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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 September 30, 2022

OR

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 October 28, 2022, the registrant had 53,652,850 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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.

Defaults Upon Senior Securities

26

Item 4.

Mine Safety Disclosures

26

Item 5.

Other Information

26

Item 6.

Exhibits

27

Signatures

28

 

i


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. 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 ongoing and global COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, 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”).

 

 

 

ii


 

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)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

83,528

 

 

$

92,752

 

Short-term investments in debt securities

 

 

235,705

 

 

 

83,348

 

Accounts receivable, net

 

 

54,059

 

 

 

42,351

 

Inventories, net

 

 

29,670

 

 

 

21,053

 

Prepaid expenses and other current assets

 

 

7,609

 

 

 

5,694

 

Total current assets

 

 

410,571

 

 

 

245,198

 

Property and equipment, net

 

 

21,191

 

 

 

16,471

 

Operating lease right-of-use assets

 

 

49,951

 

 

 

44,909

 

Deposits and other assets

 

 

6,106

 

 

 

981

 

Long-term investments in debt securities

 

 

 

 

 

3,983

 

Total assets

 

$

487,819

 

 

$

311,542

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

6,035

 

 

$

6,541

 

Payroll-related accruals

 

 

28,052

 

 

 

24,433

 

Accrued expenses and other current liabilities

 

 

7,668

 

 

 

10,737

 

Operating lease liabilities, current portion

 

 

588

 

 

 

802

 

Total current liabilities

 

 

42,343

 

 

 

42,513

 

Operating lease liabilities, noncurrent portion

 

 

30,377

 

 

 

28,404

 

Other long-term liability

 

 

 

 

 

1,416

 

Total liabilities

 

 

72,720

 

 

 

72,333

 

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 September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 300,000,000 shares
   authorized as of September 30, 2022 and December 31, 2021;
53,595,277 
   and
50,313,452 shares issued and outstanding as of September 30, 2022 and
   December 31, 2021, respectively

 

 

53

 

 

 

50

 

Additional paid in capital

 

 

457,043

 

 

 

257,144

 

Accumulated other comprehensive loss

 

 

(945

)

 

 

(402

)

Accumulated deficit

 

 

(41,052

)

 

 

(17,583

)

Total stockholders' equity

 

 

415,099

 

 

 

239,209

 

Total liabilities and stockholders' equity

 

$

487,819

 

 

$

311,542

 

 

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

3


 

Inari Medical, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

96,204

 

 

$

72,916

 

 

$

275,700

 

 

$

193,766

 

Cost of goods sold

 

 

11,064

 

 

 

7,040

 

 

 

31,378

 

 

 

16,477

 

Gross profit

 

 

85,140

 

 

 

65,876

 

 

 

244,322

 

 

 

177,289

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

19,105

 

 

 

12,499

 

 

 

53,809

 

 

 

32,292

 

Selling, general and administrative

 

 

75,833

 

 

 

56,104

 

 

 

212,721

 

 

 

135,899

 

Total operating expenses

 

 

94,938

 

 

 

68,603

 

 

 

266,530

 

 

 

168,191

 

(Loss) income from operations

 

 

(9,798

)

 

 

(2,727

)

 

 

(22,208

)

 

 

9,098

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

618

 

 

 

27

 

 

 

882

 

 

 

130

 

Interest expense

 

 

(74

)

 

 

(73

)

 

 

(220

)

 

 

(220

)

Other income (expense)

 

 

(59

)

 

 

30

 

 

 

169

 

 

 

(4

)

Total other income (expenses)

 

 

485

 

 

 

(16

)

 

 

831

 

 

 

(94

)

(Loss) income before income taxes

 

 

(9,313

)

 

 

(2,743

)

 

 

(21,377

)

 

 

9,004

 

Provision for income taxes

 

 

840

 

 

 

61

 

 

 

2,092

 

 

 

271

 

Net (loss) income

 

$

(10,153

)

 

$

(2,804

)

 

$

(23,469

)

 

$

8,733

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(406

)

 

 

(146

)

 

 

(814

)

 

 

(269

)

Unrealized gain on available-for-sale debt securities

 

 

644

 

 

 

7

 

 

 

271

 

 

 

19

 

Total other comprehensive income (loss)

 

 

238

 

 

 

(139

)

 

 

(543

)

 

 

(250

)

Comprehensive (loss) income

 

$

(9,915

)

 

$

(2,943

)

 

$

(24,012

)

 

$

8,483

 

Net (loss) income per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.19

)

 

$

(0.06

)

 

$

(0.45

)

 

$

0.18

 

Diluted

 

$

(0.19

)

 

$

(0.06

)

 

$

(0.45

)

 

$

0.16

 

Weighted average common shares used to compute net (loss)
    income per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,491,625

 

 

 

50,001,996

 

 

 

52,552,662

 

 

 

49,664,037

 

Diluted

 

 

53,491,625

 

 

 

50,001,996

 

 

 

52,552,662

 

 

 

55,511,061

 

 

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

4


 

Inari Medical, Inc.

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Additional Paid In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

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

 

Options exercised for
  common stock

 

 

228,313

 

 

 

 

 

 

156

 

 

 

 

 

 

 

 

 

156

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

54,607

 

 

 

 

 

 

(1,751

)

 

 

 

 

 

 

 

 

(1,751

)

Share-based compensation
  expense

 

 

 

 

 

 

 

 

7,164

 

 

 

 

 

 

 

 

 

7,164

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(416

)

 

 

 

 

 

(416

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,187

)

 

 

(10,187

)

Balance, June 30, 2022

 

 

53,305,825

 

 

 

53

 

 

 

445,807

 

 

 

(1,183

)

 

 

(30,899

)

 

 

413,778

 

Options exercised for common stock

 

 

167,102

 

 

 

 

 

 

109

 

 

 

 

 

 

 

 

 

109

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

43,643

 

 

 

 

 

 

(1,224

)

 

 

 

 

 

 

 

 

(1,224

)

Shares issued under Employee
  Stock Purchase Plan

 

 

78,707

 

 

 

 

 

 

4,995

 

 

 

 

 

 

 

 

 

4,995

 

Share-based compensation expense

 

 

 

 

 

 

 

 

7,356

 

 

 

 

 

 

 

 

 

7,356

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

238

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,153

)

 

 

(10,153

)

Balance, September 30, 2022

 

 

53,595,277

 

 

$

53

 

 

$

457,043

 

 

$

(945

)

 

$

(41,052

)

 

$

415,099

 

 

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

 

 

5


 

Inari Medical, Inc.

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Additional Paid In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2020

 

 

49,251,614

 

 

$

49

 

 

$

227,624

 

 

$

4

 

 

$

(27,423

)

 

$

200,254

 

Options exercised for
  common stock

 

 

296,019

 

 

 

1

 

 

 

380

 

 

 

 

 

 

 

 

 

381

 

Shares issued under Employee
  Stock Purchase Plan

 

 

36,881

 

 

 

 

 

 

1,882

 

 

 

 

 

 

 

 

 

1,882

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

901

 

 

 

 

 

 

(49

)

 

 

 

 

 

 

 

 

(49

)

Share-based compensation
  expense

 

 

 

 

 

 

 

 

3,836

 

 

 

 

 

 

 

 

 

3,836

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(162

)

 

 

 

 

 

(162

)

Net income