# Inogen Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Inogen Inc](/companies/ingn.md) (CIK 1294133)
- Form: 10-Q
- Filed: 2025-05-08
- Accepted by EDGAR: May 8, 2025, 16:12 ET
- Period: 2025-03-31
- Accession: 0000950170-25-066966
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1294133/000095017025066966/ingn-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1294133/000095017025066966/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $68.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $45.9m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $36.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $4.0m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$7.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$97.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$6.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.25 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.25 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 25,164,444 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$16.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $292.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $118.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $200.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $308.4m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $65.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $110.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $198.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 45,763 characters.

**Forward-Looking Statements**

The following discussion and analysis of the financial condition and results of our operations should be in conjunction with the consolidated financial statements and related notes elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the section entitled “Risk Factors” of our Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q filed with the SEC. Forward-looking statements include, but are not limited to, statements concerning the following:

- information concerning our possible or assumed future cash flows, revenue, sources of revenue, results of operations, and operating and other expenses;
- the impact of expense inflation on the components we use in our products, and the impact of inflation of the ability of our customers to afford our products;
- the potential for future supply chain constraints;
- our assessment and expectations regarding reimbursement rates, future rounds of competitive bidding, Centers for Medicare and Medicaid Services changes to Home Use of Oxygen national coverage determination and how those changes are implemented, and future changes in rental revenue;
- our ability to develop new products, improve our existing products, and increase the value of our products;
- our expectations regarding the timing of new products and product improvement launches as well as product features and specifications;
- our expectations with respect to our cost reduction initiatives;
- our expectations regarding regulatory approvals and government and third-party payor coverage and reimbursement;
- the ability of our competitors to introduce products to the market that may be lower priced than ours, may have more product features than ours, or are otherwise more accepted by the market, including our home medical equipment providers;
- our ability to attract key talent to the Company, and to retain key employees;
- our ability to efficiently integrate Physio-Assist and our ability to obtain reimbursement coverage and payment for the Physio-Assist products in the U.S.;
- expectations with respect to market share, unit sales, business strategies, financing plans, expansion of our business, competitive position, industry environment, and potential growth opportunities;
- our expectations regarding the market size, market growth, and the growth potential for our business;
- our ability to grow our business and enter new markets;
- our expectations regarding the average selling prices and manufacturing costs of our products and our ongoing efforts to reduce average unit costs for our systems;
- our expectations regarding the productivity of our sales and marketing teams;
- our expectations with respect to our European and U.S. facilities and our expectations with respect to our contract manufacturer in Europe;
- our expectations, and changing regulations regarding tariffs that are or may be imposed by the U.S. on certain imported materials and products;
- our ability to successfully acquire and integrate companies and assets;
- our expectations regarding the impact and implementation of trade regulations on our supply chain;
- our expectations of future accounting pronouncements or changes in our accounting policies;
- our internal control environment;
- the effects of seasonal trends on our results of operations and estimated hiring plans; and
- our expectation that our existing capital resources and the cash to be generated from expected product sales and rentals will be sufficient to meet our projected operating and investing requirements for at least the next 12 months.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the sections entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and our Annual Report on Form 10-K filed with the SEC on February 28, 2025. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events, or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

“Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” “Inogen Rove,” and the Inogen design, are registered trademarks with the United States Patent and Trademark Office of Inogen, Inc. We own pending applications for the marks “Rove,” “Inogen Rove 4,” “Inogen Rove 6,” and “VOXI” with the United States Patent and Trademark Office. We own trademark registrations for the mark “Inogen” in Argentina, Australia, Bermuda, Canada, Chile, China, Columbia, Ecuador, Hong Kong, South Korea, Malaysia, Mexico, Europe (European Union Registration), the United Kingdom, Iceland, India, Indonesia, Israel, Japan, Kuwait, New Zealand, Norway, Dominican Republic, Paraguay, Peru, Philippines, Turkey, Singapore, South Africa, Switzerland, Uruguay, and Vietnam. We own pending applications for the mark “Inogen” in Thailand, and the UAE. 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 a trademark registration for the mark “Satellite Conserver” in Canada. We own trademark registrations 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 marks “Inogen Rove 4” and “Inogen Rove 6” 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 pending applications for the marks “Inogen Rove 4” and “Inogen Rove 6” in Canada. We own trademark registrations for the mark “Rove” in Australia, China, Europe (European Union Registration), Indonesia, Mexico, and the United Kingdom. We own pending applications for the mark “Rove” in Argentina, Brazil, Canada, Colombia, India, South Korea, and Saudi Arabia. We own trademark registrations for the mark “Inogen Rove” in Australia, China, Europe (European Union Registration), Indonesia, Mexico, and the United Kingdom. We own pending applications for the mark “Inogen Rove” in Argentina, Brazil, Canada, Colombia, India, South Korea, and Saudi Arabia. We own trademark registrations for the Inogen design in Bolivia and China. 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. We own a pending application for “Inogen Simeox” in China. We own a pending application for the mark “VOXI” in Europe (European Union Registration). Other service marks, trademarks, and trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. “PHYSIOASSIST,” the Physio-Assist logo, “SIMEOX,” and the Pissenlit logo are registered trademarks of Inogen’s wholly-owned subsidiary Physio-Assist. Physio-Assist owns trademark registrations for the mark “PHYSIOASSIST” in Europe (European Union Registration), France, Japan, United Kingdom, and USA. Physio-Assist owns trademark registrations for the Physio-Assist logo in China, Europe (European Union Registration), France, Japan, South Korea, United Kingdom, and USA. Physio-Assist owns trademark registrations for the mark “SIMEOX” in Europe (European Union Registration), France, Japan, Russia, United Kingdom, and USA. Physio-Assist owns pending applications for the mark “SIMEOX” in Argentina, Canada, Colombia, Mexico, Norway, and Switzerland. Physio-Assist owns a trademark registration for the Pissenlit logo in France.

In this Quarterly Report on Form 10-Q, “the Company,” “we,” “us,” and “our” refer to Inogen, Inc. and its subsidiaries.

The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements and the accompanying condensed notes to those statements included elsewhere in this document. In addition, you should refer to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.

### 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 U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with U.S. GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates and such differences could be material to the financial position and results of operations.

Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to:

- revenue recognition; and
- acquisitions and related acquired intangible assets and goodwill.

There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three months ended March 31, 2025 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.

### Recent accounting pronouncements

Information about recently adopted and proposed accounting pronouncements, if applicable, is included in Note 2 to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q under the heading “Recent Accounting Pronouncements” and is incorporated herein by reference.

### Macroeconomic environment

While we have worked to improve our global supply chain, challenges and potential disruptions still exist. We have experienced, and may continue to experience, increases in cost and limited availability of certain raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and inflation within the global supply chain, as well as increases in wage costs and the cost and time to distribute our products. Uncertainty around inflationary pressures, interest rates, monetary policy, and changes in tariffs and tax laws could potentially cause new, or exacerbate existing, economic challenges that we may face, including the impact of foreign currency fluctuations on our results of operations, or result in an economic downturn or recession, which could negatively impact our business operations and results. Existing and future potential geopolitical dynamics may create economic, supply chain, energy, and other challenges, including disruptions to business operations, which has impacted, and may in the future negatively impact our business. In particular, international conflicts could create instability, have and may further result in sanctions, tariffs, and other measures that restrict international trade and may negatively affect our business operations and results.

We continue to monitor the additional tariffs announced by the U.S. government, and potential tariff modifications or the imposition of tariffs or export controls by other countries. As the tariffs are currently detailed, we do not expect a material impact to our business.

For additional information on risk factors that could impact our results, please refer to the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025.

### Overview

We are a medical technology company that primarily develops, manufactures, and markets innovative respiratory market products, including our portable oxygen therapy solutions for patients with chronic respiratory conditions as well as our Simeox product for airway clearance treatment. Our leading portfolio of innovative POCs is designed to deliver high output ratio-to-weight, meaningful sound suppression and has among the longest run times in the industry so that we can meet the needs of patients across a variety of disease states. We are positioned in the market as both a medical technology company and as a home medical equipment provider that is accredited in all 50 states in the United States with a significant patient, prescriber and provider reach. Our products are sold in the United States through direct patient and prescriber sales, as well as resellers and home medical equipment companies, and internationally through distributors and medical equipment companies.

