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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 June 30, 2024
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
InariMedical_Logo_R small.jpg
Inari Medical, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware45-2902923
(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 classTrading
Symbol(s)		Name of each exchange on which registered
Common stock, $0.001 par value per shareNARIThe 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, a 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 July 26, 2024, the registrant had 58,266,743 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents
Page
i
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. We intend such 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, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. 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”, “expects”, “plans”, “anticipates”, “could”, “intends”, “targets”, “projects”, “contemplates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report include, but are not limited to statements regarding our future results of operations and financial position, plans for our current and future products, anticipated product launches, expectations regarding our acquisition of LimFlow S.A., the impact of macroeconomic conditions, industry and business trends, and our expectations regarding stock compensation, business strategy, plans, market growth, regulatory climate, competitive landscape and our objectives for future operations.
The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations. Forward-looking statements involve known and unknown risks and uncertainties, and are subject to other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, those factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as such risks and uncertainties may be amended, supplemented or superseded from time to time by our subsequent reports on Forms 10-Q and 10-K we file with the United States Securities and Exchange Commission. We qualify all of our forward-looking statements by these cautionary statements. 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.
The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. 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.


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)
June 30,
2024		December 31,
2023
Assets
Current assets
Cash and cash equivalents$70,125 $38,597 
Restricted cash
67 611 
Short-term investments in debt securities39,547 76,855 
Accounts receivable, net81,631 70,119 
Inventories, net49,359 42,900 
Prepaid expenses and other current assets8,623 6,481 
Total current assets249,352 235,563 
Property and equipment, net23,005 20,929 
Operating lease right-of-use assets48,824 48,407 
Goodwill204,401 214,335 
Intangible assets143,106 150,884 
Deposits and other assets4,242 4,117 
Total assets$672,930 $674,235 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$16,375 $10,577 
Payroll-related accruals54,363 48,706 
Accrued expenses and other current liabilities65,605 15,364 
Operating lease liabilities, current portion1,918 1,692 
Total current liabilities138,261 76,339 
Operating lease liabilities, noncurrent portion31,231 30,355 
Deferred tax liability35,126 36,231 
Other long-term liability44,503 66,400 
Total liabilities249,121 209,325 
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023
— — 
Common stock, $0.001 par value, 300,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 58,166,309 and 57,762,414 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
58 58 
Additional paid in capital528,624 504,453 
Accumulated other comprehensive (loss) income
(837)8,885 
Accumulated deficit(104,036)(48,486)
Total stockholders' equity423,809 464,910 
Total liabilities and stockholders' equity$672,930 $674,235 
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 June 30,Six Months Ended June 30,
2024202320242023
Revenue$145,820 $119,005 $289,014 $235,172 
Cost of goods sold19,993 13,844 38,886 27,585 
Gross profit125,827 105,161 250,128 207,587 
Operating expenses
Research and development24,905 21,085 51,785 43,149 
Selling, general and administrative114,153 85,586 217,208 171,286 
Change in fair value of contingent consideration
5,728 — 12,031 — 
Amortization of intangible asset
2,449 — 4,910 — 
Acquisition-related expenses
1,036 — 3,815 — 
Total operating expenses148,271 106,671 289,749 214,435 
Loss from operations
(22,444)(1,510)(39,621)(6,848)
Other income (expense)
Interest income1,076 4,552 2,267 8,697 
Interest expense(77)(44)(155)(84)
Other income
23 26 — 65 
Total other income1,022 4,534 2,112 8,678 
(Loss) income before income taxes
(21,422)3,024 (37,509)1,830 
Provision for income taxes9,926 939 18,041 1,963 
Net (loss) income
$(31,348)$2,085 $(55,550)$(133)
Other comprehensive income (loss)
Foreign currency translation adjustments(2,359)(79)(9,718)(70)
Unrealized loss on available-for-sale debt securities
— (1,095)(4)(1,960)
Total other comprehensive loss
(2,359)(1,174)(9,722)(2,030)
Comprehensive (loss) income
$(33,707)$911 $(65,272)$(2,163)
Net (loss) income per share
Basic$(0.54)$0.04 $(0.96)$(0.00)
Diluted$(0.54)$0.04 $(0.96)$(0.00)
Weighted average common shares used to compute net (loss) income per share
Basic58,142,45457,207,90258,040,06955,988,736
Diluted58,142,45458,496,35058,040,06955,988,736
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 StockAdditional Paid In
Capital		Accumulated Other Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 202357,762,414$58 $504,453 $8,885 $(48,486)$464,910 
Options exercised for common stock81,952 — 145 — — 145 
Shares issued under Employee Stock Purchase Plan82,816 — 3,983 — — 3,983 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
73,963 — (3,113)— — (3,113)
Share-based compensation expense—— 12,870 — — 12,870 
Other comprehensive loss—— — (7,363)— (7,363)
Net loss—— — — (24,202)(24,202)
Balance, March 31, 202458,001,14558 518,338 1,522 (72,688)447,230 
Options exercised for common stock47,750 — 98 — — 98 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
117,414 — (2,851)— — (2,851)
Share-based compensation expense—— 13,039 — — 13,039 
Other comprehensive loss—— — (2,359)— (2,359)
Net loss
—— — — (31,348)(31,348)
Balance, June 30, 202458,166,309$58 $528,624 $(837)$(104,036)$423,809 
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 StockAdditional Paid In
Capital		Accumulated Other Comprehensive
Income (Loss)		Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 202254,021,656$54 $462,949 $849 $(46,850)$417,002 
Options exercised for common stock209,966— 226 — — 226 
Shares issued under Employee Stock Purchase Plan86,051— 4,172 — — 4,172 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
2,766,0433 (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, 202357,083,71657 475,754 (7)(49,068)426,736 
Options exercised for common stock81,712— 214 — — 214 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
101,027— (2,569)— — (2,569)
Share-based compensation expense—— 10,353 — — 10,353 
Other comprehensive loss—— — (1,174)— (1,174)
Net income
—— — — 2,085 2,085 
Balance, June 30, 202357,266,455$57 $483,752 $(1,181)$(46,983)$435,645 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
INARI MEDICAL, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
20242023
Cash flows from operating activities
