Inari Medical(NARI) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's analysis Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Inari Medical, Inc.'s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023, along with detailed explanatory notes Condensed Consolidated Balance Sheets As of September 30, 2023, the company's total assets grew to $548.8 million from $504.2 million at the end of 2022, primarily driven by an increase in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current assets | $469,061 | $422,905 | | Total assets | $548,835 | $504,152 | | Total current liabilities | $66,066 | $56,174 | | Total liabilities | $96,693 | $87,150 | | Total stockholders' equity | $452,142 | $417,002 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For the third quarter of 2023, the company achieved a significant turnaround, reporting a net income of $3.2 million compared to a net loss of $10.2 million in the same period of 2022 Q3 2023 vs Q3 2022 Performance (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Revenue | $126,366 | $96,204 | | Gross Profit | $111,889 | $85,140 | | Income (loss) from operations | $2,113 | $(9,798) | | Net income (loss) | $3,162 | $(10,153) | | Diluted EPS | $0.05 | $(0.19) | Nine Months 2023 vs 2022 Performance (in thousands, except per share data) | Metric | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | Revenue | $361,538 | $275,700 | | Gross Profit | $319,476 | $244,322 | | Income (loss) from operations | $(4,735) | $(22,208) | | Net income (loss) | $3,029 | $(23,469) | | Diluted EPS | $0.05 | $(0.45) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased from $417.0 million at the end of 2022 to $452.1 million as of September 30, 2023 - Total stockholders' equity grew by $35.1 million during the first nine months of 2023, reaching $452.1 million[17] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, the company generated $23.7 million in cash from operating activities, a significant improvement from the $25.2 million used in the prior-year period Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $23,686 | $(25,227) | | Net cash provided by (used in) investing activities | $1,698 | $(161,969) | | Net cash provided by financing activities | $3,581 | $178,827 | | Net increase (decrease) in cash | $28,960 | $(9,224) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail key accounting policies and provide further information on financial statement items, including revenue disaggregation and a significant subsequent acquisition agreement Revenue by Product (% of Total Revenue) | Product Line | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | ClotTriever and other systems | 32% | 31% | | FlowTriever system | 68% | 69% | Revenue by Geography (in thousands) | Geography | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | United States | $119,825 | $93,597 | | International | $6,541 | $2,607 | - On November 1, 2023, the company entered into an agreement to acquire LimFlow, S.A. for $250 million in cash at closing, with up to an additional $165 million in contingent payments based on commercial and reimbursement milestones[103] - Total unrecognized stock-based compensation expense related to non-vested awards was $78.9 million as of September 30, 2023, expected to be recognized over a weighted-average period of 2.7 years[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q3 2023 financial results, highlighting a 31.4% revenue increase to $126.4 million, a shift to net income of $3.2 million, and a strong liquidity position, including plans for the LimFlow acquisition Q3 2023 vs Q3 2022 Financial Summary (in thousands) | Metric | Q3 2023 | Q3 2022 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $126,366 | $96,204 | $30,162 | 31.4% | | Gross Profit | $111,889 | $85,140 | $26,749 | 31.4% | | R&D Expense | $21,492 | $19,105 | $2,387 | 12.5% | | SG&A Expense | $88,284 | $75,833 | $12,451 | 16.4% | | Income (loss) from operations | $2,113 | $(9,798) | $11,911 | N/A | | Net income (loss) | $3,162 | $(10,153) | $13,315 | N/A | - The increase in SG&A expenses was primarily due to a $9.7 million increase in personnel-related costs from increased headcount and higher sales commissions[116] - The company plans to fund the LimFlow acquisition using existing cash and availability under its credit facility, which was increased to $75.0 million on November 1, 2023[132][133] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its quantitative and qualitative disclosures about market risk since those described in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the company's market risk disclosures from the 2022 Form 10-K[147] Item 4. Controls and Procedures Based on an evaluation as of September 30, 2023, the company's Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective - Management concluded that disclosure controls and procedures were effective as of September 30, 2023[147] - No material changes to internal control over financial reporting were identified during the third quarter of 2023[149] PART II. OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company reports that it is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings[151] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to the risk factors disclosed in the 2022 Form 10-K have occurred[152] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None reported[153] Item 5. Other Information This section discloses insider trading arrangements for tax withholding on vested RSUs for certain executives and confirms no Rule 10b5-1 trading plan changes - The company plans to sell approximately 37,000 and 25,000 shares on behalf of the CEO and CMO, respectively, to cover tax obligations for the November 2023 RSU distribution[156] - No officer or director entered into, modified, or terminated a Rule 10b5-1 trading plan during the three months ended September 30, 2023[157] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents, employment agreements, and required certifications - Exhibits filed include certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[159]