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.

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 ~~August 6, 2021,~~July 29, 2022, the registrant had ~~49,928,519~~53,389,687 shares of common stock, $0.001 par value per share, outstanding.

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,” ~~"can,"~~ “will,” ~~“would,”~~, “would”, “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” ~~“potential,”~~“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 ~~facts~~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”).

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


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenue	$	63,453		$	25,392		$	120,850		$	52,345		$	92,744		$	63,453		$	179,496		$	120,850
Cost of goods sold		4,814			3,487			9,437			6,193			10,347			4,814			20,314			9,437
Gross profit		58,639			21,905			111,413			46,152			82,397			58,639			159,182			111,413
Operating expenses
Research and development		11,630			3,628			19,793			6,646			18,569			11,630			34,704			19,793
Selling, general and administrative		42,897			18,880			79,795			35,273			73,156			42,897			136,888			79,795
Total operating expenses		54,527			22,508			99,588			41,919			91,725			54,527			171,592			99,588
Income (loss) from operations		4,112			(603	)		11,825			4,233
(Loss) income from operations														(9,328	)		4,112			(12,410	)		11,825
Other income (expense)
Interest income		35			146			103			201			214			35			264			103
Interest expense		(74	)		(463	)		(147	)		(809	)		(73	)		(74	)		(146	)		(147	)
Change in fair value of warrant liabilities		0			(2,884	)		0			(3,317	)
Other income (expense)		7			0			(34	)		0			252			7			228			(34	)
Total other expenses		(32	)		(3,201	)		(78	)		(3,925	)
Income (loss) before income taxes		4,080			(3,804	)		11,747			308
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		12			0			210			0			1,252			12			1,252			210
Net income (loss)	$	4,068		$	(3,804	)	$	11,537		$	308
Net (loss) income													$	(10,187	)	$	4,068		$	(13,316	)	$	11,537
Other comprehensive income (loss)
Foreign currency translation adjustments		57			0			(123	)		0			(291	)		57			(408	)		(123	)
Unrealized (loss) gain on available-for-sale securities		(6	)		0			12			0
Total other comprehensive income (loss)		51			0			(111	)		0
Comprehensive income (loss)	$	4,119		$	(3,804	)	$	11,426		$	308
Net income (loss) per share
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	$	0.08		$	(0.16	)	$	0.23		$	0.02		$	(0.19	)	$	0.08		$	(0.26	)	$	0.23
Diluted	$	0.07		$	(0.16	)	$	0.21		$	0.01		$	(0.19	)	$	0.07		$	(0.26	)	$	0.21
Weighted average common shares used to compute net income (loss) per share
Weighted average common shares used to compute net (loss) income per share
Basic		49,669,652			24,295,900			49,512,800			15,339,755			53,183,767			49,669,652			52,075,399			49,512,800
Diluted		55,595,016			24,295,900			55,665,193			47,362,292			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.

Condensed Consolidated Statements ~~of Mezzanine Equity and~~ Stockholders’ Equity ~~(Deficit)~~

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


	Six Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2022			2021
Cash flows from operating activities
Net income	$	11,537		$	308
Adjustments to reconcile net income to net cash provided by (used in) 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		1,288			573			2,260			1,288
Amortization of deferred financing costs		76			113			72			76
Amortization of right-of-use assets		357			0			1,225			357
Share based compensation expense		8,440			1,000
Provision for doubtful accounts		(22	)		84
Loss on change in fair value of warrant liabilities		0			3,317
Share-based compensation expense								13,719			8,440
Allowance for credit losses, net								66			(22	)
Changes in:
Accounts receivable		(3,470	)		(4,174	)		(6,960	)		(3,470	)
Inventories		(7,523	)		(1,667	)		(5,676	)		(7,523	)
Prepaid expenses, deposits and other assets		(11,306	)		(3,391	)		1,072			(11,306	)
Accounts payable		7,276			(255	)		(1,760	)		7,276
Payroll-related accruals, accrued expenses and other liabilities		9,796			2,287			650			9,796
Operating lease liabilities		(381	)		0			(544	)		(381	)
Net cash provided by (used in) operating activities		16,068			(1,805	)
Lease prepayments for lessor's owned leasehold improvements								(2,969	)		0
Net cash (used in) provided by operating activities								(12,161	)		16,068
Cash flows from investing activities
Purchase of property and equipment		(6,186	)		(1,418	)
Purchase of short-term investments		(84,751	)		0
Maturity of short-term investments		50,000			0
Purchases of property and equipment								(5,864	)		(6,186	)
Purchases of marketable securities								(230,814	)		(84,751	)
Maturities of marketable securities								67,000			50,000
Purchases of other investments								(5,693	)		0
Net cash used in investing activities		(40,937	)		(1,418	)		(175,371	)		(40,937	)
Cash flows from financing activities
Proceeds from issuance of common stock upon initial public offering, net of issuance costs paid		0			164,361
Proceeds from notes payable		0			10,000
Debt financing costs		0			(12	)
Proceeds from issuance of common stock in public offering, net of issuance costs of $11.9 million								174,394			0
Proceeds from issuance of common stock under employee stock purchase plan		1,882			0			3,427			1,882
Proceeds from exercise of stock options		573			67			501			573
Proceeds from exercise of warrants		0			4
Payment of taxes related to vested restricted stock units		(755	)		0			(3,375	)		(755	)
Net cash provided by financing activities		1,700			174,420			174,947			1,700
Effect of foreign exchange rate on cash and cash equivalents		(126	)		0			(443	)		(126	)
Net (decrease) increase in cash		(23,295	)		171,197
Cash, cash equivalents and restricted cash beginning of period		114,617			24,027
Cash, cash equivalents and restricted cash end of period	$	91,322		$	195,224
Net decrease in cash								(13,028	)		(23,295	)
Cash and cash equivalents beginning of period								92,752			114,617
Cash and cash equivalents end of period							$	79,724		$	91,322

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	158		$	81		$	2,297		$	158
Cash paid for interest	$	76		$	618		$	75		$	76
Noncash investing and financing:
Common stock issued on conversion of convertible preferred stock	$	0		$	54,170
Common stock warrants issued on conversion of preferred stock warrants and the reclassification of the warrant liability	$	0		$	4,486
Deferred initial public offering cost recorded to additional paid in capital	$	0		$	1,382
Accrual of deferred interest obligation associated with debt	$	0		$	100

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

1. Organization

Description of Business

Inari Medical, Inc. (the “Company”) was incorporated in Delaware in July 2011 and is headquartered in Irvine, California. The Company develops, manufactures, markets and sells devices for the interventional treatment of venous diseases.

~~Initial Public Offering~~

~~In May 2020, the Company completed an initial public offering (“IPO”) of its common stock. As part of the IPO, the Company issued and sold~~ ~~9,432,949~~ ~~shares of its common stock, which included~~ ~~1,230,384~~ ~~shares sold pursuant to the exercise of the underwriters’ over-allotment option, at a public offering price of $19.00~~ ~~per share. The Company received net proceeds of approximately $163.0~~ ~~million from the IPO, after deducting underwriters’ discounts and commissions of $12.6~~ ~~million and offering costs of $3.7~~ ~~million, of which $1.4~~ ~~million was incurred as of December 31, 2019.~~ ~~Upon the completion of the IPO, all shares of Series A, B, and C redeemable convertible preferred stock then outstanding were converted into~~ ~~31,968,570~~ ~~shares of common stock on a one-to-one basis.~~

~~In addition, on the completion of the IPO, all the Company’s outstanding preferred stock warrants were converted into warrants to purchase an aggregate of~~ ~~256,588~~ ~~shares of common stock, which resulted in the reclassification of the convertible preferred stock warrant liability to additional paid-in capital.~~

~~In connection with the Company’s IPO, in May 2020, the Company’s certificate of incorporation was amended and restated to provide for~~ ~~300,000,000~~ ~~authorized shares of common stock with a par value of $0.001~~ ~~per share and~~ ~~10,000,000~~ ~~authorized shares of preferred stock with a par value of $0.001~~ ~~per share.~~

2. Summary of Significant Accounting Policies

COVID-19 ~~and the Act~~

The global healthcare system continues to face an unprecedented challenge as a result of the novel coronavirus, or COVID-19, situation and its impact. COVID-19 is having, and may continue to have, an adverse impact on significant aspects of the Company and the business, including the demand for products, business operations, and the ability to research and develop and bring to market new products and services. The business was most acutely affected by a decline in procedural volumes during the first and second quarter of 2020, and the results for the first half of 2021 reflect some recovery from these declines the Company experienced in the first half of 2020 as a result of COVID-19. However, with cases continuing to resurge in certain areas, and hospitals at capacity in some instances due to non-COVID-19 treatments, toTo the extent individuals and hospital systems de-prioritize, delay or cancel deferrable medical procedures as a result of COVID-19, staffing or resource issues, or otherwise, the Company’s business, cash flows, financial condition and results of operations may continue to be negatively affected.

COVID-19 has strained hospital systems around the world, resulting in adverse financial impacts to those systems, which has resulted in and may continue to result in reduced expenditures for the Company’s products. Additionally, COVID-19’s impact on our customers may adversely affect the collectability of the Company’s current and future accounts receivable balance.

The Company continues to actively monitor the COVID-19 situation and its impact. In response to the pandemic, in March 2020 in the United States, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, be suspended or canceled. Similarly, in March 2020, the governor of California, where the Company’s headquarters are located, issued “stay at home” orders limiting non-essential activities, travel and business operations. Such orders or restrictions significantly decreased the number of procedures performed using the Company’s products ~~during March and April 2020~~ ~~and otherwise negatively impacted operations.~~

In response to the impact of COVID-19, the Company implemented a variety of measures to help manage through the impact and position it to resume operations quickly and efficiently once these restrictions were lifted. The Company continues to focus its efforts on the health and safety of patients, healthcare providers and employees, while executing its mission of transforming lives of venous thromboembolism ("VTE") patients. However, the Company expects the COVID-19 pandemic may continue to negatively impact ~~2021~~2022 performance.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 ("the Act"), was enacted on December 27, 2020. It was a response to continued market volatility and instability resulting from COVID-19 and includes provisions to support businesses in the form of loans, grants, and tax changes, among other types of relief. The Company has reviewed and incorporated the income tax changes included in the Act, including the deductibility of meals expenses previously not deductible for tax purposes. We do not believe there

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~will be a material effect on the Company’s income tax provision. The Company currently does not expect to apply for loans or grants expanded by the Act.~~

Basis of Presentation of~~Unaudited Interim Condensed Consolidated Financial Statements~~

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). ~~Certain prior year reported amounts have been reclassified to conform with the 2021 presentation.~~

The interim condensed consolidated balance sheet as of June 30, ~~2021,~~2022, the condensed consolidated statements of operations and comprehensive income (loss), ~~mezzanine~~stockholders’ equity, ~~and stockholders’ deficit,~~ and cash flows for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s consolidated financial position as of June 30, ~~2021~~2022 and its consolidated results of operations and cash flows for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021. The financial data and the other financial information disclosed in the notes to the condensed consolidated financial statements related to the three and six months ~~periods~~ended June 30, 2022 and 2021 are also unaudited. The condensed consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, ~~2020~~2021 included herein was derived from the audited financial statements as of that date. These interim condensed consolidated financial statements should be read in conjunction with our audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 filed on ~~March 9, 2021.~~February 23, 2022.

Principles of Consolidation

~~In May 2020,~~The condensed consolidated financial statements include the Company formed Inari Medical International, Inc., a wholly-owned subsidiary incorporated in Delaware. In September 2020, the Company formed Inari Medical Europe, GmbH, a wholly-owned subsidiary of Inari Medical International, Inc. organized in Switzerland.and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements may include, but are not limited to, ~~the~~ collectability of receivables, ~~the~~recoverability of long-lived assets, valuation of inventory, ~~the fair value of common stock warrants, the fair value of preferred stock warrant liabilities, the~~other investments, fair value of stock options, recoverability of ~~the Company’s~~ net deferred tax assets and related valuation allowance, and certain accruals. ~~The~~Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. Actual results could differ materially from those estimates. Management periodically evaluates ~~its~~such estimates and assumptions, ~~on an ongoing basis using historical experience~~ and ~~other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.~~they are adjusted prospectively based upon such periodic evaluation.

