Inogen Inc

Previous wording

our ability to efficiently integrate Physio-Assist SAS and our ability to obtain regulatory clearances in the U.S.;

Current wording

our ability to efficiently integrate Physio-Assist and our ability to obtain regulatory clearances and reimbursement in the U.S.;

Previous wording

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 in our Annual Report on Form 10-K filed with the SEC on March 1, 2024. 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.

Current wording

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, our Annual Report on Form 10-K filed with the SEC on March 1, 2024, and our Quarterly Report on Form 10-Q for the calendar quarter ended March 31, 2024. 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.

Previous wording

“Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” the Inogen design, color dandelion 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,” “Inogen Rove 4” and “Inogen Rove 6” with the United States Patent and Trademark Office. 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, Dominican Republic, 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 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 “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 Registrations) 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 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. We own a pending application for the Inogen One G5 design in Brazil. Other service marks, trademarks, and trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. “PHYSIO-ASSIST,” “PHYSIOASSIST,” the Physio-Assist logo, “SIMEOX,” “SIMEOX PRO,” “SIMESOFT,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” and the Pissenlit logo are registered trademarks of Inogen’s wholly-owned subsidiary Physio-Assist. Physio-Assist owns trademark registrations for the mark “PHYSIO-ASSIST” in European Union, France, Japan, United Kingdom, and USA. Physio-Assist owns trademark registrations for the Physio-Assist logo in China, European Union, France, Japan, South Korea, United Kingdom, and USA. Physio-Assist owns trademark registrations for the mark SIMEOX in European Union, France, Japan, Russia, United Kingdom, and USA. Physio-Assist owns trademark registrations in France for the mark “PHYSIOASSIST,” “SIMESOFT,” “SIMEOX PRO,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” and the Pissenlit logo.

Current wording

“Inogen,” “Inogen One,” “Inogen One G3,” “G4,” “G5,” “Oxygen.Anytime.Anywhere,” “Intelligent Delivery Technology,” “Inogen At Home,” 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,” “Inogen Rove 4” and “Inogen Rove 6” with the United States Patent and Trademark Office. 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, Dominican Republic, Peru, Turkey, Singapore, South Africa, Switzerland, and Uruguay. We own pending application for the mark "Inogen" in Bermuda, Indonesia, Taiwan, Thailand, the UAE, and Vietnam. 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 Registrations) 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 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. Other service marks, trademarks, and trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. “PHYSIO-ASSIST,” “PHYSIOASSIST,” the Physio-Assist logo, “SIMEOX,” “SIMEOX PRO,” “SIMESOFT,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” 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 European Union, France, Japan, United Kingdom, and USA. Physio-Assist owns trademark registrations for the Physio-Assist logo in China, European Union, France, Japan, South Korea, United Kingdom, and USA. Physio-Assist owns trademark registrations for the mark SIMEOX in European Union, France, Japan, Russia, United Kingdom, and USA. Physio-Assist owns trademark registrations in France for the marks “PHYSIOASSIST,” “SIMESOFT,” “SIMEOX PRO,” “PHYSIOWEB,” “PHYSIODATA,” “PHYSIOSERVICES,” and the …

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Previous wording

There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three and six months ended June 30, 2024 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 1, 2024.

Current wording

There have been no material changes in our critical accounting policies and estimates in the preparation of our consolidated financial statements during the three and nine months ended September 30, 2024 compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 1, 2024.

Previous wording

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.

Current wording

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, our Annual Report on Form 10-K, and our Quarterly Report on Form 10-Q for the calendar quarter ended March 31, 2024.

Previous wording

Invest in our oxygen product offerings to develop innovative products and expand clinical evidence. We incurred $5.6 million and $4.3 million in the three months ended June 30, 2024 and 2023, respectively, and $12.2 million and $9.6 million in the six months ended June 30, 2024 and 2023, respectively, in research and development expenses, and we intend to continue to make such investments in the foreseeable future.

Current wording

Invest in our oxygen product offerings to develop innovative products and expand clinical evidence. We incurred $3.5 million and $4.5 million in the three months ended September 30, 2024 and 2023, respectively, and $15.7 million and $14.1 million in the nine months ended September 30, 2024 and 2023, respectively, in research and development expenses, and we intend to continue to make such investments in the foreseeable future.

