
Inari Medical Reports Solid 3Q23 and Announces Complementary LimFlow Acquisition, but Investors Worry About Dilution and Distraction from Core Market
11-2-23 (by: Scott Gleason) Inari Medical has reported its financial results for the third quarter ending on September 30, 2023 with total revenue of $126.4 million marking a significant increase of 31.4% when compared to the same period in 2022. Street forecasts had been calling for revenue of $121.9 million. The company noted strong growth in its core venous thromboembolism market with the company’s FlowTreiver and ClotTriever systems. Management noted the recent publication of the FLAME study which showed very low rates of adverse events and in-hospital mortality for patients with pulmonary embolisms. Management noted that they believe the data would give physicians confidence to go downstream to lower acuity patients which could significantly expand the market given the safety profile of the device in the study. Management is also running a number of randomized clinical trials to compare its venous thromboembolism products to traditional therapies to further highlight their value proposition. Management also noted selection bias in a recent data analysis provided by competitor Boston Scientific at TCT that showed lower adverse event rates for their EKOS device.
Operating income in the third quarter of 2023 amounted to $2.1 million, a significant improvement compared to the $9.8 million operating loss during the same period in the previous year. EPS were $0.05 compared to ($0.19) in the 3Q22. Street forecasts called for EPS of $0.00 in the quarter.
Inari’s strong performance in the third quarter was attributed to robust procedural growth and effective execution across all of its growth drivers. Drew Hykes, the CEO of Inari Medical, expressed his satisfaction with the results and highlighted the company’s commitment to its patient-focused mission. Hykes noted that the core VTE business, new product launches, and international expansion all contributed meaningfully to the company’s growth. Importantly, Inari achieved positive operating income for the first time since the fourth quarter of 2021, showcasing the company’s core business and its potential for sustainable growth in the years to come.
The company’s revised its revenue guidance for 2023 calling for revenues in a range of $490 million to $493 million, representing an increase of $4.5 million at the midpoint.
Inari Medical, Inc. also announced it has entered into a definitive agreement to acquire LimFlow, S.A., a company focused on limb salvage for patients facing chronic limb-threatening ischemia (CLTI). Under the terms of the agreement, Inari is set to pay $250 million in cash upon closing, with up to $165 million in additional cash payments contingent on specific commercial and reimbursement milestones. The transaction is slated to be finalized in the fourth quarter of 2023. LimFlow focuses on CLTI treatment, a critical stage of peripheral artery disease that poses a severe risk of mortality, amputation, and reduced quality of life for affected patients. CLTI represents one of the most substantial unmet needs in vascular medicine, impacting over 1.5 million patients globally each year, including approximately 560,000 in the United States. LimFlow’s technology is the minimally-invasive LimFlow System, which is designed to bypass blocked arteries in the leg and restore oxygenated blood flow to the foot through the veins in patients who have exhausted all other therapeutic options and face major amputation. Notably, LimFlow recently secured FDA approval for its Transcatheter Arterialization of Deep Veins (TADV) system, supported by the results of the PROMISE II study published in the New England Journal of Medicine where 76% of patients treated were able to keep their limb. The company is in the early stages of commercialization and Inari will be able to accelerate these plans with its established sales force. Inari anticipates it will become a significant contributor to revenue growth with strong gross margins at scale, with a total market of $1.5 billion annual opportunity for its device in the United States alone. The deal will allow for sales synergies and allow Inari to leverage its existing infrastructure reducing costs.