We derive the majority of our revenue from the sale and rental of our portable oxygen concentrator systems and related accessories to patients, insurance carriers, home healthcare providers, resellers, and distributors, including our private label collaborator. We sell multiple configurations of our Inogen One®, Inogen Rove and Inogen At Home systems with various batteries, accessories, warranties, power cords, and language settings. Our goal is to design, build, and market oxygen solutions that redefine how long-term oxygen therapy is delivered.

To accomplish this goal, we intend to:

- *Expand our domestic home medical equipment, or HME, provider and reseller network.* We remain focused on our domestic business-to-business partnerships, including relationships with distributors, key accounts, resellers, our private label collaborator, and traditional HME providers. We offer patient-preferred, low total cost of ownership products to help providers convert their businesses to a non-delivery POC business model. The U.S. market represents a main opportunity for growth as we believe that the POC adoption is still in a low penetration rate.
- *Increase international business-to-business adoption.* We continue to believe there is a sizable international market opportunity, particularly in Europe where there is existing oxygen reimbursement for respiratory conditions. In order to take advantage of these international markets, we have partnered with distributors who serve key customers in those markets. We additionally have an Inogen base of operations for sales and customer service in the Netherlands along with sales representatives based in focused European countries, and use a contract manufacturer, Foxconn, located in the Czech Republic to support the majority of our European sales volumes. We are also focused on expanding in the Asia-Pacific region and Latin America where we have added sales representatives to set up new distributors in promising markets.
- *Improve our domestic direct-to-consumer sales and prescriber sales teams and increase productivity.* We are continuing to focus on the patient first initiative, which involves cross-training of sales representatives to execute cash sales and insurance rental. Additionally, we expect to continue to focus on increased productivity driven by improved sales management discipline, insights-informed tools, and optimized patient lead generation with a downsized direct-to-consumer sales team.
- *Optimize our rental revenues.* We continue to evolve our operating model to focus the enhanced sales teams to drive increased rental revenue by establishing relationships with the prescriber through a consistent cadence of contact.
- *Invest in our oxygen product offerings to develop innovative products and expand clinical evidence*. We incurred $4.0 million and $6.6 million in the three months ended March 31, 2025 and 2024, respectively, in research and development expenses, and we intend to continue to make such investments in the foreseeable future.

We plan to also continue to 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.* We are focused on expanding new products that drive benefits to patients, prescribers and our customers with a clinically relevant pipeline. These products would include innovations that strengthen our offerings in chronic obstructive pulmonary disease, or 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.

Our Simeox product is a technology-enabled airway clearance and mucus management device predominantly aimed at serving patients with bronchiectasis which is a condition that presents as the lung’s bronchi are damaged and widened in patients with cystic fibrosis, COPD, or other respiratory conditions. Simeox is used in pulmonary rehabilitation centers as well as at home. Simeox has been cleared under CE mark in the European Union and is currently being sold in Europe and several other markets. In addition, we obtained 510(k) clearance for Simeox in December 2024 and plan to leverage our commercial infrastructure and capabilities to market the device in the United States, while continuing to market it in the other geographies. We intend to commercialize Simeox through the sale or rental of the product initially, followed by recurring sales of device disposables. We will begin efforts to obtain market feedback in the first half of 2025, as well as to initialize the work towards reimbursement coverage for the Simeox product in the U.S.

In January 2025, we entered into the Collaboration Agreement with Yuwell. The collaboration with Yuwell is expected to broaden our product portfolio through distribution of certain respiratory products, including Yuwell’s stationary oxygen concentrators, in the United States and select other territories, expand and enhance our innovation pipeline through research and development collaboration, and accelerate the entry of our brand into the Chinese market. In the United States, we expect a limited launch in 2025 with a more extensive launch in 2026 as we focus on market development. In China, we continue to work through the registration process.