Previous wording

We launched the Inogen® Rove 6 TM, our latest POC, in December 2022 in the EU and UK. We have also received U.S. Food and Drug Administration (FDA) 510(k) clearance for the Inogen® Rove 4 TM. Inogen Rove 6 weighs 4.8 pounds and produces 1,260 ml per minute of oxygen output with very quiet operations at 37 dBA and long battery life at 6 hours and 15 minutes for a single battery and up to 12 hours and 45 minutes for a double battery, as well as improvements to provide ease-of-use and improvements to design in compliance to European Union medical device regulation (MDR) standards. The FDA clearance of Inogen Rove 6 was received June 30, 2023 and launched in the U.S. market in July 2023.

Current wording

We launched the Inogen® Rove 6 TM, in December 2022 in the EU and UK. We have also received U.S. Food and Drug Administration (FDA) 510(k) clearance for the Inogen® Rove 4 TM, which we launched in October of this year. Inogen Rove 6 weighs 4.8 pounds and produces 1,260 ml per minute of oxygen output with very quiet operations at 37 dBA and long battery life at 6 hours and 15 minutes for a single battery and up to 12 hours and 45 minutes for a double battery, as well as improvements to provide ease-of-use and improvements to design in compliance to European Union medical device regulation (MDR) standards. The FDA clearance of Inogen Rove 6 was received June 30, 2023 and launched in the U.S. market in July 2023. Inogen Rove 4 weighs less than 3 pounds and delivers up to 840ml per minute of oxygen, in a lightweight user-friendly design. The product has three battery configurations providing up to 5 hours and 45 minutes of operation.

Previous wording

The Inogen Rove 6 is the first POC with an 8-year expected service life. The 8-year expected service life also extends to the Inogen One G5®systems. We launched the Inogen One G5 in 2019. The Inogen One G5 is similar to the product specifications of the Inogen Rove 6. 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.

Current wording

The Inogen Rove 6 is the first POC with an 8-year expected service life. The 8-year expected service life also extends to the Inogen Rove 4 and the Inogen One G5®systems. In 2019, we launched the Inogen One G5, which is similar to the product specifications of the Inogen Rove 6. 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.

Previous wording

Inogen Connect, our connectivity platform on our Inogen One G4®, 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.

Current wording

Inogen Connect, our connectivity platform on our Inogen One G4®, Inogen One G5, Inogen Rove 4 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.

Previous wording

Our future financial performance will be driven primarily by the growth in sales of our POCs, Simeox airway clearance, and, to a lesser extent, sales of batteries, other accessories, and our Inogen At Home stationary oxygen concentrators. 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. 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.

Current wording

Our future financial performance will be driven primarily by the growth in sales of our POCs and our Simeox airway clearance, and, to a lesser extent, sales of batteries, other accessories, and our Inogen At Home stationary oxygen concentrators. We plan to grow our system sales in the coming years through multiple strategies including: improving sales force productivity, 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. 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.

Previous wording

Our direct-to-consumer sales processes involve numerous interactions with the individual patient, their physician and the physician’s staff, and includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, including procuring an oxygen prescription. The patient may consider whether to finance the product through an Inogen-approved third party or purchase the equipment. 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. Approximately 7-11% of consumers who purchase a system return the system during this 30-day return period.

Current wording

Our direct-to-consumer sales processes involve numerous interactions with the individual patient, their physician and the physician’s staff, and includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, including procuring an oxygen prescription. The patient may consider whether to finance the product through an Inogen-approved third party or purchase the equipment. 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. Approximately 8-11% of consumers who purchase a system return the system during this 30-day return period.

Previous wording

We sold approximately 41,300 systems in the three months ended June 30, 2024 and 34,100 systems for the same period in 2023. We sold approximately 75,200 systems in the six months ended June 30, 2024 and 61,000 for the same period in 2023. The increase in the current period was primarily due to the result of increased demand from resellers. We continue to focus on optimizing profitability in our direct-to-consumer channel, driving sales productivity with an efficiently scaled sales organization.

