Inari Medical Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Inari Medical (NASDAQ: NARI) reported strong Q2 2024 financial results, with revenue reaching $145.8 million, up 22.5% year-over-year. The company launched VenaCore, a new device for acute and chronic DVT treatment. Despite revenue growth, Inari posted a GAAP operating loss of $22.4 million and a net loss of $31.3 million. Gross margin decreased to 86.3% from 88.4% in Q2 2023. The company raised its full-year 2024 revenue guidance to $594.5-$604.5 million, projecting 20.5-22.5% growth over 2023. Inari expects to reach sustained operating profitability in the first half of 2025.

Positive

• Revenue increased by 22.5% year-over-year to $145.8 million in Q2 2024
• Full commercial launch of VenaCore, a new device for DVT treatment
• Raised full-year 2024 revenue guidance to $594.5-$604.5 million
• Expects to reach sustained operating profitability in H1 2025

Negative

• GAAP operating loss widened to $22.4 million in Q2 2024 from $1.5 million in Q2 2023
• Net loss of $31.3 million in Q2 2024 compared to net income of $2.1 million in Q2 2023
• Gross margin decreased to 86.3% from 88.4% year-over-year
• Operating expenses increased significantly to $148.3 million from $106.7 million in Q2 2023

Insights

Financial Analyst

Inari Medical's Q2 2024 results show robust growth, with revenue reaching $145.8 million, a 22.5% increase year-over-year. This impressive growth is attributed to expanded sales territories, new account acquisitions, increased procedure adoption and global expansion. However, the company's profitability picture is mixed.

While gross profit increased to $125.8 million, the gross margin slightly decreased to 86.3% from 88.4% in Q2 2023. This margin compression, though minor, is worth noting as it reflects increased costs associated with new product launches and international expansion.

The concerning aspect of the results is the significant jump in operating expenses, which rose to $148.3 million from $106.7 million in Q2 2023. This 39% increase in expenses outpaced revenue growth, resulting in an operating loss of $22.4 million, compared to a $1.5 million loss in the same quarter last year.

The company's net loss of $31.3 million is a stark contrast to the $2.1 million profit in Q2 2023. This shift from profitability to loss is a red flag that investors should monitor closely.

On a positive note, Inari has raised its full-year 2024 revenue guidance to $594.5-604.5 million, indicating confidence in continued growth. The company's projection of reaching sustained operating profitability in H1 2025 provides a timeline for potential turnaround, but execution will be critical.

In summary, while Inari's top-line growth is impressive, the company's ability to control costs and return to profitability will be important factors for investors to watch in the coming quarters.

Medical Device Industry Expert

Inari Medical's Q2 2024 results highlight several key developments in the medical device sector, particularly in the venous and peripheral artery disease (PAD) markets.

The full commercial launch of VenaCore, Inari's latest device for acute and chronic deep vein thrombosis (DVT) treatment, is a significant move. This launch demonstrates Inari's commitment to innovation and expanding its product portfolio. The VenaCore device could potentially strengthen Inari's position in the DVT treatment market, which is important given the increasing prevalence of venous thromboembolism (VTE) globally.

The company's focus on supporting hospitals in building VTE programs is a strategic approach that could lead to long-term customer relationships and sustained revenue growth. This initiative aligns with the broader healthcare trend of developing comprehensive disease management programs.

The positive reimbursement updates for LimFlow, likely referring to Inari's percutaneous deep vein arterialization (pDVA) system, is a important development. Favorable reimbursement policies can significantly impact adoption rates for new medical technologies, especially in the cost-sensitive healthcare environment.

The upcoming PEERLESS data release, mentioned by CEO Drew Hykes, could be a pivotal moment for Inari. Clinical trial data often serves as a catalyst for medical device companies, potentially influencing physician adoption and payer decisions.

However, the increasing internationalization of the business, while a growth driver, also presents challenges as evidenced by the slight gross margin compression. Navigating different regulatory environments and healthcare systems will be important for Inari's global expansion strategy.

In conclusion, Inari's product innovation and strategic initiatives position it well in the evolving medical device landscape, but managing the costs associated with growth and expansion will be critical for long-term success.

