Citron Exposes Elder Abuse Within Inogen's Sale Tactics

Inogen’s Tactics Have Not Been Lost on the Employees“This company is very unethical and they doeverything they can to try to get over on seniorcitizens by harassing them to buy this portableoxygen concentrator for 3000 to 5000 and mostof these people see the crooked advertisementsaying the machine is covered by Medicare.” –Former Employee (August 16, 2018)“I would just say that it seems the company is overly obsessed with pumping uptheir stock price and being considered a ‘hyper growth’ company.” – CurrentEmployee (January 9, 2019)“I could no longer work here because thecompany is severely unethical.” – FormerEmployee (December 12, 2018)“They have been investigate by medicare 2 times in the last 3 years, andcurrently still are doing many things that violate medicare guidelines.” – CurrentEmployee (June 4, 2018)“Lots of rules that don’t get followed except what to say to Medicareshoppers.” – Current Employee (January 2, 2019)“Medicare should take long hard look at the business practice. Advice to any patient,read the small print. The call objective is to switch from what consumer has seen inadvertisement to CASH purchase” – Current Employee (October 18, 2017)16 Copyright 2019 Citron Research www.citronresearch.com All Inquiries – info@citronresearch.com

Inogen’s Scheme Can be Found in Customer Reviews“These people prey on sick and generous folks, it’s inconceivable that a company in medical industry would be sounprofessional.” – Customer (January 17, 2019)“This company is suppose to cater to the elderly to me they rip off the elderly.” – Customer (August 13, 2018)“FRAUD by salesperson: Before buying a 2500 portable oxygen unit from Inogen I asked the sales rep if Medicarecovered such equipment and he said no. This was blatantly deceptive. I discovered the truth when the unit Ipurchased from Inogen with my credit card for 2500 in December 2017 failed. My oxygen level dipped into the70s and I am still having health issues (lethargy, fatigue, etc.) from the failure. I talked to another equipmentprovided who assured me that Medicare indeed covered the equipment. That company got me another unit andMedicare paid. My daughter, Valerie Mills, phoned Inogen and complained that I had been defrauded. The repconfirmed that Medicare does pay for the units but Inogen is not an authorized provider in my area. The repdeliberately withheld that information from me to make the sale.” – Customer (August 7, 2018)“I was intending to use my Medicare benefits to help with the purchase of the device it is fairly easy tounderstand what's going on. It's what is referred to as the old "bait an switch". – Customer (November 21, 2017)17 Copyright 2019 Citron Research www.citronresearch.com All Inquiries – info@citronresearch.com

The Whole Bull Case of InogenThe whole bull case is predicated on aTAM number that was derived fromWinterGreen Research, whichmanagement touts in presentationsand conferences.While Carson wrote 27 pages rippingapart WinterGreen and the TAM,Citron will show just one picture.Here is a photo of the WinterGreenResearch headquarters.18 Copyright 2019 Citron Research www.citronresearch.com All Inquiries – info@citronresearch.com

A Copy of This Report Has Been Sent to:CFPB’s Office for Older AmericansFederal Trade CommissionU.S. Department of JusticeNational Institute of JusticeElder Financial Protection NetworkNational Adult Protective Services AssociationNational Center on Elder AbuseNational Committee for the Prevention of Elder Abuse19 Copyright 2019 Citron Research www.citronresearch.com All Inquiries – info@citronresearch.com

ConclusionHow can a company who sells portable oxygen concentrators to the elderly only get amid-single digit% of its sales from Medicare?By pushing a carefully crafted pitch to distributors that is both unethical and often illegal and is designed todeceive the sick and elderly. While this tactic has proven profitable for Inogen, it certainly cannot beconsidered a trend. Whether it be competition, oversight, or increasing customer awareness, Inogen’smargins and growth trajectory will contract and eventually its lack of R&D will leave it as an inferior playerin the increasingly competitive COPD market.Citron estimates that Inogen sells about 90% of its POC units vs. only renting about 10% through Medicare.Assuming 40% of POC units were rented through Medicare, Inogen’s revenue would decline by about 20%while EPS would decline by about 80% due to the negative mix shift to Medicare’s much lower margins.Evidently, the multiple would see meaningful contraction as well.Citron jumps into muddy waters and assigns a conservative 46 target on Inogen.20 Copyright 2019 Citron Research www.citronresearch.com All Inquiries – info@citronresearch.com

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Whenever a new medical device is released (e.g., portable oxygen concentrators), the potential for abuse and fraud increases exponentially. No one will deny that portable oxygen concentrators are a great advancement for people suffering from COPD. Citron will acknowledge that Inogen was the first company to capitalize on this growing market.