Inari Medical, Inc. (NARI) Q2 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $145.8 million, up 23% year-over-year due to strong adoption of therapies and contributions from VTE and Emerging Therapies.
Global VTE Revenue $138 million, up 21% year-over-year, supported by ongoing commercial expansion and market development efforts.
Global Emerging Therapies Revenue $8.1 million, up 66% year-over-year, driven by strong early adoption of VenaCore.
International Revenue $10 million, up 93% year-over-year, primarily driven by adoption in Europe and Latin America.
Gross Margin 86.3%, down from 88.4% year-over-year, due to product mix, ramp-up costs for new products, and increasing internationalization.
Operating Expenses $148.3 million, up from $106.7 million year-over-year, primarily due to increases in personnel-related expenses.
R&D Expense $24.9 million, up 18.1% year-over-year, due to increases in personnel-related expenses, materials, and professional fees.
SG&A Expense $114.2 million, up 33.4% year-over-year, primarily due to increases in personnel-related expenses, commissions, and other admin expenses.
GAAP Operating Loss $22.4 million, compared to a loss of $1.5 million year-over-year, reflecting increased operating expenses.
Net Loss $31.3 million, compared to a net income of $2.1 million year-over-year, primarily due to increased operating losses.
Cash Flows from Operating Activities -$800,000, compared to $7.7 million in the prior year, primarily due to investments in the LimFlow commercial team.
Cash and Investments Balance $109.7 million, indicating confidence in self-funding the business and strategic objectives.
Operating Highlights
Emerging Therapies Revenue: In Q2, Emerging Therapies revenue was over $8 million, up 66% year-over-year, driven by strong early adoption of VenaCore.
ClotTriever XL Catheter Update: A voluntary field notice was issued for the ClotTriever XL catheter, providing additional procedural guidance to physicians.
LimFlow Integration: In Q2, Inari made significant progress integrating LimFlow, with a focus on physician training and product refinement.
Second-Generation Stent Delivery System: Received PMA approval for the second-generation stent delivery system, with limited market release planned for Q3.
International Revenue Growth: International revenue reached $10 million, up 93% year-over-year, driven by adoption in Europe and Latin America.
VTE Market Growth: Global VTE revenue was $138 million, up 21% year-over-year, supported by ongoing commercial expansion.
CMS Reimbursement Increase: CMS proposed to increase hospital outpatient reimbursement for lympho procedures from $27,500 to $35,000.
Operational Efficiency: Inari's gross margin was 86.3% for Q2 2024, with expectations for SG&A expenses as a percentage of revenue to decrease in the second half.
Cash Position: Inari held a cash balance of $109.7 million at the end of Q2, confident in self-funding strategic objectives.
CFO Transition: Mitch Hill announced his retirement, with Kevin Strange appointed as the new CFO effective October 1, 2024.
Revenue Guidance Increase: Inari raised its full-year 2024 revenue guidance to $594.5 million to $604.5 million, reflecting growth of approximately 20.5% to 22.5%.
Risk or Challenges
Competitive Pressures: Inari is facing competition in the interventional therapy market, particularly with the introduction of new products and the need to establish a competitive moat for FlowTriever against legacy lytic-based interventions.
Regulatory Issues: The company is navigating regulatory challenges, including the recent PMA approval from the FDA for its second-generation stent delivery system, which is crucial for the LimFlow system.
Supply Chain Challenges: There are potential supply chain challenges related to the ramp-up costs associated with new products and the increasing internationalization of the business.
Economic Factors: The company is affected by economic factors that influence hospital outpatient reimbursement rates, as seen with the proposed increase from CMS for lympho procedures.
Operational Losses: Inari reported a GAAP operating loss of $22.4 million in Q2 2024, indicating financial challenges as the company invests in growth and transitions leadership.
Market Adoption Risks: Despite strong growth, there is a risk that the adoption of new therapies may not meet expectations, particularly in emerging therapy segments.
Guidance & Outlook
Revenue Growth: In Q2 2024, Inari achieved record revenue of $145.8 million, reflecting a 23% year-over-year growth.
Annual Revenue Guidance: Inari raised its full year 2024 revenue guidance to $594.5 million to $604.5 million, indicating a growth of approximately 20.5% to 22.5% over 2023.
Operating Profitability: Inari expects to reach sustained operating profitability in the first half of 2025.
Emerging Therapies Revenue: In Q2 2024, Emerging Therapies revenue was over $8 million, up 66% year-over-year.
International Revenue: International revenue was $10 million, up 93% year-over-year.
VTE Revenue Growth: Global VTE revenue was $138 million, up 21% year-over-year.
Clinical Trials: Inari is advancing enrollment in three major RCTs, which are expected to change guidelines and extend their leadership position.
LimFlow Integration: Inari is focused on integrating the LimFlow business and expects to commercialize a second-generation stent delivery system in Q4 2024.
Q3 Growth Expectations: Q3 sequential growth is anticipated to be roughly half of the Q3 sequential growth from the previous year.
Operating Loss Improvement: Inari expects to see sequential operating loss decreases in Q3 and Q4 2024.
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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