IRVINE, Calif., July 30, 2024 (GLOBE NEWSWIRE) -- Inari Medical, Inc. (NASDAQ: NARI) (“Inari”), a medical device company with a mission to treat and transform the lives of patients suffering from venous and other diseases, today reported financial results for its second quarter ended June 30, 2024.

Second Quarter Financial and Recent Business Highlights

• Generated revenue of $146 million in Q2 of 2024, up 23% over the same quarter last year.
• Commenced full commercial launch of VenaCore, Inari’s latest purpose-built device for the treatment of acute and chronic DVT.
• Cash, cash equivalents and short-term investments were $110 million as of Q2 of 2024.
  

“Our second quarter performance was driven by strong adoption of our market leading solutions across our VTE, Emerging Therapies and international businesses,” said Drew Hykes, CEO of Inari Medical. “Our field team is making meaningful progress supporting our hospital customers in building VTE programs, allowing more patients to benefit from our solutions. We are also pleased with the progress of our new products, including the recent launch of VenaCore, as well as positive reimbursement updates benefiting LimFlow. Looking ahead to the second half of the year, we are confident in continued momentum across all three of our growth drivers and look forward to our PEERLESS data release.”

Second Quarter 2024 Financial Results
Revenue was $145.8 million for the second quarter of 2024, up 22.5% compared to $119.0 million for the second quarter of 2023. The increase over the prior year quarter was driven primarily by an expansion in our sales territories, opening of new accounts, increase in adoption of our procedures, and global commercial expansion.

Gross profit was $125.8 million for the second quarter of 2024, compared to $105.2 million for the second quarter of 2023. Gross margin was 86.3% for the second quarter of 2024, compared to 88.4% for the second quarter of 2023. The year-over-year change was primarily due to product mix, the ramp up costs associated with new products, and increasing internationalization of the business.

Operating expenses for the second quarter of 2024 were $148.3 million, compared to $106.7 million for the second quarter of 2023. The increase was mainly driven by personnel-related expenses, including commissions and share-based compensation associated with increased headcount to fund the expansion of the commercial, research and development, clinical, and support organizations; professional fees including legal fees; change in fair value of the contingent consideration liability; amortization expense related to an intangible asset acquired in the LimFlow acquisition, and acquisition-related expenses.

GAAP operating loss was $22.4 million in the second quarter of 2024, compared with a $1.5 million GAAP operating loss for the second quarter of 2023.

Non-GAAP operating loss was $13.2 million in the second quarter of 2024. The following items were excluded from the non-GAAP operating loss: change in fair value of contingent consideration liability of $5.7 million, acquired intangible asset amortization of $2.4 million, and acquisition-related expenses of $1.0 million. There were no non-GAAP adjustments related to the company’s operating loss for the second quarter of 2023.

Net loss was $31.3 million for the second quarter of 2024 and net loss per share was $0.54 on a weighted-average basic and diluted share count of 58.1 million, compared to a net income of $2.1 million and a net income per share of $0.04 on a weighted-average basic count of 57.2 million and $0.04 on a weighted-average diluted share count of 58.5 million, respectively, in the same period of the prior year.

Full Year 2024 Revenue Guidance and Operating Income Outlook

• Inari raises full year 2024 revenue guidance to $594.5 million to $604.5 million, an increase of $2 million at the midpoint from our prior guidance range of $592.5 million to $602.5 million, reflecting growth of approximately 20.5% to 22.5% over 2023.
• The company continues to expect to reach sustained operating profitability in the first half of 2025.

Webcast and Conference Call Information
Inari Medical will host a conference call to discuss the second quarter 2024 financial results after market close on July 30, 2024 at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time. The conference call can be accessed live by dialing (844) 825-9789 for domestic callers or (412) 317-5180 for international callers. The live webinar and presentation may be accessed by visiting the Events Section of the Inari investor relations website at ir.inarimedical.com.

