them.
For example, our devices are labeled with a 5 or 8-year product life duration and we and our distributors, in some instances, have provided serviced devices after their useful life duration to rental patients in the United States and internationally, or conducted repairs on such devices for the patients who have purchased them.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following sanctions: • adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, or seizure of our products; 46 • operating restrictions or partial suspension or total shutdown of production; • delays in the introduction of products into the market; • refusal to grant our requests for future 510(k) clearances or approvals of new products, new intended uses, or modifications to exiting products; • withdrawals or suspensions of current 510(k) clearances or approvals, resulting in prohibitions on sales of our products; and • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following sanctions: • adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • delays in the introduction of products into the market; • refusal to grant our requests for future 510(k) clearances or approvals of new products, new intended uses, or modifications to exiting products; 45 • withdrawals or suspensions of current 510(k) clearances or approvals, resulting in prohibitions on sales of our products; and • criminal prosecution.
If we, or the other parties from whom we would license intellectual property, fail to obtain, defend, and maintain adequate patent or other intellectual property protection for intellectual property used in our products, or if any protection is 53 reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position.
If we, or the other parties from whom we would license intellectual property, fail to obtain, defend, and maintain adequate patent or other intellectual property protection for intellectual property used in our products, or if any protection is reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position.
In addition, CMS increased Medicare contractors’ ability to waive replacement product requirements, paused the national prior authorization program for certain DMEPOS, automatically extended expiring accreditations, granted contractors the flexibility to grant appeals extensions, and suspended medical review of claims.
In addition, CMS increased Medicare contractors’ ability to waive replacement product requirements, paused the national prior authorization program for certain DMEPOS items, automatically extended expiring accreditations, granted contractors the flexibility to grant appeals extensions, and suspended medical review of claims.
Changes to existing tax law in the U.S. or other foreign jurisdictions could adversely affect our financial condition and results of operations. The Medicare Fee-For-Service (FFS) sequestration reduction has and may continue to negatively affect our revenue and profits.
Changes to existing tax law in the U.S. or other foreign jurisdictions could adversely affect our financial condition and results of operations. 42 The Medicare Fee-For-Service (FFS) sequestration reduction has and may continue to negatively affect our revenue and profits.
Inogen obtained its United Kingdom Conformity Assessed (UKCA) certificate covering the G4, G5 and Inogen at Home oxygen concentrators on April 27, 2022, which allowed Inogen to affix a UKCA mark to these devices and market them in Great Britain.
Inogen obtained its United Kingdom Conformity Assessed (UKCA) certificate covering the Inogen One G4, Inogen One G5 and Inogen at Home oxygen concentrators on April 27, 2022, which allowed Inogen to affix a UKCA mark to these devices and market them in Great Britain.
If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline. 59 Future sales of shares could cause our stock price to decline.
If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline. Future sales of shares could cause our stock price to decline.
In addition, providers may reduce or eliminate purchases from us due to our increased focus on building out a prescriber sales team and pursuing rentals directly, 22 which could be in competition with our providers in the United States.
In addition, providers may reduce or eliminate purchases from us due to our increased focus on building out a prescriber sales team and pursuing rentals directly, which could be in competition with our providers in the United States.
This was effective beginning January 1, 2018. 29 Due to budgetary shortfalls, many states are considering, or have enacted, cuts to their Medicaid programs. In addition, many private payors reimburse at a percentage of the Medicare rates.
This was effective beginning January 1, 2018. Due to budgetary shortfalls, many states are considering, or have enacted, cuts to their Medicaid programs. In addition, many private payors reimburse at a percentage of the Medicare rates.
The foregoing shall not apply to any claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act of 1933, as amended (the “Securities Act”). Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
The foregoing shall not apply to any claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act of 1933, as amended (the “Securities Act”). 58 Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
If the matter were to be resolved in a manner adverse to us, it could have a material adverse effect on our results of operations and financial condition. Changes in accounting principles, or interpretations thereof, could have a significant effect on our financial condition and results of operations.
If the matter were to be resolved in a manner adverse to us, it could have a material adverse effect on our results of operations and financial condition. 41 Changes in accounting principles, or interpretations thereof, could have a significant effect on our financial condition and results of operations.
In 2017, the European Union adopted the European 48 Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements for the marketing and sale of medical devices, including new clinical evaluation, quality system, and post-market surveillance requirements.
In 2017, the European Union adopted the European Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements for the marketing and sale of medical devices, including new clinical evaluation, quality system, and post-market surveillance requirements.
Such 43 changes may have a significant impact on our deferred tax assets, income tax provision and effective tax rate. Proposed legislation before the Administration and Congress may make further changes to the U.S. tax law.
Such changes may have a significant impact on our deferred tax assets, income tax provision and effective tax rate. Proposed legislation before the Administration and Congress may make further changes to the U.S. tax law.
While we implement IT controls to reduce the risk of a cybersecurity and data security breach, there is no guarantee that these measures will be adequate to safeguard all systems with an increased number of employees working remotely. 40 The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time.
While we implement IT controls to reduce the risk of a cybersecurity and data security breach, there is no guarantee that these measures will be adequate to safeguard all systems with an increased number of employees working remotely. 39 The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time.
For example, we previously experienced declines in total business-to-business demand during portions of the COVID-19 pandemic and related PHE, which we believe were due to these factors and other factors related to the COVID-19 pandemic and related PHE.
For example, we previously experienced declines in total demand during portions of the COVID-19 pandemic and related PHE, which we believe were due to these factors and other factors related to the COVID-19 pandemic and related PHE.
Average Medicare reimbursement rates in non-former CBAs, non-rural areas E1390 E1392 As of January 1, 2023 $ 125.41 $ 46.49 As of January 1, 2022 $ 115.14 $ 43.69 As of April 1, 2021 $ 109.39 $ 42.12 As of January 1, 2021 (retroactively revised March 1, 2021) $ 104.07 $ 40.06 As of January 1, 2020 $ 74.84 $ 36.87 As of January 1, 2019 $ 72.32 $ 35.64 As of January 1, 2018 $ 69.31 $ 38.10 CMS is required to conduct future rounds of competitive bidding, which could reduce reimbursement rates, negatively impact the premium for POCs over other oxygen modalities, or limit beneficiary access to our technologies.
Average Medicare reimbursement rates in non-former CBAs, non-rural areas E1390 E1392 As of January 1, 2024 $ 93.61 $ 46.12 As of January 1, 2023 $ 125.41 $ 46.49 As of January 1, 2022 $ 115.14 $ 43.69 As of April 1, 2021 $ 109.39 $ 42.12 As of January 1, 2021 (retroactively revised March 1, 2021) $ 104.07 $ 40.06 As of January 1, 2020 $ 74.84 $ 36.87 As of January 1, 2019 $ 72.32 $ 35.64 As of January 1, 2018 $ 69.31 $ 38.10 CMS is required to conduct future rounds of competitive bidding, which could reduce reimbursement rates, negatively impact the premium for POCs over other oxygen modalities, or limit beneficiary access to our technologies.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and results of operations. 47 If we, our contract manufacturer, or our component manufacturers fail to comply with the FDA’s Quality System Regulation, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and results of operations. 46 If we, our contract manufacturer, or our component manufacturers fail to comply with the FDA’s Quality System Regulation, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
The sequestration payment reduction resumed with a 1% reduction to rates from April 1, 2022 until June 30, 2022, with the full 2% Medicare sequestration having resumed on July 1, 2022. • In addition, the CARES Act established a provider relief fund of $100 billion for Medicare providers and suppliers to prevent, prepare for, and respond to the COVID-19 PHE, and as a Medicare supplier we also received funds of $6.2 million in the second quarter of 2020.
The sequestration payment reduction resumed with a 1% reduction to rates from April 1, 2022 until June 30, 2022, and the full 2% Medicare sequestration resumed on July 1, 2022. • The CARES Act established a provider relief fund of $100 billion for Medicare providers and suppliers to prevent, prepare for, and respond to the COVID-19 PHE, and as a Medicare supplier we also received funds of $6.2 million in the second quarter of 2020.
This in turn has resulted in greater pricing pressures, including pressure to offer customers more competitive pricing terms, exclusion of products from or unfavorable position on provider formularies and the exclusion of certain suppliers from important market segments as group purchasing organizations, independent delivery networks and large single accounts continue to consolidate purchasing decisions for some of the company's customers.
This in turn has resulted in greater pricing pressures, including pressure to offer customers more competitive pricing terms, exclusion of products from or unfavorable position on provider formularies and the exclusion of certain suppliers from important market segments as group purchasing organizations, independent delivery networks and large single accounts continue to consolidate purchasing decisions for some of our customers.
Our dependence on single-source or limited-source suppliers of components may expose us to several risks, including, among other things: • our suppliers or their component sub-suppliers may be unable to meet demands due to global supply chain disruptions; • we may experience delays in delivery by our suppliers due to customs clearing delays, shipping delays, scarcity of raw materials and components or changes in demand from us or their other customers; • our suppliers may be unable to meet demands due to the effect of exposure to infectious diseases, epidemics or other public health emergencies, including the COVID-19 pandemic and related PHE or due to acts of terrorism, hostilities, military conflict or war, including the war in Ukraine; • we may not be able to find new or alternative components, even at elevated prices, or reconfigure our system and manufacturing processes in a timely manner if the necessary components become unavailable, which could lead to a production slowdown or temporary stoppage; • our suppliers may encounter financial hardships as a result of unfavorable economic and market conditions unrelated to our demand for components, which could inhibit their ability to fulfill our orders and meet our requirements; • suppliers may fail to comply with regulatory requirements, be subject to lengthy compliance, validation or qualification periods, or make errors in manufacturing components that could negatively affect the performance or safety of our products, cause delays in supplying of our products to our customers, or result in regulatory enforcement against us or our suppliers; • newly identified suppliers may not qualify under the stringent quality regulatory standards to which our business is subject, which could inhibit their ability to fulfill our orders and meet our requirements; • we or our suppliers may not be able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our suppliers may have excess or inadequate inventory of materials and components; • we may be subject to price fluctuations due to a lack of long-term supply arrangements for key components or changes in import tariffs, trade restrictions or barriers or other government actions that impact our ability to obtain such components; • we or our suppliers may lose access to critical services, tools, moldings, and components, resulting in an interruption in the manufacture, assembly and shipment of our systems; • our suppliers may be subject to allegations by other parties of misappropriation of proprietary information in connection with their supply of products to us, which could inhibit their ability to fulfill our orders and meet our requirements; • fluctuations in demand for products that our suppliers manufacture for others may affect their ability or willingness to deliver components to us in a timely manner; and • our suppliers may wish to discontinue supplying components or services to us.