~~JOBS Act Accounting Election~~

As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 ("the JOBS Act"), the Company is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The Company has elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. However, we will no longer qualify as an emerging growth company as of December 31, 2021 and will no longer be able to take advantage of the extended transition period. Therefore, as of December 31, 2021, we will be required to adopt new or revised accounting standards when they are applicable to public companies that are not emerging growth companies.

~~Cash, Cash Equivalents and Restricted Cash~~

The Company considers cash on hand, cash in demand deposit accounts including money market funds, and instruments with maturity date of 90 days or less at date of purchase to be cash equivalents. The Company maintains its cash, cash equivalent and restricted cash balances with banks. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, deposits of up to

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

$~~250,000~~ at FDIC-insured institutions are covered by FDIC insurance. At times, deposits may be in excess of the FDIC insurance limit; however, management does not believe the Company is exposed to any significant related credit risk.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (in thousands):

June 30,
2021

December 31,
2020

Cash and cash equivalents

$
91,322

$
114,229

Restricted cash

0

388

Total cash, cash equivalent and restricted cash

$
91,322

$
114,617

~~Restricted cash as of December 31, 2020 consisted of a cash secured letter of credit in the amount of $338,000~~ ~~representing collateral for the Company’s facility lease and a compensating balance of $50,000~~ to secure the Company’s corporate purchasing cards. In February 2021, the Company cancelled both the cash secured letter of credit and corporate purchasing card program and moved them both to its current bank, with no required cash security. Accordingly, as of June 30, 2021, the Company had 0 ~~restricted cash.~~

~~Short-Term Investments~~

Short-term investments have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. The Company determines the appropriate classification of its investments in debt securities at the time of purchase. Available-for-sale securities with original maturities less than 12 months at the date of purchase are considered short-term investments.

Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive income (loss). The Company periodically evaluates whether declines in fair values of its marketable securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the marketable security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on marketable securities are included in other income (expenses), net on the condensed consolidated statements of operations. The cost of investments sold is based on the specific-identification method. Interest on marketable securities is included in interest income.

~~Accounts Receivable, net~~

Trade accounts receivable are recorded at the invoiced amount, net of any allowance for doubtful accounts. Any allowance for doubtful accounts, which is included in selling, general and administrative (“SG&A”) expenses, is developed based upon several factors including the customers’ credit quality, historical write-off experience and any known specific issues or disputes which exist as of the balance sheet date. Accounts receivable balances are written off against the allowance after appropriate collection efforts are exhausted. The allowance for doubtful accounts was $~~40,000~~ ~~and $62,000~~ ~~as of June 30, 2021 and December 31, 2020, respectively, and~~ 0 accounts receivable write-offs were recognized during the three and six months ended June 30, 2021 and 2020. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future economic and industry trends, including those related to COVID-19, change in such a manner as to negatively impact their cash flows. The full effects of COVID-19 on the Company’s customers are highly uncertain and cannot be predicted. As a result, the Company’s future collection experience can differ significantly from historical collection trends. If the Company’s clients experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations and financial condition.

~~Inventories, net~~

The Company values inventory at the lower of the actual cost to purchase or manufacture the inventory or net realizable value for such inventory. Cost, which includes material, labor and overhead costs, is determined on the first-in, first-out method ("FIFO"). The Company regularly reviews inventory quantities in process and on hand, and when appropriate, records a provision for obsolete and excess inventory. The Company writes down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements based on future demand and as compared to remaining shelf life. The estimate of excess quantities is subjective and primarily dependent on the Company’s estimates of future demand for a particular product. If the estimate of future demand is inaccurate based on actual sales, the Company may increase the write down forRevenue Recognition

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

~~excess inventory for that component and record a charge to inventory impairment in the accompanying condensed consolidated statement of operations and comprehensive income (loss).~~

~~Property and Equipment~~

Property and equipment are stated at cost. Additions and improvements that extend the lives of the assets are capitalized while expenditures for repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, ranging from ~~three~~ to ~~seven~~ ~~years. Leasehold improvements are depreciated over the~~ ~~shorter of the useful lives of the improvements or the lease term, including renewal periods that are reasonably assured.~~

~~Upon sale or disposition of property and equipment, any gain or loss is included in the accompanying condensed consolidated statement of operations.~~

~~Right-of-use Assets and Lease Liabilities~~

~~We determine if an arrangement contains a lease at inception and determine the classification of the lease, as either operating or finance, at commencement.~~

Right-of-use assets and lease liabilities are recorded based on the present value of future lease payments which factors in certain qualifying initial direct costs incurred as well as any lease incentives received. If an implicit rate is not readily determinable, we utilize inputs from third-party lenders to determine the appropriate discount rate. Lease expense for operating lease payments are recognized on a straight-line basis over the lease term. Lease terms may factor in options to extend or terminate the lease.

We adhere to the short-term lease recognition exemption for all classes of assets (i.e. facilities and equipment). As a result, leases with an initial term of twelve months or less are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. In addition, for certain equipment leases, we account for lease and non-lease components, such as services, as a single lease component as permitted.

~~Impairment of Long-lived Assets~~

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the assets. The Company has not identified any such impairment losses to date.

~~Fair Value of Financial Instruments~~

~~The Company’s cash, cash equivalents and restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their liquidity or short maturities.~~

The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. U.S. GAAP provides a fair value hierarchy that distinguishes between (i) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (ii) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels.



~~Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.~~



Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.



~~Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.~~

~~See Note 3 for further information.~~

~~Convertible Preferred Stock Warrant Liability~~

The Company accounted for its freestanding warrants to purchase shares of the Company’s convertible preferred stock as liabilities at fair value upon issuance primarily because the preferred shares underlying the warrants contained contingent redemption

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

features outside the control of the Company. The warrants were subject to remeasurement at each balance sheet date and any change in fair value was recognized as the change in fair value of warrant liability and included as a component of other income (expense) in the condensed consolidated statements of operations and comprehensive income (loss). The carrying value of the warrants continued to be adjusted until the completion of the IPO, which occurred in May 2020. At that time, the preferred stock warrant liability was adjusted to fair value and reclassified to additional paid-in capital, a component of stockholders’ equity (deficit) (see Note 3).

~~Revenue Recognition~~

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with ~~Customers.~~ Customers. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

~~Product sales of the FlowTriever and ClotTriever systems are made~~The Company sells its products primarily to hospitals ~~primarily~~ in the United States utilizing the Company’s direct sales force. The Company recognizes revenue for arrangements where the Company has satisfied its performance obligation of shipping or delivering the product. For sales where the Company’s sales representative hand-deliver products directly to the hospitals, control of the products transfers to the customers upon such hand delivery. For sales where products are shipped, control of the products transfers either upon shipment or delivery of the products to the customer, depending on the shipping terms and conditions. Revenue from product sales is comprised of product revenue, net of product returns, ~~administration~~administrative fees and sales rebates.

Performance Obligation—The Company has revenue arrangements that consist of a single performance obligation, the shipping or delivery of the Company’s products. The satisfaction of this performance obligation occurs with the transfer of control of the Company’s product to its customers, either upon shipment or delivery of the product.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of revenue ~~that is~~ recognized is based on the transaction price, which represents the invoiced amount, ~~and includes estimates~~net of ~~variable consideration such as rebate and~~ administrative fees and sales rebates, where applicable. The Company provides a standard 30-day unconditional right of return period. The Company establishes estimated provisions for returns at the time of sale based on historical experience. Historically, the actual product returns have been immaterial to the Company’s consolidated financial statements.

Assuming all other revenue recognition criteria have been met, the Company recognizes revenue for arrangements where the Company has satisfied its performance obligation of shipping or delivering the product. For sales where the Company’s sales representatives hand deliver products directly to the hospital, control of the products transfers to the customer upon such hand delivery. For sales where products are shipped, control of the products transfers either upon shipment or delivery of the products to the customer, depending on the shipping terms and conditions. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company recorded $~~335,000~~764,000 and $~~498,000~~448,000, respectively, of unbilled receivables, which are included in accounts receivable, net, in the accompanying ~~condensed~~ consolidated balance sheets.

Revenue for ClotTriever and FlowTriever products as a percentage of total revenue was derived as follow:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021

ClotTriever		33	%		40	%		34	%		38	%		33	%		33	%		32	%		34	%
FlowTriever		67	%		60	%		66	%		62	%		67	%		67	%		68	%		66	%

The Company offers payment terms to its customers of less than three months and these terms do not include a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.

The Company offers its standard warranty to all customers. The Company does not sell any warranties on a standalone basis. The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to repair, replace or refund the purchase price of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.

Costs associated with product sales include commissions and are recorded in selling, general and administrative ("SG&A&A") expenses. The Company applies the practical expedient and recognizes commissions as an expense when incurred because the amortization period is less than one year.

Other Investments

In March 2022, the Company made investments in certain privately held companies, with no readily determinable fair value. The Company measures these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investments. The Company will monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fair values. As of June 30, 2022, total other investments of $5.7 million was included in deposits and other assets on the condensed consolidated balance sheets with no impairment identified.

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

~~Cost of Goods Sold~~

Cost of goods sold consists primarily of the cost of raw materials, components, direct labor and manufacturing overhead. Overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management, including stock-based compensation. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalty expense.

~~Shipping Costs~~

~~Shipping costs billed to customers are not included in revenue and are reported as a reduction of costs of goods sold.~~

~~Advertising Costs~~

~~Advertising costs are charged to operations as incurred. Advertising costs were $74,000~~ ~~and $74,000~~ ~~for the three months ended June 30, 2021 and 2020, and $145,000~~ ~~and $111,000~~ ~~for the six months ended June 30, 2021 and 2020, respectively. Advertising costs are included in SG&A expenses in the accompanying condensed consolidated statements of operations.~~

~~Research and Development~~

Research and development costs are expensed as incurred and include the costs to design, develop, test, deploy and enhance new and existing products. Research and development costs also include expenses associated with clinical studies, registries and sponsored research. These costs include direct salary and employee benefit related costs for research and development personnel, costs for materials used and costs for outside services.

~~Patent-related Expenditures~~

Expenditures related to patent research and applications, which are primarily legal fees, are expensed as incurred and are included in SG&A expenses in the accompanying condensed consolidated statements of operations.

~~Share-based Compensation~~

The Company’s employee and non-employee share-based awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest. Share-based compensation is recognized over the service period.

~~Income Taxes~~

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management assesses the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance.

The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of provision for income taxes.

~~Foreign Currency Translation~~

When the functional currencies of the Company’s foreign subsidiaries are currencies other than the U.S. dollar, the assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect on the balance sheet date. Income and expense items of the subsidiaries are translated into U.S. dollars at the average exchange rates prevailing during the period. Gains or losses from these translation adjustments are reported as a separate component of stockholders’ equity in accumulated other comprehensive income (loss) until there is a sale or complete or substantially complete liquidation of the Company’s investment in the foreign subsidiaries at which time the gains or losses will be realized and included in net income (loss). Certain vendors are paid in currencies other than the U.S. dollar. Transaction gains and losses are included in other income (expense) and have not been significant for the periods presented.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~Comprehensive Income (Loss)~~

The Company’s comprehensive income (loss) is comprised of net income (loss), unrealized gains and losses on available-for-sale investments and gains and losses from foreign currency translation adjustments.

~~Net Income (Loss) per Share of Common Stock~~

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net income (loss) per share calculation, redeemable convertible preferred stock and warrants, and common stock options are potentially dilutive securities. For the periods the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities.

~~Segment Reporting~~

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in 1 segment - the development and commercialization of innovative and minimally invasive mechanical thrombectomy devices to treat thromboembolism in the venous system. Geographically, the Company primarily sells to hospitals in the United States. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.

~~Recently Adopted Accounting Pronouncements~~

~~In June 2018, the FASB issued ASU No. 2018-07,~~ ~~Compensation-Stock Compensation(Topic 718):Improvements to Nonemployee Share-Based Payment Accounting~~, which expands guidance on accounting for share-based payment awards, which includes share-based payment transactions for acquiring goods and services from nonemployees and aligns the accounting for share-based payments for employees and non-employees. The Company ~~adopted~~ ~~this guidance effective~~ ~~January 1, 2020. The adoption of this guidance did~~ ~~not~~ ~~have a material impact on the Company’s financial statements.~~

~~In February 2017, the FASB issued ASU 2016-02,~~ ~~Leases~~ (Topic 842) (“ASC 842”), as amended, which requires lessees to recognize “right of use” assets and liabilities for all leases with terms of more than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASC842 requires additional quantitative and qualitative financial statement note disclosures about the leases, significant judgments made in accounting for those leases and amounts recognized in the financial statements about those leases.