Use of Non-GAAP Financial Measures
This press release contains references to non-GAAP operating income (loss), which is considered a non-GAAP financial measure. This means that non-GAAP operating income (loss) is determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). As used by Inari, non-GAAP operating income (loss) excludes from GAAP operating income (loss) the following items: amortization of acquired intangible assets, acquisition-related costs and fair value adjustment to our contingent consideration liability. We present the non-GAAP operating income (loss) to exclude these charges because we believe these charges are significantly impacted by the timing and valuation of acquisitions, such as our LimFlow acquisition completed in the fourth quarter of 2023. Our management believes the presentation of non-GAAP operating income (loss) is useful because it provides meaningful comparisons to prior periods and provides visibility to our underlying operating performance and an additional means to evaluate the cost and expense trends excluding the impact of these acquisition-related items, which are not related to our core business operations.

Our definition of non-GAAP operating income (loss) may differ from similarly titled measures used by others. Non-GAAP operating income (loss) should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. We encourage investors to review the reconciliation of non-GAAP operating income (loss) to GAAP operating income (loss), which has been provided in the financial statement tables included in this press release.

About Inari Medical, Inc.
Patients first. No small plans. Take care of each other. These are the guiding principles that form the ethos of Inari Medical. We are committed to improving lives in extraordinary ways by creating innovative solutions for both unmet and underserved health needs. In addition to our purpose-built solutions, we leverage our capabilities in education, clinical research, and program development to improve patient outcomes. We are passionate about our mission to establish our treatments as the standard of care for venous thromboembolism and four other targeted disease states. We are just getting started. Learn more at www.inarimedical.com and connect with us on LinkedIn, X (Twitter), and Instagram.

Forward Looking Statements
Statements in this press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to substantial risks and uncertainties. Forward-looking statements contained in this press release may be identified by the use of words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements include expectations regarding Inari’s core business, plans for its current and future products, anticipated product launches, its ability to integrate and related expectations for the LimFlow acquisition, expectations regarding future growth, Inari's ability to meet customers' needs, and timing for achieving sustained operating profitability, and are based on Inari’s current expectations, forecasts, and assumptions. Forward-looking statements are subject to inherent uncertainties, risks and assumptions that are difficult to predict, and actual outcomes and results could differ materially due to a number of factors. These and other risks and uncertainties include those described more fully in the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and elsewhere in its Annual Report on Form 10-K for the period ended December 31, 2023, and in Inari’s other reports filed with the U.S. Securities and Exchange Commission. Forward-looking statements contained in this announcement are based on information available to Inari as of the date hereof and are made only as of the date of this release. Inari undertakes no obligation to update such information except as required under applicable law. These forward-looking statements should not be relied upon as representing Inari’s views as of any date subsequent to the date of this press release. In light of the foregoing, investors are urged not to rely on any forward-looking statement in reaching any conclusion or making any investment decision about any securities of Inari.

Investor Contact:
Marissa Bych
Gilmartin Group LLC
IR@inarimedical.com

INARI MEDICAL, INC. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands, except share and per share data) (unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue	$	145,820			$	119,005			$	289,014			$	235,172
Cost of goods sold		19,993				13,844				38,886				27,585
Gross profit		125,827				105,161				250,128				207,587
Operating expenses
Research and development		24,905				21,085				51,785				43,149
Selling, general and administrative		114,153				85,586				217,208				171,286
Change in fair value of contingent consideration		5,728				—				12,031				—
Amortization of intangible asset		2,449				—				4,910				—
Acquisition-related expenses		1,036				—				3,815				—
Total operating expenses		148,271				106,671				289,749				214,435
Loss from operations		(22,444	)			(1,510	)			(39,621	)			(6,848	)
Other income (expense)
Interest income		1,076				4,552				2,267				8,697
Interest expense		(77	)			(44	)			(155	)			(84	)
Other income		23				26				—				65
Total other income		1,022				4,534				2,112				8,678
(Loss) income before income taxes		(21,422	)			3,024				(37,509	)			1,830
Provision for income taxes		9,926				939				18,041				1,963
Net (loss) income	$	(31,348	)		$	2,085			$	(55,550	)		$	(133	)
Other comprehensive income (loss)
Foreign currency translation adjustments		(2,359	)			(79	)			(9,718	)			(70	)
Unrealized loss on available-for-sale debt securities		—				(1,095	)			(4	)			(1,960	)
Total other comprehensive loss		(2,359	)			(1,174	)			(9,722	)			(2,030	)
Comprehensive (loss) income	$	(33,707	)		$	911			$	(65,272	)		$	(2,163	)
Net (loss) income per share
Basic	$	(0.54	)		$	0.04			$	(0.96	)		$	(0.00	)
Diluted	$	(0.54	)		$	0.04			$	(0.96	)		$	(0.00	)
Weighted average common shares used to compute net (loss) income per share
Basic		58,142,454				57,207,902				58,040,069				55,988,736
Diluted		58,142,454				58,496,350				58,040,069				55,988,736

