☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
March 31, 2023
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 45-2902923 | ||||
(State or other jurisdiction of
| (I.R.S. Employer | ||||
| 92618 | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading
| Name of each exchange on which registered | ||||||||||||
Common stock, $0.001 par value per share | NARI | The Nasdaq Global Select Market |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
Emerging growth company | ☐ |
Table of Contents
Inari Medical, Inc.
|
| June 30, |
|
| December 31, |
| ||
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 |
|
| 0 |
|
|
| 0 |
|
Common stock, $0.001 par value, 300,000,000 shares |
|
| 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 |
|
March 31, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 56,562 | $ | 60,222 | |||||||
Short-term investments in debt securities | 271,884 | 266,179 | |||||||||
Accounts receivable, net | 55,719 | 58,611 | |||||||||
Inventories, net | 36,499 | 32,581 | |||||||||
Prepaid expenses and other current assets | 4,942 | 5,312 | |||||||||
Total current assets | 425,606 | 422,905 | |||||||||
Property and equipment, net | 21,245 | 21,655 | |||||||||
Operating lease right-of-use assets | 50,599 | 50,703 | |||||||||
Deposits and other assets | 9,084 | 8,889 | |||||||||
Total assets | $ | 506,534 | $ | 504,152 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 7,352 | $ | 7,659 | |||||||
Payroll-related accruals | 28,443 | 38,955 | |||||||||
Accrued expenses and other current liabilities | 11,018 | 8,249 | |||||||||
Operating lease liabilities, current portion | 1,527 | 1,311 | |||||||||
Total current liabilities | 48,340 | 56,174 | |||||||||
Operating lease liabilities, noncurrent portion | 31,458 | 30,976 | |||||||||
Total liabilities | 79,798 | 87,150 | |||||||||
Commitments and contingencies (Note 7) | |||||||||||
Stockholders' equity | |||||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | — | — | |||||||||
Common stock, $0.001 par value, 300,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 57,083,716 and 54,021,656 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 57 | 54 | |||||||||
Additional paid in capital | 475,754 | 462,949 | |||||||||
Accumulated other comprehensive (loss) income | (7) | 849 | |||||||||
Accumulated deficit | (49,068) | (46,850) | |||||||||
Total stockholders' equity | 426,736 | 417,002 | |||||||||
Total liabilities and stockholders' equity | $ | 506,534 | $ | 504,152 |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Revenue |
| $ | 92,744 |
|
| $ | 63,453 |
|
| $ | 179,496 |
|
| $ | 120,850 |
|
Cost of goods sold |
|
| 10,347 |
|
|
| 4,814 |
|
|
| 20,314 |
|
|
| 9,437 |
|
Gross profit |
|
| 82,397 |
|
|
| 58,639 |
|
|
| 159,182 |
|
|
| 111,413 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
|
| 18,569 |
|
|
| 11,630 |
|
|
| 34,704 |
|
|
| 19,793 |
|
Selling, general and administrative |
|
| 73,156 |
|
|
| 42,897 |
|
|
| 136,888 |
|
|
| 79,795 |
|
Total operating expenses |
|
| 91,725 |
|
|
| 54,527 |
|
|
| 171,592 |
|
|
| 99,588 |
|
(Loss) income from operations |
|
| (9,328 | ) |
|
| 4,112 |
|
|
| (12,410 | ) |
|
| 11,825 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
| 214 |
|
|
| 35 |
|
|
| 264 |
|
|
| 103 |
|
Interest expense |
|
| (73 | ) |
|
| (74 | ) |
|
| (146 | ) |
|
| (147 | ) |
Other income (expense) |
|
| 252 |
|
|
| 7 |
|
|
| 228 |
|
|
| (34 | ) |
Total other income (expenses) |
|
| 393 |
|
|
| (32 | ) |
|
| 346 |
|
|
| (78 | ) |
(Loss) income before income taxes |
|
| (8,935 | ) |
|
| 4,080 |
|
|
| (12,064 | ) |
|
| 11,747 |
|
Provision for income taxes |
|
| 1,252 |
|
|
| 12 |
|
|
| 1,252 |
|
|
| 210 |
|
Net (loss) income |
| $ | (10,187 | ) |
| $ | 4,068 |
|
| $ | (13,316 | ) |
| $ | 11,537 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency translation adjustments |
|
| (291 | ) |
|
| 57 |
|
|
| (408 | ) |
|
| (123 | ) |
Unrealized (loss) gain on available-for-sale debt securities |
|
| (125 | ) |
|
| (6 | ) |
|
| (373 | ) |
|
| 12 |
|
Total other comprehensive (loss) income |
|
| (416 | ) |
|
| 51 |
|
|
| (781 | ) |
|
| (111 | ) |
Comprehensive (loss) income |
| $ | (10,603 | ) |
| $ | 4,119 |
|
| $ | (14,097 | ) |
| $ | 11,426 |
|
Net (loss) income per share |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | (0.19 | ) |
| $ | 0.08 |
|
| $ | (0.26 | ) |
| $ | 0.23 |
|
Diluted |
| $ | (0.19 | ) |
| $ | 0.07 |
|
| $ | (0.26 | ) |
| $ | 0.21 |
|
Weighted average common shares used to compute net |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
| 53,183,767 |
|
|
| 49,669,652 |
|
|
| 52,075,399 |
|
|
| 49,512,800 |
|
Diluted |
|
| 53,183,767 |
|
|
| 55,595,016 |
|
|
| 52,075,399 |
|
|
| 55,665,193 |
|
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Revenue | $ | 116,167 | $ | 86,752 | |||||||||||||||||||
Cost of goods sold | 13,741 | 9,967 | |||||||||||||||||||||
Gross profit | 102,426 | 76,785 | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Research and development | 22,064 | 16,135 | |||||||||||||||||||||
Selling, general and administrative | 85,700 | 63,732 | |||||||||||||||||||||
Total operating expenses | 107,764 | 79,867 | |||||||||||||||||||||
Loss from operations | (5,338) | (3,082) | |||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest income | 4,145 | 50 | |||||||||||||||||||||
Interest expense | (40) | (73) | |||||||||||||||||||||
Other income (expense) | 39 | (24) | |||||||||||||||||||||
Total other income (expense) | 4,144 | (47) | |||||||||||||||||||||
Loss before income taxes | (1,194) | (3,129) | |||||||||||||||||||||
Provision for income taxes | 1,024 | — | |||||||||||||||||||||
Net loss | $ | (2,218) | $ | (3,129) | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Foreign currency translation adjustments | 9 | (117) | |||||||||||||||||||||
Unrealized loss on available-for-sale debt securities | (865) | (248) | |||||||||||||||||||||
Total other comprehensive loss | (856) | (365) | |||||||||||||||||||||
Comprehensive loss | $ | (3,074) | $ | (3,494) | |||||||||||||||||||
Net loss per share | |||||||||||||||||||||||
Basic | $ | (0.04) | $ | (0.06) | |||||||||||||||||||
Diluted | $ | (0.04) | $ | (0.06) | |||||||||||||||||||
Weighted average common shares used to compute net loss per share | |||||||||||||||||||||||
Basic | 54,756,024 | 50,954,715 | |||||||||||||||||||||
Diluted | 54,756,024 | 50,954,715 |
|
| Common Stock |
|
| Additional Paid In |
|
| Accumulated Other Comprehensive |
|
| Accumulated |
|
| Total |
| |||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Income (Loss) |
|
| Deficit |
|
| Equity |
| ||||||
Balance, December 31, 2021 |
|
| 50,313,452 |
|
| $ | 50 |
|
| $ | 257,144 |
|
| $ | (402 | ) |
| $ | (17,583 | ) |
| $ | 239,209 |
|
Options exercised for |
|
| 322,882 |
|
|
| 1 |
|
|
| 344 |
|
|
| — |
|
|
| — |
|
|
| 345 |
|
Shares issued under Employee |
|
| 54,808 |
|
|
| — |
|
|
| 3,427 |
|
|
| — |
|
|
| — |
|
|
| 3,427 |
|
Issuance of common stock upon |
|
| 31,763 |
|
|
| — |
|
|
| (1,624 | ) |
|
| — |
|
|
| — |
|
|
| (1,624 | ) |
Issuance of common stock in |
|
| 2,300,000 |
|
|
| 2 |
|
|
| 174,392 |
|
|
| — |
|
|
| — |
|
|
| 174,394 |
|
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 6,555 |
|
|
| — |
|
|
| — |
|
|
| 6,555 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (365 | ) |
|
| — |
|
|
| (365 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,129 | ) |
|
| (3,129 | ) |
Balance, March 31, 2022 |
|
| 53,022,905 |
|
|
| 53 |
|
|
| 440,238 |
|
|
| (767 | ) |
|
| (20,712 | ) |
|
| 418,812 |
|
Options exercised for |
|
| 228,313 |
|
|
| — |
|
|
| 156 |
|
|
| 0 |
|
|
| 0 |
|
|
| 156 |
|
Issuance of common stock upon |
|
| 54,607 |
|
|
| — |
|
|
| (1,751 | ) |
|
| — |
|
|
| — |
|
|
| (1,751 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 7,164 |
|
|
| — |
|
|
| — |
|
|
| 7,164 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (416 | ) |
|
| — |
|
|
| (416 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (10,187 | ) |
|
| (10,187 | ) |
Balance, June 30, 2022 |
|
| 53,305,825 |
|
| $ | 53 |
|
| $ | 445,807 |
|
| $ | (1,183 | ) |
| $ | (30,899 | ) |