The Company adopted the requirement of ASC 842 effective January 1, 2021 and elected the modified retrospective method for all lease arrangements with a cumulative-effect adjustment as of January 1, 2021. Results for reporting periods beginning on or after January 1, 2021 are presented under ASC 842, while prior period amounts were not adjusted and are reported in accordance with the Company’s historic accounting under ASC 840, Leases. For leases that commenced before the effective date of ASC 842, the Company elected the transition package of three practical expedients permitted within ASC 842, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company also elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of right-of-use assets. Further, the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets.

The Company determines if an arrangement is a lease at inception. As a lessee, right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company does not have any outstanding debt or committed credit facilities, the Company estimates the incremental borrowing rate based on prevailing financial market conditions, peer company credit analyses, and management judgment. Operating lease right-of-use assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The lease terms used to calculate the right-of-use asset and related lease liability include

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, while the expense for finance leases is recognized as amortization expense and interest expense using the accelerated interest method of recognition.

~~As a result of adopting ASC 842 as of January 1, 2021, the Company recorded an operating lease right-of-use asset of approximately $1.2~~ ~~million and related operating lease liability of approximately $1.3~~ ~~million based on the present value of the future lease payments on the date of adoption. There was~~ 0 cumulative-effect adjustment recorded to retained earnings upon adoption. Adopting ASC 842 did not have a material impact on the Company’s condensed consolidated statements of operations and cash flows. See Note 7, Commitments and Contingencies, for further discussion of the Company’s adoption of ASC 842 and related disclosures.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes – Simplifying the Accounting for Income Taxes~~, which simplifies the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step-up in the tax basis of goodwill and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company ~~adopted~~ ~~this guidance effective~~ ~~January 1, 2021~~ ~~and the adoption of this standard did~~ ~~not~~ ~~have a material impact on its consolidated financial statements~~.

~~Recent Accounting Pronouncements~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments~~, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This standard provides guidance regarding methodologies and disclosures related to expected credit losses. The guidance will become effective for the Company on December 31, 2021 when the Company no longer qualifies for emerging growth company status. Management is evaluating the impact that adopting this guidance will have on the Company's consolidated financial statements.

3. Fair Value Measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


	June 30, 2021								June 30, 2022
	Level 1		Level 2		Level 3		Aggregate Fair Value		Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	51,199	$	0	$	0	$	51,199	$	11,041	$	0	$	0	$	11,041
U.S. Treasury securities										14,977		0		0		14,977
Corporate debt securities and commercial paper										0		5,992		0		5,992
Total included in cash and cash equivalents		51,199		0		0		51,199		26,018		5,992		0		32,010
Marketable securities:
Investments:
U.S. Treasury securities		42,631		0		0		42,631		185,491		0		0		185,491
U.S. Government agencies										0		16,004		0		16,004
Corporate debt securities and commercial paper		0		42,113		0		42,113		0		49,277		0		49,277
Total included in short-term investments		42,631		42,113		0		84,744		185,491		65,281		0		250,772
Total assets	$	93,830	$	42,113	$	0	$	135,943	$	211,509	$	71,273	$	0	$	282,782

	December 31, 2020								December 31, 2021
	Level 1		Level 2		Level 3		Aggregate Fair Value		Level 1		Level 2		Level 3		Aggregate Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	1,034	$	0	$	0	$	1,034	$	48,595	$	0	$	0	$	48,595
Total included in cash and cash equivalents										48,595		0		0		48,595
Investments:
U.S. Treasury securities		33,996		0		0		33,996		44,322		0		0		44,322
Total included in cash and cash equivalents		35,030		0		0		35,030
Marketable securities:
U.S. Treasury securities		24,992		0		0		24,992
U.S. Government agencies		0		24,989		0		24,989
Corporate debt securities and commercial paper										0		39,026		0		39,026
Total included in short-term investments		24,992		24,989		0		49,981		44,322		39,026		0		83,348
U.S. Treasury securities included in long-term investments										3,983		0		0		3,983
Total assets	$	60,022	$	24,989	$	0	$	85,011	$	96,900	$	39,026	$	0	$	135,926

There were 0 transfers between Levels 1, 2 or 3 for the periods presented.

~~The change in the fair value of the warrant liability is summarized below (in thousands):~~

Six Months Ended June 30,

2021

2020

Beginning balance

$
0

$
1,169

Change in fair value of warrant liability

0

3,317

Conversion of preferred stock warrants to common stock
warrants upon the closing of the IPO

0

(4,486
)
Ending balance

$
0

$
0

The valuation of the Company’s convertible preferred stock warrant liability contains unobservable inputs that reflect the Company’s own assumptions for which there was little, if any, market activity for at the measurement date. Accordingly, the Company’s convertible preferred stock warrant liability was measured at fair value in a recurring basis using unobservable inputs and are classified as Level 3 inputs, and any change in fair value was recognized as other expense in the statements of operations (see Note 11).

4. Cash Equivalents and ~~Short-Term~~ Investments

The following is a summary of the Company’s cash equivalents and ~~short-term~~ investments in debt securities as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):

139

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements


	June 30, 2021									June 30, 2022
	Amortized Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value		Amortized Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	51,199	$	0	$	0		$	51,199	$	11,041	$	0	$	0		$	11,041
U.S. Treasury securities											14,968		9		0			14,977
Corporate debt securities and commercial paper											5,985		7		0			5,992
Total included in cash and cash equivalents		51,199		0		0			51,199		31,994		16		0			32,010
Marketable securities:
Investments:
U.S. Treasury securities		42,631		2		(2	)		42,631		185,887		0		(396	)		185,491
U.S. Government agencies											16,012		0		(8	)		16,004
Corporate debt securities and commercial paper		42,096		17		0			42,113		49,282		0		(5	)		49,277
Total included in short-term investments		84,727		19		(2	)		84,744		251,181		0		(409	)		250,772
Total assets	$	135,926	$	19	$	(2	)	$	135,943	$	283,175	$	16	$	(409	)	$	282,782

	December 31, 2020									December 31, 2021
	Amortized Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value		Amortized Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value
Financial Assets
Cash and cash equivalents:
Money market mutual funds	$	1,034	$	0	$	0		$	1,034	$	48,595	$	0	$	0		$	48,595
Total included in cash and cash equivalents											48,595		0		0			48,595
Investments:
U.S. Treasury securities		33,996		0		—			33,996		44,349		0		(27	)		44,322
Total included in cash and cash equivalents		35,030		0		0			35,030
Marketable securities:
U.S. Treasury securities		24,991		1		0			24,992
U.S. Government agencies		24,986		3		0			24,989
Corporate debt securities and commercial paper											39,012		14		0			39,026
Total included in short-term investments		49,977		4		0			49,981		83,361		14		(27	)		83,348
U.S. Treasury securities included in long-term investments											3,993		0		(10	)		3,983
Total assets	$	85,007	$	4	$	0		$	85,011	$	135,949	$	14	$	(37	)	$	135,926

~~As of June 30, 2021, the remaining contractual maturities for available-for-sale securities were less than one year.~~

5. Inventories, net

Inventories, net of reserves as of June 30, 2022 and December 31, 2021 totaling $391,000 and $285,000, respectively, consist of the following (in thousands):


	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Raw materials	$	3,730	$	2,607	$	8,695	$	5,763
Work-in-process		2,408		787		1,507		1,490
Finished goods		11,974		7,203		16,472		13,800
	$	18,112	$	10,597	$	26,674	$	21,053

6. Property and Equipment, net

Property and equipment consist of the following (in thousands):


	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Manufacturing equipment	$	5,261		$	4,003		$	9,300		$	7,408
Leasehold improvements		1,875			1,737			4,900			4,712
Computer software		228			128
Assets in progress								4,519			3,124
Furniture and fixtures		377			363			3,719			3,044
Computer hardware		1,551			980			4,450			2,864
Assets in progress		4,855			2,320
		14,147			9,531
Computer software								100			100
Total property and equipment, gross								26,988			21,252
Accumulated depreciation		(3,320	)		(2,033	)		(6,912	)		(4,781	)
	$	10,827		$	7,498
Total property and equipment, net							$	20,076		$	16,471

Depreciation expense of $~~522,000~~970,000 and $~~218,000~~522,000 was included in SG&A expenses and $~~157,000~~226,000 and $~~81,000~~157,000 was included in cost of goods sold for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Depreciation expense of $~~985,000~~1,827,000 and $~~418,000~~985,000 was included in SG&A expenses and $~~303,000~~433,000 and $~~155,000~~303,000 was included in cost of goods sold for the six months ended June 30, ~~2021~~2022 and ~~2020, respectively. In connection with the adoption of ASC 842, the Company reclassified $1,569,000~~ ~~of tenant improvement costs related to the Oak Canyon lease that were deemed to be landlord assets, which were included in assets in progress as of December 31, 2020, to other assets (see Note 7).~~

~~Capitalized Implementation Costs of a Hosting Arrangement~~

The Company has several software systems that are cloud-based hosting arrangements with service contracts. The Company accounts for costs incurred in connection with the implementation of these various software systems under ASU 2018-15, ~~Intangibles—Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The Company expenses all costs (internal and external) that are incurred in the planning and post-implementation operation stages and has capitalized approximately $479,000~~ ~~in implementation costs related to the application development stage.~~ ~~The capitalized costs are amortized on a straight-line basis over the non-cancelable contract terms, generally~~ ~~three years~~. ~~As of June 30,~~ 2021, ~~and December 31, 2020, approximately $162,000~~ ~~and $228,000, respectively, of the capitalized costs were included in prepaid expenses and other current assets, and $95,000~~ ~~and $~~0, respectively, were included in deposits and other assets. The Company starts amortizing capitalized implementation costs when the systems are placed in production and ready for their intended use. Amortization expense, which was included in SG&A expenses, was approximately $~~65,000~~ ~~and $16,000~~ ~~for the three months ended June 30, 2021 and 2020 and $106,000~~ ~~and $39,000~~ ~~for the six months ended June 30, 2021 and 2020,~~ respectively.

7. Commitments and Contingencies

Operating Leases

The Company has operating leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. For lease agreements, ~~entered into or reassessed after the adoption of ASC 842,~~other than long-term real estate leases, the Company combines lease and non-lease components. ~~See Note 2, Summary of Significant Accounting Policies for additional information.~~

In March 2019, the Company executed a five-year lease for a facility in Irvine, California, where substantially all operations of the Company have been located since September 2019. The lease expires in September 2024 and contains 2 optional extension periods of five years each. In addition to the minimum future lease commitments presented below, the lease requires the Company to pay property taxes, insurance, maintenance, and repair ~~costs.~~costs, which are considered variable lease payments and not included in the lease liability. The lease includes a one-month rent holiday concession and escalation clauses for increased rent over the lease term. Concurrent with the execution of a new ten-year lease (see below), the Company entered into a termination agreement (as amended) that releases the Company from the current facility lease obligation 12 months following the commencement date of the new lease, with options to extend the lease term for up to three periods of an additional 30 days each. As of June 30, ~~2021,~~2022, the operating lease right-of-use asset and liability were $~~675,000~~52,000 and $~~755,000~~59,000, respectively, with the remaining lease term of 131 ~~months.~~month.

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

In October 2020, the Company entered into a ten-year lease for a facility located in Irvine, California (the “Oak Canyon lease”)~~. The Company estimates that the Oak Canyon lease will have a lease commencement date in the third quarter of 2021. The Oak Canyon lease contains~~ with 2 ~~optional~~option extension periods of five years ~~each.~~each, which the Company has determined that it's reasonably certain to exercise. The Oak Canyon lease requires the Company to make variable lease payments, which are not included in the lease liability due to the amounts not being fixed, for property taxes, insurance, maintenance, repair costs, and ~~repair costs.~~certain improvements deemed to be assets of the lessor. The Oak Canyon lease includes scheduled payment escalation clauses over the lease term. ~~In connection with this lease, the Company has budgeted approximately $~~28 ~~million of tenant improvement costs, $4.5~~ million of which is required to be funded by the related landlord. Because a significant portion of the tenant improvements have been deemed to be assets of the landlord and were under construction as of June 30, 2021, the Company has not yet taken control of the leased facility and the lease has not yet commenced. As of June 30, 2021, the Company has spent approximately $~~13.1~~ ~~million in improvements, which are included in deposits and other assets on the condensed consolidated balance sheet.~~ The Oak Canyon lease also requires ~~that~~ the Company to maintain a letter of credit for the benefit of the landlord in the amount of $1.5 million, which is secured by the Company’s Credit Agreement.

