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Inari Medical Q3 Earnings Miss Estimates, Revenues Increase Y/Y
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Inari Medical, Inc. (NARI - Free Report) reported an adjusted loss per share of 13 cents in the third quarter of 2024 against the year-ago reported earnings of 5 cents per share. The Zacks Consensus Estimate for loss per share was pegged at 12 cents. On a GAAP basis, the company recorded a loss per share of 31 cents.
Inari Medical registered revenues of $153.4 million, up 21.4% year over year. The figure beat the Zacks Consensus Estimate by 1.7%.
Q3 Highlights
According to management, Inari Medical’s robust sales performance was driven primarily by the expansion of sales territories, new account openings, increasing adoption of procedures and introduction of new products. The result also benefited from the launch of VenaCore as well as positive reimbursement updates for Lim Flow during the second quarter.
The company stated that it observed strong performances for its market-leading PE and DVT therapies as well as its emerging therapies portfolio. NARI continues to enjoy leading position in large and underserved vascular markets.
NARI expects to start treating patients in China and Japan soon and is currently finalizing its go-to-market strategy for both regions. The company gained regulatory approval in Japan for ClotTriever during the third quarter, with reimbursement approval likely in the fourth quarter. Due to unmet needs, management expects its international business to represent more than 20% of total revenues in the future.
During the reported quarter, NARI witnessed growth in revenues from its global VTE business on the back of commercial expansion and market development. The global VTE revenues totaled $145.3 million, up 19.7% year over year. The company expects robust growth to continue for this business on the back of the strong adoption of mechanical thrombectomy in upcoming years as NARI leads in the significantly underpenetrated VTE market in the United States. The company continues to evaluate patient outcomes using its VTE products like FlowTriever and ClotTriever to establish them as the standard of care.
Emerging therapies business saw robust growth as well. The business recorded $8 million in sales during the quarter, reflecting 64% year-over-year growth. NARI expects the strong performace to continue in the fourth quarter.
The company is currently progressing well with the limited market release of the LimFlow system in the United States. Inari Medical received PMA approval from the FDA during the third quarter for its second-generation stent delivery system, which is likely to improve a key component of the LimFlow System. The LimFlow procedures are now reimbursed through NTAP beginning October 2024, which will allow higher reimbursements. This is expected to lead to increased adoption when NARI starts the full commercial release of the system in 2025.
Inari Medical, Inc. Price, Consensus and EPS Surprise
Inari launched Artix earlier this month to treat acute limb ischemia. The company also plans to commence a full market release for the InTrill device during the fourth quarter to treat AV fistula clots.
Margin Trend
In the quarter under review, Inari Medical’s gross profit improved 19.3% to $133.5 million. The gross margin contracted 140 basis points (bps) to 87.1%.
Selling, general and administrative expenses rose 26.5% to $108.3 million. Research and development expenses increased 36.9% year over year to $29.4 million. The operating expenses of $147.1 million increased 34% year over year.
The operating loss totaled $13.6 million against an operating income of $2.1 million in the year-ago period. Excluding acquisition-related costs of $0.3 million, acquired intangible asset amortization of $2.5 million, and change in fair value of contingent consideration liability of $6.6 million, adjusted operating loss in the second quarter was $0.4 million.
Financial Position
Inari Medical exited third-quarter 2024 with cash and cash equivalents and short-term investments of $111.6 million compared with $109.7 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $1.9 million compared with $23.7 million a year ago.
Guidance Updated
Inari Medical has raised the lower-end of its sales outlook for 2024.
For 2024, the company now expects revenues to be in the range of $601.5-$604.5 million (reflecting growth of 20.5-22.5% from the 2023 level) compared with the previous guidance of $594.5-$604.5 million. The Zacks Consensus Estimate is pegged at $600.1 million.
The company continues to expect to reach sustained operating profitability in the first half of 2025.
Our Take
Inari Medical exited the third quarter of 2024 with an improvement in overall revenues. However, earnings missed the Zacks Consensus Estimate. NARI’s product portfolio witnessed consistent improvement, which led to robust product adoption by its customers. The geographical performances were equally remarkable.
Although Inari Medical’s gross margin declined year over year, the sequential expansion of margins seems to be in line with the company’s expectation of reaching operating profitability in the first half of 2025. Meanwhile, the company’s earnings are likely to be softer in the fourth quarter as well.
Shares of NARI were up 8.6% during after-hours trading on Oct. 28, likely driven by robust sales growth and sequential improvement in gross margin. The company’s shares have lost 34.4% year to date against the industry’s growth of 5.3%. The S&P 500 Index was up 21.9% in that period.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Currently, Inari Medical carries a Zacks Rank #3 (Hold).
Globus Medical has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.
AngioDynamics has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Avanos has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.
Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.
