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Inari Medical, Inc. (NARI)·Q2 2024 Earnings Summary

Executive Summary

  • Revenue of $145.8M grew 22.5% year over year; gross margin was 86.3%. GAAP operating loss widened to $22.4M and diluted EPS was a loss of $0.54 versus $0.04 profit a year ago .
  • VTE revenue rose 20.7% to $137.7M; Emerging Therapies revenue rose 65.6% to $8.1M; international revenue reached $10.0M, up ~93% YoY .
  • Full-year revenue guidance raised to $594.5–$604.5M (midpoint +$2M vs prior); company reaffirmed goal of sustained operating profitability in 1H 2025 and expects sequential operating losses to decline in Q3 and Q4 .
  • Key catalysts: PEERLESS RCT readout in Q4, LimFlow NTAP and outpatient reimbursement proposals, VenaCore full release, Arctic Gen 2 in Q4, initial patient treatments in China/Japan in Q4; management cautioned Q3 sequential growth to be ~half of last year with stronger Q4 acceleration .

What Went Well and What Went Wrong

What Went Well

  • Strong, diversified growth: Revenue +22.5% YoY to $145.8M; VTE +20.7%; Emerging Therapies +65.6%; international +92.9% YoY to $10.0M .
  • Product and clinical momentum: Full commercial launch of VenaCore for chronic venous disease; PEERLESS RCT data to be released in Q4, aimed at displacing lytic-based PE therapies .
  • Reimbursement tailwinds for LimFlow: Proposed NTAP up to $16,250 for inpatient and a draft 2025 outpatient increase from ~$27,500 to ~$35,000 per procedure, supporting 2025 ramp .
    Quote: “We are confident in continued momentum across all three of our growth drivers and look forward to our PEERLESS data release” — CEO Drew Hykes .

What Went Wrong

  • Profitability pressured: GAAP operating loss rose to $22.4M (vs $1.5M YoY) and net loss widened to $31.3M; gross margin declined to 86.3% from 88.4% YoY, driven by product mix, new product ramp costs, and internationalization .
  • SG&A step-up and onetime items: SG&A of $114.2M (+33% YoY) with headcount, commissions, legal, bad debt; management expects SG&A as % of revenue to fall back toward Q1 levels in 2H .
  • DOJ CID remains an overhang: Company continues to cooperate; management reiterated resolutions typically take quarters to years; multiple law-firm press releases flagged class actions related to alleged kickback practices, elevating legal risk perception .

Financial Results

MetricQ2 2023Q4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$119.0 $132.1 $143.2 $145.8
Gross Margin (%)88.4% 87.1% 86.8% 86.3%
GAAP Operating Income (Loss) ($USD Millions)$(1.5) $(9.3) $(17.2) $(22.4)
Net (Loss) Income ($USD Millions)$2.1 $(4.7) $(24.2) $(31.3)
Diluted EPS ($USD)$0.04 $(0.08) $(0.42) $(0.54)

Segment revenue trend (VTE and Emerging Therapies):

Segment Revenue ($USD Millions)Q4 2023Q1 2024Q2 2024
VTE$126.7 $137.2 $137.7
Emerging Therapies$5.4 $6.0 $8.1
Total Revenue$132.1 $143.2 $145.8

KPIs and operating metrics:

KPIQ1 2024Q2 2024
International Revenue ($USD Millions)$9.5 $10.0
Cash & Investments ($USD Millions)$102.0 $109.7
Cash, Cash Equivalents & ST Investments ($USD Millions)—$110.0
R&D Expense ($USD Millions)$26.9 $24.9
SG&A Expense ($USD Millions)$103.1 $114.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$592.5–$602.5 $594.5–$604.5 Raised (midpoint +$2M)
Operating Profitability TimingCompany-levelSustained operating profitability in 1H 2025 Sustained operating profitability in 1H 2025 Maintained
Sequential Growth PhasingQ3/Q4 2024—Q3 sequential growth roughly half of last year’s Q3; stronger YoY growth in Q4 New phasing color
Cash BalanceFY 2024—Expected >$100M for the year New expectation