The Company ~~also leases~~ has moved in and taken control of the facility and has determined the lease commencement date to be September 30, 2021. On the commencement date, the Company recorded approximately $242.2 million and $28.6 million of right-of-use asset and lease liability, respectively. The right-of use-asset includes approximately $13.5 million, net of $3.7 million tenant allowance, related to prepaid lease payments for the lessor’s owned leasehold improvements which were reclassified from assets in progress and deposits and other assets. The operating right-of-use assets also include $5.8 million of additional ~~warehouse spaces located in Lake Forest and Irvine, California.~~prepaid lease payments for the lessor's owned leasehold improvements paid subsequent to the commencement date. As of June 30, ~~2021,~~2022, the operating lease right-of-use assets and lease liabilities were $~~72,000~~46.5 million and $~~73,000~~28.5, million, respectively, with the ~~weighted average~~ remaining lease term of 11229 months.

The ~~Company also leases certain equipment~~Company's wholly owned subsidiary, Inari Medical Europe GmbH entered into a five-year commercial lease agreement for ~~warehouse and~~ office ~~use. As of June 30, 2021, the operating~~space located in Basel, Switzerland (the "Basel lease"). The lease ~~right-of-use assets and liabilities were $121,000~~ ~~and $121,000, respectively,~~will be effective July 1, 2022 with ~~the weighted average remaining lease term~~an option to extend for a period of 48five years ~~months.~~

As, which the Company has determined that it is reasonably certain to exercise. The lease payment is also indexed to the national consumer price index, which may be adjusted once per calendar year. The Basel lease will also require the Company to maintain a bank guarantee deposit for the benefit of ~~June 30, 2021,~~ the ~~weighted average incremental borrowing rate used to measure operating lease liabilities was~~ ~~2.9%. During the three and six months ended June 30, 2021, cash paid for amounts included~~landlord in the ~~measurement~~amount of ~~operating lease liabilities was $199,000~~ ~~and $398,000, respectively.~~

~~Operating lease costs under the lease agreements for the three and six months ended June 30, 2021 was~~approximately $186,000 ~~and $371,000, respectively.~~ ~~Future minimum lease payments under operating leases liabilities as of June 30, 2021 are as follows (in thousands):~~

Year ending December 31:

Amount

Remainder of 2021

$
406

2022

486

2023

34

2024

33

2025

16

Thereafter

0

Total lease payments

975

Less imputed interest

(26
)
Total lease liabilities

949

Less: lease liabilities - current portion

(793
)
Lease liabilities - noncurrent portion

$
156

~~The following are minimum future rental payments owed for the Oak Canyon lease which has not yet commenced as of June 30, 2021 (in thousands):~~.

Year ending December 31:

Amount

Remainder of 2021

$
287

2022

2,050

2023

2,123

2024

2,195

2025

2,272

Thereafter

42,091

Total minimum lease payments

$
51,018

~~Indemnification~~

1611

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of June 30, 2022, the weighted average incremental borrowing rate used to measure operating lease liabilities was 6.1%. Cash paid for amounts included in the measurement of operating lease liabilities was $705,000 and $199,000 for the three months ended June 30, 2022 and 2021 and $1,419,000 and $398,000 for the six months ended June 30, 2022 and 2021, respectively.

Total lease cost for the three and six months ended June 30, 2022, are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Operating lease cost	$	1,057	$	186	$	2,100	$	371
Short-term lease cost		30		23		45		34
Variable lease cost		157		81		296		123
Total lease costs	$	1,244	$	290	$	2,441	$	528

Future minimum lease payments under operating leases liabilities as of June 30, 2022 are as follows (in thousands):


Year ending December 31:	Amount
Remainder of 2022	$	1,124
2023		2,163
2024		2,234
2025		2,295
2026		2,361
Thereafter		39,536
Total lease payments		49,713
Less imputed interest		(21,052	)
Total lease liabilities		28,661
Less: lease liabilities - current portion		(465	)
Lease liabilities - noncurrent portion	$	28,196

The following are future minimum lease payments owed for the Basel lease, which has not yet commenced as of June 30, 2022 (in thousands):


Year ending December 31:	Amount
Remainder of 2022	$	90
2023		284
2024		293
2025		300
2026		308
Thereafter		1,797
Total lease payments	$	3,072

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Legal Proceedings

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

From time to time, the Company may become involved in legal proceedings arising out of the ordinary course of its business. Management is currently not aware of any matters that will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Sublicense Agreement

In August 2019, the Company entered into a sublicense agreement of intellectual property rights related to the tubular braiding for the non-surgical removal of clots and treatment of embolism and thrombosis in human vasculature other than carotid arteries, coronary vasculature and cerebral vasculature. Under the sublicense agreement, the Company is required to pay an ongoing quarterly administration fee, which amounted to $29,000 for the three months ended June 30, 2022 and 2021 and $58,000 for the six months ended June 30, 2022 and 2021. Additionally, the Company is obligated to pay an ongoing royalty ranging from 1% to 1.5% of the net sales of products utilizing the licensed intellectual property, subject to a minimum royalty quarterly fee of $1,000. The Company recorded royalty expense to cost of goods sold of $0 and $195,000 for the three months ended June 30, 2022 and 2021, respectively, and $212,000 and $385,000 for the six months ended June 30, 2022 and 2021, respectively.

Licensed Technology

In December 2021, the Company entered into an exclusive, perpetual, royalty free, technology license agreement (the “Licensed Technology”) for use in a particular research and development project that requires total payments of approximately $4.2 million payable in three installments due in 2022 and 2023. The Company accounted for the purchase as a research and development expense in December 2021 as it was determined to have no future alternative uses. As of June 30, 2022, the outstanding balance was approximately $2.5 million, $1.2 million of which was included in accrued expenses and other current liabilities, and the remaining $1.3 million was included in other long-term liability on the consolidated balance sheets.

8. Concentrations

The Company’s revenue is derived primarily from the sale of catheter-based therapeutic devices in the United States. For the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, there were 0 customers that accounted for more than 10% of the Company’s revenue. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there were 0 customers that accounted for more than 10% of the Company’s accounts receivable.

NaN vendor accounted for more than 10% of the Company’s purchases for the three and six months ended June 30, ~~2021~~2022 and ~~2020.~~2021. There were 0 vendors that accounted for more than 10% of the Company’s accounts payable as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

9. Related Party

~~Licensed Patents~~

Certain stockholders of the Company are stockholders of Inceptus Medical, Inc. (“Inceptus”). Beginning in September 2011, the Company engaged Inceptus to develop the technology that has led to certain components used in the Company’s products, the FlowTriever and the ClotTriever systems. In October 2014, the Company, through a license agreement with Inceptus, obtained an exclusive, perpetual, fully paid-up irrevocable, worldwide license to the patents, patent applications and technology, including the right to grant and authorize sublicenses, to make, have made, use, sell, offer for sale, import and otherwise exploit products in connection with the licensed technology. The licensed technology is any and all technology involving a high wire count braid, excluding the tubular braiding subject to the sublicense agreement described below.

~~Sublicense Agreement~~

In August 2019, the Company entered into a sublicense agreement with Inceptus, pursuant to which Inceptus granted to the Company a non-transferable, worldwide, exclusive sublicense to its licensed intellectual property rights related to the tubular braiding for the non-surgical removal of clots and treatment of embolism and thrombosis in human vasculature other than carotid arteries, coronary vasculature and cerebral vasculature; such rights were originally granted to Inceptus pursuant to an intellectual property license agreement with Drexel University, or Drexel License, under which Drexel retained certain rights to use, and to permit other non-commercial entities to use, the sublicensed intellectual property for educational and non-commercial research purposes. The Company is obligated to comply with, and to avoid acts or omissions that would reasonably be likely to cause a breach of the Drexel License. The sublicense agreement will continue until the expiration of the sublicensed patent, unless terminated earlier pursuant to the terms of the agreement. The Company may terminate the sublicense agreement at any time by providing prior written notice.

~~Under the sublicense agreement, the Company is required to pay an ongoing quarterly administration fee, which amounted to $29,000~~ ~~and $29,000~~ ~~for the three months ended June 30, 2021 and 2020 and $58,000~~ ~~and $47,000~~ ~~for the six months ended June 30, 2021 and 2020, respectively. Additionally, the Company is obligated to pay Inceptus an ongoing royalty ranging from~~ 1~~% to~~ ~~1.5% of the net sales of products utilizing the licensed intellectual property, subject to a minimum royalty quarterly fee of $1,000. The Company recorded royalty expense of $195,000~~ ~~and $95,000~~ ~~for the three months ended June 30, 2021 and 2020, and $385,000~~ ~~and $186,000~~ ~~for the six months ended June 30, 2021 and 2020, respectively.~~

~~Other Services~~

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

The Company utilizes MRI The Hoffman Group (“MRI”), a recruiting services company owned by the brother of the Chief Executive Officer and President and member of the board of directors of the Company. The Company paid for recruiting services provided by MRI amounting to $~~129,000~~118,000 and $~~170,000~~129,000 for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021 and $~~263,000~~192,000 and $~~249,000~~263,000 for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, which was included in operating expenses on the condensed consolidated statements of operations. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was 0 balance payable to MRI.

11. Stockholder’s Equity

~~Redeemable Convertible Preferred~~Common Stock

In ~~connection with~~March 2022, the ~~IPO in May 2020, the~~Company completed an underwritten public offering (“Follow-On Offering”) of ~~31,968,570~~2,300,000 shares of ~~redeemable convertible preferred~~its common stock, ~~then outstanding were converted into~~including ~~31,968,570~~300,000 shares sold pursuant to the underwriters’ exercise of ~~common stock.~~

~~Warrants~~

~~There were~~ their option to purchase additional shares, at a public offering price of $081.00 ~~warrants outstanding as of June 30, 2021 and December 31, 2020.~~per share. The Company ~~had previously issued common stock warrants~~received net proceeds of approximately $174.4 million, after deducting underwriters’ discounts and ~~redeemable convertible preferred stock warrants (“Preferred Warrants”) allowing the holders to obtain shares~~commissions of ~~redeemable convertible preferred stock that contain a liquidation preference. Because this liquidation preference may have been payable in cash upon a change in control~~$11.2 million and offering costs of the Company or upon exercise of redemption rights and because such a transaction was considered to be outside of the control of the Company, the Preferred Warrants were classified as liabilities in the Company’s consolidated balance sheets and were presented at their estimated fair values at each reporting date. On the completion of the IPO, all the outstanding Preferred Warrants were converted into warrants to purchase an aggregate of $~~256,588~~0.7 ~~shares of common stock, which resulted in the reclassification of the convertible preferred stock warrant liabilities to additional paid-in capital.~~

~~In June 2020,~~ ~~27,810~~ ~~common stock warrants were exercised for cash. In addition,~~ ~~77,030~~ ~~warrants were net exercised and the Company issued~~ ~~74,723~~ ~~shares of common stock. In November 2020, the remaining~~ ~~179,558~~ ~~warrants were net exercised and the Company issued~~ ~~174,776~~ ~~shares of common stock.~~

~~The fair value of the Preferred Warrants was determined using the Black Scholes option pricing model with the following assumptions:~~

May 21, 2020 (1)

Series A

Series B

Expected volatility

51.10
%

50.00
%
Preferred stock fair value (per share)

$
19.00

$
19.00

Dividend yield

0.00
%

0.00
%
Risk free interest rates

0.17
%

0.53
%
Expected remaining term in years

1.55

5.94-6.86

~~(1) Date the Company's registration statement on Form S-1 was declared effective.~~million.

12. Equity Incentive Plans

~~2011 Equity Incentive Plan and 2020 Incentive Award Plan~~

In 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”) to permit the grant of share-based awards, such as stock grants and incentives and non-qualified stock options to employees, directors, consultants and advisors. The Board has the authority to determine to whom awards will be granted, the number of shares, the term and the exercise price.