| $ | 413,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, December 31, 2020 |
|
| 49,251,614 |
|
| $ | 49 |
|
| $ | 227,624 |
|
| $ | 4 |
|
| $ | (27,423 | ) |
| $ | 200,254 |
|
Options exercised for |
|
| 296,019 |
|
|
| 1 |
|
|
| 380 |
|
|
| — |
|
|
| — |
|
|
| 381 |
|
Shares issued under Employee |
|
| 36,881 |
|
|
| — |
|
|
| 1,882 |
|
|
| — |
|
|
| — |
|
|
| 1,882 |
|
Issuance of common stock upon |
|
| 901 |
|
|
| — |
|
|
| (49 | ) |
|
| — |
|
|
| — |
|
|
| (49 | ) |
Share-based compensation |
|
| — |
|
|
| — |
|
|
| 3,836 |
|
|
| — |
|
|
| — |
|
|
| 3,836 |
|
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (162 | ) |
|
| — |
|
|
| (162 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,469 |
|
|
| 7,469 |
|
Balance, March 31, 2021 |
|
| 49,585,415 |
|
|
| 50 |
|
|
| 233,673 |
|
|
| (158 | ) |
|
| (19,954 | ) |
|
| 213,611 |
|
Options exercised for common stock |
|
| 213,605 |
|
|
| — |
|
|
| 193 |
|
|
| — |
|
|
| — |
|
|
| 193 |
|
Issuance of common stock upon |
|
| 29,809 |
|
|
| — |
|
|
| (706 | ) |
|
| — |
|
|
| — |
|
|
| (706 | ) |
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 4,604 |
|
|
| - |
|
|
| — |
|
|
| 4,604 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 51 |
|
|
| — |
|
|
| 51 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,068 |
|
|
| 4,068 |
|
Balance, June 30, 2021 |
|
| 49,828,829 |
|
| $ | 50 |
|
| $ | 237,764 |
|
| $ | (107 | ) |
| $ | (15,886 | ) |
| $ | 221,821 |
|
Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | 54,021,656 | $ | 54 | $ | 462,949 | $ | 849 | $ | (46,850) | $ | 417,002 | ||||||||||||||||||||||||
Options exercised for common stock | 209,966 | — | 226 | — | — | 226 | |||||||||||||||||||||||||||||
Shares issued under Employee Stock Purchase Plan | 86,051 | — | 4,172 | — | — | 4,172 | |||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes | 2,766,043 | 3 | (1,932) | — | — | (1,929) | |||||||||||||||||||||||||||||
Share-based compensation expense | — | — | 10,339 | — | — | 10,339 | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (856) | — | (856) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (2,218) | (2,218) | |||||||||||||||||||||||||||||
Balance, March 31, 2023 | 57,083,716 | $ | 57 | $ | 475,754 | $ | (7) | $ | (49,068) | $ | 426,736 | ||||||||||||||||||||||||
Stockholders’ Equity
thousands, except share data)
|
| Six Months Ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net (loss) income |
| $ | (13,316 | ) |
| $ | 11,537 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by |
|
|
|
|
|
| ||
Depreciation |
|
| 2,260 |
|
|
| 1,288 |
|
Amortization of deferred financing costs |
|
| 72 |
|
|
| 76 |
|
Amortization of right-of-use assets |
|
| 1,225 |
|
|
| 357 |
|
Share-based compensation expense |
|
| 13,719 |
|
|
| 8,440 |
|
Allowance for credit losses, net |
|
| 66 |
|
|
| (22 | ) |
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| (6,960 | ) |
|
| (3,470 | ) |
Inventories |
|
| (5,676 | ) |
|
| (7,523 | ) |
Prepaid expenses, deposits and other assets |
|
| 1,072 |
|
|
| (11,306 | ) |
Accounts payable |
|
| (1,760 | ) |
|
| 7,276 |
|
Payroll-related accruals, accrued expenses and other liabilities |
|
| 650 |
|
|
| 9,796 |
|
Operating lease liabilities |
|
| (544 | ) |
|
| (381 | ) |
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 |
|
|
|
|
|
| ||
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 |
|
| (175,371 | ) |
|
| (40,937 | ) |
Cash flows from financing activities |
|
|
|
|
|
| ||
Proceeds from issuance of common stock in public offering, net of |
|
| 174,394 |
|
|
| 0 |
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
| 3,427 |
|
|
| 1,882 |
|
Proceeds from exercise of stock options |
|
| 501 |
|
|
| 573 |
|
Payment of taxes related to vested restricted stock units |
|
| (3,375 | ) |
|
| (755 | ) |
Net cash provided by financing activities |
|
| 174,947 |
|
|
| 1,700 |
|
Effect of foreign exchange rate on cash and cash equivalents |
|
| (443 | ) |
|
| (126 | ) |
Net decrease in cash |
|
| (13,028 | ) |
|
| (23,295 | ) |
Cash and cash equivalents beginning of period |
|
| 92,752 |
|
|
| 114,617 |
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Cash and cash equivalents end of period |
| $ | 79,724 |
|
| $ | 91,322 |
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Supplemental disclosures of cash flow information: |
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Cash paid for income taxes |
| $ | 2,297 |
|
| $ | 158 |
|
Cash paid for interest |
| $ | 75 |
|
| $ | 76 |
|
Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 50,313,452 | $ | 50 | $ | 257,144 | $ | (402) | $ | (17,583) | $ | 239,209 | ||||||||||||||||||||||||
Options exercised for common stock | 322,882 | 1 | 344 | — | — | 345 | |||||||||||||||||||||||||||||
Shares issued under Employee Stock Purchase Plan | 54,808 | — | 3,427 | — | — | 3,427 | |||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for taxes | 31,763 | — | (1,624) | — | — | (1,624) | |||||||||||||||||||||||||||||
Issuance of common stock in public offering, net of issuance costs of $11.9 million | 2,300,000 | 2 | 174,392 | 174,394 | |||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | 6,555 | — | — | 6,555 | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (365) | — | (365) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (3,129) | (3,129) | |||||||||||||||||||||||||||||
Balance, March 31, 2022 | 53,022,905 | $ | 53 | $ | 440,238 | $ | (767) | $ | (20,712) | $ | 418,812 | ||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (2,218) | $ | (3,129) | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
Depreciation | 1,348 | 1,063 | |||||||||
Amortization of deferred financing costs | 8 | 36 | |||||||||
Amortization of right-of-use assets | 1,625 | 604 | |||||||||
Share-based compensation expense | 10,339 | 6,555 | |||||||||
Allowance for credit losses, net | 91 | 79 | |||||||||
Loss on disposal of fixed assets | 26 | — | |||||||||
Amortization of premium and discount on marketable securities | (3,810) | — | |||||||||
Changes in: | |||||||||||
Accounts receivable | 2,827 | (2,695) | |||||||||
Inventories | (3,825) | (2,788) | |||||||||
Prepaid expenses, deposits and other assets | 504 | 261 | |||||||||
Accounts payable | (317) | (467) | |||||||||
Payroll-related accruals, accrued expenses and other liabilities | (7,787) | (6,247) | |||||||||
Operating lease liabilities | (366) | (2,097) | |||||||||
Lease prepayments for lessor's owned leasehold improvements | (458) | (275) | |||||||||
Net cash used in operating activities | (2,013) | (9,100) | |||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | (964) | (2,745) | |||||||||
Purchases of marketable securities | (122,054) | (112,073) | |||||||||
Maturities of marketable securities | 119,300 | 47,000 | |||||||||
Purchases of other investments | (325) | (5,693) | |||||||||
Net cash used in investing activities | (4,043) | (73,511) | |||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of common stock in public offering, net of issuance costs of $11.9 million | — | 174,394 | |||||||||
Proceeds from issuance of common stock under employee stock purchase plan | 4,172 | 3,427 | |||||||||
Proceeds from exercise of stock options | 226 | 345 | |||||||||
Payment of taxes related to vested restricted stock units | (1,932) | (1,624) | |||||||||
Net cash provided by financing activities | 2,466 | 176,542 | |||||||||
Effect of foreign exchange rate on cash and cash equivalents | (70) | (127) | |||||||||
Net (decrease) increase in cash and cash equivalents | (3,660) | 93,804 | |||||||||
Cash and cash equivalents beginning of period | 60,222 | 92,752 | |||||||||
Cash and cash equivalents end of period | $ | 56,562 | $ | 186,556 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for income taxes | $ | 104 | $ | 89 | |||||||
Cash paid for interest | $ | 32 | $ | 37 | |||||||
Noncash investing and financing: | |||||||||||
Lease liabilities arising from obtaining new right-of-use assets | $ | 1,030 | $ | — |
ORGANIZATION
COVID-19
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. To 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.