Our dependence on single-source or limited-source suppliers of components may expose us to several risks, including, among other things: • our suppliers or their component sub-suppliers may be unable to meet demands due to global supply chain disruptions; • we may experience delays in delivery by our suppliers due to customs clearing delays, shipping delays, scarcity of raw materials and components or changes in demand from us or their other customers; • our suppliers may be unable to meet demands due to the effect of exposure to infectious diseases, epidemics or other public health emergencies, or due to acts of terrorism, hostilities, military conflict or war, including the conflict between Israel and Hamas and the war in Ukraine; • we may not be able to find new or alternative components, even at elevated prices, or reconfigure our system and manufacturing processes in a timely manner if the necessary components become unavailable, which could lead to a production slowdown or temporary stoppage; • our suppliers may encounter financial hardships as a result of unfavorable economic and market conditions unrelated to our demand for components, which could inhibit their ability to fulfill our orders and meet our requirements; • suppliers may fail to comply with regulatory requirements, be subject to lengthy compliance, validation or qualification periods, or make errors in manufacturing components that could negatively affect the performance or safety of our products, cause delays in supplying of our products to our customers, or result in regulatory enforcement against us or our suppliers; • newly identified suppliers may not qualify under the stringent quality regulatory standards to which our business is subject, which could inhibit their ability to fulfill our orders and meet our requirements; • we or our suppliers may not be able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our suppliers may have excess or inadequate inventory of materials and components; • we may be subject to price fluctuations due to a lack of long-term supply arrangements for key components or changes in import tariffs, trade restrictions or barriers or other government actions that impact our ability to obtain such components; • we or our suppliers may lose access to critical services, tools, moldings, and components, resulting in an interruption in the manufacture, assembly and shipment of our systems; • our suppliers may be subject to allegations by other parties of misappropriation of proprietary information in connection with their supply of products to us, which could inhibit their ability to fulfill our orders and meet our requirements; • fluctuations in demand for products that our suppliers manufacture for others may affect their ability or willingness to deliver components to us in a timely manner; and • our suppliers may wish to discontinue supplying components or services to us.
CMS will issue additional sub-regulatory guidance on these timelines in the future. If our products are subject to prior authorization, it could reduce the number of patients qualified to come on service using their Medicare benefits, it could delay the start of those patients while we wait for the prior authorization to be received, and/or it could decrease sales productivity.
CMS will issue additional sub-regulatory guidance on these timelines in the future. If our products become subject to prior authorization, it could reduce the number of patients qualified to come on service using their Medicare benefits, it could delay the start of those patients while we wait for the prior authorization to be received, and/or it could decrease sales productivity.
Of the $484 billion, $75 billion is additional funding for healthcare providers to reimburse healthcare related expenses and lost revenues attributable to COVID-19 PHE, which is in addition to the $100 billion approved in the CARES Act. • On April 6, 2020, CMS issued an Interim Final Rule (IFR) in the Federal Register for policy and regulatory revisions in response to the COVID-19 PHE.
Of the $484 billion, $75 billion was additional funding for healthcare providers to reimburse healthcare related expenses and lost revenues attributable to COVID-19 PHE, which was in addition to the $100 billion approved in the CARES Act. • On April 6, 2020, CMS issued an Interim Final Rule (IFR) in the Federal Register for policy and regulatory revisions in response to the COVID-19 PHE.
Our facilities and the equipment we use to manufacture our products would be costly to replace and could require 33 substantial lead time to procure, repair or replace.
Our facilities and the equipment we use to manufacture our products would be costly to replace and could require substantial lead time to procure, repair or replace.
In addition, currency hedging may result in a reduction or increase in revenue should the currency strengthen or decline during the contract period. A discussion of the hedging program is contained in Item 7A. Quantitative and Qualitative Disclosures about Market Risk in this Annual Report on Form 10-K for the year ended December 31, 2022.
In addition, currency hedging may result in a reduction or increase in revenue should the currency strengthen or decline during the contract period. A discussion of the hedging program is contained in Item 7A. Quantitative and Qualitative Disclosures about Market Risk in this Annual Report on Form 10-K for the year ended December 31, 2023.
We have modified some of our 510(k) cleared products and have determined that in certain instances new 510(k) clearances or pre-market approval are not required. We plan to make similar determinations regarding modifications to our 510(k) products, which may include the redesign of the G5 System motherboard pending validation testing.
We have modified some of our 510(k) cleared products and have determined that in certain instances new 510(k) clearances or pre-market approval are not required. We plan to make similar determinations regarding modifications to our 510(k) products, which may include the redesign of the Inogen One G5 system motherboard pending validation testing.
Prop 65 required that all businesses must be in compliance by August 30, 2018 with new regulations that require modifications to product warnings and for businesses to coordinate with upstream vendors or downstream customers for the 800+ regulated chemicals in consumer products and assess whether new occupational exposure warnings need to be posited in California facilities.
Proposition 65 required that all businesses must be in compliance by August 30, 2018 with new regulations that require modifications to product warnings and for businesses to coordinate with upstream vendors or downstream customers for the 800+ regulated chemicals in consumer products and assess whether new occupational exposure warnings need to be posited in California facilities.
We have sold our products in a total of 59 international countries or overseas regions outside the United States through our wholly owned subsidiary, distributors or directly to large “house” accounts. In some foreign countries, particularly in the European Union, the pricing of medical devices is subject to governmental control.
We have sold our products in a total of 62 international countries or overseas regions outside the United States through our wholly-owned subsidiary, distributors or directly to large “house” accounts. In some foreign countries, particularly in the European Union, the pricing of medical devices is subject to governmental control.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires the Secretary of HHS to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment, including oxygen equipment.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required the Secretary of HHS to establish and implement programs under which competitive acquisition areas are established throughout the United States for purposes of awarding contracts for the furnishing of competitively priced items of durable medical equipment, including oxygen equipment.
If we are found to be in non-compliance, we could be subject to CMPs of up to $0.025 million (subject to annual adjustment for inflation) for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federal or state healthcare programs.
If we are found to be in non-compliance, we could be subject to CMPs of up to $0.121 million (subject to annual adjustment for inflation) for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federal or state healthcare programs.
Congress also is debating federal privacy legislation, which if passed, may restrict our business operations and require us to incur additional costs for compliance. 41 Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations.
Congress also is debating federal privacy legislation, which if passed, may restrict our business operations and require us to incur additional costs for compliance. 40 Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations.
Numerous initiatives and reforms instituted by legislators, regulators and third-party payors to reduce home medical equipment costs have caused pricing pressures which have resulted in a consolidation trend in the home medical equipment industry as well as among the company's customers, including home healthcare providers.
Numerous initiatives and reforms instituted by legislators, regulators and third-party payors to reduce home medical equipment costs have caused pricing pressures which have resulted in a consolidation trend in the home medical equipment industry as well as among our customers, including home healthcare providers.
This IFR included that for the duration of the COVID-19 PHE, the face-to-face requirements and clinical indications of coverage for home oxygen, among other respiratory products, will be waived. • The Trump administration also issued a number of regulatory waivers to increase the flexibility in durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers’ ability to service patients quickly and without the normal requirements.
This IFR included that for the duration of the COVID-19 PHE, the face-to-face requirements and clinical indications of coverage for home oxygen, among other respiratory products, were waived. • The Trump administration also issued a number of regulatory waivers to increase the flexibility in durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers’ ability to service patients quickly and without the normal requirements.
Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Invacare Corporation, Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura.
Our significant manufacturing competitors are Respironics (a subsidiary of Koninklijke Philips N.V.), Caire Medical (subsidiary of NGK Spark Plug), DeVilbiss Healthcare (a subsidiary of Drive Medical), O2 Concepts, Precision Medical, Gas Control Equipment (subsidiary of Colfax), Nidek Medical, 3B Medical, SysMed, and Belluscura.
Our facilities are in areas that have and may in the future be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, the COVID-19 pandemic and related PHE related facility shutdowns, fire, flood, earthquakes and power outages, which may render it difficult or impossible for us to manufacture our products for some period of time.
Our facilities are in areas that have and may in the future be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, pandemic and related facility shutdowns, fire, flood, earthquakes and power outages, which may render it difficult or impossible for us to manufacture our products for some period of time.
We assemble our products at our facilities in Plano, Texas and Goleta, California and through our contract manufacturer in the Czech Republic. No other manufacturing facilities are currently available to us, particularly facilities of the size and scope of our Texas facility.
We assemble our products at our facility in Plano, Texas and through our contract manufacturer in the Czech Republic. No other manufacturing facilities are currently available to us, particularly facilities of the size and scope of our Texas facility.
The Paycheck Protection Program and Heath Care Enhancement Act was also signed into law on April 24, 2020 and provides additional funding of $484 billion to programs enacted under the CARES Act.
The Paycheck Protection Program and Heath Care Enhancement Act was also signed into law on April 24, 2020 and provided additional funding of $484 billion to programs enacted under the CARES Act.
In addition, cybersecurity risks and data security incidents could lead to potential unauthorized access to or acquisition of confidential information (including protected health information), and data loss, corruption, unavailability, or other unauthorized processing.
In addition, cybersecurity risks and data security incidents could lead to potential unauthorized access to or acquisition of confidential information (including personally identifiable information and protected health information), and data loss, corruption, unavailability, or other unauthorized processing.
Our exposure to credit risks of our business partners may increase if our business partners and their end customers are adversely affected by potential worsening global economic conditions or the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, the COVID-19 pandemic and related PHE, the war in Ukraine, potential uncertainty related to Taiwan and its relationship with China or other events affecting the United States or global economy.
Our exposure to credit risks of our business partners may increase if our business partners and their end customers are adversely affected by potential worsening global economic conditions or the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, the COVID-19 pandemic and related PHE, the conflict between Israel and Hamas and the war in Ukraine, potential uncertainty related to Taiwan and its relationship with China or other events affecting the United States or global economy.
We have analyzed the potential impact to revenue associated with patients in the capped rental period and have deferred $0 associated with the capped rental period as of December 31, 2022 and December 31, 2021.
We have analyzed the potential impact to revenue associated with patients in the capped rental period and have deferred $0 associated with the capped rental period as of December 31, 2023 and December 31, 2022.
Average Medicare reimbursement rates in former CBAs E1390 E1392 As of January 1, 2023 $ 90.77 $ 44.49 As of January 1, 2022 $ 85.31 $ 41.81 As of April 1, 2021 $ 81.25 $ 39.82 As of January 1, 2021 $ 73.88 $ 36.20 As of January 1, 2020 $ 73.98 $ 36.25 As of January 1, 2019 $ 72.92 $ 35.72 As of January 1, 2018 $ 77.03 $ 36.06 CMS also issued a final rule in December 2021 (CMS-1738-P) to establish payment methodologies that will be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.
Average Medicare reimbursement rates in former CBAs E1390 E1392 As of January 1, 2024 $ 93.41 $ 45.78 As of January 1, 2023 $ 90.77 $ 44.49 As of January 1, 2022 $ 85.31 $ 41.81 As of April 1, 2021 $ 81.25 $ 39.82 As of January 1, 2021 $ 73.88 $ 36.20 As of January 1, 2020 $ 73.98 $ 36.25 As of January 1, 2019 $ 72.92 $ 35.72 As of January 1, 2018 $ 77.03 $ 36.06 CMS also issued a final rule in December 2021 (CMS-1738-P) to establish payment methodologies to be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare.