In March 2020, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan”), which became effective in connection with the IPO. As a result, the Company may not grant any additional awards under the 2011 Plan. The 2011 Plan will continue to govern outstanding equity awards granted thereunder. The Company has initially reserved 3,468,048 shares of common stock for the issuance of a variety of awards under the 2020 Plan, including stock options, stock appreciation rights, awards of restricted stock and awards of restricted stock units. In addition, the number of shares of common stock reserved for issuance under the 2020 Plan will automatically increase on the first day of January for a period of up to ten years, commencing on January 1, 2021, in an amount equal to 3% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors. As of June 30, ~~2021,~~2022, there were ~~4,738,162~~5,753,764 shares available for issuance under the 2020 Plan, including ~~1,477,548~~1,509,404 additional shares reserved effective January 1, ~~2021.~~2022.

2011 Equity Incentive Plan

Stock Options

A summary of stock option activities under the 2011 Plan for the six months ended June 30, ~~2021~~2022 is as follows (intrinsic value in thousands):

Number of
Awards

Weighted
Average
Exercise
Price

Weighted
Average
Fair Value

Weighted
Average
Remaining
Contractual
Life (in years)

Intrinsic
Value

Outstanding, December 31, 2020

3,436,785

$
1.36

$
0.98

7.76

$
295,331

Exercised

(509,624
)

$
1.13

$
0.87

$
49,258

Cancelled

(22,191
)

$
2.00

$
1.29

$
2,357

Outstanding, June 30, 2021

2,904,970

$
1.39

$
1.00

7.55

$
266,928

Vested and exercisable at June 30, 2021

1,400,775

$
0.98

$
0.73

7.34

$
129,288

Vested and expected to vest at June 30, 2021

2,847,163

$
1.35

$
0.97

7.52

$
261,736


	Number of Awards			Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Life (in years)		Intrinsic Value
Outstanding, December 31, 2021		2,574,354		$	1.43	$	1.02		7.07	$	231,286
Exercised		(551,195	)	$	0.91	$	0.70			$	42,063
Cancelled		(16,513	)	$	2.14	$	1.30			$	1,270
Outstanding, June 30, 2022		2,006,646		$	1.56	$	1.10		6.62	$	133,292
Vested and exercisable at June 30, 2022		1,452,085		$	1.21	$	0.88		6.47	$	96,966
Vested and expected to vest at June 30, 2022		1,986,007		$	1.55	$	1.09		6.62	$	131,956

The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.

~~The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model.~~

Restricted Stock Units

In March 2019, the Company granted, under the 2011 Plan,~~2,867,326~~ restricted stock unit awards (“RSUs”) to certain employees that vest only upon the satisfaction of both a time-based service condition and a performance-based condition. The performance-based condition is a liquidity event requirement that was satisfied on the effective date of the IPO of the Company’s common stock. The RSUs are subject to a four-year cliff vesting and will vest in March 2023. If the RSUs vest, the actual number of RSUs that will vest will be dependent on the per share value of the Company’s common stock, which is a market-based condition, determined based on the average closing price of the Company’s common stock for the three-month period immediately preceding the satisfaction of the service condition.

There was 0 activity related to RSUs under the 2011 Plan during the three and six months ended June 30, 2022. As of June 30, 2022 and December 31, 2021, the outstanding balance of RSU under 2011 Plan was 2,712,674 with a weighted average fair value at the time of grant of $0.17.

2020 Incentive Award Plan

Restricted Stock Units

RSUs are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line vesting and a 25% one-year cliff or over a three-year period in equal amounts on a quarterly basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

RSU ~~activity~~activities under the 2020 Plan is set forth ~~below (intrinsic value in thousands):~~below:

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements


	Number of Awards			Weighted Average Fair Value
Outstanding, December 31, 2021		611,205		$	88.34
Granted		506,331			74.77
Vested		(123,745	)		84.15
Cancelled		(26,334	)		83.21
Outstanding, June 30, 2022		967,457		$	81.91

The total fair value of RSUs vested under both the 2011 Plan and 2020 Plan was $6.3 million and $3.5 million for the three months ended June 30, 2022 and 2021, and $10.8 million and $3.7 million for the six months ended June 30, 2022 and 2021, respectively.

Number of
Awards

Weighted
Average
Fair Value

Intrinsic
Value

Outstanding, December 31, 2020

222,564

$
58.86

$
19,428

Granted

325,570

$
111.05

$
30,783

Vested

(37,887
)

$
52.19

$
132

Cancelled

(15,545
)

$
72.59

$
524

Outstanding, June 30, 2021

494,702

$
88.08

$
52,748

Total compensation costs as of June 30, ~~2021~~2022 related to all non-vested awards to be recognized in future periods was $~~41,833,000~~68.0 million and is expected to be recognized over the remaining weighted average period of~~3.4 years (See Note 16)~~ 3.0. years.

In May 2020, the Company adopted the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective on the date the ESPP was adopted by the Company’s board of directors. The Company has initially reserved 990,870 shares of common stock for purchase under the ESPP. Each offering to the employees to purchase stock under the ESPP will begin on each August 1 and February 1 and will end on the following January 31 and July 31, respectively. The first offering period began on August 1, 2020 and ~~ended~~ends on January 31, 2021. On each purchase date, which falls on the last date of each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of (1) the fair market value per share of the common stock on the offering date or (2) the fair market value of the common stock on the purchase date. The occurrence and duration of offering periods under the ESPP are subject to the determinations of the Company’s Compensation Committee, in its sole discretion.

As of June 30, ~~2021,~~2022, total of ~~36,881~~139,857 shares of common stock, including 54,808 shares purchased in January 2022, have been purchased under the ESPP, and a total of ~~1,446,505~~1,846,664 shares of common stock, including 503,135 additional shares effective January 1, 2022, are reserved for future purchases.

13. Income Taxes

The following table reflects the Company’s provision ~~(benefit)~~ for income taxes for the periods indicated (in thousands):

2116

Inari Medical, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Income (loss) before income taxes

$
4,080

$
(3,804
)

$
11,747

$
308

Provision for income taxes

12

0

210

0

Net income (loss)

$
4,068

$
(3,804
)

$
11,537

$
308

Provision for income taxes as a percentage
of income (loss) before income taxes

0.3
%

0.0
%

1.8
%

0.0
%


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
(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
Provision for income taxes as a percentage of (loss) income before income taxes		14.0	%		0.3	%		10.4	%		1.8	%

The ~~Company’s effective tax rate was~~ ~~0.3% and~~ 0~~% for the three months ended June 30, 2021 and 2020, and 1.8% and~~ 0~~% for the six months ended June 30, 2021 and 2020, respectively.~~ ~~The Company’s~~ effective tax rate for all periods is driven by pre-tax ~~income,~~income/(loss), business credits, equity compensation, state taxes, and the change in valuation allowance. The ~~Company recognized an~~Company's income tax provision for interim reporting periods has historically been calculated by applying an estimate of $~~12,000~~ ~~and $210,000~~the annual effective income tax rate for the ~~three~~full year to "ordinary" income (loss) for the interim reporting period, which is calculated as pre-tax income (loss) excluding unusual and infrequently occurring discrete items. For the six months ended June 30, ~~2021, respectively. There was~~ 02022, we calculated the income tax provision ~~(benefit)~~using a discrete effective income tax rate method as if the interim year to date period was an annual period. We determined that since normal changes in estimated "ordinary" income (loss) would result in disproportionate changes in the estimated annual effective income tax rate, the Company's historical method of calculating its income tax provision for interim reporting periods would not provide a reliable estimate for the ~~three and~~ six months ended June 30, ~~2020.~~2022.

For tax years beginning after December 31, 2021, certain research and development costs are required to be capitalized and amortized over a five year period under the Tax Cuts and Jobs Act, which was signed into law December 22, 2017. The Company has reviewed and incorporated this change, which will impact the expected U.S. federal and state tax expense and cash taxes to be paid for the tax year ending December 31, 2022.

Valuation Allowance

ASC 740 requires that the tax benefit of net operating losses, or NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryback or carryforward periods. As of December 31, ~~2020,~~2021, the Company maintained a full valuation allowance of $~~11.9~~17.9 million against the Company's net deferred tax assets. As of June 30, ~~2021,~~2022, the Company believes that the deferred tax assets are currently not considered more likely than not to be realized and, accordingly, has maintained a full valuation allowance against its deferred tax assets. The Company will continue to assess its position on the realizability of its deferred tax assets, until such time as sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Any release of the valuation allowance ~~will~~may result in a material benefit recognized in the quarter of release.

Uncertain Tax Positions

The Company has recorded uncertain tax positions related to its federal and California research and development credit carryforwards. NaN interest or penalties have been recorded related to the uncertain tax positions due to credit carryforwards that are available ~~NOLs~~ to offset the uncertain tax positions. It is not expected that there will be a significant change in uncertain tax position in the next 12twelve months. The Company is subject to U.S. federal and state income tax as well as to income tax in ~~multiple state jurisdictions, and~~ various foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no tax examinations in progress. The statute of limitations for tax years ended after December 31, ~~2015~~2016 and December 31, ~~2016~~2017 are open for state and federal tax purposes, respectively.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 ("the Act"), was enacted on December 27, 2020. It was a response to continued market volatility and instability resulting from the coronavirus pandemic and includes provisions to support businesses in the form of loans, grants, and tax changes, among other types of relief. The Company has reviewed and incorporated the income tax changes included in the Act, including the deductibility of meals expenses previously not deductible for tax purposes. The Company does not believe there will be a material effect on the its income tax provision. The Company currently does not expect to apply for loans or grants expanded by the Act.

14. Retirement Plan

In December 2017, the Company adopted the Inari Medical, Inc. 401(k) Plan which allows eligible employees after one month of service to contribute pre-tax and Roth contributions to the plan, as allowed by law. The plan assets are held by Vanguard and the plan administrator is Ascensus Trust Company. Beginning in January 2021, the Company contributes a $1.00 match for every $1.00 contributed by a participating employee up to the greater of $3,000 or 4% of eligible compensation under the plan, with such Company's contributions becoming fully vested immediately. ~~For~~Matching contribution expense was $2.7 million and $0.9 million for the three months ended June 30, 2022 and 2021, and $4.4 million and $1.8 million for the six months ended June 30, 2022 and 2021, respectively. The Company recorded an out-of-period adjustment in the second quarter of 2022 resulting in additional matching contribution expense of $1.0 million and $0.8 million for the three and six months ended June 30, 2022, respectively. The out-of-period adjustment was not considered material to the fiscal 2021 ~~the Company recognized $921,000~~ ~~and $1,759,000~~ ~~in matching contributions expense.~~or fiscal 2022 annual consolidated financial statements.

15. Net Income (Loss) Per Share

The components of net income per share are as follows:

~~Inari Medical, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~


	Three Months Ended June 30,					Six Months Ended June 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020			2021		2020		2022			2021		2022			2021
Numerator:
Net income (in thousands)	$	4,068	$	(3,804	)	$	11,537	$	308
Net (loss) income (in thousands)										$	(10,187	)	$	4,068	$	(13,316	)	$	11,537
Denominator:
Weighted average number of common shares outstanding - basic		49,669,652		24,295,900			49,512,800		15,339,755		53,183,767			49,669,652		52,075,399			49,512,800
Common stock equivalents from convertible preferred stock		0		0			0		25,118,162
Common stock equivalents from outstanding common stock options		2,940,337		0			3,057,128		3,663,793		0			2,940,337		0			3,057,128
Common stock equivalents from unvested RSUs		2,947,918		0			3,054,465		2,840,720		0			2,947,918		0			3,054,465
Common stock equivalents from ESPP		3,233		0			6,924		0		0			3,233		0			6,924
Common stock equivalents from outstanding warrants		0		0			0		160,001
Common stock equivalents from restricted stock		33,876		0			33,876		239,861		0			33,876		0			33,876
Weighted average number of common shares outstanding - diluted		55,595,016		24,295,900			55,665,193		47,362,292		53,183,767			55,595,016		52,075,399			55,665,193
Net income (loss) per share:
Net (loss) income per share:
Basic	$	0.08	$	(0.16	)	$	0.23	$	0.02	$	(0.19	)	$	0.08	$	(0.26	)	$	0.23
Diluted	$	0.07	$	(0.16	)	$	0.21	$	0.01	$	(0.19	)	$	0.07	$	(0.26	)	$	0.21

The following ~~instruments were~~outstanding potentially dilutive common stock equivalents have been excluded ~~for purposes of calculating weighted average common share equivalents in~~from the ~~computation~~calculation of diluted net loss per share for the three and six months ended June 30, ~~2020 as~~2022 due to their ~~effect would have been anti-dilutive:~~anti-dilutive effect:


	Three and Six Months Ended June 30, ~~2020~~2022
~~Convertible preferred stock~~		~~18,267,754~~
Common stock options		2,006,646	~~4,154,153~~
RSUs		3,680,131	~~2,971,864~~
~~Restricted stock subject to future vesting~~ESPP		10,404	~~239,861~~
~~Common stock warrants~~		~~179,558~~
		5,697,181	~~25,813,190~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, ~~2020,~~2021, included in our Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q.