Current wording

We sold approximately 43,900 systems in the three months ended September 30, 2024 and 35,400 systems for the same period in 2023. We sold approximately 119,100 systems in the nine months ended September 30, 2024 and 96,400 for the same period in 2023. The increase in the current period was primarily due to the result of increased demand from resellers. We continue to focus on optimizing profitability in our direct-to-consumer channel by driving sales productivity.

Previous wording

Our rental process involves numerous interactions with the individual patient, their physician and the physician’s staff. The process includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, and their medical history to confirm the appropriateness of our product for the patient’s oxygen therapy and compliance with Medicare and private payor billing requirements, which often necessitates additional physician evaluation and/or testing for oxygen. Once the product is deployed, the patient receives instruction on product use and may receive a clinical titration from our licensed staff to confirm the product meets the patient’s medical oxygen needs prior to billing. As a result, the period of time from initial contact with a patient to billing can vary significantly and be up to one month or longer. CMS adopted additional changes to the administrative requirements to dispense and bill for oxygen therapy which may have reduced the administrative burden and increased patient access to our products.

Current wording

Our rental process involves numerous interactions with the individual patient, their physician and the physician’s staff. The process includes an in-depth analysis and review of our product, the patient’s diagnosis and prescribed oxygen therapy, and their medical history to confirm the appropriateness of our product for the patient’s oxygen therapy and compliance with Medicare and private payor billing requirements, which often necessitates additional physician evaluation and/or testing for oxygen. Once the product is deployed, the patient receives instruction on product use and may receive a clinical titration from our licensed staff to confirm the product meets the patient’s medical oxygen needs prior to billing. As a result, the period of time from initial contact with a patient to billing can vary significantly and be up to one month or longer.

Previous wording

Rental revenue decreased in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due lower average reimbursement rates per patient resulting from the change in mix of payors toward private insurance from Medicare. Medicare reimbursement rates for oxygen therapy have increased annually each January as they are subject to Consumer Price Index adjustments. 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.

Current wording

Rental revenue decreased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due lower average reimbursement rates per patient resulting from the change in mix of payors toward private insurance from Medicare. Medicare reimbursement rates for oxygen therapy have increased annually each January as they are subject to Consumer Price Index adjustments. We plan to add new rental patients on service in future periods through multiple strategies, including investing in patient and physician awareness and advocacy, expanding clinical evidence, and securing additional insurance contracts.

Previous wording

We had approximately 51,900 and 48,900 oxygen rental patients as of June 30, 2024 and June 30, 2023, respectively. 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.

Current wording

We had approximately 51,400 and 51,900 oxygen rental patients as of September 30, 2024 and September 30, 2023, respectively. 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.

Previous wording

We rely significantly on reimbursement from Medicare and private payors, including Medicare Advantage plans and Medicaid, for our rental revenue. For the three months ended June 30, 2024 and 2023, approximately 57.0% and 70.2%, respectively, and for the six months ended June 30, 2024 and 2023, approximately 57.7% and 72.1%, respectively, of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs. For additional discussion of our reliance on third-party reimbursement and the impact of the recent Medicare reimbursement proposals, see the discussion in the subsection entitled "Third-Party Reimbursement" in Item 1 of our Annual Report on Form 10-K and the section entitled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 1, 2024.

Current wording

We rely significantly on reimbursement from Medicare and private payors, including Medicare Advantage plans and Medicaid, for our rental revenue. For the three months ended September 30, 2024 and 2023, approximately 55.6% and 65.0%, respectively, and for the nine months ended September 30, 2024 and 2023, approximately 57.0% and 69.7%, respectively, of our rental revenue was derived from Medicare’s traditional fee-for-service reimbursement programs. For additional discussion of our reliance on third-party reimbursement and the impact of the recent Medicare reimbursement proposals, see the discussion in the subsection entitled "Third-Party Reimbursement" in Item 1 of our Annual Report on Form 10-K and the section entitled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 1, 2024.

Previous wording

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 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.

Current wording

We plan to continue to invest in research and development activities to stay at the forefront of patient preference in oxygen and respiratory therapy, including significant investments in clinical research. 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.