### Results of operations

### Comparison of three months ended March 31, 2025 and 2024

#### Revenue

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales revenue | $68,470 | $63,095 | $5,375 | 8.5% | 83.2% | 80.9% |
| Rental revenue | 13,810 | 14,930 | (1,120) | -7.5% | 16.8% | 19.1% |
| Total revenue | $82,280 | $78,025 | $4,255 | 5.5% | 100.0% | 100.0% |

Sales revenue increased $5.4 million, or 8.5%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The increase was primarily attributable to higher demand in domestic and international business-to-business sales. We sold approximately 43,000 oxygen systems during the three months ended March 31, 2025 compared to approximately 33,900 oxygen systems sold during the three months ended March 31, 2024, an increase of 26.8%.

Rental revenue decreased $1.1 million, or 7.5%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in rental revenue was primarily related to a higher mix of lower private-payor reimbursement rates.

*(dollar amounts in thousands)*

| Revenue by region and category | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Business-to-business domestic sales | $21,454 | $16,519 | $4,935 | 29.9% | 26.1% | 21.2% |
| Business-to-business international sales | 31,985 | 26,035 | 5,950 | 22.9% | 38.9% | 33.4% |
| Direct-to-consumer domestic sales | 15,031 | 20,541 | (5,510) | -26.8% | 18.2% | 26.3% |
| Direct-to-consumer domestic rentals | 13,810 | 14,930 | (1,120) | -7.5% | 16.8% | 19.1% |
| Total revenue | $82,280 | $78,025 | $4,255 | 5.5% | 100.0% | 100.0% |

Domestic business-to-business sales increased 29.9% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the result of increased demand from existing customers.

International business-to-business sales increased 22.9% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to higher demand. In the three months ended March 31, 2025, sales in Europe as a percentage of total international sales revenue decreased to 85.6% from 88.2% during the comparable period in 2024.

Domestic direct-to-consumer sales decreased 26.8% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by lower volume due to lower sales representative headcount versus the comparable period in 2024.

Domestic direct-to-consumer rentals decreased 7.5% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily related to a higher mix of lower private-payor reimbursement rates.

#### Cost of revenue and gross profit

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of sales revenue | $38,083 | $35,244 | $2,839 | 8.1% | 46.3% | 45.1% |
| Cost of rental revenue | 7,825 | 8,410 | (585) | -7.0% | 9.5% | 10.8% |
| Total cost of revenue | $45,908 | $43,654 | $2,254 | 5.2% | 55.8% | 55.9% |
| Gross profit - sales revenue | $30,387 | $27,851 | $2,536 | 9.1% | 36.9% | 35.7% |
| Gross profit - rental revenue | 5,985 | 6,520 | (535) | -8.2% | 7.3% | 8.4% |
| Total gross profit | $36,372 | $34,371 | $2,001 | 5.8% | 44.2% | 44.1% |
| Gross margin percentage - sales revenue | 44.4% | 44.1% |  |  |  |  |
| Gross margin percentage- rental revenue | 43.3% | 43.7% |  |  |  |  |
| Total gross margin percentage | 44.2% | 44.1% |  |  |  |  |

Cost of sales revenue increased $2.8 million, or 8.1%, for the three months ended March 31, 2025 from the three months ended March 31, 2024 due primarily to an increase in the number of systems sold.

Cost of rental revenue decreased $0.6 million, or 7.0%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in cost of rental revenue was primarily attributable to a decrease in logistics costs. Cost of rental revenue included $3.0 million of rental asset depreciation for the three months ended March 31, 2025 compared to $3.2 million for the three months ended March 31, 2024.

Gross margin on sales revenue increased to 44.4% for the three months ended March 31, 2025 from 44.1% for the three months ended March 31, 2024. The increase was driven primarily by lower warranty expense, partially offset by channel and customer mix as well as higher material cost premiums associated with open-market purchases of semiconductor chips used in our POCs. Total worldwide business-to-business sales revenue accounted for 78.0% of total sales revenue in the three months ended March 31, 2025 versus 67.4% in the three months ended March 31, 2024.

Gross margin on rental revenue decreased to 43.3% for the three months ended March 31, 2025 from 43.7% for the three months ended March 31, 2024, primarily due to a higher mix shift of private-payor reimbursement and lower net revenue per rental patient as a result of a decrease in the percentage of patients billed compared to total patients on service.

