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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, 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 October 24, 2024, the registrant had 58,544,158 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. and expectations regarding market penetration, 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, and 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)
September 30,
2024		December 31,
2023
Assets
Current assets
Cash and cash equivalents$41,141 $38,597 
Restricted cash
67 611 
Short-term investments in debt securities70,397 76,855 
Accounts receivable, net84,403 70,119 
Inventories, net55,210 42,900 
Prepaid expenses and other current assets12,168 6,481 
Total current assets263,386 235,563 
Property and equipment, net24,098 20,929 
Operating lease right-of-use assets48,301 48,407 
Goodwill213,345 214,335 
Intangible assets143,808 150,884 
Deposits and other assets4,301 4,117 
Total assets$697,239 $674,235 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$15,523 $10,577 
Payroll-related accruals54,797 48,706 
Accrued expenses and other current liabilities76,881 15,364 
Operating lease liabilities, current portion1,579 1,692 
Total current liabilities148,780 76,339 
Operating lease liabilities, noncurrent portion31,145 30,355 
Deferred tax liability36,748 36,231 
Other long-term liability45,805 66,400 
Total liabilities262,478 209,325 
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 September 30, 2024 and December 31, 2023
— — 
Common stock, $0.001 par value, 300,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 58,435,576 and 57,762,414 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
58 58 
Additional paid in capital543,961 504,453 
Accumulated other comprehensive income
13,145 8,885 
Accumulated deficit(122,403)(48,486)
Total stockholders' equity434,761 464,910 
Total liabilities and stockholders' equity$697,239 $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 September 30,Nine Months Ended September 30,
2024202320242023
Revenue$153,390 $126,366 $442,404 $361,538 
Cost of goods sold19,846 14,477 58,732 42,062 
Gross profit133,544 111,889 383,672 319,476 
Operating expenses
Research and development29,431 21,492 81,216 64,641 
Selling, general and administrative108,271 85,603 325,479 256,889 
Change in fair value of contingent consideration
6,578 — 18,609 — 
Amortization of intangible asset
2,504 — 7,414 — 
Acquisition-related expenses
328 2,681 4,143 2,681 
Total operating expenses147,112 109,776 436,861 324,211 
(Loss) income from operations
(13,568)2,113 (53,189)(4,735)
Other income (expense)
Interest income1,104 4,202 3,371 12,899 
Interest expense(78)(43)(233)(127)
Other expense
(130)(682)(130)(617)
Total other income896 3,477 3,008 12,155 
(Loss) income before income taxes
(12,672)5,590 (50,181)7,420 
Provision for income taxes5,695 2,428 23,736 4,391 
Net (loss) income
$(18,367)$3,162 $(73,917)$3,029 
Other comprehensive income (loss)
Foreign currency translation adjustments13,918 (68)4,200 (138)
Unrealized gain (loss) on available-for-sale debt securities
64 91 60 (1,869)
Total other comprehensive income (loss)
13,982 23 4,260 (2,007)
Comprehensive income (loss)
$(4,385)$3,185 $(69,657)$1,022 
Net (loss) income per share
Basic$(0.31)$0.06 $(1.27)$0.05 
Diluted$(0.31)$0.05 $(1.27)$0.05 
Weighted average common shares used to compute net (loss) income per share
Basic58,366,36457,384,88458,149,29656,478,317
Diluted58,366,36458,588,45258,149,29658,495,921
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
INARI MEDICAL, INC.
Condensed Consolidated Statements of 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, 202458,166,30958 528,624 (837)(104,036)423,809 
Options exercised for common stock41,104 — 117 — — 117 
Shares issued under Employee Stock Purchase Plan133,430 — 5,281 — — 5,281 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
94,733 — (3,012)— — (3,012)
Share-based compensation expense—— 12,951 — — 12,951 
Other comprehensive income
—— — 13,982 — 13,982 
Net loss—— — — (18,367)(18,367)
Balance, September 30, 202458,435,576$58 $543,961 $13,145 $(122,403)$434,761 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
INARI MEDICAL, INC.