INARI MEDICAL, INC. Condensed Consolidated Balance Sheets (in thousands, except share data and par value) (unaudited)
	June 30, 2024				December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	70,125			$	38,597
Restricted cash		67				611
Short-term investments in debt securities		39,547				76,855
Accounts receivable, net		81,631				70,119
Inventories, net		49,359				42,900
Prepaid expenses and other current assets		8,623				6,481
Total current assets		249,352				235,563
Property and equipment, net		23,005				20,929
Operating lease right-of-use assets		48,824				48,407
Goodwill		204,401				214,335
Intangible assets		143,106				150,884
Deposits and other assets		4,242				4,117
Total assets	$	672,930			$	674,235
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	16,375			$	10,577
Payroll-related accruals		54,363				48,706
Accrued expenses and other current liabilities		65,605				15,364
Operating lease liabilities, current portion		1,918				1,692
Total current liabilities		138,261				76,339
Operating lease liabilities, noncurrent portion		31,231				30,355
Deferred tax liability		35,126				36,231
Other long-term liability		44,503				66,400
Total liabilities	$	249,121			$	209,325
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023		—				—
Common stock, $0.001 par value, 300,000,000 shares authorized as of June 30, 2024, and December 31, 2023; 58,166,309 and 57,762,414 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		58				58
Additional paid in capital		528,624				504,453
Accumulated other comprehensive (loss) income		(837	)			8,885
Accumulated deficit		(104,036	)			(48,486	)
Total stockholders' equity		423,809				464,910
Total liabilities and stockholders' equity	$	672,930			$	674,235
INARI MEDICAL, INC. Reconciliation of GAAP Operating Loss to Non-GAAP Operating Loss (in thousands) (Unaudited)

Reconciliation of GAAP Operating Loss to Non-GAAP Operating Loss:

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
GAAP Operating loss	$	(22,444	)		$	(1,510	)		$	(39,621	)		$	(6,848	)
Non-GAAP Adjustments:
Change in fair value of contingent consideration		5,728				—				12,031				—
Amortization of acquired intangible asset		2,449				—				4,910				—
Acquisition-related expenses (a)		1,036				—				3,812				—
Non-GAAP Operating loss	$	(13,231	)		$	(1,510	)		$	(18,868	)		$	(6,848	)

________________
^(a) The acquisition-related expenses primarily include integration, severance and retention related expenses.

Revenue Disaggregation

The following tables present the amount of revenue in VTE and Emerging Therapies recognized for the periods presented (in thousands, unaudited):

	Three Months Ended June 30,
		2024				2023			% Growth
VTE	$	137,674			$	114,086			20.7		%
Emerging Therapies		8,146				4,919			65.6		%
Total Revenue	$	145,820			$	119,005			22.5		%

	Six Months Ended June 30,
		2024				2023			% Growth
VTE	$	274,867			$	228,144			20.5		%
Emerging Therapies		14,147				7,028			101.3		%
Total Revenue	$	289,014			$	235,172			22.9		%

FAQ

What was Inari Medical's revenue for Q2 2024?

Inari Medical reported revenue of $145.8 million for Q2 2024, representing a 22.5% increase compared to Q2 2023.

Did Inari Medical (NARI) report a profit or loss in Q2 2024?

Inari Medical reported a net loss of $31.3 million for Q2 2024, compared to a net income of $2.1 million in the same period of the previous year.

What is Inari Medical's revenue guidance for full-year 2024?

Inari Medical raised its full-year 2024 revenue guidance to $594.5-$604.5 million, projecting growth of approximately 20.5% to 22.5% over 2023.

When does Inari Medical (NARI) expect to reach sustained operating profitability?

Inari Medical expects to reach sustained operating profitability in the first half of 2025.