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Inari Medical, Inc. (NARI)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue rose 21.4% year-over-year to $153.4M and accelerated sequentially by $7.6M; gross margin was 87.1% with sequential improvement versus Q2 as new product ramp and mix headwinds moderated .
  • GAAP operating loss improved sequentially to $(13.6)M from $(22.4)M in Q2; non-GAAP operating loss narrowed to $(0.4)M, excluding contingent consideration revaluation, software impairment, amortization and acquisition costs .
  • FY24 revenue guidance raised to $601.5–$604.5M (midpoint +$3.5M vs prior), and management guided to roughly breakeven GAAP operating income in Q4 and sustained GAAP operating profitability in H1 2025, reaffirmed .
  • Near-term catalysts: PEERLESS randomized data presentation at TCT (mechanical thrombectomy vs catheter-directed thrombolysis), 510(k)-cleared next-gen Artix limited release ahead of full market launch, and reimbursement tailwinds for LimFlow (NTAP in effect; outpatient increase proposed) .

What Went Well and What Went Wrong

What Went Well

  • Record revenue and balanced portfolio performance: total revenue $153.4M (+21.4% YoY), VTE $145.3M (+19.7% YoY), Emerging Therapies $8.0M (+64% YoY); international revenue grew 76.4% YoY to $11.5M .
  • Sequential margin and loss improvement: gross margin improved by 80 bps vs Q2; GAAP operating loss improved by ~$9M (or ~$13M ex one-time impairment), and non-GAAP operating loss narrowed materially .
  • Strategic momentum and catalysts: “golden era of randomized controlled data” with PEERLESS RCT readout; next-gen Artix 510(k) clearance and limited market release; LimFlow NTAP in effect from Oct 1 with proposed outpatient reimbursement increase; expanding into Japan and China .

Management quote: “We believe this presentation marks the beginning of a golden era of randomized controlled data focused on thrombectomy for patients suffering from VTE.” – CEO Drew Hykes .

What Went Wrong

  • Profitability still negative: GAAP net loss $(18.4)M, diluted EPS $(0.31), with higher operating expenses (personnel, legal/professional, contingent consideration fair value, amortization from LimFlow, and software impairment) .
  • Gross margin down YoY to 87.1% (from 88.5%) driven by product mix, new product ramp costs, and internationalization; emerging therapies were roughly flat sequentially despite robust YoY growth .
  • Ongoing DOJ inquiry overhang (no operational impact but timeline measured in quarters/years per prior commentary) and continued investment needs to drive market development and program-building (VT Excellence) .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$143.2 $145.8 $153.390
Gross Margin %86.8% 86.3% 87.1%
GAAP Operating Income ($USD Millions)$(17.2) $(22.4) $(13.568)
Non-GAAP Operating Income ($USD Millions)$(5.6) $(13.2) $(0.369)
Net Income ($USD Millions)$(24.2) $(31.3) $(18.367)
Diluted EPS ($USD)$(0.42) $(0.54) $(0.31)

Segment and regional breakdown:

Segment / RegionQ1 2024Q2 2024Q3 2024
VTE Revenue ($USD Millions)$137.2 $137.7 $145.3
Emerging Therapies Revenue ($USD Millions)$6.0 $8.1 $8.0
International Revenue ($USD Millions)$9.5 $10.0 $11.5

KPIs and operating metrics:

KPIQ1 2024Q2 2024Q3 2024
Cash & Investments ($USD Millions)$102.0 $109.7 $111.6
Cash Flows from Operations ($USD Millions)$(12.3) $(0.8) $1.9
Operating Expenses ($USD Millions)$141.5 $148.3 $147.112
R&D Expense ($USD Millions)$26.9 $24.9 $29.431
SG&A Expense ($USD Millions)$103.1 $114.2 $108.271

