UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ___________

Commission File Number: 001-39293

Inari Medical, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	45-2902923
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6001 Oak Canyon, Suite 100 Irvine, California	92618
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (877) 923-4747

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	NARI	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 5, 2021, the registrant had 50,204,758 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” "can," “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical facts contained in this Quarterly Report, including without limitation statements regarding our business model and strategic plans for our products, technologies and business, including our implementation thereof, the impact on our business, financial condition and results of operations from the ongoing and global COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, the timing of and our ability to obtain and maintain regulatory approvals, our commercialization, marketing and manufacturing capabilities and strategy, our expectations about the commercial success and market acceptance of our products, the sufficiency of our cash, cash equivalents and short-term investments, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, and assumptions, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon these forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

ii

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Inari Medical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data and par value)

(unaudited)

	September 30, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	81,158		$	114,229
Short-term investments		81,436			49,981
Accounts receivable, net		38,916			28,008
Inventories, net		19,499			10,597
Prepaid expenses and other current assets		7,141			2,808
Restricted cash		—			50
Total current assets		228,150			205,673
Property and equipment, net		14,748			7,498
Long-term investments		6,002			—
Operating lease right-of-use assets		42,855			—
Deposits and other assets		672			583
Restricted cash		—			338
Total assets	$	292,427		$	214,092
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		5,083			3,047
Payroll-related accruals		16,987			8,198
Accrued expenses and other current liabilities		6,583			2,593
Operating lease liabilities, current portion		857			—
Total current liabilities		29,510			13,838
Operating lease liabilities, noncurrent portion		28,547			—
Total liabilities		58,057			13,838
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 September 30, 2021 and December 31, 2020		—			—
Common stock, $0.001 par value, 300,000,000 shares    authorized as of September 30, 2021 and December 31, 2020; 50,144,590     and 49,251,614 shares issued and outstanding as of September 30, 2021 and    December 31, 2020, respectively		50			49
Additional paid in capital		253,256			227,624
Accumulated other comprehensive (loss) income		(246	)		4
Accumulated deficit		(18,690	)		(27,423	)
Total stockholders' equity		234,370			200,254
Total liabilities and stockholders' equity	$	292,427		$	214,092

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Inari Medical, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue	$	72,916		$	38,715		$	193,766		$	91,059
Cost of goods sold		7,040			3,228			16,477			9,420
Gross profit		65,876			35,487			177,289			81,639
Operating expenses
Research and development		12,499			5,217			32,292			11,863
Selling, general and administrative		56,104			23,080			135,899			58,353
Total operating expenses		68,603			28,297			168,191			70,216
(Loss) income from operations		(2,727	)		7,190			9,098			11,423
Other income (expense)
Interest income		27			208			130			409
Interest expense		(73	)		(251	)		(220	)		(1,060	)
Change in fair value of warrant liabilities		—			—			—			(3,317	)
Other income (expense)		30			(651	)		(4	)		(651	)
Total other expenses		(16	)		(694	)		(94	)		(4,619	)
(Loss) income before income taxes		(2,743	)		6,496			9,004			6,804
Provision for income taxes		61			—			271			—
Net (loss) income	$	(2,804	)	$	6,496		$	8,733		$	6,804
Other comprehensive (loss) income
Foreign currency translation adjustments		(146	)		—			(269	)		—
Unrealized gain on available-for-sale securities		7			—			19			—
Total other comprehensive loss		(139	)		—			(250	)		—
Comprehensive (loss) income	$	(2,943	)	$	6,496		$	8,483		$	6,804
Net (loss) income per share
Basic	$	(0.06	)	$	0.13		$	0.18		$	0.26
Diluted	$	(0.06	)	$	0.12		$	0.16		$	0.14
Weighted average common shares used to compute net       (loss) income per share
Basic		50,001,996			48,335,443			49,664,037			26,423,681
Diluted		50,001,996			55,355,846			55,511,061			49,940,409

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Inari Medical, Inc.

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		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  common stock		—		—		296,019		1		380			—			—			381
Issuance of common  stock under employee  stock purchase plan		—		—		36,881		—		1,882			—			—			1,882
Issuance of common  stock upon vesting  of restricted stock  units, net of shares  withheld for taxes		—		—		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 vesting  of restricted stock  units, net of shares  withheld for taxes		—		—		29,809		—		(706	)		—			—			(706	)
Share-based  compensation		—		—		—		—		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
Issuance of common  stock under employee  stock purchase plan		—		—		48,168		—		3,676			—			—			3,676
Issuance of common  stock upon vesting  of restricted stock  units, net of shares  withheld for taxes		—		—		116,931		—		(842	)		—			—			(842	)
Share-based  compensation		—		—		—		—		12,499			—			—			12,499
Other comprehensive  loss		—		—		—		—		—			(139	)		—			(139	)
Net loss		—		—		—		—		—			—			(2,804	)		(2,804	)
Balance, September 30,   2021		—	$	—		50,144,590	$	50	$	253,256		$	(246	)	$	(18,690	)	$	234,370

	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid In		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Income (Loss)		Deficit			Equity
Balance, December 31,   2019		31,968,570	$	54,170		6,720,767	$	7	$	2,061	$	—	$	(41,212	)		(39,144	)
Options exercised for  common stock		—		—		58,498		—		22		—		—			22
Share-based  compensation		—		—		—		—		495		—		—			495
Net income		—		—		—		—		—		—		4,112			4,112
Balance, March 31, 2020		31,968,570		54,170		6,779,265		7