Inari Medical, Inc. (NARI) Q4 2023 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: strong year-over-year revenue growth and promising international expansion, but lower-than-expected 2024 guidance and ongoing DOJ investigation create uncertainties. While the company's gross margins are stable, competitive pressures and conservative guidance may temper investor enthusiasm. The Q&A section reveals cautious optimism from management but also highlights some areas of concern, such as competition and the DOJ investigation. Given the market cap and these mixed signals, the stock price is likely to remain neutral in the short term.
Key Financial Performance
Q4 2023 Revenue $132.1 million, up 23% year-over-year; driven by strength in core VTE business and growth from emerging therapies.
Full Year 2023 Revenue $493.6 million, up 29% year-over-year; VTE accounted for over 85% of the growth.
Q4 2023 Gross Margin 87.1%, down from 87.8% year-over-year; slight decrease in margin.
Q4 2023 Operating Expenses $124.4 million, up 24% year-over-year; increase primarily due to higher SG&A and R&D expenses.
Q4 2023 R&D Expense $22.9 million, up 12% year-over-year; increase due to professional fees and clinical/regulatory expenses.
Q4 2023 SG&A Expense $101.5 million, up 27% year-over-year; increase due to higher personnel costs, commissions, and professional fees related to LimFlow acquisition.
Q4 2023 GAAP Operating Loss $9.3 million, compared to a loss of $5.9 million year-over-year; higher operating expenses contributed to the loss.
Q4 2023 Non-GAAP Operating Loss $300,000; no adjustments related to 2022 operating loss.
Q4 2023 Net Loss $4.7 million, compared to a net loss of $5.8 million year-over-year; improved loss due to higher revenue.
Q4 2023 Net Loss per Share $0.08, compared to $0.11 year-over-year; improved loss per share due to reduced net loss.
Full Year 2023 GAAP Operating Loss $14 million, compared to $28.1 million year-over-year; reduced loss due to increased revenue.
Full Year 2023 Non-GAAP Operating Loss $2.4 million; no adjustments related to 2022 operating loss.
Full Year 2023 Net Loss $1.6 million, compared to a net loss of $29.3 million year-over-year; significant improvement due to revenue growth.
Full Year 2023 Net Loss per Share $0.03, compared to $0.55 year-over-year; improved loss per share due to reduced net loss.
Cash and Investments at End of Q4 2023 $116.1 million; strong cash position.
Cash Flows from Operating Activities 2023 $35.9 million, compared to cash flows used in operating activities of $14 million in 2022; significant improvement in cash flow.
Operating Highlights
New Products: Inari launched multiple new products to augment its VTE franchise, including T16Curve, ClotTriever XL, and ClotTriever BOLD Gen 2.
Emerging Therapies: RevCore, the first mechanical thrombectomy device for venous stent thrombosis, is gaining traction with a projected $500 million U.S. TAM.
LimFlow Acquisition: Inari closed the LimFlow acquisition in Q4, integrating it into their operations and launching it in the U.S.
Artix System: Inari is working to bring the second generation Artix system to market later in 2024.
Market Expansion: Inari is expanding internationally, with Q4 international revenue reaching nearly $8 million, up more than 130% year-over-year.
New Revenue Framework: Inari will report revenue from its global VTE portfolio and emerging therapies portfolio, enhancing visibility into growth pillars.
Operational Efficiencies: Inari is focused on achieving sustained operating profitability in the first half of 2025, despite increased operating expenses.
Clinical Trials: Inari completed patient enrollment for the PEERLESS trial, aiming to change the standard of care in VTE.
Strategic Shifts: Inari is diversifying into new patient populations and disease states, including chronic limb-threatening ischemia and acute limb ischemia.
Risk or Challenges
Regulatory Issues: In December 2023, Inari received a civil investigative demand from the Department of Justice regarding meals and consulting service payments to healthcare professionals, which may lead to increased legal and associated expert expenses.
Acquisition Risks: The acquisition of LimFlow may introduce incremental operating deficits and requires careful integration into Inari's existing operations, which could pose challenges in achieving projected synergies.
Supply Chain Challenges: Inari is working to stabilize and build capacity across the supply chain following the LimFlow acquisition, indicating potential risks in supply chain management during integration.
Economic Factors: The company anticipates greater operating losses in the first half of 2024 compared to the second half, reflecting economic uncertainties that may impact revenue growth and profitability.
Competitive Pressures: Inari faces competition in the VTE market, with multiple randomized controlled trials (RCTs) being conducted by various sponsors, which could affect market share and growth.
Guidance & Outlook
LimFlow Acquisition: Inari closed the acquisition of LimFlow in Q4 2023, which allows for the transcatheter arterialization of deep veins to treat patients with chronic limb-threatening ischemia (CLTI). This addresses a significant unmet need and is expected to provide new treatment options.
VTE Excellence Program: Inari is implementing the VTE Excellence program to increase penetration within existing accounts, aiming for over 50% penetration in advanced accounts.
Emerging Therapies: Inari is focusing on four distinct patient populations outside of VTE, representing a $4 billion total addressable market (TAM) in the U.S.
International Expansion: Inari aims for international sales to account for at least 20% of revenue over time, currently at 5%.
2024 Revenue Guidance: Inari projects full year 2024 revenue between $580 million to $595 million, reflecting growth of approximately 17.5% to 20.5% over 2023.
Q1 2024 Revenue Growth: Sequential revenue growth of approximately 4% is anticipated for Q1 2024 relative to Q4 2023.
Profitability Outlook: Inari expects to achieve sustained operating profitability in the first half of 2025, with greater operating losses anticipated in the first half of 2024 compared to the second half.
Shareholder Return Plan
Share Repurchase Program: None
Key Q&A
Earnings Word Cloud
NARI Transcript
The earnings call presents mixed signals. Financial performance shows strong revenue growth but also increased operating losses, which is concerning. The Q&A section reveals stable market health and growth potential, but management's vague responses on certain topics may raise investor concerns. The lack of a shareholder return plan and declining gross margins also contribute to a neutral outlook. However, the raised annual revenue guidance and robust growth in emerging therapies offer positive aspects, balancing the negative elements. Given the company's market cap, the stock price is likely to remain stable over the next two weeks.
The earnings call highlighted strong financial performance, including record revenue growth and international expansion. Despite increased operating losses and a DOJ inquiry, optimistic guidance and a raised revenue forecast signal confidence. The Q&A session reinforced positive sentiment, especially with the expected impact of PEERLESS data. The lack of a shareholder return plan is a minor downside, but overall, the market is likely to react positively, considering the company's small-cap nature.
The earnings call reflects a positive outlook with strong revenue growth, international expansion, and a raised guidance. Despite increased losses and expenses, management's confidence in market leadership, new product launches, and strategic acquisitions support a positive sentiment. The Q&A reinforced management's optimism with no significant competitive threats and robust growth across segments. The market cap indicates moderate sensitivity to news, suggesting a stock price increase between 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: strong year-over-year revenue growth and promising international expansion, but lower-than-expected 2024 guidance and ongoing DOJ investigation create uncertainties. While the company's gross margins are stable, competitive pressures and conservative guidance may temper investor enthusiasm. The Q&A section reveals cautious optimism from management but also highlights some areas of concern, such as competition and the DOJ investigation. Given the market cap and these mixed signals, the stock price is likely to remain neutral in the short term.
NARI Report
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