Inari Medical Q2 Earnings Miss, Revenues Increase Y/Y

Inari Medical, Inc. NARI reported an adjusted loss per share of 41 cents in the second quarter of 2024 compared with the year-ago period's loss of 4 cents per share. The Zacks Consensus Estimate for loss per share was pegged at 16 cents. On a GAAP basis, the company recorded a loss per share of 54 cents. There was no adjustment in the prior-year period.

Revenues in Detail

Inari Medical registered revenues of $145.8 million in the second quarter, up 22.5% year over year. The figure beat the Zacks Consensus Estimate by 1.3%.

Q2 Highlights

According to management, Inari Medical saw record cases and revenue generation outside of the United States in the second quarter. Increased adoption of Inari Medical's products in Western Europe was the main factor driving its performance and excellent case growth in early-stage markets in Latin America, Canada, and the Asia-Pacific region.

The company is expecting to start treating patients in China and Japan in 2024, and it is currently making good progress in both regions. Management expects its international business to represent more than 20% of total revenues in the future on the back of unmet needs.

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 were 138 million, up 21% year over year.

Emerging therapies business saw robust growth as well. The company recorded $8 million during the quarter, reflecting 66% year-over-year growth and 36% sequentially. Per the second-quarter earnings call, Inari Medical received PMA approval from the FDA for its second-generation stent delivery system, which is likely to improve a key component of the LimFlow System.

The company is currently progressing well with the limited market release of the LimFlow system in the United States. It has already signed several reimbursement deals for the system. NARI expects to start the full commercial release of the system in the fourth quarter of 2024.

During the second quarter of 2024, Inari Medical commenced the full commercial launch of VenaCore, its latest purpose-built device within the CBD toolkit for the treatment of acute and chronic venous diseases.

Inari Medical expects to showcase its PEERLESS data, which is one of the three randomized controlled trials (RCTs), in the fourth quarter of 2024. PEERLESS study evaluates patient outcomes using the FlowTriever device. The company is progressing well with the other two RCTs as well.

Margin Trend

In the quarter under review, Inari Medical's gross profit improved 19.7% to $125.8 million. The gross margin contracted 210 basis points (bps) to 86.3%.

Selling, general and administrative expenses rose 33.4% to $114.2 million. Research and development expenses increased 18.1% year over year to $24.9 million. The operating expenses of $148.3 million increased 38.9% year over year.

The operating loss totaled $22.4 million compared with $1.5 million in the year-ago period. Excluding acquisition-related costs of $1 million, acquired intangible asset amortization of $2.4 million, and change in fair value of contingent consideration liability of $5.7 million, adjusted operating loss in the second quarter was $13.3 million.

Financial Position

Inari Medical exited second-quarter 2024 with cash and cash equivalents and short-term investments of $109.7 million compared with $101.8 million at the first quarter of 2024-end.

Cumulative net cash used in operating activities at the end of second-quarter 2024 was $0.8 million compared to cumulative net cash provided by operating activities of approximately $7.7 million in the year-ago quarter.

Guidance

Inari Medical has raised its financial outlook for 2024.

For 2024, the company now expects revenues in the range of $594.5-$604.5 million (reflecting growth of 20.5%-22.5% from 2023) compared with the previous guidance of $592.5-$602.5 million. The Zacks Consensus Estimate is pegged at $599.1 million.

Our Take

Inari Medical exited the second quarter of 2024 with an improvement in overall revenues. However, earnings missed the Zacks Consensus Estimate. The business's product portfolio witnessed consistent improvement, which led to robust product adoption by its customers. The geographical performances were equally remarkable.

However, Inari Medical's lower gross margin and dismal bottom-line performances were disappointing. The company incurred an operating loss during the quarter, which raised our apprehension.

Zacks Rank and Key Picks

Inari Medical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Boston Scientific Corporation BSX, Hologic HOLX and Universal Health Services UHS.

Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, which beat the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank of 2 (Buy).

Boston Scientific has a long-term growth rate of 12.5%. BSX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.

Hologic, carrying a Zacks Rank of 2 at present, has a long-term growth rate of 7.4%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.50%.

Hologic reported second-quarter 2024 adjusted EPS of $1.06, which beat the Zacks Consensus Estimate by 3.9%. Revenues of $1 billion surpassed the Zacks Consensus Estimate by 1.1%.

Universal Health Services reported second-quarter 2024 adjusted EPS of $4.31, which beat the Zacks Consensus Estimate by 27.9%. Revenues of $3.9 billion surpassed the Zacks Consensus Estimate by 1.5%. It currently carries a Zacks Rank of 1.

Universal Health Services has a long-term growth rate of 18%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.

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