nari-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ___________

Commission File Number: 001-39293

Inari Medical, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			45-2902923
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

6001 Oak Canyon, Suite 100 Irvine, California			92618
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (877) 923-4747

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value per share

NARI

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2023, the registrant had 57,172,042 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “would,” “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, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our business model and strategic plans for our products, technologies and business, including our implementation thereof, the impact on our business, financial condition and results of operations from macroeconomic conditions, the timing of and our ability to obtain and maintain regulatory approvals, our commercialization, marketing and manufacturing capabilities and strategy, our expectations about the commercial success and market acceptance of our products, the sufficiency of our cash, cash equivalents and short-term investments, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, and assumptions, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon these forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

INARI MEDICAL, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share data and par value)

(unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	56,562	$	60,222
Short-term investments in debt securities	271,884		266,179
Accounts receivable, net	55,719		58,611
Inventories, net	36,499		32,581
Prepaid expenses and other current assets	4,942		5,312
Total current assets	425,606		422,905
Property and equipment, net	21,245		21,655
Operating lease right-of-use assets	50,599		50,703
Deposits and other assets	9,084		8,889

Total assets	$	506,534	$	504,152
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	7,352	$	7,659
Payroll-related accruals	28,443		38,955
Accrued expenses and other current liabilities	11,018		8,249
Operating lease liabilities, current portion	1,527		1,311
Total current liabilities	48,340		56,174
Operating lease liabilities, noncurrent portion	31,458		30,976

Total liabilities	79,798		87,150
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value, 300,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 57,083,716 and 54,021,656 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	57		54
Additional paid in capital	475,754		462,949
Accumulated other comprehensive (loss) income	(7)		849
Accumulated deficit	(49,068)		(46,850)
Total stockholders' equity	426,736		417,002
Total liabilities and stockholders' equity	$	506,534	$	504,152

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INARI MEDICAL, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended March 31,
	2023		2022

Revenue	$	116,167	$	86,752
Cost of goods sold	13,741		9,967
Gross profit	102,426		76,785
Operating expenses
Research and development	22,064		16,135
Selling, general and administrative	85,700		63,732
Total operating expenses	107,764		79,867
Loss from operations	(5,338)		(3,082)
Other income (expense)
Interest income	4,145		50
Interest expense	(40)		(73)
Other income (expense)	39		(24)
Total other income (expense)	4,144		(47)
Loss before income taxes	(1,194)		(3,129)
Provision for income taxes	1,024		—
Net loss	$	(2,218)	$	(3,129)
Other comprehensive income (loss)
Foreign currency translation adjustments	9		(117)
Unrealized loss on available-for-sale debt securities	(865)		(248)
Total other comprehensive loss	(856)		(365)
Comprehensive loss	$	(3,074)	$	(3,494)
Net loss per share
Basic	$	(0.04)	$	(0.06)
Diluted	$	(0.04)	$	(0.06)
Weighted average common shares used to compute net loss per share
Basic	54,756,024		50,954,715
Diluted	54,756,024		50,954,715

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INARI MEDICAL, INC.

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)


	Common Stock			Additional Paid In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2022	54,021,656	$	54	$	462,949	$	849	$	(46,850)	$	417,002
Options exercised for common stock	209,966	—		226		—		—		226
Shares issued under Employee Stock Purchase Plan	86,051	—		4,172		—		—		4,172
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes	2,766,043	3		(1,932)		—		—		(1,929)

Share-based compensation expense	—	—		10,339		—		—		10,339
Other comprehensive loss	—	—		—		(856)		—		(856)
Net loss	—	—		—		—		(2,218)		(2,218)
Balance, March 31, 2023	57,083,716	$	57	$	475,754	$	(7)	$	(49,068)	$	426,736

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INARI MEDICAL, INC.

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)


	Common Stock			Additional Paid In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2021	50,313,452	$	50	$	257,144	$	(402)	$	(17,583)	$	239,209
Options exercised for common stock	322,882	1		344		—		—		345
Shares issued under Employee Stock Purchase Plan	54,808	—		3,427		—		—		3,427
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes	31,763	—		(1,624)		—		—		(1,624)
Issuance of common stock in public offering, net of issuance costs of $11.9 million	2,300,000	2		174,392						174,394
Share-based compensation expense	—	—		6,555		—		—		6,555
Other comprehensive loss	—	—		—		(365)		—		(365)
Net loss	—	—		—		—		(3,129)		(3,129)
Balance, March 31, 2022	53,022,905	$	53	$	440,238	$	(767)	$	(20,712)	$	418,812

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INARI MEDICAL, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net loss	$	(2,218)	$	(3,129)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation	1,348		1,063
Amortization of deferred financing costs	8		36
Amortization of right-of-use assets	1,625		604
Share-based compensation expense	10,339		6,555
Allowance for credit losses, net	91		79
Loss on disposal of fixed assets	26		—
Amortization of premium and discount on marketable securities	(3,810)		—
Changes in:
Accounts receivable	2,827		(2,695)
Inventories	(3,825)		(2,788)
Prepaid expenses, deposits and other assets	504		261
Accounts payable	(317)		(467)
Payroll-related accruals, accrued expenses and other liabilities	(7,787)		(6,247)
Operating lease liabilities	(366)		(2,097)
Lease prepayments for lessor's owned leasehold improvements	(458)		(275)
Net cash used in operating activities	(2,013)		(9,100)
Cash flows from investing activities
Purchases of property and equipment	(964)		(2,745)
Purchases of marketable securities	(122,054)		(112,073)
Maturities of marketable securities	119,300		47,000
Purchases of other investments	(325)		(5,693)
Net cash used in investing activities	(4,043)		(73,511)
Cash flows from financing activities
Proceeds from issuance of common stock in public offering, net of issuance costs of $11.9 million	—		174,394
Proceeds from issuance of common stock under employee stock purchase plan	4,172		3,427
Proceeds from exercise of stock options	226		345
Payment of taxes related to vested restricted stock units	(1,932)		(1,624)
Net cash provided by financing activities	2,466		176,542
Effect of foreign exchange rate on cash and cash equivalents	(70)		(127)
Net (decrease) increase in cash and cash equivalents	(3,660)		93,804
Cash and cash equivalents beginning of period	60,222		92,752
Cash and cash equivalents end of period	$	56,562	$	186,556

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	104	$	89
Cash paid for interest	$	32	$	37
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets	$	1,030	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INARI MEDICAL, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

1. ORGANIZATION

Description of Business

Inari Medical, Inc. (the “Company”) was incorporated in Delaware in July 2011 and is headquartered in Irvine, California. The Company purpose builds minimally invasive, novel, catheter-based mechanical thrombectomy systems for the unique characteristics of specific disease states.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The interim condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial position as of March 31, 2023 and its consolidated results of operations and cash flows for the three months ended March 31, 2023 and 2022. The financial data and the other financial information disclosed in the notes to the condensed consolidated financial statements related to the three months ended March 31, 2023 and 2022 are also unaudited. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The consolidated balance sheet as of December 31, 2022 included herein was derived from the audited consolidated financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 27, 2023.

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements may include, but are not limited to, collectability of receivables, recoverability of long-lived assets, valuation of inventory, operating lease right-of-use (“ROU”) assets and liabilities, other investments, fair value of stock options, recoverability of net deferred tax assets and related valuation allowance, and certain accruals. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. Actual results could differ materially from those estimates. Management periodically evaluates such estimates and assumptions, and they are adjusted prospectively based upon such periodic evaluation.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to

SEC Form 10-Q filed by Inari Medical Inc.