We are a ~~commercial-stage~~ medical device company ~~focused on developing products~~with a mission to treat and transform the lives of patients suffering from venous and other diseases. Our ~~primary~~current product ~~offering consists~~offerings consist of two minimally-invasive, novel catheter-based mechanical thrombectomy ~~devices. We~~systems, which are purpose-built ~~our products~~ for the specific ~~characteristics~~characteristic of the venous system and the treatment of the two distinct manifestations of venous thromboembolism, or VTE –- deep vein thrombosis, or DVT, and pulmonary ~~embolism.~~embolism, or PE. Our ClotTriever product is FDA-cleared for the treatment of ~~deep vein thrombosis, or~~ DVT. Our FlowTriever product is the first thrombectomy system FDA-cleared for the treatment of ~~pulmonary embolism, or~~ PE and is also FDA-cleared for clot in transit in the right atrium.

We believe the best way to treat VTE and improve the quality of life of patients suffering from this disease is to safely and effectively remove the blood clot. With that in mind, we designed and purpose-built our ClotTriever and FlowTriever ~~products~~systems. The ClotTriever is a mechanical thrombectomy system designed to core, capture and remove large clots from large vessels and is used to treat DVT. The FlowTriever is a large bore catheter-based aspiration and mechanical thrombectomy system designed to remove large clots from large vessels ~~and~~to treat PE. Both systems are designed to eliminate the need for thrombolytic drugs. ~~We believe our products are transformational and could be the catalyst to drive an evolution of treatment for venous diseases, establishing our products as the standard of care for DVT and PE.~~

We believe our ~~venous-focused~~mission-focused and highly-trained commercial organization provides a significant competitive advantage. Our most important relationships are between our sales representatives and our treating physicians, which include interventional cardiologists, interventional radiologists and vascular surgeons. We recruit sales representatives who have substantial and applicable medical device and/or sales experience. Our front-line sales representatives typically attend procedures, which puts us at the intersection of the patients, products and physicians. We have developed systems and processes to harness the information gained from these relationships and we leverage this information to rapidly iterate products, introduce and execute physician education and training programs and scale our sales organization. We market and sell our products to hospitals, which are reimbursed by various third-party payors. ~~We have dedicated meaningful resources to building a direct sales force in the United States, and we continue to expand our sales organization through additional sales representatives and territories.~~

~~On May 27, 2020,~~In March 2022, we completed ~~our IPO, which resulted in~~an underwritten public offering, or the ~~issuance and sale~~Follow-On Offering, of ~~9,432,949~~2,300,000 shares of common stock, ~~including 1,230,384 shares sold pursuant to the exercise of the underwriters’ over-allotment option,~~ at ~~the IPO~~a price of ~~$19.00~~$81.00 per share. We received net proceeds of approximately ~~$163.0~~$174.4 million, ~~from the IPO,~~ after deducting underwriters’ discounts and commissions ~~of $12.6 million~~ and offering ~~costs of $3.7 million.~~costs.

Prior to our IPO, our primary sources of capital were private placements of preferred stock, debt financing arrangements and revenue from sales of our products. Since inception, we had raised a total of approximately $54.2 million in net proceeds from private placements of preferred stock. As of June 30, ~~2021,~~2022, we had cash, cash equivalents, and short-term ~~investment~~investments of ~~$176.1~~$330.5 million, no long-term debt outstanding and an accumulated deficit of ~~$15.9~~$30.9 million.

For the three months ended June 30, ~~2021,~~2022, the Company generated ~~$63.5~~$92.7 million in revenues with a gross margin of 88.8% and net loss of $10.2 million, as compared to revenues of $63.5 million with a gross margin of 92.4% and net income of $4.1 million ~~as compared to revenues of $25.4 million with a gross margin of 86.3% and net loss of $3.8 million~~ for the three months ended June 30, ~~2020.~~2021.

For the six months ended June 30, ~~2021,~~2022, the Company generated ~~$120.9~~$179.5 million in revenues with a gross margin of 88.7% and net loss of $13.3 million, as compared to revenues of $120.9 million with a gross margin of 92.2% and net income of $11.5 million ~~as compared to revenues of $52.3 million with a gross margin of 88.2% and net income of $0.3 million~~ for the six months ended June 30, ~~2020.~~2021.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, was identified in Wuhan, China. Since then, SARS-CoV-2, and the resulting disease, COVID-19, has spread to most countries, including all 50 states in the United States. The global healthcare system continues to face an unprecedented challenge as a result of the COVID-19 situation and its impact. COVID-19 has had and may continue to have an adverse impact on aspects of our ~~Company and~~ business, including the demand for our products, ~~our~~ operations, and ~~the~~ ability to research and develop and bring ~~to market~~ new products and ~~services.~~services to market.

In response to the pandemic, in March 2020, many governmental authorities suspended or canceled elective, specialty and other procedures and appointments, and some states and countries issued “stay at home” orders limiting non-essential activities, travel and business operations. These orders significantly decreased the number of procedures performed using our products ~~during March and April 2020~~ ~~and otherwise negatively impacted our operations.~~ In response to the impact of COVID-19, we implemented a variety of measures to help manage through the impact and position us to ~~resume~~keep operations ~~quickly and efficiently once these restrictions were lifted. The results for the first half of 2021 reflect some recovery from the declines we experienced in the first half of 2020.~~running efficiently. However, with ~~cases continuing~~hospitals facing staff or other resource constraints, to ~~resurge in certain areas, and hospitals at capacity in some instances due to non-COVID-19 treatments, to~~ the

extent individuals and hospital systems de-prioritize, delay or cancel deferrable medical procedures, our business, cash flows, financial condition and results of operations may continue to be negatively affected.

In addition, COVID-19 has strained hospital systems around the world, resulting in adverse financial impacts to those systems, which has resulted in and may continue to result in reduced expenditures for the products we provide and may adversely affect the collectability of our current and future accounts receivable balance. We continue to actively monitor the COVID-19 situation and its impact.

~~While we are encouraged by our first half of the year results, we are aware that the~~The actual and perceived impact of COVID-19 is ~~changing~~still evolving and cannot be predicted. AsAs a result, we cannot assure you that our recent procedure volumes are indicative of future results or that we will not experience additional negative impacts associated with COVID-19 or staffing shortages, which could be significant. We continue to focus our efforts on the health and safety of patients, healthcare providers and employees, while executing our mission of transforming lives of ~~VTE~~ patients. While we expect the COVID-19

pandemic may continue to negatively impact ~~2021~~2022 performance, we believe the long-term fundamentals remain strong and we will continue to effectively manage through these challenges.

We regularly review various operating and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions. We believe the number of procedures performed to treat DVT and PE using our products is an indicator of our ability to drive adoption and generate revenue. We believe this is an important metric for our business; however, we anticipate that additional metrics may become important as our business grows. The following table lists the number of procedures performed in each of the three-month periods as indicated:

We currently derive substantially all our revenue from the sale of our ClotTriever and FlowTriever ~~products~~systems directly to hospitals primarily in the United States. Our customers typically purchase an initial stocking order of our products and then reorder replenishment ~~products~~ as procedures are performed. ~~No single customer accounted for 10% or more of our revenue during the three and six months ended June 30, 2021 and 2020.~~ We expect our revenue to increase in absolute dollars as we expand our sales organization and sales territories, add customers, expand the base of physicians that are trained to use our products, expand awareness of our products with new and existing customers and as physicians perform more procedures using our products. Revenue for ClotTriever and FlowTriever ~~products~~systems as a percentage of total revenue is as follows:

~~For~~Other than the accounting policy changes discussed in "Note 2 - Summary of Significant Accounting Policies" to our condensed consolidated financial statements, which is included in "Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)", there have been no significant changes in our critical accounting policies during the six months ended June 30, ~~2021, our blended revenue per procedure averaged approximately $9,000,~~2022, as compared to ~~$9,100~~the critical accounting policies disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the ~~six months~~year ended ~~June 30, 2020, respectively.~~

~~We manufacture and/or assemble all our products at our facility in Irvine, California. Cost of goods sold consists primarily of~~December 31, 2021, filed with the cost of raw materials, components, direct labor and manufacturing overhead. Overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management, including stock-based

compensation. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalty expense. Shipping costs billed to customers are reported as a reduction of cost of goods sold. We expect cost of goods sold to increase in absolute dollars as our revenue grows and more of our products are sold; however, we also expect to realize opportunities to increase operating leverage in our manufacturing operations.

We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, including average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, headcount and cost-reduction strategies. Our gross margin could fluctuate from quarter to quarter as we introduce new products, adopt new manufacturing processes and technologies, and as we expand internationally.

Treatments using the FlowTriever may involve one or more Triever aspiration catheters and one or more FlowTriever catheters. We charge customers the same price for each FlowTriever procedure, regardless of the number of components used. As a result, changes in the number of components used, the cost of these components and the introduction of additional components can impact our gross margin.

Research and development, or R&D, expenses consist primarily of engineering, product development, clinical studies to develop and support our products, regulatory expenses, and other costs associated with products that are in development. These expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation and an allocation of facility overhead expenses. Additionally, R&D expenses include costs associated with our clinical trials and registries, including clinical study design, clinical study site initiation and study costs, data management, and internal and external costs associated with our regulatory compliance, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings. We expense R&D costs as incurred. We expect R&D expenses as a percentage of revenue to vary over time dependingSEC on ~~the level and timing of our new product development efforts, as well as our clinical development, clinical trials and registries and other related activities.~~

Selling, general and administrative, or SG&A, expenses consist primarily of compensation for personnel, including stock-based compensation, related to selling and marketing functions, physician education programs, commercial operations and analytics, finance, information technology and human resource functions. Other SG&A expenses include sales commissions, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, physician training, professional services fees (including legal, audit and tax fees), insurance costs, general corporate expenses and facilities-related expenses. We expect SG&A expenses to continue to increase in absolute dollars as we expand our sales and marketing organization and infrastructure to both drive and support the anticipated growth in revenue and due to additional legal, accounting, insurance and other expenses associated with being a public company.

~~Interest income consists primarily of interest income earned on our cash, cash equivalents and short-term investments.~~

Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the amortization of debt discount and issuance costs associated with our indebtedness.

Change in fair value of warrant liabilities consists of gains and losses resulting from the remeasurement of the fair value of our preferred stock warrant liabilities at each balance sheet date. Upon the closing of our IPO, our outstanding preferred stock warrants automatically converted into warrants to purchase shares of our common stock. At such time, the final fair value of the warrant liabilities was reclassified to stockholders’ equity (deficit). We will no longer record any related periodic fair value adjustments.