Non-GAAP adjustments in Q3: change in contingent consideration $6.6M, capitalized software impairment $3.8M, amortization of acquired intangible assets $2.5M, acquisition-related expenses $0.3M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$594.5–$604.5 $601.5–$604.5 Raised (+$3.5M midpoint)
GAAP Operating Profitability TimingFY 2025Sustained in H1 2025 (reaffirmed) Sustained in H1 2025 (reaffirmed) Maintained
GAAP Operating IncomeQ4 2024N/ARoughly breakeven New disclosure
SG&A as % of RevenueH2/Q4 2024Decrease to ~Q1 level in H2 Further decrease in Q4 Updated
R&D as % of RevenueH2/Q4 2024~Similar to H1 Decrease sequentially in Q4 to ~Q2 level Updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3)Trend
VTE market growth and leadershipMarket growing ~20%; clear leadership (PE ~4:1, DVT ~1.5–2:1); TAM penetration still single-digit; VT Excellence building penetration VTE +19.7% YoY; stable U.S./OUS dynamics; long runway; pricing modest tailwind with PPP programs Stable-to-robust growth, continued leadership
PEERLESS and RCTsPEERLESS readout in H2/Q4; PEERLESS II and Defiance enrolling vs anticoagulation PEERLESS late-breaking at TCT; expectation to shift practice from CDT; sustained marketing push in 2025 Data-driven adoption inflection starting Q4–2025
Emerging Therapies (LimFlow, Artix, CBD)LimFlow foundation year; NTAP proposed; next-gen stent delivery PMA; Artix gen-2 targeting Q4; VenaCore LMR progressing LimFlow NTAP effective Oct 1; outpatient increase proposed (~$27.5k→$35k); Artix 510(k) clearance and LMR; aiming FM launch later Q4; Emerging Therapies +64% YoY Reimbursement tailwinds and portfolio relaunch
International expansionStrong Europe-led growth; treating patients in China/Japan targeted for Q4 $11.5M (+76.4% YoY); Brazil approval; progress to launch in China (25-patient study submitted) and PMDA approval for ClotTriever in Japan with reimbursement pending Broadening footprint (Europe, LatAm, Asia)
Pricing dynamicsStable-to-up pricing; PPP bundles support toolkit use Pricing stable; modest tailwind via PPP conversions and renewals Modest positive
DOJ inquiryCooperation continues; timeline likely quarters/years; no commercial impact No new detail in Q3; remains an overhang referenced by investors Ongoing, unchanged
Profitability trajectoryGreater H2 improvement; path to H1’25 sustained GAAP profitability Q4 roughly breakeven; H1’25 sustained GAAP profitability reaffirmed Improving sequentially

Management Commentary

  • Strategic positioning: “We continue to drive strong performance across the entire Inari portfolio…several important catalysts on the horizon…PEERLESS data…full market release of Artix…plans to offer Inari solutions in Japan and China.” – CEO Drew Hykes .
  • Margin progression: “Sequential gross margins improved by 80 basis points over Q2 2024.” – CFO Kevin Strange .
  • Profitability outlook: “We remain fully committed to achieving sustained GAAP operating profitability in the first half of 2025…We also anticipate roughly breakeven GAAP operating income in Q4 of this year.” – CFO Kevin Strange .
  • International strategy: “We obtained PMDA regulatory approval for ClotTriever [Japan]…finalizing reimbursement…submitted 25-patient ClotTriever data to NMPA [China].” – CEO Drew Hykes .

Q&A Highlights

  • VTE market health: Management characterized market and share dynamics as stable with a long runway for adoption; global VTE +~20% in Q3 .
  • Emerging Therapies trajectory: LimFlow sequential growth and NTAP tailwind now effective; Artix gen-2 limited release underway with full market launch later Q4; goal for Emerging Therapies to reach ≥20% of revenue over time .
  • International catalysts: Western Europe to lead in 2025, with increasing contributions across APAC/LatAm; Japan reimbursement in Q4; China regulatory progress with submitted study .
  • Pricing and PPP programs: Pricing stable with modest tailwinds from PPP conversions and renewals .
  • Profitability cadence: Sequential operating improvement expected to continue; Q4 breakeven GAAP operating income target; path to sustained GAAP operating profitability in H1 2025 reaffirmed .

Estimates Context

  • S&P Global consensus estimates were unavailable for NARI in our tool environment due to a CIQ mapping issue; as a result, we cannot provide definitive beat/miss vs Wall Street consensus for Q3 or FY24 at this time (S&P Global data unavailable).
  • Investor commentary on the call referenced Street models (e.g., low-to-mid-teens U.S. BT growth), but without S&P Global consensus values we do not anchor comparisons to third-party models .

Key Takeaways for Investors

  • Revenue momentum with improving sequential operating leverage; watch for Q4 breakeven GAAP operating income as a tangible milestone toward H1’25 sustained profitability .
  • Multiple catalysts likely to shape sentiment: PEERLESS late-breaker (potential practice shift from CDT), full market release of Artix, and LimFlow reimbursement tailwinds (NTAP effective; outpatient increase proposed) – these can drive adoption and mix .
  • International is scaling off a small base; regulatory and reimbursement progress in Japan/China adds optionality to 2025–2026 growth .
  • Gross margin YoY pressure from mix/new product ramp appears manageable; sequential improvement suggests normalization as launches progress .
  • SG&A and R&D intensity expected to moderate as % of revenue in Q4; focus on operating discipline without sacrificing growth investments .
  • Pricing stable with PPP program tailwinds; continued VT Excellence program-building supports deeper penetration in underpenetrated U.S. VTE markets .
  • Legal overhang (DOJ inquiry) persists but with no operational impact cited; timeline likely extended based on prior disclosures .

Additional Notes

  • Press release vs call figures align (e.g., Q3 revenue $153.390M in 8-K vs $153.4M discussed on the call) .
  • Q3 non-GAAP operating loss excludes: $6.6M contingent consideration FV change; $3.8M capitalized software impairment; $2.5M amortization; $0.3M acquisition-related expenses .

All data and statements above are cited from company filings and the Q3/Q2/Q1 earnings calls as indicated.