Condensed Consolidated Statements of 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, 202357,266,45557 483,752 (1,181)(46,983)435,645 
Options exercised for common stock43,547— 107 — — 107 
Shares issued under Employee Stock Purchase Plan118,4941 5,748 — — 5,749 
Issuance of common stock upon vesting of equity awards, net of shares withheld for taxes
77,966— (2,388)— — (2,388)
Share-based compensation expense—— 9,844 — — 9,844 
Other comprehensive income—— — 23 — 23 
Net income—— — — 3,162 3,162 
Balance, September 30, 202357,506,462$58 $497,063 $(1,158)$(43,821)$452,142 
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)
Nine Months Ended September 30,
20242023
Cash flows from operating activities
Net (loss) income
$(73,917)$3,029 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization11,879 4,186 
Amortization of deferred financing costs
65 30 
Amortization of right-of-use assets2,858 3,099 
Share-based compensation expense38,860 30,536 
Impairment loss on strategic investment
— 565 
Allowance for credit losses, net622 526 
Loss on disposal of fixed assets436 26 
Impairment of capitalized software development costs
3,789 — 
Amortization of premium and discount on marketable securities(1,707)(11,407)
Change in fair value of contingent consideration liability
18,609 — 
Changes in:
Accounts receivable(15,107)(11,566)
Inventories(12,378)(7,797)
Prepaid expenses, deposits and other assets(3,278)4,294 
Accounts payable4,927 2,436 
Payroll-related accruals, accrued expenses and other liabilities28,356 7,218 
Operating lease liabilities(1,797)(1,031)
Lease prepayments for lessor's owned leasehold improvements(280)(458)
Net cash provided by operating activities
1,937 23,686 
Cash flows from investing activities
Purchases of property and equipment(7,899)(3,801)
Purchases of marketable securities(91,085)(394,496)
Maturities of marketable securities
96,708 400,560 
Purchases of other investments— (565)
Working capital adjustment related to acquisition
3,722 — 
Capitalized software development costs(2,298)— 
Net cash (used in) provided by investing activities
(852)1,698 
Cash flows from financing activities
Proceeds from issuance of common stock under employee stock purchase plan9,264 9,920 
Proceeds from exercise of stock options360 547 
Payment of taxes related to vested equity awards
(8,976)(6,886)
Net cash provided by financing activities
648 3,581 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
267 (5)
Net increase in cash, cash equivalents and restricted cash
2,000 28,960 
Cash, cash equivalents and restricted cash beginning of period39,208 60,222 
Cash, cash equivalents and restricted cash end of period$41,208 $89,182 
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. Certain reclassifications have been made to prior period financial statements to conform to classifications used in the current period.
The interim condensed consolidated balance sheet as of September 30, 2024 and the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the three and nine months ended September 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 September 30, 2024 and its consolidated results of operations and cash flows for the three and nine months ended September 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 nine months ended September 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 September 30, 2024 and December 31, 2023, the Company recorded $1.2 million 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 September 30,Nine Months Ended September 30,
2024202320242023
VTE
$145,346 $121,460 $420,213 $349,604 
Emerging Therapies
8,044 4,906 22,191 11,934 
Total revenue
$153,390 $126,366 $442,404 $361,538 
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 September 30,Nine Months Ended September 30,
2024202320242023
United States$141,854$119,825$411,321$345,473
International11,5366,54131,08316,065
Total revenue
$153,390 $126,366$442,404$361,538
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 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 September 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. Additionally, during the three and nine months ended September 30, 2023, the Company recorded an impairment loss of $0.6 million in other income (expense) within the condensed consolidated statements of operations and comprehensive income (loss). There was no impairment recorded during the three and nine months ended September 30, 2024.
Significant Accounting Policies
As of September 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 and does not expect there to be a material impact on its consolidated financial statements and related disclosures upon adoption.
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):
Nine Months Ended September 30,
20242023
Supplemental disclosures of cash flow information:
Cash paid for income taxes$7,371 $3,562 
Cash paid for interest$168 $98 
Noncash investing and financing:
Lease liabilities arising from obtaining new right-of-use assets$2,447 $1,030 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$41,141 $89,182 
Restricted cash
67 — 
Total cash, cash equivalents and restricted cash as shown in the statement of cash flows
$41,208 $89,182 
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 nine months ended September 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.
Purchase Price
The total purchase price as of the date of the acquisition consisted of the following (in thousands):
As of November 15, 2023
Cash$238,279 
Fair value of contingent consideration65,931 
Fair value of previously held investment10,235 
Total purchase price$314,445 
11
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
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. See Note 4. Fair Value Measurements for additional information.