Average Medicare reimbursement rates in rural areas E1390 E1392 As of January 1, 2023 $ 164.48 $ 50.44 As of January 1, 2022 $ 151.15 $ 48.39 As of April 1, 2021 $ 143.48 $ 47.13 As of January 1, 2021 $ 136.84 $ 44.99 As of January 1, 2020 $ 136.71 $ 44.93 As of January 1, 2019 $ 134.71 $ 44.32 As of January 1, 2018 $ 76.31 $ 41.91 Rates in non-former CBAs that are not defined as rural are set based on the rates in former CBAs.
Average Medicare reimbursement rates in rural areas E1390 E1392 As of January 1, 2024 $ 168.96 $ 51.18 As of January 1, 2023 $ 164.48 $ 50.44 As of January 1, 2022 $ 151.15 $ 48.39 As of April 1, 2021 $ 143.48 $ 47.13 As of January 1, 2021 $ 136.84 $ 44.99 As of January 1, 2020 $ 136.71 $ 44.93 As of January 1, 2019 $ 134.71 $ 44.32 As of January 1, 2018 $ 76.31 $ 41.91 31 Rates in non-former CBAs that are not defined as rural are set based on the rates in former CBAs.
Finally, future changes in tax laws could limit our ability to obtain the future tax benefits represented by our deferred tax assets. See Note 6 – Income taxes in the notes of our consolidated financial statements in this Annual Report on Form 10-K for additional information and factors that could impact the Company’s ability to realize the deferred tax assets.
Finally, future changes in tax laws could limit our ability to obtain the future tax benefits represented by our deferred tax assets. See Note 7 – Income taxes in the notes to our consolidated financial statements in this Annual Report on Form 10-K for additional information and factors that could impact our ability to realize the deferred tax assets.
We cannot predict the potential impact to rental revenues in future periods associated with patients in the capped rental period. • The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, includes, among other things, face-to-face physician encounter requirements for certain durable medical equipment and home health services, and a requirement that by 2016, the competitive bidding process must be nationalized or prices in non-competitive bidding areas must be adjusted to match competitive bidding prices. • There have been significant U.S. reimbursement and policy changes associated with the COVID-19 PHE that impact oxygen therapy and other durable medical equipment.
We cannot predict the potential impact to rental revenues in future periods associated with patients in the capped rental period. • The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, included, among other things, face-to-face physician encounter requirements for certain durable medical equipment and home health services, and a requirement that by 2016, the competitive bidding process be nationalized or prices in non-competitive bidding areas be adjusted to match competitive bidding prices. • There were significant U.S. reimbursement and policy changes associated with the COVID-19 PHE that impacted oxygen therapy and other durable medical equipment.
For example, for the years ended December 31, 2022 and 2021, we experienced net foreign currency losses of $0.8 million and $0.7 million, respectively, and for the year ended December 31, 2020 we experienced a net foreign currency gain of $0.6 million. Fluctuations in currency exchange rates could have an adverse impact on our financial results in the future.
For example, for the year ended December 31, 2023, we experienced a net foreign currency gain of $0.2 million, and for the years ended December 31, 2022 and 2021, we experienced net foreign currency losses of $0.8 million and $0.7 million, respectively. Fluctuations in currency exchange rates could have an adverse impact on our financial results in the future.
For example, we have previously experienced a decline in sales to one large national homecare provider who purchased through our private label partner. We have also experienced a decline in sales from other home medical equipment providers and these providers have communicated to us that they continue to be subject to capital constraints.
For example, we have previously experienced a decline in sales to one large national homecare provider who purchased through our private label partner. We have also experienced a decline in sales from other HME providers and these providers have communicated to us that they continue to be subject to capital constraints.
We utilize a third-party contract manufacturer located in the Czech Republic for production of a portion of our Inogen One G3 and Inogen One G5 concentrators and for repair services for these products. Since 2018, our contract manufacturer has produced the vast majority of the concentrators required to support our European demand and we expect this to continue in 2023.
We utilize a third-party contract manufacturer located in the Czech Republic for production of a portion of our Inogen One G3 and Inogen One G5 concentrators and for repair services for these products. Since 2018, our contract manufacturer has produced the vast majority of the concentrators required to support our European demand.
Failure to submit the required information under the federal Physician Payment Sunshine Act may result in civil monetary penalties of up to an aggregate of $0.19 million per year (and up to an aggregate of $1.265 million per year for “knowing failures”), subject to an annual adjustment for inflation.
Failure to submit the required information under the federal Physician Payment Sunshine Act may result in civil monetary penalties of up to an aggregate of $0.2 million per year (and up to an aggregate of $1.363 million per year for “knowing failures”), subject to an annual adjustment for inflation.
Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
Monitoring unauthorized use of our intellectual property is difficult and costly. Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize the risk of this occurring, any such failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business.
We own trademark registrations for the marks “印诺真” and “艾诺根” in China. We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom. We own a trademark registration for the mark “Satellite Conserver” in Canada.
We own a trademark registration for the mark “ イノジェン ” in Japan. We own trademark registrations for the marks “ 印 诺 真 ” and “ 艾 诺 根 ” in China. We own trademark registrations for the mark “Inogen One” in Australia, Canada, China, South Korea, Mexico, Europe (European Union Registration), and the United Kingdom.
We own trademark registrations for the mark “Inogen” in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay. We own a trademark registration for the mark “イノジェン” in Japan.
We own trademark registrations for the mark “Inogen” in Argentina, Australia, Canada, Chile, China, Columbia, Ecuador, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Israel, Japan, Kuwait, New Zealand, Norway, Paraguay, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay. We own a pending application for the mark “Inogen” in the Dominican Republic.
There are a number of risks associated with our dependence on a contract manufacturer, including: • reduced control over delivery schedules and planning; • reliance on the quality assurance procedures of a third party; • risks associated with our contract manufacturer failing to manufacture our products according to our specifications, quality regulations, including the FDA’s Quality System regulations, or otherwise manufacturing products that we or regulatory authorities deem to be unsuitable for commercial use; • risks associated with our contract manufacturer’s ability to successfully undergo FDA and other regulatory authority quality inspections; • potential uncertainty regarding manufacturing yields and costs; • availability of manufacturing capability and capacity, particularly during periods of high demand and the COVID-19 pandemic and related PHE; • risks and uncertainties associated with the location or country where our products are manufactured, including potential manufacturing disruptions caused by social, geopolitical or environmental factors; • changes in U.S. law or policy governing foreign trade, manufacturing, development and investment in the countries where we manufacture our products, including the World Trade Organization Information Technology Agreement or other free trade agreements; • delays in delivery by suppliers due to customs clearing delays, shipping delays, scarcity of raw materials and changes in demand from us or their other customers; • limited warranties provided to us; and • potential misappropriation of our intellectual property.
There are a number of risks associated with our dependence on a contract manufacturer, including: • reduced control over delivery schedules and planning; • reliance on the quality assurance procedures of a third party; • risks associated with our contract manufacturer failing to manufacture our products according to our specifications, quality regulations, including the FDA’s Quality System regulations, or otherwise manufacturing products that we or regulatory authorities deem to be unsuitable for commercial use; • risks associated with our contract manufacturer’s ability to successfully undergo FDA and other regulatory authority quality inspections; • potential uncertainty regarding manufacturing yields and costs; • availability of manufacturing capability and capacity, particularly during periods of high demand; • risks and uncertainties associated with the location or country where our products are manufactured, including potential manufacturing disruptions caused by social, geopolitical or environmental factors; • changes in U.S. law or policy governing foreign trade, manufacturing, development and investment in the countries where we manufacture our products, including the World Trade Organization Information Technology Agreement or other free trade agreements; • delays in delivery by suppliers due to customs clearing delays, shipping delays, scarcity of raw materials and changes in demand from us or their other customers; • limited warranties provided to us; and • potential misappropriation of our intellectual property. 34 These and other risks could impair our ability to fulfill orders, harm our sales and impact our reputation with customers.
In addition, any disruption or delay in the shipping of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations. During the years ended December 31, 2022, 2021 and 2020, approximately 26.8%, 22.2% and 20.1%, respectively, of our total revenue was generated from customers located outside of the United States.
In addition, any disruption or delay in the shipping of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations. During the years ended December 31, 2023, 2022 and 2021, approximately 28.3%, 26.8% and 22.2%, respectively, of our total revenue was generated from customers located outside of the United States.
Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010 and possibly other anti-corruption, anti-bribery and anti-money laundering laws in the more than fifty-nine countries around the world where we have conducted activities and have sold our products.
Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act of 2010 and possibly other anti-corruption, anti-bribery and anti-money laundering laws in the more than sixty-two countries around the world where we have conducted activities and have sold our products.
For many years, Lincare, Inc. (a subsidiary of the Linde Group), Apria Healthcare, Inc., AdaptHealth Corp., Rotech Healthcare, Inc., and Viemed Healthcare, Inc. have been among the market leaders in providing respiratory therapy products, while the remaining market is serviced by local providers.
(a subsidiary of the Linde Group), Apria Healthcare, Inc., AdaptHealth Corp., Rotech Healthcare, Inc., and Viemed Healthcare, Inc. have been among the market leaders in providing respiratory therapy products, while the remaining market is serviced by local providers.
We receive a significant amount of our sales revenue from a limited number of customers, including distributors, HME providers, our private label partner, resellers, and charitable organizations. For the years ended December 31, 2022, 2021, and 2020, sales revenue to our top 10 customers accounted for approximately 30.5%, 27.4% and 29.0%, respectively, of our total revenue.
We receive a significant amount of our sales revenue from a limited number of customers, including distributors, HME providers, our private label partner, resellers, and charitable organizations. For the years ended December 31, 2023, 2022, and 2021, sales revenue to our top 10 customers accounted for approximately 25.2%, 30.5% and 27.4%, respectively, of our total revenue.
Medicare revenue, including patient co-insurance and deductible obligations, represented 15.0% of our total revenue in the year ended December 31, 2022 and 10.6% in the year ended December 31, 2021. 31 Medicare reimbursement for oxygen rental equipment is limited to a maximum of 36 months within a 60-month service period, and the equipment remains the property of the home oxygen supplier.
Medicare revenue, including patient co-insurance and deductible obligations, represented 13.7% of our total revenue in the year ended December 31, 2023 and 15.0% in the year ended December 31, 2022. Medicare reimbursement for oxygen rental equipment is limited to a maximum of 36 months within a 60-month service period, and the equipment remains the property of the home oxygen supplier.
As a reminder, the bids for oxygen were based on the Healthcare Common Procedure Coding System (HCPCS) code E1390, which is for stationary oxygen, and there were 130 regions bid. The simple average of the 2018 payment amounts for these regions for this code was $73.98.
As a reminder, the bids for oxygen were based on the HCPCS code E1390, which is for stationary oxygen, and there were 130 regions bid. The simple average of the 2018 payment amounts for these regions for this code was $73.98.
This will allow the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.
This allows the Medicare Administrative Contractors to make coverage determinations regarding the use of home oxygen and oxygen equipment for cluster headaches.
Effective April 1, 2021, rates were adjusted to remove a percentage reduction that was put in place to meet the budget neutrality requirement previously mandated by section 1834(a)(9)(D)(ii) of the Social Security Act. Note that the 2021 rates listed below include CARES Act increased rates due to the COVID-19 PHE, which may not be in place for all of 2022.