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 2022 performance.
and include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Principles of Consolidation
The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Management Estimates
Revenue Recognition
7
Inari Medical, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
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ClotTriever |
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| 33 | % |
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| 33 | % |
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| 32 | % |
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| 34 | % |
FlowTriever |
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| 67 | % |
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| 67 | % |
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| 68 | % |
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| 66 | % |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
ClotTriever and other systems | 34 | % | 32 | % | |||||||||||||||||||
FlowTriever system | 66 | % | 68 | % |
3. June 30, 2022 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 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 26,018 5,992 0 32,010 Investments: U.S. Treasury securities 185,491 0 0 185,491 U.S. Government agencies 0 16,004 0 16,004 Corporate debt securities and commercial paper 0 49,277 0 49,277 Total included in short-term investments 185,491 65,281 0 250,772 Total assets $ 211,509 $ 71,273 $ 0 $ 282,782 December 31, 2021 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 48,595 $ 0 $ 0 $ 48,595 Total included in cash and cash equivalents 48,595 0 0 48,595 Investments: U.S. Treasury securities 44,322 0 0 44,322 Corporate debt securities and commercial paper 0 39,026 0 39,026 Total included in short-term investments 44,322 39,026 0 83,348 U.S. Treasury securities included in 3,983 0 0 3,983 Total assets $ 96,900 $ 39,026 $ 0 $ 135,926 June 30, 2022 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 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 31,994 16 0 32,010 Investments: U.S. Treasury securities 185,887 0 (396 ) 185,491 U.S. Government agencies 16,012 0 (8 ) 16,004 Corporate debt securities and commercial paper 49,282 0 (5 ) 49,277 Total included in short-term investments 251,181 0 (409 ) 250,772 Total assets $ 283,175 $ 16 $ (409 ) $ 282,782 December 31, 2021 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 48,595 $ 0 $ 0 $ 48,595 Total included in cash and cash equivalents 48,595 0 0 48,595 Investments: U.S. Treasury securities 44,349 0 (27 ) 44,322 Corporate debt securities and commercial paper 39,012 14 0 39,026 Total included in short-term investments 83,361 14 (27 ) 83,348 U.S. Treasury securities included in 3,993 0 (10 ) 3,983 Total assets $ 135,949 $ 14 $ (37 ) $ 135,926 Inventories, net of reserves, June 30, December 31, Raw materials $ 8,695 $ 5,763 Work-in-process 1,507 1,490 Finished goods 16,472 13,800 $ 26,674 $ 21,053 June 30, December 31, Manufacturing equipment $ 9,300 $ 7,408 Leasehold improvements 4,900 4,712 Assets in progress 4,519 3,124 Furniture and fixtures 3,719 3,044 Computer hardware 4,450 2,864 Computer software 100 100 Total property and equipment, gross 26,988 21,252 Accumulated depreciation (6,912 ) (4,781 ) Total property and equipment, net $ 20,076 $ 16,471 INARI MEDICAL, INC. COMMITMENTS AND CONTINGENCIES 18.9 years. As of Total lease 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 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 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 CONCENTRATIONS In early 2023, a few U.S. banks were closed and the regulators appointed the Federal Deposit Insurance Corporation (“FDIC”) to act as receiver, which created significant market disruption and uncertainty with respect to the financial condition of the banking institutions in the U.S. While we do not have any direct exposure to these banks, we do maintain our cash and cash equivalents at multiple financial institutions, which exceed the current FDIC insurance limits. We will continue to monitor our cash and cash equivalents and take steps to identify any potential impact on our business. CREDIT FACILITY June 30, December 31, Deferred financing costs $ 430 $ 430 Accumulated amortization (263 ) (191 ) Unamortized deferred financing costs $ 167 $ 239 Three Months Ended March 31, 2023 2022 United States $ 111,846 $ 85,054 International 4,321 1,698 Total revenue $ 116,167 $ 86,752 ("(“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.OtherIn March 2022, themadehas strategic 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,March 31, 2023 and December 31, 2022, total other investments of $5.7$8.6 million wasand $8.3 million, respectively, were included in deposits and other assets on the condensed consolidated balance sheets with no impairment identified.8Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsFair Value MeasurementsJune 30, 2022March 31, 2023 and December 31, 20212022 (in thousands):March 31, 2023 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 13,863 $ — $ — $ 13,863 Total included in cash and cash equivalents 13,863 — — 13,863 Investments: U.S. Treasury securities 166,730 — — 166,730 U.S. Government agencies — 57,624 — 57,624 Corporate debt securities and commercial paper — 47,530 — 47,530 Total included in short-term investments 166,730 105,154 — 271,884 Total assets $ 180,593 $ 105,154 $ — $ 285,747
long-term investmentsDecember 31, 2022 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 20,329 $ — $ — $ 20,329 Total included in cash and cash equivalents 20,329 — — 20,329 Investments: U.S. Treasury securities 172,088 — — 172,088 U.S. Government agencies — 47,131 — 47,131 Corporate debt securities and commercial paper — 46,960 — 46,960 Total included in short-term investments 172,088 94,091 — 266,179 Total assets $ 192,417 $ 94,091 $ — $ 286,508 0no transfers between Levels 1, 2 or 3 for the periods presented.Cash Equivalents and InvestmentsCASH EQUIVALENTS AND INVESTMENTSJune 30, 2022March 31, 2023 and December 31, 20212022 (in thousands):March 31, 2023 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 13,863 $ — $ — $ 13,863 Total included in cash and cash equivalents 13,863 — — 13,863 Investments: U.S. Treasury securities 166,564 180 (14) 166,730 U.S. Government agencies 57,552 87 (15) 57,624 Corporate debt securities and commercial paper 47,502 41 (13) 47,530 Total included in short-term investments 271,618 308 (42) 271,884 Total assets $ 285,481 $ 308 $ (42) $ 285,747
long-term investmentsDecember 31, 2022 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 20,329 $ — $ — $ 20,329 Total included in cash and cash equivalents 20,329 — — 20,329 Investments: U.S. Treasury securities 171,006 1,120 (38) 172,088 U.S. Government agencies 46,777 354 — 47,131 Corporate debt securities and commercial paper 46,576 397 (13) 46,960 Total included in short-term investments 264,359 1,871 (51) 266,179 Total assets $ 284,688 $ 1,871 $ (51) $ 286,508 Inventories, netINVENTORIES, NET as of June 30, 2022 and December 31, 2021 totaling $391,000 and $285,000, respectively, consist of the following (in thousands):
2022
2021March 31,
2023December 31,
2022Raw materials $ 14,139 $ 13,943 Work-in-process 4,062 3,396 Finished goods 18,298 15,242 Total inventories, net $ 36,499 $ 32,581 10Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsProperty and Equipment, netPROPERTY AND EQUIPMENT, NET
2022
2021March 31,
2023December 31,
