Inogen calls accounting issue ‘minor’
GOLETA, Calif. – An accounting issue had little impact on Inogen’s delayed earnings for the fourth quarter ended Dec. 31, 2014.
During a conference call on April 27, company officials said five sales reps for the direct-to-consumer division “falsified or improperly modified sales and rental order documentation.” As a result, the company reduced net revenue for the fourth quarter by $300,000 and net income by $100,000.
“The employees responsible for this conduct have been terminated,” said Ali Bauerline, co-founder and CFO.
Inogen pushed back* releasing earnings for the fourth quarter and full year from March 12 to April 27 while an Audit Committee investigated the accounting issue.
Company officials said the investigation found that there was no “systemic falsification or alteration of sales and rental order documentation” and that “senior executives did not know of or participate in this conduct.”
“In the situations where any refunds were required, we have done those, so we don’t believe this will lead to any further action from CMS or anybody else,” Bauerlein said. “The numbers we’re talking about are very small and they were very minor issues overall.”
Inogen reported revenues of $29.1 million for the fourth quarter ended Dec. 31, 2014, a 47.3% increase compared to the same period in 2013. Net income was $1.5 million vs. $22 million. Sales revenues were $18.4 million, a 64.9% increase; rental revenues $10.8 million, a 24.7% increase.
The company reported revenues of $112.5 million for the year, a 49.2% increase compared to 2013. Net income was $6.8 million vs. $25.4 million. Sales revenues were $73.1 million, a 62.8% increase, and rental revenue $39.4 million, a 29.2% increase.
Inogen saw the most growth in its business-to-business division, which saw revenues of $4.9 million for the fourth quarter, a 16.7% increase; and $19.3 million for the year, an 87.2% increase.
The company updated its guidance for 2015 to $133 million to $137 million in revenues. Previously, it forecasted $130 million to $135 million.
As for next steps, Inogen plans to release earnings for the first quarter on time, by the May 15 deadline, and to implement a remediation plan in response to the accounting issue.
“That includes some new and revised control procedures in the order review process, as well as in the compliance program, supplementary document retention policies on our sales documentation, and additional screening through data analytics,” Bauerlein said.