Inogen (INGN) risk factors, FY2024 10-K

Risks related to our business and strategy

1. 01our ability to maintain effective internal controls
2. 04We operate in a highly competitive industry and we may be unable to compete effectively
3. 05greater financial and human resources for product development, sales and marketing, and patent litigation
4. 06We depend on a limited number of customers for a significant portion of our sales revenue
5. 07Reduction or interruption in our supply of components and products may adversely affect our manufacturing operations and related product sales
6. 08our suppliers may wish to discontinue supplying components or services to us
7. 09If we are unable to continue to enhance our existing products, develop or acquire and market our products that respond to customer needs and preferences and achieve market acceptance, we may experience a decrease in demand for our products and our business could suffer
8. 10We may expand through acquisitions of, collaborations with, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations, and harm our results of operations
9. 11the inability to maintain uniform standards, controls, policies, and procedures
10. 12We depend upon reimbursement from Medicare, private payors, Medicaid and payments from patients for a significant portion of our revenue, and if we fail to manage the complex and lengthy reimbursement process, our business and operating results could be adversely affected
11. 13Increases in our operating costs could have a material adverse effect on our business, financial condition and results of operations
12. 14An economic recession, downturn, period of inflation, or economic uncertainty in our key markets may adversely affect customer and consumer spending as well as demand for our products
13. 15Public health crises have had, and may continue to have, an adverse effect on certain aspects of our business, results of operations, financial condition, and cash flows. The nature and extent of future impacts are highly uncertain and unpredictable
14. 16Changes to reimbursement rates, payment methodologies, or coverage policies for our products by government or commercial payors may adversely affect our business and operating results
15. 17CMS issued a final rule in December 2021 (CMS-1738-F) to establish payment amounts that were to be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare
16. 18These legislative provisions have had and may continue to have a material and/or adverse effect on our business, financial condition and results of operations
17. 19The competitive bidding process or other reimbursement policy changes under Medicare or other third-party payors could negatively affect our business and financial condition
18. 20CMS also issued a final rule in December 2021 (CMS-1738-F) to establish payment methodologies to be effective after the COVID-19 PHE for DMEPOS products and services covered under Medicare
19. 21CMS is required to conduct future rounds of competitive bidding, which could reduce reimbursement rates, negatively impact the premium for POCs over other oxygen modalities, or limit beneficiary access to our technologies
20. 22Medicare revenue, including patient co-insurance and deductible obligations, represented 9.5% of our total revenue in the year ended December 31, 2024 and 13.7% in the year ended December 31, 2023
21. 23Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations
22. 24Healthcare reform measures may have a material adverse effect on our business and results of operations
23. 25Failure to maintain or obtain new private payor contracts and future reductions in reimbursement rates from private payors could have a material adverse effect on our financial condition and results of operations
24. 26If our manufacturing facilities become unavailable or inoperable, we could be unable to continue manufacturing our products and, as a result, our business, financial condition and results of operations could be adversely affected until we are able to secure a new facility
25. 27We rely upon a third-party contract manufacturer for certain manufacturing operations and our business and results of operations may be adversely affected by risks associated with their business, financial condition and the geography in which they operate
26. 28potential misappropriation of our intellectual property
27. 29We are exposed to the credit and non-payment risk of our HME providers, distributors, private label collaborators and resellers, especially during times of economic uncertainty and tight credit markets, which could result in material losses
28. 30If one or more of these risks occurs, it could require us to dedicate significant resources to remedy, and if we are unsuccessful in finding a solution, our financial condition and results of operations will suffer
29. 31Failure to comply with anti-bribery, and anti-corruption, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar laws associated with our activities outside of the United States and anti-money-laundering laws could subject us to penalties and other adverse consequences
30. 32If we fail to comply with U.S. and applicable foreign export control and economic sanctions or fail to expand and maintain an effective sales force or successfully develop our international distribution network, our business, financial condition and results of operations may be adversely affected
31. 33We may be subject to substantial warranty or product liability claims or other litigation in the ordinary course of business that may adversely affect our business, financial condition and results of operations
32. 34Our success depends upon the skills, experience, and efforts of our senior executives and other key technical personnel, including certain members of our engineering, accounting, and compliance staff as well as our sales and marketing personnel
33. 35Increasing data privacy and data protection regulations could impact our business and expose us to increased liability
34. 36Our financial condition and results of operations may vary significantly from quarter-to-quarter due to a number of factors, which may lead to volatility in our stock price
35. 37If the market opportunities for our products are smaller than we believe they are, our revenues may be adversely affected, and our business may suffer
36. 38The adoption and interpretation of new tax legislation, tax rulings, or exposure to additional tax liabilities, could materially affect our financial condition, results of operations, and cash flows
37. 39Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income
38. 40Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our common stock. If our internal controls are not effective, we may not be able to accurately report our financial results or prevent fraud