2022Manufacturing equipment $ 14,365 $ 13,585 Computer hardware 5,233 5,123 Leasehold improvements 5,210 5,040 Furniture and fixtures 4,124 4,119 Assets in progress 2,366 2,516 Computer software 100 100 Total property and equipment, gross 31,398 30,483 Accumulated depreciation (10,153) (8,828) Total property and equipment, net $ 21,245 $ 21,655 $970,000$1,094,000 and $522,000$857,000 was included in SG&Aoperating expenses and $226,000$254,000 and $157,000$206,000 was included in cost of goods sold for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively. Depreciation expense$Contents1,827,000 and $985,000 was included in SG&A expenses and $433,000 and $303,000 was included in cost of goods sold for the six months ended June 30, 2022 and 2021, respectively.Commitments and ContingenciesIn March 2019, The operating leases for facilities expire at various dates through July 2041 and some contain renewal options, the Company executed a five-year lease for a facility in Irvine, California, where substantially all operationslongest 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, 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, 2022, the operating lease right-of-use asset and liability were $52,000 and $59,000, respectively, with the remaining lease term of 1 month.In October 2020, the Company entered into a ten-year lease for a facility located in Irvine, California (the “Oak Canyon lease”) with 2 option extension periods of five years 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 certain improvements deemed to be assets of the lessor. The Oak Canyon lease includes scheduled payment escalation clauses over the lease term. The Oak Canyon lease also requires 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.for five years. The Company 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 $42.2 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, relatedrenewal options if the Company is reasonably certain 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 prepaid lease payments for the lessor's owned leasehold improvements paid subsequent to the commencement date. exercise such renewal options.June 30, 2022,March 31, 2023, the aggregate operating lease right-of-useROU assets and lease liabilities were $46.5$50.6 million and $28.5$33.0 million, respectively, with the weighted average remaining lease term of 229 months.The Company's wholly owned subsidiary, Inari Medical Europe GmbH entered into a five-year commercial lease agreement for office space located in Basel, Switzerland (the "Basel lease"). The lease will be effective July 1, 2022 with an option to extend for a period of five years, 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 the landlord in the amount of approximately $186,000.11Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsJune 30,December 31, 2022, the aggregate operating lease ROU asset and lease liabilities were $50.7 million and $32.3 million, respectively, with the weighted average remaining lease term of 17.1 years.6.1%6.05%. Cash paid for amounts included in the measurement of operating lease liabilities was $705,000$846,000 and $199,000$714,000 for the three months ended June 30,March 31, 2023 and 2022, and 2021 and $1,419,000 and $398,000 for the six months ended June 30, 2022 and 2021, respectively.cost for the three and six months ended June 30, 2022,costs are as follows (in thousands):Three Months Ended March 31, 2023 2022 Operating lease cost $ 1,180 $ 1,043 Short-term lease cost 22 15 Variable lease cost 166 139 Total lease costs $ 1,368 $ 1,197 June 30, 2022March 31, 2023 are as follows (in thousands):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 2023 Remainder of 2023 $ 2,602 2024 3,558 2025 3,044 2026 2,923 2027 2027 2,989 Thereafter 38,553 Total lease payments 53,669 Less imputed interest Less imputed interest (20,684) Total lease liabilities Total lease liabilities 32,985 Less: lease liabilities - current portion Less: lease liabilities - current portion (1,527) Lease liabilities - noncurrent portion Lease liabilities - noncurrent portion $ 31,458 12Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial Statementsofwith Inceptus Medical LLC (“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.$29,000$29,000 for the three months ended June 30, 2022March 31, 2023 and 2021 and $58,000 for the six months ended June 30, 2022 and 2021.2022. Additionally, the Company is obligated to pay an ongoing royalty ranging from 1%1% to 1.5%1.50% of the net sales of products utilizing the licensed intellectual property, subject to a minimum royalty quarterly fee of $1,000.$1,500. The Company recorded royalty expense to cost of goods sold of $0$1,500 and $195,000$212,000 for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and $respectively.212,000 and $385,000 for the six months ended June 30, 2022 and 2021, respectively.Licensed TechnologyIn December 2021,entered into an exclusive, perpetual, royalty free, technology license agreement (the “Licensed Technology”) for use inimplemented a particular researchself-insurance program to cover employees and development project that requires total paymentstheir dependent health benefits, including medical, dental and vision. As part of approximately $4.2 million payable in three installments due in 2022 and 2023.the program, the Company also has stop-loss coverage from a third party which limits the exposure to large claims. The Company accounted forrecords a liability associated with these benefits that includes an estimate of both claims filed and losses incurred but not yet reported based on historical claims experience. In estimating this accrual, the purchase asCompany utilizes an independent third-party broker to estimate a researchrange of expected losses, which are based on analyses of historical data. The assumptions are closely monitored and developmentadjusted when necessary by changing circumstances. If the liability generated from incurred claims exceeds the expense in December 2021 as it was determined to have no future alternative uses.recorded, the Company may record an additional expense. As of June 30, 2022,March 31, 2023, the outstanding balanceCompany's self-insurance liability, inclusive of administrative fees, was approximately $2.5$1.5 million, $1.2 million of which wasis included in accrued expenses and other current liabilities and the remaining $1.3 million was included in other long-term liability on the condensed consolidated balance sheetssheets.Concentrationsand six months ended June 30,March 31, 2023 and 2022, and 2021, there were 0no customers which accounted for more than 10% of the Company’s revenue. As of March 31, 2023 and December 31, 2022, there were no customers that accounted for more than 10% of the Company’s revenue. As of June 30, 2022 and December 31, 2021, there were 0 customers that accounted for more than 10%10% of the Company’s accounts receivable.NaN10%10% of the Company’s purchases for the three and six months ended June 30, 2022March 31, 2023 and 2021.2022. There was one vendor that accounted for 10.7% of the Company's accounts payable as of March 31, 2023. There were 0no vendors that accounted for more than 10%10% of the Company’s accounts payable as of June 30, 2022 and December 31, 2021.2022.Related PartyRELATED PARTY$118,000$30,000 and $129,000$74,000 for the three months ended June 30,March 31, 2023 and 2022, and 2021 and $192,000 and $263,000 for the six months ended June 30, 2022 and 2021, respectively, which was included in operatingSG&A expenses on the condensed consolidated statements of operations.operations and comprehensive income (loss). As of June 30, 2022March 31, 2023 and December 31, 2021,2022, there was 0no balance payable to MRI.DebtIn September 2020,entered into aamended its senior secured revolving credit facility with Bank of America (the “Credit“Amended Credit Agreement”), as amended, under which the Company may borrow loans up to a maximum principal amount of $30$40.0 million and increases the optional accordion to $120.0 million. The Amended Credit Agreement matures on December 16, 2027. The amount available to borrow under the Amended Credit Agreement as of March 31, 2023 is approximately $38.0 million, comprised ofof: a) 85%90% of eligible accounts receivable, plus b) pledged cash (up to $10 million). There was 0 principal amount outstanding and no cash was pledgedCredit Agreement as of June 30, 2022 and December 31, 2021, and the amount available to borrow under the Credit Agreement was approximately $28.2 million.Advances under theAmended Credit Agreement will bear interest at a base rate per annum (the “Base Rate”) plus an applicable margin (the “Margin”). The Base Rate equals the greater of (i) the Prime Rate, (ii) the Federal funds rate plus 