Net loss
$(55,550)$(133)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization7,746 2,754 
Amortization of deferred financing costs
43 20 
Amortization of right-of-use assets1,607 2,359 
Share-based compensation expense25,909 20,692 
Allowance for credit losses, net622 63 
Loss on disposal of fixed assets112 30 
Amortization of premium and discount on marketable securities(967)(8,112)
Change in fair value of contingent consideration liability
12,031 — 
Changes in:
Accounts receivable(12,319)(4,561)
Inventories(6,921)(6,334)
Prepaid expenses, deposits and other assets(233)352 
Accounts payable5,850 (417)
Payroll-related accruals, accrued expenses and other liabilities22,210 2,167 
Operating lease liabilities(915)(675)
Lease prepayments for lessor's owned leasehold improvements— (458)
Net cash (used in) provided by operating activities
(775)7,747 
Cash flows from investing activities
Purchases of property and equipment(5,011)(2,193)
Purchases of marketable securities(39,038)(284,165)
Maturities of marketable securities
75,207 276,800 
Purchases of other investments— (565)
Working capital adjustment related to acquisition
3,722 — 
Capitalized software development costs(1,479)— 
Net cash provided by (used in) investing activities
33,401 (10,123)
Cash flows from financing activities
Proceeds from issuance of common stock under employee stock purchase plan3,983 4,172 
Proceeds from exercise of stock options243 440 
Payment of taxes related to vested equity awards
(5,964)(4,498)
Net cash (used in) provided by financing activities
(1,738)114 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
96 (123)
Net increase (decrease) in cash, cash equivalents and restricted cash
30,984 (2,385)
Cash, cash equivalents and restricted cash beginning of period39,208 60,222 
Cash, cash equivalents and restricted cash end of period$70,192 $57,837 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
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 and markets a variety of medical products, including minimally invasive, novel, catheter-based mechanical thrombectomy systems for the unique characteristics of specific disease states.
On November 15, 2023, the Company acquired LimFlow S.A. (“LimFlow”), a medical device company focused on limb salvage for patients with chronic limb-threatening ischemia (“CLTI”). LimFlow focuses on transforming the treatment of CLTI, an advanced stage of peripheral artery disease that is associated with increased mortality, risk of amputation and impaired quality of life.
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 June 30, 2024 and the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three and six months ended June 30, 2024 and 2023 are unaudited. The consolidated balance sheet as of December 31, 2023 included herein was derived from the audited consolidated financial statements as of that date. 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 June 30, 2024 and its consolidated results of operations and cash flows for the three and six months ended June 30, 2024 and 2023. The financial data and the other financial information disclosed in the notes to the condensed consolidated financial statements related to the three and six months ended June 30, 2024 and 2023 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. 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, 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, contingent consideration liability, 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.
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INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
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 the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company sells its products primarily to hospitals in the United States through its direct sales force and also sells its products directly and through distributors in select international markets. The Company recognizes revenue for arrangements where the Company has satisfied its performance obligation of shipping or delivering the product. For sales where the Company’s sales representatives hand-deliver products directly to the hospitals, control of the products transfers to the customers upon such hand-delivery. For sales where products are shipped, control of the products transfers either upon shipment or delivery of the products to the customer, depending on the shipping terms and conditions. Revenue from product sales is comprised of product revenue, net of product returns, discounts, administrative fees and sales rebates. The Company has elected to account for shipping and handling activities that occur after the customer has obtained control as a fulfillment activity, and not a separate performance obligation.
Performance Obligation—The Company has revenue arrangements that consist of a single performance obligation, the shipping or delivery of the Company’s products. The satisfaction of this performance obligation occurs with the transfer of control of the Company’s product to its customers, either upon shipment or delivery of the product.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of revenue recognized is based on the transaction price, which represents the invoiced amount, net of discounts, administrative fees and sales rebates, where applicable. The Company provides a standard 30-day unconditional right of return period. The Company establishes estimated provisions for returns at the time of sale based on historical experience. Historically, the actual product returns have been insignificant to the Company’s condensed consolidated financial statements.
As of June 30, 2024 and December 31, 2023, the Company recorded $0.9 million and $1.2 million, respectively, of unbilled receivables, and $1.9 million and $1.3 million, respectively, of allowance for credit losses, which are included in accounts receivable, net, in the accompanying condensed consolidated balance sheets.
The Company disaggregates revenue between Venous Thromboembolism (“VTE”) and Emerging Therapies. VTE comprises revenue from the sale of the Company’s solutions addressing deep vein thrombosis and pulmonary embolism. Emerging Therapies comprises revenue from the sale of the Company’s solutions addressing chronic venous disease, CLTI, acute limb ischemia and dialysis access management. Revenue from VTE and Emerging Therapies is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
VTE
$137,674 $114,086 $274,867 $228,144 
Emerging Therapies
8,146 4,919 14,147 7,028 
Total revenue
$145,820 $119,005 $289,014 $235,172 
9
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue from the Company's products by geographic area, based on the location where title transfers, is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
United States$135,784$113,802$269,467$225,648
International10,0365,20319,5479,524
Total revenue
$145,820 $119,005$289,014$235,172
The Company offers payment terms to its customers of less than three months and these terms do not include a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.
The Company offers its standard warranty to all customers. The Company does not sell any warranties on a standalone basis. The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to repair, replace or refund the purchase price of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.