#### Research and development expense

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development expense | $4,034 | $6,578 | $(2,544) | -38.7% | 4.9% | 8.4% |

Research and development expense decreased $2.5 million, or 38.7%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. This decrease was due primarily to a $1.8 million decrease in consulting and a $0.5 million decrease in personnel-related expenses.

#### Sales and marketing expense

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales and marketing expense | $23,757 | $26,936 | $(3,179) | -11.8% | 28.9% | 34.5% |

Sales and marketing expense decreased $3.2 million, or 11.8%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. This decrease was primarily due to decreases of $1.8 million in consulting fees and $0.9 million in media and advertising costs. In the three months ended March 31, 2025, we spent $7.6 million in media and advertising costs versus $8.4 million in the comparable period in 2024.

#### General and administrative expense

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| General and administrative expense | $16,237 | $17,131 | $(894) | -5.2% | 19.7% | 22.0% |

General and administrative expense decreased $0.9 million, or 5.2%, for the three months ended March 31, 2025 from the three months ended March 31, 2024, primarily due to $0.6 million in the change in fair value of the earnout liability.

#### Other income, net

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest income, net | $1,029 | $1,403 | $(374) | -26.7% | 1.3% | 1.8% |
| Other income, net | 356 | 143 | 213 | 149.0% | 0.4% | 0.2% |
| Total other income, net | $1,385 | $1,546 | $(161) | -10.4% | 1.7% | 2.0% |

Total other income, net decreased $0.2 million, or 10.4%, for the three months ended March 31, 2025 from the three months ended March 31, 2024.

#### Income tax benefit

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Income tax benefit | $(97) | $(150) | $53 | -35.3% | -0.1% | -0.2% |
| Effective income tax rate | 1.5% | 1.0% |  |  |  |  |

Income tax benefit decreased less than $0.1 million, or 35.3%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. We continued to record a valuation allowance on the use of deferred tax assets in the current and prior periods. The decrease was attributable to lower foreign and state taxes.

Our effective tax rate for the three months ended March 31, 2025 increased compared to the three months ended March 31, 2024, primarily due to a lower net loss and foreign and state taxes.

#### Net loss

*(dollar amounts in thousands)*

|  | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  | % of Revenue 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net loss | $(6,174) | $(14,578) | $8,404 | 57.6% | -7.5% | -18.7% |

Net loss decreased $8.4 million, or 57.6%, for the three months ended March 31, 2025 from the three months ended March 31, 2024. The decrease in net loss was primarily related to an increase in sales revenue and lower operating expense.

### Liquidity and capital resources

As of March 31, 2025, we had cash and cash equivalents of $118.9 million, which consisted of highly liquid investments with a maturity of three months or less. For the three months ended March 31, 2025, we received $27.2 million from Yuwell and $0.5 million in proceeds related to our ESPP, partially offset by the payment of the earnout liability of $13.0 million. For the three months ended March 31, 2024, we received $0.4 million in proceeds related to our ESPP.

Our principal use of our funds for liquidity and capital resources in the three months ended March 31, 2025 consisted of cash used in investing activities of $2.0 million for additional rental equipment, other property and plant and equipment, partially offset by cash used in operating activities of $16.8 million.

We believe that our current cash, cash equivalents, and marketable securities and the cash to be generated from expected product sales and rentals will be sufficient to meet our projected operating and investing requirements for at least the next 12 months. However, our liquidity assumptions may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. 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. In the future, we may acquire businesses or technologies from third parties, and we may decide to raise additional capital through debt or equity financing to the extent we believe this is necessary to successfully complete these acquisitions. Our future capital requirements will also depend on many additional factors, including those set forth in the risk factors included in Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 28, 2025.

If we require additional funds in the future, we may not be able to obtain such funds on acceptable terms, or at all. In the future, we may also attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we will be subject to increased fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital, which would adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected.