0.50%0.50%, or (iii) the LIBORBloomberg Short-Term Bank Yield Index ("BSBY") rate based upon an interest period of 30 daysone month plus 1.00%1.00%. The Margin ranges from 1.00%0.50% to 1.50% based1.00% in the case of BSBY Rate loans depending on average daily availability, in each case with a floor of 0%. As a condition to entering into the Company’s applicable fixed charge coverage ratio. Advances under theAmended Credit Agreement, designated as “LIBOR Loans” will bear interest atthe Company was obligated to pay a rate per annum equal to the LIBOR rate plus the applicable Margin ranging from 2.00% to 2.50% based on the Company’s applicable fixed charge coverage ratio. Interest on loans outstanding under the Credit Agreement is payable monthly. Loan principal balances outstanding under the Credit Agreement are due at maturity in September 2023. The Company may prepay any loans under the Credit13Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsAgreement at any time without any penalty or premium.nonrefundable fee of $10,000. The Company is also required to pay an unused line fee at an annual rate ranging from 0.25% to 0.375%of 0.25% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Amended Credit Agreement.$5$5.0 million. In February 2023, the Company amended the LC Facility to increase the limit to up to $10.0 million. The aggregate stated amount outstanding of letter of credits reduces the total borrowing base available under the Amended Credit Agreement. The Company is required to pay the following fees under the LC Facility are as follows: (a) a fee equal to the applicable margin in effect for LIBORBSBY loans (currently 2.25%2.25%) times the average daily stated amount of outstanding letter of credits; (b) a fronting fee equal to 0.125%0.125% per annum on the statedJune 30, 2022 and DecemberMarch 31, 2021,2023, the Company had 2three letters of credit in the aggregated amount of $1.8$2.0 million outstanding under the LC Facility.Company paid Bank of America a closing fee of $150,000 and incurred approximately $280,000 in legal and other fees directly related to the Credit Agreement. TheAmended Credit Agreement contains certain customary covenants subject to certain exceptions, including, among others, the following: a fixed charge coverage ratio covenant, and limitations of indebtedness, liens, investments, asset sales, mergers, consolidations, liquidations, dispositions, restricted payments, transactions with affiliates and prepayments of certain debt. The Amended Credit Agreement also contains certain events of default including:subject to certain customary grace periods, including, among others, payment defaults, breaches of any representation, warranty or covenants, judgment defaults, cross defaults to certain other contracts, certain events with respect to governmental approvals if such events could cause abankruptcy and insolvency defaults, material adverse change, a material impairment in the perfection or priority of the lender's security interest or in the value of the collateral, a material adverse change in the business, operations, or condition of us or any of our subsidiaries,judgment defaults and a material impairmentchange of control default.prospect of repayment of the loans. Upon the occurrence of an event of default, a default increase in the interest rate of an additional 2.0% could be applied to the outstanding loan balanceAmended Credit Agreement, and the lender could declare all outstanding obligations immediately due and payable and take such other actions as set forth in the loan and security agreement. The Company was in compliance with its covenant requirements as of June 30, 2022.requirement. Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, excluding intellectual property.Deferred Financing CostsAs of June 30, 2022 and December 31, 2021, costs incurred directly related to debt financings were included in deposits and other assets and are being amortized over the three-year life of the Credit Agreement on the straight-line basis as follows (in thousands):
2022
2021
11. Stockholder’s EquitySTOCKHOLDER'S EQUITY
14
Inari Medical, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
EQUITY INCENTIVE PLANS
2023.
Number of Awards | Weighted Average Fair Value | ||||||||||
Outstanding, December 31, 2022 | 2,712,674 | $ | 0.17 | ||||||||
Vested | (2,712,674) | (a) | |||||||||
Outstanding, March 31, 2023 | — | $ | — |
A summary of stock option activities under the 2011 Plan for the sixthree months ended June 30, 2022March 31, 2023 is as follows (intrinsic value in thousands):
|
| Number of |
|
| Weighted |
|
| Weighted |
|
| Weighted |
|
| Intrinsic |
| |||||
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 |
|
Number of Weighted 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 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of goods sold $ 375 $ 202 $ 740 $ 379 Research and development 1,113 619 2,092 1,021 Selling, general and administrative 5,676 3,783 10,887 7,040 $ 7,164 $ 4,604 $ 13,719 $ 8,440 The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model with the following assumptions: Six Months Ended June 30, 2022 2021 Expected term (in years) 0.5 0.5 Expected volatility 56.09% 51.91% Dividend yield 0.00% 0.00% Risk free interest rate 0.48% 0.08% Stock-based Compensation Expense 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 14.0 % 0.3 % 10.4 % 1.8 % March 31, 2023. 2023. RETIREMENT PLAN 15. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Numerator: Net (loss) income (in thousands) $ (10,187 ) $ 4,068 $ (13,316 ) $ 11,537 Denominator: Weighted average number of common shares 53,183,767 49,669,652 52,075,399 49,512,800 Common stock equivalents from outstanding 0 2,940,337 0 3,057,128 Common stock equivalents from unvested RSUs 0 2,947,918 0 3,054,465 Common stock equivalents from ESPP 0 3,233 0 6,924 Common stock equivalents from restricted stock 0 33,876 0 33,876 Weighted average number of common shares 53,183,767 55,595,016 52,075,399 55,665,193 Net (loss) income per share: Basic $ (0.19 ) $ 0.08 $ (0.26 ) $ 0.23 Diluted $ (0.19 ) $ 0.07 $ (0.26 ) $ 0.21 The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the three 10-K for the year ended December 31, 2022. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.” peripheral vasculature through aspiration. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 ClotTriever 33 % 33 % 32 % 34 % FlowTriever 67 % 67 % 68 % 66 % Three Months Ended June 30, 2022 % 2021 % Change $ Revenue $ 92,744 100.0 % $ 63,453 100.0 % $ 29,291 Cost of goods sold 10,347 11.2 % 4,814 7.6 % 5,533 Gross profit 82,397 88.8 % 58,639 92.4 % 23,758 Operating expenses: Research and development 18,569 20.0 % 11,630 18.3 % 6,939 Selling, general and administrative 73,156 78.9 % 42,897 67.6 % 30,259 Total operating expenses 91,725 98.9 % 54,527 85.9 % 37,198 Income (loss) from operations (9,328 ) (10.1 %) 4,112 6.5 % (13,440 ) Other income (expense) Interest income 214 0.2 % 35 0.1 % 179 Interest expense (73 ) (0.1 %) (74 ) (0.1 %) 1 Other income (expense) 252 0.3 % 7 0.0 % 245 Total other expenses, net 393 0.4 % (32 ) 0.0 % 425 Income (loss) before income taxes $ (8,935 ) (9.7 %) $ 4,080 6.5 % $ (13,015 ) Six Months Ended June 30, 2022 % 2021 % Change $ Revenue $ 179,496 100.0 % $ 120,850 100.0 % $ 58,646 Cost of goods sold 20,314 11.3 % 9,437 7.8 % 10,877 Gross profit 159,182 88.7 % 111,413 92.2 % 47,769 Operating expenses: Research and development 34,704 19.3 % 19,793 16.4 % 14,911 Selling, general and administrative 136,888 76.3 % 79,795 66.0 % 57,093 Total operating expenses 171,592 95.6 % 99,588 82.4 % 72,004 Income from operations (12,410 ) (6.9 %) 11,825 9.8 % (24,235 ) Other income (expense) Interest income 264 0.1 % 103 0.1 % 161 Interest expense (146 ) (0.1 %) (147 ) (0.1 %) 1 Other income (expense) 228 0.1 % (34 ) 0.0 % 262 Total other expenses, net 346 0.1 % (78 ) 0.0 % 424 Income (loss) before income taxes $ (12,064 ) (6.8 %) $ 11,747 9.8 % $ (23,811 ) In addition, market conditions impacting financial institutions could impact our ability to access some or all of our cash and cash equivalents, and we may be unable to