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 purchase price allocation for the LimFlow acquisition was finalized as of September 30, 2024, and there were no measurement period adjustments recorded. The final allocation of fair value of assets acquired and liabilities assumed were (in thousands):
As of November 15, 2023
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 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 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 September 30,Nine Months Ended September 30,
20232023
Revenue$126,757 $362,848 
Net loss
$(6,245)$(28,452)
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 September 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 September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Level 1Level 2Level 3Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$7,288 $— $— $7,288 
Total included in cash and cash equivalents7,288 — — 7,288 
Investments:
U.S. treasury securities
70,397 — — 70,397 
Total included in short-term investments70,397 — — 70,397 
Total financial assets
$77,685 $— $— $77,685 
Financial Liability
Contingent consideration$— $— $84,540 $84,540 
Total financial liabilities$— $— $84,540 $84,540 
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
18,609 
Balance as of September 30, 2024
$84,540 
The fair value of the contingent consideration was $84.5 million as of September 30, 2024, of which $39.2 million was recorded within accrued expenses and other current liabilities and $45.3 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 September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Amortized Cost BasisUnrealized GainUnrealized LossFair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds$7,288 $— $— $7,288 
Total included in cash and cash equivalents7,288 — — 7,288 
Investments:
U.S. treasury securities
70,346 51 — 70,397 
Total included in short-term investments70,346 51 — 70,397 
Total financial assets
$77,634 $51 $— $77,685 
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 September 30, 2024, the risk of expected credit losses was not significant.
6. INVENTORIES, NET
Inventories, net of reserves, consist of the following (in thousands):
September 30,
2024		December 31,
2023
Raw materials$21,983 $14,310 
Work-in-process6,179 5,330 
Finished goods27,048 23,260 
Total inventories, net
$55,210 $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):
September 30,
2024		December 31,
2023
Manufacturing equipment$18,527 $16,653 
Computer hardware6,671 5,641 
Assets in progress5,902 3,135 
Furniture and fixtures4,584 4,491 
Leasehold improvements4,531 4,682 
Total property and equipment, gross40,215 34,602 
Accumulated depreciation(16,117)(13,673)
Total property and equipment, net$24,098 $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 September 30, 2024 and 2023, respectively. Depreciation expense of $3.4 million was included in operating expenses for the nine months ended September 30, 2024 and 2023, and $1.0 million and $0.8 million was included in cost of goods sold for the nine months ended September 30, 2024 and 2023, respectively.
8. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in carrying amount of goodwill for the nine months ended September 30, 2024 were as follows (in thousands):
Balance as of December 31, 2023
$214,335 
Working capital adjustment
(3,722)
Foreign currency translation adjustments2,732 
Balance as of September 30, 2024
$213,345 
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):
September 30, 2024
Gross Carrying AmountAccumulated AmortizationIntangible Assets, Net
Developed technology
$152,716 $(8,908)$143,808 
Total intangible assets, net
$152,716 $(8,908)$143,808 
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 was not determined as of December 31, 2023 as the asset was not put into service. No amortization expense has been recorded related to the capitalized software during the three and nine months ended September 30, 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 nine months ended September 30, 2024, $2.5 million and $7.4 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 nine months ended September 30, 2023.
During the three months ended September 30, 2024, the Company recorded a non-cash impairment of $3.8 million related to previously capitalized software development costs that reduced the carrying value of such asset to zero. The impairment charge was recorded in research and development expenses within the condensed consolidated statements of operations and comprehensive income (loss).
The estimated future annual amortization of the intangible assets in service is as follows (in thousands):
Year ending December 31:Amount
Remainder of 2024$2,545 
202510,181 
202610,181 
202710,181 
202810,181 
Thereafter100,539 
Total$143,808 
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:
September 30,
20242023
Weighted average remaining term (in years)
16.118.2
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 September 30,Nine Months Ended September 30,
2024202320242023
Cash paid for amounts included in the measurement of operating lease liabilities$1,048 $866 $2,877 $2,564 
Total lease costs are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Operating lease cost$1,385 $1,137 $3,929 $3,456 
Short-term lease cost48 22 141 85 
Variable lease cost184 402 746 809 
Total lease costs$1,617 $1,561 $4,816 $4,350 
Future minimum lease payments under operating leases liabilities as of September 30, 2024 are as follows (in thousands):
Year ending December 31:
Amount
Remainder of 2024$858 
20253,373 
20263,512 
20273,594 
20283,396 
Thereafter35,771 
Total lease payments50,504 
Less imputed interest(17,780)
Total lease liabilities32,724 
Less: lease liabilities - current portion(1,579)
Lease liabilities - noncurrent portion$31,145 
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
As previously disclosed, 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.
20
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Patent and Trade Secret Litigation
As previously disclosed, 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. The court has indicated that it is likely to hear the preliminary injunction motion in December 2024. It has not otherwise set a case schedule.