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)*

| Summary of consolidated cash flows | Three months ended March 31, 2025 | 2024 | Change 2025 vs. 2024 $% |  |
| --- | ---: | ---: | ---: | ---: |
| Cash used in operating activities | $(16,790) | $(4,749) | $(12,041) | -253.5% |
| Cash used in investing activities | (2,038) | (13,444) | 11,406 | 84.8% |
| Cash provided by financing activities | 23,951 | 285 | 23,666 | 8303.9% |
| Effect of exchange rates on cash | 1 | (140) | 141 | -100.7% |
| Net decrease in cash and cash equivalents | $5,124 | $(18,048) | $23,172 | -128.4% |

*(amounts in thousands)*

| Summary of working capital | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Total current assets | $200,708 | $185,451 |
| Total current liabilities | 65,451 | 76,686 |
| Net working capital | $135,257 | $108,765 |

27

### Operating activities

Historically, we derive operating cash flows from cash collected from the sales and rental of our products and services. These cash flows received are partially offset by our use of cash for operating expenses to support the growth of our business.

Net cash used in operating activities for the three months ended March 31, 2025 consisted primarily of our net loss of $6.2 million, partially offset by non-cash adjustment items of depreciation of equipment and leasehold improvements and amortization of intangibles of $5.2 million, stock-based compensation expense of $2.1 million, provision for sales returns and doubtful accounts of $1.7 million, and net loss on disposal of rental assets and other assets of $0.9 million. The net changes in operating assets and liabilities resulted in net cash used of $21.3 million, which included the payment of the earnout liability of $9.8 million.

Net cash used in operating activities for the three months ended March 31, 2024 consisted primarily of our net loss of $14.6 million, partially offset by non-cash adjustment items such as depreciation of equipment and leasehold improvements and amortization of intangibles of $5.3 million, stock-based compensation expense of $2.4 million, provision for sales returns and doubtful accounts of $2.2 million, net loss on disposal of rental assets and other assets of $1.2 million, and change in fair value of earnout liability of $0.6 million. The net changes in operating assets and liabilities resulted in a net decrease in cash of $1.5 million.

### Investing activities

Net cash used in investing activities generally includes the production and purchase of rental assets, property, plant and equipment, acquisitions, and intangibles to support our expanding business as well as maturities (purchases) of marketable securities.

For the three months ended March 31, 2025, we invested $2.0 million in the production and purchase of rental assets and other property and equipment.

For the three months ended March 31, 2024, we invested $12.4 million in the purchase of marketable securities, $4.1 million in the production and purchase of rental assets and other property and equipment, partially offset by $3.0 million we received from maturities of marketable securities.

We expend significant manufacturing and production expense in connection with the development and production of our oxygen concentrator and other respiratory care products and, in connection with our rental business, we incur expense in the deployment and maintenance of rental equipment to our patients. Investments will continue to be required in order to grow our sales and rental revenue and continue to supply and replace rental equipment to our rental patients on service.

### Financing activities

Historically, we have funded our operations through our sales and rental revenue and the issuance of preferred and common stock.

For the three months ended March 31, 2025, net cash provided by financing activities consisted of $27.2 million of proceeds from issuance of common stock pursuant to the Purchase Agreement, $0.5 million of proceeds received from purchases under our ESPP, partially offset by the payment of the earnout liability of $3.2 million and employment taxes related to the vesting of RSUs of $0.6 million.

For the three months ended March 31, 2024, net cash provided by financing activities consisted of $0.4 million from the proceeds received from purchases under our ESPP, partially offset by the payment of employment taxes related to the vesting of RSUs of $0.1 million.

### Sources of funds

During the three months ended March 31, 2025, our primary source of cash related to $27.2 million of proceeds from issuance of common stock pursuant to the Purchase Agreement. Our net cash used in operating activities in the three months ended March 31, 2025 was $16.8 million compared to $4.7 million in the three months ended March 31, 2024. As of March 31, 2025, we had cash and cash equivalents of $118.9 million.

### 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 and the payment of the earnout liability. Over the past several years our cash flows from customer collections have remained consistent and our annual cash provided by operating activities has generally been a significant source of capital to the business.

We may need to raise additional funds to support our investing operations, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. 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.