Costs associated with product sales include commissions which are recorded in selling, general and administrative (“SG&A”) expenses. The Company applies the practical expedient and recognizes commissions as an expense when incurred because the amortization period is less than one year.
Equity Investments
The Company has strategic investments in certain privately held companies, with no readily determinable fair value. The Company elected the measurement alternative under which it measures these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investments. The Company will monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fair values or if there are observable changes in fair value. Impairment loss, which is generally the difference between the carrying value and the fair value of the investment, is recorded in other income (expense) in the consolidated statements of operations and comprehensive income (loss). As of June 30, 2024 and December 31, 2023, the Company’s equity investments were $1.5 million and were included in deposits and other assets on the condensed consolidated balance sheets. There was no impairment loss recorded during the three and six months ended June 30, 2024 and 2023.
Significant Accounting Policies
As of June 30, 2024, there were no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Recently Issued Not Yet Adopted Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting, Topic 280, which requires enhanced disclosures primarily around segment expenses for all public entities, including public entities with a single reportable segment. On an annual and interim basis, entities are required to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.
10
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
In December 2023, FASB issued ASU 2023-09, Income Tax, Topic 740, which requires public companies to disclose specific categories in the rate reconciliation, disaggregate information related to income taxes paid, income or loss from operations before income tax expense or benefit, and income tax expense or benefit from operations. The ASU is effective for annual fiscal years beginning after December 15, 2024, with early adoption permitted. Amendments are applicable on a prospective basis with retrospective application permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.
Supplemental Cash Flow Information
Supplemental cash flow information includes the following (in thousands):
Six Months Ended June 30,
20242023
Supplemental disclosures of cash flow information:
Cash paid for income taxes$5,851 $1,437 
Cash paid for interest$112 $65 
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets$2,083 $1,030 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$70,125 $57,837 
Restricted cash
67 — 
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows
$70,192 $57,837 
3. BUSINESS COMBINATION
Acquisition of LimFlow S.A.
On November 15, 2023, the Company completed its acquisition of LimFlow, a medical device company focused on limb salvage for patients with CLTI. As a result of the acquisition, LimFlow’s stockholders received as consideration (i) cash, and (ii) contingent consideration related to certain commercial and reimbursement milestones. The results of operations of LimFlow have been included in the condensed consolidated financial statements from the date of the acquisition.
During the three months ended June 30, 2024, the Company recorded an adjustment related to the finalization of the working capital, which reduced the consideration transferred and the acquisition date fair value of goodwill by $3.7 million.
The Company is in the process of finalizing the allocation of the purchase price. As a result, the fair value estimates assigned to the intangible asset, goodwill and the related tax impacts of the acquisition, among other items, are subject to change as additional information is received to complete the analysis. The Company expects to finalize the valuation as soon as practicable, but no later than one year after the acquisition date.
11
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Purchase Price
The total purchase price as of the date of the acquisition consisted of the following (in thousands):
As of November 15, 2023
As Adjusted
Cash$238,279 
Fair value of contingent consideration65,931 
Fair value of previously held investment10,235 
Total purchase price$314,445 
Contingent Consideration
The LimFlow stockholders can achieve up to $165.0 million of additional contingent consideration if certain commercial and reimbursement milestones are achieved, as outlined under the Contingent Payments section of the share purchase agreement with LimFlow. Such payments include (i) up to $140.0 million based on net revenue generated from the sale of the LimFlow System for the years 2024 through 2026 and (ii) up to $25.0 million based on the achievement of certain reimbursement milestones related to the LimFlow System.
The acquisition-date fair value of the contingent consideration was measured using a Monte Carlo simulation which represents Level 3 measurements because they are supported by little or no market activity and reflect the Company’s assumptions in measuring fair value. Estimates and assumptions used in the fair value assessment included forecasted revenues for LimFlow, revenue risk premium, revenue volatility, operational leverage ratio, counterparty credit spread, and weighted average cost of capital. The Company has determined that the range of the potential payments on such contingencies is $65.9 million to $165.0 million. The fair value of the contingent consideration was $65.9 million as of the acquisition date.
Previously Held Investment
Prior to the acquisition, the Company held an investment in LimFlow, which represented approximately 3.7% of LimFlow's outstanding equity, and was recorded at cost minus impairment. Authoritative guidance on accounting for business combinations requires that an acquirer remeasure its previously held equity investment in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in earnings. In connection with acquiring the remaining 96.3% equity interest of LimFlow, the Company remeasured its previously held equity investment to its fair value, as of the date of acquisition, based on the fair value of total consideration transferred. Estimates and assumptions used in the remeasurement represent a Level 3 measurement because they are supported by little or no market activity and reflect the Company’s assumptions in measuring the fair value. As a result of the remeasurement, the Company valued its previously held equity investment in LimFlow at $10.2 million and recognized a gain of $3.5 million, included in other income (expense) in the consolidated statements of operations and comprehensive income (loss) during the year ended December 31, 2023.
Transaction Costs
The transaction costs associated with the acquisition of LimFlow consisted primarily of legal and financial advisory fees of approximately $8.7 million in addition to $1.7 million of severance and integration related costs, which were expensed as incurred as SG&A expense during the year ended December 31, 2023.