Risks related to the regulatory environment

1. 02potential FDA, state, or international regulatory enforcement action and other penalties
2. 41We are subject to extensive federal and state regulation, and if we fail to comply with applicable regulations, we could suffer severe criminal or civil sanctions and be required to make significant changes to our operations that could adversely affect our business, financial condition and results of operations
3. 42product import and export
4. 43the manufacturing process or facilities we use may not comply with applicable quality system regulations
5. 44If we modify our FDA cleared devices, we may need to seek additional clearances, authorizations, or approvals, which, if not granted, would prevent us from selling such modified products
6. 45If we fail to comply with FDA or state regulatory requirements, we can be subject to enforcement action
7. 46A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products that leads to corrective actions, could have a significant adverse effect on us
8. 47If we or our contract manufacturers fail to comply with the FDA’s Quality System Regulation, our manufacturing operations could be interrupted, and our product sales and operating results could suffer
9. 48Any of these sanctions could adversely affect our business, financial condition and results of operations
10. 49If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited
11. 50If the FDA disagrees with us that certain of our data collection and analysis methods do not constitute clinical trials, our business may be harmed
12. 51Clinical development is a long, expensive, and uncertain process and is subject to delays and the risk that products may ultimately prove unsafe or ineffective in treating the indications for which they are designed
13. 52We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “off-label” uses, resulting in damage to our reputation and business
14. 53Failure to comply with the Federal Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act, and implementing regulations could result in significant penalties
15. 54If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, Physician Self-Referral Law, false claims and anti-inducement laws, we could face substantial penalties and our business, results of operations and financial condition could be adversely affected
16. 55Foreign governments tend to impose strict price controls, which may adversely affect our future profitability
17. 56Our business activities involve the use of hazardous materials, which require compliance with environmental and occupational safety laws regulating the use of such materials. If we violate these laws, we could be subject to significant fines, liabilities or other adverse consequences
18. 57The implementation of prior authorization rules for DMEPOS under Medicare could negatively affect our business and financial condition

Risks related to our intellectual property

1. 03patent and other intellectual property litigation if our products infringe or appear to infringe the intellectual property rights of others
2. 58If we are unable to secure and maintain patent or other intellectual property protection for the intellectual property used in our products, we will lose a significant competitive advantage, which may adversely affect our future profitability
3. 59Our patents may not adequately protect our products from third party competitors
4. 60We cannot provide assurance that our products or methods do not infringe or appear to not infringe the patents or other intellectual property rights of third parties and if our business is successful, the possibility may increase that others will assert infringement claims against us whether valid or frivolous
5. 61If we are unable to prevent unauthorized use or disclosure of trade secrets, unpatented know-how and other proprietary information, our ability to compete will be harmed
6. 62We may be subject to damages resulting from claims that our employees, agents or we have wrongfully used or disclosed alleged trade secrets of other companies

Risks related to being a public company

1. 63We will incur increased costs as a result of operating as a public company and our management will be required to devote substantial time to compliance initiatives and corporate governance practices

Risks related to our common stock

1. 64We expect that our stock price will fluctuate significantly, you may have difficulty selling your shares, and you could lose all or part of your investment
2. 65general economic conditions and slow or negative growth of our markets
3. 66increasing the risk of regulatory proceedings and litigation, including class action securities litigation
4. 67Future sales of shares could cause our stock price to decline
5. 68Our directors, executive officers and principal stockholders will continue to have substantial control over us and could limit your ability to influence the outcome of key transactions, including changes of control
6. 69Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock
7. 70require a super-majority of votes to amend certain of the above-mentioned provisions
8. 71We have never paid any dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future