obtain alternative funding when and as needed on acceptable terms, if at all. Six Months Ended June 30, 2022 2021 Net cash provided by (used in): Operating activities $ (12,161 ) $ 16,068 Investing activities (175,371 ) (40,937 ) Financing activities 174,947 1,700 Effect of foreign exchange rate on cash and cash equivalents (443 ) (126 ) Net increase (decrease) in cash and cash equivalents $ (13,028 ) $ (23,295 ) cash used in operating activities processed, summarized and reported, with the time period specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that 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. LEGAL PROCEEDINGS RISK FACTORS UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS DEFAULTS UPON SENIOR SECURITIES MINE SAFETY DISCLOSURES Incorporated by reference Exhibit Number Description Form File Number Exhibit Filing Date 3.1 8-K 001-39293 3.1 5/28/2020 3.2 8-K 001-39293 3.2 5/28/2020 10.1 Third Amendment to Loan, Guaranty and Security Agreement, dated July 21, 2022 31.1 31.2 32.1† 32.2† 101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its EBRL tags are embedded within the inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page with Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). EXHIBITS Inari Medical, Inc. Date: By: /s/ Andrew Hykes Chief Executive Officer and President Date: By: /s/ Mitchell Hill Mitchell Hill Chief Financial OfficerNumber of
AwardsWeighted
Average
Exercise
PriceWeighted
Average
Remaining
Contractual
Life (in years)Intrinsic
ValueOutstanding, December 31, 2022 1,456,328 $ 1.93 6.20 $ 89,749 Exercised (209,966) $ 1.11 $ 12,688 Cancelled (938) $ 3.27 Outstanding, March 31, 2023 1,245,424 $ 2.07 6.00 $ 74,313 Vested and exercisable at March 31, 2023 1,114,127 $ 1.77 5.90 $ 66,811 Vested and expected to vest at March 31, 2023 1,242,625 $ 2.06 6.00 $ 74,155 Restricted Stock UnitsIn March 2019, the Company granted, under the 2011 Plan, 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.andin equal amounts on a 25%quarterly basis or a 25% one-year cliff orvesting with remaining RSUs vest 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.15Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial Statements
Awards
Average
Fair ValueNumber of
AwardsWeighted
Average
Fair ValueOutstanding, December 31, 2022 999,215 $ 79.16 Granted 593,855 57.35 Vested (82,511) 83.11 Cancelled (13,217) 82.55 Outstanding, March 31, 2023 1,497,342 $ 70.26 both the 2011 Plan and 2020 Plan was $6.3$5.2 million and $3.5$4.5 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, and $10.8 million and $3.7 million forrespectively.sixthree months ended June 30, 2022March 31, 2023, the Company granted non-qualified stock options to certain employees with vesting over a four-year period on a quarterly basis. The fair value of the stock options was calculated using the Black-Scholes option pricing model, which requires valuation assumptions of expected term, expected volatility, risk-free interest rate, and 2021, respectively.Stock-based Compensation ExpenseTotal compensation costexpected dividend yield. For the purposes of the valuation model, the Company used the simplified method for all share-based payment arrangements recognized,including $956,000 and $724,000determining the expected term of the granted options. The simplified method was used since the Company does not have adequate historical data to utilize in calculating the expected term of options. The fair value for options granted was calculated using the following weighted average assumptions:Three Months Ended March 31, 2023 Expected term (in years) 4.56 Expected volatility 50.35% Dividend yield 0.00% Risk free interest rate 4.05% Weighted-average fair value of options granted $25.98 per share June 30, 2022 and 2021 and $March 31, 2023 is as follows (intrinsic value in thousands):Number of
AwardsWeighted
Average
Exercise
PriceWeighted
Average
Fair ValueWeighted
Average
Remaining
Contractual
Life (in years)Intrinsic
ValueOutstanding, December 31, 2022 — $ — $ — $ — Granted 181,870 $ 56.00 $ 25.98 — $ — Outstanding, March 31, 2023 181,870 $ 56.00 $ 25.98 6.90 $ 1,044 Vested and exercisable at March 31, 2023 — $ — $ — — $ — Vested and expected to vest at March 31, 2023 163,812 $ 56.00 $ 25.98 6.90 $ 940 1.8Table of Contents million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively, relatedthe Unaudited Condensed Consolidated Financial Statements was as follows (in thousands):Total compensation costs as of June 30, 2022 related to all non-vested awards to be recognized in future periods was $68.0 million and is expected to be recognized over the remaining weighted average period of 3.0 years.Employee Stock Purchase Plan 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 ends on January 31, 2021.2020. 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%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.Three Months Ended March 31, 2023 2022 Expected term (in years) 0.5 0.5 Expected volatility 49.89 % 56.09 % Dividend yield 0.00 % 0.00 % Risk free interest rate 4.79 % 0.48 % June 30, 2022,March 31, 2023, a total of 139,857304,615 shares of common stock, including 54,80886,051 shares purchased in January 2022,2023, have been purchased under the ESPP, and a total of 1,846,6642,222,123 shares of common stock, including 503,135540,217 additional shares effective January 1, 2022,2023, are reserved for future purchases.Three Months Ended March 31, 2023 2022 Cost of goods sold $ 525 $ 364 Research and development 1,590 978 Selling, general and administrative 8,224 5,213 $ 10,339 $ 6,555 Income TaxesINCOME TAXESThree Months Ended March 31, 2023 2022 Loss before income taxes $ (1,194) $ (3,129) Provision for income taxes 1,024 — Net loss $ (2,218) $ (3,129) Provision for income taxes as a percentage of loss before income taxes (85.8%) —%
of (loss) income before income taxes"ordinary"“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 sixthree months ended June 30, 2022,March 31, 2023, we calculated the income tax provision 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"“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 sixthree months ended June 30, 2022.2022.2021,2022, the Company maintained a full valuation allowance of $17.9$30.3 million against the Company's net deferred tax assets. As of June 30, 2022,March 31, 2023, 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 may result in a material benefit recognized in the quarter of release.NaNNo interest or penalties have been recorded related to the uncertain tax positions due to credit carryforwards that are available to offset the uncertain tax positions. It is not expected that there will be a significant change in the uncertain tax position in the next twelve months. The Company is subject to U.S. federal and state income tax as well as to income tax in 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 income tax examinations in progress. The statute of limitations for tax years ended after December 31, 20162019, December 31, 2018, and December 31, 2017 are open for federal and state, and federalforeign tax purposes, respectively.Retirement Plan$1.00$1.00 match for every $1.00$1.00 contributed by a participating employee up to the greater of $3,000$3,000 or 4%4% of eligible compensation under the plan, with such Company's contributions becoming fully vested immediately. Matching contribution expense was $2.7$2.7 million and $0.9$1.7 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, and $respectively.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 quarterTable of 2022 resulting in additional matching contribution expense of $Contents1.0 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 or fiscal 2022 annual consolidated financial statements.17Inari Medical, Inc.Net Income (Loss) Per ShareNET INCOME (LOSS) PER SHAREThe components ofBasic 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, shares from common stock options, RSUs and ESPP are potentially dilutive securities. For the periods the Company is in a net loss position, basic net loss per share is the same as follows:diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.