12
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Net Assets Acquired and Liabilities Assumed
The preliminary fair values of assets acquired and liabilities assumed were (in thousands):
As of November 15, 2023
As Adjusted
Cash and cash equivalents$1,582 
Accounts receivable919 
Inventories2,635 
Property and equipment266 
Goodwill204,078 
Intangible asset146,000 
Other current and noncurrent assets2,155 
Accounts payable(2,509)
Deferred tax liability(36,500)
Other current and noncurrent liabilities(4,181)
Total net assets acquired$314,445 
The preliminary fair value assigned to the intangible asset acquired was as follows (in thousands, except for estimated useful life which is in years):
Fair value
Useful life
Developed technology$146,000 15 years
The preliminary fair value assigned to identifiable intangible asset, the developed technology, acquired as part of the LimFlow acquisition, was estimated using the multi-period excess earnings method. Under this method, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by discounting future net cash flows to their present value at market-based rates of return. Such assumptions included forecasted revenues, cost of sales and operating expenses, technology obsolescence, and weighted average cost of capital. The useful life of the developed technology for amortization purposes was determined by considering the period of expected cash flows used to measure the fair values of the intangible asset adjusted as appropriate for entity-specific factors including competitive, economic and other factors that may limit the useful life. The developed technology asset will be amortized on a straight-line basis over its estimated useful life.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information summarizes the combined results of operations of the Company and LimFlow as if the companies had been combined as of the beginning of fiscal year 2023 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
20232023
Revenue$119,445 $236,091 
Net loss
$(8,478)$(22,207)
13
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been completed at the beginning of the fiscal year ended December 31, 2023. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition. The unaudited pro forma financial information includes adjustments to reflect the elimination of intercompany transactions, incremental amortization of the identifiable intangible asset and elimination of the remeasurement the Company’s previously held investment in LimFlow.
4. FAIR VALUE MEASUREMENTS
Investments in debt securities have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. As of June 30, 2024, all of the Company's investments in debt securities had maturities of less than 12 months and were classified as short-term investments on the condensed consolidated balance sheets.
The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2024 and December 31, 2023 (in thousands):
June 30, 2024
Level 1Level 2Level 3Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$37,085 $— $— $37,085 
Total included in cash and cash equivalents37,085 — — 37,085 
Investments:
U.S. treasury securities
39,547 — — 39,547 
Total included in short-term investments39,547 — — 39,547 
Total financial assets
$76,632 $— $— $76,632 
Financial Liability
Contingent consideration$— $— $77,962 $77,962 
Total financial liabilities$— $— $77,962 $77,962 
14
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
December 31, 2023
Level 1Level 2Level 3Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$2,753 $— $— $2,753 
Total included in cash and cash equivalents2,753 — — 2,753 
Investments:
U.S. treasury securities
41,685 — — 41,685 
U.S. government agencies
— 26,238 — 26,238 
Corporate debt securities and commercial paper— 8,932 — 8,932 
Total included in short-term investments41,685 35,170 — 76,855 
Total financial assets
$44,438 $35,170 $— $79,608 
Financial Liability
Contingent consideration$— $— $65,931 $65,931 
Total financial liabilities$— $— $65,931 $65,931 
There were no transfers between Levels 1, 2 or 3 for the periods presented.
Contingent payments are related to the acquisition of LimFlow and consist of commercial and reimbursement milestones, which were valued using a Monte Carlo simulation and probability weighted discounted cash flow analysis, respectively, and represent Level 3 measurements because they are based upon significant unobservable inputs such as forecasted revenues of LimFlow, revenue risk premium, revenue volatility, operational leverage ratio, credit risk, weighted average cost of capital, and probability assumptions in achieving certain milestones.
The following table summarizes the changes in the estimated fair value of the Company’s contingent consideration liabilities (in thousands):
Contingent Consideration Fair Value
Balance as of December 31, 2023
$65,931 
Change in estimated fair value
12,031 
Balance as of June 30, 2024
$77,962 
The fair value of the contingent consideration was $78.0 million as of June 30, 2024, of which $33.9 million was recorded within accrued expenses and other current liabilities and $44.1 million was recorded within other long-term liabilities, and $65.9 million as of December 31, 2023 which was recorded within other long-term liabilities. The change in estimated fair value of contingent consideration was recorded in operating expenses within the condensed consolidated statements of operations and comprehensive income (loss).
15
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
5. CASH EQUIVALENTS AND INVESTMENTS
The following is a summary of the Company’s cash equivalents and investments in debt securities as of June 30, 2024 and December 31, 2023 (in thousands):
June 30, 2024
Amortized Cost BasisUnrealized GainUnrealized LossFair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$37,085 $— $— $37,085 
Total included in cash and cash equivalents37,085 — — 37,085 
Investments:
U.S. treasury securities
39,551 1 (5)39,547 
Total included in short-term investments39,551 1 (5)39,547 
Total financial assets
$76,636 $1 $(5)$76,632 
December 31, 2023
Amortized Cost BasisUnrealized GainUnrealized LossFair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$2,753 $— $— $2,753 
Total included in cash and cash equivalents2,753 — — 2,753 
Investments:
U.S. treasury securities
41,672 13 — 41,685 
U.S. government agencies
26,248 — (10)26,238 
Corporate debt securities and commercial paper8,935 — (3)8,932 
Total included in short-term investments76,855 13 (13)76,855 
Total financial assets
$79,608 $13 $(13)$79,608 
The Company regularly reviews any changes to the rating of its debt securities and reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of June 30, 2024, the risk of expected credit losses was not significant.
6. INVENTORIES, NET
Inventories, net of reserves, consist of the following (in thousands):
June 30,
2024		December 31,
2023
Raw materials$19,826 $14,310 
Work-in-process6,238 5,330 
Finished goods23,295 23,260 
Total inventories, net
$49,359 $42,900 
16
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
7. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following (in thousands):
June 30,
2024		December 31,
2023
Manufacturing equipment$17,650 $16,653 
Computer hardware6,481 5,641 
Assets in progress5,637 3,135 
Leasehold improvements4,846 4,682 
Furniture and fixtures4,663 4,491 
Total property and equipment, gross39,277 34,602 
Accumulated depreciation(16,272)(13,673)
Total property and equipment, net$23,005 $20,929 
Depreciation expense of $1.1 million was included in operating expenses and $0.3 million was included in cost of goods sold for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense of $2.2 million was included in operating expenses for the six months ended June 30, 2024 and 2023, and $0.6 million and $0.5 million was included in cost of goods sold for the six months ended June 30, 2024 and 2023, respectively.
8. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in carrying amount of goodwill were as follows (in thousands):
June 30,
2024
Balance as of December 31, 2023
$214,335 
Working capital adjustment
(3,722)
Foreign currency translation adjustments(6,212)
Balance as of June 30, 2024
$204,401 
The working capital adjustment relates to the acquisition of LimFlow. See Note 3. Business Combination for additional information.
17
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Intangible Assets
The intangible assets consist of the following (in thousands):
June 30, 2024
Gross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Developed technology
$146,229 $(6,093)$140,136 
Capitalized software(a)
2,970 — 2,970 
Total intangible assets, net
$149,199 $(6,093)$143,106 
December 31, 2023
Gross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Developed technology
$150,649 $(1,256)$149,393 
Capitalized software(a)
1,491 — 1,491 
Total intangible assets, net
$152,140 $(1,256)$150,884 
_____________
(a) The useful life of the capitalized software will be determined once the asset is put into service. No amortization expense has been recorded related to the capitalized software during the three and six months ended June 30, 2024 and 2023.
The gross carrying amount and the accumulated amortization of the developed technology asset is subject to foreign currency translation effects. During the three and six months ended June 30, 2024, $2.4 million and $4.9 million, respectively, of amortization expense was recorded in operating expenses within the condensed consolidated statements of operations and comprehensive income (loss) related to the developed technology asset. There were no intangible assets and no amortization recorded for the three and six months ended June 30, 2023.
The estimated future annual amortization of the intangible assets in service is as follows (in thousands):
Year ending December 31:Amount
Remainder of 2024$4,874 
20259,749 
20269,749 
20279,749 
20289,749 
Thereafter96,266 
Total$140,136 
9. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has operating leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. For lease agreements, other than long-term real estate leases, the Company combines lease and non-lease components. The variable lease payments primarily relate to common area maintenance, property taxes, and insurance. The operating leases for facilities expire at various dates through July 2041 and some contain renewal options, the longest of which is for five years. The ROU asset and lease liability includes renewal options if the Company is reasonably certain to exercise such renewal options.
18
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest rate the Company would incur to borrow on a collateralized basis, considering factors such as length of lease term.
The following table presents the weighted average remaining lease term and discount rate:
June 30,
20242023
Weighted average remaining term (in years)
16.418.5
Weighted average discount rate6.1 %6.1 %
Cash paid for amounts included in the measurement of operating leases were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Cash paid for amounts included in the measurement of operating lease liabilities$944 $852 $1,826 $1,698 
Total lease costs are as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Operating lease cost$1,369 $1,139 $2,544 $2,319 
Short-term lease cost35 34 70 63 
Variable lease cost279 247 584 407 
Total lease costs$1,683 $1,420 $3,198 $2,789 
Future minimum lease payments under operating leases liabilities as of June 30, 2024 are as follows (in thousands):
Year ending December 31:
Amount
Remainder of 2024$2,090 
20253,645 
20263,542 
20273,627 
20283,430 
Thereafter36,017 
Total lease payments52,351 
Less imputed interest(19,202)
Total lease liabilities33,149 
Less: lease liabilities - current portion(1,918)
Lease liabilities - noncurrent portion$31,231 
19
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company signed a ten-year lease in Costa Rica for its second manufacturing facility in October 2023, with total undiscounted contractual payments of the lease of approximately $7.2 million, which is expected to commence in the fourth quarter of 2024.
Indemnification
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.
The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.
Legal Proceedings
From time to time, the Company is involved in various claims and proceedings arising in the ordinary course of its business. Management does not believe that any existing claims and proceedings, including potential losses relating to such contingencies, will have a material adverse effect on its consolidated financial position, results of operations or cash flows.
Civil Investigative Demand
In December 2023, the Company received a civil investigative demand (“CID”) from the U.S. Department of Justice, Civil Division, in connection with an investigation under the federal Anti-Kickback Statute and Civil False Claims Act (the “Investigation”). The CID requests information and documents primarily relating to meals and consulting service payments provided to health care professionals. The Company is cooperating with the Investigation. The Company is unable to express a view at this time regarding the likely duration, or ultimate outcome, of the Investigation or estimate the possibility of, or amount or range of, any possible financial impact. Depending on the outcome of the Investigation, there may be a material impact on the Company’s business, results of operations, or financial condition.
Patent Litigation
On May 22, 2024, the Company filed a patent infringement lawsuit against Imperative Care, Inc. (“Imperative Care”) and Truvic Medical, Inc. (“Truvic”) in the United States District Court for the Northern District of California, alleging that Imperative Care's Symphony Thrombectomy System infringes eight patents related to mechanical thrombectomy devices used for treating pulmonary emboli and deep vein thrombosis. On July 9, 2024, the Company filed an amended complaint to allege infringement of an additional, ninth patent, and to drop Truvic as a named defendant because Imperative Care confirmed that Truvic has been merged into Imperative Care. In the complaint, the Company seeks injunctive relief and damages for the alleged infringement. On July 24, 2024, the Company filed a motion for a preliminary injunction seeking to enjoin Imperative Care's sale or use, among other activities, of the Symphony Thrombectomy System outside of clinical trials.
20
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Securities Class Action
On May 13, 2024, purported stockholder Michiana Area Electrical Workers’ Pension Fund filed a verified class action complaint on behalf of itself and similarly situated Inari stockholders in the United States District Court for the Southern District of New York, captioned Michiana Area Elec. Workers’ Pension Fund v. Inari Medical, Inc., No. 1:24-cv-03686-JHR (the “MAEW Action”). On June 18, 2024, purported stockholder Paul Hartmann filed a verified class action complaint on behalf of himself and similarly situated Inari stockholders in the United States District Court for the Southern District of New York, captioned Hartmann v. Inari Medical, Inc., No. 1:24-cv-04662-JHR (the “Hartmann Action” and together with the MAEW Action, the “Related Actions”). Each of the Related Actions alleges the Company and certain of its officer and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act by making false or misleading statements regarding the Company’s revenue and expenses.
