Business Overview

Inari Medical, Inc. is a leading medical device company that has carved out a formidable presence in the vascular and limb salvage markets. Founded in 2011 and headquartered in Irvine, California, Inari has steadily transformed itself into a driving force in the treatment of venous thromboembolism (VTE) and chronic limb-threatening ischemia (CLTI).

The company's journey began with a laser-sharp focus on developing minimally invasive, novel, catheter-based mechanical thrombectomy systems. This strategic vision has paid dividends, as Inari's flagship products, FlowTriever and ClotTriever, have emerged as market leaders in the treatment of deep vein thrombosis (DVT) and pulmonary embolism (PE).

Company History

Inari Medical was incorporated in Delaware in July 2011 with the purpose of building and marketing a variety of medical products for the unique characteristics of specific disease states. In the same year, the company adopted the 2011 Equity Incentive Plan to permit the grant of share-based awards, such as stock grants and incentives and non-qualified stock options to employees and directors. This was followed by the adoption of the 2020 Incentive Award Plan in March 2020, which became effective in connection with the company's initial public offering in May 2020.

Product Portfolio

Over the years, Inari has established a comprehensive portfolio of mechanical thrombectomy devices to address not only deep vein thrombosis and pulmonary embolism but also chronic venous disease, acute limb ischemia, and dialysis access management. The company's success has been built on the strong relationships between its sales representatives and treating physicians, including interventional cardiologists, interventional radiologists, and vascular surgeons. These relationships have allowed Inari to rapidly iterate its solutions, introduce and execute physician education and training programs, and scale its sales organization effectively.

Inari's product portfolio is divided into two main segments: Venous Thromboembolism (VTE) and Emerging Therapies. The VTE segment includes solutions for deep vein thrombosis and pulmonary embolism, such as the recently launched VenaCore device for the treatment of acute and chronic deep vein thrombosis. The Emerging Therapies segment comprises solutions for chronic venous disease, chronic limb-threatening ischemia (CLTI), acute limb ischemia, and dialysis access management.

Market Expansion

In 2023, Inari took a significant step forward by acquiring LimFlow, a medical device company dedicated to limb salvage for CLTI patients. This transformative move has positioned Inari as a powerhouse in the $1.5 billion CLTI market, offering new hope for the 55,000 patients per year suffering from this advanced stage of peripheral artery disease. The company is also developing other products such as VenaCore for chronic venous disease and Artix for acute limb ischemia.

Financials

Inari's financial performance has been impressive. In the latest reported quarter (Q3 2024), the company delivered record revenue of $153.4 million, representing a 21.4% year-over-year increase. This strong top-line growth was driven by robust performance across Inari's entire portfolio, including the market-leading VTE therapies and the emerging CLTI business.

For the full fiscal year 2023, Inari reported revenue of $493.63 million, with a net loss of $1.64 million. Operating cash flow for the year was $35.93 million, with free cash flow of $29.73 million.

Breaking down the Q3 2024 results by segment, the VTE segment generated revenue of $145.35 million, accounting for 94.8% of total revenue. The Emerging Therapies segment contributed $8.04 million, or 5.2% of total revenue. For the nine months ended September 30, 2024, VTE revenue was $420.21 million (95.0% of total), while Emerging Therapies revenue was $22.19 million (5.0% of total).

Geographically, 92.5% of Q3 2024 revenue was generated in the United States, with the remaining 7.5% coming from international markets. International revenue of $11.54 million was up 76.4% compared to the prior year period, primarily driven by adoption in Europe.

The company's gross margin for Q3 2024 was 87.1%, and 86.7% for the first nine months of 2024. Inari continues to invest heavily in research and development, with R&D expenses of $29.43 million in Q3 2024, up 36.9% from the prior year period. Selling, general and administrative (SG&A) expenses also increased 26.5% year-over-year to $108.27 million in Q3 2024, reflecting the company's expanded commercial efforts and capabilities.

Liquidity

Despite the global macroeconomic challenges, Inari has maintained a healthy balance sheet, ending Q3 2024 with $111.6 million in cash, cash equivalents, and short-term investments. The company's robust liquidity position has allowed it to continue investing in research and development, as well as strategic initiatives, to drive future growth.

Inari's financial health is further evidenced by its strong liquidity ratios, with a current ratio of 1.7703 and a quick ratio of 1.3992. The company's debt-to-equity ratio stands at a low 0.0688, indicating a conservative approach to leverage. As of September 30, 2024, Inari had no long-term debt outstanding and maintained a revolving credit facility with Bank of America, providing access to loans up to $75 million, including an $18.8 million letter of credit subline facility. As of the latest reporting date, $67.9 million was available to borrow under this facility, with $2.4 million in letters of credit outstanding.

Clinical Trials and Research

One of the most notable developments in Inari's recent history has been the positive results from the PEERLESS Randomized Controlled Trial (RCT). This landmark study, presented at the 2024 Transcatheter Cardiovascular Therapeutics (TCT) conference, demonstrated the superiority of Inari's FlowTriever system over catheter-directed thrombolytics in the treatment of intermediate-risk pulmonary embolism. The data from PEERLESS is expected to have a significant impact on the standard of care, further solidifying Inari's leadership in the VTE market.

International Growth

Moreover, Inari has made substantial progress in expanding its international footprint. In the third quarter of 2024, the company's international revenue grew by an impressive 76.4% year-over-year, driven primarily by strong adoption of its solutions in Europe. Inari has also laid the groundwork for future growth in Asia, with regulatory approvals and commercial launches underway in China and Japan.

Challenges and Risks

While Inari's growth trajectory has been impressive, the company is not without its challenges. The medical device industry is highly competitive, and Inari faces the risk of potential competitors entering the market with innovative products. Additionally, the company's reliance on a limited number of large customers for a significant portion of its revenue represents a potential risk. In December 2023, Inari received a civil investigative demand 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 company has also been involved in patent and trade secret litigation with competitors.

Future Outlook

Nevertheless, Inari's forward-looking approach, pioneering technology, and commitment to improving patient outcomes have positioned the company for continued success. With a robust product pipeline, a growing international presence, and a strong balance sheet, Inari Medical is well-equipped to navigate the evolving healthcare landscape and cement its position as a leader in vascular and limb salvage solutions.

The global mechanical thrombectomy devices market is expected to grow at a compound annual growth rate (CAGR) of approximately 11% from 2023 to 2028. This growth is driven by the increasing prevalence of vascular diseases, growing demand for minimally invasive procedures, and technological advancements in thrombectomy devices.

Looking ahead, Inari has raised its full-year 2024 revenue guidance to between $601.5 million and $604.5 million, representing growth of 22% to 22.5% over 2023. This increase of $3.5 million at the midpoint of the prior guidance range reflects the company's confidence in its growth trajectory. Inari expects to deliver roughly breakeven GAAP operating income in Q4 2024 and remains committed to achieving sustained GAAP operating profitability in the first half of 2025.

With its innovative product portfolio, strong financial performance, and strategic market positioning, Inari Medical is well-positioned to capitalize on the growing demand for advanced vascular treatments and continue its trajectory of growth and market leadership.