outstanding - basic
common stock options
outstanding - dilutedand six months ended June 30,March 31, 2023 and 2022 due to their anti-dilutive effect:Three Months Ended March 31, 2023 2022 Common stock options 1,427,294 2,241,630 RSUs 1,497,342 3,649,255 Restricted stock subject to future vesting — 10,404 2,924,636 5,901,289 Three and Six Months Ended June 30, 2022Common stock options2,006,646RSUs3,680,131ESPP10,4045,697,18118Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.2021,2022, included in our Annual Report on Form 10-K.10-K for the year ended December 31, 2022. 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,“Part I, Item 1A, “Risk1A. Risk Factors” in this Quarterlyour Annual Report on Form 10-Q.Overviewa medical device company with acommitted to improving lives in extraordinary ways by creating innovative solutions for both unmet and underserved health needs. In addition to our purpose-built solutions, we leverage our capabilities in education, clinical research, and program development to improve patient outcomes. We are passionate about our mission to treatestablish our treatments as the standard of care for venous thromboembolism and transform the lives of patients suffering from venous and other diseases. beyond. We are just getting started.current product offeringssolutions (“products”) primarily consist of two minimally-invasive,our ClotTriever and FlowTriever systems, which are minimally invasive, novel, catheter-based mechanical thrombectomy systems whichthat are purpose-built for the specific 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, or PE. Our ClotTriever productsystem is FDA-cleared for the treatment of DVT. OurDVT, and our FlowTriever productsystem is the first thrombectomy system FDA-cleared for the treatment of PE and is also FDA-cleared for clot in transit in the right atrium.We believe Our solutions also consist of our InThrill system, which is FDA-cleared for the best way to treat VTEremoval of thrombus from the peripheral vasculature 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 systems. The ClotTriever is a mechanical thrombectomy system designed to core, capture and remove large clots from largefor smaller vessels, and our ProTrieve sheath, which is used to treat DVT. The FlowTriever is a large bore catheter-based aspiration and mechanical thrombectomy system designed to remove large clotsFDA-cleared for removal of thrombus from large vessels to treat PE. Both systems are designed to eliminate the need for thrombolytic drugs.We believe our 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.June 30, 2022,March 31, 2023, we had cash, cash equivalents, and short-term investments of $330.5$328.4 million, no long-term debt outstanding and an accumulated deficit of $30.9$49.1 million.June 30, 2022,March 31, 2023, the Company generated $92.7$116.2 million in revenues with a gross margin of 88.8%88.2% and net loss of $10.2$2.2 million, as compared to revenues of $63.5$86.8 million with a gross margin of 92.4%88.5% and net incomeloss of $4.1$3.1 million for the three months ended June 30, 2021.For the six months ended June 30, 2022, the Company generated $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 for the six months ended June 30, 2021.COVID-19The 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 business, including the demand for our products, operations, and ability to research and develop and bring new products and services to market.In response to the impact of COVID-19, we implemented a variety of measures to help manage through the impact and position us to keep operations running efficiently. However, with hospitals facing staff or other resource constraints, 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.The actual and perceived impact of COVID-19 is still evolving and cannot be predicted. As 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.March 31, 2022.continue to focus our efforts on the health and safety of patients, healthcare providers and employees, while executing our mission of transforming lives of patients. While we expect the COVID-1919pandemic may continue to negatively impact 2022 performance, we believe the long-term fundamentals remain strong and we will continue to effectively manage through these challenges.RevenueWe currently derivederived substantially all our revenue from the sale of our ClotTriever and FlowTriever systems directly to hospitals primarily located in the United States. Our customers typically purchase our products through an initial stocking order, of our products and then reorder replenishment inventory as procedures are performed. No single customer accounted for 10% or more of our revenue during the three months ended March 31, 2023 and 2022. We expect our revenue to increase in absolute dollars as we expand our offerings, grow 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.forfrom ClotTriever and other systems and FlowTriever systemssystem as a percentage of total revenue is as follows:Critical Accounting Policies and EstimatesOther 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, 2022, as compared to 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 year ended December 31, 2021, filed with the SEC on February 23, 2022.Results of OperationsThree Months Ended March 31, 2023 2022 ClotTriever and other systems 34 % 32 % FlowTriever system 66 % 68 % June 30,March 31, 2023 and 2022 and 2021Three Months Ended March 31, Change $ 2023 % 2022 % Revenue $ 116,167 100.0 % $ 86,752 100.0 % $ 29,415 Cost of goods sold 13,741 11.8 % 9,967 11.5 % 3,774 Gross profit 102,426 88.2 % 76,785 88.5 % 25,641 Operating expenses Research and development 22,064 19.0 % 16,135 18.6 % 5,929 Selling, general and administrative 85,700 73.8 % 63,732 73.5 % 21,968 Total operating expenses 107,764 92.8 % 79,867 92.1 % 27,897 Loss from operations (5,338) (4.6) % (3,082) (3.6) % (2,256) Other income (expense) Interest income 4,145 3.6 % 50 0.1 % 4,095 Interest expense (40) — % (73) (0.1) % 33 Other income (expense) 39 — % (24) — % 63 Total other income (expense) 4,144 3.6 % (47) (0.1) % 4,191 Loss before income taxes (1,194) (1.0) % (3,129) (3.6) % 1,935 Provision for income taxes 1,024 0.9 % — — % 1,024 Net loss $ (2,218) (1.9) % $ (3,129) (3.6) % $ 911 $29.3$29.4 million or 46.2%33.9%, to $92.7$116.2 million during the three months ended June 30, 2022,March 31, 2023, compared to $63.5$86.8 million during the three months ended June 30, 2021.March 31, 2022. The increase in revenue was due primarily to an increase in the number of product offerings and the number of unitsproducts sold as we expanded our sales territories, opened new accounts and achieved deeper penetration of our products into existing accounts.accounts, and introduced new products.$5.5$3.8 million, or 114.9%37.9%, to $10.3$13.7 million during the three months ended June 30, 2022,March 31, 2023, compared to $4.8$10.0 million during the three months ended June 30, 2021.March 31, 2022. 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 ouranticipated future growth.20June 30, 2022March 31, 2023 decreased slightly to 88.8%88.2%, compared to 92.4%88.5% for the three months ended June 30, 2021,March 31, 2022, primarily due to a decreasethe increase in operating leverage due to the expanded footprint of our manufacturing capacity andcosts associated with the addition of new products tocomponents offered under our FlowTriever per procedure pricing model.system price partially offset by manufacturing efficiencies.$7.0$5.9 million, or 59.7%36.7%, to $18.6$22.1 million during the three months ended June 30, 2022,March 31, 2023, compared to $11.6$16.1 million during the three months ended June 30, 2021.March 31, 2022. The increase in R&D expenses was primarily due to increases of $5.1$3.9 million of personnel-related expenses, $1.0$1.3 million in materialsof material and supplies and $0.5 million of clinical and regulatory expenses, in support of our growth drivers to develop new products and build the clinical evidence base.Selling, General and Administrative Expenses. SG&A expenses increased $30.3 million, or 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. The increase in SG&A costs was primarily due to increases of $19.4 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, $3.2 million in marketing expenses, $2.9 million in travel and related expenses, $2.3 million in professional fees, and $1.1 million in facility related expenses, particularly related to our new facility.Interest Income. Interest income increased by $179,000 or 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. The increase in interest income was primarily due to higher average cash and short-term investments balances during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.Interest Expense. Interest expense 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.Other Income (Expense). Other income of $252,000 for the three months ended June 30, 2022 consisted primarily of foreign currency transaction gains.Comparison of the six months ended June 30, 2022 and 2021The 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):Revenue. Revenue increased $58.6 million, or 48.5%, to $179.5 million during the six months ended June 30, 2022, compared to $120.9 million during the six months ended June 30, 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 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, 2022, compared to $9.4 million during the six months ended June 30, 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 our growth.Gross Margin. Gross margin for the six months ended June 30, 2022 decreased to 88.7%, compared to 92.2% for the six months ended June 30, 2021, primarily due to a decrease in operating leverage due to the expanded footprint of our manufacturing capacity and the addition of new products to our FlowTriever per procedure pricing model.Research and Development Expenses. R&D expenses increased $14.9 million, or 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. The increase in R&D expenses was21primarily due to increases of $10.1 million of personnel-related expenses, $2.8 million in materials and supplies, $0.7 million of clinical and regulatory expenses, and $0.7$0.2 million in software costs and depreciation expenses, in support of our growth drivers to develop new products and build the clinical evidence base.base, partially offset by a decrease of $0.4 million of expenses related to professional fees.