### Non-GAAP financial measures

EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with U.S. GAAP. We define EBITDA as net loss excluding interest income, interest expense, taxes and depreciation and amortization. Adjusted EBITDA also excludes stock-based compensation, change in fair value of earnout liability, acquisition-related expenses, and restructuring-related and other charges. 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 a net loss or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. Our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other organizations because other organizations may not calculate EBITDA and Adjusted EBITDA in the same manner as we calculate these measures.

We include EBITDA and Adjusted EBITDA in this Quarterly Report on Form 10-Q because they are important measures upon which our management assesses our operating performance. 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. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use EBITDA and Adjusted EBITDA for business planning purposes, to incentivize and compensate our management personnel, and in evaluating acquisition opportunities. In addition, we believe EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.

Our uses of EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. 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 costs associated with workforce reductions and associated costs and other restructuring-related activities; and
- other companies, including companies in our industry, may calculate EBITDA and Adjusted EBITDA measures differently, which reduces their usefulness as a comparative measure.

In evaluating EBITDA and Adjusted EBITDA, we anticipate that in the future we will incur expenses within these categories similar to this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by certain expenses. When evaluating our financial results, EBITDA and Adjusted EBITDA should be considered alongside other financial performance measures, including U.S. GAAP results.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most comparable U.S. GAAP measure, for each of the periods indicated:

*(amounts in thousands)*

| Non-GAAP EBITDA and Adjusted EBITDA | Three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net loss (GAAP) | $(6,174) | $(14,578) |
| Non-GAAP adjustments: |  |  |
| Interest income, net | (1,029) | (1,403) |
| Benefit for income taxes | (97) | (150) |
| Depreciation and amortization | 5,189 | 5,265 |
| EBITDA (non-GAAP) | (2,111) | (10,866) |
| Stock-based compensation | 2,147 | 2,416 |
| Acquisition-related expenses | — | 238 |
| Change in fair value of earnout liability | — | 570 |
| Adjusted EBITDA (non-GAAP) | $36 | $(7,642) |

30

## Market risk

As filed, 4,223 characters.

We are exposed to various market risks, including fluctuation in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. We do not hold or issue financial instruments for trading purposes.

### Foreign currency exchange risk

The principal market risk we face is foreign currency exchange risk. The majority of our revenue is denominated in U.S. dollars while the majority of our European sales are denominated in Euros. Our results of operations, certain balance sheet balances and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income or loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency in which they are recorded. The effect of a 10% adverse change in exchange rates on foreign denominated cash, receivables and payables as of March 31, 2025 would not have had a material effect on our financial position, results of operations or cash flows. 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.

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. These 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. As of March 31, 2025, the analysis indicated that these hypothetical market movements would not have a material effect on our financial position, results of operations or cash flows. 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 $2.5 million decline in revenue for the three months ended March 31, 2025. We designate these forward contracts as cash flow hedges for accounting purposes. The fair value of the forward contract is separated into intrinsic and time values. The fair value of forward currency-exchange contracts is sensitive to changes in currency exchange rates. Changes in the time value are coded in other income, net. 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.

### Interest rate fluctuation risk

We had cash, cash equivalents and restricted cash of $122.5 million as of March 31, 2025, which consisted of highly liquid investments with a maturity of three months or less. The primary goals of our investment policy are liquidity and capital preservation. 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. We considered the historical volatility of short-term interest rates and determined that it was reasonably possible that an adverse change of 100 basis points could be experienced in the near term. 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 March 31, 2025 and March 31, 2024. 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 three months ended March 31, 2025 or March 31, 2024.

## Controls and procedures

As filed, 3,121 characters.

### Evaluation of disclosure controls and procedures

The Company maintains a system of disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, which are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported accurately and completely within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, among other processes, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions over time, or that the degree of compliance with the policies and procedures may deteriorate. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. Based upon the evaluation described above, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on effectiveness of controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

## Risk factors

As filed, 776 characters.

The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in our 2024 Annual Report on Form 10-K filed with the SEC on February 28, 2025.

Filed May 8, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-066966. Last ingested by Listed: Oct 24, 2026, 15:10 ET. No prices; not investment advice.