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Inari Medical Q3 Earnings Miss Estimates, Revenues Increase Y/Y
Inari Medical, Inc. (NARI - Free Report) reported an adjusted loss per share of 13 cents in the third quarter of 2024 against the year-ago reported earnings of 5 cents per share. The Zacks Consensus Estimate for loss per share was pegged at 12 cents. On a GAAP basis, the company recorded a loss per share of 31 cents.
Inari Medical registered revenues of $153.4 million, up 21.4% year over year. The figure beat the Zacks Consensus Estimate by 1.7%.
Q3 Highlights
According to management, Inari Medical’s robust sales performance was driven primarily by the expansion of sales territories, new account openings, increasing adoption of procedures and introduction of new products. The result also benefited from the launch of VenaCore as well as positive reimbursement updates for Lim Flow during the second quarter.
The company stated that it observed strong performances for its market-leading PE and DVT therapies as well as its emerging therapies portfolio. NARI continues to enjoy leading position in large and underserved vascular markets.
NARI expects to start treating patients in China and Japan soon and is currently finalizing its go-to-market strategy for both regions. The company gained regulatory approval in Japan for ClotTriever during the third quarter, with reimbursement approval likely in the fourth quarter. Due to unmet needs, management expects its international business to represent more than 20% of total revenues in the future.
During the reported quarter, NARI witnessed growth in revenues from its global VTE business on the back of commercial expansion and market development. The global VTE revenues totaled $145.3 million, up 19.7% year over year. The company expects robust growth to continue for this business on the back of the strong adoption of mechanical thrombectomy in upcoming years as NARI leads in the significantly underpenetrated VTE market in the United States. The company continues to evaluate patient outcomes using its VTE products like FlowTriever and ClotTriever to establish them as the standard of care.
Emerging therapies business saw robust growth as well. The business recorded $8 million in sales during the quarter, reflecting 64% year-over-year growth. NARI expects the strong performace to continue in the fourth quarter.
The company is currently progressing well with the limited market release of the LimFlow system in the United States. Inari Medical received PMA approval from the FDA during the third quarter for its second-generation stent delivery system, which is likely to improve a key component of the LimFlow System. The LimFlow procedures are now reimbursed through NTAP beginning October 2024, which will allow higher reimbursements. This is expected to lead to increased adoption when NARI starts the full commercial release of the system in 2025.
Inari Medical, Inc. Price, Consensus and EPS Surprise
Inari Medical, Inc. price-consensus-eps-surprise-chart | Inari Medical, Inc. Quote
Inari launched Artix earlier this month to treat acute limb ischemia. The company also plans to commence a full market release for the InTrill device during the fourth quarter to treat AV fistula clots.
Margin Trend
In the quarter under review, Inari Medical’s gross profit improved 19.3% to $133.5 million. The gross margin contracted 140 basis points (bps) to 87.1%.
Selling, general and administrative expenses rose 26.5% to $108.3 million. Research and development expenses increased 36.9% year over year to $29.4 million. The operating expenses of $147.1 million increased 34% year over year.
The operating loss totaled $13.6 million against an operating income of $2.1 million in the year-ago period. Excluding acquisition-related costs of $0.3 million, acquired intangible asset amortization of $2.5 million, and change in fair value of contingent consideration liability of $6.6 million, adjusted operating loss in the second quarter was $0.4 million.
Financial Position
Inari Medical exited third-quarter 2024 with cash and cash equivalents and short-term investments of $111.6 million compared with $109.7 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $1.9 million compared with $23.7 million a year ago.
Guidance Updated
Inari Medical has raised the lower-end of its sales outlook for 2024.
For 2024, the company now expects revenues to be in the range of $601.5-$604.5 million (reflecting growth of 20.5-22.5% from the 2023 level) compared with the previous guidance of $594.5-$604.5 million. The Zacks Consensus Estimate is pegged at $600.1 million.
The company continues to expect to reach sustained operating profitability in the first half of 2025.
Our Take
Inari Medical exited the third quarter of 2024 with an improvement in overall revenues. However, earnings missed the Zacks Consensus Estimate. NARI’s product portfolio witnessed consistent improvement, which led to robust product adoption by its customers. The geographical performances were equally remarkable.
Although Inari Medical’s gross margin declined year over year, the sequential expansion of margins seems to be in line with the company’s expectation of reaching operating profitability in the first half of 2025. Meanwhile, the company’s earnings are likely to be softer in the fourth quarter as well.
Shares of NARI were up 8.6% during after-hours trading on Oct. 28, likely driven by robust sales growth and sequential improvement in gross margin. The company’s shares have lost 34.4% year to date against the industry’s growth of 5.3%. The S&P 500 Index was up 21.9% in that period.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Currently, Inari Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same medical industry areGlobus Medical (GMED - Free Report) , AngioDynamics (ANGO - Free Report) and Avanos Medical (AVNS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Globus Medical has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.
AngioDynamics has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Avanos has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.
Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.