On July 12, 2024, a group of pension funds consisting of Oklahoma Law Enforcement Retirement Systems, Local 353, I.B.E.W. Pension Fund, and City of Pontiac Reestablished General Employees’ Retirement System, Mr. Hartmann, and purported stockholder Arvin Nazerzadeh-Yazdi, each filed motions seeking to consolidate the Related Actions, be appointed lead plaintiff, and have their counsel appointed lead counsel. The matter is at a preliminary stage.
The Company believes that these complaints are without merit and intends to defend against them vigorously.
10. CONCENTRATIONS
The Company’s revenue is derived primarily from the sale of catheter-based therapeutic devices in the United States. For the three and six months ended June 30, 2024 and 2023, there were no customers which accounted for more than 10% of the Company’s revenue. As of June 30, 2024 and December 31, 2023, there were no customers that accounted for more than 10% of the Company’s accounts receivable.
No vendor accounted for more than 10% of the Company’s purchases for the three and six months ended June 30, 2024 and 2023. There were no vendors that accounted for more than 10% of the Company’s accounts payable as of June 30, 2024 and December 31, 2023.
11. RELATED PARTY
The Company utilizes MRI The Hoffman Group (“MRI”), a recruiting services company owned by the brother of the former Chief Executive Officer and President and current member of the board of directors of the Company. The Company paid for recruiting services provided by MRI amounting to $21,000 and $50,000 for the three months ended June 30, 2024 and 2023, respectively, and $31,000 and $80,000 for the six months ended June 30, 2024 and 2023, respectively, which was recorded in SG&A expenses within the condensed consolidated statements of operations and comprehensive income (loss). As of June 30, 2024 and December 31, 2023, there was no balance payable to MRI.
12. CREDIT FACILITY
Bank of America Credit Facility
On December 16, 2022, the Company amended its senior secured revolving credit facility with Bank of America (the “Previously Amended Credit Agreement”) under which the Company may borrow loans up to a maximum principal amount of $40.0 million and increase the optional accordion to $120.0 million.
21
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Advances under the Previously Amended Credit Agreement will bear interest at a base rate per annum (“the Base Rate”) plus an applicable margin (the “Margin”). The Base Rate equals the greater of (i) the Prime Rate, (ii) the Federal funds rate plus 0.50%, or (iii) the Bloomberg Short-Term Bank Yield Index (“the BSBY”) rate based upon an interest period of one month plus 1.00%, in any case has a floor of 0%. The Margin ranges, depending on average daily availability, from 0.50% to 1.00% in the case of Prime Rate and the Federal funds rate loans, and 1.50% to 2.00% in the case of BSBY Rate loans. As a condition to entering into the Previously Amended Credit Agreement, the Company was obligated to pay a nonrefundable fee of $10,000. The Company is also required to pay an unused line fee at an annual rate of 0.25% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Previously Amended Credit Agreement.
The Previously Amended Credit Agreement also includes a Letter of Credit subline facility (the “LC Facility”) of up to $5.0 million. In February 2023, the Company amended the LC Facility to increase the limit to up to $10.0 million. The Company is required to pay the following fees under the LC Facility: (a) a fee equal to the applicable margin in effect for BSBY loans (currently 2.25%) times the average daily stated amount of outstanding letters of credit; and (b) a fronting fee equal to 0.125% per annum on the stated amount of each letter of credit outstanding.
On November 1, 2023, the Company further amended its credit facility (the “Amended Credit Agreement”) to, among other things, increase the amount available for borrowing to up to a maximum principal amount of $75.0 million. Additionally, advances under the Amended Credit Agreement will bear interest at the Base Rate or the BSBY rate, plus the Margin. The Margin ranges from 0.60% to 1.10% in the case of the Base Rate loans and 1.60% to 2.10% in the case of the BSBY rate loans depending on average daily availability, in each case with a floor of 0%. As a condition of entering into the Amended Credit Agreement, the Company was obligated to pay a nonrefundable fee of $88,000. Lastly, the Company amended the LC Facility to increase the limit up to $18.8 million. This amendment was accounted for as a debt modification in accordance ASC 470, Debt.
The Amended Credit Agreement contains certain customary covenants subject to certain exceptions, including, among others, the following: a fixed charge coverage ratio covenant, and limitations of indebtedness, liens, investments, asset sales, mergers, consolidations, liquidations, dispositions, restricted payments, transactions with affiliates and prepayments of certain debt. The Amended Credit Agreement also contains certain events of default subject to certain customary grace periods, including, among others, payment defaults, breaches of any representation, warranty or covenants, judgment defaults, cross defaults to certain other contracts, bankruptcy and insolvency defaults, material judgment defaults and a change of control default.
As of June 30, 2024, the amount available to borrow under the Amended Credit Agreement is approximately $66.4 million, and the Company had four letters of credit in the aggregated amount of $2.4 million outstanding under the LC Facility. The aggregate stated amount outstanding of letter of credits reduces the total borrowing base available under the Amended Credit Agreement.
As of June 30, 2024, there was no principal amount outstanding, and no cash was pledged under the Amended Credit Agreement, and the Company was in compliance with its covenant requirements. Obligations under the Amended Credit Agreement are secured by substantially all of the Company’s assets, excluding intellectual property. The Amended Credit Agreement matures on December 16, 2027.
