Inari Medical, Inc. (NARI) Q1 2024 Earnings Call Transcript
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Overview
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.
Key Financial Performance
Total Revenue $143.2 million, up 23.3% year-over-year, driven by strong adoption of market-leading therapies and international expansion.
Global VTE Revenue $137.2 million, up 20.3% year-over-year, supported by ongoing commercial expansion and market development.
Global Emerging Therapies Revenue $6 million, up 184.5% year-over-year, reflecting strong performance in new patient populations and product launches.
International Revenue $9.5 million, up 120% year-over-year, primarily driven by adoption in Europe and other international markets.
Gross Margin 86.8%, down from 88.2% year-over-year, due to increasing internationalization, ramp-up costs for new products, and product mix.
Operating Expenses $141.5 million, up from $107.8 million year-over-year, primarily due to increased personnel costs and commissions.
R&D Expense $26.9 million, up 21.8% year-over-year, due to increases in materials, clinical, regulatory, and personnel-related expenses.
SG&A Expense $103.1 million, up 20.3% year-over-year, driven by increased headcount, commissions, professional fees, and travel costs.
GAAP Operating Loss $17.2 million, compared to a loss of $5.3 million year-over-year, reflecting higher operating expenses.
Net Loss $24.2 million, compared to a net loss of $2.2 million year-over-year, primarily due to increased operating losses.
Cash Flows Used in Operating Activities $12.3 million, compared to approximately $2 million year-over-year, primarily due to investments in the product portfolio.
Cash and Investments Balance $102 million at the end of Q1 2024, indicating a healthy liquidity position.
Operating Highlights
Emerging Therapies Revenue: In Q1, emerging therapies revenue was $6 million, up 185% versus the prior year.
VenaCore Limited Market Release: Executing the limited market release of VenaCore, our second purpose-built tool within the CBD toolkit, expected to fully market in the second half of the year.
LimFlow Integration: Progress integrating the LimFlow business into Inari and driving the early U.S. launch.
Artix System Release: On track to initiate a limited market release and commercialize our second-generation Artix system later in 2024.
InThrill Platform Development: Working on a second-generation InThrill platform and look forward to bringing it to market next year.
International Revenue Growth: Q1 international revenue was $9.5 million, up 120% versus the prior year, driven by adoption in Europe, Latin America, Canada, and Asia-Pacific.
VTE Market Position: Inari is a market leader in a $6 billion TAM for venous thromboembolism technologies in the U.S., with global VTE revenue of $137 million, up 20%.
Emerging Therapies Market: Emerging therapies segment comprises a $4 billion TAM in the U.S. alone.
Operating Expenses: Operating expenses were $141.5 million in Q1 2024, up from $107.8 million in the prior year.
R&D Expense: R&D expense was $26.9 million in Q1 2024, up 21.8% compared to the prior year.
SG&A Expense: SG&A expense was $103.1 million in Q1 2024, up 20.3% compared to the prior year.
Path to Profitability: Reaffirming expectations to reach sustained operating profitability in the first half of 2025.
VTE Excellence Initiative: Plans to drive deeper adoption within existing U.S. accounts via the VTE Excellence initiative.
International Expansion: Plans to expand internationally, including commercial entry into Japan and China.
Risk or Challenges
Competitive Pressures: Inari anticipates continued competitive activity in the large and high-growth market for venous thromboembolism (VTE) technologies, which may impact market share and pricing strategies.
Regulatory Issues: The company is navigating VAC approvals for LimFlow and is awaiting a final ruling from CMS regarding a proposed new technology add-on payment (NTAP) that could significantly impact hospital reimbursement.
Supply Chain Challenges: Increased operating expenses, particularly in R&D and SG&A, indicate potential supply chain challenges related to materials, clinical, and regulatory expenses.
Economic Factors: The company is managing a significant increase in operating losses, which may be influenced by broader economic conditions affecting healthcare spending and investment.
Financial Performance: Inari recorded a GAAP operating loss of $17.2 million in Q1 2024, up from a loss of $5.3 million in the prior year, indicating financial strain as the company invests in growth.
Market Penetration: Despite strong growth, Inari's current high single-digit total addressable market (TAM) penetration in VTE indicates significant room for improvement, but also highlights the challenges of achieving deeper market penetration.
Guidance & Outlook
Revenue Growth: Achieved record revenue of over $143 million in Q1 2024, reflecting over 23% growth.
Market Expansion: Plans to drive deeper adoption within existing U.S. accounts via VTE Excellence initiative and expand internationally into Japan and China.
Portfolio Expansion: Ongoing commitment to address unmet patient needs in venous and other diseases, with strong growth in emerging therapies.
Clinical Data Generation: On track to showcase PEERLESS data in the second half of the year, with completed enrollment of 550 patients.
Commercial Engine Leverage: Largest VTE-focused Salesforce in the industry, aiming to increase use of solutions within existing accounts.
International Growth: International revenue of $9.5 million in Q1, up 120% year-over-year, with expectations for international sales to account for at least 20% of revenue over time.
2024 Revenue Guidance: Raising full year 2024 revenue guidance to $592.5 million to $602.5 million, reflecting growth of approximately 20% to 22% over 2023.
Profitability Outlook: Expecting to achieve sustained operating profitability in the first half of 2025.
Q2 2024 Revenue Expectation: Expect Q2 revenue to be flat to slightly up sequentially, following typical seasonality.
Shareholder Return Plan
Shareholder Return Plan: Inari Medical has not announced any share buyback program or dividend program during the call.
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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