The following table sets forth the components of our unaudited condensed consolidated statements of operations in dollars and as percentage of revenue for the periods presented (dollars in thousands):


	Three Months Ended June 30,															Three Months Ended June 30,
	2021			%			2020			%			Change $			2022			%			2021			%			Change $
Revenue	$	63,453			100.0	%	$	25,392			100.0	%	$	38,061		$	92,744			100.0	%	$	63,453			100.0	%	$	29,291
Cost of goods sold		4,814			7.6	%		3,487			13.7	%		1,327			10,347			11.2	%		4,814			7.6	%		5,533
Gross profit		58,639			92.4	%		21,905			86.3	%		36,734			82,397			88.8	%		58,639			92.4	%		23,758
Operating expenses:
Research and development		11,630			18.3	%		3,628			14.3	%		8,002			18,569			20.0	%		11,630			18.3	%		6,939
Selling, general and administrative		42,897			67.6	%		18,880			74.4	%		24,017			73,156			78.9	%		42,897			67.6	%		30,259
Total operating expenses		54,527			85.9	%		22,508			88.7	%		32,019			91,725			98.9	%		54,527			85.9	%		37,198
Income (loss) from operations		4,112			6.5	%		(603	)		(2.4	%)		4,715			(9,328	)		(10.1	%)		4,112			6.5	%		(13,440	)
Other income (expense)
Interest income		35			0.1	%		146			0.6	%		(111	)		214			0.2	%		35			0.1	%		179
Interest expense		(74	)		(0.1	%)		(463	)		(1.8	%)		389			(73	)		(0.1	%)		(74	)		(0.1	%)		1
Change in fair value of warrant liabilities		—			0.0	%		(2,884	)		(11.4	%)		2,884
Other expenses		7			0.0	%		—			0.0	%		7
Other income (expense)																	252			0.3	%		7			0.0	%		245
Total other expenses, net		(32	)		0.0	%		(3,201	)		(12.6	%)		3,169			393			0.4	%		(32	)		0.0	%		425
Income (loss) before income taxes	$	4,080			6.5	%	$	(3,804	)		(15.0	%)	$	7,884		$	(8,935	)		(9.7	%)	$	4,080			6.5	%	$	(13,015	)

Revenue. Revenue increased ~~$38.1~~$29.3 million, or ~~149.9%~~46.2%, to $92.7 million during the three months ended June 30, 2022, compared to $63.5 million during the three months ended June 30, ~~2021, compared to $25.4 million during the three months ended June 30, 2020.~~2021. The increase in revenue was due primarily to an increase in the number of product offerings and the number of units sold as we expanded our sales territories, opened new accounts and achieved deeper penetration of our products ~~sold. Revenue for~~into existing accounts.

Cost of Goods Sold. Cost of goods sold increased $5.5 million, or 114.9%, to $10.3 million during the three months ended June 30, ~~2020 was also negatively impacted by a rapid deceleration in the number of products sold due to the COVID-19 pandemic.~~

~~Cost of Goods Sold and Gross Margin. Cost of goods sold increased $1.3 million, or 38.1%,~~2022, compared to $4.8 million during the three months ended June 30, ~~2021, compared to $3.5 million during the three months ended June 30, 2020.~~2021. This increase was primarily due to the increase in the number of products sold and additional manufacturing overhead costs incurred as we invested significantly in our new facility and operational infrastructure to support ~~anticipated future~~our growth.

Gross Margin. Gross margin for the three months ended June 30, ~~2021 increased~~2022 decreased to ~~92.4%~~88.8%, compared to ~~86.3%~~92.4% for the three months ended June 30, ~~2020,~~2021, primarily due ~~primarily~~ to ~~$1.1 million~~a decrease in ~~idle production capacity costs associated with the COVID-19 pandemic recognized in 2020, combined with improved~~ operating leverage due to the expanded footprint of our manufacturing capacity and ~~a change in product mix.~~the addition of new products to our FlowTriever per procedure pricing model.

Research and Development Expenses. R&D expenses increased ~~$8.0~~$7.0 million, or ~~220.6%~~59.7%, to $18.6 million during the three months ended June 30, 2022, compared to $11.6 million during the three months ended June 30, ~~2021, compared to $3.6 million during the three months ended June 30, 2020.~~2021. The increase in R&D expenses was primarily due to increases of ~~$4.1~~$5.1 million of personnel-related expenses, ~~$1.5~~$1.0 million in materials and supplies, ~~$1.0~~and $0.5 million of clinical ~~study~~ and ~~registry~~regulatory expenses, ~~and $0.8 million in professional fees,~~ in support of our growth drivers to ~~increase our~~develop new ~~product pipeline~~products and build the clinical evidence base.

Selling, General and Administrative Expenses. SG&A expenses increased ~~$24.0~~$30.3 million, or ~~127.2%~~70.5%, to $73.2 million during the three months ended June 30, 2022, compared to $42.9 million during the three months ended June 30, ~~2021, compared to $18.9 million during the three months ended June 30, 2020.~~2021. The increase in SG&A costs was primarily due to ~~an increase~~increases of ~~$17.7~~$19.4 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, ~~an increase of $1.7~~$3.2 million in marketing expenses, $2.9 million in travel and related expenses, $2.3 million in professional fees, ~~an increase of $1.7~~and $1.1 million in ~~travel costs, an increase of $0.7 million in sales & marketing, an increase of $0.6 million in depreciation and software license fees, and an increase of $0.5 million in insurance costs.~~facility related expenses, particularly related to our new facility.

Interest Income. Interest income ~~decreased~~increased by ~~$111,000~~$179,000 or ~~76.0%~~511.4% to $214,000 during the three months ended June 30, 2022, compared to $35,000 during the three months ended June 30, ~~2021, compared~~2021. The increase in interest income was primarily due to ~~$146,000~~higher average cash and short-term investments balances during the three months ended June 30, ~~2020. The decrease in interest income was primarily due to lower interest rates during the three months ended June 30, 2021,~~2022 compared to the three months ended June 30, ~~2020.~~2021.

Interest Expense. Interest expense ~~decreased by $389,000 or 84.0%~~was relatively consistent with $73,000 during the three months ended June 30, 2022, compared to $74,000 during the three months ended June 30, ~~2021, compared to $463,000 during the three months ended June 30, 2020. This decrease was primarily due to lower average borrowings under our credit facilities during the three months ended June 30,~~ 2021.

~~Change in Fair Value~~Other Income (Expense). Other income of ~~Warrant Liabilities. We recorded no change in fair value of warrant liabilities~~$252,000 for the three months ended June 30, ~~2021, compared to $2.9 million during the three months ended June 30, 2020.~~

~~Other Expenses.~~ ~~Other expenses of $7,000 for the three months ended June 30, 2021~~2022 consisted primarily of foreign currency ~~losses.~~

Revenue. Revenue increased ~~$68.5~~$58.6 million, or ~~130.9%~~48.5%, to ~~$120.8~~$179.5 million during the six months ended June 30, ~~2021,~~2022, compared to ~~$52.3~~$120.9 million during the six months ended June 30, ~~2020.~~2021. The increase in revenue was due primarily to an increase in the number of product offerings and the number of units sold as we expanded our sales territories, opened new accounts and achieved deeper penetration of our products ~~sold. Revenue for~~into existing accounts.

Cost of Goods Sold. Cost of goods sold increased $10.9 million, or 115.3%, to $20.3 million during the six months ended June 30, ~~2020 was also negatively impacted by a rapid deceleration in the number of products sold due to the COVID-19 pandemic.~~

~~Cost of Goods Sold and Gross Margin. Cost of goods sold increased $3.2 million, or 52.4%,~~2022, compared to $9.4 million during the six months ended June 30, ~~2021, compared to $6.2 million during the six months ended June 30, 2020.~~2021. This increase was primarily due to the increase in the number of products sold and additional manufacturing overhead costs incurred as we invested significantly in our new facility and operational infrastructure to support ~~anticipated future~~our growth.

Gross Margin. Gross margin for the six months ended June 30, ~~2021 increased~~2022 decreased to ~~92.2%~~88.7%, compared to ~~88.2%~~92.2% for the six months ended June 30, ~~2020,~~2021, primarily due to ~~improved~~a decrease in operating leverage due to the expanded footprint of our manufacturing capacity and ~~a change in product mix. Gross margin for~~ the ~~six months ended June 30, 2020 was also impacted by $1.1 million in idle production capacity costs associated with the COVID-19 pandemic.~~addition of new products to our FlowTriever per procedure pricing model.

Research and Development Expenses. R&D expenses increased ~~$13.2~~$14.9 million, or ~~197.8%~~75.3%, to $34.7 million during the six months ended June 30, 2022, compared to $19.8 million during the six months ended June 30, ~~2021, compared to $6.6 million during the six months ended June 30, 2020.~~2021. The increase in R&D expenses was

primarily due to increases of ~~$7.2~~$10.1 million of personnel-related expenses, ~~$2.3~~$2.8 million in materials and supplies, ~~$1.5~~$0.7 million of clinical ~~study~~ and ~~registry~~regulatory expenses, and ~~$1.3~~$0.7 million in ~~professional fees,~~software costs and depreciation expenses, in support of our growth drivers to ~~increase our~~develop new ~~product pipeline~~products and build the clinical evidence base.

Selling, General and Administrative Expenses. SG&A expenses increased ~~$44.5~~$57.1 million, or ~~126.2%~~71.5%, to $136.9 million during the six months ended June 30, 2022, compared to $79.8 million during the six months ended June 30, ~~2021, compared to $35.3 million during the six months ended June 30, 2020.~~2021. The increase in SG&A costs was primarily due to ~~an increase~~increases of ~~$34.3~~$38.6 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, ~~an increase of $2.9~~$4.8 million in travel and related expenses, $4.8 million in marketing expenses, $4.0 million in professional fees, ~~an increase of $2.0~~and $2.3 million in ~~travel costs, an increase of $1.5 million in insurance costs, an increase of $1.1 million in depreciation and software license fees, and increase of $0.9 million in sales & marketing expenses.~~facility related expenses, particularly related to our new facility.

Interest Income. Interest income ~~decreased~~increased by ~~$98,000~~$161,000 or ~~48.8%~~156.3% to $264,000 during the six months ended June 30, 2022, compared to $103,000 during the six months ended June 30, ~~2021, compared~~2021. The increase in interest income was primarily due to ~~$201,000~~higher average cash and short-term investments balances during the six months ended June 30, ~~2020. The decrease in interest income was primarily due to lower interest rates during the six months ended June 30, 2021,~~2022 compared to the six months ended June 30, ~~2020.~~2021.

Interest Expense. Interest expense ~~decreased by $662,000 or 82%~~was relatively consistent with $146,000 during the six months ended June 30, 2022, compared to $147,000 during the six months ended June 30, ~~2021, compared to $809,000~~2021.

Other income (Expenses) Other income of $228,000 for the six months ended June 30, ~~2020. This decrease was primarily due to lower average borrowings under our credit facilities during the six months ended June 30, 2021.~~

~~Change in Fair Value of Warrant Liabilities. We recorded no change in fair value of warrant liabilities for the six months ended June 30, 2021, compared to $3.3 million for the six months ended June 30, 2020.~~

~~Other Expenses.~~ ~~Other expenses of $34,000 for the six months ended June 30, 2021~~2022 consisted primarily of foreign currency ~~losses.~~

To date, our primary sources of capital have been the net proceeds we received through private placements of preferred stock, debt financing agreements, the sale of common stock in our IPO and Follow-On Offering, and revenue from the sale of our products. On May 27, 2020, we completed our IPO, including the underwriters full exercise of their over-allotment option, selling 9,432,949 shares of our common stock at $19.00 per share. Upon completion of our IPO, we received net proceeds of approximately $163.0 million, after deducting underwriting discounts and commissions and offering expenses. In ~~August 2020,~~March 2022, we ~~repaid in full the $30.0~~completed a Follow-On Offering by issuing 2,300,000 shares of common stock, at an offering price of $81.00 per share, for net proceeds to us of approximately $174.4 million ~~of principal owed under the credit facility with Signature Bank.~~after deducting underwriting discounts and commissions and offering expenses. As of June 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$91.3~~$79.7 million, short-term investments of ~~$84.7~~$250.8 million and an accumulated deficit of ~~$15.9~~$30.9 million. In September 2020, we entered into a ~~new~~ revolving Credit Agreement with Bank of America which provides for loans up to a maximum of $30 million. As of June 30, ~~2021,~~2022, we had no principal outstanding under the Credit Agreement and the amount available to borrow was approximately ~~$23.2~~$28.2 million.

Based on our current planned operations, we expect that our cash and cash equivalents, short-term investments and available borrowings will enable us to fund our operating expenses for at least 12 months from the date hereof.

If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements including because of lower demand for our products as a result of the risks described in this Quarterly Report, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our platform technologies or products or grant licenses on terms that are not favorable to us. Additional capital may not be available on reasonable terms, or at all.

The following table summarizes our cash flows for each of the ~~six-month~~ periods indicated (in thousands):

Net cash used in operating activities for the six months ended June 30, 2022 was $12.2 million, consisting primarily of net loss of $13.3 million and a decrease in net operating assets of $16.2 million, offset by non-cash charges of $17.3 million. The decrease in net operating assets was primarily due to decreases in accounts payable and accrued liabilities of $2.2 million due to timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of $3.0 million and a decrease in operating lease liabilities of $0.5 million, coupled with increases in inventories of $5.7 million and accounts receivable of $7.0 million, offset by a decrease in prepaid and other assets of $1.0 million. The non-cash charges primarily consisted of $13.7 million in stock-based compensation expense, $2.3 million in depreciation, and $1.2 million in amortization of the right-of-use assets.