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
VTE market growth and leadershipVTE market growing ~20%; clear leadership in PE and DVT; Q1 VTE +20% VTE +21% globally; leadership reiterated (4:1 in PE; 1.5–2x in DVT) Stable-to-positive
Emerging Therapies momentumVenaCore limited release; Arctic Gen 2 targeted later 2024; Emerging Therapies +185% YoY in Q1 VenaCore full release with strong feedback; Emerging Therapies +66% YoY; Arctic Gen 2 in Q4 Improving
LimFlow integration and reimbursementIntegration progressing; proposed NTAP up to ~$16K; foundation-building in 2024 NTAP expected Oct; draft outpatient reimbursement proposes ~$35K; second-gen stent delivery PMA approved Positive catalysts
International expansionStrong Western Europe; largest sequential increase; China/Japan targeted 2024 International revenue $10M (+93% YoY); treating patients in China/Japan expected Q4 Improving
DOJ inquiry/legalCID disclosed; cooperation; long timelines Status quo; cooperation continues; timelines likely quarters/years; multiple class-action PRs Ongoing overhang
Seasonality & phasingQ2 seasonality noted; Q2 flat-to-slightly up vs Q1 (Q1 call) Q2 seasonality occurred; Q3 sequential growth ~half of last year; stronger Q4 Neutral
SG&A and expense controlSG&A +20% YoY; maintain leverage path; gross margin ~flat through year SG&A +33% YoY with onetime items; % of revenue to decrease in 2H Improving in 2H
Pricing/mixPricing stable to up; PPP bundling supports complex cases Pricing stable; continued PPP usage; mix and ramp costs weighed on GM Stable

Management Commentary

  • “Our second quarter performance was driven by strong adoption of our market leading solutions across our VTE, Emerging Therapies and international businesses… and… the recent launch of VenaCore” — CEO Drew Hykes .
  • “We are raising our full year 2024 revenue guidance… reflecting growth of approximately 20.5% to 22.5% over 2023… and reaffirm… sustained operating profitability in the first half of 2025” — CFO Mitchell Hill .
  • “PEERLESS will have an impact… driving more… patients to receive mechanical thrombectomy with FlowTriever over lytic-based treatment” — Chief Medical Officer Dr. Tom Tu .
  • “CMS proposed to increase hospital outpatient reimbursement for the LimFlow procedure… and… NTAP… would add as much as $16,250… beginning October 1 of this year” — CEO commentary .

Q&A Highlights

  • VTE growth and market dynamics: Management assessed VTE market growth “in the neighborhood of 20%” and reiterated clear leadership positions (4:1 PE; 1.5–2x DVT) despite competitive activity .
  • Guidance phasing: Q3 sequential growth guided to ~half of last year; stronger Q4 YoY, reflecting timing of catalysts (PEERLESS readout, Arctic, LimFlow updates, China/Japan) .
  • DOJ inquiry: Cooperation continues; timelines typically quarters/years; no impact on commercial strategy/tactics to date .
  • SG&A step-up: Q2 SG&A rise driven by commissions, legal, bad debt, stock comp; % of revenue expected to decrease in 2H; sequential operating losses expected to decline in Q3 and Q4 .
  • VenaCore ramp: Full release with strong physician feedback; usage extending into DVT; some stocking revenue in Q2 tied to VenaCore .

Estimates Context

  • S&P Global consensus estimates were unavailable for NARI due to missing CIQ mapping in our system; therefore, we cannot provide definitive consensus comparisons at this time (S&P Global data unavailable).
  • Sell-side modeling color from the call: One analyst referenced Q3 revenue consensus around ~$151.5M; management signaled Q3 sequential growth would be ~half of last year’s Q3, implying potential downside vs that figure with stronger acceleration in Q4 .

Key Takeaways for Investors

  • Broad-based growth continues, but margins are temporarily pressured by product mix, new product ramps, and international expansion; expect operating losses to sequentially improve in 2H as SG&A normalizes and revenue scales .
  • Guidance raised again, with catalysts clustered in Q4 (PEERLESS, Arctic Gen 2, LimFlow reimbursement, China/Japan), positioning the stock for event-driven moves; Q3 tempered by phasing .
  • VenaCore full release and expanding use cases support Emerging Therapies acceleration; management targets Emerging Therapies to be at least 20% of revenue over time, enhancing diversification .
  • LimFlow remains a 2024 foundation build with meaningful 2025 ramp potential, aided by NTAP and outpatient reimbursement increases; integration and physician training progressing well .
  • International traction is material and accelerating, with Europe strength and APAC catalysts; long-term target of international representing ≥20% of revenue remains credible .
  • Legal overhang persists (DOJ CID and class-action headlines), but management sees no commercial impact; monitor for developments and potential expense/legal cost implications .
  • Pricing remains stable-to-up, supported by PPP bundling in complex VTE cases; gross margin likely steadier near current levels given mix and ramp factors .

Appendix: Additional Data Points

  • Q2 revenue disaggregation: VTE $137.7M (+20.7% YoY), Emerging Therapies $8.1M (+65.6% YoY) .
  • Non-GAAP operating loss Q2: $(13.2)M, excluding contingent consideration FV change ($5.7M), intangible amortization ($2.4M), acquisition-related expenses ($1.0M) .
  • Cash & equivalents and short-term investments: ~$110M at Q2; management expects >$100M for the year .