Previous wording

Sales revenue increased $6.1 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, an increase of 8.9% from the comparable period. The increase was primarily attributable to higher demand and new customers in international and domestic business-to-business sales. We sold approximately 41,300 oxygen systems during the three months ended June 30, 2024 compared to approximately 34,100 oxygen systems sold during the three months ended June 30, 2023, an increase of 21.7%.

Current wording

Sales revenue increased $7.0 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, an increase of 10.2% from the comparable period. The increase was primarily attributable to higher demand and new customers in domestic and international business-to-business sales. We sold approximately 43,900 oxygen systems during the three months ended September 30, 2024 compared to approximately 35,400 oxygen systems sold during the three months ended September 30, 2023, an increase of 24.0%.

Previous wording

Domestic business-to-business sales increased 16.5% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to the result of increased demand from new customers and resellers.

Current wording

Domestic business-to-business sales increased 35.1% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to the result of increased demand from new customers and resellers.

Previous wording

International business-to-business sales increased 31.1% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to higher demand from new customers. In the three months ended June 30, 2024, sales in Europe as a percentage of total international sales revenue decreased to 86.7% versus 91.5% from the comparative period in 2023.

Current wording

International business-to-business sales increased 26.2% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to higher demand. In the three months ended September 30, 2024, sales in Europe as a percentage of total international sales revenue increased to 85.7% versus 82.0% from the comparative period in 2023.

Previous wording

Domestic direct-to-consumer sales decreased 15.6% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by lower volume due to lower sales representative headcount, partially offset by increased average selling prices and increased unit volume per sales representative versus the comparative period in 2023.

Current wording

Domestic direct-to-consumer sales decreased 23.2% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by lower volume due to lower sales representative headcount versus the comparative period in 2023.

Previous wording

Domestic direct-to-consumer rentals decreased 6.2% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily related to higher mix of lower private-payor reimbursement rates.

Current wording

Domestic direct-to-consumer rentals decreased 13.1% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily related to higher mix of lower private-payor reimbursement rates.

Previous wording

Cost of sales revenue decreased $3.7 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, a decrease of 8.8% from the comparable period, due primarily to lower premiums paid for components and lower labor and overhead costs. The second quarter of 2024 included less than $0.1 million of material cost premiums associated with open-market purchases of semiconductor chips used in our POCs compared to $3.5 million in the second quarter of 2023.

Current wording

Cost of sales revenue decreased $3.1 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, a decrease of 7.3% from the comparable period, due primarily to lower premiums paid for raw material components. The third quarter of 2024 did not include premiums associated with open-market purchases of semiconductor chips used in our POCs compared to $3.3 million in the third quarter of 2023.

Previous wording

Cost of rental revenue increased $1.1 million for the six months ended June 30, 2024 from the six months ended June 30, 2023, an increase of 7.3% from the comparable period. The increase in cost of rental revenue was primarily attributable to an increase in total patients on service, which led to increased service and logistics costs. Cost of rental revenue included $6.3 million of rental asset depreciation for the six months ended June 30, 2024 compared to $6.3 million for the six months ended June 30, 2023.

Current wording

Cost of rental revenue increased $0.4 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, an increase of 5.4% from the comparable period. The increase in cost of rental revenue was primarily attributable to an increase in service costs. Cost of rental revenue included $3.2 million of rental asset depreciation for the three months ended September 30, 2024 compared to $3.4 million for the three months ended September 30, 2023.

Previous wording

Gross margin on sales revenue increased to 48.5% for the three months ended June 30, 2024 from 38.5% for the three months ended June 30, 2023. The increase was primarily due to lower material cost premiums associated with open-market purchases of semiconductor chips used in our POCs and adjustments in reserves, partially offset by a change in sales mix towards increased business-to-business sales. Total worldwide business-to-business sales revenue accounted for 69.6% of total sales revenue in the three months ended June 30, 2024 versus 60.8% in the three months ended June 30, 2023.

Current wording

Gross margin on sales revenue increased to 47.2% for the three months ended September 30, 2024 from 37.2% for the three months ended September 30, 2023. The increase was primarily due to lower material cost premiums associated with open-market purchases of semiconductor chips used in our POCs and adjustments in reserves, partially offset by a change in sales mix towards increased business-to-business sales. Total worldwide business-to-business sales revenue accounted for 74.3% of total sales revenue in the three months ended September 30, 2024 versus 63.1% in the three months ended September 30, 2023.