Effective April 1, 2021, rates were adjusted to remove a percentage reduction that was put in place to meet the budget neutrality requirement previously mandated by section 1834(a)(9)(D)(ii) of the Social Security Act. Note that the 2021 rates listed below include CARES Act increased rates due to the COVID-19 PHE.
We own a trademark application for the Inogen design in Bolivia. We own a trademark registration for the Inogen design in China. We own a trademark registration for the mark “إنوجن” in Saudi Arabia. Other service marks, trademarks, and trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.
We own a trademark registration for the mark “إنوجن” in Saudi Arabia. We own a pending application for the Inogen One G5 design in Brazil. Other service marks, trademarks, and trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.
Medicare’s service reimbursement programs accounted for 77.0%, 81.9% and 81.5% of rental revenue for the years ended December 31, 2022, 2021 and 2020, respectively, and based on total revenue were 11.6%, 10.6% and 7.5% for the years ended December 31, 2022, 2021 and 2020, respectively.
Medicare’s service reimbursement programs accounted for 67.7%, 77.0% and 81.9% of rental revenue for the years ended December 31, 2023, 2022 and 2021, respectively, and based on total revenue were 13.7%, 11.6% and 10.6% for the years ended December 31, 2023, 2022 and 2021, respectively.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we lease approximately 4,000 square feet of office space in Smyrna, Tennessee; Huntsville, Alabama; Aurora, Colorado; and Breukelen in the Netherlands with lease terms of 3 years. We also own land and office space in Manitowoc, Wisconsin.
Biggest changeIn addition, we lease approximately 4,000 square feet of office space in Smyrna, Tennessee; Huntsville, Alabama; and Aurora, Colorado with lease terms of 3 years; De Meern in the Netherlands with a lease term of 5 years; and approximately 4,300 square feet of office and warehouse space in Montpellier, France under leases that expire in June 2029 and October 2032.
PROPERTIES As of December 31, 2022, we lease approximately 51,000 square feet of manufacturing and office space at our corporate headquarters in Goleta, California under a lease that expires in March 2030; approximately 154,000 square feet of manufacturing and office space in Plano, Texas under a lease that expires in April 2031; and approximately 94,000 square feet of office space in Cleveland, Ohio under a lease that expires in September 2024.
PROPERTIES As of December 31, 2023, we lease approximately 18,000 square feet of office space at our corporate headquarters in Goleta, California under a lease that expires in January 2028; approximately 154,000 square feet of manufacturing and office space in Plano, Texas under a lease that expires in April 2031; and approximately 94,000 square feet of office space in Cleveland, Ohio under a lease that expires in September 2024.
Added
We lease approximately 51,000 square feet of manufacturing and office space in Goleta, California under a lease that expires in March 2030. In July 2023, we entered into an Assignment and Assumption of Lease Agreement in which a third party (Assignee) assumed the rights, title, and interest in the lease, including assumption of lease payments.
Added
Commencing February 1, 2024 and ending May 31, 2031, the Assignee assumes responsibility for the monthly lease payments. Notwithstanding the Assignee's assumption of lease payments, we remain the primary obligor under the lease to the landlord.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther litigation The Company is party to various legal proceedings arising in the normal course of business. The Company carries insurance, subject to specified deductibles under the policies, to protect against losses from certain types of legal claims.
Biggest changeITEM 3. LEGAL PROCEEDI NGS We are party to various legal proceedings and investigations arising in the normal course of business. We carry insurance, subject to specified deductibles under the policies, to protect against losses from certain types of legal claims.
At this time, the Company does not anticipate that any of these other proceedings arising in the normal course of business will have a material adverse effect on the Company’s business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4.
At this time, we do not anticipate that any of these other proceedings arising in the normal course of business will have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact us because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4.
Removed
ITEM 3. LEGAL PROCEEDI NGS Civil investigative demand On June 21, 2022, the Company received a civil investigative demand (CID) from the United States Attorney’s Office for the Northern District of Iowa.
Removed
The CID states that it was issued in a False Claims Act investigation to determine whether there is or has been a violation of the False Claims Act and that the investigation involves concerns of inappropriate kickbacks provided by certain manufacturers of portable oxygen concentrators and related products in violation of the Anti-Kickback Statute.
Removed
The CID followed informal requests from the United States Attorney’s Office for the Northern District of Iowa begun in late 2020, with which the Company voluntarily complied, to obtain information concerning the Company’s participation in (i) zero-interest or below market-rate loans through a third party lender to finance customer purchases; (ii) guaranteeing the obligation of a customer to a finance company in connection with financing of purchases of Company equipment; and (iii) entering into an agreement with a customer that included marketing, exclusivity, discount, and favorable financing terms.
Removed
The Company is cooperating in the investigation. The Company is currently unable to predict the outcome of this investigation or whether qui tam or other litigation is probable. Regardless of the outcome, this inquiry has the potential to have an adverse impact on the Company due to any related defense and settlement costs, diversion of management resources, and other factors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSTOCKHOLDER RETURN PERFORMANCE GRAPH COMPARISON OF THE 5 YEAR CUMULATIVE TOTAL RETURN Among Inogen, Inc., the S & P Healthcare Equipment and Supplies Index, the Russell 2000 Index and the NASDAQ Composite Index 62 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Inogen, Inc. $ 100.00 $ 150.64 $ 82.32 $ 53.34 $ 40.52 $ 23.91 S & P Healthcare Equipment & Supplies^ (1) 100.00 108.80 132.36 176.18 183.70 139.58 Russell 2000^ (2) 100.00 87.82 108.38 128.95 146.45 114.70 NASDAQ Composite^ (3) 100.00 96.12 129.59 186.43 228.03 151.61 (1) The S&P Healthcare Equipment and Supplies Index is a capitalization weighted-average index compiled of healthcare companies in the S&P 500 Index.
Biggest changeSTOCKHOLDER RETURN PERFORMANCE GRAPH COMPARISON OF THE 5 YEAR CUMULATIVE TOTAL RETURN Among Inogen, Inc., the S & P Healthcare Equipment and Supplies Index, the Russell 2000 Index and the NASDAQ Composite Index 63 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Inogen, Inc. $ 100.00 $ 84.25 $ 54.60 $ 41.47 $ 24.47 $ 6.82 S & P Healthcare Equipment & Supplies^ (1) $ 100.00 $ 121.65 $ 161.92 $ 168.83 $ 128.29 $ 120.25 Russell 2000^ (2) $ 100.00 $ 123.40 $ 146.82 $ 166.75 $ 130.60 $ 150.31 NASDAQ Composite^ (3) $ 100.00 $ 134.82 $ 193.96 $ 237.24 $ 157.74 $ 226.24 (1) The S&P Healthcare Equipment and Supplies Index is a capitalization weighted-average index compiled of healthcare companies in the S&P 500 Index.
This graph assumes an investment of $100 on December 31, 2017 in each of our common stock, the NASDAQ Composite Index, the S & P Healthcare Equipment and Supplies Index, the Russell 2000 Index and assumes reinvestment of dividends, if any. The stock price performance shown on the graph below is not necessarily indicative of future stock price performance.
This graph assumes an investment of $100 on December 31, 2018 in each of our common stock, the NASDAQ Composite Index, the S & P Healthcare Equipment and Supplies Index, the Russell 2000 Index and assumes reinvestment of dividends, if any. The stock price performance shown on the graph below is not necessarily indicative of future stock price performance.
Securities authorized for issuance under equity compensation plans The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in PART III Item 12 of this Annual Report on Form 10-K. Unregistered sales of equity securities None. Issuer purchases of equity securities None. ITEM 6. [RESE RVED] 63
Securities authorized for issuance under equity compensation plans The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in PART III Item 12 of this Annual Report on Form 10-K. Unregistered sales of equity securities None. Issuer purchases of equity securities None. ITEM 6. [RESE RVED] 64
The following graph compares the performance of our common stock for the periods indicated with the performance of the S&P Healthcare and Supplies Index, the Russell 2000 Index, and the NASDAQ Composite Index from December 31, 2017 to December 31, 2022.
The following graph compares the performance of our common stock for the periods indicated with the performance of the S&P Healthcare and Supplies Index, the Russell 2000 Index, and the NASDAQ Composite Index from December 31, 2018 to December 31, 2023.
(2) The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. (3) The NASDAQ Composite is a market-value weighted index of all common stocks listed on the NASDAQ. Stockholders As of February 17, 2023, there were 12 registered stockholders of record for our common stock.
(2) The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. (3) The NASDAQ Composite is a market-value weighted index of all common stocks listed on the NASDAQ. Stockholders As of February 23, 2024, there were 9 registered stockholders of record for our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther income (expense) Years ended December 31, Change 2022 vs. 2021 % of Revenue (amounts in thousands) 2022 2021 $ % 2022 2021 Interest income $ 2,837 $ 129 $ 2,708 2099.2 % 0.7 % 0.0 % Other expense (862 ) (710 ) (152 ) 21.4 % -0.2 % -0.2 % Total other income (expense), net $ 1,975 $ (581 ) $ 2,556 439.9 % 0.5 % -0.2 % Total other income (expense), net increased $2.6 million for the year ended December 31, 2022 from the year ended December 31, 2021, an increase of 439.9% from the comparable period, primarily attributable to an increase of $2.7 million in interest income due to the higher interest rate environment, partially offset by an increase of $0.2 million in net foreign currency losses.
Biggest changeImpairment charges Years ended December 31, Change 2023 vs. 2022 % of Revenue (amounts in thousands) 2023 2022 $ % 2023 2022 Goodwill impairment $ 32,894 $ — $ 32,894 100.0 % 10.4 % 0.0 % Impairment charges for the year ended December 31, 2023 resulted from a drop in our public stock price and resulted in impairment charges to goodwill. 77 Other income (expense) Years ended December 31, Change 2023 vs. 2022 % of Revenue (amounts in thousands) 2023 2022 $ % 2023 2022 Interest income $ 6,574 $ 2,837 $ 3,737 131.7 % 2.1 % 0.7 % Other income (expense) 468 (862 ) 1,330 154.3 % 0.1 % -0.2 % Total other income, net $ 7,042 $ 1,975 $ 5,067 256.6 % 2.2 % 0.5 % Total other income, net increased $5.1 million for the year ended December 31, 2023 from the year ended December 31, 2022, an increase of 256.6% from the comparable period.
Additionally, as more home medical equipment (HME) providers adopt portable oxygen concentrators in their businesses, we expect our historical seasonality in the domestic business-to-business channel could change as well, which was previously influenced mainly by consumer buying patterns. Direct-to-consumer sales seasonality may also be impacted by the number of sales representatives and the amount of marketing spend in each quarter.
As more home medical equipment (HME) providers adopt portable oxygen concentrators in their businesses, we expect our historical seasonality in the domestic business-to-business channel could change as well, which was previously influenced mainly by consumer buying patterns. Direct-to-consumer sales seasonality may also be impacted by the number of sales representatives and the amount of marketing spend in each quarter.