$57.1$22.0 million, or 71.5%34.5%, to $136.9$85.7 million during the sixthree months ended June 30, 2022,March 31, 2023, compared to $79.8$63.7 million during the sixthree months ended June 30, 2021.March 31, 2022. The increase in SG&A costs was primarily due to increases of $38.6$19.0 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, $4.8$1.5 million in travel and related expenses, $4.8$0.4 million in sales and marketing related expenses, $4.0$0.4 million inof material and supplies related expenses, and $0.3 million of expenses related to professional fees, and $2.3partially offset by $0.3 million in facilityof insurance related expenses, particularly related to our new facility.expenses.$161,000 or 156.3% to $264,000$4.1 million during the sixthree months ended June 30, 2022,March 31, 2023, compared to $103,000 during the sixthree months ended June 30, 2021.March 31, 2022. The increase in interest income was primarily due to higheran increase in the average cash andbalance of our short-term investments balancesas well as increased interest rates during the sixthree months ended June 30, 2022March 31, 2023 compared to the sixthree months ended June 30, 2021.March 31, 2022.was relatively consistent with $146,000decreased to $40,000 during the sixthree months ended June 30, 2022,March 31, 2023, compared to $147,000$73,000 during the sixthree months ended June 30, 2021.March 31, 2022.income (Expenses)Income (Expense). Other income of $228,000$39,000 for the sixthree months ended June 30,March 31, 2023 consisted primarily of foreign currency transaction gains. Other expense of $24,000 for the three months ended March 31, 2022 consisted primarily of foreign currency transaction gains.losses.LiquidityIncome Taxes. Income taxes increased to $1.0 million for the three months ended March 31, 2023. The increase in the income taxes primarily relates to an increase in the current year U.S. federal and Capital Resourcesstate income taxes due to the use of calculating the interim tax expense on a discrete basis for the three months ended March 31, 2023.Follow-On Offering,follow-on offering completed in March 2022, 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 March 2022, we 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 after deducting underwriting discounts and commissions and offering expenses. As of June 30, 2022,March 31, 2023, we had cash and cash equivalents of $79.7$56.6 million and short-term investments in debt securities of $250.8 million$271.9 million. We maintain cash and an accumulated deficitcash equivalents with financial institutions in excess of $30.9 million. insured limits.September 2020,December 2022, we entered into aamended our revolving Credit Agreement with Bank of America which provides for loans up to a maximum of $30$40.0 million and increases the optional accordion to $120.0 million. As of June 30, 2022,March 31, 2023, we had no principal outstanding under the Amended Credit Agreement and the amount available to borrow was approximately $28.2$38.0 million. The Amended Credit Agreement also includes a Letter of Credit subline facility (“LC Facility”) of up to $5.0 million. In February 2023, we amended the LC Facility to increase the limit to up to $10.0 million. The aggregate stated amount outstanding of letter of credits reduces the total borrowing base available under the Amended Credit Agreement and is subject to certain fees. As of March 31, 2023, we had 3 letters of credit in the aggregated amount of $2.0 million outstanding under the LC Facility. For additional information about the Amended Credit Agreement, see note expectanticipate that our cash and cash equivalents, short-term investments and available borrowings under our Amended Credit Agreement will enable usbe sufficient to fund our operating expenses for at least the next 12 months from months. Our primary short-term needs for capital for our current planned operations, which are subject to change, include:date hereof.continued advancement of research and development including clinical study activities; and 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.Cash Flows22Three Months Ended March 31, 2023 2022 Net cash provided by (used in): Operating activities $ (2,013) $ (9,100) Investing activities (4,043) (73,511) Financing activities 2,466 176,542 Effect of foreign exchange rate on cash and cash equivalents (70) (127) Net (decrease) increase in cash and cash equivalents $ (3,660) $ 93,804 Cash (Used in) Provided by Operating Activitiessixthree months ended June 30, 2022March 31, 2023 was $12.2$2.0 million, consisting primarily of net loss of $13.3$2.2 million and a decrease in net operating assets of $16.2$9.4 million, offset by non-cash charges of $17.3$9.6 million. The decrease in net operating assets was primarily due to decreases in accrued liabilities and accounts payable of $7.8 million and $0.3 million, respectively, due to the timing of payments and growth of our operations, a decrease in lease prepayments for lessor's owned leasehold improvements of $0.5 million and a decrease in operating lease liabilities of $0.4 million, coupled with an increase in inventories of $3.8 million, offset by decreases in accounts receivable of $2.8 million and prepaid and other assets of $0.5 million. The non-cash charges primarily consisted of stock-based compensation expense of $10.3 million, amortization of the right-of-use assets of $1.6 million and depreciation of $1.3 million, partially offset by amortization of premium and discount on marketable securities of $3.8 million.$2.2$6.7 million due to the timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of $3.0$2.1 million and a decrease in operating lease liabilities of $0.5$0.3 million, coupled with increases in inventories of $5.7$2.8 million and accounts receivable of $7.0$2.7 million, offset by a decrease in prepaid and other assets of $1.0$0.3 million. The non-cash charges primarily$13.7$6.6 million in stock-based compensation expense, $2.3$1.1 million in depreciation, and $1.2$0.6 million in amortization of the right-of-use assets.provided by operatingused in investing 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 $10.1 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 Investing Activitiessixthree months ended June 30, 2022March 31, 2023 was $175.4$4.0 million, consisting of $230.8$122.1 million purchases of short-term investments, $1.0 million purchases of property and equipment, and $0.3 million purchases of other investments, offset by maturities of short-term investments of $119.3 million.$5.9$2.7 million purchases of property and equipment, offset by maturities of short-term investments of $67.0$47.0 million.used in investingprovided by financing 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 Provided by Financing Activitiessixthree months ended June 30,March 31, 2023 was $2.5 million, consisting of $4.2 million proceeds from the issuance of common stock under our employee stock purchase plan and $0.2 million of proceeds from exercise of stock options, offset by $1.9 million of tax payments related to vested RSUs.$174.9$176.5 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$0.3 million of proceeds from exercise of stock options, offset by $3.4$1.6 million of tax payments related to vested RSUs.Net cash provided by financing activities to our condensed consolidated financial statements, which is included 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.Off-Balance Sheet ArrangementsWe 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.Contractual Obligations and CommitmentsThere“Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)”, there have been no materialsignificant changes outsidein our critical accounting policies during the ordinary course of businessthree months ended March 31, 2023, as compared to the Company’s contractual obligations from thosecritical accounting policies disclosed in “Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations”Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC on February 23, 2022.27, 2023.2021,2022, filed with the SEC on February 23, 202227, 2023 under “Part II, Item 7. Quantitative and Qualitative Disclosures about Market Risk.”June 30, 2022.March 31, 2023. Based on such evaluation, our Principal Executive Office and Principal Financial Officer concluded that, as of June 30, 2022,March 31, 2023, these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded,23June 30, 2022,March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.II—II — OTHER INFORMATIONLegal Proceedings.Risk Factors."Part“Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. As of the date of this Report, 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, 2021.2022.Unregistered Sales of Equity Securities and Use of Proceeds.Defaults Upon Senior Securities.Mine Safety Disclosures.Other Information.OTHER INFORMATIONExhibits.Exhibit Number Description Incorporated by reference Form File Number Exhibit Filing Date 3.1 8-K 001-39293 3.1 5/28/2020 3.2 8-K 001-39293 3.2 5/28/2020 10.1^ 10.2* 31.1 31.2 32.1† 32.2† 101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its EBRL tags are embedded within the inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page with Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). AugustMay 3, 2022William HoffmanAndrew HykesWilliam Hoffman
(Principal Executive Officer)AugustMay 3, 2022
(Principal Financial Officer and
Principal Accounting Officer)27