Previous wording

Gross margin on rental revenue decreased to 46.2% for the three months ended June 30, 2024 from 50.5% for the three months ended June 30, 2023, primarily due to lower net revenue per rental patient as a result of a decrease in the percentage of patients billed compared to total patients on service and a higher mix shift of private-payor reimbursement.

Current wording

Gross margin on rental revenue decreased to 43.2% for the three months ended September 30, 2024 from 53.1% for the three months ended September 30, 2023, primarily due to a higher mix shift of private-payor reimbursement, lower net revenue per rental patient as a result of a decrease in the percentage of patients billed compared to total patients on service, and higher service costs.

Previous wording

Research and development expense increased $1.3 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, an increase of 30.8% from the comparable period. This was due primarily to a $0.8 million increase in amortization of intangible assets and a $0.8 million increase in product development costs.

Current wording

Research and development expense decreased $1.0 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, a decrease of 21.6% from the comparable period. This decrease was due primarily to a $1.5 million decrease in product development costs and partially offset by a $0.7 million increase in amortization of intangible assets.

Previous wording

Sales and marketing expense decreased $1.3 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, a decrease of 4.8% from the comparable period. This was primarily due to decreases of $3.3 million in consulting and $0.5 million in dues, fees and licenses, partially offset by an increase of $1.8 million in media and advertising costs and $0.6 million in personnel-related expenses. In the three months ended June 30, 2024, we spent $8.5 million in media and advertising costs versus $6.7 million in the comparative period in 2023.

Current wording

Sales and marketing expense increased $0.3 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, an increase of 1.0% from the comparable period. This was primarily due to increases of $1.8 million in personnel-related expenses and $1.6 million in media and advertising costs, partially offset by a decrease of $2.6 million in consulting fees and $0.8 million in dues, fees and licenses. In the three months ended September 30, 2024, we spent $8.2 million in media and advertising costs versus $6.6 million in the comparative period in 2023.

Previous wording

General and administrative expense increased $4.0 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, an increase of 27.1% from the comparable period, primarily due to an increase of $2.1 million in personnel-related expenses, $1.0 million in bad debt expense and $0.6 million in the change in fair value of the earnout liability.

Current wording

General and administrative expense increased $2.2 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, an increase of 13.2% from the comparable period, primarily due to an increase of $1.6 million in personnel-related expenses, $1.3 million in bad debt expense and $0.7 million in the change in fair value of the earnout liability, partially offset by a decrease of $1.4 million in restructuring-related costs and $0.8 million in acquisition-related expenses.

Previous wording

Income tax expense (benefit) decreased less than $0.1 million for the three months ended June 30, 2024 from the three months ended June 30, 2023. 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 foreign taxes.

Current wording

Income tax expense (benefit) decreased $0.5 million for the three months ended September 30, 2024 from the three months ended September 30, 2023. 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 foreign taxes.

Previous wording

Our effective tax rate for the three months ended June 30, 2024 increased slightly compared to the three months ended June 30, 2023, primarily due to foreign taxes.

Current wording

Our effective tax rate for the three months ended September 30, 2024 increased compared to the three months ended September 30, 2023, primarily due to foreign taxes.

Previous wording

Net loss decreased $4.2 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, or a decrease of 43.1% from the comparable period. The decrease in net loss was primarily related to an increase in sales revenue and lower material cost premiums.

Current wording

Net loss decreased $39.8 million for the three months ended September 30, 2024 from the three months ended September 30, 2023, or a decrease of 87.0% from the comparable period. The decrease in net loss was primarily related to lower goodwill impairment and material cost premiums, partially offset by an increase in sales revenue.

Previous wording

Sales revenue increased $13.3 million for the six months ended June 30, 2024 from the six months ended June 30, 2023, an increase of 10.7% from the comparable period. The increase was primarily attributable to higher international and domestic business-to-business sales. We sold approximately 75,200 oxygen systems during the six months ended June 30, 2024 compared to approximately 61,000 oxygen systems sold during the six months ended June 30, 2023, an increase of 23.3%.