Deferred Financing Costs
Costs incurred directly related to debt are presented in other assets and are being amortized over the five-year life of the Credit Agreement on the straight-line basis. The unamortized deferred financings costs as of June 30, 2024 and December 31, 2023 are as follows (in thousands):
June 30, 2024December 31, 2023
Deferred financing costs
$729 $1,454 
Accumulated amortization
(425)(382)
Unamortized deferred financing costs
$304 $1,072 
22
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
13. STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Income (Loss)
The following is a summary of the changes in accumulated balances of other comprehensive income (loss) for the six months ended June 30, 2024 and 2023 (in thousands):
Unrealized Loss on Investments
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2023$(9)$8,894 $8,885 
Other comprehensive loss
(4)(7,359)(7,363)
Balance, March 31, 2024
(13)1,535 1,522 
Other comprehensive loss
— (2,359)(2,359)
Balance, June 30, 2024
$(13)$(824)$(837)
Unrealized Gain (Loss) on InvestmentsForeign Currency Translation
Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2022$1,820 $(971)$849 
Other comprehensive loss
(865)9 (856)
Balance, March 31, 2023
955 (962)(7)
Other comprehensive loss
(1,095)(79)(1,174)
Balance, June 30, 2023
$(140)$(1,041)$(1,181)
14. EQUITY INCENTIVE PLANS
In 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”) to permit the grant of share-based awards, such as stock grants and incentives and non-qualified stock options to employees and directors. The Board has the authority to determine to whom awards will be granted, the number of shares, the term and the exercise price.
In March 2020, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan”), which became effective in connection with the Company’s initial public offering in May 2020. As a result, the Company may not grant any additional awards under the 2011 Plan. The 2011 Plan will continue to govern outstanding equity awards granted thereunder. In addition, the number of shares of common stock reserved for issuance under the 2020 Plan will automatically increase on the first day of January for a period of up to ten years, commencing on January 1, 2021, in an amount equal to 3% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors. As of June 30, 2024, there were 7,207,309 shares available for issuance under the 2020 Plan, including 1,732,872 additional shares reserved effective January 1, 2024.
23
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
2011 Equity Incentive Plan
Stock Options
A summary of stock option activity under the 2011 Plan for the six months ended June 30, 2024 is as follows (intrinsic values in thousands):
Number of
Options
Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Life (in years)		Intrinsic
Value
Outstanding, December 31, 2023937,696$2.24 5.2$58,778 
Exercised(129,436)1.76 $6,391 
Cancelled(29)9.05 
Outstanding, June 30, 2024808,2312.31 4.8$37,047 
Vested and exercisable at June 30, 2024808,2312.31 4.8$37,047 
Vested and expected to vest at June 30, 2024808,231$2.31 4.8$37,047 
The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the estimated fair market value of the Company’s common stock.
2020 Incentive Award Plan
Restricted Stock Units
Restricted stock units (“RSUs”) are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line vesting and a 25% one-year cliff or over a three-year period in equal amounts on a quarterly basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.
RSU activity under the 2020 Plan is set forth below:
Number of
Awards 		Weighted
Average
Fair Value
Outstanding, December 31, 20231,307,998$67.91 
Granted886,96847.08 
Vested(302,237)68.85 
Cancelled(68,074)62.46 
Outstanding, June 30, 20241,824,655$58.02 
The total fair value of RSUs vested under the 2020 Plan was $8.2 million and $8.9 million for the three months ended June 30, 2024 and 2023, respectively, and $16.2 million and $14.1 million for the six months ended June 30, 2024 and 2023, respectively.
24
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Performance Stock Units
During the six months ended June 30, 2024, the Company granted performance stock units (“PSUs”) to certain employees that are eligible to vest three years from the award date, based on achieving certain revenue based performance targets. The number of shares that may be earned can range from 0% to 200% of the target amount. The fair value of PSUs is determined by the closing stock price of the Company’s common stock on the awards’ grant date. The share-based compensation expense associated with PSUs is recognized on a straight-line basis based on the estimated number of awards that are expected to vest. At each reporting period, the Company monitors the probability of achieving the performance targets and adjusts the share-based compensation expense associated with PSUs accordingly.
PSU activity under the 2020 Plan is set forth below:
Number of
Awards		Weighted
Average
Fair Value
Outstanding, December 31, 2023— $— 
Granted90,48855.48 
Outstanding, June 30, 202490,488$55.48 
Stock Options
The Company grants non-qualified stock options to certain employees with vesting over a four-year period on a quarterly basis. The fair value of the stock options was calculated using the Black-Scholes option pricing model. The fair value for options granted was calculated using the following weighted average assumptions:
Six Months Ended June 30,
20242023
Expected term (in years)4.54.6
Expected volatility
48.7% to 48.9%
50.4%
Dividend yield0.0%0.0%
Risk free interest rate
4.2% to 4.3%
4.1%
Weighted-average fair value of options granted$24.89 per share$25.98 per share
A summary of stock option activities under the 2020 Plan for the six months ended June 30, 2024 is as follows (intrinsic values in thousands):
Number of
Options
Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Life (in years)		Intrinsic
Value
Outstanding, December 31, 2023166,203 $56.00 6.1$1,483 
Granted210,18854.83 
Exercised(270)56.00 $— 
Cancelled(7,157)56.00 
Outstanding, June 30, 2024368,96455.33 6.2$218 
Vested and exercisable at June 30, 202463,571 55.76 5.7$14 
Vested and expected to vest at June 30, 2024339,566$55.35 6.2$195 
25
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Employee Stock Purchase Plan
In May 2020, the Company adopted the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective on the date the ESPP was adopted by the Company’s board of directors. Each offering to the employees to purchase stock under the ESPP will begin on each August 1 and February 1 and will end on the following January 31 and July 31, respectively. The first offering period began on August 1, 2020. On each purchase date, which falls on the last date of each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of (1) the fair market value per share of the common stock on the offering date or (2) the fair market value of the common stock on the purchase date. The occurrence and duration of offering periods under the ESPP are subject to the determinations of the Compensation Committee, in its sole discretion. The number of shares available for issuance under the ESPP increases automatically on January 1 of each calendar year of the Company beginning in 2021 and ending in 2030, in an amount equal to the lesser of (i) 1% of the aggregate number of outstanding shares of the Company’s common stock on the final day of the immediately preceding calendar year and (ii) such smaller number of shares determined by the Company’s board of directors.
