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Inogen of Goleta Releases Strong Fourth-Quarter, Full-Year Financial Results

By Inogen Inc. |

Inogen Inc., a medical technology company based in Goleta offering innovative respiratory products for use in the home care setting, on Thursday reported financial results for the three and 12 months ended Dec. 31, 2013.

Recent Highlights and Accomplishments

» Total revenue of $75.4 million for 2013, up 55 percent versus 2012. Sales revenue of $44 million for 2013, up 57 percent versus 2012; rental revenue of $30.5 million for 2013, up 54 percent versus 2012.

» Rental patient population increased to over 21,300 as of year-end 2013, reflecting growth of 58 percent over 2012.

» Private payor contracts increased to 44 as of Dec. 31, up 47 percent from 30 at Sept. 30, 2013.

» Continued operating leverage driven by customer mix and product mix resulted in margin expansion with total revenue and adjusted EBITDA growth of 55 percent and 128 percent, respectively, for 2013 versus 2012.

» Successfully completed initial public offering in February, resulting in $52.5 million of net proceeds to the company.

"We are pleased with our operational performance and financial results in 2013. Additionally, we successfully completed our initial public offering in February 2014," President/CEO Raymond Huggenberger said. "Entering 2014, Inogen is well-positioned to continue our strong momentum, and we are focused on executing our strategic initiatives including leveraging our marketing and sales capacity, and introducing our innovative stationary oxygen concentrator to expand market penetration."

Fourth Quarter Financial Results

Total revenue for the three months ended Dec. 31 rose 43 percent to $19.8 million, from $13.8 million in the 2012 period. Sales revenue was $10.9 million, up 42 percent from the prior year period. Rental revenue was $8.6 million in the 2013 quarter, up 45 percent from the prior year.

Gross margin was 51.5 percent in the fourth quarter of 2013, compared with 50.8% in the 2012 period. The increase was largely driven by contribution from the Inogen One G3 product, which was launched in the fourth quarter of 2012, an increasing mix towards our direct-to-consumer channel, and additional leverage on servicing costs, partially offset by declining Medicare reimbursement rates.

Operating expense was $9.6 million in the fourth quarter of 2013 versus $6.8 million in 2012. Of those operating expenses, research and development expense was $0.6 million in the quarter versus $0.5 million in the 2012 period. Sales and marketing expense was $5.1 million in the quarter versus $3.8 million in the 2012 period. General and administrative expense was $4 million in the quarter, compared with $2.5 million in the 2012 period.

Adjusted EBITDA for the three months ended Dec. 31 rose 82 percent to $3.2 million from $1.8 million in the 2012 period.

Net income, including the one-time tax asset benefit attributable to common stockholders for the three months ended Dec. 31, was $20.1 million, or 89 cents per diluted common share, compared with ($1.6) million, or ($5.71) loss per diluted common share, for the three months ended Dec. 31, 2012. Adjusted net income excluding this one-time tax benefit was $0.2 million.

Full Year 2013 Financial Results

Total revenue for the year ended Dec. 31 rose 55 percent to $75.4 million, from $48.6 million in the 2012 period. Sales revenue was $44 million up from $28.1 million, a 57 percent increase from the prior year period. Rental revenue was $30.5 million up from $19.9 million in 2013, a 54 percent increase from the prior year.

Gross margin was 51.7 percent for the year ended Dec. 31 compared with 49.3 percent in the 2012 period. The increase was largely driven by the Inogen One G3 product launch in Q4 2012, an increasing mix towards our direct-to-consumer channel, and additional leverage on servicing costs, partially offset by declining Medicare reimbursement rates.

Operating expense was $34.5 million for the year ended Dec. 31 versus $23.1 million in the 2012 period, a 49.3 percent increase. Research and development expense was $2.4 million for the year ended Dec. 31 versus $2.3 million in the 2012 period. Sales and marketing expense was $18.4 million in 2013 versus $12.6 million in the 2012 period. General and administrative expense was $13.8 million in 2013, compared to $8.3 million in the 2012 period.

Adjusted EBITDA for the year ended Dec. 31 rose 128 percent to $13.4 million, from $5.9 million in the 2012 period.

Net income, including the one-time tax asset benefit attributable to common stockholders for the year ended Dec. 31 was $18.2 million, or $1.10 per diluted common share, compared with ($5.2) million, or ($19.97) loss per diluted common share, for the 2012 period. Adjusted net income excluding this one-time tax benefit was $3.6 million.

Cash, cash equivalents, investments and restricted cash were $13.5 million as of Dec. 31, which did not include $52.5 million of IPO proceeds, net of underwriting fees, received in February.

Inogen's Outlook for 2014

» Total revenue in the range of $90 million to $94 million, representing an approximate increase of 19 percent to 25 percent over 2013 revenues.

» Adjusted EBITDA in the range of $17.5 million to $19 million, representing an approximate increase of 30 percent to 41 percent over 2013.

» Net income in the range of $4 million to $5 million




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