Current wording

Sales revenue increased $20.2 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023, an increase of 10.5% from the comparable period. The increase was primarily attributable to higher international and domestic business-to-business sales. We sold approximately 119,100 oxygen systems during the nine months ended September 30, 2024 compared to approximately 96,400 oxygen systems sold during the nine months ended September 30, 2023, an increase of 23.5%.

Previous wording

Domestic business-to-business sales increased 22.5% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to the result of increased demand from new customers and resellers.

Current wording

Domestic business-to-business sales increased 27.0% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to the result of increased demand from new customers and resellers.

Previous wording

International business-to-business sales increased 33.8% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to an increase in demand from our partners in Europe and new customers. In the six months ended June 30, 2024, sales in Europe as a percentage of total international sales revenue slightly increased to 87.4% versus 87.2% from the comparative period in 2023.

Current wording

International business-to-business sales increased 31.0% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an increase in demand from our partners in Europe and new customers. In the nine months ended September 30, 2024, sales in Europe as a percentage of total international sales revenue slightly increased to 86.8% versus 85.2% from the comparative period in 2023.

Previous wording

Domestic direct-to-consumer sales decreased 15.6% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily driven by lower volume due to lower sales representative headcount, partially offset by increased average selling prices and increased unit volume per sales representative versus the comparative period in 2023.

Current wording

Domestic direct-to-consumer sales decreased 18.1% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by lower volume due to lower sales representative headcount, partially offset by increased average selling prices versus the comparative period in 2023.

Previous wording

Domestic direct-to-consumer rentals decreased 7.3% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily related to a higher mix of lower private-payor reimbursement rates, partially offset by higher patients on service.

Current wording

Domestic direct-to-consumer rentals decreased 9.2% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily related to a higher mix of lower private-payor reimbursement rates.

Previous wording

Cost of sales revenue decreased $2.4 million for the six months ended June 30, 2024 from the six months ended June 30, 2023, a decrease of 3.2% from the comparable period, due primarily to lower premiums paid for components and lower labor and overhead costs, partially offset by an increase in the number of systems sold. The first half of 2024 included $0.1 million of material cost premiums associated with open-market purchases of semiconductor chips used in our batteries and POCs compared to $8.0 million in the first half of 2023.

Current wording

Cost of sales revenue decreased $5.5 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023, a decrease of 4.7% from the comparable period, due primarily to lower premiums paid for raw material components, partially offset by an increase in the number of systems sold. The first nine months of 2024 included less than $0.1 million of material cost premiums associated with open-market purchases of semiconductor chips used in our batteries and POCs compared to $11.3 million in the first nine months of 2023.

Previous wording

Cost of rental revenue increased $0.1 million for the three months ended June 30, 2024 from the three months ended June 30, 2023, an increase of 1.9% from the comparable period. Cost of rental revenue included $3.1 million of rental asset depreciation for the three months ended June 30, 2024 compared to $3.2 million for the three months ended June 30, 2023.

Current wording

Cost of rental revenue increased $1.5 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023, an increase of 6.6% from the comparable period. The increase in cost of rental revenue was primarily attributable to an increase in service costs. Cost of rental revenue included $9.6 million of rental asset depreciation for the nine months ended September 30, 2024 compared to $9.7 million for the nine months ended September 30, 2023.

Previous wording

Gross margin on sales revenue increased to 46.5% for the six months ended June 30, 2024 from 38.8% for the six months ended June 30, 2023. The increase was primarily due to lower material cost premiums associated with open-market purchases of semiconductor chips used in our POCs, partially offset by a change in sales mix towards increased business-to-business sales. Total worldwide business-to-business sales revenue accounted for 68.6% of total sales revenue in the six months ended June 30, 2024 versus 58.9% in the six months ended June 30, 2023.

Current wording

Gross margin on sales revenue increased to 46.7% for the nine months ended September 30, 2024 from 38.2% for the nine months ended September 30, 2023. The increase was primarily due to lower material cost premiums associated with open-market purchases of semiconductor chips used in our POCs, partially offset by a change in sales mix towards increased business-to-business sales. Total worldwide business-to-business sales revenue accounted for 70.6% of total sales revenue in the nine months ended September 30, 2024 versus 60.4% in the nine months ended September 30, 2023.