The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model with the following assumptions:
Six Months Ended June 30,
20242023
Expected term (in years)0.50.5
Expected volatility
60.8%
49.9%
Dividend yield0.0%0.0%
Risk free interest rate
5.2%
4.8%
As of June 30, 2024, a total of (i) 505,925 shares of common stock, including 82,816 shares purchased in January 2024, have been purchased under the ESPP, and (ii) 2,598,437 shares of common stock are reserved under the ESPP for future purchases, including 577,624 additional shares, which were automatically added to the reserve on January 1, 2024 pursuant to the terms of the ESPP.
Share-based Compensation Expense
Total compensation cost for all share-based payment arrangements recognized, including $1.3 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively, and $2.3 million and $2.2 million for the six months ended June 30, 2024 and 2023, respectively, of share-based compensation expense related to the ESPP, was as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Cost of goods sold$525 $420 $1,033 $839 
Research and development1,804 1,697 3,568 3,393 
Selling, general and administrative10,710 8,236 21,308 16,460 
Total share-based compensation expense
$13,039 $10,353 $25,909 $20,692 
Total compensation costs as of June 30, 2024 related to all non-vested awards to be recognized in future periods was $93.7 million and is expected to be recognized over the remaining weighted average period of 2.7 years.
26
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
15. INCOME TAXES
The following table reflects the Company’s provision for income taxes for the periods indicated (in thousands, except for percentages):
Three Months Ended June 30, Six Months Ended June 30,
2024202320242023
(Loss) income before income taxes
$(21,422)$3,024$(37,509)$1,830
Provision for income taxes9,92693918,0411,963
Net (loss) income
$(31,348)$2,085$(55,550)$(133)
Provision for income taxes as a percentage of (loss) income before income taxes
(46.3%)31.1%(48.1%)107.3 %
The effective tax rate for all periods is driven by pre-tax income/(loss), business credits, equity compensation, state taxes, and the change in valuation allowance. The Company's income tax provision for interim reporting periods historically has been calculated by applying an estimate of the annual effective income tax rate for the full year to “ordinary” income (loss) for the interim reporting period. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter in which they occur. For the six months ended June 30, 2024 and June 30, 2023, the Company calculated the income tax provision using this methodology.
Beginning in 2024, many countries are implementing some or all of the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting Two-Pillar in response to tax challenges arising from the digitalization of the global economy. While we continue to evaluate those countries’ implementations, we do not expect those implementations to have a material impact on our consolidated financial statements in 2024.
Valuation Allowance
ASC 740, Income Taxes requires that the tax benefit of net operating losses, or (“NOLs”), temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not”. Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryback or carryforward periods. As of December 31, 2023, the Company was in a net deferred tax liability position due to the LimFlow acquisition. However, a valuation allowance was maintained against certain deferred tax assets. As of June 30, 2024, the Company believes that the net deferred tax assets are currently not considered more likely than not to be realized and, accordingly, maintains a valuation allowance against certain deferred tax assets. The Company will continue to assess its position on the realizability of its deferred tax assets, until such time as sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Any release of the valuation allowance will result in a material benefit recognized in the quarter of release.
Uncertain Tax Positions
The Company has recorded uncertain tax positions related to its federal and California research and development credit carryforwards. No interest or penalties have been recorded related to the uncertain tax positions due to credit carryforwards that are available to offset the uncertain tax positions. It is not expected that there will be a significant change in the uncertain tax position in the next 12 months. The Company is subject to U.S. federal and state income tax as well as to income tax in various foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no income tax examinations in progress. The statute of limitations for tax years ended after December 31, 2020, December 31, 2019, and December 31, 2020 are open for federal, state, and foreign tax purposes, respectively.
27
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
16. RETIREMENT PLAN
In December 2017, the Company adopted the Inari Medical, Inc. 401(k) Plan which allows eligible employees after one month of service to contribute pre-tax and Roth contributions to the plan, as allowed by law. The plan assets are held by Vanguard and the plan administrator is Ascensus Trust Company. Beginning in January 2021, the Company contributed a $1.00 match for every $1.00 contributed by a participating employee up to the greater of $3,000 or 4% of eligible compensation under the plan, with such Company's contributions becoming fully vested immediately. On January 1, 2024, the plan was amended to provide that the Company contributes a $1.00 match for every $1.00 contributed by a participating employee for up to 5% of eligible compensation. The plan also includes a limit of $15,000 per individual of employer match, with such Company’s contributions becoming fully vested immediately. Matching contribution expense was $3.4 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively, and $7.5 million and $4.9 million for the six months ended June 30, 2024 and 2023, respectively.
17. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net income (loss) per share is computed using the treasury stock method by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net income (loss) per share calculation, shares from common stock options and equity awards are potentially dilutive securities. For the periods the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.
The components of net (loss) income per share are as follows (in thousands, except share and per share amounts):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Numerator:
Net (loss) income$(31,348)$2,085 $(55,550)$(133)
Denominator:
Weighted average number of common shares outstanding - basic58,142,45457,207,90258,040,06955,988,736
Common stock equivalents from outstanding equity grants
—1,159,523——
Common stock equivalents from unvested RSUs and PSUs—112,249——
Common stock equivalents from ESPP—16,676——
Weighted average number of common shares outstanding - diluted58,142,45458,496,35058,040,06955,988,736
Net (loss) income per share:
Basic$(0.54)$0.04 $(0.96)$(0.00)
Diluted$(0.54)$0.04 $(0.96)$(0.00)
28
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements