☒ | 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.
|
| September 30, |
|
| December 31, |
| ||
Assets |
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 83,528 |
|
| $ | 92,752 |
|
Short-term investments in debt securities |
|
| 235,705 |
|
|
| 83,348 |
|
Accounts receivable, net |
|
| 54,059 |
|
|
| 42,351 |
|
Inventories, net |
|
| 29,670 |
|
|
| 21,053 |
|
Prepaid expenses and other current assets |
|
| 7,609 |
|
|
| 5,694 |
|
Total current assets |
|
| 410,571 |
|
|
| 245,198 |
|
Property and equipment, net |
|
| 21,191 |
|
|
| 16,471 |
|
Operating lease right-of-use assets |
|
| 49,951 |
|
|
| 44,909 |
|
Deposits and other assets |
|
| 6,106 |
|
|
| 981 |
|
Long-term investments in debt securities |
|
| — |
|
|
| 3,983 |
|
Total assets |
| $ | 487,819 |
|
| $ | 311,542 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
| ||
Current liabilities |
|
|
|
|
|
| ||
Accounts payable |
| $ | 6,035 |
|
| $ | 6,541 |
|
Payroll-related accruals |
|
| 28,052 |
|
|
| 24,433 |
|
Accrued expenses and other current liabilities |
|
| 7,668 |
|
|
| 10,737 |
|
Operating lease liabilities, current portion |
|
| 588 |
|
|
| 802 |
|
Total current liabilities |
|
| 42,343 |
|
|
| 42,513 |
|
Operating lease liabilities, noncurrent portion |
|
| 30,377 |
|
|
| 28,404 |
|
Other long-term liability |
|
| — |
|
|
| 1,416 |
|
Total liabilities |
|
| 72,720 |
|
|
| 72,333 |
|
Commitments and contingencies (Note 7) |
|
|
|
|
|
| ||
Stockholders' equity |
|
|
|
|
|
| ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares |
|
| — |
|
|
| — |
|
Common stock, $0.001 par value, 300,000,000 shares |
|
| 53 |
|
|
| 50 |
|
Additional paid in capital |
|
| 457,043 |
|
|
| 257,144 |
|
Accumulated other comprehensive loss |
|
| (945 | ) |
|
| (402 | ) |
Accumulated deficit |
|
| (41,052 | ) |
|
| (17,583 | ) |
Total stockholders' equity |
|
| 415,099 |
|
|
| 239,209 |
|
Total liabilities and stockholders' equity |
| $ | 487,819 |
|
| $ | 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 September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 96,204 |
|
| $ | 72,916 |
|
| $ | 275,700 |
|
| $ | 193,766 |
|
Cost of goods sold |
|
| 11,064 |
|
|
| 7,040 |
|
|
| 31,378 |
|
|
| 16,477 |
|
Gross profit |
|
| 85,140 |
|
|
| 65,876 |
|
|
| 244,322 |
|
|
| 177,289 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
|
| 19,105 |
|
|
| 12,499 |
|
|
| 53,809 |
|
|
| 32,292 |
|
Selling, general and administrative |
|
| 75,833 |
|
|
| 56,104 |
|
|
| 212,721 |
|
|
| 135,899 |
|
Total operating expenses |
|
| 94,938 |
|
|
| 68,603 |
|
|
| 266,530 |
|
|
| 168,191 |
|
(Loss) income from operations |
|
| (9,798 | ) |
|
| (2,727 | ) |
|
| (22,208 | ) |
|
| 9,098 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
| 618 |
|
|
| 27 |
|
|
| 882 |
|
|
| 130 |
|
Interest expense |
|
| (74 | ) |
|
| (73 | ) |
|
| (220 | ) |
|
| (220 | ) |
Other income (expense) |
|
| (59 | ) |
|
| 30 |
|
|
| 169 |
|
|
| (4 | ) |
Total other income (expenses) |
|
| 485 |
|
|
| (16 | ) |
|
| 831 |
|
|
| (94 | ) |
(Loss) income before income taxes |
|
| (9,313 | ) |
|
| (2,743 | ) |
|
| (21,377 | ) |
|
| 9,004 |
|
Provision for income taxes |
|
| 840 |
|
|
| 61 |
|
|
| 2,092 |
|
|
| 271 |
|
Net (loss) income |
| $ | (10,153 | ) |
| $ | (2,804 | ) |
| $ | (23,469 | ) |
| $ | 8,733 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency translation adjustments |
|
| (406 | ) |
|
| (146 | ) |
|
| (814 | ) |
|
| (269 | ) |
Unrealized gain on available-for-sale debt securities |
|
| 644 |
|
|
| 7 |
|
|
| 271 |
|
|
| 19 |
|
Total other comprehensive income (loss) |
|
| 238 |
|
|
| (139 | ) |
|
| (543 | ) |
|
| (250 | ) |
Comprehensive (loss) income |
| $ | (9,915 | ) |
| $ | (2,943 | ) |
| $ | (24,012 | ) |
| $ | 8,483 |
|
Net (loss) income per share |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | (0.19 | ) |
| $ | (0.06 | ) |
| $ | (0.45 | ) |
| $ | 0.18 |
|
Diluted |
| $ | (0.19 | ) |
| $ | (0.06 | ) |
| $ | (0.45 | ) |
| $ | 0.16 |
|
Weighted average common shares used to compute net (loss) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
| 53,491,625 |
|
|
| 50,001,996 |
|
|
| 52,552,662 |
|
|
| 49,664,037 |
|
Diluted |
|
| 53,491,625 |
|
|
| 50,001,996 |
|
|
| 52,552,662 |
|
|
| 55,511,061 |
|
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 |
|
|
| — |
|
|
| — |
|
|
| 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 |
|
Options exercised for common stock |
|
| 167,102 |
|
|
| — |
|
|
| 109 |
|
|
| — |
|
|
| — |
|
|
| 109 |
|
Issuance of common stock upon |
|
| 43,643 |
|
|
| — |
|
|
| (1,224 | ) |
|
| — |
|
|
| — |
|
|
| (1,224 | ) |
Shares issued under Employee |
|
| 78,707 |
|
|
| — |
|
|
| 4,995 |
|
|
| — |
|
|
| — |
|
|
| 4,995 |
|
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 7,356 |
|
|
| — |
|
|
| — |
|
|
| 7,356 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 238 |
|
|
| — |
|
|
| 238 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (10,153 | ) |
|
| (10,153 | ) |
Balance, September 30, 2022 |
|
| 53,595,277 |
|
| $ | 53 |
|
| $ | 457,043 |
|
| $ | (945 | ) |
| $ | (41,052 | ) |
| $ | 415,099 |
|
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 | ||||||||||||||||||||||||
|
| Common Stock |
|
| Additional Paid In |
|
| Accumulated Other Comprehensive |
|
| Accumulated |
|
| Total |
| |||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Income (Loss) |
|
| Deficit |
|
| Equity |
| ||||||
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 |
|
Options exercised for common stock |
|
| 150,662 |
|
|
| — |
|
|
| 159 |
|
|
| — |
|
|
| — |
|
|
| 159 |
|
Shares issued under Employee |
|
| 48,168 |
|
|
| — |
|
|
| 3,676 |
|
|
| — |
|
|
| — |
|
|
| 3,676 |
|
Issuance of common stock upon |
|
| 116,931 |
|
|
| — |
|
|
| (842 | ) |
|
| — |
|
|
| — |
|
|
| (842 | ) |
Share-based compensation expense |
|
| — |
|
|
| — |
|
|
| 12,499 |
|
|
| — |
|
|
| — |
|
|
| 12,499 |
|
Other comprehensive income (loss) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (139 | ) |
|
| — |
|
|
| (139 | ) |
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,804 | ) |
|
| (2,804 | ) |
Balance, September 30, 2021 |
|
| 50,144,590 |
|
| $ | 50 |
|
| $ | 253,256 |
|
| $ | (246 | ) |
| $ | (18,690 | ) |
| $ | 234,370 |
|
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 | ||||||||||||||||||||||||
|
| Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash flows from operating activities |
|
|
|
|
|
| ||
Net (loss) income |
| $ | (23,469 | ) |
| $ | 8,733 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by |
|
|
|
|
|
| ||
Depreciation |
|
| 3,430 |
|
|
| 2,108 |
|
Amortization of deferred financing costs |
|
| 108 |
|
|
| 108 |
|
Amortization of right-of-use assets |
|
| 1,799 |
|
|
| 537 |
|
Share-based compensation expense |
|
| 21,075 |
|
|
| 20,939 |
|
Allowance for credit losses, net |
|
| 341 |
|
|
| (22 | ) |
Loss on disposal of fixed assets |
|
| 23 |
|
|
| — |
|
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| (12,220 | ) |
|
| (10,898 | ) |
Inventories |
|
| (8,706 | ) |
|
| (8,924 | ) |
Prepaid expenses, deposits and other assets |
|
| (1,537 | ) |
|
| (4,525 | ) |
Accounts payable |
|
| (441 | ) |
|
| 2,042 |
|
Payroll-related accruals, accrued expenses and other liabilities |
|
| (562 | ) |
|
| 12,919 |
|
Operating lease liabilities |
|
| (565 | ) |
|
| (574 | ) |
Lease prepayments for lessor's owned leasehold improvements |
|
| (4,503 | ) |
|
| (11,964 | ) |
Net cash (used in) provided by operating activities |
|
| (25,227 | ) |
|
| 10,479 |
|
Cash flows from investing activities |
|
|
|
|
|
| ||
Purchases of property and equipment |
|
| (8,173 | ) |
|
| (10,927 | ) |
Purchases of marketable securities |
|
| (332,103 | ) |
|
| (105,438 | ) |
Maturities of marketable securities |
|
| 184,000 |
|
|
| 68,000 |
|
Purchases of other investments |
|
| (5,693 | ) |
|
| — |
|
Net cash used in investing activities |
|
| (161,969 | ) |
|
| (48,365 | ) |
Cash flows from financing activities |
|
|
|
|
|
| ||
Proceeds from issuance of common stock in public offering, net of |
|
| 174,394 |
|
|
| — |
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
| 8,422 |
|
|
| 5,558 |
|
Proceeds from exercise of stock options |
|
| 610 |
|
|
| 732 |
|
Payment of taxes related to vested restricted stock units |
|
| (4,599 | ) |
|
| (1,597 | ) |
Net cash provided by financing activities |
|
| 178,827 |
|
|
| 4,693 |
|
Effect of foreign exchange rate on cash and cash equivalents |
|
| (855 | ) |
|
| (266 | ) |
Net decrease in cash |
|
| (9,224 | ) |
|
| (33,459 | ) |
Cash and cash equivalents beginning of period |
|
| 92,752 |
|
|
| 114,617 |
|
Cash and cash equivalents end of period |
| $ | 83,528 |
|
| $ | 81,158 |
|
|
|
|
|
|
|
| ||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
| ||
Cash paid for income taxes |
| $ | 3,085 |
|
| $ | 271 |
|
Cash paid for interest |
| $ | 112 |
|
| $ | 113 |
|
Noncash investing and financing: |
|
|
|
|
|
| ||
Lease liabilities arising from obtaining new right-of-use assets |
| $ | 2,334 |
|
| $ | 28,648 |
|
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 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 COVID-19 pandemic may continue to negatively impact the Company's 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 intercompany balances and transactions have been eliminated in consolidation.
Management Estimates
8
Inari Medical, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue Recognition
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ClotTriever |
|
| 31 | % |
|
| 30 | % |
|
| 32 | % |
|
| 33 | % |
FlowTriever |
|
| 69 | % |
|
| 70 | % |
|
| 68 | % |
|
| 67 | % |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
ClotTriever and other systems | 34 | % | 32 | % | |||||||||||||||||||
FlowTriever system | 66 | % | 68 | % |
3. September 30, 2022 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 21,283 $ — $ — $ 21,283 U.S. Treasury securities 3,979 — — 3,979 Corporate debt securities and commercial paper — 15,973 — 15,973 Total included in cash and cash equivalents 25,262 15,973 — 41,235 Investments: U.S. Treasury securities 178,462 — — 178,462 U.S. Government agencies — 26,184 — 26,184 Corporate debt securities and commercial paper — 31,059 — 31,059 Total included in short-term investments 178,462 57,243 — 235,705 Total assets $ 203,724 $ 73,216 $ — $ 276,940 December 31, 2021 Level 1 Level 2 Level 3 Aggregate Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 48,595 $ — $ — $ 48,595 Total included in cash and cash equivalents 48,595 — — 48,595 Investments: U.S. Treasury securities 44,322 — — 44,322 Corporate debt securities and commercial paper — 39,026 — 39,026 Total included in short-term investments 44,322 39,026 — 83,348 U.S. Treasury securities included in 3,983 — — 3,983 Total assets $ 96,900 $ 39,026 $ — $ 135,926 September 30, 2022 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 21,283 $ — $ — $ 21,283 U.S. Treasury securities 3,979 — — 3,979 Corporate debt securities and commercial paper 15,936 37 — 15,973 Total included in cash and cash equivalents 41,198 37 — 41,235 Investments: U.S. Treasury securities 178,353 363 (254 ) 178,462 U.S. Government agencies 26,139 45 — 26,184 Corporate debt securities and commercial paper 31,002 84 (27 ) 31,059 Total included in short-term investments 235,494 492 (281 ) 235,705 Total assets $ 276,692 $ 529 $ (281 ) $ 276,940 December 31, 2021 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Value Financial Assets Cash and cash equivalents: Money market mutual funds $ 48,595 $ — $ — $ 48,595 Total included in cash and cash equivalents 48,595 — — 48,595 Investments: U.S. Treasury securities 44,349 — (27 ) 44,322 Corporate debt securities and commercial paper 39,012 14 — 39,026 Total included in short-term investments 83,361 14 (27 ) 83,348 U.S. Treasury securities included in 3,993 — (10 ) 3,983 Total assets $ 135,949 $ 14 $ (37 ) $ 135,926 Inventories, net of reserves, September 30, December 31, Raw materials $ 11,700 $ 5,763 Work-in-process 2,691 1,490 Finished goods 15,279 13,800 $ 29,670 $ 21,053 September 30, December 31, Manufacturing equipment $ 12,146 $ 7,408 Leasehold improvements 4,932 4,712 Assets in progress 3,446 3,124 Furniture and fixtures 3,998 3,044 Computer hardware 4,592 2,864 Computer software 100 100 Total property and equipment, gross 29,214 21,252 Accumulated depreciation (8,023 ) (4,781 ) Total property and equipment, net $ 21,191 $ 16,471 INARI MEDICAL, INC. COMMITMENTS AND CONTINGENCIES 17.1 years. Total lease Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease cost $ 1,039 $ 331 $ 3,139 $ 702 Short-term lease cost 147 69 192 142 Variable lease cost 181 116 477 200 Total lease costs $ 1,367 $ 516 $ 3,808 $ 1,044 Year ending December 31: Amount Remainder of 2022 $ 609 2023 2,471 2024 2,550 2025 2,619 2026 2,693 Thereafter 41,478 Total lease payments 52,420 Less imputed interest (21,455 ) Total lease liabilities 30,965 Less: lease liabilities - current portion (588 ) Lease liabilities - noncurrent portion $ 30,377 Year ending December 31: Amount Remainder of 2022 $ 145 2023 758 2024 584 Total lease payments $ 1,487 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 EQUITY INCENTIVE PLANS 2023. A summary of stock option activities under the 2011 Plan for the Number of Weighted Weighted Weighted Intrinsic Outstanding, December 31, 2021 2,574,354 $ 1.43 $ 1.02 7.07 $ 231,286 Exercised (718,297 ) $ 0.85 $ 0.07 $ 54,856 Cancelled (17,495 ) $ 2.34 $ 1.41 $ 1,342 Outstanding, September 30, 2022 1,838,562 $ 1.64 $ 1.15 6.38 $ 130,529 Vested and exercisable at September 30, 2022 1,449,196 $ 1.32 $ 0.96 6.26 $ 103,352 Vested and expected to vest at September 30, 2022 1,826,633 $ 1.63 $ 1.14 6.38 $ 129,708 Number of Weighted Outstanding, December 31, 2021 611,205 $ 88.34 Granted 602,831 73.94 Vested (189,006 ) 84.52 Cancelled (42,774 ) 84.77 Outstanding, September 30, 2022 982,256 $ 80.39 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cost of goods sold $ 386 $ 218 $ 1,126 $ 597 Research and development 1,051 580 3,143 1,601 Selling, general and administrative 5,919 11,701 16,806 18,741 $ 7,356 $ 12,499 $ 21,075 $ 20,939 The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model with the following assumptions: Nine Months Ended September 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (Loss) income before income taxes $ (9,313 ) $ (2,743 ) $ (21,377 ) $ 9,004 Provision for income taxes 840 61 2,092 271 Net (loss) income $ (10,153 ) $ (2,804 ) $ (23,469 ) $ 8,733 Provision for income taxes as a percentage 9.0 % 2.2 % 9.8 % 3.0 % March 31, 2023. 2023. RETIREMENT PLAN 15. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net (loss) income (in thousands) $ (10,153 ) $ (2,804 ) $ (23,469 ) $ 8,733 Denominator: Weighted average number of common shares 53,491,625 50,001,996 52,552,662 49,664,037 Common stock equivalents from outstanding — — — 2,927,569 Common stock equivalents from unvested RSUs — — — 2,917,867 Common stock equivalents from ESPP — — — 847 Common stock equivalents from restricted stock — — — 741 Weighted average number of common shares 53,491,625 50,001,996 52,552,662 55,511,061 Net (loss) income per share: Basic $ (0.19 ) $ (0.06 ) $ (0.45 ) $ 0.18 Diluted $ (0.19 ) $ (0.06 ) $ (0.45 ) $ 0.16 The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the three Three and Nine Months Ended September 30, 2022 Three Months Ended September 30, 2021 Common stock options 1,838,562 2,732,986 RSUs 3,694,930 2,778,176 Restricted stock subject to future vesting — 741 5,533,492 5,511,903 MANAGEMENT'S DISCUSSION AND ANALYSIS 2022. Please also see the section titled “Cautionary Note Regarding Forward-Looking Statements.” peripheral vasculature through aspiration. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 ClotTriever 31 % 30 % 32 % 33 % FlowTriever 69 % 70 % 68 % 67 % Three Months Ended September 30, 2022 % 2021 % Change $ Revenue $ 96,204 100.0 % $ 72,916 100.0 % $ 23,288 Cost of goods sold 11,064 11.5 % 7,040 9.7 % 4,024 Gross profit 85,140 88.5 % 65,876 90.3 % 19,264 Operating expenses: Research and development 19,105 19.9 % 12,499 17.1 % 6,606 Selling, general and administrative 75,833 78.8 % 56,104 76.9 % 19,729 Total operating expenses 94,938 98.7 % 68,603 94.0 % 26,335 Income (loss) from operations (9,798 ) (10.2 %) (2,727 ) (3.7 %) (7,071 ) Other income (expense) Interest income 618 0.6 % 27 0.0 % 591 Interest expense (74 ) (0.1 %) (73 ) (0.1 %) (1 ) Other income (expense) (59 ) (0.1 %) 30 0.0 % (89 ) Total other expenses, net 485 0.4 % (16 ) (0.1 %) 501 Income (loss) before income taxes $ (9,313 ) (9.8 %) $ (2,743 ) (3.8 %) $ (6,570 ) Nine Months Ended September 30, 2022 % 2021 % Change $ Revenue $ 275,700 100.0 % $ 193,766 100.0 % $ 81,934 Cost of goods sold 31,378 11.4 % 16,477 8.5 % 14,901 Gross profit 244,322 88.6 % 177,289 91.5 % 67,033 Operating expenses: Research and development 53,809 19.5 % 32,292 16.7 % 21,517 Selling, general and administrative 212,721 77.2 % 135,899 70.1 % 76,822 Total operating expenses 266,530 96.7 % 168,191 86.8 % 98,339 Income from operations (22,208 ) (8.1 %) 9,098 4.7 % (31,306 ) Other income (expense) Interest income 882 0.3 % 130 0.1 % 752 Interest expense (220 ) (0.1 %) (220 ) (0.1 %) — Other income (expense) 169 0.1 % (4 ) 0.0 % 173 Total other expenses, net 831 0.3 % (94 ) 0.0 % 925 Income (loss) before income taxes $ (21,377 ) (7.8 %) $ 9,004 4.7 % $ (30,381 ) support of commercialization efforts to expand our sales force along with expanding into new markets, and developing products to enhance performance and address unmet market needs; 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. Nine Months Ended September 30, 2022 2021 Net cash provided by (used in): Operating activities $ (25,227 ) $ 10,479 Investing activities (161,969 ) (48,365 ) Financing activities 178,827 4,693 Effect of foreign exchange rate on cash and cash equivalents (855 ) (266 ) Net decrease in cash and cash equivalents $ (9,224 ) $ (33,459 ) cash used in operating activities recorded, 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 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 OfficerThree 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 September 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.9Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsFair Value MeasurementsSeptember 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 10Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsCash Equivalents and InvestmentsCASH EQUIVALENTS AND INVESTMENTSSeptember 30, 2022March 31, 2023 and December 31, 20212022 (in thousands):
long-term investmentsMarch 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 December 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 September 30, 2022 and December 31, 2021 totaling $626,000 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 11Inari 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 $947,000$1,094,000 and $648,000$857,000 was included in SG&Aoperating expenses and $223,000$254,000 and $172,000$206,000 was included in cost of goods sold for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively. Depreciation expense$Contents2,774,000 and $1,633,000 was included in SG&A expenses and $656,000 and $475,000 was included in cost of goods sold for the nine months ended September 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-yearlongest of which is for five years. The right-of-use asset and lease for a facility in Irvine, California, where substantially all operations ofliability includes renewal options if the Company had been located from September 2019 to September 2021. This five-year lease was originally set to expire in September 2024 and contained two optional extension periods of five years each. Concurrent with the execution of a new ten-year lease in October 2020 (see below), the Company entered into a termination agreement (as amended) that released the Company from the obligations under the five-year lease effective July 2022 and contained options to extend the lease term for up to three periods of an additional 30 days each, which the Company has exercised as of September 30, 2022. In October 2022, the Company amended the lease agreement to cancel the termination agreement and update the lease termination date to September 2024.In October 2020, the Company entered into a ten-year lease for a facility located in Irvine, California (the “Oak Canyon lease”) with two option extension periods of five years each, which the Company has determined that it is reasonably certain to exercise. The Oak Canyonexercise such renewal options.requires the Company to make variableROU assets and 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. 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 $42.2liabilities were $50.6 million and $28.6$33.0 million, respectively, with the weighted average remaining lease term of ROU asset and lease liability, respectively. The ROU asset includes approximately $13.5 million, net of $3.7 million tenant allowance, related to prepaid lease payments for the lessor’s owned leasehold improvements which were reclassified from assets in progress and deposits and other assets. The operating ROU asset also includes $7.3 million of additional prepaid lease payments for the lessor's owned leasehold improvements paid subsequent to the commencement date.18.9 years. As of September 30,December 31, 2022, the aggregate operating lease ROU asset and lease liability related to the Oak Canyon leaseliabilities were $47.6$50.7 million and $28.4$32.3 million, respectively, with the weighted average remaining lease term of 226 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 commenced on 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 and is, therefore, included in the calculation of the ROU asset and lease liability. The lease payment is also indexed to the national consumer price index, which may be adjusted once per calendar year. The Basel lease also requires the Company to maintain a bank guarantee for the benefit of the landlord in the amount of approximately $0.2 million, which is secured by two letters of credit issued under the Company’s Credit Agreement. The Basel lease has a remaining lease term of 117 months as of September 30, 2022.12Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsSeptember 30, 2022,March 31, 2023, the weighted average incremental borrowing rate used to measure operating lease liabilities was 6.1%6.05%. Cash paid for amounts included in the measurement of operating lease liabilities was $705,000$846,000 and $186,000$714,000 for the three months ended September 30,March 31, 2023 and 2022, and 2021 and $2,030,000 and $557,000 for the nine months ended September 30, 2022 and 2021, respectively.cost for the three and nine months ended September 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 September 30, 2022March 31, 2023 are as follows (in thousands):The following are future minimum lease payments for the lease amendment discussed above, which has not yet commenced and is not included in ROU assets and operating lease liabilities as of September 30, 2022 (in thousands):Year ending December 31: Amount Remainder of 2023 Remainder of 2023 $ 2,602 2024 3,558 2025 2025 3,044 2026 2026 2,923 2027 2027 2,989 Thereafter 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 13Inari 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 September 30, 2022March 31, 2023 and 2021 and $87,000 for the nine months ended September 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 $1,500.$1,500. The Company recorded royalty expense to cost of goods sold of $1,500$1,500 and $201,000$212,000 for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $respectively.215,000 and $586,000 for the nine months ended September 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 September 30, 2022,March 31, 2023, the outstanding balanceCompany's self-insurance liability, inclusive of administrative fees, was approximately $1.2$1.5 million, which wasis included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.Concentrationsand nine months ended September 30,March 31, 2023 and 2022, and 2021, there were no 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 September 30, 2022 and December 31, 2021, there were no customers that accounted for more than 10%10% of the Company’s accounts receivable.10%10% of the Company’s purchases for the three and nine months ended September 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 no vendors that accounted for more than 10%10% of the Company’s accounts payable as of September 30, 2022 and December 31, 2021.2022.Related PartyRELATED PARTY$70,000$30,000 and $38,000$74,000 for the three months ended September 30,March 31, 2023 and 2022, and 2021 and $262,000 and $301,000 for the nine months ended September 30, 2022 and 2021, respectively, which was included in operatingSG&A expenses on the condensed consolidated statements of operations and comprehensive income (loss). As of September 30, 2022March 31, 2023 and December 31, 2021,2022, there was no 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 no principal amount outstanding and no cash was pledgedCredit Agreement as of September 30, 2022 and December 31, 2021, and the amount available to borrow under the Credit Agreement was approximately $28.0 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 per14Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial Statementsannum 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 Credit Agreement 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 statedSeptember 30, 2022 ,March 31, 2023, the Company had fourthree letters of credit in the aggregated amount of $2.0$2.0 million outstanding under the LC Facility. As of December 31, 2021, the Company had two letters of credit in the aggregated amount of $1.8 million outstanding under the LC Facility.Therequirements as of September 30, 2022.requirement. Obligations under the Credit Agreement are secured by substantially all of the Company’s assets, excluding intellectual property.Stockholder’s EquitySTOCKHOLDER'S EQUITY$81.00$81.00 per share. The Company received net proceeds of approximately $174.4$174.4 million, after deducting underwriters’ discounts and commissions of $11.2$11.2 million and offering costs of $0.7$0.7 million.Equity Incentive Plansdirectors, consultants and advisors.directors. The Board has the authority to determine to whom awards will be granted, the number of shares, the term and the exercise price.The Company has initially reserved 3,468,048 shares of common stock for the issuance of a variety of awards under the 2020 Plan, including stock options, stock appreciation rights, awards of restricted stock and awards of restricted stock units. In addition, the number of shares of common stock reserved for issuance under the 2020 Plan will automatically increase on the first day of January for a period of up to ten years,, commencing on January 1, 2021, in an amount equal to 3%3% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors. As of September 30, 2022,March 31, 2023, there were 5,696,3046,523,422 shares available for issuance under the 2020 Plan, including 1,509,4041,620,650 additional shares reserved effective January 1, 2022.Number of
AwardsWeighted
Average
Fair ValueOutstanding, December 31, 2022 2,712,674 $ 0.17 Vested (2,712,674) (a) Outstanding, March 31, 2023 — $ — ninethree months ended September 30, 2022March 31, 2023 is as follows (intrinsic value in thousands):
Awards
Average
Exercise
Price
Average
Fair Value
Average
Remaining
Contractual
Life (in years)
Value15Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial StatementsNumber 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 no activity related to RSUs under the 2011 Plan during the three and nine months ended September 30, 2022. As of September 30, 2022 and December 31, 2021, the outstanding balance of RSUs under 2011 Plan was 2,712,674 with a weighted average fair value at the time of grant of $0.17 per RSU.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.
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 $4.5$5.2 million and $11.4$4.5 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, and $15.3 million and $15.1 million forrespectively.ninethree months ended September 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 $780,000 and $546,000determining 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 September 30, 2022 and 2021 and $2.5 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively, related to the Employee Stock Purchase Plan, wasMarch 31, 2023 is as follows (in(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 16Inari Medical, Inc.Total compensation costs as of September 30, 2022 related to all non-vested awards to be recognized in future periods was $67.0 million and is expected to be recognized over the remaining weighted average period of 2.9 years.2020.2020. 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 % September 30, 2022,March 31, 2023, a total of 218,564304,615 shares of common stock, including 78,70786,051 shares purchased in July 2022,January 2023, have been purchased under the ESPP, and a total of 1,767,9572,222,123 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 ninethree months ended September 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 ninethree months ended September 30, 2022.2022.17Inari Medical, Inc.Notes to Unaudited Condensed Consolidated Financial Statements2021,2022, the Company maintained a full valuation allowance of $17.9$30.3 million against the Company's net deferred tax assets. As of September 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.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 $1.7$2.7 million and $0.8$1.7 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, and $respectively.6.2 million and $2.6 million for the nine months ended September 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 $Contents0.8 million for the nine months ended September 30, 2022. The out-of-period adjustment was not considered material to the fiscal 2021 or fiscal 2022 annual consolidated financial statements.18Inari 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 nine months ended September 30,March 31, 2023 and 2022 and the three months ended September 30, 2021 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations.2021,2022, included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. 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 I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.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.September 30, 2022,March 31, 2023, we had cash, cash equivalents, and short-term investments of $319.2$328.4 million, no long-term debt outstanding and an accumulated deficit of $41.1$49.1 million.September 30, 2022,March 31, 2023, the Company generated $96.2$116.2 million in revenues with a gross margin of 88.2% and net loss of $2.2 million, as compared to revenues of $86.8 million with a gross margin of 88.5% and net loss of $10.2 million, as compared to revenues of $72.9 million with a gross margin of 90.3% and net loss of $2.8$3.1 million for the three months ended September 30, 2021.For the nine months ended September 30, 2022, the Company generated $275.7 million in revenues with a gross margin of 88.6% and net loss of $23.5 million, as compared to revenues of $193.8 million with a gross margin of 91.5% and net income of $8.7 million for the nine months ended September 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 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 the COVID-19 pandemic20may continue to negatively impact our 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 nine months ended September 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 % September 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 $23.3$29.4 million or 31.9%33.9%, to $96.2$116.2 million during the three months ended September 30, 2022,March 31, 2023, compared to $72.9$86.8 million during the three months ended September 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.$4.0$3.8 million, or 57.2%37.9%, to $11.1$13.7 million during the three months ended September 30, 2022,March 31, 2023, compared to $7.0$10.0 million during the three months ended September 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.21September 30, 2022March 31, 2023 decreased slightly to 88.5%88.2%, compared to 90.3%88.5% for the three months ended September 30, 2021,March 31, 2022, primarily due to the increase in costs associated with the addition of new products tocomponents offered under our FlowTriever per procedure pricing model.system price partially offset by manufacturing efficiencies.$6.6$5.9 million, or 52.9%36.7%, to $19.1$22.1 million during the three months ended September 30, 2022,March 31, 2023, compared to $12.5$16.1 million during the three months ended September 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, $0.9$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 $19.7 million, or 35.2%, to $75.8 million during the three months ended September 30, 2022, compared to $56.1 million during the three months ended September 30, 2021. The increase in SG&A costs was primarily due to increases of $12.5 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, $2.1 million in travel and related expenses, $1.5 million in marketing expenses, $1.5 million in professional fees, and $1.1 million in facility related expenses, particularly related to our new facility.Interest Income. Interest income increased by $0.6 million during the three months ended September 30, 2022, compared to the three months ended September 30, 2021. The increase in interest income was primarily due to higher interest rate and higher average cash, cash equivalent and short-term investments balances during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.Interest Expense. Interest expense was consistent with $74,000 during the three months ended September 30, 2022, compared to $73,000 during the three months ended September 30, 2021.Other Income (Expense). Other expense of $59,000 for the three months ended September 30, 2022 consisted primarily of foreign currency transaction losses.Comparison of the nine months ended September 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 $81.9 million, or 42.3%, to $275.7 million during the nine months ended September 30, 2022, compared to $193.8 million during the nine months ended September 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 $14.9 million, or 90.4%, to $31.4 million during the nine months ended September 30, 2022, compared to $16.5 million during the nine months ended September 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 nine months ended September 30, 2022 decreased to 88.6%, compared to 91.5% for the nine months ended September 30, 2021, primarily due to the costs associated with the addition of new products to our FlowTriever per procedure pricing model.22Research and Development Expenses. R&D expenses increased $21.5 million, or 66.6%, to $53.8 million during the nine months ended September 30, 2022, compared to $32.3 million during the nine months ended September 30, 2021. The increase in R&D expenses was primarily due to increases of $15.0 million of personnel-related expenses, $3.7 million in materials and supplies, $1.2$0.7 million of clinical and regulatory expenses, and $0.9$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.$76.8$22.0 million, or 56.5%34.5%, to $212.7$85.7 million during the ninethree months ended September 30, 2022,March 31, 2023, compared to $135.9$63.7 million during the ninethree months ended September 30, 2021.March 31, 2022. The increase in SG&A costs was primarily due to increases of $51.3$19.0 million in personnel-related expenses as a result of increased headcount across our organization and increased commissions due to higher revenue, $6.9$1.5 million in travel and related expenses, $6.3$0.4 million in sales and marketing related expenses, $5.4$0.4 million inof material and supplies related expenses, and $0.3 million of expenses related to professional fees, $3.4partially offset by $0.3 million in facilityof insurance related expenses, particularly related to our new facility, and $2.3 million in software costs and depreciation expenses.$0.8 million or 578.5% to $0.9$4.1 million during the ninethree months ended September 30, 2022,March 31, 2023, compared to $0.1 million during the ninethree months ended September 30, 2021.March 31, 2022. The increase in interest income was primarily due to higher interest rate and higheran increase in the average cash, cash equivalent andbalance of our short-term investments balancesas well as increased interest rates during the ninethree months ended September 30, 2022March 31, 2023 compared to the ninethree months ended September 30, 2021.March 31, 2022.was consistent with $220,000decreased to $40,000 during the ninethree months ended September 30, 2022 andMarch 31, 2023, compared to $73,000 during the ninethree months ended September 30, 2021.March 31, 2022.income (Expenses)Income (Expense). Other income of $169,000$39,000 for the ninethree months ended September 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,As of March 31, 2023, we completed our IPOhad cash and sold 9,432,949 sharescash equivalents of our common stock at $19.00 per share. Upon completion$56.6 million and short-term investments in debt securities of our IPO, we received net proceeds$271.9 million. We maintain cash and cash equivalents with financial institutions in excess of approximately $163.0 million, after deducting underwriting discounts and commissions and offering expenses. insured limits.MarchDecember 2022, we completed a Follow-On Offering and sold 2,300,000 shares ofamended our common stock at $81.00 per share, for net proceeds of approximately $174.4 million, after deducting underwriting discounts