Generally, our direct-to-consumer sales have higher gross margins than our business-to-business sales. Rental revenue Our rental revenue is primarily derived from the rental of our Inogen One and Inogen At Home systems to patients through reimbursement from Medicare, private payors and Medicaid, which typically also includes a patient responsibility component for patient co-insurance and deductibles.
Generally, our direct-to-consumer sales have higher gross margins than our business-to-business sales. 72 Rental revenue Our rental revenue is primarily derived from the rental of our Inogen One and Inogen At Home systems to patients through reimbursement from Medicare, private payors and Medicaid, which typically also includes a patient responsibility component for patient co-insurance and deductibles.
Amounts related to the capped rental period have not been material in the periods presented. The lease term begins on the date products are shipped to patients and are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private payors, and Medicaid.
Amounts related to the capped rental period have not been material in the periods presented. 66 The lease term begins on the date products are shipped to patients and are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including Medicare, private payors, and Medicaid.
A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. 73 We account for uncertainties in income tax in accordance with ASC 740-10— Accounting for Uncertainty in Income Taxes .
A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. We account for uncertainties in income tax in accordance with ASC 740-10— Accounting for Uncertainty in Income Taxes .
We plan to also invest in clinical studies to evaluate expected improvements in clinical, economic and patient reported outcomes associated with the use of our products as part of our efforts to drive payor and prescriber advocacy for our products. • Expand our product offerings.
We plan to also invest in clinical studies to evaluate expected improvements in clinical, economic and patient reported outcomes associated with the use of our products as part of our efforts to drive payor and prescriber advocacy for our products. • Expand our product offerings and indications for use.
Our future funding requirements will depend on many factors, including market acceptance of our products; the cost of our research and development activities; payments from customers; the cost, timing, and outcome of litigation or disputes involving intellectual property rights, our products, employee relations, cyber security incidents, or otherwise; the cost and timing of acquisitions; the cost and timing of regulatory clearances or approvals; the cost and timing of establishing additional sales, marketing, and distribution capabilities; and the effect of competing technological and market developments.
Our future funding requirements will depend on many factors, including market acceptance of our products; the cost of our research and development activities; payments from customers; the cost, timing, and outcome of litigation or disputes involving intellectual property rights, our products, employee relations, cyber security incidents, or otherwise; the cost and timing of acquisitions and integration thereof; the cost and timing of regulatory clearances or approvals; the cost and timing of establishing additional sales, marketing, and distribution capabilities; and the effect of competing technological and market developments.
Revenue from product sales is generally recognized upon shipment of the product but is deferred for certain transactions when control has not yet transferred to the customer. 64 Our product is generally sold with a right of return and we may provide other incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize.
Revenue from product sales is generally recognized upon shipment of the product but is deferred for certain transactions when control has not yet transferred to the customer. 65 Our product is generally sold with a right of return and we may provide other incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022, which discussion is incorporated herein by reference and which is available free of charge on the SECs website at www.sec.gov .
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023, which discussion is incorporated herein by reference and which is available free of charge on the SECs website at www.sec.gov .
We are primarily focused on expanding new products that drive benefits to patients, prescribers and our customers with a clinically-relevant pipeline.
We are focused on expanding new products that drive benefits to patients, prescribers and our customers with a clinically relevant pipeline.
Management focuses on patients on service as a leading indicator of likely future rental revenue; however, actual rental revenue recognized is subject to a variety of other factors, including billable patients as a percentage of patients on service, reimbursement levels by payor, patient location, the number of capped patients, write-offs for uncollectable balances, and rental revenue adjustments.
Management focuses on patients on service as a leading indicator of likely future rental revenue; however, actual rental revenue recognized is subject to a variety of other factors, including billable patients as a percentage of patients on service, reimbursement levels by payor, patient location, the number of capped patients, write-offs for uncollectible balances, and rental revenue adjustments.
Inogen Connect, our connectivity platform on our Inogen One G4 ® and Inogen One G5 products in the United States and Canada, is compatible with Apple and Android platforms and includes patient features such as purity status, battery life, product support functions, notification alerts, and remote software updates.
Inogen Connect, our connectivity platform on our Inogen One G4 ® and Inogen One G5, and Inogen Rove 6 products in the United States and Canada, is compatible with Apple and Android platforms and includes patient features such as purity status, battery life, product support functions, notification alerts, and remote software updates.
The MD&A is organized in the following sections: • Critical accounting policies and estimates • Recent accounting pronouncements • Macroeconomic environment and COVID-19 pandemic • Overview • Basis of presentation • Results of operations • Liquidity and capital resources • Sources of funds • Use of funds • Non-GAAP financial measures Critical accounting policies and estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S.
The MD&A is organized in the following sections: • Critical accounting policies and estimates • Recent accounting pronouncements • Macroeconomic environment • Overview • Basis of presentation • Results of operations • Liquidity and capital resources • Sources of funds • Use of funds • Non-GAAP financial measures Critical accounting policies and estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S.
Comparison of years ended December 31, 2021 and 2020 A discussion of changes in our results of operations during the year ended December 31, 2021 compared to the year ended December 31, 2020 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
Comparison of years ended December 31, 2022 and 2021 A discussion of changes in our results of operations during the year ended December 31, 2022 compared to the year ended December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
We plan to grow our system sales in the coming years through multiple strategies including: improving sales force productivity, hiring additional sales representatives directly or through our contract sales organization, investing in consumer and physician awareness and advocacy through increased sales and marketing efforts, expanding our clinical evidence, expanding our sales infrastructure and efforts outside of the United States, expanding our business-to-business sales through key strategic partnerships, and enhancing our product offerings through additional product launches.
We plan to grow our system sales in the coming years through multiple strategies including: improving sales force productivity, hiring additional sales representatives directly, investing in consumer and physician awareness and advocacy through increased sales and marketing efforts, expanding our clinical evidence, expanding our sales infrastructure and efforts outside of the United States, expanding our business-to-business sales through key strategic partnerships, and enhancing our product offerings through additional product launches.
Product is not deployed until both the prescription and payment are secured. Once a full system is deployed, the patient has 30 calendar days to return the product, subject to the payment of a minimal processing and handling fee. Approximately 6-10% of consumers who purchase a system return the system during this 30-day return period.
Product is not deployed until both the prescription and payment are secured. Once a full system is deployed, the patient has 30 calendar days to return the product, subject to the payment of a processing and handling fee. Approximately 6-11% of consumers who purchase a system return the system during this 30-day return period.
Net cash used in operating activities for the year ended December 31, 2022 consisted primarily of our net loss of $83.8 million and the non-cash add back for change in fair value of the earnout liability of $15.4 million, partially offset by non-cash adjustment items such as loss on disposal of intangible asset of $52.2 million, depreciation of equipment and leasehold improvements and amortization of intangibles of $23.5 million, provision for sales returns and doubtful accounts of $13.0 million, stock-based compensation expense of $12.3 million, net loss on disposal of rental equipment and other fixed assets of $3.1 million, and provision for inventory obsolescence and other inventory losses of $2.4 million.
The net changes in operating assets and liabilities resulted in net cash provided of $14.3 million. 79 Net cash used in operating activities for the year ended December 31, 2022 consisted primarily of our net loss of $83.8 million and the non-cash add back for change in fair value of the earnout liability of $15.4 million, partially offset by non-cash adjustment items such as loss on disposal of intangible asset of $52.2 million, depreciation of equipment and leasehold improvements and amortization of intangibles of $23.5 million, provision for sales returns and doubtful accounts of $13.0 million, stock-based compensation expense of $12.3 million, net loss on disposal of rental equipment and other fixed assets of $3.1 million, and provision for inventory obsolescence and other inventory losses of $2.4 million.
Accounts receivables are reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received, although product was delivered and revenue was earned. Upon determination that an account is uncollectable, it is 65 written-off and charged to the allowance.
Accounts receivables are reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received, although product was delivered and revenue was earned. Upon determination that an account is uncollectible, it is written-off and charged to the allowance.
These products would include innovations that strengthen our offerings in COPD, as well as future innovations that differentiate beyond devices to allow patients and clinicians to better manage respiratory disease with advanced portable oxygen concentrations with digital health value added services, broader use for hypercapnia and shortness-of-breath, and expansion to other related disease indications.
These products would include innovations that strengthen our offerings in COPD, as well as future innovations that differentiate beyond devices to allow patients and clinicians to better manage respiratory disease with advanced portable oxygen concentrators with digital health value added services, expansion of use to hypercapnia, shortness-of-breath, and to other related disease indications.
Other income (expense), net Our other income (expense), net consists primarily of foreign currency gains and (losses), as well as interest income earned on cash equivalents and marketable securities. Income taxes We account for income taxes in accordance with ASC 740— Income Taxes .
Other income (expense), net Our other income (expense), net consists primarily of foreign currency gains and (losses), sublease income, and interest income earned on cash equivalents and marketable securities. Income taxes We account for income taxes in accordance with ASC 740— Income Taxes .
We have sold our products in a total of 59 international countries and overseas regions outside the United States through our wholly-owned subsidiary, distributors or directly to large “house” accounts, which include gas companies, HME oxygen providers, and resellers.
We have sold our products in a total of 62 international countries and overseas regions outside the United States through our wholly-owned subsidiaries, distributors or directly to large “house” accounts, which include gas companies, HME oxygen providers, and resellers.
As a result of the TAV technology intangible asset disposal, a quantitative analysis was required to be performed as of December 31, 2022 and concluded that there was no impairment. A quantitative analysis was not required to be performed as of December 31, 2021.
As a result of the TAV technology intangible asset disposal in 2022, a quantitative analysis was required to be performed as of December 31, 2022 and concluded that there was no impairment.
While we believe HME providers are still in the process of converting their business model to a non-delivery model through the purchase of POCs, growth has been challenged due to the COVID-19 pandemic and related PHE, HME restructuring efforts, lack of access to available credit, provider capital expenditure constraints, and risk of potential changes in reimbursement rates.
While we believe HME providers are still in the process of converting their business model to a non-delivery model through the purchase of POCs, growth has been challenged due to HME restructuring efforts, lack of access to available credit, provider capital expenditure constraints, and risk of potential changes in reimbursement rates.
Our critical accounting policies and estimates include those related to: • revenue recognition; and • acquisitions and related acquired intangible assets and goodwill. Revenue recognition We generate revenue primarily from sales and rentals of our products. Our products consist of our proprietary line of oxygen concentrators and related accessories.
Our critical accounting policies and estimates include those related to: • revenue recognition; • acquisitions and related acquired intangible assets and goodwill; and • long-lived asset impairment. Revenue recognition We generate revenue primarily from sales and rentals of our products. Our products consist of our proprietary line of oxygen concentrators and related accessories.
For the year ended December 31, 2021, we invested $23.9 million in the production and purchase of rental assets and other property, equipment, and intangible assets as well as $10.0 million in corporate bonds with maturities greater than three months that were classified as marketable securities, partially offset by $19.3 million in maturities of marketable securities. 78 For the year ended December 31, 2020, we invested $22.8 million in corporate bonds, U.S.
For the year ended December 31, 2021, we invested $23.9 million in the production and purchase of rental assets and other property, equipment, and intangible assets as well as $10.0 million in corporate bonds with maturities greater than three months that were classified as marketable securities, partially offset by $19.3 million in maturities of marketable securities.
