10-Q
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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 June 30, 2022

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

 

Inari Medical, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-2902923

( 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 class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.001 par value per share

 

NARI

 

The 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, 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 July 29, 2022, the registrant had 53,389,687 shares of common stock, $0.001 par value per share, outstanding.

 

 


Table of Contents

 

 

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

4

 

Condensed Consolidated Statements of Stockholders’ Equity

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26

Signatures

27

 

i


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. 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,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our business model and strategic plans for our products, technologies and business, including our implementation thereof, the impact on our business, financial condition and results of operations from the ongoing and global COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, the timing of and our ability to obtain and maintain regulatory approvals, our commercialization, marketing and manufacturing capabilities and strategy, our expectations about the commercial success and market acceptance of our products, the sufficiency of our cash, cash equivalents and short-term investments, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, and assumptions, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report. 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. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon these forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. 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. We intend the 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

 

 

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)

 

 

 

June 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

79,724

 

 

$

92,752

 

Short-term investments in debt securities

 

 

250,772

 

 

 

83,348

 

Accounts receivable, net

 

 

49,171

 

 

 

42,351

 

Inventories, net

 

 

26,674

 

 

 

21,053

 

Prepaid expenses and other current assets

 

 

4,997

 

 

 

5,694

 

Total current assets

 

 

411,338

 

 

 

245,198

 

Property and equipment, net

 

 

20,076

 

 

 

16,471

 

Operating lease right-of-use assets

 

 

46,653

 

 

 

44,909

 

Deposits and other assets

 

 

6,195

 

 

 

981

 

Long-term investments in debt securities

 

 

 

 

 

3,983

 

Total assets

 

$

484,262

 

 

$

311,542

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

4,748

 

 

$

6,541

 

Payroll-related accruals

 

 

27,695

 

 

 

24,433

 

Accrued expenses and other current liabilities

 

 

8,076

 

 

 

10,737

 

Operating lease liabilities, current portion

 

 

465

 

 

 

802

 

Total current liabilities

 

 

40,984

 

 

 

42,513

 

Operating lease liabilities, noncurrent portion

 

 

28,196

 

 

 

28,404

 

Other long-term liability

 

 

1,304

 

 

 

1,416

 

Total liabilities

 

 

70,484

 

 

 

72,333

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares
   issued and outstanding as of June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 300,000,000 shares
   authorized as of June 30, 2022 and December 31, 2021;
53,305,825 
   and
50,313,452 shares issued and outstanding as of June 30, 2022 and
   December 31, 2021, respectively

 

 

53

 

 

 

50

 

Additional paid in capital

 

 

445,807

 

 

 

257,144

 

Accumulated other comprehensive loss

 

 

(1,183

)

 

 

(402

)

Accumulated deficit

 

 

(30,899

)

 

 

(17,583

)

Total stockholders' equity

 

 

413,778

 

 

 

239,209

 

Total liabilities and stockholders' equity

 

$

484,262

 

 

$

311,542

 

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

92,744

 

 

$

63,453

 

 

$

179,496

 

 

$

120,850

 

Cost of goods sold

 

 

10,347

 

 

 

4,814

 

 

 

20,314

 

 

 

9,437

 

Gross profit

 

 

82,397

 

 

 

58,639

 

 

 

159,182

 

 

 

111,413

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,569

 

 

 

11,630

 

 

 

34,704

 

 

 

19,793

 

Selling, general and administrative

 

 

73,156

 

 

 

42,897

 

 

 

136,888

 

 

 

79,795

 

Total operating expenses

 

 

91,725

 

 

 

54,527

 

 

 

171,592

 

 

 

99,588

 

(Loss) income from operations

 

 

(9,328

)

 

 

4,112

 

 

 

(12,410

)

 

 

11,825

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

214

 

 

 

35

 

 

 

264

 

 

 

103

 

Interest expense

 

 

(73

)

 

 

(74

)

 

 

(146

)

 

 

(147

)

Other income (expense)

 

 

252

 

 

 

7

 

 

 

228

 

 

 

(34

)

Total other income (expenses)

 

 

393

 

 

 

(32

)

 

 

346

 

 

 

(78

)

(Loss) income before income taxes

 

 

(8,935

)

 

 

4,080

 

 

 

(12,064

)

 

 

11,747

 

Provision for income taxes

 

 

1,252

 

 

 

12

 

 

 

1,252

 

 

 

210

 

Net (loss) income

 

$

(10,187

)

 

$

4,068

 

 

$

(13,316

)

 

$

11,537

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(291

)

 

 

57

 

 

 

(408

)

 

 

(123

)

Unrealized (loss) gain on available-for-sale debt securities

 

 

(125

)

 

 

(6

)

 

 

(373

)

 

 

12

 

Total other comprehensive (loss) income

 

 

(416

)

 

 

51

 

 

 

(781

)

 

 

(111

)

Comprehensive (loss) income

 

$

(10,603

)

 

$

4,119

 

 

$

(14,097

)

 

$

11,426

 

Net (loss) income per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.19

)

 

$

0.08

 

 

$

(0.26

)

 

$

0.23

 

Diluted

 

$

(0.19

)

 

$

0.07

 

 

$

(0.26

)

 

$

0.21

 

Weighted average common shares used to compute net
       (loss) income per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

53,183,767

 

 

 

49,669,652

 

 

 

52,075,399

 

 

 

49,512,800

 

Diluted

 

 

53,183,767

 

 

 

55,595,016

 

 

 

52,075,399

 

 

 

55,665,193

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

Inari Medical, Inc.

Condensed Consolidated Statements Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Additional Paid In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2021

 

 

50,313,452

 

 

$

50

 

 

$

257,144

 

 

$

(402

)

 

$

(17,583

)

 

$

239,209

 

Options exercised for
  common stock

 

 

322,882

 

 

 

1

 

 

 

344

 

 

 

 

 

 

 

 

 

345

 

Shares issued under Employee
  Stock Purchase Plan

 

 

54,808

 

 

 

 

 

 

3,427

 

 

 

 

 

 

 

 

 

3,427

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

31,763

 

 

 

 

 

 

(1,624

)

 

 

 

 

 

 

 

 

(1,624

)

Issuance of common stock in
  public offering, net of
  issuance costs of $
11.9 million

 

 

2,300,000

 

 

 

2

 

 

 

174,392

 

 

 

 

 

 

 

 

 

174,394

 

Share-based compensation
  expense

 

 

 

 

 

 

 

 

6,555

 

 

 

 

 

 

 

 

 

6,555

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(365

)

 

 

 

 

 

(365

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,129

)

 

 

(3,129

)

Balance, March 31, 2022

 

 

53,022,905

 

 

 

53

 

 

 

440,238

 

 

 

(767

)

 

 

(20,712

)

 

 

418,812

 

Options exercised for
  common stock

 

 

228,313

 

 

 

 

 

 

156

 

 

 

 

 

 

 

 

 

156

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

54,607

 

 

 

 

 

 

(1,751

)

 

 

 

 

 

 

 

 

(1,751

)

Share-based compensation
  expense

 

 

 

 

 

 

 

 

7,164

 

 

 

 

 

 

 

 

 

7,164

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(416

)

 

 

 

 

 

(416

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,187

)

 

 

(10,187

)

Balance, June 30, 2022

 

 

53,305,825

 

 

$

53

 

 

$

445,807

 

 

$

(1,183

)

 

$

(30,899

)

 

$

413,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

49,251,614

 

 

$

49

 

 

$

227,624

 

 

$

4

 

 

$

(27,423

)

 

$

200,254

 

Options exercised for
  common stock

 

 

296,019

 

 

 

1

 

 

 

380

 

 

 

 

 

 

 

 

 

381

 

Shares issued under Employee
  Stock Purchase Plan

 

 

36,881

 

 

 

 

 

 

1,882

 

 

 

 

 

 

 

 

 

1,882

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

901

 

 

 

 

 

 

(49

)

 

 

 

 

 

 

 

 

(49

)

Share-based compensation
  expense

 

 

 

 

 

 

 

 

3,836

 

 

 

 

 

 

 

 

 

3,836

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(162

)

 

 

 

 

 

(162

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,469

 

 

 

7,469

 

Balance, March 31, 2021

 

 

49,585,415

 

 

 

50

 

 

 

233,673

 

 

 

(158

)

 

 

(19,954

)

 

 

213,611

 

Options exercised for common stock

 

 

213,605

 

 

 

 

 

 

193

 

 

 

 

 

 

 

 

 

193

 

Issuance of common stock upon
  vesting of restricted stock units,
  net of shares withheld for taxes

 

 

29,809

 

 

 

 

 

 

(706

)

 

 

 

 

 

 

 

 

(706

)

Share-based compensation expense

 

 

 

 

 

 

 

 

4,604

 

 

 

-

 

 

 

 

 

 

4,604

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

51

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,068

 

 

 

4,068

 

Balance, June 30, 2021

 

 

49,828,829

 

 

$

50

 

 

$

237,764

 

 

$

(107

)

 

$

(15,886

)

 

$

221,821

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5


 

Inari Medical, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(13,316

)

 

$

11,537

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by
  operating activities:

 

 

 

 

 

 

Depreciation

 

 

2,260

 

 

 

1,288

 

Amortization of deferred financing costs

 

 

72

 

 

 

76

 

Amortization of right-of-use assets

 

 

1,225

 

 

 

357

 

Share-based compensation expense

 

 

13,719

 

 

 

8,440

 

Allowance for credit losses, net

 

 

66

 

 

 

(22

)

Changes in:

 

 

 

 

 

 

Accounts receivable

 

 

(6,960

)

 

 

(3,470

)

Inventories

 

 

(5,676

)

 

 

(7,523

)

Prepaid expenses, deposits and other assets

 

 

1,072

 

 

 

(