and commissions and offering expenses. In September 2020, we entered into a revolving Credit Agreement with Bank of America which provides for loans up to a maximum of $30.0$40.0 million and increases the optional accordion to $120.0 million. As of September 30, 2022, we had cash and cash equivalents of $83.5 million, short-term investments of $235.7 million and an accumulated deficit of $41.1 million. As of September 30, 2022,March 31, 2023, we had no principal outstanding under the Amended Credit Agreement and the amount available to borrow was approximately $28.0$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 along with cash flow from operations,under our Amended Credit Agreement will be adequate ussufficient to fund our operating expenses for at least the next 12 months. Our primary short-term needs for capital for our current planned operations, which are subject to change, include:Cash Flows23Three 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 Activitiesninethree months ended September 30, 2022March 31, 2023 was $25.2$2.0 million, consisting primarily of net loss of $23.5$2.2 million and a decrease in net operating assets of $28.5$9.4 million, offset by non-cash charges of $26.8$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.$1.0$6.7 million due to the timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of $4.5$2.1 million and a decrease in operating lease liabilities of $0.6$0.3 million, coupled with increases in inventories of $2.8 million and accounts receivable of $12.2$2.7 million, inventories of $8.7 million, andoffset by a decrease in prepaid and other assets of $1.5$0.3 million. The non-cash charges primarily$21.1$6.6 million in stock-based compensation expense, $3.4$1.1 million in depreciation, and $1.8$0.6 million in amortization of the right-of-use assets.provided by operatingused in investing activities for the nine months ended September 30, 2021 was $10.5 million, consisting primarily of net income of $8.7 million and non-cash charges of $23.7 million, offset by an increase in net operating assets of $21.9 million. The increase in net operating assets was primarily due to increases in accounts receivable of $10.9 million and inventories of $8.9 million to support the growth of our operations, an increase in prepaid and other assets of $4.5 million primarily from prepaid insurance, which were partially offset by increases in accounts payable of $2.0 million and accrued liabilities of $12.9 million due to timing of payments and growth of our operations, lease prepayments for lessor's owned leasehold improvements of $12.0 million and a decrease in operating lease liabilities of $0.6 million. The non-cash charges primarily consisted of $20.9 million in stock-based compensation expense, $2.1 million in depreciation, and $0.5 million in amortization of the right-of-use assets.Net Cash Used in Investing Activitiesninethree months ended September 30, 2022March 31, 2023 was $162.0$4.0 million, consisting of $332.1$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.$8.2$2.7 million purchases of property and equipment, offset by maturities of short-term investments of $184.0$47.0 million.used in investingprovided by financing activities for the nine months ended September 30, 2021 was $48.4 million, consisting of $105.4 million purchases of marketable securities coupled with $10.9 million purchases of property and equipment, offset by maturities of short-term investments of $68.0 million.Net Cash Provided by Financing Activitiesninethree months ended September 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.$178.8$176.5 million, consisting of $174.4 million net proceeds from the issuance of common stock in the Follow-On Offering,public offering, net of issuance costs of $11.9 million, $8.4$3.4 million 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 $4.6 million of tax payments related to vested RSUs.Net cash provided by financing activities in the nine months ended September 30, 2021 was $4.7 million, consisting of proceeds of $5.6 million in proceeds from the issuance of common stock under our employee stock purchase plan and $0.7$0.3 million of proceeds from exercise of stock options, offset by $1.6 million of tax payments related to vested RSUs.Off-Balance Sheet ArrangementsWe do not have any off-balance sheet arrangements, as defined by applicable regulations2. Summary of the U.S. Securities and Exchange Commission, that are reasonably likelySignificant Accounting Policies to have a current or future material effect on our condensed consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.Contractual Obligations and CommitmentsTherestatements, which is included in “Part I, Item 1. Condensed Consolidated Financial Statements (Unaudited)”, there have been no materialsignificant changes in our critical accounting policies during the three months ended March 31, 2023, as compared to our quantitative and qualitative disclosures about market risk from thosethe critical accounting policies disclosed in “Part II, Item 7. QuantitativeManagement's Discussion and Qualitative Disclosures about Market Risk”Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022, filed with the SEC on February 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.”September 30, 2022.March 31, 2023. Based on such evaluation, our Principal Executive Office and Principal Financial Officer concluded that, as of September 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, is24September 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). November 2, 2022William HoffmanAndrew HykesWilliam Hoffman
(Principal Executive Officer)November 2, 2022
(Principal Financial Officer and
Principal Accounting Officer)28