On September 11, 2024, the Company filed a lawsuit against Inquis Medical, Inc. (“Inquis”) in the United States District Court for the District of Delaware. The Company’s complaint alleges that Inquis misappropriated the Company’s trade secrets in relation to Inquis’ engagement of the services of an Inari employee, and that Inquis’ Aventus Thrombectomy System and Aventus Clot Management System infringe four Inari patents related to mechanical thrombectomy devices used for treating pulmonary emboli and deep vein thrombosis. Inquis’ response to the Company’s complaint is due November 4, 2024. The court has not otherwise set a case schedule.
Securities Class Action
As previously disclosed, 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.
As previously disclosed, 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 and the Company is not able to quantify the extent of any potential liability.
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 nine months ended September 30, 2024 and 2023, there were no customers which accounted for more than 10% of the Company’s revenue. As of September 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 nine months ended September 30, 2024 and 2023. There were no vendors that accounted for more than 10% of the Company’s accounts payable as of September 30, 2024 and December 31, 2023.
21
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
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 nil and $67,000 for the three months ended September 30, 2024 and 2023, respectively, and $31,000 and $147,000 for the nine months ended September 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 September 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.
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 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 September 30, 2024, the amount available to borrow under the Amended Credit Agreement is approximately $67.9 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 the letter of credits reduces the total borrowing base available under the Amended Credit Agreement and is subject to certain fees.
22
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
As of September 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 September 30, 2024 and December 31, 2023 are as follows (in thousands):
September 30, 2024December 31, 2023
Deferred financing costs
$729 $1,454 
Accumulated amortization
(447)(382)
Unamortized deferred financing costs
$282 $1,072 
13. STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Income (Loss)
The following is a summary of the changes in accumulated balances of other comprehensive income (loss) for the nine months ended September 30, 2024 and 2023 (in thousands):
Unrealized Gain (Loss) on InvestmentsForeign Currency Translation
Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2023$(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)
Other comprehensive income64 13,918 13,982 
Balance, September 30, 2024
$51 $13,094 $13,145 
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)
Other comprehensive income (loss)91 (68)23 
Balance, September 30, 2023
$(49)$(1,109)$(1,158)
23
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
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 September 30, 2024, there were 7,183,239 shares available for issuance under the 2020 Plan, including 1,732,872 additional shares reserved effective January 1, 2024.
2011 Equity Incentive Plan
Stock Options
A summary of stock option activity under the 2011 Plan for the nine months ended September 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(170,540)2.02 $8,211 
Cancelled(29)9.05 
Outstanding, September 30, 2024767,1272.28 4.5$29,884 
Vested and exercisable at September 30, 2024767,1272.28 4.5$29,884 
Vested and expected to vest at September 30, 2024767,127$2.28 4.5$29,884 
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.
24
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
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 
Granted1,006,24446.95 
Vested(456,160)67.69 
Cancelled(104,090)61.87 
Outstanding, September 30, 20241,753,992$56.30 
The total fair value of RSUs vested under the 2020 Plan was $7.7 million and $6.9 million for the three months ended September 30, 2024 and 2023, respectively, and $23.9 million and $21.0 million for the nine months ended September 30, 2024 and 2023, respectively.
Performance Stock Units
During the nine months ended September 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, September 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:
Nine Months Ended September 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
25
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
A summary of stock option activities under the 2020 Plan for the nine months ended September 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 $— 
Cancelled(7,157)56.00 
Outstanding, September 30, 2024368,96455.33 5.9$— 
Vested and exercisable at September 30, 202486,548 55.65 5.6$— 
Vested and expected to vest at September 30, 2024343,736$55.35 5.9$— 
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:
Nine Months Ended September 30,
20242023
Expected term (in years)0.50.5
Expected volatility
57.0% - 60.8%
42.1% - 49.9%
Dividend yield0.0%0.0%
Risk free interest rate
5.1% - 5.2%
4.8% - 5.5%
As of September 30, 2024, a total of (i) 639,355 shares of common stock, including 133,430 shares purchased in July 2024 and 82,816 shares purchased in January 2024, have been purchased under the ESPP, and (ii) 2,465,007 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.
26
INARI MEDICAL, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Share-based Compensation Expense
Total compensation cost for all share-based payment arrangements recognized, including $1.2 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and $3.5 million and $2.9 million for the nine months ended September 30, 2024 and 2023, respectively, of share-based compensation expense related to the ESPP, was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Cost of goods sold$537 $393 $1,570 $1,232 
Research and development1,779 1,587 5,347 4,981 
Selling, general and administrative10,635 7,864 31,943 24,323 
Total share-based compensation expense
$12,951 $9,844 $38,860 $30,536 
Total compensation costs as of September 30, 2024 related to all non-vested awards to be recognized in future periods was $87.4 million and is expected to be recognized over the remaining