We also expect that our rental revenue will be impacted by the number of our sales representatives, reimbursement rate changes, including the impact of COVID-19 PHE changes, the level of and response from potential customers to direct-to-consumer marketing spend, product launches, the number of billable patients and denial rates, and other uncontrollable factors such as changes in the market and competition.
We expect that our rental revenue will be impacted by the number of our sales representatives, reimbursement rate changes, the level of and response from potential customers to direct-to-consumer marketing spend, product launches, the number of billable patients and denial rates, and other uncontrollable factors such as changes in the market and competition.
The percentage of capped patients may fluctuate over time as new patients come on service, patients come off of service before and during the capped rental period, and existing patients enter the capped rental period. We had approximately 45,600, 42,900 and 32,200 oxygen rental patients as of December 31, 2022, 2021 and 2020, respectively.
The percentage of capped patients may fluctuate over time as new patients come on service, patients come off service before and during the capped rental period, and existing patients enter the capped rental period. We had approximately 51,900, 45,600 and 42,900 oxygen rental patients as of December 31, 2023, 2022 and 2021, respectively.
For the year ended December 31, 2020, net cash provided by financing activities consisted of $2.4 million from purchases under our employee stock purchase program and the proceeds received from stock options that were exercised, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.4 million.
For the year ended December 31, 2023, net cash provided by financing activities consisted of $1.5 million from the proceeds received from stock options that were exercised and purchases under our employee stock purchase program, partially offset by the payment of employment taxes related to the vesting of restricted stock awards and restricted stock units of $0.5 million.
We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.
We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.
We estimate that the Inogen One G5 is suitable for over 90% of ambulatory long-term oxygen therapy patients based on our analysis of the patients who have contacted us and their clinical needs.
We estimate that the Inogen Rove 6 and Inogen One G5 are each suitable for over 90% of ambulatory long-term oxygen therapy patients based on our analysis of the patients who have contacted us and their clinical needs.
Sales revenue Our sales revenue is primarily derived from the sale of our Inogen One systems, Inogen At Home systems, and related accessories to individual consumers, our private label partner, HME providers, distributors, resellers, and charitable organizations worldwide. Sales revenue is classified into two areas: business-to-business sales and direct-to-consumer sales.
Sales revenue Our sales revenue is primarily derived from the sale of our Rove, Inogen One, and Inogen At Home systems in addition to our related accessories to individual consumers, our private label partner, HME providers, distributors, and resellers. Sales revenue is classified into two areas: business-to-business sales and direct-to-consumer sales.
Provisions for warranty obligations are included in cost of sales revenue and are provided for at the time of revenue recognition. Supply chain disruptions began negatively impacting our cost of sales revenue starting in the third quarter of 2021 and are expected to continue to do so through 2023.
Provisions for warranty obligations are included in cost of sales revenue and are provided for at the time of revenue recognition. The impact of supply chain disruptions began negatively impacting our cost of sales revenue starting in the third quarter of 2021 and is expected to continue to do so through the first half of 2024.
As a result of these factors, product purchases can be subject to changes in demand by customers. We sold approximately 170,500 systems in 2022, 175,800 systems in 2021 and 178,900 systems in 2020.
As a result of these factors, product purchases can be subject to changes in demand by customers. We sold approximately 130,500 systems in 2023, 170,500 systems in 2022 and 175,800 systems in 2021.
For the years ended December 31, 2022, 2021 and 2020, we received $1.7 million, $15.6 million and $2.4 million, respectively, in proceeds related to stock option exercises and our employee stock purchase plan.
For the years ended December 31, 2023, 2022 and 2021, we received $1.5 million and $1.7 million and $15.6 million, respectively, in proceeds related to stock option exercises and our employee stock purchase plan.
We use EBITDA and Adjusted EBITDA as key performance measures because we believe they facilitate operating performance comparisons from period-to-period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of depreciation and amortization expense on our fixed assets and intangible assets, the impact of stock-based compensation expense, the impact of the change in fair value of the earnout liability and the impact of the loss on disposal of intangible asset.
We use EBITDA and Adjusted EBITDA as key performance measures because we believe they facilitate operating performance comparisons from period-to-period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of depreciation and amortization expense on our fixed assets and intangible assets, the impact of stock-based compensation expense, the impact of the change in fair value of the earnout liability, the impact of acquisition-related expenses, the impact of restructuring-related costs, and impairment charges.
In the years ended December 31, 2022, 2021 and 2020, approximately 26.8%, 22.2% and 20.1%, respectively, of our total revenue was from sales to customers outside the United States, primarily in Europe.
In the years ended December 31, 2023, 2022 and 2021, approximately 28.3%, 26.8% and 22.2%, respectively, of our total revenue was from sales to customers outside the United States, primarily in Europe.
Approximately 70.9%, 74.1% and 73.6% of the non-U.S. revenue for the years ended December 31, 2022, 2021 and 2020, respectively, were invoiced in Euros with the remainder invoiced in United States dollars.
Approximately 77.7%, 70.9% and 74.1% of the non-U.S. revenue for the years ended December 31, 2023, 2022 and 2021, respectively, were invoiced in Euros with the remainder invoiced in United States dollars.
In addition, general and administrative expense includes professional services, such as legal, patent registration and defense costs, insurance, consulting and accounting services, including audit and tax services, and travel and entertainment expenses. General and administrative expense also includes changes in the fair value of the New Aera earnout liability.
In addition, general and administrative expense includes professional services, such as legal, patent registration and defense costs, insurance, consulting and accounting services, including audit and tax services, and travel and entertainment expenses. General and administrative expense also includes one-time costs, such as restructuring, acquisition expenses, or changes in the fair value of the earnout liability.
Additionally, we have experienced, along with companies across many industries, the macro-economic impact of a challenging employment environment related to hiring and retaining employees and wage inflation. We expect that these hiring, retention, and wage inflation challenges, as well as challenges related to maintaining our current workforce, will continue through 2023.
We also have experienced, along with most other companies across many industries, the macroeconomic impact of a challenging employment environment related to hiring and retaining employees and wage inflation. We expect that these hiring, retention, and wage inflation challenges, as well as challenges related to maintaining our current workforce, will continue through 2024.
Cost of rental revenue included $11.1 million of rental asset depreciation for the year ended December 31, 2022 compared to $8.9 million for the year ended December 31, 2021. Gross margin on sales revenue decreased to 38.3% for the year ended December 31, 2022 from 48.1% for the year ended December 31, 2021.
Cost of rental revenue included $12.9 million of rental asset depreciation for the year ended December 31, 2023 compared to $11.1 million for the year ended December 31, 2022. Gross margin on sales revenue decreased to 37.0% for the year ended December 31, 2023 from 38.3% for the year ended December 31, 2022.
Loss on disposal of intangible asset Years ended December 31, Change 2022 vs. 2021 % of Revenue (amounts in thousands) 2022 2021 $ % 2022 2021 Loss on disposal of intangible asset $ 52,161 $ — $ 52,161 100.0 % 13.8 % 0.0 % Loss on disposal of intangible asset increased $52.2 million for the year ended December 31, 2022 from the year ended December 31, 2021, an increase of 100.0% from the comparable period.
Loss on disposal of intangible asset Years ended December 31, Change 2023 vs. 2022 % of Revenue (amounts in thousands) 2023 2022 $ % 2023 2022 Loss on disposal of intangible asset $ — $ 52,161 $ (52,161 ) -100.0 % 0.0 % 13.8 % Loss on disposal of intangible asset decreased $52.2 million for the year ended December 31, 2023 from the year ended December 31, 2022, a decrease of 100.0% from the comparable period.
The net changes in operating assets and liabilities resulted in no effect on cash flows from operating activities. Investing activities Net cash used in investing activities generally includes the production and purchase of rental assets, property, plant and equipment, and intangibles to support our expanding business as well as maturities or purchases of marketable securities.
The net changes in operating assets and liabilities resulted in a net use of cash of $20.1 million. Investing activities Net cash used in investing activities generally includes the production and purchase of rental assets, property, plant and equipment, and intangibles to support our expanding business as well as maturities or purchases of marketable securities.
(2) We obtain individual components for our products from a wide variety of individual suppliers. Consistent with industry practice, we acquire components through a combination of purchase orders, supplier contracts, and open orders based on projected demand information. Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier.
Consistent with industry practice, we acquire components through a combination of purchase orders, supplier contracts, and open orders based on projected demand information. Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier.
Also, as part of our growth plans, we expect to continue to expand sales capacity by focusing on increased productivity driven by improved sales management discipline, insights-informed tools, and optimized patient lead generation. • Expand our domestic direct-to-consumer marketing efficiently and optimize pricing.
Also, as part of our growth plans, we expect to continue to expand sales capacity by focusing on increased productivity driven by improved sales management discipline, insights-informed tools, and optimized patient lead generation. • Expand our rental revenues.
This may be influenced based on outside factors, including the result of tender offerings, changes in insurance plan coverage or reimbursement rates, business restructuring activities toward a non-delivery model, capital constraints, and overall changes in the net oxygen therapy patient populations, and is presently being impacted by the COVID-19 pandemic and related PHE.
This may be influenced based on outside factors, including the result of tender offerings, changes in insurance plan coverage or reimbursement rates, business restructuring activities toward a non-delivery model, capital constraints, mergers and acquisitions, and overall changes in the net oxygen therapy patient populations.
In the year ended December 31, 2022, we spent $33.3 million in media and advertising costs versus $35.2 million in the comparative period in 2021.
In the year ended December 31, 2023, we spent $27.1 million in media and advertising costs versus $33.3 million in the comparative period in 2022.
Net cash provided by operating activities for the year ended December 31, 2020 consisted primarily of our non-cash expense items such as depreciation of equipment and leasehold improvements and amortization of our intangibles of $18.6 million, provision for sales returns and doubtful accounts of $10.5 million, stock-based compensation expense of $8.2 million, provision for rental revenue adjustments of $2.6 million, provision for inventory obsolescence and other inventory losses of $1.3 million, change in fair value of earnout liability of $1.1 million, net loss on disposal of rental equipment and other fixed assets of $0.9 million and our net loss of $5.8 million.
Net cash used in operating activities for the year ended December 31, 2023 consisted primarily of our net loss of $102.4 million, partially offset by non-cash adjustment items such as impairment charges of $32.9 million, depreciation of equipment and leasehold improvements and amortization of intangibles of $18.2 million, provision for sales returns and doubtful accounts of $10.7 million, stock-based compensation expense of $7.4 million, change in fair value of earnout liability of $6.8 million, net loss on disposal of rental assets and other assets of $4.5 million, provision for inventory obsolescence and other inventory losses of $2.7 million, and loss on purchase commitments of $2.1 million.
Our products have been sold in 59 countries around the world through distributors and medical equipment companies outside of the United States and through direct patient and prescriber sales, as well as resellers and home medical equipment companies in the United States.
Our products are sold internationally through distributors and medical equipment companies outside of the United States and through direct patient and prescriber sales, as well as resellers and home medical equipment companies in the United States.
In the year ended December 31, 2022, sales in Europe as a percentage of total international sales revenue increased slightly to 86.9% versus 86.8% in the comparative period in 2021.
In the year ended December 31, 2023, sales in Europe as a percentage of total international sales revenue decreased to 85.3% versus 86.9% in the comparative period in 2022.
Recent accounting pronouncements Refer to Note 2 – Summary of significant accounting policies of the audited consolidated notes included in Part IV, Item 16, "Form 10-K Summary" in this Annual Report on Form 10-K for further discussion.
Recent accounting pronouncements Refer to Note 2 – Summary of significant accounting policies in the notes to the consolidated financial statements included in Part IV, Item 16, "Form 10-K Summary" in this Annual Report on Form 10-K for further discussion. Macroeconomic environment The global economy is experiencing increased inflationary pressures.
Some of these limitations are: • EBITDA and Adjusted EBITDA do not reflect our cash expenditures for capital equipment or other contractual commitments; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect capital expenditure requirements for such replacements; • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not include changes in fair value of earnout liability related to our acquisitions; and • other companies, including companies in our industry, may calculate EBITDA and Adjusted EBITDA measures differently, which reduces their usefulness as a comparative measure.
Some of these limitations are: • EBITDA and Adjusted EBITDA do not reflect our cash expenditures for capital equipment or other contractual commitments; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect capital expenditure requirements for such replacements; • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not include changes in fair value of earnout liability related to our acquisitions; • Adjusted EBITDA does not include acquisition-related expenses, whether the acquisition was consummated or not pursued; • Adjusted EBITDA does not include charges represent the costs associated with workforce reductions and associated costs and other restructuring-related activities; • goodwill impairment; and • other companies, including companies in our industry, may calculate EBITDA and Adjusted EBITDA measures differently, which reduces their usefulness as a comparative measure. 81 In evaluating EBITDA and Adjusted EBITDA, we anticipate that in the future we will incur expenses within these categories similar to this presentation.
EBITDA and Adjusted EBITDA should not be considered alternatives to net loss, or any other measure of financial performance calculated and presented in accordance with U.S. GAAP.
Below, we have provided a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA should not be considered alternatives to net loss, or any other measure of financial performance calculated and presented in accordance with U.S. GAAP.
We incurred significant costs in the second half of 2021 and 2022 associated with acquiring chips on the open market and a portion of these costs increased our prepaid expense and inventory given that these components were not yet in finished products that were sold during the period.
We incurred significant costs associated with acquiring chips on the open market and a portion of these costs increased our inventory given that these components were not yet in finished products that were sold during the period. Additionally, we are seeing cost inflation for other components used in our products.
The decrease was partially offset by higher average selling prices. Rental revenue gross margin percentage decreased to 54.3% for the year ended December 31, 2022 from 57.4% for the year ended December 31, 2021, primarily due to higher depreciation expense, loss on rental units, and higher servicing costs per patient on service, partially offset by higher Medicare reimbursement rates.
Gross margin on rental revenue decreased to 52.7% for the year ended December 31, 2023 from 54.3% for the year ended December 31, 2022, primarily due to higher rental asset depreciation expense and servicing costs per patient on service, partially offset by higher Medicare reimbursement rates.
We incurred $21.9 million, $16.6 million and $14.1 million in 2022, 2021 and 2020, respectively, in research and development costs, and we intend to continue to make such investments in the foreseeable future. With EU MDR certification in December 2022, we launched Rove 6, our latest portable oxygen concentrator. We have also announced U.S.
We incurred $20.8 million, $21.9 million and $16.6 million in 2023, 2022 and 2021, respectively, in research and development expenses, and we intend to continue to make such investments in the foreseeable future. We launched the Inogen ® Rove 6 TM , our latest portable oxygen concentrator, in December 2022 in the EU and UK. We have also received U.S.
We derive the majority of our revenue from the sale and rental of our Inogen One systems and related accessories to patients, insurance carriers, home healthcare providers, resellers, and distributors, including our private label partner. We sell multiple configurations of our Inogen One and Inogen At Home systems with various batteries, accessories, warranties, power cords and language settings.
We derive the majority of our revenue from the sale and rental of our Inogen One and Rove systems and related accessories to patients, insurance carriers, home healthcare providers, resellers, and distributors, including our private label partner.
GAAP measure, for each of the periods indicated: (amounts in thousands) Years ended December 31, Non-GAAP EBITDA and Adjusted EBITDA 2022 2021 2020 Net loss $ (83,772 ) $ (6,333 ) $ (5,829 ) Non-GAAP adjustments: Interest income (2,837 ) (129 ) (909 ) Provision for income taxes 504 14,992 549 Depreciation and amortization 23,514 21,628 18,581 EBITDA (non-GAAP) (62,591 ) 30,158 12,392 Stock-based compensation 12,283 10,943 8,203 Change in fair value of earnout liability (15,386 ) (11,596 ) 1,053 Loss on disposal of intangible asset 52,161 — — Adjusted EBITDA (non-GAAP) $ (13,533 ) $ 29,505 $ 21,648 80 Contractual obligations The following table reflects a summary of our contractual obligations as of December 31, 2022.
GAAP measure, for each of the periods indicated: (amounts in thousands) Years ended December 31, Non-GAAP EBITDA and Adjusted EBITDA 2023 2022 2021 Net loss (GAAP) $ (102,449 ) $ (83,772 ) $ (6,333 ) Non-GAAP adjustments: Interest income, net (6,574 ) (2,837 ) (129 ) Provision for income taxes 105 504 14,992 Depreciation and amortization 18,152 23,514 21,628 EBITDA (non-GAAP) (90,766 ) (62,591 ) 30,158 Stock-based compensation 7,427 12,283 10,943 Acquisition-related expenses 2,413 — — Restructuring-related and other charges 3,426 — — Impairment charges 32,894 — — Change in fair value of earnout liability 6,822 (15,386 ) (11,596 ) Loss on disposal of intangible asset — 52,161 — Adjusted EBITDA (non-GAAP) $ (37,784 ) $ (13,533 ) $ 29,505 82 Contractual obligations The following table reflects a summary of our contractual obligations as of December 31, 2023.
Food and Drug Administration 510(K) clearance for Rove 4 that will be launched in 2023. We launched the Inogen One G5 in 2019.
Food and Drug Administration (FDA) 510(k) clearance for the Inogen ® Rove 4 TM that will be launched in 2024.
As of December 31, 2022, we had twenty-four pending patent applications and seventy-two issued patents relating to the design and construction of our respiratory devices.
As of December 31, 2023, we had thirty-three pending patent applications and eighty-seven issued patents relating to the design and construction of our respiratory devices.
Domestic direct-to-consumer sales decreased 5.4% for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to lower sales representative headcount and an increased percentage of non-tenured sales representatives, partially offset by increased average selling prices versus the comparative period in the prior year.
Domestic direct-to-consumer sales decreased 28.0% for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by lower volume due to lower sales representative headcount and lower marketing spend, partially offset by increased average selling prices versus the comparative period in the prior year.
We plan to add new rental patients on service in future periods through multiple 70 strategies, including expanding our prescriber sales teams, expanding our direct-to-consumer marketing efforts, investing in patient and physician awareness and advocacy, expanding clinical evidence, and securing additional insurance contracts.
We plan to add new rental patients on service in future periods through multiple strategies, including expanding our prescriber sales teams, expanding our direct-to-consumer marketing efforts, investing in patient and physician awareness and advocacy, expanding clinical evidence, and securing additional insurance contracts. 71 A portion of rental patient population operates in a capped rental period during which no additional reimbursement is allowed unless additional criteria are met.
The increase was primarily attributable to an increase in international business-to-business sales, partially offset by lower domestic business-to-business and direct-to-consumer sales. We sold approximately 170,500 oxygen systems during the year ended December 31, 2022 compared to approximately 175,800 oxygen systems sold during the year ended December 31, 2021, a decrease of 3.0%.
The decrease was primarily attributable to a decrease in domestic direct-to-consumer sales as well as lower domestic and international business-to-business sales. We sold approximately 130,500 oxygen systems during the year ended December 31, 2023 compared to approximately 170,500 oxygen systems sold during the year ended December 31, 2022, a decrease of 23.5%.
In support of our European sales, we use a contract manufacturer located in the Czech Republic to manufacture high volume products and perform product repairs to improve delivery to our European accounts.
In support of our European sales, we use a contract manufacturer located in the Czech Republic to manufacture high volume products and perform product repairs to improve delivery to our European accounts. We also use lean manufacturing practices to maximize manufacturing efficiency. We rely on third-party manufacturers to supply several components of our products.
Rental revenue increased in 2022 compared to 2021, primarily due to a greater number of patients on service and higher Medicare reimbursement rates.
Rental revenue increased in 2023, primarily due to higher patients on service and higher Medicare reimbursement rates.
General and administrative expense Years ended December 31, Change 2022 vs. 2021 % of Revenue (amounts in thousands) 2022 2021 $ % 2022 2021 General and administrative expense $ 43,905 $ 37,852 $ 6,053 16.0 % 11.6 % 10.6 % General and administrative expense increased $6.1 million for the year ended December 31, 2022 from the year ended December 31, 2021, an increase of 16.0% from the comparable period.
General and administrative expense Years ended December 31, Change 2023 vs. 2022 % of Revenue (amounts in thousands) 2023 2022 $ % 2023 2022 General and administrative expense $ 75,260 $ 43,905 $ 31,355 71.4 % 23.8 % 11.6 % General and administrative expense increased $31.4 million for the year ended December 31, 2023 from the year ended December 31, 2022, an increase of 71.4% from the comparable period.
The increase in net loss was primarily related to a $52.2 million loss on disposal of intangible asset and a $23.0 million reduction in gross profit and higher operating expense, partially offset by an increase in the benefit from the change in fair value of the New Aera earnout liability.
The increase in net loss was primarily related to the goodwill impairment, a reduction in sales revenue and gross profit, and the change in fair value of the earnout liabilities, partially offset by the $52.2 million loss on disposal of an intangible asset in 2022.
A portion of rental patient population includes a capped rental period during which no additional reimbursement is allowed unless additional criteria are met. This capped period begins after month 36 and continues until month 60. The ratio of billable patients to total patients on service is critical to maintaining rental revenue growth as patients on service increase.
This capped period begins after month 36 and continues until month 60. The ratio of billable patients to total patients on service is critical to maintaining rental revenue growth as patients on service increase.
The largest driver of increased cost was premiums paid for components used to manufacture our batteries and motherboards used in our POCs. The year ended December 31, 2022 included $23.8 million of higher material costs associated with open-market purchases of semiconductor chips used in our batteries and POCs.
The year ended December 31, 2023 included $14.2 million of material cost premiums associated with open-market purchases of semiconductor chips used in our batteries and POCs compared to $23.8 million in the year ended December 31, 2022.
Liquidity and capital resources As of December 31, 2022, we had cash and cash equivalents of $187.0 million, which consisted of highly liquid investments with a maturity of three months or less.
Liquidity and capital resources As of December 31, 2023, we had cash and cash equivalents of $125.5 million, which consisted of highly liquid investments with a maturity of three months or less. In addition, we held marketable securities of $3.0 million, which had maturities of greater than three months.
