Inari Medical Blows Away Q2 Estimates

Chief Executive Bill Hoffman believes an urgent and expansive opportunity lies ahead for Inari Medical Inc., a medical device maker of products for patients suffering from blood clots and venous diseases. 

“We have a great deal of opportunity in front of us, and we sense a strong responsibility and urgency to address the needs of these patients,” he told analysts on Aug. 11.

The numbers—and Wall Street’s reception to the company’s business—support Hoffman’s premise.

The Irvine-based firm, in its inaugural quarterly earnings report as a public company, reported net sales of $25.4 million, which was well above analyst consensus estimates of $13.5 million and up 152% from the same period a year ago. It also reported a net loss for the June 30 quarter of $3.8 million or 16 cents per share, topping the average analyst estimate of an 18-cent loss. 

Despite disruptions to hospitals across the country due to the pandemic, treated patients increased from 2,400 in the first quarter to 2,500 in the second. 

The nascent public company has been a standout in the local business community this year.

It went public May 22, the first Orange County company to do so via a traditional IPO in over a year, raising about $163 million in proceeds. It has since seen its stock rise from an initial price of $16 to nearly $71 at press time.

Inari now sports a market cap of $3.4 billion, making it the 10th most valuable publicly traded company based in Orange County.

$3.6B Market 

Inari in its inaugural call this month with analysts said its markets are large and the “unmet need is spectacular.” 

Inari said its key advantage is that since 2000, more than 170 thrombectomy devices cleared by the FDA were nearly all designed for the arterial system and then “repurposed” for the veins.

By contrast, the company’s devices are designed from the start to remove clots from the veins.

Its ClotTriever product treats patients with deep vein thrombosis (DVT) while its FlowTriever system is used for the treatment of pulmonary embolism (PE). In the U.S. alone, there are about 240,000 patients with DVT while 200,000 patients have PE, the company said.

“At our current average selling prices, the combined market represents $3.6 billion in total addressable market,” Hoffman told analysts on a conference call. “Despite our strong growth in the first eight quarters of commercialization, we have penetrated less than 2% of this market.”

In the first half of 2020, Inari has already treated the same number of patients it treated in all of 2019. 

The company did not provide financial guidance for the remainder of the year, due to COVID-19 uncertainties. 

Analysts on average expect $109.8 million in sales this year; Inari reported $51 million of revenue in 2019. 

No Competition Woes 

Inari likes its chances despite a competitive environment. 

“There’s a reason we have two different products for two different disease states,” Hoffman told analysts, noting that its devices are built for specific venous environments and specific clots. 

Patients treated with Inari’s devices are not required to recover in the ICU. In fact, he said about 10% of its patients are treated on an outpatient basis. 

When asked about new entrants to the market, Hoffman said “the chance to expand the total number of patients being treated is going to outweigh any declining shares or marginal decrease in average selling prices.”

The average revenue for the ClotTriever and FlowTriever product was about $9,100 per procedure, for the six months ended June 30. 

Upward Momentum 

Inari said it witnessed steady recovery in procedures using its products in May and June and momentum that continued in July. 

Hoffman said he doesn’t think hospitals will postpone non-COVID procedures in the fall and he believes patients are now more comfortable seeking care. 

There is also evidence that COVID-19 patients suffer from high rates of blood clots, and Hoffman said though there has been no material impact to the business, it has raised the level of overall awareness among providers. 

“We believe this will have a positive impact on our patients and on our markets in the long haul,” he said.

Inari, which employs some 240 people and is based in 38,200-square-foot Spectrum-area headquarters, said it will expand its sales force in the third and fourth quarters, in order to support expansion in U.S territories and European countries; the company expects to receive CE marks later this year.