• information concerning our possible or assumed future cash flows, revenue,

• our expectations of the impact of the COVID-19 pandemic and related public

health emergency (PHE) on sales, productivity, hiring, media expenditures,

prescriber sales team and physician referrals, worldwide demand for oxygen

therapies, and our supply chain, including supply constraints and cost

inflation related to semiconductor chips used in our batteries and printed

circuit boards which are components of our portable oxygen concentrators

• our assessment and expectations regarding reimbursement rates, future

rounds of competitive bidding, Centers for Medicare and Medicaid Services

(CMS) changes associated with the COVID-19 pandemic and related PHE

impacting respiratory care, CMS changes to Home Use of Oxygen national

coverage determination and how those changes are implemented, and future

• our expectations regarding regulatory approvals, including the period of

time during which our sales in Europe will be suspended due to delayed

• our ability to develop new products, improve our existing products and

increase the value of our products, including the potential integration of

Tidal Assist® Ventilator (TAV®) technology into our existing products;

• our expectations regarding the timing of new products and product

improvement launches as well as product features and specifications;

• market share expectations, unit sales, business strategies, financing

• our expectations regarding the market size, market growth and the growth

• our expectations regarding the average selling prices and manufacturing

costs of our products, including our expectations related to the impact of

• our expectations regarding our sales and marketing channels related to our

insights and tools through our partnership with Ashfield Healthcare, LLC

• our expectations with respect to our European and U.S. facilities and our

• our expectations regarding tariffs being imposed by the U.S. on certain

• our ability to successfully acquire and integrate companies and assets;

• our expectations of future accounting pronouncements or changes in our

• the effects of seasonal trends on our results of operations and estimated

• 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

In this Quarterly Report on Form 10-Q, "we," "us" and "our" refer to Inogen, Inc. and its subsidiary.

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.

Critical accounting policies and estimates

COVID-19 pandemic and related PHE

To accomplish this goal and to grow our revenue, we intend to:

• Expand our domestic direct-to-consumer sales and prescriber sales teams

and increase productivity. We expect minimal net new inside

direct-to-consumer sales hires in the near term due to the size and

quality of the candidate pool and expected attrition, but as part of our

growth plans, we are increasing our focus on improving performance and

productivity of our existing sales force. Going forward, except as

otherwise limited by the impact of the COVID-19 pandemic and related PHE,

our plan is to continue to expand sales capacity while focusing on

increased productivity driven by improved sales management discipline,

insights-informed tools, and optimized patient lead generation.

• Expand our domestic direct-to-consumer marketing efficiently and optimize

pricing. We maintained our marketing efforts to continue to drive patient

awareness of our products and patient inquiries about their ability to

switch from their current oxygen products to our technology as patient

interest increased. We plan to optimize marketing spend to drive consumer

rising product costs. We plan to continue to monitor the progression of

the COVID-19 pandemic and related PHE in the United States and may adjust

• Expand our rental revenues. We are evolving our operating model to focus

the enhanced prescriber sales team on rental opportunities with our

direct-to-consumer sales team focusing mainly on cash sales. We believe

the new specialized operating model will drive higher rental setups as we

expand prescriber and payor awareness of our products and services.

• Expand our domestic HME provider and reseller sales. We are also focused

on building our domestic business-to-business partnerships, including

relationships with distributors, key accounts, resellers, our private

label partner, traditional HME providers, and charitable organizations. We

• Increase international business-to-business adoption. Although our main

growth opportunity remains POC adoption in the United States given what we

still believe is a relatively low penetration rate, we believe there is a

order to take advantage of these international markets, we have partnered

with distributors who serve those markets and key customers in them. We

additionally have an Inogen base of operations for sales and customer

service in the Netherlands, and use a contract manufacturer, Foxconn,

located in the Czech Republic to support the majority of our European

sales volumes. We have sold our products in a total of 59 international

• Invest in our oxygen product offerings to develop innovative products and

expand clinical evidence. We incurred $16.6 million and $14.1 million in

2021 and 2020, respectively, in research and development expenses, and we

intend to continue to make such investments in the foreseeable future. We

incurred $5.4 million and $4.0 million for the three months ended March

31, 2022 and March 31, 2021, respectively, in research and development

• Expand our product offerings. We are primarily focused on creating

innovative, evidence-based chronic respiratory care solutions to

strengthen and build preference and advocacy for our respiratory therapies

and brand across patients, prescribers, and payors. We plan to do this

with an expanded, high quality, connected, and innovative product

portfolio that strengthens our differentiation. We are also committed to

pursuing complementary acquisition opportunities to strengthen our

technology, product offerings, and channel access.

For additional discussion of the impact of the recent Medicare reimbursement proposals, see "Risk Factors" herein.

The following describes the line items set forth in our consolidated statements of comprehensive loss.

Comparison of three months ended March 31, 2022 and March 31, 2021

Rental revenue increased $3.1 million for the three months ended March 31, 2022 from the three months ended March 31, 2021, an increase of 31.8% from the comparable period. The increase in rental revenue was primarily related to higher rental patients on service and higher Medicare reimbursement rates.

Cost of revenue and gross profit

Gross profit - sales revenue $ 27,902 $ 34,446 $ (6,544 ) -19.0 % 34.7 % 39.7 % Gross profit - rental revenue

Our effective tax rate for the three months ended March 31, 2022 decreased compared to the three months ended March 31, 2021, primarily due to the recording of a valuation allowance on the use of deferred tax assets.

Our principal uses of cash for liquidity and capital resources in the three months ended March 31, 2022 consisted of cash used in operating activities of $18.1 million and capital expenditures of $4.1 million including additional rental equipment, other property, and plant and equipment.

The following tables show a summary of our cash flows and working capital for the periods and as of the dates indicated:

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