Use of funds Our principal uses of cash are funding our new rental asset deployments and other capital purchases, operations, and other working capital requirements and, from time-to-time, the acquisition of businesses.
As of December 31, 2023, we had cash and cash equivalents of $125.5 million and marketable securities of $3.0 million. 80 Use of funds Our principal uses of cash are funding our new rental asset deployments and other capital purchases, operations, and other working capital requirements and, from time-to-time, the acquisition of businesses.
Product selling prices and gross margins may fluctuate based on revenue channel mix, as we introduce new products, our product costs change, we have changes in purchase volumes, and as currency variations occur. For example, the higher costs for semiconductor chips has had a negative impact on our gross margin, and we expect that will continue in 2023.
Product selling prices and gross margins may fluctuate based on revenue channel mix, as we introduce new products, our product costs change, we have changes in purchase volumes, and as currency variations occur.
Payments due by period (amounts in thousands) Less than 1-3 3-5 More than Contractual Obligations Total 1 year years years 5 years Operating leases - properties and other (1) $ 25,183 $ 3,974 $ 9,109 $ 8,356 $ 3,744 Purchase obligations (2) 109,900 109,900 — — — Total $ 135,083 $ 113,874 $ 9,109 $ 8,356 $ 3,744 (1) We lease manufacturing and office space in Plano, TX, Goleta, CA, Smyrna, TN, Huntsville, AL, Aurora, CO, Cleveland, OH and Breukelen, Netherlands with terms that expire between 2023 and 2031 and miscellaneous office and processing equipment in Texas, California and Ohio with terms expiring between 2023 and 2031.
Payments due by period (amounts in thousands) Less than 1-3 3-5 More than Contractual Obligations Total 1 year years years 5 years Operating leases - properties and other (1) $ 23,812 $ 4,162 $ 6,561 $ 6,266 $ 6,823 Purchase obligations (2) 83,000 83,000 — — — Total $ 106,812 $ 87,162 $ 6,561 $ 6,266 $ 6,823 (1) We lease manufacturing and office space in Plano, TX, Goleta, CA, Smyrna, TN, Huntsville, AL, Aurora, CO, Cleveland, OH, De Meern, Netherlands and Montpellier, France with terms that expire between 2024 and 2031 and miscellaneous office and processing equipment in Texas, California and Ohio with terms expiring between 2024 and 2028.
We also use lean manufacturing practices to maximize manufacturing efficiency. We rely on third-party manufacturers to supply several components of our products. We have elected to source certain key components from single sources of supply, including our batteries, motors, valves, columns, and some molded plastic components.
We have elected to source certain key components from single sources of supply, including our batteries, motors, valves, columns, and some molded plastic components.
Revenue We classify our revenue in two main categories: sales revenue and rental revenue. There will be fluctuations in mix between business-to-business sales, direct-to-consumer sales and rental revenue from period-to-period.
Basis of presentation The following describes the line items set forth in our consolidated statements of comprehensive loss. Revenue We classify our revenue in two main categories: sales revenue and rental revenue. There will be fluctuations in mix between business-to-business sales, direct-to-consumer sales, and rental revenue from period-to-period.
We plan to continue to invest in research and development activities to stay at the forefront of patient preference in oxygen therapy, including significant investments in clinical research.
We have made substantial investments in research and development since our inception. Our research and development efforts have focused primarily on development and commercialization of new and existing products. We plan to continue to invest in research and development activities to stay at the forefront of patient preference in oxygen therapy, including significant investments in clinical research.
In addition, if our operating performance during the next twelve months is below our expectations, our liquidity and ability to operate our business could be adversely affected. 77 The following tables show a summary of our cash flows and working capital for the periods and as of the dates indicated: (amounts in thousands) Years ended December 31, Summary of consolidated cash flows 2022 2021 2020 Cash provided by (used in) operating activities $ (37,532 ) $ 23,633 $ 37,013 Cash used in investing activities (10,877 ) (14,645 ) (25,640 ) Cash provided by financing activities 380 15,000 2,066 Effect of exchange rates on cash (481 ) (426 ) 486 Net increase (decrease) in cash and cash equivalents $ (48,510 ) $ 23,562 $ 13,925 (amounts in thousands) December 31, Summary of working capital 2022 2021 Total current assets $ 304,645 $ 329,186 Total current liabilities 65,349 61,512 Net working capital $ 239,296 $ 267,674 Operating activities Historically, we derive operating cash flows from cash collected from the sales and rental of our products and services.
The following tables show a summary of our cash flows and working capital for the periods and as of the dates indicated: (amounts in thousands) Years ended December 31, Summary of consolidated cash flows 2023 2022 2021 Cash provided by (used in) operating activities $ (3,234 ) $ (37,532 ) $ 23,633 Cash used in investing activities (59,315 ) (10,877 ) (14,645 ) Cash provided by financing activities 960 380 15,000 Effect of exchange rates on cash 67 (481 ) (426 ) Net increase (decrease) in cash and cash equivalents $ (61,522 ) $ (48,510 ) $ 23,562 (amounts in thousands) December 31, Summary of working capital 2023 2022 Total current assets $ 207,067 $ 304,645 Total current liabilities 72,496 65,349 Net working capital $ 134,571 $ 239,296 Operating activities Historically, we derive operating cash flows from cash collected from the sales and rental of our products and services.
Net loss Years ended December 31, Change 2022 vs. 2021 % of Revenue (amounts in thousands) 2022 2021 $ % 2022 2021 Net loss $ (83,772 ) $ (6,333 ) $ (77,439 ) -1222.8 % -22.2 % -1.8 % Net loss increased $77.4 million for the year ended December 31, 2022 from the year ended December 31, 2021, or an increase of 1222.8% from the comparable period.
Net loss Years ended December 31, Change 2023 vs. 2022 % of Revenue (amounts in thousands) 2023 2022 $ % 2023 2022 Net loss $ (102,449 ) $ (83,772 ) $ (18,677 ) -22.3 % -32.5 % -22.2 % Net loss increased $18.7 million for the year ended December 31, 2023 from the year ended December 31, 2022, or an increase of 22.3% from the comparable period.
For these reasons, we expect sales gross margin percentage to fluctuate over time based on the sales channel mix, product mix, and changes in average selling prices and manufacturing cost per unit.
The supply chain constraints are primarily associated with semiconductor chips used in our batteries and printed circuit boards which are components of our POCs. For these reasons, we expect sales gross margin percentage to fluctuate over time based on the sales channel mix, product mix, and changes in average selling prices and manufacturing cost per unit.
Contingent consideration In connection with our acquisition of New Aera, we have contingent obligations to pay up to $31.4 million in earnout payments in cash if certain future financial results are met. As a result of the earnout requirements not expected to be met as of December 31, 2022, we do not expect to make the earnout payments.
Contingent consideration In connection with our acquisition of New Aera and Physio-Assist, we have contingent obligations to pay up to $31.4 million and $13.0 million, respectively, in earnout payments in cash if certain future financial results are met.
We also expect research and development expense to increase in absolute dollars in future periods as we continue to invest in our engineering and technology teams to support our new and enhanced product research and development efforts and manufacturing improvements. We expect increased research and development costs associated with broadening our product portfolio.
We continue to invest in our engineering and technology teams to support our new and enhanced product research and development efforts and manufacturing improvements. We will also focus research and development efforts on broadening our product portfolio.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed6 unchanged
Biggest changeWe began entering into foreign exchange forward contracts in December 2015 to protect our forecasted U.S. dollar-equivalent earnings from adverse changes in foreign currency exchange rates. These hedging contracts reduce, but will not entirely eliminate, the impact of adverse currency exchange rate movements on revenue, cash, receivables and payables.
Biggest changeThese hedging contracts reduce, but will not entirely eliminate, the impact of adverse currency exchange rate movements on revenue, cash, receivables and payables. We performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign exchange rates to the hedging contracts and the underlying exposures described above.
The effect of a 10% adverse change in exchange rates on foreign denominated cash, receivables and payables as of December 31, 2022 would not have had a material effect on our financial position, results of operations or cash flows.
The effect of a 10% adverse change in exchange rates on foreign denominated cash, receivables and payables as of December 31, 2023 would not have had a material effect on our financial position, results of operations or cash flows.
FINANCIAL STATEMENTS AN D SUPPLEMENTARY DATA The financial statements and supplementary data required by this item are included in Part IV, Item 15 of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 82
FINANCIAL STATEMENTS AN D SUPPLEMENTARY DATA The financial statements and supplementary data required by this item are included in Part IV, Item 15 of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 84
A hypothetical 1.00% (100 basis points) increase in interest rates would not have materially impacted the fair value of our marketable securities as of December 31, 2022 and December 31, 2021.
A hypothetical 1.00% (100 basis points) increase in interest rates would not have materially impacted the fair value of our marketable securities as of December 31, 2023 and December 31, 2022.
We estimate prior to any hedging activity that a 10% adverse change in exchange rates on our foreign denominated sales would have resulted in a $7.2 million decline in revenue for the year ended December 31, 2022. We designate these forward contracts as cash flow hedges for accounting purposes.
We estimate prior to any hedging activity that a 10% adverse change in exchange rates on our foreign denominated sales would have resulted in a $6.9 million decline in revenue for the year ended December 31, 2023. We designate these forward contracts as cash flow hedges for accounting purposes.
If overall interest rates had increased or decreased by 1.00% (100 basis points), neither our interest expense nor our interest income would have been materially affected during the years ended December 31, 2022 or December 31, 2021. ITEM 8.
If overall interest rates had increased or decreased by 1.00% (100 basis points), our interest income would not have been materially affected during the years ended December 31, 2023 or December 31, 2022. ITEM 8.
We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents. Declines in interest rates, however, would reduce future investment income.
We do not enter into investments for trading or speculative purposes. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents. Declines in interest rates, however, would reduce future investment income.
As our operations in countries outside of the United States grow, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future.
As our operations in countries outside of the United States grow, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. 83 We began entering into foreign exchange forward contracts to protect our forecasted U.S. dollar-equivalent earnings from adverse changes in foreign currency exchange rates.
We performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign exchange rates to the hedging contracts and the underlying exposures described above. As of December 31, 2022, the analysis indicated that these hypothetical market movements would not have a material effect on our financial position, results of operations or cash flows.
As of December 31, 2023, the analysis indicated that these hypothetical market movements would not have a material effect on our financial position, results of operations or cash flows.
Changes in the intrinsic value are recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into revenue to offset the hedged exposures as they occur. 81 Interest rate fluctuation risk We had cash and cash equivalents of $187.0 million as of December 31, 2022, which consisted of highly liquid investments with a maturity of three months or less.
Changes in the intrinsic value are recorded as a component of accumulated other comprehensive loss and subsequently reclassified into revenue to offset the hedged exposures as they occur.
Removed
The primary goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes.
Added
Interest rate fluctuation risk We had cash and cash equivalents of $125.5 million as of December 31, 2023, which consisted of highly liquid investments with a maturity of three months or less, and $3.0 million of marketable securities with maturity dates of greater than three months. The primary goals of our investment policy are liquidity and capital preservation.

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