Net cash provided by operating activities for the six months ended June 30, 2021 was $16.1 million, consisting primarily of net income of $11.5 million and non-cash charges of ~~$10.2~~$10.1 million, offset by an increase in net operating assets of $5.6 million. The increase in net operating assets was primarily due to increases in accounts receivable of $3.5 million and inventories of $7.5 million to support the growth of our operations, an increase in prepaid and other assets of $11.3 million primarily from deposits related to Oak Canyon and prepaid insurance, which were partially offset by increases in accounts payable of $7.3 million and accrued liabilities of $9.8 million due to timing of payments and growth of our operations and a decrease in operating lease liabilities of $0.4 million. The non-cash charges primarily consisted of $8.4 million in stock-based compensation, $1.3 million in depreciation, $0.4 million in amortization of the right-of-use assets.

Net cash used in ~~operating~~investing activities for the six months ended June 30, ~~2020~~2022 was ~~$1.8~~$175.4 million, ~~was primarily the results~~consisting of ~~our net income~~$230.8 million purchases of ~~approximately $0.3~~short-term investments, $5.7 million purchases of other investments, and ~~$5.0~~$5.9 million ~~in non-cash items, primarily for depreciation expenses~~purchases of ~~0.6 million, share-based compensation expenses of $1.0 million~~property and ~~loss on change in fair value of warrant liabilities of $3.3 million,~~equipment, offset by ~~an increase in net operating assets~~maturities of ~~$7.2~~short-term investments of $67.0 million. The increase in net operating assets was primarily due to the increases in accounts receivable of $4.1 million, inventories of $1.7 million and prepaid expenses and other current assets of $3.4 million, coupled with a decrease in accounts payable of $0.3 million, offset by an increase in payroll-related accruals, accrued expenses and other liabilities of $2.3 million.

Net cash used in investing activities for the six months ended June 30, 2021 was $40.9 million consisting of $84.7 million purchases of short-term securities coupled with $6.2 million purchases of property and equipment, offset by the maturity of short-term investment of $50.0 million.

~~Net cash used in investing activities for the six months ended June 30, 2020 was $1.4 million, consisting of purchases of property and equipment.~~

Net cash provided by financing activities in the six months ended June 30, 2022 was $174.9 million, consisting of $174.4 million net proceeds from the issuance of common stock in the public offering, net of issuance costs of $11.9 million, $3.4 million proceeds from the issuance of common stock under our employee stock purchase plan and $0.5 million of proceeds from exercise of stock options, offset by $3.4 million of tax payments related to vested RSUs.

Net cash provided by financing activities in the six months ended June 30, 2021 was $1.7 million, consisting of proceeds of $1.9 million in proceeds from the issuance of common stock under our employee stock purchase plan and $0.6 million of proceeds from exercise of stock options, offset by $0.8 million of tax payments related to vested RSUs.

Net cash provided by financing activities in the six months ended June 30, 2020 was $174.4 million, consisting primarily of net IPO proceeds of $164.4 million and net proceeds of $10.0 million received from additional borrowings under the credit facility with Signature Bank.

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the U.S. Securities and Exchange Commission, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

There have been no material changes outside the ordinary course of business to the Company’s contractual obligations from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

There were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 20202021, filed with the ~~exception of the Company’s adoption of Accounting Standards Update No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~("ASC 842"). See the section entitled “Recently Adopted Accounting Pronouncements” within the Company’s Summary of Significant Accounting Policies and Note 7,~~ ~~Commitments and Contingencies~~ ~~for further discussion of the Company’s adoption of ASC 842 and related disclosures.~~SEC on February 23, 2022.

~~We are exposed to certain market risks in the ordinary course of our business, including sensitivities as follows:~~

~~The risk associated with fluctuating interest rates is primarily limited~~There have been no material changes to our ~~debt. As of June 30,~~quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the year ended December 31, 2021, ~~we had repaid in full~~filed with the ~~SB Credit Facility~~SEC on February 23, 2022 under “Part II, Item 7. Quantitative and had no long-term debt outstanding. A hypothetical 10% relative change in interest rates during any of the periods presented would not have had a material impact on our financial statements. We do not currently engage in hedging transactions to manage our exposure to interest rate risk.Qualitative Disclosures about Market Risk.

As of June 30, 2021, our cash, cash equivalents and short-term investments were primarily maintained with two financial institutions in the United States, and our current deposits are likely in excess of insured limits. We do not believe we are exposed to any significant credit risk. Our cash equivalents are invested in highly rated money market funds.

Our accounts receivable primarily relate to revenue from the sale of our products to hospitals and medical centers primarily in the United States. No customer represented 10% or more of our accounts receivable as of June 30, 2021.

Our business is currently primarily conducted in U.S. dollar. Any transactions that may be conducted in foreign currencies are not expected to have a material effect on our results of operations, financial position or cash flows. As we expand internationally, our results of operations and cash flows may become increasingly subject to fluctuations due to changes in foreign currency exchange rates.

Our management, with the participation of our ~~Chief~~Principal Executive Officer and our ~~Chief~~Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended, or the Exchange Act), as of ~~the end of the period covered by this Quarterly Report on Form 10-Q.~~June 30, 2022. Based on ~~that~~such evaluation, our ~~Chief~~Principal Executive ~~Officer~~Office and ~~our Chief~~Principal Financial Officer concluded that, as of June 30, ~~2021, our~~2022, these disclosure controls and procedures were effective to provide reasonable assurance that information ~~we are~~ required to ~~disclose~~be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded,

processed, summarized and reported, ~~within~~with the time ~~periods~~period specified in the ~~SEC's~~SEC rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that ~~such~~ information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our ~~management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.~~management.

Changes in ~~Internal Control Over Financial Reporting~~internal control over financial reporting

~~There~~During the three months ended June 30, 2022, there were no ~~other~~ changes in our internal control over financial reporting ~~identified~~(as defined in ~~connection with the evaluation required by Rule 13a-15(d)~~Rules 13a-15(f) and ~~15d-15(d) of~~15d-15(f) under the Exchange ~~Act~~Act), that ~~occurred during the period covered by this Quarterly Report on Form 10-Q that has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating our disclosure controls and procedures, management recognizes that any control and procedure, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

For a discussion of our potential risks and uncertainties, see the information in Part I, "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020 and Part II, "Part II, Item 1A, Risk Factors" in our Quarterly~~2021. As of the date of this Report, ~~on Form 10-Q for the three months ended March 31, 2021. There~~there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020 or Quarterly Report on Form 10-Q for the three months ended March 31,~~ 2021.


Delaware	45-2902923
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~9 Parker~~6001 Oak Canyon, Suite 100 Irvine, California	92618
(Address of principal executive offices)	(Zip Code)



		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	13
	Condensed Consolidated Balance Sheets	13
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	24
	Condensed Consolidated Statements of ~~Mezzanine Equity and~~ Stockholders’ Equity ~~(Deficit~~)	35
	Condensed Consolidated Statements of Cash Flows	46
	Notes to Unaudited Condensed Consolidated Financial Statements	57
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2419
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3023
Item 4.	Controls and Procedures	3123
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	3225
Item 1A.	Risk Factors	3225
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3225
Item 3.	Defaults Upon Senior Securities	3225
Item 4.	Mine Safety Disclosures	3225
Item 5.	Other Information	3225
Item 6.	Exhibits	3326
Signatures		3427


	June 30, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	91,322		$	114,229
Restricted cash		0			50
Short-term investments		84,744			49,981
Accounts receivable, net		31,497			28,008
Inventories, net		18,112			10,597
Prepaid expenses and other current assets		2,497			2,808
Total current assets		228,172			205,673
Property and equipment, net		10,827			7,498
Restricted cash		0			338
Operating lease right-of-use assets		868			0
Deposits and other assets		13,692			583
Total assets	$	253,559		$	214,092
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		10,319			3,047
Payroll-related accruals		16,041			8,198
Accrued expenses and other current liabilities		4,429			2,593
Operating lease liabilities, current portion		793			0
Total current liabilities		31,582			13,838
Operating lease liabilities, noncurrent portion		156			0
Total liabilities		31,738			13,838
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020		0			0
Common stock, $0.001 par value, 300,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 49,828,829 and 49,251,614 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		50			49
Additional paid in capital		237,764			227,624
Accumulated other comprehensive (loss) income		(107	)		4
Accumulated deficit		(15,886	)		(27,423	)
Total stockholders' equity		221,821			200,254
Total liabilities and stockholders' equity	$	253,559		$	214,092


	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		0			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, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021		0			0
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


	Redeemable Convertible Preferred Stock						Common Stock				Additional Paid In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount			Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance, December 31, 2020		0			0			49,251,614	$	49	$	227,624		$	4		$	(27,423	)	$	200,254
Options exercised for common stock		0			0			296,019		1		380			0			0			381
Issuance of common stock under employee stock purchase plan		0			0			36,881		0		1,882			0			0			1,882
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes		0			0			901		0		(49	)		0			0			(49	)
Share-based compensation		0			0			0		0		3,836			0			0			3,836
Other comprehensive loss		0			0			—		0		0			(162	)		0			(162	)
Net income		0			0			0		0		0			0			7,469			7,469
Balance, March 31, 2021		0			0			49,585,415		50		233,673			(158	)		(19,954	)		213,611
Options exercised for common stock		0			0			213,605		0		193			0			0			193
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes		0			0			29,809		0		(706	)		0			0			(706	)
Share-based compensation		0			0			0		0		4,604			0			0			4,604
Other comprehensive income		0			0			0		0		0			51			0			51
Net income		0			0			0		0		0			0			4,068			4,068
Balance, June 30, 2021		0			0			49,828,829	$	50	$	237,764		$	(107	)	$	(15,886	)	$	221,821


Balance, December 31, 2019		31,968,570		$	54,170			6,720,767	$	7	$	2,061		$	0		$	(41,212	)		(39,144	)
Options exercised for common stock		0			0			58,498		0		22			0			0			22
Share-based compensation		—			0			0		0		495			0			0			495
Net income		0			0			0		0		0			0			4,112			4,112
Balance, March 31, 2020		31,968,570			54,170			6,779,265		7		2,578			0			(37,100	)		(34,515	)
Conversion of preferred stock to common stock upon initial public offering		(31,968,570	)		(54,170	)		31,968,570		32		54,138			0			0			54,170
Issuance of common stock in connection with initial public offering, net of issuance costs of $16.3 million		0			0			9,432,949		9		162,970			0			0			162,979
Conversion and reclassification of preferred stock warrants to common stock warrants upon initial public offering		0			0			0		0		4,486			0			0			4,486
Exercise of common stock warrants		0			0			102,533		0		4			0			0			4
Options exercised for common stock		0			0			76,764		0		45			0			0			45
Share-based compensation		0			0			0		0		505			0			0			505
Net loss		0			0			0		0		0			0			(3,804	)		(3,804	)
Balance, June 30, 2020		0		$	0			48,360,081	$	48	$	224,726		$	0		$	(40,904	)	$	183,870


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	☒	Accelerated filer	☐

Non-accelerated filer	☐	☒	Smaller reporting company	☐

Emerging growth company	☒☐


Year ending December 31:	Amount
Remainder of 2021	$	406
2022		486
2023		34
2024		33
2025		16
Thereafter		0
Total lease payments		975
Less imputed interest		(26	)
Total lease liabilities		949
Less: lease liabilities - current portion		(793	)
Lease liabilities - noncurrent portion	$	156


	May 21, 2020 (1)
	Series A			Series B
Expected volatility		51.10	%		50.00	%
Preferred stock fair value (per share)	$	19.00		$	19.00
Dividend yield		0.00	%		0.00	%
Risk free interest rates		0.17	%		0.53	%
Expected remaining term in years		1.55		5.94-6.86


		~~Six Months Ended June 30, 2021~~
~~Expected term (in years)~~		~~0.5~~
~~Expected volatility~~		~~51.91~~%
~~Dividend yield~~		~~0.00~~%
~~Risk free interest rate~~		~~0.08~~%


	Three Months Ended
Procedures(1)	June 30, 2021		March 31, 2021		Dec 31, 2020		Sept 30, 2020		June 30, 2020
DVT		3,100		2,800		2,400		2,000		1,400
PE		2,800		2,700		2,200		1,700		1,100
		5,900		5,500		4,600		3,700		2,500